Agenda Packet 2002-03-20 SP
CITY COUNCIL City of
AGENDA JIrroyo (}ranae
Michael A. Lady Mayor
Thomas A. Runels Mayor Pro Tem Steven Adams City Manager
Jim Dickens Council Member
Tony Ferrara Council Member Timothy J. Carmel City Attorney
Sandy Lubin Council Member Kelly Wetmore Director, Administrative Services
NOTICE OF SPECIAL MEETING
CITY COUNCIUREDEVELOPMENT AGENCY
AGENDA SUMMARY
WEDNESDAY, MARCH 20, 2002
7:00 P.M.
Arroyo Grande City Council Chambers
215 East Branch Street, Arroyo Grande
1. CALL TO ORDER
2. ROLL CALL: COUNCIURDA
3. PUBLIC COMMENT on Special Meeting Agenda Items. Members of the public wishing to
address the Council on any item described in this Notice may do so when recognized by the
Presiding Officer.
4. PUBLIC HEARING:
a. CONSIDERATION OF APPROVAL OF DISPOSITION AND DEVELOPMENT AGREEMENT
(ADAMS)
Recommended Action: At the close of the Public Hearing, approve Disposition and
Development/Affordable Housing Agreement by and between the Arroyo Grande
Redevelopment Agency and Courtland -Arroyo Grande, L.P., for a 108-unit senior affordable
housing project located at the northwest corner of Courtland Street and E. Grand Avenue, and
appropriate $10,000 from the Affordable Housing "In Lieu" Fee for professional services directly
related to the proposed project.
5. CITY COUNCIL CLOSED SESSION
The City Council shall convene in Closed Session to consider the following matter:
CONFERENCE WITH LEGAL COUNSEL . EXISTING LITIGATION pursuant to
Government Code Section 54956.9 (a):
Name of Case: Citizen's Committee for the Conservation of Local Aariculture v. City of
Arrovo Grande. et al. San Luis Obispo County Superior Court Case No. CV 020085.
6. RECONVENE TO OPEN SESSION
Announcement of reportable action from closed session, if any.
7. ADJOURNMENT to the Regular City Council Meeting of Tuesday, March 26, 2002 at 7:00 p.m.
in the Council Chambers, 215 East Branch Street.
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4.8.
CITY OF ARROYO GRANDE
SPECIAL CITY COUNCIUREDEVELOPMENT AGENCY MEETING
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that the City Council of the City of Arroyo Grande ("City") and the Arroyo
Grande Redevelopment Agency ("Agency") will hold a Joint Public Hearing at a Special Meeting to
consider the following:
A proposed Disposition and Development Agreement between the Agency and Arroyo
Grande Senior Partners, LP, a Califomia limited partnership. The purpose of the hearing
is to receive public testimony on the proposed Disposition and Development Agreement
with Arroyo Grande Senior Partners LP. Specifically, the Agreement would facilitate
Arroyo Grande Senior Partners LP to construct up to 108 senior apartments at the
northwest comer of Courtland Street and E. Grand Avenue. Arroyo Grande Senior
Partners LP will make the senior apartments available at affordable rental rates. In
connection with the proposed project, AITOYo Grande Senior Partners, L.P. intends to seek
assistance from the State of Califomia in the form of tax credits for the project based upon
units to be rented to seniors at low rents.
All interested persons are invited an encouraged to contact Agency staff conceming the proposed project
and funding application and to appear and testify at the Joint Public Hearing.. Any person may submit
written comments on this matter to the Community Development Department prior to the hearing and/or
may appear and be heard in support of or opposition to the Agreement at the time of the hearing.
If you challenge the decision of this case in court, you may be limited to raising only those issues that you
or someone else raised either at the Public Hearing, or in written correspondence delivered to the
Community Development Department at, or prior to, the Public Hearing. Furthermore, you must exhaust
any administrative remedies prior to commencing a court challenge to CitylAgency action.
A copy of the draft Agreement and a Summary Report on the proposed transaction are available at the
Community Development Department located at Arroyo Grande City Hall, 214 East Branch Street, Arroyo I
Grande. Questions may be directed to Rob Strong, Community Development Director, at 805-473-5420.
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Time, Date and Place of Hearing: Wednesday, March 20, 2002, at 7:00 P.M.
Arroyo Grande City Council Chambers
215 E. Branch Street
Arroyo Grande, California 93420
s/Kelly Wetmore, Director of Administrative Services! Deputy City Clerk
Publish 2T, Wednesday, March 6, 2002 and Wednesday, March 13, 2002
1/8 page display ad
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I MEMORANDUM
TO: CITY COUNCIL
FROM: STEVEN ADAMS, CITY MANAGER~~
SUBJECT: PROPOSED DISPOSITION AND DEVELOPMENT WITH
COURTLAND-ARROYO GRANDE, L.P.
DATE: MARCH 20, 2002
RECOMMENDATION:
It is recommended the City Council and Redevelopment Agency adopt the
attached resolutions approving the proposed Disposition and Development
Agreement (DDA) with Courtland-Arroyo Grande, L.P. and appropriate $10,000
from the Affordable Housing "In Lieu" Fee Fund for professional services directly
related to the proposed affordable senior housing project.
FUNDING:
The Agreement sets forth financial assistance in the form of a loan in the amount
of $800,000. This amount is proposed to be funded approximately $360,000
from the Affordable Housing "In Lieu" Fee Fund, $40,000 from the
Redevelopment Affordable Housing "Set Aside" Fund, and deferred payment in
the amount of $400,000 from development impact fees. In addition, it is
recommended the City appropriate $10,000 from the Housing "In Lieu. Fund for
Redevelopment Agency professional services associated with preparation of the
Disposition and Development Agreement. The current available balance in the
Housing "In Lieu" Fund is approximately $400,000. The Redevelopment Agency
Affordable Housing Set-aside account balance is about $46,000. The revenue
from the Agreement in interest payments over the life of the project is estimated
to be over $900,000.
DISCUSSION:
On February 19, 2002, the Planning Commission recommended approval of a
Development Code Amendment and approved the Conditional Use Permit and
Vesting Tentative Parcel Map for a proposed mixed-use project at 1524 and
1542 East Grand Avenue. The project includes a proposed 108-unit affordable
senior housing component, to be constructed in two phases. The first phase is
proposed to be 81 units. At the March 12, 2002 meeting, the City Council
introduced the Development Code Amendment amending zoning and density
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CITY COUNCIL
DISPOSITION AND DEVELOPMENT AGREEMENT
MARCH 20, 2002
PAGE 2
requirements for the project. Adoption of the ordinance is scheduled for
consideration at the regular meeting as adjourned to March 20, 2002 to the
subject meeting.
Given the financial challenges of providing affordable housing, it is typical for
jurisdictions to provide financial assistance necessary to make projects
economically feasible. The City has established a fund for such assistance,
which consists of revenue from fees that developers elect to pay in lieu of
providing affordable housing units for residential developments. In addition,
State law requires 20% of Redevelopment Agency tax increment revenue to be
set aside for affordable housing projects.
The primary source of financial assistance being sought by the applicant is a
Federal tax credit program. However, additional assistance is necessary and the
City received a request from the applicant for over $1,000,000. Rosenow
Spevacek Group, Inc. (RSG), the Agency's redevelopment consultant, assessed
the applicant's proposed financing and assisted with negotiations. Staff also
consulted with representatives of the Housing Authority of the City of San Luis
Obispo.
Two primary issues face the City in terms of proposing financial assistance for
this project. First of all, the City's balance in the two affordable housing funds is
currently about $446,000. Of this, $40,700 has been committed for the Camino
Mercado Senior Housing Project, leaving approximately $405,300. Secondly, the
proposed project has the capability, and the applicant has expressed the intent,
to apply and receive a property tax exemption. This will limit the tax increment
revenue to the Redevelopment Agency that will be generated by the project,
which is a problem given the current financial condition of the Agency.
Therefore, the goals of negotiating a recommended agreement with the applicant
were: 1) to propose a level of financial assistance that will make the project
feasible given the City's limited available funding; and 2) to structure the
assistance so that some level of ongoing revenue would be generated for the
Agency and/or City.
The key terms of the proposed agreement include the following general points:
. The 108-unit project is proposed to be constructed in two phases. The
first phase is proposed to be 81 units. All units except one manager's unit
will be affordable, targeted to households with incomes at 40%, 45%,
50%, 55% and 60% of the median.
. Total project assistance from the Redevelopment Agency will be
$7,476.64 per affordable unit for a total of $800,000. Assistance shall be
CITY COUNCIL
DISPOSITION AND DEVELOPMENT AGREEMENT
MARCH 20, 2002
PAGE 3
prorated per phase in accordance with the number of affordable units
produced.
. The sources of assistance proposed are approximately $400,000 as a
cred it against the development improvement fees, approximately
$360,000 from the affordable housing "in lieu" fund and approximately
$40,000 from the RDA affordable housing set-aside funds. Of the
$400,000 in development impact fees, approximately $360,000 will be
attributed to park improvement related fees. All assistance will be in the
form of a loan.
. The applicant will provide a Note secured by a Trust Deed and Covenants,
Conditions and Restrictions and Regulatory Agreement to be recorded
against the property assuring affordable covenants and providing for the
repayment of the RDA assistance. Assistance will accrue interest of 10%
per year, payable annually, payments to be made from residual receipts.
The balance of the loan shall be due and payable 18 years from the
commencement of the permanent loan, but in no event more than 20
years from the commencement of construction.
. The priority of payment from project income shall be in the following order:
operating expenses, including a property management fee of up to 5% of
gross effective income collected, debt service on senior mortgage
financing, asset management fee as approved by the RDA, costs of
providing additional services to the project residents beyond property
operations provided these additional service fees do no exceed 1.6% of
gross effective income collected, capitalized operating reserves required
to maintain a balance of $75,000, capitalized replacement reserves of
$200 per unit per year or other rate in accordance with TCAC Program
Regulations, and deferred developer fees. The balance after these costs
are deducted from the cash flow are the "Residual Receipts," and shall be
divided 75% to the RDA to pay down its assistance and 25% to the
developer. In the initial years, while the Developer's loan to the project is
outstanding, the Agency will receive 25% from the Residual Receipts and
the Developer 75% until the Developer is paid off.
. The current owner may sell the property to the RDA or direct deed to the
applicant at a price of between $1.5 million and $3 million, subject to an
appraisal supporting this value. The seller shall contribute the difference
between the price and $834,363 as financial assistance to the project.
The RDA shall not be required to take title unless and until the project
receives an allocation of tax credits, RDA due diligence indicates minimal
risk to the RDA, the property owner indemnifies the RDA, and funds are
available from sources other than the RDA to close the transaction.
CITY COUNCIL
DISPOSITION AND DEVELOPMENT AGREEMENT
MARCH 20, 2002
PAGE 4
. In response to City Council input, the Agreement now specifies that
preference will be given for residency in the project to Arroyo Grande
residents and their relatives.
A formal summary of the Agreement is found in Attachment 2. The abbreviated
description of the Agreement provisions as set forth above in summary form is for
convenience and does not fully set forth the terms of the Agreement. The full
text of the Agreement (Attachment 1) should be consulted as to the terms of the
Agreement.
A cash flow analysis on the project prepared by RSG is found in Attachment 3.
As shown in the attachment, projected income to the City is projected to range
from $22,631 in the first year to $143,553 in year 17. This amount does not
include tax increment that will be generated from the commercial portion of the
property. Please note that the annual breakdown of payments are projections.
Actual amounts will depend on the residual receipts as described above. Except
for the principal amount of $400,000 for the development impact fees and the
$40,000 principal and interest from the RDA Housing set-aside fund, this funding
is non-restricted. Therefore, it could be used in either the General Fund or
Redevelopment Agency.
The City and Agency has incurred a number of expenses for consultant and legal
services in order to negotiate and draft the proposed agreement. As a result, the
Agency budget for professional services has been overexpended. Therefore, it is
recommended that an additional $10,000 be appropriated, which can be financed
from the Housing In Lieu Fee Fund since it is directly related to the project.
Expenditures above this amount up to $10,000 ($20,000 if the RDA takes title to
the land) will be paid for by the applicant per the agreement.
AL TERNA TlVES:
The following alternatives are provided for the Council's consideration:
- Adopt resolutions approving the Disposition and Development
Agreement;
- Amend and approve Agreement;
- Do not approve Agreement;
- Provide staff direction.
Attachments:
1. Agreement
2. Summary Report for the DDA
3. Cash flow analysis
RESOLUTION NO. -
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF ARROYO GRANDE CONSENTING TO THE
APPROVAL BY THE ARROYO GRANDE
REDEVELOPMENT AGENCY APPROVING OF A
DISPOSITION AND DEVELOPMENTIAFFORDABLE
HOUSING AGREEMENT BETWEEN THE ARROYO
GRANDE REDEVELOPMENT AGENCY AND
COURTLAND - ARROYO GRANDE, L.P.
WHEREAS, the Arroyo Grande Redevelopment Agency ("Agency") and Courtland-
Arroyo Grande, L.P., a California limited partnership ("Developer") propose to enter into
the Disposition and Development/Affordable Housing Agreement ("Agreement") which
provides for the disposition and development as affordable senior housing of certain
real property ("Site") designated in the Agreement; and
WHEREAS, the Site is located in the project area ("Project Area") of the Arroyo Grande
Redevelopment Project ("Project"), and the provision of affordable housing under the
Agreement will promote the implementation of the Redevelopment Plan for the Project
("Redevelopment Plan") and the implementation plan promulgated pursuant thereto
("Implementation Plan"); and
WHEREAS, pursuant to Health and Safety Code Section 33433, the Agency prepared a
Summary Report concerning the Agreement; and
WHEREAS, a joint public hearing of the Agency and the City Council of the City of
Arroyo Grande ("City Council" or "City" as appropriate) concerning the Agreement was
duly noticed in accordance with Health and Safety Code Section 33433; and
WHEREAS, on March 20, 2002, the Agency and City Council held a joint public hearing
on the proposed Disposition and Development/Affordable Housing Agreement; and
WHEREAS, at the March 20, 2002, joint public hearing the Agency and City Council
considered the staff report and all other information, testimony, and evidence presented
with respect to the proposed Agreement; and
WHEREAS, all actions required of the Agency and City Council to be taken precedent
to review and consideration of the Agreement by the Agency and City Council have
been taken in accordance with applicable law;
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Arroyo
Grande as follows:
1. The City Council finds and determines that:
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a. The Agreement will effectu ate the purposes of the Community
Redevelopment Law (Health & Safety Code 933000 et seq.) and the
Redevelopment Plan for the Project Area, as well as the Implementation
Plan, by facilitating the development of affordable housing for senior
citizens in the City of Arroyo Grande, in that the Agreement provides
additional funding from the Agency's Low and Moderate Income Housing
Fund for project costs that are necessary to assure a high quality
development and provision of adequate housing amenities in the project.
b. The Agreement is consistent with the Agency's adopted Implementation
Plan adopted by the Agency in accordance with Health and Safety Code
Section 33490, in that (i) the goals and objectives set forth in the
Implementation Plan include increasing and improving the community's
supply of affordable housing, and (ii) the project on the Site is specifically
identified as one of the Agency's housing programs to be undertaken in
the time period covered by the Implementation Plan.
c. The highest and best use of the Site in accordance with the
Redevelopment Plan is the development of the Site for affordable housing.
To the extent the Agency financial assistance to the project set forth in the
Agreement constitutes an additional amount of land write-down that
affects the Agency's sale of the project site to the Developer as set forth in
the Agreement, any additional land write-down that could be construed as
resulting from the increased financial assistance provided by the Agency
in the Agreement does not affect the finding that the consideration paid by
the Developer for the Site is not less than the fair reuse value at its highest
and best use in accordance with the Redevelopment Plan, for the reasons
set forth in the Agency's Summary Report for Disposition and
Development/Affordable Housing Agreement prepared in accordance with
Health and Safety Code Section 33433, which Summary Report, a copy of
which is on file with the Agency Secretary/Director of Administrative
Services, is incorporated herein by reference as though fully set forth.
2. The City Council consents that the Agency may approve and execute the
Agreement, a copy of which is on file with the Agency Secretary/Director
of Administrative Services.
On motion by Council Member , seconded by Council Member , and on
the following roll-call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted on this _ day of March, 2002.
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MICHAEL A. LADY, MAYOR
ATTEST:
KELLY WETMORE, DIRECTOR OF ADMINISTRATIVE SERVICESI
DEPUTY CITY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, CITY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, CITY ATTORNEY
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RESOLUTION NO. RDA 02.1
A RESOLUTION OF THE ARROYO GRANDE
REDEVELOPMENT AGENCY APPROVING A
DISPOSITION AND DEVELOPMENTIAFFORDABLE
HOUSING AGREEMENT BETWEEN THE AGENCY AND
COURTLAND - ARROYO GRANDE, L.P.
WHEREAS, the Arroyo Grande Redevelopment Agency ("Agency") and Courtland-
Arroyo Grande, L.P., a California limited partnership, ("Developer") propose to enter into
a Disposition and Development/Affordable Housing Agreement ("Agreement") which
provides for the disposition and development as affordable senior housing of certain
real property ("Site") designated in the Agreement; and
WHEREAS, the Site is located in the project area ("Project Area") of the Arroyo Grande
Redevelopment Project ("Project"), and the provision of affordable housing under the
Agreement will promote the implementation of the Redevelopment Plan for the Project
("Redevelopment Plan") and the implementation plan promulgated pursuant thereto
("Implementation Plan"); and
WHEREAS, pursuant to Health and Safety Code Section 33433, the Agency prepared a
Summary Report concerning the Agreement; and
WHEREAS, a joint public hearing of the Agency and the City Council of the City of
Arroyo Grande ("City Council" or "City" as appropriate) concerning the Agreement was
duly noticed in accordance with Health and Safety Code Section 33433; and
WHEREAS, on March 20, 2002, the Agency and City Council held a joint public hearing
on the proposed Disposition and Development/Affordable Housing Agreement; and
WHEREAS, at the March 20, 2002, joint public hearing the Agency and City Council
considered the staff report and all other information, testimony, and evidence presented
with respect to the proposed Agreement; and
WHEREAS, all actions required of the Agency and City Council to be taken precedent
to review and consideration of the Agreement by the Agency and City Council have
been taken in accordance with applicable law;
NOW, THEREFORE, BE IT RESOLVED, by the Arroyo Grande Redevelopment
Agency as follows:
1. The Agency finds and determines that:
a. The Agreement will effectuate the purposes of the Community
Redevelopment Law (Health & Safety Code ~ 33000 et seq.) and the
Redevelopment Plan for the Project Area, as well as the Implementation
Plan, by facilitating the development of affordable
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housing for senior citizens in the City of Arroyo Grande, in that the
Agreement provides additional funding from the Agency's Low and
Moderate Income Housing Fund for project costs that are necessary to
assure a high quality development and provision of adequate housing
amenities in the project.
b. The Agreement is consistent with the Implementation Plan adopted by the
Agency in accordance with Health and Safety Code Section 33490, in that
(i) the goals and objectives set forth in the Implementation Plan include
increasing and improving the community's supply of affordable housing,
and (ii) the project on the Site is specifically identified as one of the
Agency's housing programs to be undertaken in the time period covered
by the Implementation Plan.
c. The highest and best use of the Site in accordance with the
Redevelopment Plan is the development of the Site for affordable housing.
To the extent the Agency financial assistance to the project set forth in the
Agreement constitutes an additional amount of land write-down that
affects the Agency's sale of the project site to the Developer as set forth in
the Agreement, any additional land write-down that could be construed as
resulting from the increased financial assistance provided by the Agency
in the Agreement does not affect the finding that the consideration paid by
the Developer for the Site is not less than the fair reuse value at its highest
and best use in accordance with the Redevelopment Plan, for the reasons
set forth in the Agency's Summary Report for Disposition and
Development/Affordable Housing Agreement prepared in accordance with
Health and Safety Code Section 33433, which Summary Report, a copy of
which is on file with the Agency Secretary/Director of Administrative
Services, is incorporated herein by reference as though fully set forth.
2. The Agreement, a copy of which is on file with the Agency SecretarylDirector of
Administrative Services, is hereby approved.
3. The Executive Director of the Agency is authorized and directed to make final,
technical modifications to the Agreement consistent with the material provisions
of the Agreement approved hereby, and to finalize the document for signature by
the Agency Chairman, and the Chairman is thereafter authorized and directed to
sign the Agreement on behalf of the Agency.
4. The Executive Director of the Agency is authorized and directed to take such
other and further actions and execute such other and further documents as may
be necessary to implement and effect the Agreement and this Resolution on
behalf of the Agency.
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On motion by Board Member , seconded by Board Member , and on the
following roll-call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted on this _ day of March, 2002.
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MICHAEL A. LADY, CHAIR
ARROYO GRANDE REDEVELOPMENT AGENCY
ATTEST:
KELLY WETMORE, SECRETARY
ARROYO GRANDE REDEVELOPMENT AGENCY
APPROVED AS TO CONTENT: I
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STEVEN ADAMS, EXECUTIVE DIRECTOR I
ARROYO GRANDE REDEVELOPMENT AGENCY
APPROVED AS TO FORM:
MARK HUEBSCH, SPECIAL COUNSEL
ARROYO GRANDE REDEVELOPMENT AGENCY I
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ATTACHMENT 1
DISPOSITION AND DEVELOPMENT/AFFORDABLE
HOUSING AGREEMENT
by and between
ARROYO GRANDE REDEVELOPMENT AGENCY
and
COURTLAND-ARROYO GRANDE, L.P., a California limited
partnership
DOCS0C\881805v7\22707.0000
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DISPOSITION AND DEVELOPMENT/AFFORDABLE HOUSING AGREEMENT
THIS DISPOSITION AND DEVELOPMENT/ AFFORDABLE HOUSING
AGREEMENT (the "Agreement"), dated, for identification purposes only, as of March 20, 2002, is
entered into by and between the ARROYO GRANDE REDEVELOPMENT AGENCY, a public
body, corporate and politic ("Agency"), and COURTLAND-ARROYO GRANDE, L.P., a
California limited partnership (the "Developer").
R!H;:IIA.L~
A. Agency is a California redevelopment agency acting under the California Community
Redevelopment Law, Part I of Division 24 of the Health and Safety Code (the "Redevelopment
Law").
B. The Redevelopment Plan for the Arroyo Grande Redevelopment Project, sometimes
referred to as the Project (herein, the "Project") was adopted by Ordinance No. 479CS by the City
Council of the City of Arroyo Grande (the "Redevelopment Plan"). The redevelopment project area
for the Redevelopment Plan as so amended constitutes the "Project Area."
C. The Agency is authorized and empowered under the Community Redevelopment
Law, California Health and Safety Code Sections 33000, et seq. (the "Community Redevelopment
Law"), to enter into agreements for the production, improvement, or preservation of affordable
housing to households oflimited income, with such housing to be available at Affordable Rent.
D. The Developer is experienced in the development and operation of affordable multi-
family housing, particularly in San Luis Obispo County.
E. Developer will accept the transfer of certain real property (the "Site") located in the
City of Arroyo Grande and within the Project Area of the Agency's Arroyo Grande Redevelopment
Project to the Developer, whereupon the Developer shall develop not fewer than eighty-one (81) and
up to one hundred eight (108) dwelling units and related improvements for occupancy by "Seniors"
(as defined below) on the Site and shall thereupon rent a specified number of dwelling units to "Very
Low Income Households," all at "Affordable Rent" and at the "Prescribed Rent Levels," as those
tenns are defined below. Such development is intended to implement the Agency's goals and
objectives under the Redevelopment Law to provide decent, safe and sanitary housing for persons of
very low income, and to increase, improve and preserve housing available at affordable housing cost
to persons of very low income, pursuant to the Redevelopment Plan and Health and Safety Code
Sections 33334.2, et seq., and 33413.
F. It is contemplated that Developer shall apply for and obtain an allocation for 9% Low
Income Tax Credits as generally provided for under Section 42 of the Internal Revenue Code and/or
California Revenue and Taxation Code Sections 17057.5, 17058,23610.4 and 23610.5 and
California Health and Safety Code Section 50199, et seq. ("9% Tax Credits").
G. The Developer has proposed to enter into this Agreement with the Agency under
which the Developer shall develop not fewer than eighty-one (81) and up to one hundred eight
(108) dwelling units and a designated number of those dwelling units to be rented at "Affordable
Rent" and at the "Prescribed Rent Levels" throughout the "Required Covenant Period" (as defined
OOCSOC\881805v7l22707.oooo
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below). Those undertakings of the Developer are material to this Agreement and but for those
undertakings by the Developer, the Agency would not have entered into this Agreement.
H. Under this Agreement, the Agency will loan certain funds to assist in the
development of the Site to be repaid from "Residual Receipts" under the "Agency Note" as defined
hereunder. Payment is further evidenced as the obligation to pay "Residual Receipts Note Payments"
under the "Agency Deed." The Developer will further provide to the Agency the "Agency Deed of
Trust," to be recorded against Developer's leasehold interest under the Agency Deed in connection
with the Agency Note.
I. This Agreement is in the vital and best interest of the City of Arroyo Grande,
California, and the health, safety and welfare of its residents.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and
conditions herein contained, the parties hereto agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. As used in this Agreement (and in all other Project Documents,
unless otherwise defined), the following capitalized terms shall have the following meanings:
"Acquisition Closing" means the recordation of the deed for the Site by Owner to the
Agency (or the Developer) consistent with and subject to recordation of the Agency CC&Rs as a first
and senior lien or encumbrance or title.
"Acquisition Assistance" means the difference between the Site Value and Eight Hundred
Thirty-Four Thousand Three Hundred Sixty-Three Dollars ($834,363.00).
"Affiliated Person" means an entity formed for the pwpose of constructing, owning, and
operating the Development, which includes Courtland-Arroyo Grande, L.P., a California limited
partnership, as a general partner and which may include tax credit investors as limited partners.
"Affordability Period" means a period equal to the greater of: (i) fifty-five (55) years
commencing with the recordation of the Agency Deed or (ii) coterminous with the term of the Tax
Credit Regulatory Agreement.
"Affordable Rent" means a cost not in excess of that which may be charged the applicable
Eligible Person or Family pursuant to (i) Section 50053 of the California Health and Safety Code or
(ii) those limitations established by TCAC, whichever is more restrictive in each case.
"Agency" means the Arroyo Grande Redevelopment Agency, a public body, corporate and
politic, exercising governmental functions and powers and organized under the Redevelopment law,
and any assignee of or successor to its rights, powers and responsibilities.
"Agency Deed" means a deed in the form of Attachment No.6 to this Agreement.
"Agency Deed of Trust" means Attachment No. 14 to this Agreement.
"Agency Developer CC&Rs" or "Regulatory Agreement" means the following: (i) in the
event the Site is conveyed by the Owner directly to the Developer, then Attachment No. II to this
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DOCSOC\881805v7\22707.0000
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Agreement; and (ii) in the event the Site is conveyed by the Owner to the Agency and then by the
Agency to the Developer, then Exhibit B to the Agency Deed.
"Agency Disbursement Amount" means an amount equal to the lesser of (i) those Agency
funds disbursed in conformity with Section 4.16.1 of this Agreement, or (ii) the lesser of (a) Fifteen
Thousand Three Hundred Eighty-Four Dollars and Sixty-Two Cents ($15,384.62) for each of the
Required Affordable Units, or (b) Eight Hundred Thousand Dollars ($800,000).
"Agency Escrow" is described in Section 2.2.
"Agency Note" means Attachment No. 13 to this Agreement.
"Agreement" is defined in the first paragraph hereof.
"Applicable Interest Rate" means the rate often percent (10%) simple per annum.
"Application Deadline" means March 26, 2002.
"Application for Disbursement" is defined in Section 4.16 hereof.
"Approved Construction and/or Permanent Lender" means one or more of Bank of
America, California Community Reinvestment Corporation ("CCRC") or Wells Fargo Bank ("Wells
Fargo") or another mutually acceptable institutional lender.
"Approved Tenant and Affordability Mix" means the following: a) for the First Phase: (i)
sixty four (64) one-bedroom Units, of which (A) six (6) shall be available to households earning not
greater than forty five percent (45%) of Median Income, (B) twenty six (26) shall be available to
households earning not greater than fifty percent (50%) of Median Income, and (C) thirty two (32)
shall be available to households earning not greater than fifty five percent (55%) of Median Income
and (ii) sixteen (16) two-bedroom Units, of which (A) two (2) shall be available to households
earning not greater than forty five percent (45%) of Median Income, (B) six (6) shall be available to
households earning not greater than fifty percent (50%) of Median Income, and (C) eight (8) shall be
available to households earning not greater than fifty five percent (55%) of Median Income; and b)
for the Second Phase: (i) twenty seven (27) one-bedroom Units, of which (A) two (2) shall be
available to households earning not greater than forty five percent (45%) of Median Income, (B)
eleven (11) shall be available to households earning not greater than fifty percent (50%) of Median
Income, and (C) fourteen (14) shall be available to households earning not greater than fifty five
percent (55%) of Median Income. Each of the foregoing components is subject to adjustment by up
to twenty percent (20%) by the Executive Director. In addition, the Approved Tenant and
Affordability Mix may be adjusted (in the event a reservation of tax credits is allocated to the
Development) in writing by the Executive Director to conform to such tenant mix and affordability
levels as may hereafter be established by TCAC for the Development.
Wherever reference is made in this Agreement (including without limitation the Attachments
hereto) to numbers of Units and affordability levels, the corresponding provisions shall be deemed
subject to and shall be adjusted to reflect such modifications to tenant and affordability mix as are set
forth in the preceding portion of this definition.
"Area" means the San Luis Obispo County Statistical Area, as periodically defined by HUD.
3
DOCSOC\88180Sv1l22707.oooo
"Audited Financial Statement" means an audited financial statement addressed to Agency,
including without limitation a profit and loss statement, generated by the certified public accounting
finn ofNovogradoc & Company or a third party certified public accountant acceptable to the Agency
in its reasonable discretion, showing, for the previous Operating Year, on a monthly basis and in an
easily readable fonnat, Gross Revenues, Operating Expenses, Debt Service, Operating Reserve,
Capital Replacement Reserve and Residual Receipts.
"Basic Concept Drawings" is defined in Section 4.2.1 hereof.
"Building Permit" means the building pennit(s) issued by the City and required for the
Improvements.
"Calculation of Affordable Rents" means Attachment No. 7 to this Agreement.
"Capital Replacement Reserve" means a reserve fund to be established by the Developer in
the amount of Two Hundred Dollars ($200) per Unit per Year or such greater amount as may be
required under the Tax Credit Rules.
"Certificate of Completion" means Attachment No. 10 to this Agreement.
"Certificate of Continuing Program Compliance" means the Certificate to be filed by the
Developer or its property manager on behalf of the Developer with the Agency, which Certificate
shall be substantially in the fonn attached hereto as Attachment No.4.
"Chargeable Fees and Reserves" means each of the following, within the respective
parameters therefor set forth in the Agency Deed: (i) Capital Replacement Reserve; and
(ii) Operating Reserve.
"City" means the City of Arroyo Grande, California, a municipal corporation.
"Condition of Title" is defined in Section 2.3 hereof.
"Condition Precedent to Conveyance" is set forth in Section 3.1.
"Conditions Precedent to Disbursement of Agency Disbursement Amount" are set forth
in Section 3.2.
"Conveyance" means the conveyance of the Site by Agency to Developer by means of the
Agency Deed (and, for the purposes of this Agreement, in the event the Site is conveyed by the
Owner directly to the Developer, then the recordation of the Agency CC&Rs).
"County" means the County of San Luis Obispo, California.
"Date of Agreement" means March 20, 2002.
"Debt Service" means required Debt Service payments for the Primary Construction Loan
and/or the Primary Pennanent Loan.
"Default" is defined in Section 7.1 hereof.
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DOCSOC\881805v7\22707.0000
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"Deferred Developer Fee Portion" means that portion of the developer's fee approved by
TCAC which the Developer is to collect from Residual Receipts and which, for the purposes of this
Agreement, shall be deemed to be not less than Three Hundred Thousand Dollars ($300,000) nor
more than Four Hundred Fifty Thousand Dollars ($450,000).
"Developer" means Courtland-Arroyo Grande, L.P., a California limited partnership.
"Developer's Title Policy" is defined in Section 2.4.
"Development" means the new apartment complex for Seniors and associated improvements
as required by this Agreement to be: (i) constructed by the Developer upon the Site, with related
off site improvements, as more particularly described in the Scope of Development, and (ii) operated
in confonnity with the Agency Deed, the Agency Developer CC&Rs and the Tax Credit Regulatory
Agreement.
"Due Diligence for the Site" means soils and related testing of the Site as deemed necessary
by the Agency, involving without limitation a Phase I and Phase 2 site investigation.
"Escrow Holder" means the holder of the Escrow for the Conveyance by the Agency to the
Developer and the recordation of the Agency Developer CC&Rs, which shall be Chicago Title
Insurance Company or another escrow holder mutually acceptable to the Agency and the Developer.
"Event of Default" has the meaning set forth in Section 7.1.
"Executive Director" means the Executive Director of the Agency or his designee or
delegate.
"First Phase Units" means eighty-one (81) Units.
"Gross Revenues" means the total rental income and all other revenues or income received
by the Developer or its successors or assigns in connection with the Project, including without
limitation Housing Rent, laundry charges, payments in connection with Section 8 certificates
(including payments under such certificates that are in excess of the restricted rents defined herein),
cable income, interest earnings, and insurance proceeds but, except for any interest earned thereon,
does not include (i) the proceeds of the sale of Tax Credits to finance the Development or
(ii) refinancing proceeds (provided the refinancing is pennitted by and is accomplished in accordance
with this Agreement), or (iii) those insurance proceeds which are directly applied to repair or
reconstruct the Improvements.
"Hazardous Materials" means any substance, material, or waste which is or becomes
regulated by any local governmental authority, the County, the State of Califomia, regional
governmental authority, or the United States Government, including, but not limited to, any material
or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted
hazardous waste" under Sections 25115,25117 or 25122.7, or listed pursuantto Section 25140 of
the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii)
defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code,
Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined
as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
5
OOCSOC\88180Sv7l22707.0000
Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous
Substances), (v) petroleum, (vi) fuable asbestos, (vii) polychlorinated biphenyls, (viii) listed under
Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 ofTitIe 22 of the
California Administrative Code, Division 4, Chapter 20, (ix) designated as "hazardous substances"
pursuant to Section 311 ofthe Clean Water Act (33 U.S.C. ~ 1317), (x) defined as a "hazardous
waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. ~690l
et seq. (42 U.S.C. ~6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. ~690l et seq.
"Housing Rent" shall mean the total of monthly payments by the tenants ofa Unit for (a) use
and occupancy for the Unit and facilities associated therewith, (b) any separately charged fees or
service charges assessed by the Developer which are required of all tenants of the Units, other than
security deposits, (c) a reasonable allowance for utilities not included in (a) or (b) above, including
garbage collection, sewer, water, electricity and gas, as detennined by regulation of Housing
Authority of the County of San Louis Obispo pursuant to 24 C.F.R. Part 813 and (d) possessory
interest, taxes or other fees or charges assessed for the use of the Units and facilities associated
therewith by a public or private entity other than the Developer.
"Improvements" means all of the improvements described in the Scope of Development.
"Income Verification" means Attachment No. 12 to this Agreement.
"Inter-Creditor and Subordination Agreement" means an agreement substantially in the
fonn of Attachment No. 17 to this Agreement with such modifications, if any, as may be approved
by the Executive Director.
"Legal Description of the Site" means Attachment No.2 to this Agreement.
