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1995-1221_SJC HOUSING INVESTORS, L.P._Agr of Restr. Covenants Affecting Real PropertyC0MM011','vEALTH LAND TITLE C0. - RECORDED AT REQUEST OF: WHEN RECORDED RETURN TO: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Recoraed in the County of Orange, California Gary L. Granville, Clerk/Recorder 1111111111111 No Fee 19950568793 11,16am 12/21/95 005 9002639 09 30 C38 25 7.00 72.00 0.00 0.00 0.00 0.00 (SPACE ABOVE THIS LINE FOR RECORDER'S USE) This Agreement of Restrictive Covenants Affecting Real Property is recorded at the request and for the benefit of the San Juan Capistrano Redevelopment Agency and is exempt from the payment of a recording fee pursuant to Government Code Section 6103. AGREEMENT OF RESTRICTIVE COVENANTS AFFECTING REAL PROPERTY THIS AGREEMENT OF RESTRICTIVE COVENANTS AFFECTING REAL PROPERTY ("Agreement") is dated this 30th day of November, 1995, by and between the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic of the State of California ("Agency"), and SAN JUAN CAPISTRANO HOUSING INVESTORS, L.P., a California limited partnership ("Developer"), with reference to the following: ra A. Developer is the owner of that certain real property (the "Property") located in the City of San Juan Capistrano, County of Orange, State of California, more particularly described in Exhibit "A" attached hereto and made a part hereof. B. The Property is within the San Juan Capistrano Central Redevelopment Project Area under the jurisdiction of the Agency. C. The Agency and Developer have entered into an Owner Participation Agreement ("OPA"), dated as of September 19, 1995, and the City of San Juan Capistrano has granted to Developer a Density Bonus Permit ("Density Bonus Permit"), concerning the development of the Property as a 112 unit residential housing project ("Project"), with the implementation of this Agreement to provide restrictive covenants for affordable senior citizen housing upon completion of construction. NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration, receipt and sufficiency of which is acknowledged by the parties, the Agency and Developer hereby agree as follows: SJCARC. KB 113095 1 ARTICLE 1. DEFINITIONS The following terms as used in this Agreement shall have the meanings given unless expressly provided to the contrary: 1.1 "Affordable Rent" means the lesser of rents permissible pursuant to the Low -Income Housing Tax Credit Program or affordable rent as defined in California Health and Safety Code Section 50053 as exists on the Effective Date or as hereafter amended. As of the Effective Date, Affordable Rent pursuant to Section 50053 shall not exceed (a) the product of 30 percent times 60 percent of the area median income adjusted for family size appropriate for the unit, with respect to Qualified Lower Income Households who gross incomes do not exceed 60 percent of the area median income adjusted for family size, and (b) the product of 30 percent times 50 percent of the area median income adjusted for family size appropriate for the unit, with respect to Very Low Income Households whose gross incomes do not exceed 50 percent of the area median income adjusted for family size. 1.2 "Agency" means the San Juan Capistrano Redevelopment Agency, a public body, corporate and politic, having its offices in San Juan Capistrano, California. The term "Agency" as used herein also includes any assignee of, or successor to, the rights, powers, and responsibilities of the San Juan Capistrano Redevelopment Agency. 1.3 "Agency Loan" means the loan by the Agency to Developer described in the OPA. 1.4 "Agreement" means this Agreement of Restrictive Covenants Affecting Real Property. 1.5 "Certificate of Completion" means the Certificate of Completion provided for in Article 3 hereof. 1.6 "City" means the City of San Juan Capistrano, a California general law municipal corporation, and its successors and assigns having jurisdiction. 1.7 "Density Bonus Permit" means the Density Bonus Permit issued by the City to Developer for the Project. 1.8 "Developer" means San Juan Capistrano Housing Investors, L.P., a California limited partnership, its successors, assigns, transferees, or other persons or entities acquiring title to or an ownership interest in the Project. 1.9 "Lender" means any Mortgagee. SJCARC.KB 113095 2 1.10 "Lien" means any security instrument encumbering the Project or any part thereof securing any Loan. 1.11 "Loan" means any loan made by a Mortgagee secured by a Lien. 1.12 "Low -Income Housing Tax Credit Program" shall have the meaning ascribed in Section 4.1 of this Agreement. 1.13 "Mortgagee" means a mortgagee of a mortgage or a beneficiary under a deed of trust encumbering title to the Project, or any part thereof. 1.14 "Owner Participation Agreement" or "OPA" means the Owner Participation Agreement entered into by the Agency and Developer for the Project. 1.15 "Party" means any party to this Agreement. 1.16 "Project" means the Property and the development of the Property as a one hundred twelve (1 12) unit residential housing project in conformance with the OPA and Density Bonus Permit. 1.17 "Property" is the subject real property located in the City of San Juan Capistrano, County of Orange, State of California, and more particularly described in Exhibit A attached hereto and incorporated herein by reference. 