06-0502_MILLENNIUM HOUSING CORPORATION_Security AgreementThis Document was electronically recorded by
RECORDING RECUUMD By First American Title -13
FIRST AMERICAN TITLE COMPANY
NATIONAUCOMMERCIAL SERVICES Recorded in Official Records, Orange County
COMMERCIAL/INDUSTRIAL DIVISION ran 9
DEED OFTtkDaLv..Clerk-Rec1ordperp
• " RECORDING REQUESTED BY AND NO FEE
WHEN RECORDED MAIL TO: ) 2006000368542 11:05am 06/01/06
119 30 D11 A36 A34 1.108 32
Francis J. Baum, Esq.
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
)
Best Best & Krieger LLP )
P.O. Box 1028 )
Riverside, California 92502-1028 )
.70; 7 -!W -AlT
This document is recorded for the benefit of the Independent Cities Lease Finance
Authority, and the recording is fee -exempt under Section 27383 of the Government Code.
DEED OF TRUST
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING (the "Deed of Trust") is made as
. of June 1, 2006, by Millennium Housing Corporation, a California nonprofit public benefit
corporation ("Trustor"), to First American Title Insurance Company ("Trustee"), for the benefit
of the Union Bank of California, N.A., as Trustee under the Indenture referred to herein (the
"Indenture Trustee" and `Beneficiary" hereunder), all as provided in the Indenture of Trust,
dated as of May 1, 2006 (the "Indenture"), by and between the Indenture Trustee and
Independent Cities Lease Finance Authority (the "Authority").
THIS DEED OF TRUST is given, inter alia, for the purpose of securing a loan (the
"Loan") from Beneficiary (as assignee of the Authority) as lender to Trustor as borrower, the
proceeds of which are to be used by Trustor for the acquisition of the San Juan Mobile Estates
mobile home park located in City of San Juan Capistrano, County of Orange, State of California,
more particularly described in Exhibit A attached hereto and by this reference incorporated
herein (the "Land"). Immediately following the execution of the promissory note secured by this
Deed of Trust (1) the Authority assigned its interest in such promissory note to Beneficiary and
(2) the promissory note was secured by this Deed of Trust.
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, the Land;
TOGETHER WITH any and all buildings and improvements now or hereafter erected on
• the Land including, without limitation, fixtures, tenements, attachments, appliances, equipment,
building systems, machinery, and other articles now or hereafter attached to the buildings and
RVPUB\FBAUM\709450.1 SD
improvements (collectively, the "Improvements"), all of which shall be deemed and construed to
be a part of the real property; provided however, the term "Improvements" as used in this Deed
of Trust shall not include any mobile home coaches owned by any party other than Trustor to the
extent such coaches are deemed to be Improvements at any time, either now or in the future.
TOGETHER WITH all earnings, rents, issues, profits, revenue, royalties, income,
proceeds and other benefits, including without limitation prepaid rents and security deposits
(collectively, the "Rents') derived from any lease, sublease, license, franchise or concession or
other agreement (collectively, the "Leases") now or hereafter affecting all or any portion of the
Land, or the Improvements or the use or occupancy thereof,
TOGETHER WITH all interests, estates or other claims, both in law and in equity, which
Trustor now has or may hereafter acquire in the Land or the Improvements, including without
limitation, all right, title and interest now owned or hereafter acquired by Trustor in and to any
greater estate in the Land or the Improvements;
TOGETHER WITH all easements, tenements, hereditaments, appurtenances,
rights-of-way and rights now owned or hereafter acquired by Trustor used or useful in
connection with the Land or as a means of access thereto, including, without limiting the
generality of the foregoing, all development rights and credits, rights pursuant to any trackage
agreement and all rights to the nonexclusive use of common drive entries, all oil and gas and
other hydrocarbons and all other minerals and water and water rights and shares of stock
evidencing the same;
. TOGETHER WITH all leasehold estate, right, title and interest of Trustor in and to all
leases, subleases, subtenancies, licenses, franchises, occupancy agreements and other agreements
covering the Land, the Improvements or any portion thereof now or hereafter existing or entered
into, and all right, title and interest of Trustor thereunder, including, without limitation, all cash
or security deposits, prepaid or advance rentals, and deposits or payments of similar nature;
•
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter
acquired in and to any land lying within the right-of-way of any street, open or proposed,
adjoining the Land and any and all sidewalks, vaults, alloys and strips and gores of land adjacent
to or used in connection with the Land;
TOGETHER WITH all the estate, interest, right, title, other claim or demand, both in law
and in equity, including claims or demands with respect to the proceeds of insurance in effect
with respect to the Land, which Trustor now has or may hereafter acquire in the Land or the
Improvements and any and all awards made for the taking by eminent domain, or by any
proceeding of purchase in lieu thereof, of the whole or any part of the interests described in this
Deed of Trust, including, without limitation, any awards resulting from a change of grade of
streets and awards for severance damages.
The entire estate, property and interest hereby conveyed to Trustee may hereafter be
collectively referred to as the "Trust Estate."
RVPUB\FBAUM\709450.1 2
FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS ("Secured
Obligations"):
(a) payment of indebtedness in the principal amount of $39,910,000 with
interest thereon, evidenced by that certain Note dated June 1, 2006 and all modifications,
extensions, renewals and replacements thereof (collectively, the "Note"), executed by
Trustor pursuant to that certain Loan Agreement, dated as of May 1, 2006, by and among
Authority, Trustor and Indenture Trustee and all supplements, amendments and
modifications thereto and all extensions and renewals thereof (the "Loan Agreement');
(b) performance of every obligation, covenant or agreement of Trustor
contained herein, in the Loan Agreement, in the Note, or in any other document,
instrument or agreement executed and delivered by Trustor in connection with the Loan;
(c) performance of every obligation, covenant and agreement of Trustor
contained in any agreement now or hereafter executed by Trustor which recites that the
obligations thereunder are secured by this Deed of Trust, including, without limitation
payment of all other sums, with interest thereon, which may hereafter be loaned to
Trustor, or its successors or assigns, by Beneficiary, or its successors or assigns, when
evidenced by a promissory note or notes reciting that they are secured by this Deed of
Trust;
(d) compliance with and performance of each and every material provision of
any declaration of covenants, conditions and restrictions pertaining to the Trust Estate or
any portion thereof; and
(e) payment and performance of all obligations of Trustor arising from any
and all existing and future agreements with Beneficiary which may afford interest rate
protection to all or part of the Loan, when such agreement recites that the obligations
thereunder are secured by this Deed of Trust.
All initially capitalized terms used herein which are defined in the Indenture or the Loan
Agreement shall have the same meaning herein unless the context otherwise requires.
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR HEREBY
COVENANTS AND AGREES AS FOLLOWS:
ARTICLE 1
COVENANTS AND AGREEMENTS OF TRUSTOR
1.1 Payment of Secured Obligations. Trustor shall pay when due the principal of and
the interest on the indebtedness evidenced by the Note; all charges, fees and other sums as
provided in the Loan Documents; the principal of and interest on any future advances secured by
this Deed of Trust; and the principal of and interest on any other indebtedness secured by this
Deed of Trust.
1.2 Maintenance, Repair, Alterations. Trustor (a) shall keep the Land and the
Improvements in good condition and repair; (b) shall not remove, demolish or substantially alter
RVPUBTBAUM\709450.1
(other than as contemplated in the Loan Agreement) any of the Improvements except upon the
prior written consent of Beneficiary; (c) shall complete promptly and in a good and workmanlike
manner any Improvement which may be now or hereafter constructed on the Land and promptly
restore in like manner any portion of the Improvements which may be damaged or destroyed
thereon from any cause whatsoever, and pay when due all claims for labor performed and
materials furnished therefor; (d) shall comply with all laws, ordinances, regulations, covenants,
conditions and restrictions now or hereafter affecting the Trust Estate or any part thereof or
requiring any alterations or improvements, including without limitation, all Hazardous Materials
Laws, the Americans with Disabilities Act, Public Law 101-336 (the "ADA"), and the California
Fair Housing Act of 1992; (e) shall not commit or permit any waste or deterioration of the Land
or the Improvements; (f) shall not allow changes in the use for which all or any part of the Land
or the Improvements were intended; (g) shall not initiate or acquiesce in a change in the zoning
classification of the Land and the Improvements without Beneficiary's prior written consent; and
(h) if requested by Beneficiary, shall provide for professional management of the Land and
Improvements by a property manager satisfactory to Beneficiary pursuant to a management
contract approved by Beneficiary in writing.
1.3 Required Insurance.
(a) Trustor shall at all times provide, maintain and keep in force or cause to be
provided, maintained and kept in force, at no expense to the Authority or the Indenture Trustee,
policies of insurance in accordance with the terms of the Loan Agreement in form and amounts,
providing for deductibles, and issued by companies, associations or organizations covering such
casualties, risks, perils, liabilities and other hazards as required by the Loan Agreement.
(b) Trustor shall not obtain separate insurance concurrent in form or contributing in
the event of loss with that required to be maintained hereunder unless Beneficiary is included
thereon under a standard, non-contributory mortgagee clause or endorsement acceptable to
Beneficiary. Trustor shall immediately notify Beneficiary whenever any such separate insurance
is obtained and shall promptly deliver to Beneficiary the original policy or policies of such
insurance.
(c) Within 90 days following the end of each fiscal year of Trustor, at the request of
Authority or Beneficiary, Trustor at Trustor's expense shall furnish such evidence of
replacement costs as the insurance carrier providing casualty insurance for the Improvements on
the Land may require to determine, or which such carrier may provide in determining, the then
replacement cost of the Improvements on the Land.
1.4 Delivery of Policies. Payment of Premiums.
(a) All policies of insurance shall either have attached thereto a lender's loss payable
endorsement for the benefit of Beneficiary in form satisfactory to Beneficiary or shall name
Beneficiary as an additional insured, as required under the Loan Agreement. Trustor shall
furnish Authority and Beneficiary with evidence of insurance issued by the applicable insurance
company for each required policy setting forth the coverage, the limits of liability, the name of
the carrier, the policy number and the period of coverage, and otherwise in form and substance as
0 provided in the Loan Agreement. At least 30 days prior to the expiration of each required policy,
RVPUB\FBAUM\709450.1 4
Trustor shall deliver to Beneficiary evidence reasonably satisfactory to Authority of the payment
G of premiums and the renewal or replacement of such policy continuing insurance in form as
required by this Deed of Trust. All such policies shall contain a provision that, notwithstanding
any contrary agreement between Trustor and the insurance company, such policies will not be
canceled, terminated, allowed to lapse without renewal, surrendered or materially amended,
which term shall include any reduction in the scope or limits of coverage, without at least 30
days' prior written notice to Beneficiary.
(b) - hi the event Trustor fails to provide, maintain, keep in force or deliver to
Beneficiary the policies of insurance required by this Deed of Trust or by the Loan Agreement,
Authority may (but shall have no obligation to) procure such insurance or single -interest
insurance for such risks covering Beneficiary's interest. Trustor will pay all premiums thereon
and reimburse Authority for all amounts paid or incurred by it in connection therewith promptly
upon demand by Authority and, until such payment and reimbursement is made by Trustor, the
amount of all such premiums and amounts paid or incurred by Authority shall be added to the
principal amount of the Loan. Trustor shall deposit with the Beneficiary an amount equal to the
estimated aggregate annual insurance premiums on all policies of insurance required by the Loan
Agreement or this Deed of Trust, all as contemplated under the Indenture. hi such event Trustor
further agrees to cause all bills, statements or other documents relating to the foregoing insurance
premiums to be sent or mailed directly to the Beneficiary. Upon receipt of such bills, statements
or other documents evidencing that a premium for a required policy is then payable, and
providing Trustor has deposited sufficient funds with the Beneficiary all as contemplated under
the Indenture, the Beneficiary shall timely pay such amounts as may be due thereunder out of the
funds so deposited with the Beneficiary. Notwithstanding the foregoing, nothing contained
herein shall modify the obligation of Trustor set forth in Section 1.3 hereof to maintain and keep
such insurance in force at all times.
1.5 Casualties; Insurance Proceeds. Trustor shall give prompt written notice thereof
to Authority and Beneficiary after the happening of any casualty to or in connection with the
Land, the Improvements, or any part thereof, whether or not covered by insurance. In the event
of such casualty, all proceeds of insurance shall be payable to the Beneficiary, whether required
by the Loan Documents or otherwise, and Trustor hereby authorizes and directs any affected
insurance company to make payment of such proceeds directly to the Beneficiary, for the benefit
of the Project. If Trustor receives any proceeds of insurance resulting from such casualty,
whether required by the Loan Documents or otherwise, Trustor shall promptly pay over such
proceeds to the Beneficiary. In the event of any damage or destruction of the Land or the
Improvements, Beneficiary, at the written direction of Authority, shall apply all loss proceeds
remaining after deduction of all expenses of collection and settlement thereof, including, without
limitation, fees and expenses of attorneys and adjusters, to the restoration of the Improvements,
but only as repairs or replacements are effected and continuing expenses become due and
payable and provided all applicable conditions specified in the Loan Agreement with respect
thereto have been satisfied. If any one or more of such conditions in the Loan Agreement have
not been met, Beneficiary shall apply all loss proceeds, after deductions as herein provided, to
the prepayment of the outstanding balance of the Note, together with all accrued interest thereon,
notwithstanding that the outstanding balance may not be due and payable. Nothing herein
contained shall be deemed to excuse Trustor from repairing or maintaining the Land and the
Improvements as provided in Section 1.2 hereof or restoring all damage or destruction to the
RVPUB\FBAUM\709450. ] 5
Land or the Improvements, regardless of whether or not there are insurance proceeds available to
Trustor or whether any such proceeds are sufficient in amount, and the application or release by
Beneficiary, at the written direction of Authority, of any insurance proceeds shall not cure or
waive any Default or notice of default under this Deed of Trust or invalidate any act done
pursuant to such notice.
1.6 Assignment of Policies Upon Foreclosure. In the event of foreclosure of this
Deed of Trust or other transfer of title or assignment of the Trust Estate in extinguishment, in
whole or in part, of the debt secured hereby, all right, title and interest of Trustor in and to all
policies of insurance obtained by Trustor, whether required by the Loan Documents or
otherwise, shall inure to the benefit of and pass to the successor in interest to Trustor or the
purchaser or grantee of the Trust Estate.
1.7 Indemnification; Subrogation; Waiver of Offset.
(a) If Beneficiary is made a party to any litigation concerning the Note, this Deed of
Trust, any of the Loan Documents, the Trust Estate or any part thereof or interest therein, or the
occupancy of the Land or the Improvements by Trustor, then Trustor shall indemnify, defend and
hold Beneficiary harmless from all liability by reason of that litigation, including reasonable
attorneys' fees and expenses incurred by Beneficiary as a result of any such litigation, whether or
not any such litigation is prosecuted to judgment. Beneficiary may employ an attorney or
attorneys selected by it to protect its rights hereunder, and Trustor shall pay to Beneficiary
reasonable attorneys' fees and costs incurred by Beneficiary, whether or not an action is actually
commenced against Trustor by reason of its breach.
.,, (b) Trustor waives any and all right to claim or recover against Authority and
Beneficiary, and their respective officers, employees, agents and representatives, for loss of or
damage to Trustor, the Trust Estate, Trustor's property or the property of others under Trustor's
control from any cause insured against or required to be insured against by the provisions of this
Deed of Trust.
(c) All sums payable by Trustor in accordance with the terms of this Deed of Trust or
the Note shall be paid without notice, demand, counterclaim, setoff, deduction or defense and
without abatement, suspension, deferment, diminution or reduction, and the obligations and
liabilities of Trustor hereunder shall in no way be released, discharged or otherwise affected
(except as expressly provided herein) by reason of: (i) any damage to or destruction of or any
condemnation or similar taking of the Trust Estate or any part thereof; (ii) any restriction or
prevention of or interference by any third party with any use of the Trust Estate or any part
thereof, (iii) any title defect or encumbrance or any eviction from the Improvements or any part
thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding relating to Beneficiary,
or any action taken with respect to this Deed of Trust by any trustee or receiver of Beneficiary,
or by any court, in any such proceeding; (v) any claim which Trustor has or might have against
Beneficiary, which does not relate to the Loan; or (vi) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing; whether or not Trustor shall have notice or knowledge of
any of the foregoing. Except as expressly provided herein and subject to any limitation thereon
provided by law, Trustor waives all rights now or hereafter conferred by statute or otherwise to
RVPUBTBAUM709450.1 6
any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and
payable by Trustor.
1.8 Taxes and Impositions.
(a) As used herein, "Impositions" shall mean all real property taxes and assessments,
general and special, and all other taxes and assessments of any kind or nature whatsoever,
including, without limitation, nongovernmental levies or assessments such as maintenance
charges, levies or charges resulting from covenants, conditions and restrictions affecting the
Trust Estate, which are assessed or imposed upon the Trust Estate or any portion of it, or become
due and payable, and which create, may create or appear to create a lien upon the Trust Estate, or
any part thereof, or upon any person, property, equipment or other facility used in the operation
or maintenance thereof, or any tax or assessment on the Trust Estate, or any part of it, in lieu
thereof or in addition thereto, or any license fee, tax or assessment imposed on Beneficiary and
measured by or based in whole or in part upon the amount of the outstanding obligations secured
hereby. Trustor shall pay all Impositions prior to delinquency, all as contemplated in the Loan
Agreement. Trustor shall deliver to the Beneficiary proof of the payment of the Impositions
within 30 days after such Impositions are due.
Trustor, at its expense, may contest, by appropriate proceedings conducted in good faith
and with due diligence, the amount or validity, in whole or in part, of any Impositions, provided
(i) Trustor shall have notified Authority and Beneficiary prior to the commencement of such
proceedings, (ii) in the case of any unpaid Impositions, such proceedings shall suspend the
collection thereof from Borrower, Beneficiary and the Trust Estate, and shall not constitute a
presently enforceable lien against the Trust Estate during the pendency of such contest, (iii)
neither the Trust Estate nor any part thereof nor any interest therein will be in danger of being
sold, forfeited, terminated, cancelled or lost, (iv) such proceedings shall not have an adverse
effect on the lien or security interest created hereby or upon the enforcement of any provisions of
the Loan Documents, and (v) if Authority or Beneficiary shall so require, Borrower shall have
deposited with Beneficiary such security reasonably necessary for payment of the contested
Impositions, with interest and penalties and Authority's and Beneficiary's expenses.
(b) In the event of the enactment after the date hereof of any law, rule, ordinance,
statute or regulation by the State of California or any political subdivision thereof deducting from
the value of land for the purpose of taxation any lien thereon, or imposing upon Beneficiary the
obligation to pay the whole or any part of the taxes or assessments or charges or liens herein
required to be paid by Trustor, or changing in any way the laws relating to the taxation of deeds
of trust or debts secured by this Deed of Trust or Beneficiary's interest in the Trust Estate, or any
portion thereof, or the manner of collection of taxes, so as to adversely affect this Deed of Trust
or the debt secured hereby, or the Beneficiary or its successors and assigns, then, and in any such
event, Trustor, upon demand by Beneficiary, shall pay such taxes or assessments, or reimburse
Beneficiary therefor; except that if, in the opinion of counsel for Beneficiary, (i) it might be
unlawful to require Trustor to make such payment or (ii) the making of such payment might
result in the imposition of interest beyond the maximum amount permitted by law, then, and in
such event, Beneficiary may elect, by notice in writing given to Trustor, to declare all of the
indebtedness secured hereby to be and become due and payable 60 days from the giving of such
notice.
RVPUB\FBAUM\709450.1 7
(c) If, by the laws of the United States of America, or of the State of California or any
political subdivision thereof having jurisdiction over Trustor, Beneficiary or the Trust Estate or
any portion thereof, any tax, assessment or other payment is due or becomes due in respect of the
issuance of the Note or the recording of this Deed of Trust, Trustor covenants and agrees to pay
each such tax, assessment or other payment in the manner required by any such law. Trustor
further covenants to defend and hold harmless and agrees to indemnify Beneficiary, its
successors or assigns, against any liability incurred by reason of the imposition of any tax,
assessment or other payment on the issuance of the Note or the recording of this Deed of Trust.
1.9 Utilities. Trustor shall pay or shall cause to be paid when due all utility charges
which are incurred by Trustor for the benefit of the Land or the Improvements and all other
assessments or charges of a similar nature, whether or not such charges are or may become liens
thereon.
1.10 Actions Affecting Trust Estate. Trustor shall promptly give Beneficiary written
notice of and shall appear in and contest any action or proceeding purporting to affect any
portion of the Trust Estate or the security hereof or the rights or powers of Beneficiary; and shall
pay all costs and expenses, including the cost of evidence of title and attorneys' fees, in any such
action or proceeding in which Beneficiary may appear.
1.11 Actions By Beneficiary to Preserve Trust Estate. If Trustor fails to make any
payment or to do any act as and in the manner provided in any of the Loan Documents,
Beneficiary, without obligation so to do, without releasing Trustor from any obligation, and
without notice to or demand upon Trustor, may make or do the same in such manner and to such
extent as it may deem necessary to protect the security hereof. In connection therewith (without
limiting their general powers, whether conferred herein, in any other Loan Documents or by
law), Beneficiary shall have and is hereby given the right, but not the obligation, (a) to enter
upon and take possession of the Land and the Improvements; (b) to make additions, alterations,
repairs and improvements to the Land and the Improvements which it may consider necessary or
proper to keep the Land or the Improvements in good condition and repair; (c) to appear and
participate in any action or proceeding affecting or which may affect the security hereof or the
rights or powers of Beneficiary; (d) to pay, purchase, contest or compromise any encumbrance,
claim, charge, lien or debt which in the judgment of either may affect or appears to affect the
security of this Deed of Trust or be prior or superior hereto; and (e) in exercising such powers, to
pay necessary expenses, including attorneys' fees and costs or other necessary or desirable
consultants. Trustor shall, immediately upon demand therefor by Beneficiary, pay to Beneficiary
an amount equal to all respective costs and expenses incurred by such party in connection with
the exercise of the foregoing rights, including, without limitation, costs of evidence of title, court
costs, appraisals, surveys and receiver's, trustee's and attorneys' fees.
1.12 Transfer of Trust Estate by Trustor. In the event of any Transfer (as defined
below) of the Trust Estate, or any portion thereof or interest therein, which is not in accordance
with Section 6.2 of the Loan Agreement, Authority shall have the absolute right at its option,
without prior demand or notice, to declare all sums secured hereby immediately due and payable.
Upon a permitted Transfer under Section 6.2 of the Loan Agreement, the transferee shall assume
• all obligations hereunder and agree to be bound by all provisions contained herein. As used
herein, the term "Transfer" means and includes the direct or indirect sale, transfer, conveyance,
RVPUB\FBAUMV09450.1 8
assignment, or other alienation of the Trust Estate, or any portion thereof or interest therein,
whether voluntary, involuntary, by operation of law or otherwise, the execution of any
installment land sale contract, sales agreement or similar instrument affecting all or a portion of
the Trust Estate, granting of an option to purchase any portion of or interest in the Trust Estate or
any interest therein, or the lease of all or substantially all of the Land or of all or substantially all
of the Improvements. "Transfer" shall not include the leasing of individual mobile home spaces
acquired by Trustor on the Land so long as Trustor complies with the provisions of the Loan
Agreement and the Regulatory Agreement relating to such leasing activity.
1.13 Survival of Warranties. All representations, warranties and covenants of Trustor
made to Authority and Beneficiary in connection with the loan secured hereby or contained in
the Loan Documents or incorporated by reference therein, shall survive the execution and
delivery of this Deed of Trust and shall remain continuing obligations, warranties and
representations of Trustor so long as any portion of the obligations secured by this Deed of Trust
remains outstanding.
1.14 Eminent Domain. In the event that any proceeding or action be commenced for
the taking of the Trust Estate, or any part thereof or interest therein, for public or quasi -public
use under the power of eminent domain, condemnation or otherwise, or if the same be taken or
damaged by reason of any public improvement or condemnation proceeding, or in any other
manner, or should Trustor receive any notice or other information regarding such proceeding,
action, taking or damage, Trustor shall give prompt written notice thereof to Beneficiary.
Beneficiary shall be entitled at its option, without regard to the adequacy of its security, to
commence, appear in and prosecute in its own name any such action or proceeding. Beneficiary
shall also be entitled to make any compromise or settlement in connection with such taking or
damage. All compensation, awards, damages, rights of action and proceeds awarded to Trustor
by reason of any such taking or damage (the "Condemnation Proceeds") are hereby assigned to
the Beneficiary, for the benefit of the Project, and Trustor agrees to execute such fiurther
assignments of the Condemnation Proceeds as may be required under the Loan Agreement. The
Beneficiary shall apply all or any of the proceeds it receives to its expenses in settling,
prosecuting or defending any claim and may apply the balance to the Secured Obligations in the
order and for such purposes as provided in the Loan Agreement.
1.15 Additional Security. No other security now existing, or hereafter taken, to secure
the obligations secured hereby shall be impaired or affected by the execution of this Deed of
Trust and all additional security shall be taken, considered and held as cumulative. The taking of
additional security, execution of partial releases of the security, or any extension of the time of
payment of the indebtedness shall not diminish the force, effect or lien of this Deed of Trust and
shall not affect or impair the liability of any maker, surety or endorser for the payment of the
indebtedness. In the event Beneficiary at any time holds additional security for any of the
obligations secured hereby, it may enforce the sale thereof or otherwise realize upon the same, at
its option, either before, concurrently, or after a sale is made hereunder.
1.16 Successors and Assigns. 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 `Beneficiary" shall mean the holder of the Note, whether or not named as
Beneficiary herein. In exercising any rights hereunder or taking any actions provided for herein,
RVPUB\FBAUM\709450.1 9
') Beneficiary may act through its employees, agents or independent contractors authorized by
Beneficiary.
1.17 Inspections. Beneficiary, or its agents, representatives or workers, are authorized
to enter at any reasonable time upon or in any part of the Land and the Improvements for the
purpose of inspecting the same and for the purpose of performing any of the acts it is authorized
to perform hereunder or under the terms of any of the Loan Documents. Without limiting the
generality of the foregoing, Trustor agrees that Beneficiary will have the same right, power and
authority to enter and inspect the Land and the Improvements as is granted to a secured lender
under Section 2929.5 of the California Civil Code, and that Beneficiary will have the right to
appoint a receiver to enforce this right to enter and inspect the Land and the Improvements to the
extent such authority is provided under California law, including the authority given to a secured
lender under Section 564(c) of the California Code of Civil Procedure.
1.18 Liens. Trustor shall pay and promptly discharge, at Trustor's cost and expense,
all liens, encumbrances and charges ("Liens) upon the Trust Estate, or any part thereof or interest
therein which liens have not been approved in writing by Beneficiary. If Trustor shall fail to
remove and discharge any such lien, encumbrance or charge, then, in addition to any other right
or remedy of Beneficiary, Beneficiary may, but shall not be obligated to, discharge the same,
either by paying the amount claimed to be due, or by procuring the discharge of such lien,
encumbrance or charge by depositing in a court a bond or the amount claimed or otherwise
giving security for such claim, or by procuring such discharge in such manner as is or may be
prescribed by law. Trustor shall, immediately upon demand therefor by Beneficiary, pay to
Beneficiary an amount equal to all costs and expenses incurred by Beneficiary in connection
with the exercise by Beneficiary of the foregoing right to discharge any such lien, encumbrance
or charge, together with interest thereon from the date of such expenditure at the Default Rate.
Trustor, at its expense, may contest, by appropriate proceedings conducted in good faith
and with due diligence, the amount or validity, in whole or in part, of any Lien, provided (i)
Trustor shall have notified Authority and Beneficiary prior to the commencement of such
proceedings, (ii) in the case of any unpaid Lien, such proceedings shall suspend the collection
thereof from Trustor, Beneficiary and the Trust Estate, and shall not constitute a presently
enforceable lien against the Trust Estate during the pendency of such contest, (iii) neither the
Trust Estate nor any part thereof nor any interest therein will be in danger of being sold,
forfeited, terminated, cancelled or lost, (iv) such proceedings shall not have an adverse effect on
the lien or security interest created hereby or upon the enforcement of any provisions of the Loan
Documents, and (v) if Authority or Beneficiary shall so require, Trustor shall have deposited
with Beneficiary such security reasonably necessary for payment of the contested Lien, with
interest and penalties and Authority's and Beneficiary's expenses.
1.19 Trustee's Powers. At any time, or from time to time, without liability therefor
and without notice, upon written request of Beneficiary and presentation of this Deed of Trust
and the Note secured hereby for endorsement, and without affecting the personal liability of any
person for payment of the indebtedness secured hereby or the effect of this Deed of Trust upon
the remainder of the Trust Estate, Trustee may (a) reconvey any part of the Trust Estate, (b)
consent in writing to the making of any map or plat thereof, (c) join in granting any easement
RVPUB\FBAUM\709450.1 10
thereon, or (d) join in any extension agreement or any agreement subordinating the lien or charge
hereof.
1.20 Beneficiary's Powers. Without affecting the liability of any other person liable
for the payment of any obligation herein mentioned, and without affecting the lien or charge of
this Deed of Trust upon any portion of the Trust Estate not then or theretofore released as
security for the full amount of all unpaid obligations, Beneficiary may, from time to time and
without notice (a) release any person so liable, (b) extend the maturity or alter any of the terms of
any such obligation, (c) grant other indulgences, (d) release or reconvey, or cause to be released
or reconveyed at any time at Beneficiary's option any parcel, portion or all of the Trust Estate,
(e) take or release any other or additional security for any obligation herein mentioned, or (f)
make compositions or other arrangements with debtors in relation thereto.
1.21 Leasehold. If a leasehold estate constitutes a portion of the Trust Estate, Trustor
agrees not to amend, change, terminate or modify such leasehold estate or any interest therein
without the prior written consent of Beneficiary. Waiver of consent to one amendment, change,
agreement or modification shall not be deemed to be a waiver of the right to require consent to
other, future or successive amendments, changes, agreements or modifications. Trustor agrees to
perform all obligations and agreements under the leasehold and shall not take any action or omit
to take any action which would effect or permit the termination of the leasehold. Trustor agrees
to promptly notify Beneficiary in writing with respect to any default or alleged default by any
party thereto and to deliver to Beneficiary copies of all notices, demands, complaints or other
communications received or given by Trustor with respect to any such default or alleged default.
