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19-0716_CC_F1a_Attachment_1_Part1RESOLUTION NO. 19-07-16-XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO APPROVING AN AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF SAN JUAN CAPISTRANO AND C & C DEVELOPMENT co., LLc AND SEAN RAWSON (THE GROVES) WHEREAS, the City of San Juan Capistrano, 32400 Paseo Adelanto, San Juan Capistrano, CA 92675 is the owner of Assessor's Parcel Number (APN) 121-050-21; and WHEREAS, C & C Development Co., LLC and Sean Rawson (collectively, the "Developer") have proposed to develop the southernmost 3.853-acre portion of APN 121-050-21 at the northwest corner of Junipero Serra Road and Camino Capistrano, with a 75-unit senior affordable housing apartment complex; and, WHEREAS, the City of San Juan Capistrano's Housing Element goals for the 2013-2021timeframe, including: Goal 1-Provide a broad range of housing oppoñunities with emphasis on providing housing which meefs the special needs of the community; Goal 2 - To the maximum extent feasible, encourage and provide housing opporiunities for persons of lower and moderate incomes; and, WHEREAS, the City of San Juan Capistrano's Housing Element identifies that the southernmost portion of APN 121-050-21 at the northwest corner of Junipero Serra Road and Camino Capistrano can accommodate 48 units of low and very-low income housing units; and, WHEREAS, in order to carry out and implement the goals of the Housing Element, the City proposes to enter into an Affordable Housing Disposition and Development Agreement (the "Agreement") with the Developer for the development of the southernmost 3.853-acre portion of APN 121-050-21 at the northwest corner of Junipero Serra Road and Camino Capistrano in the City of San Juan Capistrano (the "Site"), all as described in the Agreement, the form of which is on file with the City Clerk, and which is incorporated herein by this reference; and, WHEREAS, the Developer desires to acquire the Site for the purpose of developing a housing project (the "Housing Development") on the Site, which will generally consist of a rental housing complex for senior citizens aged 62 and older containing seventy-five (75) units, with associated parking, landscaping and community facilities; and, WHEREAS, the construction and operation of the Housing Development is intended to implement the City's Housing Element goals and objectives to provide decent, safe and sanitary housing for persons of very low and lower income, and to increase, improve and preserve housing available at affordable housing cost to seniors 1 ATTACHMENT 2 of very low and lower income; and, WHEREAS, the Developer has submitted to the City Council of the City of San Juan Capistrano (the "City Council") copies of the Agreement in a form executed by the Developer; and, WHEREAS, pursuant to the Agreement, the City would sell the Site to the Developer, and the Developer would construct and operate the Development on the Site; and, WHEREAS, the purchase price payable by Developer for the Site pursuant to the Agreement is not less than the fair market value of the Site, as determined by an appraisal conducted by a state certified appraiser commissioned by the Developer; and, WHEREAS, the Agreement further provides that the City shall provide a loan from the City's Housing ln-Lieu Fee fund in the amount of $4.8 million to assist the Developer to assist in the construction of the Housing Development; and WHEREAS, on July 16, 2019, the City Council held a public hearing on the proposed Agreement, at which time the Agreement was reviewed and evaluated; and, WHEREAS, all actions required by all applicable law with respect to the proposed Agreement have been taken in an appropriate and timely manner; and, WHEREAS, the Agreement would provide affordable housing for very low and lower income persons on the Site; and, WHEREAS, the Agreement will assist the City in meeting the objectives set forth in the Housing Element by providing for the development and operation of the Housing Development on the Site; and, WHEREAS, the project regulatory agreement proposes to restrict no more than 49% of the units to persons of low income, and the project therefore is not considered a "low rent housing project" that is subject to the restrictions of Article XXXIV of the State Constitution; and, WHEREAS, based upon its review of the entire record before it, the City Council hereby finds and determines that the proposed Project, including approval of an Affordable Housing Disposition and Development Agreement, is statutorily exempt from CEQA pursuant to Government Code section 65583.2. Specifically, according to Government Code, section 65583.2(h), when sites are re-zoned to accommodate the Regional Housing Needs Allocation ("RHNA') for low and very low income housing, future approval for multifamily rental projects on those sites are considered a "use by right". Government Code, section 65583.2(i) defines "use by right" to mean that the review shall not include any discretionary local government action or approval that would constitute a "project" for purposes of CEQA, and therefore, no CEQA compliance would be required. The City 2 Council hereby finds that those provisions of the Government Code apply here and exempt the Project, including the Refunding Bonds, from further environmental review because: On January 21,2014, the City adopted Resolution No. 14-01-20-03, approving a General Plan Amendment to amend the City's Housing Element. Within that resolution, the 3.853-acre Project site was redesignated to Very High Density Residential (30 du/acre), and the site was identified as one available for affordable housing. ii. Ordinance No. 1008, which was adopted on February 4,2014, rezoned the 3.853- acre Project site from Office Commercial to Very High Density. This rezone implemented the General Plan Amendment that was approved on January 21,2014. The re-zoning ensured that the City's inventory of housing sites in its Housing Element could accommodate all of the low and very low income RHNA allocation that the City was assigned at the time. i¡i. As a result, the 3.853-acre Project site falls within the provisions of Government Code, section 65583.2(i) and the use must be considered a use "by right" under that section. iv. No further environmental review is required WHEREAS, the City Council has duly considered all terms and conditions of the proposed Agreement and believes that the development of the Site pursuant thereto is in the best interests of the City of San Juan Capistrano and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. NOW, THEREFORE, BE lT RESOLVED that the City Council of the City of San Juan Capistrano, does hereby: Section 1. Each of the foregoing recitals is true and correct Section 2. The City finds and determines that, based upon substantial evidence provided in the record before it, the consideration for the City's sale of the Site pursuant to the terms and conditions of the Agreement is not less than the fair market value of the Site, in accordance with covenants and conditions governing the sale, and the development costs required under the Agreement. Section 3. The City hereby finds and determines that the Agreement would provide affordable housing for very low and lower income persons on the Site. Section 4. The City hereby finds and determines that the Agreement is consistent with the provisions and goals of the Housing Element. 3 Section 5. The City hereby determines that the Housing Development does not require a vote of the people pursuant to Article XXXIV of the State Constitution and Section 37001(a) of the California Health and Safety Code. This Resolution is hereby deemed to constitute approval of a proposal which may result in housing assistance benefiting persons of low income, within the meaning of Health and Safety Code Section 36005. Section 6. The City hereby approves the Agreement, incorporated into this Resolution as Exhibit A, and authorizes and directs the City Manager to execute the Agreement on behalf of the City Council, and authorizes the loan of $4.8 million in Housing ln-Lieu Fee funds, subject to the conditions set forth in the Agreement. The City manager, or his designee, is authorized to implement the Agreement and take all further actions and execute all escrow documents and other documents which are necessary or appropriate to carry out the Agreement. Section B. The proposed Project, including approval of an Affordable Housing Disposition and Development Agreement, is statutorily exempt from CEQA pursuant to Government Code section 65583.2(h). The City directs the City Manager to file a notice of exemption following approval of this Resolution. Section 9. This Resolution shall take effect from and after its date of adoption PASSED, APPROVED AND ADOPTED this 16th day of July, 2019. BRIAN L. MARYOTT, MAYOR ATTEST: MARIA MORRIS, CITY CLERK 4 AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENIT (The Groves at Williams Ranch) among THE CITY OF SAN JUAN CAPISTRANO, a California municipal corporation c & c DEVELOPMENT CO., LLC, a California limited liability company and SEAN RA\rySON, an individual 6 t | 47 .00 I 4 s\321 62022.3 EXHIBIT A TABLE OF CONTENTS ARTICLE I. DEFINITIONS; REPRESENTATIONS AND WARRANTIES; EFFECTIVE DATE Page 2 .t2 .. 15 15 15 r6 t7 18 20 2I .21 ..2r 1.1 t.2 2.1,,) 2.3 2.4 2.5 2.6 2.7 2.8 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 Definitions............. Representations and Warranties. 2 15 ARTICLE II. PROPERTY DISPOSITION Purchase and Sale.... Payment of Purchase Price... Eminent Domain..... Title Approval. ........ Developer Investigations. .......... Developer to Obtain all Project Entitlements. Delivery of Property Free of Occupants Project Marketing Plan. ARTICLE III. ESCROW INSTRUCTIONS Opening of Escrow. Conditions to Close of Escrow. Developer's Escrow Deposits. City's Escrow Deposits. Closing Procedure.. Close of Escrow. Recordation and Distribution of Documents........... Escrow Closing Costs, Taxes and Title Policy Premium... Escrow Cancellation Charges. .............. Escrow Cancellation. ............ Report to IRS....... .......25 .......26 .......26 .......27 .......27 .......27 ...23 2l 25 28 28 28 ARTICLE IV. PROJECT DEVELOPMENT.... Developer Covenant to Undertake Project.... Developer Changes to Plans and Specifications During Course of Construction.. Construction Start and Completion of Project... Compliance with Laws. ........ Schedule of Performance.......... Developer Attendance at City Meetings. .... City's Right to Inspect Project and Property............ Cost of Construction. ........... Prevailing Wages.. 4.1 4.2 6 1 1 47 .00 1 4 s\321 620223 t Certificate of Completion. TABLE OF CONTENTS ARTICLE V. DEVELOPER COVENANTS Obligation to Refrain from Discrimination. Form of Non-Discrimination and Non-Segregation Clauses. Environmental Indemnity of the City by the Developer. ....... Insurance. ..... ARTICLE VI. PROJECT FINANCING.. Page 55 5.1 5.2 5.3 5.4 7.1 7.2 7.3 7.4 7.5 aa.JJ .JJ .35 36 40 6.1 6.2 6.3 6.4 6.5 Project Financing Project Budget. Only Permitted Exceptions. City Right to Discharge Prohibited Encumbrances. Rights of Lender and Cify Regarding Permitted Security Defaults - General. Developer's Election Re: Specific Enforcement of Agreement or \ilaiver of Right to Specific Performance and Limitation on Recovery of Damages Prior to Close of Escrow.. Legal Actions.... Rights and Remedies are Cumulative..... Developer Indemnification of the City... 40 4l 4t 4I Instruments................. ARTICLE VII. DEFAULTS, REMEDIES AND TERMINATION. 42 44 44 45 46 46 46 47ARTICLE VIII. GENERAL PROVISIONS. ..... Incorporation of Recitals. Restrictions on Transfers. .... Notices, Demands and Communications Between the Parties. Conflict of Interest. . Warranty Against Payment of Consideration for Agreement............ Non-liability of City, Officials and Employees Unavoidable Delay; Extension of Time of Performance. Inspection of Books and Records............. Real Estate Commissions. Binding on Successors and Assigns...... Entire Agreement. ............ Execution of this Agreement. .............. Survival of Indemnity Obligations. .... Time Declared to be of the Essence.... Approvals Further Assurances City Approvals and Actions. fnvestor Limited Partner Provisions 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 8.15 8.16 8.17 8.18 6t I 47 .001 4s\321 62022.3 tl TABLE OF CONTENTS Legal Description of Property Scope of Development Schedule of Performance Form of Grant Deed Form of Notice of Agreement Form of Official Action of Developer Form of Certificate of Completion Form of Regulatory Agreement Form of Deed of Trust Form of Land Note Form of ProjectNote List of Impact Fees Applicable to Project Page Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Exhibit F Exhibit G Exhibit H Exhibit I Exhibit J Exhibit K Exhibit L 6 | | 47 .00 1 45\321 62022.3 llr This AFFORDABLE, HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at Williams Ranch) ("Agreement") is dated as of July 16,2019 ("Date of Agreement"), for reference purposes only, and is entered into by and among the City of San Juan Capistrano, a California municipal corporation ("City"), C &. C DEVELOPMENT CO., LLC a California limited liability company ("C&C") and SEAN RAWSON, an individual ("Rawson", together with C&C, "Developer"). The City and the Developer are sometimes referred to in this Agreement, each individually, as a "Pârt¡l," or collectively, as the "Parties." RECITALS This Agreement is entered into with reference to the following recitals of fact ("Recitals") that City and Developer believe to be true as of the Effective Date of this Agreement: A. The City is the o\Nner of that certain real property located at the northeast corner of Camino Capistrano and Junipero Serra Road, San Juan Capistrano (APN 121-050-21) and more specifically described in Exhibit A attached hereto and incorporated herein by this reference ("Property") B. On April 2,2019,the City approved an exclusive negotiation agreement with the Developer's members for potential development of the Property. The Developer proposed the acquisition and redevelopment of the Property as senior multi-family affordable rental housing complex. C. The Developer's proposed acquisition of the Property and subsequent construction and completion of the Project (as defined in Section 1.1.58) on the Property pursuant to the terms of this Agreement is in the best interest of the City and the health, safety and welfare of the City's taxpayers and residents and is in accordance with the public purposes set forth in applicable law. Implementation of this Agreement will further the goals and objectives of the City's general plan by promoting development of affordable housing on a site identified in the City's housing element for low income housing, and will provide new housing for low, very-low and extremely low income households which will help to accommodate the City's Regional Housing Needs Assessment (RHNA) obligation . D. To facilitate the development of the Project, the City desires to convey the Property to Developer, take-back a loan for the Purchase Price for the Property and provide a loan to the Developer to pay certain development and construction costs, subject to terms and conditions in this Agreement. E,. Approval of this Agreement is exempt from the California Environmental Quality Act ("CEQA") as development of the Property as required in this Agreement is an "use by right" under Government Code Section 65583.2(i), NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by City and Developer, the Parties agree as follows: 6 I | 47 .00 I 45\32rcZOZZ.l I TERMS AND CONDITIONS ARTICLE I. DEFINITIONS; REPRESENTATIONS AND EFFECTIVE DATE 1.1 Definitions. All initially capitalized terms not otherwise defined in this Agreement shall have the following meanings: 1.1.1 "Additional Insureds" has the meaning ascribed to such term in Section 5.4. 1.1.2 "Affïliate" means and refers to any person or entity, directly or indirectly, Controlling or Controlled by or under common Control with the applicable person or entity, whether by direct or indirect ownership of equity interests, by contract or otherwise. 1.1.3 "Agreement" means this Affordable Housing Disposition and Development Agreement (The Groves at Williams Ranch). 1.1.4 ,,C&C" means C &,C Development Co., LLC,aCalifornia limited liability company, and its successors and assigns that are permitted by this Agreement. 1.1.5 "CalHFA" means the Califomia Housing Finance Agency or successor in function. 1.1.6 "CDLAC" means the California Debt Limitation Allocation Committee or successor in function. 1.1.7 "CEQA" means the California Environmental Quality Act, Public Resources Code Sections 21000, et leq. 1.1.8 "Certificate of Completion" means the written certification of City that the construction of the Project has been completed in compliance with the terms and conditions of this Agreement, substantially in the form of Exhibit G attached to this Agreement. 1.1.9 "City" means the City of San Juan Capistrano, California, a Califomia municipal corporation. 1.1.10 "City Manager" means the City Manager of the City or his or her designee or successor in function. 1.1.11 "City Requirements" has the meaning ascribed to the term in Section 2.6.r. l.l.l2 "City's Title Notice Response" means the written response of the City to the Developer's Title Notice, in which the City either (i) elects to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer's Title 6 t I 47 .00 1 4s\32 rcZOZZ.S 2 Notice, or (ii) elects not to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer's Title Notice. 1.1.13 "Close of Escrow" or "Closing" means the recording of the Grant Deed for the Property in the official records of the Recorder of the County, and completion of each of the actions set forth in ARTICLE III by the Escrow Holder for the City to sell the Property to the Developer and the Developer to purchase the Property from the City. l.l.l4 "Completion of Construction" means the issuance of a Certificate of Completion confirming that the final certificate of occupancy for the Project, based on the plans submitted by the Developer to the City, has been issued. 1.1.15 "Construction Financing" means one or more loans that Developer shall obtain from one or more Institutional Lenders, the proceeds of which are to be used and applied to pay the reasonable costs of obtaining such loan(s) and either: (a) the Project Costs; or (b) to refinance only the outstanding amount owed under a prior loan obtained by Developer to finance the amount described in "(a)" of this Section 1.1 .1 5 (without any other amounts). Such loan(s) shall provide for normal and customary disbursement controls for the payment of Project Costs and normal and customary fees and expenses for loan(s) of similar size and purpose. The Construction Financing is set forth in the Project Budget. 1.1.16 "Construction Financing Documents" means the various documents and instruments made by and between Developer and one or more Institutional Lenders that evidence or perfect the Construction Financing or the security for repayment of the Construction Financing, including any associated Security Instrument. l.l.l7 "Control" means and refers to possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether by ownership of equity interests, by contract or otherwise. 1.1.18 "Controlling" and'6Controlled" mean and refer to exercising or having Control. 1.1.19 "CounQ/" means the County of Orange, California. 1.1.20 "County Loan(s)" rneans, collectively, the SNHP Loan and the County Perm Loan. l.l.2l "County Perm Loan" means that certain loan from the County in the original principal amount of approximately $500,000 for permanent financing of the Project, with any interest and principal due annually from residual receipts and all principal and accrued ihterest due fifty-five (55) years after the date of the recordation of the Certificate of Completion, and which is secured by a Permitted Security Instrument Senior in lien priority to the Deed of Trust. 6 I I 47 .00 I 45\32 rcZOZZ.l 3 1.1.22 "Deed of Trust" means the Deed of Trust made by Developer for the benefit of City in substantially the form of Exhibit I attached to this Agreement, which pledges the Property as collateral to secure repayment of the Land Loan and the Project Loan. 1.1.23 'oDeveloper" means C & C Development Co., LLC, a Califomia limited liability company, together with Sean Rawson, an individual, and their successors and assigns that are permitted by this Agreement. 1.1.24 "Developer's Title Notice" means a written notice from the Developer to the City indicating the Developer's objection to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy for the Property, describing in suitable detail the actions that the Developer reasonably believes are indicated to cure or correct each of the Developer's objections. 1.1.25 "Due Diligence Investigations" means the Developer's due diligence investigations of the Property to determine the suitability of the Property for development and operation of the Project, including, without limitation, investigations of the environmental and geotechnical suitability of the Property, as deemed appropriate in the reasonable discretion of the Developer, all at the sole cost and expense of the Developer. 1.1.26 "Due Diligence Investigation Rejection Notice" means a written notice of the Developer delivered to the City and the Escrow Holder, prior to the end of the Due Diligence Period, indicating the Developer's rejection of the condition of the Property and refusal to accept a conveyance of fee title to the Property, describing in reasonable detail the actions that the Developer reasonably believes are indicated to allow the Developer to accept the condition of the Property. 1.1.27 "Due Diligence Period" means the date commencing on the Effective Date and ending at 5:00 p.m. on the ninetieth (90th) day following the Effective Date. 1.1.28 "Effective Date" has the meaning ascribed to the term in Section 1.2.3. 1.1.29 "ENA" means the Exclusive Negotiation Agreement (The Groves at V/illiams Ranch), dated April2,2019,by and between City and members of the Developer. 1.1.30 "Environmental Claims" has the meaning ascribed to the term in Section 5.3. 1.1.31 "Environmental Laws" means all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability of standards of conduct concerning any hazardous substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property), occupational or environmental conditions on, under, or about the Property, as now or may af any later time be in effect, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") [42 USC Section 9601 et scq.]; the Resource Conservation and Recovery Act of 1976 ("RCRA") [42 USC Section 6901 et Sçq.]; 6 t | 47 .00 1 4 5\32 rcZOZZ.Z 4 the Clean Vy'ater Act, also known as the Federal Water Pollution Control Act ("FWPCA') [33 USC Sectionl25l et seq.l; the Toxic Substances Control Act ("TSCA") [15 USC Section260l et Sgq.l ; the Hazardous Materials Transportation Act ("HMT A") 149 USC Section 1 80 1 et Sçq.l; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et gçq.] the Clean Air Act 142 USC SectionT4}l et !gq.l; the Safe Drinking Water Acr.l42 USC Section 300f et qqq.l; the Solid Waste Disposal Actl42 USC Section 6901 et $q.l; the Surface Mining Control and Reclamation Act [30 USC Section iOl et fçq.] the Emergency Planning and Community Right to Know Act [42 USC Section 11001 et sgq.]; the Occupational Safety and Health Actl29 USC Section 655 and 6571; the Califomia Underground Storage of Hazardous Substances Act [California Health & Safety Code Secti on25288.ì ¡Cq.]; the Californiaftazardous Substances Account Act [California Health & Safety Code Section 25300 et !9q.]; the California Safe Drinking'Water and Toxic Enforcement Act [California Health & Safety Code Section24249.5 et Sç9.] the Porter- Cologne Water Quality Act [California Vy'ater Code Section 13000 et ¡gq.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene, and only to the extent the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property, or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use. 1.1.32 "Environmental Matters" has the meaning ascribed to the term in Section 5.3. 1.1.33 "Escrow" has the meaning ascribed to the term in Section 2.1. 1.1.34 "Escrow Closing Date" means, subject to extension due to Unavoidable Delay, the earlier of: (a) on or before the fifth (5th) business day following the Escrow Holder's receipt of written confirmation from both City and Developer of the satisfaction or waiver of all conditions precedent to the Close of Escrow; or (b) the date by which tax-exempt bonds for the Project must close as set forth in Developer's receipt of written confirmation from CDLAC of the allocation of tax-exempt bonds for the Project 1.1.35 ."Escrow Holder" means Ticor Title Company of California, through its office located at 1500 Quail Street, 3rd Floor, Newport Beach, CA92660, or such other escrow holder mutually agreed upon in writing by both City and Developer. 1.1.36 "Escrow Opening Date" has the meaning ascribed to the term in Section 3.1. 1.1.37 "Event of Default" has the meaning ascribed to the term in Section 7.1. 1.1.38 "FIRPTA Affidavit" means an affidavit complying with Section 1445 of the United States Internal Revenue Code. 1.1.39 "Governmental Agency" means any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city, or otherwise) whether now or later in existence. 6 1 | 47 .00 1 45\32 t øZOZZ.I 5 1.1.40 "Governmental Requirements" means all codes, statutes, ordinances, laws, permits, orders, and any rules and regulations promulgated thereunder of any Governmental Agency. l.l.4l "Grant Deed" means a deed in the form of Exhibit D to this Agreement, conveying all of the City's interest in the Property to the Developer. 1.1.42 "Hazardous Substances" means, without implied limitation, substances defined as"hazardous substances," "hazaÍdous material," "toxic substance," "solid waste," or "pollutant or contaminate" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et !gq.; the TSCA; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et Seq.; the Resource Conservation and Recovery Act,42 U.S.C. Sections 6901, et Seq.; those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.I0I), or by the EPA, or any successor authority, as hazardous substances [40 CFR Part302]; and those substances defined as "hazardous waste" in Section 25117 of the California Health and Safety Code or, as "hazardous substances" in Section 25316 of the California Health and Safety Code; 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 in the regulations adopted pursuant to said laws, and shall also include manure, asbestos, polychlorinated biphenyl, flammable explosives, radioactive material, petroleum products, and substances designated as a hazardous substance pursuant to 33 USC Section l32l or listed pursuant to 33 USC Section 1317. Notwithstanding the foregoiîg,"Hazardous Substances" shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner generally used in other comparable residential developments, ot substances commonly ingested by a significant population living within the Project including, without limitation, alcohol, aspirin, tobacco and saccharine. 1.1.43 "Indemnifïed Parties" has the meaning ascribed to the term in Section 5.3. 1.1.44 "Institutional Lender" means any of the following: (a) a bank (State, Federal or foreign), trust company (in its individual or trust capacity), insurance company, credit union, savings bank (State or Federal), pension, welfare or retirement fund or system, real estate investment trust (or an umbrella partnership or other entity of which areal estate investment trust is the majority owner), Federal or State agency regularly making or guaranteeing mortgage loans, investment bank or a subsidiary of a Fortune 500 company; or (b) any person or entity that is an Affiliate of or is a combination of any one or more of the persons or entities described in "(a)" of this Section. 1.1.45 "Land Loan" means the loan from the City to the Developer in an amount equal to Four Million One Hundred Thousand Dollars ($4,100,000), which is the appraised value established by Kinetic Valuation Group, Inc., real estate appraisers, in an appraisal report effective as of May 23,2019 and dated as of May 30, 3019, and which is equal to the Purchase Price for the Property. The Land Loan is made by City to finance Developer's acquisition of the Property, and shall be repaid by Developer pursuant to the terms of the Land Note. 6 1 I 47 .00 1 4 5\32 t eZOZZ.l 6 ' 1.1.46 "Land Note" means the promissory note made by Developer in favor of City in substantially the form of Exhibit J attached to this Agreement evidencing the Land Loan. 1.1.47 "Lender" means the holder of any Security Instrument and its successors and assigns. 1.1.48 "Notice of Agreement" means the notice in the form of Exhibit E to this Agreement to be recorded against the Property at the Close of Escrow to provide constructive record notice of the existence and application of this Agreement to the Property. 1.1.49 "Parties" means, collectively, the City and the Developer. 1.1.50 "Parb¡" means, individually, the City or the Developer, as applicable. 1.1.51 "PCO Statement" means a preliminary change of ownership statement provided for in California Revenue and Taxation Code Section 480.3. 1.1.52 "Permânent Loan" means any loan that the Developer shall obtain from an Institutional Lender, the proceeds of which are to be used and applied solely to pay: (1) the reasonable costs of obtaining such loan; (2)fhe then current outstanding principal and interest under any Construction Financing; and (3) any reasonable and customary fees or charges of the Institutional Lender providing the Construction Financing relating to pay-off of the Construction Financing. The Permanent Loans are set forth in the Project Budget' 1.1.53 "Permitted Exceptions" means (i) any and all items shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that the Developer accepts, pursuant to Section 2.a; Qi) any exceptions from coverage under the proposed Title Policy; (iii) non-delinquent property taxes and assessments; (iv) this Agreement; (v) the Grant Deed; (vi) the Notice of Agreement; (vii) the Regulatory Agreemenq (viii) the Deed of Trust; (ix) any Permitted Security Instrument; (x) the TCAC Regulatory Agreement; (xi) any agreement restricting occupancy and rents of the Project required by an Institutional Lender or the Subordinate Loan Lender; (xii) any encumbrance recorded against the Property with Developer's consent or as a result of the activities of Developer; and (xiii) any other document or encumbrance expressly required or allowed to be recorded against the Property or the Project under the terms of this Agreement. 