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00-1219_WILLOW PARTNERS LLC_Defferal Development Fees Agra 6 MEMORANDUM TO: Memo to File FROM: Dawn Schanderl, Deputy City Clerk DATE: February 12, 2001 SUBJECT: Villa Paloma Limited Partnership This file contains: Deferral of Development Fees (Willow Partners LLC) See additional files for information: 440.25 - Villa Paloma GPA 00-1 600.30 - Density Bonus Agreement & Restrictive Covenants Subordinate Deed of Trust and Assignment of Rents Original Promissory Note Recording Requested by and When Recorded Return to: City Clerk City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, Ca. 92675 Recorded in Official Records, County of Orange Gary Granville, Clerk -Recorder 11111111111111111111111111111111111111111111111111111111114.00 20010049843 01:21 pm 01129101 107 23 Al2 5 0.00 0.00 0.00 0.00 8.00 0.00 0.00 0.00 DEFERRAL OF DEVELOPMENT FEES AGREEMENT (VILLA PALOMA PROJECT) [Assessor's Parcel #666-241-06, County of Orange] This Agreement is made by and between the City of San Juan Capistrano (hereinafter "City"), and Willow Partners LLC (hereinafter "Developer"). RECITALS: Whereas, Developer has received a General plan amendment and Architectural Plan approvals authorizing the construction of an affordable senior apartment housing project consisting of approximately 84 units at the location of 27221 Paseo Espada, San Juan Capistrano, and Whereas, City has also agreed to provide a $500,000 affordable senior housing loan to assist the Developer constructing the project, and Whereas, City development fee requirements for the project mandate the posting of sewer and water fees with City at or prior to the time for the commencement of construction of the project, and Whereas, Developer has requested that payment of sewer and water fees be deferred until such time that Developer requests the issuance of a certificate of occupancy for the housing units, and Whereas, City finds that the deferral of payment of fees will make the project more financially feasible and in the public interest, NOW THEREFORE BE IT MUTUALLY RESOLVED BETWEEN CITY AND 1 of 3 l� DEVELOPER AS FOLLOWS: Section 1. Deferral of Payment of Fees Developer shall pay the following development fees and taxes for the Project by not later than the date Developer has requested a City Certificate of Occupancy for any of the units proposed to be constructed by the Developer, but in any event not later than two years from the date of this Agreement. The estimated development fees in questions are: A. Sewer Capacity Fees ......................... $143,902.00 B. Water Fees: (i) Water Capital Imp. Charge $166,488.00 (ii) Water Capacity Charge $ 21,743.00 (iii) Water Storage Fee $116,088.00 Total Water Fees ....................... $304,319.00 These fees are estimates and may change based upon final configuration and buildout of the projector subsequent administrative recalculation of the specific dimensions of the project. Section 2. Developer's Interest Payment Obligation. Developer agrees and understands that City will forego the benefit of the use of the development fees described above for the period of time running from the date of issuance of development permits to construct the project to the date issuance of certificates of occupancy for the apartment units. Accordingly, Developer shall have the obligation to pay to City an interest charge on the total amount of the development fees described in Section 1 of the Agreement for this period of time as follows: the interest charge shall be computed by the City's Controller in the amount of the average rate of interest earned by the City's investments; the interest charge shall be paid to City at or before the time of City's issuance of certificate(s) of occupancy for the project. Section 3. Term of Agreement. This Agreement shall remain in full force and effect until mutually rescinded by the Parties. Section 4. Attorney's Fees. Developer agrees to pay City such sum as the court may adjudge as reasonable attorney's fees for the legal services of an attorney representing City in an action brought to enforce this Agreement, and such sum shall be made a part of any judgment in such action against Developer if such action is determined in favor of City. 2 of 3 Section 5. Successors and Assigns The burdens of this Agreement shall be binding upon, and the benefits of the Agreement inure to, all successors -in -interest and assigns of the Parties. Section 6. Time of Essence. Time is of the essence with respect to all obligations under this Agreement. Section 7. Notices. All notices between the parties pursuant to this Agreement shall be in writing and shall be given by personal delivery or first class mail to the parties as follows: A) To City: George Scarborough, City Manager City of San Juan Capistrano 32400 Paaeo Adelanto San Juan Capistrano, Ca. 92675 B) To Developer: Willow Partners LLC Attn: G. Davis Slajchert 310 N. Westlake Blvd., #250 Westlake Village, Ca. 93162 In Witness Whereof, the parties have executed this Agreement on the date first above written. 