Beneficiary shall have the option to cure any such default and to perform any or all of Trustor's
obligations thereunder. All sums expended by Beneficiary in curing any such default shall be
secured hereby and shall be immediately due and payable without demand or notice.
1.22 Indemnity. In addition to any other indemnities to Beneficiary specifically
provided for in this Deed of Trust, Trustor hereby indemnifies, and shall defend and save
harmless, Beneficiary and its authorized representatives from and against any and all losses,
liabilities, suits, obligations, fines, damages, penalties, claims, costs, charges and expenses,
including, without limitation, architects', engineers' and attorneys' fees and all disbursements
which may be imposed upon, incurred by or asserted against Beneficiary and its authorized
representative by reason of. (a) the construction of any improvements on the Land, (b) any
capital improvements, other work or things done in, on or about the Land or any part thereof, (c)
any use, nonuse, misuse, possession, occupation, alteration, operation, maintenance or
management of any portion of the Trust Estate or any part thereof or any street, drive, sidewalk,
curb, passageway or space comprising a part thereof or adjacent thereto, (d) any negligence or
willful act or omission on the part of Trustor and its agents, contractors, servants, employees,
licensees or invitees, (e) any accident, injury (including death) or damage to any person or
property occurring in, on or about the Land or any part thereof, (f) any lien or claim which may
be alleged to have arisen on, against, or with respect to any portion of the Trust Estate under the
laws of the local or state government or any other governmental or quasi -governmental authority
or any liability asserted against Beneficiary with respect thereto, (g) any tax attributable to the
execution, delivery, filing or recording of this Deed of Trust, the Note or the Loan Agreement,
(h) any contest due to Trustor's actions or failure to act, permitted pursuant to the provisions of
this Deed of Trust, (i) any Default under the Note, this Deed of Trust or the Loan Agreement, or
RVPUB\FBAUM\709450.1 I I
0 ' 0) any claim by or liability to any contractor or subcontractor performing work or any party
` supplying materials in connection with the Land or the Improvements.
ARTICLE 2
ASSIGNMENT OF LEASES AND RENTS
2.1 Assignment. Trustor hereby irrevocably assigns to Beneficiary all of Trustor's
right, title and interest in, to and under: (a) all leases of the Land or any portion thereof, all
licenses and agreements relating to the management, leasing or operation of the Land or any
portion thereof, and all other agreements of any kind relating to the use or occupancy of the Land
or any portion thereof, whether now existing or entered into after the date hereof ("Leases"); and
(b) the Rents, including, without limitation, all amounts payable and all rights and benefits
accruing to Trustor under the Leases. The term "Leases" shall also include all .guarantees of and
security for the lessees' performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and absolute assignment,
not an assignment for security purposes only, and Beneficiary's right to the Leases and Land is
not contingent upon, and may be exercised without possession of, the Land.
2.2 Grant Of License. Beneficiary confers upon Trustor a license ("License") to
collect and retain the Rents as they become due and payable, until the occurrence of a Default (as
hereinafter defined). Upon a Default, the License shall be automatically revoked and
Beneficiary may collect and apply the Rents pursuant to Section 4.2, below, without notice and
without taking possession of the Land. Trustor hereby irrevocably authorizes and directs the
• lessees under the Leases to rely upon and comply with any notice or demand by Beneficiary for
the payment to Beneficiary of any rental or other sums which may at any time become due under
the Leases, or for the performance of any of the lessees' undertakings under the Leases, and the
lessees shall have no right or duty to inquire as to whether any Default has actually occurred or is
then existing hereunder. Trustor hereby relieves the lessees from any liability to Trustor by
reason of relying upon and complying with any such notice or demand by Beneficiary.
2.3 Effect Of Assignment. The foregoing irrevocable Assignment shall not cause
Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control, care,
management or repair of the Land or for performing any of the terms, agreements, undertakings,
obligations, representations, warranties, covenants and conditions of the Leases; or (c)
responsible or liable for any waste committed on the Land by the lessees under any of the Leases
or any other parties; for any dangerous or defective condition of the Land; or for any negligence
in the management, upkeep, repair or control of the Land resulting in loss or injury or death to
any Lessee, licensee, employee, invitee or other person. Beneficiary shall not directly or
indirectly be liable to Trustor or any other person as a consequence of. (i) the exercise or failure
to exercise any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii) the
failure or refusal of Beneficiary to perform or discharge any obligation, duty or liability of
Trustor arising under the Leases.
2.4 Representations And Warranties. Trustor represents and warrants that: (a) the
Schedule of Leases attached hereto as Exhibit B attached hereto and incorporated herein by this
reference is, as of the date hereof, a true, accurate and complete list of all Leases; (b) all existing
Leases are in full force and effect and are enforceable in accordance with their respective terms,
RVPUB\FBAUM\709450.1 12
and no breach or default, or event which would constitute a breach or default after notice or the
passage of time, or both, exists under any existing Leases on the part of any party; (c) no rent or
• other payment under any existing Lease has been paid by any lessee for more than one (1) month
in advance; and (d) none of the lessor's interests under any of the Leases has been transferred or
assigned.
E
2.5 Covenants. Trustor covenants and agrees at Trustor's sole cost and expense to:
(a) perform the obligations of lessor contained in the Leases; (b) exercise Trustor's best efforts to
keep all portions of the Land that are currently subject to Leases leased at all times at rentals not
less than the requirements under the Loan Agreement; and (c) execute and record such additional
assignments of any Lease or specific subordinations of any Lease to the Deed of Trust, in form
and substance acceptable to Authority, as Authority may request. Trustor shall not, without
notice to the Oversight Agent: (i) execute any other assignment relating to any of the Leases; or
(ii) subordinate or agree to subordinate any of the Leases to any other deed of trust or
encumbrance. Any such attempted action in violation of the provisions of this Section 2.5 shall
be null and void.
2.6 Estoppel Certificates. Within thirty (30) days after written request by Authority,
Trustor shall deliver to Beneficiary and to any party designated by Authority an estoppel
certificate executed by Trustor, in recordable form, certifying (if such be the case): (a) that the
foregoing assignment and the Leases are in full force and effect; (b) the date of each lessee's
most recent payment of rent; (c) that there are no defenses or offsets outstanding, or stating those
claimed by Trustor or lessees under the foregoing assignment or the Leases, as the case may be;
and (d) any other information reasonably requested by Authority.
ARTICLE 3
SECURITY AGREEMENT AND FIXTURE FILING
3.1 Security Interest. Trustor hereby grants and assigns to Beneficiary a security
interest, to secure payment and performance of all of the Secured Obligations, in all of the
following described personal property in which Trustor now or at any time hereafter has any
interest (collectively, the "Collateral"):
(a) All personal property, including, without limitation, all goods, supplies,
work in process, signs, equipment, furniture, furnishings, fixtures, machinery, inventory
and construction materials which Trustor now or hereafter owns or in which Trustor now
or hereafter acquires an interest or right, including, without limitation, those which are
now or hereafter located on or affixed to the Land and/or Improvements (the Land and
the Improvements shall hereafter be collectively referred to as the "Real Property") or
used or useful in the operation, use or occupancy thereof or the construction of any
improvements thereon, including, without limitation, any interest of Trustor in and to
personal property which is leased or subject to any superior security interest, or which is
being manufactured or assembled for later installation into the improvements to be
located or constructed at the Real Property, wherever located, and all books, records,
leases and other documents, of whatever kind or character, relating to the Real Property;
RVPUB\P3AUM\709450.1 13
(b) All fees, income, rents, issues, profits, earnings, receipts, royalties and
revenues which, after the date hereof and while any portion of the indebtedness secured
hereby remains unpaid, may accrue from said goods, fixtures, furnishings, equipment and
building materials or any part thereof or from the Real Property or any part thereof, or
which may be received or receivable by Trustor from any hiring, using, letting, leasing,
subhiring, subletting, or subleasing therefor;
(c) All of Trustor's present and future rights to receive payments of money,
services or property including, without limitation, rights to all deposits from tenants of
the Real Property, accounts receivable, deposit accounts, chattel paper, documents, letters
of credit, hedging or similar agreement, instruments, general intangibles and principal,
interest and notes, drafts, contract rights (including, without limitation, all rights under
any interest rate payments due on account of goods sold, services rendered, loans made or
credit extended), together with title or interest in all documents evidencing or securing
the same;
(d) All other intangible property and rights relating to the Real Property or the
operation thereof, or used in connection therewith, including but not limited to all
governmental permits relating to construction or other activities on the Real Property, all
names under or by which the Real Property may at any time be operated or known, all
rights to carry on business under any such names, or any variant thereof, all trade names
and trademarks relating in any way to the Real Property, good will in any way relating to
the Real Property, and all licenses and permits relating in any way to, or to the operation
j of, the Real Property;
(e) All proceeds from sale or disposition of the aforesaid Collateral;
(f) Trustor's rights under all insurance policies covering the Real Property or
any of the aforesaid Collateral (whether or not required by the Loan Documents), and all
proceeds, loss payments and premium refunds payable regarding the same;
(g) All reserves, deferred payments, deposits, refunds, cost savings and
payments of any kind relating to the construction of any Improvements on the Land;
(h) All water stock relating to the Real Property or any portion of it;
(i) All causes of action, claims, compensation and recoveries for any damage
to or condemnation or taking of the Real Property or the aforesaid Collateral, or for any
conveyance in lieu thereof, whether direct or consequential, or for any damage or injury
to the Real Property or the aforesaid Collateral, or for any loss or diminution in value of
the Real Property or the aforesaid Collateral;
0) All architectural, structural, mechanical and engineering plans and
specifications prepared for construction of improvements or extraction of minerals from
the Real Property and all studies, data and drawings relating thereto; and also all
contracts and agreements of the Trustor relating to the aforesaid plans and specifications
• or to the aforesaid studies, data and drawings or to the construction of improvements on
or extraction of minerals or gravel from the property;
RVPUBTBAUM\709450.1 14
(k) All Trustor's right, title and interest in any mobile home coaches owned
by Trustor and situated on the Real Property, together with all proceeds from the sale or
disposition of the aforesaid mobile home coach or coaches. Mobilehome coaches owned
by Trustor and situated on the Real Property on the date hereof are listed on Exhibit C
hereto.
All terms used herein which are defined in the California Commercial Code shall have
the same meanings when used herein, unless the context requires otherwise.
As to all of the above described personal property which is or which hereafter becomes a
"fixture" under applicable law, this Deed of Trust constitutes a fixture filing under Sections 9313
and 9402(6) of the California Uniform Commercial Code, as amended or recodified from time to
time.
3.2 Representations and Warranties. Trustor represents and warrants that: (a) Trustor
has, or will have, good title to the Collateral; (b) Trustor has not previously assigned or
encumbered the Collateral and no financing statement covering any of the Collateral has been
delivered to any other person or entity, and (c) Trustor's principal place of business is located at
the address shown in Section 6.5.
3.3 Rights of Beneficiarv. In addition to Beneficiary's rights as a "Secured Party"
under the California Uniform Commercial Code, as amended or recodified from time to time
("UCC"), Beneficiary may, but shall not be obligated to, at any time without notice and at the
expense of Trustor: (a) give notice to any person of Beneficiary's rights hereunder and enforce
such rights at law or in equity; (b) insure, protect, defend and preserve the Collateral or any
rights or interests of Beneficiary therein; (c) inspect the Collateral; and (d) endorse, collect and
receive any right to payment of money owing to Trustor under or from the Collateral.
Notwithstanding the above, in no event shall Beneficiary be deemed to have accepted any
property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless
Beneficiary shall make an express written election of said remedy under UCC § 9505, or other
applicable law.
3.4 Rights of Beneficiary on Default. Upon the occurrence of a Default under this
Deed of Trust, then in addition to all of Beneficiary's rights as a "Secured Party" under the UCC
or otherwise at law:
(a) Beneficiary may (i) upon written notice, require Trustor to assemble any
or all of the Collateral and make it available to Beneficiary at a place designated by
Beneficiary; (ii) without prior notice, enter upon the Real Property or other place where
any of the Collateral may be located and take possession of, collect, sell, and dispose of
any or all of the Collateral, and store the same at locations acceptable to Beneficiary at
Trustor's expense; (iii) sell, assign and deliver at any place or in any lawful manner all or
any part of the Collateral and bid and become purchaser of any such sales; and
(b) Beneficiary may, for the account of Trustor and at Trustor's expense: (i)
operate, use, consume, sell or dispose of the Collateral as Beneficiary deems appropriate
for the purpose of performing any or all of the Secured Obligations; (ii) enter into any
RVPUB\FBAUM\709450.1 15
agreement, compromise, or settlement, including insurance claims, which Beneficiary
may deem desirable or proper with respect to any of the Collateral; and (iii) endorse and
deliver evidences of title for, and receive, enforce and collect by legal action or
otherwise, all indebtedness and obligations now or hereafter owing to Trustor in
connection with or on account of any or all of the Collateral.
Notwithstanding any other provision hereof, Beneficiary shall not be deemed to have
accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary
unless Trustor shall make an express written election of said remedy under UCC § 9505, or other
applicable law.
3.5 Power of Attomev. Trustor hereby irrevocably appoints Beneficiary as Trustor's
attorney-in-fact (such agency being coupled with an interest), and as such attorney-in-fact
Beneficiary may, without the obligation to do so, in Beneficiary's name, or in the name of
Trustor, prepare, execute and file or record financing statements, continuation statements,
applications for registration and like papers necessary to create, perfect or preserve any of
Beneficiary's security interests and rights in or to any of the Collateral, and, upon a Default
hereunder, take any other action required of Trustor; provided, however, that Beneficiary as such
attorney-in-fact shall be accountable only for such ftmds as are actually received by Beneficiary.
3.6 Possession and Use of Collateral. Except as otherwise provided in this Section or
other Loan Documents, so long as no Default exists under this Deed of Trust or any of the Loan
Documents, Trustor may possess, use, move, transfer or dispose of any of the Collateral in the
=j ordinary course of Trustor's business and in accordance with the Loan Agreement.
ARTICLE 4
REMEDIES UPON DEFAULT
4.1 Events of Default. For all purposes hereof, the term "Default" shall mean (a) the
failure of Trustor to make any payment of principal or interest on the Note or, at Beneficiary's
option, to pay any other amount due hereunder or under the Note when the same is due and
payable, whether at maturity, by acceleration or otherwise; (b) the failure of Trustor to perform
any non -monetary obligation hereunder, or the failure to be true of any representation or
warranty of Trustor contained herein, and the continuance of such failure for ten (10) days after
notice, or within any longer grace period, if any allowed in the Loan Agreement for such failure,
or (c) the existence of any default, including an Event of Default, as defined therein, under the
Loan Agreement, subject to any cure or grace period allowed under the Loan Agreement.
4.2 Acceleration Upon Default, Additional Remedies. Upon the occurrence of a
Default, Beneficiary may, at its option, declare all indebtedness secured hereby to be
immediately due and payable without any presentment, demand, protest or notice of any kind.
Thereafter Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or
proceeding, or by a receiver appointed by a court and without regard to the adequacy of
its security, enter upon and take possession of the Land or the Improvements, or any part
thereof, in its own name or in the name of Trustee, and do any acts which it deems
RVPUB\FBAUM\709450.1 16
necessary or desirable to preserve the value, marketability or rentability of any portion of
the Trust Estate, including, without limitation (i) taking possession of Trustor's books
and records, (ii) completing the rehabilitation of the Improvements, (iii) maintaining or
repairing the Improvements or any other portion of the Trust Estate, (iv) increasing the
income from the Trust Estate, with or without taking possession of the Land or the
Improvements, (v) entering into, modifying, or enforcing any Leases, (vi) suing for or
otherwise collecting the Rents or other amounts owing to Trustor, including those past
due and unpaid, and (vii) applying the same, less costs and expenses of operation and
collection including, without limitation, attorneys' fees, upon any indebtedness secured
hereby, all in such order as Beneficiary may determine. The entering upon and taking
possession of the Land or the Improvements, the collection of such Rents and the
application thereof as provided above, shall not cure or waive any Default or notice of
default hereunder;
(b) Enforce all of the rights and remedies of an assignee for turnover of rents,
issues and profits under Section 2938 of the California Civil Code, as such Section may
be amended from time to time;
(c) Commence an action to foreclose this Deed of Trust as a mortgage,
appoint a receiver, or specifically enforce any of the covenants hereof,
(d) Deliver to Trustee a written declaration of default and demand for sale and
a written notice of default and election to cause Trustor's interest in the Trust Estate to be
.°� sold, which notice Trustee or Beneficiary shall cause to be duly filed of record in the
Official Records of the County in which the Land is located; or
(e) Exercise all other rights and remedies provided herein, in any Loan
Document or other document or agreement now or hereafter securing all or any portion of
the obligations secured hereby, or by law.
4.3 Foreclosure by Power of Sale. Should Beneficiary elect to foreclose by exercise
of the power of sale herein contained, Beneficiary shall notify Trustee and shall deposit with
Trustee this Deed of Trust and the Note and such receipts and evidence of expenditures made
and secured hereby as Trustee may require.
(a) Beneficiary or Trustee shall give such notice of default and election to sell
as is then required by applicable law. Trustee shall, without demand on Trustor, after
lapse of such time as may then be required by law and after recordation of such notice of
default and after notice of sale having been given as required by law, sell the Trust Estate
at the time and place of sale fixed by it in the notice of sale, either as a whole, or in
separate lots or parcels or items as Beneficiary shall deem expedient, 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 the time of sale. Trustee shall deliver to such purchaser or
purchasers thereof a trustee's deed conveying the property so sold, which shall not
contain any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof Any person,
0 including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale
RVPU13\FBAUM\709450) 17
a and Beneficiary shall be entitled to pay the purchase price by crediting the purchase price
of the property against the obligations secured hereby. Trustor hereby covenants to
warrant and defend the title of such purchaser or purchasers.
(b) After deducting all costs, fees and expenses of Trustee and of this trust,
including costs of evidence of title in connection with sale, Trustee shall apply the
proceeds of sale in the following priority, to payment of: (i) first, all sums expended
under the terms hereof, not then repaid; (ii) second, all other sums then secured hereby;
and (iii) the remainder, if any, to the person or persons legally entitled thereto.
(c) Subject to California Civil Code § 2924(g), Trustee may postpone sale of
all or any portion of the Trust Estate by public announcement at such time and place of
sale, and from time to time thereafter may postpone such sale by public announcement or
subsequently noticed sale, and without further notice make such sale at the time fixed by
the last postponement, or may, in its discretion, give a new notice of sale.
4.4 Personal Property. Pursuant to Article 3 above, Trustor has executed and
delivered to Beneficiary a Security Agreement with respect to certain Collateral described
therein. Upon the occurrence of a Default, Beneficiary may proceed at its election, in any
sequence: (a) to dispose of any Collateral separately from the sale of real property in accordance
with Division 9 of the California Commercial Code or other applicable law; and (b) to dispose of
some or all of the Trust Estate and the Collateral in any combination consisting of both real and
personal property together in one or more sales to be held in accordance with the provisions of
Section 9501(4) of the California Commercial Code.
4.5 Appointment of Receiver. Upon the occurrence of a Default hereunder,
Beneficiary, as a matter of right and without notice to Trustor or anyone claiming under Trustor,
and without regard to the then value of the Trust Estate or the adequacy for any security for the
obligations then secured hereby, shall have the right to apply to any court having jurisdiction to
appoint a receiver or receivers of the Trust Estate, and Trustor hereby irrevocably consents to
such appointment and waives notice of any application therefor. Any such receiver or receivers
shall have all the usual powers and duties of receivers in like or similar cases and all the powers
and duties of Beneficiary in case of entry as provided herein.
4.6 Remedies Not Exclusive. Trustee and Beneficiary, and each of them, shall be
entitled to enforce payment and performance of any indebtedness or obligations secured hereby
and to exercise all rights and powers under this Deed of Trust or under any Loan Document or
other agreement or any laws now or hereafter in force, notwithstanding some or all of the
indebtedness and obligations secured hereby may now or hereafter be otherwise secured,
whether by mortgage, deed of trust, pledge, lien, assignment or otherwise. Neither the
acceptance of this Deed of Trust nor its enforcement whether by court action or pursuant to the
power of sale or other powers herein contained, shall prejudice or in any manner affect Trustee's
or Beneficiary's right to realize upon or enforce any other security now or hereafter held by
Trustee or Beneficiary, it being agreed that Trustee and Beneficiary, and each of them, shall be
entitled to enforce this Deed of Trust and any other security now or hereafter held by Beneficiary
or Trustee in such order and manner as they or either of them may in their absolute discretion
0 determine. No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to
RVPUB\FBAUM\709450.1 18
be exclusive of any other remedy herein or by law provided or permitted, but each shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy given by any of the Loan
Documents to Trustee or Beneficiary or to which either of them may be otherwise entitled, may
be exercised, concurrently or independently, from time to time and as often as may be deemed
expedient by Trustee or Beneficiary and either of them may pursue inconsistent remedies.
4.7 Request for Notice. Trustor hereby requests a copy of any notice of default and
that any notice of sale hereunder be mailed to it at the address set forth in Section 6.5 of this
Deed of Trust.
4.8 Forbearance by Lender Not a Waiver. Any forbearance by Beneficiary in
exercising any right or remedy hereunder, or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of any right or remedy. The acceptance by Beneficiary of
payment of any sum secured by this Deed of Trust after the due date of such payment shall not
be a waiver of Beneficiary's right either to require prompt payment when due of all other sums
so secured or to declare a Default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by Beneficiary shall not be a waiver
of Beneficiary's right to accelerate the maturity of the indebtedness secured by this Deed of
Trust nor shall Beneficiary's receipt of any awards, proceeds or damages under this Deed of
Trust operate to cure or waive any Default with respect to any payment secured by this Deed of
Trust.
• ARTICLE 5
HAZARDOUS MATERIALS
5.1 Special Representations And Warranties. Without in any way limiting the other
representations and warranties set forth in this Deed of Trust, and after reasonable investigation
and inquiry, Trustor hereby specially represents and warrants to the best of Trustor's knowledge
as of the date of this Deed of Trust as follows:
5.2 Hazardous Materials. Except as previously disclosed to Beneficiary, to the best of
Trustor's knowledge, the Real Property is not and has not been a site for the use, generation,
manufacture, storage, treatment, release, threatened release, discharge, disposal, transportation or
presence of any oil, flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, hazardous wastes, toxic or contaminated substances or similar materials, including,
without limitation, any substances which are "hazardous substances," "hazardous wastes,"
"hazardous materials" or "toxic substances" under the Hazardous Materials Laws, as described
below, and/or other applicable environmental laws, ordinances and regulations (collectively, the
"Hazardous Materials"). "Hazardous Materials" shall not include commercially reasonable
amounts of such materials used in the ordinary course of operation of the Real Property which
are used and stored in accordance with all applicable environmental laws, ordinances and
regulations.
5.3 Hazardous Materials Laws. The Real Property is in compliance with all laws,
ordinances and regulations relating to Hazardous Materials ("Hazardous Materials Laws"),
• including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.;
RVPUB\FBAUM\709450.1 19
the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the
Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.;
the Comprehensive Environment Response, Compensation and Liability Act of 1980, as
amended (including the Superfund Amendments and Reauthorization Act of 1986, "CERCLA"),
42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C.
Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section
651, the Emergency Planning and Community Right -to -Know Act of 1986, 42 U.S.C. Section
11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et
seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; and all
comparable state and local laws, laws of other jurisdictions or orders and regulations.
5.4 Hazardous Materials Claims. There are no claims or actions ("Hazardous
Materials Claims") pending or threatened against Trustor or the Real Property by any
governmental entity or agency or by any other person or entity relating to Hazardous Materials
or pursuant to the Hazardous Materials Laws.
5.5 Border Zone Propertv. The Real Property has not been designated as Border
Zone Property under the provisions of California Health and Safety Code, Sections 25220 et seq.
and there has been no occurrence or condition on any real property adjoining or in the vicinity of
the Real Property that could cause the Real Property or any part thereof to be designated as
Border Zone Property.
5.6 Hazardous Materials Covenants. Trustor agrees as follows:
(a) No Hazardous Activities. Trustor shall not cause or permit the Real
Property to be used as a site for the use, generation, manufacture, storage, treatment,
release, discharge, disposal, transportation or presence of any Hazardous Materials.
(b) Compliance. Trustor shall comply and cause the Real Property to comply
with all Hazardous Materials Laws.
(c) Notices. Trustor shall immediately notify Beneficiary in writing of: (i)
the discovery of any Hazardous Materials on, under or about the Real Property; (ii) any
knowledge by Trustor that the Real Property does not comply with any Hazardous
Materials Laws; (iii) any Hazardous Materials Claims; and (iv) the discovery of any
occurrence or condition on any real property adjoining or in the vicinity of the Real
Property that could cause the Real Property or any part thereof to be designated as Border
Zone Property.
(d) Remedial Action. In response to the presence of any Hazardous Materials
on, under or about the Real Property, Trustor shall immediately take, at Trustor `s sole
expense, all remedial action required by any Hazardous Materials Laws or any judgment,
consent decree, settlement or compromise in respect to any Hazardous Materials Claims.
5.7 Inspection By Beneficiary. Upon reasonable prior notice to Trustor, Beneficiary,
its employees and agents, may from time to time (whether before or after the commencement of
a rnonjudicial or judicial foreclosure proceeding) enter and inspect the Real Property for the
purpose of determining the existence, location, nature and magnitude of any past or present
RVPUB\FBAUM\709450.1 20
release or threatened release of any hazardous substance into, onto, beneath or from the Real
Property.
5.8 Hazardous Materials Indemnitv. Trustor hereby agrees to defend, indemnify and
hold harmless Beneficiary, its directors, officers, employees, agents, successors and assigns from
and against any and all losses, damages, liabilities, claims, actions, judgments, court costs and
legal or other expenses (including, without limitation, attorneys' fees and expenses) which
Beneficiary may incur as a direct or indirect consequence of the use, generation, manufacture,
storage, disposal, threatened disposal, transportation or presence of Hazardous Materials in, on,
under or about the Real Property. Trustor shall immediately pay to Beneficiary upon demand
any amounts owing under this indemnity, together with interest from the date the indebtedness
arises until paid at the Default Rate. TRUSTOR'S DUTY AND OBLIGATIONS TO DEFEND,
INDEMNIFY AND HOLD HARMLESS BENEFICIARY SHALL SURVIVE THE RELEASE,
RECONVEYANCE OR PARTIAL RECONVEYANCE OF THIS DEED OF TRUST.
5.9 Legal Effect Of Section. Trustor and Beneficiary agree that: (a) this Article 5 is
intended as Beneficiary's written request for information (and Trustor's response) concerning the
environmental condition of the real property security as required by California Code of Civil
Procedure §726.5; and (b) each provision in this Article (together with any indemnity applicable
to a breach of any such provision) with respect to the environmental condition of the real
property security is intended by Beneficiary and Trustor to be an "environmental provision" for
purposes of California Code of Civil Procedure §736, and as such it is expressly understood that
Trustor's duty to indemnify Beneficiary hereunder shall survive: (a) any judicial or non judicial
foreclosure under this Deed of Trust, or transfer of the Real Property in lieu thereof, and (b) the
release and reconveyance or cancellation of this Deed of Trust.
ARTICLE 6
MISCELLANEOUS
6.1 Amendments. This instrument cannot be waived, changed, discharged or
terminated orally, but only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, discharge or termination is sought.
6.2 Trustor Waiver of Rights. Trustor waives to the extent permitted by law, (a) the
benefit of all laws now existing or that may hereafter be enacted providing for any appraisement
before sale of any portion of the Trust Estate, (b) all rights of redemption, valuation,
appraisement, stay of execution, notice of election to mature or declare due the whole of the
secured indebtedness and marshalling in the event of foreclosure of the liens hereby created, (c)
all rights and remedies which Trustor may have or be able to assert by reason of the laws of the
State of California pertaining to the rights and remedies of sureties, (d) the right to assert any
statute of limitations as a bar to the enforcement of the lien of this Deed of Trust or to any action
brought to enforce the Note or any other obligation secured by this Deed of Trust, and (e) any
rights, legal or equitable, to require marshalling of assets or to require upon foreclosure sales in a
particular order, including any rights under California Civil Code Sections 2899 and 3433.
Beneficiary shall have the right to determine the order in which any or all of the Trust Estate
shall be subjected to the remedies provided herein. Beneficiary shall have the right to determine
the order in which any or all portions of the indebtedness secured hereby are satisfied from the
RVPUB\rBAUM%709450.1 21
E
proceeds realized upon the exercise of the remedies provided herein. Nothing contained herein
shall be deemed to be a waiver of Trustor's rights under Section 2924(c) of the California Civil
Code.
6.3 Statements by Trustor. Trustor shall, within 10 days after written notice thereof
from Beneficiary, deliver to Beneficiary a written statement, fully acknowledged, stating the
unpaid principal of and interest on the Note and any other amounts secured by this Deed of Trust
and stating whether any offset, counterclaim or defense exists against such sums and the
obligations of the Deed of Trust.
6.4 Loan Statement Fees. Trustor shall pay the amount demanded by Beneficiary or
its authorized loan servicing agent for any statement regarding the obligations secured hereby;
provided, however, that such amount may not exceed the maximum amount allowed by law at
the time request for the statement is made.
