HomeMy WebLinkAboutLoan Agreement Attachment 2ACQUISITION, REHABILITATION AND PERMANENT
FINANCING LOAN AGREEMENT
Project No.
THIS ACQUISITION, REHABILITATION AND PERMANENT FINANCING
LOAN AGREEMENT ("Agreement") is dated as of the day of July, 2011, by and between
the City of National City ("City") and T & T Community Properties, LLC, a California limited
liability company ("Borrower") as follows:
RECITALS
A. Borrower intends to acquire, rehabilitate and permanently finance that certain real
property located at 138 Norton Avenue, National City, California ( "Property"), which is more
particularly described in Exhibit "A," attached hereto and made a part hereof. Borrower intends
to acquire, rehabilitate and permanently finance the Property using a loan from the City in the
original principal amount of up to Seven Hundred Seventeen Thousand Five Hundred and
No/100 Dollars ($717,500.00) ("City Loan"). The. City Loan is comprised entirely of HUD
HOME funds all of which shall be used for HOME eligible purposes.
B. The City Loan shall be evidenced by the City Note, which shall bear interest at
the rate of two percent (2.0%) simple interest per annum and will be repayable out of residual
receipts on the terms and conditions set forth in the City Note. This Agreement and the City
Note shall be secured by the Deed of Trust.
C. As soon as is reasonably practicable after the Closing, and in no event later than
fifteen (15) days after the Closing, Borrower shall begin rehabilitation of the Property. Borrower
intends to rehabilitate all eight (8) of the dwelling units at the Property (collectively, the
"Project"). Borrower shall rehabilitate and operate all eight (8) of those dwelling units on the
Property as affordable housing units (the "Affordable Units") which shall be rent and occupancy
restricted for 55-years, as provided herein. One (1) of the Affordable Units shall be a manager's
unit and will be rent or occupancy restricted at eighty percent (80%) of area median income, as
set forth in the Declaration.
D. Borrower intends to finance the Project using: (i) the City Loan; (ii) a
rehabilitation and permanent loan made by Clearinghouse CDFI in the original principal amount
of Five Hundred Sixty -Five Thousand and No/100 Dollars ($565,000.00) secured by the
Property ("Clearinghouse Loan"); and (iii) deferral of Fifty -Seven Thousand and No/100 Dollars
($57,000.00) of Borrower's developer fee ("Deferred Developer Fee"). This Agreement is being
executed in connection with, and the City's obligation to make the City Loan is contingent on
Borrower closing on the Clearinghouse Loan and deferring the Deferred Developer Fee.
E. The City Loan will be funded with HUD HOME Program Funds and shall be
governed by all HUD HOME Program regulations whether or not specifically referenced in this
Agreement and shall fund only project costs as set forth in 24 CFR 92.206. The eight (8)
Affordable Units shall all be two -bedroom units. The Affordable Units are to be operated as
1
affordable housing. Seven (7) units shall be HOME Affordable Units and as set forth in the
Declaration. All of the Affordable Units shall be restricted as set forth in the Declaration. All
eight (8) Affordable Units shall be rent and occupancy restricted as set forth in the Declaration
for fifty-five (55) years. The obligations of Borrower under the Declaration shall be independent
of, and in addition to, Borrower's obligations under this Agreement, and repayment of the City
Loan shall not terminate or otherwise affect the affordability restrictions set forth in the
Declaration. The HOME assisted Affordable Units will be rent restricted under the provisions of
the HOME requirements for a period of fifteen (15) years. During the remaining forty (40) years
the Affordable Units that were restricted under the HOME Program requirements will continue
to be rent and occupancy restricted under the Declaration.
F. The initial rehabilitation of the Project shall be completed and the Affordable
Units shall be 90% or more occupied on or before twelve (12) months after the Closing. Time is
of the essence. Completion of the Project shall occur upon the issuance of a Certificate of
Completion and the recordation of a Notice of Completion by the Borrower. Borrower shall
provide the City with a copy of the recorded Notice of Completion for all units within the Project
within five (5) days of Borrower's receipt of the same.
G. The Project shall be rehabilitated in accordance with all applicable law, rules,
regulations and conditions of approval from the U.S. Department of Housing & Urban
Development ("HUD"), the City, the various lenders involved with the Project and the
requirements of this Agreement.
NOW, THEREFORE, in furtherance of the recitals stated above, the mutual covenants
set forth below, the Parties agree, promise and declare as follows:
DEFINITIONS
The following terms shall have the meanings set forth below:
"Affordable Units" shall have the meaning ascribed to it in Recital C.
"Agreement" means this Acquisition, Rehabilitation and Permanent Financing Loan
Agreement.
"Borrower" means T & T Community Properties, LLC, a California limited liability
company. Nothing contained herein shall prohibit Borrower from changing its name provided
that there is no change in the composition and make up of Borrower, without the prior written
consent of the City.
"City" means the City of National City.
"City Loan" means the acquisition, rehabilitation and permanent financing loan from the
City to Borrower in the original principal amount of Seven Hundred Seventeen Thousand Five
Hundred and No/100 Dollars ($717,500.00).
2
"City Note" means that certain promissory note to be executed by Borrower
(concurrently with the Closing) in favor of the City evidencing the City Loan, in the form
attached hereto as Exhibit "B".
"Clearinghouse Loan" means the existing rehabilitation and permanent financing loan
made by Clearinghouse CDFI to Borrower in the original principal amount of Five Hundred
Sixty -Five Thousand and No/100 Dollars ($565,000.00) secured by the Property.
"Closing" means the closing of the Escrow, which shall in no event be later than
September 30, 2011. If Closing does not occur on or before September 30, 2011, then all rights
and liabilities of the City and Borrower with respect to this Agreement shall immediately
terminate.
"Declaration" means the declaration of covenants, conditions and restrictions, in the form
and format attached hereto as Exhibit "D", which shall be recorded as an encumbrance against
the Property concurrently with the Closing.
"Deed of Trust" means the deed of trust securing the Declaration and the City Loan, in
the form and format attached hereto as Exhibit "C," which shall be recorded as an encumbrance
against the Property concurrently with the Closing.
"Defective Work" means all work, material, or equipment that is unsatisfactory, faulty,
incomplete, or does not conform to industry standards, construction documents, or approved
drawings.
"Deferred Developer Fee" means Fifty -Seven Thousand and No/100 Dollars
($57,000.00) of the developer fee which is being deferred.
"Environmental Laws" means any federal, state or local law, statute, ordinance or
regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous
Materials, including, without limitation, (i) the California Hazardous Waste Control Act
(California Health and Safety Code §25100 et seq.), (ii) the Carpenter -Presley -Tanner Hazardous
Substance Account Act (California Health and Safety Code §25300 et seq.), (iii) the Hazardous
Materials Release Response Plans and Inventory (California Health and Safety Code §25500 et
seq.), (iv) Underground Storage of Hazardous Substances (California Health and Safety Code,
§25280 et seq.), (v) Article 9 or Article 11 of Title 22 of the California Administrative Code,
Division 4, Chapter 20, (vi) the Safe Drinking Water and Toxic Enforcement Act (California
Health and Safety Code, §25249 et seq.), (vii) the Porter -cologne Water Quality Control Act
(California Water Code, § 13000 et seq.), (viii) the Federal Water Pollution Control Act (33
U.S.C. §1271 et seq.), (ix) the Resource Conservation and Recovery Act (42 U.S.C. §6901 et
seq.), (x) the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. §9601 et seq.), (xi) the Safe Drinking Water Act (14 U.S.C. §300f et seq.), (xii) the
Hazardous Materials Transportation Act (49 U.S.C. §5101 et seq.), (xiii) the Toxic Substances
Control Act (15 U.S.C. §2601 et seq.), (xiv) the Federal Insecticide, Fungicide and Rodenticide
Act (7 U.S.C. §136, et seq.), (xv) the Clean Air Act, 42 U.S.C. (§7401 et seq.) or (xvi) any state
or federal lien or "superlien" law, any environmental cleanup statute or regulation, or any permit,
approval, authorization, license, variance or permission required by any governmental authority
having jurisdiction.
"Escrow" means the escrow depository and disbursement services to be performed by
Escrow Agent pursuant to the provisions of this Agreement.
"Escrow Agent" means First American Title Company located at 4380 La Jolla Village
Drive, Suite 110, San Diego, CA 92122.
"Hazardous Materials" means:
(i) Those substances included within the definitions of "hazardous substance,"
"hazardous waste," "hazardous material," "toxic substance," "solid waste," "pollutant" or
"contaminant" in the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 (42 U.S.C. §9601 et seq.); the Resource Conservation and Recovery Act (42 U.S.C.
§6901 et seq.); the Clean Water Act (33 U.S.C. §2601 et seq.); the Toxic Substances Control Act
(15 U.S.C. §9601 et seq.); the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.);
or under any other Environmental Laws;
(ii) Those substances included within the definitions of ' "Extremely Hazardous
Waste," "Hazardous Waste," or "Restricted Hazardous Waste," under §§25115, 25117 or
25122.7 of the California Health and Safety Code, or is listed or identified pursuant to §§25140
or 44321 of the California Health and Safety Code;
(iii) Those substances included within the definitions of "Hazardous Material,"
"Hazardous Substance," "Hazardous Waste," "Toxic Air Contaminant" or "Medical Waste"
under § § 25281, 25316, 25501, 25501.1, 25023.2 or 39655 of the California Health and Safety
Code;
(iv) Those substances included within the definitions of "Oil" or a "Hazardous
Substance" listed or identified pursuant to §311 of the Federal Water Pollution Control Act, 33
U.S.C. §1321, as well as any other hydrocarbonic substance or by-product;
(v) Those substances included within the definitions of "Hazardous Waste,"
Extremely Hazardous Waste" or an "Acutely Hazardous Waste" pursuant to Chapter 11 of Title
22 of the California Code of Regulations;
(vi) Those substances listed by the State of California as a chemical known by the
State to cause cancer or reproductive toxicity pursuant to §25249.9(a) of the California Health
and Safety Code;
(vii) Any material which due to its characteristics or interaction with one or more other
substances, chemical compounds, or mixtures, damages or threatens to damage, health, safety, or
4
the environment, or is required by any law or public agency to be remediated, including
remediation which such law or public agency requires in order for the property to be put to any
lawful purpose;
(viii) Any material whose presence would require remediation pursuant to the
guidelines set forth in the State of California Leaking Underground Fuel Tank Field Manual,
whether or not the presence of such material resulted from a leaking underground fuel tank;
(ix) Pesticides regulated under the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. §136 et seq.;
(x) Asbestos, PCBs, and other substances regulated under the Toxic Substances
Control Act, 15 U.S.C. §2601 et seq.;
(xi) Any radioactive material including, without limitation, any "source material,"
"special nuclear material," "by-product material," "low-level wastes," "high-level radioactive
waste," "spent nuclear fuel" or "transuranic waste" and any other radioactive materials or
radioactive wastes, however produced, regulated under the Atomic Energy Act, 42 U.S.C.
§§2011 et seq., the Nuclear Waste Policy Act, 42 U.S.C. §§10101 et seq., or pursuant to the
California Radiation Control Law, California Health and Safety Code §§25800 et seq.;
(xii) Any material regulated under the Occupational Safety and Health Act, 29 U.S.C.
§§651 et seq., or the California Occupational Safety and Health Act, California Labor Code
§§6300 et seq.;
(xiii) Any material regulated under the Clean Air Act, 42 U.S.C. §§7401 et seq. or
pursuant to Division 26 of the California Health and Safety Code;
(xiv) Those substances listed in the United States Department of Transportation Table
(49 CFR Part 172.101), or by the Environmental Protection the City, or any successor agency, as
hazardous substances (40 CFR Part 302);
(xv) Other substances, materials, and wastes that are or become regulated or classified
as hazardous or toxic under federal, state or local laws or regulations; and
(xvi) Any material, waste or substance that is:
(a) a petroleum or refined petroleum product;
(b) asbestos;
(c) polychlorinated biphenyl;
(d) designated as a hazardous substance pursuant to 33 U.S.C. § 1321 or listed
pursuant to 33 U.S.C. §1317;
5
(e) a flammable explosive; or
(f) a radioactive material.
"HOME Affordable Units" means the seven (7) Affordable Units described in Recital E
of this Agreement restricted under the HOME regulations.
"Project" shall have the meaning ascribed to it in Recital C.
"Property" shall have the meaning ascribed to it in Recital A.
"Statement of Insurance Requirements" means the statement of insurance requirements,
in the form and format attached hereto as Exhibit "E," which shall be executed and delivered by
the Borrower and the City concurrently with the Closing as set forth in Section 1.7, below.
"Security Agreement" means the security agreement in the form and format attached
hereto as Exhibit "F," which shall be executed and delivered by the Borrower and the City
concurrently with the Closing.
"Unsecured Environmental Indemnity Agreement" means the unsecured environmental
indemnity agreement, in the form and format attached hereto as Exhibit "G," which shall be
executed and delivered by the Borrower and the City concurrently with the Closing.
ARTICLE I
Loan Provisions - General
Section - 1.1 Acquisition, Rehabilitation and Permanent Financing Loan. the City will fund the
City Loan to Borrower according to and upon the terms and conditions set forth below. The
proceeds of the City Loan shall be used by Borrower solely for the purposes of acquiring,
rehabilitating and permanently financing the Affordable Units, in accordance with all applicable
HUD HOME regulations.
(a) City Loan Amount. The amount of the City Loan shall not exceed Seven
Hundred Seventeen Thousand Five Hundred and No/100 Dollars ($717,500.00).
(b) Promissory Note.
(1) The City Loan shall be evidenced by the City Note executed by Borrower,
in favor of the City, in the original principal amount of Seven Hundred Seventeen Thousand Five
Hundred and No/100 Dollars ($717,500.00). The City Loan and the City Note shall be fully to
Borrower.
6
(2) The City Note shall bear simple interest at two percent (2.0%) per annum
from the date of disbursement.
(3) Interest shall accrue, however, no payments shall be due under the City
Note until May 1, 2013. Beginning on May 1, 2013, and annually on May 1 of each year during
the term of the City Note, Borrower shall make payments to the City in the manner provided in
the City Note, until fifty-five (55) years from the date of disbursement, at which time all
principal and unpaid interest shall be due and payable. The principal and interest may be prepaid
in whole or in part at any time and from time to time, without notice or penalty. Any
prepayment shall be allocated first to unpaid interest and then to principal. Prepayment of the
City Loan shall not in any manner affect any obligation or restriction related to maintaining the
units as "Affordable Units" during the fifty-five (55) year term.
(4) Should Borrower agree to or actually sell, convey, transfer, further
encumber or dispose of the Property or any interest in it, without first obtaining the written
consent of the holder of the City Note (Le., the City), which consent shall be granted or withheld
at the sole discretion of the holder of the City Note, then all obligations secured by the City Note
may be declared due and payable at the option of the holder of the City Note. The consent to one
transaction of this type will not constitute a waiver of the right to require consent to future or
successive transactions. The resident tenant restrictions referenced in Section 1.5 of this
Agreement shall remain in place whether or not the City approves or disapproves a successor -in -
interest for the term of fifty-five (55) years from the date of completion of rehabilitation of the
Project.
(5) The parties acknowledge that the City Loan is not a purchase money
mortgage as defined in Code of Civil Procedure Section 580b.
Section 1.2 - Security.
(a) Deed of Trust. Borrower shall execute, acknowledge, deliver and cause to be
recorded at Closing, the Deed of Trust, as security for the City Loan and the Declaration, in a
form and format set forth in Exhibit "C," attached to this Agreement and incorporated herein by
this reference. A copy of this Agreement shall not be attached to and recorded as part of such
Deed of Trust but any breach of or misrepresentation under this Agreement shall, upon the
expiration of any applicable notice and cure period(s), constitute an event of default under such
Deed of Trust.
(b) Additional Security. Borrower shall execute and deliver to the City the Security
Agreement, UCC-1 financing statements and such other separate consents or certificates,
assignments and other documents or instruments as the City may require to properly reflect the
security interests in the personalty used in connection with the operation of the Property as the
City may require. In addition thereto, Borrower shall execute and deliver such security
agreements, and the like, as required by the City in connection with the Deed of Trust.
Specifically, Borrower agrees that any notice of default and/or copy of any notice of sale will be
mailed to the City in compliance with Section 2924(b) of the California Civil Code.
7
Section 1.3 - Subsequent Financing. No further loan, deed of trust, or encumbrance, shall be
placed by Borrower upon any portion of the Property or Project, whether by refinancing or
otherwise, without first obtaining the express written consent of the City. Any such unconsented
to financing or refinancing shall constitute a material beach of this Agreement. Further, during
any the City approved refinancing or subsequent encumbrance, the City shall be provided ALTA
title insurance or endorsements acceptable to the City, at the cost and expense of Borrower. Said
written consent shall be at the City's sole discretion. Without the express written consent of the
City such subsequent financing is void.
Section 1.4 - Funding. the City's obligation to fund the City Loan shall be and is specifically
conditioned upon Borrower closing on the Clearinghouse Loan, the City approving the
preliminary title reports concerning the Property, payment of all taxes due and payable on the
Property, issuance of an ALTA Lender's policy insuring the City Loan satisfactory to the City
and its counsel, satisfaction of all conditions precedent to the City's obligation to fund the City
Loan, and satisfaction of those conditions set forth in Section 1.16 of this Agreement.
Section 1.5 - Declaration. The obligation of the City to make and fund the City Loan hereunder
is subject to the execution and recordation against the Property of the Declaration. The
Declaration shall contain housing payment and income level restrictions for the eight (8)
Affordable Units for a period of fifty-five (55) years. Rents will provide affordable housing to
households earning between fifty percent (50%) and eighty percent (80%) of area median
income as referenced in the Declaration. The monthly rental rate shall be as set forth in the
Declaration. The rents may be subject to modification annually as set forth in the Declaration.
The Declaration shall be recorded in a position superior and prior to all encumbrances on the
Property, except for the deed of trust and other instruments securing the Clearinghouse Loan.
Section 1.6 - No Partnership or Joint Venture. The relationship between the City and Borrower
created by this Agreement shall not be one of partnership or joint venture, but rather shall be one
of secured lender and borrower.
Section 1.7 - Insurance. Borrower, at its sole cost and expense, shall purchase and maintain
public liability, auto liability and property damage insurance with limits of not less than
$2,000,000.00 for injury to or death of one or more persons and/or property damage arising out
of a single accident or occurrence, insuring against any and all liability of the City and its
respective employees, Borrower, its contractors, employees, agents, subcontractors and its
authorized representatives, arising out of or in connection with Borrower's activities under the
Project. All public liability insurance and property damage insurance shall insure the
performance of Borrower of the indemnity provisions set forth in this Agreement. Further, in all
such insurance required to be purchased and maintained by Borrower: (i) the City shall be named
as an additional insured, (ii) Borrower's coverage shall be primary, (iii) additional insured
endorsement shall not exclude completed operations, (iv) the policy shall provide ten year
extended reporting period, and (v) the policy shall contain cross -liability endorsements.
Borrower further agrees to purchase and maintain in full force and effect such policies of
worker's compensation insurance as may be required to cover all employees of Borrower during
8
the term of this Agreement, in a form and amount acceptable to the City. Further, Borrower shall
maintain policies of insurance as referenced in the Statement of Insurance Requirements
throughout the term of the City Loan and for the duration of the Declaration. Certificates of
insurance acceptable to the City shall be filed with the City prior to funding of the City Loan.
The insurance requirements contained in this section shall not be construed to limit the
Borrower's obligations under this Agreement, including without limitation any indemnities.
Section 1.8 - Assignability.
(a) Borrower may not assign any interest in this Agreement and shall not transfer any
interest in the same (whether by assignment or novation) without the prior written approval of
the City. Any assignment without the prior written consent of the City shall be voidable, at the
election of the City. The City shall have full right and authority to assign all or a part of its rights
and delegate all or a part of its duties under this agreement.
(b) Except to the extent that changes are permitted by Section 1.8(a) above, Borrower
shall not amend or modify in any material respect or, restate, revoke or rescind its LLC-1
(Articles of Organization) or Operating Agreement without the prior written consent of the City,
which consent shall not be unreasonably withheld, conditioned or delayed.