1.18 "Qualified Lower Income Households" means households whose gross annual income does not exceed 60 percent of the area median income, adjusted for family size in accordance with adjustment factors adopted by the United States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937 as amended. Qualified Lower Income Households satisfy the income eligibility criteria for Lower Income Households within the meaning of California Health and Safety Code Section 50079.5. 1.19 "Regulatory Agreement" means any regulatory agreement required by 4 California Code of Regulations § 10340(c) as required for Developer to obtain the Tax Credits. 1.20 "Restricted Units" means the 92 one bedroom units in Project. 1.21 "Restrictive Covenants" means this Agreement of Restrictive Covenants Affecting Real Property. 1.22 "Senior Citizen" means a person who is 62 years of age or older, as more particularly provided in Section 4.3 of this Agreement. SJCARC.KB 113095 3 1.23 "Tax Credits" means low-income housing tax credits allowable to the Developer with respect to the Project under Section 42 of the Internal Revenue Code of 1986, as amended. 1.24 "Very Low Income Household" means very low income households within the meaning of California Health & Safety Code Section 50105 whose gross annual income does not exceed 50 percent of the area median income adjusted for family size in accordance with the adjustment factors adopted by the United States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937 as amended. ARTICLE 2 TERM; RECORDATION; BINDING EFFECT 2.1 Term. The term of this Agreement shall be fifty-seven (57) years, commencing upon the issuance of the Certificate of Completion issued pursuant to the OPA and Section 3.1 of this Agreement, unless such term is extended or earlier terminated. 2.2 Recordation of Agreement. This Agreement shall be recorded as a restrictive covenant in the Official Records of the County where the Property is located. 2.3 Binding Effect. This Agreement, and the terms and conditions hereof, shall run with the land and shall be binding upon and inure'to the benefit of the parties hereto, and their respective successors and assigns, as provided herein. ARTICLE 3. CERTIFICATE OF COMPLETION 3.1 Certificate of Completion. Pursuant to the OPA, upon the satisfactory completion of construction of the Project, the Agency shall furnish Developer with a final Certificate of Completion for such work in such form as Exhibit K to the OPA or as may reasonably be accepted to Developer upon written request therefor by Developer. Such Certificate of Completion shall be in a form so as to permit recordation in the Office of the Recorder of the County where the Property is located. The Certificate of Completion shall be, and shall so state, a conclusive determination by the Agency of satisfactory completion of Developer's development obligations under the OPA and of full compliance with the terms of the OPA relating to construction of the Project on the Property. Except for the obligation to develop the Property, the issuance and recordation of the Certificate of Completion shall not limit the continued enforceability of Developer's obligations relating to the maintenance, operation and use of the Property or any other obligations in compliance with the terms of the OPA and this Agreement. The Agency shall not unreasonably withhold issuance of the Certificate of Completion. If the Agency refuses or fails to furnish the Certificate of Completion after written request from Developer, the Agency shall, within ten (10) days after such written request, provide Developer with a written SJCARC. KB 113095 r.1 statement of the reasons the Agency refused or failed to furnish the Certificate of Completion. The statement shall also contain the Agency's opinion of the action Developer must take to obtain the Certificate of Completion. If the reason for such refusal is confined to the immediate availability of specific items or materials for landscaping, the Agency shall issue its Certificate of Completion upon the Developer posting a cash deposit with the Agency in one hundred percent (100%) of an amount representing the fair cost of the work not yet completed. The Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage or any insurer of a mortgage on or with respect to the Property. The Certificate of Completion is not a notice of completion as referred to in California Civil Code Section 3093. ARTICLE 4. TAX CREDIT PROGRAM, RESTRICTED UNITS, SENIOR CITIZEN OCCUPANCY PERMITTED USES, OPERATION AND MAINTENANCE 4.1 Low -Income Housing Tax Credit Program. a. Qualification of Project for Tax Credits. Developer proposes to qualify the Project for and participate in the low-income housing tax credit program authorized pursuant to Internal Revenue Code of 1986, as amended Section 42, California Health and Safety Code Sections 50199.6-50199.19, California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4, and 23610.5, and applicable federal and State regulations such as 4 California Code of Regulations Sections 10300-10340 (collectively, the "Low -Income Housing Tax Credit Program"). Developer agrees to submit to the Agency all of the following documents upon receipt by Developer: (i) A copy of the Regulatory Agreement, if required, between the Tax Credit Allocation Committee and Developer (4 California Code of Regulations § 10340(c)). (ii) Copies of all correspondence or transmittals from the Tax Allocation Credit Committee or other jurisdiction (such as the Internal Revenue Service) containing any notification