HomeMy WebLinkAbout1999-05-13; Housing Commission; MinutesMinutes of: HOUSING COMMISSION
Time of Meeting: 6:OO P.M.
Date of Meeting: MAY 13,1999
Place of Meeting: CITY COUNCIL CHAMBERS
CALL TO ORDER:
Commissioner Scarpelli called the Regular Meeting to order at 6:05 p.m.
ROLL CALL:
Present:Commissioners Latas, McNeill, Rose, Scarpelli
Absent: None
Staff Present: Debbie Fountain, Housing and Redevelopment Director
Craig Ruiz, Management Analyst
Roberta “Bobbie” Nunn, Housing Program Manager Van Lynch, Assistant Planner
ELECTION OF CHAIRPERSON AND VICE-CHAIRPERSON
ACTION: Motion by Commissioner Rose, and duly seconded, to nominate Roy Latas as
Chairperson.
VOTE: 4-0-0
AYES: Latas, McNeill, Rose, Scarpelli
NOES: None
ABSTAIN: None
ACTION: Motion by Commissioner Rose, and duly seconded, to nominate Ed Scarpelli as
Vice-Chairperson.
VOTE: 4-0-0
AYES: Latas, McNeill, Rose, Scarpelli
NOES: None
ABSTAIN: None
APPROVAL OF MINUTES:
ACTION: Motion by Commissioner Rose, and duly seconded, to approve the Minutes of the
Regular Meeting of February 11, 1999, as submitted.
VOTE: 3-0-1
AYES: Latas, Rose, Scarpelli
NOES: None
ABSTAIN: McNeill (not a Commissioner at the February meeting)
APPROVAL OF MINUTES:
ACTION: Motion by Commissioner Rose, and duly seconded, to approve the Minutes of the
Special Meeting of April 22, 1999, as submitted.
VOTE: 4-0-0
AYES: Latas, McNeill, Rose, Scarpelli
NOES: None
ABSTAIN: None
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HOUSING COMMISSION MINUTES MAY 13,1999
Page 2
COMMENTS FROM THE AUDIENCE ON ITEMS NOT LISTED ON THE AGENDA:
There were no comments from the audience.
CONTINUED BUSINESS:
1. REVISED SECTION 8 TENANT-BASED RENTAL ASSISTANCE ADMINISTRATIVE PLAN -
RECOMMENDING APPROVAL OF SUBMI'ITAL OF THE REVISED SECTION 8 TENANT-
BASED RENTAL ASSISTANCE ADMINISTRATIVE PLAN TO THE U.S. DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT.
Bobbi Nunn stated that the Section 8 Tenant-based Rental Assistance Administrative Plan is required by
HUD and must be revised to comply with changes in Federal regulations. It must be adopted by the Housing Authority Board of Commissioners and submitted to €IUD, she said.
The purpose of the plan is that it establishes program policies; it allows the Housing Authority to establish
discretionary policies; it provides for consistent and effective administration of the program; it establishes
procedures and guidance for Housing Authority staff; and it ensures program integrity and minimizes
arbitrary practices.
Ms. Nunn explained the plan form, income-targeting requirements, the proposed discretionary policies, the
residency preference, and Interim Recertification policy as explained in the April 22, 1999 minutes.
Chairperson Latas asked if there were any questions of Staff. There were none.
ACTION: Motion by Commissioner Scarpelli, and duly seconded, that the Housing
Commission ADOPT Resolution No. 99-002, RECOMMENDING that the
Housing and Redevelopment Commission APPROVE submittal of the revised
Section 8 Tenant-Based Rental Assistance Administrative Plan to the U.S.
Department of Housing and Urban Development.
VOTE: 4-0-0
AYES: Latas, McNeill, Rose, Scarpelli
NOES: None
ABSTAIN: None
NEW BUSINESS:
2. CT 98-15/CP 98-08/SDP 98-17 -RANCHO CARRILLO FOR-SALE AFFORDABLE HOUSING
PROJECT - RECOMMENDATION OF APPROVAL TO THE CITY COUNCIL TO PROVIDE
$1,350,000 IN FINANCIAL ASSISTANCE FOR THE CONSTRUCTION OF NINETY TWO,
UNITS IN ORDER TO SATISFY THE REQUIREMENTS OF THE INCLUSIONARY HOUSING
ORDINANCE FOR PHASE TWO OF THE RANCHO CARRILLO MASTER PLAN.
FOR-SALE, AFFORDABLE TWO AND THREE BEDROOM ATTACHED CONDOMINIUM
Craig Ruiz reviewed the background of the request and stated that the Rancho Carrillo Master Plan will
provide for a maximum build-out of 1,711 units, which breaks down to 1,455 market-rate units and 256
affordable units. Staff has brought before the Commission two affordable housing projects that include a
116-unit affordable apartment project currently under construction and is scheduled to be completed in December of this year. The other project is for 50 second dwelling units, 11 of which have received their
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HOUSING COMMISSION MINUTES
MAY 13,1999
Page 3
administrative permits and will be constructed soon. The remaining second dwelling units will be
constructed along with the market-rate developments.
These two affordable projects have allowed for an Affordable Housing Agreement with up to 1,158 units to
be constructed right now: 992 market-rate and 166 affordable. The Affordable Housing Agreement has
been set up so that there will be no fhture market-rate development until all affordable units have been
approved.
Mr. Ruiz stated that this is the applicant’s third affordable project. He pointed out that there were a few
inconsistencies in the report. There are 124 units in this fixed-unit project. There will be 90 (rather than 92
stated in the report) affordable condominium units and there will be 34 market-rate units mixed in
throughout the development. This will allow for the maximum development of 1,711 units.
Mr. Ruiz said that the Planning Commission has reviewed the Site Development Plan for this project, which
is necessary before the project can be constructed. They have recommended approval to the City Council,
who will hear the project on Tuesday.
The developer has come to the City and requested financial assistance to help fill some of the shortfall that
will come as a result of the project. For the 90 affordable units, they have requested a total of $15,000 per
unit, which works out to a total of $1,350,000.
Homes will be sold to households earning less than 80 percent of the are median income. The median
income for the County at 80 percent for a family of four would be $42,000.
Staff structured this “deal” similar to two other previous affordable for-sale projects (Cherry Tree Walk and
Calavara Hills) where the City would loan the money to the developer during project construction. As the
development is complete and homes are sold, the developer is credited for repaying the City $15,000, which
is not totally forgiven. The repayment of the $15,000 subsidy, plus the developer subsidy, becomes the
obligation of the borrower or individual homebuyer in the form of a second trust deed. The homebuyer would get conventional financing for the first trust deed. The second trust deed would be a silent second and there would be no payments on it. It is due upon sale or transfer. That subsidy, plus contingent interest, would be due back to the City.
Mr. Ruiz then explained the source of the City subsidy. He said that in the past the City has taken financial assistance from the Housing Trust Fund. There is a total of $3,200,000 in the CHAP (Carlsbad Homebuyer Assistance Program), and nobody has used the funds in this program as to this date. Some of the funds will be used in Cherry Tree Walk. He said that CHAP was set up for low-income homebuyers. Staff is proposing to use the CHAP funds for this project, which would save the Housing Trust Fund forother
projects. Using CHAP funds would be consistent with what the City set out to do with CHAP. Staff would need to get the concurrence of Bank of America, as they are the ones who provided the funding for CHAP.
The City needs to give the bank 30 day’s notice as to its intent for utilization of the funds.
Mr. Ruiz stated that Staff‘s recommendation is that the Housing Commission adopt the resolution and recommend to the City Council that they do provide $1,350,000 in financial assistance to the project.
Mr. Ruiz pointed out that Exhibit 4 in the Staff report is the developer’s proforma. He said that in the proforma the developer was going to do 82 affordable units. Because of some changes, the requirement has increased, but the proforma had been completed prior to that number increasing. Mr. Ruiz explained how Staff figured the $1,350,000 in financing they are recommending.
Chairperson Latas asked if there were any questions of Staff.
I.
HOUSING COMMISSION MINUTES
MAY 13,1999
Page 4
Commissioner Scarpelli asked if there is any fbture liability that the City will have in the event of a lawsuit
by the Association and asked if the City is insured.
Mr. Ruiz responded that the City includes language in the notes and deeds of trust stating that the City
makes no representation or warranties about the project, that the City is strictly a lender, and the homebuyer
waives the City from any responsibility of future actions. This language goes into the recorded documents,
he said.
Commissioner Scarpelli asked if the City has the same kind of waiver a lender would have. He added that it has been proven that homebuyers have gone “after all the deep pockets’’ whether it is lender and/or
developer.
Commissioner McNeill asked what happens to the low-income aspect when an individual sells the property.
Mr. Ruiz responded that the initial buyer of the property could sell to anybody. The $15,000 that the City puts in, plus what the developer puts in, comes back to the City, plus the contingent interest. This is put back into the Housing Trust Fund, and then the City would use the funds for another affordable project.
Commissioner Rose asked if the City gets the first monies from the sale of an affordable unit.
Mr. Ruiz responded that the City is in second position behind the bank. If the property appreciates, the City will get their money back.
Chairperson Latas asked if this project signals the build-out of this area.
Mr. Ruiz responded affirmatively.
Chairperson Latas asked about Bank of America’s requirement to participate in this program.
Mr. Ruiz responded that Bank of America provided the money as a way to satisfy their housing obligation
for what was then the Arroyo La Costa, what they are calling now The Villages that are being built at La
Costa and Olivenhain Road. They provided the money and they are actually servicing these CHAP loans.
Chairperson Latas invited the applicant to speak.
David Lother, Continental Homes, 2237 Faraday Avenue, Suite 100, Carlsbad, CA, addressed the
Commission and said that Mr. Ruiz did a great job summarizing the project. He said he would like to
reinforce a couple of points on the status of the schedule. He stated that construction of the 1 16 affordable
units is moving along on schedule. The foundations have been poured for the first phase of construction
and the framing is now going up. This means that they have complied with the first threshold of the
Affordable Housing Agreement that exists today.
Mr. Lother said that the completion of construction of the apartments is expected to occur by December of
1999, which is the next threshold of the Affordable Housing Agreement. He said they are on schedule for this as well.
The second units are progressing on schedule, he said. Administrative permits have been pulled for all 19
of the first phase second units; and 1 1 building permits have been pulled. Of those 19, construction has
started on 11.
HOUSING COMMISSION MINUTES
MAY 13,1999
Page 5
Mr. Lother said that they brought forward their application some time ago for the first phase-the 116
apartments. At that time they were asked by the Housing Commission to consider for-sale units in the
second phase, hence their presence at the meeting to comply with that request. He added that he thinks the
90 units will be a great addition to the City’s program and they are anxious to get started. He said they do
agree with Staffs report and all the agreements and deeds of trust, etc.
Chairperson Latas asked if there were any questions of the applicant.
Commissioner Rose asked for clarification of what would be completed in December.
Mr. Lother responded that the 116-unit apartment project would be completed in December 1999.
ACTION: Motion by Commissioner Scarpelli, and duly seconded, that the Housing
Commission ADOPT Resolution No. 99-003, recommending APPROVAL to the
City Council to provide $1,350,000 in financial assistance from either the
reallocation of funds from the Carlsbad Homebuyer Assistance Program (CHAP) or
from the City’s Housing Trust Fund to Continental Homes, Inc., for construction of
ninety, for-sale, affordable two and three bedroom attached condominium units in
order to satisfy the requirements of the Inclusionary Housing Ordinance for the
construction of Phase 2 of the Rancho Carrillo Master Plan.
VOTE: 4-0-0
AYES: Latas, McNeill, Rose, Scarpelli
NOES: None ABSTAIN: None
3. MODERATE INCOME LOAN PROGRAM - RECOMMENDATION OF APPROVAL TO THE
CITY COUNCIL TO PROVIDE $50,000 TO ESTABLISH THE MODERATE INCOME
HOMEBUYER ASSISTANCE PROGRAM TO PROVIDE DOWNPAYMENT ASSISTANCE TO
MODERATE INCOME HOUSEHOLDS AND TO APPROVE THE RELATED LOAN AND
SECURITY AGREEMENTS.
Craig Ruiz said that Goal 3.10(b) states that “The City’s Housing Authority and Housing and
Redevelopment Department will work to secure funding and develop additional lending programs for
moderate income, especially first-time home buyers.”
This program would establish a second trust deed loan to be used toward down payment or closing costs for the purchase of a first home. The amount of the loan would be the lessor of 3 percent of the purchase price or $5,000. It would be due upon sale or transfer of the property.
The guidelines for the program would be (1) eligible properties, (2) household eligibility, (3) loan limits and terms, and (4) eligible borrowers. These guidelines are explained in Staffs May 13, 1999 report.
Staff is recommending that the Housing Commission recommend to the City Council the approval of the
moderate-income loan program. Staff is recommending $50,000 to assist up to a minimum of 10 first-time
homebuyers. Because Staff considers this to be a pilot program, they are recommending a small, manageable amount of money to make sure the program works. Staff thinks the program will work, thinks
there is product out there, and thinks there are people who will qualify for the program. Staff would re-
evaluate the program after all the fimds were distributed to determine if the program could be repeated.
Commissioner Rose asked for clarification of first-time homebuyers.
HOUSING COMMISSION MINUTES
MAY 13,1999 Page 6
Mr. Ruiz said that most government-lending programs define a first-time homebuyer as somebody who has
not owned a home in the past three years. It is not technically the first home one has owned. About the
only exception to that would be a “displaced home-maker” who is somebody who as a result of a divorce or
a family situation is in need of housing.
Commissioner Rose asked if this program is for those who live or work in Carlsbad.
Mr. Ruiz responded affirmatively.
Ms. Fountain added that the work site has to be physically located in Carlsbad.
Chairperson Latas and Commissioner Scarpelli complimented Staff for developing this program.
There was discussion about the properties being due on sale rather than rental property. Mr. Ruiz explained
that the City will be notified if the property is sold. The homebuyer also has to do an annual affidavit to
prove that they are still on the property and show a copy of the property taxes, etc.
Commissioner McNeill asked if this could be used in conjunction with low-cost housing like Rancho
Carrillo.
Mr. Ruiz responded that the units at Rancho Carrillo would be for low income, and this is for moderate; so
they would be over-income and would not qualify.
ACTION: Motion by Commissioner Rose, and duly seconded, that the Housing Commission
ADOPT Resolution No. 99-004, recommending APPROVAL to the City Council
to allocate $50,000 from the Housing Trust Fund to establish the Moderate Income
Homebuyer Assistance Program to provide downpayment assistance to first-time
moderate income homebuyers to purchase homes in the City of Carlsbad and the
related loan and security agreements.
VOTE: 4-0-0
AYES: Latas, McNeill, Rose, Scarpelli
NOES: None
ABSTAIN: None
CHAIRPERSON REPORT:
Chairperson Latas wanted to point out to the City Council that the draft documents for Item #2 would be
dramatically different from what the Housing Commission saw this evening, so they should preview the documents for themselves.
Ms. Fountain responded that the documents usually are not dramatically different. Some legal language
might change or some minor revisions may be made.
There was some discussion about establishing a time limit for Staff and applicant presentations.
DIRECTOR REPORT:
Ms. Fountain said that Mr. Ruiz came up with the moderate-income program. He did the necessary
research for a program he thinks will work in Carlsbad and should receive the credit for the program.
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HOUSING COMMISSION MINUTES
MAY 13,1999
Page 7
Ms. Fountain distributed out a copy of SB382, which relates to senior housing, that Commissioner McNeill
asked for.
Commissioner McNeill said he was interested in what was going on at the State level on this particular program because it relates to projects like Oceana and Costa Serena, where under the State guidelines, they
don’t qualify as senior projects. Peacock Hills lost a lawsuit based on the fact that a young couple moved in
there, sued and won because the subdivision did not qualify as a senior project. This legislation is to make the Federal regulations take precedence over the State regulations so that these projects do qualifL as senior
projects. Commissioner McNeill thinks things should be left the way they are because it is a great base for
low-cost housing, then the City can build new projects to comply with the current State requirements.
Commissioner McNeill added that you can purchase a two bedroom, one bath “twin home” in Costa Serena
for $85,000.
Commissioner Scarpelli commented that the people who did buy in these projects, bought under the
assumption that they were purchasing in a senior community.
Ms. Fountain said that Cherry Tree Walk (42 townhomes) was getting ready to close some escrows and will
be moving people into the units this summer, hopefully in June.
Framing for 138 units at Laurel Tree will start soon. They hope to have the units completed by December
and hope to be completely leased up by January of 2000.
Poinsettia Properties (92 units) will go to Council on May 18, 1999 to issue bonds to help finance the
project. Doug Avis Property and Bridge Housing Corporation is doing the affordable on that site. It got its
bond allocation and tax credits from the State. They will start grading in the summer and start construction
soon thereafter.
Commissioner Scarpelli asked how this construction would affect the Section 8 waiting list.
Ms. Nunn responded that this would definitely help the families. Right now there are an ample number of
one-bedroom units to assist the single-family units, who are usually elderly or disabled. The challenge right
now is for the two, three and four bedroom units. With the changes in the revisions policy giving families
an equal priority with elderly and disabled, the City will be able to assist more families. Ms. Nunn said that
there are approximately 2,300 on the waiting list. Staff is going through a purge right now; which will
probably purge a third of those people. A lot of people didn’t meet the Federal preferences, so they
basically stayed at the bottom of the list. Some of the applicants have been on the waiting list since 1991.
With new funding coming about, Staff did do a joint application recently with the County of San Diego and
the City of Oceanside to apply for vouchers to assist Welfare to Work families, which are families that are
under the CalWorks program and are transitioning into the workforce. These vouchers for rental assistance
will be designated specifically for these families.
Chairperson Latas asked what income bracket the bonds for Poinsettia Properties are for.
Ms. Fountain responded that Poinsettia Properties is for low-income individuals at 60 percent of median
income.
ADJOURNMENT:
By proper motion, the Regular meeting of May 13, 1999 was adjourned at 655 p.m.
HOUSING COMMISSION MINUTES
MAY 13,1999 Page 8
Respectfully submitted,
n
DEBBIE FOUNTAIN
Housing and Redevelopment Director
KATHY VAN PELT
Minutes Clerk
MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE
APPROVED.
ITEM NO. 1
DATE: MAY 13,1999
SUBJECT: REVISED SECTION 8 TENANT-BASED RENTAL ASSISTANCE
AD M I N I STRAT WE PLAN
1. RECOMMENDATION
That the Housing Commission ADOPT Resolution No. 99-002, RECOMMENDING that
the Housing and Redevelopment Commission APPROVE submittal of the revised
Section 8 Tenant-Based Rental Assistance Administrative Plan to the U.S. Department of
Housing and Urban Development.
II. BACKGROUND
The Housing and Redevelopment Department (“Housing Agency”) administers the
Section 8 Tenant-Based Rental Assistance Program for the City of Carlsbad. The
Department of Housing and Urban Development (HUD) requires the Housing Agency
(HA) to submit an Administrative Plan that establishes program policies which are
consistent with HUD requirements and local objectives. HUD further requires that the
Administrative Plan be revised to comply with changes in the federal regulations. Any
revisions of the Administrative Plan must be adopted by the Board of Commissioners of
the Housing Agency and a copy must be provided to HUD.
In accordance with the Conforming Rule, the administrative plan must cover HA policies
on the following subjects:
1. Process used by the HA to select applicants from the waiting list, including applicants
with federal and other preferences, and procedures for closing and reopening the HA
waiting list;
2. Issuance or denial of vouchers or certificates, including HA policy governing the
voucher or certificate term and any extensions or suspensions of the term;
3. Any special rules for use of available funds when HUD provides funding to the HA for
a special purpose, including funding for specified families or a specified category of
families;
- ADMINISTRATIVE PLAN FOR SEL I ION 8 TM-BASED RENTAL ASSISTANCE HiOCRAMS MAY 13,1999 PACE 2
4. Occupancy policies, including:
5.
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a. Definition of what group of persons may qualify as a "family";
b. Definition of when a family is considered to be "continuously assisted";
Program for encouraging participation by property owners of suitable units located
outside areas of low income or minority concentration;
Assistance to a family that claims that illegal discrimination has prevented the
family from leasing a suitable unit;
Statement of the HA policy on providing information about a family to prospective
owners;
Disapproval of owners;
Subsidy standards;
Family absence from the dwelling unit;
Process to determine who remains in the program if a family breaks up;
Informal review procedures for applicants;
Informal hearing procedures for participants;
Process for establishing and revising voucher payment standards, including
affordability adjustments;
Special policies concerning special housing types in the program; and
Policies concerning payment by a family to the HA of amounts the family owes the
HA.
DISCUSSION
On October 21, 1998, President Clinton signed into law the HUD fiscal year (FY) 1999
Appropriations Act, which includes the Quality Housing and Work Responsibility Act of
1998 (QHWRA). The FY 1999 HUD Appropriations Act and the QHWRA enact measures
that transform the Section 8 Tenant-Based Rental Assistance Programs.
On February 18, 1999, a notice was published in the Federal Register to provide initial
guidance on the QHWRA. The purpose of the notice was to advise HAS of certain
assisted
ADMINISTRATIVE PLAN FOR SEc-3N 8 TENANT-BASED RNAL ASSISTANCE MAY 13,1999 PACE3
3CRAMS
housing provisions that are effective immediately and to provide guidance on what action
needs to be taken in the future and which actions require policy determinations.
The required new provisions that have been addressed in the City’s revised
Administrative Plan are:
1. Determination of program ineligibility for individuals convicted of manufacturing or
producing methamphetamine (commonly referred to as “speed”) for certain
housing assistance.
2. Establishment of certain exceptions to the minimum rent requirement for hardship
circumstances.
3. Treatment of income changes resulting from reduced welfare (CALWorks) benefits
because of fraud or failure to comply with work requirements.
4. New income targeting requirements which state that not less than 75% of new
admissions to the program must have incomes at or below 30% of the area
median income.
5. Permanent repeal of federal preferences and authorization for local preferences.
In addition to the statutory requirements which must be included in all Administrative
Plans, there are discretionary policies that may be included within the Plan as well.
Discretionary policies that were changed or more clearly defined in the City’s Plan are as
follows:
Admissions Policy
Local Preferences Policy
Residency Preference
Over Fair Market Rent Tenancy Option (OFTO) Policy
Accommodations for Persons with Disabilities
Income Reporting Responsibilities
Interim Recertification Policy
Minimum Rent Requirement
IV. RECOMMENDATION
Staff recommends that the Housing Commission adopt Resolution No. 99-002,
recommending that the Housing and Redevelopment Commission approve submittal of
the revised Section 8 Tenant-Based Rental Assistance Administrative Plan to the U.S.
Department of Housing and Urban Development.
EXH IBlTS
1.
2.
Housing Commission Resolution No. 99-002
Administrative Plan for Section 8 Tenant-Based Rental Assistance Programs
(Revised March 1999)
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HOUSING COMMISSION RESOLUTION NO. 99-002
A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY
OF CARLSBAD, CALIFORNIA, RECOMMENDING APPROVAL OF
RENTAL ASSISTANCE ADMINISTRATIVE PLAN TO THE U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
SUBMITTAL OF THE REVISED SECTION 8 TENANT-BASED
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WHEREAS, the Housing and Redevelopment Commission ("Housing Agency")
3dministers the Section 8 Tenant-Based Rental Assistance Program; and
WHEREAS, the U.S. Department of Housing and Urban Development (HUD)
-equires a Housing Agency to develop an Administrative Plan that establishes program
Dolicies for implementation that are consistent with HUD requirements and local
3bjectives; and
WHEREAS, the U.S. Department of Housing and Urban Development (HUD)
'urther requires that the Administrative Plan be revised to comply with changes in
'ederal regulations; and
WHEREAS, federal regulations provide that the Administrative Plan and any
-evisions of the plan must be adopted by the Board of Commissioners of the Housing
Sgency and submitted to the U.S. Department of Housing and Urban Development.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission
if the City of Carlsbad, California, as follows:
1. The above recitations are true and correct.
2. That based on the information provided within the Housing Commission Staff
Report and testimony presented during the public meeting of the Housing
Commission on April 22, 1999, and on May 13, 1999, the Housing Commission
ADOPTS Resolution No. 99-002, recommending to the Housing and
Redevelopment Commission APPROVAL of submittal of the Revised Section 8
Tenant-Based Rental Assistance Administrative Plan to the U.S.
Department of Housing and Urban Development.
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3. The Housing Commission hereby recommends that the Housing and
Redevelopment Director be authorized to execute all appropriate
documents required for the submittal of said Administrative Plan.
PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Housing
Commission of the City of Carlsbad, California, held on the 13th day of May, 1999, by
the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAl N:
CARLSBAD HOUSING COMMISSION
DEBBIE FOUNTAIN
HOUSING AND REDEVELOPMENT DIRECTOR
HC RESO. NO. 99-002
PACE 2
STAff: CRAiq Ruiz
MANA~EMENT ANA~YST
ITEM NO. 2
DATE: MAY 13,1999
SUBJECT: CT 98-15/CP 98-08/SDP 98-17 - RANCHO CARRILLO FOR-SALE
AFFORDABLE HOUSING PROTECT - RECOMMENDATION OF APPROVAL
TO THE CITY COUNCIL TO PROVIDE $1,350,000 IN FINANCIAL
AFFORDABLE TWO AND THREE BEDROOM ATTACHED CONDOMINIUM
UNITS IN ORDER TO SATISFY THE REQUIREMENTS OF THE
INCLUSIONARY HOUSING ORDINANCE FOR PHASE TWO OF THE
RANCHO CARRILLO MASTER PLAN.