1 V18/=AAGREEMNTIPALOMA.wpd 3of3 Willow Partners LLC A CAO �� MG LS:OT 00, ST 03C 70d VOL OfS Alit £SOT -£67-676 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County ofyL On If Zk,L`.Emto(+ ���'� before me, ,/L21IZe J Date �i Name and Ttle of Officer (e.g.. "Jane Doe, Nolan"y Public') personally appeared ` 7e2 z, L � ✓lS -5�k iG(i, - Name(s) of Signers) JAMES S. ROE Commission # 1232572 Notoit Public - California Los Angeles County W Comm.6WccsAug 19.2003 ❑ personally known to me proved to me on the basis of satisfactory evidence to be the person(s) whose name(sr(is/are subscribed to the within i strument and acknowledged to me thath sy/p%y executed the same/. in his/h�f6ir authorized capacity(i2s�, and that by his/�/tWir signature( on the instrument the person(s�or the entity upon behalf of which the person(s� acted, executed the instrument. hand andnffi6al seal. Place Notary Seal Above V Signature of "ary Public OPTTA Though the information below is not required by law, it may prove va o persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Roc9ment Title or Type of Document: d /✓4 /pl Document Date: Number of Pages: Signer(s) Other Than Named Above: A -11A" Capacity(ies) Claimed by Signer Signer's Name: ❑ Individual ❑ Corporate Officer — Title(s): _ ❑ Partner —❑ Limited ❑ General i Attorney in Fact Trustee Guardian or Conservator Other: Signer Is Representing: RIGHT THUMBPRINT OF SIGNER 01999 Nabo al Notary Aaeooiallon • 9350 a Solo Ave.. P0. Boa 2402 • ClutawoM, CA 91313.2402 • w- w.nutooaingbqor, Prod. W. 6907 Ra r Call Toll -Free 1-BOpe]Sbe27 PUBLIC AGENCY FORM OF ACKNOWLEDGEMENT State of California ) County of Orange ) ss. City of San Juan Capistrano ) (Gov't Code 40814 & Civil Code 1181) On December 19. 2000 , before me, Cheryl Johnson City Clerk, personally appeared - - - George Scarborough - - - personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Capacity Claimed by Signer Municipal Corporate Officer City Manager Title Signer is Representing City of San Juan Capistrano OPTIONAL Description of Attached Document Deferral of Develooment Fees Agreement (Villa Paloma Project) Title or Type of Document Number of Pages December 19, 2000 Date of Document George Sluichert Signer(s) Other Than Named Above I CERTIFY THAT, IF THIS SEAL IS AFFIXED 4p� `s0�, COUNTY CLERK-Rcy,u„v...lt IN PURPLE INK, THIS IS A TRUE AND CORRECT COPY OF THE PERMANENT RECORD FILED OR RECORDED IN THIS OFFICE. Iwo JAN 2 9 2001 DATE fEE�:�L� ORANGi COUNTY ST+/t'fEOFCALIFORNIA 0 Recording Requested by and When Recorded Return to: City Clerk Recorded in Official Records, County of Orange Gary Granville, Clerk -Recorder 324000 Paseo Adelanto City San Juan Capistrano 1m11111111111IN11111M111111011111114.00 San Juan Capistrano, Ca. 92675 20010049843 01:21 pm 01129101 107 23 Al2 5 OM OM 0.00 0.00 8.00 0.00 0.00 0.00 DEFERRAL OF DEVELOPMENT FEES AGREEMENT (VILLA PALOMA PROJECT) [Assessor's Parcel #666-241-06, County of Orange] This Agreement is made by and between the City of San Juan Capistrano (hereinafter "City"), and Willow Partners LLC (hereinafter "Developer"). �( RECITALS: Whereas, Developer has received a General plan amendment and Architectural Plan approvals authorizing the construction of an affordable senior apartment housing project consisting of approximately 84 units at the location of 27221 Paseo Espada, San Juan Capistrano, and Whereas, City has also agreed to provide a $500,000 affordable senior housing loan to assist the Developer constructing the project, and Whereas, City development fee requirements for the project mandate the posting of sewer and water fees with City at or prior to the time for the commencement of construction of the project, and Whereas, Developer has requested that payment of sewer and water fees be deferred until such time that Developer requests the issuance of a certificate of occupancy for the housing units, and Whereas, City finds that the deferral of payment of fees will make the project more financially feasible and in the public interest, NOW THEREFORE BE IT MUTUALLY RESOLVED BETWEEN CITY AND 1 of 3 0 0 DEVELOPER AS FOLLOWS: Section 1. Deferral of Payment of Fees. Developer shall pay the following development fees and taxes for the Project by not later than the date Developer has requested a City Certificate of Occupancy for any of the units proposed to be constructed by the Developer, but in any event not later than two years from the date of this Agreement. The estimated development fees in questions are: A. Sewer Capacity Fees ......................... $143,902.00 B. Water Fees: (i) Water Capital Imp. Charge $166,488.00 (ii) Water Capacity Charge $ 21,743.00 (iii) Water Storage Fee $116.088.00 Total Water Fees ....................... $304,319.00 These fees are estimates and may change based upon final configuration and buildout ofthe projector subsequent administrative recalculation of the specific dimensions of the project. Section 2. Developer's Interest Payment Obligation. Developer agrees and understands that City will forego the benefit of the use of the development fees described above for the period of time running from the date of issuance of development permits to construct the project to the date issuance of certificates of occupancy for the apartment units. Accordingly, Developer shall have the obligation to pay to City an interest charge on the total amount of the development fees described in Section 1 of the Agreement for this period of time as follows: the interest charge shall be computed by the City's Controller in the amount of the average rate of interest earned by the City's investments; the interest charge shall be paid to City at or before the time of City's issuance of certificate(s) of occupancy for the project. Section 3. Term of Agreement. This Agreement shall remain in full force and effect until mutually rescinded by the Parties. Section 4. Attorney's Fees. Developer agrees to pay City such sum as the court may adjudge as reasonable attorney's fees for the legal services