1.1.54 "Permitted Security Instrument" means any Security Instrument: (a) that encumbers only the Property or any interest in the Property; (b) that is held by a Lender that is an Institutional Lender, subject to the jurisdiction of the courts of the State, not immune from suit and cannot elect to be immune from suit; and (c) only secures: (i) the repayment of money used to pay or reimburse the Project Costs; (ii) a bona fide Permanent Loan; (iii) a delivery assurance fee regarding a Permanent Loan that is refundable to Developer at the close of the Permanent Loan; or (iv) any Refinancing. The deeds of trust securing the County Loans are Permitted Security Instruments. Promptly after execution, Developer shall promptly delivery a copy of any Security Instrument to the City, with the Lender's name and notice address. 1.1.55 "Permitted Transfer" means any of the following types of Transfer by Developer, which unless otherwise provided do not require the City's prior written approval and 6 I I 47 .00 | 4 5\32 rcZOZZ.l 7 where, except for a Transfer described in subsections .1, .2, .3, .4, .6, .7 and.9 below, the person or entity to which such Transfer is made expressly and unconditionally assumes in a written assignment and assumption agreement between such person or entity, Developer and City that is in a form reasonably acceptable to City (as evidenced by execution of such assignment and assumption agreement by the City Manager), all obligations of Developer under this Agreement: 1.1.55.1 Any Transfer to Institutional Lender: (1) pursuant to a Permitted Security Instrument as collateral for bona fide Construction Financing to pay all or any part of the Project Costs; or (2) pursuant to a Permitted Security Instrument as collateral for a bona fide Permanent Loan. 1.1.55.2 Any Transfer directly resulting from the foreclosure or deed in lieu of foreclosure of a Permitted Security Instrument for a loan from an Institutional Lender to the Project or as otherwise permitted under Section 6.5.7. 1.1.55.3 Any Transfer of stock or equity in the Party that does not change management or operational Control of the Project, with no material change in beneficial ownership (with the exception of any conveyance to member(s) of the immediate family(ies) of the transferor(s) or trusts for their benefit) and which constitutes a tax-free transaction under Federal income tax law and California real estate transfer tax. 1.1.55.4 The lease of residential units in the Project consistent with the Regulatory Agreement. 1.1.55.5 Any Transfer of this Agreement and the Property to a limited partnership in which a general partner is an Affiliate of C&C and Rawson and the managing general partner is a 501(c)(3) tax exempt nonprofit corporation or its Affiliate. 1.1.55.6 The Transfer and sale of limited partnership interests in Developer while the Developer is in the form of a limited partnership. 1.1.55.7 In the event that any general partner of the Developer, while the Developer is in the form of a limited partnership, is removed by the limited paftner of such limited partnership for cause following default under the partnership agreement, the Transfer of the general partner interest to a 501(c)(3) tax exempt nonprofit corporation or its Affiliate selected by the limited partner and approved by the City, which approval shall not be withheld unreasonably, delayed or conditioned. 1.1.55.8 The Transfer of the Project from Developer, while the Developer is in the form of a limited partnership, to one or more of the general partners of the Developer or their Affiliates at the end of the tax credit compliance period for the Project; and 1.1.55.9 Any dilution of a general partner's interest in the Developer while the Developer is in the form of a limited partnership, in accordance with the Developer's limited partnership agreement. 1.1.56 "Plans and Specifications" has the meaning ascribed to the term in Section 2.6.1 6l I 47 .00 | 45\32rcZOZZ.l 8 1.1.57 "Preliminary Report" means a preliminary report issued by the Title Company in contemplation of the issuance of the Title Policy, accompanied by legible copies of all documents listed in Schedule B of the report as exceptions to coverage under the proposed Title Policy. The Parties acknowledge that they may prepare one (1) or more Preliminary Reports for each parcel, or group of parcels, comprising the Property. In such case, all reports, notices, and objection letters which pertain to the Preliminary Report for the entirety of the Property shall apply separately to each Preliminary Report associated with a parcel or a group of parcels. 1.1.58 "Project" means the construction and redevelopment of the Property as a senior affordable multi-family housing development, including all required or associated on-site and off-site improvements, all hardscape and all landscaping, all as specifically described in the Scope of Development, and all to be developed in accordance with the Plans and Specifications to be approved by the City and any conditions imposed by the City in its approval of the Plans and Specifications. 1.1.59 "Project Budget" means the Project Costs and anticipated sources of funds to pay the Project Costs as set forth in the Project proforma, dated as of June 13,2019 and approved by the City Manager as of the Effective Date, as may be modified from time to time pursuant to Section 6.2. 1.1.60 "Project Commencement Date" means no later than the date thirty (30) days after the date that Developer is required to issue the tax-exempt bonds for the Project as set forth in the written notice from CDLAC of the allocation of tax-exempt bonds for the Project, as may be modified by CDLAC. 1.1.61 "Project Completion Date" means that date set forth therefor by which a Certificate of Completion shall be issued for the Project, as more particularly provided in the Schedule of Performance. The Project Completion Date shall be no later than the date which is twenty four (24) months after the Close of Escrow, subject to Unavoidable Delay. 1.1.62 "Project Costs" means all of the costs of acquisition of the Property and development and construction of the Project. 1.1.63 "Project Loan" means a loan of Four Million Eight Hundred Thousand Dollars ($4,800,000.00) made by City to Developer to finance Project's predevelopment, development and construction costs, which shall be repaid by Developer pursuant to the terms of the Project Note. 1.1.64 "Project Note" means a promissory note made by Developer in favor of the City in substantially the form of Exhibit K attached to this Agreement evidencing the Project Loan. 1.1.65 "Properfy" means that real property, and all current and future improvements thereon (including, without implied limitation, the Project), legally described in Exhibit A. 6 | 1 47 .00 t 4 5\32 t eZOZZ.l 9 1.1.66 "Property Transfer" means and refers to any "change in ownership," as defined in Revenue and Taxation Code Sections 60, et seq., of all or any portion of the Property. 1.1.67 "Purchase Price" means the purchase price for the Property in the amount of Four Million One Hundred Thousand Dollars ($4,100,000). 1.1.68 "Rawson" means Sean Rawson, an individual, and his successors and assigns that are permitted by this Agreement. 1.1.69 "Record", "recorded", "recording" or "recordation" each mean and refer to recordation of the referenced document in the offrcial records of the Recorder of the County of Orange, California. 1.1.70 "Refînancing" means any loan secured by a Permitted Security Instrument that the Developer obtains from an Institutional Lender subsequent to recordation of the Permanent Loan for any of the following purposes: (1) to pay off all or a portion of an existing loan secured by a Permitted Security Instrument where the Lender providing the new loan will disburse loan proceeds to or on behalf of Developer exceeding the amount of principal and interest under the existing loan being paid plus the amount of any reasonable and customary fees and costs associated with obtaining such new loan that are actually paid by Developer and not rebated or refunded to Develop er; (2) disbursing funds to or on behalf of Developer without paying off any existing loan secured by a Permitted Security Instrument; or (3) any loan extension, modification or equivalent regarding an existing loan to Developer secured by a Permitted Security Instrument that results in the Lender of the existing loan disbursing additional loan proceeds to or on behalf of Developer in excess of the original principal amount of the loan. l.l.7l "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants, Conditions and Restrictions Restricting the Use of Property for Affordable Housing in substantially the form of Exhibit H attached to this Agreement, which shall be recorded against the Property in its entirety. 1.1.72 "schedule of Performance" means the schedule for the performance of certain actions by the Parties pursuant to this Agreement, attached to this Agreement as Exhibit C. 1.1.73 "Scope of Development" means the detailed description of the Project attached to this Agreement as Exhibit B. 1.1.74 "security Instrument" means any security instrument, deed of trust, security deed, contract for deed, deed to secure debt, or other voluntary real property (including leasehold) security instrument(s) or agreement(s) intended to grant real property (including leasehold) security for any obligation (including a purchase-money or other promissory note) encumbering the Property, as entered into, renewed, modified, consolidated, increased, decreased, amended, extended, restated, assigned (wholly or partially), collaterally assigned, or supplemented from time to time, unless and until paid, satisfied, and discharged of record. If two or more such security instruments are consolidated or restated as a single lien or held by the same Lender (as applicable), then all such security instruments so consolidated or restated shall 6 t 1 47 .00 t 4 5\32 rczozz.z | 0 constitute a single Security Instrument. A participation interest in a security instrument (or partial assignment of the secured loan) does not itself constitute a Security Instrument. 1.1.75 "Senior" means, referring to multiple Security Instruments, the Security Instrument that is most senior in lien of the same type. Where Senior is used as a comparative term as against any specified Security Instrument, such term refers to any Security Instrument of the same type that is senior in lien to such specified Security Instrument. If only one Security Instrument of a particular type exists, then it shall be deemed the Senior Security Instrument of such type. 1.1.76 "senior Loan" had the meaning as set forth in Section 2.2.3. 1.1.77 "SNHP Loan" means that certain loan from CaIHFA through the County of Local Govemment Special Needs Housing Program (SNHP) funds in the original principal amount of approximately $1,574,810 for construction and permanent financing of the Project, with any interest and principal due annually from residual receipts and all principal and accrued interest due fifty-five (55) years after the date of the recordation of the Certificate of Completion, and which is secured by a Permitted Security Instrument junior in lien priority to the Deed of Trust 1.1.78 "State" means the State of Californra. 1.1.79 "subordinate Loan" means the SNHP Loan and any loan approved through revisions to the Project Budget by the City Manager pursuant to Section 6.2, and which is secured by a Permitted Security Instrument junior in lien priority to the Deed of Trust. 1.1.80 "Tax Credit Equity" means the equity investment toward the cost of development and construction of the Project contributed to the Developer (when in the form of a limited partnership) by the Tax Credit Investor, in the amount set forth in the Project Budget. 1.1.81 "Tax Credit Investor" means the limited partner in Developer (when in the form of a limited partnership) that provides the Tax Credit Equity for the development and construction of the Project. 1.1.82 "Tax Credits" means an allocation from TCAC of four percent(4Yo) federal low income housing tax credits to finance a portion of the Project Costs, all in accordance with Sectio n 42 of the Internal Revenue Code of 1986, as amended, all associated Intemal Revenue Service regulations and all associated TCAC regulations. 1.1.83 "TCAC" means the California Tax Credit Allocation Committee or successor in function. 1.1.84 "TCAC Regulatory Agreement" means the regulatory agreement required to be recorded against the Property by TCAC to obtain the Tax Credits. 1.1.85 "Title Company" means Ticor Title Company of California, through its office located at 1500 Quail Street, 3rd Floor, Newport Beach, CA92660, or such other title company mutually agreed upon in writing by both City and Developer 6t | 47 .oo t 4s\3zt øzozz.t I I 1.1.86 "Title Policy" means a standard CLTA owners' policy of title insurance issued by the Title Company, with coverage in the full amount of the Purchase Price and insuring fee title to the Property, subject only to the Permitted Exceptions. However, at Developer's option, Developer may acquire an ALTA extended coverage policy. City shall pay for the standard CLTA policy. Developer shall pay for any additional or ALTA extended coverage policy. 1.1.87 "Transfer" means any of the following: 1.1.87.1 Anyassignment, conveyance, grant,hypothecation, mortgage, pledge, sale, or other transfer, whether direct or indirect, of all or any part of such property, right or obligation, or of any legal, beneficial, or equitable interest or estate in such property, right or obligation or any part of it (including the grant of any easement, lien, or other encumbrance); or 1.1.87.2 Anyconversion,exchange,issuance,modification, reallocation, sale, or other transfer of any direct or indirect equity interest(s) in the owner of such property, right or obligation by the holders of such equity interest(s); or 1.1.87.3 Any merger, consolidation, sale, or lease of all or substantially all of the assets of the Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49Yo interest of all or substantially all of the assets of the Developer; or 1.1.87.4 Any Property Transfer; or 1.1.87.5 The recordation of any deed of trust, mortgage, lien or similar encumbrance against all or any portion of the Property or the Project. 1.1.88 "Unavoidable Delay" means any delay that is caused by the exclusively by the other Party or that is beyond the control of the City or the Developer, including delay caused by strikes, acts of God, weather, inability to obtain labor or materials, inability to obtain governmental permits or approvals, governmental restrictions, civil commotion, fire or similar causes, but excluding circumstances subject to Section 8.7.2. 1.2 RepresentationsandWarranties. 1.2.1 Citv Renresentations and Warranties. The representations and warranties of City contained in this Section I .2.1 shall be based upon the actual knowledge of the City Manager as of the Effective Date. All representations and warranties contained in this Section 1.2.1 arc true and correct as of the Effective Date. City's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. City hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by Developer has been made in material reliance by Developer on such covenants, representations and warranties : 6 1 I 47 .00 | 4 s\32 t øZOZZ.I 12 l.2.l.l City is a California municipal corporation, duly formed and operating under the laws of the State of California. City has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby. 1.2.1.2 The persons executing any instruments for or on behalf of City have been authorized to act on behalf of City and this Agreement is valid and enforceable against City in accordance with its terms and each instrument to be executed by City pursuant hereto or in connection therewith will, when executed, shall be valid and enforceable against City in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by City. 1.2.1.3 City has taken all requisite action and obtained all requisite consents for agreements or matters to which City is aparty in connection with entering into this Agreement and the instruments and documents referenced herein and in connection with the consummation of the transactions contemplated hereby. 1.2.1.4 The Property is a legally formed parcel in the approximate size of 3.853 acres. 1,.2.1.5If the City becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the City under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the City's knowledge and/or belief as of a certain date, the City will give immediate written notice of such changed fact or circumstance to the Developer. 1.2.2 Developer Representations and \ilarranties. The representations and warranties of Developer contained in this Section I.2.2 shall be based upon the actual knowledge of Todd R. Cottle as of the Effective Date. All representations and warranties contained in this Section I.2.2 are true and correct as of the Effective Date. The Developer's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by City has been made in material reliance by City on such covenants, representations and warranties: 1.2.2.1The Developer is a California limited liability company, lawfully entitled to do business in the State of California and the City. The Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and authority to bind the Developer. 1.2.2.2 The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and ól l47.ool4s\32 tozozz.l 13 documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required for the Developer's authorization to enter into Agreement. 1.2.2.3 Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer or to the Property. 1.2.2.4 This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement shall be, duly executed by and shall be valid and legally binding upon the Developer and enforceable in accordance with their respective terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of in compliance with this Agreement by the Developer. 1.2.2.5If the Developer becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the Developer under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the Developer's knowledge and/or belief as of a certain date, the Developer will give immediate written notice of such changed fact or circumstance to the City. 1.2.3 Effective Date. This Agreement is dated July 16, 2019 for reference purposes only. This Agreement shall not become effective until the date on which all of the following are true ("Effective Date"): (a) this Agreement is approved and executed by the appropriate authorities of Developer and delivered to City; (b) Developer has delivered to City a certified copy of the official action taken by all of the entities comprising the Developer approving this Agreement, substantially in the form attached to this Agreement as Exhibit F; (c) following all legally required notices and hearings, this Agreement is approved by the City Council; and (d) this Agreement is executed by the authorized representatives of City. 1.2.4 Exhibit List. The following is a list of the Exhibits attached to this Agreement. Each of the Exhibits is incorporated by this reference into the text of this Agreement. Exhibit A Exhibit B Exhibit C Exhibit Exhibit E Exhibit F Exhibit G Exhibit H Exhibit I Legal Description of Property Scope of Development S chedule of Performance Form of Grant Deed Form of Notice of Agreement Form of Official Action of Developer Form of Certificate of Completion Form of Regulatory Agreement Form of Deed of Trust ól 147.00145\32 lozozz: 14 Exhibit J Exhibit K Exhibit L Form of Land Note Form of Project Note List of Impact Fees Applicable to Project ARTI E II. OPERTY DIS 2.1 Purchase and Sale. In exchange for the Purchase Price and the Developer's other covenants and undertakings set forth in this Agreement, the City shall sell the Property to the Developer and the Developer shall purchase the Property from the City pursuant to the terms and conditions of this Agreement. For the purposes of exchanging funds and documents to complete the sale from the City to the Developer and the purchase by the Developer from the City of the Property pursuant to the terms of this Agreement, the City and the Developer agree to open an escrow ("Escrow") with the Escrow Holder. ARTICLE III of this Agreement constitutes the joint escrow instructions of the Parties to the Escrow Holder for completion of the Escrow for the sale of the Property, as contemplated by this Agreement. The Developer and the City shall execute such further escrow instructions, consistent with the provisions of this Agreement, as may be reasonably requested by the Escrow Holder. In the event of any conflict between the provisions of this Agreement and any other escrow instructions requested by the Escrow Holder, the provisions of this Agreement shall control. 2.2 Payment of Purchase Price. 2.2.1 Land Note and Deed of Trust. The Developer shall pay the Purchase Price by depositing the Land Note and the Deed of Trust into the Esctow, at least one (1) business day preceding the Escrow Closing Date. 2.2.2 Non-Recourse. The Developer shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Land Note, the Project Note or the performance of the covenants of the Developer under the Deed of Trust. The sole recourse of the City with respect to the principal of, or interest on, the Land Note or the Project Note and defaults by Developer in the performance of its covenants under the Deed of Trust shall be to the Property, as described in the Deed of Trust. 2.2.3 Subordination. Except for any Subordinate Loan, the Deed of Trust and Regulatory Agreement shall be subordinated to other loans from Institutional Lenders (in each case, a "senior Loan"), provided all of the proceeds of the proposed Senior Loan, less any transaction costs, must be used to provide financing for the Project. The Deed of Trust and Regulatory Agreement shall be subordinated to the lien(s) securing the County Perm Loan as well as any occupancy and affordability restrictions recorded by the County in connection with the County Perm Loan. The City Manager or his/her designee on behalf of the City is authorized to execute the subordination agreement without the necessity of any further action or approval. 2.3 Eminent Domain. If any portion of the Property or any interest in any portion of the Property, becomes the subject of any eminent domain proceeding prior to Close of Escrow, 6 t t 47 .oo r 4s\32 t ozozzs | 5 other than such a proceeding by the City, including the filing of any notice of intended condemnation or proceedings in the nature of eminent domain commenced by any Governmental Agency, the City shall immediately give the Developer notice of such occurrence, and the Developer shall have the option, exercisable within ten (10) business days after receipt of such notice from the City, to either: (1) cancel the Escrow and terminate this Agreement and the Esctow, in which case the Parties and the Escrow Holder shall proceed in accordance with Section 3.10; or (2) continue with this Agreement in accordance with its terms, in which event the City shall assign to the Developer any right of the City to receive any condemnation award attributable to the Property. 2.4 Title Approval. As soon as practicable following the Effective Date, the City shall obtain from Title Company the Preliminary Report and deliver a copy of the Preliminary Report to the Developer. Within thirty (30) days following the Developer's receipt of a Preliminary Report for the entire Property, the Developer shall deliver the Developer's Title Notice to the City. If the Developer fails to deliver the Developer's Title Notice to the City within thirty (30) days following the Developer's receipt of the Preliminary Report, the Developer will be deemed to approve the status of title to the Property. V/ithin twenty (20) days following receipt by the City of Developer's Title Notice, if any, the City shall serve City's Title Notice Response. If the City does not serve City's Title Notice Response, if necessary, within twenty (20) days following its receipt of Developer's Title Notice, the City shall be deemed to elect not to remove any matter objected to in Developer's Title Notice, if any, from the Preliminary Report. If the City elects in City's Title Notice Response to cause the removal of any matter objected to in Developer's Title Notice from the Preliminary Report, the City shall cause the removal of each such objectionable matter from the Preliminary Report within sixty (60) days following receipt by the Developer of City's Title Notice Response or such other period of time that may be agreed to in writing by both the City and the Developer. If the City is unwilling or unable to cause the removal of any matter objected to in Developer's Title Notice from the Preliminary Report, then, within ten (10) days following the Developer's receipt of City's Title Notice Response stating that the City is unwilling to remove or cause the removal of any matter objected to in Developer's Title Notice or upon the expiration of the above sixty (60) day time period during which the City elected to remove such objectionable matters from the Preliminary Report and was unable to do so, the Developer may either (1) refuse to accept the title to and conveyance of the Property, in which case the Parties shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement without liability to either Party or any other person, by delivery of a written notice of termination to the Escrow Holder, or (2) be deemed to waive its objection to any items set forth in Developer's Title Notice. 2.4.1 If at any time prior to the Close of Escrow the Title Company issues an updated Preliminary Report containing any previously undisclosed matter affecting title to the Property, or the City becomes aware of any previously undisclosed matter affecting title to the Property, following the delivery of the Developer's Title Notice, the City shall provide written notice to the Developer of such matter, together with any updated Preliminary Report related to such matter. The City and the Developer shall have such rights and obligations with respect to such previously undisclosed title matters as they did with respect to any title matters set forth in the original Preliminary Report as set forth in Section 2.4. 6 | I 47 .001 45\32t ;ZOZZ : T 6 2.4.2 Before exercising any right a Party may have under this Section 2.4 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Parties in writing of its election to terminate and shall, upon a non-terminating Party's request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party's notice of election to terminate, meet and confer with the non-terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable title matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable title matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such title matter unless such agreement is reduced to a writing which is approved by all Parties, in their sole and absolute discretion. Ii at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving such title matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Pafty, and the Parties shall proceed pursuant to Section 3.10. 2.4.3 The City agrees not to place any matters of record against the Property (other than Permitted Exceptions and any matters arising from City's issuance or exercise of any remedy related to any approval for the Project), prior to the Close of Escrow, without the prior written consent of Developer. 2.5 Developer Investiqations. 2.5.1 The Developer shall have until the expiration of the Due Diligence Period to complete all of its Due Diligence Investigations with respect to the entirety of the Property. The Developer shall complete all of its Due Diligence Investigations within the Due Diligence Period and shall conduct all of its Due Diligence Investigations at its sole cost and expense. The Developer shall rely solely and exclusively upon the results of its Due Diligence Investigations of the Property, including, without limitation, investigations regarding geotechnical soil conditions, compliance with applicable laws pertaining to the use of the Property by the Developer and any other matters relevant to the condition or suitability of the Property for the Project, as the Developer may deem necessary or appropriate. City makes no representation or warranty to the Developer relating to the condition of the Property or suitability of the Property for any intended use or development by the Developer. The Developer shall deliver a Due Diligence Investigation Rejection Notice to the City prior to the end of the Due Diligence Period. If the Developer does not timely deliver its Due Diligence Investigation Rejection Notice prior to the end of the Due Diligence Period, the Developer shall be deemed to have accepted the condition of the Property in its current condition. If the condition of the Property is rejected, then either Party shall have the right, subject to Section2.4.2, to cancel the Escrow and terminate this Agreement, in its sole discretion, without liability to the other Party or any other person, by delivery of a written notice of termination to the other Party and Escrow Holder. The Developer shall accept all conditions of the Property, without any liability of the City whatsoever, upon the Developer's deemed acceptance of the condition of the Property by its failure to timely deliver its Due Diligence Investigation Rejection Notice. The Developer's failure to timely deliver its Due Diligence Investigation Rejection Notice shall evidence the acceptance of the condition of the Property by the Developer in its existing "As IS," "WHERE IS" and "SUBJECT TO ALL 6 | | 47 .00 t 4 s\32 t øzozz.z 17 FAULTS" condition, as of the last day of the Due Diligence Period. In its sole discretion, the Developer may accept the Property in its "AS IS," "WHERE IS" and "SUBJECT TO ALL FAULTS" condition af any time before the end of the Due Diligence Period. The Developer shall conduct during the Due Diligence Period such environmental assessment(s) of the Property as the Developer deems appropriate. If such assessment(s) do not reveal the presence of any Hazardous Substances on the Property in levels that exceed applicable Governmental Requirements, then the City shall promptly and at its sole cost and expense install security fencing around the Property. If such assessment(s) do reveal the presence of any Hazardous Substances on the Property in levels that exceed applicable Governmental Requirements, then the City and the Developer shall negotiate in good faith in an effort to reach agreement as to the allocation of responsibility and cost of remediation thereof. 