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19-0716_CC_F1a_Attachment_1_Part2efforts to conduct capital repairs and replacements and ordinary repair and maintenance (collectively, "Repairs") in good faith and in a manner that does not result in the displacement of any of the residents of the Units. If any of the Owner's actions to conduct Repairs result in displacement of any of the Units' residents, the Owner shall notify the City in writing, prior to conducting such Repairs, of the identities of the residents to be displaced, the Units they will be displaced from, and the estimated length of time such residents shall be displaced. If the displacement of the residents triggers relocation obligations, the Owner shall be responsible, at its sole cost and expense, for any and all such relocation obligations and related expenses. The Owner shall comply with all applicable federal, state and local laws, rules and regulations regarding such relocation obligations and related expenses, including any relocation requirements set forth by the City. The Owner shall defend, indemnify and hold harmless the City Parties from and against all liability for any relocation obligations and related expenses attributable to any Repairs. 13. Covenants to Run With the Land. The Owner and the City hereby declare their specific intent that the covenants, reservations and restrictions set forth herein are part of a plan for the promotion and preservation of affordable housing within the territorial jurisdiction(s) of the City and that each shall be deemed covenants running with the land and shall pass to and be binding upon the Property and each successor-in-interest of the Owner in the Property for the Term. The Owner hereby expressly assumes the duty and obligation to perform each of the covenants and to honor each of the reservations and restrictions set forth in this Regulatory Agreement. Each and every contract, deed or other instrument hereafter executed covering or conveying the Property or any interest therein shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations, and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instrument. 14. Burden and Benefit. The City and the Owner hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Owner's legal interest in the Property is affected by the affordable dwelling use and occupancy covenants hereunder. The City and the Owner hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Property by the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the affordable housing goals and objectives of the City and in order to make the Property available for acquisition by the Owner. 15. Defaults 15.1. Events of Default. The occurrence of any of the following is a default and shall constitute amaterialbreach of this Regulatory Agreement and, if not corrected, cured or remedied in the time period set forth in Section 15.2, shall constitute an "Event of Default" hereunder: 15.1 .1. failure of the Owner or any person under its direction or control to comply with or perform when due any material term, obligation, covenant or condition contained in this Regulatory Agreement; 15.1.2. any warranty, representation or statement made or furnished to the City by the Owner under this Regulatory Agreement that is false or misleading in any material respect either now or at the time made or furnished; 6 t t 47 .oo t 4s\32t 623 t 4. 21 5 15.1.3. the dissolution or termination of the existence of the Owner as an ongoing business, insolvency, appointment of a receiver for any part of the Property of the Owner, any assignment for the benefit of creditors, any type of creditor workout or the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Owner; or 15.I.4. an Event of Default pursuant to the Affordable Housing Agreement. I5.2. Notice of Default. The City shall give written notice of default to the Owner, in accordance with Section22, stating that such notice is a "Notice of Default", specifying the default complained of by the City and requiring the default to be remedied within thirty (30) calendar days of the date of the Notice of Default. Except as required to protect against further material damage, the City may not institute legal proceedings against the Owner until thirty (30) calendar days after providing the Notice of Default. Failure or delay in giving a Notice of Default shall not constitute a waiver of any default, nor shall it change the time of occurrence of the default. If the default specified in the Notice of Default is such that it is not reasonably capable of being cured within thirty (30) calendar days, and if the Owner initiates corrective action within said thifty (30) calendar day period and diligently works to effect a cure as soon as possible, then the Owner may have such additional time as authorized in writing by the City as reasonably necessary to complete the cure of the default prior to exercise of any other remedy for the occurrence of an Event of Default. Such authorization for additional time to cure shall not be unreasonably withheld, conditioned or delayed. The City shall give the investor limited partner in the Owner the following notice and cure rights: 15.2.I. The City will give the limited partner a copy of any Notice (at the limited partner's address provided in a notice by the Owner to the City) that the City gives to the Owner under this Regulatory Agreement, provided that Owner has provided the address and contact information for the investor limited partner in writing to the City; 15.2.2. 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 this Regulatory Agreement; 15.2.3. 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 Regulatory Agreement; | 5 .2.4 . 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; and 15.2.5.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 Owner. If the Owner fails to take corrective action relating to a default within thirty (30) calendar days following the date of Notice of Default (or to complete the cure within the additional as may be authorized by the City or set forth above for the limited partner of the Owner), an Event of Default shall be deemed to have occurred. 6t t 47 .oor 4s\321 623 1 4. 21 6 15.3. Inaction Not a alvet of Default. Any failure or delays by the City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the City in asserting any of its rights and remedies shall not deprive the City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 16. Remedies. Upon the occurrence of an Event of Default, the City shall, in addition to the remedial provisions of Section 12 as related to a Maintenance Deficiency at the Property, be entitled to seek any appropriate remedy or damages by initiating legal proceedings as follows: (i) by mandamus or other suit, action or proceeding at law or in equity, to require the Owner to perform its obligations and covenants hereunder, or enjoin any acts or things which may be unlawful or in violation of the rights of the City; or (ii) by other action at law or in equity as necessary or convenient to enforce the obligations, covenants and Agreements of the Owner to the City. 16.1. Rights and Remedies are Cumulative. The rights and remedies of the City as set forth in this Section 16 arc cumulative and the exercise by the City 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 Owner. 16.2. Enforcement by Third Parties. No third party shall have any right or power to enforce any provision of this Regulatory Agreement on behalf of the City or to compel the City to enforce any provision of this Regulatory Agreement against the Owner or the Project. 17. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of California and applicable federal laws, without regard to its conflicts of laws principles. 18. Amendment. This Regulatory Agreement may be amended after its recordation only by a written instrument executed by the Owner and the City. 19. Attorney's Fees. In the event that a parly to this Regulatory Agreement brings an action to enforce any condition or covenant, representation or warranty in this Regulatory Agreement or otherwise arising out of this Regulatory Agreement, the prevailing party(ies) in such action shall be entitled to recover from the other party reasonable attorneys' fees to be fixed by the court in which ajudgment is entered, as well as the costs of such suit. for the purposes of this Section 19, the words "reasonable attorneys' fees," in the case of the City, shall include the salaries, costs and overhead of the City Attorney as well as any other legal counsel hired by the City in such action, as allocated on an hourly basis. 20. Severability. If any provision of this Regulatory Agreement shall be declared invalid, inoperative or unenforceable by a final judgment or decree of a court of competent jurisdiction such invalidity or unenforceability of such provision shall not affect the remaining parts of this Regulatory Agreement which are hereby declared by the parties to be severable from any other part which is found by a court to be invalid or unenforceable. 21. Time is of the Essence. For each provision of this Regulatory Agreement which states a specific amount of time within which the requirements thereof are to be satisfied, time shall be deemed to be of the essence. 6 t | 47 .oo I 45\3zt 623 | 4. 217 22 Demands Any and all notices submitted by any party to another party pursuant to or as required by this Regulatory Agreement shall be dispatched by messenger for immediate personal delivery, or by registered or certified United States mail, postage prepaid, return receipt requested, to the address of the party, as set forth in this Section. Such notice may be sent in the same manner to such other addresses as any farty may from time to time designate by notice. Any notice 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 dispatched by messenger for immediate personal delivery, or two (2) calendar days after it is placed in the United States mail, as provided in this Section. Rejection, other refusal to accept or the inability to deliver any notice because of a changed address of which no notice was given or other action by a person or entity to whom notice is sent, shall be deemed receipt of the notice. The following are the authorized addresses for the submission of notices to the parties, as of the date of this Regulatory Agreement: To the Owner:LP With copies to C &. C Development Co., LLC l42II Yorba Street, Suite 200 Tustin, CA92780 Attn: Todd Cottle The Waterford Group, Inc. PO Box 10175 Newport Beach, CA92658 Attn: Sean Rawson Goldfarb & Lipman LLP 1300 Clay Street, 11th Floor Oakland, CA94612 Attn: Lynn Hutchins To the City:City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attn: City Manager 23. Recording. The parties hereto shall cause this Regulatory Agreement to be recorded in the official records of the County of Orange. 24. No Third Part)' Beneficiary. No claim as a third-party beneficiary under this Regulatory 6r I 47 .oo 1 4s\321 623 | 4. 21 8 Agreement by any person, corporation or any other entity, shall be made or be valid against the City or the Owner. 25. Prohibition Transfer 25.1. Except as expressly provided in the Affordable Housing Agreement, the Owner shall not, without prior written approval of the City, which may not be unreasonably withheld, delayed or conditioned: (i) assign or attempt to assign this Regulatory Agreement or any right herein; or (ii) make any total or partial sale, transfer, conveyance, lease, leaseback, or assignment of the whole or any part of the Property or the improvements thereon, with the exception of leases of the residential units as permitted by this Regulatory Agreement, or permit to be placed on any of the Property any unauthorized mortgage, trust deed, deed of trust, encumbrance or lien. 25.2. In the absence of specific written agreement or approval by the City, no unauthorized sale, transfer, conveyance, lease, leaseback or assignment of the Property shall be deemed to relieve the Owner or any other party from any obligations under this Regulatory Agreement. 