Section 1.9 - General Contractor and Subcontracting. The guaranteed not to exceed construction
contract(s), entered into by Borrower with the general contractor for the rehabilitation of the
Project shall be entered into on or before the date first set forth above, and shall be subject to the
prior written approval of the City. Borrower shall be fully responsible to the City for the acts
and omissions of its subcontractors, and of persons either directly or indirectly employed by
Borrower. Borrower shall insert in each subcontract appropriate provisions requiring compliance
with the labor standard provisions of this Agreement, including without limitation the payment
of Federal prevailing wages and State prevailing wages, if required. Notwithstanding the
foregoing, the City has not imposed, and nothing in this agreement shall be construed as
imposing, any independent prevailing wage requirements that are different from those imposed
by applicable Federal or State law.
Section 1.10 — Borrower Liability. Borrower shall be responsible for all injuries to persons
and/or all damages to real or personal property of the City or others, caused by or resulting from
the negligence and/or breach of this Agreement, of itself, its employees, subcontractors and/or its
agents during the rehabilitation of or arising out of the rehabilitation of the Project and/or the
breach of this Agreement. Borrower shall defend and hold harmless and indemnify the City, and
all of its officers and employees from all costs, damages, judgments, expenses and claims to any
third party resulting from the negligence and/or breach of this Agreement, by Borrower, its
employees, subcontractors and/or its agents, arising out of the rehabilitation of the Project and/or
the breach of this Agreement, except those arising from the sole negligence or willful
misconduct of the City.
Section 1.11 - Ownership of Materials and Documents. Any and all sketches, drawings, tracings,
field survey notes, computations, plans, details and other materials and documents prepared by or
9
on behalf of Borrower pertaining to the Property shall be the property of the City upon default by
Borrower (to the extent of Borrower's rights in such documents), and the expiration of all
applicable cure period(s), and Borrower shall deliver such materials and documents to the City
whenever requested to do so by the City. Subject to the rights of third parties that prepared such
documents, the City shall have the right to have duplicate copies of such materials and
documents for their file, at the cost and expense of the City, upon written request even if
Borrower is not in default under the terms of this Agreement.
Section 1.12 - Indemnification.
(a) With respect to any liability, including but not limited to claims asserted,
demands, causes of action, costs, expenses, losses, attorney fees, injuries, or payments for injury
to any person or property, including injury to Borrower's employees, agents, or officer, caused or
claimed to be caused by the acts or omissions of the Borrower, or the Borrower's employees,
agents, and officers, arising out of, arising from, or related to the City Loan; the design,
engineering, or rehabilitation of the Project; Borrower's ownership or operation of the Property
and the Project; or any other work or obligations performed involving this Agreement, the
Borrower agrees to defend, indemnify, protect, and hold harmless the City, their respective
agents, officers, and employees from and against all liability, losses, damages, costs or claims,
including, but not limited to, claims for injury or death to any person occurring on the Property
and contracts executed by Borrower and any losses from the Property, including losses from
negative cash flows. Also covered is liability arising from, connected with, caused by, or
claimed to be caused by the active or passive negligent acts or omissions of the City, its agents,
officers, or employees that may be in combination with the active or passive negligent acts or
omissions of the Borrower, its employees, agents or officers, or any third party. Borrower's duty
to defend, indemnify, protect and hold harmless shall not include any claims or liabilities arising
from the sole negligence or sole willful misconduct of the City, its agents, officers or employees.
This indemnity provision shall survive the repayment of the City Loan and the term of this
Agreement.
(b) Borrower further agrees to defend, indemnify, and hold harmless, the City, their
respective agents, officers and employees from and against any and all costs, damages, claims,
and liabilities, including reasonable attorney fees, foreseeable or unforeseeable, directly or
indirectly, arising from or related to Hazardous Materials located, used, released, or otherwise
present or alleged to be present, used, or released on the Property, or any violation or alleged
violation of Environmental Laws. This indemnity provision shall extend beyond the term of this
Agreement and the termination of this Agreement. The City has no obligation or liability
whatsoever regarding toxic contamination or Hazardous Materials on the Property.
(c) The Borrower agrees to pay any and all costs the City incurs to enforce the
indemnity and defense provisions set forth in Section 1.12.
Section 1.13 - Termination. This Agreement and the relationship created herein shall terminate
upon full satisfaction of all of Borrower's obligations, and those of Borrower's successors, if
approved by the City, under this Agreement. The obligations of Borrower include, but are not
10
limited to, those obligations arising under the Declaration, the provisions of which shall survive
repayment of the City Loan.
Section 1.14 - Defective Work.
(a) Correction, Removal, or Replacement. If during the term of this Agreement, or
any duration as may be required by law or regulation, the Project are discovered to contain
Defective Work, the Borrower shall promptly and in accordance with the City's written
instructions and within the reasonable time limits stated therein, either correct the Defective
Work, or if identified during rehabilitation of the Project, remove the Defective Work from the
site and replace the Defective Work with non -defective and conforming work.
(b) the City Right to Correct. If circumstances warrant, including but not limited to
an emergency or Borrower's failure to adhere to section 1.14(a), the City may correct, remove,
or replace the Defective Work. In such circumstances, Borrower shall not recover costs
associated with the Defective Work and shall reimburse the City for all costs incurred, whether
direct or indirect, associated with the correction or removal and replacement.
(c) No Limitation on other Remedies. Exercise of the remedies for defects pursuant
to this Section shall not limit the remedies the City may pursue under this Agreement or law.
Section 1.15 - Default by Borrower.
(a) In the event of a material default by Borrower in the performance of any of the
terms, covenants and conditions contained in this Agreement, the City Note, the Deed of Trust
Amendment, the Declaration, or the Security Agreement, the City shall give Borrower notice of
such default. If the default is reasonably capable of being cured within thirty (30) calendar days
after such notice is received or deemed received, Borrower shall have such period to effect a cure
prior to exercise of remedies by the City under this Agreement, the Declaration and the Deed of
Trust Amendment. If the default is such that it is not reasonably capable of being cured within
thirty (30) days and Borrower, in the City's sole and absolute discretion, (i) initiates corrective
action within said period, and (ii) diligently and in good faith works to effect a cure as soon as
possible, then Borrower shall have such additional time (but not to exceed ninety (90) days) as is
reasonably necessary to cure the default prior to exercise of any remedies by the City. If such
default is not timely cured or in the event of any default under any prior or junior note secured by
an encumbrance on the Property or any portion of it, or any note or deed of trust given in
conjunction herewith, or in the event of the filing of a bankruptcy proceeding by or against
Borrower, all sums disbursed or advanced by the City shall at the option of the City immediately
become due and payable and the City shall have no obligation to disburse any further funds from
said account, or otherwise, and the City shall be released from any and all obligations to
Borrower under the terms of this Agreement. These remedies shall be in addition to any and all
other rights and remedies available to the City, either at law or in equity.
(b) If a non -monetary event of default occurs under the terms of this Agreement, the
City Note, the Deed of Trust Amendment, the Declaration or the Security Agreement, prior to
11
exercising any remedies hereunder or thereunder, the City shall give Borrower notice of such
default. If the default is reasonably capable of being cured within thirty (30) calendar days after
such notice is received or deemed received, Borrower shall have such period to effect a cure
prior to exercise of remedies by the City under this Agreement, the Declaration and the Deed of
Trust Amendment. If the default is such that it is not reasonably capable of being cured within
thirty (30) days and Borrower, in the City's sole and absolute discretion, (i) initiates corrective
action within said period, and (ii) diligently and in good faith works to effect a cure as soon as
possible, then Borrower shall have such additional time (but not to exceed ninety (90) days) as is
reasonably necessary to cure the default prior to exercise of any remedies by the City. If such
default is not timely cured, then the City may proceed with all or any of its rights and remedies
available at law or in equity or as set forth herein, in the Declaration and/or the Deed of Trust
Amendment.
(c) In the event of any monetary default by Borrower under the terms of this
Agreement, the City Note, the Deed of Trust Amendment, the Declaration or the Security
Agreement, the City shall give Borrower a ten (10) day written notice of default, during which
Borrower shall have the ability to cure the monetary default. If the default is not timely cured,
the City may proceed with all rights and remedies under the terms of the City Loan or at law.
(d) The default or defective performance by Borrower under the terms of this
Agreement shall not relieve Borrower from any obligation to correct any incomplete, inaccurate,
or Defective Work at no further cost to the City.
Section 1.16 - Conditions to the City Obligations. The obligation of the City to make and fund
the City Loan is subject to the following conditions:
(a) This Agreement, the City Note, Deed of Trust, Declaration, Escrow Instructions,
Statement of Insurance Requirements, Security Agreement and Unsecured Environmental
Indemnity Agreement, fully executed by Borrower, shall have been delivered to the City and/or
its designee along with all other fully executed security documents and instruments provided for
herein and/or as required by the City. Borrower has provided and delivered to the City at
Borrower's sole expense a standard form ALTA Lender's Policy of Title Insurance, insuring the
City's security interest in the Property under the Deed of Trust and in an amount equal to the
original principal amount of the City Loan;
(b) Borrower's certification at the close of escrow that: (i) the City Loan is wholly for
the benefit of Borrower, (ii) Borrower is responsible for all obligations created by the City Loan
including, without limitation, the repayment of all principal and interest now due and payable or
which may become due and payable on the terms and conditions of this Agreement, the City
Note, the Deed of Trust, and any other security documents and instruments provided for herein;
(c) Borrower shall have strictly complied with, and performed, all terms and
conditions of the documents executed by Borrower in connection with this Agreement and the
City Loan;
12
(d) the City's approval of all financing documents, including without limitation the
Clearinghouse Loan documents;
(e) Borrower has paid an amount into escrow, which is sufficient to pay for all costs
associated with such escrow, including without limitation title fees, escrow fees, closing costs
and carrying costs and the City's legal fees;
(f) Recordation of a grant deed vesting fee simple title to the Property in Borrower;
(g) The guaranteed not to exceed construction contract for the work at the Project,
acceptable to the City, shall have been executed by the Borrower and the general contractor who
has been selected to do the work; and
(h) Such other conditions as the City shall request.
Section 1.17 - Borrower's Representations and Warranties. Borrower represents and warrants to
the City as provided in this Section 1.17. Borrower shall, upon learning of any fact or condition,
which would cause any warranties or representations herein not to be true in any material
respect, immediately give written notice of such fact or condition to the City.
(a) Borrower is a validly and lawfully formed California limited liability company,
and is in good standing under California law and will remain such for the term of this
Agreement.
(b) Execution of this Agreement, the Deed of Trust, the Declaration and all other
documents executed in conjunction herewith have been duly authorized by Borrower's board of
directors, and such execution shall not result with the passage of time or the giving of notice or
both in breach of or in acceleration of performance under any contract or document to which
Borrower may be a party.
(c) All required approvals have been obtained in connection with Borrower's
execution of this Agreement, and all related agreements and documents to the effect that no
breach of or acceleration of performance under any agreement or document to which Borrower is
a party will result in such execution.
(d) Funds advanced by the City pursuant to the City Loan are advanced wholly or in
part for the benefit of Borrower.
(e) The principal and interest due and payable under the City Loan are subject to the
termsand conditions of this Agreement, any other security documents or instruments provided
for herein.
(f) Borrower agrees to use the City Loan funds solely for the acquisition,
rehabilitation and permanent financing of the Project as set forth in the Recitals.
13
(g) Borrower shall comply with the terms of the Declaration at all times during the
55-year term of the Declaration.
(h) Borrower shall at all times during the first 15 years of the term of the Declaration,
comply with the HUD HOME regulations.
(i) The defective performance by Borrower under the terms of this Agreement shall
not relieve Borrower from any obligation to correct any incomplete, inaccurate, or defective
work at no further cost to the City, when such inaccuracies, defects and incomplete work are due
to Borrower's fault, including the fault of Borrower's subcontractors, agents, partners, joint
venturers and employees.
(j) To the best of Borrower's knowledge, there are no actions, suits, material claims,
legal proceedings, or any other proceedings affecting the Borrower or any parties affiliated with
the Borrower, at law or in equity before any court, tribunal, government agency, domestic or
foreign, which, if adversely determined, would materially impair the right or ability of Borrower
to execute or perform its obligations under this Agreement or any documents required hereby to
be executed by Borrower, or which would materially adversely affect the financial condition of
the Borrower or any parties affiliated with the Borrower.
(k) To the best of Borrower's knowledge, Borrower's execution, delivery, and
performance of its obligations under this Agreement will not constitute a default or breach or any
contract, agreement, or order to which Borrower or any parties affiliated with Borrower is a party
or by which it is bound.
(1) No attachment, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization, receivership or other proceedings have been filed or are
pending or threatened against the Borrower or any parties affiliated with Borrower, nor are any
of such proceedings contemplated by Borrower or any parties affiliated with Borrower
Section 1.18 Affordability Provision.
(a) Execution of Declaration. Borrower agrees to execute the Declaration and to
cause it to be recorded, assuring compliance with the affordability provisions of this Agreement.
Borrower agrees to obtain any and all subordination agreements, if any, necessary to insure that
the Declaration is an encumbrance on the Property prior to all other encumbrances and liens,
other than taxes and the deed of trust and other documents securing the Clearinghouse Loan.
Such subordinations shall be on terms and conditions acceptable to the City and its counsel in
their sole discretion. The Declaration shall be binding and enforceable against all heirs,
successors and assigns of Borrower.
(b) Term of Affordability. Borrower agrees that the Property shall remain affordable
and subject to the Declaration for not less than fifty-five (55) years from the effective date as
referenced in the Declaration.
14
(c) Cross -Default With the Declaration. Borrower and its successors in interest to the
Project and/or the Property shall strictly comply with all of the terms and conditions of the
Declaration. Any default under the Declaration shall be a default under this Agreement, the City
Note and the Deed of Trust.
(d) No Conversion to Condominiums. Borrower agrees that Borrower shall not, and
shall not allow any other person to, during the term of the Declaration, cause all or any portion of
the Property and/or the Project to be converted to condominiums or to otherwise allow a
condominium map or condominium plan to be recorded or filed against all or any portion of the
Property and/or. the Project. Borrower further agrees that the conversion of all or any portion of
the Property or the Project to condominiums and/or the recordation or filing of a condominium
map or condominium plan against all or any portion of the Property and/or the Project during the
term of the Declaration, shall be a breach of this Agreement, the City Loan, the Declaration, the
City Note and the Deed of Trust, entitling the City to immediately exercise any and all of its
rights and remedies under this Agreement, the City Loan, the Declaration, the City Note and the
Deed of Trust, including without limitation acceleration of the City Note and foreclosure under
the Deed of Trust.
Section 1.19 - City Approval of Property Manager. At all times during the term of the
Declaration, if the City serves a thirty (30) day written notice of deficiencies in the property
management for the Property, or default under the Declaration or any document executed in
conjunction herewith, which deficiencies or default have not been rectified by Borrower, within
the thirty (30) day period (unless such deficiency or default is not capable of being cured within
such thirty (30) day period, then such amount of time as the City determines is needed, not to
exceed ninety (90) days, provided Borrower commences cure within thirty (30) day period and
continues to diligently pursue cure), then, the City shall have the right, but not the duty, in its
sole discretion and upon such thirty (30) days written notice: (i) to require the retention of a
professional property management firm to manage the Property; (ii) to approve, in advance and
in writing, the retention of any such property management firm, including the terms of the
contract governing such retention; and (iii) to require Borrower to terminate any such property
management firm, provided that such termination shall comply with the termination provisions
of the management contract in question. Borrower shall cooperate with the City to effectuate the
City's rights.
Section 1.20 - Usury. If a court of competent jurisdiction determines, by way of final
unappealable order or judgment, that the interest rate charged under the City Note is usurious,
then such rate shall automatically and retroactively be reduced to the maximum rate allowed
under applicable law.
Section 1.21 - Remedies.
(a) Contract Governed by Laws of the State of California. This Agreement, its
performance, and all suits and special proceedings under this Agreement, shall be constituted in
accordance with the laws of the State of California and Federal law, to the extent applicable. In
any action, special proceeding, or other proceeding that may be brought arising out of, under or
15
because of this Agreement, the laws of the State of California and the United States, to the extent
applicable, shall govern to the exclusion of the law of any other forum, without regard to the
jurisdiction in which the action or special proceeding may be instituted.
(b) Standing, Equitable Remedies; Cumulative Remedies. Borrower expressly agrees
and declares that the City or any successor or public agency shall be the proper party and shall
have standing to initiate and pursue any and all actions or proceedings, at law or in equity,
including but not limited to foreclosure under any security instrument securing performance
hereunder, to enforce the provisions hereof and/or to recover damages for any default hereunder,
notwithstanding the fact that such damages or the detriment arising from such a default may have
actually been suffered by some other person or by the public at large. Further, Borrower
expressly agrees that receivership, injunctive relief and specific performance are proper pre-trial
and/or post -trial remedies hereunder, and that, upon any default, a receiver may be appointed by
the court to take control of the Property and to assure compliance with this Agreement. Nothing
in this subparagraph, and no recovery to the City, shall restrict or limit the rights or remedies of
persons or entities other than the City, against Borrower in connection with the same or related
acts by Borrower. The remedies set forth in this Section are cumulative and not mutually
exclusive, except the extent that their award is specifically determined to be duplicative by final
order of a court of competent jurisdiction.
(c) Remedies at Law for Breach of Operating Restrictions. In the event of any
default under this Agreement regarding restrictions on the operation and the transfer of the
Property, the City shall be entitled to, in addition to any and all other remedies available at law or
in equity: (i) declare the City Loan to be all due and payable; and (ii) recover compensatory
damages. If the default in question involves the violation of Section 1.18, above, including
without limitation a default under the Declaration, the amount of such compensatory damages
shall be the product of multiplying (A) the number of months that the default in question has
continued until the time of trial by (B) the result of subtracting the rents properly chargeable
hereunder for the Affordable Unit(s) in question from the amount actually charged. Borrower
and the City agree that it would be extremely difficult or impracticable to ascertain the precise
amount of actual damages accruing to the City as a result of such a default and that the foregoing
formula is a fair and reasonable method of approximating such damages. the City shall be
entitled to seek and to recover damages in separate actions for successive, separate breaches
which may occur. Further, interest shall accrue on the amount of such damages from the date of
the breach in question at the rate of ten percent (10%) per annum or the maximum rate than
allowed by law, whichever is less. Nothing in this section shall preclude the award of exemplary
damages as allowed by law.
(d) Expert Witness, Attorneys' Fees, and Costs. The parties agree that the prevailing
party in litigation for the breach and/or interpretation and/or enforcement of the terms of this
Agreement shall be entitled to their expert witness fees, if any, as part of their costs of suit, and
attorneys' fees as may be awarded by the court, pursuant to California Code of Civil Procedure
("CCP") Section 1033.5 and any other applicable provisions of California law, including,
without limitation, the provisions of CCP Section 998.
16
Section 1.22 — No Management Fee or Developer Fee. No management fee or developer fee
concerning the Project shall be paid to Borrower or its affiliates until ninety percent (90%) of the
Affordable Units have been leased. The amount of management fees shall be subject to the
annual approval of the City.
Section 1.23 - Replacement Reserves. Borrower shall, during the time of the term of the
Declaration, maintain operating and replacement reserves approved by the City. Failure to
maintain such reserves shall constitute a material default under the terms of this Agreement.
Annually, beginning with the first year after the timely completion of rehabilitation of the Project
and each year thereafter, not less than Three Thousand Four Hundred and No/100 Dollars
($3,400.00) set aside as a reserve for replacements (1/12th of the foregoing amount may be set
aside by Borrower each month). This replacement reserve amount is subject to revision upward
as determined by the City, annually, based upon an increase in the consumer price index for the
San Diego Metropolitan Area. The reserves shall be maintained in a separate account in
anticipation of and as a contingency against unbudgeted and/or unforeseen expenses in the
operation and maintenance of the Project. No disbursements from the operating reserve or
replacement account(s) shall be made without the express written consent of the City, which
consent shall not be unreasonably withheld or delayed. Borrower shall account to the City for
any monies expended from the operating reserves and/or replacement account(s), in such form as
approved by the City.
Section 1.24 - Completion of Rehabilitation. All rehabilitation of the Project, as approved by the
City pursuant to Section 2.1(d), hereof, and shall be completed by Borrower on or before August
31, 2012. Time is of the essence. Failure to comply with these requirements shall constitute a
material default under the terms of this Agreement. Borrower shall provide the City with a copy
of the recorded Notice of Completion for all units within the Project within five (5) days of
Borrower's receipt of the same.