2.5.2 Any Due Diligence Investigations of the Property by the Developer shall not unreasonably disrupt any then existing use or occupancy ofthe Property or the operations of the City. The Developer shall be liable for any damage or injury to any person or property arising from the acts of the Developer, its employees, agents or representatives during the course of any Due Diligence Investigations on the Property and the Developer shall indemnify, defend with counsel reasonably acceptable to the City and hold harmless the City and its elected officials, officers, directors, attorneys, contractors, agents and employees from any and all actual or alleged liens, claims, demands or liability arising from any Due Diligence Investigations by the Developer on the Property other than for discovery of existing conditions on the Property. Prior to commencing any Due Diligence Investigations on the Property, the Developer shall deliver copies of policies or certificates of insurance to the City evidencing compliance by the Developer with the liability insurance requirements of Section 5.3. 2.5.3 Before exercising any right aParty may have under this Section 2.5 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Parties in writing of its election to terminate and shall, upon a non-terminating Party's request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party's notice of election to terminate, meet and confer with the non-terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable due diligence matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable due diligence matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such due diligence matter unless such obligation is reduced to a writing which is approved by all Parties, in their sole and absolute discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving the objectionable due diligence matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 3.10. 2.6 Developer to Obtain all Proiect Entitlements. 2.6.1 Pursuant to the ENA, Developer has developed and presented to City staff and the City Council, for review, the following (collectively, the "Plans and Specifications"): 6 t t 47 .00 t 4s\32 t øzozz.l I 8 2.6.1.1A proposed complete conceptual development plan for the Project on the Property that describes and depicts: (1) the location and placement of proposed buildings and (2) the architecture and elevations of the proposed buildings; 2.6.1.2 The proposed unit mix, showing unit size and affordability levels, including one manager's unit, for the Project; 2.6,1.3 A proposed time schedule and cost estimates for the development of the Project on the Property; and 2.6.1.44 proposed financing plan identiffing financing sources for all private and public improvements proposed for the Project 2.6.2 The City's zoning, building and land use regulations (whether contained in ordinances, the City's municipal code, conditions of approval, policies, practice or elsewhere) (collectively, the "City Requirements"), shall be applicable to the use and development of the Project on the Property by the Developer. The Developer acknowledges that all Plans and Specifications and any changes to the Plans and Specifications shall be subject to the City Requirements. No action by the City with reference to this Agreement or any related documents shall be deemed to constitute a waiver of any City Requirements regarding the Property, the Project, the Developer, any successor-in-interest of the Developer or any successor-in-interest to the Property. The City Requirements may only be changed or waived by modification or variance approved by the City and consistent with this Agreement. Notwithstanding any other provision of this Agreement, the City agrees that the only City entitlement necessary for the Project under the City Requirements is design review which requires the City's Architectural Control application, and no other City entitlements are required for the Project. The City also confirms that it has waived any requirement for the Developer to relocate or underground existing overhead utilities on the Property. No entitlement, permit or other approval from the City for development of the Project on the Property shall attach to any portion of the Property or otherwise become effective to allow the Developer to develop the Project on the Property until after the Developer owns fee title to that portion of the Property to which such entitlement, permit or other approval pertains. Under no circumstances shall the Developer commence development of any portion of the Project on the Property prior to the Developer owning fee title to the Property. 2.6.3 The approval of the Scope of Development shall not be binding on the City Council or the Planning Commission of the City regarding any approvals of the Project required by such bodies. The Developer obtains no right to develop the Project on the Property or any portion of the Property by virtue of this Agreement, except that following the Close of Escrow, the Developer shall possess the same rights as any other owner of property within the Property that desires to develop its property in a manner consistent with the City's General Plan. If any revisions of the Scope of Development are required by a Governmental Agency (other than the City) having jurisdiction over the Property or the Project, the Developer shall promptly make any such revisions that are generally consistent with the Scope of Development. 2.6.4 Notwithstanding any provision to the contrary in this Agreement, following the Close of Escrow, the Developer agrees to accept and comply fully with any and all 6 1 t 47 .00 | 4 s\32 rcZOZZs | 9 conditions of approval applicable to all approvals, permits and other governmental actions regarding the development or operation of the Project on the Property, so long as such conditions of approval are consistent with the Scope of Development and this Agreement in all material respects. 2.6.5 Developer to Pay All Costs and Expenses. The Parties agree that the City shall not provide any financial assistance to the Developer in connection with the Project except as may be expressly set forth in this Agreement. The Developer shall be solely responsible for paying for the costs of all design wotk, construction, labor, materials, fees and permit expenses associated with the Project. The Developer shall pay arry and all fees pertaining to the review and approval of the Project by the City, any other Governmental Agency and utility service providers, including the costs of preparation of all required construction, planning and other documents reasonably required by a Governmental Agency pertinent to the development or operation of the Project on the Property, including, but not limited to, specif,tcations, drawings, plans, maps, permit applications, land use applications, zoning applications, environmental review and disclosure documents and design review documents. The Developer shall pay for any and all costs, including, but not limited to, the costs of design, construction, relocation and securing of permits for sewer or utility improvements and connections, that may be required in development of the Project, whether located on or off of the Property. Notwithstanding any other provision of this Section 2.6,the Developer shall not be required to bear the cost to relocate or underground existing overhead utilities on the Property as that City Requirement as been waived by the City. The Developer shall obtain any and all necessary approvals, prior to the commencement of applicable portions of construction, and the Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. In accordance with this Section 2.6.5, Developer shall be responsible for the costs, or immediate reimbursement to the City upon delivery of an invoice for the costs, of the following: 2.6.5.1all fees or expenses of engineers, architects, financial consultants, legal, planning or other consultants or contractors, retained by the Developer for any study, analysis, evaluation, report, schedule, estimate, environmental review, planning andlor design activities, drawings, specifications or other activity or matter relating to the Property or the Project or the negotiation of this Agreement that may be undertaken by the Developer; 2.6.5.2 all fees, charges and costs, make all deposits and provide all bonds or other security associated with the submission to and processing by the City of any and all applications and other documents and information to be submitted to the City by the Developer pursuant to this Agreement or otherwise associated with the Project; and 2.6.6 The Developer shall obtain all entitlements, permits and other approvals for use and development of the Project on the Property from each Governmental Agency, within the time period for such actions specifically set forth in the Schedule of Performance, subject to any extensions of time authorized by this Agreement upon the occurrence of an Unavoidable Delay. 2.7 Deliverv of Propertv Free of Occupants. At the Close of Escrow, the City will deliver possession of the Property to Developer free and clear of any contractual rights created 6 t t 4'7 .oo | 4s\32 t øzozz.z 20 by or with the consent of the City for any person or entity (other than Developer) to use or occupy the Property. 2.8 Proiect Marketins Plan. At least forty-five (45) calendar days prior to the Close of Escrow, Developer shall submit to the City an aff,rrmative fair housing marketing plan for the Project. Within ten (10) calendar days after the City receives such marketing plan submitted by Developer, the City shall approve or disapprove such marketing plan. The City's failure to approve such marketing plan within the specified ten (10) calendar day period, shall constitute City's deemed approval of such marketing plan. ARTI ,E III. ESCRO\il INSTRUCTIONS 3.1 Opening of Escrow. For purposes of this Agreement, the opening of Escrow shall be the first date on which a fully executed copy of this Agreement is deposited with Escrow Holder ("Escrow Opening Date"). The Developer shall cause the Escrow to be opened within five (5) days following the Effective Date. Escrow Holder shall promptly confirm in writing to each of the Parties the date of the Escrow Opening Date. This ARTICLE III shall constitute the joint escrow instructions of the City and the Developer to Escrow Holder for conduct of the Escrow to complete the purchase and sale of the Property between them, as contemplated in this Agreement. 3.2 Conditions to Close of Escrow. The conditions set forth below shall be satisfied or waived in writing by the respective benefited Party on or before the Escrow Closing Date or the Party benefited by any unsatisfied condition shall not be required to proceed to close Escrow. 3.2.1 Developer's Conditions to Close of Escrow. The Developer's obligation to purchase the Property from the City on the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, each of which can only be waived in writing by the Developer: 3.2.1.1The Developer agrees, or is deemed, to accept the title to and conveyance of the Property, pursuant to Section 2.4; 3.2.1.2 The Developer fails to deliver a Due Diligence Investigation Rejection Notice to the City prior to the expiration of the Due Diligence Period; 3.2.1.3 The City's planning commission finds, pursuant to Government Code Secti on 65402, that the Project is consistent with the City's General Plan; 3.2.1.4 Developer has received an allocation of tax-exempt bonds for the Project from CDLAC and a Tax Credit reservation for the Project from TCAC; 3.2.1.5 Developer has received the commitments for funding to make the construction and operation of the Project financially feasible in the Developer's discretion; 6 t r 47 .oo | 4 s\32 t øzozz.z 2l 3.2.1.6 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer; 3.2.1.7 Developer approves the Escrow Holder's estimated Escrow closing/settlement statement; 3.2.1.8 The representations, warranties and covenants of the City set forth in Section 1.2.I are true and correct in all material respects on the Effective Date and on the Escrow Closing Date; 3.2.1.9 The Developer has obtained all entitlements required in connection with the development of the Property, subject to conditions of approval acceptable to Developer in Developer's sole discretion, any applicable appeal period has expired without appeal having been filed or, ifan appeal is filed, such appeal has been denied, and no legal action has been instituted against Developer or the City alleging the invalidity of such entitlements; 3.2.1.10 The City has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow; and 3.2.1.11 The City deposits the items into the Escrow required by Section 3.3. 3.2.2 Citv's Conditions to Close of Escrow.The City's obligation to sell the Property to the Developer on or before the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, which can only be waived in writing by the City: 3.2.2.1The Developer agrees, or is deemed, to accept the title to and conveyance of the Property, pursuant to Section 2.4; 3.2.2.2 The Developer fails to deliver a Due Diligence Investigation Rejection Notice to the City prior to the expiration of the Due Diligence Period; 3.2.2.3 The City's planning commission finds, pursuant to Government Code Section 65402, that the Project is consistent with the City's General Plan; 3.2.2.4 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer; 3.2.2.5 The Developer submits to the City evidence satisfactory to the City, in the City's reasonable discretion, that the Developer has obtained all entitlements necessary for the development of the Property from each applicable Governmental Agency, including the City; 3.2.2.6 The Developer has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow; 6 t t 47 .oo t 4 s\32 rczozz.z 22 3.2.2.7 The Developer submits to the City the Developer's organizational documents; 3.2.2.8 The Developer submits to the City the marketing plan for the Project pursuant to Section 2.8; 3.2.2.9 The Developer submits to the City a copy of the construction contract for the Project in substantially final form (with a copy of the final construction contract being delivered to the City by Close of Escrow); 3.2.2.10 The Developer submits to the City copies of the Construction Financing Documents in substantially final form (with copies of the final Construction Financing Documents being delivered to the City through Close of Escrow); 3.2.2.11 The Developer submits to the City a document evidencing a commitment from the Tax Credit Investor to Developer to provide the Tax Credit Equity; 3.2.2.12 The Developer submits to the City documents evidencing a commitment from an Institutional Lender to Developer to provide the Permanent Loan and evidencing a commitment from the County to Developer to provide the County Perm Loan; 3.2.2.13 The Developer submits to the City the documents evidencing the SNHP Loan; 3.2.2.14 The Developer submits to the City documents evidencing a commitment from the Lender(s) of all Subordinate Loan(s) to Developer to provide the Subordinate Loan(s); 3.2.2.15 The representations, warranties and covenants of the Developer set forth in Section 1.2.2 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date; and 3.2.2.16 The Developer deposits the items into the Escrow required by Section 3.3. 3.3 Developer's Escrow Deposits. Following satisfaction or waiver of each of the Developer's conditions to Close of Escrow set forth in Section 3.2.l,the Developer shall deposit the following funds and documents into Escrow at least one (1) business days prior to the Escrow Closing Date in a writing delivered to the Parties: 3.3.1 PCO ent.A PCO Statement executed by the authorized representative(s) of the Developer. 3.3.2 Acceptance of Grant Deed. The Certificate of Acceptance of the Grant Deed, in the form attached to the Grant Deed, executed by the authorized representative(s) of the Developer in recordable form. 6 1 t 47 .00 t 45\32 t ezozz s 23 3.3.3 Notice of sreement.The Notice of Agreement executed by the authorized representative(s) of the Developer in recordable form, to be recorded against the Property at the Close of Escrow. 3.3.4 Regulatory Agreement. The Regulatory Agreement executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow. 3.3.5 Construction Financing Securify Instrument(s). A Permitted Security Instrument(s) securing repayment of the Construction Financing, executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow. 3.3.6 Bond Regulatory Agreement. A regulatory agreement as required by the issuer of tax-exempt bonds for the Project, executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow. 3.3.7 Land Note. The Land Note signed by the authorized representative(s) of Developer 3.3.8 Proiect Note. The Project Note signed by the authorized representative(s) of Developer. 3.3.9 Deed of Trust. The Deed of Trust executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow. 3.3.10 Subordinate Loan(s)Instrumentls). Permitted Securi ty Instrument(s) securing repayment of the Subordinate Loan(s) executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow. 3.3.11 Subordinate Loan Land U Restriction Asreement(s)Agreement(s) restricting occupancy and rents in the Project as required by the Subordinate Loans, executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow. 3.3.12 Subordination Agreements. Subordination agreement(s) subordinating the Deed of Trust and Regulatory Agreement in the form provided by an Institutional Lender, reasonably approved by the City and executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow. 3.3.13 Other Funds and Documents. Such documents required from Developer under the terms of this Agreement to close the Escrow, including funds as required to pay all Escrow closing costs, which shall be the sole responsibility of Developer, or by the Escrow Holder in the performance of the Escrow Holder's contractual or statutory obligations relating to the Escrow. 6 t t 47 .oo t 4 s\32 t ozozz.l 24 3.4 Citv's Escrow Deposits. Following satisfaction or waiver of each of the City's conditions to Close of Escrow set forth in Section 3.2.2, the City shall deposit the following documents into Escrow at least one (1) business days prior to the Escrow Closing Date: 3.4.1 Grant Deed. The Grant Deed executed by the authorized representative(s) of the City in recordable form. 3.4.2 FIRPTA davit lcifvl-The FIRPTA Affidavit completed and executed by the authorized representative(s) of the City. 3.4.3 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the City in recordable form. 3.4.4 Resulatory Agreement. The Regulatory Agreement signed by the authorized representative(s) of the City in recordable form, which shall be recorded against the entire Property. 3.4.5 Deposit Funds Under ENA. Any remaining and refundable portion of the deposit made by Developer under the ENA to be applied to any costs of Escrow to be borne by Developer and then, if any funds still remain, be returned to the Developer by Escrow Holder 3.4.6 Subordinatio Asreements.Subordination agreement(s) subordinating the Deed of Trust in the form provided by an Institutional Lender, reasonably approved by the City and executed by the authorized representative(s) of the City in recordable form, which shall be recorded against the Property. 3.4.7 Other Funds and Documents. The principal amount of the Project Loan and such other funds or documents required from the City under the terms of this Agreement to close the Escrow or by the Escrow Holder in the performance of the Escrow Holder's contractual or statutory obligations regarding the Escrow. 3.5 Closing Procedure. When each of the Developer's Escrow required deposits, as set forth in Section 3.3, and each of the City's Escrow required deposits, as set forth in Section 3.4, are deposited into Escrow, Escrow Holder shall request confirmation in writing from both the City and the Developer that each of their respective conditions to the Close of Escrow, as set forth in Section 3.2, are satisfied or waived. Upon Escrow Holder's receipt of written confirmation from both the City and the Developer that each of their respective conditions to the Close of Escrow are either satisfied or waived, Escrow Holder shall close the Escrow for the Property by doing all of the following: 3.5.1 Recordation of Documents. File the documents set forth in Section 3.7 with the Offrce of the Recorder of the County, for recordation in the order set forth in Section 3.t. 3.5.2 Distribution of Recorded Documents. Distribute each recorded document to the Party or person designated for such distribution in Section 3.7. 6 t t 47 .00 t 4s\32 rczozz.t 25 3.5.3 PCO Statement. File the PCO Statement with the Office of the Recorder of the County 3.5.4 FIRPTA Affidavit. File the FIRPTA Affidavit with the united States Internal Revenue Servrce 3.5.5 Title Policy. Obtain and deliver the Title Policy to the Developer. 3.5.6 Orisinal Notes. Deliver the original Land Note and Project Note to the City. 3.5.7 Funds. Deliver all funds held by the Escrow Holder for the account of City to City, less any charges to the account of City pursuant to the terms of this Agreement, and deliver the sum of Four Million Eight Hundred Thousand Dollars ($4,800,000.00), which is the principal portion of the Project Loan to be used to finance the Project's predevelopment, development and construction costs, and all other remaining funds held by the Escrow Holder for the account of Developer to Developer and less any other charges to the account of Developer pursuant to the terms of this Agreement. 3.6 Close of Escrow. The Close of Escrow shall occur on or before the Escrow Closing Date. The City and the Developer may mutually agree to change the Escrow Closing Date by joint written instruction to the Escrow Holder. The City Manager is authorized to agree to one or more extensions of the Escrow Closing Date on behalf of the City up to a maximum time period extension of six (6) months in the aggregate, in the City Manager's sole and absolute discretion. If for any reason the Close of Escrow has not occurred by the Escrow Closing Date, then any Party not then in default of this Agreement may cancel the Escrow and terminate this Agreement, subject to the notice and cure provisions of Section 7 .l (to the extent applicable), without liability to any other Party or any other person for such termination and cancellation, by delivering written notice of termination to the other Party(ies) and Escrow Holder and, thereafter, the Parties shall proceed pursuant to Section 3.10 if the non-terminating Party is not in default or pursuant to Section 7.1 or 7.2 (as applicable) if the non-terminating Party is in default. Without limiting the right of any Party to terminate this Agreement, pursuant to the preceding sentence, if Escrow does not close on or before the Escrow Closing Date, and no Party has exercised its contractual right to cancel Escrow and terminate this Agreement before such time, then Escrow shall close as soon as reasonably possible following the first date on which Escrow Holder is in a position to close the Escrow pursuant to the terms and conditions of this Agreement. 3.7 Recordation and Dis of Documents. As applicable, Escrow Holder shall cause the following documents to be recorded in the official records of the Recorder of the County in the following order of priority at the Close of Escrow: (a) the Grant Deed; (b) the regulatory agreement required by the issuer of tax-exempt bonds for the Project; (c) Permitted Security Instrument(s) securing the Construction Financing; (d) the Regulatory Agreement; (e) the Notice of Agreement; (f) the Deed of Trust; (g) the land use restriction agreement required by the Lender(s) of the Subordinate Loan(s); (h) the deed(s) of trust securing the Subordinate Loan(s); (i) the Subordination Agreements described in Sections 3.3.I4 and3.4.6; and O any other documents to be recorded through the Escrow upon the joint instructions of the City and the Developer. The Escrow Holder shall deliver conformed copies of all documents filed for 6 t 1 47 .oo t 4 5\32 t øzozz.l 26 recording in the official records of the County through the Escrow to the City, the Developer and any other entity or person designated in the written joint escrow instructions of the Parties to receive an original or conformed copy of each such document. Each copy of a document filed for recording shall show all recording information. The Parties intend and agree that this Section 3.7 shall establish the relative priorities of the documents to be recorded in the official records of the County through the Escrow, by providing for recordation of Senior interests prior in time to junior interests, as provided in this Section 3.7. 3.8 Escrow Closins Costs, Taxes and Title Policy Premium. The City and the Developer shall each pay one-half (Il2) of the Escrow fees and such other costs as Escrow Holder may charge for the conduct of the Escrow. Escrow Holder shall notify the Developer and the City of the costs to be borne by each of them at the Close of Escrow by delivering the Escrow Holder's estimated closing/settlement statement to both the City and the Developer at least four (4) business days prior to the Escrow Closing Date. The City shall pay the premium charged by the Title Company for the standard Title Policy for the Property, exclusive of any endorsements or other supplements to the coverage of such Title Policy that may be requested by the Developer, as well as documentary transfer taxes and any and all other charges, fees and taxes levied by a Governmental Agency relative to the conveyance of any portion of the Property through the Escrow transaction contemplated in this Agreement. The Developer shall pay any and all recording fees relative to the conveyance of any portion of the Property through the Escrow transaction contemplated in this Agreement. 3.9 Escrow Cancella fion Charses.If the Escrow fails to close due to either the City's material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the City shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close due to the Developer's material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the Developer shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close for any reason other than the material default of either the Developer or the City and the Escrow is cancelled and this Agreement is terminated, the Developer and the City shall each pay one-half (1 12) of any ordinary and reasonable Escrow and title order cancellation charges. 3.10 Escrow Cancellation. If this Agreement is terminated and the Escrow cancelled pursuant to a contractual right granted to a Party in this Agreement to terminate this Agreement and cancel the Escrow, other than due to the material default of another Party, the Parties shall do each of the following: 3.10.1 Cancellation Instructions. The Parties shall, within three (3) business days of receipt of Escrow Holder's written request, execute any reasonable Escrow cancellation instructions requested by Escrow Holder; 3.10.2 Return of Funds and Documents. Within ten (10) days ofreceipt by the Parties of a settlement statement of Escrow and title order cancellation charges from Escrow Holder: (a) the Developer or Escrow Holder shall return to the City any documents previously delivered by the City to the Developer or Escrow Holder, (b) the City or Escrow Holder shall return to the Developer all documents previously delivered by the Developer to the City or Escrow Holder; (c) Escrow Holder shall return to the Developer any funds deposited by 6 t | 47 .oo t 4s\32 t øzozz.l 27 Developer into Escrow, less the Developer's share of customary and reasonable Escrow and title order cancellation charges, if any; and (d) Escrow Holder shall return to the City any funds deposited by City into Escrow if it has already been deposited, less the City's share of customary and reasonable Escrow and title order cancellation charges, if any. 3.11 Report to IRS. Following the Close of Escrow and prior to the last date on which such report is required to be filed with the Internal Revenue Service, if such report is required pursuant to Section 60a5(e) of the Internal Revenue Code, Escrow Holder shall report the gross proceeds of the purchase and sale of the Property to the Internal Revenue Service on Form 1099-8, W-9 or such other form(s) as may be specified by the Internal Revenue Service pursuant to Section 6045(e). Upon the filing of such reporting form with the Internal Revenue Service, Escrow Holder shall deliver a copy of the filed form to the City and the Developer. ARTICLE IV. PROJECT D PMENT 4.1 Developer Covenant to Undertake Proiect. The Developer covenants, for itself, its successors and assigns, to and for the benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itselt its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.1 shall run with the land of the Property until the date of recordation of the Certificate of Completion. 