26.Citv Aoorov anrl Actions. The Ci ty Manager shall have the authority to make approvals, issue interpretations, waive provisions, grant extensions of time, approve amendments to this Regulatory Agreement and execute documents on behalf of the City (to the extent not provided otherwise in this Regulatory Agreement), including, without limitation, any documents necessary to implement any changes in the number or affordability of the Qualifying Units, as may be required by TCAC, so long as such actions do not reduce the length of affordability of the Qualiffing Units 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 the City, or reduce the length of affordability of the Project. IN V/ITNESS WHEREOF, the Owner and the City have caused this Regulatory Agreement to be signed, acknowledged and attested on their behalf by duly authorized representatives in counterpart original copies which shall upon execution by all of the parties be deemed to be one original document. [Signatures on following pages] 6 | I 47 .oo | 4s\321 623 t 4. 21 9 CITY: CITY OF SAN JUAN CAPISTRANO, a California municipal corporation By: City Manager ATTEST: City Clerk CITY SIGNATURE PAGE TO REGULATORY AGREEMENT (The Groves at V/illiams Ranch) Date: 6t I 47 .oor 4s\32r62314. 220 OWNER SIGNATURE PAGE TO REGULATORY AGREEMENT (The Groves at V/illiams Ranch) OWNER: LP, a California limited partnership By:LLC, a California limited liability company, its managing general partner By: By: By: SJC Groves CCR LLC, a California limited liability company, its developer general partner By: C&C Development Co., LLC, a Califomia limited liability company, its member and manager By a California nonprofit corporation, its sole member and manager Todd R. Cottle, Trustee of 2001 Todd R. Cottle and Jennifer N. Cottle Revocable Trust, its member 6 t | 47 .oo | 4s\3zr 623 I 4. 22 I ATTACHMENT NO. 1 TO REGULATORY AGREEMENT (The Groves at V/illiams Ranch) Property Legal Description 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 COLINTYRECORDER, LYING SOUTHEASTERLY OF THE FOLLOV/ING DESCzuBED LINE: COMMENCING AT THE INTERSECTION OF THE CENTERLINE OF CAMINO CAPISTRANO AS DESCRIBED IN BOOK 281, PAGE 245 OF DEEDS, WITH THE EAST- V/EST 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 WESTE,RLY ALONG SAID EAST-WEST CENTERLINE OF SECTION 3'6, T7S, R8V/, SBM, NORTH 89"01'53'' WEST 4T7.62 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 00"56'38'' EAST 58.57 FEET; THENCENORTH 26"21'O2U WEST T2.70 FEET; THENCE, NORTH 47"09'31'' EAST 120.82 FEET; THENCE NORTH 45"44'28U 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"02'57U EAST 1 1 1.60 FEET; THENCE NORTH 33"02'08'' EAST 31.69 FEET; THENCE NORTH 25"17'OI'' EAST 132.21 FEET; ATTACHMENTNO. l -1- 6t t 47 .00t 4s\321 623 1 4.2 THENCE SOUTH 73"21'32" EAST T48.43 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 WAY AND EASEMENTS OF RECORD. ATTACHMENTNO. l -2- 6 t 1 47 .00 I 45\321 623 1 4.2 ATTACHMENT NO. 2 TO REGULATORY AGREEMENT (The Groves at Williams Ranch) Certification of Tenant Eligibility NOTE TO PROPERTY OWNER: This form is desi$ned to assist you in computing Annual Income. Re: The Groves at V/illiams Ranch, San Juan Capistrano, Califomia I/We, the undersigned, state that l/we have read and answered fully, frankly and personally each of the following questions for all persons who are to occupy the unit being applied for in the property listed above. Listed below are the names of all persons who intend to reside in the unit: 1.) Names of Members of Household Relationship to Head of Household Social Security Number Place of Employment 543 Age 6. Head of Household (check one): Mother Father: Other:(specify relationship - i.e. legal guardian, sister, brother, etc.) ATTACHMENTNO.2-1- 6 I | 47 .001 45\321 623 I 4.2 Income Computation 7. The total anticipated income, calculated in accordance with the provisions of this Section 7, of all persons over the age of 18 years listed above for the l2-month period beginning the date that l/we plan to move into a unit is $ Included in the total anticipated income listed above are: (a) all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other compensation for personal services, before payroll deductions; (b) the net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowance for depreciation of capital assets); (c) interest and dividends (including income from assets excluded below); (d) the full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of period receipts, including any lump sum payment for the delayed start of a periodic payment; (e) payments in lieu of earnings, such as unemployment and disability compensation, workmen's compensation and severance pay; (f) the maximum amount of public assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities; (g) periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; (h) all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and (i) any earned income tax credit to the extent that it exceeds income tax liability. Excluded from such anticipated income are: (a) casual, sporadic or irregular gifts; (b) amounts which are specifically for or in reimbursement of medical expenses; (c) lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen's compensation), capital gains and settlement for personal or property losses; ATTACHMENTNO.2 a 61 t 47 .00 I 45\321 623 | 4.2 (d) amounts of educational scholarship paid directly to the student of the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, ATTACHMENTNO.2 -'t- 6 I | 47 .00 1 45\32 I 623 I 4.2 fees, book and equipment. Any amounts of such scholarships, or payments to veterans not used for the above purposes, are to be included in income; (e) special pay to a household member who is away from home and exposed to hostile fire; (Ð relocation payments under Title 11 of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 19701' (g)foster child care payments; the value of coupon allotments for the purchase of food pursuant to the Food Stamp(h) Act of 1977; (Ð payments to volunteers under the Domestic Volunteer Service Act of 1973; payments received under the Alaska Native Claims Settlement Act. 0) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; (k) payments or allowances made under the Department of Health and Human Services' Low-Income Home Energy Assistance Program; (1) payments received from the Job Training Partnership Act; (m) the first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims. 8. Do the persons whose income or contributions are included in item 6 above: (a) have savings, stocks, bonds, equity in real property or other form of capital investment (excluding the values of necessary items of personal property such as furniture and automobiles and interests in Indian trust land)? - Yes - No; or (b) have they disposed of any assets (other than at a foreclosure or bankruptcy sale) during the last two years at less than fair market value? -Yes -No(c) If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000? -Yes -No(d) If the answer to (c) is yes, state: (i) the amount of income expected to be derived from such assets in the 12- month period beginning on the date of initial occupancy in the unit that you propose to rent: $ ;and ATTACHMENTNO.2 -4- 6 | I 47 .00 I 4 5\32 I 623 1 4.2 $ (ii) the amount of such income, if any, that was included in item 6 above: Are all of the individuals who propose to reside in the unit full-time students*? No 9 (a) Yes *A full-time student is an individual enrolled as a full-time student during each of five calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance and is not an individual pursuing a full-time course of institutional or farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. (b) If the answer to 8(a) is yes, is at least one of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return? -Yes No 10. Neither myself nor any other occupant of the unit l/we propose to rent is the Owner of the property in which the unit is located (hereinafter the "Owner"), has any family relationship to the Ownerorowns,directlyorindirectly,anyinterestintheOwnership. Forpurposesofthissection, indirect the Ownership by an individual shall mean the Ownership by a family member, the Ownership by a corporation, partnership, estate or trust in proportion to the Ownership or beneficial interest in such corporation, partnership, estate or trust held by the individual or a family member, and the Ownership, direct or indirect, by a partner of the individual. 11. This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit; and I/we declare that all information set forth herein is true, correct and complete and, based upon information I/we deem reliable and that the statement of total anticipated income contained in Section 7 is reasonable and based upon such investigation as the undersigned deemed necessary. 12. I/we will assist the Owner in obtaining any information or documents required to verify the statements made herein, including either an income verification from mylour present employer(s) or copies of federal tax returns for the immediately preceding calendar year. 13. I/we acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Owner to lease the units and will entitle the Owner to prevent or terminate my/our occupancy of the unit by institution of an action for eviction or other appropriate proceedings. ATTACHMENTNO.2-5- 6 t 1 47 .00 1 4 5\32 1 623 I 4.2 t4 Marital Status: Race (Head of Household) V/hite Asian Hispanic African-American Native American Other Physical Disability: Yes - No - I/we declare under penalty of perjury that the foregoing is true and correct. Executed this _ day of _ in the County of Orange, California. Housing Issuer Statistical Information (Optional--will be used forreporting purposes only) Applicant Applicant [Signature of all persons over the age of 18 years listed in number 2 above required] ATTACHMENTNO.2-6- 6 1 r 47 .00 | 45\32 t 623 | 4 .2 FOR COMPLETION BY PROPERTY THE OWNER ONLY: 1. Calculation of eligible income: (a) Enter amount entered for entire household in 6 above: $- (b) (1) If answer to 7(c) above is yes, enter the total amount entered in 7(d)(1), subtract from that figure the amount entered in 7(dX2) and enter the remaining balance ) (2) Multiply the amount entered in 7(c) times the current passbook savings rate to determine what the total annual earnings on the amount in 7(c) would be if invested in passbook ATTACHMENTNO.2-1- 6t I 47 .001 45\321 623 14.2 $ savings ($ ), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance (3) Enter at right the greater of the amount calculated under (1) or (2) above: 2. (c) TOTAL ELIGIBLE INCOME (Line l(a) plus line 1(b)(3): $- The amount entered in l(c): Qualifies the applicant(s) as a Qualified Household. Does not qualify the applicant(s) as Qualified Household. Apartment unit assigned: Bedroom Size: Rent: $ 4. This apartment unit [was/was not] last occupied for aperiod of 31 consecutive days by persons whose aggregate anticipated annual income, as certified in the above manner upon their initial occupancy of the apartment unit, qualified them as a Qualified Household. 