"Lower Income Households" means households earning not greater than eighty percent
(80%) of Median Income pursuant to Health and Safety Code Section 50079.5.
"Maturity Date" means the eighteenth (18th) anniversary of the recordation of the permanent
loan but in no event later than the nineteenth (19th) anniversary of the Conveyance.
"Median Income" means Median Income for the Area (namely, San Luis Obispo County),
as set forth by regulation ofthe California Department of Housing and Community Development
pursuant to Health and Safety Code Sections 50079.5 and 50105.
"Memorandum of Agreement" means a memorandum of agreement in the fonn of
Attachment No. 15 to this Agreement.
"Net Collections" means Net Operating Income less Debt Service.
"Net Operating Income" means Gross Revenues, less Operating Expenses.
"9% Tax Credits" is defined in Recital F hereof.
"Nonprofit Services Fee" means a fee paid by Developer to a nonprofit corporation for
services in connection with operating the Development; the Nonprofit Services Fee shall in no event
6
DOCSOCl881805v7\22707.0000
exceed the larger of Nine Thousand Dollars ($9,000) per year increased annually in proportion with
the Consumer Price Index, All Urban Consumers, San Luis Obispo Metropolitan Statistical Area
("CPI"), or one and sixty-seven hundreds percent (1.67%) of Net Collections for any Year.
"Notice" shall mean a notice in the fonn prescribed by Section 8.2 hereof.
"Operating Expenses" means actual, reasonable and customary costs, fees and expenses
directly incurred and for which payment has been made and which are attributable to the operation,
maintenance, and management of the Development, excluding the Capital Replacement Reserve and
consisting of only the following (and such additional items, if any, as to which the prior written
approval of the Executive Director is first obtained. Such approval shall be granted, granted subject
to conditions, or refused at the sole and absolute discretion of the Executive Director): painting,
cleaning, repairs and alterations; landscaping; utilities; rubbish removal; sewer charges; costs
incurred to third parties in connection with generating laundry charges (but in no event to exceed the
laundry charges); real and personal property taxes and assessments; insurance premiums; security;
advertising, promotion and publicity; office, janitorial, cleaning and building supplies; actual and
customary salary payable to an on-site manager which directly and exclusively benefits residents of
the Development; the actual and customary salary paid for one assistant manager, one on-site
maintenance manager and such other on-site management personnel, if any, which directly and
exclusively benefit residents of the Development, subject to the prior written approval of the
Executive Director at his sole and absolute discretion; a management fee ("Management Fee")
(excluding anyon-site management personnel) of not to exceed five percent (5%) of Gross
Revenues; payments on any deferred portion of the Developer's fee, which shall not exceed the
amount of such fee as established by TCAC (on a one-time basis, to be released not earlier than pro
rata based upon the affordable units produced in the Phases, and without any accrual of interest); an
asset management fee of not to exceed two percent (2%) of the Gross Revenues, purchase, repairs,
servicing and installation of appliances, equipment, fixtures and furnishings; reasonable and
customary fees and expenses of accountants, attorneys, consultants and other professionals as
incurred commencing after the completion of the Improvements (as evidenced by the issuance by
City of a certificate of occupancy for the corresponding building developed as part of the
Improvements) in connection with the operation of the Project; tenant improvements that are not
included in the costs of the Improvements, and payments made by the Developer to satisfy indemnity
obligations and other payments by the Developer pursuant to this Agreement other than to the
Developer, partners or other related persons; provided, however, that payments to parties related to
Developer for Operating Expenses must not exceed market rates. The Operating Expenses shall not
include non-cash expenses, including without limitation, depreciation. The Operating Expenses shall
be reported in the Audited Financial Statement and shall be broken out in line item detail.
"Operating Reserve" means a reserve fund to be established by the Developer as a reserve
for operating expenses in the amount of Seventy Five Thousand Dollars ($75,000) to be funded by
Developer not later than the payment of the final equity installment by the investment limited
partner. Any disbursements ITom the Operating Reserve shall be repaid by Developer ITom available
cash flow senior to payments to the Agency under the Agency Note. Interest earned on moneys held
in the Operating Reserve shall be retained in the Operating Reserve.
"Operating Year" means the period commencing as of the Conveyance and ending as of
December 31 of that calendar year, then each succeeding calendar year thereafter during the
Required Covenant Period.
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OOCSOC\88180Sv7\22707.0000
-----" J
"Owner" means Yon's Companies, Inc., a Michigan Corporation or a successor acceptable
to the Executive Director.
"Permitted Senior Lien" means a first deed of trust loan, in favor of an institutional lender
approved by the Agency, in the amount of not to exceed the estimated cost of the Improvements not
funded by the Agency Disbursement Amount or available Tax Credit proceeds (which resulting
amount is initially estimated at Two Millions Three Hundred Seventy Thousand Dollars
($2,370,000), subject to further confinnation and approval by the Executive Director), which secures
repayment of a construction loan or pennanent loan made at prevailing market rates (as confinned
and approved by the Executive Director), unless otherwise consented to or waived in writing by the
Executive Director.
"Prescribed Rent Levels and Tenant Mix" means rent that is Affordable Rent for
households at the following income levels: (A) for the first phase (i) for fifteen (15) one-bedroom
units and 3 (3) two-bedroom units, fifty percent (50%) of Median Income; and (ii) for sixteen (16)
one-bedroom units and five (5) two-bedroom units, sixty percent (60%) of Median Income; and
(B) for the second phase (i) for five (5) one-bedroom units and one (I) two-bedroom units, fifty
percent Median Income; and (ii) for six (6) one-bedroom units and one (I) two-bedroom units, sixty
percent (60%) of Median Income. The Prescribed Rent Levels are subject to final review and
approval by the Agency following preliminary reservation by TCAC and final product unit mix but
will not be less stringent than as set forth in the preceding portion of this definition.
"Primary Construction Loan" means the first mortgage loan obtained by the Developer
from a state agency or instrumentality or a reputable and established bank, savings and loan
association, or other similar financial institution for financing the development (but not the
operation) of the Project pursuant to this Agreement.
"Primary Permanent Loan" means the first mortgage loan obtained by the Developer from
a state agency or instrumentality or a reputable and established bank, savings and loan association, or
other similar financial institution in an amount up to the amount required to satisfy the outstanding
balance of the Primary Construction Loan or in an amount in excess of such outstanding balance so
long as such excess proceeds are used to pay (or prepay) Residual Receipts Note Payments under the
Agency Note.
"Principals" means Foundation for Affordable Housing II, Inc., a California Corporation,
Thomas E. Willard, President, and MFP A, Inc., a California Corporation, Sean Clark, Vice-
President.
"Project Documents" means, collectively, this Agreement, the Agency Developer CC&Rs,
the Agency Deed, the Memorandum of Agreement, all other Attachments to this Agreement, and any
other agreement, document, or instrument that Agency requires in connection with the execution of
this Agreement or from time to time to effectuate the purposes of this Agreement.
"Purchase Price" means Two Millions One Hundred Thousand Dollars ($2,100,000) or such
other price as shall be detennined by independent appraisal and agreed to by the parties.
"Redevelopment Plan" is defined in Section 1.5 hereof.
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DOCSOC\881805v7\22707.0000
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"Related Entity" means a Principal or an entity in which any interest is held by the
Developer or one or more of the Principals.
"Request for Notice of Default" means Attachment No.8.
"Required Affordable Units" means, with regard to the First Phase, thirty-nine (39) ofthe
dwelling units, and with regards to the Second Phase (in the event the Second Phase is undertaken),
thirteen (13) of the dwelling units required to be developed on the Site under this Agreement.
"Required Covenant Period" means a period of sixty (60) years, as more particularly set
forth in the Agency Developer CC&Rs.
"Residual Receipts" for a particular Operating Year means Gross Revenues for the
corresponding Operating Year less (i) Debt Service payments made during such Operating Year on
the Primary Construction Loan or the Primary Pennanent Loan in amounts not in excess of the
amounts due and payable during such Operating Year (and not including prepayments), and (ii) the
sum of Operating Expenses and, to the extent funded, the Nonprofit Services Fee Chargeable Fees
and Reserves as required by this Agreement and made during the corresponding Operating Year. All
calculations of Residual Receipts shall be made annually, on or before March 15 for the preceding
Operating Year, on a cash (and not accrual) basis and the components thereof shall be subject to
verification and approval, on an annual basis, based upon confonnity with the tenns of this
Agreement and the Agency Deed, by the Agency.
"Residual Receipts Note Payments" or "Note Payments" means all payments required to
be made pursuant to the Agency Note.
"Schedule of Performance" means Attachment No.3 to this Agreement. The Schedule of
Perfonnance sets forth the dates by which Developer is to perfonn certain obligations under this
Agreement.
"Scope of Development" means Attachment No.9 to this Agreement.
"Second Phase Units" means twenty-seven (27) Units.
"Seuiors" means those persons meeting the qualifications as set forth in the Fair Housing
Act, 42 US.C. g 3601, et seq., and 24 C.F.R. g 100.300, et seq., and Sections 51.3 and 51.4 of the
California Civil Code, as applicable. At least one occupant for each Unit shall be fifty-five (55)
years or older and, in addition, to the greatest extent pennitted by law, all occupants shall be persons
55 years of age or older.
"Site" means that real property depicted on the Site Map and described with greater
particularity by the Legal Description of the Site.
"Site Map" means Attachment No. I to this Agreement.
"Site Value" means Two Million One Hundred Dollars ($2,100,000) or such other amount as
may hereafter be mutually designated in writing by the Developer and the Agency, based upon
appraisal(s), as the value of the Site as of the Date of Agreement.
9
OOCSOC\881805vN.2707.oo00
"Stabilized Occupancy" means occupancy of 90% (or more) ofthe Units for three (3)
consecutive months.
"TCAC" means the Tax Credit Allocation Committee of the State of California.
"Tax Credit Deadline" means the time established by TCAC for the last round during which
tax credits are awarded by TCAC in calendar 2002 (but not later than December 30, 2002), as to the
First Phase, and, as to the Second Phase, the time established by TCAC for the last round during
which tax credits are awarded by TCAC in calendar 2003 (but not later than December 30, 2003).
"Tax Credit Regulatory Agreement" shall mean the regulatory agreement which it is
contemplated may be required to be recorded against the Site with respect to the issuance of tax
credits in the event a preliminary reservation is obtained from TCAC, as set forth in Section 5.2.6
hereof.
"Tax Credit Rules" means Section 42 of the Internal Revenue Code and/or California
Revenue and Taxation Code Sections 17057.5, 17058,23610.4 and 23610.5 and California Health
and Safety Code Section 50199, et seq., and the rules and regulations implementing the foregoing,
including without limitation program regulations promulgated by TCAC.
"Tax Credits" shall mean 9% Low Income Tax Credits granted pursuant to Section 42 of the
Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058,
23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq.
"Title Company" shall be Chicago Title Insurance Company or another title insurer
mutually acceptable to the Agency and the Developer.
"Unit" means each of the one hundred eight (108) dwelling units required to be developed by
the Developer under this Agreement.
"Very Low Income Households" means households earning not greater than fifty percent
(50%) of Median Income for the Area pursuant to Health and Safety Code Section 50105.
"Year" means a calendar year.
1.2 Sinl!ular and Plural Terms. Any defined tenn used in the plural in this Agreement
or any Project Document shall refer to all members of the relevant class and any defined tenn used in
the singular shall refer to any number of the members of the relevant class.
1.3 References and Other Terms. Any reference to this Agreement or any Project
Document shall include such document both as originally executed and as it may from time to time
be modified. References herein to Articles, Sections and Exhibits shall be construed as references to
this Agreement unless a different document is named. References to subparagraphs shall be
construed as references to the same Section in which the reference appears. The tenn "document" is
used in its broadest sense and encompasses agreements, certificates, opinions, consents, instruments
and other written material of every kind. The tenns "including" and "include" mean "including
(include) without limitation."
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DOCS0C\881805v7122707.0000
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1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement, as now
existing and as the same may ftom time to time be modified, are incorporated herein by this
reference.
1.5 The Redevelopment Plan. The Redevelopment Plan for the Arroyo Grande
Redevelopment Project (the "Redevelopment Project") was approved by Ordinance No. 479CS. The
project area of the Redevelopment Project is referred to herein as the "Project Area." The use of the
Site for affordable housing purposes under this Agreement is of benefit to the Project Area. This
Agreement is made pursuant to the Redevelopment Plan. The Developer has reviewed the
Redevelopment Plan and agrees to perfonn under this Agreement in confonnity with the
Redevelopment Plan and this Agreement.
1.6 Representations and Warranties.
1.6.1 Al!encv Representations. Agency represents and warrants to Developer as
follows:
(a) Authoritv. Agency is a public body, corporate and politic, existing
pursuant to the California Community Redevelopment Law (California Health and Safety Code
Section 33000), which has been authorized to transact business pursuant to action of the City.
Agency has full right, power and lawful authority to lease the Site as provided herein and the
execution, perfonnance, and delivery of this Agreement by Agency has been fully authorized by all
requisite actions on the part of Agency. The parties who have executed this Agreement on behalf of
Agency are authorized to bind Agency by their signatures hereto.
(b) Litil!ation. To the best of Agency's knowledge, there are no actions,
suits, material claims, legal proceedings, or any other proceedings affecting the Site or any portion
thereof, at law or in equity before any court or governmental agency, domestic or foreign.
(c) No Conflict. To the best of Agency's knowledge, Agency's
execution, delivery, and perfonnance of its obligations under this Agreement will not constitute a
default or a breach under any contract, agreement or order to which Agency is a party or by which it
is bound.
(d) No Al!encv Bankruptcv. Agency is not the subject of a bankruptcy
proceeding.
Until the Conveyance, Agency shall, upon learning of any fact or condition which would
cause any of the warranties and representations in this Section 1.6.1 not to be true as of the
Conveyance, immediately give written notice of such fact or condition to Developer. Such
exceptiones) to a representation shall not be deemed a breach by Agency hereunder, but shall
constitute an exception which Developer shall have a right to approve or disapprove if such
exception would have an effect on the value and/or operation of the Site. If Developer elects to
accept the Conveyance and possession of the Site following disclosure of such information,
Agency's representations and warranties contained herein shall be deemed to have been made as of
the Conveyance, subject to such exceptiones). If, following the disclosure of such infonnation,
Developer elects to not accept the Conveyance of and possession of the Site, then this Agreement
shall automatically tenninate, and neither party shall have any further rights, obligations or liabilities
11
DOCSOC\881805v7\22707.0000
------ ---..------ -.-....-.-
hereunder. The representations and warranties set forth in this Section 1.6.1 shall survive the
Conveyance.
1.6.2 Developer Representations. Developer represents and warrants to Agency
as follows:
(a) Authoritv. Developer is a duly organized limited partnership
organized within and in good standing under the laws of the State of California. Developer has full
right, power and lawful authority to lease and accept title to and possession of the Site and undertake
all obligations as provided herein and the execution, perfonnance and delivery of this Agreement by
Developer has been fully authorized by all requisite actions on the part of the Developer. The parties
who have executed this Agreement on behalf of Developer are authorized to bind Developer by their
signatures hereto.
(b) Liti!!ation. To the best of Developer's knowledge, there are no
actions, suits, material claims, legal proceedings, or any other proceedings affecting the Developer, at
law or in equity before any court or governmental agency, domestic or foreign.
(c) No Conflict. To the best of Developer's knowledge, Developer's
execution, delivery, and perfonnance of its obligations under this Agreement will not constitute a
default or a breach under any contract, agreement or order to which Developer is a party or by which
it is bound.
(d) No Developer Bankruptcv. Developer is not the subject of a
bankruptcy proceeding.
(e) Developer Experience: Sophisticated Party. The Principals of
Developer are sophisticated parties, with substantial experience in the acquisition, rehabilitation,
development, financing, obtaining financing for, marketing, and operation of affordable housing
projects, including rental projects for Seniors, and with the negotiation, review, and preparation of
agreements and other documents in connection with such activities. The Developer is familiar with
and has reviewed all laws and regulations pertaining to the development and operation of the
Development, including without limitation the Tax Credit Rules, and has obtained advice from any
advisers of its own choosing in connection with this Agreement.
(f) Due Authorization and Execution: Studies Completed. Developer
has duly authorized the execution of this Agreement, the Agency Developer CC&Rs, the Agency
Note, the Agency Deed of Trust and the Agency Deed. Developer is ready, willing and able to
execute the Agency Developer CC&Rs, the Agency Note, the Agency Deed of Trust, and all
documents necessary to effectuate the Conveyance and has conducted all studies necessary to
proceed with the Development. Concurrently with the execution of this Agreement by Agency or
within three (3) calendar days thereafter, Developer shall execute and deposit with the Agency (to be
held pending satisfaction of the Condition Precedent to Conveyance as set forth in Section 3.1
hereunder) the Agency Developer CC&Rs, the Agency Note, the Agency Deed of Trust, and all
documents necessary to effectuate the Conveyance hereunder.
Until the Conveyance, Developer shall, upon learning of any fact or condition which would
cause any of the warranties and representations in this Section 1.6.2 not to be true as of the
Conveyance, immediately give written notice of such fact or condition to Agency. Such exceptiones)
12
DOCSOC\881805v7\22707.0000
---~~_. ------ ------- --
to a representation shall not be deemed a breach by Developer hereunder, but shall constitute an
exception which Agency shall have a right to approve or disapprove if such exception would have an
effect on the development and/or operation ofthe Site. If Agency elects to proceed with the
Conveyance following disclosure of such information, Developer's representations and warranties
contained herein shall be deemed to have been made as of the Conveyance, subject to such
exceptiones). If, following the disclosure of such information, Agency elects to not close Escrow,
then this Agreement and the Escrow shall automatically terminate, and neither party shall have any
further rights, obligations or liabilities hereunder. The representations and warranties set forth in this
Section 1.6.2 shall survive the Conveyance.
1.7 Developer Cost Disbnrsement. Within ten (10) days after the approval of this
Agreement by Agency, the Developer shall pay to Agency the amount of Twenty Thousand Dollars
($20,000) if the Agency is to take title to the Site and Ten Thousand Dollars ($10,000) if the transfer
of title to Developer is to be accomplished without Agency taking title (which resulting amounts
shall constitute the "Developer Cost Disbursement"). The Developer Cost Disbursement will be
retained by the Agency in an account of its choosing and may be commingled with other funds. Any
interest earned shall be the property of the Agency. The Developer Cost Disbursement will be
applied by Agency to defray costs of staff costs, attorney and consultant fees in connection with the
negotiation and preparation of this Agreement and the processing of the Development. Any
unexpended portion of the Developer Cost Disbursement shall re retained by the Agency.
2. DISPOSITION OF THE SITE
i
2.1 Acquisition of the Site. i
The Developer warrants and represents that it has undertaken and completed at its expense an
investigation of the Site, including without limitation condition of title, the presence of any
hazardous materials and other surface and subsurface conditions, and the suitability of the Site for the
Improvements required pursuant to this Agreement. The Developer has selected the Site and has
determined that it is suitable for all development and uses as provided for pursuant to this
Agreement. Prior to the Date of Agreement, the Developer has obtained a preliminary title report by
the Title Company. Developer has reviewed the condition of title to the Site and the condition of the
Site (as more fully set forth in Section 2.3 of this Agreement), and all such matters are satisfactory to
the Developer.
The physical condition, possession or title of the Site is and shall be delivered from Agency
to Developer in an "as-is" condition, with no warranty expressed or implied by Agency, including
without limitation, the presence of Hazardous Materials or the condition of the soil, its geology, the
presence of known or unknown seismic faults, or the suitability of the Site for the development
purposes intended hereunder.
The Developer hereby waives, releases and discharges forever, and indemnifies the Agency
and the City, and their employees, officers, agents and representatives, from all present and future
claims, demands, suits, legal and administrative proceedings and from all liability for damages,
losses, costs, liabilities, fees and expenses, present and future, arising out of or in any way connected
with the condition of the Site, any Hazardous Materials on the Site, or the existence of Hazardous
Materials Contamination due to the generation of Hazardous Materials from the Site, however they
came to be placed there, except that arising out of the negligence or misconduct of the Agency or its
employees, officers, agents or representatives.
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The Developer acknowledges that it is aware of and familiar with the provisions of
Section 1542 of the California Civil Code which provides as follows:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
As such relates to this Section 2.1, effective as of the Conveyance, the Developer waives and
relinquishes all rights and benefits which it may have under Section 1542 of the California Civil
Code.
In consideration of the Agency's participation concerning the assemblage of the Site on the
tenns and conditions herein set forth and in consideration of the provision of the Agency
Disbursement Amount, the Developer shall develop the Site and operate the Improvements as an
affordable housing project in strict confonnity with this Agreement and shall make all Residual
Receipts Note Payments, and shall comply with and cause the use of the Site in confonnance with
the Agency Deed and the Agency Developer CC&Rs throughout the Required Covenant Period.
2.1.1 Al!encv Acquisition of Site. Subject to the Owner conveying the Site to the
Agency on tenns acceptable to the Agency, and further provided that all closing costs and title
insurance are funded by Developer, and subject to the Owner (or another similarly capitalized entity
acceptable to Agency and which provides the following indemnity in a manner enforceable by
Agency) holding harmless and indemnifying Agency (the "Owner/Agency Indemnity") from any
claims or losses and attorney fees associated with holding title, providing without limitation matters
involving or related to Hazardous Materials, all in: fonn and substance acceptable to Agency
(including its risk manager), the Agency will obtain title to the Site and convey the Site to the
Developer. Subject to the willingness of the Title Company to issue its title policy insuring that the
Developer is fee owner of the Site upon conveyance by the Agency, the Agency agrees to sell to the
Developer the Site and the Developer agrees to purchase the Site from the Agency, in accordance
with and subject to all of the tenns, covenants, and conditions of this Agreement, including the
Conditions Precedent to Conveyance. The conveyance of the Site from the Agency to the Developer
(the "Conveyance") shall be accomplished through the execution and recordation in the official
records of San Luis Obispo County of the Agency Deed.
The Agency shall have no obligation for payment of its funds for purchase of the Site or to
consider the condemnation of the Site. The participation of the Agency hereunder is subject to the
contribution by the Developer of all consideration necessary, including closing costs, above and
beyond the Acquisition Assistance provided by the Agency.
As an alternative to the conveyance of the Site by the Owner to the Agency (and the
subsequent Conveyance ofthe Site by the Agency to the Developer), the Developer may acquire the
Site by conveyance directly from the Owner.
2.1.2 Acquisition of Site and Sale of Site. In the event that the Agency acquires
the Site pursuant to Section 201.1 hereof, and subject to all of the tenns and conditions of this
Agreement, the Developer agrees to purchase the Site from the Agency, and the Agency agrees to
sell to the Developer the Site, for the Purchase Price.
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~
2.1.3 Pavment of the Purchase Price. The Agency Note shall be deposited into
Escrow by the Developer for delivery to the Agency as provided in Section 2.2 hereof. Payment of
the Purchase Price shall be accomplished by the Developer as set forth in the Agency Note.
2.1.4 Acquisition Escrow. Within thirty (30) days after the execution of this
Agreement by the Agency, the parties and the Owner shall open escrow for the conveyance by the
Owner to the Agency or to the Developer (the "Acquisition Escrow") with the Escrow Holder. The
Agency and the Developer shall prepare and deliver to the Escrow Holder escrow instructions based
upon Section 20 I and its subsections.
2.1.5 Costs of Acquisition Escrow. Developer shall pay all costs associated with
the Acquisition Escrow, and shall pay for such title insurance as Agency and/or Developer shall
obtain (namely, an Owner's CLTA policy based upon the Site Value). Any additional coverage may
be purchased by Developer at its cost.
The Acquisition Closing shall take place when both the Conditions Precedent to Conveyance
have been satisfied.
2.2 Escrow. The parties shall open an escrow (the "Agency Escrow") with the Escrow
Holder, by the time established therefor in the Schedule of Performance for the Conveyance, and the
recordation and delivery of documents described in Sections 2.1. The Agency and the Developer
agree to execute such escrow instructions as may be reasonably required to implement this
Section 2.2. Such instructions shall reflect whether: (i) the Site is conveyed by the Owner to the
Agency and by the Agency to the Developer, or (ii) the Site is conveyed by the Owner directly to the
Developer. The obligation of the Agency to deliver the Memorandum of Agreement (and a copy of
the Agency Deed), as well as the Agency Note, the Agency Deed of Trust and, if not previously
recorded, the Agency Developer CC&Rs, to escrow or to proceed with the Conveyance is contingent
upon the satisfaction of the "Conditions," as set forth in Section 3.1 of this Agreement.
2.2.1 Costs of Escrow. The Developer shall pay the costs of the premium for the
Title Policy as set forth in Section 2.4 hereof, the documentary transfer taxes, if any, due with respect
to the Conveyance, and all other fees, charges, and costs which arise from Escrow.
2.2.2 Escrow Instructions. This Agreement constitutes the joint escrow
instructions of the Developer and the Agency, and the Escrow Holder to whom these inStructions are
delivered is hereby empowered to act under this Agreement. The parties hereto agree to do all acts
reasonably necessary to close this Escrow in the shortest possible time. Insurance policies, if any,
for fire or casualty are not to be transferred. All funds received in the Escrow shall be deposited with
other escrow funds in a general escrow account(s) and may be transferred to any other such escrow
trust account in any State or National Bank doing business in the State of California. All
disbursements shall be made by check or wire transfer from such account.
If in the opinion of either party it is necessary or convenient in order to accomplish
the Conveyance, such party may require that the parties sign supplemental escrow instructions;
provided that if there is any inconsistency between this Agreement and the supplemental escrow
instructions, then the provisions of this Agreement shall control. The parties agree to execute such
other and further documents as may be reasonably necessary, helpful or appropriate to effectuate the
provisions of this Agreement. The Conveyance shall take place when the Conditions Precedent have
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been satisfied. Escrow Holder is instructed to release Agency's escrow closing and The Developer's
escrow closing statements to the respective parties.
2.2.3 Authoritv of Escrow Holder. Escrow Holder is authorized to, and shall:
(a) Pay and charge the Developer for the premium of the Developer's
Title Policy as set forth in Section 2.4 and any amount necessary to place title in the condition
necessary to satisfy Section 2.3 of this Agreement.
(b) Pay and charge the Developer for any escrow fees, charges, and costs
payable under Section 2.2.1 of this Agreement.
(c) Pay and charge the Developer for any endorsements to the
Developer's Title Policy which are requested by the Developer.
(d) Disburse funds, record and deliver the Grant Deed, the Agency
Developer CC&Rs, then the Memorandum of Agreement, then a Pennitted Senior Lien (if
applicable), then the Agency Deed of Trust.
(e) Do such other actions as necessary to fulfill its obligations under this
Agreement.
(f) Prepare and file with all appropriate governmental or taxing
authorities a unifonn settlement statement, closing statement, tax withholding fonns including an
IRS 1099-S fonn, and be responsible for withholding taxes, if any such fonns are provided for or
required by law.
2.2.4 Closinl!. The Conveyance and delivery of documents related shall close
("Closing") within thirty (30) days of the parties' satisfaction of all of Conditions Precedent, but in
no event later than the last day established therefor in the Schedule of Performance. The "Closing"
shall mean the time and day that the Agency Deed, all of the Agency Developer CC&Rs, the
Memorandum of Agreement and the Agency Deed of Trust have been recorded by the Recorder of
the County and the Agency Note is executed and held by Escrow Holder for delivery to Agency. The
"Closing Date" shall mean the day on which the Closing occurs.
2.2.5 Termination. If Escrow is not in condition to close by the time established
therefor in the Schedule ofPerfonnance, then either party which has fully perfonned under this
Agreement may, in writing, demand the return of money or property and tenninate this Agreement.
If either party makes a written demand for return of documents or properties, this Agreement shall
not tenninate until five (5) days after Escrow Holder shall have delivered copies of such demand to
all other parties at the respective addresses shown in this Agreement. If any objections are raised
within said five (5) day period, Escrow Holder is authorized to hold all papers and documents until
instructed by a court of competent jurisdiction or by mutual written instructions of the parties. The
Developer, however, shall have the sole option to withdraw any money deposited by it with respect
to the Closing less the Developer's share of costs of Escrow. Tennination of this Agreement shall be
without prejudice as to whatever legal rights either party may have against the other arising from this
Agreement. Ifno demands are made, the Escrow Holder shall proceed with the Closing as soon as
possible. At the election of the Agency, default by the Developer under this Agreement shall
constitute a default under this Agreement.
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2.2.6 Closinl! Procedure. Escrow Holder shall close Escrow for the Conveyance
as follows:
(a) Record first the Agency Deed, then the Agency Developer CC&Rs,
then the Memorandum of Agreement, then a Permitted Senior Lien (if applicable), then the Agency
Deed of Trust, with instructions for the Recorder of San Luis Obispo County, California to deliver to
the Agency Deed to the Developer, and to deliver to the Agency the Agency Developer CC&Rs, the
Memorandum of Agreement and the Agency Deed of Trust, and a certified copy of each to the
Developer. The Escrow Holder shall also deliver the Agency Note to Agency;
(b) Instruct the Owner's Title Company to deliver the Developer's Title
Policy to the Developer, with a copy to the Agency;
(c) File any informational reports required by Internal Revenue Code
Section 6045( e), as amended, and any other applicable requirements;
(d) Deliver the FIRPT A Certificate, if any, to the Developer;
(e) Deliver documents as set forth in Section 2.2.3 hereof; and
(I) Forward to both the Developer and the Agency a separate accounting
of all funds received and disbursed for each party and copies of all executed and recorded or filed
documents deposited into Escrow, with such recording and filing date and information endorsed
thereon.
2.3 Review of Title. The Developer has caused the Title Company to deliver to the
Developer a standard preliminary title report (the "Report") with respect to the title to the Site prior
to the Date of Agreement, and the Developer will endeavor to cause the Title Company to provide to
Developer, with a copy of all such documents to Agency (at Developer's expense) legible copies of
the documents underlying the exceptions ("Exceptions") set forth in the Report, within fifteen (15)
days trom the date of this Agreement. The Developer shall have the right to reasonably approve or
disapprove the Exceptions; provided, however, that the Developer hereby approves the following
Exceptions:
(a) The Redevelopment Plan.
(b) The lien of any non-delinquent property taxes and assessments (to be prorated
at close of Escrow).
(c) The provisions ofthe Agency Developer CC&Rs, the Agency Deed (and the
Memorandum of Agreement), the Agency Deed of Trust and the Tax Credit Regulatory Agreement.
(d) Any incidental easements or other matters affecting title which do not
materially impact the Developer's use of the Site as described in the Scope of Development.
The Developer shall have thirty (30) days trom the date of its receipt of the Report to
give written notice to Agency and Escrow Holder of the Developer's approval or disapproval of any
of such Exceptions. The Developer's failure to give written disapproval of the Report within such
time limit shall be deemed approval of the Report. If the Developer notifies Agency of its
disapproval of any Exceptions in the Report, it shall also notify the Owner and shall request of the
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Owner that it undertake the removal of any disapproved Exceptions. If Owner cannot or does not
elect to remove any of the disapproved Exceptions within ten (10) days of Developer's notice to the
Agency, the Developer shall have ten (10) business days after the expiration of such ten (10) business
day period to either give the Agency written notice that the Developer elects to proceed with the
purchase of the Site subject to the disapproved Exceptions or to give the Agency written notice that
the Developer elects to tenninate this Agreement. The Exceptions to title approved by the Developer
as provided herein shall hereinafter be referred to as the "Condition of Title." The Developer shall
have the right to approve or disapprove any additional and previously unreported Exceptions reported
by the Title Company after the Developer has approved the Condition of Title for the Site (which are
not created by the Developer).
2.4 Title Insurance. Concurrently with recordation of the Memorandum of Agreement,
there shall be issued to the Developer a CLTA lessee's policy of title insurance (the "Developer's
Title Policy"), based upon the amount of the Site Value, together with such endorsements as are
reasonably requested by the Developer, issued by the Title Company insuring that the title to the Site
is vested in the Developer in the condition required by Section 2.3 of this Agreement. The Title
Company shall provide the Agency with a copy of the Developer's Title Policy. The Developer's
Title Policy shall be based upon the Site Value. The Developer shall pay the premium for the
Developer's Title Policy equal to the cost of a CL T A standard coverage title policy based upon the
Site Value. Any additional costs, including the cost of an AL T A policy or any endorsements
requested by the Developer, shall be borne by the Developer.
2.5 Developer Pavments. The Agency Note provides for the Developer to make
payments to the Agency, which obligation is further evidenced by the Agency Note. In addition, in
the event of (i) a sale, assignment or transfer of the Development or (ii) the refinancing of the
Development in an amount greater than the outstanding balance of a loan existing as of the time such
refinancing is commenced, the Developer shall pay to Agency, concurrent with such event ("Capital
Event") an amount equal to the net proceeds of such sale, assignment, transfer or refinancing,
(detennined by applying those closing costs of unrelated third parties which do not exceed nonnal
and customary costs charged by such unrelated third parties) up to the amount of the outstanding
Agency Note balance. Such payments, which shall be due and payable concurrent with each and
every Capital Event which occurs prior to the satisfaction of the Agency Note shall constitute
"Capital Events Payments."
3. CONDITION TO CLOSING; CONDITIONS TO DISBURSEMENT OF THE
AGENCY DISBURSEMENT AMOUNT
3.1 Al!encv's Condition to Closinl!. The Agency shall not effect the Conveyance, as
provided pursuant to this Agreement, unless the following condition precedent (the "Condition
Precedent to Conveyance") has been fully satisfied, as detennined in good faith by the Executive
Director (which condition, ifit requires action by Developer, shall also be a covenant of Developer):
(a) Allocation of 9% Tax Credits. TCAC shall have issued an allocation of 9%
Tax Credits and the Developer shall have satisfied all conditions precedent to the allocation.
(b) Available Funds. Developer shall have deposited into escrow the funds
required to closed the Conveyance.
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(c) Owner/Al!encv Indemnitv. Owner shall have provided the Owner/Agency
indemnity (as described in Section 2.1.1 hereof) infonn and substance acceptable to Agency.
(d) Seniors Requirement. The construction and pennanent lenders have agreed
that requirement of this Agreement concerning occupancy by Seniors shall remain in effect
throughout the Required Covenant Period without regard to whether such lenders foreclosed on the
Property and remarket the Property.
(e) Due Dilil!ence as to Site. The Due Diligence as to Site shall have been
accomplished to the reasonable satisfaction of Agency.
(f) Developer Cost Disbursement. The Developer shall have made the
Developer Cost Disbursement in confonnity with Section 1.7.
(g) Tax Credit Efforts. The Developer shall use best efforts, as reasonably
detennined by the Executive Director, to obtain an allocation of 9% tax credits and in connection
therewith shall seek to maximize proceeds of tax credits and eligible basis.
(h) No Defaults. The Developer shall not be in default under this Agreement.
All conditions set forth in Section 3.1, or to Agency's obligations hereunder, are for
Agency's benefit only and Executive Director may waive all or any part of such rights by written
notice to Developer and Escrow Holder. If Executive Director shall, within the applicable periods set
forth herein, disapprove of any of the items which are subject to Agency's approval, or if any of the
conditions set forth in this Agreement are not met within the times called for, Agency may thereafter
tenninate this Agreement without any further liability on the part of Agency by giving written notice
oftennination to the Escrow Holder, with a copy to Developer. Escrow Holder shall thereupon,
without further consent from Developer, return to each party the documents and funds deposited by
them.