regarding the Project's noncompliance with applicable provisions of the Low -Income Housing Tax Credit Program. b. Compliance with Regulatory Agreement. Developer agrees to perform all of Developer's obligations under the Regulatory Agreement between the California Tax Credit Allocation Committee and Developer (4 California Code of Regulations § 10340(c)). In the event of any conflict between the provisions of the Regulatory Agreement and this Agreement, in which compliance with both the Regulatory Agreement and this Agreement is impossible, the provisions of the Regulatory Agreement shall prevail and control. SJCARC.KB 113095 "I 4.2 Restricted Units. a. Very Low Income Households. During the term of this Agreement, eighteen 0 8) of the Restricted Units shall be held for occupancy at Affordable Rents to Very Low Income Households. For purposes of this Subparagraph, a Restricted Unit occupied by a Very Low Income Household who at the commencement of the term of occupancy is a Very Low Income Household shall be treated as occupied by such household until such time as an annual certification of such household's income in accordance with Subparagraph (e) below demonstrates that such household no longer qualifies as a Very Low Income Household. If, based upon the updated income certification, a tenant household ceases to qualify as a Very Low Income Household, but qualifies as a Qualified Lower Income Household, such tenant household may continue to occupy his or her existing unit in the Project and be charged rent affordable to Qualified Lower Income Households. At such time as the tenant ceases to qualify as a Very Low Income Household and subject to the provisions of Subparagraph (b) below, the unit occupied by such tenant shall be counted for purposes of this Agreement as a unit occupied by a Qualified Lower Income Household and the Developer shall rent the next available Restricted Unit and any necessary Restricted Units thereafter to a Very Low Income Household in order to comply with the requirements of this Subparagraph (a) that at least eighteen (18) of the Restricted Units in the Project are occupied by or available for occupancy by Very Low Income Households. Moreover, a Restricted Unit previously occupied by a Very Low Income Household and then vacated shall be considered occupied by a Very Low Income Household until reoccupied, at which time the character of the Restricted Unit shall be redetermined. b. Qualified Low Income Households. During the term of this Agreement, the remaining seventy-four (74) Restricted Units shall be held for occupancy at Affordable Rents to Qualified Lower Income Households (exclusive of one unit for on-site management and maintenance personnel). For purposes of this Subparagraph, a Restricted Unit occupied by a Qualified Lower Income Household who at the commencement of the term of occupancy is a Qualified Lower Income Household shall be treated as occupied by such household until such time as an annual certification of such household's income in accordance with Subparagraph (e) below demonstrates that such household no longer qualifies as a Qualified Lower Income Household. If, based upon the updated income certification, a tenant household ceases to qualify as a Qualified Lower Income Household, such tenant household may continue to occupy his or her existing unit in the Project and be charged rent affordable to Qualified Lower Income Households. Such unit will be counted for purposes of this Agreement as a unit occupied by a Qualified Lower Income Household. Notwithstanding the foregoing, if upon annual income certification a tenant's income exceeds one hundred twenty percent 0 20%) of area median income established as the maximum qualifying limit for a Moderate Income Household pursuant to Health and Safety Code Section 50093, the Developer shall, unless otherwise prohibited by the applicable laws -and regulations governing the Project, SJCARC.KB 113095 C.1 provide such tenant a one hundred twenty (120) day notice to vacate and Developer shall relet the Restricted Unit to an income qualified household consistent with the provisions of Section 4.2. Moreover, a Restricted Unit previously occupied by a Qualified Lower Income Household and then vacated shall be considered occupied by a Qualified Lower Income Household until reoccupied, at which time the character of the Restricted Unit shall be redetermined. C. Determination of Income Eligibility. Prior to renting a Restricted Unit, Developer shall obtain and maintain on file an income certification from each tenant household for such unit. In determining income eligibility for a particular Restricted Unit, Developer shall be entitled to rely upon the documentation provided by the prospective tenant as required pursuant to the Low -Income Housing Tax Credit Program procedures for determining household income eligibility. Developer shall not be required to do further investigations into the household income than are required pursuant to the Low -Income Housing Tax Credit Program requirements. The Developer shall provide to the Agency such additional tenant income certification or additional tenant income information as the Agency may reasonably require. d. Determination of Affordable Rent. The adjustment for family size appropriate for the unit, pursuant to Section 50053 of the California Health and Safety Code for purposes of determining Affordable Rent at 30 percent of 50 percent or 60 percent of the