6.5 Notices. All notices and demands given under the terms hereof shall be in writing
and may be effected by personal delivery, including by any commercial courier or overnight
delivery service, or by United States registered or certified mail, return receipt requested, with all
postage and fees fully prepaid. Notices shall be effective upon receipt by the party being given
notice, as indicated by the return receipt if mailed; except that if a party has relocated without
providing the other party with its new address for service of notices, or if a party refuses delivery
of a notice upon its tender, the notice shall be effective upon the attempt to serve the notice at the
last address given for service of notices upon that party. Alternatively, notices may be served by
y facsimile transmission, in which case service shall be deemed effective only upon receipt by the
,.,.« party serving the notice of telephonic or return facsimile transmission confirmation that the party
to whom the notice is directed has received a complete and legible copy of the notice. Notices
shall be addressed as follows:
If to Trustee: First American Title Insurance Company
#1 First American Way
Santa Ana, California 92707
If to Trustor: Millennium Housing Corporation
660 Newport Center Drive, Suite 1020
Newport Beach, California 92660
Attn: George Turk
If to Beneficiary: Union Bank of California, N.A.
350 California Street, I Ith Floor
San Francisco, California 94104
Attn: Corporate Trust Department
RVPU13\FBAUM\709450.1 22
If to Authority: Independent Cities Lease Finance Authority P.O. Box 1750
Palmdale, CA 93590-1750
Attention: Program Administrator
Any address for service of notice on any party may be changed by that party serving a
notice upon the other of the new address, except that any change of address to a post office box
shall not be effective unless a street address is also specified for use in effectuating personal
service.
6.6 Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law.
6.7 Captions. The captions or headings at the beginning of each Section hereof are
for the convenience of the parties and are not a part of this Deed of Trust.
6.8 Invalidity of Certain Provisions. Every provision of this Deed of Trust is intended
to be severable. In the event any term or provision hereof is declared to be illegal, invalid or
unenforceable for any reason whatsoever by a court of competent jurisdiction, such illegality or
invalidity shall not affect the balance of the terms and provisions hereof, which terms and
provisions shall remain binding and enforceable.
6.9 Subrogation. To the extent that proceeds of the Note are used to pay any out
standing lien, charge or prior encumbrance against the Trust Estate, such proceeds have been or
t will be advanced by Beneficiary at Trustor's request and Beneficiary shall be subrogated to any
and all rights and liens held by any Owner or holder of such outstanding liens, charges and prior
encumbrances, irrespective of whether the liens, charges or encumbrances are released.
6.10 Attorneys' Fees. If the Note is not paid when due or if any Default occurs,
Trustor promises to pay all costs of enforcement and collection, including but not limited to,
reasonable attorneys' fees, whether or not such enforcement and collection includes the filing of
a lawsuit. As used herein, the terms "attorneys' fees" or "attorneys' fees and costs" shall mean
the fees and expenses of counsel to the parties hereto (including, without limitation, in-house
counsel employed by Beneficiary) which may include printing, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals and others not admitted to the bar
but performing services under the supervision of an attorney. The terms "attorneys' fees" or
"attorneys' fees and costs" shall also include, without limitation, all such fees and expenses
incurred with respect to appeals, arbitrations and bankruptcy proceedings, and whether or not
any action or proceeding is brought with respect to the matter for which said fees and expenses
were incurred.
6.11 No Merger of Lease. If both the lessor's and lessee's estate under any lease or
any portion thereof which now or hereafter constitutes a part of the Trust Estate shall at any time
become vested in one Borrower, this Deed of Trust and the lien created hereby shall not be
destroyed or terminated by application of the doctrine of merger unless Beneficiary so elects as
evidenced by recording a written declaration so stating, and, unless and until Beneficiary so
• elects, Beneficiary shall continue to have and enjoy all of the rights and privileges of Beneficiary
1ZVPU9\FBAUM\709450.1 23
• , as to the separate estates. In addition, upon the foreclosure of the lien created by this Deed of
Trust on the Trust Estate pursuant to the provisions hereof, any leases or subleases then existing
and affecting all or any portion of the Trust Estate shall not be destroyed or terminated by
application of the law of merger or as a matter of law or as a result of such foreclosure unless
Beneficiary or any purchaser at such foreclosure sale shall so elect. No act by or on behalf of
Beneficiary or any such purchaser shall constitute a termination of any lease or sublease unless
Beneficiary or such purchaser shall give written notice thereof to such tenant or subtenant.
6.12 Governing Law. This Deed of Trust shall be governed by and construed in
accordance with the laws of the State of California.
6.13 Joint and Several Obligations. Should this Deed of Trust be signed by more than
one party, all obligations herein contained shall be deemed to be the joint and several obligations
of each party executing this Deed of Trust. Any marred person signing this Deed of Trust
agrees that recourse may be had against community assets and against his or her separate
property for the satisfaction of all obligations contained herein.
6.14 Interpretation. In this Deed of Trust the singular shall include the plural and the
masculine shall include the feminine and neuter and vice versa, if the context so requires.
6.15 Reconveyance by Trustee. Upon written request of Beneficiary stating that all
sums secured hereby have been paid, and upon surrender of this Deed of Trust and the Note to
Trustee for cancellation and retention and upon payment by Trustor of Trustee's fees, Trustee
• , shall reconvey to Trustor, or to the person or persons legally entitled thereto, without warranty,
any portion of the Trust Estate then held hereunder. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in any
reconveyance may be described as "the person or persons legally entitled thereto." Such grantee
shall pay Trustee a reasonable fee and Trustee's costs incurred in so reconveying the Trust
Estate.
6.16 Counterparts. This document may be executed and acknowledged in
counterparts, all of which executed and acknowledged counterparts shall together constitute a
single document. Signature and acknowledgment pages may be detached from the counterparts
and attached to a single copy of this document to physically form one document, which may be
recorded.
6.17 Nonforeign Entity. Section 1445 of the Internal Revenue Code of 1986, as
amended (the "Code") and Sections 18805, 18815 and 26131, as applicable, of the California
Revenue and Taxation Code ("CRTC") provide that a transferee of a U.S. real property interest
must withhold tax, in the case of the Code, if the transferor is a foreign person, or if, in the case
of the CRTC, the transferor is not a California resident. To inform Beneficiary that the
withholding of tax will not be required in the event of the disposition of the Land or the
Improvements, or any portion thereof or interest therein, pursuant to the terms of this Deed of
Trust, Trustor hereby certifies, under penalty of perjury, that: (a) Trustor is not a foreign
corporation, foreign partnership, foreign trust or foreign estate, as those terms are defined in the
Code and the regulations promulgated thereunder; and (b) Trustor's U.S. employer identification
. number is 33-0880696; and (c) Trustor's principal place of business is 660 Newport Center
RVPUB\FBAUM\709450.1 24
Drive, Suite 1020, Newport Beach, California 92660. It is understood that Beneficiary may
disclose the contents of this certification to the Internal Revenue Service and the California
• Franchise Tax Board, and that any false statement contained herein could be punished by fine,
imprisonment or both. Trustor covenants and agrees to execute such further certificates, which
shall be signed under penalty of perjury, as Beneficiary shall reasonably require. The covenant
set forth herein shall survive the foreclosure of the lien of this Deed of Trust or acceptance of a
deed in lieu thereof.
6.18 Substitute Trustee. Beneficiary at any time and from time to time, by instrument
in writing, may substitute and appoint a successor Trustee (either corporate or individual) to any
Trustee named herein or previously substituted hereunder, which instrument when executed,
acknowledged, and recorded in the Official Records of the Office of the Recorder of the County
of Orange shall be conclusive proof of the proper substitution and appointment of each successor
trustee or trustees, who shall then have all the title, powers, duties and rights of the predecessor
Trustee, without the necessity of any conveyance from such predecessor. Trustee shall not be
obligated to notify any party hereto of pending sale under any other deed of trust, or, unless
brought by Trustee, or any action or proceeding in which Trustor, Beneficiary or Trustee shall be
a party.
6.19 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, TRUSTOR
AND BENEFICIARY EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENTS OR RELATING THERETO
OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THE
• r LOAN AGREEMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
6.20 Limitation on Liability. Beneficiary's recovery against Trustor shall be limited
solely to the collateral given to Beneficiary as security for Trustor's performance under the Loan
Documents. Such recovery shall not be a lien, or the basis of a claim of lien or levy or
execution, against the general assets of the Trustor. Notwithstanding the foregoing, the Trustor
and the general assets of the Trustor shall be fully liable to Beneficiary to the same extent that
Trustor would be liable absent the foregoing limitation of this paragraph for damages and loss
attributable to: (a) fraud or willful misrepresentation on the part of Trustor; (b) waste; (c) failure
of the corporation to pay any income or other taxes, assessments or other charges attributable to
Trustor which can create liens on any portion of the Land and the Improvements (to the full
extent of any such taxes, assessments or other charges); or (d) any breach by Trustor of any
covenant, representation or warranty under Article V of this Deed of Trust. hl addition, the
limitations hereof shall not be deemed to limit: (i) any right Beneficiary might otherwise have to
obtain injunctive relief against Trustor; (ii) any suit or action in connection with the preservation,
enforcement or foreclosure of the liens, mortgages, assignments and security interests now or at
any time hereafter securing the payment and performance of all obligations under this Deed of
Trust or any of the Loan Documents; or (iii) the collection of amounts which may become owing
or payable under or on account of insurance, condemnation awards or damages for other public
actions or surety bonds maintained or provided by Trustor; provided however, that the assertion
• by Beneficiary of any such right, suit, action or collection of amounts shall not result in a
monetary claim upon the general assets of Trustor except as otherwise provided herein.
RVPU13\FBAUM\709450.1 25
4 6.21 Nondiscrimination. The Trustor covenants by and for itself and its successors and
assigns, and all persons claiming under or through it, and this Deed of Trust is made and
accepted upon and subject to the condition that there shall be no discrimination against or
segregation of any person or group of persons, on account of race, color, creed, religion, sex,
marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use,
occupancy, tenure, or enjoyment of the premises nor shall the lessee himself, or any person
claiming under or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use, or
occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises described in
this Deed of Trust.
6.22. Concerning the Beneficiary. To the extent the Beneficiary hereunder is Union
Bank of California, N.A., as Indenture Trustee, or any successor thereto, all provisions of the
Indenture relating to the rights, powers, privileges and protections of the Indenture Trustee
thereunder shall apply with equal force and effect to all actions taken by the Indenture Trustee as
Beneficiary in connection with this Deed of Trust. No duties or obligations shall be imposed
upon Indenture Trustee as Beneficiary beyond those contained in the Indenture. It is understood
and acknowledged that the Indenture Trustee as Beneficiary is not required to exercise any rights
or discretion granted to it hereunder and all rights to consent, direct and approve matters granted
herein to the Beneficiary are subject to the provisions of the lndenture and the rights afforded to
the Indenture Trustee thereunder.
The foregoing provision shall be binding upon and shall obligate the Trustor and any
• '} successors or other transferees under this Deed of Trust.
TRUSTOR ACKNOWLEDGES RECEIPT OF A TRUE COPY OF THIS DEED OF
TRUST WITHOUT CHARGE.
•
TRUSTOR PLEASE NOTE: UPON THE OCCURRENCE OF A DEFAULT,
CALIFORNIA PROCEDURE PERMITS TRUSTEE TO SELL THE TRUST ESTATE AT A
SALE HELD WITHOUT SUPERVISION BY ANY COURT AFTER EXPIRATION OF A
PERIOD PRESCRIBED BY LAW. UNLESS YOU PROVIDE AN ADDRESS FOR THE
GIVING OF NOTICE, YOU MAY NOT BE ENTITLED TO NOTICE OF THE
COMMENCEMENT OF ANY SALE PROCEEDINGS. BY EXECUTION OF THIS DEED
OF TRUST, YOU CONSENT TO SUCH PROCEDURE. BENEFICIARY URGES YOU TO
GIVE PROMPT NOTICE OF ANY CHANGE IN YOUR ADDRESS SO THAT YOU MAY
RECEIVE PROMPTLY ANY NOTICE GIVEN PURSUANT TO THIS DEED OF TRUST.
RVPUB\FBAUM\709450.1 26
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust With Absolute
Assignment of Leases and Rents, Security Agreement and Fixture Filing as of the day and year
first above written.
MILLENNIUM HOUSING CORPORATION
By:
*Gge
rk
RVPUB\FBAUM\709450.1 27
STATE OF CALIFORNIA )
) ss.
COUNTY OF RIVERSIDE )
On May 30, 2006, before me, Evelyn Corselli, A NOTARY PUBLIC, personally
appeared GEORGE TURK [�] personally known to me OR ❑ proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature of Notary
[SEAL]
MM
EVELYN CORSELLI
COMM. #1623014
NOTARY PUBLIC - CALIFORNIA
RIVER31DE COUNTY
Comm. Etcpkee October 30, POOR
i
RV PUB\FBAUM1709450.1
EXHIBIT A
LEGAL DESCRIPTION OF LAND
PARCEL 3 OF PARCEL MAPS, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 62, PAGE 19 OF
PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
SAID LAND IS ALSO BEING A PORTION OF THE FOLLOWING DESCRIBED PARCELS
"A" AND "B"
PARCEL A:
BEING THOSE PORTIONS OF LOTS 60,61 AND 62 OF TRACT NO. 103, IN THE CITY OF
SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER
MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT IN THE NORTHWESTERLY LINE OF SAID LOT 61, LYING
NORTH 210 40'07" EAST 4.78 FEET FROM THE WESTERLY CORNER OF SAID LOT 61;
THENCE NORTH 89° 58' 18" EAST 564.75 FEET TO THE WESTERLY LINE OF THE
-`' LAND DESCRIBED AS PARCEL 101, IN THE DEED TO THE ORANGE COUNTY FLOOD
CONTROL DISTRICT, RECORDED JUNE 28, 1963 IN BOOK 6609, PAGE 371 OF
OFFICIAL RECORDS OF SAID COUNTY; THENCE ALONG SAID WESTERLY LINE,
SOUTH 30 04' 46" WEST 1045.00 FEET TO A POINT LYING NORTH 30 04' 46" EAST
583.39 FEET FROM THE SOUTHERLY LINE OF SAID LOT 62; THENCE SOUTH 89° 58'
18" WEST 548.34 FEET; THENCE NORTH 44° 01' 54" WEST 687.07 FEET TO THE
NORTHWESTERLY LINE OF SAID LOT 62; THENCE ALONG SAID LAST MENTIONED
NORTHWESTERLY LINE, NORTH 42° 14' 44" EAST 743.84 FEET TO THE
NORTHEASTERLY LINE OF SAID LOT 62; THENCE ALONG SAID NORTHEASTERLY
LINE, SOUTH 700 07'46" EAST 16.40 FEET TO SAID NORTHWESTERLY LINE OF LOT
61; THENCE ALONG SAID LAST MENTIONED NORTHWESTERLY LINE, NORTH 211
40' 07" EAST 4.78 FEET TO THE POINT OF BEGINNING.
PARCEL B:
BEING THOSE PORTIONS OF LOTS 60 AND 62 OF TRACT NO. 103, IN THE CITY OF
SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER
MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE WESTERLY LINE OF THE LAND
DESCRIBED AS PARCEL 101, IN THE DEED TO ORANGE COUNTY FLOOD CONTROL
RVPUB\FBAUM\709450.1 A-1
DISTRICT, RECORDED JUNE 28, 1963 IN BOOK 6609, PAGE 371 OF OFFICIAL
RECORDS OF SAID COUNTY, WITH THE SOUTHERLY LINE OF SAID LOT 62;
THENCE ALONG SAID WESTERLY LINE, NORTH 3° 04' 46" EAST 583.39 FEET;
THENCE SOUTH 890 58' 18" WEST 548.34 FEET; THENCE NORTH 44° 01' 54" WEST
687.07 FEET TO THE NORTHWESTERLY LINE OF SAID LOT 62; THENCE ALONG
SAID NORTHWESTERLY LINE, SOUTH 42° 14'44" WEST 290.73 FEET AND SOUTH 36-
58' 16" WEST 302.19 FEET TO THE SOUTHWESTERLY LINE OF SAID LOT 62; THENCE
ALONG SAID SOUTHWESTERLY LINE, SOUTH 440 01'54" EAST 862.34 FEET TO SAID
SOUTHERLY LINE; THENCE ALONG SAID SOUTHERLY LINE, NORTH 89° 58' 18"
EAST 772.38 FEET TO THE POINT OF BEGINNING.
APN: 121-171-29 and 121-171-30
RVPUB\FBAUM\709450.1 A-2
• EXHIBIT B
1]
SCHEDULE OF LEASES
None. All tenants are month-to-month agreements.
RVPUB\FBAUM\709450.1 B-1
EXHIBIT C
SCHEDULE OF COACHES OWNED BY TRUSTOR
Space No.
101 rental will be sold eventually
153 rental will be sold eventually
76 Employee Home
205 Employee Home
RVPUB\FBAUM\709450.1 C-1
Coach License No.
261472XX/XXU
S9143X/U
GW20CALSC8931A/B
S9769XX/XXU
BEST BEST & KRIEGER LLP
A CALIFORNIA WMRED WBILRY PARTN£RSMIP INCLUDING PROFE5510NAL CORPORAMON5
INDIAN WELLS
LAWYERS
SACRAMENTO
(760) 568-261 1
3750 UNIVERSITY AVENUE
(91 5) 325-4000
-
POST OFFICE BOX 1028
-
IRVINE
RIVERSIDE, CALIFORNIA 92502-1028
SAN DIEGO
(949) 263-2500
(951) 686-1450
(519) 525-1300
-
(95 1) 586-3083 FAX
-
ONTARIO
BBKLAW,COM
WALNUT CREEK
(909) 989-8584
(925) 977-3300
August 8, 2006
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attention: Cindy Russell
Administrative Services Director
Re: $29,660,000 Independent Cities Lease Finance Authority Mobile Home
Park Revenue Bonds (San Juan Mobile Estates) Series 2006A and
$9,765,000 Independent Cities Lease Finance Authority Mobile Home
Park Subordinate Revenue Bonds (San Juan Mobile Estates) Series 2006B
and $485,000 Independent Cities Lease Finance Authority Mobile Home
Park Subordinate Revenue Bonds (San Juan Mobile Estates) Taxable
Series 2006C
Dear Cindy:
Enclosed for your files please find originals of the following documents signed by the
City of San Juan Capistrano:
Associate Membership Agreement between Independent Cities Lease Finance
Authority and the City of San Juan Capistrano
Supplemental Regulatory Agreement and Declaration of Restrictive Covenants
Administration and Oversight Agreement.
Also enclosed are copies of following documents:
- Indenture of Trust
- Loan Agreement
- Regulatory Agreement.
- Deed of Trust
Very truly yours,
u'-'� /�aet4n
Francis J. Baum
of Best Best & Krieger LLP
encls.
RVPUBTBAUW718253.1
5/2/2006
E3
AGENDA REPORT
TO: Dave Adams, City Manager
FROM: Cindy Russell, Administrative Services Director
SUBJECT: Consideration of an Associate Membership Agreement with the
Independent Cities Lease Finance Authority (ICLFA) and the Issuance of
Mobile Home Park Revenue Bonds by ICLFA to Finance the San Juan
Mobile Estates Project (Millennium Housing Corporation)
RECOMMENDATION:
By Motion,
1. Adopt a resolution approving an Associate Membership Agreement with the
Independent Cities Lease Finance Authority, a Supplemental Regulatory
Agreement and an Administration and Oversight Agreement with respect to the
San Juan Mobile Estates acquisition, and
2. Adopt a resolution approving the Issuance of Mobile Home Park Revenue Bonds
by the Independent Cities Lease Finance Authority for the San Juan Mobile
Estates acquisition.
SITUATION:
Summary and Recommendation:
The residents of the San Juan Mobile Home Estates Mobile Home Park (the "Park
Residents") have been working with Millennium Housing Corporation (Millennium), a
California non-profit public benefit corporation to acquire the park from the current
private owner. The Park Residents have determined that ownership by Millennium as
opposed to a private owner will allow them among other things to have more control
over the operations and management of their park. Additionally, Millennium has agreed
that the City's Rent Control Ordinance would be the governing guideline for rent
increases in this park for the term of the regulatory agreement which is 35 years.
The Park Residents and Millennium have requested the City of San Juan Capistrano
join a state-wide joint powers agency, the Independent Cities Lease Finance Authority
(ICLFA) so that financing through the use of tax-exempt revenue bonds can be
accomplished. These bonds would be issued by the ICLFA and the City would have no
financial obligations or risk relating to the financing. Also, this financing would not have
any affect on the City's future financings or ratings. This arrangement is similar to the
Agenda Report
Page 2 May 2, 2006
arrangement approved for the construction of the Seasons Apartment Complex by
Kaufman & Broad in 1995.
Staff recommends the City Council adopt a resolution approving an Associate
Membership Agreement with the ICLFA, a Supplemental Regulatory Agreement and an
Administration and Oversight Agreement with respect to the San Juan Mobile Estates
acquisition and adopt a resolution approving the Issuance of Mobile Home Park
Revenue Bonds by the ICLFA for the San Juan Mobile Estates acquisition.
Background:
In March 2005, George Turk of Millennium and his associate Pam Newcomb of Kinsell,
Newcomb & deDios, Inc. (KN&D) submitted a proposal to City staff regarding the
acquisition of San Juan Mobile Estates Mobile Home Park (SJME) by Millennium.
Staff met with Millennium on May 10, 2005 to review their proposal. Their proposal is to
acquire the park from the private property owner and manage the park through the non-
profit corporation through the issuance of tax-exempt bonds. The initial proposal
requested financial participation (up to $2 million of housing set-aside funds) by the
Community Redevelopment Agency (the "Agency") along with the City facilitating a tax-
exempt financing and providing a letter of condemnation to the property owner for tax
purposes. Since the project did not provide any new affordable housing stock in our
community, it did not provide any benefit to the community as a whole. Therefore, staff
told Millennium that the neither the City nor the Agency were interested in participating
financially in the project. Even though the Agency would not be participating financially,
Millennium still requested that the City facilitate a tax-exempt financing and provide the
letter of condemnation. In order to consider this request, City staff wanted to assure
that the project was financially sound and that a majority of the Park Residents
supported the acquisition.
In November 2005, the City was contacted the Park Residents representative board
(the "Board") requesting a meeting to discuss the acquisition. At that meeting,
Millennium and the Board indicated that with the use of tax-exempt financing and a
letter of condemnation to the property owner they would be able to put the project
together. They requested the City take the necessary steps of joining ICLFA and
authorizing the issuance of tax-exempt financing through ICLFA to facilitate their
project.
Although the City would have no financial obligation, it was agreed that a pro forma of
the proposed project would be prepared and reviewed by the City's Financial Advisor,
Fieldman, Rolapp & Associates (FRA) to determine if the project was financially viable
over the long-term. FRA completed its evaluation and found the project to be financially
viable, however City staff and FRA wanted to be sure that the Park Residents had
sufficient information regarding the deal points prior to making their final decision. City
staff and FRA met with the Board and Millennium to flush out a number of questions
and issues concerning the project. Upon completion of these meetings, the City notified
RESOLUTION NO. 06-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN
CAPISTRANO, CALIFORNIA, APPROVING AN ASSOCIATE
MEMBERSHIP AGREEMENT WITH THE INDEPENDENT CITIES LEASE
FINANCE AUTHORITY, A SUPPLEMENTAL REGULATORY AGREEMENT
AND AN ADMINISTRATION AND OVERSIGHT AGREEMENT WITH
RESPECT TO THE SAN JUAN MOBILE ESTATES
WHEREAS, certain cities of the State of California (collectively, the "Members")
have entered into a Joint Powers Agreement Creating the Independent Cities Lease
Finance Authority (the "Joint Powers Agreement'), establishing the Independent Cities
Lease Finance Authority (the "Authority") and prescribing its purposes and powers, and
providing, among other things, for associate members of the Authority (an "Associate
Member');
WHEREAS, the Authority has been formed for the purpose, among others, of
assisting its Members and Associate Members in the raising of capital to finance the
capital improvement needs of Local Agencies (as defined in the Joint Powers Agreement),
to provide for home mortgage financing with respect to those Members or Associate
Members that are either a city or a county of the State of California, to provide financing in
connection with the improvement, construction, acquisition, creation, rehabilitation and
preservation of affordable housing within the boundaries of the Members and Associate
Members, and to provide financing in accordance with the provisions of applicable law in
connection with other projects and programs that are in the public interest and which
benefit Members and Associate Members including making loans to tax-exempt
organizations from the proceeds of mortgage revenue bonds to finance the acquisition of
multi -family rental housing, including mobile home parks, under the provisions of Chapter
8 of Part 5 of Division 31 (commencing with Section 52100) of the Health and Safety
Code;
WHEREAS, the City of San Juan Capistrano (the "City") desires to become an
Associate Member of the Authority as provided in the Associate Membership Agreement,
in the form on file with the City Clerk; and
WHEREAS, the Authority proposes to issue its Mobile Home Park Revenue Bonds
2006 Series A, 2006 Series B and 2006 Taxable Series C (the "Bonds"); and
WHEREAS, the proceeds of the Bonds, if any are issued, will be loaned to
Millennium Housing Corporation, a California nonprofit corporation (the "Owner") for the
purpose of financing the acquisition and improvement of a 312 -space mobile home park
known as the San Juan Mobile Estates located at 32302 Alipaz Street in the City (the
"Project"); and
ATTACHMENT
WHEREAS, inconsideration of the Cityjoining the Authority, the Owner has agreed
to enter into a Supplemental Regulatory Agreement and Declaration of Restrictive
Covenants with the City (the "Supplemental Regulatory Agreement") providing for certain
additional affordable housing requirements for the Project, which shall be administered
pursuant to an Administration and Oversight Agreement, said Agreements being in the
forms on file with the City Clerk;
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San
Juan Capistrano does hereby:
Section 1. Approval of an Associate Membership Agreement (Exhibit A). This City
Council hereby approves the City's membership in the Authority as an Associate Member
and authorizes the Mayor or the Mayor Pro Tem to execute and the City Clerk to attest the
Associate Membership Agreement, in substantially the form on file with the City Clerk,
pursuant to which the City shall become an Associate Member of the Authority. The
Mayor, Mayor Pro Tem, City Manager, City Clerk and any other officers of the City, are
hereby authorized and directed to take all actions and do all things necessary or desirable
hereunder with respect to the Associate Membership Agreement, including but not limited
to, the execution and delivery of any an all agreements, certificates, instruments and other
documents which they, or any of them, may deem necessary or desirable and not
inconsistent with the purposes of this Resolution.
Section 2. Approval of the Supplemental Regulatory Agreement (Exhibit B) and
Administration and Oversight Agreement (Exhibit C). The form of the Supplemental
Regulatory Agreement and Declaration of Restrictive Covenants (the "Supplemental
Regulatory Agreement") by and between the City and the Owner presented to this meeting
and imposing certain restrictions in the Project is hereby approved and any of the Mayor,
Mayor Pro Tem or City Manager (each an "Authorized Officer') are, and each of them is,
hereby authorized and directed, for and in the name and on behalf of the City, to execute
the Supplemental Regulatory Agreement in substantially the form hereby approved, with
such additions or changes therein as the Authorized Officer executing the same may
approve, such approval to be conclusively evidenced by the execution and delivery
thereof. Any of the Authorized Officers are hereby authorized and directed to cause the
Supplemental Regulatory Agreement to be recorded in the real estate records of the
County of Orange on a subordinate basis to the Regulatory Agreement and Deed of Trust
relating to the Bonds. Any of the Authorized Officers are further authorized to and
directed, for and in the name and on behalf of the City, to execute the Administration and
Oversight Agreement by and among the City, the Authority, the Owner and the Oversight
Agent named therein and relating to the administration of the Supplemental Regulatory
Agreement and the Regulatory Agreement.
Section 3. Effective Date. This Resolution shall take effect from and after the date
of its passage and adoption.
PASSED, APPROVED, AND ADOPTED this 2nd day of May 2006.
DAVID M. SWERDLIN, MAYOR
ATTEST:
MARGARET R. MONAHAN, CITY CLERK
ASSOCIATE MEMBERSHIP AGREEMENT
by and between the
INDEPENDENT CITIES LEASE FINANCE AUTHORITY
and the
CITY OF SAN JUAN CAPISTRANO
THIS ASSOCIATE MEMBERSHIP AGREEMENT, dated as of May 1, 2006, by and
between THE INDEPENDENT CITIES LEASE FINANCE AUTHORITY (the "Authority") and
the CITY OF SAN JUAN CAPISTRANO, duly organized and existing under the laws of the
State of California (the "City");
WITNESSETH:
WHEREAS, certain cities of the State of California (collectively, the "Members") have
entered into a Joint Powers Agreement Creating the Independent Cities Lease Finance Authority
(the "Agreement'), establishing the Authority and prescribing its purposes and powers, and
providing, among other things, for associate members of the Authority (an "Associate
Member");
WHEREAS, the Authority has been formed for the purpose, among others, of assisting its
Members and Associate Members in the raising of capital to finance the capital improvement
needs of Local Agencies (as defined in the Joint Powers Agreement), to provide for home
mortgage financing with respect to those Members or Associate Members that are either a city or
a county of the State of California, to provide financing in connection with the improvement,
construction, acquisition, creation, rehabilitation and preservation of affordable housing within
the boundaties of the Members and Associate Members, and to provide financing in accordance
with the provisions of applicable law in connection with other projects and programs that are in
the public interest and which benefit Members and Associate Members including making loans
to tax-exempt organizations from the proceeds of mortgage revenue bonds to finance the
acquisition of multi -family rental housing, including mobilehome parks, under the provisions of
Chapter 8 of Part 5 of Division 31 (commencing with Section 52100) of the Health and Safety
Code (the "Nonprofit Financing Law");
WHEREAS, the City desires to become an Associate Member of the Authority;
WHEREAS, the Board of Directors of the Authority has determined that the City should
become an Associate Member of the Authority;
NOW, THEREFORE, in consideration of the above premises and of the mutual promises
herein contained, the Authority and the City do hereby agree as follows:
Section I. Associate Member Status. The City is hereby made an Associate Member of
the Authority for all purposes of the Agreement and the Bylaws of the Authority, the provisions
RVPUBT13AUvn710435.1 1
EXHIBIT A
of which are hereby incorporated herein by reference. From and after the date of execution and
delivery of this Associate Membership Agreement by the City and the Authority, the City shall
be and remain an Associate Member of the Authority.