Section 1.25 - Failure to Receive Funding. The failure of Borrower to close on the
Clearinghouse Loan on or before the Closing, shall constitute a material default under the terms
of the Agreement.
Section 1.26 - Funding Mechanism. The Seven Hundred Seventeen Thousand Five Hundred and
No/100 Dollars ($717,500.00) the City Loan shall be disbursed as set forth in this Section 1.26.
(a) Disbursement at Closing. At Closing, the City shall disburse up to $
such amount shall be used solely to acquire the Property.
(b) Submission of Draw Requests. During rehabilitation of the Project, Borrower
shall submit to the City written draw requests supported by such back up documentation as the
City requires.
(c) Approval of Draw Requests. The City shall inspect the work to determine its
completion and shall thereafter approve, approve in part, or disapprove such draw request.
17
(d) Limit on Effect of Approval. Any the City review and/or approval of the work and
disbursements of monies pursuant to draw requests shall be general review and/or approval only,
and shall not relieve Borrower of the responsibility to design, engineer, and rehabilitate the
Project in accordance with all applicable laws, codes, regulations, and good design, construction,
and engineering practice. Any deficiencies or defects shall be corrected at Borrower's cost and
expense and without any cost to the City.
(e) Disbursements Conditioned on Lien Releases. Disbursements of approved draws
shall be conditioned upon the City's receipt of evidence of conditional lien releases.
{fj Final Disbursement. At the sole and absolute discretion of the City, up to
$25,000.00 may be withheld and not be funded, regardless of expenditures and draw requests,
unless and until a rehabilitation of the units has been completed.
ARTICLE II
Specific Loan Provisions
Section 2.1 - Conditions to the City Obligations and Borrower Representations and Warranties.
(a) Interest of Current or Former Members, Officers or Employees. Borrower
represents and warrants that no member, officer, or employee of Borrower, no member of the
governing body of the locality in which the City was activated, and no other public official of
such locality or localities who exercises any functions or responsibilities with respect to this
Agreement, shall, during his or her tenure, or for one year thereafter, have any interest direct or
indirect, in this Agreement or the proceeds thereof. Any violation of this section may, at the
option of the City, result in unilateral and immediate termination of this Agreement by the City.
Further, the contractor, who rehabilitates the Project, agrees to comply with all of the Conflict of
Interest provisions contained in 24 CFR 92.356.
(b) Unsecured Environmental Indemnity. Concurrently with Closing, the Borrower
and the City shall enter into the Unsecured Environmental Indemnity Agreement. Borrower
shall name the City as an additional insured on its insurance policies. Said policies shall be
acceptable to the City and shall insure against any and all losses which may occur as a result of
problems, claims, work, and the like associated with rehabilitation of the Project.
(c) Title Policy. Borrower, shall, at its sole cost and expense, obtain an ALTA
lender's policy naming the City as a named insured, and insuring that the City's interest is
subject to no superior liens, encumbrances, special assessments or taxes, except as provided for
in the Recitals and except as approved by the City.
(d) Construction Loan and Contract. The City shall be entitled to review, inspect and
approve, without liability, the construction contract and all of the rehabilitation being performed
pursuant to the terms of the construction contract. All rehabilitation shall be performed in
accordance with the plans and specifications approved by the City in accordance with Section
18
2.2 of this Agreement, without liability to the City for review and observation of the
rehabilitation. The City approval shall be understood to be general approval only, and shall not
relieve Borrower or contractor of the responsibility to design, engineer, and rehabilitation of the
Project in accordance with all applicable laws, codes, regulations, and good design, construction,
and engineering practice. Any deficiencies in rehabilitation of the Project shall be corrected by
the contractor, and/or Borrower, upon written notice from the City to Borrower, prior to any
additional funding of the City Loan, at Borrower's expense and at no cost to the City.
(e) Housing Quality Standards. Borrower represents and warrants that Affordable
Units shall be maintained, at all times during the term of the Agreement, in complete compliance
with all housing quality standards contained within 24 CFR §92.251, regardless of whether such
section would apply to the Property. Further, Borrower warrants that all construction shall meet
or exceed the applicable local codes and construction standards, including zoning and building
codes of the City as well as the provisions of the Model Energy Code published by the Council
of American Building Officials. Borrower hereby consents to periodic inspection by the City's
designated inspectors and/or designees during regular business hours, including the Code
Enforcement Agents of the City, to assure compliance with said zoning, building codes,
regulations, and housing quality standards. Borrower agrees to comply with the provisions of 24
CFR §92.251, whether or not contained in this Section.
(f) Limitation of Use of Funds for Religious Purposes. Borrower represents and
warrants that Borrower will fully comply with any and all requirements and limitations contained
in 24 CFR 92.257, as amended, from time to time. Borrower further represents, warrants and
agrees that Project funds will not be used for any purpose proscribed in 24 CFR 92.257, as
amended.
(g) Approval of the City Disclosure Statement. This Agreement is subject to
approval by the City of the executed disclosure statements of Borrower.
(h) Administrative Requirements. Borrower shall strictly comply with the
administrative requirements that are applicable to Borrower contained within 24 CFR Section
92.505, including, but not limited to, the requirements of OMB Circular No. A-87 and the
requirements of 24 CFR Part 85, Section 85.6, 85.12, 85.20, 85.22, 85.26, 85.35, 85.36, 85.44,
85.51, and 85.52. Further, Borrower covenants (if it is a nonprofit organization) to comply with
the OMB Circular No. A-122 and the applicable provisions of OMB Circular No. A-110. Copies
of said OMB Circulars are on file in the offices of the City and are available for inspection and
copying by Borrower. Borrower further agrees that should the administrative requirements
contained in Section 92.505 be amended and/or changed from time to time by HUD, that
Borrower will comply with the terms and conditions of such changed and/or amended
administrative requirements.
(i) Records and Reports. Each year during the term of the Declaration, Borrower
shall supply the City with: (i) a certified rent roll on January 15 for all tenants occupying the
Affordable Units as of the immediately preceding December 3 1 ; and (ii) a certified rent roll on
July 15 for all tenants occupying the Affordable Units as of the immediately preceding June 30.
19
Borrower shall supply the City, annually (after completion of rehabilitation of the Project) not
later than July 1, for the immediately preceding calendar year, with such records and reports as
are required and are requested by the City. The records and reports include, but are not limited
to the following:
(1) Amount of funds expended pursuant to this Agreement;
(2) Eligible Tenant information, including yearly income verifications;
(3) Housing payments charged to resident tenants, to the extent applicable;
(4) On -site inspection results;
(5) Affirmative marketing records;
(6) Insurance policies and notices;
(7) Equal Employment Opportunity and Fair Housing records;
(8) Labor costs and records;
(9) An audited income and expense statement and balance sheets for
Borrower;
(10) An audited income and expense statement and balance sheets for the
Project;
(11) A Management Plan for the calendar year in which the report is prepared
showing anticipated rental income, other income, expenses, anticipated
repairs and replacements to the Project, timing of such repairs and
replacements, insurance maintained with respect to the Project, and such
other matters as the City shall require, in its sole discretion;
(12) Federal and State income tax returns for the calendar year, ending on the
preceding December 31 st;
(13) Annual analysis of reserves for repair and replacement;
(14) Annual certification and representation regarding status of all loans,
encumbrances and taxes;
(15) Annual statement regarding condition of the Property and disclosing any
known defects;
(1 6) An OMB A-133 financial audit if required by HUD;
20
(17) A report or reports, certifying compliance with the terms and provisions of
the Section 3 requirements, as set forth in Paragraph 2.1(t) of this
Agreement and certifying compliance with the provisions of federal law as
it relates to Section 3, whether or not specifically set forth in Paragraph
2.1 (t); and
(18) Such other and further information and records as the City and/or HUD
shall request in writing from Borrower.
Time is of the essence in supplying each and every report required to be supplied to the
City. The parties agree that a fee of $25.00 per day shall be paid by Borrower to the City for
each day that each report is delinquent. The parties agree that multiple fees may be charged at
any one time, depending upon the number of report(s) and/or information that is delinquent. The
parties agree that a fee of $25.00 per day, per report and/or information is a reasonable
estimation of the damages that will accrue to the City as a result of the failure of Borrower to
timely submit the required information and/or reports and that said fees shall be treated as
liquidated damages by the parties, in anticipation of the damages that will be incurred by the City
as a result of a breach by Borrower. The parties further agree that it would be difficult, if not
impossible, to determine the exact actual amount of damages suffered by the City in the event of
a breach by Borrower in the reporting requirements of this Agreement. Notwithstanding the
foregoing or anything to the contrary contained herein, the City shall give Borrower prior written
notice of any report and/or information that Borrower has failed to provide the City pursuant to
this Section 2.1(i) and Borrower shall have thirty (30) days to provide such report and/or
information to the City prior to the assessment of any liquidated damages.
(j) Monitoring of Project Activities. Borrower agrees to allow the City reasonable
access to review and inspect Borrower's activities under this Agreement as the City shall require
to perform its monitoring duties. The City shall monitor Borrower's activities without liability
for said inspection and review.
(k) Federal and State Requirements. Borrower represents, warrants and agrees that
Borrower will fully comply, during the term of this Agreement, with any and all HOME
requirements including, but not limited to the requirements of 24 CFR Part 92, 24 CFR Section
92.351 (Affirmative Marketing), 92.352 (Environmental Review), 92.353 (Displacement,
Relocation and Acquisition Residential, Antidisplacement and Relocation Plan), 92.354 (Labor),
92.356 (Conflict of Interest) and 92.358 (Flood Insurance). Borrower further warrants,
represents and agrees that should said Program requirements be changed by HUD, from time to
time, that Borrower will comply with said changed and amended regulations. Borrower, the
general contractor, and any and all subcontractors, shall pay prevailing wages for all work done
with respect to the Project as required by Federal and California law. Notwithstanding the
foregoing, the City has not imposed, and nothing in this agreement shall be construed as
imposing, any independent prevailing wage requirements that are different from those imposed
by applicable Federal or State law.
21
(1) Affirmative Marketing, Borrower shall, at all times during the term of this
Agreement, comply with all of the provisions of Section 24 CFR 92.351 and the affirmative
marketing procedures adopted by the City, including, but not limited to, all requirements and
procedures referenced in said Section 24 CFR 92.351(b), amended from time to time. Borrower
shall maintain records to verify compliance with the applicable affirmative marketing procedures
and compliance. Such records are subject to inspection by the City during regular business hours
upon five (5) days written notice.
(m) Equal Opportunity and Fair Housing Programs. During the term of this
Agreement, Borrower agrees as follows:
(1) Borrower will not discriminate against any employee, person, or applicant
for employment and/or housing because of race, age, sexual orientation, marital status, color,
religion, sex, handicap, or national origin. Borrower will take affirmative action to ensure that
applicants are employed and/or are housed, and that employees or applicants are treated during
employment and/or housing, without regard to their race, age, sexual orientation, marital status,
color, religion, sex, handicap, or national origin. Such action shall include, but is not limited to
the following: employment, upgrading, demotion, or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship. Borrower agrees to post in
conspicuous places, available to employees and applicants for employment, notices to be
provided by the City setting forth the provisions of this nondiscrimination clause.
(2) Borrower will, in all solicitations or advertisements for employees and
housing placed by on or behalf of Borrower, state that all qualified applicants will receive
consideration for employment without regard to race, age, sexual orientation, marital status,
color, religion, sex, handicap, or national origin.
(3) Borrower will cause the foregoing provisions to be inserted in all
subcontracts for any work covered by this Agreement so that such provisions will be binding
upon each subcontractor, provided that the foregoing provision shall not apply to contracts or
subcontracts for standard commercial supplies of raw materials.
(4) Borrower hereby agrees to comply with the Title VII of the Civil Rights
Act of 1964, as amended, the California Fair Employment Practices Act, and any other
applicable Federal and State laws and regulations. the City will provide technical assistance and
copies of the referenced programs upon request. 24 CFR Section 92.350.
(5) All activities carried out by Borrower and/or agents of Borrower shall be
in accordance with the requirements of the Federal Fair Housing Act. The Fair Housing
Amendments Act of 1988 became effective on March 12, 1989. The Fair Housing Amendments
Act of 1988 and Title VIII of the Civil Rights Act of 1968, taken together, constitute The Fair
Housing Act. The Act provides protection against the following discriminatory housing
practices if they are based on race, sex, religion, color, handicap, familial status, or national
origin: denying or refusing to rent housing, denying or refusing to sell housing, treating
differently applicants for housing, treating residents differently in connection with terms and
22
conditions, advertising a discriminatory housing preference or limitation, providing false
information about the availability of housing, harassing, coercing or intimidating people from
enjoying or exercising their rights under the Act, blockbusting for profit, persuading owner to
sell or rent housing by telling them that people of a particular race, religion, etc. are moving into
the neighborhood, imposing different terms for loans for purchasing, constructing, improving,
repairing, or maintaining a home, or loans secured by housing; denying use or participation in
real estate services, e.g., brokers' organizations, multiple listing services, etc.
The Fair Housing Act gives HUD the authority to hold administrative
hearings unless one of the parties elects to have the case heard in U.S. District Court and to issue
subpoenas. Both civil and criminal penalties are provided. The Act also provides protection for
people with disabilities.
The following State of California Laws also govern housing
discrimination: Fair Employment and Housing Act, Unruh Civil Rights Act of 1959, Ralph Civil
Rights Act of 1976, and Civil Code Section 54.1.
(n) Labor Requirements. Borrower represents and warrants that during the term of
this Agreement that Borrower will comply with each and every provision and requirement
contained within CFR 92.354, as amended from time to time, to the extent applicable, and will
pay not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor
pursuant to the Davis -Bacon Act (40 U.S.C. 276a-276a-5), to all laborers and mechanics
employed in the development of any part of the Project in accordance with the terms and
provisions of CFR 92.354 and will comply with the overtime provisions, as applicable, of the
Contract Work Hours and Safety Standards Act (40 U.S.C. 327-332). Prevailing wages need not
be paid to "Volunteers" or for "Sweat Equity" as defined in 24 CFR 92.354(b) and (c).
Furthermore, Borrower, the general contractor, and any and all subcontractors, shall pay
prevailing wages for all work done with respect to the Project as required by Federal and
California law.
(o) Lead Based Paint. Borrower represents and warrants that during the term of the
Agreement that Borrower will comply with each and every provision and requirement contained
within CFR 92.355, as amended from time to time, to the extent applicable.
(p) Certification Concerning Debarment and Suspension. Borrower represents,
warrants and hereby certifies, pursuant to 24 CFR 92.357, that Borrower will not use a contractor
that has been debarred and or suspended, nor that is proposed for debarment, declared ineligible
or voluntarily excluded from participation in the Project, which is the subject matter of this
Agreement. Borrower agrees to execute such further certification(s) required by the City and/or
HUD including, if necessary, that certification included as Appendix B of CFR Part 24, to verify
the certification made in this Section 2.1(p).
(q) Flood Insurance. Borrower represents, warrants, and certifies, pursuant to 24
CFR 92.358, that no Real Property which is the subject of this Agreement, is located within a
Flood Plain or Flood Hazard Zone or Area, as indicated on a FEMA Map; or that the Real
23
Property is located within a community participating in the National Flood Insurance Program
and Borrower agrees to purchase and maintain flood insurance for the duration of the term of this
Agreement concerning such Real Property.
(r) Fire Protection and Safety. Borrower represents and warrants that Borrower will
comply with all requirements and regulations of the Fire Administration Act of 1992 and the
Federal Fire and Prevention Control Act. Borrower will use and install all fire and safety related
equipment pursuant to the National Fire Protection Association standards.
(s) Accessibility Standards. Borrower represents and warrants that Borrower will
comply with all federal, state and local requirements and regulations concerning access to the
units by the disabled and handicapped persons, including, but not limited to, those requirements
of the HOME Program.
(t) Section 3 Requirements. Borrower shall comply with the following requirements
during the term of the City Loan:
(i) The work to be performed under this Agreement is subject to the
requirements of section 3 of the Housing and Urban Development Act of 1968, as amended, 12
U.S.C. §1701u (section 3). The purpose of section 3 is to ensure that employment and other
economic opportunities generated by HUD assistance or HUD -assisted projects covered by
section 3, shall, to the greatest extent feasible, be directed to low- and very low-income persons,
particularly persons who are recipients of HUD assistance for housing.
(ii) The parties to this Agreement agree to comply with HUD's regulations in
24 CFR part 135, which implement section 3. As evidenced by their execution of this
Agreement, the parties to this Agreement certify that they are under no contractual or other
impediment that would prevent them from complying with the part 135 regulations.
(iii) Borrower agrees to send to each labor organization or representative of
workers with which Borrower has a collective bargaining agreement or other understanding, if
any, a notice advising the labor organization or workers' representative of Borrower's
commitments under this section 3 clause, and will post copies of the notice in conspicuous places
at the work site where both employees and applicants for training and employment positions can
see the notice. The notice shall describe the section 3 preference, shall set forth minimum
number and job titles subject to hire, availability of apprenticeship and training positions, and
qualifications for each; and the name and location of the person(s) taking applications for each of
the positions; and the anticipated date the work shall begin.
(iv) Borrower agrees to include this section 3 clause in every subcontract
subject to compliance with regulations in 24 CFR part 135, and agrees to take appropriate action,
as provided in an applicable provision of the subcontract or in this section 3 clause, upon a
finding that the subcontractor is in violation of the regulations in 24 CFR part 135. Borrower
will not subcontract with any subcontractor where Borrower has notice or knowledge that the
subcontractor has been found in violation of the regulations in 24 CFR part 135.
24
(v) Borrower will certify that any vacant employment positions, including
training positions, that are filled (1) after Borrower is selected but before the contract is
executed, and (2) with persons other than those to whom the regulations of 24 CFR part 135 -
require employment opportunities to be directed, were not filled to circumvent Borrower's
obligations under 24 CFR part 135.
(vi) Noncompliance with HUD's regulations in 24 CFR part 135 may result in
sanctions, termination of this Agreement for default, and debarment or suspension from future
HUD assisted contracts.
(u) Drug Free Workplace. Borrower shall comply with all applicable State and
Federal rules, laws and regulations to ensure a drug free workplace at all times during the term of
this Agreement. Further, Borrower shall incorporate such federal provisions as are required in
each contract or subcontract that Borrower enters into in connection with the Project.
(v) Lobbying Prohibition. Borrower hereby certifies to the City, under penalty of
perjury, under the terns of applicable federal law, that at all applicable times before, during and
after the term of the Agreement, that:
(i) No Federal appropriated funds have been paid or will be paid, by or on
behalf of Borrower, to any person for influencing or attempting to influence an officer or
employee of Congress, or an employee of a Member of Congress in connection with the
awarding of any Federal contract, the making of any Federal grant, the making of any Federal
loan, the entering into of any cooperative agreement, and the extension, continuation, renewal,
amendment, or modification of any Federal contract, grant, loan or cooperative agreement;
(ii) If any funds other than Federal appropriated funds have been paid to any
person for influencing or attempting to influence an officer or employee of any agency, a
Member of Congress, an officer or employee of Congress, or an employee of a Member of
Congress in connection with this Federal contract, grant, loan or cooperative agreement,
Borrower will complete and submit Standard Form-LLL, "Disclosure Form to Report
Lobbying," in accordance with its instructions;
(iii) Borrower will require that the above stated language be included in the
award documents for all subawards at all tiers, including subcontracts, subgrants, loans,
contracts, and cooperative agreements concerning the subject matter of this Agreement; and
(iv) Further, Borrower and all subrecipients, at all times, shall certify
compliance with the provisions of 31 U.S.C. §1352 and any and all terms and conditions of the
Byrd Anti -Lobbying Amendment, as amended from time to time.
Section 2.2 - Commencement of Rehabilitation and Compliance with Plans and Specifications.
25
(a) Completion Deadline. Borrower shall continue rehabilitation of the Project
diligently and without delay, in a good and workmanlike manner. Borrower will complete
rehabilitation of the Project in accordance with the plans and specifications approved by the City
("Plans and Specifications"), including any additional specifications prescribed by the City, and
in compliance with all requirements of governmental authorities having or asserting jurisdiction.
Rehabilitation of the Project shall be completed on or before August 31, 2012, as referenced in
Section 1.24 of this Agreement.