3.2 Al!encv's Conditions to Disbursement of the Al!encv Disbursement Amount. The
Agency shall not disburse any portion of the Agency Disbursement Amount to the Developer, as
provided pursuant to this Agreement, unless and until each and every one of the following conditions
precedent (the "Conditions Precedent to Disbursement") has been fully satisfied, as detennined in
good faith by the Executive Director (each of which condition[s], ifit requires action by Developer,
shall also be a covenant of Developer):
(a) Recordinl! of Certain Documents. The Agency Developer CC&Rs, the
Memorandum of Agreement and the Agency Deed of Trust have been recorded.
(b) Evidence of Financinl!. Developer shall have provided written proof
acceptable to Agency that the Developer has sufficient internal funds and/or has obtained a loan or
financing, subject to customary conditions, for construction of the Development, and Agency has
approved such evidence of financing, in accordance with Sections 4.15 and 4.15.1.1 hereof. In the
event Developer obtains a loan or financing for the construction of the Development, such
construction loan or financing for the Development shall be ready to close, and shall close, and a
portion of proceeds from the sale of Tax Credits, as described in Section 4.15.1.1, shall be
immediately available for use in constructing the Improvements.
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(c) Owner/Ae:encv Indemnitv. Owner shall have provided the Owner/Agency
indemnity (as described in Section 2.1.1 hereof) infonn and substance acceptable to Agency.
(d) Seniors ReQuirement. The construction and pennanent lenders have agreed
that requirement of this Agreement concerning occupancy by Seniors shall remain in effect
throughout the Required Covenant Period without regard to whether such lenders foreclosed on the
Property and remarket the Property.
(e) Due Dilie:ence as to Site. The Due Diligence as to Site shall have been
accomplished to the reasonable satisfaction of Agency.
(f) Developer Cost Disbursement. The Developer shall have made the
Developer Cost Disbursement in confonnity with Section 1.7
(g) Construction Contract. Developer shall have provided to the Agency a
signed copy of a fixed-price contract between the Developer and the general contractor for the
construction of the Development, certified by the Developer to be a true and correct copy thereof,
and Executive Director shall have approved such contractor or contractors, and the construction
contract or contracts, pursuant to Section 4.15 hereof. The parties acknowledge that the Principals
are or may be Related Parties to the Developer. However, nothing contained in this subsection (c)
shall be deemed to create any responsibility or liability on the part of Agency for selection of the
contractor(s) of for construction of the Improvements, the Developer being solely responsible for
such activities.
(h) Payment. Performance and Completion Bonds. Developer shall have
obtained payment bonds and perfonnance and completion bonds for off-site improvements as may be
required by City in connection with the development of the Site, in an amount and from a surety
company reasonably acceptable to the Executive Director. All bonds shall be issued by good and
solvent sureties qualified to do business in California and shall have a rating of A or better in the
most recent edition of Best's Key Rating Guide.
(i) Confirmation bv Lender Concernine: Disbursements. The Agency shall
have received written confinnation from a reasonably acceptable construction lender that such lender
agrees to cause the disbursement of funds consistent with Section 4.16 of this Agreement or that such
construction lender acknowledges that the disbursement of the Agency Disbursement Amount will be
accomplished by Agency in the manner described in Section 4.16 of this Agreement.
(j) TCAC Approval. All TCAC approvals required in connection with the
Preliminary Reservation of 9% Tax Credit for the Project have been obtained and remain in full force
and effect.
(k) Insurance. Agency shall have received evidence, satisfactory to Executive
Director, that all of the insurance policies required by Section 4.5, below, are in full force and effect.
(I) Representations and Warranties. The representations and warranties of
Developer contained in this Agreement shall be correct as of the request for disbursement of the
Agency Disbursement Amount as though made on and as of that date, and Executive Director shall
have received a certificate to that effect signed by an officer of Developer.
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(m) No Default. No Event of Default by Developer shall have occurred under
this Agreement, no event shall have occurred which, with the giving of notice or the passage of time
or both, would constitute an Event of Default by Developer under this Agreement, and Executive
Director shall have received a certificate to that effect signed by an officer of Developer.
All conditions set forth in Section 3.1, or to Agency's obligations hereunder, are for
Agency's benefit only and Executive Director may waive all or any part of such rights by written
notice to Developer and Escrow Holder. If Executive Director shall, within the applicable periods set
forth herein, disapprove of any of the items which are subject to Agency's approval, or if any of the
conditions set forth in this Agreement are not met within the times called for, Agency may thereafter
tenninate this Agreement without any further liability on the part of Agency by giving written notice
oftennination to the Escrow Holder, with a copy to Developer. Escrow Holder shall thereupon,
without further consent ftom Developer, return to each party the documents and funds deposited by
them.
3.3 Al!encv Disbursement Amount. Subject to the prior satisfaction of the Conditions
Precedent, the Agency agrees to disburse to the Agency Disbursement Amount. Disbursement of the
Agency Disbursement Amount shall be accomplished at the time(s) and in the manner prescribed by
Section 4.16 of this Agreement. The Agency Disbursement Amount is being disbursed as a loan, and
shall be repaid from Residual Receipts as set forth in the Agency Note. The Agency Note shall be
secured by the Agency Deed of Trust. The Agency Deed of Trust is to be recorded against the Site
(which deed of trust shall be subordinate to liens securing repayment of the Primary Construction
Loan and the Primary Pennanent Loan).
4. SCOPE OF DEVELOPMENT; INSURANCE AND INDEMNITY, FINANCING
4.1 ScoDe of DeveloDment. The Developer shall develop the Improvements in
accordance with the Scope of Development, and the approved plans, drawings and documents for the
Improvements. In the event of any inconsistency between the Scope of Development and the plans
for the Improvements which have been approved by the Agency and/or City, the approved
Development plans shall control.
4.2 Desil!n Review.
4.2.1 DeveloDer Submissions. Prior to the Date of Agreement, in connection with
its application for land use approvals by the City, the Developer has submitted "Basic Concept
Drawings" for the Improvements. Before commencement of construction of the Improvements or
other works of improvement upon the Site, the Developer shall submit to the City any plans and
drawings (collectively, the "Design Development Drawings") which may be required by the City
with respect to any pennits which are required to be obtained to develop the Improvements, which
the City shall comment on and return to the Developer within fifteen (15) days from the date of
receipt thereof. Developer, on or prior to the date set forth in the Schedule of Performance, shall
submit to the City such plans for the Improvements as required by the City in order for Developer to
obtain building pennits for the Improvements. Within thirty (30) days after the City's disapproval or
conditional approval of such plans, Developer shall revise the portions of such plans identified by the
City as requiring revisions and resubmit the revised plans to the City.
4.2.2 City Review and ADDroval. The City shall have all rights to review and
approve or disapprove all Design Development Drawings modified or first submitted after the Date
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of Agreement and other required submittals in accordance with the City Municipal Code, and nothing
set forth in this Agreement shall be construed to constitute the City's approval of any or all of the
Design Development Drawings or to limit or affect the City's review and right to approve, approve
subject to conditions, or disapprove Design Development Drawings, plans, drawings, applications, or
submittals.
4.2.3 Revisions. Any and all change orders or revisions required by the City and
its inspectors which are required under the Municipal Code and all other applicable Unifonn Codes
(e.g. Building, Plumbing, Fire, Electrical, etc.) and under other applicable laws and regulations shall
be included by the Developer in its Design Development Drawings and other required submittals and
shall be completed during the construction of the Improvements.
4.2.4 Defects in Plans. The Agency and the City shall not be responsible either to
the Developer or to third parties in any way for any defects in the Design Development Drawings,
nor for any structural or other defects in any work done according to the approved Design
Development Drawings, nor for any delays reasonably caused by the review and approval processes
established by this Section 4.2.4.
4.2.5 Land Use Approvals. Before commencement of construction ofthe
Improvements or other works of improvement upon the Site, the Developer shall, at its own expense,
secure or cause to be secured any and all land use and other entitlements, permits, and approvals
which may be required for the Improvements by the City or any other governmental agency affected
by or having jurisdiction over such construction or work, except for those which are the
responsibility of Agency as set forth herein. The Developer shall, without limitation, apply for and
secure, and pay all costs, charges and fees associated therewith, all pennits and fees required by the
City, County of San Luis Obispo, and other governmental agencies with jurisdiction over the
Improvements.
4.3 Time of Performance: Prol!ress Reports. The Developer shall submit all Design
Development Drawings, commence and complete all construction of the Improvements, and satisfY
all other obligations and conditions of this Agreement within the times established therefor in this
Agreement. Construction of the Improvements shall be commenced on or before the time established
therefor in the Schedule of Perfonnance. Once construction is commenced, it shall continuously and
diligently be pursued to completion and shall not be abandoned for more than fifteen (15) days
except when due to causes beyond the control and without the fault of Developer as set forth in
Section 7 .l( e). During the course of construction and prior to issuance of the Certificate of
Completion, Developer shall provide timely reports of the progress of construction when requested
by the Executive Director. Developer shall complete construction of all of the corresponding Phase
(i.e., the First Phase or the Second Phase) on the Site within fourteen (14) months after the first to
occur of (i) commencement of construction of such Phase or (ii) the time established by this
Agreement for commencement of construction of such Phase.
4.4 Cost of Construction. The cost of planning, designing, developing, and constructing
the Improvements shall be borne solely by the Developer; excepting for the disbursement by Agency
of the Agency Disbursement Amount by the Agency as provided herein. All fees imposed by any
governmental entity in connection with the acquisition of the Site or the development of the
Improvements shall be borne by Developer and shall be paid when due by Developer.
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I
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4.5 Insurance Reauirements. Commencing as of Conveyance and continuing
throughout the Required Covenant Period, Developer shall maintain at Developer's sole expense,
with insurers reasonably approved by Agency, the following policies of insurance in fonn and
substance reasonably satisfactory to Agency:
(a) workers' compensation insurance and any other insurance required by law in
connection with the Improvements or other work perfonned on the Site (to be in effect only while
work is being perfonned on the Site);
(b) upon commencement of construction of the Improvements and at all times
prior to completion of the Improvements, builder's risk-all risk insurance covering 100% of the
replacement cost of all Improvements (including off site and the materials) during the course of
construction in the event of fire, lightning, windstonn, vandalism, earthquake, malicious mischief
and all other risks nonnally covered by "all risk" coverage policies in the area where the Site is
located (including loss by flood if the Site is in an area designated as subject to the danger of flood);
(c) following completion of the Improvements, fire and hazard "all risk"
insurance covering 100% of the replacement cost of the Improvements in the event of fire, lightning,
windstonn, vandalism, earthquake, malicious mischief and all other risks nonnally covered by "all
risk" coverage policies in the area where the Site is located (including loss by flood if the Site is in an
area designated as subject to the danger of flood);
(d) public liability insurance in amounts reasonably required by the Executive
Director from time to time, and in no event less than $2,000,000 for "single occurrence;"
(e) property damage insurance in amounts reasonably required by the Executive
Director from time to time, and in no event less than $2,000,000; and
(f) all other insurance reasonably required by the Executive Director from time
to time.
All such insurance shall provide that it may not be canceled or materially modified
without 30 days prior written notice to Agency. The policies required under subparagraphs (b) and
(c) shall include a "lender's loss payable endorsement" (Fonn 438BFU) in fonn and substance
satisfactory to Agency, showing Agency as an additional insured and loss payee. Agency shall be an
additional insured in the policies required under subparagraphs (d) and (e). No such insurance shall
include deductible amounts to which Agency has not previously consented in writing. Certificates of
insurance for the above policies (and/or original policies, if required by Agency) shall be delivered to
Agency from time to time within 10 days after demand therefor. All policies insuring against
damage to the Improvements shall contain an agreed value clause sufficient to eliminate any risk of
co-insurance. No less than thirty (30) days prior to the expiration of each policy, Developer shall
deliver to Agency evidence of renewal or replacement of such policy reasonably satisfactory to the
Executive Director.
Coverage provided hereunder by Developer shall be primary insurance and not be
contributing with any insurance maintained by Agency or City, and the policy shall contain such an
endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the
benefit of the City and Agency. None of the above-described policies shall require Developer to
meet a deductible or self-insured retention amount of more than Five Thousand Dollars ($5,000.00)
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unless approved in writing by the Executive Director. All policies shall be written by good and
solvent insurers qualified to do business in California and shall have a policyholder's rating of A or
better in the most recent edition of "Best's Key Rating Guide -- Property and Casualty." The
required certificate shall be furnished by Developer at the time set forth herein.
4.5.2 Waiver of Subrof!ation. Developer hereby waives all rights to recover
against Agency (or any officer, employee, agent or representative of Agency) for any loss incurred
by Developer from any cause insured against or required by any Project Document to be insured
against; provided, however, that this waiver of subrogation shall not be effective with respect to any
insurance policy if the coverage thereunder would be materially reduced or impaired as a result.
Developer shall use its best efforts to obtain only policies which pennit the foregoing waiver of
subrogation.
4.6 Oblif!ation to Repair and Restore Damaf!e Due to Casualtv. If during the period
of construction the Improvements shall be totally or partially destroyed or rendered wholly or partly
uninhabitable by fire or other casualty required to be insured against by Developer, Developer shall
promptly proceed to obtain insurance proceeds and take all steps necessary to begin reconstruction
and, immediately upon receipt of insurance proceeds, to promptly and diligently cornmence the
repair or replacement of the Improvements to substantially the same condition as the Improvements
are required to be constructed pursuant to this Agreement, and Developer shall complete the same as
soon as possible thereafter so that the Improvements can be occupied as an affordable housing
project in accordance with this Agreement. In no event shall the repair, replacement, or restoration
period exceed fourteen (14) months from the date Developer obtains insurance proceeds unless the
Executive Director, in his or her sole and absolute discretion, approves a longer period of time.
Agency shall cooperate with Developer, at no expense to Agency, in obtaining any governmental
pennits required for the repair, replacement, or restoration. If, however, the then-existing laws of
any other governmental agencies with jurisdiction over the Site do not pennit the repair, replacement,
or restoration, Developer may elect not to repair, replace, or restore the Improvements by giving
notice to Agency (in which event Developer will be entitled to all insurance proceeds after paying to
Agency from such proceeds an amount equal to any assistance expended by Agency but Developer
shall be required to remove all debris from the Site) or Developer may reconstruct such other
improvements on the Site as are consistent with applicable land use regulations and approved by the
City, Agency, and the other governmental agency or agencies with jurisdiction, and the Agency may
pursue remedies of its choosing under this Agreement, including without limitation tennination.
4.7 Indemnitv. Developer shall defend (by counsel satisfactory to Agency), indemnify
and save and hold hannless Agency and City and their officers, contractors, agents and employees
(collectively, the "Indemnitees") from and against all claims, damages, demands, actions, losses,
liabilities, costs and expenses (including, without limitation, attorneys' fees and court costs) arising
from or relating to: (i) this Agreement (including without limitation Section 4.9 hereof); (ii) the
disbursement of the Agency Disbursement Amount; (iii) a claim, demand or cause of action that any
person has or asserts against Developer; (iv) any act or omission of Developer, any contractor,
subcontractor or material supplier, engineer, architect or other person with respect to the Site; or
(v) the ownership, occupancy or use of the Site. Notwithstanding the foregoing, Developer shall not
be obligated to indemnify the Agency with respect to the consequences of any act of gross
negligence or willful misconduct of the Agency. Developer's obligations under this Section 4.7 shall
survive the issuance of the Certificate of Completion and tennination of this Agreement; the
requirements under this Section 4.7 are in addition to and do not limit the obligations of the
Developer under the Agency Deed.
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The Developer shall reimburse the Agency immediately upon written demand for all
costs reasonably incurred by the Agency (including the reasonable fees and expenses of attorneys,
accountants, appraisers and other consultants, whether the same are independent contractors or
employees of Agency) in connection with the enforcement ofthe Project Documents and all related
matters including the following: (a) the Agency's commencement of, appearance in, or defense of
any action or proceeding purporting to affect the rights or obligations of the parties to any Project
Document, and (b) all claims, demands, causes of action, liabilities, losses, commissions and other
costs against which the Agency is indemnified under the Project Documents. Such reimbursement
obligations shall bear interest from the date occurring ten (10) days after the Agency gives written
demand to the Developer at the Applicable Interest Rate. Such reimbursement obligations shall
survive the issuance of the Certificate of Completion and tennination of this Agreement and are in
addition to and do not limit the obligations of the Developer under the Agency Deed.
The Developer shall indemnity the Agency from any real estate commissions or
brokerage fees which may arise from this Agreement or the Site, including without limitation the
acquisition of the Site by the Developer, or the leasing of dwelling units on the Site. The Developer
represents that it has engaged no broker, agent, or finder in connection with this transaction, and the
Developer agrees to hold the Agency harmless from any claim by any broker, agent or finder in
connection with this Agreement, the activities by the Developer, or the Site.
In addition, and without limitation to the foregoing, Developer agrees to indemnity,
defend and hold Agency hannless from and against any claim, action, suit, proceeding, loss, cost,
damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without
limitation, reasonable attorneys' fees), resulting from, arising out of, or based upon (i) the presence,
release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or
about, or the transportation of any such Hazardous Materials to or from, the Site which occurs after
the first to occur of (i) the acquisition of the Site by Agency (or Developer) or (ii) the Conveyance, or
(ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, pennit,
judgment or license relating to the use, generation, release, discharge, storage, disposal or
transportation of Hazardous Materials on, under, in or about, to or from, the Site which occurs after
the first to occur of (i) the acquisition of the Site by Agency (or Developer) or (ii) the Conveyance.
This indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel
indemnity after closing cost or expense arising from or out of any claim, action, suit or proceeding
for personal injury (including sickness, disease or death), tangible or intangible property damage,
compensation for lost wages, business income, profits or other economic loss, damage to the natural
resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on
the environment. At the request of the Developer, the Agency shall cooperate with and assist the
Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability,
deficiency, fine, penalty, punitive damage, or expense; provided that the Agency shall not be
obligated to incur any expense in connection with such cooperation or assistance. Upon the Closing,
the Developer shall take all necessary precautions to prevent the release into the environment of any
Hazardous Materials which are located in, on or under the Site. Such precautions shall include
compliance with all Governmental Requirements with respect to Hazardous Materials. In addition,
the Developer shall install and utilize such equipment and implement and adhere to such procedures
as are consistent with commercially reasonable standards as respects the disclosure, storage, use,
removal and disposal of Hazardous Materials.
4.8 Riehts of Access. Prior to the issuance of the Certificate of Completion, for purposes
of assuring compliance with this Agreement, representatives of Agency shall have the right of access
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to the Site, without charges or fees, at normal construction hours during the period of construction for
the purposes of this Agreement, including but not limited to, the inspection of the work being
performed in constructing the Improvements so long as Agency representatives comply with all
safety rules. Agency representatives shall, except in emergency situations, notify the Developer prior
to exercising its rights pursuant to this Section 4.8.
4.9 Compliance With Laws. Developer shall carry out the design, construction and
operation of the Improvements in conformity with all applicable laws, including all applicable state
labor standards (including without limitation provisions for payment of prevailing wages to the
extent applicable), the City zoning and development standards, building, plumbing, mechanical and
electrical codes, and all other provisions of the City Municipal Code, and the Fair Housing Act,
42 U.S.c. Section 3601 et seq. (and 24 C.F.R. Part 100), the Americans With Disabilities Act,
42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code
Section 11135, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and the California
Building Standards Code, Health and Safety Code Section 18900, et seq.
4.10 Nondiscrimination in Emplovment. Developer certifies and agrees that all persons
employed or applying for employment by it, its affiliates, subsidiaries, or holding companies are and
will be treated equally by it without regard to, or because of race, color, religion, ancestry, national
origin, sex, sexual orientation, age, pregnancy, childbirth or related medical condition, medical
condition (cancer related) or physical or mental disability.
4.11 Taxes and Assessments. Developer shall pay prior to delinquency all ad valorem
real estate taxes and assessments on the Site. Developer shall remove or have removed any levy or
attachment made on any of the Site or any part thereof which is owned or leased by Developer, or
assure the satisfaction thereof within a reasonable time, but in no event to exceed sixty (60) days. The
Developer shall additionally defend, indemnify, and hold hannless the Agency and the City from and
against any taxes, assessments, mechanic's liens, claims of materialmen and suppliers, or other
claims by private parties in connection with (a) activities undertaken by the Developer or (b) the Site.
4.12 Liens and Stop Notices. Developer shall not allow to be placed on the Site or any
part thereof any mechanic's or materialmen's lien or stop notice. If a claim of a lien or stop notice is
given or recorded affecting the Improvements the Developer shall within thirty (30) days of such
recording or service or within five (5) days of Agency's demand whichever last occurs:
(a) pay and discharge the same; or
(b) affect the release thereof by recording and delivering to Agency a surety bond
in sufficient form and amount, or otherwise; or
(c) provide Agency with indemnification from the Title Company against such
lien or other assurance which Agency deems, in its sole discretion, to be satisfactory for the payment
of such lien or bonded stop notice and for the full and continuous protection of Agency from the
effect of such lien or bonded stop notice.
4.13 Certificate of Completion. Promptly after completion of the Improvements in
conformity with this Agreement, Agency shall furnish the Developer with a "Certificate of
Completion," substantially in the form of attached hereto. Agency shall not unreasonably withhold
such Certificate of Completion. The Certificate of Completion shall be a conclusive determination of
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I
--,
satisfactory completion of the Improvements and the Certificate of Completion shall so state. Any
party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Site or
such applicable portion shall not (because of such ownership, purchase, lease or acquisition) incur
any obligation or liability under this Agreement except for those continuing covenants as set forth in
documents recorded against the Site prior to the recordation of the Certificate of Completion. If
Agency refuses or fails to furnish a Certificate of Completion after written request uom Developer,
Agency shall, within fifteen (15) days of receipt of written request therefor, provide Developer with a
written statement of the reasons Agency refused or failed to furnish the Certificate of Completion.
The statement shall also contain Agency's opinion of the actions Developer must take to obtain the
Certificate of Completion. The Certificate of Completion is not a notice of completion as referred to
in Section 3093 of the California Civil Code. At the discretion of the Executive Director, the Agency
may (but is not required to) issue a partial certificate of completion for the First Phase.
4.14 Further Assurances. Developer shall execute and acknowledge (or cause to be
executed and acknowledged) and deliver to Agency all documents, and take all actions, reasonably
required by Agency uom time to time to confirm the rights created or now or hereafter intended to be
created under the Project Documents or otherwise to carry out the purposes of the Project
Documents.
4.15 Financinl! of the ImDrovements.
4.15.1 ADDroval of Financinl!. As required herein and as an Agency Condition
Precedent to the disbursement of the Agency Disbursement Amount, Developer shall submit to
Agency evidence that Developer has obtained sufficient equity capital or has arranged for and
obtained a binding commitment for construction financing necessary to undertake the development
of the Site and the construction of the Improvements in accordance with this Agreement ("Proof of
Financing Commitments").
The Agency shall reasonably approve or disapprove such evidence of financing
within twenty (20) days of receipt of each of the respective submittals, provided that such submittal
is complete. Approval shall not be unreasonably withheld so long as the terms and conditions of the
financing are consistent with this Agreement, including without limitation acknowledgment and
consent by such lender to the Agency Developer CC&Rs, and are otherwise reasonable and
customary. Such consent may be included in an "Inter-Creditor Agreement" in connection with
which the Agency will agree to subordinate, for the benefit of such lender, the obligation to pay
Residual Receipts Note Payments in the event such lender should acquire the Developer's interest in
the Site upon foreclosure by such lender. The failure or refusal by the Agency to approve financing
that does not satisfY the foregoing criteria shall conclusively be deemed to be reasonable. If Agency
shall disapprove any such evidence of financing, Agency shall do so by Notice to Developer stating
the reasons for such disapproval and Developer shall endeavor to promptly obtain and submit to
Agency new evidence of financing. Agency shall approve or disapprove such new evidence of
financing in the same manner and within the same times established in this Section 4.15.1 for the
approval or disapproval of the evidence of financing as initially submitted to Agency. Developer
shall close the approved financing prior to or concurrently with the Closing.
The Proof of Financing Commitment shall include a copy of a legally binding, firm
and enforceable loan commitment(s) obtained by Developer uom one or more financial institutions
for the mortgage loan or loans for financing to fund the construction and completion of the
Improvements.
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(a) Tax Credits. The parties intend that the Developer is to obtain equity
financing for the construction and operation of the Development including the use of Tax Credits and
obtaining capital contributions from limited partners in the Development in consideration primarily
for the receipt of the Tax Credits received by the Developer with respect to the Development. In the
event an allocation of Tax Credits is not obtained by the Developer or the Developer is unable to
cause Tax Credits to be marketed generating capital for construction of the Improvements concurrent
with the issuance of multifamily conduit revenue bonds, as a provided in subsection (b) of this
Section 4.15.1, this Agreement shall be subject to tennination by the Agency. The following
requirements must be satisfied in order for the financing utilizing Tax Credits to be approved by the
Agency pursuant to this Section 4.15.1:
(i) The equity investment of the limited partners shall not be less
than thirty percent (30%) of the Tax Credits awarded, as reasonably detennined by the
Executive Director.
(ii) Not less than sixty-five percent (65%) of such equity
investment shall be payable no later than the completion of construction of the
Improvements, as evidenced by the issuance of the Certificate of Completion for the
Improvements.
The Developer understands and agrees that Developer and/or one or more of the Principals of
Developer may be required to provide an operating deficit guaranty, tax credit recapture guaranty,
and/or other guaranties which may be required with respect to the limited partners' investment in the
Development. If required for such financing, the execution of such guaranties shall be an additional
Condition Precedent for the purposes of Section 3.1.
Developer shall submit the following documents as evidence of financing: (a) a copy ofa
legally binding, finn and enforceable loan commitment(s) or approval(s) obtained by the Developer
from unrelated financial institutions for the mortgage loan or loans for financing to fund the
construction of the Development, subject to such lenders' reasonable, customary and nonnal
conditions and tenns, (b) a limited partnership agreement or funding agreement from the equity
investors in the Development which demonstrates that Developer has sufficient funds for such
construction, and that such funds have been committed to such construction, and a current financial
statement of Developer and Developer's other sources of equity capital, (c) a copy of a Preliminary
Reservation of Tax Credits (and when available, the Final Reservation of Tax Credits) from the
California Tax Credit Allocation Committee for Tax Credits for the construction of the Development
(or other evidence satisfactory to the Executive Director that Tax Credits will be available), (d) a
binding agreement for the purchase of the Tax Credits, and/or (e) other documentation satisfactory to
Agency as evidence of other sources of capital, all of which together are sufficient to demonstrate
that the Developer has adequate funds to construct and complete the Development.
4.15.2 No Encumbrances Except Mortl!al!es. Deeds of Trust. or Sale and
Lease-Back for Development. Mortgages, deeds of trust and subleases and subleases-back on the
Developer's leasehold shall be pennitted before the completion of the Improvements only with the
Agency's prior written approval, which shall not be unreasonably withheld as more fully described in
Section 4.15.2, but only for the purpose of securing loans of funds to be used for financing the
construction of the Improvements (including architecture, engineering, legal, construction period
carrying costs such as property taxes, insurance and interest, acquisition and land costs and related
direct costs as well as indirect costs) on or in connection with the Site, and the obtaining of a
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permanent loan in the amount of the outstanding balance of the construction loan. In no event,
however, shall the amount or amounts of indebtedness secured by mortgages or deeds of trust on the
Developer's interest as to the Site exceed the projected Developer's cost, as evidenced by a pro
forma and a construction contract which have been delivered to the Executive Director prior to the
Date of this Agreement and which set forth such costs, unless the written approval of the Executive
Director is first obtained. The Developer shall notify the Agency in advance of any mortgage, deed
of trust or sublease and sublease-back financing, if the Developer proposes to enter into the same
before completion of the construction of the Improvements. The words "mortgage" and "trust deed"
as used hereinafter shall include sublease and sublease-back. No liens shall be permitted on the Site,
excepting only as to Developer's leasehold interest. Upon receipt of Developer's request therefor,
Agency agrees to subordinate the Agency Deed of Trust and its rights to receive Residual Receipts
(under the Agency Note) to Permitted Senior Liens, so long as such lender(s) agree to provide
reasonable notice and the right but not the obligation for the Agency to cure. The Agency authorizes
the Executive Director to execute such instruments on behalf of the Agency without necessity of
further action by the governing board of the Agency.
4.15.3 Holder Not Oblieated to Construct Improvements. The holder of any
mortgage or deed of trust on the Developer's leasehold interest authorized by this Agreement shall
not be obligated by the provisions of this Agreement to construct, complete, or operate the
Improvements or any portion thereof, or to guarantee such construction, completion or operation; nor
shall any covenant or any other provision in this Agreement be construed so to obligate such holder.
Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Site
to any uses or to construct any improvements thereon, other than those uses or improvements
provided for or authorized by this Agreement.
4.15.4 Notice of Default to Morteaeee or Deed of Trust Holders: Riebt to Cure.
With respect to any mortgage or deed of trust granted by Developer as to its leasehold interest as
provided herein, whenever the Agency may deliver any notice or demand to Developer with respect
to any breach or default by the Developer under this Agreement, the Agency shall at the same time
deliver to each holder of record of any mortgage or deed of trust authorized by this Agreement a
copy of such notice or demand; provided that the failure to notify any holder of record shall not
vitiate or affect the effectiveness of notice to the Developer. Each such holder shall (insofar as the
rights granted by the Agency are concerned) have the right, at its option, within sixty (60) days after
the receipt of the notice, to cure or remedy or commence to cure or remedy and thereafter to pursue
with due diligence the cure or remedy of any such default and to add the cost thereof to the mortgage
debt and the lien of its mortgage or deed of trust. Nothing contained in this Agreement shall be
deemed to permit or authorize such holder to undertake or continue the construction or completion of
the Improvements, or any portion thereof (beyond the extent necessary to conserve or protect the
improvements or construction already made) without first having expressly assumed the Developer's
obligations to the Agency by written agreement reasonably satisfactory to the Agency. The holder,
in that event, must agree to complete, in the manner provided in this Agreement, the improvements to
which the lien or title of such holder relates, but on a schedule which takes into account the time
reasonably required for the holder to obtain title to and possession ofthe Developer's interest in the
Site, analyze and negotiate amendments to plans, specifications, construction contracts and operating
contracts or to negotiate new construction contracts and operating contracts. Any such holder
properly completing such improvement shall be entitled, upon compliance with the requirements of
Section 4.13 of this Agreement, to a Certificate of Completion. It is understood that a holder shall be
deemed to have satisfied the sixty (60) day time limit set forth above for commencing to cure or
remedy a Developer default which requires title and/or possession of the Developer's interest in the
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Site (or portion thereof) ifand to the extent any such holder has within such sixty (60) day period
commenced proceedings to obtain title and/or possession and thereafter the holder diligently pursues
such proceedings to completion and cures or remedies the default.
4.15.5 Failure of Holder to Complete Improvements. In any case where, sixty
(60) days after the holder of any mortgage or deed of trust creating a lien or encumbrance upon the
Site (or interest therein) or any part thereof receives a notice ITom Agency of a default by the
Developer in completion of construction of any of the Improvements under this Agreement, and such
holder is not vested with ownership of the Developer's interest in Site and has not exercised the
option to construct as set forth in Section 4.15, or if it has exercised the option but has defaulted
hereunder and failed to timely cure such default, the Agency may purchase the mortgage or deed of
trust by payment to the holder of the amount of the unpaid mortgage or deed of trust debt, including
principal and interest and all other sums secured by the mortgage or deed of trust. If the ownership
of the Site (or the Developer's interest therein) or any part thereof has vested in the holder, the
Agency, ifit so desires, shall be entitled to a conveyance ITom the holder to the Agency upon
payment to the holder of an amount equal to the sum of the following:
(a) The unpaid mortgage or deed of trust debt at the time title became
vested in the holder (less all appropriate credits, including those resulting ITom collection and
application of rentals and other income received during foreclosure proceedings);
(b) All expenses with respect to foreclosure including reasonable
attorneys' fees;
(c) The net expense, if any, incurred by the holder as a direct result of the
subsequent management of the Site or part thereof;
(d) The costs of any improvements made by such holder;
(e) An amount equivalent to the interest that would have accrued at the
rate(s) specified in the holder's loan documents on the aggregate of such amounts had all such
amounts become part of the mortgage or deed of trust debt and such debt had continued in existence
to the date of payment by the Agency; and
(f) Any customary prepayment charges imposed by the lender pursuant
to its loan documents and agreed to by the Developer.
The foregoing rights shall be in addition to those measures set forth in an Inter-Creditor
Agreement, and in addition shall supplement and not limit the Agency's rights under the Agency
Deed or by operation oflaw.
4.15.6 Ri!!ht of the A!!encv to Cure Mort!!a!!e or Deed of Trust Default. In the
event of a mortgage or deed of trust default or breach by the Developer whether prior to or after the
completion of the construction of any of the Improvements or any part thereof (continuing until the
end of the Required Covenant Period), Developer shall immediately deliver to Agency a copy of any
mortgage holder's notice of default. If the holder of any mortgage or deed of trust has not exercised
its option to construct, the Agency shall have the right but no obligation to cure the default. In such
event, the Agency shall be entitled to reimbursement from the Developer of all proper costs and
expenses incurred by the Agency in curing such default.
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In addition, the Developer, the Primary Construction Lender and the Primary Pennanent
Lender shall agree that in the event either such lender acquires the Development, including without
limitation upon exercise of foreclosure or assignment in lieu of foreclosure, such lender(s) shall so
notify the Agency and the Agency shall have not less than sixty (60) days following receipt by
Agency of such notice (given in the manner described in Section 8.2 hereof) to purchase the interests
of such lender in the Development (including the corresponding loan) for an amount equal to the
outstanding balance of the corresponding loan. The Developer agrees to provide documentation
evidencing the relinquishment of any and all rights to the Development and under the Agency Deed
in such event; provided that the failure to provide such documentation shall not be construed to
mean that the Developer retains any rights under the Agreement or the Agency Deed.
4.15.7 Limited Subordination of Covenants. It is contemplated that financing for
the Development will be provided from funds of the Developer, bond proceeds, the Agency
Disbursement Amount, proceeds of a conventional construction loan, proceeds of a bridge loan and
proceeds obtained in connection with the marketing by the Developer of Tax Credits. In connection
with the provision of the Primary Construction Loan and the Primary Pennanent Loan, Wells Fargo
has infonned the Developer that it will provide financing only in the event the Agency agrees to the
subordination of the Agency Deed of Trust and those provisions of the Agency Developer CC&R's
and the Agency Deed that limit rents to affordable rents and limit occupants to households of
specified incomes on the basis set forth in this Section 4.15.7. Developerrepresents that it has
diligently attempted to obtain commitments for construction and pennanent financing which would
not require a substantial additional investment of public funds and which do not require
subordination of affordability requirements, as described above, but has been unable to do so and has
detennined that no such commitments are available without such subordination. Accordingly,
subject to the tenns and conditions set forth in the Inter-Creditor and Subordination Agreement (and
specifically the rights of the Agency to notice and an opportunity to cure and to purchase the
corresponding loan), in the event foreclosure (or assignment in lieu of foreclosure) is completed
pursuant to deeds of trust securing the Primary Construction Loan or the Primary Permanent Loan,
the subsequent purchaser and all successors (but excepting from the effect of such exclusion the
Developer, the Principals or any person having any financial interest in the Developer or the
Principals) will accede to the rights of the Developer under the Agency Deed with the exception that
the requirements for affordability and limiting incomes of occupants under the Agency Developer
CC&Rs and the Agency Deed will no longer be applicable.