Section 2. Restrictions and Rights of the City. The City shall not have the right, as an
Associate Member of the Authority, to vote on any action taken by the Board of Directors or by
the Authority. In addition, no officer, employee or representative of the City shall have any right
to become an officer or director of the Authority.
Section 3. No Obligations of the City. The debts, liabilities and obligations of the
Authority shall not be the debts, liabilities and obligations of the City.
Section 4. Indemnification by Owner. The Authority shall ensure that the legal
documents relating to any bonds issued to finance projects within the jurisdiction of the City
shall provide that the owner of any such project shall indemnify, hold harmless and defend the
City and each of its officers, officials, employees and agents from any and all loss, liability,
fines, penalties, forfeitures, costs, expenses and damages (whether imposed by statute, in
contract, tort or strict liability) incurred by the City and from any and all claims, demands and
actions in law or equity (including attorney's fees and litigation expenses) arising or alleged to
have arisen directly or indirectly out of performance by the City of this Agreement.
Section 5. Execution of the Agreement. Execution of this Associate Membership
Agreement shall satisfy the requirements of Article 27 of the Agreement and Article XI of the
Bylaws of the Authority for participation by the City in all programs and other undertakings of
the Authority, including, without limitation, any Home Mortgage Financing Program (as defined
in the Agreement), any financing under the Nonprofit Financing Law, any undertaking to finance
the acquisition, construction, installation and/or equipping of public capital improvements, and
any other financing program.
RVPURTBAUM1710435.1 2
IN WITNESS WHEREOF, the parties hereto have caused this Associate Membership
Agreement to be executed and attested by their proper officers thereunto duly authorized, on the
day and year fust set forth above.
INDEPENDENT CITIES LEASE FINANCE
AUTHORITY
President
Attest:
Secretary
CITY OF SAN JUAN CAPISTRANO
M
Attest:
City Clerk
0XV98 31W-YANb&IP_k7111
Mayor
RECORDING REQUESTED BY AND )
WHEN RECORDED RETURN TO: )
BEST BEST & KRIEGER LLP )
3750 University Avenue, 3d Floor )
Riverside, CA 92501 )
Attention: Francis J. Baum, Esq. )
1
[Space above for Recorder's use]
SUPPLEMENTAL
REGULATORY AGREEMENT
AND DECLARATION OF RESTRICTIVE COVENANTS
By and Between the
CITY OF SAN JUAN CAPISTRANO
and
MILLENNIUM HOUSING CORPORATION,
as Owner
Dated as of 1, 2006
EXHIBIT B
RVPUBTRAUNC708986.1
TABLE OF CONTENTS
Page
Section 1.
Definitions and Interpretation.................................................................... 1
Section 2.
Membership in Authority; Rental Assistance Fund ...................................
3
Section 3.
Project Requirements.................................................................................
4
Section 3A.
Property Management and Maintenance...................................................
5
Section 4.
Qualified Residents....................................................................................
6
Section 5.
Repair and Replacement Fund...................................................................
9
Section 6.
Other Covenants.........................................................................................
9
Section7.
Indemnification.......................................................................................... 9
Section 8.
Consideration...........................................................................................
10
Section9.
Reliance....................................................................................................
10
Section 10.
Sale or Transfer of the Project; Option to Purchase ................................
10
Section11.
Term.........................................................................................................
11
Section 12.
Covenants to Run With the Land.............................................................
12
Section 13.
Burden and Benefit..................................................................................
12
Section 14.
Uniformity; Common Plan ......................................................................
12
Section 15.
Enforcement.............................................................................................
12
Section 16.
Recording and Filing................................................................................
13
Section 17.
Payment of Fees.......................................................................................
13
Section 1.8.
Governing Law........................................................................................
13
Section19.
Amendments............................................................................................
13
Section20.
Notice.......................................................................................................13
Section 21.
Severability..............................................................................................
14
Section 22.
Multiple Counterparts..............................................................................
14
Section 23.
Subordination...........................................................................................
14
EXHIBIT A - Legal Description................................................................................................. A-1
EXHIBIT B — Rental Control Ordinance.....................................................................................B-1
RVPUBT13AUM708986.1 -i_
THIS SUPPLEMENTAL REGULATORY AGREEMENT AND DECLARATION OF
RESTRICTIVE COVENANTS (the "Regulatory Agreement"), made and entered into as of
1, 2006, by and between the City of San Juan Capistrano, a public body, corporate
and politic (the "City"), and Millennium Housing Corporation, a California nonprofit
corporation, as the owner of the property described in Exhibit A attached hereto (the "Owner"):
Cra 11►i113.10M
WHEREAS, the Owner is acquiring the property described on Exhibit A attached hereto
and the improvements located thereon, consisting of a 312 -space mobile home park known as
"San Juan Mobile Estates" (the "Project"), with a loan to it from the Independent Cities Lease
Finance Authority (the "Authority") from the proceeds of the Authority's Mobile Home Park
Revenue Bonds, Series A, Series B and Taxable Series C (collectively, the "Authority Bonds");
and
WHEREAS, in connection with the issuance of the Authority Bonds, the Owner, the
Authority and Union Bank of California, N.A., as trustee for the Authority Bonds (the "Authority
Bond Trustee") have entered into a Regulatory Agreement and Declaration of Restrictive
Covenants dated as of 1, 2006 (the "Authority Regulatory Agreement") which is
being recorded in the real estate records of Orange County as a covenant running with the real
property described in Exhibit A (the "Property"); and
WHLREAS, in consideration of the City joining the Authority as an Associate Member
in order to enable the Authority to provide financing to the Owner for the Project, the Owner and
the City are entering into this Supplemental Regulatory Agreement and wish it to be recorded as
a covenant running with the Property on a subordinate basis to the Authority Regulatory
Agreement and the Deed of Trust referred to herein;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth herein, and other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the City and the Owner hereby agree as follows:
Section 1. Definitions and Interpretation. The following terms shall have the
respective meanings assigned to them in this Section 1 unless the context in which they are used
clearly requires otherwise:
"Adjusted Income" — The total anticipated annual income of all persons in a household,
as calculated in accordance with 25 California Code of Regulations Section 6914 or pursuant to a
successor State housing program that utilizes a reasonably similar method of calculation of
adjusted income. In the event that no such program exists, the City shall provide the Owner with
a reasonably similar method of calculation of adjusted income as provided in said Section 6914.
"Administration Agreement'- The Administration and Oversight Agreement, dated as of
_ 1, 2006, by and among the Authority, the City, the Owner and the Oversight Agent.
"Area" - The Primary Metropolitan Statistical Area in which the Project is located.
"Authority" - The Independent Cities Lease Finance Authority.
RVPUBTBAUM1708986.1
"Authority Bonds" - Collectively, the Authority's Mobile Home Park Revenue Bonds
(San Juan Mobile Estates) Series 2006A, Mobile Home Park Subordinate Revenue Bonds (San
Juan Mobile Estates) Series 2006B and Mobile Home Park Subordinate Revenue Bonds (San
Juan Mobile Estates) Taxable Series 2006C issued pursuant to an Indenture of Trust between the
Authority and the Authority Bond Trustee and dated as of 1, 2006.
"Authority Bond Trustee" - Union Bank of California, N.A., as trustee for the Authority
Bonds.
"Certificate of Continuing Program Compliance" - The certificate with respect to the
Project to be filed by the Owner with the Authority, the City, the Oversight Agent and the
Authority Bond Trustee which shall be substantially in the form attached to the Authority
Regulatory Agreement as Exhibit C.
"City" - The City of San Juan Capistrano.
"County" - The County of Orange.
"Deed of Trust" - The Deed of Trust defined in the Indenture.
"Income Certification" - The Income Computation and Certification attached to the
Authority Regulatory Agreement as Exhibit B.
"Lower Income Residents" - An individual or family household that, on the later of: (i)
the date of this Agreement, or (ii) the date of the Lower Income Resident's initial occupancy of
the Park, has an Adjusted Income that does not exceed the qualifying limits for lower income
households, adjusted for actual household size, as established and amended from time to time
pursuant to Section 8 for the United States Housing Act of 1937, and as published by the State of
California Department of Housing and Community Development.
"Lower Income Spaces" - The spaces in the Project designated for occupancy by Lower
Income Residents pursuant to Section 4(a) of this Supplemental Regulatory Agreement.
"Median Income for the Area" - The median gross yearly income adjusted for household
size for the Area, as published from time to time by the State. In the event that such income
determinations are no longer published, or are not updated for a period of at least eighteen (18)
months, the City shall provide the Owner with other income determinations which are reasonably
similar with respect to methods of calculation to those previously published by the State.
"Oversight Agent" - the Oversight Agent appointed under the Administration Agreement,
which initially shall be Wolf & Company Inc.
"Project Restriction Period" - The period ending 35 years from the execution date of this
Supplemental Regulatory Agreement.
"Qualified Residents" - means Very Low Income Residents and Lower Income
Residents.
"Qualified Space" - a Very Low Income Space or a Lower Income Space.
RVPUBTRAUNA708986.1 2
"Rental Assistance Fund" - The fund by that name established pursuant to the Indenture
and to be administered pursuant to Section 2(b) hereof.
"Space" - A mobile home space within the Project upon which a mobile home may be
placed
"Very Low Income Residents" - Individuals or families with an Adjusted Income which
does not exceed the qualifying limits for very low income households, adjusted for actual
household size, as established and amended from time to time pursuant to Section 8 of the
United States Housing Act of 1937, and as published by the State of California Department of
Housing and Community Development.
"Very Low Income Spaces" - The Spaces in the Project designated for occupancy by
Very Low Income Residents pursuant to Section 4(a) of this Supplemental Regulatory
Agreement.
Such terms as are not defined herein shall have the meanings assigned to them in the Indenture.
Unless the context clearly requires otherwise, as used in this Supplemental Regulatory
Agreement, words of the masculine, feminine or neuter gender shall be construed to include each
other gender when appropriate and words of the singular number shall be construed to include
the plural number, and vice versa, when appropriate. This Supplemental Regulatory Agreement
and all the terms and provisions hereof shall be construed to effectuate the purposes set forth
herein and to sustain the validity hereof. The defined terms used in the preamble and recitals of
this Supplemental Regulatory Agreement have been included for convenience of reference only,
and the meaning, construction and interpretation of all defined terms shall be determined by
reference to this Section 1 notwithstanding any contrary definition in the preamble or recitals
hereof. The titles and headings of the sections of this Supplemental Regulatory Agreement have
been inserted for convenience of reference only, and are not to be considered a part hereof and
shall not in any way modify or restrict any of the terms or provisions hereof or be considered or
given any effect in construing this Supplemental Regulatory Agreement or any provisions hereof
or in ascertaining intent, if any question of intent shall arise.
Section 2. Membership in Authority; Rental Assistance Fund.
(a) City Membership in Authority. In consideration of the Borrower entering into
this Supplemental Regulatory Agreement, the City has agreed to become an Associate Member
of the Authority in order to enable the Authority to provide financing to the Owner for the
Project.
(b) Rental Assistance Fund. (i) The Owner shall establish with the Authority Bond
Trustee the Rental Assistance Fund, which shall be held by the Authority Bond Trustee pursuant
to Section 5.18 of the Indenture. After initial funding of the Rental Assistance Fund, the Owner
shall thereafter fund additional deposits to the Rental Assistance Fund from moneys in the
Surplus fund under the Indenture so as to maintain sufficient moneys in the Rental Assistance
Fund to meet the Owner's obligations under this Section 2(b).
(ii) The Owner is authorized to make monthly withdrawals and utilize moneys in the
Rental Assistance Fund to provide a subsidy for rental payments to be made by tenants in the
Project in the manner and in the amounts set forth as follows:
RVPU13\FBAUN1\708986.1
(a) Upon close of escrow ("Close of Escrow"), initial space rent for each
mobilehome space in the Project occupied by a resident at that time will be $805 per
month (the "Rent Cap"). The Rent Cap for residents that do not currently rent space in
the Project will be adjusted annually after the Close of Escrow to the rent permitted under
the Rent Control Ordinance of the City of San Juan Capistrano (the "Rent Control
Ordinance"). The Rent Cap for residents that currently rent space in the Project or rent
space in the Project within seven days of the Close of Escrow ("Current Residents") shall
remain at $805 per month until the second anniversary of the Close of Escrow, and shall
thereafter be adjusted annually to the rent permitted under the Rent Control Ordinance
(said amount, as adjusted from time to time, being referred to herein as the "Space
Rent").
(b) Notwithstanding the Space Rent set forth in (a) above, every Current
Resident will pay only that amount permitted as rent under the Rent Control Ordinance
and any difference will be provided as assistance from the Rental Assistance Fund such
that the total of the rent actually paid by such Current Resident, and the amount paid as
rental assistance will equal the Space Rent. This rental subsidy for Current Residents
will continue to be paid from the Rental Assistance Fund as long as the Current Resident
resides in the Project.
(c) All rental assistance will be contingent upon the Current Resident
applicant's compliance with park rules, including the requirement to provide the Annual
Income Certification needed for the Owner's compliance with the bond documents;
failure to comply with park rules or the annual certification requirement, after written
notice and the expiration of a reasonable cure period, may result in a suspension of the
rental assistance, such suspension to continue until the Current Resident is again in
compliance.
(d) The Owner shall not seek to evict Current Residents who, while otherwise
complying with park rules, cannot pay the subsidized rents; in such cases, the Owner
shall use park surplus funds or the Rental Assistance Fund to reasonably further
subsidize or defer a portion of the rent, depending upon individual circumstances, but the
Owner shall not be obligated to subsidize or defer sums in excess of the amount that
would reduce the rent payable by a Current Resident below the rent that would be
payable by that Current Resident under the Rent Control Ordinance had the Owner never
purchased the Project. Owner shall also assist any Current Resident brought to the
Owner's attention by the City, to the extent such assistance will not prevent the Owner
from meeting its other obligations under its various bond agreements.
Section 3. Project Requirements. The Owner hereby represents, as of the date
hereof, and covenants, warrants and agrees as follows:
(a) The Project is being owned and operated for the purpose of providing residential
rental housing, consisting of one mobile home Space for each household, together with related
facilities.
(b) All of the mobile homes in the Project will contain separate facilities for living,
sleeping, eating, cooking and sanitation, including a sleeping area, bathing and sanitation
facilities and cooking facilities equipped with a cooking range, refrigerator and sink.
RVPUBTBAUW708986.1 4
(c) All of the Spaces will be available for rental on a continuous basis to members of
the general public, and the Owner will not give preference to any particular class or group in
renting the Spaces in the Project, except to the extent that Spaces are required to be leased or
rented to Qualified Residents.
(d) The Project comprises a single geographically and functionally integrated project
for residential rental property, as evidenced by the ownership, management, accounting and
operation of the Project.
(e) There shall be no discrimination against or segregation of any person or group of
persons on account of race, color, religion, age, sex, marital status, ancestry, national origin,
source of income (e.g. AFDC or SSI) or disability in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Project nor shall the transferee or any person claiming
under or through the transferee, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees of the Project.
(f) The Very Low Income Spaces and the Lower Income Spaces shall be
intermingled with, and shall be of comparable quality to, all other Spaces in the Project. Tenants
in all Spaces shall have equal access to and enjoyment of all common facilities of the Project.
(g) In the aggregate, no more than two persons per bedroom, plus one person shall
occupy any Space in the Project. For example, with respect to a two bedroom mobilehome,
maximum occupancy shall be 5 persons.
(h) The Owner will accept as tenants, on the same basis as all other prospective
tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the
existing housing program under Section 8 of the United Stated Housing Act, or its successor.
The Owner shall not apply selection criteria to Section 8 certificate or voucher holders that is
more burdensome than criteria applied to all other prospective tenants, nor shall the Owner apply
or permit the application of management policies or lease provisions with respect to the Project
which have the effect of precluding occupancy of Spaces by such prospective tenants.
(i) The Owner agrees to honor all existing lease agreements in effect on the date of
the Agreement, including any provisions contained therein with respect to rent adjustments, or if
requested by a tenant who is a party to such a lease agreement, to replace such lease agreement
with a month-to-month lease arrangement, subject to the Rent Control Ordinance.
Section 3A. Property Management and Maintenance. The following provisions
shall apply during the term of this Supplemental Regulatory Agreement.
(a) Management Responsibilities. The Owner is responsible for all management
functions with respect to the Project including without limitation the selection of tenants,
certification and recertification of household size and income, evictions, collection of rents and
deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital
items, and security. The City shall not have responsibility over management of the Project. The
Owner may delegate its duties under this Section 3A to a property management company. A
resident manager shall also be required. In no instance shall the Owner delegate or forego its
responsibility to manage and operate the Project in the manner set forth in this Supplemental
Regulatory Agreement and the Loan Agreement.
RVPUBIFBAUM 708986.1 5
(b) Management and Operation of Project. The Owner acknowledges that there
exists a Residents Association for the Project and a governing board thereof (the "Resident
Association Board"). The Owner agrees that the Resident Association Board may provide tenant
comment and input to the Owner in the management and operation of the Project. The Owner or
its representative or agent agrees to meet with any such Resident Association Board at least
twice a year, or at such other frequency as agreed by the Resident Association Board and the
Owner, to receive comments and recommendations with respect to Project operation and
management. The Owner further agrees to provide regular reports (at least quarterly, or at such
other intervals as agreed to by the Owner and the Resident Association Board) relating to the
operation of the Project to the Resident Association Board. While the Resident Association
Board shall have no decision-making authority with respect to the management and operation of
the Project, the Owner agrees to use its best efforts to implement recommendations of the
Resident Association Board that can reasonably be implemented by the Owner and that will not
cause the Owner, in its reasonable judgment, to be unable to perform its obligations under this
Agreement, the Authority Regulatory Agreement, the Loan Agreement and the Deed of Trust.
The Owner further agrees that it shall not refuse any good -faith request by the Resident
Association Board for the addition, deletion or amendment of a Project rule or regulation absent
a good -faith, business reason for doing so. The Owner may request all residents of the Project to
vote on any such addition, deletion or amendment. The Owner further agrees to review and take
such action as it determines to be appropriate with respect to any documented complaints about
Project management presented to it by the Resident Association Board.
(c) Property Maintenance. The Owner agrees, for the entire Term of this
Supplemental Regulatory Agreement, to maintain all common area interior and exterior
improvements and common buildings on the Project (exclusive of the mobile homes and tenant
spaces), including landscaping and common buildings on the Project in good condition and
repair (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws,
rules, ordinances, orders and regulations of all federal, state, county, municipal, and other
governmental agencies and bodies having or claiming jurisdiction and all their respective
departments, bureaus, and officials.
The City places prime importance on quality maintenance to ensure that all City -assisted
affordable housing projects within the City are not allowed to deteriorate due to below-average
maintenance.
Section 4. Qualified Residents. The Owner hereby represents, as of the date hereof,
and warrants, covenants and agrees as follows:
(a) During the Project Requirement Period (a) not less than twenty percent (20%) of
the Spaces in the Project shall be designated as Very Low Income Spaces and shall be
continuously occupied by Very Low Income; and (b) not less than thirty percent (30%) of the
Spaces in the Project shall be designated as Lower Income Spaces and shall be continuously
occupied by Lower Income Residents. The monthly rent charged for one-half of the Very Low
Income Spaces (i.e., 10% of the Spaces in the Project) shall be not greater than as follows:
(A) where a Very Low Income Resident is both the registered and legal owner
of the mobile home and is not making mortgage payments for the purchase of that mobile
home, the total rental charge for occupancy of the Space (excluding a reasonable
allowance for other related housing costs determined at the time of acquisition of the
RVPU13\PBAUW08986.1 6
Project by the Owner and excluding any supplemental rental assistance from the State,
the federal government, or any other public agency to the Very Low Income Resident, on
behalf of the Space and the mobile home) shall not exceed one -twelfth of 30 percent of
50 percent of Median Income for the Area, adjusted for household size in the manner set
forth below.
(B) where a Very Low Income Resident is the registered owner of the mobile
home and is making mortgage payments for the purchase of that mobile home, the total
rental charge for occupancy of the Space (excluding any charges for utilities and storage
and excluding any supplemental rental assistance from the State, the federal government,
or any other public agency to the Very Low Income Resident, or on behalf of the Space
and mobile home), shall not exceed one -twelfth of 15 percent of 50 percent, of Median
Income for the Area, as adjusted for household size in the manner set forth below.
(C) where a Very Low Income Resident rents both the mobile home and the
Space occupied by the mobile home, the total rental payments paid by the Very Low
Income Resident on the mobile home and the Space occupied by the mobile home
(excluding any supplemental rental assistance from the State, the federal government, or
any other public agency to that Very Low Resident or on behalf of that Space and mobile
home) shall not exceed one -twelfth of 30 percent of 50 percent, of Median Income as
established by the U.S. Department of Housing and Urban Development for the Area
adjusted for household size in the manner set forth below.
In adjusting rent for household size, it shall he assumed that two persons will
occupy a single -wide mobilehome and three persons will occupy a multisecfional
mobilehome; provided that if the multisectional mobilehome has three or more bedrooms,
then it shall be assumed that four persons shall occupy a three-bedroom unit and five
persons will occupy a four-bedroom unit.
(b) In the event a recertification of the income of a Very Low Income Resident or a
Lower Income Resident, as applicable, in accordance with Section 4(d) below demonstrates that
such tenant no longer qualifies as a Very Low Income Resident or a Lower Income Resident, as
applicable, the Space occupied by such tenant shall continue to be treated as a Very Low Income
Space or a Lower Income Space, as applicable, unless and until any Space in the Project
thereafter is occupied by a new tenant other than a Very Low Income Resident or a Lower
Income Resident, as applicable. Moreover, a Space previously occupied by a Very Low Income
Resident, a Lower Income Resident or a Moderate Income Resident, as applicable, and then
vacated shall be considered occupied by a Qualified Resident until reoccupied, other than for a
temporary period, at which time the character of the Space shall be redetermined. In no event
shall such temporary period exceed thirty-one (3 1) days. Notwithstanding anything herein to the
contrary, if at any time the number of Qualified Residents falls below the number required by
subparagraph (a) (i) of this Section, the next available vacant Space shall be rented to a Qualified
Resident.
(c) Annually, the Owner will obtain and maintain on file an Income Certification
form from each Qualified Resident occupying a Qualified Space, dated immediately prior to the
initial occupancy of such Qualified Resident in the Project (or prior to the Closing Date in the
case of existing Very Low Income Residents). In addition, the Owner will provide such further
information as may be required in the future by the State of California, as requested by the City
RVPUBTBAUvn708986.1 7
or the Oversight Agent. The Owner shall verify that the income provided by an applicant with
respect to a Space to be occupied after the Closing Date is accurate by taking one or more of the
following steps as a part of the verification process: (1) obtain a federal income tax return for the
most recent tax year, (2) obtain a written verification of income and employment from
applicant's current employer such as a current pay stub or W-2 form, (3) if an applicant is
unemployed or did not file a tax return for the previous calendar year, obtain other verification of
such applicant's income reasonably satisfactory to the Oversight Agent or (4) such other
information as may be reasonably requested by the Oversight Agent.
Within ten days of the last day of each calendar quarter during the term of this Regulatory
Agreement commencing with the quarter ending 2006, the Owner shall advise the
Oversight Agent or in the absence of a Oversight Agent, the City, of the status of the occupancy
of the Project by delivering to the Oversight Agent a Certificate of Continuing Program
Compliance; provided, however, with the prior written approval of the Oversight Agent or the
City, as the case may be, such Certificate need be filed only semi-annually. Copies of the most
recent Income Certifications for Qualified Residents commencing or continuing occupancy of a
Qualified Space shall be made available to the City or Oversight Agent upon request.
(d) Annually, the Owner shall recertify the income of the occupants of such Very
Low Income Spaces and Lower Income Spaces, as applicable, by obtaining a completed Income
Certification based upon the current income of each occupant of the unit. In the event the
recertification demonstrates that such household's income exceeds 140% of the income at which
such household would qualify as Very Low Income Residents or Lower Income Residents, as
applicable, such household will no longer qualify as a Very Low Income Resident or a Lower
Income Resident, as applicable, and the Owner either (i) will designate another qualifying
Tenant and Space in the Project as a Very Low Income Resident or a Lower Income Resident, as
applicable and a Very Low Income Space or a Lower Income Space, as applicable, respectively,
or (ii) will rent the next available vacant Space to one or more Very Low Income Residents or
Lower Income Residents, as applicable.
(e) The Owner will maintain complete and accurate records pertaining to the
Qualified Spaces, and will permit any duly authorized representative of the City or the Oversight
Agent to inspect during normal business hours and with prior notice the books and records of the
Owner pertaining to the Project, including those records pertaining to the occupancy of the
Qualified Spaces.
(f) Each lease or rental agreement pertaining to a Qualified Space occupied after the
Closing Date shall contain a provision to the effect that the Owner has relied on the Income
Certification and supporting information supplied by the Qualified Resident in determining
qualification for occupancy of the Qualified Space, and that any material misstatement in such
certification (whether or not intentional) may be cause for immediate termination of such lease.
Each lease or rental agreement will also contain a provision that failure to cooperate with the
annual recertification process reasonably instituted by the Owner pursuant to Section 4(d) above
will disqualify the Space as a Qualified Space and provide grounds for termination of the lease.
The Owner agrees to provide to the Oversight Agent and the City, a copy of the formof
application and lease or rental agreement to be provided to prospective Qualified Residents and
any amendments thereto.
RVPUBTBAUPoA708986.1 8
(g) In the event, despite the Owner's exercise of best efforts to comply with the
provisions of Section 4 of this Regulatory Agreement, the Owner shall have been out of
compliance with any of the restrictions of Section 4 hereof relative to Qualified Residents, for a
period in excess of six months, then at the sole option of the City the term of the Regulatory
Agreement shall be automatically extended for the period of non-compliance upon written notice
to the Owner and the Oversight Agent from the City, such extension to relate to the Qualified
Spaces and Qualified Residents as to which such noncompliance relate.
Section 5. Repair and Replacement Fund. The Owner agrees and covenants to
cause to be established and maintained the Repair and Replacement Fund created by Section
5.3(7) of the Indenture and to be used and replenished as provided in Sections 5.13 and 5.7(h) of
the Indenture and Section 6.22 of the Loan Agreement.
Section 6. Other Covenants. (a) The Owner further covenants and agrees as
follows: The Owner will comply with the provisions of Title 2, Chapter 2, Article 9 of the City
Municipal Code relating to mobile home rent control (the "Rent Control Ordinance"), a copy of
which Rent Control Ordinance is attached hereto as Exhibit B notwithstanding any legal
challenges to the Rent Control Ordinance, and further agrees that it shall at all times abide by and
follow the terms and provisions of the Rent Control Ordinance, and shall not in any manner
challenge said provisions.
(b) In the event the Owner requests any discretionary rental increases under the Rent
Control ordinance, the Owner agrees not to appeal any decision of the City with respect to such
request.
(c) In the event the Rent Control Ordinance is determined in any legal proceeding to
be invalid for any reason, the Owners agrees to continue to comply with the provisions of the
Rent Control Ordinance as if it were still in effect.
Section 7. Indemnification. The Owner shall indemnify, hold harmless and defend
the City, the Oversight Agent and the Authority Bond Trustee and the respective officers,
members, directors, officials and employees of each of them (the "indemnified party") against all
loss, costs, damages, expenses, suits, judgments, actions and liabilities of whatever nature, joint
and several (including, without limitation, attorneys' fees, litigation and court costs, amounts
paid in settlement, and amounts paid to discharge judgments), directly or indirectly resulting
from or arising out of or related to (a) the operation, use, occupancy, maintenance, or ownership
of the Project (including compliance with laws, ordinances and rules and regulations of public
authorities relating thereto); or (b) any written statements or representations with respect to the
Owner the Project or the Authority Bonds made or given to the City, the Oversight Agent or the
Authority Bond Trustee, by the Owner, or any of its agents or employees, including, but not
limited to, statements or representations of facts or financial information; provided, however, the
Owner shall not be obligated to indemnify the City, the Authority Bond Trustee or the Oversight
Agent for damages caused by the gross negligence or willful misconduct of the City, the
Authority Bond Trustee or the Oversight Agent. The Owner also shall pay and discharge and
shall indemnify and hold harmless the City, the Oversight Agent and the Authority Bond Trustee
from (x) any lien or charge upon payments by the Owner to the City and the Authority Bond
Trustee hereunder and (y) any taxes (including, without limitation, all ad valorem taxes and sales
taxes), assessments, impositions and other charges in respect of any portion of the Project. If any
such claim is asserted, or any such lien or charge upon payments, or any such taxes, assessments,
RVPUBTBAU1Vt7089861 9
impositions or other charges, are sought to be imposed, the City shall give prompt notice to the
Owner, and the Owner shall have the sole right and duty to assume, and will assume, the defense
thereof, including the employment of counsel selected by the indemnified parry and the payment
of all reasonable expenses related thereto, with full power to litigate, compromise or settle the
same in its sole discretion; provided, however, that the Owner shall have the right to review and
approve or disapprove any such compromise or settlement, and provided further that any such
approval shall not be unreasonably withheld.
Section 8. Consideration. The City has agreed to become an Associate Member of
the Authority for the purpose, among others, of inducing the Owner to own and operate the
Project such that the Project shall contribute to the City's efforts to provide affordable housing to
Qualified Residents in the City and to the satisfaction of the City's ongoing housing burden. In
consideration of the City joining the Authority as an Associate Member in order to allow the
Authority to provide financing to the Owner for the Project, the Owner has entered into this
Supplemental Regulatory Agreement and has agreed to restrict the uses to which the Project can
be put on the terms and conditions set forth herein.
Section 9. Reliance. In performing its duties and obligations hereunder, the City
may rely upon statements and certificates of the Owner and Qualified Residents, and upon audits
of the books and records of the Owner pertaining to the Project. In addition, the City may
consult with counsel, and the opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken or suffered by the City hereunder in good faith and
in conformity with such opinion.