(b) No Material Changes. No material change shall be made in the plans and
specifications approved by the City, including any additional specifications prescribed by the
City, without its written consent. For purposes of this Section, "material change" means changes
which, in aggregate, increases or decreases the rehabilitation costs by Ten Thousand Dollars
($10,000.00) or more or affect the Project quality or safety established during the City review
and approval process. Notwithstanding the foregoing, no changes to the budget, which in the
aggregate exceed One Hundred Thousand Dollars ($100,000.00), regardless of any increase of
decrease in the overall rehabilitation costs, may be made without the written consent and
approval of the City.
(c) Submission of Documents Related to Changes. Borrower shallsubmit any
proposed change to the Plans and Specifications to the City at least ten (10) days prior to the
commencement of construction relating to such proposed change whether or not such change is
subject to the City's consent. Requests for any change that requires consent shall be
accompanied by working drawings and a written description of the proposed change, submitted
on a change order form acceptable to the City, signed by Borrower and, if required by the City,
also signed by the architect and the contractor.
Section 2.3 - No Purchase Under Conditional Sales Agreements, Etc. Except for leased
laundry equipment, no supplies, materials, equipment, fixtures, carpets, appliances, or any part of
said improvements shall be purchased or installed under any conditional sales agreement, lease
or under any other arrangement wherein the right is reserved or accrues to anyone to remove or
to repossess any such items. It is expressly agreed that all such items shall be part of the
Property.
Section 2.4 - Security Agreement. Borrower hereby grants to the City a security interest in all
supplies, materials, fixtures, carpets, appliances, furniture or equipment now or hereafter located
on said Property, together with all proceeds thereof, including insurance proceeds paid or
payable as the result of any loss, injury or damage of the foregoing collateral, whether or not the
City is named beneficiary under any such insurance. Upon request, from time to time, Borrower
will furnish the City with an inventory of such collateral. Nothing contained in this Section 2.4
shall affect the provisions of Section 2.5.
Section 2.5 - Stoppage of Work by the City. the City or its agents shall have the right to enter
upon the Property and the Project during the period of rehabilitation of the Project. If in the
opinion of the City, the rehabilitation is not in material conformance with the plans and
specifications, the City shall have the right to order the replacement of any unsatisfactory work
26
theretofore incorporated into rehabilitation of the Project, and to withhold all disbursements from
the accounts until it is satisfied with the work. If the work is not made satisfactory to the City, in
its sole discretion, within fifteen (15) calendar days from the date of stoppage by the City, such
shall constitute a default hereunder. If any unsatisfactory work is such that it is not reasonably
capable of being cured within fifteen (15) calendar days and Borrower, in the City's sole
discretion, (i) initiates corrective action within said period, and (ii) diligently and in good faith
works to correct the unsatisfactory work as soon as possible, then Borrower shall have such
additional time as the City determines, in its sole discretion, is reasonably necessary to cure the
unsatisfactory work prior to exercise of any remedies by the City.
Section 2.6 - Cessation of Work, Completion by the City. Should the work of rehabilitating of
the Project cease, and continues for a period of thirty (30) consecutive days, or should said work
for any reason whatsoever not progress continuously in a manner satisfactory to the City, in its
sole discretion, then the City may, at its option and without notice, declare Borrower to be in
default hereunder, and the City may thereupon, should it so elect, take possession of said
property and let contracts for the completion of rehabilitation of the Project and pay the cost
thereof, plus a fee of fifteen percent (15%) for supervision of construction, disbursing all or any
part of the loan for such purposes; and should the cost of completing rehabilitation of the Project
plus such fee exceed the undisbursed balance of the loan, then the amount of such excess may be
expended by the City, in which event such amount shall be considered an additional loan to
Borrower, and the repayment thereof, together with interest thereon at the rate provided in the
City Note, shall be secured by the Deed of Trust Amendment and shall be repaid within ten (10)
days after the completion of rehabilitation of the Project, and Borrower agrees to pay the same;
Borrower further authorizes the City at its option at any time, upon a default by any contractor
under any contract in connection with rehabilitation of the Project which is not cured within ten
(10) days following notice to Borrower, either in its own name or in the name of Borrower, to
do any act or thing necessary or expedient in the opinion of the City to secure the performance of
construction contracts and assure the completion of rehabilitation of the Project substantially in
accordance with the plans and specifications, disbursing all or any part of the loan funds for such
purposes. In addition to the specific rights and remedies hereinabove mentioned, the City shall
have the right to avail itself of any other rights or remedies to which it may be entitled under any
existing law or laws.
Section 2.7 - Mechanic's Liens and Notices to Withhold. Borrower shall use its best efforts to
prevent any lien or stop notice from being place on the Property or Project. If a claim of lien or
stop work notice is given or recorded affecting the Property or Project, the Borrower shall within
ten (10) calendar days of such recording or service: (i) pay and discharge same; (ii) effect a
release thereof by recording and delivering to the City a surety bond in sufficient form and
amount; or (iii) provide the City with indemnification from a title insurance company reasonably
acceptable to the City against such lien or other assurance which the City, in its sole discretion,
deems to be satisfactory for the payment of such lien or stop notice and for the full and
continuous protection of the City from the effect of such lien or notice. In the event of the filing
with the City of a notice to withhold or the recording of a mechanic's lien pursuant to Division 3,
Part 4, Title 15 of the Civil Code of the State of California, the City may summarily refuse to
honor any requests for payment pursuant to this Agreement. In the event Borrower fails to
27
furnish the City with a bond causing such notice or lien to be released (or alternatively issuance
of a title policy or endorsement in the full amount of the City Loan, which title policy or
endorsement excludes such lien as an exception to title) within thirty (30) days after the filing or
recording thereof, such failure shall at the option of the City constitute a default under the terms
of this Agreement.
Section 2.8 - Involvement of the City in Legal Proceedings. the City shall have the right to
commence, to appear in, or to defend any action or proceeding purporting to affect the rights or
duties of the parties hereunder or the payment of any funds in connection with this the City Loan
and to pay out of funds not yet disbursed, necessary expenses, employ counsel and pay its fees,
all of which the undersigned, jointly and severally, agree to repay to the City upon demand.
Provided, however, such costs and expenses shall not be due and owing to the City, if they are
incurred as a result of the breach of the Agreement by the City or its negligence or willful
misconduct.
Section 2.9 - Books and Records. Borrower shall require that the general contractor maintain
complete and accurate books and records showing all of the income and disbursements made in
connection with the rehabilitation of the Project and such books and records shall be available
for inspection and copy by the City upon request and during regular business hours.
Section 2.10 - Waiver and Amendment. No provision of this Agreement, or breach of any
provision, can be waived except in writing. Waiver of any provision or breach shall not be
deemed to be a waiver of any other provision, or of any subsequent breach of the same or other
provision. Except as otherwise provided herein, this Agreement may be amended, modified or
rescinded only in writing signed by Borrower and the Executive Director of the City.
ARTICLE III
Miscellaneous Provisions
Section 3.1 - Governmental Requirements Superior. All provisions of this Agreement and all the
other documents relating to the City Loan shall be subject and subordinate to any and all
applicable federal, state and local statutes, regulations and ordinances and shall be subject to
modification to comply therewith.
Section 3.2 - Notices. All notices under this Agreement shall be in writing and sent by (a)
certified or registered mail, return receipt requested, in which case notice shall be deemed
delivered seven (7) business days after deposit, postage prepaid in the United States Mail, (b) by
a nationally recognized overnight courier such as UPS Overnight or Federal Express, in which
case notice shall be deemed delivered one (1) business day after deposit with that courier, or (c)
by personal delivery, in which case notice shall be deemed delivered upon the actual date of
delivery. All notices shall be delivered to the following addresses, provided, however the
addresses may be changed by any party by written notice to all other parties.
City: City of National City
28
Borrower:
1243 National City Boulevard
National City, CA, 91950-4397
T & T Community Properties, LLC
760 Arroyo Ct.
Chula Vista, CA 91910
Section 3.3 - Severability. If any provision of this Agreement is deemed to be invalid or
unenforceable by a court of competent jurisdiction, that provision shall be severed from the rest
of this Agreement and the remaining provisions shall continue in full force and effect.
Section 3.4 - Nonwaiver of the City's Rights. No right, remedy, or power of the City in this
Agreement shall be deemed to have been waived by any act or conduct on the part of the City or
by any failure to exercise or delay in exercising such right, remedy, or power. Every such right,
remedy or power of the City shall continue in full force and effect until specifically waived or
released by an instrument in writing executed by the City.
Section 3.5 - Entire Agreement. This Agreement contains the entire understanding between the
Parties concerning the subject matter contained herein. There are no representations,
agreements, arrangements or understandings, oral or written, between or among the parties
hereto, relating to the subject matter of this Agreement, which are not fully expressed and/or
referred to herein.
Section 3.6 - Exhibits and Recitals Incorporated. All exhibits referred to in this Agreement are
hereby incorporated in this Agreement by this reference, regardless of whether or not the exhibits
are actually attached to this Agreement. The Recitals to this Agreement are hereby incorporated
in this Agreement by this reference.
Section 3.7 - Construction of the Agreement. The provisions contained in this Agreement shall
not be construed in favor of or against either party but shall be construed as if both parties
contributed equally to its preparation. This Agreement shall be construed in accordance with the
laws of the State of California.
Section 3.8 - City's Reliance on Statements and Disclosures of Borrower. Borrower has made
certain statements in order to induce the City to make said loan and enter into this Agreement,
and in the event Borrower has made material misrepresentations or failed to disclose any
material fact, the City may treat such misrepresentation or omission as a breach of this
Agreement, and the act of doing so shall not affect any remedies the City may have under the
deed of trust securing said loan for such misrepresentation or concealment.
Section 3.9 - City Not Liable for Acts of Omissions of Borrower or Others. City shall in no way
be liable for any acts or omissions of Borrower, any agent or contractor employed by Borrower,
or any person furnishing labor and/or materials used in or related to the rehabilitation of the
Proj ect.
29
Section 3.10 - Time of the Essence. Time is of the essence of this Agreement and of each and
every provision hereof. The waiver by the City of any breach or breaches hereof shall not be
deemed, nor shall the same constitute, a waiver of any subsequent breach or breaches.
Section 3.11 - Integration. This Agreement represents the entire agreement between the Parties
of the subject matter of this Agreement and supersedes any other agreements, promises, or
representations oral or written pertaining to such subject matter, including without limitation, any
and all agreements, promissory notes, and deeds of trust, along with any amendments and
modifications to such agreements, promissory notes and deeds of trust entered into by and
between the City and Borrower.
Section 3.12 - Participation. At the request of the City, Borrower shall cause the fact that the
City has provided funds to be referenced in any advertisements, press releases, brochures or
information sheets where funding for the Project is discussed, and on all project designation
placards placed on the Property or other sites, as approved in advance, by the City. The design,
content and format of the press releases, brochures, information sheets, and all project
designation placards containing a reference to the City are subject to the written approval of the
City with respect to all references to the City. the City, at its sole option, reserves the right to
request, in writing, that the references to the participation of the City not be included in any, or
all, advertisements, press releases, brochures, information sheets, and/or project designation
placards.
Section 3.13 - Approvals, Consents and Other Determinations. Unless otherwise provided, in
any approval, consent, or other determination by the City or Borrower required under this
Agreement or any of the other loan documents evidencing and/or securing the City Loan, the
City and Borrower shall act in good faith and without delay.
Section 3.14 - Counterparts. This Agreement may be executed in any number of counterparts
and, as so executed, the counterparts shall constitute one and the same Agreement. The parties
agree that each such counterpart is an original and shall be binding upon all the parties, even
though all of the parties are not signatories to the same counterpart.
Section 3.15 - Consents and Approvals. Any approval required under this Agreement shall be in
writing and executed by an authorized representative of the party granting the approval.
Section 3.16 - Non -Liability of Officials and Employees of the City. No member, official or
employee of the City shall be personally liable to Borrower, or any successor in interest, in the
event of any default or breach of this Agreement or for any amount which may become due to
Borrower or its successors, or on any obligations under the terms of this Agreement.
Section 3.17 - Capacity and Authority. All individuals signing this Agreement for a party which
is a corporation, limited liability company, partnership or other legal entity, or signing under a
power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant
30
to the City that they have the necessary capacity and authority to act for, sign and bind the
respective entity or principal on whose behalf they are signing.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
set forth above.
BORROWER:
T & T Community Properties, LLC, a alifornia limited liability company
By:
Print Name: Mitchel L. Thompso
Its: Managing Member
City:
City of National City
By:
Ron Morrison, Mayor
APPROVED AS TO FORM:
Christensen & Spath LLP, Special Counsel to the City
By:
Walter F. Spath III, Esq.
3I
Exhibit "A"
Property Description
All that certain real property situated in the County of San Diego, State of California, described
as follows:
All of Lot 34 and that portion of Lot 36, Block 3 Paradena Park, in the City of National City,
County of San Diego, State of California, according to Map thereof No. 1404, filed in the Office
of the County Recorder of San Diego County, February 16, 1912, lying southerly of a line
described as follows:
Beginning at a point on the easterly line of said Lot 36 distant thereon 50.00 feet southerly from
the most northerly corner thereof; thence westerly in a straight line to an intersection with the
westerly line of said Lot 36 at a point which is a distant thereon 25.00 feet southerly from the
northwesterly corner thereof.
Excepting from said Lot 34 the southerly 65.00 feet measured at right angles to the southerly
line.
APN: 5 54-013-16-00
32
Exhibit "B"
City Note
33
DO NOT DESTROY THIS NOTE: WHEN PAID, THIS NOTE AND THE DEED OF TRUST
SECURING IT MUST BE SURRENDERED TO TRUSTEE FOR CANCELLATION
BEFORE RECONVEYANCE WILL BE MADE.
PROMISSORY NOTE
("Note")
National City, California , 2011
1. Principal and Interest. For value received and in consideration of the Acquisition,
Rehabilitation and Permanent Financing Loan Agreement dated as of July 2011 ("City Loan
Agreement"), by and between the City of National City ("City") and T & T Community Properties,
LLC, a California limited liability company ("Maker"), Maker promises to pay to City, or order, at
1243 National City Boulevard, National City, California 91950-4397, or such other place as the
holder may from time to time designate by written notice to Maker, the principal sum of Seven
Hundred Seventeen Thousand Five Hundred and No/100 Dollars ($717,500.00), or so much as is
advanced, together with accrued interest at the rate of two percent (2%) simple interest per annum.
This Note is issued pursuant to: (i) the City Loan Agreement; (ii) the Deed of Trust ("Deed of
Trust") being executed concurrently herewith by Maker in favor of the City, to be recorded in the
office of the County Recorder of San Diego County; and (iii) the Declaration of Covenants,
Conditions and Restrictions (Tenant Restrictions), being executed concurrently herewith by Maker
in favor of the City, to be recorded in the office of the County Recorder of San Diego County
("Declaration"). All capitalized terms which are not defined herein shall have the meaning ascribed
to them in the City Loan Agreement.
2. Term of Loan, Due Date and Right of Prepayment. Payments shall be due and payable as
follows:
(a) On May 1, 2013, and annually on May 1 of each year thereafter during the term of
this Note, Maker shall calculate its Residual Receipts for the immediately previous calendar year, as
defined herein, and pay to the City thirty percent (30%) of such Residual Receipts.
(b) Fifty-five (55) years from the date first set forth above, when all principal and
accrued interest shall be due and payable.
(c) Concurrently with the refinancing of any loan or other obligation secured all or in
part by the Property, as defined in the City Loan Agreement.
(d) Acceleration of this Note pursuant to the provisions of Paragraph 4 of this Note, when
all principal and accrued interest shall be due and payable.
1
(e)
Property.
"Residual Receipts" shall mean Gross Income less Operating Expenses, calculated on a
calendar year basis, as provided herein and on a form approved by the City. All calculations of
Residual Receipts shall be subject to verification and approval by the City.
"Gross Income" shall mean all gross income actually collected from all residential and non-
residential components of the Property.
"Operating Expenses" shall mean actual, reasonable and customary costs, fees and expenses
directly attributable to the operation, maintenance, taxes and management of the Property, to the
extent approved by the City in Maker's annual operating budget.
Maker shall annually provide to the City, on May 1st, each year during the term of this Note,
a Residual Receipts report, which provides the basis for Maker's calculation of the payment or
nonpayment of Residual Receipts to the City.
This Note may be prepaid in whole or in part at any time and, from time to time, without
notice or penalty. Any prepayment shall be allocated first to unpaid interest and then to principal.
Should the undersigned sell, convey, transfer, further encumber, or dispose of the Property described
in the Deed of Trust securing this Note, or any part of it, or any interest in it, then all obligations
secured by this Note shall be due and payable immediately.
3. Security for Note. This Note is secured by the Deed of Trust of even date herewith executed
by Maker, which creates a lien on that certain real property described therein and by the Security
Agreement of even date herewith,
4. Acceleration Upon Default. Notwithstanding Section 2, above, or anything contained herein
to the contrary, in the event of any default in the performance of any of the terms, covenants and
conditions contained in: (i) this Note, the City Loan Agreement, Declaration or Deed of Trust, in
each case after the expiration of applicable cure periods, including without limitation the failure by
Maker to rehabilitate the Project, as defined in the City Loan Agreement, on or before April 30,
2010; (ii) any other instrument executed by the Maker in conjunction with this Note after the
expiration of applicable cure periods; (iii) any prior or junior note secured by an encumbrance on the
Property or any portion of it after the expiration of applicable cure periods; or (iv) in the event of the
filing of a Bankruptcy proceeding by or against Maker, then (x) all sums owing by Maker to the City
shall at the option of the City immediately become due and payable; (y) the City shall have no
obligation to disburse any further funds to Maker or any other person: and (z) the City shall be
released from any and all obligations to Maker under the terms of this Note. These remedies shall be
in addition to any and all other rights and remedies available to the City, either at law or in equity.
Further, default interest shall accrue on the principal balance of this Note from the date of this Note
at the rate of ten percent (10%) simple interest per annum or the maximum rate than allowed by law,
whichever is less. Failure to exercise such option shall not constitute a waiver of the right to
exercise it in the event of any subsequent default.
Any sale, transfer, conveyance or further encumbrance of all or any part of the
2
5. Costs Paid by Maker. Maker agrees to pay the following costs, expenses, and reasonable
attorneys' fees paid or incurred by the holder of this Note, or adjudged by a court: (a) reasonable
costs of collection, costs, and expenses, and attorneys' fees paid or incurred in connection with the
collection or enforcement of this Note, whether or not suit is filed; and (b) costs of suit and such sum
as the court may adjudge as attorneys' fees in any action to enforce payment of this Note or any part
of it.
6. Payment and Interest Calculation. Principal and interest shall be payable in lawful money of
the United States of America. Interest shall be computed based on a 360-day year and 30-day month
and the actual number of days elapsed. Payments shall be applied to interest first and then to any
unpaid principal balance.
7. Incorporation of Documents. The provisions of the City Loan Agreement, Declaration and
Deed of Trust are expressly incorporated in this Note by this reference.
8. Waiver. Maker hereby waives diligence, presentment, protest and demand, notice of protest,
dishonor and nonpayment of this Note, and expressly agrees that, without in any way affecting the
liability of Maker hereunder, the City may extend any maturity date or the time for payment of any
installment due hereunder, accept additional security, release any party liable hereunder and release
any security now or hereafter securing this Note. Maker further waives, to the full extent permitted
by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note,
or on any deed of trust, security agreement, guaranty or other agreement now or hereafter securing
this Note.
9. Recourse During Rehabilitation and Indemnity.
(a) Prior to the timely completion of rehabilitation of the Project, in any action brought to
enforce the obligations of Maker under this Note or the Loan Documents, the judgment or decree
shall be enforceable against Maker, in addition to any collateral security for the payment of this
Note, and the City may seek any deficiency judgment against Maker. Upon such recordation of a
proper and timely Notice of Completion, this Note shall become non -recourse to both Maker and the
recourse provisions of this Paragraph 9(a) shall no longer be operative. Provided, however, nothing
contained herein shall apply to defeat any cause of action against Maker that accrues prior to timely
completion of rehabilitation of the Project.