area median income, as the case may be, shall be based upon the following household sizes for the following types of residential units: Residential Unit Number Of Persons In Household Studio One One bedroom Two Two bedroom Three Three bedroom Four Four bedroom Five e. Annual Certification. Upon initial occupancy of 100% of the Restricted Units and annually thereafter, the Developer shall provide to the Agency, a certification from Developer for compliance with the provisions of this Section 4.2 with respect to the income and rents for the Restricted Units. Such certification shall be in such form as Developer may use for the Low -Income Housing Tax Credit Program or such other form as the Agency may reasonably require. Developer shall maintain the annual certifications and all other records obtained by Developer relating to tenant eligibility pursuant to this Agreement for such period as required under the Low -Income Housing Tax Credit Program, or as may reasonably be required by the Agency during the term of this Agreement. Any duly authorized representative of the Agency shall have the right to inspect such records in accordance with Section 7.1 hereof. SJCARC. KB 113095 7 4.3 Units For Senior Citizen Occu anc . a. Senior Citizen Occul2ancy Re uirements. During the term of this Agreement, and subject to the requirements of applicable law, 100 percent of the completed residential units in the Project, including the Restricted Units, shall be held for occupancy by Senior Citizens of 62 years of age or older (exclusive of units for on- site management and maintenance personnel). Should the foregoing restrictions limiting occupancy of units to persons 62 years of age or older be declared unlawful or unenforceable by the decision of any court of competent jurisdiction or other applicable law, then in such event, Developer shall limit the use of any such units to such class of persons as may be required by said court decision or law, and in so doing, Developer shall be deemed to be in compliance with the provisions of this Agreement. 4.4 Permitted Uses. Throughout the term of this Agreement, the Property shall be used, operated and maintained only for private senior citizen rental dwelling purposes and related amenity uses all in accordance with the Redevelopment Plan for the San Juan Capistrano Central Redevelopment Project Area as provided by this Agreement. Developer covenants and agrees to make available, restrict occupancy to, and rent each of the Restricted Units in the Project at an Affordable Rent as set forth in Section 4.2. None of the dwelling units on the Property shall at any time be utilized on a transient basis, nor shall the Property or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium or rest home without the prior written approval of the Agency and the City of San Juan Capistrano. The developer shall not convert the Property to condominium ownership during the term of this Agreement without the prior written approval of the City, which approval the City may grant, withhold or deny separate and apart from this Agreement. 4.5 Operation and Maintenance. a. Maintenance by Developer. The Developer shall, at its sole cost and expense, maintain and repair the Property keeping the same in good condition and making all repairs as they may be required by this Agreement and by all applicable Municipal Code and state law provisions. b. Maintenance and Replacement. The Developer shall maintain the Property in good repair and working order, and in a safe, decent and sanitary condition, including the walkways, driveways, alleyways and landscaping, and from time to time make all necessary and proper repairs, and replacements in order to keep the Property in a safe, decent and sanitary condition. Developer shall manage and maintain the Project in accordance with all applicable housing laws and local code requirements, concerning operation, maintenance, repair, security and rental of the Property. SJCARC.KB 113095 0 C. Interior Maintenance. Developer shall maintain the interior of buildings, including carpet, drapes and paint, in clean and habitable condition. d. Exterior Building Maintenance. All exterior, painted surfaces shall be maintained at all times in a clean and presentable manner, free from chipping, cracking and defacing marks. All graffiti and defacement of any type, including marks, words and pictures must be removed and any necessary painting or repair completed within five (5) working days after notice to Developer. e. Landscaping. All front setback areas that are not buildings, driveways or walkways shall be adequately and appropriately landscaped in accordance with the Project Approvals and shall be maintained in good condition. f. All the foregoing maintenance and repair requirements shall be subject to the effects of ordinary wear and tear and the aging of improvements, and no repair or replacement on account of any casualty loss shall be applicable except to the extent of insurance proceeds available to Developer to complete such repair or replacement. ARTICLE 5. INSURANCE 5.1 Liability Insurance. Developer shall furnish or cause to be furnished to the Agency evidence, reasonably satisfactory to the Agency of commercial general liability insurance coverage for the Project and Developer's activities thereon, including bodily injury, personal injury, and property damage in the amount of at least One Million Dollars ($1,000,000) combined single limits, and naming the Agency