Section 10. Sale or Transfer of the Project; Option to Purchase. (a) The Owner
intends to hold the Project for its own account, has no current plans to sell, transfer or otherwise
dispose of the Project, and hereby covenants and agrees not to sell, transfer or otherwise dispose
of the Project, or any portion thereof (other than for individual tenant use as contemplated
hereunder), without obtaining the prior written consent of the City and upon receipt by the City
of (i) reasonable evidence satisfactory to the City that the Owner's purchaser or transferee has
assumed in writing and in full, the Owner's duties and obligations under this Supplemental
Regulatory Agreement, (ii) an opinion of counsel for the transferee that the transferee has duly
assumed the obligations of the Owner under this Supplemental Regulatory Agreement, and that
such obligations and this Supplemental Regulatory Agreement are binding on the transferee, (iii)
the City receives evidence acceptable to the City that either (A) the transferee has experience in
the ownership, operation and management of comparable projects without any record of material
violations of discrimination restrictions or other state or federal laws or regulations applicable to
such projects, or (B) the transferee agrees to retain a property management firm with the
experience and record described in subparagraph (A) above and in either case, at its option, the
City may cause the Oversight Agent to provide on-site training in program compliance if the
City determines such training is necessary and (iv) the City receives evidence that the purchaser
is a not for-profit organization. It is hereby expressly stipulated and agreed that any sale, transfer
or other disposition of the Project in violation of this Section 10 shall be null, void and without
effect, shall cause a reversion of title to the Owner, and shall be ineffective to relieve the Owner
of its obligations under this Supplemental Regulatory Agreement. Not less than 30 days prior to
consummating any sale, transfer or disposition of any interest in the Project, the Owner shall
deliver to the City and the Oversight Agent a notice in writing explaining the nature of the
proposed transfer.
R VPUB\FBAUM\708986.1 to
(b) Notwithstanding the provisions of Section 10(a) above, the Owner shall grant to
the San Juan Capistrano Residents Association (the "Residents Association") an option to
purchase the Project from the Owner under a written option agreement on the following general
terms:
(i) During the first 10 years following the Closing Date, the purchase price of
the Project under said option shall be equal to $ plus the costs of any financing
undertaken by the Residents Association to accomplish such purchase;
(ii) After the first 10 years following the Closing Date, the purchase price of
the Project shall be equal to $ plus the increase in the Consumer Price Index for
the preceding year (beginning with year 11), together with the costs of any financing
undertaken by the Residents Association to accomplish said purchase;
(iii) The Residents Association shall pay, in addition to the purchase price set
forth in (a) or (b) above, all costs, fees and expenses, including, but not limited to, title,
escrow and all other closing costs, necessary to defease, prepay and redeem the
Outstanding Bonds of the Authority and the transfer of ownership of the Project from the
Owner to the Residents Association; and
(iv) The Residents Association shall provide to the City, the Authority and the
Owner an opinion of Bond Counsel to the effect that the exercise of said option and the
purchase of the Project by the Residents Association and the defeasance of the
Outstanding Authority Bonds will not in and of itself, cause interest on said Authority
Bonds to be included in gross income for federal income tax purposes.
(c) It is hereby expressly stipulated and agreed that any sale, transfer or other
disposition of the Project in violation of this Section 10 shall be null, void and without effect,
shall cause a reversion of title to the Owner, and shall be ineffective to relieve the Owner of its
obligations under this Supplemental Regulatory Agreement. Not less than 30 days prior to
consummating any sale, transfer or disposition of any interest in the Project, the Owner shall
deliver to the City and the Oversight Agent a notice in writing explaining the nature of the
proposed transfer.
Section 11. Term. This Regulatory Agreement and all and several of the terms hereof
shall become effective upon its execution and delivery and shall remain in full force and effect
during the Project Restriction Period, it being expressly agreed and understood that the
provisions hereof are intended to survive the retirement of the Authority Bonds.
Notwithstanding any other provisions of this Regulatory Agreement to the contrary, this entire
Supplemental Regulatory Agreement, or any of the provisions or sections hereof, may be
terminated upon agreement by the City and the Owner.
The terms of this Supplemental Regulatory Agreement to the contrary notwithstanding,
this Supplemental Regulatory Agreement, and all and several of the terms hereof, shall terminate
and be of no further force and effect in the event of (i) a foreclosure or delivery of a deed in lieu
of foreclosure whereby the Authority Bondowners or a third party shall take possession of the
Project, or (ii) involuntary non-compliance with the provisions of this Supplemental Regulatory
Agreement caused by fire, seizure, requisition, change in a federal law or an action of a federal
agency after the date hereof which prevents the City from enforcing the provisions hereof, or (iii)
RVPUBIP13AU?,A708986.1 11
condemnation or a similar event and the payment in full and retirement of the Authority Bonds
theretofore or within a reasonable period thereafter. Upon the termination of the terms of this
Supplemental Regulatory Agreement, the parties hereto agree to execute, deliver and record
appropriate instruments of release and discharge of the terms hereof, provided, however, that the
execution and delivery of such instruments shall not be necessary or a prerequisite to the
termination of this Supplemental Regulatory Agreement in accordance with its terms.
Section 12. Covenants to Run With the Land. The Owner hereby subjects the
Project (including the Project site) to the covenants, reservations and restrictions set forth in this
Supplemental Regulatory Agreement. The City and the Owner hereby declare their express
intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants
running with the land and shall pass to and be binding upon the Owner's successors in title to the
Project; provided, however, that upon the termination of this Supplemental Regulatory
Agreement said covenants, reservations and restrictions shall expire with the exception of the
non-discrimination covenant of Section 3(e) which shall continue in perpetuity. Each and every
contract, deed or other instrument hereafter executed covering or conveying the Project or any
portion thereof 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.
Section 13. 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 Project is rendered less valuable thereby. 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
Project by Qualified Residents, the intended beneficiaries of such covenants, reservations and
restrictions.
Section 14. Uniformity; Common Plan. The covenants, reservations and restrictions
hereof shall apply uniformly to the entire Project in order to establish and carry out a common
plan for the use, development and improvement of the Project.
Section 15. Enforcement. If the Owner defaults in the performance or observance of
any covenant, agreement or obligation of the Owner set forth in this Supplemental Regulatory
Agreement, and if such default remains uncured for a period of 60 days after notice thereof shall
have been given by the City to the Owner (provided, however, that the City may at its sole option
extend such period and provided further, in the event any default relates to Section 4 hereof and
the Owner is exercising best efforts to comply with such restrictions as determined by the City in
its reasonable discretion, then the cure period described above shall be 6 months and shall be
subject to the extension of the Project Restriction Period under Section 4(h) hereof), then the
City shall declare an "Event of Default" to have occurred hereunder, and the City, at its option,
may take any one or more of the following steps:
(a) by mandamus or other suit, action or proceeding at law or in equity, 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 hereunder;
(b) have access to and inspect, examine and make copies of all of the books and
records of the Owner pertaining to the Project; and
RVPUBTBAUv1\708986.1 12
(c) take such other action at law or in equity as may appear necessary or desirable to
enforce the obligations, covenants and agreements of the Owner hereunder.
All fees, costs and expenses of the City and the Oversight Agent (including, without
limitation, reasonable attorneys' fees) reasonably incurred in taking any action pursuant to this
Section 15 shall be the sole responsibility of the Owner.
Section 16. Recording and Filing. The Owner shall cause this Supplemental
Regulatory Agreement and all amendments and supplements hereto, to be recorded and filed,
after the recording of the Authority Regulatory Agreement and the Deed of Trust in the real
property records of the County and in such other places as the may reasonably request. The
Owner shall pay all fees and charges incurred in connection with any such recording.
Section 17. Payment of Fees. In the event of a default hereunder by the Owner, the
Owner shall pay to the City reasonable compensation for any services rendered by it hereunder
and reimbursement for all expenses reasonably incurred by in connection with such default.
Section 18. Governing Law. This Supplemental Regulatory Agreement shall be
governed by the laws of the State of California.
Section 19. Amendments. This Supplemental Regulatory Agreement shall be
amended only by a written instrument executed by the parties hereto or their successors in title,
and duly recorded in the real property records of the County.
Section 20. Notice. All notices, certificates or other communications shall be
sufficiently given and shall be deemed given on the date personally delivered or on the second
day following the date on which the same have been mailed by certified mail, return receipt
requested, postage prepaid, addressed as follows:
City: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: City Manager
Oversight Wolf & Company Inc.
Agent: 5 Pembroke Lane
Laguna Niguel, CA 92677
Attn: Wesley R. Wolf
Owner: Millennium Housing Corporation
660 Newport Center Drive, Suite 1020
Newport Beach, CA 92660
Attn: George Turk
Any of the foregoing parties may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates, documents or other communications
shall be sent.
RVPUB\FBAUW08986.1 13
Section 21. Severability. If any provision of this Supplemental Regulatory
Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining portions hereof shall not in any way be affected or impaired thereby.
Section 22. Multiple Counterparts. This Supplemental Regulatory Agreement may
be executed in multiple counterparts, all of which shall constitute one and the same instrument,
and each of which shall be deemed to be an original.
Section 23. Subordination. This Supplemental Regulatory Agreement and any
amendments, modifications, renewals and extensions hereof shall at all times be a lien and
charge on the Project and the real property described on Exhibit A hereto expressly and
unconditionally subordinate to the lien and charge thereon of the Authority Regulatory
Agreement and the Deed of Trust.
RVPUBWBAU 0708986.1 14
IN WITNESS WHEREOF, the City and the Owner have executed this Supplemental
Regulatory Agreement by duly authorized representatives, all as of the date first written
hereinabove.
CITY OF SAN JUAN CAPISTRANO
By: _
Title:
MILLENNIUM HOUSING CORPORATION, a
California non-profit public benefit corporation
Un
President
RVPUBTRAUM708986.1 15
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On 2006, before me, , personally appeared
❑ personally known to me OR ❑ proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature of Notary
[SEAL]
RVPUBTBAM708986.1
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On 2006, before me, , personally appeared
❑ personally known to me OR ❑ proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature of Notary
[SEAL]
R V PUB\FBAUMA708986.1
*Note to Article 9.
TITLE 2. ADMINISTRATION
CHAPTER -2 COMMISSIONS_ AND BOARDS
*Note to Article 9.
Page 1 of 1
* Article 9 entitled "Mobile Home Park Review Board", consisting of Sections 2-2.901 through 2-2,911,
codified from Ordinance No. 380, as amended by Ordinance Nos. 386, 393, and 405, effective April 16,
1980, amended in its entirety by Ordinance No. 412, effective December 5, 1980. Article 9 entitled
"Mobile Home Park Review Committee", consisting of Sections 2-2.901 through 2-2.909, as added by
said Ordinance No. 412, as amended by Ordinance Nos. 423, effective May 5, 1981, 425, effective
August 6, 1981, 427, effective July 21, 1981, and 430, effective October 1, 1981, repealed by Ordinance
No. 439, effective November 3, 1981.
Article 9 entitled "Mobile Home Park Review Committee", consisting of Sections 2-2.901 through 2-
2.906, as added by Ordinance No. 439, as amended by Ordinance Nos. 456, effective June 3, 1982,
492, effective September 6, 1983, 507, effective May 3, 1984, 526, effective January 3, 1985, 545,
effective July 18, 1985, 602, 613, and 715, amended in its entirety by Ordinance No. 795, effective June
6, 1997.
hnp://municipalcodes.lexisnexis.com/codes/sanivancai)/ DATA/TITLE02/CHAPTER 2 COM... 4/17/2006
Sec. 2-2.901. Findings.
TITLE 2. ADMINISTRATION
CHAPTER 2. COMMISSIO_NS_AND BOARDS
Sec. 2-2.901. Findings.
Page 1 of 1
The Council finds and determines that:
(a) There is presently, within the City and the surrounding areas, a shortage of spaces for the location of
mobile homes, resulting in a low vacancy rate and rising space rents.
(b) Mobile home owners have invested substantial sums in their mobile homes and appurtenances.
(c) Alternative sites for the relocation of mobile homes are difficult to find, and the moving and
installation of mobile homes are expensive, with possibilities of damage to the units.
The Council, accordingly, does find and declare that it is necessary to protect the residents of mobile
homes from unreasonable space rent increases, recognizing the need of mobile home park owners to
receive a fair, just, and reasonable return. (§ 1, Ord. 795)
hnD://municiDalcodes.lexisnexis.com/codes/sanivancan/ DATA /TTTT,E02/CHAPTER 2 COM 4/17/ 006
Sec. 2-2.902. Definitions.
TITLE 2._ADMINISTRATION
CHAPTER 2. COMMISSIONS_ AND BOARDS
Sec. 2-2.902, Definitions.
For the purposes of this article, unless otherwise apparent from the context, certain words and phrases
used in this article are defined as follows:
Page 1 of I
(a) "Assessment" shall mean the entire allocation of the cost of installing, improving, repairing, or
maintaining any capital improvement benefiting the resident.
(b) "Committee" shall mean the Housing Advisory Committee established under Title 2, Chapter 2,
Article 2 of this Code.
(c) "Consumer Price Index" shall mean the Consumer Price Index for all urban consumers (CPI -U)
published for the Los Angeles -Long Beach -Anaheim area.
(d) "Maximum allowable increase" shall mean the maximum allowable increase in mobile home space
rent an owner may charge, unless a higher increase is approved by the City after a petition and hearing
as provided in this article. The maximum allowable increase shall be provided in this subsection (d) and
shall be determined by either of the following formulae an owner may choose to apply:
(1) Take the operating expenses of the park for the twelve (12) month period immediately preceding the
date upon which notification of any rent increase is to be made; multiply that sum by the percentage of
increase in the CPI -U appearing in the latest published Consumer Price Index to arrive at the maximum
allowable annual increase in rent for the entire park, and divide the number of units in the park to
compute the maximum allowable annual rent increase (in dollars) for each space, or
(2) Secure the percentage of annual increase in the CPI -U for the calendar year immediately preceding
the one in which the rental adjustment is being made; multiply that figure by the rent to be adjusted to
arrive at the maximum allowable rent increase percentage per year, and apply that product to each
space rent.
(3) Effective April 1, 1988, the maximum allowable increase for rental adjustments occurring under this
subsection shall be based upon the percentage of annual rise in the CPI -U for the previous calendar
year. Any rental increase occurring between October 1, 1987 and March 31, 1988 shall be subject to the
maximum allowable increase computed with the annual rise of the CPI -U for the 1986 calendar year.
(4) The percentage increase computed by either of the methods set forth in this subsection shall be
applied to each space and shall not be applied to the park's mean rent. Moreover, there shall be no
more than one increase in space rents within a park during any twelve (12) month period without the
prior approval of the City.
(5) The occurrence of a vacancy in either a space within a park or a mobile home unit on a space within
a park shall not result in a space rental increase in excess of the percentage increase allowed once
during any twelve (12) month period by this subsection, unless it results from a petition duly heard and
approved pursuant to Section 2-2.903.
(e) "Owner" shall mean the owner, lessor, or designated agent of a park.
(f) "Park" shall mean a mobile home park which rents spaces for mobile home dwelling units.
(g) "Rent" shall mean the consideration charged solely for the use and occupancy of a mobile home
space in a park and shall not include any amount paid for the use of the mobile home dwelling unit or for
facilities or amenities in a park, other than a mobile home space, or any other fees or charges regulated
by a governmental agency and charged to residents on an actual usage and/or cost basis.
(h) "Resident" shall mean any person entitled to occupy a mobile home dwelling unit pursuant to the
ownership thereof or a rental or lease arrangement with the owner of the subject dwelling unit. (§ 1, Ord.
795)
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Sec. 2-2.903. Petition and hearing process regarding rent increases. Page 1 of 3
TITLE 2. ADMINISTRATION
CHAPTER 2. COMMISSIONS AND BOARDS
Sec. 2-2.903. Petition and hearing process regarding rent increases.
(a) Petition and hearing procedure. Upon the filing with the secretary of a written petition concerning a
proposed or actual increase in rent filed by an owner or by residents who reside in and represent more
than fifty (50) percent of the inhabited spaces within a park, excluding management, a hearing thereon
shall be conducted by a Hearing Officer within sixty (60) calendar days, or as soon thereafter as is
reasonably practicable, after the filing of the petition.
In the event that the park owner has proposed a rent increase for one or more residents (e.g., based
upon one year anniversary dates) but less than the total number of residents in the park, then only one
hearing process shall be conducted by the same hearing officer where the rent increases proposed for
all residents in the park for that year is based upon the same factual justification. Any such rent increase
shall be subject to a protest petition when filed by a majority of total park residents. The filing of one
petition protest shall be sufficient to place all similar rent increases for that year at issue under the
hearing review process.
The hearing shall be conducted only in the event the petition is filed with the secretary thirty (30)
calendar days following the effective date of the rent increase which is the subject of the petition.
The Hearing Officer shall be chosen and a hearing conducted in accordance with the Hearing Officer
procedure established by the Council.
(b) Purpose of hearings. At the hearing on such petition, the Hearing Officer shall conduct an
investigation to determine if the rent increase in question exceeds the maximum allowable increase as
defined in subsection (d) of Section 2-2.902 of this article. If the Hearing Officer concludes that the rent
increase exceeds the maximum allowable increase, the Hearing Officer shall then continue the hearing
by receiving all relevant evidence for the purpose of rendering findings and conclusions as to the
propriety of the rent increase in accordance with the criteria set forth in subsection (g) of this section.
The Hearing Officer may require either party to a hearing on the petition to provide any books, records,
and papers deemed pertinent, in addition to that information previously set forth by the parties.
(c) Hearing Officer recommendations. Within thirty (30) days after concluding the hearing, the Hearing
Officer shall render written findings and conclusions as to the propriety of the rent increase to the
Housing Advisory Committee. The Hearing Officer recommendations shall not be binding.
(d) Committee reviews of Hearing Officer findings. The Housing Advisory Committee shall review the
findings and conclusions of the Hearing Officer at its next available meeting. Its scope of review shall be
limited to the written record consisting of the evidence received by the Hearing Officer, written
arguments of the parties, findings of the Hearing Officer, other relevant matters as compiled by the
secretary of the Committee, and additional oral or written arguments the parties may wish to make.
However, the Committee shall not receive or consider any additional evidence.
The Housing Advisory Committee shall give ten (10) days prior written notice of its meeting to the
parties.
(e) Council reviews. The Council shall review the findings of the Hearing Officer and the
recommendations of the Housing Advisory Committee as soon as reasonably practicable. The Council
shall not reopen the hearing held by the Hearing Officer for the purpose of receiving new evidence
unless, in the discretion of the Council, it is necessary to do so.
The Council may affirm, modify, or reverse the rent increase in question, but in no case require a
reduction lower than the maximum allowable increase.
The Council shall render written findings in support of its conclusions within thirty (30) days after its
meeting, and the decision of the Council shall be final.
(f) Return of excess rents collected. Any rent increases which are collected by an owner pursuant to an
increase which is the subject of a petition for hearing, and which later is determined by the Council to
exceed the maximum allowable increase, or such greater increase as the Council approves, shall be
either returned to the residents or credited to future space rents, provided, however, no increase
collected prior to December 5, 1980, shall be returned.
(g) Criteria to be utilized in rent increase reviews.
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Sec. 2-2.903. Petition and hearing process regarding rent increases.
Page 2 of 3
(1) Purpose of reviews. The Hearing Officer, the Housing Advisory Committee, and the Council shall
review the rent increase to determine whether the increase is, or is not, fair and reasonable. Such
review shall be conducted by applying the nonexclusive criteria set forth in subsection (g)(2) of this
section to the facts submitted to the Hearing Officer.
(2) Nonexclusive criteria. The Hearing Officer, the Committee, and the Council shall consider all relevant
factors, including, but not limited to, increased or decreased costs to the mobile home park owner
attributable to utility rates, property taxes, insurance, advertising, governmental assessments, cost -of -
living increases attributable to incidental services, normal repairs and maintenance, capital
improvements, except those defined in subsection (h) of this section, the upgrading and addition of
amenities for services, except as defined in subsection (h) of this section, and a fair rate of return on the
property.
(3) Fair rate of return on property criteria. The Council finds and declares that the following principles
shall be applied in utilizing the fair rate of return on property standard as a criterion in the review
process:
(i) All the provisions of this article shall be applied with the overall purpose of eliminating the imposition
of excessive rents while at the same time providing park owners with a just and reasonable return on
property.
(ii) The reasonableness of rent increases is not to be determined solely by the application of a fixed or
mechanical accounting formula, such as "return on investment" or "return on market value" of the
property; in particular, recent court decisions have discouraged the use of a "return on market value"
test.
(iii) The fair rate of return on property is but one of a number of nonexclusive factors to be taken into
account in reviewing the fairness of rent incfeases; it is to be given weight, but not to dominate other
relevant criteria in arriving at a final determination.
(iv) The Hearing Officer, the Committee, and the Council shall impartially consider all relevant evidence
in relation to the application of the nonexclusive criteria. The extent to which the criteria are considered
in the review process, that is, the amount of weight given to any one of the several criteria, ultimately
falls within the wisdom and best judgment of said three (3) bodies.
(v) In conducting the entire process, guidance should be taken from leading California case law
decisions dealing with rent control issues and in particular, rent control in mobile home parks. Such
cases include: Birkenfeld v. City of Berkeley (1976), 17 C.3d 165, Gregory v. City of San Juan
Capistrano (1983), 142 C.A.3d 8; Cotati Alliance for Better Housing v. Cotati (1983), 143 C.A.3d 296;
Palisades Shores v. City of Los Angeles (1983), 143 C.A.3d 369: Oceanside Mobile Home Park Owners
Association v. City of Oceanside (1984), 157 C.A.3d 887; and Carson Mobile Home Park Owners
Association v. City of Carson (1983), 35 C.3d 184.
(h) Rent increases and capital improvement upgrade costs.
(1) Capital improvement upgrade costs. Only those capital improvement costs incurred to upgrade
through additions, alterations or replacements, park facilities, assets, or amenities, shall not be
recouped from residents through rent increases, or any other special assessment, unless the following
procedure is first followed:
(i) The park owner shall first inform by first-class mail all park residents of the exact nature, approximate
cost, billing method, and billing duration of the proposed capital improvement upgrade by written notice.
(ii) After allowing the residents a reasonable period of time (of not less than thirty (30) days) to consider
whether the capital improvement cost is one the residents believe is necessary and desirable, the park
owner shall then obtain formal written consent on a form approved by the City from a simple majority of
the total number of residents in the park. The simple majority shall be calculated on the basis of one
vote per coach space.
(iii) The costs of the capital improvement upgrade shall be prorated and billed in a method mutually
acceptable to the park owner and the residents.
For the purposes of this subsection, "to upgrade' shall mean to raise to a substantially higher quality, or
to substantially improve, the existing level of service. Examples of capital improvement upgrades
include, but are not limited to, swimming pools, spas, tennis courts, clubhouses, clubhouse additions,
fencing, children's play equipment, and other similar improvements.
(2) Exceptions for governmentally mandated costs. Capital improvement upgrade costs incurred
because of the application of current day Building Codes, such as, but not limited to, City Building
Codes, Health and Safety Codes, and State, Federal, and Fire Codes, shall be exempted from the
resident consent provision set forth in subsection (h)(1) of this section. The park owner shall obtain a
written statement from the Building Official verifying that the subject capital improvement upgrade arose
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Sec. 2-2.903. Petition and hearing process regarding rent increases.
from the more stringent current day Building Code requirements before the exception set forth in this
subsection may be utilized by the park owner.
(i) Leasehold agreement exemptions. Notwithstanding any provision of this article to the contrary,
leasehold agreements (that is, leases other than tenancies at will or month-to-month) entered into
between mobile home park owners and their residents shall be exempted from the operation of the
petition and hearing review process.
(ii) Forms. The City Manager is authorized and directed to develop and require the completion of forms
by interested parties at the time a petition is received by the secretary. Until such forms are completed
to the satisfaction of the City Manager, or his designated representative, the petition and hearing
process shall proceed no further. (§ 1, Ord. 795, as amended by § 1, Ord. 902)
Page 3 of 3
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Sec. 2-2.904. Hearing Officer costs: Fee reimbursement.
TITLE 2_. ADMINISTRATION
CHAPTER 2. COMMISSIONS AND BOARDS
Sec. 2-2.904. Hearing Officer costs: Fee reimbursement.
(a) Administrative fee. There is hereby instituted a One Thousand and no/100ths ($1,000.00) Dollar fee
to be paid to the City for costs incurred in invoking the Hearing Officer procedure set forth in Section 2-
2.903.
Page 1 of 1
(b) Five Hundred and no/100ths ($500.00) Dollar deposit. At the time the park residents file a petition in
protest of a proposed increase, the petitioners shall simultaneously post a Five Hundred and no/100ths
($500.00) Dollar deposit with the Secretary to the Housing Advisory Committee. The Secretary shall find
that the petition is incomplete if the Five Hundred and no/100ths ($500.00) Dollar deposit is not posted.
Further, the statute of limitation period of thirty (30) days from the effective date of a rent increase shall
continue to run in the event that the petition has been found to be incomplete.
If the petition is in order and the deposit has been posted, the City shall promptly notify the park owner
that the hearing procedure will be invoked and that the park owner shall, within ten (10) days of receipt
of notice, post a Five Hundred and no/100ths ($500.00) Dollar deposit equal to the petitioners' deposit.
Should the park owner not post the Five Hundred and no/100ths ($500.00) Dollar deposit within the ten
(1 D) day time limit, the residents shall be under no legal obligation to pay the proposed rent increase.
(c) Responsibility for payment of administrative fee. At the conclusion of the administrative hearing, the
Hearing Officer, as a part of his responsibility to make findings, shall make a recommendation as to the
percentage that each party is to pay in satisfying the One Thousand and no/100ths ($1,000.00) Dollar
administrative fee. The City Council shall make a final decision regarding the Hearing Officer's
determination based upon the final rent award.
(d) Remedies for nonpayment of administrative fee. Should any party refuse to pay his portion of the
required administrative fee, the City may pursue any civil remedy available, or in the alternative, refuse
to process a future petition by the same petitioners. In the case of park owner nonpayment, park tenants
shall not be obligated to pay proposed rent increases until the administrative fee debt has been
satisfied. (§ 1, Ord. 795)
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ADMINISTRATION AND OVERSIGHT AGREEMENT
by and among
INDEPENDENT CITIES LEASE FINANCE AUTHORITY
and
WOLF & COMPANY INC.,
as Oversight Agent
and
MILLENNIUM HOUSING OF CALIFORNIA,
as Borrower
and
CITY OF SAN JUAN CAPISTRANO
Dated as of
Relating to:
1, 2006
Independent Cities Lease Finance Authority
Mbbile Home Park Revenue Bonds
(San Juan Mobile Estates)
Series 2006A
and
Independent Cities Lease Finance Authority
Mobile Home Park Subordinate Revenue Bonds
(San Juan Mobile Estates)
Series 2006B
and
Independent Cities Lease Finance Authority
Mobile Home Park Subordinate Revenue Bonds
(San Juan Mobile Estates)
Taxable Series 2006C
RVPUBIFBAUM709452.1
EXHIBIT C
ADMINISTRATION AND OVERSIGHT AGREEMENT
THIS ADMINISTRATION AND OVERSIGHT AGREEMENT (the "Administration
Agreement") is made and entered into as of 1, 2006, by and among the
INDEPENDENT CITIES LEASE FINANCE AUTHORITY a joint powers authority duly
organized and existing under the laws of the State of California (the "Authority"), the CITY OF
SAN JUAN CAPISTRANO, a public body corporate and politic duly organized and existing
under the laws of the State of California (the "City"), MILLENNIUM HOUSING
CORPORATION, a California nonprofit public benefit corporation (the "Borrower"), and
WOLF & COMPANY INC. (the "Oversight Agent").
RECITALS:
WHEREAS, to assist the Borrower in its acquisition of the San Juan Mobile Estates
mobile home park located in the City of San Juan Capistrano (which is an associate member of
the Authority) (the "Project"), the Authority has issued its Mobile Home Park Revenue Bonds
(San Juan Mobile Estates) Series 2006A and its Mobile Home Park Subordinate Revenue Bonds
(San Juan Mobile Estates) Series 2006B and its Mobile Home Park Subordinate Revenue Bonds
(San Juan Mobile Estates) Taxable Series 2006C (collectively, the "Bonds") pursuant to an
Indenture of Trust, dated as of 1, 2006 (the "Indenture"), by and between the
Authority and Union Bank of California, N.A., as Trustee thereunder (the "Trustee"); and
WHEREAS, the Authority has made a loan (the "Loan") of the proceeds of the Bonds to
the Borrower, as provided in the Loan Agreement, dated as of 1, 2006 (the "Loan
Agreement"), by and among the Authority, the Borrower and the Trustee, which agreement
provides for certain oversight provisions relating to the management of the Project; and
WHEREAS, the Authority has entered into a Regulatory Agreement and Declaration of
Restrictive Covenants, dated as of 1, 2006 (the "Regulatory Agreement") with the
Trustee and the Borrower, which agreement, among other things, sets forth certain restrictions
applicable to the property being financed with the proceeds of the Loan, which restrictions are
intended to assure continued compliance with the provisions of the Internal Revenue Code of
1986, as amended (the "Code"); and
WHEREAS, the Authority desires to appoint Wolf & Company, Inc., as Oversight Agent
under the Regulatory Agreement to monitor the income levels of the residents of the Qualified
Spaces (as defined in the Regulatory Agreement) and as Oversight Agent under the Loan
Agreement to carry out the duties of the Oversight Agent set forth in the Loan Agreement; and
WHEREAS, the City and the Borrower have entered into a Supplemental Regulatory
Agreement and Declaration of Restrictive Covenants dated as of 1, 2006 (the
"Supplemental Regulatory Agreement") which provides, among other things, for certain
additional affordability restrictions on the Project applicable to Qualified Residents and
Qualified Spaces; and
WHEREAS, the City desires that the Oversight Agent monitor the income levels of the
residents of the Qualified Spaces for purposes of the Supplemental Regulatory Agreement; and
RVPUETBAUM1709452.1
WHEREAS, Wolf & Company, Inc., represents that it has the necessary experience and
expertise required to evaluate whether the Project complies with the requirements set forth in the
Loan Agreement, the Regulatory Agreement and the Supplemental Regulatory Agreement.