4.16 Mechanics of Disbursement of Al!encv Disbursement Amount.
4.16.1 Provided that the Conditions Precedent to Disbursement have first been
satisfied, the Agency shall make available to the Developer the Agency Disbursement Amount in
installments as follows: (i) fifty percent (50%) of that portion of the Agency Disbursement Amount
for the corresponding Phase shall be disbursed to City toward the City's fees at the time the City
customarily collects the City's Parks and Recreation Fee; (ii) twenty five percent (25%) of that
portion of the Agency Disbursement Amount for the corresponding Phase shall be disbursed to
Developer upon sign-off by the City's building official for the last structure to be built for the
corresponding Phase; and (iii) the balance of that portion of the Agency Disbursement Amount for
the corresponding Phase shall be disbursed to Developer at Stabilized Occupancy.
4.16.2 The Agency shall have no obligation to disburse any portion of the Agency
Disbursement Amount unless and until all of the Conditions Precedent to Disbursement are first
satisfied and the Conveyance has taken place.
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4.16.3 Neither the Agency nor the City shall provide any assistance pursuant to this
Agreement other than the disbursement by Agency of the Agency Disbursement Amount on the
tenns and conditions set forth in this Agreement. Excepting only for the Agency Disbursement
Amount, the Developer assumes all responsibility for any and all costs to provide the Development.
All amounts disbursed by the Agency to or for the benefit of the Developer pursuant to this
Agreement shall be applied to defray the cost of the Development.
4.16.4 The Developer has obtained advice from advisers of its choosing regarding
this Agreement and all matters which may pertain thereto, including without limitation any
consequences as to income tax or property tax, and neither the City nor the Agency has made any
representations or provided any advice in connection therewith.
4.17 Establishment and Maintenance of Accounts. At or prior to the time of
Conveyance, Developer shall establish and maintain (or shall cause the Approved Construction
and/or Pennanent Lender to establish and maintain) all accounts and funds referenced in this
Agreement, including without limitation the Capital Replacement Reserve and the Operating
Reserve.
The Developer shall provide to Agency, without charge, reports on the balances in such
accounts when such reports are made available to the limited partner and the Approved Construction
and/or Pennanent Lender but not less often than semi-annually. In addition, the Developer shall
deliver to Agency a comprehensive report which details Gross Revenues, Operating Expenses, the
Capital Replacement Reserve, the Operating Reserve, occupancy levels, compliance with the
affordable housing requirements and Senior housing requirements of this Agreement, and which shall
include an Audited Financial Statement. The report shall be delivered by Developer to Agency
within forty-five (45) days following the last day of the Year for which a report is being made. In
addition, the Developer shall make payments to the agency of "Reporting Amounts" (as provided in
the Agency Developer CC&Rs) to the extent provided therein.
The Developer agrees that: (i) the Developer shall cooperate fully with the Agency and its
designees in providing infonnation necessary or convenient, in the reasonable judgment of the
Agency, to the computation and verification of the all payments due by Developer under this
Agreement (including without limitation under the Agency Note and the Agency CC&Rs), including
without limitation a certified financial statement for the Developer each Year until the Agency Note
has been fully satisfied; if the Agency has reasonable cause to believe there has been an under-
reporting, or otherwise at the Agency's discretion, the Agency may conduct an audit. If the audit
reveals under-reporting of3% or more of the amount payable to Agency for the corresponding year,
the Developer shall reimburse the Agency for the cost of the audit); and (ii) the finn of Rosenow
Spevacek Group, or another finn or economist mutually acceptable to the Agency and the Developer,
will be employed to detennine the payments due, and the costs of employing such finn shall be borne
by the Agency.
5. COVENANTS AND RESTRICTIONS
5.1 Use Covenants. Developer covenants and agrees for itself, its successors, assigns,
and every successor in interest to the Site or any part thereof, that the Developer shall devote the Site
to the uses specified in and shall operate in confonnity with this Agreement, the Agency Developer
CC&Rs, the Agency Deed and the Tax Credit Regulatory Agreement, whichever is the more
restrictive in each case unless expressly provided to contrary effect herein. All uses conducted on the
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_____n_________ __
Site, including, without limitation, all activities undertaken by the Developer pursuant to this
Agreement, shall confonn to the Redevelopment Plan and all applicable provisions of the City
Municipal Code. The Agency Developer CC&Rs shall, to the greatest feasible extent, be interpreted
in a manner consistent with the Tax Credit Regulatory Agreement; provided that in the event of
express conflict which is required under federal law incident to the issuance of filed tax credits, the
Tax Credit Regulatory Agreement shall control.
5.2 Affordable Housinl! Reauirements.
5.2.1 Number of Affordable Units. Developer agrees to make available, restrict
occupancy to, and rent all of the Required Affordable Units at Affordable Rent. Subject to minor
modification if mutually approved by the parties, there shall be fifty-two (52) Required Affordable
Units on the Site, as follows: for the First Phase, thirty-nine (39) units at the Prescribed Rent Levels
and Tenant Mix, and for the Second Phase, thirteen (13) Units at the Prescribed Rent Levels and
Tenant Mix. All units shall be rented at the Prescribed Rent Levels and in accordance with the
prescribed tenant mix. An example of the calculation of Affordable Rent for the Housing Units is
attached hereto as Attachment No. 13 and incorporated herein. In the event the Tax Credit
Regulatory Agreement imposes stricter rent requirements, it shall control for so long as it remains in
effect.
5.2.2 Duration of Affordabilitv Reauirements. The Required Affordable Units
shall be maintained as rental units available at and rented to Very Low Income Households and
Lower Income Households tluoughout the Required Covenant Period, as more particularly set forth
in the Agency Developer CC&Rs.
5.2.3 Selection of Tenants. Developer shall be responsible for the selection of
tenants for the Required Affordable Units in compliance with the criteria set forth in Section 5.3 of
this Agreement. To the greatest extent legally allowable, preference will be afforded residents of the
City and their relatives.
5.2.4 Income of Tenants. Each tenant shall be a Very Low Income Household or
a Lower Income Household which meets the eligibility requirements established for the correspond
Required Affordable Unit, and Developer shall obtain a certification from each tenant renting or
leasing each housing unit which substantiates such fact. Developer shall verifY the income
certification of each tenant as set forth in Section 5.3 hereof. Prior to the first rental of a Unit in the
First Phase, and in addition upon request therefor by Agency, the Developer shall submit to Agency
or its designee, at Developer's expense, a completed income computation and certification fonn, in a
fonn to be provided by Agency.
5.2.5 Determination of Affordable Rent for the Housinl! Units. Each Required
Affordable Unit shall be rented at an "Affordable Rent" to be established as provided herein:
(a) The maximum monthly rental amount for the Required Affordable
Units to be rented to Very Low Income Households shall be established at one-twelfth (1112) of
thirty percent (30%) of fifty percent (50%) of Median Income for the Area for a household ofa size
appropriate to the housing unit, or, iflower, the maximum rent for such unit as detennined under the
Regulatory Agreement.
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(b) The maximum monthly rental amount for the Required Affordable
Units, if any, to be rented to Lower Income Households shall be established at one-twelfth (1112) of
thirty percent (30%) of sixty percent (60%) of Median Income for the Area for a household ofa size
appropriate to the housing unit, or, if lower, the maximum rent for such unit as detennined under the
Regulatory Agreement.
"Household size appropriate to the unit," for the purpose of the calculation of
rent herein (and without regard to actual occupancy), shall mean three persons for each two bedroom
unit; provided that the maximum monthly rental amount of the Required Affordable Units shall be
adjusted annually by the fonnula set forth above upon the promulgation of revised figures concerning
Median Income for the Area by regulation of the California Department of Housing and Community
Development ("HCD"). Actual rent charged may be less than such maximum rent.
Notwithstanding the foregoing portion of this Section 5.2.5, the Developer
agrees that rents shall be limited to the Prescribed Rent Levels. Development acknowledges that
such Prescribed Rent Levels will further diminish rents from the Development.
5.2.6 Relationship to Tax Credit Requirements. Notwithstanding any other
provisions of this Agreement, to the extent that the regulatory agreement executed by the Developer
as a requirement of the reservation of tax credits (the "Tax Credit Regulatory Agreement") is more
restrictive with respect to the requirements applicable to tenant selection, tenant income levels and
unit rent levels than as provided in this Agreement and the Agency Developer CC&Rs, the Tax
Credit Regulatory Agreement shall control and the Developer's compliance therewith shall not be a
default hereunder.
5.2.7 Senior Housinl!. All of the Units shall be occupied by Seniors, consistent
with all applicable requirements as set forth in the Fair Housing Act, 42 U.S.C. ~ 3601, et seq., and
24 C.F.R. ~ 100.300 et seq., and Sections 51.3 and 51.4 of the California Civil Code, as applicable.
5.3 Verifications.
5.3.1 Income Verification. Developer shall verify the income of each proposed
and existing tenant of the Required Affordable Units.
5.3.2 Annual Reports. Following the issuance of the Certificate of Completion,
and on or before March 15 of each Operating Year, Developer, at its expense, shall submit to Agency
or its designee the reports required pursuant to Health and Safety Code Section 33418, as the same
may be amended from time to time, with each such report to be in the fonn prescribed by Agency.
Each annual report shall cover the immediately preceding fiscal year.
The Developer shall maintain on file each tenant's executed lease and Income
Verification and rental records for the Required Affordable Units. The Developer shall maintain
complete and accurate records pertaining to the Required Affordable Units and will permit any duly
authorized representative of the Agency to inspect the books and records of the Developer pertaining
to this Agreement and the Required Affordable Units. The Developer shall prepare and submit to the
Agency (or its designee) annually commencing March 15,2003 and continuing throughout the
Required Covenant Period, a Certificate of Continuing Program Compliance. Such documentation
shall state for each Required Affordable Unit the unit size, the rental amount, the number of
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___n_
occupants, and the income of the occupants and any other infonnation which may be used to
detennine compliance with the tenns of this Agreement.
As part of its annual report, the Developer shall include a statement of amounts
payable by Developer under this Agreement (including the Agency Deed) supported by an Audited
Financial Statement (prepared by an independent accounting finn reasonable acceptable to the
Agency) which sets forth infonnation in detail sufficient for adequate review by the Agency for the
purposes of confinning those amounts payable by the Developer to the Agency as well as showing
the general financial perfonnance of the Affordable Housing Project ("Annual Financial Report").
Each Annual Financial Report shall include a profit and loss statement showing Gross Revenues,
Operating Expenses, Debt Service, Operating Reserve, Capital Replacement Reserve and Rental
Receipts, all certified by the Audited Financial Statement. In the event the amounts reported or paid
deviate by three percent (3%) or more from that amount detennined to be owing upon review of the
Developer's submittal, Developer shall reimburse Agency for its cost to review (which may require
engagement of auditors and attorneys) and collect the amounts owing (including attorney fees); such
amounts shall, until paid, be added to the amount payable under the Agency Note.
5.4 Maintenance of Site. Developer agrees for itself and its successors in interest to the
Site, to maintain the improvements on the Site in confonnity with the City Municipal Code and the
conditions set forth in the Agency Developer CC&Rs, and shall keep the Site free from any
accumulation of debris or waste materials. During such period, the Developer shall also maintain the
landscaping planted on the Site in a healthy condition.
5.5 Nondiscrimination Covenants. Developer covenants by and for itself and any
successors in interest that there shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion, sex, marital status, national origin or
ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor
shall the Developer itself or any person claiming under or through it establish or pennit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site or any
portion thereof. In addition, the Developer shall comply with all applicable Home Requirements.
The foregoing covenants shall run with the land.
Developer shall refrain from restricting the rental, sale or lease of the Site on the basis
of race, color, religion, sex, marital status, ancestry or national origin of any person. All such deeds,
leases or contracts shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
In deeds: "The grantee herein covenants by and for himself or herself, his or her
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, sex, marital status, national origin or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment ofthe land herein conveyed, nor shall the
grantee or any person claiming under or through him or her, establish or pennit any such practice or
practices of discrimination or segregation with reference to the selection, location, number, use or
occupancy oftenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The
foregoing covenants shall run with the land."
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In leases: "The lessee herein covenants by and for himself or herself, his or her
heirs, executors, administrators, and assigns, and all persons claiming under or through him or her,
and this lease is made and accepted upon and subject to the following conditions:
"That there shall be no discrimination against or segregation of any person or group
of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry
in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein
leased nor shall the lessee himself or herself, or any person claiming under or through him or her,
establish or pennit any such practice or practices of discrimination or segregation with reference to
the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or
vendees in the premises herein leased."
In contracts: "There shall be no discrimination against or segregation of, any
person, or group of persons on account of race, color, creed, religion, sex, marital status, national
origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
premises, nor shall the transferee himself or herself or any person claiming under or through him or
her, establish or pennit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy oftenants, lessees, subtenants, sublessees or
vendees of the premises."
5.6 Effect of Violation of the Terms and Provisions of this A!!reement After
Comuletion of Construction. Agency is deemed the beneficiary of the tenns and provisions of this
Agreement and of the covenants running with the land, for and in its own right and for the purposes
of protecting the interests of the community and other parties, public or private, in whose favor and
for whose benefit this Agreement and the covenants running with the land have been provided,
without regard to whether Agency has been, remains or is an owner of any land or interest therein in
the Site or in the Project Area ofthe Redevelopment Plan. Agency shall have the right, if the
Agreement or any covenants in any agreement pursuant to this Agreement, including without
limitation the Agency Developer CC&Rs and the Agency Deed, are breached, to exercise all rights
and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to
enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and such
covenants may be entitled.
6. DEVELOPER'S GENERAL REPRESENTATIONS AND WARRANTIES.
As a material inducement to Agency to enter into this Agreement, Developer represents and
warrants to Agency that:
6.1 Formation, Oualification and Comuliance. Developer (a) is a California limited
partnership validly existing and in good standing under the laws of the State of California; (b) has all
requisite and the authority to conduct its business and own, purchase, improve and sell its properties.
Developer is in compliance in all material respects with all laws applicable to its business and has
obtained all approvals, licenses, exemptions and other authorizations ftom, and has accomplished all
filings, registrations and qualifications with any governmental agency that are necessary for the
transaction of its business; (c) Developer has and will in the future duly authorize, execute and
deliver this Agreement and any and all other agreements and documents required to be executed and
delivered by the Developer in order to carry out, give effect to, and consummate the transactions
contemplated by this Agreement; (d) Developer does not have any material contingent obligations or
any material contractual agreements which could materially adversely affect the ability of the
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Developer to carry out its obligations hereunder; (e) There are no material pending or, so far as is
known to the Developer, threatened, legal proceedings to which the Developer is or may be made a
party or to which any of its property is or may become subject, which have not been fully disclosed
by the Developer to the Agency in this Agreement which could materially adversely affect the ability
of the Developer to carry out its obligations hereunder; and (t) There is no action or proceeding
pending or, to the Developer's best knowledge, threatened, looking toward the dissolution or
liquidation of the Developer and there is no action or proceeding pending or, to the Developer's best
knowledge, threatened by or against the Developer which could affect the validity and enforceability
of the tenns of this Agreement, or materially and adversely affect the ability of the Developer to
carry out its obligations hereunder.
Each of the foregoing items (a) to (t), inclusive, shall be deemed to be an ongoing
representation and warranty. The Developer shall advise the Agency in writing if there is any change
pertaining to any matters set forth or referenced in the foregoing items (a) to (t), inclusive.
6.2 Execution and Performance of Proiect Documents. Developer has all requisite
authority to execute and perfonn its obligations under the Project Documents. The execution and
delivery by Developer of, and the perfonnance by Developer of its obligations under, each Project
Document has been authorized by all necessary action and do not and will not violate any provision
of, or require any consent or approval not heretofore obtained under, any articles of incorporation,
by-laws or other governing document applicable to Developer.
6.3 Covenant Not to Transfer Except in Conformity. Excepting for the rental of
individual dwelling units to occupants in the regular course of business (which rental activity shall
not be limited by this Section 6.3), the Developer shall not sell, lease, or otherwise transfer or convey
all or any part of the Site, or any interest therein, unless the Developer has first obtained the prior
written consent of the Executive Director, which consent may be granted or refused in the Executive
Director's sole and absolute discretion; except Agency shall upon receipt of written request therefor
consent to a sale by Developer of its interest in the Development to General Partner of Courtland-
Arroyo Grande, L.P., after the expiration of the tax credit period. Any sale, lease, transfer or
conveyance without such consent shall, at Agency's option, be void. A change in ownership of the
Developer resulting in the individuals executing this Agreement on behalf of Developer retaining less
than fifty-one percent (51%) ownership of all outstanding shares of Developer shall be deemed to
violate this Section 6.3. In connection with the foregoing consent requirement, Developer
acknowledges that Agency relied upon Developer's particular expertise in entering into this
Agreement and continues to rely on such expertise to ensure the satisfactory completion of all of the
Improvements, and the marketing and rental of the Required Affordable Units to Very Low Income
Households and Lower Income Households to afford the community a long-term, quality affordable
housing resource.
7. DEFAULTS, REMEDIES, AND TERMINATION.
7.1 Default Remedies. Subject to the extensions of time set forth in Section 7.12 of this
Agreement, failure by either party to perfonn any action or covenant required by this Agreement
within the time periods provided herein following notice and failure to cure as described hereafter,
constitutes a "Default under this Agreement. A party claiming a Default shall give written notice of
Default to the other party specifying the Default. Except as otherwise expressly provided in this
Agreement, and without limiting or affecting rights of parties hereto to tenninate this Agreement, the
claimant shall not institute any proceedings against any other party, and the other party shall not be in
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!
I
Default if such party within thirty (30) days from receipt of such notice immediately, with due
diligence, commences to cure, correct or remedy the specified Default and shall complete such cure,
correction or remedy with diligence.
7.2 Institution of Le2al Actions. In addition to any other rights or remedies and subject
to the restrictions otherwise set forth in this Agreement, any party may institute an action at law or
equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any
Default, to recover damages for any Default, or to obtain any other remedy consistent with the
purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County
of Los Angeles, State of Cali fomi a, in an appropriate municipal court that county.
7.3 Termination bv the DeveloDer. In the event that: (i) the Developer is not in default
under this Agreement and Agency does not attempt to effect the Conveyance to the Developer
subject to the conditions and in the manner and condition and by the date provided in this
Agreement; or (ii) on or before the Tax Credit Deadline, the Developer fails to obtain a preliminary
reservation by TCAC for tax credits for the Development, or (iii) in the event of any default of
Agency prior to the Conveyance which is not cured within the time set forth in Section 7.1 hereof,
and any such failure is not cured within the applicable time period after written demand by the
Developer, then this Agreement may, at the option of the Developer, be terminated by Notice thereof
to Agency. From the date of the Notice oftermination of this Agreement by the Developer to
Agency and thereafter, this Agreement shall be deemed terminated and there shall be no further
rights or obligations among the parties.
7.4 Termination bv A2encv. In the event that the Developer fails to obtain a
preliminary reservation for tax credits by TCAC or to provide by the Tax Credit Deadline evidence
satisfactory to the Executive Director that tax credit proceeds will be available for the Development
prior to the time established in the Schedule of Performance for the satisfaction of the Agency's
Conditions Precedent:
7.4.1 Developer (or any successor in interest) assigns this Agreement or any rights
therein or in the Site in violation of this Agreement; or
7.4.2 Any Condition Precedent to Conveyance has not been fulfilled; or
7.4.3 Developer fails to execute (as lessee/covenantee) the Agency Developer
CC&Rs, the Agency Deed or the Memorandum of Agreement; or
7.4.4 Developer is otherwise in default of this Agreement and fails to cure such
default within the time set forth in Section 7.1 hereof;
then this Agreement and any rights of the Developer or any assignee or transferee
with respect to or arising out of the Agreement or the Site, shall, at the option of Agency, be
terminated by Agency by Notice thereof to the Developer. From the date of the Notice of termination
of this Agreement by Agency to the Developer and thereafter this Agreement shall be deemed
terminated and there shall be no further rights or obligations among the parties, except that Agency
may pursue any remedies it has hereunder.
7.5 AcceDtance of Service of Process. In the event that any legal action is commenced
against the Agency, service of process on the Agency shall be made by personal service upon the
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-- ---- --...-------------------- --..-.
Executive Director or in such other manner as may be provided by law. In the event that any legal
action is commenced against the Developer, service of process on the Developer shall be made in
such manner as may be provided by law and shall be effective whether served inside or outside of
California.
7.6 Ri!!hts and Remedies Are Cumulative. Except as otherwise expressly stated in this
Agreement, the rights and remedies of the parties are cumulative, and the exercise by a party of one
or more of such rights or remedies shall not preclude the exercise by it, at the same or different times,
of any other rights or remedies for the same default or any other default by another party.
7.7 Inaction Not a Waiver of Default. Any failures or delays by either party in
asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default
or of any such rights or remedies, or deprive either such party of its right to institute and maintain
any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights
or remedies.
7.8 ADDlicable Law. The laws of the State of California shall govern the interpretation
and enforcement of this Agreement.
7.9 !Intentionally Omitted!
7.10 Enforced Delav: Extension of Times of Performance. In addition to specific
provisions of this Agreement, perfonnance by any party hereunder shall not be deemed to be in
Default, and all perfonnance and other dates specified in this Agreement shall be extended, where
delays or Defaults are due to: war; insurrection; riots; floods; earthquakes; fires; casualties; acts of
God; acts of the public enemy; acts or omissions of another party, or acts or failures to act of the City
or any other public or governmental agency or entity (excepting that acts or failures to act of Agency
or City shall not excuse perfonnance by Agency or City). Notwithstanding anything to the contrary
in this Agreement, an extension of time for any such cause shall be for the period of the enforced
delay and shall commence to run from the time of the commencement of the cause, if notice by the
party claiming such extension is sent to the other party within thirty (30) days of the commencement
of the cause. Times of perfonnance under this Agreement may also be extended in writing by the
mutual agreement of Agency and Developer. The Agency Executive Director shall have the
authority to approve extensions on behalf of Agency to approve extensions of time not to exceed a
cumulative total of one hundred eighty (180) days. Notwithstanding any provision of this Agreement
to the contrary, the inability to obtain a preliminary reservation by TCAC or the failure to conclude
the marketing of tax credits, for any reason, or the lack of funding to complete the Development or
failure or refusal by the Owner to convey the Property or to provide the Owner/ Agency Indemnity or
if the Due Diligence to Site is not accomplished to the reasonable satisfaction of Agency shall not
constitute grounds of enforced delay pursuant to this Section 7.10. This Section 7. I 0 shall not be
deemed applicable to the Agency Deed unless expressly incOlporated by reference therein.
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7.11 Transfers of Interest in Al!reement or of Site. Section 7.11, and all subsections of
this Section 7.11, shall apply to transfers prior to the Conveyance. Any transfers occurring or
proposed after the Conveyance are subject to the provisions therefor of the Agency Developer
CC&Rs. In the event of conflict between the provisions of this Section 7.11 and the Agency
Sublease (concerning transfers of interest), the Agency Sublease shall control.
7.11.1 Prohibition. The qualifications and identity ofthe Developer are of
particular concern to Agency. It is because ofthose qualifications and identity that Agency has
entered into this Agreement with the Developer. For the period commencing upon the date of this
Agreement and until the end of the Required Covenant Period, no voluntary or involuntary successor
in interest of the Developer shall acquire any rights or powers under this Agreement, nor shall the
Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing
or lease of the whole or any part of the Site or the Development thereon (excepting the rental Lease
of Units to Occupants) without prior written approval of Agency, except as expressly set forth herein.
7.11.2 Permitted Transfers. Notwithstanding any other provision of this
Agreement to the contrary, the Agency shall not unreasonably withhold its approval of an assignment
of this Agreement or conveyance of the interest in Site, or any part thereof, in connection with any of
the following:
(a) Any transfers to an entity or entities in which the Developer retains a
minimum of fifty-one percent (51 %) of the ownership or beneficial interest and retains management
and control of the transferee entity or entities.
(b) The conveyance or dedication of any portion of the Site to the City or
other appropriate govemmental agency, or the granting of easements or permits to facilitate
construction of the Development.
In the event of a proposed assignment by Developer under subparagraphs 7.11 (a)
through 7.11 (b), inclusive, above, Developer agrees that at least thirty (30) days prior to such
assignment it shall give written notice to Agency including a request for approval of such assignment
and satisfactory evidence that the assignee has assumed jointly with Developer the Obligations of
this Agreement.
7.11.3 Al!encv Consideration of Reauested Transfer. Agency agrees that it will
consider in good faith a request made pursuant to this Section 7.11 after the achievement of
occupancy of ninety percent (90%) or more of the Housing Units in confonnity with this Agreement
following the issuance by Agency of a Certificate of Completion for the last building to be
constructed as part of the Improvements, provided the Developer delivers written notice to Agency
requesting such approval and provided further that the Tax Credit Regulatory Agreement and the
Agency Developer CC&Rs remain in full force and effect. Such notice shall be accompanied by
sufficient evidence regarding the proposed assignee's or purchaser's development and/or operational
qualifications and experience, its financial commitments and resources, and the financial terms of
such assignment (including the consideration proposed to flow to the Developer or Related Entity
and/or any of the Principals) in sufficient detail to enable Agency to evaluate the proposed assignee
or purchaser pursuant to the criteria set forth in this Section 7.11, and as reasonably determined by
Agency. Notwithstanding the foregoing, the transfer oflimited partnership interests to tax credit
investors shall not entitle the Agency to receive compensation (in connection with such transfer to
tax credit investors). Agency shall evaluate each proposed transferee or assignee on the basis of its
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I
development and/or qualifications and experience in the operation of facilities similar to the
Development, and its financial commitments and resources, and may reasonably disapprove any
proposed transferee or assignee, during the period for which this Section 7.11 applies, which Agency
reasonably detennines does not possess sufficient qualifications. An assignment and assumption
agreement in fonn satisfactory to Agency's legal counsel shall also be required for all proposed
assignments. The Developer agrees and acknowledges that in connection with any such assignment
approved by the Agency pursuant to this Agreement, the Developer shall remain liable for
perfonnance pursuant to this Agreement for a period of five (5) years following such assignment;
provided that the five-year limitation shall not apply (and the ongoing liability of Developer shall not
be thereby limited) in connection with the transfer oflimited partnership interests to tax credit
investors. Within thirty (30) days after the receipt of the Developer's written notice requesting
approval of an assignment or transfer pursuant to this Section 7.11, including assignments that do not
require AgencylExecutive Director approval, Agency shall either approve or disapprove such
proposed assignment or shall respond in writing by stating what further infonnation, if any, Agency
reasonably requires in order to detennine the request complete and detennine whether or not to grant
the requested approval. Upon receipt of such a response, the Developer shall promptly furnish to
Agency such further infonnation as may be reasonably requested.
7.11.4 Successors and Assitms. All of the tenns, covenants and conditions of this
Agreement shall be binding upon the Developer and its pennitted successors arid assigns. Whenever
the tenn "Developer" is used in this Agreement, such tenn shall include any other pennitted
successors and assigns as herein provided.
7.11.5 Assitmment bv Al!encv. Agency may assign or transfer any of its rights or
obligations under this Agreement with the approval of the Developer, which approval shall not be
unreasonably withheld; provided, however, that Agency may assign or transfer any of its interests
hereunder to the City at any time without the consent of the Developer.
7.12 Non-Liabilitv of Officials and EmDlovees of Al!encv. No member, official, officer
or employee of Agency or the City shall be personally liable to the Developer, or any successor in
interest, in the event of any Default or breach by Agency (or the City) or for any amount which may
become due to the Developer or its successors, or on any obligations under the tenns of this
Agreement.
7.13 RelationshiD Between Al!encv and DeveloDer. It is hereby acknowledged that the
relationship among the Agency and Developer is not that of a partnership or joint venture and that
Agency and Developer shall not be deemed or construed for any purpose to be the agent of the other.
Accordingly, except as expressly provided in this Agreement, including the Attachments hereto,
neither the Agency nor the City shall have no rights, powers, duties or obligations with respect to the
development, operation, maintenance or management of the Development.
7.14 Al!encv and City ADDrovals and Actions. Whenever a reference is made herein to
an action or approval to be undertaken by the Agency, the Executive Director is authorized to act on
behalf of the Agency unless specifically provided otherwise or the law otherwise requires. When a
reference is made herein to an action or approval to be undertaken by the City the City Manager is
authorized to act on behalf of the City unless specifically provided otherwise or the law otherwise
requires.
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7.15 Real Estate Brokers. Agency and Developer each represent and warrant to each
other that no broker or finder is entitled to any commission or finder's fee in connection with this
transaction, and each agrees to defend and hold harmless the other from any claim to any such
commission or fee resulting from any action on its part.
7.16 Attornevs' Fees. In any action among the parties to interpret, enforce, reform,
modify, rescind, or otherwise in connection with any of the terms or provisions of this Agreement,
the prevailing party in the action shall be entitled, in addition to any other relief to which it might be
entitled, reasonable costs and expenses including, without limitation, litigation costs and reasonable
attorneys' fees.
8. MISCELLANEOUS
8.1 Oblil!ations Unconditional and Independent. Notwithstanding the existence at any
time of any obligation or liability of Agency to Developer, or any other claim by Developer against
Agency, in connection with the Site or otherwise, Developer hereby waives any right it might
otherwise have (a) to offset any such obligation, liability or claim against Developer's obligations
under this Agreement (including without limitation the attachments hereto), or (b) to claim that the
existence of any such outstanding obligation, liability or claim excuses the nonperformance by
Developer of any of its obligations under the Project Documents.
8.2 Notices. All notices, demands, approvals and other communications provided for in
the Project Documents shall be in writing and be delivered to the appropriate party at its address as
follows:
If to Developer: Courtland-Arroyo Grand, L.P.
c/o Meta Housing Corporation
4100 West Alameda Avenue, Suite 205
Burbank, CA 91505
Telephone: (818) 559-2412
Telecopier: (818) 559-2449
If to Agency: Arroyo Grande Redevelopment Agency
214 East Branch Street
Arroyo Grande, CA 93421
Attn: Executive Director
with copy to: Stradling Y occa Carlson & Rauth
Attention: Mark J. Huebsch
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
Telephone: (949) 725-4167
Telecopier: (949) 725-4100
Addresses for notice may be changed from time to time by written notice to all other
parties. All communications shall be effective when actually received; provided, however, that
nonreceipt of any communication as the result of a change of address of which the sending party was
not notified or as the result of a refusal to accept delivery shall be deemed receipt of such
communication.
42
OOCSOC\881805v7\22707.oooo
.- -"
8.3 Survival of Representations and Warranties. All representations and warranties in
the Project Documents shall survive the Conveyance and the rental of the Required Affordable Units
and have been or will be relied on by Agency notwithstanding any investigation made by Agency.
8.4 No Third Parties Benefited Except for City. This Agreement is made for the
purpose of setting forth rights and obligations of Developer and Agency, and no other person (except
for the City) shall have any rights hereunder or by reason hereof. Except for the City, which shall be
deemed to be a third party beneficiary of this Agreement (including without limitation the
Attachments hereto), there shall be no third party beneficiaries of this Agreement.
8.5 Bindinl! Effect: Assil!nment of Oblil!ations. This Agreement shall bind, and shall
inure to the benefit of, Developer and Agency and their respective successors and assigns. Developer
shall not assign any of its rights or obligations under any Project Document without the prior written
consent of the Executive Director, which consent may be withheld in the Executive Director's sole
and absolute discretion. Any such assignment without such consent shall, at Agency's option, be
void. In connection with the foregoing consent requirement, Developer acknowledges that Agency
relied upon Developer's particular expertise in entering this Agreement and continues to rely on such
expertise to ensure the satisfactory completion of the Improvements and the use of the Required
Affordable Units in conformity with this Agreement.
8.6 Counterparts. Provided that the written approval of the Executive Director is first
obtained, any Project Document may be executed in counterparts, all of which, taken together, shall
be deemed to be one and the same document.
8.7 Prior Al!reements: Amendments: Consents. This Agreement (together with the
other Project Documents) contains the entire agreement between Agency and Developer with respect
to the Site, and all prior negotiations, understandings and agreements with respect to such matters,
including without limitation the Prior Agreement, are superseded by this Agreement and such other
Project Documents. No modification of any Project Document (including waivers of rights and
conditions) shall be effective unless in writing and signed by the party against whom enforcement of
such modification is sought, and then only in the specific instance and for the specific purpose given.
This Agreement is executed in three (3) duplicate originals, each of which is deemed to be an
original. This Agreement includes pages I through 45 and Attachments I through 17, which
constitutes the entire understanding and agreement of the parties.
This Agreement integrates all of the terms and conditions mentioned herein or
incidental hereto, and supersedes all negotiations or previous agreements between the parties or their
predecessors in interest with respect to all or any part of the subject matter hereof.
All waivers of the provisions of this Agreement must be in writing by the appropriate
authorities of the Agency and the Developer, and all amendments hereto must be in writing by the
appropriate authorities of the Agency and the Developer.
8.8 Governinl! Law. All of the Project Documents shall be governed by, and construed
and enforced in accordance with, the laws of the State of California. Developer irrevocably and
unconditionally submits to the jurisdiction of the Superior Court of the State of California for the
County of San Luis Obispo or the United States District Court of the Central District of California, as
Agency may deem appropriate, or, if required, the Municipal Court of the State of California for the
County of San Luis Obispo, in connection with any legal action or proceeding arising out of or
43
OOCSOCI881805v7\22707.0000
--~~ --- .~.-
relating to this Agreement or the other Project Documents. Assuming proper service of process,
Developer also waives any objection regarding personal or in rem jurisdiction or venue.
8.9 Severability of Provisions. No provision of any Project Document that is held to be
unenforceable or invalid shall affect the remaining provisions, and to this end all pro-visions of the
Project Documents are hereby declared to be severable.
8.10 Headine:s. Article and Section headings are included in the Project Documents for
convenience of reference only and shall not be used in construing the Project Documents.
8.11 Conflicts. In the event of any conflict between the provisions of this Agreement and
those of any other Project Document, this Agreement shall prevail; provided however that, with
respect to any matter addressed in both such documents, the fact that one document provides for
greater, lesser or different rights or obligations than the other shall not be deemed a conflict unless
the applicable provisions are inconsistent and could not be simultaneously enforced or performed.
8.12 Time of the Essence. Time is of the essence of all of the Project Documents.
8.13 Conflict of Interest. No member, official or employee of Agency shall have any
direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement
which is prohibited by law.
8.14 Warranty Ae:ainst Pavment of Consideration. Developer warrants that it has not
paid or given, and will not payor give, any third person any money or other consideration for
obtaining this Agreement.
8.15 Nonliabilitv of Ae:encv Officials and Emplovees. No member, official or employee
of Agency shall be personally liable to Developer, or any successor in interest, in the event of any
default or breach by Agency or for any amount which may become due to Developer or successor, or
on any obligation under the terms of this Agreement.
44
OOCSOC\881805v7\22707.0000
L --------- --
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on
the dates hereinafter respectively set forth.
DEVELOPER:
COURTLAND-ARROYO GRANDE, L.P.
(a California limited partnership)
By: Foundation for Affordable Housing, Inc.
a California Corporation
(Its: General Partner)
By:
Thomas E. Willard
Its: President
By: MFP A, Inc.
a California Corporation
(Its: General Partner)
By:
Sean Clark
Its: Vice-President
AGENCY:
ARROYO GRANDE REDEVELOPMENT
AGENCY, a public body, corporate and politic
By:
Steven Adams, Executive Director
ATTEST:
Kelly Wetmore
Director of Administrative Services/ Agency Secretary
45
DOCSOCl881805v7\22707.0000
----"- I
ATTACHMENT NO.1
SITE MAP
Attachment No.1
DOCSOC\881805v7\22707.oooo ,
!