(b) Maker shall indemnify, defend, protect and hold the City harmless from and against
any and all loss, damage, liability, action, cause of action, cost or expense (including, without
limitation, reasonable attorneys' fees and expenses) incurred by the City as a result of any (i) fraud
or material misrepresentation under or in connection with the Loan or any Loan Document; (ii)
intentional bad faith waste of the Property; (iii) losses resulting from Maker's failure to maintain
insurance as required under the Deed of Trust; and (iv) misapplication of any rents, security
deposits, insurance proceeds, condemnation awards or any other proceeds derived from the collateral
security in a manner prohibited by the City Loan Agreement, Deed of Trust or Declaration. The
City shall promptly provide Maker with written notice of any event for which Maker has an
indemnification obligation as provided in this Paragraph 9(b).
3
(c) Notwithstanding anything to the contrary contained herein, Maker's obligation to
indemnify the City as aforesaid shall be personal, recourse obligations of Maker and in the event of
any breach of such obligations, the City shall have the right to proceed directly against Maker to
recover any and all losses, damages, liabilities, actions, causes of action, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) resulting from such breach
and the right to bring any action and to institute any proceedings to obtain a deficiency judgment in
or following after foreclosure for any and all losses, damages, liabilities, actions, causes of action,
costs and expenses (including without limitation reasonable attorneys' fees and expenses) resulting
from such breach.
10. Late Charge. In addition to the foregoing, if any installment due hereunder, is not paid
within fifteen (15) days from the date due, Maker promises to pay a "late charge" of five percent
(5%) of the installment so overdue to defray the expense incident to handling any such delinquent
payment or payments.
11. Severability. If any provision of this Note is determined to be void by court of competent
jurisdiction, such determination shall not affect any other provision of this Note, and such other
provisions shall remain in full force and effect.
12. Non -Waiver. No delay in demanding or failure to demand performance hereunder shall
constitute a waiver by holding of its right to subsequently demand such performance or to exercise
any remedies for any default hereunder. Further, in order to be effective, any waiver of any of the
City's rights and remedies hereunder shall be expressed in a writing signed by the City. Further
waiver by the City of any right hereunder shall not constitute a waiver of any other right, including
but not limited to the right to exercise any and all remedies for a different or subsequent event of
default hereunder.
13. Replacement Note. The undersigned agrees that, in the event that this Note shall become lost
or stolen, upon request of the City, the undersigned shall execute a replacement Note incorporating
the terms hereof, provided that the City shall furnish a written agreement to indemnify the
undersigned against all losses, costs, and damages arising from a duplicative demand for payment
under this Note.
14. Interpretation. This Note shall be governed and interpreted in accordance with applicable
California law.
Maker:
T & T Community Properties, LLC, a California limited liability company
By:
Print Name:
Its:
4
Exhibit "C"
Deed of Trust
34
NO CHARGE ON THIS DOCUMENT
PER CALIFORNIA GOVERNMENT
CODE SECTION 6103
Recording Requested By
And When Recorded Mail To:
City of National City
1243 National City Boulevard
National City, CA 91950-4397
DEED OF TRUST
THIS DEED OF TRUST is made as of this day of , 2011, by T & T Community
Properties, LLC, a California limited liability company ("Trustor"), whose address is
, and First American Title Company ("Trustee") and the City of National City
("Beneficiary"), whose address is 1243 National City Boulevard, National City, California, 91950-
4397.
TRUSTOR HEREBY irrevocably grants, transfers, and assigns to Trustee, in trust, with
power of sale, all that property in the City of National City, County of San Diego, State of
California, described as:
(See Legal Description - Exhibit "A")
FOR THE PURPOSE OF SECURING:
(1) Payment of the indebtedness evidenced by a Promissory Note of even date herewith executed
by Trustor, in the principal sum of Seven Hundred Seventeen Thousand Five Hundred and No/100
Dollars ($717,500.00), and any renewal, extension, or modification of the promissory note (the
"Note");
(2) Any additional sums and interest that may hereafter be loaned to the then record owner of the
Property by Beneficiary, when evidenced by another note or notes reciting that it or they are so
secured;
(3) The performance of each agreement contained in this Deed of Trust;
(4) The performance of each agreement of Trustor under that certain Acquisition, Rehabilitation
and Permanent Financing Loan Agreement ("Loan Agreement") dated as of July , 2011, by and
between Trustor and Beneficiary on file in the Office of Beneficiary; and
(5) The performance of each agreement and covenant of Trustor under that certain Declaration
of Covenants, Conditions and Restrictions ("Restrictions") of even date herewith and recorded
concurrently herewith affecting the Property.
1
A. TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:
Maintenance and Repair
(1) To keep the Property in good condition and repair; not to remove or demolish any buildings
on the Property; to complete or restore promptly and in good and workmanlike manner any building
that may be constructed, damaged, or destroyed on the Property; to pay when due all claims for labor
performed and materials furnished for the Property; to comply with all laws affecting the Property or
requiring any alterations or improvements to be made on the Property; not to commit or permit waste
of the Property; not to commit, suffer, or permit any act upon the Property in violation of law; and to
cultivate, irrigate, fertilize, fumigate, prune, and do all other acts that from the character or use of the
Property may be reasonably necessary.
Fire Insurance
(2) To provide, maintain, and deliver to Beneficiary fire insurance satisfactory to and with loss
payable to Beneficiary as its interest may appear. Subject to the rights of any senior lenders, the
amount collected under any fire or other insurance policy may be applied by Beneficiary upon any
indebtedness secured by this Deed of Trust and in any order determined by Beneficiary, or at the
option of Beneficiary the entire amount so collected or any part of that amount may be released to
Trustor. This application or release shall not cure or waive any default or notice of default under
this Deed of Trust or invalidate any act done pursuant to such a notice. Notwithstanding the
foregoing, in the event of any fire or other casualty to the Property, Trustor shall have the right to
rebuild the Property, and to use all available insurance proceeds therefor, provided that (a) such
proceeds are sufficient to rebuild the Property in a manner that provides adequate security to
Beneficiary for repayment of the indebtedness secured hereby or if such proceeds are insufficient
then Trustor shall have funded any deficiency, (b) Beneficiary shall have the right to approve (which
shall not be unreasonably withheld or delayed) plans and specifications for any major rebuilding and
the right to approve (which shall not be unreasonably withheld or delayed) disbursements of
insurance proceeds for rebuilding under a construction escrow or similar arrangement, and (c) no
material default then exists hereunder or under the Note. If the casualty affects only part of the
Property and total rebuilding is not feasible, then proceeds may be used for partial rebuilding and
partial repayment of the indebtedness secured hereby in a manner that provides adequate security to
Beneficiary for repayment of the remaining indebtedness secured hereby.
Defense of Security
(3) To appear in and defend any action or proceeding purporting to affect the security of this
Deed of Trust or the rights or powers of Beneficiary, or Trustee; and to pay all costs and expenses,
including cost of evidence of title and attorneys' 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 of Trust.
Payment of Liens and Taxes
2
(4) To pay, at least ten (10) days before delinquency, all taxes and assessments affecting the
Property, including assessments on appurtenant water stock, all encumbrances, charges, and liens,
with interest, on the Property or any part of the Property, which appear to be prior or superior to this
Deed of Trust; and all costs, fees, and expenses of this Trust. If Trustor fails to make any payment
or to do any act as provided in this Deed of Trust, then Beneficiary or Trustee may (but is not
obligated to) make the payment or do the act in the required manner and to the extent deemed
necessary by Beneficiary or Trustee to protect the security of this Deed of Trust. The performance
by Beneficiary or Trustee of such an act shall not require notice to or demand upon Trustor and shall
not release Trustor from any obligation under this Deed of Trust. Beneficiary or Trustee shall also
have the following related rights and powers: to enter upon the Property for the foregoing purposes;
to appear in and defend any action or proceeding purporting to affect the security of this Deed of
Trust or the rights or powers of Beneficiary or Trustee; to pay, purchase, contest, or compromise any
encumbrance, charge, or lien that in the judgment of either appears to be prior or superior to this
Deed of Trust; to employ counsel; and to pay necessary expenses and costs, including reasonable
attorneys' fees.
Reimbursement of Costs
(5) To pay immediately and without demand all sums expended by Beneficiary or Trustee
pursuant to this Deed of Trust, with interest from date of expenditure at the amount allowed by law
in effect at the date of this Deed of Trust, and to pay any amount demanded by Beneficiary (up to the
maximum allowed by law at the time of the demand) for any statement regarding the obligation
secured by this Deed of Trust.
(6) That it will pay the Note at the time and in the manner provided therein.
(7) That it will not permit or suffer the use of any of the Property for any purpose other than the use
for which the same was intended at the time this Deed of Trust was executed.
(8) That the Note, the Loan Agreement, and the Restrictions are incorporated herein by reference
and made a part of this Deed of Trust, although not attached. Copies are on file in the office of the
Beneficiary.
(9) To perform, in a timely manner, each agreement and covenant by and between Trustor on any
and all notes, loans and deeds of trust that are senior and/or junior to this Deed of Trust. A default in
any of these obligations and the expiration of any applicable notice or cure period shall constitute a
default under this Deed of Trust.
3
B. THE PARTIES AGREE THAT:
Condemnation Award
(10) Any award of damages in connection with any taking or condemnation, or for injury to the
Property by reason of public use, or for damages for private trespass or injury to the Property, is
hereby assigned and shall be paid to Beneficiary (subject to the rights of any senior lenders), as its
interest may appear as further security for all obligations secured by this Deed of Trust. Upon
receipt of such proceeds, Beneficiary may hold the proceeds as further security, or apply or release
them in the same manner and with the same effect as provided in Section 2 of this Deed of Trust for
the disposition of proceeds of fire or other insurance.
Waiver of Late Payments
(11) By accepting payment of any sum secured by this Deed of Trust after its due date,
Beneficiary does not waive its right either to require prompt payment when due of all other sums so
secured or to declare default for failure to pay any indebtedness secured by this Deed of Trust.
Trustee's Powers
(12) Upon written request of Beneficiary and presentation of this Deed of Trust and the Note for
endorsement, Trustee may (a) reconvey all or any part of the Property; (b) consent to the making and
recording, or either, of any map or plat of all or any part of the Property; (c) join in granting any
easement on the Property; or (d) join in or consent to any extension agreement or any agreement
subordinating the lien, encumbrance, or charge of this Deed of Trust. Trustee need not provide
Trustor with notice before taking any of the foregoing actions, and shall not be liable for the proper
performance of the act. The exercise by Trustee of any of the foregoing powers shall not affect the
personal liability of any person for payment of the indebtedness secured by this Deed of Trust, or the
lien of this Deed of Trust on the remaining property as security for the repayment of the full amount
secured by this Deed of Trust.
Full Reconveyance
(13) Upon written request of Beneficiary stating that all sums secured by this Deed of Trust have
been paid, surrender of this Deed of Trust, the Note, and any other notes secured by this Deed of
Trust to Trustee for cancellation and retention, and payment of Trustee's fees and charges, Trustee
shall reconvey, without warranty, the Property then subject to this Deed of Trust. The recitals in the
reconveyance shall be conclusive proof of the truthfulness of the recitals. The grantee in the recon-
veyance may be described as "the person or persons legally entitled thereto." Five years after
issuance of the full reconveyance, Trustee may destroy the Note and this Deed of Trust, unless
directed in the request to retain them.
4
Assignment of Rents
(14) 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 the Property, but reserves the right, prior to any default, which shall continue beyond any
applicable notice and cure periods, to collect and retain these rents, issues, and profits as they
become due and payable. Upon any such default, Beneficiary may, without notice and without
regard to the adequacy of the security for the indebtedness secured by this Deed of Trust, either per-
sonally or by agent or court -appointed receiver, do the following: enter upon and take possession of
the Property or any part of the Property; sue for or otherwise collect all rents, issues, and profits,
including those past due and unpaid; and apply these rents, issues, and profits, less costs and
expenses of operation and collection (including reasonable attorneys' fees), upon any indebtedness
secured by this Deed of Trust, in any order determined by Beneficiary. The exercise of the
foregoing rights by Beneficiary shall not cure or waive any default or notice of default under this
Deed of Trust or invalidate any act done pursuant to such a notice.
Default in Foreclosure
(15) Upon default by Trustor in the payment of any indebtedness secured by this Deed of Trust or
in the performance of any material obligation under this Deed of Trust, and the expiration of any and
all applicable notice or cure periods, Beneficiary may declare all sums secured by this Deed of Trust
immediately due and payable by delivering to Trustee a written declaration of default and demand
for sale and a written notice of default and election to sell the Property. Trustee shall cause the
notice of default and election to sell to be recorded. Beneficiary also shall deposit with Trustee this
Deed of Trust, the Note, and all documents evidencing any additional expenditures secured by this
Deed of Trust.
After the required time period has lapsed following the recordation of the notice of default, and after
notice of sale has been given as required by law, Trustee, without demand on Trustor, shall sell the
Property at the time and place specified in the notice of sale, either as a whole or in separate parcels,
and in any order determined by Trustee, at. public auction to the highest bidder for cash in lawful
money of the United States, payable at the time of sale. Trustee may postpone sale of all or any
portion of the Property by public announcement at the time and place of sale, and from time to time
thereafter may postpone the sale by public announcement at the time fixed by the preceding
postponement. Trustee shall deliver to the purchaser at the auction its deed conveying the Property
sold, but without any covenant or warranty, express or implied. The recital in the deed of any matter
or fact shall be conclusive proof of the truthfulness of the recital. Any person, including Trustor,
Trustee, or Beneficiary, may purchase at the sale.
After deducting all costs, fees, and expenses of Trustee and Beneficiary under this paragraph,
including costs of procuring evidence of title incurred in connection with sale, Trustee shall apply
the proceeds of sale to payment of: all sums expended under the terms of this Deed of Trust, not
then repaid, with accrued interest at the amount allowed by law in effect at the date of this Deed of
Trust; all other sums then secured by this Deed of Trust; and the remainder, if any, to the person or
persons legally entitled to the remaining proceeds.
5
(16) Should the undersigned agree to or actually sell, convey, transfer, or dispose of, or further
encumber the real property described in this deed of trust securing the Promissory Note, or any part
of it, or any interest in it, without first obtaining the written consent of the Holder of the Note, then
all obligations secured by the Note and trust deed may be declared due and payable, at the option of
the Holder. Consent to one transaction of this type will not constitute a waiver of the right to require
consent to future or successive transactions.
General Provisions
(17) This Deed applies to, inures to the benefit of, and binds all parties to this Deed of Trust and
their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term
"Beneficiary" shall mean the holder and owner, including pledgee, of the Note secured by this Deed
of Trust, whether or not named as a beneficiary in this Deed of Trust, and the heirs, legatees,
devisees, administrators, executors, and assigns of any such person. In this Deed, whenever the
context so requires, the masculine gender includes the feminine and/or neuter, and the singular
number includes the plural.
Acceptance by Trustee
(18) 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 to this Deed of Trust
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.
Substitution of Trustees
(19) Beneficiary, or any successor in ownership of any indebtedness secured by this Deed of
Trust, may from time to time, by written instrument, substitute a successor or successors to any
Trustee named in or acting under this Deed of Trust. The substitution instrument shall contain the
name of the original Trustor, Trustee, and Beneficiary under this Deed of Trust, the book and page
where this Deed is recorded, and the name and address of the new Trustee. When executed by
Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or
counties where the Property is situated, the substitution instrument shall be conclusive proof of
proper substitution of the successor Trustee or Trustees. Any successor Trustee or Trustees shall,
without conveyance from the predecessor Trustee, succeed to all its title, estate, rights, powers, and
duties.
Cumulative Powers and Remedies
(20) The powers and remedies conferred in this Deed of Trust are concurrent and cumulative to
all other rights and remedies provided in this Deed of Trust or given by law. These powers and
remedies may be exercised singly, successively, or together, and as often as deemed necessary.
6
Conclusiveness of Recitals
(21) The recitals contained in any reconveyance, trustee's deed, or any other instrument executed
by Trustee from time to time under the authority of this Deed of Trust or in the exercise of its
powers or the performance of its duties under this Deed of Trust, shall be conclusive evidence of
their truth, whether stated as specific and particular facts, or in general statements or conclusions.
Further, the recitals shall be binding and conclusive upon Trustor, its heirs, executors, adminis-
trators, successors, and assigns, and all other persons.
Attorneys' Fees
(22) If any action is brought for the foreclosure of this Deed of Trust or for the enforcement of
any provision of this Deed of Trust (whether or not suit is filed), Trustor agrees to pay all costs and
expenses of Beneficiary and Trustee, including reasonable attorneys' fees; and these sums shall be
secured by this Deed of Trust.
Co -trustees
(23) If two or more persons are designated as Trustee in this Deed of Trust, any, or all, power
granted in this Deed of Trust to Trustee may be exercised by any of those persons, if the other
person or persons are unable, for any reason, to act. Any recital of this inability in any instrument
executed by any of those persons shall be conclusive against Trustor and Trustor's heirs and assigns.
Request for Notices of Default and Sale
(24) In accordance with Section 2924b of the California Civil Code, request is hereby made that a
copy of any Notice of Default and a copy of any Notice of Sale under any Deeds of Trust executed
by Trustor, and recorded in the Official Records of San Diego County, California, in which
Beneficiary, is named as beneficiary, be mailed to:
City of National City
1243 National City Boulevard
National City, CA 91950-4397
NOTICE: A copy of any notice of default and of any notice of sale will be sent only to the
address contained in this recorded request. If your address changes, a new request must be
recorded.
The undersigned Trustor requests that a copy of any notice of default and of any notice of sale under
this Deed of Trust be mailed to Trustor at the address of Trustor set forth above.
(25) Trustor shall permit Beneficiary and its agents or representatives, to inspect the Property at any
and all reasonable times, upon prior written notice (unless Trustor is in default under any of the Loan
Documents). Inspections shall be conducted so as not to interfere with the tenants' use and
enjoyment of the Property and the general operation of the Property.
7
(26) The Property shall be subject to the restrictions set forth in the Loan Agreement and
Restrictions and Trustor hereby consents to such restrictions and agrees to be bound thereby. Such
restrictions shall be in addition to and not in limitation of the rights of Beneficiary expressly set forth
in this Deed of Trust.
(27) For purposes of this Deed of Trust, "Hazardous Materials" mean and include any hazardous,
toxic or dangerous waste, substance or material including, without limitation, flammable explosives,
radioactive materials, asbestos, hazardous wastes, toxic substances and any materials or substances
defined as hazardous materials, hazardous substances or toxic substances in (or for purposes of) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended (42 U.S.C. §9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 1801,
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §6901, et seq.), and those
substances defined as hazardous wastes in §25117 of the California Health and Safety Code or as
hazardous substances in §25316 of the California Health and Safety Code or in any regulations
promulgated under either such law, any so-called "Superfund" or "Superlien" law, or any other
federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at any time hereafter in effect.
(28) In addition to the general and specific representations, covenants and warranties set forth in the
Deed of Trust or otherwise, Trustor represents, covenants and warrants, with respect to Hazardous
Materials, as follows:
(a) Neither Trustor nor, to the best knowledge of Trustor, any other person, has ever
caused or permitted any Hazardous Materials to be manufactured, placed, held, located or disposed
of on, under or at the Property or any part thereof, and neither the Property nor any part thereof, or
any property adjacent thereto, has ever been used (whether by Trustor or, to the best knowledge of
Trustor, by any other person) as a manufacturing site, dump site or storage site (whether permanent
or temporary) for any Hazardous Materials. "Hazardous Materials" for purposes of this Paragraph
28(a) shall not include substances typically used in the ordinary course of developing, operating and
maintaining apartment complexes, provided that such substances are used in accordance with all
applicable laws.
(b) Trustor hereby agrees to indemnify Beneficiary, its officers, employees, contractors
and agents, and hold Beneficiary, its officers, employees, contractors and agents harmless from and
against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every
kind whatsoever paid, incurred or suffered by, or asserted against Beneficiary, its officers,
employees, contractors or agents for, with respect to, or as a direct or indirect result of, the presence
or use, generation, storage, release, threatened release or disposal of Hazardous Materials on or
under the Property or the escape, seepage, leakage, spillage, discharge, emission or release of any
Hazardous Materials from the Property (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under CERCLA, any so-called
"Superfund" or "Superlien" law, or any other federal, state or local statute, law, ordinance, code,
rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct
concerning any Hazardous Materials) regardless of whether or not caused by or within the control of
Trustor. The foregoing indemnification shall not apply to any liability resulting from (i) an event
8
that occurs after a transfer of the Property due to any foreclosure sale (judicial or nonjudicial) or a
deed in lieu of foreclosure, or (ii) acts or omissions of Beneficiary or its agents.