5. Method used to verify applicant(s) income: Employer income verification. Copies of tax returns. Other Manager The undersigned employee has applied for a rental unit located in a project financed in part by the City of San Juan Capistrano for persons of very low income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current ATTACHMENTNO.2-8- ô-t 6 I 1 47 .00 | 4 5\32 t 623 t 4.2 annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis. Annual wages Commissions Overtime Bonuses Total current income I hereby certify that the statements above are true and complete to the best of my knowledge Signature Date Title I hereby grant you permission to disclose my income to order that they may determine my income eligibility for rental of an apartment 1n at Signature Please send to Date I hereby attach copies of my individual federal and state income tax retums for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. Signature Date ATTACHMENTNO.2 -9 - 6 I | 47 .00 | 45\321 623 | 4.2 ATTACHMENT NO. 3 TO REGULATORY AGREEMENT (The Groves at V/illiams Ranch) Certificate of Continuing Program Compliance For Annual Reporting Period Ending The undersigned,as the authorized representative of - LP, a California limited partnership ("Owner"), has read and is thoroughly familiar with the provisions of the various documents associated with the financial assistance provided by the City of San Juan Capistrano ("City"), as established in numerous documents including the Regulatory Agreement, dated as of 2020, between the Owner and the City As of the date of this Certificate, the following percentage of residential units in the Project are (i) occupied by Qualified Households (as such term is defined in the Regulatory Agreement) or (ii) are currently vacant and being held available for such occupancy and have been so held continuously since the date a Qualified Household vacated such unit, as indicated: Number of Units occupied by Qualified Households: Number of Vacant Units Number of Qualified Households who commenced occupancy during the preceding reporting period: Attached is a separate sheet ("Occupancy Summary") listing, among other items, the appropriate information for each residential unit in the Project, the occupants of each unit and the rent paid for each unit. The information contained thereon is true and accurate and reasonable and is based on information submitted to the Owner and is certified under penalty of perjury by each tenant. [Signatures on following page] ATTACHMENTNO.3-l- (, t I 4't .00 | 4 5\32 I 623 I 4.2 The undersigned hereby certifies that (1) a review of the activities of the Owner during such reporting period and of the Owner's performance under the Regulatory Agreement has been made under the supervision of the undersigned; and (2) to the best of the knowledge of the undersigned, based on the review described in clause (1) hereof, the Owner is not in default under any of the terms and provisions of the above documents. Dated:OWNER LP, a California limited partnership By: Name: Its: ATTACHMENTNO.3 a 6 l 147.00 I 45\32 1623 14.2 OCCUPANCY SUMMARY Total Number of Units in the Project: Total Units occupied by Qualified Households: Total Units available for rent to Qualified Households: ATTACHED IS THE FOLLOV/ING INFORMATION Dated A. Resident and rental information on each occupied apartment in the complex. B. Certification of Tenant Eligibility for all Qualified Households who have moved into San Juan Capistrano, California, since the filing of the last Occupancy Summary. The same are true and correct to the best of the undersigned's knowledge and belief. OWNER: LP, a California limited partnership By: Name Its: ATTACHMENTNO.3 - t- 6 1 I 47 .001 4s\321 623 | 4.2 EXHIBIT I TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at V/illiams Ranch) Form of Deed of Trust [Attached Behind This Page] EXHIBIT I I-1 I 603\40\259s738.4 6 I I 47 .00 I 4 s\32 I 62022.3 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attn: City Manager APN: l2l-050-21 SPACE ABOVE FOR RECORDER'S USE ONLY EXEMPT FROM RECORDING FEE PER GOVERNMENT CODE 527383 DEED OF TRUST . SECI]RITY AGREEMENT AND FILING OF RENTS (City of San Juan Capistrano - The Groves at Williams Ranch) This Deed of Trust, Security Agreement and Fixture Filing (with Assignment of Rents) ("Deed of Trust") is dated as of 2020,by LP, a California limited partnership, whose address is ("Trustor"), to TICOR TITLE COMPANY OF CALIFORNtrA, a California corporation ("Trustee"), for the benefit of the CITY OF SAN JUAN CAPISTRANO, a municipal corporation, whose address is 32400 Paseo Adelanto, San Juan Capistrano, California 92675 ("Beneficiary"), and is executed to secure those two certain Promissory Notes each of even date herewith, in the principal amounts of Four Million One Hundred Thousand Dollars ($4,100,000.00) and Four Million Eight Hundred Thousand Dollars ($4,800,000.00), respectively, executed by Trustor in favor of Beneficiary (such Promissory Notes, as it may from time to time be supplemented, amended extended, renewed or otherwise modified), the provisions of which are incorporated in the Deed of Trust by this reference. This Deed of Trust is made with respect to that certain Affordable Housing Disposition and Development Agreement (City of San Juan Capistrano - The Groves at Williams Ranch), dated July 16, 2019, for reference purposes only, between the Trustor's predecessor-in-interest and the Beneficiary (the "Affordable Housing Agreement"). Trustor hereby IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee, its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH RIGHT OF ENTRY AND POSSESSION, the following property ("Trust Estate"): (a) Atl of that certain real property in the City of San Juan Capistrano, County of Orange, State of California, more particularly described in Exhibit "4" attached hereto and by this reference made apart hereof ("Subject Properfy"); (b) All buildings, structures and other improvements no\¡/ or in the future located or to be constructed on the Subject Property ("Improvements"); I 603\40\2603420.3 6t | 47 .00 | 4s\321 8 1929 . 1 (c) All tenements, hereditament, appurtenances, privileges, franchises and other rights and interests now or in the future benefitting or otherwise relating to the Subject Property or the Improvements, including easements, rights-of-way and development rights ("Appurtenances"). (Appurtenances, together with the Subject Property and the Improvements, are hereafter collectively referred to as the "Real Property"); (d) Subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management operation, leasing or occupancy of the Trust Estate, including those past due and unpaid ("Rents"); (e) All present and future right, title and interest of Trustor in and to all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code ("UCC"), whether existing now or in the future) located at, upon or about, or affixed or attached to or installed in, the Real Property, or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings, machinery, appliances, building materials and supplies, generators, boilers, furnaces, water tanks, heating, ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property ("Goods," and together with the Real Property, collectively the "Property"); and (Ð All present and future right, title and interest of Trustor in and to all accounts, general intangibles, chattel paper, deposit accounts, money, instruments and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights and written material (in each case whether existing now or in the future) now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing, occupancy, sale or financing of the Property or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (i) permits, approvals and other goverrìmental authorizations, (ii) improvement plans and specifications and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors, designers, architects, engineers, sales agents, leasing agents, consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow proceeds, sale proceeds and other I 603\40U603420.3 6 | | 47 .001 45\321&1929.1 2 rights to the payment of money, trade names, ttademarks, goodwill and all other types of intangible personal property of any kind or nature, and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (collectively, "Intangibles"). Trustor further grants to Trustee and Beneficiary, pursuant to the UCC, a security interest in all present and future right, title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estates described above in which a security interest may be created under the UCC (collectively, the "Personal Property"). This Deed of Trust constitutes a security agreement under the UCC, conveying a security interest in the Personal Property to Trustee and Beneficiary. Trustee and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and remedies of a "secured party" under the UCC and other applicable California law. Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Sections 9313 and9402(6) of the UCC. FOR THE PURPOSE OF SECURING, in such order of priority as Benef,rciary may elect, the following: (a) payment of that certain Land Promissory Note dated 2020 inthe (the "Land)original principal amount of - Dollars Note',),(b)paymentofthatcertainProjectPromissoryNotedated-)2020inthe original principal amount of Four Million Eight Hundred Thousand Dollars ($4,800,000.00) (the "Project Note", and together with the Land Note referred to herein as the "Notes"); and (c) due, prompt and complete observance, performance and discharge of each and every monetary and non-monetary condition, obligation, covenant and agreement contained herein or contained in the Affordable Housing Agreement. The Affordable Housing Agreement, that certain Regulatory Agreement (San Juan Capistrano - The Groves at Williams Ranch) dated 2020, for reference purposes only, between the Trustor and the Beneficiary ("Regulatory Agreement") and the Notes (collectively, "Secured Obligations") and all of their terms are incorporated herein by reference and this conveyance shall secure any and all extensions, amendments, modifications or renewals thereof, however evidenced. AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: 1. That Trustor shall perform its obligations as set forth in the Secured Obligations at the time and in the manner respectively provided therein; 2. That Trustor shall not permit or suffer the use of any of the property for any purpose other than the use for which the same was intended at the time this Deed of Trust was executed; 3. That the Secured Obligations are incorporated in and made apart of this Deed of Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any applicable cure period, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable. This Deed of Trust shall cover, and the property subject hereto shall include, all property now or hereafter affixed or attached to or incorporated upon the Subject Property in, to or under which Trustor now has or hereafter acquires any right, title or interest, which, to the fullest extent permitted by law, shall be deemed 1603\40u603420.3 6 1 I 47 .00 | 4 5\32 I 8 1929. I J fixtures and a part of the Subject Property. To the extent any of the property subject to this Deed of Trust consists of rights in action or personal property covered by the UCC, this Deed of Trust shall also constitute a security agreement, and Trustor hereby grants to Beneficiary, as secured party, a security interest in such property, including all proceeds thereof, for the purpose of securing the Secured Obligations. In addition, for the purpose of securing the Secured Obligations, Trustor hereby grants to Beneficiary, as secured party, a security interest in all of the property described herein in, to, or under which Trustor now has or hereafter acquires any right, title or interest, whether present, future or contingent, including, but not limited to, all equipment, inventory, accounts, general