4.2 f)eveloner Chanses to Plans and Snecifications Durins Course of Construction. The Developer shall have the right during the course of construction of the Project to make "minor field changes," without seeking the approval of the City, if such changes do not affect the type of use to be conducted within all or any portion of a structure. "Minor field changes" shall be defined as those changes from the approved Plans and Specifications that have no substantial effect on the Project or are made in order to expedite the work of construction in response to field conditions. The Developer shall submit all other changes, i.e. those changes which are not oominor field changes", to the City for its review and approval no less than fifteen (15) days prior to the date that the Developer intends to implement such changes. The City shall have ten (10) days from its receipt of such proposed changes to review the same and advise the Developer in writing whether such changes are acceptable to the City in its reasonable discretion. Any proposed changes which are not disapproved by the City within such ten (10) day period shall be deemed approved. Nothing contained in this Section 4.2 shall be deemed to constitute a waiver of or change in the City Requirements governing "minor fïeld changes" or other changes or in any approvals by the City otherwise required for "minor field changes." or other changes. 6 t 1 47 .oo r 4 s\32 rczozz.t 28 4.3 Construction Start and Comnletion of Proiect. The Developer shall comrnence construction of the Project no later than the Project Commencement Date and, thereafter, shall diligently proceed to complete the construction of the Project in a good and workmanlike manner in substantial conformity with the approved plans, specifications, and conditions for the Project approved by the City and the Schedule of Performance, subject to Unavoidable Delays. The Developer shall obtain a Certificate of Completion on or before the Project Completion Date, subject to Unavoidable Delays. The Developer will, promptly upon Completion of Construction of the Project, cause the Project to be inspected by each Governmental Agency with jurisdiction over the Project, shall correct any defects and deficiencies that may be disclosed by any such inspection and shall cause to be duly issued all occupancy certificates and other licenses, permits and authorizations necessary for the operation and occupancy of the completed Project. The Developer shall do and perform all of the foregoing acts and things and cause to be issued and executed all such occupancy certificates, licenses, and authorizations for the Project on or before the date set forth therefor in the Schedule of Performance as the completion date for the Project. After commencement of the work of improvement of the Project, the Developer shall not permit the work of improvement of the Project to cease or be suspended for a time period in excess of thirty (30) consecutive calendar days, subject to Unavoidable Delays. 4.4 Compliance with Laws. All work performed in connection with the development of the Project shall comply with all Govemmental Requirements. 4.5 Schedule of Performance. The Schedule of Performance establishes various dates and times for the accomplishment of various tasks assigned to the City and the Developer and the satisfaction of the conditions precedent to the close of the Escrow. The Parties agree that time is of the essence in the performance of such tasks and the satisfaction of conditions precedent, in view of the large investment of resources that all Parties recognize will be required for the undertaking of the Proj ect. If the date or time for the performance of a task or the satisfaction of a condition, as set forth in either the text of this Agreement or in the Schedule of Performance, may not be achieved, then prior to such date or time set forth in the text of this Agreement or the Schedule of Performance, the Parties shall consider whether a modification to the text of this Agreement or to the Schedule of Performance is indicated. Any decision to approve a modification to a time or date established in either the text of this Agreement or the Schedule of Performance shall be subject to the sole discretion of each Party. Any modification of a time or date for performance of a particular task or satisfaction of a particular condition that does not result in a change of more than one hundred eighty (180) days may be approved on behalf of the City by the City Manager, in his or her reasonable discretion. A modification of a time or date for performance of a task or satisfaction of a condition (or a series of such modifications) that results in an aggregate change of more than one hundred eighty (180) days shall be subject to the approval of the City Council, in its sole and absolute discretion. If performance of a task or satisfaction of a condition in the Schedule Performance is prevented or delayed by Unavoidable Delays, the deadline for completion of such task or satisfaction of such condition shall be extended by the period of such Unavoidable Delays. 4.6 Developer Attendance at City Meetings. The Developer agrees to have one or more of its employees or consultants who are knowledgeable regarding this Agreement and the development of the Project, such that such person(s) can meaningfully respond to City questions 6 t | 47 .oo t 4 s\32 t øzozz s 29 regarding the progress of the Project, attend City Council meetings, when requested to do so on not less than ten (10) days prior written notice by City staff. 4.7 Citv's Right to Inspect Proiect and Pronertv. Officers, employees, agents and representatives of the City shall have the right of reasonable access to the Property, without the payment of charges or fees, during normal construction hours, during the period of construction of the Project. Such officers, employees, agents or representatives of the City shall be those persons who are designated by the City Manager. Any and all officers, employees, agents or representatives of the City who enter the Property shall identify themselves at the construction management office on the Property, upon their entrance on to the Property, and shall at all times be accompanied by a representative of the Developer, while on the Property. The Developer shall make a representative of the Developer available for this purpose at all times during normal construction hours, upon reasonable notice from the City. The City shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the City of the right of access to the Property provided in this Section 4.7, other than injury, property damage or liability arising from the negligence or willful misconduct of the Developer or its officers, agents or employees. The City shall inspect relevant portions of the Property, prior to issuing any written statements reflecting adversely on the Developer's compliance with the terms and conditions of this Agreement pertaining to development of the Project. If in the City's reasonable judgment it is necessary, the City shall have the further right, from time to time, to retain a consultant or consultants to inspect the Project and verify compliance by the Developer with the provisions of this Agreement. The Developer acknowledges and agrees that any such inspections are for the sole pulpose of protecting the City's rights under this Agreement, are made solely for the City's benefit, that the inspections may be superficial and general in nature, and are for the purposes of informing the City of the progress of the Project and the conformity of the Project with the terms and conditions of this Agreement, and that the Developer shall not be entitled to rely on any such inspection(s) as constituting an approval, satisfaction or acceptance of any materials, workmanship, conformity of the Project with this Agreement or otherwise. The Developer agrees to make its own regular inspections of the work of construction of the Project to determine that the quality of the Project and all other requirements of the work of construction of the Project are being performed in a manner satisfactory to the Developer. The Developer also agrees to immediately notify the City in writing should the Developer's inspections show any matters that will prevent the entire Project from being completed by the Project Completion Date set forth therefore in the Schedule of Performance. V/ithout limiting the foregoing, the Developer shall permit the City upon reasonable notice to examine and copy all books and account records and other papers relating to the Property and the construction ofthe Project. The Developer will use commercially reasonable efforts to cause all contractors, subcontractors and materialmen to cooperate with the City to enable such examination. 4.8 Cost of Construction. The cost and expense of undertaking and completing the Project, including, without limitation, constructing all legally imposed on- and off-site improvements, and providing all utilities therefor, shall be borne by Developer at its sole cost, expense and liability except as otherwise provided in this Agreement. Developer shall be solely responsible for payment of all City land use, construction, inspection, plan check and development impact fees imposed by the City with respect to the development of the Project. Developer shall bear all costs and expenses associated with the processing and obtaining of the entitlements and shall bear all costs and expenses (except to the extent expressly set forth 6 1 | 47 .00 t 4 5\32 t ezozz.l 3 0 otherwise in this Agreement), associated with any and all terms, conditions, requirements, mitigation measures and other exactions imposed on, or required in connection with, the entitlements. 4.9 Prevailing Wases. 4.9.1 The Developer acknowledges that the City has not made any representation, express or implied, to the Developer or any person associated with the Developer regarding whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to Labor Code Sections 1720, et leg. The Developer agrees with the City that the Developer shall assume the responsibility and be solely responsible for determining whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification. 4.9.2 The Developer, on behalf of itself, its successors, and assigns, waives and releases the City from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781 . The Developer acknowledges the protections of Civil Code Section 1542 rclative to the waiver and release contained in this Section 4.9, which reads as follows: ..A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS V/HICH THE CREDITOR DOES NOT KNOV/ OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, V/HICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT V/ITH THE DEBTOR." BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY V/AIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION V/ITH THE WAIVERS AND RELEASES OF THIS SECTION 4.9.2. Developer's Initials 4.9.3 Additionally, in accordance with Section7.5, the Developer shall indemnifu, defend with counsel acceptable to the City and hold the City harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising from this Agreement or the construction or operation ofthe Project. 4.10 Certificate of Completion. 4.10.1 Following the substantial Completion of Construction of the Project, and upon written request from the Developer for issuance of a Certificate of Completion for the Project, the City shall inspect the Project to determine whether or not the Project has been substantially completed in compliance with this Agreement. If the City determines that the Project is complete and in compliance with this Agreement, the City Manager shall furnish the Developer with a Certificate of Completion for the Project. If the City determines that the Project is not in compliance with this Agreement, the City Manager shall send written notice of 6 | t 47 .oo | 4s\32 t ozozz.l 3 7 each non-conformity to the Developer. Upon issuance of the final certificate of occupancy for the development of the Project, based on the plans submitted by the Developer to the City, the City shall furnish the Developer with a Certificate of Completion for the Project. 4.10.2 The Certificate of Completion, upon issuance, shall be evidence of the City's conclusive determination of satisfactory substantial completion of the entirety of the Project pursuant to the terms of this Agreement. 4.10.3 The City shall not unreasonably withhold the issuance of a Cerlificate of Completion. After the recordation of a Certificate of Completion for the Project, any person then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property improved with the Project shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement regarding construction or installation of the Project except that such person shall be bound by any reservations, covenants, conditions, restrictions and other interests recorded against the Property pursuant to this Agreement and the Grant Deed. 4.10.4 If the City fails or refuses to issue a Certificate of Completion following written request from the Developer, the City shall, within fifteen (15) calendar days of the Developer's written request or within three (3) calendar days after the next regular meeting of the City Council, whichever date occurs later, provide the Developer with a written statement setting forth the reasons for the City's failure or refusal to issue a Certificate of Completion. The statement shall also contain the City's opinion of the action(s) the Developer must take to obtain a Certificate of Completion from the City. If the reason for the Developer's failure to complete the Project is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other minor building "punch-list" items, the City may issue its Certificate of Completion upon the posting of a bond or irrevocable standby letter of credit by the Developer in a form reasonably acceptable to the City in an amount representing the fair value of the work on the Project remaining to be completed, as reasonably determined by the City. If the City fails to provide such written statement, within the specified time period, the Developer shall be deemed conclusively and without fuither action of the City to have satisfied the requirements of this Agreement with respect to the Project, as if a Certificate of Completion had been issued by the City pursuant to this Agreement. 4.10.5 A Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Project, or any parts thereof. A Certificate of Completion shall not be deemed to constitute a notice of completion under Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants, restrictions or conditions contained in the Grant Deed or any other instruments recorded against the Property pursuant to this Agreement. A Certificate of Completion is not evidence of the compliance of the Project with any City Requirements or any building code, conditions of approval, land use, zoningor other requirements of the City or any Governmental Agency with jurisdiction over the Property, other than the City. 6 t t 47 .oo r 4s\32 rczozz.l 32 ARTICLE V DEVELOPER COVENANTS 5.1 Oblisation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion ofthe Property and/or Project, covenants and agrees that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, colot, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer, 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 oftenants, lessees, sub-tenants, sub-lessees or vendees ofthe Property. V/ith respect to familial status, this Section 5.1 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. 'With respect to familial status, nothing in this Section 5.1 hall be construed to affect Section 51.2,51.3,51.4, 5 1 .10, 5 I .1 1 and 199.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 5. 1 . The covenant of this Section 5. 1 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity and be a covenant in the Grant Deed and the Notice of Agreement. 5.2 Form of Non-Discrimination and Non-Sesresation Clauses. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.2.1 The Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, race, color, religion, cteed, ancestry or national origin of any person. With respect to familial status, this Section 5.2.1 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in this Section 5.2.1 shall be construed to affect Section 5I.2, 51.3, 51 .4, 51.10, 51.1 1 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 5.2.1. 5.2.2 All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non-discrimination or non-segregation covenants: 5.2.2.1In deeds: "The grantee herein covenants by and for itselt its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee 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 6 t t 47 .oo | 4 s\32 t øzozzs 3 3 or occupancy of tenants, lessees, sub-tenants, sub-lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. Notwithstanding the foregoing paragraph, with respect to familial status, the foregoingparagraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. V/ith respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2,51.3,5I.4,5T.10, 51.11 and 199.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to foregoingparagraph." 5.2.2.2In 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 ofany person or group ofpersons, on account ofrace, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee 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, sub-lessee, sub-tenants, or vendees in the premises herein leased. Notwithstanding the foregoing paragraph, with respect to familial status, the foregoing paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2,51.3, 5I.4,51.10,51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to the foregoing paragraph" 5.2.2.3In contracts: "There shall be no discrimination against or segregation ofany person or group ofpersons on account ofrace, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee 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, sub-lessees, sub-tenants, or vendees of the premises herein transferred." The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. "Notwithstanding the foregoing paragraph, with respect to familial status, the foregoiîg paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2,51.3, 51.4,51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to the foregoing paragraph." 6 t I 47 .00 1 4 5\32 t øZOZZ : 3 4 5.2.3 The covenant of this Section 5.2 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. 5.3 Environmental Indemnity of the City bv the Developer. The Developer agrees, at its sole cost and expense, to fully indemnify, protect, hold harmless, and defend (with counsel selected by the Developer and approved by the City) the City and its commissions, agents, attorneys, officers, employees, and authorizedrepresentatives (collectively, the "fndemnified Parties"), from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including, without limitation, attorney fees, disbursements and costs of attorneys, environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever (collectively, "Environmental Claims") that may, af any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded against, the Indemnified Parties, directly or indirectly relating to or arising from any of the following "Environmental Matters" existing or occutring during or arising from the Developer's ownership of the Property or construction or operation of the Project: 5.3.1 The presence of Hazardous Substances on, in, under, from or affecting all or any portion of the Property or the Project. 5.3.2 The storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Substances on, in, under, from or affecting the Property or the Project. 5.3.3 The violation of any law, rule, regulation, judgment, order, permit, license, agreement, covenant, restriction, requirement or the like by the Developer, its agents or contractors, relating to or governing in any way Hazardous Substances on, in, under, from or affecting the Property or the Project. 5.3.4 The failure of the Developer, its agents or contractors, to properly complete, obtain, submit andlor file any and all notices, permits, licenses, authorizations, covenants and the like in connection with the Developer's activities on the Property or regarding the Project. 5.3.5 The implementation and enforcement by the Developer, its agents or contractors of any monitoring, notification or other precautionary measures that may, at any time, become necessaty to protect against the release, potential release or discharge of Hazardous Substances on, in, under, from or affecting the Property or the Project. 5.3.6 The failure of the Developer, its agents or contractors, in compliance with all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of any Hazardous Substances existing, stored or generated on, in, under or from the Property or the Project. 5.3.7 Any investigation, inquiry, order, hearing, action or other proceeding by or before any Governmental Agency in connection with any Hazardous Substances on, in, under, 6 t 1 47 .oo t 4 s\32 rczozz.l 3 5 from or affecting the Property or the Project or the violation of any Environmental Law relating to the Property or the Project. 5.3.8 The Developer shall pay to the Indêmnified Parties all costs and expenses including, without limitation, reasonable attorneys' fees and costs, incurred by the Indemnified Parties in connection with enforcement of the aforementioned environmental indemnity. 5.4 Insurance. In order to protect the City and its commissions, agents, attorneys, officers, employees and authorized representatives (collectively, "Additional Insureds") against any and all claims and liability for death, injury, loss and damage resulting from the Developer's actions in connection with this Agreement, the Property, and the Project, the Developer shall secure and rnaintain the insurance coverage, described in and required by this Section 5.4. The City shall not have any obligation under this Agreement until the Developer provides the required policies andlor certificates evidencing the insurance required by this Section 5.4 to the City and the City approves such evidence of insurance. The Developer shall pay any deductibles and self-insured retentions under all insurance policies issued in satisfaction of the terms of this Agreement. Developer shall retain all insurance policies as set forth in this Section 5.4 until recordation of the Certificate of Completion. 5.4.1 \ilorkers' Compensation Insurance Requirement. The Developer shall submit written proof that the Developer is insured against liability for workers' compensation in accordance with the provisions of Section 3700 of the Labor Code. By executing this Agreement, the Developer makes the following certification, required by Section 1861 of the Labor Code: "I am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the perforrnance of the work of the Agreement." The Developer shall require each contractor and sub-contractor performing work on the Project to provide workers' compensation coverage for all of such contractor's or sub-contractor's employees, unless the contractor's or sub-contractor's employees are covered by workers' compensation insurance provided by the Developer. If any class of employees engaged in work or services performed in connection with the Project is not covered by Labor Code Section 3700, the Developer shall provide and/or require each contractor or sub-contractor to provide adequate workers' compensation insurance covering such employees. Each wotkers' compensation policy procured pursuant to this Section 5.4.1 shall contain a full waiver of subrogation clause in favor of the Additional Insureds. 6 t t 47 .oo t 4 s\32 t øzozz.r 3 6 5.4.2 Liabilitv and Permanent Insurance Requirements. 5.4.2.1The Developer shall maintain in full force and effect, from the Effective Date until the issuance of the Certificate of Completion, subject to Section 5.4.2.4,the following insurance coverage : 5.4.2.1.1 CommercialGeneralLiabilitylnsurancecoverage, including, but not limited to, Premises-Operations, Contractual Liability Insurance (specifically covering all indemnity obligations of the Developer pursuant to this Agreement), Products- Completed Operations Hazards, Personal lnjury (including bodily injury and death), and Property Damage for liability arising out of the construction of the Project andlor the Developer's operations concerning the Property or the Project. The commercial general liability insurance coverage shall have minimum limits for Bodily Injury and Property Damage liability of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. 5.4.2.1.2 Automobile Liability Insurance against claims of Personal Injury (including bodily injury and death) and Property Damage covering all owned, leased, hired and non-owned vehicles used by the Developer with minimum limits for Bodily Injury and Property Damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and ONE MILLION DOLLARS ($1,000,000) aggregate. Such insurance shall be provided by a business or commercial vehicle policy. 5.4.2.1..3 If the Developer hires a consultant to provide design services, such as architectural or engineering services in connection with the Project, or any portion of the Project, the Developer shall require each such consultant to provide Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in connection with, the performance of such design services, with limits of not less than ONE MILLION DOLLARS ($l,ooo,ooo). 5.4.2.1.4 Upon acceptance of the Project or any porlion thereof, from each contractor, the Developer shall maintain Fire and Extended Coverage Insurance, excluding earthquake coverage, on the Project on a blanket basis or with an agreed amount clause in amounts not less than 100%o of the replacement value of all portions of the Project so accepted. 5.4.2.2 During the construction of the Project, the Developer shall require that each contractor performing work on the Project maintain the following insurance coverage, as specified below, at all times during the performance of said work, or the Developer shall provide for such contractors "wrap" coverage, as specified below, at all times during the performance of said work: 5.4.2.2.1 The Developer shall maintain Builder's Risk Insurance to be written on an All Risk Completed Value form, in an aggregate amount equal to rc}% of the completed insurable value of the Project or portion of the Project on which such contractor is performing work. 6 r 1 47 .00 | 4 s\3zt ezozzs 3 7 5.4.2.2.2 Each general contractor and each sub-contractor shall maintain Commercial General Liability Insurance with limits of not less than ONE MILLION DOLLARS ($1,000,000) per occurrence and TV/O MILLION DOLLARS ($2,000,000) aggregate to protect the Developer during the construction of the Project from claims involving bodily injury andlor death and damage to the property of others. 5.4.2.2.3 Each general contractor and each sub-contractor shall maintain Automobile Liability Insurance against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used in the performance of the contractor's obligations with minimum limits for bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each ocsurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such automobile liability insurance shall be provided by a business or commercial vehicle policy. 5.4.2.3 The insurance required in Section 5.4.2.I and Section 5.4.2.2 above shall include endorsements naming the Additional Insureds as additional insured for liability arising out of this Agreement and any operation related to this Agreement. 5.4.2.4 Any insurance coverage required under this Agreement shall not be written on a "claims made" basis. The applicable certificate of insurance must clearly provide that the coverage is on an "occurrence" basis. The requirements of this Section 5.4.2.4 shall survive any expiration or termination of this Agreement and the recordation of the Grant Deed and any Certificate of Completion. 5.4.2.5 Receipt by the City of evidence of insurance that does not comply with the above requirements shall not constitute a waiver of the insurance requirements of this Agreement. 5.4.2.6 Subject to Section 5.4.2.4, all of the insurance coverage required under this Section 5.4 shall be maintained by the Developer or its contractors, as required by the terms of this Agreement, until the issuance of the Certificate of Completion and shall not be reduced, modified, or canceled without, at least, thirty (30) days prior written notice to the City. Also, phrases such as "endeavor to" and "but failure to mail such notice shall impose no obligation or liability of any kind upon the company" shall not be included in the cancellation wording of any certificates of insurance or any coverage for the Additional Insureds. The Developer shall immediately obtain replacement coverage for any insurance policy that is terminated, canceled, non-renewed, or whose policy limits are exhausted or upon insolvency of the insurer that issued the policy. 5.4.2.7 All insurance to be obtained and maintained by the Developer under this Section 5.4 shall be issued by a company or companies listed in the then cunent "Best's Key Rating Guide" publication with a minimum of an "A:VII" rating and be admitted to conduct business in the State of California by the State of California Department of Insurance. 5.4.2.8 The City will not accept selÊinsurance in satisfaction of the insurance requirements of this Section 5.4. 6 I 1 47 .00 t 4s\32 t øZOZZs 3 8 5.4.2.9 All insurance obtained and maintained by the Developer in satisfaction of the requirements of this Agreement shall be primary to and not contributing to any insurance maintained by the Additional Insureds. 