(c) Trustor has not received any notice of (i) the happening of any event involving the
use, spillage, discharge, or cleanup of any Hazardous Materials ("Hazardous Discharge") affecting
Trustor or the Property or (ii) any complaint, order, citation or notice with regard to air emissions,
water discharges, noise emissions or any other environmental, health or safety matter affecting
Trustor or the Property ("Environmental Complaint") from any person or entity, including, without
limitation, the United States Environmental Protection Agency ("EPA"). If Trustor receives any
such notice after the date hereof, then Trustor will give, within seven (7) business days thereafter,
oral and written notice of same to Beneficiary.
(d) Without limitation of Beneficiary's rights under this Deed of Trust, Beneficiary shall
have the right, but not the obligation, to enter onto the Property or to take such other actions as it
deems necessary or advisable to clean up, remove, resolve or minimize the impact of, or otherwise
deal with, any such Hazardous Materials or Environmental Complaint upon its receipt of any notice
from any person or entity, including without limitation, the EPA, asserting the existence of any
Hazardous Materials or an Environmental Complaint on or pertaining to the Property which, if true,
could result in an order, suit or other action against Trustor affecting any part of the Property by any
governmental agency or otherwise which, in the sole opinion of Beneficiary, could jeopardize its
security under this Deed of Trust. All reasonable costs and expenses incurred by Beneficiary in the
exercise of any such rights shall be secured by this Deed of Trust and shall be payable by Trustor
upon demand together with interest thereon at a rate equal to the highest rate payable under the note
secured hereby.
(e) The foregoing representation, covenants, indemnities and warranties shall be
continuing and shall be true and correct for the period from the date hereof to the release of this
Deed of Trust (whether by payment of the indebtedness secured hereby or foreclosure or action in
lieu thereof), and these representations, covenants, indemnities and warranties shall survive such
release.
(29) Each successor owner of an interest in the Property other than through foreclosure or deed in
lieu of foreclosure of an interest superior to this Deed of Trust, shall take its interest subject to this
Deed of Trust.
(30) This Deed of Trust shall be governed by and construed in accordance with the laws of the State
of California.
(31) Trustor 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, sexual orientation, marital status, national origin, ancestry, familial status,
source of income or disability in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the Property, nor shall Trustor or any person claiming under or through it establish or
permit any such practice or practices of discrimination or segregation of any person or group of
persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government
Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of
9
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, with reference to
the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the Property. The foregoing covenants shall run with the land.
(32) Trustor shall refrain from restricting the rental, lease and sale of the Property and any
dwelling unit thereon on the basis of race, color, creed, religion, sex, sexual orientation, marital
status, national origin, ancestry, familial status, source of income or disability of any person. All
such deeds, leases or contracts for the rental, lease or sale of the Property or any dwelling unit, shall
contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) Deeds. In deeds "The grantee herein 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, religion, sex, sexual
orientation, disability, medical condition, familial status, source of income, 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 itself or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or segregation with reference to
the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the land herein conveyed. The foregoing covenants shall run with the land."
(b) Leases. In leases "The lessee herein covenants by and for itself, its successors and
assigns, and all persons claiming under or through them, 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, religion, sex, sexual orientation, disability,
medical condition, familial status, source of income, marital status, national origin or
ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or
enjoyment of the land herein leased, nor shall lessee itself, or any person claiming
under or through it, establish or permit such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of
tenants, lessees, sublessees, subtenants or vendees in the land herein leased."
(c) Contracts. In contracts for the rental, lease or sale of the Property or any dwelling
unit "There shall be no discrimination against or segregation of any person or group of persons on
account of race, color, religion, sex, sexual orientation, disability, medical condition, familial status,
source of income, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming
under or through it, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees of the land."
(33) All individuals signing this Deed of Trust for a party which is a corporation, limited liability
company, partnership or other legal entity, or signing under a power of attorney, or as a trustee,
guardian, conservator, or in any other legal capacity, covenant to the Beneficiary that they have the
10
necessary capacity and authority to act for, sign and bind the respective entity or principal on whose
behalf they are signing.
TRUSTOR:
T & T Community Properties, LLC, a California limited liability company
By:
Print Name:
Its:
Exhibit "D"
Declaration of Covenants, Conditions and Restrictions
35
NO CHARGE ON THIS DOCUMENT
PER CALIFORNIA GOVERNMENT
CODE SECTION 6103
Recording Requested By
And When Recorded Mail To:
the City of National the City
1243 National the City Boulevard
National the City, CA 91950-4397
DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
(TENANT RESTRICTIONS)
THIS DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
("Declaration") is dated as of the day of , 2011, by T & T Community Properties,
LLC, a California limited liability company ("Declarant") in connection with that certain parcel of
real property ("Property") located in the City of National the City, County of San Diego, California,
described in Exhibit "A" attached hereto and incorporated herein by reference.
RECITALS
A. Concurrently with the recordation of this Declaration, the City of National City
("City") is funding a loan ("Loan") secured by a deed of trust ("Deed of Trust") on the Property, as
described in that certain Acquisition, Rehabilitation and Permanent Financing Loan Agreement
dated as of July , 2011 ("Agreement").
B. The Agreement and Deed of Trust were conditioned by the City in part upon the
recordation of a document setting forth certain restrictions upon the use and sale of the Property.
Declarant shall rehabilitate the entire eight (8) dwelling unit affordable housing project (the
"Project"). One of the eight (8) units will be occupied as a manager's unit, but will be rent and
occupancy restricted as set forth herein.
NOW, THEREFORE, Declarant hereby declares that the Property shall be subject to the
covenants, conditions and restrictions set forth below:
1. Restrictive Covenants. Declarant agrees and covenants on behalf of itself and its successors
and assigns, and each successor in interest to the Property, that at all times during the term of this
Declaration set forth herein eight (8) residential units at the Project shall be set aside and reserved as
"Affordable Units." As used herein the term "Affordable Units" shall refer to the eight (8)
residential units in the Project which are owned or held available strictly in accordance with the
terms and conditions set forth below.
(a) Affordable Unit and HOME Unit Restrictions. The following restrictions shall apply
to the eight (8) Affordable Units, including the seven (7) floating Affordable HOME Units ("HOME
1
Units") restricted pursuant to the HOME Program, shall be restricted as set forth herein. The
restrictions set forth in the Table below shall establish the maximum rental rate, from which a utility
allowance as approved by the City shall be deducted: Number of Affordable Units (Column 1); Unit
Type (Column 2); Maximum Rents as Percentage of AMI (Column 3); Number of HOME Units
(Column 4); Limit in Income of Eligible Tenants based upon percentage of the Median Area Income
(Column 5); Years of Restriction (Column 6):
TABLE OF RENT AND INCOME RESTRICTION CRITERIA.
2'
NUMBER OF
AFFORDABLE
UNITS
UNIT TYPE
MAXIMUM RENTS
AS %AGE OF AMI
NUMBER OF HOME
UNITS
MAXIMUM % OF
AREA MEDIAN
INCOME OF
ELIGIBLE TENANTS
YEARS OF RENT
RESTRICTION
3
2-Bedroom
30% of 50%
3***
50%
55***
4
2-Bedroom
30% of 60%
4***
60%
55***
1*
2-Bedroom
30% of 80%
0***
TOTAL
AFFORDABLE
UNITS
TOTAL HOME UNITS
80%
55***
8
7***
* Manager's Unit
* * * The HOME Units will be restricted for fifteen (15) years under the HOME -Program. From year
16 through year 55, the Affordable Units that were previously restricted as HOME Units will
continue to be subject to the restrictions set forth herein.
(b) "Eligible Tenants" are those tenants whose aggregate gross annual income does not
exceed the respective percentages set forth in the table above of annual median income, as adjusted
for family size. For purposes of this Declaration, the current annual median income shall be the
median income deemed by the Department of Housing and Urban Development ("HUD") as the then
current median income for the San Diego Standard Metropolitan Statistical Area, established
periodically by HUD and published in the Federal Register, as adjusted for family size. The rents
and the occupancy restrictions shall be deemed adjusted, from time to time, in accordance with any
adjustments that are authorized by HUD or any successor agency. In the event HUD ceases to
publish an established median income as aforesaid, the City may, in its sole discretion, use any other
reasonably comparable method of computing adjustments in median income or HOME Program
rents. Notwithstanding anything contained herein to the contrary, to the extent any other restrictions
applicable to the Property limit the rent and/or occupancy of the Property, the most restrictive shall
apply.
(c) An adjustment of rents may be performed annually in accordance with the rents
contained in the applicable the City or HUD rent schedules published by the City based upon the
HUD determined median income for the San Diego Standard Metropolitan Statistical Area for the
affected unit type and updated from time to time. However, in no event shall the rents, as adjusted,
2
exceed the maximum HOME rents for HOME Affordable Units. Further, the rents charged shall be
further limited as set forth in Section 14, hereof.
2. Affordable Marketing Plan Compliance. Eligible Tenants shall be described in Declarant's
approved Affirmative Marketing Plan and Declarant shall comply with the terms of its approved
Affirmative Marketing Plan, renting to those person(s) referenced in said approved plan, as may be
amended from time to time. Provided, however, nothing herein shall restrict Declarant from
screening tenants through the application of criteria which is lawful and customary in apartment
management in San Diego County and otherwise consistent with federal, state and local regulations
and restrictions related to the financing for the Property.
3. Determination; Annual Requalification. On the July 1 immediately following the calendar
year in which rehabilitation of the Affordable Units is completed, and annually on July 1 of each
year thereafter during the term of this Declaration, Declarant shall certify to the City under penalty
of perjury, utilizing such forms and providing such backup documentation as the City may require,
that Declarant is complying with all provisions of this Declaration. Failure to complete the annual
certification process described in this Section 3 within fifteen (15) days of receipt of written notice
from the City shall constitute a material default under this Declaration. the City may resort to the
remedies set forth herein upon such material default, as well as any and all other remedies available
at law or in equity or contained in the Agreement or Deed of Trust.
4. Relationship with Declarant. The term "Eligible Tenant" shall not include Declarant or any
individuals who are partners or shareholders in Declarant or in any entity having an interest in
Declarant or in the Property, or officer, employee, agent or consultant of the owner, developer or
sponsor.
5. No Student Dependents. No Affordable Unit shall be occupied or leased to any person who
is a full-time student, or a household comprised exclusively of persons who are full-time students,
unless such persons are married and eligible to file a joint federal income tax return. The term "full-
time student" shall be defined as any person who will be or has been a full-time student during five
calendar months of the calendar year in question at an educational institution (other than a
correspondence school) with regular faculty and students and or a student dependent as defined in
the U.S. Internal Revenue Code, unless the taxpayer (upon whom the student in question is
dependent) resides in the same dwelling unit.
6. Income of Co -Tenants. The income of all co -tenants and/or non-dependent occupants shall
be taken into account in determining whether a household is an Eligible Tenant hereunder.
7. Over Income Tenants. In the event that a tenant who was properly certified as an Eligible
Tenant at the commencement of such tenant's occupancy ceases to be eligible, for any reason other
than the tenant being over income, Tenant shall give sixty (60) days written notice to such tenant to
vacate the Affordable Unit. The vacated Affordable Unit shall thereafter be rented to an Eligible
Tenant. Notwithstanding anything to the contrary in this Declaration, no occupant of a HOME
Program Affordable Unit or Affordable Unit who previously and properly qualified as an Eligible
Tenant shall be evicted by Declarant because such occupant fails to requalify as an Eligible Tenant,
because such occupant exceeds the income limits set forth above, as in the case of increased income,
3
except as provided for in Section 92.252 of the Code of Federal Regulations, as amended from time
to time. Rather, the next available unit shall be designated as a HOME Program Affordable Unit or
Affordable Unit to replace the Unit of the occupant in question. Further, subject to the fair market
limitations set forth in HOME Regulation 92.252, such occupant shall commence paying rent equal
to 30% of such occupant's adjusted income, effective from and after the date of such failure to
requalify. The over -income tenant shall continue to be considered an Eligible Tenant until evicted,
provided this continued occupancy complies with the applicable regulations as referenced below,
depending upon the sources of funds involved:
(a) Non -HOME Funds. A tenant who occupies an Affordable Unit that is not a HOME
Affordable Unit and who becomes over income at the time of recertification shall be given one
hundred eighty (180) days notice to vacate the affordable unit, effective from and after the date of
such failure to requalify (i.e., the recertification date, provided the tenant was properly certified
originally). During the time the over -income tenant resides in the Affordable Unit, the tenant shall
continue to pay the restricted rent. The tenant shall continue to be considered an "Eligible Tenant"
until evicted, provided this continued occupancy complies with this Declaration.
(b) HOME Program Funds. When a HOME Eligible Tenant's gross income exceeds the
"low income" definition as defined in CFR 92.252(i), then the tenant shall commence paying rent
equivalent to thirty percent (30%) of the tenant's adjusted income, subject to the fair market rent
ceiling as set forth in HOME Regulation 92.252(i) and the next available comparable sized and
configured unit shall be designated as a HOME Affordable Unit. The tenant shall continue to be
considered an Eligible Tenant, provided this continued occupancy otherwise complies with all
applicable HOME Program requirements.
8. Physical Condition of Affordable Units. After completion of rehabilitation of the Project,
Declarant shall continually maintain the Affordable Units in a condition which satisfies the Housing
Quality Standards promulgated by HUD under its Section 8 Program, as such standards are
interpreted and enforced by the City under its normal policies and procedures. the City shall have
the right to inspect the Affordable Units from time to time, on reasonable notice and at reasonable
times, in order to verify compliance with the foregoing maintenance covenant. Further, each
Affordable Unit shall be requalified annually, as to the foregoing maintenance covenant, as part of
the annual tenant requalification process described in Section 3, above. Any deficiencies in the
physical condition of an Affordable Unit shall be corrected by Declarant at Declarant's expense
within thirty (30) days of the identification of such deficiency by the City and delivery of written
notice of the same to Declarant.
9. City Monitoring Functions. It is contemplated that, during the term of this Declaration, the
City will perform the following monitoring functions: (a) preparing and making available to
Declarant any general information that the City possesses regarding income limitations and
restrictions which are applicable to the Affordable Units; (b) reviewing the documentation submitted
by Declarant in connection with the annual certification process for Eligible Tenants described in
Section 3, above; and (c) inspecting the Affordable Units to verify that they are being maintained in
accordance with Section 8, above. Notwithstanding the foregoing description of the City's
functions, Declarant shall have no claim or right of action against the City based on any alleged
4
failure to perform such function, except that Declarant may reasonably rely upon the City's tenant
eligibility determination.
10. Designation of Affordable HOME Units. The HOME Units will be designated prior to initial
occupancy at the discretion of the City. Such designations may be changed by Declarant, provided
that the units before and after the change in designation are of the same unit types, size, features and
otherwise comply with the terms of 24 C.F.R. §92.252(j).
11. Compliance with HOME Regulations. Declarant shall comply with all regulations, policies
and procedures promulgated by HUD, or by the City in connection with the HOME Program, under
which the Loan is being made to Declarant. Declarant's failure to so comply shall constitute a
material default hereunder, entitling the City to the remedies set forth in Section 23, below.
12. Lease Provisions. Declarant agrees that it will include in all of its leases and cause its
successors in interest to include in all of their leases, all provisions required under the terms of the
HOME Program, including the following provisions:
(a) Additional Lease Provisions/Annual Income Verification. Lessee agrees,
upon written request from the landlord or the City of National the City ("the City"),
to certify under penalty of perjury the accuracy of all information provided in
connection with the examination or reexamination of annual income of the tenant's
household. Further, tenant agrees that the annual income and other eligibility
requirements are substantial and material obligations of the tenancy and that the
tenant will comply promptly with all requests for information with respect to the
tenancy from the landlord and/or the City. Further, tenant acknowledges that
tenant' s failure to provide accurate information regarding such requirements
(regardless of whether such inaccuracy is intentional or unintentional) or the refusal
to comply with the request for information with respect thereto, shall be deemed a
violation of this lease provision, and a material breach of the tenancy and shall
constitute cause for immediate termination of the tenancy.
(b) Term of Lease for HOME Program Restricted Units. LESSEE has been made
aware by Landlord that the unit being leased was assisted with HOME funds. Under
the provisions of 24 C.F.R. §92.253, a lease must be for a period of not less than one
(1) year unless the parties agree by mutual agreement that the term of the lease be
less. The Lessee acknowledges by initialing in the space below that it has been made
aware of the provisions of 24 C.F.R. §92.253.
13. Successors Bound. Declarant covenants, for itself and its successors and assigns, not to sell,
transfer, assign or otherwise dispose of ownership of the Property, without the express written
consent of the City. Any prospective purchaser, transferee or assignee shall expressly promise in
writing to be bound by all of the provisions hereof, including the covenant in this Section 13 to
require successors to expressly assume the obligations herein. It is expressly acknowledged that the
covenants and restrictions set forth herein shall survive any repayment of the Loan. Further, the
obligations of Declarant hereunder shall be deemed independent of Declarant's obligations under the
Loan.
5
14. Maximum Rent To Be Collected by Declarant. In no event, shall all of the rent paid by the
Eligible Tenant for any rent restricted unit exceed the amount of rent set forth in the table in Section
1(a), above. Should Declarant receive rent from a tenant in excess of the allowable maximum rent
set forth in the table in Section 1(a), above, Declarant agrees to immediately notify the City and
reimburse the City for any such overpayment. Acceptance by Declarant or its successors in interest,
of rent in excess of the maximum rent set forth in the table in Section 1(a), above, shall constitute a
material breach of this Declaration and the Agreement.
15. Cross Default: Occupancy Schedule for Affordable Units. A default under the Agreement,
including without limitation failure to make the annual loan payments to the City as set forth in the
Agreement, shall be a material default under this Declaration. The Affordable Units shall be
rehabilitated and receive final inspection approval and shall be occupied by Eligible Tenants no later
than six (6) months after the Closing, as defined in the Agreement. Time is of the essence in the
rehabilitation and occupancy of the Affordable Units.
16. Term. This Declaration and the covenants and restrictions contained herein shall be effective
upon the completion of the rehabilitation of the Project and shall remain in full force and effect for a
period of fifty-five (55) years from their effective date.
17. Covenant Against Discrimination. Declarant covenants on behalf of itself and its successors
and assigns, and each successor in interest to the Property, not to discriminate against any purchaser
or prospective purchaser of any Affordable Unit on the basis of their race, age, sexual orientation,
marital status, color, religion, sex, handicap, or national origin, as referenced in all applicable state,
local and federal law.
18. Enforcement. Declarant expressly agrees and declares that the City or any successor public
agency is a proper party and shall have standing to initiate and pursue any and all actions or
proceedings, at law or in equity to enforce the provisions hereof and/or to recover damages for any
default hereunder, notwithstanding the fact that such damages or the detriment arising from such
default may have actually been suffered by some other person or the public at large. Further, the
City or any successor public agency shall be the proper party to waive, relinquish, release or modify
the rights, covenants, obligations or restrictions contained in or arising under this Declaration.
19. Attorneys' Fees. In the event that any litigation for the enforcement or interpretation of this
Declaration, whether an action at law or arbitration or any manner of non judicial dispute resolution
to this Declaration by reason of the breach of any condition or covenant, representation or warranty
in this Declaration, or otherwise arising out of this Declaration, the prevailing party in such action
shall be entitled to recover from the other reasonable attorneys' fees to be fixed by the court which
shall render a judgment, as well as the costs of suit.
20. Severability. In the event that any provision or covenant of this Declaration is held by a
court of competent jurisdiction to be invalid or unenforceable, then it shall be severed from the
remaining portions of this Declaration which shall remain in full force and effect.
6
21. Covenants to Run With the Land. The covenants contained herein shall constitute
"covenants running with the land", and shall bind the Property and every person having an interest
therein during the term of this Declaration. Declarant agrees for itself and its successors that, in the
event that, for any reason whatsoever, a court of competent jurisdiction determines that the
foregoing covenants do not run with the land, such covenants shall be enforced as equitable
servitudes against the Property.