intangibles, instruments, documents and chattel paper, as those terms are defined in the UCC, and all other personal property of any kind (including, without limitation, money and rights to the payment of money), whether now existing or hereafter created, that are now or at any time hereafter (i) in the possession or control of Beneficiary in any capacity; (ii) erected upon, attached to or appurtenant to the Subject Property; (iii) located or used on the Subject Property or identified for use on the Subject Property (whether stored on the Subject Property or elsewhere); or (iv) used in connection with, arising from, related to, or associated with the Subject Property or any of the personal property described herein, the construction of any improvements on the Subject Property, the ownership, development, maintenance, management or operation of the Subject Property, the use or enjoyment of the Subject Property or the operation of any business conducted thereon, including, without limitation, all such property described as the Trust Estate hereinabove. The security interests granted in this Paragraph 3 are hereinafter severally and collectively called the "security Interest". The Security Interest shall be self-operative with respect to the real property described herein but Trustor shall execute and deliver on demand such additional security agreements, financing statements and other instruments as may be requested in order to impose the Security Interest more specifically upon the real and personal property encumbered hereby. The Security Interest, at all times, shall be prior to any other interest in the personal property encumbered hereby. Trustor shall act and perform as necessary and shall execute and file all security agreements, financing statements, continuation statements and other documents requested by Beneficiary to establish, maintain and continue the perfected Security Interest. Trustor, on demand, shall promptly pay all costs and expenses of filing and recordation, to ensure the continued priority of the Security Interest. Trustor shall not sell, transfer, assign or otherwise dispose of any personal property encumbered hereby without obtaining the prior written consent of Beneficiary, except that the Trustor may, in the ordinary course of business, replace personal property or dispose of personal property that will not be replaced because of its obsolescence. Unless Beneficiary then agrees otherwise in writing, all proceeds from any permitted sale or disposition in excess of that required for full replacement shall be paid to Beneficiary to be applied on the Notes subject to the rights of any senior lenders. Although proceeds of personal property are covered hereby, this shall not be construed to mean that Beneficiary consents to any sale of such personal property. Upon its recordation in the real property records of Orange County, this Deed of Trust shall be effective as a financing statement filed as a fixture filing. In addition, a carbon, photostatic or other reproduced copy of this Deed of Trust and/or any financing statement relating hereto shall be sufficient for filing and/or recording as a financing statement; 4. That all rents, profits and income from the property covered by this Deed of Trust are hereby assigned to the Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder after the giving of 4 r 603\40U603420.3 6 I 1 47 .00 t 45\32 I 8 I 929 . 1 notice and the expiration of any applicable cure period, to collect such tents, profits and income for use in accordance with the provisions of the Secured Obligations; 5. That upon default hereunder or under the aforementioned agreements, and after the giving of notice and the expiration of any applicable cure period, Beneficiary shall be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the property described herein and operate same and collect the rents, profits and income therefrom; 6. That Trustor will keep the improvements now existing or hereafter erected on the property insured against loss by fire and such other hazards, casualties, and contingencies as may be required by applicable provisions of the Secured Obligations, and all such insurance shall be evidenced by standard fire and extended coverage insurance policy or policies. Such policies shall be endorsed with standard mortgage clause with loss payable to the Beneficiary and certificates thereof together with copies of original policies, if requested, shall be deposited with the Beneficiary; 7. To pay before delinquency any taxes and assessments affecting said Property; to pay, when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of this trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be required to pay and discharge any such tax, assessment charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings, and Trustor has adequate funds to pay any liabilities contested pursuant to this ParagraphT; 8. As it is provided more specifically in the Secured Obligations, to keep said property in good condition and repair, subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon (subject to Trustor's right to contest the validity or applicability of laws or regulations); not to commit or permit waste thereof; not to commit, suffer or permit any actupon said property in violation of law andlor covenants, conditions andlor restrictions affecting said property; not to permit or suffer any material alteration of or addition to the buildings or improvements hereafter constructed in or upon said property without the consent of the Beneficiary; 9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and reasonable attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear; 10. Should Trustor fail, after the giving of notice and the expiration of any applicable cure period, to make any payment or do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to l 603\40\2603420.3 6l t47 .00t45\32181929 .l 5 such extent as either may deem necessary to protect the security hereof. Following default, after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee, being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest or compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay his reasonable fees; 1 1. Beneficiary shall have the right to pay all insurance premiums required by the Secured Obligations when due should Trustor fail to make any required premium payments. All such payments made by the Beneficiary shall be added to the sums secured hereby; T2. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under permission given under this Deed of Trust, with interest from date of expenditure, at the highest rate of interest permitted by law; 13. That the funds to be advanced hereunder are to be used in accordance with applicable provisions of the Secured Obligations; upon the failure of Trustor to do so, after the giving of notice and the expiration of any applicable cure period, Trustor shall be in default hereunder; 14. Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the property subject to this Deed of Trust any lien or liens except as authorized by Beneficiary and/or as provided in the Secured Obligations and further that it will keep and maintain the property free from the claims of all persons supplying labor or materials which will enter into the construction ofany and all buildings now being erected or to be erected on said premises. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting, provided that Trustor shall, at Beneficiary's written request, within thirty (30) days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary must first provide a written request prior to foreclosure) record in the Office of the Recorder of Orange County, a surety bond in the amount required by law to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary; 15. That any and all improvements made or about to be made upon the premises covered by this Deed of Trust and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated, now or hereafter, by lawful authority, and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office. IT IS MUTUALLY AGREED THAT: 16. Trustor confirms that if Trustor should sell, enter into a contract of sale, convey, or in any way transfer all or any interest of Trustor in the Real Property encumbered by this Deed of Trust or suffer Trustor's title or any interest therein to be divested, whether voluntarily or 1603\40U603420.3 6I I47 .00|45\32t 81929.| 6 involuntarily, unless the same is a Permitted Transfer as defined in the Affordable Housing Agreement, without the prior written consent of the Beneficiary being first obtained, then Beneficiary shall have the right, at Beneficiary's sole option, to declare all sums payable under the Notes secured hereby immediately due and payable in full, irrespective of the maturity date otherwise specified in the Notes. No waiver of this right shall be effective unless in writing and signed by the Beneficiary. Consent by the Beneficiary to any one such transaction shall not be deemed a waiver of the right to require such consent to future or successive transactions. Further, upon default under one of the Secured Obligations, and after the giving of notice and the expiration of any applicable cure period provided therein, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be immediately due and payable in full, irrespective of the maturity date otherwise specified in the Notes; 17. As provided more specifically in the Secured Obligations, should the Property or any partthereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner, subject to the rights of any senior lenders, Beneficiary shall be entitled to all compensation, awards, and other payments or relief therefor which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings, or to make any compromise or settlement, in connection with such taking or damage subject to the rights of any senior lenders. All such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting said property, are hereby assigned to Beneficiary subject to the rights of any senior lenders; 18. Notwithstanding Sections 16 and l7 , inthe event that a portion of the Property is taken for a public improvement or pursuant to a condemnation proceeding and the Qualifying Units (as defined in the Regulatory Agreement) remain intact and continue to be owned and operated by Trustor in conformance with the Affordable Housing Agreement and the Regulatory Agreement, Beneficiary shall not declare all sums due and payable under the Notes, nor shall the Beneficiary be entitled to any compensation, awards and other payments therefor, provided that such compensation, awards and other payments are used for (1) paying principal and interest owed on the Permanent Loan (as defined in the Affordable Housing Agreement), (2) making improvements to the Property that are approved.by Beneficiary, in its reasonable discretion, or (3) payment of principal owing under the Notes. In the event that Trustor receives such compensation, awards or other payments and fails to expend the funds in conformance with subsections (l) and (2) this section within thirty (30) days of receipt of such funds, Trustor shall be in default under this Deed of Trust. 19. Upon default by Trustor in taking any action or in making any payments provided for herein, or in the Secured Obligations, if Trustor shall fail to perform any covenant or agreement in this Deed of Trust within thirty (30) days after written demand therefor by Beneficiary (or, in the event that more than thirty (30) days is reasonably required to cure such default, should Trustor fail to promptly commence such cure, and diligently prosecute same to completion), after the giving of notice and the expiration of any applicable cure period, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and 1603\40U603420.3 6t I 47 .001 45\3218 t929. I 7 of election to cause the property to be sold, which notice Trustee shall cause to be duly f,rled for record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this Deed of Trust and all documents evidencing expenditures secured hereby; 20. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public arìnouncement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its Deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the Deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Benefici ary, may purchase at the sale. The Trustee shall apply the proceeds of sale to payment of (1) the expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee's fees or attomey's fees for conducting the sale, and the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee's Deed; (3) all sums expended under the terms hereof, not then repaid, with accrued interest at the maximum rate allowed by law; (a) all other sums then secured hereby; and (5) the remainder, if any, to the person or persons legally entitled thereto; 2I. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Deed of Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the property is situated, shall be conclusive proof of proper appointment of the successor trustee; 22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the fulI extent permissible by law; 23. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, and upon surrender ofthis Deed of Trust to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters of fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto"; 24. The trust created hereby is irrevocable by Trustor; l 603\40\2603420.3 6t | 47 .001 45\32181929.1 8 25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term "Benefìciary" shall include not only the original Beneficiary hereunder but also any future successor in interest to Beneficiary. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several; 26. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law, the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be aparty unless brought by Trustee; 27 . The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to it at the address set forth in the Deed of Trust; 28. Trustor agrees at any time and from time to time, upon receipt of a written request from Beneftciary,to furnish to Beneficiary detailed statements in writing of income, rents, profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements, and such other information regarding the premises and their use as may be requested by Beneficiary; 29. Trustor agrees that the obligations secured by this Deed of Trust are made expressly for the purpose of acquiring the Property, completing the construction work necessary to construct a new 75- unit affordable housing development on the Property, as is more specifically provided in the Secured Obligations; 30. As is provided more specifically in the Secured Obligations, the obligations of Trustor thereunder are nomecourse obligations of the Trustor. The sole recourse of Beneficiary shall be the exercise of its rights against the Property; 3 I . Notwithstanding specific provisions of this Deed of Trust, non-monetary performance hereunder shall not be deemed to be in default where delays or defaults are due to: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; govemmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the Authority or any other public or governmental agency or entity (except that any act or failure to act of Beneficiary shall not excuse performance by Beneficiary unless such act or failure to act is allowed or required by law); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause (a "Force Majeure Delay") shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than thirty (30) days ãfter the commencement of the cause, the period shall commence to 9 r 603\40\2603420.3 6 | t 47 .00 t 4 s\32 | I 1929 . 1 run only thirty (30) days prior to the giving of such notice. Times of performance under this Deed of Trust may also be extended in writing by the Beneficiary and Trustor; 32. If the rights and liens created by this Deed of Trust shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the unsecured portion of such obligations shall be completely performed and paid prior to the performance and payment of the remaining and secured portion of the obligations, and all performance and payments made by Trustor shall be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations; 33 . (a) Subj ect to the extensions of time set forth in Paragraph 3 1 , and subj ect to the fuither provisions of this Paragraph 33, failure or delay by Trustor to perform any term or provision respectively required to be performed under the Secured Obligations or this Deed of Trust constitutes a default under this Deed of Trust; (b) Beneficiary shall give written notice of default to Trustor, specifying the default complained of by the Beneficiary. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default; (c) Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Beneficiary in asserting any of its rights and remedies shall not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies; (d) If an event of default occurs under the terms of this Deed of Trust, prior to exercising any remedies hereunder or thereunder, Beneficiary shall give Trustor written notice of such default. Trustor shall have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary under this Deed of Trust. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within thirty (30) days after the notice of default is first given; (e) If an event of default occurs under the terms of the Secured Obligations, prior to exercising any remedies hereunder or thereunder, Beneficiary shall give Trustor notice of such default. As is provided more specifically in the Secured Obligations, if the default is reasonably capable of being cured within thirty (30) days, Trustor shall have such period to effect a cure prior to exercise of remedies by the Beneficiary under the Secured Obligations, or this Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i) initiates corective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default. 34. This Deed of Trust shall be subject and subordinate to the terms of that certain extended use agreement executed by the Trustor in connection with the Trustor's allocation of l 603\40\2603420.3 6 I I 47 .00 | 4 5\32 I 8 I 929. I l0 low-income housing tax credits under Section 42 of the Code (the "Extended Use Agreement"). If Beneficiary or its successors or assigns (collectively, the "subsequent Owner") acquires the Property by foreclosure (or instrument in lieu of foreclosure), then the "extended use period" (as defined in Section 42(hX6XD) of the Internal Revenue Code) shall terminate, except for the obligation of the Subsequent Owner to comply with the limitations on evictions, termination of tenancy and increase in rents for the three year period following the Subsequent Owner's acquisition of the Property, as set forth in Section 42(hX6XE)(ii) of the Internal Revenue Code. As provided in the Affordable Housing Agreement, upon request when appropriate, Beneficiary shall execute such documentation as is necessary to subordinate this Deed of Trust to a Senior Loan. fSignatures on Following Page] I 603\40U603420.3 6 I I 47 .00 I 4 5\32 I 8 t 929. I 1l IN V/ITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first set forth above. TRUSTOR: a California limited partnership By:LLC, a Califomia limited liability company, its managing general partner a California nonprofit corporation, its sole member and manager By By: SJC Groves CCR LLC, a California limited liability company, its developer general partner By: C &. C Development Co., LLC, a California limited liability company, its member and manager By Todd R. Cottle, Trustee of 2007 Todd R. Cottle and Jennifer N. Cottle Revocable Trust, its member [SIGNATURES MUST BE NOTARY ACKNOWLEDGED] I 603\40\2603420.3 6 I t 47 .00 I 45\32181929.1 By: t2 EXHIBIT A TO DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) (San Juan Capistrano - The Groves at Williams Ranch) Legal Description of Subject 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 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 DESCRIBED IN SAID DEED RECORDED ON AUGUST 30, T995, AS INSTRUMENT NO. 95-0376669 OF OFFICIAL RECORDS; THENCE V/ESTERLY ALONG SAID EAST-WEST CENTERLINE OF SECTION 36, T7S, R8W, SBM, NORTH 89O01'53'' V/EST 417.62 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 00O56'38'' EAST 58.57 FEET; THENCE NORTH 26"2T'O2U V/EST 12.]O 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 ]4.13 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"T7'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 I 603\40U603420.3 61 1 47 .00 | 45\32181929.1 A-1 SUBJECT TO: COVENANTS, CONDITIONS, RESTRICTIONS, RIGHT OF WAY AND EASEMENTS OF RECORD. 1 603\40U603420.3 6t 1 47 .001 45v21 81929.1 A-2 EXHIBIT J TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at V/illiams Ranch) Form of Land Note [Attached Behind This Page] EXHIBIT J J-1 I 603\40\259s738.4 6 I I 47 .00 | 4 s\32 I 62022.3 LAND PROMISSORY NOTE SECURED BY DEED OF TRUST (San Juan Capistrano - The Groves at Williams Ranch) Principal Amount: $4,100,000 Date of Note: _,20- Lender: CITY OF SAN JUAN CAPISTRANO, a municipal corporation Interest Rate: One-Quarter Percent (0.25%) Maker:LP, A California limited partnership Maturity Date: Fifty-hve (55) years from the date on which the Certificate of Completion is issued 1. LandLoan. FOR VALUE RECEIVED, the undersigned LP, a California limited partnership ("Maker"), with its principal place of business located at promises to pay to the CITY OF SAN JUAN CAPISTRANO, a municipal corporation (the "City" or "Holder") at 32400 Paseo Adelanto, San Juan Capistrano, California 92675, or such place as the Holder may, from time to time, designate by written notice to the Maker, the principal sum of FOUR MILLION ONE HTINDRED THOUSAND DOLLARS ($4,100,000), (the "Land Loan"), together with any accrued interest, if applicable, as set forth in this Note. This Promissory Note (the "Note") is made and given pursuant to that certain Affordable Housing Disposition and Development Agreement between the City and Maker's predecessor-in-interest, dated July 16, 2019 (the "Affordable Housing Agreement"). The Affordable Housing Agreement is incorporated herein by this reference. All initially capitalized terms used but not defined herein shall have the meanings given to them in the Affordable Housing Agreement. The Land Loan is made for the conveyance of the Property by City to Maker in accordance with the terms and conditions of the Affordable Housing Agreement. 2. Term of Loan and Rieht of Prepayment. a. Maturity Date. All accrued interest, if any, and principal shall be due and payable in full without any further demand or notice fifty-five (55) years from the date on which the Certificate of Completion is recorded pursuant to the Affordable Housing Agreement ("Maturity Date"). b. Prepayment. This Note may be prepaid in whole or in part at any time and from time to time without penalty or premium. 3. Security for Nole. This Note is secured by a Deed of Trust executed by Maker which creates a lien on that ceftain real property as described therein and in the Affordable Housing Agreement. 1603\40u603416.2 61 I 47 .001 45\321 62353.2 1 4. Interest Calculation The principal outstanding under this Note shall accrue simple interest at the rate of one- quarter percent (0.25%) per annum, except in the case of Default as set forth in Section 9 of this Note. Principal and interest shall be payable in lawful money of the United States of America. If applicable, interest shall be computed based on an actual day year and the actual number of days elapsed. Interest shall commence on amounts disbursed hereunder from the date of disbursement. 