5.4.2.10 Insurance coverage in the minimum amounts set forth in this Section 5.4 shall not be construed to relieve the Developer of any liability, whether within, outside, or in excess ofsuch coverage, and regardless ofsolvency or insolvency ofthe insurer that issues the coverage; nor shall it preclude the Additional Insureds from taking such other actions as are available to them under any other provision of this Agreement or otherwise at law. 5.4.3 Failure by the Developer to maintain all insurance coverage required by this Section 5.4 ineffect shall be an Event of Default by the Developer. The City, at its sole option, may exercise any remedy available to them in connection with such an Event of Default. Alternatively, the City may, at its sole option, purchase any such required insurance coverage and the City shall be entitled to immediate payment from the Developer for any premiums and associated costs paid by the City for such insurance coverage. Any election by the City to purchase or not to purchase insurance otherwise required to be carried by the Developer shall not relieve the Developer of its obligation to obtain and maintain the insurance coverage required by this Agreement 5.5 Developer Covenant to Defend this Agreement. The Developer acknowledges that the City is a "public entity" andlor "public agency" as defined under applicable California |aw. Therefore, the City must satisfu the requirements of certain California statutes relating to the actions of public entities and public agencies including, without limitation, CEQA. Also, as a public body, the City's action in approving this Agreement may be subject to proceedings to invalidate this Agreement or mandamus. The Developer assumes the risk of delays and damages that may result to the Developer from any third-party legal actions related to the City's approval of this Agreement or the pursuit of the activities contemplated by this Agreement, even in the event that an erïor, omission or abuse of discretion by the Cþ is determined to have occurred. If a third-party files alegal action regarding the City's approval of this Agreement or the pursuit of the activities contemplated by this Agreement, either the City may terminate this Agreement on thirty (30) days written notice to the Developer of the City's intent to terminate this Agreement, referencing this Section 5.5, without any further obligation to perform the terms of this Agreement and without any liability to the Developer resulting from such termination, unless the Developer unconditionally agrees to indemnify and defend the City, with legal counsel acceptable to the City, against such third-party legal action, as provided in the next sentence. Within thirty (30) days of receipt of the City's notice of intent to terminate this Agreement, as provided in the preceding sentence, the Developer may offer to defend the City, with legal counsel reasonably acceptable to the City, in the third-party legal action and pay all of the court costs, attorney fees, monetary awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. Any such offer from the Developer must be in writing and reasonably acceptable to the City in both form and substance. Nothing contained in this Section 5.5 shall be deemed or construed to be an express or implied admission that the City is liable to the Developer or any other person or entity for damages alleged from any alleged or established failure of the City to comply with any statute, including, without limitation, CEQA. 6 | t 47 .oo t 45\32 t ezozz.l 3 9 The Developer's defense of such third party actions as described in this Section 5.5 shall constitute an Unavoidable Delay. ARTICLE VI. PROJECT ANCING 6.1 Proiect Financing. Developer shall finance the development of the Project in accordance with the Project Budget. Further, City and Developer agree that the financing of the Project shall comply with all of the following: 6.1.1 Tax-Ronds and Tax Credit Fin To provide funds forånctnp the development and construction of the Project, Developer shall in good faith apply for and obtain an allocation of tax-exempt bonds and an allocation of the Tax Credits to finance a portion of the Project Costs. Developer shall use commercially reasonably efforts to submit applications for an allocation of tax-exempt bonds and a reservation of the Tax Credits by the November 2019 deadline for CDLAC's and TCAC's January 2020 allocation and reservation meetings. If Developer does not receive the allocation of tax-exempt bonds and Tax Credits as a result of such application, the Developer agrees to use commercially reasonably efforts to submit applications for an allocation of tax-exempt bonds and a reservation of the Tax Credits for the next round of CDLAC's and TCAC's allocation and reservation meetings. If Developer does not receive the allocation of tax-exempt bonds and Tax Credits as a result of such second application, the Developer agrees to use commercially reasonably efforts to submit a third round of applications for an allocation of tax-exempt bonds and a reservation of the Tax Credits for the next round of CDLAC's and TCAC's allocation and reservation meetings. If Developer does not receive the allocation of tax-exempt bonds and Tax Credits as a result of all three (3) rounds of applications, the Parties agÍee to meet and confer in good faith for a period of ninety (90) days to determine if a feasible and mutually acceptable alternate arrangement can be made to finance development and construction of the Project. If no agreement is reached by the Parties within such ninety (90) day period regarding the alternative courses of action described in the preceding sentence, this Agreement may be terminated upon fifteen (15) days' notice to the other Parties. Any agreement that is reached between the Parties on an alternative financing plan for the Project shall be memorialized in an implementation agreement to this Agreement. If Developer fails to make the required applications to CDLAC and TCAC, then the City or the Developer may terminate this Agreement upon fifteen (15) days' notice to the other Parties. Failure of Developer to obtain tax-exempt bond allocation or Tax Credits shall not constitute an Event of Default under the terms of this Agreement, unless due to the intentional misconduct of Developer. 6.1.2 Construction Financing. Prior to the Close of Escrow, Developer shall provide for the City's review and approval, which may be withheld or conditioned in City's reasonable discretion and which shall not be unreasonably delayed, the terms of the Construction Financing, and shall provide the City the opportunity to review such terms with the Insitutional Lender providing such Construction Financing. 6.1.3 Permanent Loan. Prior to the Close of Escrow, Developer shall obtain for the City's review and approval, which may be withheld or conditioned in City's reasonable 6 t t 4i .oo t 4s\32 t øzozz.t 4 0 discretion and which shall not be unreasonably delayed, a conditional forward loan commitment for each Permanent Loan. 6.2 Proiect Budset. By its execution of this Agreement, the City has given its approval to the Project Budget. The approved Project Budget is based on the following assumptions: (a) relocation or undergrounding of existing overhead utilities will not be an obligation on the Project; and (b) that only certain City Impact Fees are applicable to the Project and others are not since the Project is an affordable senior housing development as set forth on the attached Exhibit L. The City agrees to not require any changes in the Project or Project Budget that would change these two assumptions. While the Project Budget has been prepared based on the best, good faith estimate of Developer of the costs which are likely to be incurred for the Project, the Parties recognize that events and circumstances not currently contemplated, some of which are outside of the control of the Parties, could result in changes in the Project Costs, necessitating changes in the Project Budget. To the extent that Developer is required to make changes to the Project Budget, Developer shall immediately submit a revised Project Budget to the City Manager for review and approval, which review and approval shall not be unreasonably withheld, conditioned or delayed, as to the sufficiency of the financing secured by Developer to meet the revised Project Costs. 6.3 Only Permitted Exceptions. Developer shall not record and shall not allow to be recorded against the Property any Security Instrument, lien or other encumbrance that is not a Permitted Exception. Developer shall remove or cause to be removed (or providing title insurance in form and substance reasonably acceptable to the City and issued by a title insurance company reasonably acceptable to the City, insuring the priority of this Agreement and the Deed of Trust securing the Land Loan and Project Loan as superior to such lien, with such title insurance being in the minimum amount of the outstanding principal and interest under the Land Loan and the Project Loan plus 125% of the amount of the lien claim or providing a statutory bond resulting in removal of such lien) any non-Permitted Exception made or recorded against the Property or shall assure the complete satisfaction of any such non-Permitted Exception to the satisfaction of the City, in the City's sole and absolute discretion. The covenants of Developer set forth in this Section regarding the placement of encumbrances on the Properly shall run with the land of the Property and bind successive owners of the Property, until recordation (or deemed issuance) of the Certificate of Completion for the Project. 6.4 Cifv Risht to Discharse P rohibited Encumbrances. After sixty (60) calendar days' Notice to Developer of a non-Permitted Exception and provided that Developer has not caused such non-Permitted Exception to be removed pursuant to Section 6.3, the City shall have the right, but not the obligation, to satisfy or remove any non-Permitted Exception against the Property or the Project and receive reimbursement from Developer for any amounts paid or incurred in satisfying or removing any such non-Permitted Exception, upon demand. Any amount expended by the City to discharge a non-Permitted Exception that is not reimbursed to the City by Developer within thirty (30) calendar days following written demand for payment from the City shall accrue interest at an annual rate equal to the lesser of eight percent (8%) per annum or the maximum highest rate of interest allowed by law under the circumstances, until paid in full. Nothing in this Section 6.4, though, shall require Developer to pay or make provisions for the payment of any tax, assessment, lien or charge that Developer is in the process 6 | I 47 .001 45\32t øZOZZ.Z 4 | of contesting the validity or amount thereof,, in good faith, and so long as such contest shall not subject all or any portion of the Property to forfeiture or sale. 6.5 Rights of Lender and Citv Regardins Permitted Securitv Instruments. 6.5.1 Notice of Liens. The D eveloper shall promptly notify the City of any Security Instrument or lien asserted against or attached to all or any portion of the Project or the Property, other than as listed in Section 3.7 , prior to the date of issuance of a Cerlificate of Completion for the Project, whether by voluntary act of Developer or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic's liens need be given by Developer to the City, prior to suit being filed to foreclose any such mechanic's lien. 6.5.2 Notice of D to Lenders. Vy'henever the City delivers any notice of default to Developer under this Agreement, the City shall send a copy of such notice of default to each Lender holding a Permitted Security Instrument of which the City has received notice and a contact address for transmittal of such notices. Each Lender receiving a copy of any such notice of default shall have the right, at its option, to commence the cure or remedy of any default of Developer set forth in such notice and to diligently and continuously proceed with such cure or remedy such default, within the cure period allowed to Developer under this Agreement. The City shall accept such performance by a Lender with the same force and effect as if furnished by Developer. If such default can only be remedied or cured by the Lender upon obtaining possession of the Property, the City shall allow the Lender an opportunity to obtain possession with diligence and continuity through exercise of remedies under such Lender's Permitted Security Instrument and to remedy or cure such default within ninety (90) days after obtaining possession of the Property. If the default reasonably requires more than ninety (90) days to cure, however, then the time available to a Lender to cure pursuant to this Section 6.5 shall be the reasonable time required to complete such cure, as long as the Lender has commenced the cure of the default within such ninety (90) day period and diligently pursues the cure to completion. During such extension of time, the City shall not terminate this Agreement or exercise other remedies under this Agreement by reason of such default. All Developer specific defaults shall be deemed cured upon Transfer of Developer's interest in the entire Property to the Lender, its assignee or nominee, pursuant to exercise of remedies under a Permitted Security Instrument. In addition, any Lender properly completing the Project with the consent of the City shall be entitled, upon written request made to the City, to a Certificate of Completion from the City. Nothing contained in this Agreement shall be deemed to permit, authorize or require any Lender to undertake or continue the construction or installation of any portion of the Project (beyond the extent necessary to conserve or protect improvements or construction already made) prior to or after acquiring title to or possession of the entire Property, without expressly assuming Developer's obligations under this Agreement by written agreement reasonably satisfactory to the City, in which the Lender agrees to complete the Project in the manner provided in this Agreement. Any Lender desiring to complete the Project must provide the City with evidence reasonably satisfactory to the City that the Lender has the qualifications (or will engage one or more licensed contractor(s) or consultant(s) with such qualifications) and financial capability necessary to perform such obligations. 6.5.3 No Termination of Permitted Securitv Instruments hv Defa ult-An Event of Default by Developer under this Agreement shall not defeat or render invalid the lien of 6 I I 47 .00 | 45\32rcZOZZ.l 42 any Permitted Security Instrument made in good faith and for value as to all or any part of the Property, whether or not the Lender is subordinated to this Agreement; but unless otherwise provided in this Agreement, this Agreement shall be binding and effective against any owner of the Property, whose title thereto is acquired pursuant to exercise of remedies under a Permitted Security Instrument or from a person or entity exercising any such remedies. 6.5.4 Lender Rishts on Termination or Modification. No termination of this Agreement shall be binding upon a Lender unless the termination occurs after notice to such Lender and such Lender's failure to cure all then existing defaults under this Agreement (except any Developer specific defaults), pursuant to this Section 6.5, or with such Lender's prior written consent. No modification of this Agreement that materially affects the rights of a Lender shall be binding upon the Lender without its prior written consent. 6.5.5 No Construction of Lender. A Lender shall in no way be obligated by the provisions of this Agreement to construct or complete the development of the Project or to guarantee such construction or completion, but may do so pursuant to and in accordance with this Section 6.5. Nothing in this Agreement shall be deemed to consÍue, permit, or authorize any Lender to devote all or any portion of the Property to any uses, or to construct any improvements thereon, other than those uses or the Project provided for or authorized by this Agreement. 6.5.6 City Rieht to Cure Oblieations. In the event of a default by Developer under any Permitted Security Instrument, where the Lender has not exercised its option to complete the Project under Section 6.5.2, the City may cure the default of Developer under the applicable Permitted Security Instrument, but is under no obligation to do so, prior to completion of any sale or foreclosure of all or any portion of the Property under the applicable Permitted Security Instrument. The City shall be entitled to reimbursement from Developer of all costs and reasonable expenses incurred by the City in curing any default of Developer under any Permitted Security Instrument, under demand. Any amount expended by the City to cure a default of Developer under any Permitted Security Instrument that is not reimbursed to the City, by Developer within thirty (30) calendar days after notice of such amount to Developer, shall accrue interest at an annual rate equal to the lesser of eight percent (8%) per alìnum or the maximum highest rate of interest allowed by law under the circumstances until paid in full. City's rights to cure under this Section shall remain in effect until Developer has repaid the Land Note and the Project Note in full. 6.5.7 Foreclosure of Securitv Instrument. Foreclosure of any Permitted Security Instrument, whether by judicial proceedings or by power of sale, or any conveyance by deed in lieu of foreclosure, shall not require the consent of the City or constitute a default under this Agreement. 6 | t 47 .00 | 45\32 rczozzs 43 ARTICLE VII. DEFAULTS. REMEDIES AND TERMINATION 7.1 Defaults - General. 7.1.1 Subject to any extensions of time provided for in this Agreement, failure or delay by any Party to perform any term or provision of this Agreement shall constitute an "Event of Default" under this Agreement; provided, however, that if a Party otherwise in default commences to cure, correct or remedy such default, within thirty (30) calendar days after receipt of written notice from the injured Party specifying such default, and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, coffection or remedy are specifically set forth in this Agreement, then within said time limits), such Party shall not be deemed to be in default under this Agreement and no Event of Default shall be deemed to have occurred. 7.1.2 The injured Party shall give written notice of default to the Party in default, specifying the default complained of by the non-defaulting Party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. 7.1.3 Any failure or delays by any Party in asserting any of their rights and/or remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by any Party in asserting any of its rights and/or remedies shall not deprive that Party of its right to institute and maintain any actions or proceedings that it may deem necessary to protect, assert or enforce any such rights or remedies. 7.1.4 In addition to other acts or omissions of the Developer that may legally or equitably constitute a default or breach of this Agreement, the occurrence of any of the following specific events, prior to the issuance of a Certificate of Completion for the Project, shall constitute an "Event of Default" under this Agreement and shall not be subject to the notice and cure provisions of Section 7 .l.l: 7.1.4.1Any material default by the Developer under any Security Financing Instrument for any purpose or reason that remains uncured following any applicable notice and expiration of any applicable cure period under such Security Financing Instrument. 7.1.4.2 Any representation, warranty or disclosure made to the City by the Developer regarding this Agreement or the Project is materially false or misleading, whether or not such representation or disclosure appears in this Agreement. 7.1.4.3 The construction of the Project is delayed or suspended for a period in excess of that permitted under Section 4.3 or the Developer has not been issued, or entitled to be issued, a Certificate of Completion by the Project Completion Date. 7.1.4.4 There occurs any event of dissolution, reorganization or termination of the Developer that adversely and materially affects the operation or value of the Property or the Project, and such event is not corrected within five (5) days following written notice of such event from the City to the Developer. 6 t 1 47 .oo t 4 5\32 rczozz.l 4 4 7.1.4.5 The Developer Transfers its interest in this Agreement, the Property, or the Project, or any portion thereof, whether voluntarily or involuntarily or by operation of law, in violation of the terms and conditions of this Agreement and such action is not cured within the period prescribed in Section 8.2.2. 7.1.4.6 The Developer becomes insolvent or a receiver is appointed to conduct the affairs of the Developer under state or federal law. 7.1.4.7 The Developer's legal entity status authorized by the Secretary of State of the State of California to transact business in California is suspended or terminated. 7.2 DEVELOPER'S ELECTION RE: SPECIFIC RCF],MN,NT OF' AGREF],MENT OR WAIVER OF TO SPE,CIF'IC PERFORMANCE AND LIMITATION ON Y OF DAMAGES PRIOR TO ,OSE OF'E,SCROW. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT PERTAINING TO THE CONVEYANCE OF THE PROPERTY BY THE CITY UNDER THIS AGREEMENT PRIOR TO CLOSE OF ESCROV/, THE DEVELOPER SHALL, AS ITS SOLE AND EXCLUSIVE REMEDY, HAVE THE RIGHT TO EXE,RCISE ONE OF THE ALTE,RNATIVE REMEDIES DESCRIBED IN SECTIONS 7.2.1 AND 7.2.2, THE DEVELOPER'S ELECTION, ONCE MADE, SHALL BE IRREVOCABLE. 7.2.1 WAIVER OF RIGHT TO SPE CIF'IC PERF'ORMANCE AND LIMITATION ON VERY OF DAMAGES. THE DEVELOPER MAY WAIVE THE REMEDIES SET FORTH IN SECTION 7.2.2 AND MAY CANCEL THE ESCROV/ PURSUANT TO SECTION 3.10, AND UPON CANCELLATION OF THE ESCROW, THE DEVELOPER SHALL BE RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT TO PURCHASE OR ACCEPT TITLE TO THE PROPERTY AND ANY SUCH ESCROV/ CANCELLATION SHALL BE V/ITHOUT ANY LIABILITY OF THE DEVELOPER TO THE CITY OR ANY OTHER PERSON ARISING FROM SUCH ACTIONS. THE DEVELOPER SHALL BE LIMITED TO RECOVERING ANY AMOI.INTS ACTUALLY EXPENDED BY THE DEVELOPER IN REASONABLE RELIANCE ON THIS AGREEMENT PRIOR TO THE DATE OF THE OCCURRENCE OF THE EVENT OF DEFAULT BY THE CITY, NOT TO EXCEED FrFTy THOUSAND DOLLARS ($s0,000). THE DEVELOPER WAIVES ANY RIGHT TO RECOVER ANY OTHER SUMS FROM THE CITY ARISING FROM AN EVENT OF DEFAULT BY THE CITY PRIOR TO THE CLOSE OF ESCROW. THE DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION 7.2.1, WHICH CIVI CODE SECTION READS AS FOLLOWS: ..A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOV/ OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." 6 1 t 47 .00 t 4 5\32 t øzozz.l 4 5 BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLTINTARII,Y V/AIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 7.2.1. DEVELOPER'S INITIALS IN CONNECTION V/ITH THE WAIVERS OF THIS SECTION 7.2.T, THE DEVELOPER FURTHER WAIVES THE RIGHT TO RECORD A NOTICE OF PENDENCY OF ACTION AGAINST ALL OR ANY PORTION OF THE PROPERTY EXCEPT DEVELOPER MAY RECORD SUCH A NOTICE IN CONNECTION V/ITH ANY SUIT FOR SPECIFIC PERFORMANCE PERMITTED HEREIINDER IN THE EVENT DEVELOPER ELECTS NOT TO WAIVE ITS RIGHT TO SEEK SPECIFIC PERFORMANCE UNDER SECTION 7.2.2. 7.2.2 SPECIFIC PERFORMANCE. THE DEVELOPER MAY V/AIVE THE REMEDIES SET FORTH IN SECTION 7.2.1 AND,IN ACCORDANCE V/ITH CIVIL CODE SECTION 3384, ET SEO., INSTITUTE AN ACTION AGAINST THE CITY FOR SPECIFIC PERFORMANCE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT V/HICH WERE TO HAVE BEEN COMPLETED BY THE CITY PRIOR TO THE CLOSE OF ESCROV/. 7.3 Lesal Actions. 7.3.L Except as otherwise provided by Section 7.2, any Party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy available to that Party under this Agreement or at law or in equity. Such legal actions must be instituted in the Superior Court of the State of California in and for the County of Orange, California, in any other appropriate court within the County of Orange, Califomia. 7.3.2 The procedural and substantive laws of the State of California shall govern the interpretation and enforcement of this Agreement, without regard to conflicts of laws principles. The Parties acknowledge and agree that this Agreement is entered into, is to be fully performed in and relates to real property located in the City of San Juan Capistrano, County of Orange, California. 7.4 Rishts and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties set forth in this ARTICLE VII are non- exclusive and cumulative, and the exercise by any Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party(ies). 7.5 Develoner n of the Citv. In addition to any other specif,rc indemnification or defense obligations of the Developer set forth in this Agreement, the Developer agrees to indemnify, defend (upon written request by the City and with counsel reasonably acceptable to the City) and hold harmless the Indemnified Parties, from any and all losses, liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and expenses, including, but not limited to reasonable attorney's fees of counsel retained by the 6 | | 47 .oo 1 45\32 t øzozz.i 4 6 Indemnified Parties, expert fees, costs of staff time, and investigation costs, of whatever kind or nature, that are in any manner directly or indirectly caused, occasioned or contributed to in whole or in part, through any act, omission, fault or negligence, whether active or passive, of the Developer or the Developer's officers, agents, employees, independent contractors or subcontractors of any tier, relating in any manner to this Agreement, any work to be performed by the Developer related to this Agreement, the Property, or the Project, or any authority or obligation exercised or undertaken by the Developer under this Agreement. Without limiting the generality of the foregoing, the Developer's obligation to indemnify the Indemnified Parties shall include injury or death to any person or persons, damage to any property, regardless of where located, including the property of the Indemnified Parties, any workers' compensation or prevailing wage determination, claim or suit or any other matter arising from or connected with any goods or materials provided or services or labor performed regarding the Project or the Property on behalf of the Developer by any person or entity. ARTI ,8, VIII. GENERAL PROVISIONS. 8.1 Incorporation of Recitals. The Recitals of fact set forth preceding this Agreement are true and correct and are incorporated into this Agreement in their entirety by this reference. 8.2 Restrictions on Transfers. 8.2.1 The Developer acknowledges that the qualifications and identity of the Developer are of particular importance to the City. The Developer further recognizes and acknowledges that the City has relied and is relying on the specific qualifications and identity of the Developer in entering into this Agreement with the Developer and, as a consequence, Transfers are permitted only as expressly provided in this Agreement. The Developer shall promptly notify the City in writing of any and all changes whatsoever in the identity of the business entities or individuals either comprising or in Control of the Developer, as well as any and all changes in the interest or the degree of Control of the Developer by any such person, of which information the Developer or any of its partners, members or officers are notified or may otherwise have knowledge or information. 8.2.2 Except as expressly permitted in this Agreement, the Developer represents to the City that it has not made and agrees that it will not make or cteate, or suffer to be made or created, any Transfer other than a Permitted Transfer, either voluntarily, involuntarily or by operation of law, until after the recordation of a Certificate of Completion for the Project subject to the Transfer; provided, however, that the City may approve in its reasonable discretion, Transfers other than Permitted Transfers prior to the recordation of a Certificate of Completion. In deciding whether to approve or disapprove any proposed Transfer, the City may consider the proposed transferee's financial strength and the experience of the proposed transferee and its senior management in undertaking and successfully completing projects of a similar type and size as the Project or that portion of the Project proposed to be transfened. Any Transfer made in contravention of this Section 8.2 shall be voidable at the election of the City and this 6 | I 47 .00 I 4 5\32 t øZOZZ.I 47 Agreement may be terminated by the City or the City may exercise any other remedy available to the City under the terms of this Agreement, provided, however, that (i) the City shall first notify the Developer in writing of its intention to terminate this Agreement or to exercise any other remedy, and (ii) the Developer shall have twenty (20) calendar days following its receipt of such written notice to commence and, thereafter, diligently and continuously proceed to cure the default of the Developer and submit evidence of the initiation and satisfactory completion of such cure to the City, in a form and substance reasonably satisfactory to the City. 8.2.3 The Developer shall provide the City no less than thirty (30) days prior written notice of any proposed Permitted Transfer which the Developer desires to enter into prior to the recordation of a Certificate of Completion for the Project subject to the Transfer, other than a Permitted Transfer for which no notice shall be required. The Developer shall have the burden of demonstrating to the City's reasonable satisfaction that the proposed Permitted Transfer meets the conditions and requirements of this Agreement with respect to Permitted Transfers. 8.2.4 Anything in this Agreement to the contrary notwithstanding, the restrictions and prohibitions on Transfers contained in this Section 8.2 shall terminate upon issuance of a Certificate of Completion for the Project. 8.3 Notices. Demands and nications Retween the Parties. 8.3.1 Any and all notices, demands or communications submitted by any Party to another Party pursuant to or as required by this Agreement shall be proper, if in writing and dispatched by messenger for immediate personal delivery, by a nationally recognized overnight courier service or by registered or certified United States Mail, postage prepaid, return receipt requested, to the principal office of the City or the Developer, as applicable, as designated in Section 8.3.2. Such written notices, demands or communications may be sent in the same marìner to such other addresses as either Party may from time to time designate. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is delivered by personal delivery, on the date of delivery by a nationally recognized overnight courier service or three (3) calendar days after it is placed in the United States Mail, as provided in this Section 8.3. 