of an attorney representing City in an action brought to enforce this Agreement, and such sum shall be made a part of any judgment in such action against Developer if such action is determined in favor of City. 2of3 Section 5. Successors and Assigns The burdens of this Agreement shall be binding upon, and the beneftts of the Agreement inure to, all successors -in -interest and assigns of the Parties. Section 6. Time of Essence Time is of the essence with respect to all obligations under this Agreement. Section 7. Notices. All notices between the parties pursuant to this Agreement shall be in writing and shall be given by personal delivery or first class mail to the parties as follows: A) To City: George Scarborough, City Manager City of San Juan Capistrano 32400 Paaeo Adelanto San Juan Capistrano, Ca. 92675 B) To Developer: Willow Partners LLC Attn: G. Davis Slajchert 310 N. Westlake Blvd., #250 Westlake Village, Ca. 93162 In Witness Whereof, the parties have executed this Agreement on the date first above written. Willow Partners LLC 1 Title: t�zye 12/18/000AAGREEM MPALOMA.," 3 of 3 LS:OI 00, 81 03a V0d VOL. DES AlIJ £S0i-£6V-6V6 0 0 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ���i� ss. r County of o persons relying on the document ec`l9/lLty' G6 .6ttcJ On before me, � SzCr Date Name and Title of Officer (e.g., "Jane Doe, Notary Public") S/, personally appeared ` %�' C Y�/PS i,e4,c. V Name(6) of Signer(s) ❑ personally known to me Signer(s) Other Than Named Above: proved to me on the basis of satisfactory Capacity(les) Claimed by Signer evidence Signer's Name: to be the person(s)/ whose name(O'/is/are JAMES S. ROE Commission # 1232572 subscribed to the within i strument and acknowledged to me that h sO� *ey executed Notary Public - Calfomio _ Los Angeles County the same/. in his/h;/t it autho'zed capacity(ias), and that by his/ r/tr My Comm. [�'vesAug 19,2003 signature(,$f on the instrument the person(§ or the entity upon behalf of which the personW ❑ Corporate Officer — Title(s): acted, executed the instrument. --UICUNESS my hand pafLQVial seal. Place Notary Seal Above / ill Signature of NUlary Public yr 1 wrvrs Though the information below is not required by law, it may prove va o persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached ocument Title or Type of Document: y Document Date: IZ ' rd' 0-0 Number of Pages: Signer(s) Other Than Named Above: Capacity(les) Claimed by Signer Signer's Name: ❑ Individual Top of thumb here ❑ Corporate Officer — Title(s): ❑ Partner —❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: 01999 National Notary Aaeoviation • 9350 be Soto Ave., PO. Box 2002 • Ctiatav , CA 91313 2402 • w .nationalwt arg PmE. No, 5907 Reorder. Call Toll -Free 1-600 -Vii 0 PUBLIC AGENCY FORM OF ACKNOWLEDGEMENT State of California ) County of Orange ) ss City of San Juan Capistrano ) (Gov't Code 40814 & Civil Code 1181) • On December 19. 2000 , before me, Cheryl Johnson City Clerk, personally appeared - - - George Scarborough - - - personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Capacity Claimed by Signer Municipal Corporate Officer City Manager Title Signer is Representing City of San Juan Capistrano OPTIONAL Description of Attached Document Deferral of Development Fees Agreement (Villa Paloma Project) Title or Type of Document Number of Pages December 19, 2000 Date of Document George Sluichert Signer(s) Other Than Named Above 2. n AYES: NOES: ABSTAIN: ABSENT: 0 Council Members Greiner, Hart, Swerdlin and Mayor Campbell None Council Member Bathgate None Approval of Residential Allocation Schedule: It was moved by Council Member Hart, seconded by Council Member Greiner that the following Resolution be adopted: 2003 -A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, APPROVING THE RESIDENTIAL ALLOCATION SCHEDULE FOR CALENDAR YEARS 2000 THROUGH 2003 PURSUANT TO TITLE 9, CHAPTER 7, RESIDENTIAL GROWTH MANAGEMENT PROGRAM The motion carried by the following vote: AYES: Council Members Greiner, Hart, Swerdlin and Mayor Campbell NOES: None ABSTAIN: Council Member Bathgate ABSENT: None nProposal: Consideration of a General Plan Amendment to redesignate an existing 1.897 -acre parcel located at 27191 Paseo Espada from 5.3 Assisted Care Facility to 2.6 Affordable Family/Senior Housing and to consider approval of a Density Bonus Agreement which would allow a maximum density of 44 dwelling units per acre. The project involves an application to the Federal Department of Housing and Urban Development's Affordable Housing Tax Credit Program. The current zoning of 5.3 Assisted Care Facility does not provide for senior affordable housing. The site is situated within Sector B-2 of the Ortega Planned Community and is subject to Comprehensive Development Plan 78-1; the proposed use is consistent with the zoning. The site would be developed with a three-story structure, including subterranean parking on the basement level and apartments on the first and second levels. City Council Minutes -7- 3/7/00 410 Applicant: Friess Company Builders, Attention Kenneth Friess, 31658 Rancho Viejo Road, San Juan Capistrano. Project Representative: Willow Partners, LLC, Attention G. David Slajchert, 310 North Westlake Boulevard, #250, Westlake Village, California 91362. Written Communications: Report dated March 7, 2000, from the Planning Director, forwarding background information and a recommendation of approval. Preliminary landscape and grading plans and site plans were on display and William Ramsey, Principal Planner, made an oral presentation, noting