NOW, THEREFORE, in consideration of the premises and respective representations and
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
I.I. Definitions of Terms. All capitalized terms used in this Administration
Agreement and not otherwise defined herein shall have the respective meanings given to them in
the Indenture and/or the Regulatory Agreement and/or the Supplemental Regulatory Agreement.
1.2. Article and Section Headings. The heading or titles of the several articles and
sections hereof shall be solely for the convenience of reference and shall not affect the meaning,
construction or effect of the provisions hereof.
1.3. Interpretation. The singular form of any word used herein, including terms
defined in the Indenture and/or the Regulatory Agreement, shall include the plural and vice
versa, if applicable. The use of a word of any gender shall include all genders, if applicable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations of the Authority. The Authority makes the following
representations:
(a) It is a joint powers authority, duly organized and existing under the Constitution
and laws of the State of California.
(b) It has the power to enter into the transactions contemplated by this Administration
Agreement and to cavy out its obligations hereunder and to consummate all other transactions on
its part contemplated herein; and it has duly authorized the execution and delivery of this
Administration Agreement.
(c) The City of San Juan Capistrano is an associate member of the Authority.
2.2. Representations and Warranties of the Borrower. The Borrower makes the
following representations and warranties:
(a) It has power and authority to own its properties and carry on its business as now
being conducted, and is duly qualified to do such business wherever such qualification is
required, including the State of California.
(b) It has the power to execute and deliver this Administration Agreement and to
cavy out the transactions on its part contemplated hereby; and it has duly authorized the
execution, delivery and performance of this Administration Agreement.
RVI'MFBAUNC709452.1
(c) The Oversight Agent is independent from and not under the control of the
Borrower, does not have any substantial interest, direct or indirect, in the Borrower, and is not an
officer or employee of the Borrower.
2.3. Representations and Warranties of the Oversight Agent. The Oversight Agent
makes the following representations and warranties:
(a) It is a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has the power and authority to carry on its business as now
being conducted.
(b) It has the power to execute and deliver this Administration Agreement and to
carry out the transactions on its part contemplated hereby; and it has duly authorized the
execution, delivery and performance of this Administration Agreement.
(c) It is independent from and not under the control of the Borrower, does not have
any substantial interest, direct or indirect, in the Borrower, and is not an officer or employee of
the Borrower.
(d) It has received copies of the Indenture, the Loan Agreement, the Regulatory
Agreement and the Supplemental Regulatory Agreement, and it is familiar with the terms and
conditions thereof as the same relate to the Code and the Act.
ARTICLE III
DUTIES AND COMPENSATION OF THE OVERSIGHT AGENT
3.1. Duties of Oversight Agent. Wolf & Company, Inc., is the initial Oversight Agent
hereunder. This Section 3.1 applies to Wolf & Company, Inc., as Oversight Agent and to any
successor Oversight Agent. In its capacity as Oversight Agent hereunder, for and on behalf of
the Authority, the Oversight Agent will perform the following duties in a careful and timely
manner, to the highest standards of its profession:
(a) It will be familiar with and will give written notice to the Authority, the City, the
Trustee and the Borrower within ten days of the publication by the Department of Housing and
Urban Development of any change in:
(i) The Median Income for the Area; and
(ii) The maximum income at which households consisting of various numbers
of persons may be determined to be Qualified Residents under the terms of the
Regulatory Agreement and the Supplemental Regulatory Agreement; and
(iii) The maximum allowable rents under each applicable provision of Section
4 of the Regulatory Agreement and Section 4 of the Supplemental Regulatory
Agreement; and
(iv) The maximum income at which households consisting of various numbers
of persons may be determined to be Very Low Income Residents or Lower Income
RVPUBTBALJM709452.1 3
Residents, under the terms of the Regulatory Agreement and the Supplemental
Regulatory Agreement.
(b) Promptly following its receipt thereof, it will review the Income Certifications,
Certificates of Continuing Program Compliance, and all other reports and certificates furnished
to it pursuant to the Regulatory Agreement and the Supplemental Regulatory Agreement in order
to determine that each such document is complete and to verify the internal accuracy of the
calculations, and conclusions with respect to such calculations, set forth therein, including the
conclusion that the Qualified Spaces have been rented as specified by the terms of the
Regulatory Agreement and the Supplemental Regulatory Agreement; and it will maintain such
documents on file and open to the inspection by the Authority, the City, the Trustee and the
Borrower during the term of the Regulatory Agreement and the Supplemental Regulatory
Agreement.
(c) Promptly upon receipt, it will review the form of application and lease with
respect to the Qualified Spaces to verify compliance with the provisions of the Regulatory
Agreement and the Supplemental Regulatory Agreement.
(d) Promptly upon determining that any report or certificate submitted to it pursuant
to the Regulatory Agreement and the Supplemental Regulatory Agreement is inaccurate or
incomplete the Oversight Agent shall:
(i) If the inaccuracy or lack of completeness does not cause the Project to
cease to meet the qualifications set forth in Section 3 or 4 of the Regulatory Agreement,
give notice of such inaccuracy or lack of completeness to the Borrower and direct the
Borrower to correct or complete the same, as the case may be, within a 30 -day period,
subject to extension in the sole discretion of the Oversight Agent;
(ii) If the inaccuracy or lack of completeness is not corrected within thirty (30)
days or if the inaccuracy or lack of completeness causes the Project to cease to meet the
qualification set forth in Section 3 or 4 of the Regulatory Agreement immediately give
written notice of said fact to the Authority, the Trustee and the Borrower; and
(iii) If the inaccuracy or lack of completeness does not cause the Project to
meet the requirements of Section 4 of the Supplemental Regulatory Agreement, give
notice of such inaccuracy or lack of completeness to the Borrower and the City and direct
the Borrower to correct and complete the same, as the case may be, within a 30 -day
period, subject to extension in the sole discretion of the Oversight Agent.
(e) (i) In the event that the Borrower fails to file with the Oversight Agent any report,
certification (including, in particular, the certification to the Secretary of the Treasury required
by Section 4(e) of the Regulatory Agreement) or other document required pursuant to the
Regulatory Agreement within the time set forth in the Regulatory Agreement as applicable, the
Oversight Agent shall immediately give written notice of that fact to the Authority, the Trustee,
the City and the Borrower.
(ii) In the event that the Borrower fails to file with the Oversight Agent any
report, certification or other document required pursuant to the Supplemental Regulatory
RVPUB\FBAUM\709452.1 4
Agreement within the time set forth in the Supplemental Regulatory Agreement, as
applicable, the Oversight Agent shall immediately give written notice of that fact to the
City and the Borrower.
(f) On behalf of the Authority and the City, the Oversight Agent shall, at least
annually and whenever requested by the Authority, audit the survey of the tenants of the
Qualified Spaces with respect to income levels, household sizes and such other information as
the Authority may specify, and all as further required under Section 4 of the Regulatory
Agreement and Section 4 of the Supplemental Regulatory Agreement. Based on such
information, the Authority shall determine compliance with the affordability requirements under
the Act and the Code. In the event of any noncompliance the Oversight Agent shall notify the
Authority and the City as to the nature and extent of the noncompliance and the Oversight Agent
shall suggest alternatives for bringing the Qualified Spaces into compliance.
(g) The Oversight Agent will perform on a timely basis all duties ascribed to the
Oversight Agent in the Indenture, the Loan Agreement, the Regulatory Agreement and the
Supplemental Regulatory Agreement, including without limitation the following: (i) annual
review of the Borrower's financial statements, (ii) review the coverage calculation for release of
surplus cashflow and report comments to the Borrower, the Authority and the City, (iii) review
the final budget and forward comments to the Borrower, the Authority, (iv) physical inspection
of the Project on a quarterly basis, including examination of the infrastructure, the clubhouse,
and any other common areas, and (v) monthly confirmation report to the Authority, the City and
any Bondholder requesting such information that the Trustee has received the monthly deposit in
accordance with the approved budget and, in the event that the Trustee has not, to take such
further steps as required by the Loan Agreement.
3.3. Compensation. For its services as the Oversight Agent, Wolf & Company, Inc.
shall be paid $ at Bond Closing, and thereafter an annual fee of $ payable by the
Borrower in equal quarterly installments commencing 15, 2007, as set forth in the
Indenture. The fee of the Oversight Agent shall be paid to the Oversight Agent by the Trustee
upon receipt by the Trustee of an invoice from the Oversight Agent. If the Oversight Agent
provides services outside the scope of this Agreement; as requested in writing by the Authority,
the compensation shall be paid at the then prevailing fee schedule of the Oversight Agent.
ARTICLE IV
TERM
4.1. Term of Agreement. Unless sooner terminated pursuant to the provisions of
Sections 4.2 and 4.3 hereof, this Administration Agreement shall remain in full force and effect
for the term of the Regulatory Agreement.
4.2. Termination. At its sole discretion, the Authority may terminate this
Administration Agreement upon giving the Oversight Agent and the Borrower thirty (30) days
written notice of its intention to do so. This Administration Agreement may be terminated in
whole or in part only as to the services described in Section 3.1, whereupon a partial fee for the
services not terminated will be agreed upon by the parties and memorialized in an amendment
hereto.
RVPUBTBAU 0709432.1 5
4.3. Resignation of Oversight Agent. With the written consent of the Authority, the
Oversight Agent may resign from its position and terminate this Administration Agreement by
giving the other parties hereto thirty (30) days written notice of its intention to do so.
4.4 Termination With Respect to Supplemental Regulatory Agreement. At its sole
discretion, the City may terminate this Administration Agreement with respect to the
Supplemental Regulatory Agreement upon giving the Oversight Agent and the Borrower thirty
(30) days written notice of its intention to do so.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1. Execution in Counterparts. This Administration Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.
5.2. Business Days. If any action is required to be taken hereunder on a date which
falls on other than a Business Day, such action shall be taken on the next succeeding Business
Day.
5.3. Governing Law. This Administration Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
5.4. Notices. All notices, certificates or other communications hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed by registered mail,
postage prepaid, addressed to the appropriate Notice Address set forth in the Regulatory
Agreement and the Supplemental Regulatory Agreement. The Notice Address of the Oversight
Agent is: Wolf & Company Inc., 5 Pembroke Lane, Laguna Niguel, California 92677, Attention:
Wesley R. Wolf.
RVPUB\FBAUM\709452.1 6
IN WITNESS WHEREOF, the parties hereto have caused this Administration Agreement
to be executed on their behalf by their duly authorized representatives, all as of the date
hereinabove written.
INDEPENDENT CITIES LEASE FINANCE
AUTHORITY
President
CITY OF SAN JUAN CAPISTRANO
MILLENNIUM HOUSING CORPORATION,
a California nonprofit public benefit corporation
President
WOLF & COMPANY INC., as Oversight Agent
Authorized Signatory
RVPUBIFBAUM\709452.1
RESOLUTION NO. 06-05-02-05
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN
CAPISTRANO, CALIFORNIA, APPROVING THE ISSUANCE OF MOBILE
HOME PARK REVENUE BONDS BY THE INDEPENDENT CITIES
LEASE FINANCE AUTHORITY FOR THE SAN JUAN MOBILE ESTATES
WHEREAS, the Independent Cities Lease Finance Authority (the "Authority") is
authorized pursuant to the provisions of California Health and Safety Code Section
52100 and the terms of the Joint Powers Agreement Creating the Independent Cities
Lease Finance Authority (the "Authority'), to issue revenue bonds in accordance with
Chapter 8 of Part 5 of Division 31 of the California Health and Safety Code for the
purpose of financing multifamily rental housing projects, including mobile home parks;
and
WHEREAS, the City of San Juan Capistrano is joining the Authority as an
associate member: and
WHEREAS, Millennium Housing Corporation, a California nonprofit corporation
("Millennium") has requested that the Authority issue mobile home park revenue bonds
in one or more series in an aggregate principal amount not to exceed $43,000,000 (the
"Authority Bonds") for the purpose of providing financing for the acquisition of a 312 -unit
mobile home park located at 32302 Alipaz Street, San Juan Capistrano, California, and
known as San Juan Mobile Estates (the `Project'); and
WHEREAS, the Project will be owned by Millennium, or a successor, assign or
affiliate thereof (the "Owner"); and
WHEREAS, the Authority Bonds will be qualified "private activity bonds' for
purposes of the Internal Revenue Code of 1986 (the "Code"); and
WHEREAS, pursuant to Section 147(f) of the Code, the proposed issuance of
private activity bonds is required to be approved by the "applicable elected
representative' of the governmental unit having jurisdiction over the area in which the
facility financed by such bonds is to be located, after a public hearing held following
reasonable public notice; and
WHEREAS, the Project is located in the City of San Juan Capistrano (the "City')
and the members of the City Council (this "City Council") are the applicable elected
representatives of the City; and
WHEREAS, there has been published, at least 14 days prior to the date hereof,
in a newspaper of general circulation within the City, a notice that a public hearing
regarding the proposed issuance of the Authority Bonds would be held on the date
hereof; and
SIP Page 1 of 2 05-02-2006
WHEREAS, such public hearing was conducted on said date by this City Council,
at which time an opportunity was provided to interested parties to be heard with respect
to the proposed issuance of the Authority Bonds and financing of the Project; and
WHEREAS, it is intended that this resolution shall constitute the approval of the
proposed issuance of the Authority Bonds required by Section 147(f) of the Code;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San
Juan Capistrano does hereby:
Section 1. Approval of Issuance of Authority Bonds. This City Council hereby
approves the issuance of the Authority Bonds by the Authority. It is the purpose and
intent of this City Council that this resolution constitutes approval of the Authority Bonds
for the purposes of Section 147(f) of the Code. This City Council further finds that,
based on information provided by the Owner, the financing of the Project by the
Authority will result in savings in the costs of the Bond financing.
Section 2. Effective Date. This resolution shall take effect iyx►rF7ediate on its
passage. — ,/� n ��
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF SAN JUAN CAPISTRANO )
I, MARGARET R. MONAHAN, appointed City Clerk of the City of San Juan Capistrano, do
hereby certify that the foregoing Resolution No. 06-05-02-05 was duly adopted by the City
Council of the City of San Juan Capistrano at a Regular meeting thereof, held the 2°a day of May
2006, by the following vote:
AYES: COUNCIL MEMBERS: Hart, Bathgate, Soto, Allevato, and Mayor Swerdlin
NOES- : GA IL N�EMBER: None
ABS N Chh IL/M/ EMBER: None
Clerk
Page 2 of 2 05-02-2006 SP
San Juan Mobile Estates
Residents Association
32302 Alipaz Street, San Juan Capistrano, CA 92675
Cindy Russell
Administrative Services Director
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA. 92675
RE: San Juan Mobile Estates
Dear Ms. Russell:
Apr'l\ Iq,znob
The undersigned are the boardmembers of the San Juan Mobile Estates Residents Association. This letter
shall confirm that we have reviewed the proposed acquisition of our community by Millennium Housing
and that we are requesting that the City take the necessary steps to facilitate Millennium's purchase.
Specifically, we ask the City to conduct the TEFRA Hearing, join the Independent Cities Lease Financing
Authority, approve the resolutions needed for the bond issuance, and approve the Regulatory Agreement,
Supplemental Regulatory Agreement, Oversight and Administrative Agreement, the Association
Membership Agreement and any other items as discussed at our meeting with the bond underwriter and
bond counsel last Thursday. We have reviewed these agreements and are very supportive of this
transaction and the City's role as a facilitator.
We appreciate the care and time taken by the City Staff and feel that the various agreements, as modified
to reflect your suggested revisions, will lead to a strong transaction that will significantly benefit the park
residents. Thanks again to the City Staff for helping make this exciting transaction happen.
Very Truly yours,
San Juan Mobile Estates Residents Association Board
B an Bolton Chairman
D Mi�II�gEj. Vice Chairman
r'
san Well Secretary
Dennis Funaro Treasurer
Deb(�,
Deborah Shuler
Bwalw
�y
eborah er enh
ATTACHMENT
32400 PASEO ADEI-ANTO
SAN JUAN CAPISTRANO, CA 92675
(949) 493-1171
(949) 493-1053 FAX
WW14.Su19)Aa11capislrario. org
MEMBERS OF THE CITY COUNCIL
NOTIFICATION OF MEETINU-0-F POTENTIAL INTEREST
OF THE SAN JUAN CAPISTRANO CITY COUNCIL
SAM ALLEVATO
DIANE BATHGATE
WYATT HART
JOE SOTO
DAVID M. SWERDLIN
The City Council of San Juan Capistrano will meet at 7:00 p.m. on May 2, 2006 in the
City Council Chamber in City Hall, to consider: "Consideration of an Associate
Membership Agreement with the Independent Cities Lease Finance Authority
(ICLFA) and the Issuance of Mobile Home Park Revenue Bonds by ICLFA to
Finance the San Juan Mobile Estates Project (Millennium Housing Corporation)"
— Item No. E3.
If you have specific thoughts or concerns regarding this item, you are encouraged to
participate in this decision making process. You can communicate with the City Council
through correspondence addressed to the Council and/or by attending the meeting and
speaking to the Council during the public meeting.
Correspondence related to this item must be received at the City Clerk's office by 5:00
p.m. on Monday, May 1, 2006 to allow time for the Council to consider its content.
If you would like to speak at the meeting, please complete a yellow "Request to Speak"
form found inside the entrance to the Council Chamber. This form is turned in at the
staff table, just in front of the Council dais. You will be called to speak by the Mayor
when the item is considered.
You have received this notice at the request of the City staff member Cindy Russell,
Administrative Services Director. You may contact that staff member at (949) 443-6301
with any questions.
The agenda, including agenda reports, is available to you on our web site:
www.sanauancapistrano.org. If you would like to subscribe to receive a notice when
agendas are posted to the web site, please make that request by sending an e-mail to:
council-agendas(r)sanivancapistrano.org.
Meg Monahan, CMC
City Clerk
cc: Millennium Housing Corporation*; San Juan Mobile Estates Resident
Association*; Independent Cities Lease Financing Authority*; Cindy Russell,
Administrative Service Director; Cindy Russell, Administrative Services Director
* Received staff report
San Juan Capistrano: Presevving the Past to Enhance the Future
32400 PASEO ADELANTO
I J.I A
MEMBERS OF THE CICOUNCIL
CITU COUNCIL
SAN JUAN OAPISTRANO, CA 92675
�%SAM
VATO
(949) 493.1171
y Int
DIANE SATHGATE
(949) 493-1053 FAXl
BIPBp SM(p
1961
WYATT HART
Www sonjuancopisrrano. orf,
1776
JOE SOTO
•
•
DAVID M. SWERDLIN
May 3, 2006
NOTIFICATION OF ACTION BY THE
CITY COUNCIL OF SAN JUAN CAPISTRANO
On May 2, 2006 the City Council of San Juan Capistrano met regarding:
"Consideration of an Associate Membership Agreement with the Independent
Cities Lease Finance Authority (ICLFA) and the Issuance of Mobile Home Park
Revenue Bonds by ICLFA to Finance the San Juan Mobile Estates Project
(Millennium Housing Corporation)" Item No, E3.
The following action was taken at the meeting: Resolution No. 06-05-02-04 adopted
approving an Associate Membership Agreement with Independent Cities Lease
Finance Authority, a supplemental Regulatory Agreement; and an
Administrantion and Oversight Agreement with respect to the San Juan Mobile
Estate acquistion by Millennium Housing Corporation; and Resolution no. 06-05-
02-05 adopted approving issuance of Moblie Home Park Revenue Bonds by the
Independent Cities Lease finance Authority for the San Juan Mobile Estates
acquistion: Hart/Soto, 5-0
The following documents are in the process of being executed: .
If you have any questions regarding this action, please contact Cindy Russell,
Administrative Services Director at 443-6301 for more detailed information.
Thank you,
Meg Monahan, CMC
City Clerk
Enclosed:
Cc: Millennium Housing Corporation"; San Juan Mobile Estates Resident
Association'; Independent Cities Lease Financing Authority'; Cindy Russell,
Administrative Service Director
San Juan Capistrano: Preserving the Past to Enhance the Future
RESOLUTION NO. 06-05-02-04
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN
CAPISTRANO, CALIFORNIA, APPROVING AN ASSOCIATE
MEMBERSHIP AGREEMENT WITH THE INDEPENDENT CITIES LEASE
FINANCE AUTHORITY, A SUPPLEMENTAL REGULATORY AGREEMENT
AND AN ADMINISTRATION AND OVERSIGHT AGREEMENT WITH
RESPECT TO THE SAN JUAN MOBILE ESTATES
WHEREAS, certain cities of the State of California (collectively, the "Members")
have entered into a Joint Powers Agreement Creating the Independent Cities Lease
Finance Authority (the "Joint Powers Agreement'), establishing the Independent Cities
Lease Finance Authority (the "Authority") and prescribing its purposes and powers, and
providing, among other things, for associate members of the Authority (an "Associate
Member");
WHEREAS, the Authority has beF ed for the purpose, among others, of
assisting its Members and Associate M- raising of capital to finance the capital
improvement needs of Local Ager ri the Joint Powers Agreement), to
provide for home mortgage f; to those Members or Associate
Members that are either a & (, alifornia, to provide financing in
connection with the in, creation, rehabilitation and
preservation of affordable I, as of the Members and Associate
Members, and to provide fina. `7 lith the provisions of applicable law in
connection with other projects tnat are in the public interest and which
benefit Members and Associa. . rs including making loans to tax-exempt
organizations from the proceeds of gage revenue bonds to finance the acquisition of
multi -family rental housing, including mobile home parks, under the provisions of Chapter 8
of Part 5 of Division 31 (commencing with Section 52100) of the Health and Safety Code;
WHEREAS, the City of San Juan Capistrano (the "City') desires to become an
Associate Member of the Authority as provided in the Associate Membership Agreement, in
the form on file with the City Clerk; and
WHEREAS, the Authority proposes to issue its Mobile Home Park Revenue Bonds
2006 Series A, 2006 Series B and 2006 Taxable Series C (the 'Bonds"); and
WHEREAS, the proceeds of the Bonds, if any are issued, will be loaned to
Millennium Housing Corporation, a California nonprofit corporation (the "Owner") for the
purpose of financing the acquisition and improvement of a 312 -space mobile home park
known as the San Juan Mobile Estates located at 32302 Alipaz Street in the City (the
'Project'); and
Page 1 of 3 05-02-2006
WHEREAS, inconsideration of the City joining the Authority, the Owner has agreed
to enter into a Supplemental Regulatory Agreement and Declaration of Restrictive
Covenants with the City (the "Supplemental Regulatory Agreement") providing for certain
additional affordable housing requirements for the Project, which shall be administered
pursuant to an Administration and Oversight Agreement, said Agreements being in the
forms on file with the City Clerk;
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San
Juan Capistrano does hereby:
Section 1. Approval of an Associate Membership Agreement (Exhibit A). This City
Council hereby approves the City's membership in the Authority as an Associate Member
and authorizes the Mayor or the Mayor Pro Tem to execute and the City Clerk to attest the
Associate Membership Agreement, in substantially the form on file with the City Clerk,
pursuant to which the City shall become an Associate Member of the Authority. The
Mayor, Mayor Pro Tem, City Manager, City Clerk and any other officers of the City, are
hereby authorized and directed to take all actions and do all things necessary or desirable
hereunder with respect to the Associate Membership Agreement, including but not limited
to, the execution and delivery of any an all agreements, certificates, instruments and other
documents which they, or any of them, may deem necessary or desirable and not
inconsistent with the purposes of this Resolution.
Section 2. Approval of the Supplemental Regulatory Agreement (Exhibit B) and 4
Administration and Oversight Agreement (Exhibit C). The form of the Supplemental !
Regulatory Agreement and Declaration of Restrictive Covenants (the "Supplemental i
Regulatory Agreement") by and between the City and the Owner presented to this meeting
and imposing certain restrictions in the Project is hereby approved and any of the Mayor,
Mayor Pro Tem or City Manager (each an "Authorized Officer") are, and each of them is,
hereby authorized and directed, for and in the name and on behalf of the City, to execute
the Supplemental Regulatory Agreement in substantially the form hereby approved, with
such additions or changes therein as the Authorized Officer executing the same may
approve, such approval to be conclusively evidenced by the execution and delivery thereof.
Any of the Authorized Officers are hereby authorized and directed to cause the
Supplemental -Regulatory Agreement to be recorded in the real estate records of the
County of Orange on a subordinate basis to the Regulatory Agreement and Deed of Trust
relating to the Bonds. Any of the Authorized Officers are further authorized to and directed,
for and in the name and on behalf of the City, to execute the Administration and Oversight
Agreement by and among the City, the Authority, the Owner and the Oversight Agent
named therein and relating to the administration of the Supplemental Regulatory
Agreement and the Regulatory Agreement.
Section 3. Effective Date. This Resolution shall take effect from and after the date
of its passage and adoption.
Page 2 of 3 05-02-2006
M
PASSED, APPROVED, AND ADOPTED this 2"d day of May 2006.
/ n VID M. SW5RDLtN, MAYOR
CLERK
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF SAN JUAN CAPISTRANO )
I, MARGARET R. MONAHAN, appointed City Clerk of the City of San Juan Capistrano, do hereby
certify that the foregoing Resolution No. 06-05-02-04 was duly adopted by the City Council of the
City of San Juan Capistrano at a Regular meeting thereof, held the 2nd day of May 2006, by the
following vote:
AYES: COU CIL MBERS: Hart, Bathgate, Soto, Allevato, and Mayor Swerdlin
NOES:O MBER: None
ABO EMBER: None
Page 3 of 3 05-02-2006
ASSOCIATE MEMBERSHIP AGREEMENT
by and between the
INDEPENDENT CITIES LEASE FINANCE AUTHORITY
and the
CITY OF SAN JUAN CAPISTRANO
THIS ASSOCIATE MEMBERSHIP AGREEMENT, dated as of May 1, 2006, by and
between THE INDEPENDENT CITIES LEASE FINANCE AUTHORITY (the "Authority") and
the CITY OF SAN JUAN CAPISTRANO, duly organized and existing under the laws of the
State of California (the "City");
WITNESSETH:
WHEREAS, certain cities of the State of California (collectively, the "Members") have
entered into a Joint Powers Agreement Creating the Independent Cities Lease Finance Authority
(the "Agreement'), establishing the Authority and prescribing its purposes and powers, and
providing, among other things, for associate members of the Authority (an "Associate
Member");
WHEREAS, the Authority has been formed for the purpose, among others, of assisting its
Members and Associate Members in the raising of capital to finance the capital improvement
needs of Local Agencies (as defined in the Joint Powers Agreement), to provide for home
mortgage financing with respect to those Members or Associate Members that are either a city or
a county of the State of California, to provide financing in connection with the improvement,
construction, acquisition, creation, rehabilitation and preservation of affordable housing within
the boundaries of the Members and Associate Members, and to provide financing in accordance
with the provisions of applicable law in connection with other projects and programs that are in
the public interest and which benefit Members and Associate Members including making loans
to tax-exempt organizations from the proceeds of mortgage revenue bonds to finance the
acquisition of multi -family rental housing, including mobilehome parks, under the provisions of
Chapter 8 of Part 5 of Division 31 (commencing with Section 52100) of the Health and Safety
Code (the "Nonprofit Financing Law");
WHEREAS, the City desires to become an Associate Member of the Authority;
WHEREAS, the Board of Directors of the Authority has determined that the City should
become an Associate Member of the Authority;
NOW, THEREFORE, in consideration of thee above premises and of the mutual promises
herein contained, the Authority and the City do hereby agree as follows:
Section 1. Associate Member Status. The City is hereby made an Associate Member of
the Authority for all purposes of the Agreement and the Bylaws of the Authority, the provisions
RVPUB\FBAUM\710435.1 I EXHIBIT A
of which are hereby incorporated herein by reference. From and after the date of execution and
delivery of this Associate Membership Agreement by the City and the Authority, the City shall
be and remain an Associate Member of the Authority.
Section 2. Restrictions and Rights of the City. The City shall not have the right, as an
Associate Member of the Authority, to vote on any action taken by the Board of Directors or by
the Authority. In addition, no officer, employee or representative of the City shall have any right
to become an officer or director of the Authority.
Section 3. No Obligations of the City. The debts, liabilities and obligations of the
Authority shall not be the debts, liabilities and obligations of the City.
Section 4. Indemnification by Owner. The Authority shall ensure that the legal
documents relating to any bonds issued to.finance projects within the jurisdiction of the City
shall provide that the owner of any such project shall indemnify, hold harmless and defend the
City and each of its officers, officials, employees and agents from any and all loss, liability,
fines, penalties, forfeitures, costs, expenses and damages (whether imposed by statute, in
contract, tort or strict liability) incurred by the City and from any and all claims, demands and
actions in law or equity (including attorney's fees and litigation expenses) arising or alleged to
have,arisen directly or indirectly out of performance by the City of this Agreement.
Section 5. Execution of the Agreement. Execution of this Associate Membership
Agreement shall satisfy the requirements of Article 27 of the Agreement and Article XI of the
Bylaws of the Authority for participation by the City in all programs and other undertakings of
the Authority, including, without limitation, any Home Mortgage Financing Program (as defined
in the Agreement), any financing under the Nonprofit Financing Law, any undertaking to finance
the acquisition, construction, installation and/or equipping of public capital improvements, and
any other financing program.
RVPUB\FBAUM\710435.1 2 EXHIBIT A
IN WITNESS WIiEREOF, the parties hereto have caused this Associate Membership
Agreement to be executed and attested by their proper officers thereunto duly authorized, on the
day and year first set forth above.