as an additional insured with respect to the Project except as caused by the acts or omissions of the Agency. In addition, unless otherwise approved by the executive director or administrator of the Agency, all such insurance shall be primary insurance for the Project and not contributory with any other insurance which the Agency may have other than for its own acts and omissions; shall be "per occurrence" rather than "claims made" insurance; shall provide that the policy will not be cancelled or limited in scope by the insurer unless there is a minimum of thirty (30) days prior written notice by certified mail, return receipt requested to the Agency; and shall be written by a California licensed insurer with a Best rating of not less than B+, Class X. ARTICLE 6. INDEMNIFICATION 6.1 indemnification of Agency. Developer agrees to indemnify, defend, and hold harmless the Agency and its respective officers, employees, and agents (collectively, the "Indemnitee") from and against any and all claims, causes of action, liabilities, and damages arising out of any acts or omissions of Developer or Developer's partners, officers, employees, and agents, and arising out of Developer's performance under this Agreement or with respect to the Project, provided this indemnity shall not extend to any negligence or willful acts or omissions on the part SJCARC.KB 113095 of any Indemnitee. The Indemnitee shall promptly notify Developer of the filing of any such action and cooperate with Developer in the defense thereof (at no cost to Indemnitee). So long as Developer is not in default under this Section, the Indemnitee shall not compromise the defense of such action or permit a default judgment to be taken against the Indemnitee without the prior written approval of Developer, or its successors in interest. ARTICLE 7. INSPECTION 7.1 Inspection by Agency. For the purpose of assuring compliance with this Agreement, representatives of the Agency shall have the reasonable right of access to the Project and the books and records of Developer pertaining to the Project, upon at least twenty four (24) hours prior notice to Developer, during normal business hours during the term of this Agreement, including but not limited to the inspection of the documentation from tenants for establishing household income eligibility. Such representatives of the Agency shall be those who are so identified in writing to Developer by the Agency. The Agency shall indemnify, defend, and hold harmless Developer and Developer's partners, officers, employees, and agents from any damage caused or liability arising out of the negligence or willful acts or omissions of the Agency, its officers, officials, employees, volunteers, agents, or representatives in their exercise of this right of access and inspection; provided that it is understood that the Agency does not by this Article assume any responsibility or liability for a negligent inspection or failure to inspect. ARTICLE 8. FORCED DELAY; EXTENSION OF TIME 8.1 In addition to specific provisions of this Agreement, performance by Developer hereunder shall not be deemed to be in default and Developer shall be entitled to an extension of time to perform its obligations hereunder where delays in performance are due to causes beyond the control and without the fault of Developer, including as applicable: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; supernatural causes; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplies; acts or omissions of the other party or any third party; acts or the failure to act of the Agency or any other public or governmental agency or entity (except that any act or failure to act by the Agency shall not excuse performance by the Agency). ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 Developer executing this Agreement and each person executing this Agreement on behalf of Developer represents and warrants that: (i) Developer is a limited partnership organized and existing under the laws of the State of California, in good standing, and authorized to do business and doing business in the State of SJCARC.KB 113095 10 California; (ii) Developer has all requisite power and authority to carry out its business as now and whenever conducted and to enter into and perform its obligations under this Agreement; (iii) by proper action of Developer, Developer's signatories have been duly authorized to execute and deliver this Agreement; (iv) the execution of this Agreement by Developer does not violate any provision of any other agreement to which Developer is a party; and (v) except as may be specifically set forth in this Agreement, no approvals or consents not heretofore obtained by Developer are necessary in connection with the execution of this Agreement by Developer or with the performance by Developer of its obligations hereunder. ARTICLE 10. MORTGAGEE PROTECTION 10.1 Developer's Right to Encumber the Protect. Subject to the limitations in Article 3 of the OPA, the parties hereto agree that this Agreement shall not prevent or limit Developer in any manner, at Developer's sole discretion, from encumbering the Project or any part thereof by any Lien securing financing with respect to the Property. The Agency acknowledges that the Mortgagees providing such financing may require certain interpretations and modifications of this Agreement, and the Agency agrees upon written request, from time to time, to meet with Developer and representatives of such Mortgagees