ASSISTANCE FOR THE CONSTRUCTION OF NINETY, FOR-SALE,
I. RECOMMENDATION
That the Housing Commission ADOPT Resolution No. 99-003, recommending
APPROVAL to the City Council to provide $1,350,000 in financial assistance from either
the reallocation of funds from the Carlsbad Homebuyer Assistance (CHAP) Program or
from the City’s Housing Trust Fund to Continental Homes, Inc., for construction of
ninety, for-sale, affordable two and three bedroom attached condominium units in
order to satisfy the requirements of the Inclusionary Housing Ordinance for the
construction of Phase 2 of the Rancho Carrillo Master Plan.
11. PROJECT BACKGROUND
At build-out, it is anticipated the Rancho Carrillo Master Plan will contain a maximum
of 1,721 residential housing units. Pursuant to the City’s Inclusionary Housing
Ordinance, 15%, or 258 of the total units will be required to be affordable to lower
income households. The Master Developer of the project, Continental Homes, chose to
phase the construction of both the affordable and market rate housing units.
Previously, the Developer received approval to construct a 116 unit affordable
apartment project and up to 50 affordable second dwelling units (SDUS). The approval
of these previous two projects allowed the developer to construct a total of 1,158
housing units (992 market rate and 166 affordable). The development of the 1,158 units
is considered Phase 1 of the Rancho Carrillo Master Plan.
On April 7,1999, the Planning Commission recommended approval to the City Council
of the site development plan (SDP 98-17), tentative map (CT 98-15) and a condominium
permit (CP 98-08) for 124 for-sale attached condominium units.
CT 98-15/CP 98-08/SDP 98-17 - RANCHO CARRILLO FOR-SALE AFFORDABLE HOUSING PROJECT
MAY 13, 1999
PACE 2
Number of Bedrooms Size of Unit
Two 901 SQ. FT.
Three 1.003 SO. FT.
Of the 124 units, 92 units will be sold to low income households while 32 will be sold at
market rates. The approval of the 90 affordable units by the City Council, along with
the previously approved apartments and SDUs will allow for the development of a
total of 1,711 units within the Master Plan. The City Council is tentatively scheduled to
consider the permits for the condominium project at their May 18,1999, meeting. The
affordable condominiums and remaining market rate units make up Phase 2 of the
Carrillo Ranch Master Plan.
Number of Units
10
40
111. PROTECT DESCRIPTION
Three
The project is located on the southeast corner of Palomar Airport Road and Melrose
Drive on a portion of Village B of the Rancho Carrillo Master Plan. Village B consists of
3 multi-family lots: Lots 206,207 and 208. The development of 116 affordable apartment
units is currently under construction on Lot 207. The condominium project will be
located on the remaining two lots (See Exhibit Nu. 5). The proposed 124 unit project will
consist of 27 residential buildings (16 five-plexes and 11 four-plexes), a common pool,
fitness and turf area and tot lots (See Exhibit Nu. 6). Table 1 below shows the size and
types of affordable units proposed. The affordable units will be restricted and
affordable to households with incomes not exceeding 80% of the area median.
1,139 SQ. FT. 40
Total 90
Number of bedrooms
Two
Three
“Two or Three
Size of Unit
1,034 SQ. FT. 14
1,139 SQ. FT. 14
Number of Units
901 SQ. FT. 4
Table 2 shows the size and type of market rate units proposed.
Total
I TABLE 2 - MARKET RATE UNITS I
32
*The proposed number of 1,139 square feet market rate units that will be built as two vs.
three bedrooms will be determined at a later date. These units do not change in size,
only in interior floor plan.
CT 98-15/CP 98-08/SDP 98-17 - RANCHO CARRILLO FOR-SALE AFFORDABLE HOUSING PROJECT
MAY 13, 1999
PACE 3
IV. FINANCIAL
When the Developer originally requested financial assistance, the total number of
housing units in the Master Plan was estimated to be 1,658. To satisfy the Inclusionary
Housing Ordinance requirement for the development, it was necessary for the
Developer to provide 82 of the condominium units at affordable levels. The Developer’s
proforma contained in Exhibit Nu. 4 reflects the need for 82 units. Today, it is estimated
that the Master Plan will contain a maximum of 1,711 total housing units. Thus, the
Developer now needs to provide 90 units at affordable levels to satisfy their
Inclusionary Housing Ordinance requirements.
When the request for financial assistance was reviewed for 82 affordable units, the Staff
Affordable Housing Policy Teams recommended providing financial assistance of
$15,000 per unit or a total of $1,230,000. While the number of affordable units has
increased to 90, staff continues to support providing financial assistance of $15,000 per
unit or a total of $1,350,000. The following factors were considered in arriving at this
recommendation.
A. Development Team
It is important that the developer have the capacity to successfully implement the
proposed project. Although the developer, Continental Homes, is not experienced
with affordable housing development, the team is experienced and has been highly
successful in developing conventional home ownership projects.
B. Cost Reasonableness
The developer has provided detailed proforma development cost information for
review by staff and the Housing Commission (See Exhibit 4). Since development
costs are one of the key variables determining the need for subsidies, it is important
that those costs be reasonable. At an average cost of approximately $160,000,
including land but no profit, these average unit costs are consistent with typical
development within the City.
C. UndueGain
It is important that any financial assistance have the effect of making the units more affordable
and not creating undue gain for any party. In the proposed affordable project there is no
developer return or profit factored into the project proforma and there are no other incentives
tied to either the market or affordable projects which would create any gain for the developer.
CT 98-15/CP 98-08/SDP 98-17 - RANCHO CARRILLO FOR-SALE AFFORDABLE HOUSING PROJECT
MAY 13,1999 PAGE 4
COST
LAND
OTHER
TOTAL
D. Subsidy Analvsis
HOMEBUYER INCOME HOMEBUYER INCOME
80% AMI* 70% AMI*
(Mrn/MUM (MRx/ML/MUMAff OWABL€)
ALLOWABL r)
$38,000 $38,000
120,000 120,000
$1 58.000 $1 58.000
With projected costs and a known restricted purchase price based on the maximum
household incomes, it is possible to determine the estimated level of subsidy
required to develop and sell the affordable units. With this subsidy estimate, an
amount of City assistance is recommended which effectively “leverages” the City’s
housing funds. Leveraging is defined as the ratio of City subsidy to subsidy
provided from other sources. The following chart estimates the required subsidy for
the affordable project and shows the recommended level of City assistance and
developer subsidy necessary for the project to be feasible.
MAXIMUM PURCHASE
PRICE**
$1 27,7420 $1 09,034
(Including Land)
SUBSIDY SOURCES
City Assistance
SUBS1 DY
REQUIREMENT
$ 15,000 $ 15,000
($ 30,260)
Developer Subsidy (/nc/uding Land)
CITY LEVERAGE
($ 48,970)
$ 15,260 $ 33,970
$ 2.0 : $1 $ 3.3 : $1
The Subsidy Analysis shows estimated subsidy needs for two levels of homebuyer income.
Eighty percent (80%) of Area Median Income (AMI) is the maximum allowed income and is
used to determine the maximum allowed purchase price. However, actual buyers will have
incomes below 80% AMI, therefore, 70% AMI is used to illustrate the subsidy requirement
L
CARRILLO FOR-SALE AFFORDABLE HOUSING PROJECT
MAY 13, 1999
PAGE 5
based on the realistic actual average incomes of buyers. Based on 70% of AMI the
recommended level of City assistance would provide $1 of subsidy for each $3.30 from
the developer or some other outside source (leverage of 3.3: 1). Although this is a
lower level of leveraging than rental projects such as Villa Loma and Laurel Tree
Apartments, staff believes it is acceptable for a homeownership project where there are
no ”deep subsidy’’ funding programs available to assist in production.
E. Form of Assistance
City as well as developer assistance would be provided in the form of funds which
are first used for construction and then for deferred financing (no payment for a
period of time) for the actual homebuyer. This subsidy financing is structured as
loan which is repaid to the City upon resale of the unit. Any real appreciation is
shared between the City and the homebuyer based on the contribution to the initial
purchase. No ”windfall” comes to the subsidized buyer.
Staff is proposing two alternatives for the source of funding. First, there is currently
a balance of approximately $2,500,000 in the City’s Housing Trust Fund. Typically,
this would be the source of the funding. However, staff is proposing that the
Commission also recommend that staff seek to reallocate funds from the City’s
Carlsbad Homebuyer Assistance Program (CHAP) program.
The CHAP program is intended for first time, low income home buyers earning less
than 80% of the Area Median Income. In today’s market place, a low-income family
of four could afford a home loan of approximately $110,000. As the Commission is
aware, there are few if any homes in this price range in the City of Carlsbad.
Because of this, there have been no loans made from this program to date. For this
program to be effective, new affordable product is required.
The source of the CHAP funds comes from the Bank of America as means to satisfy
their inclusionary housing requirement for the Villages of La Costa project. To use
the funds for purposes other than CHAP would require the concurrence of the Bank.
The attached resolution allows for staff to explore this possibility. If the Bank
agrees, this would be the source of funding for this project. Should the Bank not
concur, the funding would come from the Housing Trust Fund. Staff feels that the
overall intent of CHAP is to assist low income home buyers. The use of CHAP
funds for this project would be consistent with the intent of the program.
F. Security
As indicated, the City takes a security interest in each property. Because the amount
of City assistance is only a portion of the total subsidy, the City will have a
sigruficant “cushion” of equity protecting its actual cash loan.
CT 98-15/CP 98-08/SDP 98-17 - RANCHO CARRILLO FOR-SALE AFFORDABLE HOUSING PROJECT
MAY 15,1999
PAGE 6
G. Risks
The two major types of risk in th.~s for-sale development are construction risk (units
do not get built) and market risk (units do not sell). In addition, it is likely that any
City financial assistance will be subordinated to conventional bank financing. If a
problem did arise, the bank's interest would come ahead of the City's. Although the
City would be taking on some of the risk inherent with development, there are
several factors that mitigate these risks. First, the City's financial involvement
would constitute a very small portion of the project, meaning that the other lenders
and developer will be motivated to insure successful completion. Second, in terms
of market risk, the City's assistance will be fixed and additional subsidies required
to insure sale of all units will be the obligation of the developer.
V.
VI
VII.
AFFORDABLE HOUSING AGREEMENT
Prior to final map or issuance of building permits, the developer will be required to
enter into an Affordable Housing Agreement with the City which binds the developer
to the specifics of the affordable housing project including, but not limited to the size,
location and tenure of affordability of the project.
LOAN AGREEMENT
A draft of the Developer Loan Agreement, Deed of Trust and Promissory Note, and Borrower
Deed of Trust, Promissory Note and Disclosure Statement is attached for review by the Housing
Commission as Exhibit No. 3. Staff is requesting that the Housing Commission recommend approval of the documents in substantially the form presented, subject to final approval by the
City Attorney.
SUMMARY
It is the role of the Housing Commission to make recommendations to the City Council
based on several considerations with respect to affordable housing projects. These are:
The proposal's effectiveness in serving the City's needs and priorities as
expressed in the Housing Element of the General Plan and the HUD
Consolidated Plan.
The proposal's consistency with the City's affordable housing policies and
ordinances as expressed in the Housing Element, Inclusionary Housing
Ordinance, Density Bonus Ordinance, etc.
The proposal's development and operating feasibility, emphasizing the development team
capacity, financing sources and the role of the City in providing financial assistance or
incentives.
.-
CT 98-15/CP 98-08/SDP 98-17 - RANCHO CARRILLO FOR-SALE AFFORDABLE HOUSING PROJECT
MAY 13,1999 PAGE 7
Staff recognizes that affordable homeownership units of the size and type proposed are
costly in comparison to other affordable housing alternatives. The financial information
contained in the Proforma demonstrates the need for financial assistance to assist in the
development of this project. The project will meet an affordable housing need and is
consistent with City policies and ordinances on affordable housing.
The Affordable Housing Policy Team (staff) is recommending that the Housing
Commission approve a recommendation to the City Council to commit a total of
$1,350,000 to Continental Homes for the development of 90 affordable two and three
bedroom condominium units within Village B of the Rancho Carrillo Mater Plan. The
funding will be provided from the City of Carlsbad’s Housing Trust Fund. The Housing
Trust Fund has a current undesignated fund balance of approximately $2.5 million. The
Housing Policy Team (staff) is also requesting that the Housing Commission review and
recommend approval of the Loan Agreement and related documents in substantially
the form submitted subject to final approval by the City Attorney.
VIII. EXHIBITS
1. Housing Commission Resolution No. 99-003
2. Letter from Developer Requesting Financial Assistance
3. Draft Developer Loan Agreement, Developer Deed of Trust, Developer Promissory Note,
Borrower Promissory Note, Borrower Deed of Trust and Borrower Disclosure Statement.
4. Project Proforma
5. Project Site Map
6. Project Site Plan & Elevations
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HOUSING COMMISSION RESOLUTION NO. 99-003
A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY
OF CARLSBAD, CALIFORNIA, RECOMMENDING APPROVAL TO
THE CITY COUNCIL OF $1,350,000 IN FINANCIAL ASSISTANCE
FROM EITHER THE REALLOCATION OF FUNDS FROM THE
CARLSBAD HOMEBUYER ASSISTANCE PROGRAM OR FROM
THE HOUSING TRUST FUND FOR THE CONSTRUCTION OF
NINETY, FOR-SALE, AFFORDABLE TWO AND THREE
BEDROOM ATTACHED CONDOMINIUM UNITS IN ORDER TO
HELP SATISFY THE REQUIREMENTS OF THE INCLUSIONARY
HOUSING ORDINANCE FOR PHASE TWO OF THE RANCHO
CARRILLO MASTER PLAN.
APPLICANT: CONTINENTAL HOMES, INC.
CASE NO: CT 98- 15/CP 98-08/SDP 98- 17
~ ~~
WHEREAS, Continental Homes is the developer of the Rancho Carrillo Master Plan; and
WHEREAS, Continental Homes intends to construct a total of 1,711 residential housing units
vithin the Rancho Carrillo Master Plan; and
WHEREAS, pursuant to the City of Carlsbad’s Inclusionary Housing Ordinance, Chapter 21.85
If the Carlsbad Municipal Code, fifteen percent of all residential development within the Rancho
:arrillo Master Plan is required to be affordable to low income households; and
WHEREAS, the City Council has previously approved two affordable housing projects totaling
66 residential units which allows for the total development of 1,158 residential units for the Phase 1
evelopment of the Rancho Carrillo Master Plan; and
WHEREAS, the developer is proposing to construct 124 two and three bedroom, for-sale,
ttached condominium units, of which 90 will be restricted for sale to low income households as a
leans to satisfy the remaining affordable housing obligations for the Phase 2 development of the
kancho Carrillo Master Plan as permitted by Carlsbad Municipal Code Section 21.85 of the City’s
wlusionary Housing Ordinance; and
WHEREAS, on May 13, 1999, the Housing Commission held a public meeting to consider the
eveloper’s request for financial assistance to construct said affordable housing units; and
WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all
ersons desiring to be heard, said Commission considered all factors relating to the request for financial
ssistance;
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NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of
Carlsbad, California, as follows:
1.
2.
3.
4.
...
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The above recitations are true and correct.
The project is consistent with the goals and objectives of the City of Carlsbad's Housing
Element, the Consolidated Plan, the Inclusionary Housing Ordinance, and the Carlsbad
General Plan.
The project will provide a total of 90, for-sale, two and three bedroom attached
condominium units affordable for purchase to households at 80% or below of the county
median income which meets a "medium priority" affordable housing need as outlined within
the City of Carlsbad's approved 1995-2000 Consolidated Plan. The project, therefore, has
the ability to effectively serve the City's housing needs and priorities as expressed in the
Housing Element and the Consolidated Plan.
That based on the information provided within the Housing Commission Staff Report and
testimony presented during the public meeting of the Housing Commission on May 13,
1999, the Housing Commission hereby ADOPTS Resolution No. 99-003, recommending
APPROVAL to the City Council to provide $1,350,000 in financial assistance to
Continental Homes, Inc., for the construction of 90, for sale, affordable two and three
bedroom attached condominium units to satisfy the requirements of the Inclusionary
Housing Ordinance for the development of Phase 2 of the Rancho Carrillo Master Plan.
Staff shall work with the Bank of America to reallocate funds from the City's Carlsbad
Homebuyer Assistance Program. Should an agreement not be reached, funding for the
project shall be provided from the City of Carlsbad's Housing Trust Fund.
HC RESO. NO. 99-003
PAGE 2
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5. That the Housing Commission recommends that the City Manager or his designee be
authorized to execute all documents related to provision of the City assistance, including
but not limited to a Developer Loan Agreement, Promissory Note, Deed of Trust in
substantially the form presented to the Housing Commission on May 13, 1999, and
subject to review and approval by the City Attorney.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of
he City of Carlsbad, California, held on the 13th day of May, 1999, by the following vote, to wit:
AYES :
NOES:
ABSENT:
ABSTAIN:
CHAIRPERSON
CARLSBAD HOUSING COMMISSION
)EBORAH K. FOUNTAIN
[OUSING AND REDEVELOPMENT DIRECTOR
E RESO. NO. 99-003
4CE 3
e.. *
.
February 4, 1999
Debbie Fountain
Housing and Redevelopment Department
City of Carlsbad .
2965 Roosevelt St. Suite B
' Carlsbad, CA 92008-2389
Exhibit '2
Subject: Rancho Carrillo Village B Phase 2 - Request for Financial Assistance
Dear Debbie;
As you know our application for 124 for-sale town-homes inVillage B Phase 2 has been processing
with the City Planning Department for some time and is now ready to go before the Planning
Commission. We have been told that we will be on the agenda for the March 3, 1999 Planning
Commission. It is our desire to resolve the method of financing for the 82 affordable for-sale town-
homes as quickly as possible so that we may commence construction in the near future.
At this time, it is our intention for Continental Homes to be the builder of this project. Continental
Homes is a wholly owned subsidiary of D.R. Horton, Inc. All sources of cash for the construction
of thC: units will come from D.R Horton's unsecured bank credit facility. D,R.Horton, Inc. is
currently the third largest builder in the United States. The financial strength and success of our
company should give the Ci* complete confidence that the project will be completed without delay
and that any financial assikmce from the City will be secure.
Attached is Exhibit A - Calculation of Sales Price for Affordable Units. We propose to sell the 82
townhomes at prices based on 80% of the Area Median Income. Not all homeowners will qualify at
exactly 80% of the A.M.I. Therefore, we have also'calculated sales prices for 70% A.M.I.
Presenting you with-this range is consistent with other for-sale projects in &e City of Carlsbad.
Also-attached are Exhibits B and C which &e the Project Proformas for bo& the 70% and 80% I
A.M.I.
r
I .
/
The following summarizes our back up regarding the Project Costs:
1. Land was valued at $38,000 per unit. This was based on an appraisal of the school site in
Rancho Carrillo performed by Blackstone Appraisal, Inc. See attached Exhibit D. The date of
value was' February 14, 1997. The land was valued at $5,690,000, The appraisal assumes that
the school site yield is 147 units on 12.8 net acres. This equates to a value of $38,700 per unit.
The density of Village B Phase 2 will be slightly higher at 16.9 ddac. However, when you
consider that the appmisal was done two years ago and we have easily seen 15% appreciation in
land prices over that two year period the value of $38,000 per unit for Village B Phase 2 could
be considered conservative.
I
2. Offsite Hard Costs were estimated by our civil enginekring consultant, Hunsaker & Associates,
and our landscape architect, Ivy Landscape Architects. Attached as Exhibit E are their
estimates.
Telephone: (760) 736-2344
.A Continental Homes Community
h t t p : \ \ w w w. true c a 1 if o r n i a. c o rn
3. Ons'ite Hard Costs were estimated by our own staff based upon our experience with similar
projects. Attached as Exhibit F is our estimate dated January 27, 1999.
4, Consultant's Fees, Development Fees at Final Map, and Development Fees at Building Permit
are shown on Exhibit E but are broken out as separate numbers on the Pro-Forma. 7
5, All other costs such as ~arranty,~contractors fee, closing costs, taxes, etc. are determined using
percentages which are similar to other financial requests to the City.
/ Based on the financial information submitted with this letter and based on financial assistance
granted to other for-sale affordable projects within the City of Carlsbad we are requesting financial
assistance of $15,000 per affordable for-sale dwelling unit or $1,230,000. This money would be
secured by a promissory note on each unit and would be paid back to the City when the unit is sold
again by the homeowner at a market purchase price. This form of security is the same as has been
used on the other for-sale affordable units in the City.
Thank you for your assistance on this matter and we look forward to your timely response.
Very truly yours, I
..
\ Vice President, Development
cc Mike,Van Home - Hecht, Solberg, Robinson, and Goldberg (with attachements)
I ..
I
,.
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' g:\userskdcdave\word\dave\letters\fountnZ.doc
- Exhibit 3
LOAN AGREEMENT
BY AND BETWEEN
THE CITY OF CARLSBAD
and
CONTINENTAL RANCH INC.,
a Delaware corporation
LOAN AGREEMENT
-1-
This Loan Agreement (the "Agreement") is entered into as of , 1999, by and between the City of Carlsbad, a municipal corporation (the "City"), and
CONTINENTAL RANCH INC., a Delaware corporation (the "Developer"), with
reference to the following facts:
A. Developer is the owner of certain real property in the City of Carlsbad, in
the County of San Diego, California ("Affordable Development Property") described in
Exhibit A, which is attached hereto and incorporated herein by this reference.
B. The Developer seeks to construct, or to enable merchant builders who
purchase land from Developer to construct, a of 1,721 residential housing units in the
City, in a development known as Rancho Carrillo (the "Master Development").
Previously, the Developer has received City approval to construct a total of 1,108
residential housing units. In satisfaction of certain conditions of approval in connection
with the City's approvals of the Master Development, the City and the Developer
executed an Affordable Housing Agreement Imposing Restrictions on Real Property
dated as of March 25, 1998 (the "Original Affordable Housing Agreement"), and the First
Amended and Restated Affordable Housing Agreement Imposing Restrictions on Real
Property dated as of , 1998 (the "First Amendment"). The previous approvals
require the Developer to construct a total of 116 affordable apartment units and 50
affordable second dwelling units.
C. Pursuant to the Second Amended and Restated Affordable Housing
Agreement Imposing Restrictions on Real Property dated as of , 1999 (the
"Second Amendment"; referred to collectively with the Original Agreement and the First
Amendment as the "Affordable Housing Agreement"), the Developer agreed to sell 82 of
the housing units to be built on the Affordable Development Property in the Master
Development at affordable housing cost to lower income households (the "Affordable
Units"). The Developer firther agreed to carry back second mortgage financing on the
Affordable Units in an amount equal to the difference between the market rate purchase
price of the Affordable Unit and the affordable price of such unit, and to assign such
second mortgage financing to the City [ ZWhere in the Second Amendment?]. The
Developer intends to construct the Affordable Units in a discrete townhome development
on the Affordable Development Property. The provision of these 92 Affordable Units
will allow for the Developer, or merchant builders who purchase land within the Master
Development from Developer, to construct a total of 1,721 residential units within the
Master Development.
D. Pursuant to City Council Ordinance No. , the City agreed to
provide financial assistance to the Developer for the Affordable Units in the form of a
$1,230,00 construction loan (the "City Loan"), which, represents a direct City subsidy
amount of $15,000 per Affordable Unit. As more fully set forth herein, upon sale of each
Affordable Unit to an eligible lower income household in compliance with the Affordable
Housing Agreement, and execution of second mortgage loan documents by the
homebuyer to the City in compliance with the Affordable Housing Agreement, the City
-2-
will credit the Developer with repayment of $1 5,000 of the City Loan.
F. The City intends to hnd the City Loan with moneys from the City's
Housing Trust Fund created pursuant to City Ordinance No. NS-232.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE 1. DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.
The following capitalized terms shall have the following meanings in this
Agreement:
(a) "Affordable Development" shall mean the Affordable
Development Property, the Affordable Units, and all landscaping, roads, parking spaces,
and common area appurtenant to such units.
(b) "Affordable Development Property" shall mean the property
described in Exhibit A on which the Affordable Development will be constructed.
(c) "Affordable Housing Agreement" shall mean the Affordable
Housing Agreement Imposing Restrictions on Real Property dated as of March 25, 1998
and recorded as Document No. 1998-0162920 in the Official Records of San Diego
County (the "Original Affordable Housing Agreement"), and the First Amended and
Restated Affordable Housing Agreement Imposing Restrictions on Real Property dated as
of , 1998 (the "First Amendment and the Second Amended and Restated
Affordable Housing Agreement Imposing Restrictions on Real Property dated as of , 1999 (the "Second Amendment").
(d) "Affordable Unit" shall mean a Unit sold to an Eligible Buyer in
compliance with the Affordable Housing Agreement.
(e) llAgreement'l shall mean this Loan Agreement. .
[(f) and (g) unnecessary because Developer uses funds from unsecured
credit facility of corporate parent?
(f) "Bank" shall mean the maker of the Bank Loan.
(g) "Bank Loan" shall mean the construction loan obtained by the
Developer from a private institutional lender, to pay for costs of construction of the
Affordable Units not paid from the City Loan.]
(h) "Borrower Disclosure Statement" shall mean the borrower
disclosure statement to be signed by Eligible Buyers purchasing Units.
-3-
(i) "City" shall mean the City of Carlsbad, a municipal corporation.
0) "City Loan" shall mean the loan for the amount of One Million
Two Hundred Thirty Thousand Dollars ($1,230,000) by the City to the Developer
pursuant to this Agreement.