that the updated General Plan had designated the property Assisted Care Facility in recognition of an approved project for the site. He advised that the current designation was fairly narrow and would not accommodate the revised project proposal. He discussed the density bonus application and noted that the only other project in town with a density bonus was the adjacent Seasons apartment complex. He also advised that due to the density bonus allocation and federal tax credits, all units in this project would be designated as affordable housing available to low-income and very low-income households. He discussed the Planning Commission concerns with massing of the project and the three-story building facade on the south eleyation, noting that landscape elements had been incorporated to address those concerns. Council Comments: Discussion ensued regarding the mix and size of units. Mayor Campbell expressed her concerns that there be sufficient landscaping; that there be sufficient walking areas appropriate for the age of the residents; and, that all future residents be aware of the St. Margaret's Episcopal School ballfields and lights. Mr. Ramsey described the proposed landscaping, pedestrian walkways and courtyards, and advised that those issues would be addressed in detail in the follow-up Planning Commission review. He further advised that the existence of the St. Margaret's ballfields could be addressed in the lease disclosure. Council Member Hart expressed concern that the units, and particularly the bathroom areas, were ADA accessible. Applicant's Comments: Davis Slajchert, representing Willow Partners, advised that there were minimum safety standards and Building Code requirements with regard to ADA accessibility that would be met. Dr. Friess, applicant, advised that the installation of handrails in the bathroom areas was a standard requirement. Public Hearing: Notice having been given as required by law, Mayor Campbell opened the Public Hearing and there being no response, closed the Hearing with the right to re -open at any time. Approval of General Plan Amendment: It was moved by Council Member Swerdlin, seconded by Council Member Hart that the following Resolution be adopted: City Council Minutes -8- 3/7/00 Recording Requested by and When Recorded Return to: City Clerk City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, Ca. 92675 Recorded in official Records, County of orange Gary Granville, Clerk -Recorder 111111111 INTI 1111 IL IIII ILI 111111111@I I11ll 15.00 2001004799104:30pm 01126101 118 16 Al2 S 0.00 0.00 0.00 0.00 8.00 0.00 0.00 0.00 DEFERRAL OF DEVELOPMENT FEES AGREEMENT (VILLA PALOMA PROJECT) [Assessor's Parcel #666-241-06, County of Orange] This Agreement is made by and between the City of San Juan Capistrano (hereinafter "City"), and Willow Partners LLC (hereinafter "Developer"). RECITALS: Whereas, Developer has received a General plan amendment and Architectural Plan approvals authorizing the construction of an affordable senior apartment housing project consisting of approximately 84 units at the location of 27221 Paseo Espada, San Juan Capistrano, and Whereas, City has also agreed to provide a $500,000 affordable senior housing loan to assist the Developer constructing the project, and Whereas, City development fee requirements for the project mandate the posting of sewer and water fees with City at or prior to the time for the commencement of construction of the project, and Whereas, Developer has requested that payment of sewer and water fees be deferred until such time that Developer requests the issuance of a certificate of occupancy for the housing units, and Whereas, City finds that the deferral of payment of fees will make the project more financially feasible and in the public interest, NOW THEREFORE BE IT MUTUALLY RESOLVED BETWEEN CITY AND 1 of 3 PROMISSORY NOTE (MODIFIED) (Residual Receipts) $950,000.00 December 14, 2000 (modified March 6, 200 1) For value received, the undersigned, NHPAHP VILLA PALOMA LIMITED PARTNERSHIP, a California limited partnership ("Borrower") whose principal address is set forth hereinbelow, promises to pay to the order of the CITY OF SAN JUAN CAPISTRANO, a public body corporate and politic ("City") at 32400 Paseo Adelanto, San Juan Capistrano, California, 93675 (or to such designee and/or at such other address as City may from time to time designate in writing), the principal sum of NINE HUNDRED FIFTY THOUSAND DOLLARS ($950,000.00) (the "Loan"), or such greater amount which may from time to time be owing as a result of accrued and unpaid interest being added to principal as provided hereinbelow. The purpose of the Loan is to provide Borrower with funds for use in connection with development ofan 84 -unit affordable senior housing development ("Development") on a site ("Site") more particularly described in the Deed of Trust and the Density Bonus Agreement and Restricted Covenants executed concurrently herewith. 1. Interest. 