to negotiate in good faith any such request for interpretation or modification. The Agency will not unreasonably withhold its consent to any such requested interpretation or modification provided such interpretation or modification is consistent with the intent and purposes of this Agreement. Any Mortgagee of the Project now and hereafter shall be entitled to the following rights and privileges: a. Preservation of Liens. Neither entering into this Agreement nor a violation or breach of this Agreement shall defeat, render invalid, diminish or impair any Lien thereof made in good faith and for value. b. No Assumption of Obligations by Mortgagee. Any Mortgagee who comes into possession of the Project, or any part thereof, pursuant to foreclosure of Lien, or deed in lieu of such foreclosure, shall take the Project, or part thereof, subject to the terms of this Agreement; provided, however, in no event shall such Mortgagee be liable for any defaults or monetary obligations of Developer arising prior to acquisition of title to the Project by such Mortgagee. 10.2 Notice of Default. Before the Agency may resort to any remedy provided for in Article 12 hereof, the Agency must give NO written notice of the default or breach (the "Initial Default Notice") and (vii) written notice of the failure of the Developer to cure the default or breach (the "Second Default Notice") to each Mortgagee concurrent with transmittal of such notices to Developer and afford each Mortgagee the opportunity after service of such Second Default Notice to: SJCARC. KB 113095 11 a. Monetary Default. Cure the breach or default within thirty (30) days after service on each Mortgagee of the Second Default Notice where the default can be cured by the payment of money to the Agency or some other person; b. Non Monetary Default. Commence to cure the breach or default within sixty (60) days after service on each Mortgagee of the Second Default Notice where the breach or default must be cured by something other than the payment of money and can be cured within that time; or C. Extended Right to Cure Non Monetary Default. Cure the breach or default in such reasonable time as may be required where something other than the payment of money is required to cure the breach or default and cannot be reasonably performed within sixty (60) days after service on each Mortgagee of the Second Default Notice provided that acts to cure the breach or default are commenced within that time period after service of the Second Default Notice on each Mortgagee by the Agency and are thereafter diligently continued by such Mortgagee. 10.3 Foreclosure in Lieu of Curing Default. Notwithstanding any other provision of this Agreement, a Mortgagee may forestall any remedy of the Agency for a default under or breach of this Agreement by Developer by commencing proceedings to foreclose any Lien. The proceedings so commenced may be for foreclosure of any such Lien by order of court or for foreclosure of any such Lien under a power of sale contained in the Lien. The proceedings shall not, however, forestall the Agency's right to execute any remedy or right under this Agreement for the default or breach by Developer unless: (i) they are commenced within sixty (60) days after service on each Mortgagee of the Second Default Notice; and (ii) they are, after having been commenced, diligently pursued in the manner provided by law. 10.4 Assignment Without Consent on Foreclosure. The consent of the Agency shall not be required for transfer of Developer's right, title and interest in the Project or this Agreement to: a. any purchaser, which includes a Mortgagee, at a foreclosure sale of the Lien, whether the foreclosure is conducted pursuant to court order or pursuant to a power of sale in the instrument creating the Lien; or b. A purchaser from a Mortgagee after foreclosure where a Mortgagee was the purchaser of Developer's interest at the foreclosure sale of the Lien, or acquired Developer's interest by transfer in lieu of foreclosure. 10.5 Mortgagee as Including Subsequent Security Holders. The term "Mortgagee" as used in this Article shall mean not only the person, persons or entity that loaned money to Developer and is named as beneficiary, mortgagee, secured party or security holder in the instrument creating any Lien, but also all subsequent assignees and holders of the instrument and interest secured by such instrument who SJCARC. KB 113095 12 give written notice to the Agency setting forth the name and address of the transferee. 10.6 Estoppel Certificates. The Agency shall provide to any Mortgagee, on request, an estoppel certificate certifying to such matters as to the continuation of this Agreement as being in full force and effect, the satisfaction of the terms and conditions of this Agreement and the existence of any defaults hereunder, if any. 10.7 Amendments. The Agency shall cooperate in including in this Agreement by suitable amendment from time to time any provision which may reasonably be requested by any proposed or existing Mortgagee for the purpose of implementing the mortgagee -protection provisions contained in this Article and allowing such Mortgagee reasonable means to protect or preserve any Lien on the occurrence of a default under the terms of this Agreement. The Agency agrees to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effect any such amendment consistent with the terms and conditions of this Agreement and the parties' interest in entering into this Agreement. Any modification or amendment of this Agreement shall require the prior written consent of each Mortgagee. 