[Inconsistent with Recital Paragraph D which says the City provides the
financing; also see Recital Paragraph C above and 1 .l(q) and (r) below] (k)
"CityEIomebuyer Second Mortgage Loan" shall mean the carryback financing
provided by the Developer to Eligible purchasers and assigned by the Developer to the
City. Each City/Homebuyer Second Mortgage Loan shall be evidenced by an Eligible
Buyer Note and secured by an Eligible Buyer Deed of Trust.
(1) "Default" shall have the meaning set forth in Section 5.1 below.
(m) "Developer Deed of Trust" shall mean the deed of trust to be
placed on the Affordable Development Proptrty, in substantially the form shown in the
attached Exhibit C, securing the Developer Note and naming the City as beneficiary.
(n) "Developer Note" shall mean the promissory note, in substantially
the form shown in the attached Exhibit B, in the principal amount of One Million Two
Hundred Thirty Thousand Dollars ($1,230,000), evidencing the City Loan.
(0) "Direct City Subsidy Amount" shall mean the $15,000 increment
of the City Loan attributable to each Affordable Unit.
@) "Eligible Buyer" shall mean a Lower Income Household
purchasing an Affordable Unit.
(4) "Eligible Buyer Deed of Trust" shall mean the deed of trust held by
the City to secure payment of an Eligible Buyer Note executed and delivered to the City
by the Eligible Buyer of an Affordable Unit, in the form attached hereto as Exhibit E.
(r) "Eligible Buyer Note" shall mean the promissory note, in the form
attached hereto as Exhibit D, executed and delivered to the City by an Eligible Buyer of a
Affordable Unit.
(s)
(0
(4
4.5 below.
Section 4.5 below.
Section 4.5 below.
"Hazardous Materials'' shall have the meaning set forth in Section
"Hazardous Materials Claim" shall have the meaning set forth in
"Hazardous Materials Law" shall have the meaning set forth in
-4-
(v) reserved
(w) "Loan Documents'' shall mean the following documents: (i) the
Developer Note; (ii) the Developer Deed of Trust; (iii) the Affordable Housing
Agreement and (iv) this Agreement.
(x) "Lower Income Household" shall mean a household with an annual
income, adjusted for actual household size, that is no greater than eighty percent (80%) of
Median Income.
(y) "Median Income" shall mean the median gross yearly income for
households in San Diego County, California, as adjusted for household size, as published
periodically by the United States Department of Housing and Urban Development
("HUD"). In the event such income determinations are no longer published by HUD, or
are not updated for a period of at least eighteen (18) months, the City shall provide the
Developer with other income determinations which are reasonably similar with respect to
method of calculation to those previously published by HUD.
(z) "Parties" shall mean the City and the Developer.
(aa) "Primary Affordability Subsidy" shall have the meaning set forth
in Section 2.4.2 of the Affordable Housing Agreement.
(bb) "Property" shall mean the property on which the Developer shall
construct the Improvements, as more particularly described in the attached Exhibit A.
(cc) "Schedule of Performance'' shall mean the schedule of
performance set forth in Section 2.2 of the Affordable Housing Agreement.
(dd) "Term" shall mean the thirty-six (36) month term of the Loan,
commencing on the date of recordation of the Deed of Trust and continuing for thirty-six
(36) months thereafter.
(ee) "Transfer" shall have the meaning set forth in Section 4.9 below.
(ff) "Unit" shall mean a housing unit located within the Affordable
Development.
Section 1.2 Exhibits.
The following exhibits are attached to this Agreement and incorporated into this
Agreement by this reference:
EXHIBIT A: Legal Description of the Affordable Development Property
EXHIBIT B: Form of the Developer Note
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EXHIBIT C: Form of the Developer Deed of Trust
EXHIBIT D: Form of Eligible Buyer Note
EXHIBIT E: Form of Eligible Buyer Deed of Trust
EXHIBIT F: Form of Borrower Disclosure Statement
EXHIBIT G: Development Budget
ARTICLE 2. LOAN PROVISIONS
Section 2.1 Loan.
The City shall loan to the Developer the Loan in the principal amount of One
Million Two Hundred Thirty Thousand Dollars ($1,230,000) for the purposes set forth in
Section 2.3 of ths Agreement. The obligation of the Developer to repay the Loan shall
be evidenced by the Developer Note in substantially the form attached to this Agreement
as Exhibit B.
Section 2.2 Interest.
The Loan shall not bear interest; provided, however, if a Default is declared by the
City, the Loan shall bear interest, commencing on the date of declaration of the Default
(subject to applicable cure periods), at the default rate equal to the lesser of ten percent
(lO%)-or the maximum rate permitted by law.
Section 2.3 Use of Loan Funds.
The Developer shall use the City Loan to pay for a portion of costs associated
with development of the Affordable Units, identified as City-funded costs in the budget
attached hereto as Exhibit G. The Developer shall not use the City Loan funds for any
other purpose without the prior written consent of the City.
Section 2.4 Security.
The Developer shall secure its obligation to repay the City Loan, as evidenced by
the Developer Note, by signing and delivering to the City the Developer Deed of Trust in
substantially the form attached to this Agreement as Exhibit C.
Section 2.5 Disbursement of Loan Proceeds.
(a) The City shall have no obligation to disburse any portion of the
City Loan unless the following conditions have been satisfied and continue to be
satisfied:
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(i) The Developer has signed and delivered to the City the Developer
Note in substantially the form attached to this Agreement as Exhibit B and the Developer
Deed of Trust in substantially the form attached to this Agreement as Exhibit C.
(ii) The Developer Deed of Trust has been recorded against the
Affordable Development Property in the Office of the Recorder of the County of San
Diego.
(iii) A title insurer reasonably acceptable to the City is unconditionally
and irrevocably committed to issuing a CLTA Lender's Policy of insurance insuring the
priority of the City Deed of Trust in the amount of the City Loan, subject only to such
exceptions and exclusions as may be reasonably acceptable to the City and containing
such endorsements as the City may reasonably require. The City agrees to accept the deed
of trust securing the Bank Loan as a prior exception to title.
(iv) The Developer has fimished the City with evidence of the
insurance coverage required pursuant to Section 4.4 below.
(v) The City has received a good standing certificate issued by the
California Secretary of State's office indicating that the Developer exists in good standing
at the time of the proposed disbursement, as well as a copy of a resolution of the
Developer indicating that Developer has duly authorized the execution of and
performance under this Agreement.
(vi) The Developer has certified in writing to the City that the City
Loan, together with the Bank Loan and any other financing obtained by the Developer, is
projected to be sufficient to pay all development costs of the Affordable Units.
(vii) The Developer (A) has received all general plan and zoning
approvals necessary to construct the Affordable Units, (B) has submitted to the City a
proposed final tract map for the Affordable Development which satisfies all tentative tract
map conditions and is reasonably acceptable to the City Engineer, together with all fees
required therefor, and (C) has submitted to the City all grading and improvement plans
required for the Affordable Development, in a form which is reasonably acceptable to the
City Engineer, together with all fees required therefore, and (D) has received from the
City temporary or interim approval to commence grading of the Affordable Development
Property, and (E) has received approval of building plans for the Affordable Development
by the City Building and Safety Department, pending pad certification for permit
issuance.
(viii) The closing of the Bank Loan shall be completed and the City, the
Bank, and the Developer shall have executed an Intercreditor Agreement as provided in
Section 2.6 below. Prior to such closing, the City and the Developer shall cooperate in
good faith with the Bank and shall make changes to the terms and conditions of this
Agreement (including the exhibits hereto) as the Bank may require, and which the
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Developer and the City Housing and Community Development Director determine are
reasonable.]
(b) Upon satisfaction of the conditions set forth in Section 2.5(a)
above the City shall promptly, but in no event later than five (5) business days after
receiving Developer's written request and any required documentation, disburse the City
Loan proceeds to Developer from time to time, but in no event more often than monthly.
Disbursement requests shall include a certified statement from Developer: (i) reaffirming
the accuracy as of the date of the disbursement request of Developer's representations and
warranties set forth in Article 6 below; (ii) certifying that Developer is not in default
under the City Loan Documents or loan documents for the Bank Loan; and (iii) setting
forth the proposed uses of funds consistent with Section 2.3 and Exhibit G, the amount of
funds needed, and, where applicable, a copy of the bill or invoice covering a cost incurred
or to be incurred. When a disbursement is requested to pay any contractor in connection
with the Affordable Development, the written request must be accompanied by
certification by Developer that the work for which disbursement is requested has been
completed (although the City reserves the right to inspect the Affordable Development
and make an independent evaluation), and lien releases and/or mechanics lien title
insurance endorsements reasonably acceptable to the City. City Loan proceeds utilized
for hard construction costs of on-site improvements shall be subject to a retention of ten
percent (lo%), with retained proceeds to be released upon completion of the on-site
improvements.
Section 2.6 Reserved
Section 2.7 Subordination.
The City shall execute such documents as may be necessary to subordinate the
priority of the City Deed of Trust to the lien of the deed of trust securing the Bank Loan.
The subordination documents shall provide the City with reasonably adequate notice and
cure rights to enable the City to avoid foreclosure of a senior deed of trust.]
Section 2.8 Term and Repayment Schedule.
The Loan shall be repaid as follows:
(a) [Does not make sense; is inconsistent with l.l(k) above: Upon
sale of an Affordable Unit to an Eligible Buyer, the Developer shall carry back second
mortgage financing to the Eligible Buyer in an amount equal to the Primary Affordability
Subsidy for the Affordable Unit, as established pursuant to the Affordable Housing
Agreement. The Developer shall assign its interest in such second mortgage financing to
the City, and shall require that the Eligible Buyer sign, at close of escrow on the purchase
of the Affordable Unit, the Borrower Disclosure Statement and the Eligible Buyer Note
and the Eligible Buyer Deed of Trust for the benefit of the City. Upon the execution of
the Borrower Disclosure Statement, the Eligible Buyer Note and the Eligible Buyer Deed
of Trust, and the recordation of the Eligible Buyer Deed of Trust against the Affordable
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Unit, the City shall credit the Developer with repayment of Fifteen Thousand Dollars
($15,000) of the City Loan. The City and the Developer acknowledge that the principal
amount of the Eligible Buyer Note to the City shall be equal to the Primary Affordability
Subsidy, which includes the value to the Eligible Purchaser of the City's inclusionary
housing restrictions pursuant to the Affordable Housing Agreement and will therefore be
greater in principal amount than the Direct City Subsidy Amount of Fifteen Thousand
Dollars ($1 5,000), but nevertheless agree that only the Direct City Subsidy Amount of
Fifteen Thousand Dollars ($15,000) shall be credited toward repayment of the City
Loan.]
(b) Upon the sooner of the date of expiration of the Term, the date of
an unauthorized Transfer of the Development, or Developer's Transfer of the last
Affordable Unit still owned by the Developer, all principal remaining unpaid or
uncredited shall be due and payable.
(c) At the time of sale of an Affordable Unit to an Eligible Buyer, the
City shall execute a partial reconveyance of the Developer Deed of Trust to release the
Affordable Unit being sold from the lien of the Developer Deed of Trust. Upon the sale
of all Affordable Units in compliance with the Affordable Housing Agreement, the City
shall entirely reconvey the Developer Deed of Trust.
(d) The Developer may pay the principal and any interest due the City
under the Developer Note prior to or in advance of the time for payment thereof as
provided in the Developer Note, without penalty. However, the provisions of this
Agreement and the Affordable Housing Agreement will be applicable to the Affordable
Development even though Developer may have prepaid the Developer Note, including
the requirement that a minimum of eighty-two (82) of the Units shall be sold to Eligible
Buyers who execute City Second Mortgage Loan documents.]
Section 2.9 Assumption,
Subject to Section 4.9 below, the Developer Note shall not be assumable by
successors and assigns of Developer without the prior written consent of the City, which
consent shall not be withheld unreasonably.
Section 2.10 Approval of Additional Financing.
The Developer shall not place any additional encumbrances on the Affordable
Development Property without the prior written consent of the City, which consent shall
not be withheld unreasonably. The City consents to encumbrances in connection with the
Bank Loan.]
ARTICLE 3. CONSTRUCTION OF THE DEVELOPMENT
Section 3.1 Schedule of Performance.
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The Developer shall develop the Affordable Development in compliance with the
defined term not set forth in Affordable Housing Agreement:
Section 3.2 Construction Pursuant to Plans and Laws.
(a) The Developer shall construct the Affordable Development in
conformance with the construction drawings approved by the City in connection with
approval of the building permits for the Affordable Development.
(b) The Developer shall cause all work performed in connection with
the Affordable Development to be performed in compliance with (i) all applicable laws,
ordinances, rules and regulations of federal, state, county or municipal governments or
agencies now in force or that may be enacted hereafter, and (ii) all directions, rules and
regulations of any fire marshal, health officer, building inspector, or other officer of every
governmental agency now having or hereafter acquiring jurisdiction. The work shall
proceed only after procurement of each permit, license, or other authorization that may be
required by any governmental agency having jurisdiction, and the Developer shall be
responsible to the City for the procurement and maintenance thereof, as may be required
of the Developer and all entities engaged in work on the Affordable Development.
(c) All construction work and professional services shall be performed
by persons or entities licensed or otherwise authorized to perform the applicable
construction work or service in the State of California.
(d) The Developer shall be solely responsible for all aspects of the
Developer's conduct in connection with the Affordable Development, including (but not
limited to) the quality and suitability of the construction drawings, the supervision of
construction work, and the qualifications, financial condition, and performance of all
architects, engineers, contractors, subcontractors, suppliers, consultants, and property
managers. Any review or inspection undertaken by the City with reference to the
Affordable Development is solely for the purpose of determining whether the Developer
is properly discharging its obligations to the City, and should not be relied upon by the
Developer or by any third parties as a warranty or representation by the City as to the
quality of the design or construction of the Affordable Development. .
Section 3.3 Equal Opportunity.
During the construction of the Affordable Development there shall be no
discrimination on the basis of race, color, creed, religion, age, disability, sex, sexual
orientation, marital status, national origin, or ancestry, in the hiring, firing, promoting, or
demoting of any person engaged in the construction work.
Section 3.4 Mechanics Liens, Stop Notices, and Notices of Completion.
(a) If any claim of lien is filed against the Affordable Development
Property or the Affordable Development or a stop notice affecting the City Loan is served
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on the City or any other lender or other third party in connection with the Affordable
Development, then the Developer shall, within twenty (20) days after such filing or
service, either pay and fully discharge the lien or stop notice, effect the release of such
lien or stop notice by delivering to the City a surety bond in sufficient form and amount,
or provide the City with other assurance satisfactory to the City that the claim of lien or
stop notice will be paid or discharged.
(b) If the Developer fails to discharge any lien, encumbrance, charge,
or claim in the manner required in Section 3.4(a), then in addition to any other right or
remedy, the City may (but shall be under no obligation to) discharge such lien,
encumbrance, charge, or claim at the Developer's expense. Alternately, the City may
require the Developer to immediately deposit with the City the amount necessary to
satisfy such lien or claim and any costs, pending resolution thereof. The City may use
such deposit to satisfy any claim or lien that is adversely determined against the
Developer.
(c) The Developer shall file a valid notice of cessation or notice of
completion upon cessation of construction on the Affordable Development for a
continuous period of thirty (30) days or more, and take all other reasonable steps to
forestall the assertion of claims or lien against the Affordable Development. The City
may (but has no obligation to) record any notices of completion or cessation of labor, or
any other notice that the City deems necessary or desirable to protect its interest in the
Affordable Development.
ARTICLE 4. REQUIREMENTS DURTNG AND AFTER CONSTRUCTION
Section 4.1 Information.
The Developer shall as promptly as reasonable practicable under the
circumstances provide any information reasonably requested by the City in connection
with the Affordable Development.
Section 4.2 Records.
The Developer shall maintain complete, accurate, and current records pertaining
to the Affordable Development for a period of five (5) years after the creation of such
records, and shall permit any duly authorized representative of the City to inspect and
copy records, including records pertaining to income and household size of purchasers of
the Affordable Units. Such records shall include records regarding the occupancy and
sales price of the Affordable Units, as well as records that accurately and fully show the
date, amount, purpose, and payee of all expenditures drawn from Loan funds. Such
records shall also include all invoices, receipts, and other documents related to
expenditures from the Loan funds. Records shall be maintained accurately and shall be
kept current.
Section 4.3 Inspections.
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The Developer shall permit and facilitate, and shall require its contractors to
permit and facilitate, observation and inspection at the Affordable Development by the
City and by public authorities during reasonable business hours and upon reasonable
advance notice for the purposes of determining compliance with this Agreement,
Section 4.4 Insurance.
Throughout the period of Developer's ownership of any portion of the Affordable
Development, Developer shall maintain the following insurance policies:
(a) Worker's Compensation insurance, including Employer's Liability
coverage, with limits of not less than One Million Dollars ($1,000,000) each accident, if
required by law or if the Developer has employees.
(b) Comprehensive General Liability insurance with limits of not less
than Five Million Dollars ($5,000,000) each occurrence, combined single limit, for
Bodily Injury and Property Damage, including coverages for Contractual Liability,
Personal Injury, Broadform Property Damage, Products and Completed Operations.
(c) Comprehensive Automobile Liability insurance with limits of not
less than One Million Dollars ($1,000,000) each occurrence, combined single limit, for
Bodily Injury and Property Damage, including coverages for owned, non-owned and
hired vehicles, as applicable. However, if the Developer does not own or lease vehicles
for purposes of this Agreement, then no automobile insurance shall be required.
(d) Property insurance covering all Affordable Development real and
personal (non-expendable) property, in form appropriate for the nature of such property,
covering all risks of loss, including flood (if the Affordable Development Property is
located within a flood zone), for 100% of the replacement value, with deductible, if any,
reasonably acceptable to the City, naming the City as a Loss Payee, as its interests may
appear.
(e) The Developer shall cause any general contractoror agent working
on the Affordable Development under direct contract with the Developer to maintain
insurance of the types and in at least the minimum amounts described in Sections 4.4(a),
(b) and (c), and shall require that such insurance meet all of the general requirements of
Sections 4.4(f), (g), and (h). Liability and Comprehensive Automobile Liability
insurance to be maintained by such general contractor and agents pursuant to this
subsection shall name as additional insureds the City, its officers, agents, employees, and
members of the City Council. The Developer shall cause the conditions in this Section
4.4(e) to continue to be satisfied at all times after the disbursement of any City Loan
hnds and before sale of all Affordable Units in compliance with the Affordable Housing
Agreement.
(f) The required insurance shall be provided under an occurrence
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form, and Developer shall maintain such coverage continuously until all Affordable Units
are sold.
(g) Comprehensive General Liability, Comprehensive Automobile
Liability and Property insurance policies shall be endorsed to name as additional insureds
the City and its officers, agents, and employees, as well members of the City Council.
(h) All policies and bonds shall be endorsed to provide thirty (30) days
prior written notice of cancellation, reduction in coverage, or intent not to renew, to the
address established for notices to the City.
Section 4.5 Hazardous Materials.
(a) The Developer shall keep and maintain the Affordable
Development in compliance with, and shall not cause or permit the Affordable
Development to be in violation of, any federal, state or local laws, ordinances or
regulations relating to industrial hygiene or to the environmental conditions on, under or
about the Affordable Development including, but not limited to, soil and ground water
conditions. The Developer shall not use, generate, manufacture, store or dispose of on,
under, or about the Affordable Development or transport to or from the Affordable
Development any flammable explosives, radioactive materials, hazardous wastes, toxic
substances or related materials, including without limitation, any substances defined as or
included in the definition of "hazardous substances," "hazardous wastes," ''hazardous
materials," or ''toxic substances" under any applicable federal or state laws or regulations
(collectively referred to hereinafter as "Hazardous Materials") except such of the
foregoing as may be customarily kept and used in and about single family residential
property, both during and after construction.
(b) The Developer shall immediately advise the City in writing if at
any time it receives written notice of (i) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened against the
Developer or the Affordable Development pursuant to any applicable federal, state or
local laws, ordinances, or regulations relating to any Hazardous Materials ("Hazardous
Materials Law"); (ii) all claims made or threatened by any third party against the
Developer or the Affordable Development relating to damage, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Materials (the matters set
forth in clauses (i) and (ii) above are hereinafter referred to as "Hazardous Materials
Claims"); and (iii) the Developer's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of the Affordable Development that could cause the
Affordable Development or any part thereof to be classified as "border-zone property"
under California Health and Safety Code Sections 25220 et seq. or any regulation adopted
in accordance therewith, or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of the Affordable Development Property under any
Hazardous Materials Law.
(c) The City shall have the right to join and participate in, as a party if
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it so elects, any legal proceedings or actions initiated in connection with any Hazardous
Materials Claims and to have its reasonable attorneys' fees in connection therewith paid
by the Developer. The Developer shall indemnify, defend (with counsel reasonably
chosen by the City, at the City's option), and hold harmless the City and its officers,
councilmembers, employees, and agents from and against any loss, damage, cost,
expense, or liability directly or indirectly arising out of or attributable to the use,
generation, storage, release, threatened release, discharge, disposal, or presence of
Hazardous Materials on, under, or about the Affordable Development, including (without
limitation): (i) all foreseeable consequential damages; (ii) the costs of any required or
necessary repair, cleanup, or detoxification of the Affordable Development and the
preparation and implementation of any closure, remedial, or other required plans; and (iii)
all reasonable costs and expenses incurred by the City in connection with clauses (i) and
(ii), including (but not limited to) reasonable attorneys' fees. This paragraph shall survive
termination of this Agreement.
(d) Without the City's prior written consent, which shall not be
unreasonably withheld, the Developer shall not take any remedial action in response to
the presence of any Hazardous Materials on, under or about the Affordable Development,
nor enter into any settlement agreement, consent decree, or other compromise in respect
to any Hazardous Material Claims, which remedial action, settlement, consent decree or
compromise might, in the City's reasonable judgement, impair the value of the City's
security hereunder. However, the City's prior consent shall not be necessary if the
presence of Hazardous Materials on, under, or about the Affordable Development either
poses an immediate threat to the health, safety or welfare of any individual, or is of such a
nature that an immediate remedial response is necessary and it is not reasonably possible
to obtain the City's consent before taking such action, provided that in such event the
Developer shall notify the City as soon as practicable of any action so taken. The City
shall not withhold its consent, where consent is required hereunder, if either (i) a
particular remedial action is ordered by a court of competent jurisdiction, (ii) the
Developer will or may be subjected to civil or criminal sanctions or penalties if it fails to
take a required action; or (iii) the Developer establishes to the reasonable satisfaction of
the City that there is no reasonable alternative to such remedial action which would result
in less impairment of the City's security hereunder.
(e) The Developer acknowledges and agrees that (i) this Section 4.5 is
intended as the City's written request for information (and the Developer's response)
concerning the environmental condition of the Affordable Development as required by
California Code of Civil Procedure Section 726.5, and (ii) each representation and
warranty in this Agreement (together with any indemnity obligation applicable to a
breach of such representation and warranty) with respect to the environmental condition
of the Affordable Development is intended by the Parties to be an "environmental
provision" for purposes of California Code of Civil Procedure Section 736.
Section 4.6 Fees and Taxes.
During the period of ownership of the Affordable Development by the Developer,
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the Developer shall be solely responsible for payment of all fees, assessments, taxes,
charges, and levies imposed by any public authority or utility company with respect to the
Affordable Development or portion thereof owned by the Developer, and shall pay such
charges prior to delinquency. However, the Developer shall not be required to pay and
discharge any such charge so long as (a) the legality thereof is being contested diligently
and in good faith and by appropriate proceedings, and (b) if reasonably requested by the
City, the Developer deposits with the City any funds or other forms of assurance that the
City in good faith from time to time determines are reasonably appropriate to protect the
City from the consequences of the contest being unsuccessfid.
Section 4.7 Nondiscrimination.
The Developer covenants by and for itself that there shall be no discrimination
against or segregation of a person or of a group of persons on account of race, color,
religion, creed, age, disability, sex, sexual orientation, marital status, ancestry or national
origin in the sale, transfer, use, occupancy, or enjoyment of any Affordable Unit, nor
shall the Developer or any person subject to legal control by the Developer establish or
permit any such practice or practices of discrimination or segregation. The foregoing
covenant shall run with the land.
Section 4.8 Notice of Litigation.
During the period of ownership of the Affordable Development by the Developer,
the Developer shall promptly notify the City in writing of any litigation affecting the
Developer or the Development and of any claims or disputes that involve a material risk
of litigation.
Section 4.9 Transfers.
(a) The qualifications and identity of the Developer are of particular
concern to the City. It is because of those qualifications and identity that the City has
entered into this Agreement with the Developer. The City shall have no obligation to
perform hereunder if any voluntary or involuntary successor in interest of the Developer
shall acquire any rights or powers under this Agreement except as expressly set forth
herein. The City may terminate this Agreement upon the occurrence of a Transfer
prohibited by subsection (b). The City shall approve a proposed Transfer if the
Developer is transfemng the entire Affordable Development Property to the transferee
and the City reasonably determines that the proposed transferee possesses the
qualifications, development experience and financial capability necessary and adequate to
fulfill the obligations undertaken in this Agreement and the Affordable Housing
Agreement by the Developer.
(b) No Transfer shall be permitted prior to repayment of the City Loan
in full or prior to sale of all Affordable Units in compliance with the Affordable Housing
Agreement without the prior written consent of the City, which the City shall grant or
withhold in accordance with the standard set forth in subsection (a) above. Pursuant to
Section 2.8(b) above, the City Loan shall automatically accelerate and be due in full upon
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any Transfer for which prior written City approval has not been obtained.