ATTACHMENT NO.2
LEGAL DESCRIPTION OF THE SITE
Attachment No.2
DOCSOC\BBIB05v7l22707.0000
~---
ATTACHMENT NO.3
SCHEDULE OF PERFORMANCE
For the purposes of this Schedule of Performance, the "Date of Agreement" is March 20,
2002. The Executive Director may extend by not more than ninety (90) days the time under this
Schedule of Performance by which any obligation of Developer shall be performed.
1. Satisfaction of Conditions Precedent to Not later than December 30, 2002.
Convevance. Developer shall satisfy the
Conditions Precedent to Conveyance.
2. Closing. The Conveyance is effected Within thirty (30) days after the satisfaction of
transferring a interest in the Site to the the Condition Precedent to Conveyance and not
Developer (by the Agency Deed, to be later than the three hundredth (300th) day after the
evidenced and made of public record by Date of Agreement.
the recording of the Memorandum of
Agreement, to be recorded immediately
following recordation of the Agency
Developer CC&Rs), with the recorded
Agency Developer CC&Rs and
MemorandwnofAgreememtobe
delivered to the Agency.
3. TCAC Approval. The Developer shall Not later than December 30, 2002.
have obtained a preliminary reservation of
tax credits by TCAC.
4. Commencement of Construction. The For the First Phase: by the earlier of: (i) the first
Developer shall have commenced anniversary of the Conveyance, or
construction of the Improvements. (ii) December 30, 2003.
For the Second Phase: by the earlier of: (i) the
second anniversary of the Conveyance, or
(ii) December 30, 2004.
5. Completion of Construction. Developer Within fourteen (14) months after the earlier of
shall complete construction of the (i) the commencement of construction of the
Improvements. corresponding Phase or (ii) the time established
in this Schedule of Performance for the
commencement of construction of the
corresponding Phase of the Improvements.
6. Rental Units Occupied. Developer causes Within one hundred (100) days after the earlier of
the Required Affordable Units to be (i) completion of construction or (ii) the time
occupied using the Prescribed Rent Levels established for completion of construction in this
in conformity with the Agreement. Schedule of Performance.
Attachment No.3
Page 1 of 1
DOCSOCI881805v7\22707.0000
,
I
_..m_ ._----,-------- I
ATTACHMENT NO.4
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
TO: Arroyo Grande Redevelopment Agency
214 East Branch Street
. Arroyo Grande, California 93421
Attention: Executive Director
The undersigned, , being duly authorized to execute this Certificate of
Continuing Program Compliance (this "Certificate") on behalf of Courtland-Arroyo Grande, L.P., a
California limited partnership (the "Developer"), hereby represents and warrants that:
1. He has read and is thoroughly familiar with the provisions of the Disposition and
Development/Affordable Housing Agreement (the "DDA") by and between the Agency and the
Developer dated as of March 20, 2002, including without limitation the Agency Developer CC&Rs,
the Agency Deed, and other attachments thereto. Capitalized tenns used herein shall have the same
meaning as that set forth in the DDA; and
2. As of the date of this Certificate, the following number of completed residential units
at the Site: (i) are currently occupied by Very Low Income Households at Affordable Rent; (ii) are
currently occupied by Lower Income Households at Affordable Rent; or (iii) are currently vacant and
being held available for occupancy by a Very Low Income Household or a Lower Income Household
and have been so held continuously since the date a Very Low Income Household or a Lower Income
Household vacated such unit:
Occupied at an Affordable Rent by:
Very Low Income Households (50%) # of Units, Nos.:
Lower Income Households (60%) # of Units, Nos.:
Occupied at Home Rent # of Units, Nos.:
Vacant:
a. Held for occupancy by:
1. Very Low Income Households (50%) # of Units, Nos.:
11. Lower Income Households (60%) # of Units, Nos.:
111. Home Units # of Units, Nos.:
b. Last occupied by:
i. Very Low Income Households (50%) # of Units, Nos.:
ii. Lower Income Households (60%) # of Units, Nos.:
iii. Home Units # of Units, Nos.:
3. At no time since the date of filing of the last Certification of Continuing Program
Compliance have less than one hundred percent (100%) of the Required Affordable Units as
Attachment No.4
Page 1 of2
DOCSOC\881805v7\22707.0000
completed units in the Project been occupied by, or been last occupied, or have been available for
occupancy by Very Low Income Households or Lower Income Households at an Affordable Rent.
4. The Developer is not in default under the terms of the Agreement, including without
limitation the attachments thereto (such as the Agency Deed and the Agency Developer CC&Rs).
COURTLAND-ARROYO GRANDE, L.P.
(a California limited partnership)
By: Foundation for Affordable Housing, Inc.
a California Corporation
(Its: General Partner)
By:
Thomas E. Willard
Its: President
By: MFP A, Inc.
a California Corporation
(Its: General Partner)
By:
Sean Clark
Its: Vice-President
(DEVELOPER)
Attachment No.4
Page 2 of2
DOCSOC\881805v7\22707.0000 I
I
i
!
.
I
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ATTACHMENT NO.5
[INTENTIONALLY OMITTED]
[To Come]
Attachment No.5
DOCSOC\881805v7\22707.0000
--.-...-- - --.----....,-----
ATTACHMENT NO.6
AGENCY DEED
Recording Requested by: )
)
When Recorded Return to and )
Mail Tax Statements to: )
)
)
)
)
Attn: )
(Space above for Recorder's Use.)
This document is exempt from the payment of a recording fee
pursuant to Government Code Section 6103.
By:
GRANT DEED
For a valuable consideration, receipt of which is hereby acknowledged,
The ARROYO GRANDE REDEVELOPMENT AGENCY, a public body, corporate and
politic, of the State of California, ("Grantor"), acting to carry out the Redevelopment Plan
("Redevelopment Plan") for the Arroyo Grande Redevelopment Project ("Project"), under the
Community Redevelopment Law of California, hereby grants to COURTLAND-ARROYO
GRANDE, a California limited partnership, herein called ("Grantee"), the real property hereinafter
referred to as the "Site," described in Exhibit A attached hereto and incorporated herein, subject to
the existing easements, restrictions and covenants or record described there and further subject to the
Covenants, Conditions and Restrictions where are described in Exhibit B hereto (the "Agency
Developer CC&Rs") and incorporated by reference herein.
1. The Property is conveyed in accordance with and subject to the Redevelopment Plan
("Redevelopment Plan") which was approved and adopted by Ordinance No. 479CS of the City
Council of the City of Arroyo Grande (as more particularly described in the "Agreement," as
described below), and pursuant to that certain Disposition and Development Agreement entered into
between Grantor and Grantee dated as of March 20, 2002 (the "Agreement"), a copy of which is on
file with the Grantor at its offices as a public record and which is incorporated herein by reference.
All capitalized tenus not defined herein shall have the meanings capitalized therefor in the
Agreement.
2. The Grantee hereby covenants and agrees, for itself and its successors and assigns,
that during construction and thereafter, the Grantee shall not use the Site for other than the uses
allowed pursuant to the Redevelopment Plan.
Attachment No.6
Page 1 of4
DOCSOC\881805v7l22707.0000
-.. - - -- - _._~-
3. The Site is conveyed to grantee at a purchase price, herein called "Purchase Price,"
detennined in accordance with the uses pennitted and based upon the Agency Developer CC&Rs.
Therefore, Grantee hereby covenants and agrees for itself, its successors, its assigns, and every
successor in interest to the Site that the Grantee, such successors and such assigns, shall maintain and
use the Site in accordance with the Agency Developer CC&Rs.
4. The Grantee agrees for itself and any successor in interest not to discriminate upon
the basis of race, color, creed or national origin in the sale, lease, or rental or in the use or occupancy
of the Site hereby conveyed or any part thereof. Grantee covenants by and for itself, its successors,
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, national
origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the
Site, nor shall the Grantee itself or any person claiming under or through it, establish or pennit any
such practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, sub-tenants, sublessees, or vendees in the Site. The
foregoing covenants shall run with the land.
5. No violation or breach of the covenants, conditions, restrictions, provisions or
limitations contained in this Grant Deed shall defeat or render invalid or in any way impair the lien or
charge of any mortgage or deed of trust or security interest pennitted by the Agreement; provided,
however, that any subsequent owner of the Site shall be bound by the Agency Developer CC&Rs and
such remaining covenants, conditions, restrictions, limitations and provisions, whether such owner's
title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise.
6. [Intentionally Omitted]
7. All covenants contained in this Grant Deed (including without limitation the Agency
Developer CC&Rs) shall be covenants running with the land. Grantee's obligation to maintain and
use the improvements constructed as provided in paragraph 3 shall continue in effect for a period
ending on the sixtieth (60th) anniversary ofthe recording of this Grant Deed. Section 6 of this Grant
Deed shall remain in effect until the issuance by the Agency of a Certificate of Completion pursuant
to the Agreement. Every covenant contained in this Grant Deed against discrimination contained in
paragraph 4 of this Grant Deed shall remain in perpetuity.
8. All covenants without regard to technical classification or designation shall be
binding for the benefit of the Grantor, and such covenants shall run in favor of the Grantor for the
entire period during which such covenants shall be in force and effect, without regard to whether the
Grantor is or remains an owner of any land or interest therein to which such covenants relate. The
Grantor, in the event of any breach of any such covenants, shall have the right to exercise all the
rights and remedies and to maintain any actions at law or suits in equity or other proper proceedings
to enforce the curing of such breach.
9. Both before and after recordation of a Certificate of Completion, both Grantor, its
successors and assigns, and Grantee and the successors and assigns of Grantee in and to all or any
part of the fee title to the Site shall have the right to consent and agree to changes in, or to eliminate
in whole or in part, any of the covenants, easements or restrictions contained in this Grant Deed
without the consent of any tenant, lessee, easement holder, licenses, mortgagee, trustee, beneficiary
under a deed of trust or any other person or entity having any interest less than a fee in the Site. The
covenants contained in this Grant Deed, without regard to technical classification shall not benefit or
Attachment No.6
Page 2 of4
OOCSOC\881805v1\22707.oo00
----..- ~
be enforceable by any owner of any other real property within or outside the Project Area, or any
person or entity having any interest in any other such realty.
Attachment No.6
Page 3 of4
DOCSOC\881805v7\22707.0000
I
__m_____
IN WITNESS WHEREOF, the Grantor and Grantee have caused this instrument to be
executed on their behalf by their respective officers hereunto duly authorized, this _ day of
,200_
ARROYO GRANDE REDEVELOPMENT
AGENCY, a public body corporate and politic
By:
Executive Director
"GRANTOR"
ATTEST:
Agency Secretary
The Grantee agrees to be bound by the covenants set forth above and the Agency Developer
CC&Rs which are attached hereto as Exhibit B and are incorporated herein by reference.
COURTLAND-ARROYO GRANDE, L.P.
(a California limited partnership_
By: Foundation for Affordable Housing, Inc.
a California Corporation
(Its: General Partner)
By:
Thomas E. Willard
Its: President
By: MFP A, Inc.
a California Corporation
(Its: General Partner)
By:
Sean Clark
Its: Vice-President
"GRANTEE"
Attachment No.6
Page 4 of4
DOCSOC\88I 805v7\22707.0000
EXHmlT A
LEGAL DESCRIPTION
(To Come)
Exhibit "A" to Attachment No.6
Page 1 of1
DOCSOC\881805v7\22707.0000
----...--"..--..- ---~~.
EXHIBIT B
AGENCY DEVELOPER CC&Rs
COVENANTS, CONDITIONS AND RESTRICTIONS
These Covenants, Conditions and Restrictions, herein sometimes referred to as these
"CC&Rs" or "Declaration" or "Regulatory Agreement" are made by the signatories hereto.
RECITALS
WHEREAS, each of the ARROYO GRANDE REDEVELOPMENT AGENCY, a public
body, corporate and politic ("Agency"), the CITY OF ARROYO GRANDE, a municipal
corporation ("City"), and COURTLAND-ARROYO GRANDE, L.P., a California limited
partnership ("Developer") is a party to this Declaration. The Agency, the City and the Developer are
sometimes collectively referred to herein as the "Declarants."
WHEREAS, the Agency and the Developer have entered into that certain Disposition and
Development Agreement dated as of March 20, 2002 (the "DDA") for the improvement and
development of certain real property described in Exhibit "A" to the Grant Deed (to which these
CC&Rs are attached) as the "Site," which DDA provides for the recordation of this Regulatory
Agreement. The DDA is incorporated herein by this reference and any capitalized teI1ll not defined
herein shall have the meaning established therefor in the DDA. The City is a third party beneficiary
ofthe DDA.
WHEREAS, this Regulatory Agreement establishes a plan for the improvement,
development, rehabilitation and maintenance of the Site, for the benefit of the Project Area, as well
as the rest of the City.
WHEREAS, by the deed to which these CC&Rs are attached and incorporated by reference,
the Developer has acquired title to certain real property and the improvements thereon located in the
City of Arroyo Grande defined herein as the "Site" and described in the legal description attached
hereto as Exhibit "A" and incorporated herein by this reference.
WHEREAS, the DDA sets forth certain restrictive covenants applicable to the Site,
particularly the use of the Site for the provision of rental housing units available to Very Low Income
Households and Lower Income Households at Affordable Rents as those teI1lls are defined therein.
WHEREAS, Agency, City, and Developer wish to adopt this Regulatory Agreement to
further govern the use of the Site in conjunction and along with the DDA and to ensure that the
Agency achieves credit for production of affordable housing units pursuant to Section 33413 of the
California Health and Safety Code.
NOW, THEREFORE, the Agency and the City each of the Developer (as owner of real
property interests described hereinabove), in the City, declares that the Site shall be held, transferred,
encumbered, used, sold, conveyed, leased and occupied subject to the Covenants, Conditions and
Restrictions hereinafter set forth expressly and exclusively for the use and benefit of said property,
and the Agency and the City. Each and all of the restrictions, limitations, conditions, covenants,
liens, reservations and charges herein contained shall run with the land and be recorded on the
Exhibit "B" to Attachment No.6
Page 1 of 11
DOCSOC\88I 80Sv7\22707.0000
.~-~-- ______ __u
property title and shall be binding on Declarants, their grantees, successors, heirs, executors,
administrators, devisees or assigns, and all subsequent owner of all or any part of the Site.
ARTICLE I
DEFINITIONS
The definitions provided herein shall be applicable to this Declaration and also to any
amendment or supplemental Declaration (unless the context implicitly or explicitly shall prohibit),
recorded against the Site pursuant to the provision of this Declaration.
Section 1. "Affordable Rent" shall have the meaning set forth in Health and Safety Code
Section 50053. For a Very Low Income Household, Affordable Rent means a monthly rent which
does not exceed one twelfth (1I12th) of thirty percent (30%) of fifty percent (50%) of the Median
Income for the Area for a household size appropriate to the unit. For a Lower Income Household,
Affordable Rent means a monthly rent which does not exceed one-twelfth (1112"') of thirty percent
(30%) of sixty percent (60%) of the Median Income for the Area. "Household size appropriate to the
unit," as used herein, shall mean two persons for each one-bedroom unit (if any), and three persons
for each two bedroom unit. The maximum monthly rental amount of the units shall be adjusted
annually by the fonnula set forth above upon the promulgation of revised San Luis Obispo Primary
Metropolitan Statistical Area median income figures by regulation of the California Department of
Housing and Community Development. Actual rent charged may be less than such maximum rent.
Section 2. "Agencv" shall mean the Arroyo Grande Redevelopment Agency and its
successors in interest.
Section 3. "Annual ReDorting Amounts" or "ReDorting Amounts" means those certain
amounts described in Section 3 hereof.
Section 4. "Area" means the San Luis Obispo Primary Metropolitan Statistical Area, as
periodically defined by HUD.
Section 5. "Calculation of Affordable Rents" means the worksheet substantially in the
fonn of Attachment No.7 to the DDA.
Section 6. "Certificate" or "Certification" is defined in Section 3(a).
Section 7. "City" shall mean and refer to the City of Arroyo Grande, a municipal
corporation.
Section 8. "City Code" shall mean and refer to the City of Arroyo Grande Municipal
Code as revised trom time to time.
Section 9. "Common Areas" means all areas on the Site that are open or accessible to all
tenants of the Site (such as grounds, but excluding buildings).
Section 10. "Gross Income" means all payments trom all sources received by a person
(together with the gross income of all persons of the age of 18 years or older who intend to reside
with such person in one residential unit) whether in cash or in kind as calculated pursuant to the
Department of Housing and Urban Development ("HUD") Regulations (24 CFR 813) in effect as of
the Date of Agreement.
Exhibit "B" to Attachment No.6
Page 2 of 11
DOCSOCl881805v7\22707.0000
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Section 11. Lower Income Household shall mean a household eaming not greater than
eighty percent (80%) of median income for the Area as set forth by regulation of the California
Department of Housing and Community Development, pursuant to Health and Safety Code
Section 50079.5.
Section 12. "Median Income for the Area" means the median income for the Area as most
recently detennined by the Secretary of Housing and Urban Development under Section 8 of the
United States Housing Act of 1937, as amended, or, if programs under Section 8 are tenninated,
Median Income for the Area detennined under the method used by the Secretary prior to such
tennination.
Section 13. "Regulatorv Agreement" means this Regulatory Agreement and any
amendments, modifications or supplements which may also be referred to herein as these "CC&Rs"
or this "Declaration."
Section 14. "Rental Proiect" shall mean the one hundred eight (108) unit residential rental
development on the Site.
Section 15. "Required Affordable Unit" means a dwelling unit in the Rental Project, as
rehabilitated or reconstructed under the DDA, and available to, occupied by, or held vacant for
occupancy only by tenants qualifying as Very Low Income Households or Lower Income
Households and rented at Affordable Rent.
Section 16. "Required Covenant Period" means the period commencing on the date this
Regulatory Agreement is recorded and ending sixty (60) years thereafter.
Section 17. "Site" shall mean all ofthe real property and appurtenances as described
above, including all structures and other improvements thereon, and those hereafter constructed.
Section 18. "Verv Low Income Households" means Very Low Income Households
whose Adjusted Income does not exceed fifty percent (50%) of Median Income for the Area as
detennined by the United States Department of Housing and Urban Development from time to time
and as set forth in Health and Safety Code Section 50105.
ARTICLE II
LAND USE RESTRICTIONS
Section 1. Uses. The Site shall be devoted only to the uses specified in the DDA and the
Grant Deed (including without limitation this Regulatory Agreement) for the periods of time
specified herein. All uses conducted on the Site, including, without limitation, all activities
undertaken by the Developer pursuant to the DDA, shall confonn to all applicable provisions of the
Arroyo Grande Municipal Code and the City Approvals.
The Site shall be used, maintained and operated in accordance with this Agreement
for the Required Covenant Period. None of the units in the Rental Project shall at any time be
utilized on a transient basis nor shall the Rental Project or any portion thereof ever be used as a hotel,
motel, donnitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium,
rest home or trailer court or park. No part of the Site, from the date the Developer acquired its
Exhibit "B" to Attachment No.6
Page 3 of 11
OOCSOC\881805v7l22707.oooo
I .-------
leasehold interest in the Site, has been or will at any time be owned or used as a cooperative housing
corporation or a community apartment project or a stock cooperative.
Section 2. Affordable Housing.
Number of Units. The Developer shall devote not less than 49 percent ([49]%) of the
units in the Rental Project as Affordable Units. Throughout the Required Covenant Period, not less
than _ (L-]) [confonn to Agreement] of the Required Affordable Units shall be continuously
occupied by or held available for occupancy by Very Low Income Households at an Affordable
Rent. All of the remaining Required Affordable Units shall be continuously occupied by or held
available for occupancy by Very Low Income Households or Lower Income Households at an
Affordable Rent. All Affordable Units shall be rented at Affordable Rent. For this purpose, a tenant
who qualifies as a Very Low Income Household (or a Lower Income Household) at the time he or
she first occupies an Affordable Unit shall be deemed to continue to be so qualified until such time as
a recertification of such individual's or family's income in accordance with Section 3 below
demonstrates that such individual or family no longer qualifies as a Very Low Income Household (or
a Lower Income Household). Moreover, a unit previously occupied by a Very Low Income
Household (or a Lower Income Household), and then vacated shall be considered occupied by such
Very Low Income Household (or a Lower Income Household) until reoccupied, other than for a
temporary period, at which time the character of the unit shall be redetennined. In no event shall
such temporary period exceed thirty-one (31) days.
At such time as a tenant ceases to qualify as a Very Low Income Household (or a
Lower Income Household), the unit occupied by such tenant shall cease to be a Very Low Income
Unit (or a Lower Income Unit). The Developer shall replace each such Very Low Income Unit (or a
Lower Income Unit) by designating the next available unit and any necessary units thereafter as a
Very Low Income Unit (or a Lower Income Unit). For purposes of this Agreement, such designated
unit will be considered a Very Low Income Unit (or a Lower Income Unit) if it is held vacant and
available for occupancy by a Very Low Income Household (or a Lower Income Household), and,
upon occupancy, the income eligibility of the tenant as a Very Low Income Household (or a Lower
Income Household) is verified and the unit is rented at Affordable Rent.
In the event a household's income initially complies with the corresponding income
restriction (for a Very Low Income Household or a Lower Income Household, whichever is
applicable) but the income of such household increases, such increase shall not be deemed to result in
a violation of the restrictions of this Regulatory Agreement concerning limitations upon income of
occupants, provided that the occupancy by such household is for a reasonable time of not to exceed
one year (measured from the time the income of the household ceases to qualify at the designated
affordability level). The Developer shall include in its rental agreements provisions which
implement this requirement and limitation, and the Developer shall expressly infonn prospective
renters as to this limitation prior to the commencement of a tenancy.
Duration of AfJordability Requirements. The Required Affordable Units shall be
available to and occupied by Very Low Income Households or, within the limitations set forth above,
Lower Income Households, at Affordable Rent throughout the Required Covenant Period. All
tenants residing in the Affordable Units during the last two (2) years of the Required Covenant
Period shall be given notice by the Developer at least once every six (6) months prior to the
expiration date of this requirement, that the rent payable on the Affordable Unit may be raised to a
market rate rent at the end of the Required Covenant Period.
Exhibit "B" to Attachment No.6
Page 4 of 11
OOCSOC\881805v7\22707.0000
_..._---._._-~-
Selection of Ten ants. As specified hereinbelow, Developer shall demonstrate to the
Agency that the proposed tenants of each of the Required Affordable Units constitutes a Very Low
Income Household or, within the limitations set forth above, a Lower Income Household.
Prior to the rental or lease of an Required Affordable Unit to a tenant, and as set forth
in this Section 2 of Article II of this Declaration, the Developer shall require the tenant to execute a
written lease and to complete an Income Verification certifying that the tenant(s) occupying the
Required Affordable Unit is/are a Very Low Income Household or, if applicable, a Lower Income
Household and meet(s) the eligibility requirements established for the Required Affordable Unit.
The Developer shall verify the income of the tenant(s).
The Developer shall accept as tenants on the same basis as all other prospective
tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing
program under Section 8 of the United States Housing Act of 1937, or its successor. The Developer
shall not apply selection criteria to Section 8 certificate holders which are more burdensome than
criteria applied to any other prospective tenants.
Determination of Affordable Rentfor the Affordable Units. The Affordable Units
shall be rented or leased at Affordable Rent. As of the approval of the DDA, Affordable Rent is
calculated in accordance with the Affordable Rent Worksheet. The maximum monthly rental for the
Affordable Unit shall be adjusted annually as permitted by Section 50053 of the California Health
and Safety Code based on the annual adjustment to the Median Income for the Area established
pursuant to Section 50093 of the California Health and Safety Code, as more particularly set forth in
the Affordable Rent Worksheet.
THE DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE
MAXIMUM RENTAL FOR THE AFFORDABLE UNITS ESTABLISHED BY THE DDA AND
THE GRANT DEED (INCLUDING WITHOUT LIMITATION THIS DECLARATION) AS AN
AFFORDABLE RENT IS NOT NECESSARILY EQUAL TO THE FAIR MARKET RENT FOR
THE AFFORDABLE UNITS, AND MAYBE SUBSTANTIALLY BELOW THE FAIR MARKET
RENT.
Developer Initials:
Section 3. Developer Verification and Program Compliance.
Income Verification and Certification. The Developer will obtain and maintain on
file an Income Verification from each tenant, dated immediately prior to the initial occupancy of
such tenant in the Rental Project.
On July 31, 2002 and annually thereafter, the Developer shall file with the Agency or
its designee a Certificate, containing all information required pursuant to Health and Safety Code
Section 33418, in a form prescribed by the Agency. Each Certificate shall cover the immediately
preceding fiscal year.
Reporting Amounts. Agency is required by Section 33418 of the California Health
and Safety Code to require Developer to monitor the Affordable Units and submit the annual reports
required by Section 3 of Article II of this Declaration. The Agency relies upon the information
contained in such reports to satisfy its own reporting requirements pursuant to Sections 33080 and
Exhibit "B" to Attachment No.6
Page 5 of 11
DOCSOC\S8! 805v7\22707.0000
-'-",-- --
33080.1 of the California Health and Safety Code. In the event the Developer fails to submit to the
Agency or its designee the Certification as required by Section 3(a), the Developer shall be in
noncompliance with this Regulatory Agreement. In the event the Developer remains in
noncompliance for thirty (30) days following receipt of written notice from the Agency of such
noncompliance under Sections 3(a) and 3(b) of Article II hereinabove, then the Developer shall,
without further notice or opportunity to cure, pay to the Agency Two Hundred Fifty Dollars
($250.00) per Required Affordable Unit for each year Developer fails to submit a Certificate
covering each and every housing unit on the Site.
Section 4. Nondiscrimination. The Developer shall refrain from restricting the rental,
sale or lease of the Site, or any portion thereof, on the basis of race, color, creed, religion, sex,
marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall
contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(1) In deeds: "The grantee herein covenants by and for himself or herself, his or
her 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, sex, marital status, national origin or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the
grantee himself or herself or any person claiming under or through him or her, establish or permit
any such practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land
herein conveyed. The foregoing covenants shall run with the land."
(2) In leases: "The lessee herein covenants by and for himself or herself, his or
her heirs, executors, administrators and assigns, and all persons claiming under or through him or
her, and this lease is made and accepted upon and subject to the following conditions:
"There shall be no discrimination against or segregation of any person or group of
persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in
the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein
leased nor shall the lessee himself or herself, or any person claiming under or through him or her,
establish or pennit any such practice or practices of discrimination or segregation with reference to
the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or
vendees in the premises herein leased."
(3) In contracts: "There shall be no discrimination against or segregation of, any
person, or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or
national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
premises, nor shall the transferee himself or herself or any person claiming under or through him or
her, establish or pennit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the premises."
The covenants established in this Declaration and the deeds of conveyance for the
Site shall, without regard to technical classification and designation, be binding for the benefit and in
favor ofthe Agency, its successors and assigns, the City and any successor in interest to the Site,
together with any property acquired by the Developer pursuant to this Agreement, or any part
Exhibit "B" to Attachment No.6
Page 6 of 11
DOCS0C\881805v7\22707.oo00
----"-------
thereof. The covenants against discrimination as set forth in this Section I of Article II shall remain
in effect in perpetuity.
Section 5. Keeping of Animals. No animals of any kind shall be raised, bred or kept on
the Site, except that domesticated dogs, cats or other household pets may be kept by the tenants in the
Rental Project at the discretion of Developer and subject to compliance with all laws. However, no
animal shall be kept, bred or maintained for any commercial purpose or for fighting purposes.
Nothing pennitted herein shall derogate in any way the right of the Developer to further restrict
keeping of pets.
Section 6. Parking of Vehicles. The Developer shall not pennit the parking, storing or
keeping of any vehicle except wholly within the parking areas designated for the Required
Affordable Units. The Developer shall not pennit the parking, storing or keeping of any large
commercial type vehicle (dump truck, cement mixer truck, oil or gas truck, etc.), or any recreational
vehicle over twenty (20) feet in length (camper unit, motor home, trailer, mobile home or other
similar vehicle), boats over twenty (20) feet in length, or any vehicle other than a private passenger
vehicle, upon any portion of the Common Areas, including parking spaces. For purposes of this
Section, a pickup truck with a pickup bed mounted camper shall be considered a private passenger
vehicle; provided however, that no such vehicle shall be used for residential purposes while parked
on the premises.
The Developer shall not pennit major repairs or major restorations of any motor vehicle,
boat, trailer, aircraft or other vehicle to be conducted upon any portion of the Common Area,
including the parking areas, except for emergency repairs thereto and then only to the extent
necessary to enable movement of the vehicle to a proper repair facility. No inoperable vehicle shall
be stored or kept in the Common Area. The Developer shall give the vehicle owner not less than
four (4) days, nor more than seven (7) days notice and an opportunity to remove any vehicle parked,
stored or kept in violation of the provisions of this Declaration. Notice shall consist minimally of a
reasonably diligent attempt to personally notify the vehicle owner or alternatively leaving written
notice on the subject vehicle. After due notice and opportunity have been given to the vehicle owner,
the Developer shall have the right to remove, at the vehicle owner's expense, any vehicle parked,
stored or kept in violation of the provisions of this Declaration.
Section 7. Maximum Occupancies. No persons shall be pennitted to occupy any
Apartment within the Rental Project in excess of applicable limit of maximum occupancy set by the
Arroyo Grande Municipal Code and the laws of the State of California.
Section 8. Signs ReQuired. "No loitering" signs will be posted at each building and
enforced by the owner(s). "Illegally parked vehicles will be towed" signs in compliance with
California Vehicle Code requirements will be posted and enforced by the Developer.
Section 9. Fences and Electronic Installations. The Developer shall not install or
knowingly pennit to be installed on the exterior of any improvement or building on any fences or any
antenna or other television or radio receiving device, excepting satellite dishes having a diameter of
eighteen inches (18") or less, without prior written consent of City. This prohibition shall not
prohibit the installation of cable television or subscription wires or receiving devices.
Section 10. Structural Change. Nothing shall be done on the Site in, on or to any building
which would structurally change the exterior or the interior bearing walls of any such building or
Exhibit "B" to Attachment No.6
Page 7 of 11
DOCSOC\JJ81805v7\22707.0000
---- - -----------.~._.__.._--- -----
structure, except as otherwise provided herein. Nothing herein shall affect the rights of the
Developer to repair, alter or construct improvements on the buildings on the Site unless such repair,
alteration or improvement would impair the structural integrity and/or exterior appearance of said
buildings. Nothing herein shall be deemed to prohibit work ordered to be performed by the City
building official.
Section II. ComDliance with Laws. The Developer shall comply with all applicable laws
in connection with the development and use of the Site, including without limitation the California
Community Redevelopment Law (Health and Safety Code Section 33000, et seq.) and Fair Housing
Act (42 V.S.C. ~ 3601, et seq., and 24 CFR 100.300 et seq.). The Developer is a sophisticated party,
with substantial experience in the acquisition, rehabilitation, development, financing, obtaining
financing for, marketing, and operation of affordable housing projects, and with the negotiation,
review, and preparation of agreements and other documents in connection with such activities. The
Developer is familiar with and has reviewed all laws and regulations pertaining to the acquisition,
development and operation of the Rental Project and has obtained advice from any advisers of its
own choosing in connection with this Agreement.
ARTICLE III
DUTIES OF DEVELOPER: SPECIFIC MAINTENANCE RESPONSffiILITIES
Section 1. Exterior Building Maintenance. All exterior, painted surfaces shall be
maintained at all times in a clean and presentable manner, free from chipping, cracking and defacing
marks. Any such defacing marks shall be cleaned or removed within a reasonable period of time as
set forth herein.
Section 2. Front and Side Exteriors. The Developer shall at all times maintain the front
exterior and yard in a clean, safe and presentable manner, free from defacing marks or any disrepair
and any visible side exteriors. The Developer shall hire maintenance personnel to maintain and/or
repair any front exterior or yard or visible side yard and exterior of any lot or building.
Section 3. Graffiti Removal. All graffiti, and defacement of any type, including marks,
words and pictures must be removed and any necessary painting or repair completed by the later to
occur of (i) seventy-two (72) hours of their creation or (ii) seventy-two (72) hours after notice to
Developer.
Section 4. Drivewavs. All driveways must be paved and maintained with impervious
material in accordance with the Arroyo Grande Municipal Code. In addition, all water must be made
to drain freely to the public part of the waterway without any pooling.
Section 5. Exterior lllumination. The Developer shall at all times maintain adequate
lighting in all entrance ways, garages and parking areas. Adequate lighting shall mean outdoor, night
lighting designed and installed, which provides no less than one (1.0) foot candles in the parking
areas and no less than one and one-half (1-1/2) foot candles in the walking areas or common areas
and no less than 0.2 foot candles at the point ofleast illumination.
Section 6. Front Setbacks. All front setback areas that are not buildings, driveways or
walkways shall be adequately and appropriately landscaped in accordance with minimum standards
established by the City and shall be maintained by the Developer. The landscaping shall meet
minimum standards set from time to time by the City.
Exhibit "B" to Attachment No.6
Page 8 of 11
DOCSOC\881805v7\22707.0000
---'.-- --------
Section 7. Trash Bins. All trash shall be collected and placed at all times in an
enclosable bin to be placed in a designated refuse/trash bin area. The designated area shall be located
so that the bin will, to the extent possible, be readily accessible ITom the street.
Section 8. Prohibited Signs. No sign of any kind shall be displayed to the public view
on or ITom any portion ofthe Site without the approval of the City and appropriate City departments
if any as required by the City Code.
ARTICLE IV
OBLIGATION TO MAINTAIN. REPAIR AND REBUILD.
AND TO PAY ANNUAL IN LIEU AMOUNTS
Section I. Maintenance bv Developer. The Developer shall, at its sole cost and expense,
maintain and repair the Site and the improvements thereon keeping the same in a decent, safe and
sanitary manner, in accordance with the United States Department of Housing and Urban
Development ("HUD") Housing Quality Standards ("HQS"), and in good condition and making all
repairs as they may be required by these CC&Rs and by all applicable Municipal Code and Uniform
Code provisions. The Developer shall also maintain the landscaping required to be planted in a
healthy condition. If, at any time, Developer fails to maintain the Rental Project or any portion
thereof, and said condition is not corrected after the expiration of forty-five (45) days ITom the date
of written notice ITom the Agency, either the Agency or the City may perform the necessary
maintenance and Developer shall pay such costs as are reasonably incurred for such maintenance.
Payment shall be due within fifteen (15) days of receipt of an invoice from the Agency or the City.
Section 2. Damage and Destruction Affecting Proiect - Developer's Duty to Rebuild. If
all or any portion of the Site and the improvements thereon is damaged or destroyed by fire or other
casualty, it shall be the duty of the Developer to rebuild, repair or reconstruct said portion of the Site
and/or the improvements in a timely manner which will restore it to Code compliance condition.
In furtherance of the requirements of this Section 2, Developer shall keep the construction on
the Site insured by carriers at all times satisfactory to Agency against loss by fire and such other
hazards, casualties, liabilities and contingencies as included within an all risk extended coverage
hazard insurance policy, in an amount of the full replacement cost of the constructions. In the event
ofloss, Developer shall give prompt notice to the insurance carrier and to the Agency.
If the Site is abandoned by the Developer, or if Developer fails to respond to Agency within
thirty (30) days from the date notice is mailed by Agency to Developer that the insurance carrier
offers to settle a claim for insurance benefits, Agency is authorized to collect and apply the insurance
proceeds at Agency's option either to restoration or repair of the Site.