1.1 Basic Interest. The disbursed and unpaid principal balance of the Loan shall bear interest commencing on the date on which the Loan proceeds are first disbursed for the account of Borrower, and ending on the date paid, at the rate of three percent (3%) per annum, simple interest. hiterest shall be computed on the basis of actual number of days elapsed and a 360 -day year. 1.2 Payment Dates and Amounts. Except as otherwise provided in this Note, Borrower shall repay the Loan with interest in arrears in annual installments on March 15th of each calendar year for the previous calendar year, commencing March 15, 2003. Absent prepayment or acceleration, each of the annual payments due March 15, 2003 through and including March 15, 2033 ("Maturity Date") shall be in an amount equal to fifty percent (50%) of "Residual Receipts" for the prior calendar year, as defined herein. Residual Receipts shall be calculated by Borrower (and certified by an authorized officer of Borrower) and reported by Borrower to City annually for each calendar year no later than March 15th of the following calendar year on forms required by the California Tax Credit Allocation Commission ("TCAC") in connection with Borrower's award of tax credits for the Development. All calculations and records are subject to audit by City. Notwithstanding any other provision of this Note, unless due sooner, any outstanding principal balance of the Loan remaining at the Maturity Date, together with any outstanding interest and any other sums payable under this Note, shall be forgiven on the Maturity Date. 1.3 Default Rate. Any amounts (including but not limited to amounts of principal and interest on the Loan) which Borrower does not pay when otherwise due under the terms of this Note, shall bear interest at the rate of seven percent (7%) per annum ("Default Rate"), simple interest, from the date otherwise due until the date paid. 56526.5 001205 0006 03/12/2001 - 11:12 am - I - 0 0 1.4 Definition of Residual Receipts. 1.4.1 'Residual Receipts" shall mean, with respect to each calendar year, the amount by which "Gross Rents," as defined herein, for such calendar year exceed the "Operating Expenses", as defined herein, for that calendar year. 1.4.2 With the exception ofthe "Excluded Items" (as defined below), "Gross Rents" shall mean, with respect to each calendar year or portion thereof, all gross income, rentals, revenues, payments and consideration, of whatever form or nature, whether direct or indirect, received by or paid to or for the account or benefit of Borrower or any "Affiliate" (as defined below) of Borrower or any of their agents or employees, from any and all sources, resulting from or attributable to the ownership, operation, leasing and occupancy of the Development, determined on the basis of generally accepted accounting principles applied on a consistent basis, and shall include, but not be limited to: (i) gross rentals paid by occupancy tenants of the Development under occupancy leases and payments and subsidies ofwhatever nature, including without limitation any payments, vouchers or subsidies from the United States Department of Housing and Urban Development ("HUD") or any other person or organization, received on behalf of tenants under occupancy leases, (ii) amounts paid to Borrower or any Affiliate of Borrower on account of "Operating Expenses" (as defined herein), for further disbursement by Borrower or such Affiliate to a third party or parties, (iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses, concessions, vending machines, coin laundry and similar sources; (v) other fees, charges or payments not denominated as rental but payable to Borrower in connection with the rental of office, retail, storage, or other space in the Development; and (vi) consideration received in whole or in part for the cancellation, modification, extension or renewal of occupancy leases. The term "Affiliate" shall mean any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Borrower which, if Borrower is a partnership or limited liability company, shall include each of the constituent members or partners, respectively, thereof. The term "control" as used in this immediately preceding sentence, means, with respect to a person that is a corporation, the right to the exercise, directly or indirectly, of more than 50% of the voting rights attributable to the shares of the controlled corporation, and, with respect to a person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled person. Notwithstanding the foregoing, Gross Rents shall not include the following items ("Excluded Items"): (aa) security deposits from tenants (except when applied by Borrower to rent or other amounts owing by tenants); (bb) capital contributions to Borrower by its members, partners or shareholders; (cc) condemnation or insurance proceeds, to the extent used for reconstruction; or (dd) funds received from any source actually and directly used for acquisition and/or initial development of the Development. 1.4.3 "Operating Expenses" shall mean, with respect to each calendar year or portion thereof, the sum of the following expenses to the extent reasonably paid by Borrower during such period: (i) amounts paid with respect to costs of initial development of the Project or with respect to Project Financing to which the City's Deed of Trust is subordinated; (ii) all taxes and assessments imposed upon the Development and required to be paid by Borrower but only to the extent such taxes and assessments are paid or set aside as a reserve by Borrower during such calendar 56526.5 001205-0006 03/12/2001 - 11:12 am -2- year; (iii) all amounts paid or set aside as a reserve by Borrower on account of insurance premiums for insurance carried in connection with the Development, provided that if insurance on the Development is maintained as part of a blanket policy covering the Development and other properties, the insurance premium included in this definition shall be the portion of the premium fairly allocable to the Development for the period; (iv) ownership and operating costs incurred by Borrower for the