8.3.2 The following are the authorized addresses for the submission of notices, demands or communications to the Parties: TO DEVELOPER:C &. C Development Co., LLC l42ll Yorba Street, Suite 200 Tustin, California 927 80 Attn: Todd R. Cottle (r) (714) 288-7600 (F) (866) s10-0128 6 t t 47 .oo t 4 s\3zt ezozz.l 4 8 COPY TO:Sean Rawson c/o The Waterford Group, Inc. PO Box 10175 Newport Beach, CA92658 (r) (e4e) 28e-3438 (F) COPY TO Goldfarb & Lipman LLP 1300 Clay Street, 1lth Floor Oakland, CA94612 Attn: Lynn Hutchins (T) 510-836-6336 (F) 510-836-103s TO CITY:City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: City Manager (T) 949-493-r17r (F) COPY TO:Best Best & Krieger, LLP 18101 Von Karman Ave, Suite 1000 Irvine, CA92614 Attention: Elizabeth Wagner Hull (T) 949-263-2600 (F) 949-260-0912 8.4 Conflict of Interest. No member, official or employee of the City, having any conflict of interest, direct or indirect, related to this Agreement, the Property, or the development or operation of the Project shall participate in any decision relating to this Agreement. The Parties represent and warrant that they do not have knowledge of any such conflict of interest. 8.5 Warranfv Asainst Pavment of Consideration for Asreement. The D eveloper warrants that it has not paid or given, and will not pay or give, any third parly any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section 8.5, shall not include persons to whom fees are paid for professional services, if rendered by attomeys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer. 8.6 Non-liabilitv of Cifv"ls and Emnlovees. No member , official or employee of the City shall be personally liable to the Developer, or any successor in interest of the Developer, in the event of any default or breach by the City under this Agreement or for any amount that may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement, except as may arise from the gross negligence or willful acts of such member, official or employee. 6 1 | 47 .00 | 4s\32 t øzozz.t 49 8.7 Unavoidable Delay¡ Extension of Time of Performance. 8.7.1 Subject to specific provisions of this Agreement, performance by any Party under this Agreement shall not be deemed, or considered to be, in default where any such default is due to an Unavoidable Delay that is not attributable to the fault of the Party claiming an extension of time to perform. An extension of time for any Unavoidable Delay shall be for the period of the Unavoidable Delay and shall commence to run from the date of occurrence of the Unavoidable Delay, if the Party asserting the existence of the Unavoidable Delay provides the other Parties with written notice of the occuffence of the Unavoidable Delay, within ten (10) days of the commencement of such asserted Unavoidable Delay. Otherwise, the extension of time for an Unavoidable Delay shall commence on the date of receipt of written notice of the occuffence of the Unavoidable Delay by the Parties not requesting an extension of time to perform due to such Unavoidable Delay. 8.7.2 The Parties expressly acknowledge and agree that changes in either general economic conditions or changes in the economic assumptions of either of them that may have provided a basis for entering into this Agreement and that occur at any time after the execution of this Agreement, do not constitute an Unavoidable Delay and do not provide any Party with grounds for asserting the existence of an Unavoidable Delay in the performance of any covenant or undertaking arising under this Agreement. Each Party expressly assumes the risk that changes in general economic conditions or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such Party under this Agreement. 8.8 Inspection of Books and Records. The City shall have the right at all reasonable times, at the City's cost and expense, to inspect the books and records of the Developer pertaining to the Property andlor the Project. The Developer shall also have the right at all reasonable times, at the Developer's sole cost and expense, to inspect the books and records of the City pertaining to the Property andlor the Project, to the extent relevant to the Developer's obligations under this Agreement. Nothing in this Section 8.8 or elsewhere in this Agreement shall, however, constitute a waiver or modification of any right or privilege which any Party may have with respect to any document, statement, or other record, including, without implied limitation, the attorney-client privilege, the attorney-work product privilege, any privilege arising under any state or federal evidentiary code or rule, or any privilege or exclusionary right arising under any state or federal freedom of information or public records disclosure law. 8.9 Real Estate Commissions. The City and the Developer each represent and warrant to the other that no real estate brokerage commission is payable to any person or entity in connection with the transactions contemplated hereby on account of or due to the acts or omissions of such representingparty, and each agrees to and does hereby indemnify, defend and hold the other harmless from and against the payment of any commission to any other person or entity claiming by, through or under the City or the Developer, as applicable. 8.10 Bindine on rs and Assisns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns. 6 t 1 47 .oo l 45\32 t øzozz.l 5 0 8.11 Entire Asreement. 8.11.1 This Agreement shall be executed in three (3) duplicate originals, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement includes fiftythree (53) pages (exclusive of signature pages) and eleven (11) exhibits, that constitute the entire understanding and agreement of the Parties regarding the Property, the Project, and the other subjects addressed in this Agreement. 8.11.2 This Agreement integrates all of the terms and conditions mentioned in this Agreement or incidental to this Agreement, and supersedes all negotiations or previous agreements between the Parties with respect to the Property, the Project, and the other subjects addressed in this Agreement. 8.11.3 None of the terms, covenants, agreements or conditions set forth in this Agreement shall be deemed to be merged with any deed conveying title to the Property and this Agreement shall continue in full force and effect before and after such conveyances. 8.11.4 All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the authorized representative(s) of all Parties. 8.12 Execution of this Asreement. Following execution of three (3) originals of this Agreement by the authorized representative(s) of the Developer and prompt delivery of such originals, thereafter, to the City, accompanied by an official action of the governing body of the Developer authorizing the individuals executing this Agreement on behalf of the Developer to execute and perform this Agreement, in form and substance acceptable to the City, this Agreement shall be subject to the review and approval by the City Council, in its sole and absolute discretion, no later than forty-frve (45) calendar days after such date of delivery to the City. If the City have not approved, executed, and delivered an original of this Agreement to the Developer within the foregoing time period, then no provision of this Agreement shall be of any force or effect for any purpose. 8.13 Survival of Indemnitv Oblieations. All general and specific indemnity and defense obligations of the Parties set forth in this Agreement shall survive the expiration or termination of this Agreement, the execution or recordation of the Grant Deed, and/or the issuance and recordation of any Certificate of Completion. 8.14 Time Declared to be of the Essence. As to the performance of any obligation hereunder as to which time is a component thereof, the performance of such obligation within the time provided is of the essence. 8.15 Approvals. Except as otherwise provided in this Agreement, approvals required of the City or the Developer, or any officers, agents or employees of the City or the Developer, shall not be unreasonably withheld and approval or disapproval shall be given within the time set forth in this Agreement or, if no time is given, within a reasonable time. 8.16 Further ces The Parties agree to reasonably consider such additional actions or the execution of such other documents as may be reasonably necessary or convenient to the financing, development, and operation of the Project, although nothing in this Section 8.16 6 1 1 47 .00 1 4 5\32 rczozz.z 5 I shall be deemed a representation, guaranty or commitment by any Party to take any action or execute any document. 8.17 Citv Apnrovals and Actions. The City Manager shall have the authority, on behalf of the City (to the extent not provided otherwise in this Agreement), to make approvals, issue interpretations, waive provisions, grant extensions of time, approve amendments to this Agreement and changes to the attached exhibits prior to their execution and execute documents, including, without limitation, the Notice of Completion and any documents necessary to implement any changes in the number or affordability of the Qualifying Units (as defined in the Regulatory Agreement), as may be required by TCAC, CDLAC, CaIHFA or the County, so long as such actions do not reduce the length of affordability of the Qualifying Units (as defined in the Regulatory Agreement) or add to the costs incurred or to be incurred by the City as specified herein. The City Manager reserves the right, in his or her sole and absolute discretion, to submit any requested modification, interpretation, amendment or waiver to the City Council if the City Manager determines or believes that such action could increase the risk, liability or costs to City, or reduce the length of affordability of the Project. 8.18 Investor Limited Provisions. If and when the Developer is in the torm of a limited partnership and admits an investor limited partner into Developer's partnership, the City agrees to the following provisions for the benefit of the Developer's investor limited partner: 8.18.1 The City will give the limited partner a copy of any notice (at the limited partner's address provided in a notice by Developer to the City) that the City gives to the Developer under this Agreement, the Regulatory Agreement and the other Land Loan and Project Loan documents, provided that Developer has provided the address and contact information for the investor limited partner in writing to the City; 8.18.2 The City will give the limited partner thirty (30) days after the limited partner's receipt of such Notice to cure a non-payment of any sum due under the Land Loan and Project Loan; S.18.3 The City will give the limited partner sixty (60) days after the limited partner's receipt of such notice to cure any other default under this Agreement, the Regulatory Agreement and other Land Loan and Project Loan documents; 8.18.4 If a non-monetary default is incapable of being cured within sixty (60) days, the City will give the limited partner an additional ninety (90) days to cure such default provided the limited partner has commenced to cure such default and is diligently proceeding to cure such default through the end of such period; 8.18.5 If the limited partner makes any such payment or otherwise cures such default, the City will accept such action as curing such default as if such payment or cure were made by the Developer; 8.18.6 The City will permit the limited partner to transfer the limited partner's interest to any person or entity at any time provided that, if at the time of such transfer the limited partner has not made one hundred percent (100%) of the capital contributions the limited 6 l 1 47 .00t 4 5\32 t OZOZZ.l 52 partner is required to make to the Partnership, the limited partner shall remain liable to the Developer for such capital contributions; 8.18.7 The City will permit the limited partner to remove the general partner of the partnership in accordance with the partnership agreement, provided that the substitute general partner is reasonably acceptable to the City; and 8.18.8 The City will permit insurance and condemnation proceeds to be used to rebuild the Project provided that (i) sufficient funds are provided from other sources to effectively rebuild the Project to a lawful senior affordable housing multi-family complex, and (ii) subject to the rights of any Senior Lenders, the City shall hold all such proceeds and disburse them based on the progress ofconstruction, subject to such additional reasonable conditions as the City may impose. [Signatures on Following Pagesl 6 | | 47 .oo l 45\32 rczozz.l 53 SIGNATURE PAGE TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at Williams Ranch) CITY: THE CITY OF SAN JUAN CAPISTRANO a California municipal corporation 2019 By: City Manager Dated: ATTE$T: City Clerk APPROVED AS TO LEGAL FORM: BEST & KRIEGER LLP By: City Attorney 6 t t 47 .00 1 4s\32t øzozz.r S - | SIGNATURE PAGE TO AFFORDABLE HOUSING DI SPO SITION AND DEVELOPMENT AGREEMENT (The Groves at Williams Ranch) DEVELOPER: C&,C: C &. C DEVELOPMENT CO.,LLC, A California limited liability company 2019 By:Dated Dated:20r9 Todd R. Cottle, Trustee of the 2007 Todd R. Cottle and Jennifer N. Cottle Revocable Trust, its member RAWSON: By: Sean Rawson, an individual 6 | | 47 oo 1 4s\32 t øzozz.z S -2 EXHIBIT A TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at V/illiams Ranch) Legal Description of the Property THAT PORTION OF REAL PROPERTY IN THE CITY OF SAN JUAN CAPISTRANO, COLINTY OF ORANGE, STATE OF CALIFORNIA AS DESCRIBED IN THE DEED RECORDED ON AUGUST 30,1995, ASINSTRUMENT NO. 95-0376669 OF OFFICIAL RECORDS, IN THE OFFICE OF THE ORANGE COUNTYRECORDER, LYING SOUTHEASTERLY OF THE FOLLOWING DESCzuBED LINE: COMMENCING AT THE INTERSECTION OF THE CENTERLINE OF CAMINO CAPISTRANO AS DESCRIBED IN BOOK 281, PAGE 245 OF DEEDS, WITH THE EAST- WEST CENTERLINE OF SECTION 36, T7S, R8W, SBM, SAID POINT ALSO BEING THE SOUTHEAST CORNER OF REAL PROPERTY AS DESCRIBED IN SAID DEED RECORDED ON AUGUST 30,1995, AS INSTRUMENT NO. 95-0376669 OF OFFICIAL RECORDS; THENCE WESTERLY ALONG SAID EAST-V/EST CENTERLINE OF SECTION 36, T7S, R8W, SBM, NORTH 89'01'53" WEST 417 .62 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 00O56'38" EAST 58.57 FEET; THENCE NORTH 26"21'02" WEST 12.70 FEET; THENCE NORTH 47"09'31" EAST 120.82 FEET; THENCE NORTH 45"44'28" EAST 144.28 FEET; THENCE NORTH 46"25'09" EAST 74.13 FEET; THENCE NORTH 37O40'58" EAST 94.88 FEET; THENCE NORTH 28"02'57" EAST 1 1 1.60 FEET; THENCE NORTH 33"02'08" EAST 37 .69 FEET; THENCE NORTH 25"17'OI" EAST 132.27 FEE,T; THENCE SOUTH 73"21'32" EAST 148.43 FE,ET TO SAID CENTERLINE OF CAMINO CAPISTRANO AS DESCRIBED IN BOOK 281, PAGE 245,OF DEEDS; EXHIBIT A A-1 6 | t 47 .00 t 4s\321 62022.3 CONTAINING: 3.853 ACRES, MORE OR LESS SUBJECT TO: COVENANTS, CONDITIONS, RESTRICTIONS, RIGHT OF WAY AND EASEMENTS OF RECORD. EXHIBIT A A-2 6 t 1 47 00 I 45\32 I 62022.3 EXHIBIT B TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at V/illiams Ranch) Scope of Development The Groves Apartments The Groves Apartments, to be located at the northwest corner of Junipero Serra Road and Camino Capistrano, consist of the development of an approximately 75 unit affordable senior apartment community with a single, three story, elevator serviced building. It is anticipated that the building will have Spanish/Mediterranean architectural influences. The approximately 3.853 acre site is currently comprised of a vacant, City owned parcel. The proposed unit mix for the community is: Units 60 t5 Type One Bedroom Multifamily Two Bedroom Multifamily The unit mix will consist of one and two bedroom units. These units are designed for the needs of seniors. Each unit will have air conditioning, storage and private open space. Refrigerators and stoves will be provided in each unit. The project will provide up to 75 parking spaces. The project will feature open space amenities and onsite laundry facilities. A community room with kitchen, exercise room, and leasing office are anticipated onsite community spaces. The project will also feature multiple passive open space areas. The new development is designed to meet California Title 24 requirements and will utilize sustainable building methods such as "low-E" windows, grass bio swales, filtera units, water saving plumbing fixtures, formaldehyde-free insulation, install CRI Green label plus carpet, and will vent all kitchen range hoods and bathroom fans to the exterior of the building. The property witl be landscaped throughout with trees, shrubs, and grass to provide aesthetic value, shade, and to aid in the retention of water prior to run off. EXHIBIT B B-1 6 I I 47 .00 | 4 5\32 I 62022.3 EXHIBIT C TO AFFORDABLE HOUS ING DI SPO SITION AND DEVELOPMENT AGREEMENT (The Groves at Williams Ranch) Schedule of Performance Schedule Prior to Suhmittins Annlications to CDLAC and TCAC: EXHIBIT c-1 Date Action to be Completed By Action See Section 1.3 Effective Date Effective Date Due Dilieence Period commences As soon as practicable after the Effective Date City to deliver Preliminary Report to Developer V/ithin 30 days following Developer's receipt of the Preliminary Report Developer to deliver Developer's Title Notice to City, if applicable Within 20 days following City's Receipt of Developer's Title Notice City to deliver City's Title Notice Response to Developer, if appropriate 60 days after Effective Date Submit to City 100% Complete V/orking Drawings 30 days after Submittal of Working Drawings Comments Received from City. On or before the end of the Due Diligence Period Developer to deliver its Due Diligence Investigation Rejecting Notice, if appropriate On the 90th day following the Effective Date Due Diligence Period ends 6 I I 47.00 145\32 162022.3 Date Action to be Completed Bv Action 30 days after receipt of City Comments Submit Revised Working Drawings to City. 15 days after Submittal of Revised V/orking Drawings Comments on Revised Working Drawings Received from City. 15 days after receipt of City Comments on Revised Working Drawings Submit Re-revised V/orking Drawings to City. 15 days after Submittal of Re- Revised V/orking Drawings Comments on Re-revised Working Drawings Received from City. Same timeframes to apply to any additional rounds of submittals of and comments on working drawings until plans approved. Schedule for e Annlications to the CD C and TCAC Date Task November 2019 CDLAC/TCAC Submittal Date Submittal to CDLAC for tax-exempt bond allocation and TCAC for an allocation of 4o/o Tax Credits. January 2020 CDLAC/TCAC Awards Announced. If unsuccessful, Developer to submit new applications CDLAC for tax-exempt bond allocation and TCAC for an allocation of 4Yo Tax Credits in next round. Next 2020 CDLAC/TCAC Submittal Date Submittal to CDLAC for tax-exempt bond allocation and TCAC for an allocation of 4%o Tax Credits. Applicable CDLAC/TCAC Meeting Date CDLAC/TCAC Awards Announced. If unsuccessful, Developer to submit new applications CDLAC for tax-exempt bond allocation and TCAC for an allocation of 4o/o Tax Credits in next round. Next 2020 CDLAC/TCAC Submittal Date Submittal to CDLAC for tax-exempt bond allocation and TCAC for an allocation of 4o/o Tax Credits. Applicable CDLAC/TCAC Meeting Date CDLAC/TCAC Awards Announced. If unsuccessful, Developer, Developer and City to meet and confer EXHIBIT c-2 6 I 1 47 .00 | 45\32 I 62022.3 *Note -CDLAC and TCAC funding deadlines and award dates are based upon currently available schedules and are subject to change. Schedule for C onstruction followins the of the Tax-Exemnt Bond Allo cation from CDLAC and o/oTax it Allocation from TCAC: EXHIBIT c-3 Date Task Day 1 Receipt of CDLAC Tax-Exempt Bond Allocation and TCAC Tax Credit Allocation No later than 45 days prior to Close of Escrow Developer to deliver Marketing Plan No later than l0 days after receipt of Marketing Plan City to deliver to approval or disapproval of Marketing Plan. Day 175 Obtain to Issue Permit Letter of Permit Fees Day 180 or 195 Close of Escrow and CDLAC Deadline to Issue Tax-Exempt Bonds as set forth in CDLAC Resolution Allocating Tax-Exempt Bonds to be revised from time to timeAS Day 925 Completion of Construction. 6 1 | 47 .00 | 4 s\32 I 62022.3 EXHIBIT D AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at Williams Ranch) Form of Grant Deed [Attached Behind This Pagel EXHIBIT D D-1 6 t t 4'7 . 00 | 4 5\32 I 62022.3 RECORDING REQUESTED BY: City of San Juan Capistrano WHEN RECORDED MAIL TO AND MAIL TAX STATEMENTS TO: LP 14211Yorba Street, Suite 200 Tustin, California 927 80 Attn: Todd R. Cottle SPACE ABOVE FOR RECORDER'S USE ONLY GRANT DEED THE UNDERSIGNED GRANTOR(S) DECLARE(S) Documentary Transfer Tax is $ PART ONE FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE CITY OF SAN JUAN CAPISTRANO, a California municipal corporation ("Grantor"), hereby grants to a California limited partnership ("Grantee"), that certain real property located in the City of San Juan Capistrano, County of Orange, State of California, specifically described in Exhibit "A" attached to this Grant Deed ("Property") and made apart of this Grant Deed by this reference. PART TWO The conveyance of the Property by the Grantor to the Grantee in Part One is subject to the following community development terms, conditions, covenants and restrictions: Section 1. Convevance Subiect to Terms of an Affordable s l)isnosition and Development Agreement. The Property is conveyed subject to that certain Affordable Housing Disposition and Development Agreement (The Groves at Williams Ranch), dated as of July 16, 2019, between the Grantor and the Grantee's predecessor-in-interest (the "Agreement"). The provisions of the Agreement are incorporated into this Grant Deed by this reference and are deemed to be a part of this Grant Deed, as though fully set forth in this Grant Deed. Section 2. Condition of Property. The Grantee acknowledges and agrees that the Property is conveyed by the Grantor to the Grantee in its "AS IS," "WHERE IS" and "SUBJECT TO ALL FAULTS CONDITION," as of the date of recordation of this Grant Deed, with no EXHIBIT D D-2 6 | 1 47 .00 1 45\32 1 62022.3 waffanties, expressed or implied, as to the environmental or other physical condition of the Property, the presence or absence of any patent or latent environmental or other physical condition on or in the Property, or any other matters affecting the Property. Section 3 Oblisation to from Discrimination. The Grantee for itself, its successors and assigns to all or any part or portion of the Property andlor Project, covenants and agrees that: 3.1. There shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property 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 oftenants, lessees, sub-tenants, sub-lessees or vendees ofthe Property. V/ith respect to familial status, this Section 3.1 shall not be construed to apply to housing for older persons, as defìned in Section 12955.9 of the Government Code. With respect to familial status, nothing in this Section 3.1 hall be construed to affect Section 51.2, 51.3, 5I .4, 5 1 . 10, 5l.l 1 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 3.1. 3.2. The covenant of this Section 3 shall run with the land of the Property in perpetuity and shall be enforceable against the Grantee and its successors and assigns in perpetuity. Section 4.and Non-Se The Grantee for itselt its successors and assigns to all or any parl or portion of the Property andlor Project, covenants and agrees that: 4.1. The Grantee, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, tace, color, religion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non-discrimination or non- segregation covenants : (a) 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, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee 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, sub*tenants, sub-lessee, ot vendees in the premises herein conveyed. The foregoing covenants shall run with the land. EXHIBIT D D-3 6 1 | 47 .00 1 45\32 I 62022.3 Notwithstanding the foregoiîg paragraph, with respect to familial status, paragraph 5.2.1.2 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. 'With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2, 51.3,51.4,51.10, 51.1 I and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to fore go in g par agr aph." (b) 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 ofany person or group ofpersons, on account ofrace, colot, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee 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, sub-lessee, sub-tenants, or vendees in the premises herein leased. Notwithstanding the foregoing paragraph, with respect to familial status, paragraph 5 .2.1 .2 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraphshall be construed to affect Section 51.2, 51.3,51.4, 51.10, 5 1.1 1 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to foregoing paragraph." (c) In contracts: "There shall be no discrimination against or segregation ofany person or group ofpersons on account ofrace, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee 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, sub-lessees, sub-tenants, or vendees of the premises herein transferred." The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. "Notwithstanding the foregoingparagraph, with respect to familial status; paragraph 5 .2.1 .2 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2, 51.3, 51 .4, 51.I0,51.1 I and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to foregoin g paragraph." 4.2. The covenants of this Section 4 shall run with the land of the Property in perpetuity. EXHIBIT D D-4 6 I I 4't .001 45\321 62022.3 PART THREE Section 5 Grantee Covenant I Indertake Proiect. The Grantee covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Grantee shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Grantee covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 5 shall run with the land of the Property until the earlier of the date of recordation of the Certificate of Completion. Section 6.Covenants Run with e T.and of the Prooertv. Each of the covenants and agreements contained in this Grant Deed touch and concern the Property and each of them is expressly declared to be a community development covenant that runs with the land for the benefit of the Grantor and such covenants run with the land in favor of the Grantor for the entire period that such covenants are in full force and effect, regardless of whether the Grantor is or remains an owner of any land or interest in land to which such covenants relate. The Grantor, in the event ofany breach ofany such covenants, has the right to exercise all ofthe rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings, to enforce the curing of such breach, as provided in the Agreement or by law. The covenants contained in this Grant Deed are for the benefit of and are enforceable only by the Grantor, and shall survive the execution and recordation of this Grant Deed and the issuance and recordation of each and every Certificate of Completion, for the time period set forth above for each covenant. Section 7. Costs and Attorneys' Fees for Enforcement Proceeding. If legal proceedings are initiated to enforce the rights, duties or obligations of any of the covenants set forth in this Grant Deed, then the prevailing party in such proceeding shall be entitled to collect its reasonable attorney fees and costs from the other party in addition to any other damages or relief obtained in such proceedings. Section 8. Effect of Unlawful Provision: Severability. In the event that any provision of this Grant Deed is held to be invalid or unlarnful by a final judgment of a court of competent jurisdiction, such invalidity shall not affect the validity of any other provision of this Grant Deed. GRANTOR: THE CITY OF SAN JUAN CAPISTRANO a California municipal corporation By: Ben Siegel, City Manager IALL SIGNATURES MUST BE NOTARY ACKNO\ilLEDGED] EXHIBIT D D-5 6 t 1 47 .00 I 45\32 I 62022.3 CERTIFICATE OF ACCEPTANCE OF GRANT DEED The undersigned hereby acknowledges acceptance by a California limited partnership, the Grantee in the within Grant Deed, of the delivery of the subject Property described in the within Grant Deed from the City of San Juan Capistrano. GRANTEE: a California limited partnership By:LLC, a Califomia limited liability company, its managing general partner By: a California nonprofit corporation, its sole member By: By: SJC Groves CCR LLC, a California limited liability company, its developer general partner By C 8. C Development Co., LLC, a California limited liability company, its member and manager Dated:20 By Todd R. Cottle, Trustee of the 2007 Todd R. Cottle and Jennifer N. Cottle Revocable Trust, its member IALL SIGNATURES MUST BE NOTARY ACKNO\ilLEDGEDI EXHIBIT D D-6 6 1 | 47 .00 I 45\32 | 62022.3 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COLINTY OF on-, before me,Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. V/ITNESS my hand and official seal. Name: Notary Public EXHIBIT D D-7 ) ) ) 6 I I 47 .00 1 45\32 I 62022.3 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF on-, before me,Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoingparagraph is true and correct. V/ITNESS my hand and official seal. Name: Notary Public EXHIBIT D D-8 ) ) ) 6 t I 47 .00 1 4 5\32 | 62022.3 EXHIBIT 1 TO GRANT DEED Property Legal Description EXHIBIT D D-9 6t t 47 .001 45\321 62022 .3 EXHIBIT 1 Legal Description of the Property THAT PORTION OF REAL PROPERTY IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA AS DESCRIBED IN THE DEED RECORDED ON AUGUST 30, T995, ASINSTRUMENT NO. 95-0376669 OF OFFICIAL RECORDS, IN THE OFFICE OF THE ORANGE COUNTYRECORDER, LYING SOUTHEASTERLY OF THE FOLLOWING DESCRIBED LINE: COMMENCING AT THE INTERSECTION OF THE CENTERLINE OF CAMINO CAPISTRANO AS DESCRIBED IN BOOK 281, PAGE 245 OF DEEDS, V/ITH THE EAST- V/EST CENTERLINE OF SECTION 36, T7S, R8W, SBM, SAID POINT ALSO BEING THE SOUTHEAST CORNER OF REAL PROPERTY AS DESCRIBED IN SAID DEED RECORDED ON AUGUST 30,1995, AS INSTRUMENT NO. 95-0376669 OF OFFICIAL RECORDS; THENCE V/ESTERLY ALONG SAID EAST-V/EST CENTERLINE OF SECTION 36, T7S, R8W, SBM, NORTH 89"01'53'' WEST 4T7 .62 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 00"56'38'' EAST 58.57 FEET; THENCE NORTH 26"27'02" Vy'EST 12.70 FEET; THENCE NORTH 47"09'31" EAST T20.82 FEET; THENCE NORTH 45"44'28" EAST 144.28 FEET; THENCE NORTH 46"25'09" EAST 74.13 FEET; THENCE NORTH 37"40'58" EAST 94.88 FEET; THENCE NORTH 28O02'57" EAST 1 1 1.60 FEET; THENCE NORTH 33O02'08" EAST 37.69 FEET; THENCE NORTH 25"I7'OI" EAST 132.27 FEET; THENCE SOUTH 73"21'32" EAST 148.43 FEET TO SAID CENTERLINE OF CAMINO CAPISTRANO AS DESCRIBED IN BOOK 281, PAGE 245, OF DEEDS; CONTAINING: 3.853 ACRES, MORE OR LESS SUBJECT TO: COVENANTS, CONDITIONS, RESTRICTIONS, RIGHT OF V/AY AND EASEMENTS OF RECORD. 