5. Annual Payment. Following completion of the Project as evidenced by the issuance by the City of a Certificate of Completion as set forth in the Affordable Housing Agreement, and continuing each year thereafter until the Maturity Date, a portion of the Residual Receipts (as defined below) from the Project shall be paid to Holder and applied to pay down the amounts due and owing under this Note. The payments described below shall be paid to Holder no later than April 1 each year, with the first payment due on the April I following the issuance of a Certificate of Occupancy for the Project, and continuing each year thereafter. a.ts from Residual Maker shall make repayments of the outstanding principal and accrued interest, if any, equal to the City's Land Percentage of Fifty Percent (50%) of the Residual Receipts from the Project as repayment of amounts due and owing under this Note. For the purposes of this Note, "City's Land Percentage" means the percentage calculated by dividing (1) the original principal amount of the Land Loan actually disbursed to Borrowerby (2) the sum of Total Assistance from all other government entities obtained by the Borrower, any portion of which is a loan to be repaid utilizing Residual Receipts "Total Assistance" means the original principal amounts of loans and grants made by the other government entities plus the cumulative value of Project Based Section 8 or similar housing vouchers provided by the other government entities. Such annual payments shall be accompanied by the Maker's report of Residual Receipts. The Maker shall provide the Holder with the audited financial statement provided for in Section 6, and any other documentation reasonably requested by Holder to substantiate the Maker's determination of Residual Receipts. All payments made hereunder shall be credited first to any accrued but unpaid interest (if applicable), then to current interest due and owing and lastly to principal. Interest not paid current each year shall be added to and thereafter be considered additional principal due hereunder. Notwithstanding the foregoing, the entire outstanding balance of principal and any interest owing under this Note shall be due and payable in full fifty-five (55) years from the date hereof. Prior to any sale of all or any portion of the Project, or Refinancing of all or any portion of the outstanding debt from the Project, and so long as there is any outstanding amount due and owing under this Note, Maker shall notiff Holder of any such proposed or intended sale or Refinancing. In such event, Maker and Holder shall meet and confer, and shall use good faith efforts, I 603\40\26034 I 6.2 6 1 | 4"t .00 | 45\32 | 623 53 .2 2 to determine the feasibilþ of the payoff or restructuring of the remaining balance owing under this Note as part of any such sale or Refinancing to provide for repayment of this Note sooner than the fifty-five (55) year repayment period. b. Definition of Residual Receipts. For the purposes of this Note, "Residual Receipts" shall mean the sum of money computed as follows: (i) All rents, revenues, consideration or income (of any form) received by Maker in connection with or relating to the ownership or operation of the Project, including any net revenue derived from any Refinancing ofthe Project and any revenue from contributions, loans or grants which is not required to meet future Project obligations (but excluding tenants' security deposits, partner capital contributions and similar advances) ("Gross Revenue") less all of the following: all customary and reasonable costs (i.e., mandatory (hard) mortgage payments) and expenses reasonably and actually incurred in connection with the operation and maintenance of the Project, including but not limited to premiums for property and liability insurance; utility services not paid directly by tenants; maintenance and repair; security services and payments for social/supportive services; any adjuster payments to the investor limited partner required under Maker's partnership agreement; payment of principal or interest on any indebtedness of Maker to any affiliate of Maker (individual or entity) or partner of Maker to repay completion and operating deficit loans relating to the Project; asset management fee payable to the limited partner of Maker in an amount approved as part of the Project Budget (as defined in the Affordable Housing Agreement); partnership management fee payable to Maker, not to exceed the amount approved as part of the Project Budget (as defined in the Affordable Housing Agreement); reasonable property management fees not to exceed 8% of gross revenue; defened developer fee in an amount approved as part of the Project Budget (as defined in the Affordable Housing Agreement); amounts (approved by Holder) expended to restore the Project after acasualty loss or condemnation; reasonable and customary cost for accounting and auditing the books and records ofthe Project; taxes; franchise tax filing fees; and any other reserves reasonably required by the investors or the lenders approved by the City for the Project (collectively "Operating Expenses"). (iÐ Notwithstanding the generality of the foregoing, the following items are not expenses or deductible in computing Residual Receipts: (A) Depreciation, cost recovery, amortization and similar items which do not involve the expenditure of cash. 6. Audited Statement. Maker shall annually provide Holder with an audited financial statement documenting the calculation of Residual Receipts for the previous calendar year ending December 31. The audited financial statement shall be provided on or before April 1, together with payment of the Residual Receipts payment due to Holder. Holder shall have the right to inspect and audit Maker's books and records concerning the calculation of the Residual Receipts Payment and to object within ninety (90) days from receipt of Maker's statement. Failure to timely object shall be deemed acceptance. If Holder does object, Holder shall specify the reasons for disapproval. Maker shall have thirty (30) days to reconcile any disapproved item. If Maker and Holder cannot agree on the 1603\40U6034 r 6.2 6 t t 47 00 t 4 s\32 I 623 53.2 -1 amount of the Residual Receipts payment, an independent auditor mutually selected by Maker and Holder shall resolve any disputed items. The cost of the auditor shall be shared equally by Maker and Holder. 7. Annual Budget. Maker shall prepare and submit to Holder a proposed annual operating budget for the management and operation of the Project ("Annual Budget") no later than 60 days preceding the effective year of such budget. The Annual Budget shall include the projected Gross Revenue and Operating Expenses for the year and a line item showing the projected Residual Receipts from the Project for the year. Holder will review the Annual Budget and, if acceptable, approve it, which approval shall not be unreasonably withheld. If the Annual Budget is not acceptable, Holder shall specify the reasons for disapproval. The intent of this section is to provide Holder an opportunity to disapprove any unreasonable expenses which would diminish the Residual Receipts from the Project. Once approved, any changes to the Annual Budget which exceed ten percent (10%) of the total Annual Budget shall require Holder's prior written consent, which consent shall not be unreasonably withheld. 8 ,A n¡plerofinn I Tnnn Cartçti Events or T Tnnn Tìofortlf In the event of any Default under the terms of this Note, the Affordable Housing Agreement or the Regulatory Agreement, the Deed of Trust which is the security for this Note, or under any Senior loans, notes or deeds of trust, at the option of the Holder and after notice to the Maker, providing Maker with thirty (30) days in which to cure any Default, and such Default not having been cured within thirty (30) days (or if a greater amount of time is reasonably necessary to effect a cure, if actions to cure such Default are not undertaken within said thirty (30) day period and pursued with reasonable diligence thereafter), all principal and interest due under this Note shall immediately become due and payable, upon thirty (30) day written notice from the Holder to the Maker. Failure to exercise such option shall not constitute a waiver of the right to exercise it in the event of any subsequent Default. Should the undersigned Maker agree to or sell, convey, transfer, or dispose of the real property described in the Deed of Trust securing this Note or any part thereof or interest therein, without first obtaining the prior written consent of the Holder (except for a Permitted Transfer, as defined in the Affordable Housing Agreement), then, at the option of the Holder, all principal and interest due hereunder shall immediately become due and payable upon thirty (30) days written notice from the Holder to the Maker. Consent to one transaction of this type will not constitute a waiver of the right to require consent to future or successive transactions. Notwithstanding the generality of the foregoing, certain transfers permitted under the Affordable Housing Agreement shall not constitute a Default hereunder or under the Affordable Housing Agreement, and any such action shall not accelerate the maturity of this Promissory Note, provided that any transfer is either a Permitted Transfer as defined in the Affordable Housing Agreement or is reasonably acceptable to the Authority with reasonable promptness, and any transferee under such a transfer agrees to be bound by any and all instruments in favor of the Authority. l 603\40\26034 l 6.2 6 I I 47.001 45\32 I 62353.2 4 9. Interest on Default. From and after a Default, the entire outstanding principal balance of this Note shall automatically bear an annual interest rate equal to the lesser of: (a) eight percent (8%) compounding annually; or (b) the maximum interest rate allowed by law. 10. Costs Paid bv Maker Maker agrees to pay the following costs, expenses and attorneys fees paid or incurred by the Holder of this Note, or as adjudged by a court of competent jurisdiction: (a) reasonable costs of collection, costs and expenses and attorneys fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed; and (b) costs of suit in such sum as the court may adjudge reasonable as attorneys fees in any action to enforce payment of this instrument. 11. Waiver. Maker hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this instrument, and expressly agrees that, without in any way affecting the liability of Maker hereunder, the Holder hereof may extend the Maturity Date or the time for payment of any installment due hereunder, accept additional security, release any party liable hereunder or release any security now or hereafter securing this Note. Maker hereby waives, to the fullest extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this instrument or any deed of trust, security agreement, guarantee or other agreement now or hereafter securing this Note. 12. Indemnification. Maker shall indemnify, defend, protect and hold the Authority harmless from and against any and all loss, damage, liability, action, cause of açtion, cost or expense, including, without limitation, reasonable attorneys fees and expenses incurred by the Holder hereof, arising as a result of any (i) fraud or material misrepresentation by the Maker under or in connection with the Affordable Housing Agreement or related agreements; (ii) intentional bad faith waste of the real property encumbered by the deed of trust which secures this Note; and (iii) losses resulting from Maker's failure to maintain insurance as required under the provisions of the deed of trust securing this Note and the Affordable Housing Agreement. 