Attest:
Attest:
Secretary
City Clerk
INDEPENDENT CITIES LEASE FINANCE
AUTHORITY
President
CITY OF SAN JUAN CAPISTRANO
Mayor
RVPUB\FBAUM\710435.1 3 EXHIBIT A
RECORDING REQUESTED BY AND )
WHEN RECORDED RETURN TO: )
BEST BEST & KRIEGER LLP )
3750 University Avenue, 3rd Floor )
Riverside, CA 92501 )
Attention: Francis J. Baum, Esq. )
[Space above for Recorder's use]
SUPPLEMENTAL
REGULATORY AGREEMENT
AND DECLARATION OF RESTRICTIVE COVENANTS
By and Between the
CITY OF SAN JUAN CAPISTRANO
MMS
MILLENNIUM HOUSING CORPORATION,
as Owner
Dated as of 1, 2006
RVPUB\FBAUMV08996.1 EXHIBIT B
THIS SUPPLEMENTAL REGULATORY AGREEMENT AND DECLARATION OF
r
RESTRICTIVE COVENANTS (the "Regulatory Agreement"), made and entered into as of
1, 2006, by and between the City of San Juan Capistrano, a public body, corporate
and politic (the "City"), and Millennium Housing Corporation, a California nonprofit
corporation, as the owner of the property described in Exhibit A attached hereto (the "Owner"):
WITNESSETH:
WHEREAS, the Owner is acquiring the property described on Exhibit A attached hereto
and the improvements located thereon, consisting of a 312 -space mobile home park known as
"San Juan Mobile Estates" (the "Project"), with a loan to it from the Independent Cities Lease
Finance Authority (the "Authority") from the proceeds of the Authority's Mobile Home Park
Revenue Bonds, Series A, Series B and Taxable Series C (collectively, the "Authority Bonds");
and
WHEREAS, in connection with the issuance of the Authority Bonds, the Owner, the
Authority and Union Bank of California, N.A., as trustee for the Authority Bonds (the "Authority
Bond Trustee") have entered into a Regulatory Agreement and Declaration of Restrictive
Covenants dated as of 1, 2006 (the "Authority Regulatory Agreement") which is
being recorded in the real estate records of Orange County as a covenant running with the real
property described in Exhibit A (the "Property"); and
WHEREAS, in consideration of the City joining the Authority as an Associate Member
in order to enable the Authority to provide financing to the Owner for the Project, the Owner and
the City are entering into this Supplemental Regulatory Agreement and wish it to be recorded as
a covenant running with the Property on a subordinate basis to the Authority Regulatory
Agreement and the Deed of Trust referred to herein;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth herein, and other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the City and the Owner hereby agree as follows:
Section 1. Definitions and Interpretation. The following terms shall have the
respective mearlings assigned to them in this Section 1 unless the context in which they are used
clearly requires otherwise:
"Adjusted Income" — The total anticipated annual income of all persons in a household,
as calculated in accordance with 25 California Code of Regulations Section 6914 or pursuant to a
successor State housing program that utilizes a reasonably similar method of calculation of
adjusted income. In the event that no such program exists, the City shall provide the Owner with
a reasonably similar method of calculation of adjusted income as provided in said Section 6914.
"Administration Agreement" - The Administration and Oversight Agreement, dated as of
1, 2006, by and among the Authority, the City, the Owner and the Oversight Agent.
"Area"- The Primary Metropolitan Statistical Area in which the Project is located.
"Authority" - The Independent Cities Lease Finance Authority. '
RVPUBTBAUM\708986.1 I
"Authority Bonds" - Collectively, the Authority's Mobile Home Park Revenue Bonds
(San Juan Mobile Estates) Series 2006A, Mobile Home Park Subordinate Revenue Bonds (San
Juan Mobile Estates) Series 2006B and Mobile Home Park Subordinate Revenue Bonds (San
Juan Mobile Estates) Taxable Series 2006C issued pursuant to an Indenture of Trust between the
Authority and the Authority Bond Trustee and dated as of 1, 2006.
"Authority Bond Trustee" - Union Bank of California, N.A., as trustee for the Authority
"Certificate of Continuing Program Compliance" - The certificate with respect to the
Project to be filed by the Owner with the Authority, the
Authority Bond Trustee which shall be substantially in
Regulatory Agreement as Exhibit C.
"City" - The City of San Juan Capistrano.
"County" - The County of Orange.
City, the Oversight Agent and the
the form attached to the Authority
"Deed of Trust" - The Deed of Trust defined in the Indenture.
"Income Certification" - The Income Computation and Certification attached to the
Authority Regulatory Agreement as Exhibit B.
"Lower Income Residents" - An individual or family household that, on the later of. (i)
the date of this Agreement, or (ii) the date of the Lower Income Resident's initial occupancy of
the Park, has an Adjusted Income that does not exceed the qualifying limits for lower income
households, adjusted for actual household size, as established and amended from time to time
pursuant to Section 8 for the United States Housing Act of 1937, and as published by the State of
California Department of Housing and Community Development.
"Lower Income Spaces" - The spaces in the Project designated for occupancy by Lower
Income Residents pursuant to Section 4(a) of this Supplemental Regulatory Agreement.
"Median Income for the Area" - The median gross yearly income adjusted for household
size for the Area, as published from time to time by the State. In the event that such income
determinations are no longer published, or are not updated for a period of at least eighteen (18)
months, the City shall provide the Owner with other income determinations which are reasonably
similar with respect to methods of calculation to those previously published by the State.
"Oversight Agent" - the Oversight Agent appointed under the Administration Agreement,
which initially shall be Wolf & Company Inc.
"Project Restriction Period" - The period ending 35 years from the execution date of this
Supplemental Regulatory Agreement.
"Qualified Residents" - means Very Low Income Residents and Lower Income
Residents.
"Qualified Space" - a Very Low Income Space or a Lower Income Space.
RVPUB\FBAUM\708986.1 2
"Rental Assistance Fund" - The fund by that name established pursuant to the Indenture
and to be administered pursuant to Section 2(b) hereof.
"Space" - A mobile home space within the Project upon which a mobile home may be
placed.
"Very Low Income Residents" - Individuals or families with an Adjusted Income which
does not exceed the qualifying limits for very low income households, adjusted for actual
household size, as established and amended from time to time pursuant to Section 8 of the
United States Housing Act of 1937, and as published by the State of California Department of
Housing and Community Development.
"Very Low Income Spaces" - The Spaces in the Project designated for occupancy by
Very Low Income Residents pursuant to Section 4(a) of this Supplemental Regulatory
Agreement.
Such terms as are not defined herein shall have the meanings assigned to them in the Indenture.
Unless the context clearly requires otherwise, as used in this Supplemental Regulatory
Agreement, words of the masculine, feminine or neuter gender shall be construed to include each
other gender when appropriate and words of the singular number shall be construed to include
the plural number, and vice versa, when appropriate. This Supplemental Regulatory Agreement
and all the terms and provisions hereof shall be construed to effectuate the purposes set forth
herein and to sustain the validity hereof. The defined terms used in the preamble and recitals of
this Supplemental Regulatory Agreement have been included for convenience of reference only,
and the meaning, construction and interpretation of all defined terms shall be determined by
reference to this Section 1 notwithstanding any contrary definition in the preamble or recitals
hereof. The titles and headings of the sections of this Supplemental Regulatory Agreement have
been inserted for convenience of reference only, and are not to be considered a part hereof and
shall not in any way modify or restrict any of the terms or provisions hereof or be considered or
given any effect in construing this Supplemental Regulatory Agreement or any provisions hereof
or in ascertaining intent, if any question of intent shall arise.
Section 2. Membership in Authority; Rental Assistance Fund.
(a) City Membership in Authority. In consideration of the Borrower entering into
this Supplemental Regulatory Agreement, the City has agreed to become an Associate Member
of the Authority in order to enable the Authority to provide financing to the Owner for the
Project.
(b) Rental Assistance Fund. (i) The Owner shall establish with the Authority Bond
Trustee the Rental Assistance Fund, which shall be held by the Authority Bond Trustee pursuant
to Section 5.18 of the Indenture. After initial funding of the Rental Assistance Fund, the Owner
shall thereafter fund additional deposits to the Rental Assistance Fund from moneys in the
Surplus fund under the Indenture so as to maintain sufficient moneys in the Rental Assistance
Fund to meet the Owner's obligations under this Section 2(b).
(ii) The Owner is authorized to make monthly withdrawals and utilize moneys in the
Rental Assistance Fund to provide a subsidy for rental payments to be made by tenants in the
Project in the manner and in the amounts set forth as follows:
RVPus\FSAUM\709986.1 3
(a) Upon close of escrow ("Close of Escrow"), initial space rent for each
mobilehome space in the Project occupied by a resident at that time will be $805 per
month (the "Rent Cap"). The Rent Cap for residents that do not currently rent space in
the Project will be adjusted annually after the Close of Escrow to the rent permitted under
the Rent Control Ordinance of the City of San Juan Capistrano (the "Rent Control
Ordinance"). The Rent Cap for residents that currently rent space in the Project or rent
space in the Project within seven days of the Close of Escrow (`Current Residents") shall
remain at $805 per month until the second anniversary of the Close of Escrow, and shall
thereafter be adjusted annually to the rent permitted under the Rent Control Ordinance
(said amount, as adjusted from time to time, being referred to herein as the "Space
Rent").
(b) Notwithstanding the Space Rent set forth in (a) above, every Current
Resident will pay only that amount permitted as rent under the Rent Control Ordinance
and any difference will be provided as assistance from the Rental Assistance Fund such
that the total of the rent actually paid by such Current Resident, and the amount paid as
rental assistance will equal the Space Rent. This rental subsidy for Current Residents
will continue to be paid from the Rental Assistance Fund as long as the Current Resident
resides in the Project.
(c) All rental assistance will be contingent upon the Current Resident
applicant's compliance with park rules, including the requirement to provide the Annual
Income Certification needed for the Owner's compliance with the bond documents;
failure to comply with park rules or the annual certification requirement, after written
notice and the expiration of a reasonable cure period, may result in a suspension of the
rental assistance, such suspension to continue until the Current Resident is again in
compliance.
(d) The Owner shall not seek to evict Current Residents who, while otherwise
complying with park rules, cannot pay the subsidized rents; in such cases, the Owner
shall use park surplus funds or the Rental Assistance Fund to reasonably further
subsidize or defer a portion of the rent, depending upon individual circumstances, but the
Owner shall not be obligated to subsidize or defer sums in excess of the amount that
would reduce the rent payable by a Current Resident below the rent that would be
payable by that Current Resident under the Rent Control Ordinance had the Owner never
purchased the Project. Owner shall also assist any Current Resident brought to the
Owner's attention by the City, to the extent such assistance will not prevent the Owner
from meeting its other obligations under its various bond agreements.
Section 3. Project Requirements. The Owner hereby represents, as of the date
hereof, and covenants, warrants and agrees as follows:
(a) The Project is being owned and operated for the purpose of providing residential
rental housing, consisting of one mobile home Space for each household, together with related
facilities.
(b) All of the mobile homes in the Project will contain separate facilities for living,
sleeping, eating, cooking and sanitation, including a sleeping area, bathing and sanitation
facilities and cooking facilities equipped with a cooking range, refrigerator and sink.
RVPUB\FBAUM\708986.1 4
(c) All of the Spaces will be available for rental on a continuous basis to members of
the general public, and the Owner will not give preference to any particular class or group in
renting the Spaces in the Project, except to the extent that Spaces are required to be leased or
rented to Qualified Residents.
(d) The Project comprises a single geographically and functionally integrated project
for residential rental property, as evidenced by the ownership, management, accounting and
operation of the Project.
(e) There shall be no discrimination against or segregation of any person or group of
persons on account of race, color, religion, age, sex, marital status, ancestry, national origin,
source of income (e.g. AFDC or SSI) or disability in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Project nor shall the transferee or any person claiming
under or through the transferee, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees of the Project.
(f) The Very Low Income Spaces and the Lower Income Spaces shall be
intermingled with, and shall be of comparable quality to, all other Spaces in the Project. Tenants
in all Spaces shall have equal access to and enjoyment of all common facilities of the Project.
(g) In the aggregate, no more than two persons per bedroom, plus one person shall
occupy any Space in the Project. For example, with respect to a two bedroom mobilehome,
maximum occupancy shall be 5 persons.
(h) The Owner will accept as tenants, on the same basis as all other prospective
tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the
existing housing program under Section 8 of the United Stated Housing Act, or its successor.
The Owner shall not apply selection criteria to Section 8 certificate or voucher holders that is
more burdensome than criteria applied to all other prospective tenants, nor shall the Owner apply
or permit the application of management policies or lease provisions with respect to the Project
which have the effect of precluding occupancy of Spaces by such prospective tenants.
(i) The Owner agrees to honor all existing lease agreements in effect on the date of
the Agreement, including any provisions contained therein with respect to rent adjustments, or if
requested by a tenant who is a party to such a lease agreement, to replace such lease agreement
with a month-to-month lease arrangement, subject to the Rent Control Ordinance.
Section 3A. Property Management and Maintenance. The following provisions
shall apply during the term of this Supplemental Regulatory Agreement.
(a) Management Responsibilities. The Owner is responsible for all management
functions with respect to the Project including without limitation the selection of tenants,
certification and recertification of household size and income, evictions, collection of rents and
deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital
items, and security. The City shall not have responsibility over management of the Project. The
Owner may delegate its duties under this Section 3A to a property management company. A
resident manager shall also be required. hi no instance shall the Owner delegate or forego its
responsibility to manage and operate the Project in the manner set forth in this Supplemental
Regulatory Agreement and the Loan Agreement.
RVPUBTBAUM\708986.1 5
(b) Management and Operation of Project. The Owner acknowledges that there
exists a Residents Association for the Project and a governing board thereof (the "Resident
Association Board"). The Owner agrees that the Resident Association Board may provide tenant
comment and input to the Owner in the management and operation of the Project. The Owner or
its representative or agent agrees to meet with any such Resident Association Board at least
twice a year, or at such other frequency as agreed by the Resident Association Board and the
Owner, to receive comments and recommendations with respect to Project operation and
management. The Owner further agrees to provide regular reports (at least quarterly, or at such
other intervals as agreed to by the Owner and the Resident Association Board) relating to the
operation of the Project to the Resident Association Board. While the Resident Association
Board shall have no decision-making authority with respect to the management and operation of
the Project, the Owner agrees to use its best efforts to implement recommendations of the
Resident Association Board that can reasonably be implemented by the Owner and that will not
cause the Owner, in its reasonable judgment, to be unable to perform its obligations under this
Agreement, the Authority Regulatory Agreement, the Loan Agreement and the Deed of Trust.
The Owner further agrees that it shall not refuse any good -faith request by the Resident
Association Board for the addition, deletion or amendment of a Project rule or regulation absent
a good -faith, business reason for doing so. The Owner may request all residents of the Project to
vote on any such addition, deletion or amendment. The Owner further agrees to review and take
such action as it determines to be appropriate with respect to any documented complaints about
Project management presented to it by the Resident Association Board.
(c) Property Maintenance. The Owner agrees, for the entire Term of this
Supplemental Regulatory Agreement, to maintain all common area interior and exterior
improvements and common buildings on the Project (exclusive of the mobile homes and tenant
spaces), including landscaping and common buildings on the Project in good condition and
repair (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws,
rules, ordinances, orders and regulations of all federal, state, county, municipal, and other
governmental agencies and bodies having or claiming jurisdiction and all their respective
departments, bureaus, and officials.
The City places prime importance on quality maintenance to ensure that all City -assisted
affordable housing projects within the City are not allowed to deteriorate due to below-average
maintenance. -
Section 4. Qualified Residents. The Owner hereby represents, as of the date hereof,
and warrants, covenants and agrees as follows:
(a) During the Project Requirement Period (a) not less than twenty percent (20%) of
the Spaces in the Project shall be designated as Very Low Income Spaces and shall be
continuously occupied by Very Low Income; and (b) not less than thirty percent (30%) of the
Spaces in the Project shall be designated as Lower Income Spaces and shall be continuously
occupied by Lower Income Residents. The monthly rent charged for one-half of the Very Low
Income Spaces (i.e., 10% of the Spaces in the Project) shall be not greater than as follows:
(A) where a Very Low Income Resident is both the registered and legal owner
of the mobile home and is not making mortgage payments for the purchase of that mobile
home, the total rental charge for occupancy of the Space (excluding a reasonable
allowance for other related housing costs determined at the time of acquisition of the
RVPUB\FBAUM\708986.1 6
Project by the Owner and excluding any supplemental rental assistance from the State,
the federal government, or any other public agency to the Very Low Income Resident, on
behalf of the Space and the mobile home) shall not exceed one -twelfth of 30 percent of
50 percent of Median Income for the Area, adjusted for household size in the manner set
forth below.
(B) where a Very Low Income Resident is the registered owner of the mobile
home and is making mortgage payments for the purchase of that mobile home, the total
rental charge for occupancy of the Space (excluding any charges for utilities and storage
and excluding any supplemental rental assistance from the State, the federal government,
or any other public agency to the Very Low Income Resident, or on behalf of the Space
and mobile home), shall not exceed one -twelfth of 15 percent of 50 percent, of Median
Income for the Area, as adjusted for household size in the manner set forth below.
(C) where a Very Low Income Resident rents both the mobile home and the
Space occupied by the mobile home, the total rental payments paid by the Very Low
Income Resident on the mobile home and the Space occupied by the mobile home
(excluding any supplemental rental assistance from the State, the federal government, or
any other public agency to that Very Low Resident or on behalf of that Space and mobile
home) shall not exceed one -twelfth of 30 percent of 50 percent, of Median Income as
established by the U.S. Department of Housing and Urban Development for the Area
adjusted for household size in the manner set forth below.
In adjusting rent for household size, it shall be assumed that two persons will
occupy a single -wide mobilehome and three persons will occupy a multisectional j
mobilehome; provided that if the multisectional mobilehome has three or more bedrooms,
then it shall be assumed that four persons shall occupy a three-bedroom unit and five
persons will occupy a four-bedroom unit.
(b) hi the event a recertification of the income of a Very Low Income Resident or a
Lower Income Resident, as applicable, in accordance with Section 4(d) below demonstrates that
such tenant no longer qualifies as a Very Low Income Resident or a Lower Income Resident, as
applicable, the Space occupied by such tenant shall continue to be treated as a Very Low Income
Space or a Lower Income Space, as applicable, unless and until any Space in the Project
thereafter is occupied by a new tenant other than a Very Low Income Resident or a Lower
Income Resident, as applicable. Moreover, a Space previously occupied by a Very Low Income
Resident, a Lower Income Resident or a Moderate Income Resident, as applicable, and then
vacated shall be considered occupied by a Qualified Resident until reoccupied, other than for a
temporary period, at which time the character of the Space shall be redetermined. In no event
shall such temporary period exceed thirty-one (3 1) days. Notwithstanding anything herein to the
contrary, if at any time the number of Qualified Residents falls below the number required by
subparagraph (a) (i) of this Section, the next available vacant Space shall be rented to a Qualified
Resident.
(c) Annually, the Owner will obtain and maintain on file an Income Certification
form from each Qualified Resident occupying a Qualified Space, dated immediately prior to the
initial occupancy of such Qualified Resident in the Project (or prior to the Closing Date in the _a
case of existing Very Low Income Residents). In addition, the Owner will provide such further
information as may be required in the future by the State of California, as requested by the City
RVPUBTBAUM\708986.] 7
or the Oversight Agent. The Owner shall verify that the income provided by an applicant with
respect to a Space to be occupied after the Closing Date is accurate by taking one or more of the
following steps as a part of the verification process: (1) obtain a federal income tax return for the
most recent tax year, (2) obtain a written verification of income and employment from
applicant's current employer such as a current pay stub or W-2 form, (3) if an applicant is
unemployed or did not file a tax return for the previous calendar year, obtain other verification of
such applicant's income reasonably satisfactory to the Oversight Agent or (4) such other
information as may be reasonably requested by the Oversight Agent.
Within ten days of the last day of each calendar quarter during the term of this Regulatory
Agreement commencing with the quarter ending 2006, the Owner shall advise the
Oversight Agent or in the absence of a Oversight Agent, the City, of the status of the occupancy
of the Project by delivering to the Oversight Agent a Certificate of Continuing Program
Compliance; provided, however, with the prior written approval of the Oversight Agent or the
City, as the case may be, such Certificate need be filed only semi-annually. Copies of the most
recent Income Certifications for Qualified Residents commencing or continuing occupancy of a
Qualified Space shall be made available to the City or Oversight Agent upon request.
(d) Annually, the Owner shall recertify the income of the occupants of such Very
Low Income Spaces and Lower Income Spaces, as applicable, by obtaining a completed Income
Certification based upon the current income of each occupant of the unit. In the event the
recertification demonstrates that such household's income exceeds 140% of the income at which
such household would qualify as Very Low Income Residents or Lower Income Residents, as
applicable, such household will no longer qualify as a Very Low Income Resident or a Lower
Income Resident, as applicable, and the Owner either (i) will designate another qualifying
Tenant and Space in the Project as a Very Low Income Resident or a Lower Income Resident, as
applicable and a Very Low Income Space or a Lower Income Space, as applicable, respectively,
or (ii) will rent the next available vacant Space to one or more Very Low Income Residents or
Lower Income Residents, as applicable.
(e) The Owner will maintain complete and accurate records pertaining to the
Qualified Spaces, and will permit any duly authorized representative of the City or the Oversight
Agent to inspect during normal business hours and with prior notice the books and records of the
Owner pertaining to the Project, including those records pertaining to the occupancy of the
Qualified Spaces.
(f) Each lease or rental agreement pertaining to a Qualified Space occupied after the
Closing Date shall contain a provision to the effect that the Owner has relied on the Income
Certification and supporting information supplied by the Qualified Resident in determining
qualification for occupancy of the Qualified Space, and that any material misstatement in such
certification (whether or not intentional) may be cause for immediate termination of such lease.
Each lease or rental agreement will also contain a provision that failure to cooperate with the
annual recertification process reasonably instituted by the Owner pursuant to Section 4(d) above
will disqualify the Space as a Qualified Space and provide grounds for termination of the lease.
The Owner agrees to provide to the Oversight Agent and the City, a copy of the form of
application and lease or rental agreement to be provided to prospective Qualified Residents and
any amendments thereto.
RVPUBTBAUW708986.1 8
(g) In the event, despite the Owner's exercise of best efforts to comply with the
provisions of Section 4 of this Regulatory Agreement, the Owner shall have been out of
compliance with any of the restrictions of Section 4 hereof relative to Qualified Residents, for a j
period in excess of six months, then at the sole option of the City the term of the Regulatory
Agreement shall be automatically extended for the period of non-compliance upon written notice
,to the Owner and the Oversight Agent from the City, such extension to relate to the Qualified
Spaces and Qualified Residents as to which such noncompliance relate.
Section 5. Repair and Replacement Fund. The Owner agrees and covenants to
cause to be established and maintained the Repair and Replacement Fund created by Section
5.3(7) of the Indenture and to be used and replenished as provided in Sections 5.13 and 5.7(h) of
the Indenture and Section 6.22 of the Loan Agreement.
Section 6. Other Covenants. (a) The Owner further covenants and agrees as
follows: The Owner will comply with the provisions of Title 2, Chapter 2, Article 9 of the City
Municipal Code relating to mobile home rent control (the "Rent Control Ordinance"), a copy of
which Rent Control Ordinance is attached hereto as Exhibit B notwithstanding any legal
challenges to the Rent Control Ordinance, and further agrees that it shall at all times abide by and
follow the terms and provisions of the Rent Control Ordinance, and shall not in any manner
challenge said provisions.
(b) In the event the Owner requests any discretionary rental increases under the Rent
Control ordinance, the Owner agrees not to appeal any decision of the City with respect to such
request.
i
(c) In the event the Rent Control Ordinance is determined in any legal proceeding to
be invalid for any reason, the Owners agrees to continue to comply with the provisions of the
Rent Control Ordinance as if it were still in effect.
Section 7. Indemnification. The Owner shall indemnify, hold harmless and defend
the City, the Oversight Agent and the Authority Bond Trustee and the respective officers,
members, directors, officials and employees of each of them (the "indemnified party") against all
loss, costs, damages, expenses, suits, judgments, actions and liabilities of whatever nature, joint
and several (including, without limitation, attorneys' fees, litigation and court costs, amounts
paid in settlement, and amounts paid to discharge judgments), directly or indirectly resulting
from or arising out of or related to (a) the operation, use, occupancy, maintenance, or ownership
of the Project (including compliance with laws, ordinances and rules and regulations of public
authorities relating thereto); or (b) any written statements or representations with respect to the
Owner the Project or the Authority Bonds made or given to the City, the Oversight Agent or the
Authority Bond Trustee, by the Owner, or any of its agents or employees, including, but not
limited to, statements or representations of facts or financial information; provided, however, the
Owner shall not be obligated to indemnify the City, the Authority Bond Trustee or the Oversight
Agent for damages caused by the gross negligence or willful misconduct of the City, the
Authority Bond Trustee or the Oversight Agent. The Owner also shall pay and discharge and
shall indemnify and hold harmless the City, the Oversight Agent and the Authority Bond Trustee
from (x) any lien or charge upon payments by the Owner to the City and the Authority Bond
Trustee hereunder and (y) any taxes (including, without limitation, all ad valorem taxes and sales J
taxes), assessments, impositions and other charges in respect of any portion of the Project. If any
such claim is asserted, or any such lien or charge upon payments, or any such taxes, assessments,
RVPUB\FBAUM\708986.1 9
impositions or other charges, are sought to be imposed, the City shall give prompt notice to the
Owner, and the Owner shall have the sole right and duty to assume, and will assume, the defense
thereof, including the employment of counsel selected by the indemnified party and the payment
of all reasonable expenses related thereto, with full power to litigate, compromise or settle the
same in its sole discretion; provided, however, that the Owner shall have the right to review and
approve or disapprove any such compromise or settlement, and provided further that any such
approval shall not be unreasonably withheld.
Section 8. Consideration. The City has agreed to become an Associate Member of
the Authority for the purpose, among others, of inducing the Owner to own and operate the
Project such that the Project shall contribute to the City's efforts to provide affordable housing to
Qualified Residents in the City and to the satisfaction of the City's ongoing housing burden. In
consideration of the City joining the Authority as an Associate Member in order to allow the
Authority to provide financing to the Owner for the Project, the Owner has entered into this
Supplemental Regulatory Agreement and has agreed to restrict the uses to which the Project can
be put on the terms and conditions set forth herein.
Section 9. Reliance. In performing its duties and obligations hereunder, the City
may rely upon statements and certificates of the Owner and Qualified Residents, and upon audits
of the books and records of the Owner pertaining to the Project. In addition, the City may
consult with counsel, and the opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken or suffered by the City hereunder in good faith and
in conformity with such opinion.
Section 10. Sale or Transfer of the Project; Option to Purchase. (a) The Owner
intends to hold the Project for its own account, has no current plans to sell, transfer or otherwise
dispose of the Project, and hereby covenants and agrees not to sell, transfer or otherwise dispose
of the Project, or any portion thereof (other than for individual tenant use as contemplated
hereunder), without obtaining the prior written consent of the City and upon receipt by the City
of (i) reasonable evidence satisfactory to the City that the Owner's purchaser or transferee has
assumed in writing and in full, the Owner's duties and obligations under this Supplemental
Regulatory Agreement, (ii) an opinion of counsel for the transferee that the transferee has duly
assumed the obligations of the Owner under this Supplemental Regulatory Agreement, and that
such obligations and this Supplemental Regulatory Agreement are binding on the transferee, (iii)
the City receives evidence acceptable to the City that either (A) the transferee has experience in
the ownership, operation and management of comparable projects without any record of material
violations of discrimination restrictions or other state or federal laws or regulations applicable to
such projects, or (B) the transferee agrees to retain a property management firm with the
experience and record described in subparagraph (A) above and in either case, at its option, the
City may cause the Oversight Agent to provide on-site training in program compliance if the
City determines such training is necessary and (iv) the City receives evidence that the purchaser
is a not for-profit organization. It is hereby expressly stipulated and agreed that any sale, transfer
or other disposition of the Project in violation of this Section 10 shall be null, void and without
effect, shall cause a reversion of title to the Owner, and shall be ineffective to relieve the Owner
of its obligations under this Supplemental Regulatory Agreement. Not less than 30 days prior to
consummating any sale, transfer or disposition of any interest in the Project, the Owner shall
deliver to the City and the Oversight Agent a notice in writing explaining the nature of the
proposed transfer.
RVPUB\FBAUM\708986.1 10
(b) Notwithstanding the provisions of Section 10(a) above, the Owner shall grant to
the San Juan Capistrano Residents Association (the "Residents Association") an option to
purchase the Project from the Owner under a written option agreement on the following general
terms:
(i) During the first 10 years following the Closing Date, the purchase price of
the Project under said option shall be equal to $ plus the costs of any financing
undertaken by the Residents Association to accomplish such purchase;
(ii) After the first 10 years following the Closing Date, the purchase price of
the Project shall be equal to $ plus the increase in the Consumer Price Index for
the preceding year (beginning with year 11), together with the costs of any financing
undertaken by the Residents Association to accomplish said purchase;
(iii) The Residents Association shall pay, in addition to the purchase price set
forth in (a) or (b) above, all costs, fees and expenses, including, but not limited to, title,
escrow and all other closing costs, necessary to defease, prepay and redeem the
Outstanding Bonds of the Authority and the transfer of ownership of the Project from the
Owner to the Residents Association; and
(iv) The Residents Association shall provide to the City, the Authority and the
Owner an opinion of Bond Counsel to the effect that the exercise of said option and the
purchase of the Project by the Residents Association and the defeasance of the
Outstanding Authority Bonds will not in and of itself, cause interest on said Authority
Bonds to be included in gross income for federal income tax purposes.
(c) It is hereby expressly stipulated and agreed that any sale, transfer or other
disposition of the Project in violation of this Section 10 shall be null, void and without effect,
shall cause a reversion of title to the Owner, and shall be ineffective to relieve the Owner of its
obligations under this Supplemental Regulatory Agreement. Not less than 30 days prior to
consummating any sale, transfer or disposition of any interest in the Project, the Owner shall
deliver to the City and the Oversight Agent a notice in writing explaining the nature of the
proposed transfer.
Section 11. Term. This Regulatory Agreement and all and several of the terms hereof
shall become effective upon its execution and delivery and shall remain in full force and effect
during the Project Restriction Period, it being expressly agreed and understood that the
provisions hereof are intended to survive the retirement of the Authority Bonds.