6 I I 47 .00 | 4s\321 62022.3 EXHIBIT E TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at Williams Ranch) Form of Notice of Agreement [Attached Behind This Page] EXHIBIT E E-1 6 t 1 47 .00 t 4 s\32 | 62022.3 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: The City of San Juan Capistrano 32400 Paseo Adelanto. San Juan Capistrano, California 92675 Attn: City Manager Exempt from Recording fee pursuant to Gov't Code $ 27383 NOTICE OF AGREEMENT AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at V/illiams Ranch) TO ALL INTERESTED PERSONS PLEASE TAKE NOTICE thAt C &, C DEVELOPMENT CO., LLC a Califomia limited liability company ("C&C"), and SEAN RAV/SON, an individual ("Rawson"), and the City of San Juan Capistrano, a California municipal corporation (the "City") entered into an agreement entitled Affordable Housing Disposition and Development Agreement (The Groves at V/illiams Ranch), dated as of July 16, 2019 (the "Agreement"). As permitted under the Agreement, C&C's and Rawson's rights and interests in and obligations under the Agreement have been assigned to LP, a California limited partnership ("Developer"), pursuant to an Assignment and Assumption Agreement among C&C, Rawson and City dated 20_. A copy of the Agreement is on file with the City and is available for inspection and copying by interested persons as a public record of the City at the City's offices located at32400 Paseo Adelanto., San Juan Capistrano, California 92675,during the City's regular business hours. The Agreement affects the real property described in Exhibit A attached to this Notice of Agreement (the "Properfy"). The meaning of defined terms, indicated by initial capitalization, used in this Notice of Agreement shall be the same as the meaning ascribed to such terms in the Agreement. PLEASE TAKE FURTHER NOTICE that the Agreement contains certain development covenants running with the land of the Property and other agreements between the Developer and the City affecting the Property, as set forth below (all section references are to the Agreement): Section 4.1 of the Agreement provides: 4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of EXHIBIT E E-2 6 l 147.00 I 45\32 t 62022.3 Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.1 shall run with the land of the Property until the earlier of the date of recordation of the Certificate of Completion. Section 5.1 of the Agreement provides: 5.1 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Property andlor Project, covenants and agrees that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer, 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 oftenants, lessees, sub-tenants, sub-lessees or vendees ofthe Property. With respect to familial status, this Section 5.1 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in this Section 5.1 shatl be construed to affect Section 51.2,51.3,51.4,51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 5.1. The covenant of this Section 5.1 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. EXHIBIT E E-3 6 | | 47 .00 I 45\32 I 62022.3 This NOTICE OF AGREEMENT is dated as of 20-, and has been executed on behalf of the Developer and the City by and through the signatures of their authorized representative(s) set forth below. This Notice of Agreement may be executed in counterparts and when fully executed each counterpart shall be deemed to be one original instrument. CITY: THE CITY OF SAN JUAN CAPISTRANO a California municipal corporation Dated:2018 ATTEST: City Clerk APPROVED AS TO LEGAL FORM: BEST & KRIEGER LLP By: City Attorney By: City Manager EXHIBIT E E-4 6 I I 47 . 00 | 4 5\32 | 62022.3 By DEVELOPER: LP, a California limited partnership LLC, a Califomia limited liability company, its managing general partner By: a Califomia nonprofit corporation, its sole member By: C &. C Development Co., LLC, a California limited liability company, its member and manager By: Todd R. Cottle, Trustee of the 2007 Todd R. Cottle and Jennifer N. Cottle Revocable Trust, its member By: By: SJC Groves CCR LLC, a California limited liability company, its developer general partner Dated 20r9 [ALL SIGNATURES MUST BE NOTARY ACKNO\üLEDGEDì EXHIBIT E E-5 6 t t 47 . 00 I 4 5\32 I 62022.3 EXHIBIT A TO NOTICE OF AGREEMENT Legal Description of Property EXHIBIT E E-6 6 I I 4'7 .00 | 45\321 62022.3 EXHIBIT A Legal Description of the Property THAT PORTION OF REAL PROPERTY IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA AS DESCRIBED IN THE DEED RECORDED ON AUGUST 30,1995, ASINSTRUMENT NO. 95-0376669 OF OFFICIAL RECORDS, IN THE OFFICE OF THE ORANGE COUNTYRECORDER, LYING SOUTHEASTERLY OF THE FOLLOWING DESCRTBED LINE: COMMENCING AT THE INTERSECTION OF THE CENTERLINE OF CAMINO CAPISTRANO AS DESCRIBED IN BOOK2gI, PAGE 245 OF DEEDS, WITH THE EAST- WEST CENTERLINE OF SECTION 36, T7S, R8V/, SBM, SAID POINT ALSO BEING THE SOUTHEAST CORNER OF REAL PROPERTY AS DESCzuBED IN SAID DEED RECORDED ON AUGUST 30, 1995, AS INSTRUMENT NO. 95-03]6669 OF OFFICIAL RECORDS; THENCE WESTERLY ALONG SAID EAST-WEST CENTERLINE OF SECTION 36, T7S, R8W, SBM, NORTH 89'01'53" WEST 417 .62 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 00O56'38'' EAST 58.57 FEET; THENCE NORTH 26'21'02" Vy'EST 12.70 FEET; THENCE NORTH 47"09'31" EAST 120.82 FEET; THENCE NORTH 45O44'28" EAST T44.28 FEET; THENCE NORTH 46"25'09" EAST 74.13 FEET; THENCE NORTH 37O40'58" EAST 94.88 FEET; THENCE NORTH 28O02'57" EAST 1 1 1.60 FEET; THENCE NORTH 33O02'08" EAST 37.69 FEET; THENCE NORTH 25O17'OI" EAST 132.27 FEET; THENCE SOUTH 73"2T'32" EAST 148.43 FEET TO SAID CENTERLINE OF CAMINO CAPISTRANO AS DESCRIBED IN BOOK 281, PAGE 245, OF DEEDS; CONTAINING: 3.853 ACRES, MORE OR LESS SUBJECT TO: COVENANTS, CONDITIONS, RESTRICTIONS, RIGHT OF V/AY AND EASEMENTS OF RECORD. 6 I I 47 .00 | 4s\321 62022.3 EXHIBIT F TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at V/illiams Ranch) Form of Official Action of Developer The undersigned, do certifu that together C & C Development Co., LLC a California limited liability company ("C&C"), and Sean Rawson ("Rawson"), an individual, will serve as the Developer of The Groves at V/illiams Ranch under the Agreement described below. No consent or approval of any other person is required for the undersigned to make the certifications set forth in this Certificate. Each of us, only on behalf of the entity or person identified below, further cerlify that the following named person(s): 1. Todd R. Cottle, Trustee of the 2007 Todd R. Cottle and Jennifer N. Cottle Revocable Trust, as a member of C & C Development Co., LLC 2. Sean Rawson for himself are, without any additional or fuither consent of any person, authorized and empowered for and on behalf of and in the name of the respective entity set forth above to: (1) sign and deliver that certain Affordable Housing Disposition and Development Agreement (The Groves at Williams Ranch), dated as of July 16, 2019 ("Agreement"), regarding the development of certain real property located in the City of San Juan Capistrano, California, and performance of other obligations of the "Developer" as set forlh in the Agreement; (2) sign and deliver all other documents on behalf of the respective entity identified set forth above to be signed or executed in connection with the transactions contemplated in the Agreement; and (3) take all actions on behalf of the respective entity identified above that may be considered necessary to conclude the transactions and complete the development contemplated in the Agreement. The authority conferred and cerlified to in this Certificate shall be considered retroactive and any and all acts authorizedinthis Certificate that were performed before the execution of this Certifìcate are approved and ratified by each entity identified above. The authority conferred and certified to in this Certificate shall continue in full force and effect until the City Manager of the City of San Juan Capistrano receives written notice of the revocation of this Certificate. V/e further certify that the activities covered by the authorities conferred and certified to in this Certificate and the foregoing certifications constitute duly authorized activities of each entity or person identified above; that these authorities and certifications are now in full force and effect; and that there is no provision in any document under which the entity identified above is organized andlor that governs such entity's continued existence or limits the power of the undersigned to confer the authorities or make the certifications set forth in this Certificate, and that the same are in conformity with the provisions of all such documents. EXHIBIT F F-t 6 t t 47 00 I 45\32 | 62022.3 DEVELOPER: C&C C &, C Development Co., LLC, a California limited liability company, its member and manager By: Todd R. Cottle, Trustee of the 2007 Todd R. Cottle and Jennifer N. Cottle Revocable Trust By: Barry A. Cottle, Trustee of The Cottle Family Trust Dated 318/1987 RAWSON, By: Sean Rawson, an individual EXHIBIT F F-2 6 1 | 4't . 00 I 45\32 1 62022.3 EXHIBIT G TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at Williams Ranch) Form of Certificate of Completion [Attached Behind This Page] EXHIBIT G G-1 6 I 1 47 . 00 I 4 5\32 I 62022.3 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO LP l42Il Yorba Street, Suite 200 Tustin, California 927 80 Attention: Todd R. Cottle Exempt from Recording fee pursuant to Gov't Code $ 27383 CITY OF SAN JUAN CAPISTRANO CERTIFICATE OF COMPLETION (The Groves at V/illiams Ranch) I,City Manager of the City of San Juan Capistrano (the "City") certify that: Section 1. The Project required to be constructed in accordance with that certain Affordable Housing Disposition and Development Agreement (The Groves at V/illiams Ranch), dated July 16, 2019 (the "Agreement"), among the City, C & C Development Co., LLC a California limited liability company ("C&C"), and Sean Rawson, an individual ("Rawson"), as assigned to LP, a California limited partnership, as permitted under the Agreement, on that certain real property specifically described in the legal description(s) attached to this Certificate of Completion as Exhibit A (the "Prop€rtY"), is complete in accordance with the provisions of the Agreement. This Certificate of Completion constitutes conclusive evidence of the City's determination of the Developer's satisfaction of its obligation under the Agreement to construct and install the Project on the Property, including any and all buildings, parking areas, landscaping areas and related improvements necessary to support or meet any requirements applicable to the Project and its use and occupancy on the Project, whether or not such improvements are located on or off the Property or on other property subject to the Agreement. Notwithstanding any provision of this Certificate of Completion, the City may enforce any covenant surviving this Certificate of Completion in accordance with the terms and conditions of the Agreement and the Regulatory Agreement recorded against the Property by the Developer and the City under the Agreement. The Agreement is an official record of the City and a copy of the Agreement may be inspected at the City's office located at32400 Paseo Adelanto, San Juan Capistrano, California 92675, during the City's regular business hours. EXHIBIT G G-2 6 I I 47 .00 I 45\32 | 62022.3 DATED AND ISSUED this _ day of EXHIBIT G G-3 THE CITY OF SAN JUAN CAPISTRANO a California municipal corporation 6t I 47 .001 45\321 62022.3 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On before me,Notary Public, personally appeared , who proved to me basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the ) ) ) on the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify UNDER PENALTY OF PERJURY under the laws of the State of Califomia that the foregoitlgparagraph is true and correct. WITNESS my hand and official seal. Name: Notary Public EXHIBIT G G-4 6 1 I 47.00 l 45\32 | 62022.3 EXHIBIT A TO CE,RTIFICATE OF COMPLETION Legal Description of the Property EXHIBIT G G-5 6t t 47 .00 I 45\321 62022.3 EXHIBIT A Legal Description of the Property THAT PORTION OF REAL PROPERTY IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA AS DESCRIBED IN THE DEED RECORDED ON AUGUST 30, T995, ASINSTRUMENT NO. 95.0376669 OF OFFICIAL RECORDS, IN THE OFFICE OF THE ORANGE COUNTYRECORDER, LYING SOUTHEASTERLY OF THE FOLLOWING DESCRIBED LINE: COMMENCING AT THE INTERSECTION OF THE CENTERLINE OF CAMINO CAPISTRANO AS DESCRIBED IN BOOK 281, PAGE 245 OF DEEDS, WITH THE EAST- WEST CENTERLINE OF SECTION 36, T7S, R8W, SBM, SAID POINT ALSO BEING THE SOUTHEAST CORNER OF REAL PROPERTY AS DESCzuBED IN SAID DEED RECORDED ON AUGUST 30,1995, AS INSTRUMENT NO. 95-0376669 OF OFFICIAL RECORDS; THENCE WESTERLY ALONG SAID EAST-V/EST CENTERLINE OF SECTION 36, T7S, R8'W, SBM, NORTH 89'01'53"'WEST 417,62 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 00"56'38" EAST 58.57 FEET; THENCE NORTH 26"21'02" WEST 12,70 FEET; THENCE NORTH 47"09'31" EAST 120.82 FEET; THENCE NORTH 45"44'28" EAST 144.28 FEET; THENCE NORTH 46"25'09" EAST 74.13 FEET; THENCE NORTH 37"40'58" EAST 94.88 FEET; THENCE NORTH 28"02'57" EAST 1 1 1.60 FEET; THENCE NORTH 33"02'08" EAST 37.69 FEET; THENCE NORTH 25"17'OI" EAST 132.27 FEET; THENCE SOUTH 73"21'32" EAST 148.43 FEET TO SAID CENTERLINE OF CAMINO CAPISTRANO AS DESCRIBED IN BOOK29I, PAGE 245, OF DEEDS; CONTAINING: 3.853 ACRES, MORE OR LESS SUBJECT TO: COVENANTS, CONDITIONS, RESTRICTIONS, RIGHT OF WAY AND EASEMENTS OF RECORD. 6 1 1 47 . 00 I 4 5\32 | 62022.3 EXHIBIT H TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at Williams Ranch) Form of Regulatory Agreement [Attached Behind This Pagel EXHIBIT H H-1 6 1 I 47 .00 I 4 5\32 t 62022.3 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, Califomia 92675 Attn: City Manager APN: 121-050-21 SPACE ABOVE FOR RECORDER'S USE ONLY EXEMPT FROM RECORDING FEE PER GOVERNMENT CODE ç27383 [Dated as of REGULATORY AGREEMENT (The Groves at \ililliams Ranch) by and between THE CITY OF SAN JUAN CAPISTRANO, a California municipal corporation' and LPo a California limited partnership .2020 for reference purposes onlyl 6I | 47 .001 4s\32r 6231 4.2 REGULATORY AGREEMENT (The Groves at Williams Ranch) This REGULATORY AGREEMENT (The Groves at Williams Ranch) ("Regulatory Agreement") is made and entered into as of 2020, by and between THE CITY OF SAN JUAN CAPISTRANO, a California municipal corporation ("City") and LP, a California limited partnership ("Owner"). RECITALS A. The City and the Owner's predecessor-in-interest entered into that certain Affordable Housing Disposition and Development Agreement (The Groves at Williams Ranch) dated as of July 16,2019 (the "Affordable Housing Agreement"), which provides that the City will convey to the Owner that certain property located at the northeast corrrer of Camino Capistrano and Junipero Serra Road, San Juan Capistrano (APN 12l-050-21), more specifically described in Attachment No. 1, incorporated herein by this reference (the "Prop€rty"), subject to the terms and conditions of the Affordable Housing Agreement. Under the Affordable Housing Agreement, the City has agreed to provide financial assistance to the Owner for acquisition of the Property and the construction thereon by the Owner of a seventy-five (75)-unit multifamily residential development for seniors (the "Project"). B. The City and the Owner desire that the Project be operated as a multifamily residential community on the Property with the residential units made available to Qualified Households at an Affordable Rent as more specifically defined herein. This Regulatory Agreement establishes terms and conditions which govern the operation of the Property. C. The terms of the Affordable Housing Agreement require that certain covenants and affordability restrictions remain in full force and effect on the Project for a term commencing on the date of recordation of this Regulatory Agreement and continuing for fifty-five (55) years following the recordation of Certificate of Completion as defined herein. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND TINDERTAKINGS SET FORTH HEREIN, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF V/HICH IS HEREBY ACKNOV/LE,DGED, THE OWNER AND THE CITY DO HEREBY COVENANT AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS AS FOLLOV/S: 1. Definitions of Certain Terms. AS USED IN THIS REGULATORY AGREEMENT' THE FOLLOWING WORDS AND TERMS SHALL HAVE THE MEANING AS PROVIDED IN THE RECITALS OR IN THIS SECTION I, UNLESS THE SPECIFIC CONTEXT OF USAGE OF A PARTICULAR WORD OR TERM MAY OTHER\üISE REQUIRE. ALL INITIALLY CAPITALIZED TERMS USED AND NOT OTHERWISE DE,F'INED IN THE RECITALS OR IN THIS SECTION SHALL HAVE THE MEANING ASCRIBED TO SUCH TERM BY THE AFFORDABLE HOUSING AGREEMENT. 1.1. 30% Household. An individual or household that has a household income equal to or less than thirty percent (30%) of then current AMI adjusted for household size, as published by 6 I 1 47 .00 | 45\321 623 I 4. 21 TCAC annually. 1.2. 50olo Household. An individual or household that has a household income equal to or less than fifty percent (50%) of then current AMI adjusted for household size, as published by TCAC annually. 1.3. 600lo Household. An individual or household that has a household income equal to or less than sixty percent (60%) of then current AMI adjusted for household size, as published by TCAC annually. 1.4. 70olo Household. An individual or household that has a household income equal to or less than seventy percent (70%) of then current AMI adjusted for household size, as published by TCAC annually. 1.5. Affordable Rent. In reference to each Qualifying Unit, the maximum rent, with allowance for utilities, for the applicable household income as published by the TCAC annually to qualify for, receive and be in compliance with the applicable program for the Tax Credits. For purposes of the calculation of Affordable Rent "adjusted for household size" shall be the federally- mandated household size assumptions as set forth in federal statutes or regulations for the Tax Credit program. 1.6. AMI. The Area Median Family Income for the Santa Ana-Anaheim-Irvine, CA HUD Metro FMR Area, as published annually by HUD. I.7 . Annual Report. The Certification of Continuing Program Compliance attached to this Regulatory Agreement as Attachment No. 3 and incorporated by this reference or comparable report filed annualty by the Owner with TCAC or other governmental agencies. 1.8. Automobile Liability Insurance. Insurance coverage against claims of personal injury (including bodily injury and death) and property damage covering all the Owner owned, leased, hired and non-owned vehicles, with minimum limits for bodily injury and property damage of One Million Dollars ($1,000,000). Such insurance shall be provided by a business or commercial vehicle policy and may be provided through a combination of primary and excess or umbrella policies, all of which shall be subject to pre-approval by the City, which approval shall not be unreasonably withheld, delayed or conditioned. 1.9. Certifîcate of CoqBþtian. The written certification of the City, in substantially the form of Exhibit G attached to the Affordable Housing Agreement, certifying that the Project has been completed in compliance with the terms and conditions of this Regulatory Agreement. 1 .10. City Parties.Collectively, the City and its commissions, agents, attorneys, offìcers, employees, and autho rized repr esentatives. 1.11. HUD. The United States Department of Housing and Urban Development. I.I2. Income Certification Form. The Certification of Tenant Eligibility attached to this Regulatory Agreement as Attachment No. 2 and incorporated by this reference, or comparable income certification form required by TCAC or other governmental agencies. 6 I I 47 .00 I 4 5\321 623 I 4. 22 1.13. Liability Insurance. Commercial general liability insurance against claims for bodily injury, personal injury, death, or property damage occurring upon, in, or about the Property, the Project or adjoining streets or passageways, at least as broad as Insurance Services Office Occurrence Form CG0001, with a minimum liability limit of Two Million Dollars ($2,000,000) for any one occurrence and which may be provided through a combination of primary and excess or umbrella insurance policies. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Project or the general aggregate limit shall be twice the required minimum liability limit for any one occurrence. I.I4. Manasement Agent. A person with significant experience in management of affordable rental housing projects substantially similar to the Project and that is, at the time, managing other financially self-supporting, successful affordable rental housing projects substantially similar to the Project. 1.15. Manager Unit. The one (1) Three Bedroom Unit within the Project reserved exclusively for use by the on-site manager employed by the Owner or the Management Agent, as applicable. 1.16. One Bedroom Unit.Any one of the one bedroom residential accommodations within the Project. 1.17. Project. The operation of a multi-family rental housing project which shall include not less than seventy-five (75) units, thirty-seven (37) of which shall be rented to Qualified Households at Affordable Rents, and all related on- and off-site improvements, as more particularly described in the Affordable Housing Agreement. 1.18. Property Insurance. Insurance providing coverage for the Property and all improvements on or to the Property against loss, damage, or destruction by fire and other hazards encompassed under the broadest form of property insurance coverage then customarily used for like properties in the County of Orange, excluding earthquake coverage, in an amount equal to one hundred percent (100%) of the replacement value (without deduction for depreciation) of all improvements comprising the Project (excluding excavations and foundations) and in any event sufficient to avoid co-insurance and with no co-insurance penalty provision, with "ordinance or law" coverage. To the extent customary for like properties in the County of Orange at the time, such insurance shall include coverage for explosion of steam and pressure boilers and similar apparatus located on the Property; an "increased cost of construction" endorsement; and an endorsement covering demolition and cost of debris removal, all subject to policy sublimits. Property Insurance shall also include rental or business interruption insurance in an amount, at least, equal to the aveîage annual gross income from the Project for the preceding three (3) calendar years and providing for a l2-month extended period of indemnity. 1.19. Oualified Households. A household that (1) intends to reside in the Qualifying Unif (2) is a Senior Household; and (3) whose income does not exceed the maximum income allowable for the subject Qualifying Unit. 1.20. Oualifyine Units. The 6 1 1 47 .00 | 4 5\321 623 | 4. 23 thirty-seven (37) One Bedroom Units and Two Bedroom Units within the Project restricted to occupancy by Qualified Households as set forth in Section 6 (exclusive of the Manager Unit). 1.2I. Senior Household. A household consisting of a person who is 55 years of age or older and any qualified permanent residents, as described in California Civil Code Section 51.3; provided that if the TCAC regulations impose a different definition for senior households, then the definition under the TCAC regulations shall apply 1.22. Tax Credits. An allocation from TCAC of four percent (4%) federal low income housing tax credits to finance a portion of the costs of the Project, in accordance with Section 42 of the Internal Revenue Code of 1986, as amended, all associated Internal Revenue Service regulations and all associated TCAC regulations. 1.23. TCAC. The California Tax Credit Allocation Committee or its successor in function. 1.24. Term. The period of time following the date of recordation of this Regulatory Agreement, and ending on the fifty-fifth (55th) anniversary of recordation of the Certificate of Completion. 1.25. Three Bedroom Unit. Any one of the three bedroom residential accommodations within the Project. 1,26. Two Bedroom Unit. Any one of the two bedroom residential accommodations within the Project. I.27. Workers Compensation Insurance. Workers compensation insurance complying with the provisions of California law and an employer's liability insurance policy or endorsement to a liability insurance policy, with a minimum liability limit of One Million Dollars ($1,000,000) per accident for bodily injury or disease, covering all employees of the Owner. 2. Reservation of Property for Affordable Housins. The Owner covenants and agrees to reserve and restrict the Property for construction ofthe Project and, thereafter, reserve and restrict use and residential occupancy of the Qualifying Units by households who, at the time of initial occupancy of a Qualifying Unit and continuously thereafter (subject to the other provisions of this Regulatory Agreement), until the end of the Term, are members of a Qualifying Household. One (1) Three Bedroom Unit within the Project may be used as a Manager Unit at any given time provided that no Qualifying Unit shall be used as a Manager Unit. aJ.Á ffnrrlqhlc Multi-F o*il-, Þocirlenfiol Ppnfol Þrnnerfr¡Restrictive Õn¡ ¡pn anf The Owner covenants to and for the benefit of the City that the Owner shall develop, own, manage and operate, or cause the management and operation of, the Project to provide multi-family residential rental housing in the Qualifying Units only to Qualifying Households at an Affordable Rent. The Owner hereby confirms and remakes its covenant set forth in Section 4.1 of the Affordable Housing Agreement to develop the Property with the Project and such covenant is incorporated into this Regulatory Agreement in its entirety by this reference. The Owner will not knowingly permit any Qualifying Unit to be used on a transient basis and will not lease or rent any Qualifying Unit for an initial period of less than twelve (12) months. No Qualifying Unit will, at any time, be leased 6 t | 47 .00 I 45\321 øZl v. Z4 or rented for use as a hotel, motel, time share, dormitory, fraternity house, sorority house, rooming house, hospital, nursing home, sanitary or rest home. 4. Continuous Operation Covenant. The Owner covenants to and for the benefit of the City to cause the Project to be continuously operated, in accordance with the other provisions of this Regulatory Agreement, throughout the Term. 5. Abandonment. The Owner shall not abandon or surrender the operation of all or any part of the Project during the Term, except due to material casualty or condemnation. 6. Rental of Qualifyine Uq{S. The Owner covenants that each Qualifying Unit shall be occupied or available for occupancy by a Qualifuing Household at an Affordable Rent on a continuous basis throughout the Term, in accordance with the following tenant income level mix: 6.1. Not less than ten (10) of the One Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 30o/o Households; and 6.2. Not less than twenty-three (23) of the One Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 50olo Households; and 6.3. Not less than two (2) of the Two Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 50o/o Households; and 6.4. Not less than two (2) of the Two Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 60Yo Households. 7. Affordable Rent. The monthly rent charged to a Qualifying Household for the occupancy of a Qualifying Unit shall never exceed an Affordable Rent for such Qualifying Unit set fofth in Section 1.5. 7 .1. Rent for Qualifying Units may be increased only once per calendar year, based on changes in Area Median Income; provided that the rent for each Qualifying Unit must never exceed an Affordable Rent for the Qualifying Unit as necessary to maintain the tenant income mix specified in Section 6. 7.2. Determination of Qualifying Household income shall be made by the Owner at the time of initial application by an individual or family for occupancy of a Qualifying Unit. At the time of initial application, the Owner shall require an applicant to complete the Income Certification Form and certify the accuracy of the information provided on such form. On or before March 31 of each calendaî year during the Term, the Owner shall require each Qualifying Household occupying a Qualifying Unit to recertify the Qualifying Household's income on the Income Certification Form. The Owner shall make a good faith effort to verify the accuracy of income information provided in any Income Certification Form by an applicant for occupancy of a Qualifying Unit or by a Qualifying Household occupying a Qualifying Unit, by taking one or more of the following steps, as reasonably required or indicated: (1) obtain an income tax return and copy of each W2 Wage and Earnings Statement for the most recently concluded income tax year; (2) conduct a credit reporting agency or similar search; (3) obtain an income verification form from the applicant's or the Qualiffing Household's current employer(s); (4) obtain an income 6 | | 47 .00t 45\321 623 | 4. 25 verification form from the United States Social Security Administration and/or the California Department of Social Services, if the applicant or the Qualifying Household receives assistance from either of such agencies; or (5) if the applicant or an adult member of a Qualifying Household is unemployed and has no such income tax return, obtain another form of independent verification. For purposes of this Section 7.2,the Owner may conclusively rely upon the evidence of the age of the occupant(s) of a Qualifying Unit as presented in a valid California Driver's License, other form of identification issued by the State of California or the United States Government, which includes a date of birth. All such verification information shall only be obtained by the Owner after obtaining the applicant's or the Qualifying Household's written consent for the release of such information to the Owner. Failure to consent in writing to the release of such income verification information to the Owner may disqualify an applicant for occupancy of a Qualifying Unit or be grounds for termination of Qualifying Household's occupancy of a Qualifying llnit. 