(c) For purposes of this Agreement, "Transfer" shall mean, except as
excluded by the provisions of subsection (d), any sale, assignment, or transfer, whether
voluntary or involuntary, of (i) any rights and/or duties under this Agreement, and/or (ii)
any interest in the Development, including (but not limited to) a fee simple interest, a
joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a security
interest, or an interest evidenced by a land contract by which possession of the Affordable
Development is transferred and the Developer retains title.
(d) The term "Transfer" shall exclude the following transfers that
would otherwise be Transfers under subsection (a):
(i) the assignment of this Agreement (and the transfer of the
Affordable Development) to a corporation controlled by the Developer, or to a
partnership, limited liability company or joint venture in which the Developer, or an
entity controlled by the Developer, is a general partner or manager and is in control
thereof;
(ii) the admission of additional new general or limited partners,
or members, or the substitution or deletion of partners to any partnership or joint venture,
or members to any limited liability company, set forth in (i) above so long as the
Developer, or an entity controlled by the Developer, continues in control;
(iii) the development of the Affordable Development;
the granting of easements, licenses or permits to facilitate
(iv) the granting of any security interest in the Affordable
Development or other financing arrangement for the purposes of securing the Bank Loan
or other financing or the transfer of such security interests to another entity;
(v) the transfer or conveyance of all or any portion of the
Affordable Development by foreclosure of a mortgage or deed of trust or by transfer in-
lieu-of foreclosure thereof, and a subsequent transfer or conveyance of all or any portion
of the Development to a third party transferee.
(vi) the sale or transfer of individual Units in the Affordable
Development to individual homebuyers, including, but not limited to, sales or transfers to
Eligible Buyers in compliance with the Affordable Housing Agreement.
(e) In the absence of specific written agreement by the City, or except
to a transferee otherwise authorized in this Agreement (whereupon the transferor-assignor
shall be relieved of its obligations hereunder), no Transfer (whether authorized or
unauthorized) shall be deemed to relieve the Developer or any other party of any
obligations under this Agreement.
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Section 4.10 Sale of Units.
All Affordable Units in the Affordable Development shall be sold to
Eligible Buyers in compliance with the Affordable Housing Agreement. The Developer
shall grant preference in the sale of Units to persons who have lived for sixty (60) days in
the City of Carlsbad or who are employed in the City of Carlsbad.
ARTICLE 5. DEFAULT
Section 5.1 Events of Default.
Each of the following shall constitute a "Default" by Developer under this
Agreement:
(a) Failure to Make Payment. Failure to make prompt payments of the
principal on the Developer Note when due;
(b) Breach of Covenants. Failure by the Developer to duly perform,
comply with, or observe any of the conditions, terms, or covenants of any of the Loan
Documents (other than a monetary default as described in paragraph (a) above). If such a
non-monetary event of default occurs under the terms of the Loan Documents, unless
automatic acceleration is provided for hereunder, prior to exercising any remedies
thereunder, the City shall give the Developer written notice of such default and the
Developer shall have thirty (30) days from receipt of written notice (unless an alternative
time period is specified hereunder, in which event such alternate cure period shall apply)
to effect a cure prior to the exercise of any of its remedies by the City; provided, however,
if the event of default cannot reasonably be cured within thirty (30) days, the City shall
not be entitled to exercise any of its remedies so long as Developer diligently commences
to cure such default within thirty (30) days and completes the cure within ninety (90)
days of receipt of written notice.
(c) Insolvency. A court having jurisdiction shall have made or entered
any decree or order (i) adjudging the Developer to be bankrupt or insolvent, (ii)
approving as properly filed a petition seeking reorganization of the Developer or seeking
any arrangement for the Developer under the bankruptcy law or any other applicable
debtor's relief law or statute of the United States or any state or other jurisdiction, (iii)
appointing a receiver, trustee, liquidator, or assignee of the Developer in bankruptcy or
insolvency or for any of Developer's properties, or (iv) directing the winding up or
liquidation of the Developer, or the Developer 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 described in clauses (i) to (iv) with regard to Developer's
managing member, if Developer is a limited liability company, shall also be a Default
hereunder. The occurrence of any of the events of Default in this Section 5.l(c) shall act
to accelerate automatically, without the need for any notice or action by the City, the
indebtedness evidenced by the Developer Note.
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(d) Assignment; Attachment. The Developer, by reason of a default
under its obligations to creditors, has 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; provided that Developer shall have sixty (60) days to cure any sequestration,
attachment, or execution not consented to by Developer. The occurrence of any of the
events of Default in this Section 5.l(d) shall act to accelerate automatically, without the
need for any notice or action by the City, the indebtedness evidenced by the Developer
Note.
(e) Suspension; Termination. The Developer shall have voluntarily
suspended its business or, if Developer is a partnership or limited liability company, the
partnership or limited liability company shall have been dissolved or terminated.
(f) Liens on the Development. There shall be filed any claim of lien
(other than the deed(s) of trust and other security instruments in connection with
[Unnecessary given Developer’s financing sources: the Bank Loan lien] any financing of
the Affordable Development approved in writing by the City) against the Affordable
Development or any part thereof, or any interest or right made appurtenant thereto, or the
service of any notice to withhold proceeds of the City Loan, and such claim of lien or
notices to withhold is maintained for a period of forty-five (45) days without discharge or
satisfaction thereof or provision therefor satisfactory to the City.
(g) Condemnation. The condemnation, seizure, or appropriation of all
or, in the opinion of the City, a substantial part of the Affordable Development.
(h) Defaults Under Other Loans. Any default declared by the lender
under any loan document related to [Unnecessary because of Developer’s financing
sources: the Bank Loan or other] any loan secured by the Affordable Development
Property, which default is not cured by the Developer following the expiration of
applicable notice and cure periods under the [Unnecessary because of Developer’s
financing sources: Bank Loan Documents or other] loan documents, shall act to
accelerate automatically, without the need for any notice or action by the City, the
indebtedness evidenced by the Developer Note.
(i) Breach of Representation. Any representation or warranty of
Developer to the City was materially incorrect when made.
Section 5.2 Remedies.
The occurrence of any Default will either at the option of the City, or
automatically where so specified, relieve the City of any obligation to make or continue
the City Loan and shall give the City the right to proceed with any and all remedies set
forth in this Agreement and the Loan Documents, including but not limited to the
following:
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(a) Acceleration of Developer Note. The City shall have the right to
cause all indebtedness of the Developer to the City under this Agreement and the
Developer Note to become immediately due and payable, with interest accruing on the
principal amount from the date of acceleration to the date of repayment at an interest rate
equal to the lesser of ten percent (10%) or the maximum rate permitted by law. The
Developer waives all right to presentment, demand, protest or notice of protest or
dishonor. The City may proceed to enforce payment of the indebtedness and to exercise
any or all rights afforded to the City as a creditor and secured party under the law
including the Uniform Commercial Code, including foreclosure under the Developer
Deed of Trust. The Developer shall be liable to pay the City on demand all expenses,
costs and fees (including, without limitation, reasonable attorney's fees and expenses)
paid or incurred by the City in connection with the collection of the City Loan and the
preservation, maintenance, protection, sale, or other disposition of the security given for
the Loan.
(b) Specific Performance. The City shall have the right to mandamus
or other suit, action or proceeding at law or in equity to require the Developer 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) Right to Cure at the Developer's Expense. The City shall have the
right to cure any monetary default by the Developer under a loan other than the City
Loan. The Developer shali reimburse the City for any funds advanced by the City to cure
a monetary default by Developer upon demand therefor, together with interest thereon at
the rate of interest equal to the rate of interest on the loan being cured from the date of
expenditure until the date of reimbursement.
Section 5.3 Remedies Cumulative.
No right, power, or remedy given to the City by the terms of this Agreement or
the Loan Documents is intended to be exclusive of any other right, power, or remedy; and
each and every such right, power, or remedy shall be cumulative and in addition to every
other right, power, or remedy given to the City by the terms of any such instrument, or by
any statute or otherwise against the Developer and any other person. Neither the failure
nor any delay on the part of the City to exercise any such rights and remedies shall
operate as a waiver thereof, nor shall any single or partial exercise by the City of any such
right or remedy preclude any other or further exercise of such right or remedy, or any
other right or remedy.
Section 5.4 Waiver of Terms and Conditions.
The City's Housing and Redevelopment Director may at his or her discretion
waive in writing any of the obligations of the Developer under this Agreement, without
the Developer completing an amendment to this Agreement. No waiver of any default or
breach by Developer hereunder shall be implied from any omission by the City to take
action on account of such default if such default persists or is repeated, and no express
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waiver shall affect any default other than the default specified in the waiver, and such
waiver shall be operative only for the time and to the extent therein stated. Waivers of
any covenant, term, or condition contained herein shall not be construed as a waiver of
any subsequent breach of the same covenant, term, or condition. The consent or approval
by the City to or of any act by the Developer 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 City 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 the Developer
to City are paid and discharged in full.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF DEVELOPER
Section 6.1 Representations and Warranties.
Developer hereby represents and warrants to the City as follows:
(a) Organization. Developer is duly organizedfjj and validly existing
under the laws of the State of Delaware and in good standing under the laws of the State
of California and has the power and authority to own its property and cany on its
business as now being conducted.
(b) Authority of Developer. Developer 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 City Loan Documents and all other documents or
instruments executed and delivered, or to be executed and delivered, pursuant to this
Agreement, and to perfom and observe the terms and provisions of all of the above.
(c) Authority of Persons Executing Documents. This Agreement and
the Loan Documents and all other documents or instruments executed and delivered, or to
be executed and delivered, pursuant to this Agreement have been executed and delivered
by persons who are duly authorized to execute and deliver the same for: and on behalf of
Developer, and all actions required under Developer'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 Binding Agreements, This Agreement and the Loan
Documents and all other documents or instruments which have been executed and
delivered pursuant to or in connection with this Agreement constitute or, if not yet
executed or delivered, will when so executed and delivered constitute, legal, valid and
binding obligations of Developer enforceable against it in accordance with their
respective terms.
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(e) No Breach of Law or Agreement. Neither the execution nor
delivery of this Agreement and the Loan Documents or of any other documents or
instruments executed and delivered, or to be executed or delivered, pursuant to this
Agreement, nor the performance of any provision, condition, covenant or other term
hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation,
or any judgment, decree or order of any court, board, commission or agency whatsoever
binding on Developer, or any provision of the organizational documents of Developer,
or will conflict with or constitute a breach of or a default under any agreement to which
Developer is a party, or will result in the creation or imposition of any lien upon any
assets or property of Developer, other than liens established pursuant hereto.
(f) Pending Proceedings. Developer is not in default under any law or
regulation or under any order of any court, board, commission or agency whatsoever, and
there are no claims, actions, suits or proceedings pending or, to the current, actual
knowledge of Developer, threatened against or affecting Developer or the Affordable
Development, at law or in equity, before or by any court, board, commission or agency
whatsoever which might, if determined adversely to Developer, materially affect
Developer's ability to repay the City Loan or impair the security to be given to the City
pursuant hereto.
(g) Financial Statements. The financial statements of Developer and
other financial data and information finished by Developer to the City fairly present the
information contained therein. As of the date of this Agreement, there has not been any
adverse, material change in the financial condition of Developer from that shown by such
financial statements and other data and information.
(h) Sufficient Funds. Developer holds sufficient fimds and/or binding
commitments for sufficient fimds to complete the construction of the Affordable
Development in accordance with the plans and specifications approved by the City.
ARTICLE 7. GENERAL PROVISIONS
Section 7.1 Relationship of Parties.
Nothing contained in this Agreement shall be interpreted or understood by any of
the Parties, or by any third persons, as creating the relationship of employer and
employee, principal and agent, limited or general partnership, or joint venture between
the City and the Developer or its agents, employees or contractors, and the Developer
shall at all times be deemed an independent contractor and shall be wholly responsible for
the manner in which it or its agents, or both, perform the services required of it by the
terms of this Agreement. The Developer has and retains the right to exercise full control
of employment, direction, compensation, and discharge of all persons assisting in the
performance of services under the Agreement. In regards to the construction of the
Improvements and sale of the Units, the Developer shall be solely responsible for all
matters relating to payment of its employees, including compliance with Social Security,
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withholding, and all other laws and regulations governing such matters, and shall include
requirements in each contract that contractors shall be solely responsible for similar
matters relating to their employees. The Developer shall be solely responsible for its own
acts and those of its agents and employees.
Section 7.2 No Claims.
Nothing contained in this Agreement shall create or justify any claim against the
City by any person that the Developer may have employed or with whom the Developer
may have contracted relative to the purchase of materials, supplies or equipment, or the
furnishing or the performance of any work or services with respect to the construction or
sale of the Affordable Units, and the Developer shall include similar requirements in any
contracts entered into for the construction or sale of the Affordable Units.
Section 7.3 Amendments.
No alteration or variation of the terms of this Agreement shall be valid unless
made in writing by the Parties.
Section 7.4 Indemnification.
Developer shall indemnify, defend, and hold harmless (without limit as to
amount) City and its elected officials, officers, employees and agents in their official
capacity (hereinafter collectively referred to as Yndemitees"), and any of them, from and
against all loss, all risk of loss and all damage (including reasonable expenses and
reasonable attorneys fees) sustained or incurred because of or by reason of any and all
claims, demands, suits, actions, judgments and executions for damages of any and every
kind and by whomever and whenever made or obtained, allegedly caused by, arising out
of or relating in any manner to Developer's actions or defaults pursuant to this
Agreement, or construction of the Development and sale of any Units, and shall protect
and defend Indemnitees, and any of them with respect thereto. The provisions of this
Section 7.4 shall survive the expiration of the Term or the termination of this Agreement.
Section 7.5 Non-Liability of City Officials, Employees and Agents.
No member, official, employee or agent of the City shall be personally liable to
the Developer in the event of any default or breach by the City or for any amount which
may become due to the Developer or its successor or on any obligation under the terms of
this Agreement.
Section 7.6 No Third Party Beneficiaries.
There shall be no third party beneficiaries to this Agreement.
Section 7.7 Discretion Retained By City.
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The City's execution of this Agreement in no way limits the discretion of the City
in the permit and approval process in connection with the Development.
Section 7.8 Notices, Demands and Communications.
Formal notices, demands, and communications between the Parties shall be
sufficiently given if and shall not be deemed given unless dispatched by registered or
certified mail, postage prepaid, return receipt requested, or delivered by express delivery
service, return receipt requested, or delivered personally, to the principal office of the
Parties as follows:
City:
City of Carlsbad
Housing and Community Development Department
Attention: Housing and Redevelopment Director
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389
Developer :
Continental Ranch Inc.
Attn: David Lother, Vice President, Development
2237 Faraday Avenue, Suite 100
Carlsbad, CA 92008
Such written notices, demands and communications may be sent in the same
manner to such other addresses as the affected Party may from time to time designate by
mail as provided in this Section 7.8. Receipt shall be deemed to have occurred on the
date shown on a written receipt as the date of delivery or refusal of delivery (or attempted
delivery if undeliverable).
Section 7.9 Applicable Law.
This Agreement shall be governed by California law.
Section 7.10 Parties Bound; Covenants Running with the Land.
Except as otherwise limited herein, the provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties and their heirs, executors,
administrators, legal representatives, successors, and assigns. This Agreement is intended
to run with the Affordable Development Property and shall bind the Developer and its
successors and assigns in the Affordable Development Property and the Development for
the entire Term, and the benefit hereof shall inure to the benefit of the City and its
successors and assigns.
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Section 7.1 1 Attorneys' Fees.
If any lawsuit is commenced to enforce any of the terms of this Agreement, the
prevailing Party will have the right to recover its reasonable attorneys' fees and costs of
suit from the other Party.
Section 7.12 Severability.
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the provisions shall continue in full force
and effect unless the rights and obligations of the Parties have been materially altered or
abridged by such invalidation, voiding or unenforceability.
Section 7.13 Force Majeure.
In addition to specific provisions of this Agreement, performance by either Party
shall not be deemed to be in default where delays or defaults are due to war; insurrection;
strikes; lock-outs; riots; floods; earthquakes; fires; quarantine restrictions; freight
embargoes; lack of transportation; third party lawsuit; or court order; or any other similar
causes beyond the control or without the fault of the Party claiming an extension of time
to perform (but not including any inability by Developer to secure financing). An
extension of time for any such cause shall be for the period of the enforced delay and
shall commence to run fi-om the time of the commencement of the cause. If, however,
notice by the party claiming such extension is sent to the other party more than thirty (30)
days after the commencement of the cause, the period shall commence to run only thirty
(30) days prior to the giving of such notice.
Section 7.14 Approvals.
Whenever this Agreement calls for City approval, consent, or waiver, the written
approval, consent, or waiver of the City's Housing and Redevelopment Director shall
constitute the approval, consent, or waiver of the City, without further authorization
required from the City Council. The City hereby authorizes the City's Housing and
Redevelopment Director to deliver such approvals or consents as are required by this
Agreement, or to waive requirements under this Agreement, on behalf of the City.
Section 7.15 Title of Parts and Sections.
Any titles of the sections or subsections of this Agreement are inserted for
convenience of reference only and shall be disregarded in interpreting any part of the
Agreement's provisions.
Section 7.16 Entire Understanding of the Parties.
This Agreement constitutes the entire understanding and agreement of the Parties
with respect to the Loan.
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Section 7.17 Multiple Originals; Counterpart.
This Agreement may be executed in multiple originals, each of which is deemed
to be an original, and may be signed in counterparts.
Section 7.18 Time of the Essence.
Time is of the essence in this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
Developer:
CONTINENTAL, RANCH INC.,
a Delaware corporation
By:
Name:
Title:
By:
Name:
Title:
City:
City of Carlsbad, a municipal corporation
By: Raymond R. Patchett
Its: Citv Manager
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Carlsbad
City Clerk's Office 1200 Carlsbad Village Drive Carlsbad, CA 92008
Attention: City Clerk
No fee for recording pursuant to
Government Code Section 27383
(Space above for Recorder's Use)
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") is made as
of this day of June, 1999, by and among CONTINENTAL RANCH INC., a Delaware
corporation ("Trustor"), ,a ("Trustee"), and the City of Carlsbad, a municipal corporation
("Beneficiary").
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, Trustor's fee interest in the property located in the City of Carlsbad, 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 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 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 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;
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TOGETHER WITH all 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 by any
proceeding 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, including all other goods and chattels and personal property as are ever used or hmished
in operating a building, or the activities conducted therein, similar to the one herein described
and referred to, 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.
TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment,
work in process and other personal property to be incorporated into the Property; all goods,
materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other
personal property now or hereafter appropriated for use on the Property, whether stored on the
Property or elsewhere, and used or to be used in connection with the Property; all rents, issues
and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles,
chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance
and condemnation awards and proceeds, trade names, trademarks and service marks arising from
or related to the Property and any business conducted thereon by Trustor; all replacements,
additions, accessions and proceeds; and all books, records and files relating to any of the
foregoing.
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 the indebtedness of Trustor to Beneficiary as set forth in the Note
(defined in Article 1 below) until paid or canceled. Said principal and other payments shall be
due and payable as provided in the Note. Said Note and all its terms are incorporated herein by
reference, and this conveyance shall secure any and all extensions thereof, however evidenced;
and
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to
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the terms and provisions of this Deed of Trust following a breach of Trustorls 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 of Trust, the following terms shall
have the following meanings in this Deed of Trust:
Section 1.1 The term "Affordable Housing Agreement" means that certain Affordable
Housing Agreement Imposing Restrictions on Real Property between the City of Carlsbad and
Continental Ranch Inc., dated March 23, 1999 and recorded as Document No. 1998-01 62920 in
the Official Records of San Diego County, and the First Amended and Restated Affordable
Housing Agreement Imposing Restrictions on Real Property dated , 199-, and the
Second Amended and Restated Affordable Housing Agreement Imposing Restrictions on Real
Property dated , 1992
Section 1.2 The term "Loan Agreement" means that certain Loan Agreement between
Trustor and Beneficiary, dated
Trustor One Million Two Hundred Thirty Thousand Dollars ($1,230,000) for the construction of
improvements on the Property.
, 1999 providing for the Beneficiary to loan to the
Section 1.3 The term "Loan Documents" means this Deed of Trust, the Note, the Loan
Agreement, and the Affordable Housing Agreement and any other debt, loan or security
instruments between Trustor and the Beneficiary relating to the Property.
Section 1.4 The term "Note" means the promissory note in the principal amount of
One Million Two Hundred Thirty Thousand Dollars ($1,230,000) 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 this reference.)
Section 1.5 The term "Principal" means all amounts (including interest) required to be
paid under the Note.
ARTICLE 2
MAINTENANCE AND MODIFICATION OF THE PROPERTY AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
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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. 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 within a reasonable period of time.
Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or
claims as Beneficiary shall specify upon laborers, materialmen, subcontractors or other persons
who have furnished or claim to have furnished labor, services or materials in connection with the
Security. Nothing herein contained shall require Trustor to pay any claims for labor, materials or
services which Trustor in good faith disputes and is diligently contesting provided that Trustor
shall, within thirty (30) days after the filing of any claim of lien, record in the Office of the
Recorder of San Diego County, a surety bond in an amount 1 and 1/2 times the amount of such
claim item to protect against a claim of lien.
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, at least fifteen (15) days prior to the date of
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,
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however, that Trustor shall not be required to pay and discharge any such tax, assessment, charge
or levy so long as (a) the legality thereof shall be promptly and actively contested in good faith
and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities
contested pursuant to this Section 3.1. With respect to taxes, special assessments or other similar
governmental charges, Trustor shall pay such amount in full prior to the attachment of any lien
therefor on any part of the Security; provided, however, if such taxes, assessments or charges
may be paid in installments, Trustor may pay in such installments. Except as provided in clause
(b) of the first sentence of this paragraph, 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. Any amount so
advanced therefor by Beneficiary, together with interest thereon from the date of such advance at
the maximum rate permitted by law, shall become an additional obligation of Trustor to the
Beneficiary and shall be secured hereby, and Trustor agrees to pay all such amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under the
Loan Documents during the course of construction and following completion, and at all times
until all amounts secured by this Deed of Trust have been paid and all other obligations secured
hereunder fulfilled, and this Deed of Trust reconveyed.
All such insurance policies and coverages shall be maintained at Trustor's sole cost and
expense. Certificates of insurance for all of the above insurance policies, showing the same to be
in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time
prior to the Beneficiary's receipt of the entire Principal and all amounts secured by this Deed of
Trust.
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this
Deed of Trust or shall fail to keep the Security in accordance with the Loan Documents, 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 or
may make such repairs or replacements as are necessary and provide for payment thereofi 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 lesser of (i) ten percent (10%) per annum or
(ii) the maximum rate permitted by law.
ARTICLE 4
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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 in
any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the
Property (collectively "Funds") are hereby assigned to and shall be paid to the Beneficiary by a
check made payable to the Beneficiary. The Beneficiary is authorized and empowered (but not
required) to collect and receive any Funds and is authorized to apply them in whole or in part
upon any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary
shall determine at its sole option. 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 or any part of the amounts so collected and recovered by the
Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for
its disposition. 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 hereaftkr involving or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys' Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary
should employ attorneys or incur other expenses for the collection of amounts due or the
enforcement of performance or observance of an obligation or agreement on the part of the
Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the
Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred
by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the
indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such
expenses are incurred at the lesser of (i) ten percent (1 0%) per annum or (ii) the maximum rate
permitted by law.
Section 5.3 Payment of the Principal.
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The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth
in the Note in the amounts and by 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 Uniform 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 Uniform 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 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 to Trustor, the
Beneficiary and its duly authorized agents, attorneys, experts, engineers, accountants and
representatives, shall have the right, without payment of charges or fees, to inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, and
assigns, and all persons 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, sex, sexual orientation, marital status, national origin or ancestry in the sale,
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 transferees or vendees in the Security. The foregoing covenants shall run with the land.
ARTICLE 6
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HAZARDOUS WASTE
Trustor shall keep and maintain the Property in compliance with, and shall not cause or
permit the Property to be in violation of any federal, state or local laws, ordinances or regulations
relating to industrial hygiene or to the environmental conditions on, under or about the Property
including, but not limited to, soil and ground water conditions. Trustor shall not use, generate,
manufacture, store or dispose of on, under, or about the Property or transport to or from the
Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or
related materials, including without limitation, any substances defined as or included in the
definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations (collectively referred to
hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily kept
and used in and about multifamily residential property, both during and after construction.
Trustor shall immediately advise Beneficiary in writing if at any time it receives written
notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against Trustor or the Property pursuant to any
applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous
Materials, ("Hazardous Materials Law"); (ii) all claims made or threatened by any third party
against Trustor or the Property relating to damage, contribution, cost recovery compensation,
loss or injury resulting fiom any Hazardous Materials (the matters set forth in clauses (i) and (ii)
above are hereinafter referred to as "Hazardous Materials Claims"); and (iii) Trustor's discovery
of any occurrence or condition on any real property adjoining or in the vicinity of the Property
that could cause the Property or any part thereof to be classified as "border-zone property" under
the provision of California Health and Safety Code, Sections 25220 et seq. or any regulation
adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of the Property under any Hazardous Materials Law.
Beneficiary shall have the right to join and participate in, as a party if it so elects, any
legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to
have its reasonable attorneys' fees in connection therewith paid by Trustor. Trustor shall
indemnify and hold harmless Beneficiary and its councilmembers, supervisors, directors,
officers, employees, agents, successors and assigns fiom and against any loss, damage, cost,
expense or liability directly or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on,
under, or about the Property including without limitation: (a) all foreseeable consequential
damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the
Property and the preparation and implementation of any closure, remedial or other required
plans; and (c) all reasonable costs and expenses incurred by Beneficiary in connection with
clauses (a) and (b), including but not limited to reasonable attorneys' fees.