Notwithstanding any other provisions of this Regulatory Agreement to the contrary, this entire
Supplemental Regulatory Agreement, or any of the provisions or sections hereof, may be
terminated upon agreement by the City and the Owner.
The terms of this Supplemental Regulatory Agreement to the contrary notwithstanding,
this Supplemental Regulatory Agreement, and all and several of the terms hereof, shall terminate
and be of no further force and effect in the event of (i) a foreclosure or delivery of a deed in lieu
of foreclosure whereby the Authority Bondowners or a third party shall take possession of the
Project, or (ii) involuntary non-compliance with the provisions of this Supplemental Regulatory
Agreement caused by fire, seizure, requisition, change in a federal law or an action of a federal
agency after the date hereof which prevents the City from enforcing the provisions hereof, or (iii)
RVPUB\FBAUM\708986.1 I I
condemnation or a similar event and the payment in full and retirement of the Authority Bonds
theretofore or within a reasonable period thereafter. Upon the termination of the terms of this
Supplemental Regulatory Agreement, the parties hereto agree to execute, deliver and record
appropriate instruments of release and discharge of the terms hereof, provided, however, that the
execution and delivery of such instruments shall not be necessary or a prerequisite to the
termination of this Supplemental Regulatory Agreement in accordance with its terms.
Section 12. Covenants to Run With the Land. The Owner hereby subjects the
Project (including the Project site) to the covenants, reservations and restrictions set forth irl this
Supplemental Regulatory Agreement. The City and the Owner hereby declare their express
intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants
running with the land and shall pass to and be binding upon the Owner's successors in title to the
Project; provided, however, that upon the termination of this Supplemental Regulatory
Agreement said covenants, reservations and restrictions shall expire with the exception of the
non-discrimination covenant of Section 3(e) which shall continue in perpetuity. Each and every
contract, deed or other instrument hereafter executed covering or conveying the Project or any
portion thereof 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.
Section 13. 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 Project is rendered less valuable thereby. 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
Project by Qualified Residents, the intended beneficiaries of such covenants, reservations and
restrictions.
Section 14. Uniformity; Common Plan. The covenants, reservations and restrictions
hereof shall apply uniformly to the entire Project in order to establish and carry out a common
plan for the use, development and improvement of the Project.
Section 15. Enforcement. If the Owner defaults in the performance or observance of
any covenant, agreement or obligation of the Owner set forth in this Supplemental Regulatory
Agreement, and if such default remains uncured for a period of 60 days after notice thereof shall
have been given by the City to the Owner (provided, however, that the City may at its sole option
extend such period and provided further, in the event any default relates to Section 4 hereof and
the Owner is exercising best efforts to comply with such restrictions as determined by the City in
its reasonable discretion, then the cure period described above shall be 6 months and shall be
subject to the extension of the Project Restriction Period under Section 4(h) hereof), then the
City shall declare an "Event of Default" to have occurred hereunder, and the City, at its option,
may take any one or more of the following steps:
(a) by mandamus or other suit, action or proceeding at law or in equity, 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 hereunder;
(b) have access to and inspect, examine and make copies of all of the books and
records of the Owner pertaining to the Project; and
RVFUB\FBAUM\708986.1 12
(c) take such other action at law or in equity as may appear necessary or desirable to
enforce the obligations, covenants and agreements of the Owner hereunder.
All fees, costs and expenses of the City and the Oversight Agent (including, without
limitation, reasonable attorneys' fees) reasonably incurred in taking any action pursuant to this
Section 15 shall be the sole responsibility of the Owner.
Section 16. Recording and Filing. The Owner shall cause this Supplemental
Regulatory Agreement and all amendments and supplements hereto, to be recorded and filed,
after the recording of the Authority Regulatory Agreement and the Deed of Trust in the real
property records of the County and in such other places as the may reasonably request. The
Owner shall pay all fees and charges incurred in connection with any such recording.
Section 17. Payment of Fees. In the event of a default hereunder by the Owner, the
Owner shall pay to the City reasonable compensation for any services rendered by it hereunder
and reimbursement for all expenses reasonably incurred by in connection with such default.
Section 18. Governing Law. This Supplemental Regulatory Agreement shall be
governed by the laws of the State of California.
Section 19. Amendments. This Supplemental Regulatory Agreement shall be
amended only by a written instrument executed by the parties hereto or their successors in title,
and duly recorded in the real property records of the County.
Z
i
Section 20. Notice. All notices, certificates or other communications shall be
sufficiently given and shall be deemed given on the date personally delivered or on the second
day following the date on which the same have been mailed by certified mail, return receipt
requested, postage prepaid, addressed as follows:
City: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: City Manager
Oversight Wolf & Company Inc.
Agent: 5 Pembroke Lane
Laguna Niguel, CA 92677
Attn: Wesley R. Wolf
Owner: Millennium Housing Corporation
660 Newport Center Drive, Suite 1020
Newport Beach, CA 92660
Attn: George Turk
Any of the foregoing parties may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates, documents or other communications
shall be sent. G
RVPUB\FHAUM\708986.1 13
Section 21. Severability. If any provision of this Supplemental Regulatory
Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining portions hereof shall not in any way be affected or impaired thereby.
Section 22. Multiple Counterparts. This Supplemental Regulatory Agreement may
be executed in multiple counterparts, all of which shall constitute one and the same instrument,
and each of which shall be deemed to be an original.
Section 23. Subordination. This Supplemental Regulatory Agreement and any
amendments, modifications, renewals and extensions hereof shall at all times be a lien and
charge on the Project and the real property described on Exhibit A hereto expressly and
unconditionally subordinate to the lien and charge thereon of the Authority Regulatory
Agreement and the Deed of Trust.
RVPUBIFBAUM1708986.1 14
IN WITNESS WHEREOF, the City and the Owner have executed this Supplemental
Regulatory Agreement by duly authorized representatives, all as of the date first written
hereinabove.
CITY OF SAN JUAN CAPISTRANO
By: _
Title:
MILLENNIUM HOUSING CORPORATION, a
California non-profit public benefit corporation
an
President
RVPU13\FBAUM\708986.1 15
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On 2006, before me, personally appeared
❑ personally known to me OR ❑ proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature of Notary
[SEAL]
RVPUBTBAUM\708986.1
STATE OF CALIFORNIA
) ss.
COUNTY OF
On 2006, before me, , personally appeared
❑ personally known to me OR ❑ proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature of Notary
[SEAL]
R V PUB\FBAUM\708986.1
TABLE OF CONTENTS
Page
Section 1.
Definitions and interpretation....................................................................
1
Section 2.
Membership in Authority; Rental Assistance Fund ...................................
3
Section 3.
Project Requirements.................................................................................
4
Section 3A.
Property Management and Maintenance...................................................
5
Section 4.
Qualified Residents....................................................................................
6
Section 5.
Repair and Replacement Fund...................................................................
9
Section 6.
Other Covenants.........................................................................................
9
Section 7.
Indemnification ..........................................................................................
9
Section 8.
Consideration...........................................................................................
10
Section9.
Reliance....................................................................................................
10
Section 10.
Sale or Transfer of the Project; Option to Purchase ................................
10
Section11.
Term.........................................................................................................
11
Section 12.
Covenants to Run With the Land.............................................................
12
Section 13.
Burden and Benefit..................................................................................
12
Section 14.
Uniformity; Common Plan ......................................................................
12
Section 15.
Enforcement.............................................................................................
12
Section 16.
Recording and Filing................................................................................
13
Section17.
Payment of Fees.......................................................................................
13
Section 18.
Governing Law........................................................................................
13
Section 19.
Amendments............................................................................................
13
Section20.
Notice.......................................................................................................
13
Section 21.
Severability ........................................................................................
14
Section 22.
Multiple Counterparts..............................................................................
14
Section 23.
Subordination...........................................................................................
14
EXHIBIT A - Legal Description................................................................................................. A-1
EXHIBIT B — Rental Control Ordinance.....................................................................................B-1
RVPUB\FBAUM\708986.1 -i-
ADMINISTRATION AND OVERSIGHT AGREEMENT
by and among
INDEPENDENT CITIES LEASE FINANCE AUTHORITY
and
WOLF & COMPANY INC.,
as Oversight Agent
and
MILLENNIUM HOUSING OF CALIFORNIA,
as Borrower
and
CITY OF SAN JUAN CAPISTRANO
Dated as of 1, 2006
Relating to:
Independent Cities Lease Finance Authority
Mobile Home Park Revenue Bonds
(San Juan Mobile Estates)
Series 2006A
and
Independent Cities Lease Finance Authority
Mobile Home Park Subordinate Revenue Bonds
(San Juan Mobile Estates)
Series 2006B
and
Independent Cities Lease Finance Authority
Mobile Home Park Subordinate Revenue Bonds
(San Juan Mobile Estates)
Taxable Series 2006C
RvrUBTBAUM\709452.1 EXHIBIT C
ADMINISTRATION AND OVERSIGHT AGREEMENT
THIS ADMINISTRATION AND OVERSIGHT AGREEMENT (the "Administration
Agreement') is made and entered into as of 1, 2006, by and among the
INDEPENDENT CITIES LEASE FINANCE AUTHORITY a joint powers authority duly
organized and existing under the laws of the State of California (the "Authority"), the CITY OF
SAN JUAN CAPISTRANO, a public body corporate and politic duly organized and existing
under the laws of the State of California (the "City"), MILLENNIUM HOUSING
CORPORATION, a California nonprofit public benefit corporation (the "Borrower"), and
WOLF & COMPANY INC. (the "Oversight Agent').
RECITALS:
WHEREAS, to assist the Borrower in its acquisition of the San Juan Mobile Estates
mobile home park located in the City of San Juan Capistrano (which is an associate member of
the Authority) (the "Project'), the Authority has issued its Mobile Home Park Revenue Bonds
(San Juan Mobile Estates) Series 2006A and its Mobile Home Park Subordinate Revenue Bonds
(San Juan Mobile Estates) Series 2006B and its Mobile Home Park Subordinate Revenue Bonds
(San Juan Mobile Estates) Taxable Series 2006C (collectively, the "Bonds") pursuant to an
Indenture of Trust, dated as of 1, 2006 (the "Indenture"), by and between the
Authority and Union Bank of California, N.A., as Trustee thereunder (the "Trustee"); and
WHEREAS, the Authority has made a loan (the "Loan") of the proceeds of the Bonds to
the Borrower, as provided in the Loan Agreement, dated as of 1, 2006 (the "Loan
Agreement'), by and among the Authority, the Borrower and the Trustee, which agreement
provides for certain oversight provisions relating to the management of the Project; and
WHEREAS, the Authority has entered into a Regulatory Agreement and Declaration of
Restrictive Covenants, dated as of 1, 2006 (the "Regulatory Agreement') with the
Trustee and the Borrower, which agreement, among other things, sets forth certain restrictions
applicable to the property being financed with the proceeds of the Loan, which restrictions are
intended to assure continued compliance with the provisions of the Internal Revenue Code of
1986, as amended (the "Code"); and
WHEREAS, the Authority desires to appoint Wolf & Company, Inc., as Oversight Agent
under the Regulatory Agreement to monitor the income levels of the residents of the Qualified
Spaces (as defined in the Regulatory Agreement) and as Oversight Agent under the Loan
Agreement to carry out the duties of the Oversight Agent set forth in the Loan Agreement; and
WHEREAS, the City and the Borrower have entered into a Supplemental Regulatory
Agreement and Declaration of Restrictive Covenants dated as of 1, 2006 (the
"Supplemental Regulatory Agreement") which provides, among other things, for certain
additional affordability restrictions on the Project applicable to Qualified Residents and
Qualified Spaces; and
WHEREAS, the City desires that the Oversight Agent monitor the income levels of the
residents of the Qualified Spaces for purposes of the Supplemental Regulatory Agreement; and
RVPUB\FBAUM\709452.1 I
WHEREAS, Wolf & Company, Inc., represents that it has the necessary experience and
expertise required to evaluate whether the Project complies with the requirements set forth in the
Loan Agreement, the Regulatory Agreement and the Supplemental Regulatory Agreement.
NOW, THEREFORE, in consideration of the premises and respective representations and
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1. Definitions of Terms. All capitalized terms used in this Administration
Agreement and not otherwise defined herein shall have the respective meanings given to them in
the Indenture and/or the Regulatory Agreement and/or the Supplemental Regulatory Agreement.
1.2. Article and Section Headings. The heading or titles of the several articles and
sections hereof shall be solely for the convenience of reference and shall not affect the meaning,
construction or effect of the provisions hereof.
1.3. hiterpretation. The singular form of any word used herein, including terms
defined in the Indenture and/or the Regulatory Agreement, shall include the plural and vice
versa, if applicable. The use of a word of any gender shall include all genders, if applicable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations of the Authority. The Authority makes the following
representations:
(a) It is a joint powers authority, duly organized and existing under the Constitution
and laws of the State of California.
(b) It has the power to enter into the transactions contemplated by this Administration
Agreement and to carry out its obligations hereunder and to consummate all other transactions on
its part contemplated herein; and it has duly authorized the execution and delivery of this
Administration Agreement.
(c) The City of San Juan Capistrano is an associate member of the Authority.
2.2. Representations and Warranties of the Borrower. The Borrower makes the
following representations and warranties:
(a) It has power and authority to own its properties and carry on its business as now
being conducted, and is duly qualified to do such business wherever such qualification is
required, including the State of California.
(b) It has the power to execute and deliver this Administration Agreement and to
carry out the transactions on its part contemplated hereby; and it has duly authorized the
execution, delivery and performance of this Administration Agreement.
R VPUBTBAUMV09452. f 2
(c) The Oversight Agent is independent from and not under the control of the
Borrower, does not have any substantial interest, direct or indirect, in the Borrower, and is not an
officer or employee of the Borrower.
2.3. Representations and Warranties of the Oversight Agent. The Oversight Agent
makes the following representations and warranties:
(a) It is a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has the power and authority to carry on its business as now
being conducted.
(b) It has the power to execute and deliver this Administration Agreement and to
carry out the transactions on its part contemplated hereby; and it has duly authorized the
execution, delivery and performance of this Administration Agreement.
(c) It is independent from and not under the control of the Borrower, does not have
any substantial interest, direct or indirect, in the Borrower, and is not an officer or employee of
the Borrower.
(d) It has received copies of the Indenture, the Loan Agreement, the Regulatory
Agreement and the Supplemental Regulatory Agreement, and it is familiar with the terms and
conditions thereof as the same relate to the Code and the Act.
ARTICLE III
DUTIES AND COMPENSATION OF THE OVERSIGHT AGENT
3.1. Duties of Oversight Agent. Wolf & Company, Inc., is the initial Oversight Agent
hereunder. This Section 3.1 applies to Wolf & Company, Inc., as Oversight Agent and to any
successor Oversight Agent. In its capacity as Oversight Agent hereunder, for and on behalf of
the Authority, the Oversight Agent will perform the following duties in a careful and timely
manner, to the highest standards of its profession:
(a) It will be familiar with and will give written notice to the Authority, the City, the
Trustee and the Borrower within ten days of the publication by the Department of Housing and
Urban Development of any change in:
(i) The Median Income for the Area; and
(ii) The maximum income at which households consisting of various numbers
of persons may be determined to be Qualified Residents under the terms of the
Regulatory Agreement and the Supplemental Regulatory Agreement; and
(iii) The maximum allowable rents under each applicable provision of Section
4 of the Regulatory Agreement and Section 4 of the Supplemental Regulatory
Agreement; and
(iv) The maximum income at which households consisting of various numbers
of persons may be determined to be Very Low Income Residents or Lower Income
RVpUBTBAUM\709452.1 3
Residents, under the terms of the Regulatory Agreement and the Supplemental
Regulatory Agreement.
(b) Promptly following its receipt thereof, it will review the Income Certifications,
Certificates of Continuing Program Compliance, and all other reports and certificates furnished
to it pursuant to the Regulatory Agreement and the Supplemental Regulatory Agreement in order
to determine that each such document is complete and to verify the internal accuracy of the
calculations, and conclusions with respect to such calculations, set forth therein, including the
conclusion that the Qualified Spaces have been rented as specified by the terms of the
Regulatory Agreement and the Supplemental Regulatory Agreement; and it will maintain such
documents on file and open to the inspection by the Authority, the City, the Trustee and the
Borrower during the term of the Regulatory Agreement and the Supplemental Regulatory
Agreement.
(c) Promptly upon receipt, it will review the form of application and lease with
respect to the Qualified Spaces to verify compliance with the provisions of the Regulatory
Agreement and the Supplemental Regulatory Agreement.
(d) Promptly upon determining that any report or certificate submitted to it pursuant
to the Regulatory Agreement and the Supplemental Regulatory Agreement is inaccurate or
incomplete the Oversight Agent shall:
(i) If the inaccuracy or lack of completeness does not cause the Project to
cease to meet the qualifications set forth in Section 3 or 4 of the Regulatory Agreement,
give notice of such inaccuracy or lack of completeness to the Borrower and direct the
Borrower to correct or complete the same, as the case may be, within a 30 -day period,
subject to extension in the sole discretion of the Oversight Agent;
(ii) If the inaccuracy or lack of completeness is not corrected within thirty (30)
days or if the inaccuracy or lack of completeness causes the Project to cease to meet the
qualification set forth in Section 3 or 4 of the Regulatory Agreement immediately give
written notice of said fact to the Authority, the Trustee and the Borrower; and
(iii) If the inaccuracy or lack of completeness does not cause the Project to
meet the requirements of Section 4 of the Supplemental Regulatory Agreement, give
notice of such inaccuracy or lack of completeness to the Borrower and the City and direct
the Borrower to correct and complete the same, as the case may be, within a 30 -day
period, subject to extension in the sole discretion of the Oversight Agent.
(e) (i) hi the event that the Borrower fails to file with the Oversight Agent any report,
certification (including, in particular, the certification to the Secretary of the Treasury required
by Section 4(e) of the Regulatory Agreement) or other document required pursuant to the
Regulatory Agreement within the time set forth in the Regulatory Agreement as applicable, the
Oversight Agent shall immediately give written notice of that fact to the Authority, the Trustee,
the City and the Borrower.
(ii) In the event that the Borrower fails to file with the Oversight Agent any
report, certification or other document required pursuant to the Supplemental Regulatory
RVPUB\FBAUM\709452.1 4
Agreement within the time set forth in the Supplemental Regulatory Agreement, as
applicable, the Oversight Agent shall immediately give written notice of that fact to the
City and the Borrower.
(f) On behalf of the Authority and the City, the Oversight Agent shall, at least
annually and whenever requested by the Authority, audit the survey of the tenants of the
Qualified Spaces with respect to income levels, household sizes and such other information as
the Authority may specify, and all as further required under Section 4 of the Regulatory
Agreement and Section 4 of the Supplemental Regulatory Agreement. Based on such
information, the Authority shall determine compliance with the affordability requirements under
the Act and the Code. In the event of any noncompliance the Oversight Agent shall notify the
Authority and the City as to the nature and extent of the noncompliance and the Oversight Agent
shall suggest alternatives for bringing the Qualified Spaces into compliance.
(g) The Oversight Agent will perform on a timely basis all duties ascribed to the
Oversight Agent in the Indenture, the Loan Agreement, the Regulatory Agreement and the
Supplemental Regulatory Agreement, including without limitation the following: (i) annual
review of the Borrower's financial statements, (ii) review the coverage calculation for release of
surplus cashflow and report comments to the Borrower, the Authority and the City, (iii) review
the final budget and forward comments to the Borrower, the Authority, (iv) physical inspection
of the Project on a quarterly basis, including examination of the infrastructure, the clubhouse,
and any other common areas, and (v) monthly confirmation report to the Authority, the City and
any Bondholder requesting such information that the Trustee has received the monthly deposit in
accordance with the approved budget and, in the event that the Trustee has not, to take such
further steps as required by the Loan Agreement.
3.3. Compensation. For its services as the Oversight Agent, Wolf & Company, Inc.
shall be paid $ at Bond Closing, and thereafter an annual fee of $ payable by the
Borrower in equal quarterly installments commencing 15, 2007, as set forth in the
Indenture. The fee of the Oversight Agent shall be paid to the Oversight Agent by the Trustee
upon receipt by the Trustee of an invoice from the Oversight Agent. If the Oversight Agent
provides services outside the scope of this Agreement, as requested in writing by the Authority,
the compensation shall be paid at the then prevailing fee schedule of the Oversight Agent.
ARTICLE IV
TERM
4.1. Term of Agreement. Unless sooner terminated pursuant to the provisions of
Sections 4.2 and 4.3 hereof, this Administration Agreement shall remain in full force and effect
for the term of the Regulatory Agreement.
4.2. Termination. At its sole discretion, the Authority may terminate this
Administration Agreement upon giving the Oversight Agent and the Borrower thirty (30) days
written notice of its intention to do so. This Administration Agreement may be terminated in
whole or in part only as to the services described in Section 3. 1, whereupon a partial fee for the
services not terminated will be agreed upon by the parties and memorialized in an amendment
hereto.
RVPUB\FBAUM\709452.1 5
4.3. Resignation of Oversight Agent. With the written consent of the Authority, the
Oversight Agent may resign from its position and terminate this Administration Agreement by
giving the other parties hereto thirty (30) days written notice of its intention to do so.
4.4 Termination With Respect to Supplemental Regulatory Agreement. At its sole
discretion, the City may terminate this Administration Agreement with respect to the
Supplemental Regulatory Agreement upon giving the Oversight Agent and the Borrower thirty
(30) days written notice of its intention to do so.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1. Execution in Counterparts. This Administration Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.
5.2. Business Days. If any action is required to be taken hereunder on a date which
falls on other than a Business Day, such action shall be taken on the next succeeding Business
Day.
5.3. Governing Law. This Administration Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
5.4. Notices. All notices, certificates or other communications hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed by registered mail,
postage prepaid, addressed to the appropriate Notice Address set forth in the Regulatory
Agreement and the Supplemental Regulatory Agreement. The Notice Address of the Oversight
Agent is: Wolf & Company Inc., 5 Pembroke Lane, Laguna Niguel, California 92677, Attention:
Wesley R. Wolf.
RVPUB\FBAUM\709452.1 6
IN WITNESS WHEREOF, the parties hereto have caused this Administration Agreement
to be executed on their behalf by their duly authorized representatives, all as of the date
hereinabove written.
INDEPENDENT CITIES LEASE FINANCE
AUTHORITY
By:
President
CITY OF SAN JUAN CAPISTRANO
By:
Title:
MILLENNIUM HOUSING CORPORATION,
a California nonprofit public benefit corporation
By:
President
WOLF & COMPANY INC., as Oversight Agent
By:
Authorized Signatory
RV PUB\FBAUM\709452.1
AFFIDAVIT OF PUBLICATION
STATE OF CALIFORNIA, )
) ss.
County of Orange )
I am a citizen of the United States and a resident
of the County aforesaid; I am over the age of
eighteen years, and not a party to or interested
in the above entitled matter. I am the principal
clerk of the Capistrano Valley News, a
newspaper that has been adjudged to be a
newspaper of general circulation by the Superior
Court of the County of Orange, State of
California, on June 7, 1984, Case No. A-122949
in and for the City of San Juan Capistrano,
County of Orange, State of California; that the
notice, of which the annexed is a true printed
copy, has been published in each regular and
entire issue of said newspaper and not in any
supplement thereof on the following dates, to
wit:
April 13, 2006
"I certify (or declare) under the penalty of
perjury under the laws of the State of California
that the foregoing is true and correct":
Executed at Santa Ana, Orange County,
California, on
Date: April 13, 2006
Signature
Capistrano Valley News
625 N. Grand Ave.
Santa Ana, CA 92701
(714) 796-2209
PRODS UJI KATION
HE VE
1006 MAY I I P 2: 2U
CITY C _Ehl(
SAN JUAN CAPISTRANO
Proof of Publication of
1
NOTICE OF
PUBLIC NEARING
CRY OF SAN JUAN
CAPISTRANO
NOTICE IS NEREEY GIVEN, that on Me 2nd day
of Meyy, 2006, at ]:00 P.M. in the City Council Cham-
ber, 32400 Paseo Atleiento, San Juan Capistrano, Cal-
ifornia, Me City Council will hold a public hearing on
the following:
CONSIDERATION OF THE ISSUANCE OF
MOBl. OME PARK REVENUE BONDS BY
THE INDEPENDENT CITIES LEASE FINANCE
AUTHOIOTT TO FINANCE THE SAN JUAN MO-
BILE ESTATES PROJECT
(MILLENNIUM HOUSING CORPORATION)
Pursuant M Section 147M of Me Internal Revenue
Code of 1986, as amended Me CM Council will hear
and consider information concerning the proposed is-
suance by Me Independent Class Lease Finance Au-
Mor9y nhe 'Auority') of its mobilahame park reve-
nue bonds thin one or more sense in the aggregate pml-
cl'pel amount of appmzimah,l, 543,OOF,000 (Me
AUMOnWty Bands'?7 pursuant to Chapter 6 of Part 5 W
Division 31 of the Caidomia Health and Safety Code.
The proceeds from Me sale of such Authority Bands,
i any are issued, are mended M be used to finance
Me acquisition and renovation of a 312-unh
mobilehome pork known as San Juan Mobile Estates
located m 32302 Nlpaz Street, San Juan Capistrano,
California 92615 (Me 'Project`). The project will be
owned and operated by Millennium Housing Corpora-
lion, a Celifomu non-profit corporation. proceeds of
a , AURAorrty Bonds are expectetl to be used M make
a loan to Millennium Housing Corporation, or a sub-
cassm, assign or affiliate thereof, to finance the
project.
In order M facilitate Me issuance of Mase bonds the
City of San Juan Capistrano will join the Aunorlty, as
an associate member prior M the issuance of the Au -
Manly Bonds.
Those desiringg M be need in favor of, or oppositionto, Nis Item m'lI be given an opportunity M do so dur-
ing such hearing. Written information pertaining b
MIs aom must be submitted to the City Clerk by 5:00
%mp.m., on Monday. May 1, 2006 at 32400 Paseo
lamo, San Juan Caotstrano, CA 92615. IndiNdu-
als deeming to submit late written information at the
meeting must orally request such notion.
Forfurther information you may contact Cin Rus.
sell, Administrative SeMCes Director m (949 443-
6301.
/sl Mari R. Manahan
MARGARET R. MONAHAN, CITU CLERK
Publish Coostrano Valley News
April 13, 2006
3-070 7026468
NOTICE OF TRANSMITTAL
CAPISTRANO VALLEY NEWS
Legal Publications
CHARGE TO ACCOUNT NO.
FOR PUBLICATION ON:
DOCUMENT TO BE PUBLISHED:
PROOF OF PUBLICATION
AUTHORIZED BY:
DATE: April 5,
0041125000
THURSDAY, April 13, 2006
NOTICE OF PUBLIC HEARING -
Consideration of Issuance of Mobilehome Park
Revenue Bonds by the Independent Cities
Lease Finance Authority to Finance the
Independent Cities Lease Finance Authority to
Finance the San Juan Mobile estates Project
(Millennium Housing Corporation)
Please send to:
City Clerk's Division, City Hall
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
(949)493-1171
Date of Public Hearing -05/02/06
Date notice published -04/13/06
Date affidavit received - (�
Date notice posted in
designated posting places (3) - 04/13/06
Date notice posted on property - n/a
Date of mailing notice to
interested parties - n/a
Date notice transmitted to
City Manager's Office -4/5/06
0
NOTICE OF
PUBLIC HEARING
CITY OF SAN JUAN CAPISTRANO
NOTICE IS HEREBY GIVEN, that on the 2nd day of May, 2006, at 7:00 P.M. in the City Council
Chamber, 32400 Paseo Adelanto, San Juan Capistrano, California, the City Council will hold a
public hearing on the following:
CONSIDERATION OF THE ISSUANCE OF MOBILEHOME PARK REVENUE
BONDS BY THE INDEPENDENT CITIES LEASE FINANCE AUTHORITY TO
FINANCE THE SAN JUAN MOBILE ESTATES PROJECT
(MILLENNIUM HOUSING CORPORATION)
Pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended the City Council
will hear and consider information concerning the proposed issuance by the Independent Cities
Lease Finance Authority (the "Authority') of its mobilehome park revenue bonds in one or more
series in the aggregate principal amount of approximately $43,000,000 (the "Authority Bonds")
pursuant to Chapter 8 of Part 5 of Division 31 of the California Health and Safety Code.
The proceeds from the sale of such Authority Bonds, if any are issued, are intended to be used
to finance the acquisition and renovation of a 312 -unit mobilehome park known as San Juan
Mobile Estates located at 32302 Alipaz Street, San Juan Capistrano, California 92675 (the
"Project'). The project will be owned and operated by Millennium Housing Corporation, a
California non-profit corporation. Proceeds of the Authority Bonds are expected to be used to
make a loan to Millennium Housing Corporation, or a successor, assign or affiliate thereof, to
finance the Project.
In order to facilitate the issuance of these bonds the City of San Juan Capistrano will join the
Authority as an associate member prior to the issuance of the Authority Bonds.
Those desiring to be heard in favor of, or opposition to, this item will be given an opportunity to
do so during such hearing. Written information pertaining to this item must be submitted to the
City Clerk by 5:00 p.m., on Monday, May 1, 2006 at 32400 Paseo Adelanto, San Juan
Capistrano, CA 92675. Individuals desiring to submit late written information at the meeting
must orally request such action.
For further information you may contact Cindy Russell, Adnistrative Services Director at (949)
443-6301. 7 A
a
FOR OFFICE USE ONLY:
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF SAN JUAN CAPISTRANO
) ss. AFFIDAVIT OF POSTING
AND PUBLICATION
I, MARGARET R. MONAHAN, declare that I am the duly appointed and
qualified City Clerk of the City of San Juan Capistrano; that on April 13, 2006, 1 caused
the above Notice to be posted in three (3) public places in the City of San Juan
Capistrano, to wit:
City Hall;
Community Center Reception Area;
Orange County Public Library
AND, that on April 13, 2006, the above Notice was published in the Capistrano Valley
News newspaper. Z�
I declare under penalty
City of San
is true and correct.
Capistrano, California