Section 3. Variance in Exterior Appearance and Design. In the event the Rental Project
sustains substantial physical damage due to a casualty event, the Developer may apply to the City of
Arroyo Grande for approval to reconstruct, rebuild or repair in a manner which will provide different
exterior appearance and lot design from that which existed prior to the date of the casualty.
Section 4. Time Limitation. Upon damage to the Site or the Rental Project or other
improvements, the Developer shall be obligated to proceed with all due diligence hereunder and
commence reconstruction within two (2) months after the damage occurs and complete
reconstruction within six (6) months after damage occurs or demolition and vacate within two (2)
Exhibit "B" to Attachment No.6
Page 9 of 11
DOCSOC\88180Sv7\22707.0000
----. ------------- -- -------
months, unless prevented by causes beyond their reasonable control, in which event reconstruction
shan be commenced at the earliest feasible time.
ARTICLE V
ENFORCEMENT
Section 1. Remedies. Breach of the covenants contained in the Declaration may be
enjoined, abated or remedied by appropriate legal proceeding by the Agency or City.
This Declaration does not in any way infringe on the right or duties of the City of Arroyo
Grande to enforce any of the provisions of the Arroyo Grande Municipal Code including, but not
limited to, the abatement of dangerous buildings.
Section 2. Nuisance. The result of every act or omission whereby any of the covenants
contained in this Declaration are violated in whole or in part is hereby declared to be and constitutes
a nuisance, and every remedy allowable at law or equity, against a nuisance, either public or private,
shan be applicable against every such result and may be exercised by any owner or its successors in
interest, without derogation of the City's rights under law.
Section 3. Right of Entrv. In addition to the above general rights of enforcement, the
City shan have the right through its agents and employees, to enter upon any part of the project area
for the purpose of enforcing the California Vehicle Code, and the ordinances and other regulations of
the City, and for maintenance and/or repair of any or an publicly owned utilities. In addition, the
City has the right of entry at reasonable hours and upon and after reasonable attempts to contact
Developer, on any lot to effect emergency repairs or maintenance which the Developer has failed to
perform. Subsequent to sixty (60) days written notice to the Developer specifically outlining the
Developer's noncompliance, the City shan have the right of entry on the Site at reasonable hours to
enforce compliance with this Declaration which the Developer has failed to perform.
Section 4. Costs of Repair. The costs borne by the City or Agency of any such repairs
or maintenance emergency and/or non-emergency, shan become a charge for which Developer shall
be responsible.
Section 5. Cumulative Remedies. The remedies herein provided for breach of the
covenants contained in this Declaration shall be deemed cumulative, and none of such remedies shan
be deemed exclusive.
Section 6. Failure to Enforce. The failure to enforce any of the covenants contained in
this Declaration shan not constitute a waiver of the right to enforce the same thereafter.
Section 7. Enforcement and Nonliabilitv. The City or Agency may from time to time
make such efforts, if any, as it shan deem appropriate enforce and/or assist in enforcing this
Declaration. However, neither the Agency nor the City will not be subject to any liability for failure
to affirmatively enforce any provision of this Declaration.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Covenant Against Partition. By acceptance of its interest in the Site, the
Developer shan be deemed to covenant for itself and for its heirs, representatives, successors and
Exhibit "B" to Attachment No.6
Page 10 of 11
DOCSOC\881805v1l22707.0000
----.- -~_._~--~._- -
assigns, that it will not institute legal proceedings or otherwise seek to effect partition of its right and
interest in the interest being conveyed to the Developer, or the burdens running with the land as a
result of this Regulatory Agreement.
Section 2. Severabilitv. Invalidation of anyone of these covenants or restrictions by
judgment or court order shall in no way affect any other provisions which shall remain in all force
and effect.
Section 3. Term. This Declaration shall run with and bind the interest of the Developer
in the Site, and shall inure to the owner(s) of any property subject to this Declaration, his legal
representatives, heirs, successors and assigns, and as provided in Article VI, Sections 2 and 3, be
enforceable by the City, for a term equal to the Required Covenant Period as defined in the DDA,
provided; however, that the covenants regarding nondiscrimination set forth in Section 4 of Article II
of this Declaration shall remain in effect for perpetuity.
Section 4. Construction. The provisions of this Declaration shall be liberally construed
to effectuate its purpose of creating a uniform plan for the development and operation of rental
housing available at Affordable Rent for Very Low Income Households and Lower Income
Households. The article and Section headings have been inserted for convenience only, and shall not
be considered or referred to in resolving questions of interpretation or construction.
Section 5. Amendments. This Declaration may be amended only by the written
agreement of the Developer, the Agency and the City.
Section 6. Encroachments. None of the rights and obligations of the Developer created
herein shall be altered in any way by encroachments due to settlement or shifting of structures or any
other cause. There shall be valid easements for the maintenance of said encroachments so long as
they shall exist; provided, however, that in no event shall a valid easement for encroachment be
created in favor of Developer if said encroachment occurs due to the willful conduct of said
Developer.
Section 7. Notices. Any notice permitted or required to be delivered as provided herein
to Developer shall be in writing and may be delivered either personally or by certified mail. Notice
to the Agency shall be made by certified mail to the Executive Director or his designee at 214 E.
Branch Street, Arroyo Grande, California 93420 (with a copy to Stradling Y occa Carlson & Rauth,
Attention: Mark J. Huebsch, 660 Newport Center Drive, Suite 1600, Newport Beach, California
92660), and shall be effective upon receipt. Notice to Developer shall be made by certified mail to
Courtland-Arroyo Grande, L.P., , , California ,
and shall be effective upon receipt. Such address may be changed from time to time by notice in
writing.
Exhibit "B" to Attachment No.6
Page 11 of 11
DOCSOC\881805v7\22707.0000
I
ATTACHMENT NO.7
CALCULATION OF AFFORDABLE RENTS
San Luis Obispo County
Affordable Rent Worksheet
(2002 Income Figures)1
1. Income Eligibility
The first step in detennining eligibility for an affordable housing program is detennining
whether the family which will be purchasing or renting the housing unit meets the following income
standards applicable to San Luis Obispo County, based upon the size of the family:
Income 1 person 2 person 3 person 4 person 5 person 6 person 7 person 8 person
Level household household household household household household household household
Very Low $17,600 $20,100 $22,650 $25,150 $27,150 $29,150 $31,200 $33,200
Lower $28,150 $32,200 $36,200 $40,250 $43,450 $46,700 $49,900 $53,100
Medkm $35,200 $40,250 $45,250 $50,300 $54,300 $58,350 $62,350 $66,400
Moderate $42,250 $48,300 $54,300 $60,350 $65,200 $70,000 $74,850 $79,650
1 Based on currently effective median income of San Luis Obispo County, as set forth in
25 Cal. Code Regs. Section 6932, operative as of March 2002. These median income
numbers are revised annually.
2. Determining Affordable Rent
The rental housing, the second step in detennining compliance with affordable housing
requirements is detennining whether the total rent costs payable by the tenant are within allowable
amounts.
For Very Low Income Households:2
Units at 50% of Median Income:
. renting a 0 bedroom unit, monthly rent may not exceed $440.00
. renting a 1 bedroom unit, monthly rent may not exceed $503.13
. renting a 2 bedroom unit, monthly rent may not exceed $565.63
. renting a 3 bedroom unit, monthly rent may not exceed $628.75
. renting a 4 bedroom unit, monthly rent may not exceed $678.75
. renting a 5 bedroom unit, monthly rent may not exceed $729.38
Attachment No.7
Page 1 of2
DOCSOC\881805v7Vl2707.oooo
.---.--
2 Under Health and Safety Code Section 50053(b)(1), Affordable Rent for Very Low Income
Households is the product of 30 percent times 50 percent of the area median income adjusted
for family size appropriate to the unit.
For Lower Income Households:3
. renting a 0 bedroom unit, monthly rent may not exceed $616.00
. renting a 1 bedroom unit, monthly rent may not exceed $704.38
. renting a 2 bedroom unit, monthly rent may not exceed $791.88
. renting a 3 bedroom unit, monthly rent may not exceed $880.25
. renting a 4 bedroom unit, monthly rent may not exceed $950.25
. renting a 5 bedroom unit, monthly rent may not exceed $1,021.13
3 Affordable Rent for Lower Income Households is the product of 30 percent times 60 percent
of the area median income adjusted for family size appropriate to the unit. Health and Safety
Code Section 50053(b)(1).
In addition, for any Lower Income Household whose income falls within the following
guidelines, its optional for the Agency to require that affordable rent not exceed 30 percent of the
gross income of the household:4
. 1 person households whose income is between $24,640 and $28,150
. 2 person households whose income is between $28,175 and $32,200
. 3 person households whose income is between $31,675 and $36,200
. 4 person households whose income is between $35,210 and $40,250
. 5 person households whose income is between $38,010 and $43,450
. 6 person households whose income is between $40,845 and $46,700
. 7 person households whose income is between $43,645 and $49,900
. 8 person households whose income is between $46,480 and $53,100
4 Health and Safety Code Section 50053(b)(2).
Attachment No.7
Page 2 of2
OOCSOC\88180Sv7l22707.0000
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ATTACHMENT NO.8
REQUEST FOR NOTICE OF DEFAULT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Arroyo Grande Redevelopment Agency
214 East Branch Street
Arroyo Grande, California 93421
Attention: Executive Director
SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY
Exempt &om recording fees pursuant to Government Code ~ 6103.
Request for Notice Under Section 2924b Civil Code
In accordance with Section 2924b, Civil Code, request is hereby made that a copy of any
Notice of Default and a copy of any Notice of Sale under the Deed of Trust recorded as Instrument
No. - on ,200_, in Book , Page , Official Records of Los
Angeles County, California, and describing land therein as
See Exhibit A attached hereto
executed by , as Trustor, in which is named as
Beneficiary, and as Trustee, be mailed to ARROYO GRANDE
REDEVELOPMENT AGENCY, at 214 East Branch Street, Arroyo Grande, California 93421,
Attention: Executive Director.
NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE
WILL BE SENT ONLY TO THE ADDRESS CONTAINED THIS RECORDED
REQUEST. IF YOUR ADDRESS CHANGES, A REQUEST MUST BE
RECORDED.
Executive Director
Date
Attachment NO.8
Page 1 of 1
DOCSOCI881805v7\22707.0000
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ATTACHMENT NO.9
SCOPE OF DEVELOPMENT
I. GENERAL DESCRIPTION
The Site is specifically delineated on the Site Map and the Legal Description of the Site.
II. DEVELOPMENT
The Developer shall construct a minimum of eighty one (81) and up to one hundred eight
(108) housing units on the Site, together with all on-site and off-site features described in this Scope
of Development (as presented to the City Council of the City on March 20, 2002), including without
limitation landscaping. All such improvements collectively constitute the "Improvements."
The quality of construction shall be of a high level. The Improvements shall confonn to the
approved plans on file with the Agency as of the Date of the Agreement as supplemented by the
Design Development Drawings (the "Approved Plans"), including all conditions and mitigation
measures under: Use PennitNo. 01-014, Parcel Map No. 01-004, Development Code Amendment
Case No. 01-004, and Ordinance No. 531.
The Improvements may, at the election of Developer, be accomplished in two Phases, the
"First Phase" and the "Second Phase." The First Phase shall consist of eighty-one (81) dwelling
units, all off-sites and improvements required under the City approvals for the Development, .
including zoning, general plan, environmental clearance and all conditions of approval thereunder.
The Second Phase shall consist of twenty-seven (27) Units.
The Developer shall commence and complete the Improvements by the respective times
established therefor in the Schedule of Perfonnance.
III. DEVELOPMENT STANDARDS
The Improvements shall confonn to all applicable state laws and regulations and to local
zoning, applicable provisions of the Municipal Code of the City of Arroyo Grande (the "Municipal
Code") and the following development standards:
A. General Requirements:
1. Vehicular Access. The placement of vehicular driveways shall be
coordinated with the needs of proper street traffic flow as approved by the City. In the interest of
minimizing traffic congestion, the City will control the number and location of curb breaks for access
to the Site for off-street parking and truck loading. All access driveways shall require written
approval of the City staff.
2. Building Signs. Signs shall be limited in size, subdued and otherwise
designed to contribute positively to the environment. Signs identitying the building use will be
pennitted, but their height, size, location, color, lighting and design will be subject to City staff
approval, and signs must confonn to the Municipal Code.
Attachment No.9
Page 1 oB
DOCSOC\881805v7\22707.oooo
3. Screening. All outdoor storage of materials or equipment shall be enclosed
or screened to the extent and in the manner required by the City staff.
4. Landscaping. The Developer shall provide and maintain landscaping within
the public rights-of-way and within setback area along all street frontages and confonning with the
plans as hereafter approved by the City.
Landscaping shall consist of trees, shrubs and installation of an automatic irrigation
system adequate to maintain such plant material. The type and size of trees to be planted, together
with a landscaping plan, shall be subject to the City staff approval prior to planting.
S. Utilities. All utilities on the Site provided to service the units rehabilitated or
reconstructed by the Developer shall be underground at Developer's expense.
6. Building Design. Buildings shall be constructed such that the Improvements
shall be of high architectural quality, and shall be effectively and aesthetically designed and in
confonnance with City approvals.
B. Design Features:
The following design features are considered essential components to the
Improvements:
Handicapped Units - Units are to be fully handicapped accessible in compliance with
State Housing Code - Title 24 requirements.
Senior Housing - The Units shall contain features especially adapted for Seniors.
Overall Desil!1l Oualitv. Materials. Colors. Desil!1l Features - Quality of design is
important, materials and colors are to be approved by City.
Mobilitv/ Agilitv - All facilities shall comply, to the extent feasible, with "New
Horizon Accessible, Adaptable Apartments for the Physically Disabled" published by the
State of California, Department of Housing and Community Development dated July 1989,
and shall comply with those portions of Title 24 of the California Code of Regulations that
have been adopted by the Department of Housing and Community Development (HCD)
relating to handicapped units, and the requirements of the federal Department of Housing and
Urban Development, Part VI, 24 C.F.R. Ch. 1, Vol. 56, No. 44, as published in the Federal
Register March 6, 1991.
IV. DEMOLITION AND SOILS
The Developer assumes all responsibility for surface and subsurface conditions at the Site,
and the suitability of the Site for the Improvements. The Developer has undertaken all investigation
of the Site as it shall deem necessary and has not received or relied upon any representations of the
Agency, the City, or their respective officers, agents and employees.
Attachment No.9
Page 2 of3
DOCSOC\8S1S05v1'{l2707.oooo
~-_._.._- -.-----.-..-.
V. SPECIAL AMENITIES
The Developer shall undertake all improvements required by the City as a condition of
development of the Site, as more particularly provided in the City approvals given for the Site.
/
Attachment No.9
Page 3 00
DOCSOC\881805v7\22707.0000 ,
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ATTACHMENT NO. 10
CERTIFICATE OF COMPLETION
RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
)
)
)
)
)
)
(Space Above for Recorder's Use Only)
This document is exempt from the payment of a recording
fee pursuant to Government Code Section 27383.
CERTIFICATE OF COMPLETION
TillS CERTIFICATE OF COMPLETION (the "Certificate") is made by the ARROYO
GRANDE REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"),
in favor of COURTLAND-ARROYO GRANDE, L.P., a California limited partnership (the
"Developer"), as of the date set forth below.
RECITALS
A. Agency and the Developer have entered into that certain Disposition and
Development/Affordable Housing Agreement (the "DDA") dated as of March 20, 2002 concerning
the redevelopment of certain real property situated in the City of Arroyo Grande, California, as more
fully described in Exhibit "A" attached hereto and made a part hereof (the "Site").
B. As referenced in Section 4.13 of the DDA, Agency is required to furnish the
Developer or its successors with a Certificate of Completion upon completion of construction of the
"Improvements" (as defined in Section 1.1 of the DDA), which Certificate is required to be in such
fonn as to pennit it to be recorded in the Recorder's Office of San Luis Obispo County. This
Certificate is conclusive detennination of satisfactory completion of the construction and
development required by the DDA.
C. Agency has conclusively detennined that the construction and development of the
Development has been satisfactorily completed.
NOW, THEREFORE, Agency hereby certifies as follows:
1. Agency does hereby certify that the Improvements to be constructed by the
Developer has been fully and satisfactorily completed in full confonnance with the DDA.
2. This Certificate shall not constitute evidence of compliance with or satisfaction of
any obligation of Developer to any holder of a mortgage, or any insurer of a mortgage, securing
money loaned to finance construction work on the Site, or any part thereof.
Attachment No. 10
Page 10f2
OOCSOC\881805v7\22707.0000
_._---.~-
3. This Certificate shall not constitute evidence of Developer's compliance with those
covenants in the DDA that survive the issuance ofthis Certificate.
4. This Certificate is not a Notice of Completion as referred to in California Civil Code
Section 3093.
5. Nothing contained in this instrument shall modifY in any other way any other
provisions of the DDA (including without limitation the attachments thereto).
IN WITNESS WHEREOF, Agency has executed this Certificate of Completion this_
day of ,200_"
ARROYO GRANDE REDEVELOPMENT
AGENCY, a public body, corporate and politic
By:
Steven Adams, Executive Director
ATTEST:
, Agency Secretary
Attachment No. 10
Page 2 of2
DOCSOC\88I 805v7\22707.0000
-- ------.-----.--..--.---.....-----.-
EXHffiIT "A" TO ATTACHMENT NO. 10
LEGAL DESCRIPTION
[To Be Attached]
Exhibit "An to Attacbment No. lO
Page lofl
DOCSOC\88I 805v7\22707.0000
----------------- - ,-,-. .. -..--------
ATTACHMENT NO. 11
AGENCY DEVELOPER CC&RS
Recording Requested by: )
)
When Recorded Return to and )
Mail Tax Statements to: )
)
Arroyo Grande Redevelopment Agency )
214 East Branch Street )
Arroyo Grande, California 93421 )
Attn: Executive Director )
)
(Space above for Recorder's Use.)
This document is exempt from the payment of a recording fee
pursuant to Government Code Section 6103.
By:
REGULATORY AGREEMENT
These Covenants, Conditions and Restrictions, herein sometimes referred to as these
"CC&Rs" or "Declaration" or "Regulatory Agreement" are made by the signatories hereto.
RECITALS
WHEREAS, each of the Arroyo Grande Redevelopment Agency, a public body, corporate
and politic ("Agency"), the City of Arroyo Grande, a municipal corporation ("City"), and
Courtland-Arroyo Grande, L.P., a California limited partnership ("Developer") is a party to this
Declaration. The Agency, the City and the Developer are sometimes collectively referred to herein
as the "Declarants."
WHEREAS, the Agency and the Developer have entered into that certain Disposition and
Development/Affordable Housing Agreement dated as of March 20,2002 (the "DDA") for the
improvement and development of certain real property described in Exhibit "A" (to which these
CC&Rs are attached) as the "Site," which DDA provides for the recordation of this Regulatory
Agreement. The DDA is incorporated herein by this reference and any capitalized term not defined
herein shall have the meaning established therefor in the DDA. The City is a third party beneficiary
of the DDA.
WHEREAS, this Regulatory Agreement establishes a plan for the improvement,
development and maintenance ofthe Site, for the benefit of the Project Area, as well as the rest of the
City.
Attachment No. 11
Page 1 of 13
DOCSOC\881805v7l22707.0000
WHEREAS, it is contemplated under the DDA that, as of the recordation of this Regulatory
Agreement, the Developer has received the conveyance of the "Site" as described in the legal
description attached hereto as Exhibit "A" and incOlporated herein by this reference. The fonn of the
deed, as prescribed by the DDA, is referenced to as the "Agency Deed."
WHEREAS, the DDA sets forth certain restrictive covenants applicable to the Site,
particularly the use of the Site for the provision of rental housing units available to Very Low Income
Households and Lower Income Households at Affordable Rents as those tenns are defined therein.
WHEREAS, Agency, City, and Developer wish to adopt this Regulatory Agreement to
further govern the use of the Site in conjunction and along with the DDA and to ensure that the
Agency achieves credit for production of affordable housing units pursuant to Section 33413 of the
California Health and Safety Code.
NOW, THEREFORE, the Agency and the City each of the Developer (as owner of real
property interests described hereinabove), in the City, declares that the Site shall be held, transferred,
encumbered, used, sold, conveyed, leased and occupied subject to the Covenants, Conditions and
Restrictions hereinafter set forth expressly and exclusively for the use and benefit of said property,
and the Agency and the City. Each and all of the restrictions, limitations, conditions, covenants,
liens, reservations and charges herein contained shall run with the land and be recorded on the
property title and shall be binding on Declarants, their grantees, successors, heirs, executors,
administrators, devisees or assigns, and all subsequent owner of all or any part of the Site.
ARTICLE I
DEFINITIONS
The definitions provided herein shall be applicable to this Declaration and also to any
amendment or supplemental Declaration (unless the context implicitly or explicitly shall prohibit),
recorded against the Site pursuant to the provision of this Declaration.
Section I. "Affordable Housing Proiect" means an affordable housing project operated
in confonnity with this Regulatory Agreement throughout the Required Covenant Period.
Section 2. "Affordable Rent" has the meaning set forth in Health and Safety Code
Section 50053. For a Very Low Income Household, Affordable Rent means a monthly rent which
does not exceed one twelfth (1/12th) of thirty percent (30%) of fifty percent (50%) of the Median
Income for the Area for a household size appropriate to the unit. For a Lower Income Household,
Affordable Rent means a monthly rent which does not exceed one-twelfth (1/12"') of thirty percent
(30%) of sixty percent (60%) of the Median Income for the Area. "Household size appropriate to the
unit," as used herein, shall mean two persons for each one-bedroom unit (if any), and three persons
for each two bedroom unit. The maximum monthly rental amount of the units shall be adjusted
annually by the fonnula set forth above upon the promulgation of revised median income figures for
San Luis Obispo County by regulation of the California Department of Housing and Community
Development. Actual rent charged may be less than such maximum rent.
Section 3. "Agencv" means the Arroyo Grande Redevelopment Agency and its
successors in interest.
Attachment No. 11
Page 2 of 13
OOCSOCI881805v7\22707.0000
Section 4 "Approved Housing Proiect" means all improvements as provided to be
developed by Developer under the DDA. The Approved Housing Project must be completed in strict
conformity with all specifications contained in or referred to in the DDA.
Section 4. "Area" means the area defined by HUO which includes and consists primarily
of San Luis Obispo County.
Section 5. "Calculation of Affordable Rents" means the worksheet substantially in the
fonn of Attachment No.7 to the DDA.
Section 6. "Certificate" or "Certification" is defined in Section 3(a).
Section 7. "City" means and refers to the City of Arroyo Grande, a municipal
corporation.
Section 8. "City Code" means and refers to the City of Arroyo Grande Municipal Code
as revised from time to time.
Section 9. "Common Areas" means all areas on the Site that are open or accessible to all
tenants of the Site (such as grounds, but excluding buildings).
Section 10. "Gross Income" means all payments from all sources received by a person
(together with the gross income of all persons of the age of 18 years or older who intend to reside
with such person in one residential unit) whether in cash or in kind as calculated pursuant to the
Department of Housing and Urban Development ("HUO") Regulations (24 C.F.R. ~ 813) in effect as
of the Date of Agreement.
Section II. Lower Income Household shall mean a household earning not greater than
eighty percent (80%) of median income for the Area as set forth by regulation of the California
Department of Housing and Community Development, pursuant to Health and Safety Code
Section 50079.5.
Section 12. "Median Income for the Area" means the median income for the Area as most
recently detennined by the Secretary of Housing and Urban Development under Section 8 of the
United States Housing Act of 1937, as amended, or, if programs under Section 8 are tenninated,
Median Income for the Area detennined under the method used by the Secretary prior to such
tennination.
Section 13. "Prescribed Rent Levels" means rent that is Affordable Rent for households
at the following income levels: (i) for U one-bedroom units and Utwo-
bedroom unit, fifty percent (50%) of Median Income; and (ii) for U one-bedroom units
and U two-bedroom units, sixty percent (60%) of Median Income. [confonn to
Agreement]
Section 15. "Regulatory Agreement" means this Regulatory Agreement and any
amendments, modifications or supplements which may also be referred to herein as these "CC&Rs"
or this "Declaration."
Section 16. "Rental Proiect" means the one hundred eight (108) unit residential rental
development on the Site.
Attachment No. 11
Page 3 of 13
OOCSOC\88I 805v7\22707.0000
----------- ---...- I
Section 17. "Required Affordable Unit" means a dwelling unit in the Rental Project, as
rehabilitated or reconstructed under the DDA, and available to, occupied by, or held vacant for
occupancy only by tenants qualifYing as Very Low Income Households or Lower Income
Households and rented at Affordable Rent conforming to the Prescribed Rent Levels.
Section 18. "Required Covenant Period" means the period commencing on the date this
Regulatory Agreement is recorded and ending sixty (60) years thereafter.
Section 19. "Seniors" means those persons meeting the qualifications as set forth in the
Fair Housing Act, 42 US.C. ~ 3601, et seq., and 24 C.F.R. ~ 100.300, et seq., and Sections 51.3
and 51.4 of the California Civil Code, as applicable. At least one occupant for each Unit shall be
fifty-five (55) years or older and, in addition, to the greatest extent permitted by law, all occupants
shall be persons 55 years of age or older.
Section 20. "Site" means all of the real property and appurtenances as described above,
including all structures and other improvements thereon, and those hereafter constructed.
Section 21. "Unit" means a dwelling unit on the Rental Project.
Section 22. "Verv Low Income Households" means Very Low Income Households
whose Adjusted Income does not exceed fifty percent (50%) of Median Income for the Area as
determined by the United States Department of Housing and Urban Development rrom time to time
and as set forth in Health and Safety Code Section 50105.
ARTICLE II
LAND USE RESTRICTIONS; IMPROVEMENTS
Section 1. Uses. The Developer shall develop the Approved Housing Project on the Site
in conformity with the DDA. Thereafter, the Site shall be operated as an Affordable Housing Project
and devoted only to the uses specified in the DDA and the Agency Deed for the periods of time
specified herein. All uses conducted on the Site, including, without limitation, all activities
undertaken by the Developer pursuant to the DDA, shall conform to all applicable provisions of the
Arroyo Grande Municipal Code and the City Approvals.
The Site shall be used, maintained and operated in accordance with the DDA, the
Agency Deed, and this Regulatory Agreement for the Required Covenant Period. None of the units
in the Rental Project shall at any time be utilized on a transient basis nor shall the Rental Project or
any portion thereof ever be used as a hotel, motel, dormitory, rraternity or sorority house, rooming
house, hospital, nursing home, sanitarium, rest home or trailer court or park. No part of the Site,
rrom the date the Developer acquired its interest in the Site, has been or will at any time be owned or
used as a cooperative housing corporation or a community apartment project or a stock cooperative.
Section 2. Affordable Housing.
Number of Units. The Developer shall devote not less than one hundred percent
(100%) of the units in the Rental Project as Units available to and rented by Seniors. In addition,
throughout the Required Covenant Period, not less than thirty-nine (39) of the Units shall be rented at
"Prescribed Rent Levels." "Prescribed Rent Levels" means rent that is Affordable Rent for
households at the following income levels: (i) for U one-bedroom units and
Attachment No. 11
Page 4 of 13
OOCSOC\881805v1\22707.0000
- _._.._~_._--
U two-bedroom unit, fifty percent (50%) of Median Income; (ii) for U
one-bedroom units and U two-bedroom units, sixty percent (60%) of Median Income.
[Confonn to Agreement] Required Affordable Unites shall be continuously occupied by or held
available for occupancy by Very Low Income Households or, if applicable, Lower Income
Households at an Affordable Rent. All Affordable Units shall be rented at Affordable Rent. For this
purpose, a tenant who qualifies as a Very Low Income Household (or a Lower Income Household) at
the time he or she first occupies an Affordable Unit shall be deemed to continue to be so qualified
until such time as a recertification of such individual's or family's income in accordance with Section
3 below demonstrates that such individual or family no longer qualifies as a Very Low Income
Household (or a Lower Income Household). Moreover, a unit previously occupied by a Very Low
Income Household (or a Lower Income Household), and then vacated shall be considered occupied
by such Very Low Income Household (or a Lower Income Household) until reoccupied, other than
for a temporary period, at which time the character of the unit shall be redetennined. In no event
shall such temporary period exceed thirty-one (31) days.
At such time as a tenant ceases to qualify as a Very Low Income Household (or a
Lower Income Household), the unit occupied by such tenant shall cease to be a Very Low Income
Unit (or a Lower Income Unit). The Developer shall replace each such Very Low Income Unit (or a
Lower Income Unit) by designating the next available unit and any necessary units thereafter as a
Very Low Income Unit (or a Lower Income Unit). For purposes of this Agreement, such designated
unit will be considered a Very Low Income Unit (or a Lower Income Unit) if it is held vacant and
available for occupancy by a Very Low Income Household (or a Lower Income Household), and,
upon occupancy, the income eligibility of the tenant as a Very Low Income Household (or a Lower
Income Household) is verified and the unit is rented at Affordable Rent.
In the event a household's income initially complies with the corresponding income
restriction (for a Very Low Income Household or a Lower Income Household, whichever is
applicable) but the income of such household increases, such increase shall not be deemed to result in
a violation of the restrictions of this Regulatory Agreement concerning limitations upon income of
occupants, provided that the occupancy by such household is for a reasonable time of not to exceed
one year (measured from the time the income of the household ceases to qualify at the designated
affordability level). The Developer shall include in its rental agreements provisions which
implement this requirement and limitation, and the Developer shall expressly infonn prospective
renters as to this limitation prior to the commencement of a tenancy.
Duration of Affordability Requirements. The Required Affordable Units shall be
available to and occupied by Very Low Income Households or, within the limitations set forth above,
Lower Income Households, at Affordable Rent throughout the Required Covenant Period. All
tenants residing in the Affordable Units during the last two (2) years of the Required Covenant
Period shall be given notice by the Developer at least once every six (6) months prior to the
expiration date of this requirement, that the rent payable on the Affordable Unit may be raised to a
market rate rent at the end of the Required Covenant Period.
Selection of Ten ants. As specified hereinbelow, Developer shall demonstrate to the
Agency that the proposed tenants of each of the Required Affordable Units constitutes a Very Low
Income Household or, within the limitations set forth above, a Lower Income Household.
Prior to the rental or lease of an Required Affordable Unit to a tenant, and as set forth
in this Section 2 of Article II of this Declaration, the Developer shall require the tenant to execute a
Attachment No. 11
Page 5 of 13
DOCSOC\881805v7\22707.0000
written lease and to complete an Income Verification certifYing that the tenant(s) occupying the
Required Affordable Unit is/are a Very Low Income Household or, if applicable, a Lower Income
Household and meet(s) the eligibility requirements established for the Required Affordable Unit.
The Developer shall verify the income of the tenant(s).
The Developer shall accept as tenants on the same basis as all other prospective
tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing
program under Section 8 of the United States Housing Act of 1937, or its successor. The Developer
shall not apply selection criteria to Section 8 certificate holders which are more burdensome than
criteria applied to any other prospective tenants.
Determination of Affordable Rent for the Affordable Units. The Affordable Units
shall be rented or leased at Affordable Rent. As of the approval of the DDA, Affordable Rent is
calculated in accordance with the Affordable Rent Worksheet. The maximum monthly rental for the
Affordable Unit shall be adjusted annually as pennitted by Section 50053 of the California Health
and Safety Code based on the annual adjustment to the Median Income for the Area established
pursuant to Section 50093 of the California Health and Safety Code, as more particularly set forth in
the Affordable Rent Worksheet.
THE DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE
MAXIMUM RENTAL FOR THE AFFORDABLE UNITS ESTABLISHED BY THE DDA, THIS
REGULATORY AGREEMENT AND THE AGENCY DEED IS SUBSTANTIALLY BELOW THE
FAIR MARKET RENT FOR THE AFFORDABLE UNITS.
Developer Initials:
Section 3. Developer Verification and Program Compliance.
Income Verification and Certification. The Developer will obtain and maintain on
file an Income Verification from each tenant, dated immediately prior to the initial occupancy of
such tenant in the Rental Project.
On July 31, 2003 and annually thereafter, the Developer shall file with the Agency or
its designee a Certificate, containing all infonnation required pursuant to Health and Safety Code
Section 33418 and containing such infonnation as the Agency additionally requires pursuant to the
Home Regulations, in a fonn prescribed by the Agency. Each Certificate shall cover the immediately
preceding fiscal year.
Reporting Amounts. Agency is required by Section 33418 of the California Health
and Safety Code to require Developer to monitor the Affordable Units and submit the annual reports
required by Section 3 of Article II of this Declaration. The Agency relies upon the infonnation
contained in such reports to satisfy its own reporting requirements pursuant to Sections 33080 and
33080.1 of the California Health and Safety Code. In the event the Developer fails to submit to the
Agency or its designee the Certification as required by Section 3(a), the Developer shall be in
noncompliance with this Regulatory Agreement. In the event the Developer remains in
noncompliance for thirty (30) days following receipt of written notice from the Agency of such
noncompliance under Sections 3(a) and 3(b) of Article II hereinabove, then the Developer shall,
without further notice or opportunity to cure, pay to the Agency Two Hundred Fifty Dollars
Attachment No. 11
Page 6 of 13
OOCSOCI881805v7\22707.0000
,
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($250.00) per Required Affordable Unit for each year Developer fails to submit a Certificate
covering each and every housing unit on the Site.
Section 4. Nondiscrimination. The Developer shall rerrain rrom restricting the rental,
sale or lease of the Site, or any portion thereof, on the basis of race, color, creed, religion, sex,
marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall
contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(1) In deeds: "The grantee herein covenants by and for himself or herself, his or
her 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, sex, marital status, national origin or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the
grantee himself or herself or any person claiming under or through him or her, establish or pennit
any such practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land
herein conveyed. The foregoing covenants shall run with the land."
(2) In leases: "The lessee herein covenants by and for himself or herself, his or
her heirs, executors, administrators and assigns, and all persons claiming under or through him or
her, and this lease is made and accepted upon and subject to the following conditions:
"There shall be no discrimination against or segregation of any person or group of
persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in
the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein
leased nor shall the lessee himself or herself, or any person claiming under or through him or her,
establish or pennit any such practice or practices of discrimination or segregation with reference to
the selection, location, number, use or occupancy oftenants, lessees, sublessees, subtenants or
vendees in the premises herein leased."
(3) In contracts: "There shall be no discrimination against or segregation of, any
person, or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or
national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
premises, nor shall the transferee himself or herself or any person claiming under or through him or
her, establish or pennit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the premises."
The covenants established in this Declaration and the deeds of conveyance for the
Site shall, without regard to technical classification and designation, be binding for the benefit and in
favor of the Agency, its successors and assigns, the City and any successor in interest to the Site,
together with any property acquired by the Developer pursuant to this Agreement, or any part
thereof. The covenants against discrimination as set forth in this Section 1 of Article II shall remain
in effect in perpetuity.
Section 5. Keeping of Animals. No animals of any kind shall be raised, bred or kept on
the Site, except that domesticated dogs, cats or other household pets may be kept by the tenants in the
Rental Project at the discretion of Developer and subject to compliance with all laws. However, no
animal shall be kept, bred or maintained for any commercial purpose or for fighting purposes.
Attachment No. 11
Page 7 of 13
OOCSOC\88I 80Sv7\22707.0000
---
Nothing permitted herein shall derogate in any way the right of the Developer to further restrict
keeping of pets.