Without Beneficiary's prior written consent, which shall not be unreasonably withheld,
Trustor shall not take any remedial action in response to the presence of any Hazardous Materials
on, under or about the Property, nor enter into any settlement agreement, consent decree, or other
compromise in respect to any Hazardous Material Claims, which remedial action, settlement,
consent decree or compromise might, in Beneficiary's reasonable judgement, impair the value of
-8-
,-
the Beneficiary's security hereunder; provided, however, that Beneficiary's prior consent shall not
be necessary in the event that the presence of Hazardous Materials on, under, or about the
Property either poses an immediate threat to the health, safety or welfare of any individual or is
of such a nature that an immediate remedial response is necessary and it is not reasonably
possible to obtain Beneficiary's consent before taking such action, provided that in such event
Trustor shall notifL Beneficiary as soon as practicable of any action so taken. Beneficiary agrees
not to withhold its consent, where such consent is required hereunder, if either (i) a particular
remedial action is ordered by a court of competent jurisdiction, (ii) Trustor will or may be
subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii)
Trustor establishes to the reasonable satisfaction of Beneficiary that there is no reasonable
alternative to such remedial action which would result in less impairment of Beneficiary's
security hereunder; or (iv) the action has been agreed to by Beneficiary.
The Trustor hereby acknowledges and agrees that (i) this Article is intended as the
Beneficiary's written request for information (and the Trustor's response) concerning the
environmental condition of the Property as required by California Code of Civil Procedure
Section 726.5, and (ii) each representation and warranty in this Deed of Trust or any of the other
Loan Documents (together with any indemnity applicable to a breach of any such representation
and warranty) with respect to the environmental condition of the property is intended by the
Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code
of Civil Procedure Section 736.
In the event that any portion of the Property is determined to be "environmentally
impaired" (as that term is defined in California Code of Civil Procedure Section 726S(e)(3)) or
to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section
726.5(e)( l)), then, without otherwise limiting or in any way affecting the Beneficiary's or the
Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its
rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such
environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and
remedies of an unsecured creditor, including reduction of its claim against the Trustor to
judgment, and (b) any other rights and remedies permitted by law. For purposes of determining
the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil
Procedure Section 726.5(a), the Trustor shall be deemed to have willfblly permitted or
acquiesced in a release or threatened release of hazardous materials, within the meaning of
California Code of Civil Procedure Section 726S(d)(l), if the release or threatened release of
hazardous materials was knowingly or negligently caused or contributed to by any lessee,
occupant, or user of any portion of the Property and the Trustor knew or should have known of
the activity by such lessee, occupant, or user which caused or contributed to the release or
threatened release. All costs and expenses, including (but not limited to) reasonable attorneys'
fees, incurred by the Beneficiary in connection with any action commenced under this paragraph,
including any action required by California Code of Civil Procedure Section 726.5(b) to
determine the degree to which the Property is environmentally impaired, plus interest thereon at
the rate specified in the Note until paid, shall be added to the indebtedness secured by this Deed
of Trust and shall be due and payable to the Beneficiary upon its demand made at any time
following the conclusion of such action.
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ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.
The following shall constitute Events of Default following the expiration of any
applicable notice and cure periods: (1) failure to make any payment to be paid by Trustor under
the Loan Documents; (2) failure to observe or perform any of Trustor's other covenants,
agreements or obligations under the Loan Documents, including, without limitation, the
provisions concerning discrimination; or (3) failure to make any payment or perform any of
Trustor's other covenants, agreements, or obligations under any other debt instruments or
regulatory agreement secured by the Property, which default shall not be cured within the times
and in the manner provided therein.
Section 7.2 Acceleration of Maturity.
If an Event of Default 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 7.3 The Beneficiary's Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or proceeding, or by
a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the
Security and take possession thereof (or any part thereof) and of any of the Security, 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 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
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(d) Exercise all other rights and remedies provided herein, in the instruments by which
the Trustor acquires title to any Security, 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 7.4 Foreclosure By Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein
contained, the Beneficiary shall give notice to the Trustee (the "Notice of Sale") and shall deposit
with Trustee this Deed of Trust and the Note 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
required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse
of such time as may then be required by law and after recordation of such Notice of Default and
Election to Sell and after Notice of Sale having been given as required by law, sell the Security,
at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate
lots or parcels or items as Trustee shall deem expedient and in such order as it may determine
unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b), at
public auction to the highest bidder, for cash in lawful money of the United States payable at the
time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient
deed or deeds conveying the property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed or any matters of facts shall be conclusive proof of the
truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary,
may purchase at such sale, and Trustor hereby covenants to warrant and defend the title of such
purchaser or purchasers.
(b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of
evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment
of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to Beneficiary under
the Loan Documents; (iii) all other sums then secured hereby; and (iv) the remainder, if any, to
Trustor.
(c) Trustee may postpone sale of all or any portion of the Property by public
announcement at such time and place of sale, and 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 7.5 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
- 11 -
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 all such powers until the date of
confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 7.6 Remedies Cumulative.
No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of
Trust is intended to be exclusive of any other right, power or remedy, but each and every such
right, power and remedy shall be cumulative and concurrent and shall be in addition to any other
right, power and remedy given hereunder or now or hereafter existing at law or in equity.
Section 7.7 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 or 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 original liability under this Deed of Trust, or any other obligation of
the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-
signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or
omission preclude the Beneficiary from exercising any right, power or privilege herein granted or
intended to be granted in any Event of Default then made or of any subsequent Event of Default,
nor, except as otherwise expressly provided in an instrument or instruments executed by the
Beneficiary shall the lien of this Deed of Trust be altered thereby.
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Section 7.8 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 of or compliance with such enactment,
rule or order would impair the Security thereunder or be prejudicial to the interest of the
Beneficiary.
Section 7.9 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 7.10 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 thls Deed of Trust.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but only by
an instrument in writing signed by Beneficiary and Trustor.
Section 8.2 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 8.3 Notices.
If at any time after the execution of this Deed of Trust it shall become necessary or
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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:
City of Carlsbad
Housing and Community Development Department
Attn: Housing and Redevelopment Director
2965 Roosevelt Street
Carlsbad, CA 92008-2389
and (2) if intended for Trustor shall be addressed to:
Continental Ranch Inc.
Attn: David Lother, Vice President, Development
2237 Faraday, Suite 100
Carlsbad, CA 92008
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 8.4 Successors and Joint Trustors.
Where an obligation is created herein binding upon Trustor, the obligation shall also
apply to and bind any transferee or successors in interest. Where the terms of the Deed of Trust
have the effect of creating an obligation of the Trustor and a transferee, such obligation shall be
deemed to be ajoint and several obligation of the Trustor and such transferee. Where Trustor is
more than one entity or person, all obligations of Trustor shall be deemed to be a joint and
several obligation of each and every entity and person comprising Trustor.
- 14-
Section 8.5 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 8.6 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 8.7 Governing Law.
This Deed of Trust shall be governed by and construed in accordance with the laws of the
State of California.
Section 8.8 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 8.9 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 8.10 Actions.
Trustor agrees to appear in and defend any action or proceeding purporting to affect the
Security.
Section 8.1 1 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
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county or counties in which the Property is situated, shall be conclusive proof of proper
appointment of the successor trustee.
Section 8.12 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 8.13 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 @€j
or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by
Trustee.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year
first above written.
TRUSTOR:
CONTINENTAL RANCH, INC., a Delaware corporation
By:
Title:
By:
Title:
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EXHIBIT A
(Legal Description)
The land is situated in the State of California, City of Carlsbad, County of San Diego, and
is described as follows:
- 18-
PROMISSORY NOTE
$1,380,000 Carlsbad, California
FOR VALUE RECEIVED, the undersigned-CONTINENTAL RANCH INC., a Delaware
corporation (the "Developer"), hereby promises to pay to the order of the City of Carlsbad, a
municipal corporation (the llHolderll), a principal amount equal to One Million Two Hundred
Thirty Thousand Dollars ($1,230,000), or so much thereof as is advanced by the Holder to the
Developer pursuant to the Loan Agreement between the Developer and the Holder dated as of
this Note shall have the meanings set forth in the Agreement.
, 1999 (the "Agreement"). All capitalized terms not otherwise defined in
1. Interest; Repayment Terms. The indebtedness evidenced by this Note
shall not bear interest; provided, however, if a default occurs hereunder, the principal amount of
this Note shall bear interest commencing on the date of default at the default rate equal to the
lesser of (i) ten percent (10%) per annum, compounded annually, or (ii) the maximum interest
rate permitted by law. The Note shall be due and payable at the times and in the manner set forth
in Section 2.8 of the Agreement.
2. No Assumption. Except as provided in Section 4.9'of the Agreement,
this Note shall not be assumable by the successors and assigns of Developer without the prior
written consent of the City.
3. Terms of Payment.
a. All payments due under this Note shall be paid in currency of the
United States of America, which at the time of payment is lawfid for the payment of public and
private debts.
b. All payments on this Note shall be paid to'Holder at the Housing
and Community Development Department, City of Carlsbad, 2965 Roosevelt Street, Suite B,
Carlsbad, CA 92008, Attn: Housing and Redevelopment Director, or to such other place as the
Holder of this Note may from time to time designate.
c. All payments on this Note shall be without expense to the Holder,
and the Developer agrees to pay all costs and expenses, including re-conveyance fees and
reasonable attorney's fees of the Holder, incurred in connection with the payment of this Note
and the release of any security hereof.
4. Acceleration. Upon the occurrence of a Default (as defined
in the Loan Agreement), the City shall have the right to accelerate the debt evidenced by this
Note and declare all of the unpaid principal and interest, if any, immediately due and payable.
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Upon the occurrence of a Default, the outstanding portion of the principal shall bear interest at
the rate of the lesser of (i) ten percent (1 0%) per annum, compounded annually, or (ii) the
maximum interest rate permitted by law. Any failure by the City to pursue its legal and equitable
remedies upon Default shall not constitute a waiver of the City's right to declare a Default and
exercise all of its rights under this Note, the Deed of Trust, and the Loan Agreement. Nor shall
acceptance by the City of any payment provided for herein constitute a waiver of the City's right
to require prompt payment of any remaining balance owed.
5. No Offset. The Developer hereby waives any rights of offset it now
has or may hereafter have against the City, its successors and assigns, and agrees to make the
payments called for herein in accordance with the terms of this Note and the Loan Agreement.
6. Waiver; Attorneys' Fees. Developer, for itself, its heirs, legal
representatives, successors and assigns, respectively, waives diligence, presentment, protest, and
demand, and notice of protest, dishonor and non-payment of this Note, and expressly waives 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 waives
the right to plead any and all statutes of limitations as a defense to any demand on this Note or
agreement to pay the same, and agrees to pay all costs of collection when incurred, including
reasonable attorneys' fees. If an action is instituted on this 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.
7. Security. This Note is secured by a Deed of Trust and Security
Agreement (the "Developer Deed of Trust"), of even date herewith, wherein the Developer is the
Trustor and the Holder is the Beneficiary, constituting a [Unnecessary because of Developer's
sources of financing: second priority] lien against the Affordable Development.
8. Miscellaneous Provisions.
a. All notices to the Holder or the Developer shall be given in the
manner and at the addresses set forth in the Agreement, or to such addresses as the Holder and
the Developer may hereinafter designate.
b. This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
c. This Note shall be governed by and construed in accordance with
the laws of the State of California.
d.
be strictly construed, time being of the essence.
The times for the performance of any obligations hereunder shall
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e. This document, together with the other Loan Documents, contains
the entire agreement between the parties as to the City Loan. It may not be modified except upon
written consent of the parties.
Developer:
1 CONTINENTAL RANCH, INC., a Delaware corporation
By:
Title:
By:
Title:
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NOTICE TO BORROWER:
THIS NOTE IS NOT ASSUMABLE
Rancho Carrillo
PROMISSORY NOTE
Secured by Deed of Trust
Carlsbad, California
7 199-
FOR VALUE RECEIVED, the undersigned
(the "Borrower") promises to pay to the City of Carlsbad, a
municipal corporation (the "City"), or order, at the Housing and Redevelopment Department,
2965 Roosevelt Street, Suite B, Carlsbad, California 92008, or such other place as the City may
designate in writing, the principal sum of $
calculated pursuant to Section 3 below.
, plus Contingent Interest
1. Purpose of Loan. Borrower is purchasing the Residence located at in the
City of Carlsbad. This Note evidences a loan made by the Seller of the Residence (the "Seller")
to the Borrower, utilizing subsidy funds provided by the City and the Seller, and assigned by the
Seller to the City (the "City/Seller Loan"). The CityISeller Loan is in the amount determined by
the City to be necessary for the Borrower to afford to purchase the Residence making a
reasonable downpayment and using conventional first mortgage financing for the balance of the
purchase price not financed by the City/Seller Loan. The Seller made the City/Seller Loan to the
Borrower and assigned the City/Seller Loan to the City in fulfillment of certain inclusionary
housing obligations pursuant to City Ordinance No. NS-232 and an Affordable Housing
Agreement between the dated March 23, 1999 and recorded as Document No. 1998-0162920 in
the Official Records of San Diego County, and the First Amended and Restated Affordable
Housing Agreement Imposing Restrictions on Real Property dated , 199-, and the
Second Amended and Restated Affordable Housing Agreement Imposing Restrictions on Real
Property dated 7 199-9
2. Definitions. The terms set forth in this Section shall have the following
a.
meanings in this Note.
subtracting the total original purchase price of the Residence paid by the Borrower, which was
Dollars ($ ), from one of the following amounts, as
applicable: (i) in the event of a sale of the Residence, the amount received by the Borrower as
the sale price of the Residence, as certified by the Borrower pursuant to Section 13 below; or (ii)
in the event of a prepayment of this Note, a Transfer other than sale of the Residence, or in the
event of a default, the Fair Market Value of the Residence; or (iii) in the event a creditor acquires
"Appreciation Amount'' shall mean the amount calculated by
04/02/99 1
title to the Residence through a deed in lieu of foreclosure, a trustee's deed upon sale, or
otherwise, the amount paid for the Residence at a creditor's sale of the Residence.
b. "Contingent Interest" shall mean the percentage of the
Appreciation Amount set out in Section 4.
C. "Fair Market Value" shall be determined by a real estate appraisal
made by an independent residential appraiser designated by the City. If possible, the appraisal
shall be based upon the sales prices of comparable properties sold in the market area during the
preceding three-month period. The cost of the appraisal shall be paid by the Borrower. Nothing
in this subparagraph shall preclude the Borrower and the City from establishing the Fair Market
Value of the Residence by mutual agreement in lieu of an appraisal.
d. "First Mortgage" shall mean the promissory note and deed of trust
evidencing and securing the first mortgage loan for the Residence.
e. "Residence" shall mean the housing unit and land encumbered by
the deed of trust executed in connection with this Note.
f. "Transfer" shall mean any sale, assignment or transfer, voluntary
or involuntary, of any interest in the Residence, including, but not limited to, a fee simple
interest, a joint tenancy interest, tenancy in common interest, a life estate, a leasehold interest, or
an interest evidenced by a land contract by which possession of the Residence is transferred and
the Borrower retains title. Any Transfer without satisfaction of the provisions of this Note is
prohibited. A transfer: (i) to an existing spouse who is also an obligor under the Note; (ii) by a
Borrower to a spouse where the spouse becomes the co-owner of the Residence; (iii) between
spouses as part of a marriage dissolution proceeding; (iv) to an existing spouse or child of the
Borrower by devise or inheritance following the death of the Borrower; (v) by the Borrower into
an inter vivos trust in which the Borrower is the beneficiary; or (vi) by deed of trust or
imposition of a lien subordinate to the Deed of Trust, shall not be considered a Transfer for the
purposes of this Note; provided, however, that the Borrower shall continue to occupy the
Residence as his or her principal place of residence and the Borrower shall provide written notice
of such transfer to the City pursuant to Section 14 below.
3. Security. This Note is secured by a second deed of trust dated the same
date as this Note (the "Deed of Trust").
4. Contingent Interest. The Borrower shall pay contingent interest equal to
percent ( %) [staff to insert appropriate percentage which shall in no
event exceed (50%)] of the Appreciation Amount (the "Contingent Interest"). No interest other
than Contingent Interest shall be due hereunder. The Contingent Interest shall be paid to the City
at the time set forth in Section 7(a) below, unless forgiven by the City pursuant to Section 7(b)
below. Borrower acknowledges that the Contingent Interest percentage amount is equal to the
CityBeller Loan principal amount as a percentage of the total purchase price of the Home paid
by the Borrower at the time of purchase, multiplied by seventy-five one hundredths (.75).
Borrower acknowledges that this calculation of the percentage of the Appreciation Amount due
04/02/99 2
to the City as Contingent Interest includes a twenty-five percent (25%) discount to Borrower to
account for any capital improvements Borrower may make to the Residence.
5. Term. The Term of this Note shall mean the period commencing on the
date of this Note and expiring on the date thirty (30) years thereafter.
6. Owner-OccuDancv Required: Representations Regarding Income.
a. The Borrower is required to occupy the Residence as his or her
principal place of residence, and failure by the Borrower to comply with this requirement shall be
a default under this Note. The Borrower shall be considered as occupying the Residence if the
Borrower is living in the Residence for at least ten (10) months out of each calendar year. The
Borrower shall provide an annual written certification to the City that the Borrower is occupying
the Residence as his or her principal place of residence. The Borrower shall not lease the Home
to another party. Any lease of the Residence shall be a default under this Note.
b. Borrower hereby certifies that all income information previously
submitted to the Seller and/or the City is true and correct. Misrepresentation by Borrower of
income information provided to the Seller and/or the City shall be a default under this Note.
7. Repavment.
a. The total amount of the principal and any Contingent Interest owed
under this Note shall immediately become due and payable (i) in the event of a default by the
Borrower under this Note, the Deed of Trust, or the First Mortgage, (ii) on the date Transfer is
made whether voluntarily, involuntarily, or by operation of law and whether by deed, contract of
sale, gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to occupy the Residence
as his or her principal place of residence; or (iv) at the end of the Term of this Note as described
above in Section 5. Failure to declare such amounts due shall not constitute a waiver on the part
of the City to declare them due in the event of a subsequent Transfer.
b. In the event, upon expiration of the Term, (i) no Transfer has
occurred, (ii) Borrower has repaid all principal pursuant to subsection (a) above, (iii) Borrower
continues to owner-occupy the Residence, and (iv) Borrower is not in default hereunder or under
the Deed of Trust, the City shall forgive repayment of all Contingent Interest due hereunder.
8. Late Payment Fees. If any payment due hereunder is not paid within five
(5) days from the date such becomes due, Borrower shall pay a reasonable late or collection
charge equal to five percent (5%) of the amount so unpaid. The City and Borrower agree that the
actual damages and costs sustained by the City due to the failure to make timely payments would
be extremely difficult to measure and that the charges specified in this paragraph represent a
reasonable estimate by Borrower and the City of a fair average compensation for such damages
and costs. Such charges shall be paid by Borrower without prejudice to the right of the City to
collect any other amounts provided to be paid under this Note or the Deed of Trust or, with
respect to late payments, to declare a default.
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9. Prepayments. The Borrower may prepay all or part of the balance due
under this Note including principal and Contingent Interest. In the event the entire amount of
principal due under this Note is prepaid, all Contingent Interest, calculated as of the date of
prepayment, shall also be due at the time of prepayment.
10. No AssumDtion of Note. The Borrower acknowledges that this Note is
given in connection with the purchase of property (the "Residence") as part of a program of the
Agency to assist in the purchase of homes by lower income persons. Consequently, this Note is
not assumable by transferees of the Residence, but is due in full upon Transfer.
1 1. Maintenance: Taxes; Insurance. Borrower shall maintain the Residence in
good repair and in a neat, clean and orderly condition. Borrower shall promptly pay all property
taxes due on the Residence prior to any delinquency and shall comply with the insurance
requirements set forth in the Deed of Trust.
12. Refinance of First Mortgage Loan. The outstanding principal and interest
on this Note shall not be due upon prepayment and refinance of the First Mortgage, and the Deed
of Trust shall be subordinated to the refinanced loan, provided that (i) such refinancing is
approved by the City, (ii) the amount refinanced does not exceed the outstanding principal
balance of the First Mortgage at the time of refinance plus reasonable costs of refinance, and (iii)
the refinance does not result in higher monthly payments on the First Mortgage Loan than were
due prior to the refinance.
13. Certification of Purchase Price on Transfer. Upon any sale of the
Residence, the Borrower shall submit to the City at least fifteen (15) days prior to the close of
escrow, a copy of the sales contract and a written declaration, under penalty of perjury, from the
Borrower and the proposed purchaser in a form acceptable to the City stating the gross sales
price of the Residence. The certification shall also provide that the proposed purchaser or any
other party has not paid and will not pay to the Borrower, and the Borrower has not received and
will not receive fiom the proposed purchaser or any other party, money or other consideration,
including personal property, in addition to what is set forth in the sales contract.
14. Notice to City of Transfers. Borrower shall provide the City with written
notice of any sale, assignment or transfer, voluntary or involuntary, of any interest in the
Residence, including, but not limited to, encumbrance of the Residence with a junior deed of
trust or transfer of the Residence to a spouse or trust. Borrower shall provide this notice to the
City no later than fifteen (1 5) days before the sale, assignment, or transfer occurs, except where
the transfer is by devise or inheritance after death of the Borrower in which event notice shall be
provided within thirty (30) days of the date of transfer.
15. Default.
a. The Borrower shall be in default under this Note if he or she is in
default under the First Mortgage following the expiration of First Mortgage cure periods, or if,
after the notice and cure period provided by the City to the Borrower pursuant to the notice and
cure provisions of the Deed of Trust, the Borrower (i) fails to pay any money when due under
04/02/99 4
this Note; (ii) breaches any representation or covenant made in this Note in any material respect;
or (iii) breaches any provision of the Deed of Trust.
b. Upon the Borrower's breach of any covenant or agreement of the
Borrower in this Note or the Deed of Trust, including, but not limited to, the covenants to pay,
when due, any sums secured by the Deed of Trust, the City, prior to acceleration, will send, in
the manner set forth in Section 19, notice to the Borrower specifying: (1) the breach; (2) if the
breach is curable, the action required to cure such breach; (3) a date, not less than thirty (30) days
from the date the notice is effective, by which such breach, if curable, is to be cured and (4) if the
breach is curable, that failure to cure such breach on or before the date specified in the notice
may result in acceleration of the sums secured by the Deed of Trust and foreclosure by the City.
The notice will also inform the Borrower of the Borrower's right to reinstate after acceleration
and the right to bring a court action to assert the nonexistence of default or any other defense of
the Borrower to acceleration and sale.
16. Acceleration. -Upon the occurrence of a default under this Note, the Deed
of Trust, or the First Mortgage, the City shall have the right to declare the full amount of the
principal along with any Contingent Interest under this Note immediately due and payable. Any
failure by the City to pursue its legal and equitable remedies upon default shall not constitute a
waiver of the City's right to declare a default and exercise all of its rights under this Note and the
Deed of Trust. Nor shall acceptance by the City of any payment provided for herein constitute a
waiver of the City's right to require prompt payment of any remaining principal and interest
owed.
17. No Offset. The Borrower hereby waives any rights of offset it now has or
may later have against the City, its successors and assigns, and agrees to make the payments
called for in this Note in accordance with the terms of this Note.
18. Waiver: Attorney Fees and Costs. The Borrower and any endorsers or
guarantors of this 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 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 Note or agreement to pay the same, and jointly
and severally agree to pay all costs of collection when incurred, including reasonable attorney
fees. If an action is instituted on this Note, the Borrower 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.
19. No Waiver by the Citv. No waiver of any breach, default or failure of
condition under the terms of this Note shall be implied from any failure of the City to take action
with respect to such breach, default or failure or from any previous waiver of any similar or
unrelated breach, default or failure.
04/02/99 5
20. Notices. All notices required in this Note shall be sent by certified mail,
return receipt requested, or express delivery service with a delivery receipt, or personally
delivered with a delivery receipt obtai ed and shall be deemed to be effective as of the date
shown on the delivery receipt as the d $ e of delivery, the date delivery was refused, or the date
the notice was returned as undeliverable as follows:
To the Borrower:
At the address of the Residence.
To the City:
City of Carlsbad
Housing and Redevelopment Department
Attention: Housing and Redevelopment Director
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389
The parties may subsequently change addresses by providing written notice of the change
in address to the other parties in accordance with this Section 20.
21. Joint and Several Oblinations. This Note is the joint and several
obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and
their successors and assigns.
22. Nonliabilitv for Negligence, Loss. or Damage. Borrower acknowledges,
understands and agrees that the relationship between Borrower and the City is solely that of
borrower and lender, and that the City does not undertake or assume any responsibility for or
duty to Borrower to select, review, inspect, supervise, pass judgment on, or inform Borrower of
the quality, adequacy or suitability of the Residence or any other matter. The City owes no duty
of care to protect Borrower against negligent, faulty, inadequate or defective building or
construction or any condition of the Residence and Borrower agrees that neither Borrower, or
Borrower's heirs, successors or assigns shall ever claim, have or assert any right or action against
the City for any loss, damage or other matter arising out of or resulting from any condition of the
Residence and will hold the City harmless from any liability, loss or damage for these things.