management, operation, cleaning, leasing, marketing, maintenance and repair of the Development (including without limitation, property management fees, administrative fees, incentive management fees, developer fees and other fees and expenses required to be paid pursuant to Borrower's limited partnership agreement), properly chargeable against income according to generally accepted accounting principles, including without limitation wages, payroll and accounting costs, utility and heating charges, material costs, maintenance costs, costs of services, water and sewer charges, travel expenses allocable to the Development, and license fees and business taxes, all or a portion of each of which may be paid to Borrower and/or an Affiliate of Borrower; (v) reasonable and ordinary reserves actually set aside for replacement of roofing, furniture, fixtures, equipment, and other capital expenditures; and (vi) to the extent not otherwise included in Operating Expenses, amounts paid from any account as a reserve account for the purpose for which such reserve was created so long as such purpose would constitute an Operating Expense. 2. Acceleration. Notwithstanding the payment terms set forth in Section 1 above, upon the occurrence of any "Event of Default" as set forth in Section 8 below, the entire outstanding principal balance of the Note, together with any outstanding interest and other amounts payable thereunder, shall, at the election of City and upon notice to Borrower thereof, become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by Borrower. 3. Prepayment; Application of Payments. At any time after the disbursement of the Loan proceeds, Borrower may prepay all or a portion of the unpaid principal amount of the Loan and accrued interest and any other sums outstanding without penalty. All payments, including any prepayments or funds received upon acceleration pursuant to Section 2 above, shall be applied first toward any outstanding costs of collection or other amounts (excluding Loan principal or interest thereon) due under this Note, then toward outstanding interest accrued at the Default Rate, if any, then toward outstanding interest accrued at the basic interest rate of three percent (3%) per annum (simple interest), if any, then toward any deferred principal, and finally toward the remaining principal balance under the Note. 4. Security and Source of Payment. Borrower's obligations under this Note shall, at all times during which any amount remains outstanding, be secured by that certain Subordinate Deed of Trust and Assignment of Rents ("Deed of Trust") of even date herewith, and of which City is the beneficiary, recorded January 29, 2001 as Instrument No. 20010049842 against Borrower's fee interest in the Site and the Development 56526.5 001205-0006 03/12/2001 - 11:12 am -3- (collectively, the 'Property"). Except to the extent any Event of Default hereunder results directly or indirectly from any fraud or intentional and material misrepresentation by Borrower in connection with this Note or the Loan, in the event of the occurrence of an Event of Default, City's only recourse under the Deed of Trust shall be against the Property, the proceeds thereof, and the rents and other income arising from its use and occupancy as provided in the Deed of Trust. 5. Purpose of Loan. The Loan proceeds shall be used by Borrower only to pay eligible development costs of the Development and such other uses previously approved in writing by City. In no event shall Borrower use or otherwise invest the proceeds of the Loan except as expressly provided in this Note. 6. Covenants of Borrower. As additional consideration for the making of the Loan by City, Borrower covenants as follows: 6.1 Compliance with Deed of Trust. Borrower shall comply with all of its obligations under the Deed of Trust. Any amounts payable by Borrower under the Deed of Trust (other than amounts also payable hereunder) shall be deemed added to the principal amount of the Loan payable hereunder. 6.2 Other Loans. Borrower shall comply with all monetary and non -monetary covenants associated with any loan secured by an interest in the Site or the Development. Borrower shall provide to City a copy of any notice of default within (3) three business days after receiving any notice of a default or alleged default of such covenants by Borrower, and Borrower shall promptly cure any such default and cooperate in permitting City, to the extent City in its sole discretion elects to do so, to cure or assist in curing the default. Any cost or expenditure incurred by City in providing or assisting in such a cure shall be deemed added to the outstanding principal amount of the Loan. 7. Assimment of this Note. This Note shall be assignable by Borrower only to a successor owner of the Site. 8. Events of Default and Remedies. A. Borrower Events of Default. The occurrence of any of the following shall, after the giving of any notice described therein, constitute an event of default by Borrower hereunder ("Event of Default"): (1) The failure of Borrower to pay or perform any monetary covenant or obligation hereunder or under the terms of the Deed of Trust without curing such failure within 56526.5 001205-0006 03/12/2001 - 11:12 am -4- ten (10) days after receipt of written notice of such default from City (or from any party authorized by City to deliver such notice as identified by City in writing to Borrower); or (2) The failure of Borrower to perforin any non -monetary covenant or obligation hereunder or under or the Deed of Trust without curing such