Section 6. Parking of Vehicles. The Developer shall not permit the parking, storing or
keeping of any vehicle except wholly within the parking areas designated for the Required
Affordable Units. The Developer shall not permit the parking, storing or keeping of any large
commercial type vehicle (dump truck, cement mixer truck, oil or gas truck, etc.), or any recreational
vehicle over twenty (20) feet in length (camper unit, motor home, trailer, mobile home or other
similar vehicle), boats over twenty (20) feet in length, or any vehicle other than a private passenger
vehicle, upon any portion of the Common Areas, including parking spaces. For purposes of this
Section, a pickup truck with a pickup bed mounted camper shall be considered a private passenger
vehicle; provided however, that no such vehicle shall be used for residential purposes while parked
on the premises.
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The Developer shall not permit major repairs or major restorations of any motor vehicle,
boat, trailer, aircraft or other vehicle to be conducted upon any portion of the Common Area,
including the parking areas, except for emergency repairs thereto and then only to the extent
necessary to enable movement of the vehicle to a proper repair facility. No inoperable vehicle shall
be stored or kept in the Common Area. The Developer shall give the vehicle owner not less than
four (4) days, nor more than seven (7) days notice and an opportunity to remove any vehicle parked,
stored or kept in violation of the provisions of this Declaration. Notice shall consist minimally of a
reasonably diligent attempt to personally notifY the vehicle owner or alternatively leaving written
notice on the subject vehicle. After due notice and opportunity have been given to the vehicle owner,
the Developer shall have the right to remove, at the vehicle owner's expense, any vehicle parked,
stored or kept in violation of the provisions of this Declaration.
Section 7. Maximum Occupancies. No persons shall be permitted to occupy any
Apartment within the Rental Project in excess of applicable limit of maximum occupancy set by the
Arroyo Grande Municipal Code and the laws of the State of California.
Section 8. Signs Reauired. "No loitering" signs will be posted at each building and
enforced by the owner(s). "Illegally parked vehicles will be towed" signs in compliance with
California Vehicle Code requirements will be posted and enforced by the Developer.
Section 9. Fences and Electronic Installations. The Developer shall not install or
knowingly permit to be installed on the exterior of any improvement or building on any fences or any
antenna or other television or radio receiving device, excepting satellite dishes having a diameter of
eighteen inches (18") or less, without prior written consent of City. This prohibition shall not
prohibit the installation of cable television or subscription wires or receiving devices.
Section 10. Structural Change. Nothing shall be done on the Site in, on or to any building
which would structurally change the exterior or the interior bearing walls of any such building or
structure, except as otherwise provided herein. Nothing herein shall affect the rights of the
Developer to repair, alter or construct improvements on the buildings on the Site unless such repair,
alteration or improvement would impair the structural integrity and/or exterior appearance of said
buildings. Nothing herein shall be deemed to prohibit work ordered to be performed by the City
building official.
Attachment No. 11
Page 8 of 13
DOCSOC\88I 80Sv7\22707.0000
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Section 11. Compliance with Laws. The Developer shall comply with all applicable laws
in connection with the development and use of the Site, including without limitation the California
Community Redevelopment Law (Health and Safety Code Section 33000, et seq.) and Fair Housing
Act (42 D.S.C. 9 3601, et seq., and 24 C.F.R. 9 100.300, et seq.). The Developer is a sophisticated
party, with substantial experience in the acquisition, development, financing, obtaining financing for,
marketing, and operation of affordable housing projects, and with the negotiation, review, and
preparation of agreements and other documents in connection with such activities. The Developer is
familiar with and has reviewed all laws and regulations pertaining to the acquisition, development
and operation of the Rental Project and has obtained advice from any advisers of its own choosing in
connection with this Agreement.
ARTICLE III
DUTIES OF DEVELOPER: SPECIFIC MAINTENANCE RESPONSffiILITIES
Section 1. Exterior Building Maintenance. All exterior, painted surfaces shall be
maintained at all times in a clean and presentable manner, free from chipping, cracking and defacing
marks. Any such defacing marks shall be cleaned or removed within a reasonable period of time as
set forth herein.
Section 2. Front and Side Exteriors. The Developer shall at all times maintain the front
exterior and yard in a clean, safe and presentable manner, free from defacing marks or any disrepair
and any visible side exteriors. The Developer shall hire maintenance personnel to maintain and/or
repair any front exterior or yard or visible side yard and exterior of any lot or building.
Section 3. Graffiti Removal. All graffiti, and defacement of any type, including marks,
words and pictures must be removed and any necessary painting or repair completed by the later to
occur of (i) seventy-two (72) hours of their creation or (ii) seventy-two (72) hours after notice to
Developer.
Section 4. Drivewavs. All driveways must be paved and maintained with impervious
material in accordance with the Arroyo Grande Municipal Code. In addition, all water must be made
to drain freely to the public part of the waterway without any pooling.
Section 5. Exterior Illumination. The Developer shall at all times maintain adequate
lighting in all entrance ways, garages and parking areas. Adequate lighting shall mean outdoor, night
lighting designed and installed, which provides no less than one (1.0) foot candles in the parking
areas and no less than one and one-half (1-112) foot candles in the walking areas or common areas
and no less than 0.2 foot candles at the point ofleast illumination.
Section 6. Front Setbacks. All front setback areas that are not buildings, driveways or
walkways shall be adequately and appropriately landscaped in accordance with minimum standards
established by the City and shall be maintained by the Developer. The landscaping shall meet
minimum standards set from time to time by the City.
Section 7. Trash Bins. All trash shall be collected and placed at all times in an
enclosable bin to be placed in a designated refuse/trash bin area. The designated area shall be located
so that the bin will, to the extent possible, be readily accessible from the street.
Attachment No. 11
Page 9 of 13
OOCSOC\881805v7\22707.0000
Section 8. Prohibited Signs. No sign of any kind shall be displayed to the public view
on or ITom any portion of the Site without the approval of the City and appropriate City departments
if any as required by the City Code.
ARTICLE IV
OBLIGATION TO MAINTAIN. REPAIR AND REBUILD
Section 1. Maintenance bv Developer. The Developer shall, at its sole cost and expense,
maintain and repair the Site and the improvements thereon keeping the same in a decent, safe and
sanitary manner, in accordance with the United States Department of Housing and Urban
Development ("HUD") Housing Quality Standards ("HQS"), and in good condition and making all
repairs as they may be required by these CC&Rs and by all applicable Municipal Code and Unifonn
Code provisions. The Developer shall also maintain the landscaping required to be planted in a
healthy condition. If, at any time, Developer fails to maintain the Rental Project or any portion
thereof, and said condition is not corrected after the expiration of forty-five (45) days ITom the date
of written notice ITom the Agency, either the Agency or the City may perfonn the necessary
maintenance and Developer shall pay such costs as are reasonably incurred for such maintenance.
Payment shall be due within fifteen (15) days of receipt ofan invoice ITom the Agency or the City.
Section 2. Damage and Destruction Affecting Proiect - Developer's Dutv to Rebuild. If
all or any portion of the Site and the improvements thereon is damaged or destroyed by fire or other
casualty, it shall be the duty of the Developer to rebuild, repair or reconstruct said portion ofthe Site
and/or the improvements in a timely manner which will restore it to Code compliance condition.
In furtherance of the requirements of this Section 2, Developer shall keep the construction on
the Site insured by carriers at all times satisfactory to Agency against loss by fire and such other
hazards, casualties, liabilities and contingencies as included within an all risk extended coverage
hazard insurance policy, in an amount of the full replacement cost of the constructions. In the event
ofloss, Developer shall give prompt notice to the insurance carrier and to the Agency.
If the Site is abandoned by the Developer, or if Developer fails to respond to Agency within
thirty (30) days ITom the date notice is mailed by Agency to Developer that the insurance carrier
offers to settle a claim for insurance benefits, Agency is authorized to collect and apply the insurance
proceeds at Agency's option either to restoration or repair of the Site.
Section 3. Variance in Exterior Appearance and Design. In the event the Rental Project
sustains substantial physical damage due to a casualty event, the Developer may apply to the City of
Arroyo Grande for approval to reconstruct, rebuild or repair in a manner which will provide different
exterior appearance and lot design ITom that which existed prior to the date of the casualty.
Section 4. Time Limitation. Upon damage to the Site or the Rental Project or other
improvements, the Developer shall be obligated to proceed with all due diligence hereunder and
commence reconstruction within two (2) months after the damage occurs and complete
reconstruction within six (6) months after damage occurs or demolition and vacate within two (2)
months, unless prevented by causes beyond their reasonable control, in which event reconstruction
shall be commenced at the earliest feasible time.
AttacIunent No. 11
Page 10 of 13
DOCSOC\881805v7\22707.0000
ARTICLE V
ENFORCEMENT
Section 1. Remedies. Breach of the covenants contained in the Declaration may be
enjoined, abated or remedied by appropriate legal proceeding by the Agency or City.
This Declaration does not in any way infiinge on the right or duties of the City of Arroyo
Grande to enforce any of the provisions of the Arroyo Grande Municipal Code including, but not
limited to, the abatement of dangerous buildings.
Section 2. Nuisance. The result of every act or omission whereby any of the covenants
contained in this Declaration are violated in whole or in part is hereby declared to be and constitutes
a nuisance, and every remedy allowable at law or equity, against a nuisance, either public or private,
shall be applicable against every such result and may be exercised by any owner or its successors in
interest, without derogation of the City's rights under law.
Section 3. Right of Entrv. In addition to the above general rights of enforcement, the
City shall have the right through its agents and employees, to enter upon any part of the project area
for the pllIpose of enforcing the California Vehicle Code, and the ordinances and other regulations of
the City, and for maintenance and/or repair of any or all publicly owned utilities. In addition, the
City has the right of entry at reasonable hours and upon and after reasonable attempts to contact
Developer, on any lot to effect emergency repairs or maintenance which the Developer has failed to
perfonn. Subsequent to sixty (60) days written notice to the Developer specifically outlining the
Developer's noncompliance, the City shall have the right of entry on the Site at reasonable hours to
enforce compliance with this Declaration which the Developer has failed to perfonn. The Agency
shall additionally have rights of entry as a landlord under the Agency Deed.
Section 4. Costs of Repair. The costs borne by the City or Agency of any such repairs
or maintenance emergency and/or non-emergency, shall become a charge for which Developer shall
be responsible.
Section 5. Cumulative Remedies. The remedies herein provided for breach of the
covenants contained in this Declaration shall be deemed cumulative, and none of such remedies shall
be deemed exclusive.
Section 6. Failure to Enforce. The failure to enforce any of the covenants contained in
this Declaration shall not constitute a waiver of the right to enforce the same thereafter.
Section 7. Enforcement and Nonliabilitv. The City or Agency may from time to time
make such efforts, if any, as it shall deem appropriate enforce and/or assist in enforcing this
Declaration. However, neither the Agency nor the City will not be subject to any liability for failure
to affinnatively enforce any provision of this Declaration.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Covenant Against Partition. By acceptance of its interest in the Site, the
Developer shall be deemed to covenant for itself and for its heirs, representatives, successors and
assigns, that it will not institute legal proceedings or otherwise seek to effect partition of its right and
Attachment No. 11
Page 11 of 13
DOCSOC\881805v7l22707.0000
interest in the interest being conveyed to the Developer, or the burdens running with the land as a
result of this Regulatory Agreement.
Section 2. Severabilitv. Invalidation of anyone of these covenants or restrictions by
judgment or court order shall in no way affect any other provisions which shall remain in all force
and effect.
Section 3. Tenn. This Declaration shall run with and bind the interest of the Developer
in the Site, and shall inure to the owner(s) of any property subject to this Declaration, his legal
representatives, heirs, successors and assigns, and as provided in Article VI, Sections 2 and 3, be
enforceable by the City, for a tenn equal to the Required Covenant Period as defined in the DDA,
provided; however, that the covenants regarding nondiscrimination set forth in Section 4 of Article II
of this Declaration shall remain in effect for perpetuity.
Section 4. Construction. The provisions of this Declaration shall be liberally construed
to effectuate its purpose of creating a unifonn plan for the development and operation of rental
housing available at Affordable Rent for Very Low Income Households and Lower Income
Households. The article and Section headings have been inserted for convenience only, and shall not
be considered or referred to in resolving questions of interpretation or construction.
The Developer shall be obligated by this Declaration to comply with the provisions hereof, as
well as the Agency Deed. In the event of conflict, the Developer shall comply with the most
stringent requirements, in each case.
Section 5. Amendments. This Declaration may be amended only by the written
agreement of the Developer, the Agency and the City.
Section 6. Encroachments. None of the rights and obligations of the Developer created
herein shall be altered in any way by encroachments due to settlement or shifting of structures or any
other cause. There shall be valid easements for the maintenance of said encroachments so long as
they shall exist; provided, however, that in no event shall a valid easement for encroachment be
created in favor of Developer if said encroachment occurs due to the willful conduct of said
Developer.
Section 7. Notices. Any notice pennitted or required to be delivered as provided herein
to Developer shall be in writing and may be delivered either personally or by certified mail. Notice
to the Agency shall be made by certified mail to the Executive Director or his designee at 214 East
Branch Street, Arroyo Grande, California 93421 (with a copy to Stradling Yocca Carlson & Rauth,
Attention: Mark J. Huebsch, 660 Newport Center Drive, Suite 1600, Newport Beach, California
92660), and shall be effective upon receipt. Notice to Developer shall be made by certified mail to
Courtland-Arroyo Grande, L.P., a California limited partnership, ,Suite _'
, California , and shall be effective upon receipt. Such address may be changed
from time to time by notice in writing.
Attaclunent No. 11
Page 12 of 13
OOCS0C\881805v7\22707.0000
I ARROYO GRANDE REDEVELOPMENT
I AGENCY,
a public body, corporate and politic
By:
Dated: Steven Adams, Executive Director
ATTEST:
By:
, Agency Secretary
CITY OF ARROYO GRANDE,
a municipal corporation
By:
Dated: Steven Adams, City Manager
ATTEST:
By:
, City Clerk
COURTLAND-ARROYO GRANDE, L.P.
(a California limited partnership)
By: Foundation for Affordable Housing, Inc.
a California Corporation
(Its: General Partner)
By:
Thomas E. Willard
Its: President
By: MFP A, Inc.
a California Corporation
(Its: General Partner)
By:
Sean Clark
Its: Vice-President
Attachment No. 11
Page 13 of 13
DOCSOC\881805v7\22707.0000
___m_________
EXHIBIT A
LEGAL DESCRIPTION
[To Come]
Exhibit "A" to Attacbment No. 11
Page lof1
DOCSOC\88I 805v7\22707.0000
--.------------ ------
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On _, before me, , Notary Public,
(Print Name of Notary Public)
personally appeared
D personally known to me
-or-
D proved to me on the basis of 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 hislher/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
0 Individual
0 Corporate Officer
Title(s) Title Or Type QfDocument
0 Partner(s) 0 Limited
0 General
0 Attorney-In-Fact
0 Trustee(s)
0 Guardian/Conservator Number Of Pages
0 Other:
Signer is representing:
Name OfPerson(s) Or Entity(ies)
Date Of Documents
Signer(s) Other Than Named Above
DOCSOC\88180Sv7IJ.2707.0000 I
--------
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On _, before me, , Notary Public,
(Print Name of Notary Public)
personally appeared
D personally known to me
-Of-
D proved to me on the basis of 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 hislher/their authorized capacity(ies), and that by hislher/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
0 Individual
0 Corporate Officer
Title(s) Title Or Type Of Document
0 Partner(s) 0 Limited
0 General
0 Attorney-In-Fact
0 Trustee( s)
0 Guardian/Conservator Number Of Pages
0 Other:
Signer is representing:
Name OfPerron(s) Or Entity(ies)
Date Of Documents
Signer(s) Other Than Named Above
DOCSOC\881805v7\22707.0000
- ----._-----
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On _, before me, , Notary Public,
(Print Name of Notary Public)
personally appeared
0 personally known to me
-Of-
0 proved to me on the basis of 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.
WITNESS my hand and official seal.
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent reattachmeut of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
0 Individual
0 Corporate Officer
Title(s) Title Or Type Of Document
0 Partner(s) 0 Limited
0 General
0 Attorney-In-Fact
0 Trustee(s)
0 Guardian/Conservator Number Of Pages
0 Other:
Signer is representing:
Name OfPerson(s) Or Entity(ies)
Date Of Documents
Signer(s) Other Than Named Above
DOCSOC\881805v7\22707.0000
ATTACHMENT NO. 12
INCOME VERIFICATION
Part I -- General Information
1. Project Location:
2. Landlord's Name:
Part II -- Unit Information
3. Unit 4. Number of 5. Monthly 6. Number of
Number Bedrooms Rent Occupants
Part III -- Affidavit of Tenant
I, ,and I, , as applicants for rental of an Apartment Unit at the
above-described location, do hereby represent and warrant as follows:
A. (My/Our) gross income (anticipated total annual income) does not exceed fifty percent
(50%) ofthe median income for the area defined by HOD which includes and consists
primarily of San Luis Obispo County as such income levels are established and amended
from time to time pursuant to Section 8 of the United States Housing Act of 1937 and
published by the State Department of Housing and Community Development in the
California Code of Regulations. (IfW e) understand that the applicable median income is $
. The following computation includes all income (IIwe) anticipate receiving for the l2-month
period beginning on the date (IIwe) execute a rental agreement for an Affordable Unit or the
date on which (IIwe) will initially occupy such unit, whichever is earlier.
Tenant(s)' Initials
B. (My/Our) gross income (anticipated total annual income) exceeds fifty percent (50%) but
does not exceed eighty percent (80%) of the median income for the area defined by HOD
which includes and consists primarily of San Luis Obispo County as such income levels are
established and amended from time to time pursuant to Section 8 of the United States
Housing Act of 1937 and published by the State Department of Housing and Community
Development in the California Code of Regulations. (IfWe) understand that the applicable
median income is $ . The following computation includes all income (I/we) anticipate
receiving for the l2-month period beginning on the date (IIwe) execute a rental agreement for
an Affordable Unit or the date on which (IIwe) will initially occupy such unit, whichever is
earlier.
Tenant(s)' Initials
C. (My/Our) gross income (anticipated total annual income) exceeds eighty percent (80%) but
does not exceed one hundred twenty percent (120%) of the median income for the area
Attaclunent No. 12
Page lof6
DOCSOCI881805v7\22707.0000
defined by HOD which includes and consists primarily of San Luis Obispo County as such
income levels are established and amended from time to time pursuant to Section 8 of the
United States Housing Act of 1937 and published by the State Department of Housing and
Community Development in the California Code of Regulations. (IIW e) understand that the
applicable median income is $ . The following computation includes all income
(I/we) anticipate receiving for the 12-month period beginning on the date (I/we) execute a
rental agreement for an Affordable Unit or the date on which (I/we) will initially occupy such
unit, whichever is earlier.
T enant( s)' Initials
D. (My/Our) gross income (anticipated total annual income) exceeds one hundred twenty
(120%) of the median income for the area defined by HOD which includes and consists
primarily of San Luis Obispo County as such income levels are established and amended
from time to time pursuant to Section 8 of the United States Housing Act of 1937 and
published by the State Department of Housing and Community Development in the
California Code of Regulations. (IIWe) understand that the applicable median income is $
. The following computation includes all income (I/we) anticipate receiving for the 12-month
period beginning on the date (I/we) execute a rental agreement for an Affordable Unit or the
date on which (I/we) will initially occupy such unit, whichever is earlier.
Tenant(s)' Initials
Attachment No. 12
Page 2 of6
DOCSOC\881805v7\22707.0000
---~.- -----.-.----
1. Tenants qualifYing as A and B, above, must complete the following:
Monthly Gross Income
(All Sources of Income of All Adult Household Members Must be Listed)
Source Head of Co-Tenants Total
Household
Gross amount, before payroll
deductions of wages, salaries,
overtime pay, commissions, fees,
tips and bonuses
Interest and/or dividends
Net income from business or from
rental property
Social security, annuities, insurance
policies, pension/retirement funds,
disability or death benefits received
periodically
Payment in lieu of earnings, such as
unemployment and disability
compensation, worker's
compensation and severance pay
Alimony, child support, other
periodic allowances
Public assistance, welfare payments
Regular pay, special pay and
allowances of members of Armed
Forces
Other
II Total: ~
Total x 12 = Gross Annual Household Income
Note: The following items are not considered income: casual or sporadic gifts; amounts specifically
for or in reimbursement of medical expenses; lump sum payments such as inheritances, insurance
payments (including payments under health and accident insurance and worker's compensation),
AttachmenlNo.12
Page 3 of6
OOCSOCI881805v7\22707.0000
- --- ---...--
capital gains and settlement for personal or property losses; educational scholarships paid directly to
the student or educational institution; government benefits to a veteran for education; special pay to a
serviceman head of family away from home and under hostile fire; foster child care payments; value
of coupon allotments for purpose of food under Food Stamp Act of 1964 which is in excess of
amount actually charged the eligible household; relocation payments under Title II ofUnifonn
Relocation Assistance and Real Property Acquisition Policies Act of 1970; payments received
pursuant to participation in the following programs: VISTA, Service Learning Programs, and
Special Volunteer Programs, SCORE, ACE, Retired Senior Volunteer Program, Foster Grandparent
Program, Older American Community Services Program, and National Volunteer Program to Assist
Small Business Experience.
2. This affidavit is made with the knowledge that it will be relied upon by the Landlord to
detennine maximum income for eligibility and (I/we) warrant that all infonnation set forth in
this document is true, correct and complete and based upon infonnation (I/we) deem reliable
and that the estimate contained in paragraph I of this Part III is reasonable and based upon
such investigation as the undersigned deemed necessary.
3. (I/W e) will assist the Landlord in obtaining any infonnation or documents required to verify
the statements made in this Part III and have attached hereto copies of federal income tax
return for most recent tax year in which a return was filed (past two years federal income tax
returns for self-employed persons).
4. (I/W e) acknowledge that (I/we) have been advised that the making of any misrepresentation
or misstatement in this affidavit will constitute a material breach of (my/our) agreement with
the Landlord to rent the unit and will additionally enable the Landlord and/or the Arroyo
Grande Redevelopment Agency to initiate and pursue all applicable legal and equitable
remedies with respect to the unit and to me/us.
(I/W e) do hereby swear under penalty of peIjury that the foregoing statements are true and
correct.
Date Tenant
Date Tenant
Attachment No. 12
Page 4 of6
DOCSOC\881805v7\22707.0000
--------.
INCOME VERIFICATION
(for emploved persons)
The undersigned employee has applied for a rental unit located in a project financed under a
multifamily housing program of the City of Arroyo Grande and the Arroyo Grande Redevelopment
Agency for persons of low or moderate income. Every income statement of a prospective tenant
must be stringently verified. Please indicate below the employee's CUITent annual income from
wages, overtime, bonuses, commissions or any other form of compensation received on a regular
basis.
Annual wages
Overtime
Bonuses
Commissions
Total CUITent income
I hereby certify that the statements above are true and complete to the best of my knowledge.
Signature Date Title
I hereby grant you permission to disclose my income to in order that they may
determine my income eligibility for rental of an apartment located in their project which has been
financed under a multifamily housing program of the City of Arroyo Grande and the Arroyo Grande
Redevelopment Agency.
Signature Date
Please send to:
Attachment No. 12
Page 5 of6
DOCSOCI881805v7\22707.0000
INCOME VERIFICATION
(for self-emploved persons)
I hereby attach copies of my individual federal and state income tax returns for the
immediately preceding calendar year and certify that the infonnation shown in such income tax
returns is true and complete to the best of my knowledge.
Signature Date
Attachment No. 12
Page 6 of6
DOCSOC\881805v1l22707.oooo
I
ATTACHMENT NO. 13
AGENCY NOTE
PROMISSORY NOTE
2002
Arroyo Grande, California
$800,000.00
FOR VALUE RECEIVED, the undersigned COURTLAND-ARROYO GRANDE, L.P., a
California limited partnership ("Maker" or "Developer"), having its principal place of business at
,Suite _' , California _, promises to pay to the
order of ARROYO GRANDE REDEVELOPMENT AGENCY, a public body, corporate and politic
("Payee" or "Agency"), at 214 East Branch Street, Arroyo Grande, California 93421, or at such other
place as the holder of this Note from time to time may designate in writing, the principal sum of
Eight Hundred Thousand Dollars ($800,000.00) , together with interest on the unpaid principal
amount of this Promissory Note ("Note") from time to time outstanding at the rate often percent
(10%) simple per annum (herein, the "Interest Rate") in lawful money of the United States of
America. This Note is being delivered pursuant to the Disposition and Development! Affordable
Housing Agreement dated as of March 20, 2002, between Maker and Payee (the "DDA"). The loan
evidenced by this Note shall be governed by such provisions of the DDA (including without
limitation the attachments thereto) as shall be applicable. All capitalized tenns used herein shall
have the meanings set forth therefor in the DDA.
1. Pavrnents of Principal and Interest. Payments hereunder shall be due on the fifteenth
day of February commencing as of [insert date which is second anniversary of the Date
of Agreement] and continuing until the eighteenth (18th) anniversary of the Conveyance. Payments
shall be made in the amount equal to seventy-five percent (75%) of Residual Receipts; provided that
until such time as Developer has received the Deferred Developer Fee Portion, payments shall be
made in the amount equal to twenty five percent (25%) of Residual Receipts. The entire outstanding
balance, including principal and interest, shall be done as of the eighteenth (18th) anniversary of the
Conveyance (the "Maturity Date"); provided that, if the Agency Note is not fully satisfied as of the
Maturity Date, then the Agency, at its option, may extend the maturity for a period of twenty (20)
years, and during such twenty (20) year period, the Developer shall make payments equal to one
hundred percent (100%) of Residual Receipts until this Note has been fully satisfied. Payments may,
at the option of Payee, be accelerated and shall be due and payable hereunder in the event of the
occurrence of any default under the DDA, the Agency Deed of Trust, the Agency Developer CC&Rs,
or any debt that is senior to this Note.
In addition, and notwithstanding any contrary portion of this Section 1 to contrary effect, in
the event that the Developer has developed the Improvements and has operated the Affordable
Housing Project (as defined in the DDA) in conformity with the DDA and the Agency Deed
throughout the Required Covenant Period, then, within thirty (30) days following the termination of
the Agency Deed, upon receipt of request therefor by the Maker, the Payee will cancel this Note. No
partial credit shall be made available under this portion of Section I.
Attachment No. 13
Page 1 of3 ,
OOCSOCI881805v7\22707.0000 I
Except in the event ofa transfer of Developer's interest in the Site (or the Improvements)
contrary to the provisions of the DDA (including without limitation the Agency Deed), the Maker's
payments to Agency hereunder shall not be deemed in default hereunder so long as Maker makes
payments to the Agency of its Residual Receipts, if any, for the corresponding Operating Year.
2. Other Loan Documents. Repayment ofthis Note is secured by a deed of trust (the
"Deed of Trust") of this date executed by Maker for the benefit of Payee encumbering the property
described in the Deed of Trust (the "Property").
3. Prepayment. Maker shall have the right to prepay amounts owing under this Note at
any time.
4. Due on Sale or Encumbrance. In the event of any Transfer (as defined below) of the
Property, or any portion thereof or interest therein, Beneficiary shall have the absolute right at its
option, without prior demand or notice, to declare all sums secured hereby immediately due and
payable. As used herein, the term "Transfer" means and includes the direct or indirect sale, transfer,
conveyance, mortgage, further encumbrance, assignment, or other alienation of the Property, or any
portion thereof or interest therein, whether voluntary, involuntary, by operation oflaw or otherwise,
the execution of any installment land sale contract, sales agreement or similar instrument affecting all
or a portion of the Property, granting of an option to purchase any portion of or interest in the
Property or any interest therein, or the lease of all or substantially all of the Property or of all or
substantially all of the improvements located thereon. "Transfer" shall not include the leasing of
individual dwelling units on the Property so long as Trustor complies with the provisions of the \
Agency Developer CC&Rs, the Agency Deed and the DDA relating to such leasing activity. Failure
of Beneficiary to exercise the option to declare all sums secured hereby immediately due and payable
upon a Transfer will not constitute waiver of the right to exercise this option in the event of any
subsequent Transfer.
5. Potential Adiustment to Principal Amount. In the event the Developer undertakes
development of no more than eighty one (81) Units and Developer has not commenced development
of the Second Phase by December 31, 2004 (or such later date as may have been mutually approved
by Developer and Agency for the Second Phase), then the principal amount of this Note shall be
deemed to be reduced by Two Hundred Thousand Dollars ($200,000) nunc pro tunc as of the date of
this Note.
6. Miscellaneous.
(a) Governing Law. All questions with respect to the construction of this Note
and the rights and liabilities of the parties to this Note shall be governed by the laws of the State of
California.
(b) Binding on Successors. This Note shall inure to the benefit of, and shall be
binding upon, the successors and assigns of each of the parties to this Note.
(c) Attornevs' Fees.
(i) Maker shall reimburse Payee for all reasonable attorneys' fees, costs
and expenses, incurred by Payee in connection with the enforcement of Payee's rights under this
Note, including, without limitation, reasonable attorneys' fees, costs and expenses for trial, appellate
Attaclunent No. 14
Page 2 oB
DOCSOC\881805v7\22707.0000
proceedings, out-of-court negotiations, workouts and settlements or for enforcement of rights under
any state or federal statute, including, without limitation, reasonable attorneys' fees, costs and
expenses incurred to protect Payee's security and attorneys' fees, costs and expenses incurred in
bankruptcy and insolvency proceedings such as (but not limited to) seeking relief from stay in a
bankruptcy proceeding. The term "expenses" means any expenses incurred by Payee in connection
with any of the out-of-court, or state, federal or bankruptcy proceedings referred to above, including,
without limitation, the fees and expenses of any appraisers, consultants and expert witnesses retained
or consulted by Payee in connection with any such proceeding.
(ii) Payee shall also be entitled to its attorneys' fees, costs and expenses
incurred in any post-judgment proceedings to collect and enforce the judgment. This provision is
separate and several and shall survive the merger of this Note into any judgment on this Note.
(d) Entire Agreement. This Note and the relevant provisions of the DDA
constitute the entire agreement and understanding between and among the parties in respect of the
subject matter of such agreements and supercede all prior agreements and understandings with
respect to such subject matter, whether oral or written.
(e) Time of the Essence. Time if of the essence with respect to every provision
hereof.
(f) Waivers bv Maker. Except as otherwise provided in any agreement executed
in connection with this Note, Maker waives: presentment; demand; notice of dishonor; notice of
default or delinquency; notice of acceleration; notice of protest and nonpayment; notice of costs,
expenses or losses and interest thereon; and diligence in taking any action to collect any sums arising
under this Note or in any proceeding against any of the rights or interests in or to properties securing
payment of this Note.
(g) Non-waivers. No previous waiver and no failure or delay by Maker in acting
with respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach,
default, or failure of condition under this Note, the Deed of Trust or the obligations secured thereby.
A waiver of any term of this Note, the Deed of Trust or of any of the obligations secured thereby
must be made in writing and shall be limited to the express written terms of such waiver. In the
event of any inconsistencies between the terms of this Note and the terms of any other document
related to the loan evidenced by this Note, the terms of this Note shall prevail.
COURTLAND-ARROYO GRANDE, L.P.
(a California limited partnership)
By: Foundation for Affordable Housing, Inc.
a California Corporation
(Its: General Partner)
By:
Thomas E. Willard
Its: President
Attachment No. 14
Page 3 of3
DOCSOCI881805v7\22707.oooo
_. --.----
By: MFPA, Inc.
a California Corporation
(Its: General Partner)
By:
Sean Clark
Its: Vice-President
Attachment No. 14
Page 4 00
DOCSOC\881805v7\22707.0000
ATTACHMENT NO. 14
AGENCY DEED OF TRUST
Order No.
Escrow No.
Loan No.
WHEN RECORDED MAIL TO:
Arroyo Grande Redevelopment Agency
214 East Branch Street
Arroyo Grande, California 93421
Attention: Executive Director
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST WITH ASSIGNMENT OF RENTS
(SHORT FORM)
This DEED OF TRUST, made as of ,2002 , between
COURTLAND-ARROYO GRANDE, L.P., a California limited partnership herein called TRUSTOR, whose
address is:
, Suite ----' , California
FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, herein called TRUSTEE, and
the ARROYO GRANDE REDEVELOPMENT AGENCY, a public body corporate and politic, herein called
BENEFICIARY,
WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, that property in the City of Arroyo
Grande,
County of San Luis Obispo, State of California, described as:
SEE EXHIBIT "A" ATfACHED HERETO AND MADE A PART HEREOF.
together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter
given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of
securing (I) payment of the sum of $800,000.00 with interest thereon according to the tenns of a promissory note
or notes of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals
thereof, (2) the performance of each agreement of Trustor incorporated by reference or contained herein and
(3) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or his successors or
assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust.
To protect the security of this Deed of Trust, and with respect to the property above described, Trustor expressly
makes each and all of the agreements, and adopts and agrees to perfonn and be bound by each and all of the tenns
and provisions set forth in subdivision A, and it is mutually agreed that each and all of the tenns and provisions set
forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other
counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the
county where said property is located, noted below opposite the name of such county, namely:
AttachmenlNo.14
Page 10f3
DOCSOC\88180Sv7\22707.0000
- ------------..----
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187
Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621
Butte 1330 513 Los Angeles T3878 874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56
Colusa 323 391 Marin 1849 122 S. Bernardino 6213 768 Sutter 655 585
Contra Costa 4684 1 Mariposa 90 453 S. Francisco A-804 596 Tehama 457 183
Del Norte 101 549 Mendocino 667 99 S. Joaquin 2855 283 Trinity 108 595
E1 Dorado 704 635 Merced 1660 753 S. Luis Obispo 1311 137 Tulare 2530 108
Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolunme 177 160
Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16
Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693
Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego 1964 149774
Series 5
shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and
provisions contained in said subdivisions A and B, (identical in all counties, and printed on pages 3 and 4 hereof)
are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as
fully as set forth at length herein, and Beneficiary may charge for a statement regardin1\ the obligation secured
hereby, provided the charge therefor does not exceed the maximum allowed by law.
The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to
him at his address hereinbefore set forth.
Attachment No. 14
Page 2 of3
DOCSOC188I 805v7\22707.0000
) Signature of Trustor
STATE OF CALIFORNIA ss
COUNTY OF ) COURTLAND-ARROYO GRANDE, L.P.
On before me, (a California limited partnership)
personally appeared , By: Foundation for Affordable Housing, Inc.
personally known to me (or proved to me on the basis of a California Corporation
satisfactory evidence) to be the person(s) whose names(s) is/are (Its: General Partner)
subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in histher/their authorized
capacity(ies), and that by histher/their signature(s) on the By:
instrument the person( s), or the entity upon behalf of which the Thomas E. Willard
person( s) acted, executed the instrument. Its: President
WI1NESS my hand and official seal
SIGNATURE By: MFP A, Inc.
a California Corporation
(Its: General Partner)
By:
Sean Clark
Its: Vice-President
(This area for official notaries seal)
Attachment No. 14
Page 3 of3
DOCSOC\881805v1l22707.0000
----..--..-- _.---
EXHIBIT "A"
LEGAL DESCRIPTION
[To Come]
Exhibit "A" to Attachment No. 14
Page 1 of1
DOCSOC\881805v7\22707.0000
--.-- ..-
EXHIBIT "B"
RIDER TO DEED OF TRUST
Exhibit B to Deed of Trust with Assignment of Rents dated as of , 2002, executed
by Courtland-Arroyo Grande, L.P., a California limited partnership, as "Trustor," to Chicago Title
Insurance Company, a California corporation, as Trustee, for the benefit of Arroyo Grande
Redevelopment Agency, a public body, corporate and politic, as "Beneficiary" ("Deed of Trust").
1. DEFAULT - OTHER DEEDS OF TRUST. DEED. COVENANTS CONDITIONS AND
RESTRICTIONS (CC&Rs) AND AGREEMENT. A default under any of the following
shall, at Beneficiary's option, constitute a default under this Deed of Trust:
(a) A default under that certain Disposition and Development/Affordable Housing
Agreement ("Agreement") dated as of March 20,2002, between Trustor and
Beneficiary or any default under any Agency Note or Agency Deed of Trust
delivered under the Agreement, whether senior or junior to this Deed of Trust (all
capitalized tenus not defined herein shall have the meanings established therefor
under the Agreement);
(b) A default under that certain deed of trust dated as of , 2002, executed by
Trustor in favor of Bank, a California banking corporation encumbering
the Property; which deed of trust secures a promissory note in the original principal
amount of $ (the" Bank Deed of Trust");
(c) A default under any other deed of trust encumbering the Property which has a priority
senior to this Deed of Trust;
(d) A default under the "Agency Developer CC&Rs" (as executed and recorded pursuant
to the Agreement); or
(e) A default under the Agency Deed (as entered into pursuant to the Agreement).
2. DEFAULT - DEED OF TRUST. A default under this Deed of Trust shall, at Beneficiary's
option, as appropriate, constitute a default under the deeds of trust or other instruments
referenced in Paragraph I (a) through (e), inclusive (collectively the "Other Deeds of Trust"),
of this Rider.
3. NON-IMPAIRMENT. Except as supplemented and/or modified by this Deed of Trust, all
ofthe tenus, covenants and conditions of the Other Deeds of Trust and the other loan
documents executed in connection therewith shall remain in full force and effect.
4. DUE ON SALE OR ENCUMBRANCE. In the event of any Transfer (as defmed below) of
the Property, or any portion thereof or interest therein, Beneficiary shall have the absolute
right at its option, without prior demand or notice, to declare all sums secured hereby
immediately due and payable. As used herein, the tenu "Transfer" means and includes the
direct or indirect sale, transfer, conveyance, mortgage, further encumbrance, assignment, or
other alienation of the Property, or any portion thereof or interest therein, whether voluntary,
involuntary, by operation oflaw or otherwise, the execution of any installment land sale
Exhibit "B" to Attachment No. 14
Page lof5
DOCSOC\881805v7\22707.0000
________n_
contract, sales agreement or similar instrument affecting all or a portion of the Property,
granting of an option to purchase any portion of or interest in the Property or any interest
therein, or the lease of all or substantially all of the Property or of all or substantially all of
the improvements situated on the Property. "Transfer" shall not include the leasing of
individual dwelling units on the Property so long as Trustor complies with the provisions of
the Agreement relating to such leasing activity. Failure of Beneficiary to exercise the option
to declare all sums secured hereby immediately due and payable upon a Transfer will not
constitute waiver of the right to exercise this option in the event of any subsequent Transfer.
5. PRIORITY OF DEED OF TRUST. This Deed of Trust is subject and subordinate
to the following deed of trust: The Bank Deed of Trust.
Exhibit "B" to Attachment No. 14
Page 2 of5
DOCSOC\881805v7\22707.0000
,
I
--- --- -- -- -----.-.-.-..- I
DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in
California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a
part thereof as if set forth at length therein.
G. To protect the security of this Deed of Trust, Trustor agrees:
(1) To keep said property in good condition and repair; not to remove or demolish any building
thereon; to complete or restore promptly and in good and workmanlike manner any building which may be
constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials
furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be
made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in
violation of law; to cultivate irrigate, fertilize, fumigate, prune and do all other acts which from the character or use
of said property may be reasonably necessary, the specific enumerations herein not excluding the general.
(2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable
to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon
any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the
entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure
or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
(3) To appear in and defend any action or proceeding purporting to affect the security hereof or the
rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and
attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear,
and in any suit brought by Beneficiary to foreclose this Deed.
(4) to pay: at least ten days before delinquency all taxes and assessments affecting said property,
including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on
said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this
trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee,
but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from
any obligation thereof, may: make or do the same in such manner and to such extent as either may deem necessary
to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes;
appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the
judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary
expenses, employ counsel and pay his reasonable fees.
(5) To Pay immediately and without demand all sums so expended by Beneficiary or Trustee, with
interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any
statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount
demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is
demanded.
H. It is mutoally agreed:
(1) That any award of damages in connection with any condemnation for public use of or injury to
said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such
mouies received by him in the same manner and with the same effect as above provided for disposition of proceeds
of fire or other insurance.
Exhibit "B" to Attachment No. 14
Page 3 of5
DOCSOC\881805v7l22707.0000
--_._~-~ _._--~--_._-- -
(2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not
waive his right either to require prompt payment when due of all other sums so secured or to declare default for
failure so to pay.
(3) That at any time or from time to time, without liability therefor and without notice, upon written
request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the
personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of
said property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any
extension agreement or any agreement subordinating the lien or charge hereof.
(4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and
upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in
its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property
then held hereunder. The recitals in such reconveyance or any matters or facts shall be conclusive proof of the
truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled
thereto,"
(5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power
and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property,
reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in
perfonnance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and
payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a
receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby
secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise
collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and
expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby,
and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the
collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any
default or notice of default hereunder or invalidate any act done pursuant to such notice.
(6) That upon default Trustor in payment of any indebtedness secured hereby or in perfonnance of
any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by
delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of
election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also
shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of
default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell
said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in
such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States,
payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at
such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the
time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property
so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts
shall be conclusive proof of the truthfulness thereof. AIly person, including Trustor, Trustee, or Beneficiary as
hereinafter defmed, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title
in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the tenns
hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums
then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto.
(7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to
time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder,
which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of
the county or counties where said property is situated, shall be conclusive proof of proper substitution of such
Exhibit "B" to Attachment No. 14
Page 4 of5
OOCSOC\881805v7\22707.0000
~.---_.__.-
successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title,
estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and
Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee.
(8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees,
devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder,
including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed,
whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number
inclndes the plural.
(9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a
public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other
Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought
by Trustee.
DO NOT RECORD REQUEST FOR FULL RECONVEYANCE
TO CHICAGO TITLE INSURANCE COMPANY, TRUSTEE:
The undersigned is the legal owner and holder of the note or notes, and of all other
indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other
indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby
requested and directed on payment to you of any sums owning to you under the tenns of said Deed of
Trust, to cancel said note or notes above mentioned, and all other evidences of indebtedness secured
by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to
reconvey, without warranty, to the parties designated by the tenns of said Deed of Trust, all the estate
now held by you under the same.
Dated:
Please mail Deed of Trust,
Note and Reconveyance to
Do not lose or destroy this Deed ofT rust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation
before reconvevance will be made.
DEED OF TRUST Chicago Title Insurance Company
with power of sale TRUSTEE
Exhibit "B" to Attachment No. 14
Page 5 of5
OOCSOC\881805v7\22707.0000 I
- .-.- I
ATTACHMENT NO. 15
MEMORANDUM OF AGREEMENT
[TO COME]
Attachment No. 15
Page 1 of 1
DOCSOC\881805v7\22707.0000
-----" _.~_m
ATTACHMENT NO. 16
[INTENTIONALLY OMITTED]
Attachment No. 16
Page 1 of1
DOCSOC\881805v7\22707.0000
-- ~- -.-.-
ATTACHMENT NO. 17
INTERCREDITOR AND SUBORDINATION AGREEMENT
RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
)
ARROYO GRANDE REDEVELOPMENT AGENCY)
214 East Branch Street )
Arroyo Grande, California 93421 )
Attention: Kelly Wetmore, Agency Secretary )
INTERCREDITOR AND SUBORDINATION AGREEMENT
NOTICE: THIS INTERCREDITOR AND SUBORDINATION AGREEMENT RESULTS IN THE
SECURITY INTEREST UNDER YOUR DEEDS OF TRUST BECOMING SUBJECT TO AND OF
LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY
INSTRUMENT.
This Intercreditor and Subordination Agreement ("Intercreditor and Subordination
Agreement"), made this _ day 200_, by and among Courtland-Arroyo Grande,
L.P., a California limited partnership ("Owner or Developer"), which is owner of that certain interest
in real property as legally described on Exhibit "A" hereto and hereinafter described as the
"Property," Arroyo Grande Redevelopment Agency, a public body corporate and politic
("Beneficiary" or "Agency"), present holder and owner ofthe deed of trust and note first hereinafter
described, and Wells Fargo Bank, NT & SA ("Lender").
WHEREAS, Agency is a California redevelopment agency acting under the California
Community Redevelopment Law, Part I of Division 24 of the Health and Safety Code (the
"Redevelopment Law"); and
WHEREAS, the Redevelopment Plan for the Arroyo Grande Redevelopment Project,
sometimes referred to as the Project (herein, the "Project") was adopted by Ordinance No. 479CS by
the City Council of the City of Arroyo Grande (the "Redevelopment Plan"). The redevelopment
project area for the Redevelopment Plan as so amended constitutes the "Project Area"; and
WHEREAS, the Agency is authorized and empowered under the Community
Redevelopment Law, California Health and Safety Code Sections 33000, et seq. (the "Community
Redevelopment Law"), to enter into agreements for the production, improvement, or preservation of
affordable housing to households oflimited income, with such housing to be available at "Affordable
Rent" (within the meaning of the Redevelopment Law); and
WHEREAS, the Developer is experienced in the development and operation of affordable
multi-family housing, particularly in San Luis Obispo County; and
Attachment No. 17
Page 1 of5
OOCSOC\881805v7\22707.0000
- ------------ I
WHEREAS, the Developer has entered into a Disposition and Development Agreement with
the Agency dated as of March 20, 2002 (the "DDA") which provides for the Agency to transfer
certain real property (the "Site") located in the City of Arroyo Grande and within the Project Area of
the Agency's Arroyo Grande Redevelopment Project to the Developer, whereupon the Developer
shall develop L-J dwelling units and related improvements for occupancy by
"Seniors" (as defined below) on the Site and would thereupon rent a specified number of dwelling
units to "Very Low Income Households," all at "Affordable Rent" and at the "Prescribed Rent
Levels," as those terms are defined below. Such development is intended to implement the Agency's
goals and objectives under the Redevelopment Law to provide decent, safe and sanitary housing for
persons of very low income, and to increase, improve and preserve housing available at affordable
housing cost to persons of very low income, pursuant to the Redevelopment Plan and Health and
Safety Code Sections 33334.2, et seq., and 33413; and
WHEREAS, Developer shall apply for and obtain an allocation for the obtaining of9% Low
Income Tax Credits as generally provided for under Section 42 of the Internal Revenue Code and/or
California Revenue and Taxation Code Sections 17057.5, 17058,23610.4 and 23610.5 and
California Health and Safety Code Section 50199, et seq. ("9% Tax Credits"); and
WHEREAS, under the DDA, the Developer shall develop L-J dwelling
units and a designated nwnber of those dwelling units to be rented at "Affordable Rent" and at the
"Prescribed Rent Levels" throughout the "Required Covenant Period" (as defined in the DDA). All
capitalized items no defined herein shall have the meanings established therefor in the DDA ; and
WHEREAS, in connection with the DDA, the Agency deeded the Site to the Owner and the
Owner has executed and delivered to escrow the "Agency Note," the "Agency Deed of Trust" and
the "Agency Developer CC&R's" all as defined in the DDA. The Agency Note is to be delivered to
Agency prior to or immediately upon the recordation of this Intercreditor and Subordination
Agreement. In addition, the Agency Developer CC&R's are to be recorded as to the Property among
the official land records of the County Recorder of San Luis Obispo County of even day herewith;
and
WHEREAS, Owner has executed, or is about to execute, a deed of trust (the "Lender Deed
of Trust") and note in the sum Dollars ($ T"!!!!!!!!!) (the "Loan Amount")
dated as 200_, in favor of Lender, payable by the Owner with interest and upon the
terms and conditions described therein; and
WHEREAS, the parties hereto intend that any lien in favor of Lender shall be subordinate to
the Agency Developer CC&R's excepting only to the extend Section 5 hereof provides to contrary
effect; and
WHEREAS, it is a condition precedent to obtaining the loan of the loan amount from Lender
that the Lender Deed of Trust shall unconditionally be a lien or charge upon the Property prior and
superior to the lien or charge of the Agency Deed of Trust (notwithstanding that the Lender Deed of
Trust shall be junior and subordinate to the Agency Developer CC&R's) excepting only to the extend
Section 5 hereof provides to contrary effect; and
WHEREAS, Lender is willing to make said loan provided the Lender Deed of Trust securing
the same is a lien or charge upon the Property prior and superior to the lien or charge of the Agency
Deed of Trust and provided that Beneficiary will specifically and unconditionally subordinate the
Attachment No. 17
Page 2 of5
DOCS0C\88180Sv7\22707.0000
..-----
lien or charge of the Agency Deed of Trust to the lien or charge of the Lender Deed of Trust and
further provided that the Agency will agree to the provisions of Section 5 of this Intercreditor and
Subordination Agreement; and
WHEREAS, it is to the mutual benefit of the parties hereto that Lender make such loan to
Owner, and Beneficiary is willing that the Lender Deed of Trust securing the same shall, when
recorded, constitute a lien or charge upon the Property which is unconditionally prior and superior to
the lien or charge of the Agency Deed of Trust;
NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto
and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged and in
order to induce Lender to make the loan above referred to, it is hereby declared, understood, and
agreed as follows:
1. That the Lender Deed of Trust shall unconditionally be a lien or charge on the Property prior
and superior to the lien or charge of the Agency Deed of Trust;
2. That Lender would not make its loan above described without this Intercreditor and
Subordination Agreement;
3. The Lender Deed of Trust shall be junior and subordinate to the Agency CC&R's, however,
that subject to the notice and cure rights of the Agency as a junior creditor under applicable laws and
those rights of Agency under Section 5 hereof, in event foreclosure (or assignment in lieu of
foreclosure) is completed pursuant to the Lender Deed of Trust, the subsequent purchaser and all
successors (but excluding from the effect of the following exception the Owner, the "Principals" [as
defined in the DDA] or any person having any financial interest in the Developer or the Principals)
will accede to the rights of the Developer under the DDA with the exception that the requirements for
affordability and for limiting of incomes of occupants under the Agency Developer CC&R's and the
Agency Deed will longer be applicable;
4. In the event of a mortgage or deed of trust default or breach by the Developer whether prior
to or after the completion of the construction of any of the "Improvements" (as defined in the DDA)
or any part thereof (continuing until the expiration of the tenn of the Required Covenant Period),
Developer shall immediately deliver to Agency a copy of any mortgage holder's notice of default. If
the holder of any mortgage or deed of trust has not exercised its option to construct, the Agency shall
have the right but no obligation to cure the default. In such event, the Agency shall be entitled to
reimbursement from the Developer of all proper costs and expenses incurred by the Agency in curing
such default.
In addition, the Developer and the Lender agree that in the event Lender acquires the
Development, including without limitation upon exercise of foreclosure or assignment in lieu of
foreclosure, Lender shall so notify the Agency and the Agency shall have not less than sixty (60)
days following receipt by Agency of such notice (given in the manner described in Section 8.2 of the
DDA) to purchase the interests of such lender in the Development (including the corresponding loan
for an amount equal to the outstanding balance of the corresponding loan). The Developer agrees to
provide documentation evidencing the relinquishment of any and all rights to the Development in
such event; provided that the failure to provide such documentation shall not be construed to mean
that the Developer retains any rights under the DDA.
Attachment No. 17
Page 3 of5
DOCSOC\881805v7\22707.0000
----- --..---- ----_._----_._-_..~_. - -------..----------------
5. Beneficiary declares, agrees, and acknowledges that:
5.1 It intentionally and unconditionally waives, relinquishes, and subordinates the lien or
charge of the Agency Deed of Trust in favor of the lien or charge upon said Property of the Lender
Deed of Trust, and understands that in reliance upon, and in consideration of, this waiver,
relinquishment and subordination specific loans and advances are being made and, as part and parcel
thereof, specific monetary and other obligations are being and will be entered into which would not
be made or entered into but for said reliance upon this waiver, relinquishment and subordination; and
5.2 An endorsement has been or shall be placed upon the note secured by the Agency
Deed of Trust that the Agency Deed of Trust has by this instrument been subordinated to the lien or
charge of the Lender Deed of Trust.
"OWNER"
COURTLAND-ARROYO GRANDE, L.P.
(a California limited partnership)
By: Foundation for Affordable Housing, Inc.
a California Corporation
(Its: General Partner)
By:
Thomas E. Willard
Its: President
By: MFP A, Inc.
a California Corporation
(Its: General Partner)
By:
Sean Clark
Its: Vice-President
AII,chmenlNo.17
P'ge 4 of5
DOCSOC\881805v7\22707.0000
"LENDER"
WELLS FARGO BANK" NT & SA
By:
Name:
Its:
By:
Name:
Its:
"BENEFICIARY"
ARROYO GRANDE REDEVELOPMENT
AGENCY, a public body corporate and politic
By:
Steven Adams
Its: Executive Director
ATIEST:
, Secretary
Attachment No. 17
Page 5 of5
DOCSOC\881805v7\22707.0000
--.--- ----..-- -_._---_..,_._-~---_.-
EXHIBIT A
LEGAL DESCRIPTION
[TO COME]
Exhibit "A" - Attachment No. 17
Page 1 of 1
OOCSOC\881805v7\22707.0000
---.-
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On , before me, , Notary Public,
(Print Name of Notary Public)
personally appeared
,
D personally known to me
-or-
D proved to me on the basis of 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 hislher/their
authorized capacity(ies), and that by hislher/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the docwnent and could prevent
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
0 Individual
0 COIporate Officer
Title(s) Title Or Type Of Document
o Partner(s) 0 Limited
0 General
0 Attorney-In-Fact
0 Trustee(s) Number Of Pages
0 Guardian/Conservator
0 Other:
Signer is representing: Date Of Document
Name OfPerson(s) Or Entity(ies)
Signer(s) Other Than Named Above
DOCSOCI881805v7\22707.0000 J
---.._-.---------_..-
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On , before me, , Notary Public,
(Print Name of Notary Public)
personally appeared
,
0 personally known to me
-Of-
0 proved to me on the basis of 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 hislher/their
authorized capacity(ies), and that by hislher/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent reattachment of this fonn.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
0 Individual
0 COIporate Officer
TiOe(s) Title Or Type Of Document
0 Partner(s) 0 Limited
0 General
o Attorney-In-Fact
o Trustee( s) Number Of Pages
0 Guardian/Conservator
0 Other:
Signer is representing: Date Of Document
Name OfPerson(s) Or Entity(ies)
Signer(s) Other Than Named Above
DOCSOC\881805v7\22707.0000
'-
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On , before me, , Notary Public,
(Print Name of Notary Public)
personally appeared
,
0 personally known to me
-or-
0 proved to me on the basis of 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 hislher/their
authorized capacity(ies), and that by hislher/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the docnment and could prevent
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
0 Individual
0 COlporate Officer
Title(s) Title Or Type Of Document
0 Partner(s) 0 Limited
0 General
o Attorney-In-Fact Number Of Pages
0 Trustee( s)
0 Guardian/Conservator
0 Other:
Signer is representing: Date Of Document
Name OfPerson(s) Or Entity(ies)
Signer(s) Other Than Named Above
OOCSOC\881805v7\22707.0000
Table of Contents
Page
1. DEFINITIONS AND INTERPRETATION..............................................................................2
1.1 Defined Terms.................. ................................................... ............... ...........................2
1.2 Singular and Plural Terms...........................................................................................10
1.3 References and Other Terms.......................................................................................10
1.4 Exhibits Incorporated .................................................. ................ ................................11
1.5 The Redevelopment Plan ............................................................................................11
1.6 Representations and Warranties. .................................................................................11
1.7 Developer Cost Disbursement................................................. ......................... ........... 13
2. DISPOSITION OF THE SITE ................................................................................................13
2.1 Acquisition of the Site...................... ................................. .................. ........................ 13
2.2 Escrow................................. ..... ............................................. ............................... ....... IS
2.3 Review of Title... ... ...... ... ........................................................ ............... ... ....... ............ 17
2.4 Title Insurance............................................................................................................. 18
2.5 Developer Payments.................................................. ................... ...............................18
3. CONDITION TO CLOSING; CONDITIONS TO DISBURSEMENT OF
THE AGENCY DISBURSEMENT AMOUNT...................................................................... 18
3.1 Agency's Condition to Closing...................................................................................18
3.2 Agency's Conditions to Disbursement of the Agency Disbursement
Amount.................................................................. ...................... ................................19
3.3 Agency Disbursement Amount ................................... .................. ..............................21
4. SCOPE OF DEVELOPMENT; INSURANCE AND INDEMNITY,
FINANCING .................................... ................................................ ................................. ...... 21
4.1 Scope of Development..... .................................................... ............................... ........ 21
4.2 Design Review. .. ........ ............................................................. .......................... .......... 21
4.3 Time of Performance; Progress Reports .....................................................................22
4.4 Cost of Construction ............................. .............. ....................... ................................. 22
4.5 Insurance Requirements ............................................... ................. ..............................23
4.6 Obligation to Repair and Restore Damage Due to Casualty .......................................24
4.7 Indemnity.... ............................................ ......................... .................. .........................24
4.8 Rights of Access............................... ................................ ................... ........................ 25
4.9 Compliance With Laws................. .................................... ................... .................. ..... 26
4.10 Nondiscrimination in Employment ..................................... ....................... ........... ...... 26
4.11 Taxes and Assessments............ ............................................. ................................ ...... 26
4.12 Liens and Stop Notices......... .................................................. ............................... ...... 26
4.13 Certificate of Completion............................................................................................ 26
4.14 Further Assurances...................................................................................................... 27
4.15 Financing of the Improvements. .................................................................................27
4.16 Mechanics of Disbursement of Agency Disbursement Amount. ................................31
4.17 Establishment and Maintenance of Accounts .............................................................32
5. COVENANTS AND RESTRICTIONS ..................................................................................32
5.1 Use Covenants........................................... .... ..... ......... ................. ............................... 32
5.2 Affordable Housing Requirements. ............................................................................33
i
DOCSOCI881805v7\22707.0000 ~
--,.-.- -..--.----
Table of Contents
(continued)
Page
5.3 Verifications. ....................................................... .................... ..................... .......... ..... 34
5.4 Maintenance of Site..................................................... ................ ................................ 35
5.5 Nondiscrimination Covenants... ....................................... .................. .........................35
5.6 Effect of Violation of the Terms and Provisions of this Agreement
After Completion of Construction .......................................... ................. ........ ........... 36
6. DEVELOPER'S GENERAL REPRESENTATIONS AND WARRANTIES........................ 36
6.1 Formation, Qualification and Compliance..................................................................36
6.2 Execution and Performance of Project Documents.....................................................37
6.3 Covenant Not to Transfer Except in Conformity ........................................................37
7. DEFAULTS, REMEDIES, AND TERMINATION. ..............................................................37
7.1 Default Remedies ......................................................... ................. ..............................37
7.2 Institution of Legal Actions............................. ............. ..................... .........................38
7.3 Termination by the Developer ....................................................................................38
7.4 Termination by Agency............ ......................................... ................... .................. ..... 38
7.5 Acceptance of Service of Process ...............................................................................38
7.6 Rights and Remedies Are Cumulative ........................................................................ 39
7.7 Inaction Not a Waiver of Default................................................................................ 39
7.8 Applicable Law.......................................................... .................. ...............................39
7.9 [Intentionally Omitted]........................ .......................... ..................... ............ .............39
7.10 Enforced Delay; Extension of Times of Performance ................................................39
7.11 Transfers of Interest in Agreement or ofSite..............................................................40
7.12 Non-Liability of Officials and Employees of Agency ................................................41
7.13 Relationship Between Agency and Developer............................................................41
7.14 Agency and City Approvals and Actions....................................................................41
7.15 Real Estate Brokers..................................................................................................... 42
7.16 Attorneys' Fees........................................................................................................... 42
8. MISCELLANEOUS ................................................................................................................42
8.1 Obligations Unconditional and Independent...............................................................42
8.2 Notices ........................................................................................................................ 42
8.3 Survival of Representations and Warranties ...............................................................43
8.4 No Third Parties Benefited Except for City ................................................................43
8.5 Binding Effect; Assignment of Obligations ......................... ................................. ...... 43
8.6 Counterparts................................................................................................................ 43
8.7 Prior Agreements; Amendments; Consents ................................................................43
8.8 Governing Law........................................................................ .......................... .......... 43
8.9 Severability of Provisions........................................................................................... 44
8.10 Headings............................................... ....... ........... ..................... ................................ 44
8.11 Conflicts...................................................................................................................... 44
8.12 Time of the Essence ................................................... .................. ............................... 44
8.13 Conflict of Interest ................................. ...... ....... ......... ................. .............................. 44
8.14 Warranty Against Payment of Consideration .............................................................44
8.15 Nonliability of Agency Officials and Employees .......................................................44
ii
OOCSOC\88I 805v7\22707.0000
~------ -----
Table of Contents
ATTACHMENTS
ATIACHMENTNO.l MAP
ATIACHMENTNO.2 LEGAL DESCRIPTION OF THE SITE
ATIACHMENTNO.3 SCHEDULE OF PERFORMANCE
ATIACHMENTNO.4 CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
ATIACHMENTNO.5 [INTENTIONALLY OMITIED]
ATIACHMENTNO.6 AGENCY DEED
ATIACHMENTNO.7 CALCULATION OF AFFORDABLE RENTS
ATIACHMENTNO.8 REQUEST FOR NOTICE OF DEFAULT
ATIACHMENTNO.9 SCOPE OF DEVELOPMENT
ATIACHMENTNO.lO CERTIFICATE OF COMPLETION
ATIACHMENTNO.ll AGENCY DEVELOPER CC&RS
ATIACHMENT NO. 12 INCOME VERIFICATION
ATIACHMENT NO. 13 AGENCY NOTE
ATIACHMENT NO. 14 AGENCY DEED OF TRUST
ATIACHMENTNO.15 MEMORANDUM OF AGREEMENT
ATIACHMENT NO. 16 [INTENTIONALLY OMITIED]
ATIACHMENTNO.17 INTER-CREDITOR AND SUBORDINATION AGREEMENT
iii
OOCSOC188 I 805v7\22707.oooo
I
I
.-.---.---.-.- __~_~___J
ATTACHMENT 2
SUMMARY REPORT
FOR THE
DISPOSITION AND DEVELOPMENT AGREEMENTI
AFFORDABLE HOUSING AGREEMENT
BETWEEN THE
ARROYO GRANDE REDEVELOPMENT AGENCY
AND
ARROYO GRANDE SENIOR PARTNERS, L.P.
MARCH 20, 2002
INTRODUCTION
This document is the Summary Report ("Report") for the Disposition and Development
Agreement/Affordable Housing Agreement ("DDA") by and between the Arroyo Grande
Redevelopment Agency ("Agency") and Arroyo Grande Senior Partners, L.P. ("Developer").
The DDA facilitates the construction of a I08-unit multi-family residential development, and
associated public improvements ("Senior Development"). The multi-family apartments will be
affordable to very low and low-income senior citizen households.
The Developer is seeking investment tax credit fmancing and separate capital resources to
underwrite the Senior Development.
This Report has been prepared pursuant to Section 33433 of the California Health and Safety
Code (the California Community Redevelopment Law or "Community Redevelopment Law")
and presents the following:
,. A summary of the proposed Senior Development.
. The cost of the DDA to the Agency.
. The estimated value of the interest to be conveyed, determined at the highest and best uses
permitted by the Agency's Redevelopment Plan.
. The estimated value of the interest to be conveyed determined at the use with' the
conditions, covenants, and development costs required by the DDA.
. An explanation of why the sale of property pursuant to the DDA will assist in the
elimination of blight.
I
I
I
-----,..- -------
C THE SENIOR DEVELOPMENT
City and Agency Housing Mandates
Both the City of Arroyo Grande ("City") and the Agency are mandated by the State Planning and
the Community Redevelopment Laws to continually seek opportunities that increase and
improve the supply of housing affordable to very low, low, and moderate-income households.
State Planning Laws mandate that the City pursue a housing mix that accommodates both local
and regional housing demand for affordable dwellings. The Community Redevelopment Law
provides that the Agency must pursue the production of affordable housing units within the
Agency's redevelopment project area. Said Law further mandates that a minimum of 15% of all
new and rehabilitated dwelling units within these project areas be affordable to very low, low,
and moderate income households, and that these dwellings feature covenants that maintain their
affordability for a minimum of fifty five years. If the Agency does not implement this housing
mandate, then the Agency's non-housing redevelopment revenue may be forfeited.
The Site
The property consists of approximately 3.22 acres of undeveloped land located at the northwest
comer of Courtland Street and Grand Avenue (the "Site"). The assessor's parcel number is 077-
071-024. The property is owned by Vons Companies Inc. of Portland Oregon.
C Project Description
Senior Develoument. The Senior Development encompasses 108 multi-family senior citizen
rental units to be constructed on the Site. The Senior Development will be developed in two
phases, with the first phase consisting of approximately 81 units and the second phase consisting
of approximately 27 units. The project is being developed in two phases because the California
Tax Credit Allocation Committee ("TCAC") limits projects in rural areas to a maximum size of
80 affordable units. One unit, to be occupied by the property manager, will not be affordable.
TCAC is the committee fonned under the State of California Department of Finance and changed
with the allocation of Federal and State Low Income Housing Tax Credits within the State of
California. Within the first phase, 16 of the units are planned as two bedroom one bath units,
and 64 of the units will be one bedroom one bath units. The two bedroom units will be
approximately 740 square feet in size and the one-bedroom units will be 530 square feet in size.
Within the second phase it is anticipated that approximately 22 units will be one bedroom one
bath units and 6 units will be two bedroom one bath units.
The Senior Development is proposed to be financed through a combination of Agency assistance
and Federal and State Low Income Housing Tax Credits ("Tax Credits"). Tax Credits are
allocated through a competitive process that takes into account project features, costs, local
assistance, and other factors. If the Developer does not secure Tax Credits then the Agency will
C be relieved of its commitment to provide assistance, and the Developer will be allowed to pursue
other options to finance the development.
2
-....----- -~._.-
C Affordable Housing Mix
In order to achieve some of the City's and Agency's affordable housing production mandates the
Agency will impose covenants restricting 49% of the units to rental rates affordable to very low
or lower income senior households. Very low income households are households with incomes
at or below 50% of area median income; lower income households are households with incomes
at or below 80% of area median income. Upon completion of both phases of the Senior
Development, units will be affordable to very low and low-income senior citizen households,
pursuant to the following:
. At least 25 units will be rented to very low-income senior households.
. At least 25 units will be rented to low-income senior households.
These units will also feature covenants to ensure their continued affordability to the designated
households for a period of 60 years.
THE COST OF THE DDA TO THE AGENCY
The total cost of the DDA to the Agency is $1,379,615. This consists of the $800,000 provided
C by the agency for both the 1" and 2nd phase and $579,615 in interest on the Agency assistance at
6.00% per year. Offsetting this cost is $1,202,308 in income to the Agency, calculated at 10%
per year as specified in the DDA. In addition to the interest income the Agency will be paid back
its assistance by the 18th year of the project. Therefore total cash flow to the Agency, including
principal and interest, is $2,002,308. The Agency will not receive tax increment income from
the Senior Development due to the welfare tax exemption that will be provided to the project as
provided in State law.
The total Senior Development cost for both phases is projected to be $11,624,282; this consists
of $10,789,919 of hard and soft construction costs, and $834,363 of property acquisition costs.
Pursuant to the DDA, the Agency will fund up to $800,000 or 7% of the total development cost.
Property Acquisition/Sale
The Developer and Vons Companies Inc.("Vons"), the current property owner, will have the
property appraised to determine its fair market value. V ons has agreed to sell the property to the
Agency for $834,363, an amount estimated to be below the fair market value of the property,
provided the Agency devotes the property to the development of affordable housing. Vons will
contribute the difference between the fair market value of the property and $834,363 as
assistance towards the development ofthe project. Vons assistance may assist the Developer in
its application for Tax Credits. The Agency will in turn sell the property to the Developer for
C $834,363 through the DDA.
3
---- -- _..--._~_.,--_. --,. ~ ~..~...~_._- -'---.'---.'
C Source and Cost of Agency Funds
The source ofthe revenue to underwrite the Agency's $800,000 will be as follows:
. Tax increment revenue -housing set-aside - $ 40,000
. Developer "in lieu of' fees to provide affordable housing - $360,000
. City loan to Agency - credit against Parks & Recreation fee - $400.000
TOTAL $800,000
ESTIMATED VALUE OF INTEREST TO BE CONVEYED
The Agency's redevelopment consultant prepared a property reuse profonna to determine the
value of the Site if it was developed today with a market rate project. The analysis used the
following assumptions:
Developed use - apartments
Market value per unit $ 80,000
Less; developer profit @ 15% 12,000
All in cost to develop - per unit $ 68,000
Less; cost of developing improvements - per unit $ 56,250
C Land portion of development costs - per unit $ 11,750
Number of units allowed per pennitted density - 33.5 units/acre 108
Value of Site $ 1,269,000
The analysis concluded that the value of the 3.22 acre Senior Development parcel is $1,269,000
or $9.05 per square foot ofland area.
ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED. DETERMINE AT
THE USE WITH THE CONDITIONS. COVENANTS. AND DEVELOPMENT COSTS
REOUlRED BY THE DDA
The DDA will facilitate the transfer of a 3.22-acre site upon which the Senior Development will
be built. The DDA imposes affordabi1ity covenants wherein 25 units will be offered at rents
affordable to very low-income senior households and 25 units will be offered at rents affordable
to low income senior households.
C The Senior Development's development and operating pro fonnas indicate a capitalized value of
the Senior Development, based upon projected income restricted rental income, of $2,734,224.
4
---- --. '-
C' This compares to a total development cost of $11,624,282 inclusive ofland, and $10,789,919
exclusive of land. Given the less than market rate rents imposed by the DDA and the
development costs required to fulfill the DDA, the value of the 3.22 acre site to be conveyed is
$1.00. Taking the impact of the Tax Credits into consideration and the Agency assistance
provided through the DDA, the value of the land is $834,363.
EXPLANATION OF WHY THE SALE OF THE PROPERTY PURSUANT TO THE DDA
WILL ASSIST IN THE ELIMINATION OF BLIGHT
The conveyance of the property and construction of the Senior Development will address the
following reasons for establishing the Arroyo Grande Redevelopment Project:
. Inftastructure Improvements. The Senior Development will provide street improvements
consisting of sidewalk, curb and gutter and street lighting. On-site improvements will
provide utility capacity and distribution which currently does not exist.
. Removal of Impediments to Development. The land and financial assistance provided
through the DDA will make it possible for the affordable housing units to be developed
within the Project Area. Further, the Agency's acquisition and subsequent conveyance of the
Site facilitates the development of property that is otherwise difficult to develop. Finally,
C the Senior Development will generate jobs during the construction phase, and will provide
additional demand for products and services when the units are occupied. This additional
demand will encourage merchants to locate into the area to meet demand which will have a
positive impact upon rental rates.
. Increasing and Improving the Supplv of Affordable Housing. The SA Development will
result in the construction of housing units that will be affordable to very low and low-income
senior citizen households.
A copy of the proposed Amendment is attached to this Report or available for review at City
Hall. The proposed Amendment will be the subject of a joint public hearing of the Agency and
City Council on March 20, 2002, at 7:00 p.m. in the City Council Chambers located at 215 East
Branch Street, Arroyo Grande, California.
C'
5
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