23. Indemnity. Borrower agrees to defend, indemnify, and hold the City
harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable
attorneys fees that the City may incur as a direct or indirect consequence of:
a. the making of the loan to Borrower;
b. Borrower's failure to perform any obligations as and when required
by the Note or the Deed of Trust; of
04/02/99 6
c. the failure at any time of any of Borrower's representations to the
Seller or the City to be true and correct.
24. Termination of Restrictions. Any legal restrictions on conveyance of the
Residence (as defined in 24 CFR 203.41(a)(3)(u)) included in this Note shall terminate upon
transfer of the Residence by foreclosure, deed in lieu of foreclosure, or assignment to the
Secretary of the United States Department of Housing and Urban Development.
25. Controlling Law. This Note shall be construed in accordance with and be
governed by the laws of the State of California.
26. Assignment bv Citv. The City may assign its right to receive the proceeds
under this Note to any person and upon notice to the Borrower by the City all payments shall be
made to the assignee.
27. Invalid Provisions. If any one or more of the provisions contained in this
Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such
provision or provisions shall be deemed severable from the remaining provisions contained in
this Note, and this Note shall be construed as if such invalid, illegal or unenforceable provision
had never been contained in this Note.
28. Entire Ameement. This Note (along with the Deed of Trust) sets forth the
entire understanding and agreement of the City and the Borrower and any amendment, alteration
or interpretation of this Note must be in writing signed by both the City and the Borrower.
BORROWER
(Print Name)
(Print Name)
04/02/99 7
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
City of Carlsbad City Clerk's Office 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attention: City Clerk
No fee for recording pursuant to Government Code Section 27383
(Space above for Recorder's Use)
NOTE TO BORROWER:
THIS DEED OF TRUST CONTAINS PROVISIONS PROHIBITING ASSUMPTIONS
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") made as of
this day of Y 192 among ("Borrower") as trustor, and
("Trustee"), and the City of Carlsbad, a municipal corporation (the "City"), as beneficiary.
irrevocably grants, transfers, conveys and assigns to the Trustee, in trust, with power of sale, the
property located in the City of Carlsbad, State of California, described in the attached Exhibit - "A" (the "Property").
TOGETHER with all the improvements now or hereafter erected on the property, and all easements, rights, appurtenances, and all fixtures now or hereafter attached to the property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the property covered by this Deed of Trust; and
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, including all
other goods and chattels and personal property as are ever used or furnished in operating a
building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefore, whether or not the same are, or shall be attached to said building or buildings in any manner; and all of the foregoing, together with the Property, is herein referred to as the "Security";
The Borrower, in consideration of the promises herein recited and the trust herein created,
TOGETHER with all articles of personal property or fixtures now or hereafter attached to
To have and to hold the Security together with acquittances to the Trustee, its successors
and assigns forever;
TO SECURE to the City the repayment of the sums evidenced by a promissory note executed by the Borrower to the City dated , 19-, in the amount of Dollars ($ ) (the "Note");
1
TO SECURE to the City the payment of all other sums, with interest thereon, advanced in
accordance herewith to protect the security of this Deed of Trust; and the performance of the
covenants and agreements of the Borrower herein contained; and
TO SECURE the performance of any obligations of Borrower in any other agreements with respect to the financing of the Property or the Security the failure of which would adversely affect Beneficiary, whether or not Beneficiary is a party to such agreements.
BORROWER AND CITY COVENANT AND AGREE AS FOLLOWS:
1. Borrower's Estate. That the Borrower is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security, that other than this Deed of Trust, the Security is encumbered only by that deed of trust executed by the Borrower in connection with a loan made to the Borrower by or its successors and assigns (the "First Lender"), dated Lender, and recorded in the County of San Diego on
Recorder's Serial No. (the "First Lender Deed of Trust"), securing a promissory note executed by the Borrower in favor of the First Lender ("First Lender Note"), to assist in the purchase of the Property. The Borrower agrees to warrant and defend generally the title to the Security against all claims and demands, subject to any declarations, easements or restrictions listed in a schedule of exceptions to coverage in any title insurance policy insuring the City's
interest in the Security. (As used in this Deed of Trust, the term "First Lender" shall include all
successors and assigns of the First Lender.)
, 19-, executed by the Borrower in favor of First , 19-, and assigned
2. Repayment of Loan. The Borrower will promptly repay, when due, the principal
and interest required by the Note. The Note contains the following provisions concerning
repayment of the loan under certain conditions:
No Assumption of Note. The Borrower acknowledges that this Note is given in connection with the purchase of property (the "Residence") as part of a program of the Agency to assist in the purchase of homes by lower income persons.
Consequently, this Note is not assumable by transferees of the Residence, but is due in full upon Transfer.
3. and agreements of the First Lender Note, First Lender Deed of Trust, and related First Lender loan documents.
First Lender Loan. The Borrower will observe and perform all of the covenants
4. Owner-Occupancy Required. The Borrower shall occupy the Property as his or her principal place of residence. The Borrower shall be considered as occupying the Property if the Borrower is living in the unit for at least ten (1 0) months out of each calendar year. The Borrower shall provide an annual written certification to the City that the Borrower is occupying
the Property as his or her principal place of residence.
5. Charges: Liens. The Borrower will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority over this Deed of Trust, by the Borrower making any payment, when due, directly to the payee thereof. The Borrower will promptly furnish to the City all notices of amounts due under this paragraph, and
in the event the Borrower makes payment directly, the Borrower will promptly discharge any
lien which has priority over this Deed of Trust; provided, that the Borrower will not be required
to discharge the lien of the First Lender Deed of Trust or any other lien described in this paragraph so long as the Borrower will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to the City, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement
2 1010\03\101715.01
of the lien or forfeiture of the Security or any part thereof.
6. Hazard Insurance. The Borrower will keep the Security insured by a standard fire and extended coverage insurance policy in at least an amount equal to the replacement cost of the Security, but in no event less than the amount necessary to prevent the Borrower from becoming a co-insurer under the terms of the policy.
The insurance carrier providing this insurance shall be licensed to do business in the State of California and be chosen by the Borrower subject to approval by the City; provided, that such approval will not be withheld if the insurer is also approved by the First Lender, the Federal Home Loan Mortgage Corporation, Fannie Mae, Freddie Mac, the United States Department of Housing and Urban Development, the United States Department of Veterans Affairs, or successors thereto.
All insurance policies and renewals thereof will be in a form acceptable to the City and
will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of the First Lender Note and the City as their interests may appear and in a form acceptable to the City. The City shall have the right to hold, or cause its designated agent to
hold, the policies and renewals thereof, and the Borrower shall promptly firnish to the City, or
its designated agent, the original insurance policies or certificates of insurance, all renewal
notices and all receipts of paid premiums. In the event of loss, the Borrower will give prompt notice to the insurance carrier and the City or its designated agent. The City, or its designated agent, may make proof of loss if not made promptly by the Borrower. The City shall receive thirty days advance notice of cancellation of any insurance policies required under this section.
Unless the City and the Borrower otherwise agree in writing, insurance proceeds, subject to the rights of the First Lender, will be applied to restoration or repair of the Security damaged,
provided such restoration or repair is economically feasible and the Security of this Deed of
Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, the insurance proceeds will be used, subject to
the rights of the First Lender, to repay the Note and all sums secured by this Deed of Trust, with
the excess, if any, paid to the Borrower. If the Security is abandoned by the Borrower, or if the
Borrower fails to respond to the City, or its designated agent, within thirty (30) days from the date notice is mailed by either of them to the Borrower that the insurance carrier offers to settle a claim for insurance benefits, the City, or its designated agent, is authorized, subject to the rights of the First Lender, to collect and apply the insurance proceeds at the City's option either to restoration or repair of the Security or to repay the Note and all sums secured by this Deed of
Trust.
If the Security is acquired by the City, all right, title and interest of the Borrower in and to
any insurance policy and in and to the proceeds thereof resulting from damage to the Security
prior to the sale or acquisition will pass to the City to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of the First Lender.
7. Preservation and Maintenance of Security. The Borrower will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security.
8. Protection of the Citv's Security. If the Borrower fails to perform the covenants
and agreements contained in this Deed of Trust, the First Lender Note, the First Lender Deed of
Trust, or if any action or proceeding is commenced which materially affects the City's interest in
the Security, including, but not limited to, default under the First Lender Deed of Trust, the First Lender Note or any other deed of trust encumbering the Property, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the City, at the City's option, upon notice to the Borrower, may make such appearances, disburse
3 1010\03\101715.01
such sums and take such action as it determines necessary to protect the City's interest, including but not limited to, disbursement of reasonable attorney's fees and entry upon the Security to make repairs.
Any amounts disbursed by the City pursuant to this paragraph, with interest thereon, will
become an indebtedness of the Borrower secured by this Deed of Trust. Unless the Borrower and City agree in writing to other terms of payment, such amount will be payable upon notice from the City to the Borrower requesting payment thereof, and will bear interest from the date of
disbursement at the lesser of ten percent (1 0%) or the highest rate permissible under applicable
law. Nothing contained in this paragraph will require the City to incur any expense or take any
action hereunder.
9. Inspection. The City may make or cause to be made reasonable entries upon and inspections of the Security; provided that the City will give the Borrower reasonable notice of
inspection.
10. Forbearance by the City Not a Waiver. Any forbearance by the City in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy. The
procurement of insurance or the payment of taxes or other liens or charges by the City will not be
a waiver of the City's right to accelerate the maturity of the indebtedness secured by this Deed of Trust.
1 1. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively.
12. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the
City and the Borrower subject to the provisions of this Deed of Trust.
13. be joint and several. Joint and Several Liabilitv. All covenants and agreements of the Borrower shall
14. Notice. Except for any notice required under applicable law to be given in
another manner, all notices required in this Deed of Trust shall be sent by certified mail, return receipt requested or express delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained, and shall be deemed to be effective as of 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 as follows:
To the Owner:
At the address of the Residence.
To the City:
City of Carlsbad
Housing and Redevelopment Department
Attn: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389
The parties may subsequently change addresses by providing written notice of the change
4 1010\03\101715.01
in address to the other parties in accordance with this section.
15. Controlling Law. This Deed of Trust shall be construed in accordance with and be governed by the laws of the State of California.
16. Invalid Provisions. If any one or more of the provisions contained in this Deed of
Trust or the Note shall for any reason be held to be invalid, illegal or unenforceable in any
respect, then such provision or provisions shall be deemed severable from the remaining provisions, and this Deed of Trust and the Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Deed of Trust or the Note.
17. Captions. The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof.
18. Default: Remedies. Upon the Borrower's breach of any covenant or agreement of
the Borrower in this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, the City, prior to acceleration, will send, in the manner set forth in Section 14 of this Deed of Trust, notice to the Borrower specifying: (1) the breach; (2) if the breach is curable, the action required to cure such breach; (3) a date, not less than thirty (30) days from the date the notice is effective as set forth in Section 14 of this Deed of Trust, by which such breach, if curable, is to be cured; and (4) if the breach is curable, that failure to cure
such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Security. Notice shall be effective as of 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. The notice will also inform the Borrower of the Borrower's
right to reinstate after acceleration and the right to bring a court action to assert the nonexistence
of default or any other defense of the Borrower to acceleration and sale. If the breach is not curable or is not cured on or before the date specified in the notice, the City, at the City's option, may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and
payable without further demand and may invoke the power of sale and any other remedies
permitted by California law; (b) 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) and of any of
the Security, in its own name or in the name of the Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Security, 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 breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the City shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of
sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or
specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et seq., as amended from time to time; or (e) exercise all other rights and remedies provided herein, in the instruments by which the Borrower acquires title to any Security, 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.
The City shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorney's fees.
19. Acceleration. Upon the occurrence of a default under the Note, this Deed of Trust, the First Lender Note, or the First Lender Deed of Trust, the City shall have the right to declare the fill amount of the principal along with any interest under the Note immediately due
5 1010\03\101715.01
and payable. Any failure by the City to pursue its legal and equitable remedies upon default shall not constitute a waiver of the City’s right to declare a default and exercise all of its rights under the Note and this Deed of Trust. Nor shall acceptance by the City of any payment provided for
in the Note constitute a waiver of the City’s right to require prompt payment of any remaining
principal and interest owed.
20. Borrower’s Rinht to Reinstate. Notwithstanding the City’s acceleration of the sums secured by this Deed of Trust, the Borrower will have the right to have any proceedings
begun by the City to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) the Borrower pays City all
sums, if any, which would be then due under this Deed of Trust and no acceleration under the
Note has occurred; (b) the Borrower cures all breaches of any other covenants or agreements of the Borrower contained in this Deed of Trust; (c) the Borrower pays all reasonable expenses incurred by City and the Trustee in enforcing the covenants and agreements of the Borrower contained in this Deed of Trust, and in enforcing the City’s and the Trustee’s remedies, including,
but not limited to, reasonable attorney’s fees; and (d) the Borrower takes such action as City may
reasonably require to assure that the lien of this Deed of Trust, City’s interest in the Security and the Borrower’s obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by the Borrower, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred.
2 1. Reconvevance. Upon payment or forgiveness of all sums secured by this Deed of Trust, the City will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the Note to the Trustee. The Trustee will reconvey the Security without warranty and
without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any.
22. Substitute Trustee. The City, at the City’s option, may fi-om time to time remove
the Trustee and appoint a successor trustee to any trustee appointed hereunder. The successor
trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law.
23. Subordination to First Mortgage. Notwithstanding acy other provision hereof,
the provisions of this Deed of Trust shall be subordinate to the lien of the First Lender Deed of Trust and shall not impair the rights of the First Lender, or the First Lender’s successor or assign,
to exercise its remedies under the First Lender Deed of Trust in the event of default under the
First Lender Deed of Trust by the Borrower. Such remedies under the First Lender Deed of Trust include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed or assignment in lieu of foreclosure, or upon
assignment of the First Lender Deed of Trust to the Secretary of the United States Department of
Housing and urban Development (the “Secretary”), this Deed of Trust shall be forever terminated and shall have no further effect as to the Property or any transferee thereafter; provided, however, if the holder of such First Lender Deed of Trust acquired title to the Property pursuant to a deed or assignment in lieu of foreclosure, or if the First Lender’s Deed of Trust is assigned to the
Secretary, this Deed of Trust shall automatically terminate upon such acquisition of title, or
assignment to the Secretary provided that (i) the City has been given written notice of default under such First Lender Deed of Trust and (ii) the City shall not have cured or commenced to cure the default within such 30-day period and given its firm commitment to complete the cure in the form and substance acceptable to the First Lender. Borrower agrees to record any necessary documents to effect such termination, if applicable.
1010\03\101715.01 6
24. Attornev's Fees. If any action or proceeding is brought to enforce this Deed of Trust
or any provision of this Deed of Trust or the Note, the prevailing party shall be entitled to its attorney's fees and the cost of such action or proceeding.
IN WITNESS WHEREOF, the Borrower has executed this Deed Of Trust as of the date
first written above.
Borrower
(Print Name)
Borrower
(Print Name)
1010\03\101715.01 7
EXHIBIT A Property Description
1010\03\101715.01
BORROWER DISCLOSURE STATEMENT
FIRST-TIME HOMEBUYER
RANCHO CARRILL0 HOMEBUYER ASSISTANCE PROGRAM
The City of Carlsbad (the Tity"), through its Inclusionary Housing Ordinance, has
required the developer of the Rancho Camllo condominium development to sell the homes in the
development to qualified households under terms that make the home affordable to you and the
other new homebuyers. The City has also provided financial assistance to the developer to assist
in making the Rancho Carrillo homes affordable. Your new home is affordable to you because
the City and the developer are providing you with second mortgage financing through the
Rancho Carrillo Homebuyer Assistance Program (the "Program") so that you will be able to buy
your home. The City offers the Program in order to enable low income households to own their
own homes in Carlsbad.
As a condition of the financing, the City will require you to sign a Promissory Note and a
Deed of Trust. The Deed of Trust will be recorded apainst vour propertv.
This Disclosure Statement explains the major provisions of the Promissory Note and the
Deed of Trust to help you understand their requirements. You should, of course, read all of the
City loan documents yourself and become completely familiar with them.
A. PRIMARY RESIDENCE AND LEASING YOUR HOME
Under the terms of the Promissory Note and Deed of Trust, the house you buy with the
assistance of the City loan must be your main place of residence. This means you must live in
the house no less than 10 months out of each calendar year. Each year, you must certify in
wri:ins to the City that you are living in your home as your main place of residence. In addition,
you cannot lease your home. If you fail to follow these provisions, you are considered to be in
default, and the City may declare its loan immediately due and payable.
B. NOTICES TO CITY
1. Notice of Intent to Sell, Assim or Transfer. If you decide to sell, assign or
transfer your home or any partial interest in your home, or if you record a mortgage or deed of
trust against your home, you must let the City know in writing at least fifteen (15) days prior to
the sale, assignment, transfer, or the recording of a mortgage.
2. Notice and Certification of Purchase Price. If you go to sell your home, at least
fifteen (15) days before the sale closes (close of escrow), you must give the City a copy of the
sales contract and a written statement that declares, under penalty of perjury, the gross sales price
of the home. The written statement must be signed by both you (as seller) and the proposed
0611 1198 1
buyer. The written statement must also certify that the proposed buyer, or any other party, has
not paid and will not pay to you money or any other consideration that is not set out in the sales
contract for the home. The statement must also certify that you (as the seller) have not received
and will not receive from the proposed buyer, or anybody else, money or other consideration that
is not included in the sales contract.
3. Deliverv of Reauired Notices. Any notice you must provide to the City under
the terms of the City loan documents must be sent by certified mail, return receipt requested, or
express delivery service with a delivery receipt, or personally delivered with a delivery receipt
obtained.
C. INTEREST ON THE CITY LOAN: "CONTINGENT INTEREST"
The City loan charges "contingent interest". The contingent interest represents the
benefit you received from the City loan, and may generally be described as the percentage of the
sales price that the City loaned to you, with an adjustment or discount applied. The contingent
interest on your loan is due immediately if:
8 You default under the City loan or the First Mortgage, or
You sell or transfer title to your home, or
The end of the term of your loan is reached, with exceptions (see section 0
E. below)
The contingent interest on your City loan has three (3) parts:
(1) Appreciation Amount;
(2) Contingent interest percentage; and
(3) Automatic 25% discount to account for any improvements you may make
to the house.
An example is used to show each of the three (3) parts and how each would be calculated.
Example 1 Your loan from the City is $1 8,200. The original sales price you paid for your
home was $140,000. When you sell, the sales price is $173,600.
1.
between the original sales price you paid for the home and the price at which you sell it. For
example:
Amreciation Amount. The appreciation amount is generally the difference
Price of House When You Sell:
Price of House When You Bought: -
$173,600
$140,000
Minus
Appreciation Amount: $ 33,600
0611 1/98 2
The appreciation amount is calculated differently under certain circumstances. If you (a) prepay
your City loan, or (b) transfer your home by means other than selling it, or (c) are in default
under the terms of the City loan, the appreciation amount will be figured by using the Fair
Market Value of the home (instead of the price of house when you sell, as above). Fair Market
Value is the value of the home as determined by an independent appraiser chosen by the City. If
such an appraisal is necessary, the cost of the appraisal would be paid by you. If a creditor takes
title to your home, the appreciation amount will be figured by using the amount paid for the
home at the creditor's sale.
2. Contingent Interest Percentaere. The contingent interest percentage is the
percentage of the sales price that the City loaned to you. This percentage is figured by dividing
the amount of the City loan by the purchase price you paid for the home. Continuing with the
example:
City Loan Amount: $ 18,200
Price of House When You Bought: + $140,000
Divided By
Contingent Interest Percentage 13%
3. Automatic Discount For Possible Capital Improvements. During the time that
you live in your home, you may make improvements to it that will increase its value. For
example, you may put in a new central heating system or update the bathroom. To recognize the
possibility that you have invested in improvements which have contributed to an increase in
value beyond the increase due to a rise in the general real estate market, the contingent interest
on the City loan provides for a 25% discount. This discount is given automatically, even if you
have not made any improvements. Continuing with the example, the discount for capital
improvements reduces the contingent interest owed the City as follows:
Appreciation Amount: $ 33,600
Multiplied By
Contingent Interest Percentage x .13
Multiplied By 4,368
Automatic Discount X .25
Total Dollar Amount of Discount $ 1,092
$ 4,368
1,092
Contingent Interest You Owe City $ 3,276
0611 1/98 3
The automatic capital improvement discount shall be calculated by the City as set out in
the Promissory Note under Section 4. "Contingent Interest". The result is the same as with the
calculation above. A mathematical step has been eliminated.
Appreciation Amount: $ 33,600
Contingent Interest Percentage x .13
$ 4,368
Multiplied By
Automatic Discount Applied .75
Contingent Interest You Owe City $ 3,276
D. PAYING BACK YOUR CITY LOAN
1. No Pavments Reauired for 30 Years Unless You Sell, Transfer, or Default.
Your loan from the City is a ''deferred" loan. This means that you do not have to make
payments on your loan for the entire 30 year term. If, however, at any time you sell, assign or
transfer the home or if you break the terms of the loan documents, both the principal and
contingent interest owed on the loan will be immediately due and payable. The refinancing of
your first mortgage loan does not trigger immediate payment of principal and contingent interest
if the refinancing meets the terms of Promissory Note (as described in section F. below).
2. When You Sell Your Home.
When you sell, transfer, or assign your home or any interest in it, the principal and
contingent interest owing is immediately due and payable. The only times when this is not the
case is when a transfer is to an existing husband or wife who signed the Promissory Note, to a
husband or wife who then becomes a co-owner of the home, to a husband or wife as part of a
marriage or a divorce, to an inter vivos trust in which you are the beneficiary, or to a husband,
wife, or child upon death of the borrower.
Example 2 shows the repayment process for the City loan when the house is sold.
Example 2 You have lived in your home for 8 full years and now must sell it because you
received a promotion to a job in another state. You bought your home for
$140,000. The City provided you with a loan of $18,200 to help you buy your
house. The sales price of your home is 200,000.
(a) Amount of PrinciDal Owed Upon Sale. Since the City Loan is a
deferred loan, and you have made no payments during the time you have held the loan, the full
amount of principal must be repaid to the City at the time of sale. In this example, the principal
amount due is $18,200.
4 0611 1198
(b) Amount of Contingent Interest Owed. To figure out the amount
of contingent interest you owe the City, we need to calculate the appreciation amount and the
contingent interest percentage, and then apply the automatic discount.
Calculatinp the Aptweciation Amount
Sales Price of Your Home:
Price You Originally Paid: $140,000.00
$200,000.00
Appreciation Amount $ 60,000.00
Calculatinp the Contineent Interest Percentape
Your City Loan x Price You
Originally Paid:
Contingent Interest Percentage = 13%
$18,200 c $140,000 = .13
Calculatinp Continpent Interest Owed With Discount Aoplied)
Appreciation Amount: $ 60,000.00
Multiplied By X .13
Contingent Interest Percentage $ 7,800.00
Multiplied By
Automatic Discount X .75
Contingent Interest Owed City $ 5,850.00
Total You Owe City Upon Sale of the Home
Principal Owed:
Contingent Interest:
$ 18,200.00
$ 5,850.00
Total Owed $24,050.00
E. POTENTIAL FORGIVENESS OF CONTINGENT INTEREST
Under the terms of the Promissory Note, the contingent interest on your loan is due at the
end of the 30-year loan term. However, you will not have to pay the contingent interest at the
end of the loan term if you meet all of the following conditions:
(1) You live in your home and there has been no sale or transfer during the entire 30
year term, and
5 06/11/98
(2) You have repaid all of the principal you owe the City, and
(3) You are not in default under the City loan.
F. REFINANCING FIRST MORTGAGE LOAN
The Promissory Note allows you to refinance your first mortgage loan without triggering
repayment of your City loan if the following conditions are met. The refinancing must be
approved by the City. The amount received from the refinancing can be no more than the
remaining principal amount of your first mortgage plus reasonable closing costs of the
refinancing. The refinance cannot result in higher monthly payments on the first mortgage loan
than were due before the refinancing. If these conditions are not met, principal and contingent
interest on your City loan must be paid to the City when you refinance.
G. DEFAULT PROVISIONS
When you accept City loan assistance, you agree to meet all of the conditions of all of the
City loan documents. If you violate any provisions of the documents, you are considered to be in
default under your City loan. Also, if you default under the first mortgage loan, you would also
be considered to be in default under the City loan. If you do not correct the violation, the City
could require you to immediately repay the principal and contingent interest owing on the City
loan. The City could also go to court and get a court order to enforce the provisions of the City
loan documents, which may result in a foreclosure on your home.
**************
Please sign the enclosed copy of this Borrower Disclosure Statement in the space
provided below and return it to the City at , Carlsbad, California.
I have read and understand the above Borrower Disclosure Statement.
By:
By:
Dated:
Signature of Borrower
Print Name of Borrower
Dated:
Signature of Borrower
Print Name of Borrower
0611 1/98 6
Exhibit 4
I I I I I 1 1 Carrillo - Calculation of Sales Price for Affordable Units
70% 80 % 1 Bedrooms Total 1 Affordable Median Median 1 Family 1 Units 1 Units Income 1 Income 1 Size
I
I I
i !' I I 1 16 4 ; 5 I 1 (a) j 3
I
I
mn A9 nnn I
l
H OA I$ 771 I I
1.80% I Taxe Rate I I
I I Loan to Value 95 %
Mortgage Factor 6.65 7%
Debt Ratio of Gross 30% '
I
I I I I I
i
02/01/1999 8:59 AM
I I
Median Income , 80%
Available to pay P&l, Taxes, HOA
I
I I
Carvilb2 Affordable
I
Plan 1 Plan 2 Plan 3 I Plan 1 Plan 2 Plan 3
39,300 47,025 47,025 I 70% 34,925 41.1 75 41.1 75
12.353 I 12,353 11,790 14,108 14,108 1 I I 10,478 1 I
I 1 I
i HOA I
Taxes
Principal & Interest 1
I Sales Price I
Sub HOA 1
1
Loan Amount I I
I
924 924
1,855 2,299 2,299 1,603 1,963 1,963
7,811 9,684 9,684 I 6,151 8,266 1 8,266
11,790 14,108 14,108 10,478 12,353 1 12,353
103.038 127,742 127,742 1 89,047 1 109,034 I 109,034
97,886 121,355 121,355 I 84,595 103,583 1 103,583
I
924
I
924 924 924
1,200 7,200 1,200 1,200 1,200 1,200
!