22. Recordation; Waiver and Amendment. This Declaration shall be recorded in the Office of
County Recorder of San Diego, California. No provision of this Declaration, or breach of any
provision, can be waived except in writing. Waiver of any provision or breach shall not be deemed
to be a waiver of any other provision, or of any subsequent breach of the same or other provision.
Except as otherwise provided herein, this Declaration may be amended, modified or rescinded only
in writing signed by Declarant and the City.
23. Remedies.
(a) Contract Governed by Laws of State of California. This Declaration, its performance,
and all suits and special proceedings under this Declaration, shall be constituted in accordance with
the laws of the State of California and Federal law, to the extent applicable. In any action, special
proceeding, or other proceeding that may be brought arising out of, under or because of this
Declaration, the laws of the State of California and the United States, to the extent applicable, shall
govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which the
action or special proceeding may be instituted.
(b) Standing, Equitable Remedies; Cumulative Remedies. Declarant expressly agrees
and declares that the City or any successor or public agency shall be the proper party and shall have
standing to initiate and pursue any and all actions or proceedings, at law or in equity, to enforce the
provisions hereof and/or to recover damages for any default hereunder, notwithstanding the fact that
such damages or the detriment arising from such a default may have actually been suffered by some
other person or by the public at large. Further, Declarant expressly agrees that receivership,
injunctive relief and specific performance are proper pre-trial and/or post -trial, remedies hereunder,
and that, upon any default, and to assure compliance with this Declaration. Nothing in this
subparagraph, and no recovery to the City, shall restrict or limit the rights or remedies of persons or
entities other than the City, against Declarant in connection with the same or related acts by
Declarant. The remedies set forth in this Section are cumulative and not mutually exclusive, except
the extent that their award is specifically determined to be duplicative by final order of a court of
competent jurisdiction.
(c) Remedies at Law for Breach of Tenant Restrictions. In the event of any material
default under Sections 1 through 22 hereof regarding restrictions on the operation and the transfer of
the Property and the expiration of any applicable cure period provided under the Agreement, the
City shall be entitled to, in addition to any and all other remedies available at law or in equity: (i)
declare the Loan to be all due and repayable; and (ii) recover compensatory damages. If the default
in question involves the collection of rents in excess of the rents permitted hereunder, the amount of
such compensatory damages shall be the product of multiplying: (a) the number of months that the
default in question has continued until the time of trial by (b) the result of subtracting the rents
7
properly chargeable hereunder for the Affordable Units in question from the amount actually
charged for those Affordable Units. Declarant and the City agree that it would be extremely difficult
or impracticable to ascertain the precise amount of actual damages accruing to the City as a result of
such a default and that the foregoing formula is a fair and reasonable method of approximating such
damages. the City shall be entitled to seek and to recover damages in separate actions for successive
and separate breaches which may occur. Further, interest shall accrue on the amount of such
damages from the date of the breach in question at the rate of ten percent (10%) per annum or the
maximum rate than allowed by law, whichever is less. Nothing in this section shall preclude the
award of exemplary damages as allowed by law.
(d) Expert Witness, Attorneys' Fees, and Costs. The parties agree that the prevailing
party in litigation for the breach and/or interpretation and/or enforcement of the terms of this
Declaration and/or the Agreement shall be entitled to their expert witness fees, if any, as part of their
costs of suit, and reasonable attorneys' fees as may be awarded by the court, pursuant to California
Code of Civil Procedure ("CCP") §1033.5 and any other applicable provisions of California law,
including, without limitation, the provisions of CCP §998.
24. Mortgagees Protection. No violation or breach of the covenants, conditions, restrictions,
provisions or limitations contained in this Declaration shall defeat or render invalid or in any way
impair the lien or charge of any permitted deed of trust recorded on the Property provided, however,
that any subsequent owner of the Property shall be bound by the covenants, conditions, restrictions,
limitations and provisions of this Declaration, whether such owner' s title was acquired by
foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise.
25. City Approval of Property Manager. At all times that this Declaration is in force and effect,
and the City has served a thirty (30) day written notice of deficiencies in the property management
for the Property which do not conform to the standards of property management of a professional
property manager operating similar properties in San Diego County and which deficiencies have not
been rectified by Declarant, within the thirty (30) day period (unless such deficiency is not
reasonably capable of being cured within such thirty (30) day period, then such reasonable amount
of time as is needed not to exceed ninety (90) days, provided Declarant commences cure within such
thirty (30) day period and continues to diligently pursue cure), then, the City shall have the right, in
its reasonable discretion, and upon thirty (30) days written notice: (i) to require the retention of a
professional property management firm to manage the Property; (ii) to approve, in advance and in
writing, the retention of any such property management firm, including the terms of the contract
governing such retention; and (iii) to require Declarant to terminate any such property management
firm, provided that such termination shall comply with the termination provisions of the
management contract in question. Declarant shall cooperate with the City to effectuate the City's
rights.
26. Declarant Required to Pay Monitoring Fees. Declarant shall pay the City a set-up fee (the
"Set -Up Fee") in the amount of Five Hundred Dollars ($500.00) which shall be paid by Declarant to
the City at closing of the Loan. Declarant shall pay to the City an annual monitoring fee, as
determined by the City in schedules printed by the City from time to time. Said fee shall be subject
to revision annually, based upon the increase in the Consumer Price Index for the San Diego
Metropolitan Area. Each year the Monitoring Fees shall be increased based upon the percentage of
8
increase in the Cost of Living as referenced in the Consumer Price Index for the San Diego
Metropolitan Area. In no event, shall the monitoring fees decrease, however, The schedule of
monitoring fees may be requested from the City. No fees shall be due and payable for any of the
HOME Units, however. Annual Monitoring Fees shall be paid to the City annually within ten (10)
days after the City provides a written invoice for the same. Failure to timely pay such fees shall
constitute a material default under the terms and conditions of the Agreement and this Declaration.
Both the Set -Up Fee and the Loan Monitoring Fee shall be paid to the City as a consideration for the
lending of funds by the City to Declarant.
27. No Conversion to Condominiums. Declarant agrees during the term of this Declaration, that
Declarant shall not, and shall not allow any other person to, cause all or any portion of the Property
to be converted to condominiums or to otherwise allow a condominium map or condominium plan to
be recorded or filed against all or any portion of the Property. Declarant further agrees that the
conversion of all or any portion of the Property to condominiums and/or the recordation or filing of a
condominium map or condominium plan against all or any portion of the Property during the term of
this Declaration, shall be a breach of this Declaration, the Agreement, the Note, as defined in the
Agreement, and the Deed of Trust, entitling the City to immediately exercise any and all of its rights
and remedies under this Declaration, the Agreement, Note and Deed of Trust, including without
limitation acceleration of the Note and foreclosure under the Deed of Trust.
28. Noticing Requirements Prior to Termination. Prior to termination of this Declaration,
Declarant shall comply with any and all noticing requirements required under any applicable laws or
regulations, including without limitation, the requirements of California Government Code Sections
65863.10 and 65863.11.
29. No Further Encumbrance. Should Declarant agree to or actually sell, convey, transfer,
further encumber or dispose of the Property or any interest in it (or obtain any other funds with
respect to the Property or Declarant's activities at the Property, regardless of whether the source),
without first obtaining the written consent of the City, shall be a material breach of this Declaration.
The consent to one transaction of this type will not constitute a waiver of the right to require
consent to future or successive transactions. This Declaration shall remain in effect for its fifty-five
(55) year term, whether or not the City approves or disapproves a successor -in -interest or further
encumbrance.
30. Indemnity. Declarant shall be responsible for all injuries to persons and/or all damages to
real or personal property of the City or others, caused by or resulting from the sale, rental, ownership
or operation of the Property, the negligence and/or breach of this Declaration, of itself, its
employees, subcontractors and/or its agents during or arising out of rehabilitation of the Affordable
Units, Declarant shall defend and hold harmless and indemnify the City, and all of its officers and
employees from and against all claims, liens, claims of lien, losses, damages, judgments, costs, and
expenses, whether direct or indirect, arising in any way from (i) the sale, rental, ownership or
operation of the Property, including without limitation the Affordable Units; (ii) Declarant's
negligence; (iii) breach of this Declaration, by Declarant, its employees, subcontractors and/or its
agents; and/or (iv) arising out of the rehabilitation of the Affordable Units, except those arising from
the sole negligence or willful misconduct of the City.
9
31. Signature Authority. All individuals signing this Declaration for a party which is a
corporation, limited liability company, partnership or other legal entity, or signing under a power of
attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the City
that they have the necessary capacity and authority to act for, sign and bind the respective entity or
principal on whose behalf they are signing.
DECLARANT:
T & T Community Properties, LLC, a California limited liability company
By:
Print Name:
Its:
10
Exhibit "E"
Statement of Insurance Requirements
36
STATEMENT OF
INSURANCE REQUIREMENTS
(Including All Successors and Assigns of Borrower)
Borrower acknowledges the receipt of these insurance requirements and agrees to maintain in fall
force and effect, the following policies at Borrower's sole cost and expense during the term of the
Declaration of Covenants, Conditions and Restrictions being made by Borrower with respect to a
loan from the City of National City ("City"). All insurance policies shall contain a provision
requiring thirty (30) days advance written notice to the City of cancellation. Borrower agrees to
maintain the following insurance coverages:
1. Required Insurance. To at all times provide, maintain and keep in force at Borrower's sole
expense the following policies of insurance:
(a) Insurance against loss or damage to the Improvements by fire and any of the
risks covered by insurance of the type now known as "fire and extended coverage" including
endorsement designating City as a Loss Payee, in an amount no less than the original amount of the
Note plus any senior liens or encumbrances or the full replacement cost of the Improvements,
including the cost of debris removal (exclusive of the cost of excavations, foundations and footings
below the lowest basement floor), whichever is greater, and with not more than One Thousand
Dollars ($1,000.00) deductible from the loss payable for any casualty. The policies of insurance
carried in accordance with this subparagraph (a) shall contain the "Replacement Cost
Endorsements";
(b) Business interruption insurance and/or loss of"rental value" insurance in such
amounts as are satisfactory to the City;
(c) Auto liability and comprehensive general public liability insurance, including
coverage for elevators and escalators, if any, on the Property insuring against claims for "personal
injury", including, without limitation, bodily injury, death or property damage occurring on, in or
about the Property and the adjoining streets, sidewalks and passageways, such insurance to afford
immediate minimum protection to a limit of not less than a project specific One Million Dollars
($1,000,000.00) Per Occurrence, Combined Single Limit with Two Million Dollar ($2,000,000.00)
Aggregate Limit, with respect to personal injury or death to any one or more persons or damage to
property (as that amount may be increased from time to time by the City in its reasonable
discretion). General Liability policy must endorse and designate City and the City of National City
as Additional Insureds. Liability Additional Insured Endorsement must be primary, must not exclude
Completed Operations, and must be endorsed to include a Ten (10) year extended reporting period;
1
(d) Workers' compensation insurance (including employer's liability insurance, if
requested by the City) for all employees of Borrower engaged on or with respect to the Property in
such amount as is reasonably satisfactory to the City, or if such limits are established by law, in such
amounts;
(e) During the course of any construction or repair of Improvements on the
Property, builder's completed value risk insurance against "all risks of physical loss", including
collapse and transit coverage, during construction of such Improvements, with deductibles not to
exceed Ten Thousand Dollars ($10,000.00), in non -reporting form, covering the total value of work
performed and equipment, supplies and materials furnished. The City shall be endorsed as a Loss
Payees. Said policy of insurance shall contain the "permission to occupy upon completion of work
or occupancy" endorsement;
(f) Boiler and machinery insurance covering pressure vessels, air tanks, boilers,
machinery, pressure piping, heating, air conditioning, and elevator equipment and escalator
equipment provided the Improvements contain equipment of such nature, and insurance against loss
of occupancy or use arising from breakdown of any of the items referred to in this subparagraph (f),
in such amounts as are reasonably satisfactory to the City;
(g) Insurance against flood damage, including surface waters, if the Property is
located in an area considered a flood risk by the United State Department of Housing and Urban
Development;
(h) Insurance against loss or damage to the Personal Property by fire and other
risks covered by insurance of the type now known as "fire and extended coverage"; and
(i) Such other insurance (including, but not limited to, earthquake insurance), and
in such amounts, as may from time to time be required by the City against the same or other hazards,
provided such additional insurance is available at commercially reasonable rates.
(j) Pollution Liability insurance — project specific limits
(k) Excess Liability Insurance
(1) Professional Liability / E&O (design professionals, etc) — project specific
limits
All policies of insurance required by the terms of the Deed of Trust shall contain an
endorsement or agreement by the insurer that any loss shall be payable in accordance with the terms
of such policy, notwithstanding any act or negligence of Borrower which might otherwise result in
forfeiture of said insurance, and the further agreement of the insurer waiving all rights of setoff,
counterclaim or deductions against Borrower.
2
2. Delivery of Policies, Payment of Premiums. All policies of insurance shall be issued by
companies admitted to issue insurance policies in the State of California, and rated AV or better by
AM Best, and in amounts in each company satisfactory to the City. All policies of insurance shall
have attached thereto a lender's loss payable endorsement for the benefit of the holder of the first
priority deeds of trust on the property and improvements, and then for the benefit of the City in form
satisfactory to the City. Borrower shall furnish the City with an original copy of all policies of
required insurance. At least thirty (30) days prior to the expiration of each such policy, Borrower
shall furnish the City with evidence satisfactory to the City of the payment of premium and the re -
issuance of a policy continuing insurance in force as required by the Deed of Trust. All such
policies shall contain a provision that such policies will not be canceled or materially amended,
which terms shall include any reduction in the scope of limits of coverage, without at least thirty
(30) days prior written notice to the City. In the event Borrower fails to provide the policies of
insurance required by the Deed of Trust, the City may procure such insurance or single -interest
insurance for such risks covering the City' s interest, and Borrower will pay all premiums thereon
promptly upon demand by the City, and until such payment is made by Borrower the amount of all
such premiums, together with interest thereon at the rate of ten percent (10%) per annum or the
maximum rate allowed by law, whichever is less.
In the event any lender, who has a secured interest in the Property, requires additional
insurance and/or insurance with greater coverages than that required by this Statement of Insurance
Requirements, Borrower agrees to provide to and name the City on such policies providing greater
and additional coverages.
Borrower, by execution of this Statement of Insurance Requirements, agrees to provide the
required insurance during the term of the loan and to require all successors in interest to agree to
provide such coverages for the benefit of the City. Borrower acknowledges that performance of the
covenants contained herein are a material inducement to making the loan to Borrower.
3. Signature Authority. All individuals signing this Statement of Insurance Requirements for
a party which is a corporation, limited liability company, partnership or other legal entity, or signing
under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity,
covenant to the City that they have the necessary capacity and authority to act for, sign and bind the
respective entity or principal on whose behalf they are signing.
Dated as of the day of , 2011.
Borrower:
T & T Community Properties, LLC, a California limited liability company
By:
Print Name:
Its:
3
Exhibit "F"
Security Agreement
37
SECURITY AGREEMENT
THIS SECURITY AGREEMENT
, 2011, by and between T & T
liability company ("Borrower") and the City
collectively referred to as the "Parties."
("Agreement") is dated as of the day of
Community Properties, LLC, a California limited
of National City ("City"). City and Borrower are
RECITALS:
A. The City has agreed to loan up to Seven Hundred Seventeen Thousand Five Hundred
and No/100 Dollars ($717,500.00) to Borrower ("Loan") pursuant to that certain "Acquisition,
Rehabilitation and Permanent Financing Loan Agreement" dated as of July , 2011 (the "Loan
Agreement"). The Loan is secured by a deed of trust ("Deed of Trust") on certain real property (the
"Property") owned by Borrower more particularly described in the Loan Agreement. The Loan is
evidenced by that certain Promissory Note Secured by Deed of Trust ("Note") of even date herewith,
executed by Borrower in favor of the City. The Loan Agreement, Note, Deed of Trust and this
Agreement may be referred to collectively herein as the "Loan Documents."
B. The Parties desire that the Loan and the Note should be further secured by certain
personal property owned by Borrower and the Property.
AGREEMENT
NOW, THEREFORE, for valid consideration, the Parties agree, pledge and covenant as
follows:
1. Grant of Security Interest. Borrower hereby grants to the City a security interest, in the
following described personal property ("Collateral"):
SEE EXHIBIT "1" ATTACHED HERETO FOR DESCRIPTION OF COLLATERAL
2. Attachment of Security Interest. The security interest hereby created shall attach
immediately upon execution of this Agreement by Borrower and shall secure the payment of the
Loan according to the terms of the Loan Agreement.
3. Proceeds Included. Borrower also hereby grants to the City a security interest in and to any
and all additions and modifications to, replacements and substitutions for, and products, proceeds,
and interest from the Collateral on any sale, transfer, exchange or other disposition thereof. How-
ever, nothing in this Paragraph 3 shall be deemed to constitute a grant of authority to Borrower to
sell, transfer, exchange or otherwise dispose of the Collateral without the prior written consent of the
City.
1
4. Warranties of Borrower. Borrower represents and warrants to the City that:
(a) Borrower is or will be the full legal owner of the Collateral and no other person or
entity has or will have any right, title, interest or claim in or to the Collateral or any part thereof,
except for the security interest created herein, or created pursuant to those certain deeds of trust
recorded as encumbrances against the property that are senior to the City' s deed of trust and that
were duly approved by the City, and/or security interests in the Collateral granted by Borrower with
the knowledge and approval of the City, in its reasonable discretion.
(b) Some or all of the Collateral is or will be located at the Property, and once so located,
it will not, during the continuance of this Agreement, be removed from the Property without the
prior written consent of the City. If the Collateral is moved or upon any default, which continues
beyond any applicable notice and cure periods, of this Agreement by Borrower, at the City's written
request, at its own cost and expense, shall assemble the Collateral wherever in San Diego County the
City requests the Collateral to be assembled.
5. Duty to Maintain. Borrower shall maintain the Collateral, and each part or item thereof, in
good order and repair at Borrower's own cost and expense, and shall not use the Collateral or allow
the Collateral to be used in a manner which is likely to result in deterioration of the Collateral to a
degree beyond that associated with normal usage and ordinary "wear and tear."
6. Insurance. Borrower shall keep the Collateral, and all parts and items thereof, insured, at
Borrower's own cost and expense, in an amount equal to the full replacement cost new value of the
Collateral, as such replacement value may vary from time to time. Such insurance policy shall cover
all insurable risks to which the Collateral might foreseeably be exposed, and shall be issued by an
insurance carrier acceptable to the City, and shall provide that the loss payable thereunder shall be
paid to Borrower, the City and to any senior secured party, as their respective interests may appear.
Notwithstanding the foregoing, this Paragraph 6 shall not be deemed to require a separate insurance
policy covering the Collateral, if equivalent coverage first satisfactory to the City is provided as part
of the insurance maintained by Borrower with respect to the Property as a whole.
7. Taxes. Borrower shall be solely liable for any taxes or assessments which are levied or
assessed against the Collateral and shall ensure the prompt payment of same.
8. Disposition of Collateral. Borrower shall not (without the prior written consent of the City),
sell, transfer, encumber, hypothecate, exchange or otherwise dispose of the Collateral until the Loan
secured hereby is fully and finally paid, except Borrower may replace items of collateral in the
ordinary course of business with items of equal or greater value.
9. Right to Inspect. The City, through its agents or employees, shall have the right, upon
reasonable notice, to enter the Property at reasonable times and intervals to inspect and take
inventory of the Collateral, provided the same does not unnecessarily infringe upon the operation of
the Property.
2
10. Right to Make Payments. The City shall be entitled, but not obligated, to pay, on behalf of
Borrower, after giving written notice to Borrower and ten (10) days from receipt of the notice in
which to make payment, any costs or expenses reasonably necessary to keep the Collateral fully
insured, properly repaired or maintained, and lien free, which costs or expenses Borrower should
have paid pursuant to this Agreement but failed to do so. Similarly, the City shall have the right to
enter the Property, upon reasonable notice to Borrower and its Eligible Tenants and at reasonable
times, and to perform such acts as it may deem necessary for the maintenance or protection of the
Collateral. Any monies expended or expenses incurred under this Paragraph 10 shall be secured by
the security interest created by this Agreement, and shall be due and payable to the City by
Borrower, together with interest thereon at the lesser of ten percent (10%) per annum or the
maximum rate permitted by law, on demand.