13. Nonrecourse This Note shall become a noffecourse obligation of Maker on the date that Maker files a valid and timely Notice of Completion for the Project and the Holder must resort only to the Project or the Property, or both, for repayment should the Maker fail to repay the sums evidenced hereby. At such time as this Note becomes nonrecourse, neither Maker nor any of its general and limited partner shall have any personal liability for repayment of the Land Loan and no deficiency judgment may be obtained against Maker or any of its general and limited partners except for actual or constructive fraud, material misrepresentation, intentional bad faith waste of or on the Project and such other matters as are referred to below. Notwithstanding the generality of the foregoing, however, Maker shall indemnify, defend, protect and hold Holder harmless from and 5 t603\40U603416.2 6 | t 47 .00 1 45\32 | 623 53 .2 against any and all loss, damage, liability, action, cause of action, cost or expense, including, without limitation, reasonable attorneys' fees and expenses incurred by the Holder arising as a result of any (i) fraud or material misrepresentation by the Maker under or in connection with the Affordable Housing Agreement or any other agreements or documents provided in connection therewith; (ii) intentional bad faith waste of the Property encumbered by the deed of trust which secures this Note; and (iii) losses resulting from Maker's failure to maintain insurance as required under the provisions of the deed of trust securing this Note. Maker's obligation to indemnify the Holder hereof as aforesaid shall be recourse obligations of the Maker, and in the event of any breach of such obligations, the Holder shall have the right to proceed directly against the Maker to recover any and all losses, damages, liability, costs and expenses (including without limitation, reasonable attorneys' fees and expenses) and may bring any action and institute any proceeding to obtain a deficiency judgment in or following foreclosure for any and all such losses, damages, liabilities, costs and expenses resulting from such breach. 14. Severabilig' If any provision of this Note is determined by a court of competent jurisdiction to be void or unenforceable, such determination shall not affect any other provision of this instrument, and all other provisions hereof shall remain valid and in full force and effect. 15. Non-Waiver No delay in demanding or failure to demand performance hereunder shall constitute a waiver by the Holder hereof of its right to subsequently demand such performance or to exercise any remedies for any Default hereunder. Further, in order to be effective, any waiver of any of the Holder's rights and remedies hereunder shall be expressed in a writing signed by a duly appointed representative of the Holder hereof. Further, waiver by the Holder hereof of any right hereunder shall not constitute a waiver of any other right, including, but not limited to, the right to exercise any and all remedies for a different or subsequent event of Default hereunder. [Signatures on Following Page] 1603\40u603416.2 61 1 47 .001 45\321 62353.2 6 MAKER LP, a California limited partnership By LLC, a California limited liability company, its managing general partner By: a California nonprofit corporation, its sole member and manager By: By: SJC Groves CCR LLC, a California limited liability company, its developer general partner 1603\40U603416.2 6t I 47 .001 4s\321 62353.2 By: C &, C Development Co., LLC, a California limited liability company, its sole member and manager By: Todd R. Cottle, Trustee of 2007 Todd R. Cottle and Jennifer N. Cottle Revocable Trust, its member 7 EXHIBIT K TO AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (The Groves at V/illiams Ranch) Form of Project Note [Attached Behind This Page] EXHIBIT K K-1 I 603\40\2s95738.4 6 I I 47 . 00 | 45\32 I 62022.3 PROJECT PROMISSORY NOTE SECURED BY DEED OF TRUST (San Juan Capistrano - The Groves at \ililliams Ranch) Principal Amount: $4,800,000.00 Date of Note: _,20_ Lender: CITY OF SAN JUAN CAPISTRANO, a municipal corporation Interest Rate: One-Quarter Percent (0.25%) Maker:LP ,a California limited partnership Maturity Date: Fifty-five (55) years from the date on which the Certificate of Completion is issued 1. Proiect Loan. FOR VALUE RECEIVED, the undersigned LP, a California limited partnership ("Maker"), with its principal place of business located at promises to pay to the CITY OF SAN JUAN CAPISTRANO, a municipal corporation (the "City" or "Holder") at 32400 Paseo Adelanto, San Juan Capistrano, California 92675, or such place as the Holder may, from time to time, designate by written notice to the Maker, the principal sum of FOUR MILLION EIGHT HLINDRED THOUSAND DOLLARS ($4,800,000.00), (the "Project Loan"), together with any accrued interest, if applicable, as set forth in this Note. This Promissory Note (the "Note") is made and given pursuant to that certain Affordable Housing Disposition and Development Agreement between the City and Maker's predecessor-in-interest, dated July 16, 2019 (the "Affordable Housing Agreement"). The Affordable Housing Agreement is incorporated herein by this reference. All initially capitalized terms used but not defined herein shall have the meanings given to them in the Affordable Housing Agreement. Funds for the Project Loan consist of City In-Lieu Fees. The Project Loan is made to finance the Project's predevelopment, development and construction costs in accordance with the terms and conditions of the Affordable Housing Agreement. 2. Term of Loan and Rieht of Prepayment. a. Maturity Date. All accrued interest, if any, and principal shall be due and payable in full without any further demand or notice fifty-five (55) years from the date on which the Certificate of Completion is recorded pursuant to the Affordable Housing Agreement ("Maturity Date"). b. Prepayment. This Note may be prepaid in whole or in part at any time and from time to time without penalty or premium. 3. Security for Note. This Note is secured by a Deed of Trust executed by Maker which creates a lien on that certain real property as described therein and in the Affordable Housing Agreement. 1603\40u603099. l 6 | | 47 .001 4s\32t 6237 8.2 I 4. Interest Calculation. The principal outstanding under this Note shall accrue simple interest at the rate of one- quarter percent (0.25%) per annum, except in the case of Default as set forth in Section 9 of this Note. Principal and interest shall be payable in lawful money of the United States of America. If applicable, interest shall be computed based on an actual day year and the actual number of days elapsed. Interest shall commence on amounts disbursed hereunder from the date of disbursement. 5. Annual Payment. Following completion of the Project as evidenced by the issuance by the City of a Certificate of Completion as set forth in the Affordable Housing Agreement, and continuing each year thereafter until the Maturity Date, a portion of the Residual Receipts (as defined below) from the Project shall be paid to Holder and applied to pay down the amounts due and owing under this Note. The payments described below shall be paid to Holder no later than April 1 each year, with the first payment due on the April 1 following the issuance of a Certificate of Occupancy for the Project, and continuing each year thereafter. a. Annual Payments from Residual Receipts. Maker shall make repayments of the outstanding principal and accrued interest, if any, equal to the City's Project Percentage of Fifty Percent (50%) of the Residual Receipts from the Project as repayment of amounts due and owing under this Note. For the pu{poses of this Note, "City's Project Percentage" means the percentage calculated by dividing (1) the original principal amount of the Project Loan actually disbursed to Borrower by (2) the sum of Total Assistance from all other government entities obtained by the Borrower, any portion of which is a loan to be repaid utilizing Residual Receipts. "Total Assistance" means the original principal amounts of loans and grants made by the other government entities plus the cumulative value of Project Based Section 8 or similar housing vouchers provided by the other government entities. Such annual payments shall be accompanied by the Maker's report of Residual Receipts. The Maker shall provide the Holder with the audited financial statement provided for in Section 6, and any other documentation reasonably requested by Holder to substantiate the Maker's determination of Residual Receipts. All payments made hereunder shall be credited first to any accrued but unpaid interest (if applicable), then to current interest due and owing and lastly to principal. Interest not paid current each year shall be added to and thereafter be considered additional principal due hereunder. Notwithstanding the foregoing, the entire outstanding balance of principal and any interest owing under this Note shall be due and payable in full fifty-five (55) years from the date hereof. Prior to any sale of all or any portion of the Project, or Refinancing of all or any portion of the outstanding debt from the Project, and so long as there is any outstanding amount due and owing under this Note, Maker shall notiff Holder of any such proposed or intended sale or Refinancing. In such event, Maker and Holder shall meet and confer, and shall use good faith efforts, 2 l 603\40u603099. l 61 1 47 .00 1 45\32t 6237 8.2 to determine the feasibility of the payoff or restructuring of the remaining balance owing under this Note as part of any such sale or Refinancing to provide for repayment of this Note sooner than the fifty-five (55) year repayment period. b. Definition of Residual Receipts. For the purposes of this Note, "Residual Receipts" shall mean the sum of money computed as follows: (i) All rents, revenues, consideration or income (of any form) received by Maker in connection with or relating to the ownership or operation of the Project, including any net revenue derived from any Refinancing ofthe Project and any revenue from contributions, loans or grants which is not required to meet future Project obligations (but excluding tenants' security deposits, partner capital contributions and similar advances) ("Gross Revenue") less all of the following: all customary and reasonable costs (i.e., mandatory (hard) mortgage payments) and expenses reasonably and actually incurred in connection with the operation and maintenance of the Project, including but not limited to premiums for property and liability insurance; utility services not paid directly by tenants; maintenance and repair; security services and payments for social/supportive services; any adjuster payments to the investor limited partner required under Maker's partnership agreement; payment of principal or interest on any indebtedness of Maker to any affiliate of Maker (individual or entity) or partner of Maker to repay completion and operating deficit loans relating to the Project; asset management fee payable to the limited partner of Maker in an amount approved as part of the Project Budget (as defined in the Affordable Housing Agreement); partnership management fee payable to Maker, not to exceed the amount approved as part of the Project Budget (as defined in the Affordable Housing Agreement); reasonable property management fees not to exceed \Yo of gross revenue; deferred developer fee in an amount approved as part of the Project Budget (as dehned in the Affordable Housing Agreement); amounts (approved by Holder) expended to restore the Project after a casualty loss or condemnation; reasonable and customary cost for accounting and auditing the books and records ofthe Project; taxes; franchise tax filing fees; and any other reserves reasonably required by the investors or the lenders approved by the City for the Project (collectively "Operating Expenses"). (ii) Notwithstanding the generality of the foregoing, the following items are not expenses or deductible in computing Residual Receipts: (A) Depreciation, cost recovery, amortization and similar items which do not involve the expenditure of cash. 6. Audited Financial Statement. Maker shall annually provide Holder with an audited financial statement documenting the calculation of Residual Receipts for the previous calendar year ending December 3 1. The audited financial statement shall be provided on or before April 1, together with payment of the Residual Receipts payment due to Holder. Holder shall have the right to inspect and audit Maker's books and records concerning the calculation of the Residual Receipts Payment and to object within ninety (90) days from receipt of Maker's statement. Failure to timely object shall be deemed acceptance. If Holder does object, Holder shall specify the reasons for disapproval. Maker shall have thirty (30) days to reconcile any disapproved item. If Maker and Holder cannot agree on the J l 603\40u603099. l 6t I 47 .001 45\321 6237 8.2 amount of the Residual Receipts payment, an independent auditor mutually selected by Maker and Holder shall resolve any disputed items. The cost of the auditor shall be shared equally by Maker and Holder. l. Annual Budget. Maker shall prepare and submit to Holder a proposed annual operating budget for the management and operation of the Project ("Annual Budget") no later than 60 days preceding the effective year of such budget. The Annual Budget shall include the projected Gross Revenue and Operating Expenses for the year and a line item showing the projected Residual Receipts from the Project for the year. Holder will review the Annual Budget and, if acceptable, approve it, which approval shall not be unreasonably withheld. If the Annual Budget is not acceptable, Holder shall specify the reasons for disapproval. The intent of this section is to provide Holder an opportunity to disapprove any unreasonable expenses which would diminish the Residual Receipts from the Project. Once approved, any changes to the Annual Budget which exceed ten percent (10%) of the total Annual Budget shall require Holder's prior written consent, which consent shall not be unreasonably withheld. 8. Acceleration Upon Certain Events aLllnaq lefault. ' In the event of any Default under the terms of this Note, the Affordable Housing Agreement or the Regulatory Agreement, the Deed of Trust which is the security for this Note, or under any Senior loans, notes or deeds of trust, at the option of the Holder and after notice to the Maker, providing Maker with thirty (30) days in which to cure any Default, and such Default not having been cured within thirty (30) days (or if a greater amount of time is reasonably necessary to effect a cure, if actions to cure such Default are not undertaken within said thirty (30) day period and pursued with reasonable diligence thereafter), all principal and interest due under this Note shall immediately become due and payable, upon thirty (30) day written notice from the Holder to the Maker. Failure to exercise such option shall not constitute a waiver of the right to exercise it in the event of any subsequent Default. Should the undersigned Maker agree to or sell, convey, transfer, or dispose of the real property described in the Deed of Trust securing this Note or any part thereof or interest therein, without first obtaining the prior written consent of the Holder (except for a Permitted Transfer, as defined in the Affordable Housing Agreement), then, at the option of the Holder, all principal and interest due hereunder shall immediately become due and payable upon thirty (30) days written notice from the Holder to the Maker. Consent to one transaction of this type will not constitute a waiver of the right to require consent to future or successive transactions. Notwithstanding the generality of the foregoing, certain transfers permitted under the Affordable Housing Agreement shall not constitute a Default hereunder or under the Affordable Housing Agreement, and any such action shall not accelerate the maturity of this Promissory Note, provided that any transfer is either a Permitted Transfer as defined in the Affordable Housing Agreement or is reasonably acceptable to the Authority with reasonable promptness, and any transferee under such a transfer agrees to be bound by any and all instruments in favor of the Authority. l 603\40\2603099. l 6 I I 4't .00 | 45\32 I 6237 8.2 4 9. Interest on Default. From and after a Default, the entire outstanding principal balance of this Note shall automatically bear an annual interest rate equal to the lesser of: (a) eight percent (8%) compounding annually; or (b) the maximum interest rate allowed by law. 10. Costs Paid by Maker. Maker agrees to pay the following costs, expenses and attorneys fees paid or incurred by the Holder of this Note, or as adjudged by a court of competent jurisdiction: (a) reasonable costs of collection, costs and expenses and attorneys fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed; and (b) costs of suit in such sum as the court may adjudge reasonable as attorneys fees in any action to enforce payment of this instrument. 11. 'Waiver Maker hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this instrument, and expressly agrees that, without in any way affecting the liability of Maker hereunder, the Holder hereof may extend the Maturity Date or the time for payment of any installment due hereunder, accept additional security, release any party liable hereunder or release any security now or hereafter securing this Note. Maker hereby waives, to the fullest extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this instrument or any deed of ttust, security agreement, guarantee or other agreement now or hereafter securing this Note. 12. Indemnificatron. Maker shall indemnify, defend, protect and hold the Authority harmless from and against any and all loss, damage, liability, action, cause of action, cost or expense, including, without limitation, reasonable attorneys fees and expenses incurred by the Holder hereof, arising as a result of any (i) fraud or material misrepresentation by the Maker under or in connection with the Affordable Housing Agreement or related agreements; (ii) intentional bad faith waste of the real property encumbered by the deed of trust which secures this Note; and (iii) losses resulting from Maker's failure to maintain insurance as required under the provisions of the deed of trust securing this Note and the Affordable Housing Agreement. 13. Nonrecourse This Note shall become a noffecourse obligation of Maker on the date that Maker files a valid and timely Notice of Completion for the Project and the Holder must resort only to the Project or the Property, or both, for repayment should the Maker fail to repay the sums evidenced hereby. At such time as this Note becomes nonrecourse, neither Maker nor any of its general and limited partner shall have any personal liability for repayment of the Project Loan and no deficiency judgment may be obtained against Maker or any of its general and limited partners except for actual or constructive fraud, material misrepresentation, intentional bad faith waste of or on the Project and such other matters as are refened to below. Notwithstanding the generality of the 5 l 603\40u603099. l 6 | | 47 .00 I 45\321 6237 8.2 foregoing, however, Maker shall indemnify, defend, protect and hold Holder harmless from and against any and all loss, damage, liability, action, cause of action, cost or expense, including, without limitation, reasonable attorneys' fees and expenses incurred by the Holder arising as a result of any (i) fraud or material misrepresentation by the Maker under or in connection with the Affordable Housing Agreement or any other agreements or documents provided in connection therewith; (ii) intentional bad faith waste of the Property encumbered by the deed of trust which secures this Note; and (iii) losses resulting from Maker's failure to maintain insurance as required under the provisions of the deed of trust securing this Note. Maker's obligation to indemnify the Holder hereof as aforesaid shall be recourse obligations of the Maker, and in the event of any breach of such obligations, the Holder shall have the right to proceed directly against the Maker to recover any and all losses, damages, liability, costs and expenses (including without limitation, reasonable attorneys' fees and expenses) and may bring any action and institute any proceeding to obtain a deficiency judgment in or following foreclosure for any and all such losses, damages, liabilities, costs and expenses resulting from such breach. 14. Severability If any provision of this Note is determined by a court of competent jurisdiction to be void or unenforceable, such determination shall not affect any other provision of this instrument, and all other provisions hereof shall remain valid and in full force and effect. 15. Non-Waiver No delay in demanding or failure to demand performance hereunder shall constitute a waiver by the Holder hereof of its right to subsequently demand such performance or to exercise any remedies for any Default hereunder. Further, in order to be effective, any waiver of any of the Holder's rights and remedies hereunder shall be expressed in a writing signed by a duly appointed representative of the Holder hereof. Further, waiver by the Holder hereof of any right hereunder shall not constitute a waiver of any other right, including, but not limited to, the right to exercise any and all remedies for a different or subsequent event of Default hereunder. [Signatures on Following Page] I 603\40\2603099. I 6 1 t 47 .00 I 4s\32 t 6237 8.2 6 MAKER: LP, a California limited partnership By:LLC, a California limited liability company, its managing general partner By a California nonprofit corporation, its sole member and manager By: By: SJC Groves CCR LLC, a California limited liability company, its developer general partner I 603\40\2603099. I 6 l 147.00 I 45\32 | 6237 8.2 By: C &.C Development Co., LLC, a California limited liability company, its sole member and manager By: Todd R. Cottle, Trustee of 2007 Todd R. Cottle and Jennifer N. Cottle Revocable Trust, its member 7 EXHIBIT L TO AFFORDABLE HOUS ING DISPO SITION AND DEVELOPMENT AGREEMENT (The Groves at Williams Ranch) List of Impact Fees Applicable to Project The followine City Development Impact Fees are applicable to the Proiect: o Parks and Recreation Facilities Development Fee (Ordinance 210, as amended) o Agricultural Preservation Fee (Ordinance 316, as amended) o Sewer Connection Fees (Resolution No. 04-11-16-05) o Capistrano Circulation Fee Program Traffic Impact Fees (Resolution No. 02-05-21-02) o Domestic 'Water (Resolution No. 04-05-18-04) o Non-Domestic Water (Recycled Water) (CVV/D Resolution No. 00-9-5-1) The following City Development Impact Fees are not Applicable to the Project (which is an affordable senior housins development) : Systems Development Fee (Ordinance #364) New Building Construction Fee (Ordinance 211) a Housing In-Lieu Fee (Ordinance 767) EXHIBIT L L-1 l 603\40\2595738.4 6 I 1 47 . 00 t 4 5\32 1 62022.3 a o