I I
I I I
PROJECT PRO-FORMA
CONTINENTAL HOMES - CALIFORNIA
January 15, 1999
10
12.20%
2
PROJECT NAME: Carrillo Village B2
36 I 36 82
31 3 .-
._ 43.90% 1 43.90 Yo
l ASSUMPTIONS
89,047
0
0
0
Product Mix
% Mix
# of Bedrooms
Square Footage
109,034 109,034 8,740,934
0 0
0 0
01 0
ISALES REVENUE
38,000
52,450
5.1 13
753
13,895
890
3,562
890
4,452
6,233
1,336
5,343
16,384
1 2 3
1 2 3
Plan Plan Plan Total
38,000 38,000 3,116,000
57,170 63,510 4,868,980
5,113 5,113 41 9,266
753 753 61,746
13,895 13,895 1,139,390
1,090 1,090 87,409
4,361 4,361 349,637
1,090 1,090 87,409
5,452 5,452 437,047
7,632 7,632 61 1,865
1,636 1,636 131,114
6,542 6,542 I 524,456
16,384 16,384 1,343,488
89,047
(60,255)
~2,255)
I I -1 901 1 1,003 1 1,139 1
109,034 I 109,034 I 8,740,934
(50,085) 1 (56,425) I (4,436,874)
(1 2,085) I (1 8,425)l (1,320,874)
Sales Price
Premiums
Inflation
Incentives
15,000
7.255
45,255
15,000 15,000 1,230,000
-I 3.425 I 195,850
35,085 41,425 3,206,874
Net Revenue I $ 89,047 I $ 709.034 $ 109,034 1 $ 8,740,934
IPROJECT COSTS 1
Land
Offsite Hard Costs ,
Onsite Hard Costs
Consultants
Dev. Fees @J Map
Dev. Fees @J Permit
Warranty Expense
Contractors Fee
Closing Costs
Selling Expenses
General & Admin.
Taxes
Financing
Total Costs
1.00%
4.00%
1 .OO%
5.00%
7.00%
1.50%
6.00%
Maximum Purchase Price @ 70% A.M.I.
Subsidy Requirement with land
Subsidy Requirement wlo land
lSUBSlDY SOURCES
City Assistance
Developer Subsidy with land
Developer Subsidy w/o land
City Leverage @ 70% A.M.I.
~
2.61 I I i I
Carvilb2 02/03/1999 1 :04 PM
-
PROJECT PRO- JRMA
CONTINENTAL HOMES - CALIFORNIA
January 15, 1999
16,384
52,450
5,113
753
PROJECT NAME: Carrillo Village B2
16,384 16,384 1,343,488
57,170 63,510 4,8 68,980
41 9,266
753 753 61,746
5,113 5,113
ASSUMPTIONS I
Product Mix
% Mix
# of Bedrooms
Square Footage
13,895
1,030
4,122
1.030
SALES REVENUE 1
Sales Price per sq. ft.
13,895 1 13,895 ) 1,139,390
1,277 [ 1,277 1 102,278
5,110 1 5,110 1 409,113
1,277 1 1.277 1 102,278
Sales Price
Premiums
Inflation
Incentives
5,152
7,213
1,546
6,182
Net Revenue
6,387 6,387 51 1,391
8,942 8,942 71 5,948
1,916 1,916 153,417
613,669 7,665 7,665 1
IPROJECT COSTS 1
103,038
(49,832)
(1 1,832)
Land
Offsite Hard Costs
Onsite Hard Costs
Consultants
Dev.-Fees @ Map
Dev. Fees @ Permit
Warranty Expense
Contractors Fee
Closing Costs
Selling Expenses
General & Admin.
Taxes
Financing
127.742 1 127,742 10,227,822
(36,147) I (42,487) (3,329,142)
- I (4,487) (279,849)
Total Costs
L
1 .OO%
4.00%
1.00%
5.00%
7.00%
1.50%
6.00%
SUBSIDY SOURCES 1
Maximum Purchase Price @J 80% A.M.I.
Subsidy Requirement with land
Subsidy Requirement w/o land
15,000
34,832
15,000 1 15,000 1,230,000
21,147 I 27,487 2,099,142
I
Developer Subsidy with land
Developer Subsidy w/o land
1 2 3
1 2 3
Plan Plan Plan Total
10 j 36 I 36 1 82
12.20%1 43.90% I 43.90% I
~
21 31 31 901 1 1,003 1 1,139 1
$ 114.36 $ 127.36 $ 112.15
103,038 1 127,742 I 127,742 1 10,227,822
01 01 01
01 0) 0)
01 01 01
I $ 103,038 I $ 127,742 1 $ 127,742 1 $ 10,227,822
38,000 1 38,000 1 38,000 1 3.1 16,000
City Leverage @ 80% A.M.I. 1.71 I
Carrvilb 02/03/1999 1 :06 PM
Exhibit 5
/-
SITE
RANCHO CARRILLO
VILLAGE B PHASE II
CT 98-1 5lCP 98-O8lSDP 98-1 7
/
RANCHO CARRILLO
VILLAGE B PHASE II
CT 98-1 5lCP 98-08lSDP 98-1 7
/
I
Exhibit 6
LJ
\/
b
E
I I -
Y -
- I I
A REPORT TO T~E HousiNq COMMiSSiON
STAff: CRAiG Ruiz
MANA~EMENT ANA~YST
ITEM NO. 3
DATE: MAY 13,1999
SUBJECT: MODERATE INCOME LOAN PROGRAM - RECOMMENDATION OF
APPROVAL TO THE CITY COUNCIL TO PROVIDE $50,000 TO ESTABLISH
THE MODERATE INCOME LOAN PROGRAM TO PROVIDE
DOWNPAYMENT ASSISTANT TO MODERATE INCOME HOUSEHOLDS
AND TO APPROVE THE RELATED LOAN AND SECURITY AGREEMENTS
I. RECOMMENDATION
That the Housing Commission ADOPT Resolution No. 99-004, recommending
APPROVAL to the City Council to allocate $50,000 from the Housing Trust Fund to
establish the Moderate Income Homebuyer Assistance Program to provide
downpayment assistance to first-time moderate income homebuyers to purchase homes
in the City of Carlsbad and the related loan and security agreements.
11. PROJECT BACKGROUND
The City of Carlsbad’s Housing Element identifies and analyzes the existing and
projected housing needs and list goals, policies, objectives, resources and programs for
the preservation, improvement and development of housing. Section Three of the
Element sets out the City’s long-term housing goals and identifies a menu of shorter-
term objectives, policy positions, and action programs which can be utilized to achieve
these long-term goals. Specifically, Goal 3.10(b) states that ”The City’s Housing
Authority and Housing and Redevelopment Department will work to secure funding
and develop additional lending programs for moderate income, especially first-time
home buyers.” The Moderate Income Loan Program (MILP), which is described in
further detail below, attempts to implement this goal.
111. PROGRAM DESCRIPTION
The MILP is a program designed to provide qualified applicants with second trust deed
loans to be used toward downpayment or closing costs when purchasing their first
home. The loans will be limited to 3% of the purchase price or up to a maximum of
$5,000, which ever is less. Repayment of the loan will be deferred until sale, transfer or
refinance or, or if the property is no longer the primary residence of the borrower. The
program requirements are listed in Exhibit Nu. 2, which has been included for the
Commission’s review, and is summarized as follows:
MODERATE INCOME LOAN PROGRAM
MAY 13, 1999
PACE 2
1. Eligible Properties - all properties must be located within the City of Carlsbad, and
is limited to single-family homes including detached homes, condominiums and
townhomes.
2. Household Elijybility Requirements - all households shall have sufficient income
and credit worthiness, and shall have sufficient liquid assets to be able to provide a
minimum investment of 2% of the purchase price.
3. Loan Limits & Terms - loans will be the lessor of 3% of the purchase or $5,000. The
interest rate on the loan will be 6% simple interest for years 1-5, 3% simple interest
in years 6-10, and interest will be forgiven if occupancy exceeds 10 years. The loan
is due and payable if the property is sold or transferred, or if the property is no
longer the primary residence of the borrower.
4. Eligible Borrowers - assistance will be limited to those people who live or work in
the City of Carlsbad, earn less than 120% of the area median income, adjusted for
family size, and have not owned a home in the past three years.
IV. STAFF RECOMMENDATION
The price of housing in the City of Carlsbad is out of reach for most, if not all, low and
moderate income households. The City's Housing Element states that the City will
establish programs that will meet the needs of lower and moderate income households.
Specifically, Goal 3.10@) states that the Housing and Redevelopment Department will
establish programs that provide for housing opportunities for first time moderate
income home buyers. It is staff's opinion that the Moderate Income Loan Program
meets the purpose and intent of Goal 3.10(b) and therefore recommends that the
Housing Commission recommend approval of the program to the City Council. Staff is
recommending that the MILP originally be funded in the amount of $50,000 to assist a
minimum of ten moderate income, first-time homebuyers. The Program is intended to
be a Pilot program and will be evaluated at the end of one year. At the end of the first
year, any modifications, if necessary, would be made at that time.
V. EXHIBITS
1. Housing Commission Resolution No. 99-004
2. Program Criteria
3. Borrower Note
4. Borrower Deed of Trust
5. Borrower Disclosure
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
. . .. ..
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HOUSING COMMISSION RESOLUTION NO. 99-004
A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY
OF CARLSBAD, CALIFORNIA RECOMMENDING APPROVAL TO
THE CITY COUNCIL TO ALLOCATE $50,000 FROM THE
HOUSING TRUST FUND TO ESTABLISH THE MODERATE
INCOME LOAN PROGRAM TO PROVIDE DOWNPAWENT
ASSISTANCE TO FIRST TIME MODERATE INCOME
HOMEBUYERS PURCHASE HOMES IN THE CITY OF CARLSBAD.
WHEREAS, the City of Carlsbad’s Housing Element identifies and analyzes the existing and
projected housing needs and list goals, policies, objectives, resources and programs for the preservation,
improvement and development of housing; and
WHEREAS, the Housing Element further identifies short-term objectives, policy positions, and
action programs which can be utilized to achieve the long-term housing goals of the City of Carlsbad;
and
WHEREAS, the Housing Element seeks to provide a variety of housing opportunities for
households of all income levels; and
WHEREAS, Goal 3.10(b) of the Housing Element states that the City of Carlsbad’s Housing
and Redevelopment Department will work to secure funding and develop additional lending programs
for moderate income, especially first-time home buyers; and
WHEREAS, on May 13, 1999, the Housing Commission held a public meeting to consider the
Moderate Income Loan Program to provide downpayment assistance to first-time moderate income
homebuyers purchase homes in the City of Carlsbad; and
WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all
persons desiring to be heard, said Commission considered all factors relating to the Moderate Income
Homebuyer Program;
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of
Carlsbad, California, as follows:
1 . The above recitations are true and correct.
2. The Program is consistent with the goals and objectives of the City of Carlsbad’s Housing
Element, the Consolidated Plan, the Inclusionary Housing Ordinance, and the Carlsbad
General Plan.
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3. The project will provide a minimum of 10 home-buying opportunities for moderate income
first-time homebuyers at 120% or below of the county median income. The Program,
therefore, has the ability to effectively serve the City's housing needs and priorities as
expressed in the Housing Element.
4. That based on the information provided within the Housing Commission Staff Report and
testimony presented during the public meeting of the Housing Commission on May 13,
1999, the Housing Commission ADOPTS Resolution No. 99-004, recommending
APPROVAL to the City Council to allocate $50,000 from the Housing Trust Fund to
establish a Moderate Income Homebuyer Assistance Program to provide downpayment
assistance to first-time moderate income homebuyers to purchase homes in the City of
Carlsbad, and approval of the related loan and security agreements.
5. That the Housing Commission recommends that the City Manager or his designee be
authorized to execute all documents related to provision of the City assistance, including but
not limited to a Promissory Note, Deed of Trust and Borrower Disclosure in substantially
the form presented to the Housing Commission on May 13, 1999, and subject to review and
approval by the City Attorney.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of
the City of Carlsbad, California, held on the 13th day of May, 1999, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
CHAIRPERSON
CARLSBAD HOUSING COMMISSION
IEBORAH K. FOUNTAIN
3OUSING AND REDEVELOPMENT DIRECTOR
-IC RESO. NO. 99-004
'ACE 2
- Exhibit 2
CITY OF CARLSBAD
MODERATE INCOME LOAN PROGRAM
Information & Program Guidelines
introduction
The Moderate Income Loan Program (M.I.L.P.) is a program designed to provide qualified
applicants with second trust deed loans to be used toward downpayment or closing costs when
purchasing their first home.
The loans will be limited to 3% of the purchase price or $5,000 (whichever is less). Repayment
of the loan will be deferred until sale, transfer, refinance or when the M.I.L.P. assisted buyer no
longer occupies the property.
To be eligible for the loan, borrowers’ income must be at or below 120% of the currently published San Diego County median income, adjusted for household size, as defined by the
U.S. Department of Housing and Urban Development and the California Department of Housing and Community Development.
1. Eliaible ProDerties
(A) Loans will only be made on residential properties located within the City limits of Carlsbad.
(B) Properties can be new or resale single-family homes including detached homes,
condominiums, or townhouses.
(C) Properties purchased with M.I.L.P. assistance must be owner-occupied or vacant at the time of the purchase offer, in order to avoid the potential cost of relocating
tenants.
(D) Properties purchased with M.I.L.P. assistance must meet minimum code, health and safety standards upon occupancy.
2. Household EliGibilitv Reauirements
(A) Households shall have sufficient income and credit worthiness to qualify for
primary financing from one of the participating program lenders.
(B) Households shall be required to have sufficient liquid assets to be able to provide a minimum investment toward the required downpayment. A minimum investment of
2% will be required from the borrowers.
(C) Households shall not have assets which exceed $50,000, as defined by this program.
3. Income Qualification Criteria
__ 5 Person
Household adjusted gross income shall not exceed 120% of the San Diego area median
income adjusted for family size. The income limits shall be subject to annual adjustments.
~ 68,050
Maximum Yearly
7 Person
8 Person
1 Person
78,100
83,150
4. Maximum Purchase Price
The appraised value of the property cannot exceed $240,000. The maximum purchase
price will be determined based on the buyer’s ability to obtain a first mortgage loan and
maintain an acceptable affordability level as set forth herein.
5. Loan Limits and Terms
(A) The maximum loan under this program shall be the lesser of 3% of the purchase price or $5,000.
The terms of the City’s second trust deed loan were designed to encourage long
term residency in the program-assisted home. Interest on the City’s loan will
descend and may ultimately be forgiven based on the number of years the
assisted household resides in the home. If the property is sold, transferred,
refinanced or the assisted borrower no longer occupies the property within years
1-5 from the date the Deed of Trust is executed, the simple interest rate at
payback will be 6%. During years 6-10 the simple interest rate will be 3%. After
10 years of owner-occupancy, all interest will be forgiven.
(C) The loan shall become due and payable at the time of the property’s transfer or sale, or when the acceleration clause noted below is triggered.
(D) The acceleration clause will be in effect when the property is no longer the assisted borrower’s principal place of residency, or upon discovery of willful misrepresentation or fraud in connection with the program. Rental of the property
is prohibited and will cause the loan to be accelerated.
1 Figures based on HUD & HCD published 1999 Median Income Limits for San Diego County.
2
(E) The loan is not assumable.
(F) The loan will be secured by a promissory note and deed of trust.
(G) Refinancing of the property Streamline Refinance. accelerate the loan except in the case of an FHA
6. Eliaible Borrowers/Borrower Priority
The program is for first-time homebuyers.
(A) Priority will be given to residents of Carlsbad and/or households who are employed in businesses located within the City of Carlsbad and have been employed for 90
days.
(B) City of Carlsbad employees are eligible to participate.
(C) Applications will be accepted only from households who have not owned a home for at least three years.
7. Aqencv Loan Procedures
(A) All buyers receiving loans through the City’s program are required to participate in a Homebuyer Training Program. The training can be accomplished in one-on-one meetings, group meetings periodically provided by participating program lenders or
by completing a home-study course completion of the homebuyer training.
(B) Homebuyers will apply for M.I.L.P. through an approved program lender. Lender
will determine applicant’s eligibility for funding based on City guidelines. A list of approved lenders is available from the City’s Housing & Redevelopment Program.
8. Additional Procedures and Reauirements
The First-Time Homebuyer Commission will serve as an appeal board for rejected loans if review is requested.
3
Exhibit 3
MODERATE INCOME LOAN PROGRAM
NOTICE TO BORROWER:
THIS NOTE IS NOT ASSUMABLE
PROMISSORY NOTE
Secured by Deed of Trust
Carlsbad, California
, 199-
FOR VALUE RECEIVED, the undersigned
(the "Borrower") promises to pay to the City of Carlsbad, a
municipal corporation (the "City"), or order, at the Housing and Redevelopment Department,
2965 Roosevelt Street, Suite B, Carlsbad, California 92008, or such other place as the City may
designate in writing, the principal sum of $ , plus Interest calculated pursuant to
Section 4 below.
1. Purpose of Loan. Borrower is purchasing the Residence located
at in the City of Carlsbad. This Note evidences a loan made by
the City to the Borrower (the "City Loan") pursuant to the Carlsbad Moderate Income Loan
Program ("MILP"). The City Loan is in the amount determined by the City to be necessary for
the Borrower to afford to purchase the Residence making a reasonable downpayment and using
conventional first mortgage financing for the balance of the purchase price not financed by the
City Loan, as amended.
2.
following meanings in this Note.
Definitions. The terms set forth in this Section shall have the
a. reserved.
b. Interest" shall mean the amount set out in Section 4.
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C. "Fair Market Value" shall be determined by a real estate appraisal
made by an independent residential appraiser designated by the City. If possible, the appraisal
shall be based upon the sales prices of comparable properties sold in the market area during the
preceding three-month period. The cost of the appraisal shall be paid by the Borrower. Nothing
in this subparagraph shall preclude the Borrower and the City from establishing the Fair Market
Value of the Residence by mutual agreement in lieu of an appraisal.
d. "First Mortgage" shall mean the promissory note and deed of trust
evidencing and securing the first mortgage loan for the Residence.
e. "Residence" shall mean the housing unit and land encumbered by
the deed of trust executed in connection with this Note.
f. "Transfer" shall mean any sale, assignment or transfer, voluntary
or involuntary, of any interest in the Residence, including, but not limited to, a fee simple
interest, a joint tenancy interest, tenancy in common interest, a life estate, a leasehold interest, or
an interest evidenced by a land contract by which possession of the Residence is transferred and
the Borrower retains title. Any Transfer without satisfaction of the provisions of this Note is
prohibited. A transfer: (i) to an existing spouse who is also an obligor under the Note; (ii) by a
Borrower to a spouse where the spouse becomes the co-owner of the Residence; (iii) between
spouses as part of a marriage dissolution proceeding; (iv) to an existing spouse or child of the
Borrower by device or inheritance following the death of the Borrower; (v) by the Borrower into
an inter vivos trust in which the Borrower is the beneficiary; or (vi) by deed of trust or
imposition of a lien subordinate to the Deed of Trust, shall not be considered a Transfer for the
purposes of this Note; provided, however, that the Borrower shall continue to occupy the
Residence as his or her principal place of residence and the Borrower shall provide written notice
of such transfer to the City pursuant to Section 14 below.
3. Securitv. This Note is secured by a second deed of trust dated the
same date as this Note (the "Deed of Trust").
4. Interest. If the subject property is sold, transferred, or refinanced,
or is no longer the primary residence of the assisted buyer, within five years of the initial
purchase of said property, the Borrower shall pay interest equal to six percent (6%) simple
interest of the loan amount. If the subject property is sold, transferred, or refinanced, or is no
longer the primary residence of the assisted buyer, within years six through ten of the initial
purchase of said property, the Borrower shall pay interest equal to three percent (3%) simple
interest of the loan amount. If the subject property is sold, transferred, or refinanced in year
eleven or later, all interest shall be foregiven and only the principal amount of the laon shall be
due. The Interest shall be paid to the City at the time set forth in Section 7(b) below, unless
forgiven by the City pursuant to Section 7(c) below.
5. Term. The Term of this Note shall mean the period commencing
on the date of this Note and expiring on the date in which the subject property is sold,
transferred, or refinanced, or is no longer the primary residence of the assisted buyer.
101 0\02\111700.3 2
6. Residency. First Time Homebuver. and Owner-
OccupancvRequirements: Representations Regarding Reauirements.
a. The Borrower shall either have lived in the City for a minimum of
sixty (60) days or work in the City, and also be a first time homebuyer. Failure of the Borrower
to comply with these requirements shall be a default under this Note. The Borrower shall
provide written certification to the City that he or she meets these requirements.
b. The Borrower is required to occupy the Residence as his or her
principal place of residence, and failure by the Borrower to comply with this requirement shall be
a default under this Note. The Borrower shall be considered as occupying the Residence if the
Borrower is living in the Residence for at least ten (10) months out of each calendar year. The
Borrower shall provide an annual written certification to the City that the Borrower is occupying
the Residence as his or her principal place of residence. The Borrower shall not lease the Home
to another party. Any lease of the Residence shall be a default under this Note.
c. Borrower hereby certifies that all income, residency or
employment, and first time homebuyer status information previously submitted to the City is true
and correct. Misrepresentation by Borrower of this information provided to the City shall be a
default under this Note.
7. Repavment.
a. Repayment of the principal amount of this Note shall be deferred
until such time as the Term of the loan expires as defined in Section 5. At such time as the Term
of the Note expires, the borrower shall repay the amount of Dollars
($2-
b. The total amount of the principal and any Interest owed under this
Note shall immediately become due and payable (i) in the event of a default by the Borrower
under this Note, the Deed of Trust, or the First Mortgage, (ii) on the date Transfer is made
whether voluntarily, involuntarily, or by operation of law and whether by deed, contract of sale,
gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to occupy the Residence as
his or her principal place of residence; or (iv) at the end of the Term of this Note as described
above in Section 5. Failure to declare such amounts due shall not constitute a waiver on the part
of the City to declare them due in the event of a subsequent Transfer.
c. In the event, upon expiration of the Term, (i) no Transfer has
occurred, (ii) Borrower has repaid all principal pursuant to subsection (a) above, (iii) Borrower
continues to owner-occupy the Residence, and (iv) Borrower is not in default hereunder or under
the Deed of Trust, the City shall forgive repayment of all Interest due hereunder.
8. Prepayments. The Borrower may prepay all or part of the balance
due under this Note including principal and Interest. In the event the entire amount of principal
due under this Note is prepaid, all Interest, calculated as of the date of prepayment, shall also be
due at the time of prepayment.
1010\02\111700.3 3
9. No Assumption of Note.The Borrower acknowledges that this Note
is given in connection with the purchase of property (the ''Residence") as part of a program of the
Agency to assist in the purchase of homes by lower income persons. Consequently, this Note is
not assumable by transferees of the Residence, but is due in full upon Transfer.
10. Maintenance: Taxes: Insurance. Borrower shall maintain the
Residence in good repair and in a neat, clean and orderly condition. Borrower shall promptly
pay all property taxes due on the Residence prior to any delinquency and shall comply with the
insurance requirements set forth in the Deed of Trust.
11. Refinance of First Mortgage Loan. The outstanding principal and
interest on this Note shall not be due upon prepayment and refinance of the First Mortgage, and
the Deed of Trust shall be subordinated to the refinanced loan, provided that (i) such refinancing
is approved by the City, (ii) the amount refinanced does not exceed the outstanding principal
balance of the First Mortgage at the time of refinance plus reasonable costs of refinance, and (iii)
the refinance does not result in higher monthly payments on the First Mortgage Loan than were
due prior to the refinance.
12. Certification of Purchase Price on Transfer. Upon any sale of the
Residence, the Borrower shall submit to the City at least fifteen (15) days prior to the close of
escrow, a copy of the sales contract and a written declaration, under penalty of perjury, from the
Borrower and the proposed purchaser in a form acceptable to the City stating the gross sales
price of the Residence. The certification shall also provide that the proposed purchaser or any
other party has not paid and will not pay to the Borrower, and the Borrower has not received and
will not receive from the proposed purchaser or any other party, money or other consideration,
including personal property, in addition to what is set forth in the sales contract.
13. Notice to City of Transfers. Borrower shall provide the City with
written notice of any sale, assignment or transfer, voluntary or involuntary, of any interest in the
Residence, including, but not limited to, encumbrance of the Residence with a junior deed of
trust or transfer of the Residence to a spouse or trust. Borrower shall provide this notice to the
City no later than fifteen (1 5) days before the sale, assignment, or transfer occurs, except where
the transfer is by devise or inheritance after death of the Borrower in which event notice shall be
provided within thirty (30) days of the date of the transfer.