11. Assignment by City. The City may assign its rights hereunder and its security interest
created herein. In the event of such an assignment, the City's assignee shall be entitled, upon written
notice to Borrower of such assignment, to all performance required of Borrower under this
Agreement, and to all payments and monies secured by this Agreement.
12. Default. If Borrower fails to perform any obligation provided for in this Agreement or to pay
any obligation secured by this Agreement as such obligation comes due, after any notice or cure
periods provided herein or in any unexpired Loan Documents, then Borrower shall be in default of
this Agreement, and the City shall be entitled to all of the rights and remedies afforded secured
parties under applicable provisions of Division 9 of the California Commercial Code on the date of
this Agreement, excluding the right to any deficiency judgment against Borrower. Further, the City
may also:
(a) Enter the Property to take possession of the Collateral, provided that the Collateral
shall not be removed from the Real Property unless such removal is reasonably necessary to protect
the Collateral from destruction or unauthorized removal by Borrower or some third party; or
(b) Enter the Property and dispose of the Collateral, in the manner provided by the
California Commercial Code; and,
(c) Apply the proceeds of any such disposition of the Collateral, in addition to the items
specified in Division 9 of the California Commercial Code, to the payment of reasonable attorneys'
fees and legal expenses incurred by the City as a result of Borrower's default.
Before exercising any of the foregoing rights, the City shall first give written notice of such
default to Borrower, and Borrower shall have thirty (30) days from receipt of the notice to cure any
such default before the City exercises its rights.
13. Financing Statement. Immediately upon executing this Agreement, the Parties shall execute
any Financing Statement(s) necessary to perfect the security interest created by this Agreement.
Such Financing Statement(s) shall be on a form or forms approved by the California Secretary of
State, and the City shall pay the fees associated with filing such documents.
3
14. No Waiver. Neither the acceptance of any partial or delinquent payment by the City nor the
City's failure to exercise any of its rights or remedies upon the occurrence of a default by Borrower
shall constitute a waiver of such default, a modification of this Agreement or of Borrower's
obligations under this Agreement, or a waiver of any subsequent default by Borrower.
15. Term. This Agreement shall continue in effect until each and every obligation of Borrower
under the Loan Agreement has been satisfied (except any obligations that survive repayment of the
Loan, foreclosure of the Property or termination of the Loan Agreement), or until the Loan
Agreement has terminated by virtue of a foreclosure of a senior lienholder.
16. Time of Essence. Time is hereby expressly declared to be of the essence of this Agreement.
17. Notice. Notice hereunder shall be deemed given upon actual personal delivery to the notified
Party or upon the expiration of three (3) days from the insertion of the notice in a United States Mail
depository within California, or upon the expiration of seven (7) days from the insertion of the
notice, properly addressed and certified mail, return receipt requested, postage prepaid, in a United
States Mail depository outside of California. Notices shall be sent to the addresses of the Parties as
set forth below, or as changed by either party from time to time by written notice to the other Party.
City:
City of National City
1243 National City Boulevard
National City, CA 91950-4397
Borrower: T & T Community Properties, LLC
18. Certain Requirements Superior. All provisions of this Agreement shall be subject and
subordinate to:
(a) Any and all federal, state and local statutes and regulations applicable to the Property,
the Collateral or the Loan;
(b) The provisions of the Loan Agreement secured by this Agreement, to the extent of
any inconsistency between it and this Agreement; and
19. Attorneys' Fees. If either party initiates legal proceedings for the enforcement or
interpretation of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees
and costs of suit, in addition to any other relief to which such Party may be entitled.
20. Severability. If any provision of this Agreement is held to be invalid or unenforceable by a
court of competent jurisdiction, then such provision shall be severed from the rest of this Agreement
and the remaining provisions shall remain in full force and effect.
4
21. Construction of Agreement. The provisions contained in this Agreement shall not be
construed in favor of or against either party, but shall be construed as if both Parties prepared this
Agreement. This Agreement shall be construed in accordance with the laws of the State of
California.
22. Counterparts. This Agreement may be executed in any number of counterparts and, as so
executed, the counterparts shall constitute one and the same Agreement. The parties agree that each
such counterpart is an original and shall be binding upon all the parties, even though all of the
parties are not signatories to the same counterpart.
23. Exhibits and Recitals Incorporated. All exhibits referred to in this Agreement are hereby
incorporated in this Agreement by this reference, regardless of whether or not the exhibits are
actually attached to this Agreement. The Recitals to this Agreement are hereby incorporated in this
Agreement by this reference.
24. Signature Authority. All individuals signing this Agreement for a party which is a
corporation, limited liability company, partnership or other legal entity, or signing under a power of
attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the City
that they have the necessary capacity and authority to act for, sign and bind the respective entity or
principal on whose behalf they are signing.
BORROWER:
T & T Community Properties, LLC, a California limited liability company
By:
Print Name:
Its:
City:
City of National City
By:
Ron Morrison, Mayor
APPROVED AS TO FORM:
Christensen & Spath LLP, Special Counsel to the City
By:
Print Name:
Its:
5
Exhibit "G"
Unsecured Environmental Indemnity Agreement
38
UNSECURED ENVIRONMENTAL INDEMNITY AGREEMENT
THIS UNSECURED ENVIRONMENTAL INDEMNITY AGREEMENT ("Indemnity")
is dated as of the day of , 2011, by T & T Community Properties, LLC, a
California limited liability company ("Indemnitor"), to and for the benefit of the City of National
City ("City"), its successors and assigns and, to the extent not otherwise referenced, the Indemnified
Parties (as hereinafter defined).
RECITALS
A. The City has agreed to make a loan ("City Loan") to Indemnitor as described in that
certain Acquisition, Rehabilitation and Permanent Financing Loan Agreement between the City and
Indemnitor, dated as of July , 2011 ("City Loan Agreement") and that certain Promissory Note
made by Indemnitor in favor of the City, of even date herewith ("Promissory Note"), which City
Loan is secured by, among other things, a Deed of Trust executed by Indemnitor in favor of the City
("Deed of Trust"). The Deed of Trust encumbers the real property described on Exhibit A attached
hereto (the "Property").
B. It is a condition of the City making the City Loan that this Indemnity be executed and
delivered by Indemnitor. The City is making the City Loan in reliance upon this Indemnity.
C. This Indemnity is unsecured and is separate from the security and other collateral
being delivered by Indemnitor in connection with the making of the City Loan,
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the City making the City
Loan, and other valuable consideration, the receipt of which is hereby acknowledged, Indemnitor
agrees as follows:
1. Indemnity.
(a) Subject to Sections 2, 3 and 4 below, Indemnitor hereby agrees to defend, protect,
indemnify and hold harmless the City, the City's affiliates, directors, officers, shareholders, agents
and employees, and the City' s participants, successors and assigns specified in Section 4 hereof
(hereinafter, collectively, the "Indemnified Parties"), from and against, and shall reimburse the
Indemnified Parties for, any and all actual out-of-pocket costs (including, without limitation,
attorneys' fees, expenses and court costs), expenses or losses arising from any claim, liability,
damage, injunctive relief, injury to person, property or natural resources, fine, penalty, action or
cause of action (collectively, "Costs and Liabilities"), incurred by or asserted against any
Indemnified Party and arising directly or indirectly, in whole or in part, out of the release, discharge,
deposit or presence, or alleged or suspected release, discharge, deposit or presence, of any
Hazardous Materials at, on, within, under, about or from the Property, or in or adjacent to any part of
the Property, or in the soil, groundwater or soil vapor on or under the Property, or elsewhere in
1
connection with the transportation of Hazardous Materials to or from the Property in violation of any
Hazardous Materials Laws, whether or not known to Indemnitor or Indemnified Parties, whether
foreseeable or unforeseeable, regardless of the source of such release, discharge, deposit or presence
or, except as expressly provided to the contrary in Sections 2 and 4 hereof, regardless of when such
release, discharge, deposit or presence occurred or is discovered. Without limiting the generality of
the foregoing indemnity, such Costs and Liabilities shall include, without limitation, all actual out-
ofpocket costs incurred by Indemnified Parties in connection with (i) determining whether the
Property is in compliance with this Indemnity and with all applicable Hazardous Materials Laws or
the amount of money required to remediate any environmental contamination, and causing the
Property to be or become in compliance, with all applicable Hazardous Materials Laws, (ii) any
removal or remediation of any kind and disposal of any Hazardous Materials present at, on, under or
within the Property or released from the Property to the extent required by applicable Hazardous
Materials Laws in effect at the time of such removal, remediation or disposal, and (iii) repair of any
damage to the Property or any other property caused by any removal, remediation or disposal.
(b) Upon demand by any Indemnified Party, Indemnitor shall defend any investigation,
action or proceeding in connection with any claim or liability, or alleged claim or liability, that
would, if determined adversely to such Indemnified Party, be covered by the foregoing
indemnification provisions, such defense to be at Indemnitor's sole cost and expense and by counsel
reasonably approved by such Indemnified Party, which counsel may, without limiting the rights of
an Indemnified Party pursuant to the next succeeding sentence of this Section 1(b), also represent
Indemnitor in such investigation, action or proceeding. If any Indemnified Party determines
reasonably and in good faith that its defense by Indemnitor is being conducted in a manner which is
prejudicial to its interests, such Indemnified Party may elect to conduct its own defense through
counsel of its own choosing and at the expense of Indemnitor.
(c) As used herein, the term "Hazardous Materials" means and includes any flammable,
explosive, or radioactive materials or hazardous, toxic or dangerous wastes, substances or related
materials or any other chemicals, materials or substances, exposure to which is prohibited, limited or
regulated by any federal, state, county, regional or local authority or which, even if not so regulated,
may or could pose a hazard to the health and safety of the occupants of the Property or of property
adjacent to the Property, including, but not limited to, asbestos, PCBs, petroleum products and
byproducts, substances defined or listed as "hazardous substances" or "toxic substances" or similarly
identified in, pursuant to, or for purposes of, the California Solid Waste Management, Resource
Recovery and Recycling Act (California Government Code §66700 et seq.), the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended (42 U.S.C. §9601, et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. § 1801, et se .), the Resource Conservation
and Recovery Act (42 U.S.C. §6901, et Leg.), Section 25117 or Section 25316 of the California
Health & Safety Code; and any so-called "Superfund" or "Superlien" law, or any other federal, state
or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste,
substance or material; or any substances or mixture regulated under the Toxic Substance Control Act
of 1976, as now or hereafter amended (15 U.S.C. §2601 et seq.); and any "toxic pollutant" under the
Clean Water Act, as now or hereafter amended (33 U.S.C. §1251 et se .); and any hazardous air
pollutant under the Clean Air Act, as now or hereafter amended (42 U.S.C. §7901 et seq.).
Notwithstanding the above, the term "Hazardous Materials" shall not include small amounts of
2
chemicals, cleaning agents and the like commonly employed in routine household uses in a manner
typical of occupants in other similar residential properties provided they are used in compliance with
applicable laws. The term "Hazardous Materials Laws" means any federal, state or local law, code,
statute, ordinance, rule, regulation, rule of common law or guideline relating to Hazardous Materials
now or hereafter enacted or promulgated (collectively, and including, without limitation, any such
laws which require notice of the use, presence, storage, generation, disposal or release of any
Hazardous Materials to be provided to any party).
2. Time Limits on Claims. Notwithstanding the foregoing provisions:
(a) No claim shall be made hereunder by any Indemnified Party unless and until any one
of the following events shall have occurred: (i) repayment in full of the City Loan (as evidenced by
the release and reconveyance of the Deed of Trust); or (ii) vesting of title to the Property in the City
or any Indemnified Party through judicial or non judicial foreclosure or acceptance of a deed in lieu
thereof.
(b) Indemnitor shall not have any obligation under this Indemnity to an Indemnified
Party with respect to any Costs and Liabilities that, prior to the first to occur of the events described
in Section 2(a)(i) or (ii) above: (i) were actually known to the City; (ii) were liquidated in amount, or
were otherwise readily determinable in amount without undue delay; and (iii) would have been
lawfully and properly includable as part of the secured indebtedness under the Deed of Trust in an
action for a deficiency judgment following a judicial foreclosure sale of the Property.
(c) If any Indemnified Party or any affiliate of any Indemnified Party has acquired
ownership of the Property through foreclosure or deed in lieu of foreclosure, the obligations of
Indemnitor hereunder shall apply, without limitation, to all Costs and Liabilities that arise out of or
are attributable to, whether directly or indirectly, ownership of the Property or any part thereof by
any Indemnified Party or any such affiliate, or to the position of such Indemnified Party or such
affiliate as an owner in the chain of title to the Property or any part thereof. .
(d) If the City Loan has been repaid in full, whether by voluntary payment or by
foreclosure or deed in lieu of foreclosure, the obligations of Indemnitor hereunder shall continue to
apply, without limitation, to all Costs and Liabilities that arise out of or are attributable to, whether
directly or indirectly, any claim or allegation against an Indemnified Party relating to any act or
omission of such Indemnified Party in respect of the City Loan or the Property, or in connection
with any exercise of such Indemnified Party's rights under any of the City Loan Documents.
3
3. Acts of Indemnified Parties.
(a) Notwithstanding anything to the contrary herein, Indemnitor shall not be liable
hereunder to an Indemnified Party to the extent of that portion of any Costs and Liabilities which
Indemnitor establishes is attributable to an affirmative act of such Indemnified Party, its agent or any
successor in interest of an Indemnified Party at the Property which causes (i) the release, discharge,
deposit or presence, or alleged or suspected release, discharge, deposit or presence of a Hazardous
Material at the Property, or (ii) material aggravation of a then existing Hazardous Material condition
or occurrence at the Property, if and only if, in either such case referred to in (i) or (ii) above, such
act was in violation of any Hazardous Materials Laws or was carried out without reasonable care
under the circumstances.
(b) In addition, Indemnitor shall not be liable hereunder for that portion of any Costs and
Liabilities which Indemnitor establishes is attributable to the introduction and initial release,
discharge or deposit, or alleged or suspected introduction, initial release, discharge or deposit of a
Hazardous Material at the Property by any party, other than Indemnitor or an affiliate of Indemnitor,
at any time after Indemnitor's ownership interest in the Property terminates. Notwithstanding the
foregoing, but subject to Sections 2 and 3(a) above and Section 4 below, the liability of Indemnitor
hereunder shall otherwise remain in full force and effect after the City or such affiliate of the City so
acquires title to the Property, including without limitation with respect to any Hazardous Materials
which are discovered at the Property after the date the City or such affiliate of the City acquires title
but which were actually introduced to the Property prior to the date of such acquisition.
4. Indemnified Parties. This Indemnity and Indemnitor's obligations hereunder shall inure to
the benefit of and be enforceable only by (a) the City, the City's directors, officers, shareholders,
agents and employees, (b) any person or entities to which any the City participates, assigns or sells
all or any portion of its interest in the City Loan, or which otherwise succeeds to the interest of the
City under the Deed of Trust, whether by purchase or otherwise, and (c) any affiliate of the City
which acquires title to the Property at a foreclosure sale or by deed in lieu of foreclosure.
5. Unsecured Obligations. The obligations of Indemnitor hereunder are unsecured. This
Indemnity is not intended to be, nor shall it be, secured by the Deed of Trust or any other instrument
or agreement executed by Indemnitor or any other entity or person in favor of the City or any Indem-
nified Party relating to the City Loan (except for any guaranty) (such documents together with the
Deed of Trust being referred to collectively herein as the "City Loan Documents"). The obligations
of Indemnitor under this Indemnity are independent of any indemnification or other obligations of
Indemnitor under the City Loan Documents with respect to any Hazardous Materials. The rights and
remedies of the Indemnified Parties under this Indemnity shall be in addition to any other rights and
remedies of such Indemnified Parties under the City Loan Documents. In no event shall any
provision of this Indemnity be deemed to be waiver of or to be in lieu of any right or claim,
including without limitation any right of contribution or other right of recovery, that any person
entitled to enforce this Indemnity might otherwise have against Indemnitor under any Hazardous
Materials Laws. Any sums payable hereunder shall not be deemed to be based upon any diminution
in or other impairment of the value of any collateral held by the City to secure the City Loan.
4
6. Interest on Unpaid Amounts. Any amount claimed hereunder by an Indemnified Party not
paid by Indemnitor within thirty (30) days after written demand made by such Indemnified Party and
accompanied by a reasonable summary of the amounts claimed, shall bear interest at the rate of ten
percent (10%) per annum or the highest interest rate permitted by law, whichever is less.
7. Limitations on Liability. The liability of Indemnitor under this Indemnity shall in no way be
limited or impaired by (a) any amendment or modification of the provisions of any of the City Loan
Documents; (b) except as set forth in Sections 2, 3 and 4, any participation in or sale or assignment
of the City Loan Documents or any sale or transfer of all or part of the Property; (c) the release of
Indemnitor or any person or entity from performance or observance of any of the agreements,
covenants, terms, or conditions contained in any of the City Loan Documents by operation of law;
and, in any such case, whether with or without notice to Indemnitor and with or without
consideration. Except as provided in Sections 2, 3 and 4, Indemnitor's obligations hereunder shall in
no way be impaired, reduced or released by reason of (i) an Indemnified Parry's omission or delay in
exercising any right described herein or (ii) any act or omission of an Indemnified Party in
connection with any notice, demand, warning, or claim regarding violations of codes, laws or
ordinances governing the Property.
8. Recourse Obligations. Notwithstanding anything to the contrary in the City Loan
Documents, Indemnitor shall be personally liable on a recourse basis for the obligations of
Indemnitor set forth herein.
9. Successors and Assigns. This Indemnity shall be continuing, irrevocable and binding upon
each of the persons and entities comprising Indemnitor and their respective heirs, successors, and
assigns.
10. Inconsistencies. In the event of any inconsistencies or conflicts between the terms of this
Indemnity and the terms of the other City Loan Documents (including any exculpatory language
contained therein), the terms of this Indemnity shall control.
11. Separate Causes of Action. A separate right of action hereunder shall arise each time an
Indemnified Party acquires knowledge of any matter described herein. Separate and successive
actions may be brought hereunder to enforce any of the provisions hereof at any time and from time
to time. No action hereunder shall preclude any subsequent action.
12. Severability. If any provision of this Indemnity shall be determined to be unenforceable in
any circumstances by a court of competent jurisdiction, then the balance of this Indemnity never-
theless shall be enforceable, and the subject provision shall be enforceable in all other circumstan-
ces.
13. Attorneys' Fees. In any action or proceeding brought by the Indemnified Parties to enforce
any rights under this Indemnity, the prevailing party shall be entitled to all reasonable attorneys' fees
and all costs, expenses and disbursements in connection with such action.
5
14. Notices. Any notice, demand, request or other communication which any party hereto may
be required or may desire to give hereunder shall be in writing and will be effectively served upon
personal delivery or, if mailed, no later than 48 hours after deposit in first class or certified United
States mail, postage prepaid, sent to:
City:
City of National City
1243 National City Boulevard
National City, CA 91950-4397
Developer: T & T Community Properties, LLC
which addresses may be changed by written notice.
15. Governing Law. This Indemnity shall be governed by and construed in accordance with the
laws of the State of California.
16. Counterparts. This Indemnity may be executed in any number of counterparts and, as so
executed, the counterparts shall constitute one and the same agreement. The parties agree that each
such counterpart is an original and shall be binding upon all the parties, even though all of the
parties are not signatories to the same counterpart.
17. Exhibits and Recitals Incorporated. All exhibits referred to in this Indemnity, if any, are
hereby incorporated in this Indemnity by this reference, regardless of whether or not the exhibits are
actually attached to this Indemnity. The Recitals to this Indemnity are hereby incorporated in this
Indemnity by this reference.
18. Signature Authority. All individuals signing this Indemnity for a party which is a
corporation, limited liability company, partnership or other legal entity, or signing under a power of
attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the City
that they have the necessary capacity and authority to act for, sign and bind the respective entity or
principal on whose behalf they are signing.
IN WITNESS WHEREOF, this Indemnity is executed as of the day and year above written.
[SIGNATURE PAGES FOLLOW]
City:
City of National City
By:
Ron Morrison, Mayor
APPROVED AS TO FORM:
Christensen & Spath LLP, Special Counsel to the City
By:
Print Name:
Its:
INDEMNITOR:
T & T Community Properties, LLC, a California limited liability company
By:
Print Name:
Its: