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HomeMy WebLinkAboutPromissory Note PROMISSORY NOTE February 23 , 2009 ("Note Date") FOR VALUE RECEIVED, the undersigned, HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO, a public body, corporate and politic, hereinafter referred to as "Borrower," promises to pay to the ARROYO GRANDE REDEVELOPMENT AGENCY, a public body, corporate and politic, hereinafter referred to as "Agency," so much principal as may be outstanding in accordance with the terms of this Note, not exceeding FIFTY-FIVE THOUSAND FIVE HUNDRED DOLLARS ($55,500.00), plus such other costs, charges, and fees which may be owing from time to time, all subject to the terms, conditions, and provisions hereinafter set forth. Reference is made to (i) The Agreement for Purchase and Sale and Escrow Instructions entered into by and between the Borrower and Agency on or about JANUARY y2, Zoog (the "Agreement"), pursuant to which the Agency sold to 13orrower that certain real property located at 252 South Court land Street, in the City of Arroyo Grande, County of San Luis Obispo, State of California (the "Property"). The Agreement is incorporated herein by this reference as though fully set forth herein. (ii) The Affordable Housing Regulatory Agreement and Declaration of Covenants and Restrictions entered into by and between Borrower and Agency, entered into and recorded in the Official Records of the County of San Luis Obispo on or about the same date hereof, which requires, for a term of fifty-five (55) years, that the Property be restricted for rental to a moderate-income household at a rental rate affordable to such household (the "Regulatory Agreement"). The Regulatory Agreement is incorporated herein by reference as though fully set forth herein. I. Principal Amount. The principal amount of the Agency's loan to Borrower is FIFTY-FIVE THOUSAND FIVE HUNDRED DOLLARS ($55,500.00) (the "Loan Amount"), which has been disbursed to Borrower in accordance with the terms of the Agreement. Interest shall accrue only as set forth in Paragraph 4, in the event of a Borrower default. 2. Repayment of Note. Subject to the provisions of Paragraph 4 below which provide for acceleration of the then outstanding principal and accrued interest and immediate payment thereof in the event of a default by Borrower, Borrower shall not be obligated to make any payments on this Note unless and until Borrower sells the Property to a person or family of moderate income (as defined in Health and Safety Code Section 50093) (an "Eligible Household") at a purchase price which results in the Eligible Household paying no more than an affordable housing cost (as defined in Health and Safety Code Section 50052.5) (an "Affordable Sales Price"). Upon any such sale, and out of the sales proceeds thereof, Borrower shall promptly pay to Agency the Loan Amount; provided, however, that if the Borrower's sales price is less than Three Hundred Forty Thousand Five Hundred Dollars ($340,500), then the Loan Amount shall be reduced, on a dollar-for-dollar basis, by the amount of any such difference. 882/023600-0003 969863,03 001/15/09 3. Borrower's Obligation to Rent/Sell the Property. Borrower acknowledges and agrees to all of the following: • a. . In accordance with that certain Buyer's Occupancy and Resale Agreement with Option to Purchase entered into by and between the City of Arroyo Grande and the initial owner of the Property on February 17, 2005, which was recorded on-February 25, 2005, as Instrument No. 2005014633, and which imposed certain occupancy and resale restrictions on the Property, the Property is required to be owned and occupied by an Eligible Household for the term thereof. b. Agency's primary purpose in selling the Property to Borrower was to further Agency's goal of preserving, improving and increasing the supply of affordable housing in the City of Arroyo Grande. c. Borrower represents to Agency that Borrower has located an Eligible Household, and that Borrower intends to enter into an agreement with the Eligible Household pursuant to which the Eligible Household will rent the Property from Borrower until such time as (i) the home mortgage market improves, (ii) conventional home mortgages are available on reasonable terms, and (iii) the Eligible Household is financially able to obtain a conventional loan in an amount necessary to purchase the Property at an Affordable Sales Price, at which time the Eligible Household will purchase the Property. d. Borrower shall diligently pursue selling the Property to said Eligible Household within five (5) years from the Note Date, and shall make diligent efforts to cause the sales price to be at least Three Hundred Forty Thousand Five Hundred Dollars ($340,500). e. In connection with Borrower's sale of the Property to said Eligible Household or a different household determined by Borrower to qualify as an Eligible Household, Borrower shall record an affordable housing regulatory agreement against the Property requiring that the Property be owned and occupied by an Eligible Household for a term of forty-five (45) years, and restricting any resale to Eligible Households at an Affordable Sales Price (an "Owner Regulatory Agreement"). The form of Owner Regulatory Agreement shall be approved by Agency's legal counsel, and upon recordation of the Owner Regulatory Agreement, the Regulatory Agreement would be terminated. Notwithstanding any of the foregoing, prior to Borrower entering into any rental and/or sales agreement (as applicable) with the Eligible Household that has been located by Borrower as of the Note Date, Borrower shall provide Agency with a copy of the proposed rental and/or sales agreement (as applicable) for approval by Agency's legal counsel. 4. Default; Acceleration; Cross-Default. In the event Borrower is in material default of any of the covenants, terms, or provisions of this Note, the Agreement, or the Regulatory Agreement, and Borrower fails to timely cure such default under the terms of the applicable agreement, it being understood and agreed by Borrower that a default of this Note, or of the Agreement, or of the Regulatory Agreement, shall be a default of all of the foregoing listed documents; then Borrower shall be in default of this Note, and the Loan Amount shall become immediately due and payable. The rate of interest applicable to periods of default for the 882/024600-0003 969863.03 a01/15109 -2- defaults set forth in this Paragraph 4 shall be calculated at the lesser of five percent (5%) per annum or the maximum legal rate, and shall accrue as of the date such payment was originally due. 5. Additional Terms. a. All payments shall be first credited to accrued interest, next to costs, charges, and fees which may be owing from time to time, and then to principal. All payment shall be made in lawful money of the United States. Payments shall be made to Agency at the address set forth in Paragraph 8 herein or at such other address as Agency or the holder of this Note may direct pursuant to notice delivered to Borrower in accordance with Paragraph 8. b. Borrower agrees to pay the following costs, expenses, and reasonable . attorney's fees paid or incurred by Agency, or adjudged by the court, in the collection of amounts in default or other costs incurred as a result of a default by Borrower: (i) reasonable costs of collections, costs and expenses and attorney's fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed, and (ii) costs of suit and • such sums as the court may adjudge as attorney's fees in any action to enforce payment of this Note or any part of it if Agency prevails in such suit. 6. Nonassumability. This Note shall not be assumable without the prior, express, . written consent of Agency's Executive Director. 7. Presentment, Etc'. Notwithstanding any other provision herein to the contrary, to the extent permitted by law Borrower hereby waives the following: (a) notice of default or delinquency, (b) notice of acceleration, (c) notice of nonpayment, (d) notice of costs, expenses and losses and interest thereon, (e) notice of interest on interest and late charges, (f) diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the . rights and presentment for payment, demand, protest, and notices of dishonor and/or protest; (g) the benefits of all waivable exemptions; and (h) all defenses and pleas on the grounds of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice. 8. Notices. Any notices required by law or this Note shall be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail, certified mail, postage prepaid, return receipt requested. Notices shall be addressed as follows: • To Agency: Arroyo Grande Redevelopment Agency 214 East Branch Street Arroyo Grande, CA 93420 Attn: Executive Director To Buyer: Housing Authority of the City of San Luis Obispo 487 Leff Street San Luis Obispo, CA 93401 Attn: Executive Director 882/024600-0003 969863.03 301/13/09 -3- Notices personally delivered or delivered by reputable document delivery service such as Federal Express that provides a receipt with the time and date of delivery shall be deemed effective upon receipt. Notices mailed shall be deemed effective on the second business day following deposit in the United States mail. Either party may designate that notices be sent to other or additional addresses by complying with the requirements of this section. 9. Litigation. This Note shall be governed by and construed under the internal laws of the State of California without regard to conflicts of law. The parties agree that in any litigation between the parties arising out of this Note, the Superior Court of the State of California in and for the County of San Luis Obispo shall have exclusive jurisdiction. The prevailing party in any litigation between the parties arising out of or connected to this Note, in addition to whatever other relief to which the prevailing party is entitled, shall also be entitled to reasonable attorney's fees, including fees and costs for discovery, and any fees and costs for appeal. In the event of such legal action, service of process on Agency shall be made in such manner as provided by law for service on a California public entity; service of process on Borrower shall be made in such manner as may be provided for by law, and shall be valid whether made within or without the State of California. 10. Waiver. No waiver of any breach, default, or failure of condition under the terms of this Note, or the obligations secured hereby, shall be implied from any failure of Agency to take, or any delay by the Agency in taking, action with respect to such breach, default, or failure from any previous waiver or any similar or unrelated breach, default, or failure; arid a waiver of any term of this Note must be made in writing and shall be limited to the express written terms of such waiver. 11 • . Time of Essence. Time is of the essence in this Note. • 12. Severability. In the event that any term or provision of this Note• is held to be • unenforceable, the remainder of this Note shall remain in full force and effect to the fullest extent without inclusion of the unenforceable terns or provision. 13. Interpretation. In the event of ally conflict between this Note and the Agreement, this Note shall apply. The terms of this Note shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Note or any other rule of construction which might otherwise apply. The paragraph headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this Note. 14. Assignment. Agency, at its option, may assign its right to receive payment under this Note without obtaining the consent of the Borrower or the holder or beneficiary of the lien of any deed of tnist or other security instrument, whether recorded or unrecorded. Borrower shall not be permitted to assign or transfer this Note or any portion thereof without the prior express written consent of the Agency Executive Director, which consent may be given or withheld in the Executive Director's sole discretion. 882/024600-0003 969863.03 601/15/09 -4- IN WITNESS WHEREOF, Borrower has executed this Note as of the Note Date. "Borrower" HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO, a public body, corporate and politic Date: 2—l'� 2009 `� Its: C-kkitin-ck ATTEST: • `goyN qD Sa4,Bt4 Housing Authority Secretary r}�1'ROVED STO FORM: � y:'�`i By: g,bberf- 4 /elf— Housing Authority Counsel • • 882/024600-0003 969863.03 a0I/13!09 -5-