14. Default.
a. The Borrower shall be in default under this Note if he or she is in
default under the First Mortgage following the expiration of First Mortgage cure periods, or if,
after the notice and cure period provided by the City to the Borrower pursuant to the notice and
cure provisions of the Deed of Trust, the Borrower (i) fails to pay any money when due under
this Note; (ii) breaches any representation or covenant made in this Note in any material respect;
or (iii) breaches any provision of the Deed of Trust.
101 0\02\111700.3 4
b. Upon the Borrower's breach of any covenant or agreement of the
Borrower in this Note or the Deed of Trust, including, but not limited to, the covenants to pay,
when due, any sums secured by the Deed of Trust, the City, prior to acceleration, will send, in
the manner set forth in Section 20, notice to the Borrower specifying: (1) the breach; (2) if the
breach is curable, the action required to cure such breach; (3) a date, not less than thirty (30) days
from the date the notice is effective, by which such breach, if curable, is to be cured and (4) if the
breach is curable, that failure to cure such breach on or before the date specified in the notice
may result in acceleration of the sums secured by the Deed of Trust and foreclosure by the City.
The notice will also inform the Borrower of the Borrower's right to reinstate after acceleration
and the right to bring a court action to assert the nonexistence of default or any other defense of
the Borrower to acceleration and sale.
15. Acceleration. Upon the occurrence of a default under this Note,
the Deed of Trust, or the First Mortgage, the City shall have the right to declare the full amount
of the principal along with any Contingent Interest under this Note immediately due and payable.
Any failure by the City to pursue its legal and equitable remedies upon default shall not
constitute a waiver of the City's right to declare a default and exercise all of its rights under this
Note and the Deed of Trust. Nor shall acceptance by the City of any payment provided for
herein constitute a waiver of the City's right to require prompt payment of any remaining
principal and interest owed.
16. No Offset. The Borrower hereby waives any rights of offset it now
has or may later have against the City, its successors and assigns, and agrees to make the
payments called for in this Note in accordance with the terms of this Note.
17 Waiver: Attornev Fees and Costs. The Borrower and any
endorsers or guarantors of this 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 Note, and expressly waive any rights to be
released by reason of any extension of time or change in terrns 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 Note or agreement to pay
the same, and jointly and severally agree to pay all costs of collection when incurred, including
reasonable attorney fees. If an action is instituted on this Note, the Borrower 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.
18 No Waiver bv the Citv. No waiver of any breach, default or failure
of condition under the terms of this Note shall be implied from any failure of the City to take
action with respect to such breach, default or failure or from any previous waiver of any similar
or unrelated breach, default or failure.
19. Notices. All notices required in this Note shall be sent by certified
mail, return receipt requested, or express delivery service with a delivery receipt, or personally
delivered with a delivery receipt obtained and shall be deemed to be effective as of the date
1010\02\111700.3 5
shown on the delivery receipt as the date of delivery, the date delivery was refused, or the date
the notice was returned as undeliverable as follows:
To the Borrower:
At the address of the Residence.
To the City:
City of Carlsbad
Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389
Attention: Housing and Redevelopment Director
The parties may subsequently change addresses by providing written notice of the change
in address to the other parties in accordance with this Section 20.
20. Joint and Several Obliaations. This Note is the joint and several
obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and
their successors and assigns.
21. Controlling Law. This Note shall be construed in accordance with
and be governed by the laws of the State of California.
22. Assignment by City. The City may assign its right to receive the
proceeds under this Note to any person and upon notice to the Borrower by the City all payments
shall be made to the assignee. The City may not transfer or assign the Note to a profit-making
entity without first obtaining approval of the First Mortgage lender. The City may transfer or
assign this Note to a government agency or non-profit entity without obtaining approval of the
First Mortgage lender.
23. Invalid Provisions. If any one or more of the provisions contained
in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect,
then such provision or provisions shall be deemed severable f?om the remaining provisions
contained in this Note, and this Note shall be construed as if such invalid, illegal or
unenforceable provision had never been contained in this Note.
24. Entire Am-eement. This Note (along with the Deed of Trust) sets
forth the entire understanding and agreement of the City and the Borrower and any amendment,
alteration or interpretation of this Note must be in writing signed by both the City and the
Borrower.
BORROWER
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1010\02\111700.3
(Print Name)
(Print Name)
7
PROMISSORY NOTE
CITY OF CARLSBAD
ADMINISTRATIVE COVER SHEET
(Remove Upon Completion)
BLANK LINES: CHECKLIST
Amount of City Loan, p. 1, upper left
Date of Document, p. 1, upper right
Borrower's Name, p. 1, first paragraph
Amount of City Loan, p. 1, first paragraph
Street Address of Residence, p. 1, Section 1
Original Purchase Price of Residence, p. 1,
Section 2(a)
Contingent Interest Percent, p. 2, Section 4
Monthly Repayment Amount, p. 3, Section 7(a)
Date Monthly Repayment Commences, p. 3, Section 7(a)
Signatures, p. 8
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- Exhibit 4
Recording Requested and When Recorded Mail To:
City of Carlsbad City Clerk's Office Attn: City Clerk 1200 Carlsbad Village Drive Carlsbad. CA 92008
(Space above for Recorder's Use)
NOTE TO BORROWER:
THIS DEED OF TRUST CONTAINS PROVISIONS PROHIBITING ASSUMPTIONS
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") made as of
this day of 9 19-3 among ("Borrower") as trustor, and ("Trusteel'), and the City of Carlsbad, a municipal corporation (the Tity"), as beneficiary.
The Borrower, in consideration of the promises herein recited and the trust herein created,
irrevocably grants, transfers, conveys and assigns to the Trustee, in trust, with power of sale, the property located in the City of Carlsbad, State of California, described in the attached Exhibit - "A" (the "Property").
TOGETHER with all the improvements now or hereafter erected on the property, and all easements, rights, appurtenances, and all fixtures now or hereafter attached to the property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of
the property covered by this Deed of Trust; and
TOGETHER with 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, including all
other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefore, whether or not the
same are, or shall be attached to said building or buildings in any manner; and 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;
TO SECURE to the City the repayment of the sums evidenced by a promissory note executed by the Borrower to the City dated , 19-, in the amount of
Dollars ($ ) (the "Note");
1010\02\104149.01 1
TO SECURE to the City the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and the performance of the covenants and agreements of the Borrower contained in the Note and this Deed of Trust; and
TO SECURE the performance of any obligations of Borrower in any other agreements
with respect to the financing of the Property or the Security the failure of which would adversely
affect Beneficiary, whether or not Beneficiary is a party to such agreements.
BORROWER AND CITY COVENANT AND AGREE AS FOLLOWS:
1. Borrower's Estate. That the Borrower is lawfully seized of the estate hereby
conveyed and has the right to grant and convey the Security, that other than this Deed of Trust,
the Security is encumbered onlv bv that deed of trust executed bv the Borrower in connection _I with a loan made to the BorroGer by
(the "First Lender"), dated
Lender, and recorded in the County of San Diego on Recorder's Serial No.
executed by the Borrower in favor of the First Lender ("First Lender Note"), to assist in the
or its successors and assigns , 19-, executed by the Borrower in favor of First , 19-, and assigned (the "First Lender Deed of Trust"), securing a promissory note
purchase of the Property. The Borrower agrees to war& and defend generally the title to the Security against all claims and demands, subject to any declarations, easements or restrictions listed in a schedule of exceptions to coverage in any title insurance policy insuring the City's interest in the Security. (As used in this Deed of Trust, the term "First Lender'' shall include all successors and assigns of the First Lender.)
2. Repavment of Loan. The Borrower will promptly repay, when due, the principal and interest required by the Note. The Note contains the following provisions concerning repayment of the loan under certain conditions:
No Assumption of Note. The Borrower acknowledges that this Note is given in connection with the purchase of property (the "Residence") as part of a program of the Agency to assist in the purchase of homes by lower income persons. Consequently, this Note is not assumable by transferees of the Residence, but is due in full upon Transfer.
3.
and agreements of the First Lender Note, First Lender Deed of Trust, and related First Lender loan documents.
First Lender Loan. The Borrower will observe and perform all of the covenants
4. Owner-Occupancv Reauired; No Leasing Permitted. The Borrower shall occupy
the Property as his or her principal place of residence. The Borrower shall be considered as occupying the Property if the Borrower is living in the unit for at least ten (10) months out of each calendar year. The Borrower shall provide an annual written certification to the City that the Borrower is occupying the Property as his or her principal place of residence. The Borrower
shall not lease the Property to another party. Any lease of the Property shall be a default
hereunder.
5. Char3es; Liens. The Borrower will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority over this Deed of Trust, by the Borrower making any payment, when due, directly to the payee thereof. The
Borrower will promptly furnish to the City all notices of amounts due under this paragraph, and
in the event the Borrower makes payment directly, the Borrower will promptly discharge any
lien which has priority over this Deed of Trust; provided, that the Borrower will not be required to discharge the lien of the First Lender Deed of Trust or any other lien described in this
paragraph so long as the Borrower will agree in writing to the payment of the obligation secured
2 1010\02\104149.01
.-
by such lien in a manner acceptable to the City, or will, in good faith, contest such lien by, or
defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement
of the lien or forfeiture of the Security or any part thereof.
6. Hazard Insurance. The Borrower will keep the Security insured by a standard fire and extended coverage insurance policy in at least an amount equal to the replacement cost of the Security, but in no event less than the amount necessary to prevent the Borrower from becoming a co-insurer under the terms of the policy.
The insurance carrier providing this insurance shall be licensed to do business in the State
of California and be chosen by the Borrower subject to approval by the City; provided, that such
approval will not be withheld if the insurer is also approved by the First Lender, the Federal Home Loan Mortgage Corporation, Fannie Mae, Freddie Mac, the United States Department of Housing and Urban Development, the United States Department of Veterans Affairs, or successors thereto.
All insurance policies and renewals thereof will be in a form acceptable to the City and will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of the First Lender Note and the City as their interests may appear and in a form acceptable to the City. The City shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and the Borrower shall promptly furnish to the City, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, the Borrower will give prompt notice to the insurance carrier and the City or its designated agent. The City, or its designated
agent, may make proof of loss if not made promptly by the Borrower. The City shall receive thirty days advance notice of cancellation of any insurance policies required under this section.
Unless the City and the Borrower otherwise agree in writing, insurance proceeds, subject
to the rights of the First Lender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically feasible and the Security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, the insurance proceeds will be used, subject to the rights of the First Lender, to repay the Note and all sums secured by this Deed of Trust, with
the excess, if any, paid to the Borrower. If the Security is abandoned by the Borrower, or if the
Borrower fails to respond to the City, or its designated agent, within thirty (30) days from the date notice is mailed by either of them to the Borrower that the insurance carrier offers to settle a claim for insurance benefits, the City, or its designated agent, is authorized, subject to the rights
of the First Lender, to collect and apply the insurance proceeds at the City's option either to restoration or repair of the Security or to repay the Note and all sums secured by this Deed of Trust.
If the Security is acquired by the City, all right, title and interest of the Borrower in and to
any insurance policy and in and to the proceeds thereof resulting from damage to the Security
prior to the sale or acquisition will pass to the City to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of the First Lender.
7. Preservation and Maintenance of Security. The Borrower will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security.
8. Protection of the City's Securitv. If the Borrower fails to perform the covenants and agreements contained in this Deed of Trust, the First Lender Note, the First Lender Deed of Trust, or if any action or proceeding is commenced which materially affects the City's interest in the Security, including, but not limited to, default under the First Lender Deed of Trust, the First Lender Note or any other deed of trust encumbering the Property, eminent domain, insolvency,
3 1010\02\104149.01
code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the City, at the City's option, upon notice to the Borrower, may make such appearances, disburse such sums and take such action as it determines necessary to protect the City's interest, including but not limited to, disbursement of reasonable attorney's fees and entry upon the Security to make repairs.
Any amounts disbursed by the City pursuant to this paragraph, with interest thereon, will
become an indebtedness of the Borrower secured by this Deed of Trust. Unless the Borrower
and City agree in writing to other terms of payment, such amount will be payable upon notice from the City to the Borrower requesting payment thereof, and will bear interest from the date of disbursement at the lesser of ten percent (1 0%) or the highest rate permissible under applicable law. Nothing contained in this paragraph will require the City to incur any expense or take any action hereunder.
9. Inspection. The City may make or cause to be made reasonable entries upon and
inspections of the Security; provided that the City will give the Borrower reasonable notice of inspection.
10. Forbearance bv the Citv Not a Waiver. Any forbearance by the City in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy. The
procurement of insurance or the payment of taxes or other liens or charges by the City will not be a waiver of the City's right to accelerate the maturity of the indebtedness secured by this Deed of Trust.
1 1. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct
and cumulative to any other right or remedy under this Deed of Trust or any other document, or
afforded by law or equity, and may be exercised concurrently, independently or successively.
12. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the
City and the Borrower subject to the provisions of this Deed of Trust.
13. be joint and several.
14.
another manner, all notices required in this Deed of Trust shall be sent by certified mail, return receipt requested or express delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained, and shall be deemed to be effective as of the date shown on the
delivery receipt as the date of delivery, the date delivery was refbed, or the date the notice was
returned as undeliverable as follows:
Joint and Several Liabilitv. All covenants and agreements of the Borrower shall
Notice. Except for any notice required under applicable law to be given in
To the Owner:
At the address of the Residence.
To the City:
City of Carlsbad Housing and Redevelopment Department 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 Attn: Housing and Redevelopment Director
4 1010\02\104149.01
The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this section.
15. Controlling Law. This Deed of Trust shall be construed in accordance with and be governed by the laws of the State of California.
16. Invalid Provisions. If any one or more of the provisions contained in this Deed of Trust or the Note shall for any reason be held to be invalid, illegal or unenforceable in any
respect, then such provision or provisions shall be deemed severable from the remaining
provisions, and this Deed of Trust and the Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Deed of Trust or the Note.
17. Captions. The captions and headings in this Deed of Trust are for convenience
Default; Remedies. Upon the Borrower's breach of any covenant or agreement of the Borrower in this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, the City, prior to acceleration, will send, in the manner set forth in Section 14 of this Deed of Trust, notice to the Borrower specifying: (1) the breach; (2) if the breach is curable, the action required to cure such breach; (3) a date, not less than thirty
(30) days from the date the notice is effective as set forth in Section 14 of this Deed of Trust, by which such breach, if curable, is to be cured; and (4) if the breach is curable, that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums
secured by this Deed of Trust and sale of the Security. Notice shall be effective as of 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. The notice will also inform the Borrower of the Borrower's right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of default or any other defense of the Borrower to acceleration and sale. If the breach is not curable or is not cured on or before the date specified in the notice, the City, at the City's option, may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and
payable without further demand and may invoke the power of sale and any other remedies
permitted by California law; (b) 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) and of any of
the Security, in its own name or in the name of the Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Security, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and talung possession of the Security shall not cure or waive any breach hereunder or invalidate
any act done in response to such breach and, notwithstanding the continuance in possession of
the Security, the City shall be entitled to exercise every right provided for in this Deed of Trust,
or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration
of default and demand for sale, pursuant to the provisions for notice of sale found at California
Civil Code Sections 2924, et seq., as amended fiom time to time; or (e) exercise all other rights and remedies provided herein, in the instruments by which the Borrower acquires title to any Security, 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.
only and are not to be used to interpret or define the provisions hereof.
18.
The City shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorney's fees.
1010\02\104149.01 5
19. Acceleration. Upon the occurrence of a default under the Note, this Deed of Trust, the First Lender Note, or the First Lender Deed of Trust, the City shall have the right to declare the full amount of the principal along with any interest under the Note immediately due and payable. Any failure by the City to pursue its legal and equitable remedies upon default shall not constitute a waiver of the City’s right to declare a default and exercise all of its rights under the Note and this Deed of Trust. Nor shall acceptance by the City of any payment provided for in the Note constitute a waiver of the City’s right to require prompt payment of any remaining principal and interest owed.
sums secured by this Deed of Trust, the Borrower will have the right to have any proceedings begun by the City to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) the Borrower pays City all sums, if any, which would be then due under this Deed of Trust and no acceleration under the Note has occurred; (b) the Borrower cures all breaches of any other covenants or agreements of
the Borrower contained in this Deed of Trust; (c) the Borrower pays all reasonable expenses
incurred by City and the Trustee in enforcing the covenants and agreements of the Borrower
contained in this Deed of Trust, and in enforcing the City’s and the Trustee’s remedies, including, but not limited to, reasonable attorney’s fees; and (d) the Borrower takes such action as City may reasonably require to assure that the lien of this Deed of Trust, City’s interest in the Security and the Borrower’s obligation to pay the sums secured by this Deed of Trust shall continue
unimpaired. Upon such payment and cure by the Borrower, this Deed of Trust and the
obligations secured hereby will remain in full force and effect as if no acceleration had occurred.
20. Borrower’s Right to Reinstate. Notwithstanding the City’s acceleration of the
2 1. Reconvevance. Upon payment or forgiveness of all sums secured by this Deed of Trust, the City will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the Note to the Trustee. The Trustee will reconvey the Security without warranty and
without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any.
22. Substitute Trustee. The City, at the City’s option, may from time to time remove
the Trustee and appoint a successor trustee to any trustee appointed hereunder. The successor
trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by
applicable law.
23. Subordination to First Mortgage. Notwithstanding any other provision hereof,
the provisions of this Deed of Trust shall be subordinate to the lien of the First Lender Deed of
Trust and shall not impair the rights of the First Lender, or the First Lender’s successor or assign, to exercise its remedies under the First Lender Deed of Trust in the event of default under the First Lender Deed of Trust by the Borrower. Such remedies under the First Lender Deed of
Trust include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure.
After such foreclosure or acceptance of a deed or assignment in lieu of foreclosure, or upon assignment of the First Lender Deed of Trust to the Secretary of the United States Department of Housing and urban Development (the “Secretary”), this Deed of Trust shall be forever terminated and shall have no fbrther effect as to the Property or any transferee thereafter; provided, however, if the holder of such First Lender Deed of Trust acquired title to the Property pursuant to a deed or assignment in lieu of foreclosure, or if the First Lender’s Deed of Trust is assigned to the Secretary, this Deed of Trust shall automatically terminate upon such acquisition of title, or
assignment to the Secretary provided that (i) the City has been given written notice of default
under such First Lender Deed of Trust and (ii) the City shall not have cured or commenced to
cure the default within such 30-day period and given its firm commitment to complete the cure in
the form and substance acceptable to the First Lender. Borrower agrees to record any necessary documents to effect such termination, if applicable.
6 1010\02\104149.01
24. Attornev's Fees. If any action or proceeding is brought to enforce this Deed of Trust or any provision of this Deed of Trust or the Note, the prevailing party shall be entitled to its attorney's fees and the cost of such action or proceeding.
IN WITNESS WHEREOF, the Borrower has executed this Deed of Trust as of the date first written above.
Borrower
(Print Name)
Borrower
(Print Name)
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EXHIBIT A
Property Description
1010\02\104149.01
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO ) )ss
On , 199-, before me, , personally appeared
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in 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.
, personally known to me (or proved to me on the basis of
WITNESS my hand and official seal.
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO ) )ss
On , 199-, before me, , personally appeared
satisfactory evidence) to be the person(s) whose name(s) idare subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or
the entity upon behalf of which the person(s) acted, executed the instrument.
, personally known to me (or proved to me on the basis of
WITNESS my hand and official seal.
1010\02\104149.01
DEED OF TRUST AND SECURITY AGREEMENT
CITY OF CARLSBAD
ADMINISTRATIVE CHECKLIST
(Remove Upon Completion)
BLANK LINES: CHECKLIST
Date of Document, p. 1, first paragraph
Borrower's Name, p. 1, first paragraph
Trustee's Name, p. 1, first paragraph
Date and Amount of Promissory Note, p. 2, second full paragraph
First Lender's Name, p. 2, Section 1
Date of First Lender's Deed of Trust, p. 2, Section 1
Recording Information for First Lender's Deed of Trust, p. 2, Section 1
Signatures, p. 9
Include Exhibit A, Property Description
Notary
Exhibit 5 -
BORROWER DISCLOSURE STATEMENT
FIRST-TIME HOMEBUYER
CARLSBAD MODERATE INCOME LOAN PROGRAM
The City of Carlsbad (the "City") is loaning you money through its Moderate Income
Loan Program (the "Program") so that you will be able to buy your home. The City offers the
Program in order to enable low income households to own their own homes in Carlsbad.
As a condition of the financing, the City will require you to sign a Promissory Note and a
Deed of Trust. The Deed of Trust will be recorded apainst your DroDertv.
This Disclosure Statement explains the major provisions of the Promissory Note and the
Deed of Trust to help you understand their requirements. You should, of course, read all of the
City loan documents yourself and become completely familiar with them.'
A. PRIMARY RESIDENCE AND LEASING YOUR HOME
Under the terms of the Promissory Note and Deed of Trust, the house you buy with the
assistance of the City loan must be your main place of residence. This means you must live in
the house no less than 10 months out of each calendar year. Each year, you must certify in
writing to the City that you are living in your home as your main place of residence. In addition,
you cannot lease your home. If you fail to follow these provisions, you are considered to be in
default, and the City may declare its loan immediately due and payable.
B. NOTICES TO CITY
1. Notice of Intent to Sell, Assim or Transfer. If you decide to sell, assign or transfer
your home or any partial interest in your home, or if you record a mortgage or deed of trust
against your home, you must let the City know in writing at least fifteen (1 5) days prior to the
sale, assignment, transfer, or the recording of a mortgage.
2. Notice and Certification of Purchase Price. If you go to sell your home, at least
fifteen (15) days before the sale closes (close of escrow), you must give the City a copy of the
sales contract and a written statement that declares, under penalty of perjury, the gross sales price
of the home. The written statement must be signed by both you (as seller) and the proposed
buyer. The written statement must also certify that the proposed buyer, or any other party, has
not paid and will not pay to you money or any other consideration that is not set out in the sales
' Numerical examples are included in this Disclosure Statement to help you better understand the concepts, terms,
and provisions of your City loan. Please be aware that these are simply to show how things work and that they are - not intended to represent your specific situation. If you follow along with a calculator, you may not get exactly the same answers. Any differences are probably due to how your calculator "rounds-off' numbers.
1010\02\112580.2 1
contract for the home. The statement must also certify that you (as the seller) have not received
and will not receive from the proposed buyer, or anybody else, money or other consideration that
is not included in the sales contract,
3. Deliverv of Reauired Notices. Any notice you must provide to the City under the
terms of the City loan documents must be sent by certified mail, return receipt requested, or
express delivery service with a delivery receipt, or personally delivered with a delivery receipt
obtained.
C. INTEREST ON THE CITY LOAN
The City loan charges interest". The interest represents the benefit you received from the
City loan, and may generally be described as the percentage of the sales price that the City
loaned to you, with an adjustment or discount applied. The interest on your loan is due
immediately if:
0 You default under the City loan or the First Mortgage, or
You sell or transfer title to your home, or
The home is no longer your primary residence; or
The end of the term of your loan is reached, with exceptions (see section
0
e
e
E. below)
The interest on your City loan is based upon the length of time your occupy the subject
residence as follows:
(1) The interest rate is equal to six percent (6%) in years one (1) through year
five (5);
(2) year ten (10); and
The interest rate is equal to three percent (3%) in years six (6) through
(3) The interest is forgiven if the property is occupied more than ten (10)
years;
An example is used to show each of the three (3) sales scenarios and how each would be
calculated.
(a) Interest Amount Due - years 1-5. The interest due on a property sold in years one
through five calculated as follows:
Example 1 Your loan from the City is $5,000. The original sales price you paid for your home was
$120,000. You sell the property three years from the date of purchase.
Loan Amount from City: - $5,000
multiplied by 6% interest rate x 6%
equals: = $300
multiplied by number of years in the property x 3vrs
101 0\02\112580.2 2
equals interest amount due to the City = $900
plus original loan amount
total amount due the City
+ $5.000
= $5,900
(b) Interest Amount Due - years 6-10. The interest due on a property sold in years six
through ten is calculated as follows:
Example 2 Your loan from the City is $5,000. The original sales price you paid for your home was $120,000. You sell the property years from the date of purchase.
Loan Amount from City: - $5,000
equals: = $150
multiplied by number of years in the property x 8vrs
plus original loan amount
total amount due the City
multiplied by 6% interest rate x 3%
equals interest amount due to the City = $1.200 + $5.000
= $6.200
(c) Interest Amount Due - years 11 and later. The interest due on a property sold in
years eleven or later is calculated as follows:
Example 2 Your loan from the City is $5,000. The original sales price you paid for your home was $120,000. You sell the property eleven years from the date of purchase.
Loan Amount from City: - $5,000
multiplied by 6% interest rate x 0%
equals: =$ 0
equals interest amount due to the City =$ 0
multiplied by number of years in the property
plus original loan amount
total amount due the City
x 11 vrs
+ $5.000
= $5,000
D. DEFAULT PROVISIONS
When you accept City loan assistance, you agree to meet all of the conditions of all of the
City loan documents. If you violate any provisions of the documents, you are considered to be in
default under your City loan. Also, if you default under the first mortgage loan, you would also
be considered to be in default under the City loan. If you do not correct the violation, the City
could require you to immediately repay the principal and contingent interest owing on the City
loan. The City could also go to court and get a court order to enforce the provisions of the City
loan documents, which may result in a foreclosure on your home.
**************
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Please sign the enclosed copy of this Borrower Disclosure Statement in the space
provided below and return it to the City at , Carlsbad, California.
I have read and understand the above Borrower Disclosure Statement.
By: Dated:
Signature of Borrower
Print Name of Borrower
By: Dated:
Signature of Borrower
Print Name of Borrower
101 0\02\112580.2 4