failure within thirty (30) days after receipt of written notice of such default from City (or from any party authorized by City to deliver such notice as identified by City in writing to Borrower) specifying the nature of the event or deficiency giving rise to the default and the action required to cure such deficiency. Provided, however, that if any default with respect to a non -monetary obligation is such that it cannot be cured within a 30 -day period, it shall be deemed cured if Borrower commences the cure within said 30 -day period and diligently prosecutes such cure to completion thereafter. B. City Remedies. Upon the occurrence of an Event of Default hereunder, City may, in its sole discretion, take any one or more of the following actions: (1) By notice to Borrower, declare the entire then unpaid principal balance of the Loan immediately due and payable, and the same shall become due and payable without further demand, protest or further notice of any kind, all of which are expressly waived. Upon such declaration, outstanding principal and (to the extent permitted by law) interest and any other sums outstanding in connection with the Loan shall thereafter bear interest at the Default Rate, payable from the date of such declaration until paid in full; (2) Subject to the nonrecourse provisions of Section 4 above, take any and all actions and do any and all things which are allowed, permitted or provided by law, in equity or by statute, in the sole discretion of City, to collect the amounts then due and thereafter to become due hereunder, to exercise its rights under the Deed of Trust, and to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Note or under any other document executed in connection herewith; and/or (3) Subject to the nonrecourse provisions of Section 4 above, upon the occurrence of an Event of Default which is occasioned by Borrower's failure to pay money, whether under this Note, City may, but shall not be obligated to, make such payment. If such payment is made by City, Borrower shall deposit with City, upon written demand therefor, such sum plus interest at the Default Rate. In either case, the Event of Default with respect to which any such payment has been made by City shall not be deemed cured until such repayment (as the case may be) has been made by Borrower. C. No Remedy Exclusive. No remedy herein conferred upon or reserved to City is intended to be exclusive of any other available remedy or remedies, but each such remedy shall be cumulative and shall be in addition to every other remedy given under this Note or now existing at law or in equity or by statute. 56526.5 001205-0006 07/12/2001 - 11:12 am -5- 0 0 9. Agreement to Pay Attorneys' Fees and Expenses. hi the event that either party hereto brings any action or files any proceeding in connection with the enforcement of its respective rights under this Note, the prevailing party in such action or proceeding shall be entitled to have its reasonable attorneys' fees and out-of-pocket expenditures paid by the losing party. 10. Conflict of Interest, No Individual Liability. No official or employee of City shall have any personal interest, direct or indirect, in this Note, nor shall any official or employee of City participate in any decision relating to this Note which affects such official's or employee's pecuniary interest in any corporation, partnership or association in which such official or employee is directly or indirectly interested. No official or employee of City shall be personally liable in the event of a breach of this Note by City. 11. Amendments. Changes and Modifications. This Note may not be amended, changed, modified, altered or terminated without the prior written consent of the parties hereto. 12. Notices. All notices, demands, requests, elections, approvals, disapprovals, consents or other communications given under this Note shall be in writing and shall be given by personal delivery, certified mail, return receipt requested, or overnight guaranteed delivery service and addressed as follows: If to City: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California 93675 Attn.: City Manager and Planning Director If to Borrower: c/o Willow Partners, LLC 310 N. Westlake Blvd #250 Westlake Village, CA 91362 Attn.: Mr. Davis Slajchert With a copy to: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California 93675 Attn: City Attorney With a copy to: Brown, Winfield & Canzoneri, Inc. 300 South Grand Avenue, Ste. 1500 Los Angeles, California 90071 Attn.: Joshua C. Gottheim Notices shall be effective upon receipt, if given by personal delivery, the earlier of (i) three (3) business days after deposit with United States Mail, or (ii) the date of actual receipt as evidenced by 565265 001205-0006 03/12/2001 - 11:12 am -6- the return receipt, if delivered by certified mail, and one (1) day after deposit with the delivery service, if delivered by overnight guaranteed delivery service. Each party shall promptly notify the other party of any change(s) of address to which notice shall be sent pursuant to this Note. 13. Severabilitv. The invalidity or unenforceability of any one or more provisions of this Note will in no way affect any other provision. 