7.3. The Qualifying Units are not specifically assigned to any qualifying income category (i.e., 30Yo Household , 50yo Household, 600/0 Household or 70o/o Household). The restricted income level of each Qualifying Unit may change as Qualifying Units become vacant, a Qualifying Household tenant's income changes or other Qualifuing Units are occupied by Qualifyine Households. In all circumstances, though, the rent for each Qualifying Unit shall be an Affordable Rent for the Qualifying Unit as necessary to maintain the restricted income tenant mix required under Section 6. If, upon any recertification, the income of a previously Qualifying Household exceeds one hundred forty percent (140%) of the qualifying income for a 60Yo Household, then the Owner or Management Agent shall notify such household that its lease for its Qualifying Unit will not be renewed upon the expiration of its lease, unless the household again becomes a Qualifying Household upon recertification prior to the expiration of its lease. In any event, if the income category of a Qualifying Household upon recertification is different from the previous income of the Qualifying Household (i.e. a 30olo Household becomes a 50o/o Household, a 600/o Household or a 70Yo Household; a 50Yo Household becomes a 30Yo Household, a 60o/o Household or a70%o Household; a 600/o Household becomes a30o/o Household, a 50Yo Household or a70o/o Household; or 70Yo Household becomes a30o/o Household, a 50o/o Household or a 60Yo Household; or any similar change in the income of a Qualifying Household tenant of the Project), the Owner or Management Agent shall rent the next available Unit to a Qualifying Household with an income level that will maintain the tenant income level mix set forth in Section 6. To the extent the federal low-income housing tax credit requirements conflict with the requirements in this Section 7.3 relative to the continued occupancy by households that do not qualify as Qualifying Households, the federal low-income housing tax credit requirements shall apply in place of the provisions in this Section 7.3. 7.4. The Owner shall maintain on file all Income Certification Forms completed by applicants for occupancy of Qualifying Units and by Qualifying Households that occupied or are occupying Qualifying Units in accordance with Section 6 and shall provide copies of the rent ro11 and Income Certification Forms to the City for its review and approval within fifteen (15) days following Notice to the Owner. 1.5. The Owner and each Qualifying Household occupying a Qualifying Unit shall permit the City to conduct inspections of the Property, the Project and each Qualifying Unit, from time-to-time, for purposes of verifying compliance with this Regulatory Agreement, upon fifteen (15) days prior written notice to the Owner. 6 I I 47 .00 1 45\321 623 I 4. 26 7.6. The Owner shall submit its first Annual Report to the City on the April 30th immediately following the issuance of the final Certificate of Occupancy for the Project by the City. Thereafter, on each April 30 during the Term, the Owner shall submit an Annual Report to the City. The City shall maintain the confidentiality of the information contained in any Annual Report specifically relating to any particular Qualiffing Household occupying a Qualifying Unit, to the extent reasonably allowed by Law, as determined by the City's general or special counsel. 8 The Owner Covenant Lease of Oualifrins Units. The Owner , for itself, its successors and assigns, covenants and agrees that, if any Qualifying Unit is rented or leased during the Term, the rental or lease of the Qualifying Unit shall be accomplished through a written lease agreement and all of the following restrictions shall apply: 8.1. A Qualifying Household shall be the record tenant and only occupant of the Qualifying Unit. 8.2. The lease for each Qualifuing Unit shall be for an initial term of not less than twelve (12) months. 8.3. Each lease for a Qualifying Unit shall contain all of the following provisions: 8.3 . 1 . An agreement authori zing the Owner to immediately terminate the tenancy of a Qualifying Household occupying a Qualifying Unit, where one or more members of that Qualifying Household misrepresented any fact material to the qualification of such household as a Qualifying Household; 8.3.2. An agreement providing that each Qualifying Household occupying a Qualifying Unit shall be subject to annual certification or recertification of income as a condition to continued occupancy of the Qualifying Unit; 8.3.3. An agreement providing that each Qualifying Household occupying a Qualifying Unit may be subject to rental increases in accordance with this Regulatory Agreement; and 8.3.4. An agreement providing that the Owner will not discriminate on the basis ofrace, color, creed, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status (except as may legally be permitted for Senior Households), source of income, disability, genetic information or receipt of public assistance or housing assistance in connection with rental of a Qualifying Unit, or in connection with the employment or application for employment of persons for operation and management of the Project, and all contracts, applications and leases entered into for such purposes shall contain similar non-discrimination clauses to such effect. 8.4. The Owner shall not terminate the tenancy or refuse to renew the lease or rental agreement of a Qualifying Household except for: (i) serious or repeated violations of the terms and conditions of the lease; (ii) because the previously Qualifying Household is no longer a Qualifying Household; (iii) for violation of applicable Federal, State, or local law; or (iv) for other good cause. The Owner shall follow all applicable laws in connection with termination of the tenancy of a Qualifying Household or a refusal to renew the lease or rental agreement of a Qualifying 6t I 47 .001 45\321 623 1 4. 2'7 Household. 8.5. Tenant Selection Policies and Criteria. The Owner shall adopt written tenant selection policies and criteria that: 8.5.1. are consistent with the purpose of providing affordable rental housing for Qualifying Households at an Affordable Rent; 8.5.2. are reasonably related to tenant eligibility and ability to perform the obligations of the lease for a Qualifying Unit; 8.5.3. subject to applicable fair housing laws, give reasonable preference and consideration to the housing needs of households residing in the City of San Juan Capistrano that are involuntarily displaced by natural disaster, or by activities of the City, including but not limited to priority placement on a written waiting list of available units; 8.5.4. subject to applicable fair housing laws, give reasonable preference and consideration to the housing needs of households residing in, employed in, or offered employment in the City of San Juan Capistrano, including but not limited to priority placement on a written waiting list of available units; 8.5.5. provide for the selection of tenants from a written waiting list in the chronological order oftheir application subject to Sections 8.5.3 and 8.5.4, insofar as is practicable; 8.5.6. give prompt written notice to any rejected applicant of the grounds for rejection; 8.5.7. provide for all of the Qualifying Units to be available for occupancy on a continuous basis to Qualifying Households at an Affordable Rent; and 8.5.8. do not give preference to any particular class or group of persons in leasing or renting the Qualifying Units, except as provided in Sections 8.5.3 and 8.5.4 and to the extent that atenant must be a Qualifying Household. 9. Non-Discrimination. All units in the Project shall be available at an Affordable Rent for occupancy on a continuous basis to Qualified Households. Except as provided in Sections 8.5.3 and 8.5.4 and except as legally permitted for Senior Households, the Owner shall not give preference to any particular class or group of persons in renting the units in the Project. There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, or genetic information in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit. Neither the Owner nor any person claiming under or through the Owner, shall 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, sublessees, subtenants, or vendees of any Unit or in connection with the employment of persons for the operation and management of any Unit, the Project or the Property. All deeds, leases or contracts made or entered into by the Owner as to the units, the Project or the Property or any portion thereof, shall contain 6 | t47 .00t 45\321 623 I 4. 28 covenants prohibiting discrimination, as prescribed by this Regulatory Agreement. The Owner shall include a statement in all advertisements, notices and signs for the availability of units in the Project for rent to the effect that the Owner is an Equal Housing Opportunity Provider. i0. Equal Housine Notice. Provide for a statement in all advertisements, notices and signs for the availability of Qualifying Units for lease or rent to the effect that the Owner is an equal housing opportunity provider, and include an equal housing opportunity logotype in all notices, signs and advertisements in print media for the Qualifying Units. 11. Development and Manasement of the Proiect. 11.1. Management of Project. The Owner shall be responsible for management of the Project including, without limitation, the selectio4 of Qualified Households, certification and recertification of household size, income, gender and the age of the head of household and relation of head of household to the household, of all Qualified Households, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The City shall have bear no responsibility for the management or operation of the Project or the Property. The Project shall at all times be managed by a Management Agent reasonably acceptable to the City, with demonstrated ability to operate residential rental facilities similar to the Project in a manner that will provide decent, safe, and sanitary housing. For the purposes hereof, if the Owner directly performs the functions of the Management Agent by its employees or by means of a service contract with an entity which is a partner or an affiliate of a partner in the Owner, such Management Agent shall be deemed approved by the City. If the Management Agent is an entity or person other than the Owner, its employees, a partner in the Owner or an entity owned or controlled by the Owner or which owns and/or controls the Owner, the Owner shall submit for the City's approval the identity of any proposed Management Agent, together with additional information relevant to the background, experience and financial condition of any proposed Management Agent, as reasonably requested by the City. If the proposed Management Agent meets the standard for a qualified Management Agent set forth above, the City shall approve the proposed Management Agent by notifying the Owner in writing within thirty (30) days following the Owner's written request for such approval. Unless the proposed Management Agent is disapproved by the City within thirty (30) days, which disapproval shall state with reasonable specificity the basis for disapproval, it shall be deemed approved. The City hereby approves Advanced Property Services, LLC, as the initial property manager. 1 1.1.1. If the Owner directly performs the functions of the Management Agent by its employees or by means of a service contract with an entity which is a partner or an affiliate of a partner in the Owner and the City determines the Owner has not met its management responsibilities, the City shall have the right to enter the Project, to review relevant documentation to determine if the Owner is acting in a reasonable manner and to require the Owner to hire a third party management company acceptable to the City. 11.2. Insutance. lI.z.L Required Insurance. The Owner shall maintain, to protect the City Parties against all insurable claims resulting from the actions of the Owner in connection with this Regulatory Agreement, the Property and the Project, at the sole cost and expense of the Owner 6 I I 47 .00 1 4 5\32 | 623 1 4. 29 during the Term hereof the following insurance (or its then reasonably available equivalent): (a) Liability Insurance; (b) Automobile Liability Insurance to the extent required by this Regulatory Agreement; (c) Property Insurance; and (d)'Workers Compensation Insurance. The Owner shall require all subcontractors to maintain the same insurance required of the Owner set forth in this Section ll.2 pÅor to performing any work on the Property or the Project. II.2.2. Policy Requirements and Endorsements. All insurance policies required by this Regulatory Agreement shall contain (by endorsement or otherwise) the following provisions: Insured. The Owner's Liability Insurance and Automobile Liability Insurance policies shall name the City Parties as "additional insured." The Owner's Property Insurance policy shall name the City as a "loss payee." The coverage afforded to the City Parties shall be at least as broad as that afforded to the Owner regarding the Property and the Project and may not contain any terms, conditions, exclusions, or limitations applicable to the City Parties that do not apply to the Owner. Primary Coverage. Any insurance or self-insurance maintained by the City Parties shall be in excess of all insurance required under this Regulatory Agreement and shall not contribute to any insurance required under this Regulatory Agreement. Contractual Liability. The Owner's Liability Insurance policy shall contain contractual liability coverage for the Owner's indemnity obligations under this Regulatory Agreement. The Owner's obtaining or failure to obtain such contractual liability coverage shall not relieve the Owner from nor satisfy any indemnity obligation of the Owner under this Regulatory Agreement. Deliveries to the City. The Owner shall deliver to the City evidence of all insurance policies required by this Regulatory Agreement. No later than three (3) days before any insurance required by this Regulatory Agreement expires, is cancelled or its liability limits are reduced or exhausted, the Owner shall deliver to the City evidence of the Owner's maintenance of all insurance this Regulatory Agreement requires. Each insurance policy required by this Regulatory Agreement shall be endorsed to state that coverage shall not be cancelled, suspended, voided, reduced in coverage or in limits, except after thirty (30) calendar days' advance written notice of such action has been given to the City by certified mail, return receipt requested; provided that if a thirty (30) days' notice of cancellation endorsement is not available the Owner shall notify the City of this unavailability in writing and shall forward any notice of cancellation to the City within two (2) business days from date of receipt by the Owner; and further provided, however, that only ten (10) days' advance written notice shall be required for any such action arising from non-payment of the premium for the insurance. Phrases such as "endeavor to" and "but failure to mail such Notice shall impose no obligation or liability of any kind upon the company" shall not be included, to the extent commercially available, in the cancellation wording of any certificates or policies of insurance applicable to the City Parties pursuant to this Regulatory Agreement. Waiver of Certain Claims. The Owner shall cause each insurance carrier providing insurance coverage under this Regulatory Agreement to endorse their applicable policy(ies) with a Waiver of Subrogation with respect to the City Parties, if not already in the 6 | | 47 .oo1 4s\32t azt t +. zl 0 policy. To the extent that the Owner obtains insurance with a Waiver of Subrogation, the parties release each other, and their respective authorized representatives, from any claims for damage to any person or property to the extent such claims are paid by such insurance policies obtained pursuant to and in satisfaction of the provisions of this Regulatory Agreement. No Claims Made Coverage. None of the insurance coverage required under this Regulatory Agreement may be written on a claims-made basis. IL2.3.Fulty Paid and Non A$ç$abþ. All insurance obtained and maintained by the Owner pursuant to this Section 1 1.2 shall be fully paid for and non-assessable. However, such insurance policies may be subject to insurer audits. II.2.4.City Option to Obtain Coverage. During the continuance of an Event of Default arising from the failure of the Owner to carry any insurance required by this Regulatory Agreement, the City may, aT" its option, purchase any such required insurance coverage and the City shall be entitled to immediate payment from the Owner of any premiums and associated reasonable costs paid by the City for such insurance coverage. Any amount becoming due and payable to the City under this Section 11.2.4 that is not paid within fifteen (15) calendar days after written demand from the City for payment of such amount, within an explanation of the amounts demanded, will bear interest from the date of the demand at the rate of eight percent (8%) per annum or the maximum interest rate allowed by applicable law, whichever is less. Any election by the City to purchase or not to purchase insurance otherwise required by the terms of this Regulatory Agreement to be carried by the Owner shall not relieve the Owner of its obligation to obtain and maintain any insurance coverage required by this Regulatory Agreement. 1I.2.5. Separation of Insured. The Owner's Liability Insurance and Automobile Liability Insurance policies shall provide for separation of insured for the Owner and the City Parties. Insurance policies obtained in satisfaction of or in accordance with the requirements of this Regulatory Agreement may provide a cross-suits exclusion for suits between named insureds, but shall not exclude suits between named insureds and additional insureds. 11.2.6. Deductibles and Insured Retentions Any deductibles or self-insured retentions under insurance policies required by this Regulatory Agreement shall be declared to and approved by the City. The Owner shall pay all such deductibles or self-insured retentions regarding the City Parties or, alternatively, the insurer under each insurance policy required by this Section 1 1.2 shall eliminate such deductibles or self-insured retentions with respect to the City Parties. II.2.7.No Separate Insurance. The Owner shall not carry separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Regulatory Agreement, unless the City is made an additional insured thereon, as required by this Regulatory Agreement. lI.2.8.Insurance of Tndemnification. The insurance requirements of this Regulatory Agreement are independent of the Owner indemnification and other obligations under this Regulatory Agreement and shall not be construed or interpreted in any way to satisfy, restrict, limit, or modify the Owner's indemnification or other obligations or to limit the Owner's 6 t | 4i.oor s\izt 623 | 4. 2l I liability under this Regulatory Agreement, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall the provision of such insurance preclude the City from taking such other actions as are available to it under any other provision of this Regulatory Agreement or otherwise at law or in equity. II.2.9. Nature of Insurance. The policies of insurance required by this Regulatory Agreement shall be issued by caniers that: (a) are listed in then current "Best's Key Rating Guide-Property/Casualty-United States &. Canadt' publication (or its equivalent, if such publication ceases to be published) with a minimum financial strength rating of "A-" and a minimum financial size category of "XI" (exception may be made for the California Compensation Insurance Fund when not specifically rated); and (b) are authorized to do business in California. The Owner may provide any insurance under a "blanket" or "umbrella" insurance policy, provided that: (i) such policy or a ceftificate of such policy shall specify the amount(s) of the total insurance allocated to the Property and the Project, which amount(s) shall equal or exceed the amount(s) required by this Regulatory Agreement; and (ii) such policy otherwise complies with this Regulatory Agreement. 12. Maintenance of the Proiect. The Owner, for itself, its successors and assigns, hereby covenants and agrees that the exterior areas of the Project which are subject to public view (e.g.: all improvements, paving, walkways, landscaping, and ornamentation) shall be maintained in good repair and in aneat, clean and orderly condition, ordinary wear and tear excepted. In the event thaf at any time during the Term, there is an occurrence of an adverse condition on any area of the Project which is subject to public view in contravention of the general maintenance standard described above ("Maintenance Deficiency"), then the City shall notify the Owner in writing of the Maintenance Deficiency and give the Owner thirty (30) calendar days from the date of such notice to cure the Maintenance Deficiency as identified in the notice. "Maintenance Deficiency" includes, without limitation, the following inadequate or non-conforming property maintenance conditions andlor breaches of residential property use restrictions: (i) failure to properly maintain the windows, structural elements, and painted exterior surface areas of the units in a clean and presentable manner; (ii) failure to keep the common areas of the Project free of accumulated debris, appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building materials or equipment not regularly in use on the Property; (iii) failure to regularly maintain, replace and renew the landscaping in a reasonable condition free of weed and debris; and (iv) the use of garage areas on the Project for purposes other than the parking of motor vehicles and the storage of personal possessions and mechanical equipment of persons residing in the Project. 12.1. In the event the Owner fails to cure or commence to cure the Maintenance Deficiency within the time allowed, the City may thereafter conduct a public hearing following transmittal of written notice thereof to the Owner ten (10) calendar days prior to the scheduled date of such public hearing in order to verify whether a Maintenance Deficiency exists and whether the Owner has failed to comply with the provision of this Section 12. If, upon the conclusion of a public hearing, the City makes a finding that a Maintenance Deficiency exists and that there appears to be non-compliance with the general maintenance standard, as described above, then the City shall have the right to enter the Project (exterior areas of the Project which are subject to public view only) and perform all acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity that the City may then have to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the City for the abatement of a Maintenance 61 147 .oo1 45\3zt 623 t 4. 212 Deficiency as authorized by this Section 12.1 shall become a lien on the Project. If the amount of the lien is not paid within thirty (30) calendar days after written demand for payment by the City to the Owner, the City shall have the right to enforce the lien in the manner as provided in Section 12.3. 12.2. Graffiti which is visible from any public right-of-way which is adjacent or contiguous to the Project shall be removed by the Owner from any exterior surface of a structure or improvement on the Project by either painting over the evidence of such vandalism with a paint which has been color-matched to the surface on which the paint is applied, or grafÍiti may be removed with solvents, detergents or water as appropriate. In the event that graffiti is placed on the Project (exterior areas only) and such graffiti is visible from an adjacent or contiguous public right-of-way and thereafter such graffiti is not removed within seventy-two (72) hours following the time of its application, or the Owner's actual knowledge of its existence, whichever occurs later; then in such event and without notice to the Owner, the City shall have the right to enter the Project and remove the graffiti. Notwithstanding any provision of the Regulatory Agreement to the contrary, aîy sum expended by the City for the removal of graffiti from the Project as authorized by this Section 12.2 shall become a lien on the Project. If the amount of the lien is not paid within thirty (30) calendar days after written demand for payment by the City to the Owner, the City shall have the right to enforce its lien in the manner as provided in Section 12.3. 12.3. The parties hereto fuither mutually understand and agree that the rights conferred upon the City under this Section 12 expressly include the power to establish and enforce a lien or other encumbrance against the Property in the manner provided under California Civil Code Sections 2924,2924b and2924c, as such sections may be amended or superseded, in the amount as reasonably necessary to restore the Project to the maintenance standards required under this Section 12, including attorneys fees and costs of the City associated with the abatement of the Maintenance Deficiency or removal of graffiti and the collection of the costs of the City in connection with such action. In any legal proceeding for enforcing such a lien against the Project, the prevailing party shall be entitled to recover its attorneys' fees and costs of suit. The provisions of this Section 12 shall be a covenant running with the land for the Term and shall be enforceable by the City in its discretion, cumulative with any other rights or powers granted to the City under applicable law. Nothing in the foregoing provisions of this Section 12 shall be deemed to preclude the Owner from making any alterations, additions, or other changes to any structure or improvement or landscaping on the Project, provided that such changes comply with the zoning and development regulations of the City and other applicable law. 12.4. Caoital Reserve Account. The Owner shall establish an account for the payment of repair and replacement of capital items ("Capital Replacement Reserve Account") in an initial amount as required by the Institutional Lenders for the Project or the investor limited partner of the Owner. Each year thereafter, the Owner shall deposit into the Capital Reserve Replacement Account additional amounts as required by the Institutional Lenders for the Project or the investor limited partner of the Owner, but not less than Two Hundred Fifty Dollars ($250) per Unit per year. r2.4.r.Canital Reoairs Renlacements. Capital repairs and replacements shall include, but not be limited to, the following: wet and dry utilities; roof repair and replacement as necessary; repair and replacement of boilers and the major operating components thereof; stucco 61 1 47 .oo1 4s\321 623 | 4. 213 repair and replacement; exterior painting; replacement of carpeting and vinyl or other hard surface flooring; replacement of drapes; replacement of dishwashers, garbage disposals and other interior appliances; repair and replacement of heating, ventilating and air conditioning systems, equipment and components; and installation of solar panels. All of the foregoing and other similar expenditures on the Project shall be considered to be qualifying capital repair and replacement expenses. Interior painting and servicing, repair or replacement of interior hardware shall not be considered to be a capital repair, but shall be ordinary operating expenses for the Project. The Owner shall withdraw funds from the Capital Replacement Reserve Account to pay such capital repair and replacement expenses as the Owner may deem necessary for the purposes of meeting the maintenance and replacement obligations described herein. I2.4.2.Insured Depository. The Capital Replacement Reserve Account shall be maintained in a depository insured by an agency of the federal government. I2.4.3. Documentation. Annually, or more frequently at the City's, the Owner shall document the level of capital repairs and replacements for the preceding period. The Owner shall maintain and shall provide as requested documentation showing the quantity and price of items purchased, price of materials and the cost of contracted labor or other services incurted in connection with such capital repair and replacement, and such other items as the City may reasonably request. t2.4.4.Withdrawals from Reserve Account. On an annual basis, the Owner shall notify the City of the anticipated cash requirements which will need to be withdrawn from the Capital Replacement Reserve Account. Amounts so budgeted and approved by the City may be withdrawn by the Owner from the indicated Capital Replacement Reserve Account without further the City approval. Other withdrawals for unbudgeted, unanticipated or emergency Project expenditures may be withdrawn by the Owner without prior the City approval, but the Owner shall notify the City in writing within ten (10) calendar days after withdrawal. All amounts so withdrawn by the Owner shall be expended on the Project and in accordance with this Regulatory Agreement. Withdrawals in excess of Twenty-Five Thousand Dollars ($25,000) in any one calendar year shall be pre-approved by the City in its reasonable discretion, subject to the rights of any Senior Lenders or the investor limited partner of the Owner. t2.4.5 Tnfprecf Earned on Ëtr-.1o in fhc f-qnifol Iìenlqnemenf Reserve Ä ¡nnr rnf Any interest or other eamings from sums deposited into the Capital Replacement Reserve Account shall be retained in and added to the balance in said account. 12.4.6.tal Needs As If requested in writing by the City, the Owner shall deliver to the City, for the City's reasonable review and approval, a capital needs assessment ("CNA") no more often than every ten (10) years after the date of the Certificate of Completion for the Project. The CNA shall include an analysis of the Owner's actual expenditures for capital needs compared to the most recently approved CNA, the Owner's original operating budget and its then-current operating budget. Each CNA shall include aten (10) year capital needs assessment or analysis of replacement reserve requirements prepared by a qualified third party in accordance with reasonable and customary standards for similar residential rental projects. 12.4.7. Displacement of Residents and Relocation. The Owner shall make best 61 1 47 .oot 45\321 623 14. 27 4