14. Interpretation. Whenever the context requires, all words used in the singular will be construed to have been used in the plural, and vice versa, and each gender will include any other gender. The captions of the paragraphs of this Note are for convenience only and do not define or limit any terms or provisions. Time is of the essence in the performance of this Note by Borrower. Each party has been represented by counsel in the negotiation of this Note, and it shall not be interpreted in favor of or against any Party on account of relative responsibilities in drafting. Notwithstanding any other provision of this Note, nothing herein shall be deemed to require Borrower to pay interest in the amount of any applicable usury law or other legal limitation on interest, and the terms hereof shall be interpreted to require in each instance the lesser of (i) the amount stated in this Note; and (ii) the maximum applicable legal limit. 15. No Waiver; Consents. Any waiver by City must be in writing and will not be construed as a continuing waiver. No waiver will be implied from any delay or failure by City to take action on account of any default of Borrower. Consent by City to any actor omission by Borrower will not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for City's consent to be obtained in any future or other instance. 16. Governing Law. This Note shall be governed by the laws of the State of California. 17. Disbursement Schedule. City shall disburse portions of the $950,000 Loan proceeds to Borrower as the Development progresses according to the following schedule: Development Milestone Percent of City Loan Disbursed Building Permit Issuance 15% 56526.5 001205-0006 03/122001 - 11:12 am -7- Grading Inspection and Completion 15% Foundation Inspection Completion 10% Roof Sheathing Inspection 15% Final Framing Inspection / Rough 20% Mechanical, Electrical & Plumbing Final Drywall Inspection 15% Final Certificate of Occupancy 10% Total: 100% 18. Prior Note Superseded. This Promissory Note (Modified) supersedes and replaces the original $500,000 Promissory Note dated December 14, 2000, which shall be returned to Borrower and destroyed upon the execution hereof. 19. REPLACEMENT OF ORIGINAL NOTE. This Promissory Note (Modified) is a replacement of the original Promissory Note (Modified) provided to the City by the Borrower, on the assumption that the original Promissory Note (Modified) previously provided by the Borrower has been permanently misplaced. Notwithstanding any other provision herein, Borrower shall only be liable under one Promissory Note (Modified), even if the first original Promissory Note (Modified) is subsequently located. IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year first above written. BORROWER: NHPAHP VILLA PALOMA LIMITED PARTNERSHIP, a California limited partnership By: W.P. Villa Paloma, LLC, a California limited liability company, its General Partner 56526.5 001205-0006 03/12/2001 - 11:12 am -8- Agreed and Accepted by: CITY OF SAN JUAN CAPISTRANO, a municipal corporation Attested by: By:f994" - V._ 112 P� Mayor6f. Wyatt Hart 2ty Jerk : Margaret R. Monahan 56526.5 001205-0006 03/122001 - 11:12 am -9- L, 32400 PASEO ADELANTO SAN JUAN CAPISTRANO, CA 92675 (949) 493-1171 (949) 493-1053 (FAX) www.sanjuancapistrano.org November 8, 2001 Willow Partners, LLC 310 N. Westlake Blve #250 Westlake Village, CA 91362 Attention: Mr. Davis Slajchert Dear Mr. Davis: Jew' • j:/ IA[IAIIAAIN fs,uuan 1961 1776 MEMBERS OF THE CITY COUNCIL DIANE L. BATHGATE JOHNS GELFF COLLENE CAMPBELL MATT HART DAVID M. SWERDLIN CITY MANAGER GEORGE SCARBOROUGH Please find enclosed a certified copy of a Promissory Note (Modified) dated December 14, 2000 (modified March 6, 2001) related to NHPAHP VILLA PALOMA LIMITED PARTNERSHIP, referencing a principal sum of $950,000. This certified copy is for your records. If you have any questions regarding this document, please contact Deborah Dirnu, Housing Consultant (949) 443-6330. Sincerely, Me ona an, CMC Cit (949) 443-6308 enclosure: Promissory Note (Modified) cc: Joshua C. Gotteim, Brown, Winfield & Canzoneri, Inc; Deborah Dirnu, Housing Consultant; Tom Tomlinson, Planning Director DRUG USE IS San Juan Capistrano: Preserving the Past to Enhance the Future ■ Complete items 1, 2, and 3. Also complete i`em 4 if'hestricted Delivery is desired. ■ Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: Ow/vu) i r errs LCC: 3 J o ti l�s� lu ke �loc�. Sb li%stIa4e fit-rN.t b&6 2. Article Number (Copy from service label) A. Received by (Please Print Cleedy) B. [)9(e, of eli U C. Signal �. �� X 1:1 Agent ❑ Addis D. Is deliveryrent Item 1? ❑ Yee If YES, enter delivery address below: ❑ No 3, Service Type Certified Mail ❑ xpress Mail Registered Return Receipt for Merchandise ❑ Insured Mail .O.D. 4. Restricted Delivery? (Extra Feel ❑ yes PS Form 3811, July 1999 Domestic Return Receipt ■ Complete items 1, 2, and 3. Also complete item 4 if ReSfricted Delivery is desired. ■ Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: � GU�hC1��'IC-SCJ S CANzO K0� � T� 5 6�arrd �e sU04e isvo q I 2. Article Number (Copy from service label) A. Receyxt\by (Please Print Clearly) 102595-00-M-0952 Wdelivery address differentTrom itR(n 11 �Yes If YES, anter delivery address bel No 3. Service Type Certified Mail ❑ Express Mail ❑ Registered Return Receipt for Merchandise 13 Insured Mail ❑ C.O.D. 4. Restricted Delivery? (Extra Fee) D yes Return Receipt ul uT O Pus[ageS y a O Postage $ t RO rl ' 6� GeAJid Fee / Certified Fee �j l Pos'Interk 1 Return Receipt Fee Here geturn Recei pt Fse (End Requlrerq (Endorsement Renutretg 50 M Restricted Delivery Fee O Pestncted Ile vary Fee 0 iErdnn,ement negwrd) I O (End., semi Renung C3 Total Postage a Fees $y. t7 Total Postage S Fees $ ("f r r 1.. a s Ir���1?/�__ Q Street Aot. No orP xNp tree!, 9pt No -ar PD No o�a��.. ty ta, z Postmark Here 0 101Ioj