10.8 Special Provisions for Permanent Loan Affecting this Agreement. The Agency agrees that, in addition to all the Mortgagee protection provisions hereinabove, the following additional provisions shall be applicable to any Loan or refinancing thereof ("Permanent Loan") which is funded to Developer on or after completion of construction of the Project and issuance of the Certificate of Completion by the Agency, and which provisions shall apply in favor of the Lender, Mortgagee or other holder of the Permanent Loan or refinancing thereof, and their successors and assigns in interest (the "Permanent Lender"), including without limitation the Federal National Mortgage Association ("Fannie Mae"): a. Indemnification. Neither the Permanent Lender nor any successor in interest to the Permanent Lender will assume or take subject to any liability for the indemnification obligations of the Developer under this Agreement for acts or omissions of the Developer prior to any transfer of title to the Project to the Permanent Lender, whether by foreclosure, deed in lieu of foreclosure or comparable conversation of the Permanent Loan, and further the Developer must remain liable under the indemnification provisions of this Agreement for its actions and omissions prior to any transfer of title to the Permanent Lender. The Permanent Lender will agree to indemnify the Agency but only for acts and omissions of the Permanent Lender which occur following acquisition of the Project by the Permanent Lender and occurring during the period of the Permanent Lender's ownership and operation of the Project, whether such acquisition is by foreclosure, deed in lieu of foreclosure or comparable conversion of the Permanent Loan. b. Sale or Transfer. No restrictions on sale or transfer of the Project shall apply to any transfer of title to the -Project to the Permanent Lender by SJCARC.KB 113095 13 foreclosure, deed in lieu of foreclosure or comparable conversion of the Permanent Loan. No transfer of the Project may operate to release the Developer from its obligations under this Agreement arising prior to such transfer. Nothing contained in this Agreement may affect any provision of the Permanent Loan or any Permanent Loan document which requires the Developer to obtain the consent of the holder of the Permanent Loan as a precondition to sale, transfer or other disposition of the Project. C. Termination. The Permanent Lender shall have the right to terminate this Agreement in the event of an involuntary noncompliance with the provisions of this Agreement caused by foreclosure of the lien of the Permanent Loan, delivery of a deed in lieu of foreclosure or comparable conversion of the Permanent Loan, fire, seizure, requisition, change in a federal law, or an action of a federal agency which prevents the Agency from enforcing the provisions of this Agreement, or condemnation or a similar event, but only if (i) within a reasonable period thereafter the bonds ("Bonds") issued in connection with the Permanent Loan, in an aggregate principal amount equal to the Permanent Loan are paid in full and retired, and further, this Agreement shall be reinstated if, at any time subsequent to the termination of this Agreement as the result of the foreclosure of the lien of the Permanent Loan, the delivery of a deed in lieu of foreclosure or comparable conversion of the Permanent Loan, the Developer or any related person (within the meaning of Section 1.103-10(e) of the Treasury Regulations) obtains an interest in the Project which constitutes an ownership interest for federal income tax purposes, or (ii) an opinion of bond counsel is delivered to the issuer of the Bonds to the effect that such termination will not adversely affect the exclusion from gross income for federal income tax purposes of the interest payable on the Bonds. d. Enforcement. Upon any default by the Developer under this Agreement, the Agency may seek specific performance of this Agreement or enjoin acts which may be unlawful or in violation of this Agreement, but the Agency may not seek to recover damages from the Developer apart from any claim of indemnification hereunder. The obligations of the Developer under this Agreement for the payment of its indemnification obligations may not be secured by or in any manner constitute a lien on the Project, and no person may have the right to enforce such indemnification obligations other than directly against the Developer. No subsequent owner of the Project may be liable or obligated for the breach or default of any obligation of any prior owner under this Agreement, including, but not limited to, any payment or indemnification obligation. In addition, promptly upon determining that a violation of this Agreement has occurred, the Agency must, by notice in writing to the Permanent Lender inform the Permanent Lender that such violation has occurred, the nature of the violation and that the violation has been cured or has not been cured, but is curable within a reasonable period of time, or is incurable. SJCARC.KB 113095 M ARTICLE 11. DISCRIMINATION 11.1 No Discrimination. There shall be no discrimination against, or segregation of, any persons, or group of persons, on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the enjoyment of the Project, nor shall Developer itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Property or any portion thereof. ARTICLE 12. DEFAULTS, REMEDIES, AND TERMINATION 12.1 Defaults -General. Subject to the extensions of time set forth in Article 8 hereof, failure or delay by any Developer to perform any term or provision of this Agreement constitutes a default under this Agreement; provided, however, Developer shall not be deemed to be in default if (i) Developer cures, corrects or remedies such default within thirty (30) days after receipt of a notice of default from the party specifying the default, where the default can be cured by the payment of money to the Agency or some other person, or (ii) Developer cures, corrects, or remedies such default within sixty (60) days after receipt of a notice from the party specifying such failure or delay, where the default must be cured by something other than the payment of money and can be cured within that time, or (iii) for defaults where something other than the payment of money is required to cure the default and the default cannot reasonably be cured, corrected, or remedied within such sixty (60) day period, if Developer commences to cure, correct, or remedy such failure or delay within such sixty (60) day period after receipt of a notice from the Party giving notice of said default specifying such failure or delay, and diligently prosecutes such cure, correction or remedy to completion. The Agency claiming a default (the "Notifying Party") shall give written notice of default to Developer, specifying the default complained of by the Notifying Party. Copies of any notice of default given to Developer shall also be given to each Mortgagee. Except as required to protect against further damages, the Notifying Party may not institute proceedings against Developer in default until the time for cure, correction, or remedy of a default has expired. Upon the expiration of time to cure the default of Developer, the Notifying Party shall give written notice to Developer and each Mortgagee of Developer's failure to cure the default or breach ("Second Default Notice"). Except as otherwise expressly provided in this Agreement, any failure or delay by a Party in giving a notice of default or in asserting any of its rights and remedies as to any default shall not constitute a waiver of any future default. 12.2 Termination by A enc . Subject to the provisions of Articles 8 and 10 hereof, and provided that the Agency is not in default under this Agreement, the SJCARC.KB 113095 15 Agency shall have the right to terminate this Agreement upon written notice to Developer if: (i) Developer shall have failed to obtain any of the Project Approvals required for construction of the Project as required by the OPA within the applicable time set forth in the OPA, or (ii► Developer shall have failed to commence construction of the Project pursuant to a valid building permit or permits and has not diligently completed such construction as required under the OPA within the applicable time set forth in the OPA, or (iii) if Developer shall, after the expiration of any applicable grace period herein provided for, be in default under the terms of this Agreement. 12.3 Legal Actions. a. Institution of Legal Actions. In addition to any other rights or remedies, any party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement. Such legal actions must be instituted and maintained in the Superior Court of the County where the Property is located, or in any other appropriate court in that county. b. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 12.4 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. 12.5 Attorney's Fees. If any Party to this Agreement is required to initiate or defend litigation in any way connected with this Agreement, the prevailing Party in such litigation, in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to reasonable attorney's fees. If any Party to this Agreement is required to initiate or defend litigation with a third party because of the violation of any term or provision of this Agreement by the other party, then the Party so litigating shall be entitled to reasonable attorney's fees from the other Parties to this Agreement. Attorney's fees shall include attorney's fees on any appeal, and in addition a Party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, retaining expert witnesses, taking depositions and discovery, and all other necessary costs incurred with respect to such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment. ARTICLE 13. EFFECT OF COVENANTS 13.1 Covenants Running With The Land In Favor Of Agencv. The Agency is deemed beneficiary of the terms and provisions of this Agreement and of the SJCARC. KB 113095 16 restrictions and covenants running with the land for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit the covenants running with the land have been provided. The covenants in favor of the Agency shall run without regard to whether the Agency has been, remains, or is an owner of any land or interest therein in the Project. ARTICLE 14. GENERAL PROVISIONS. 14.1 Notices and Demands Between the Parties. All notices and demands between the Agency and Developer shall be in writing and shall be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to: To Agency: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attn: Executive Director With a copy to: Stradling, Yocca, Carlson & Rauth 660 Newport Center Drive Suite 1600 Newport Beach, California 92660 Attn: Thomas P. Clark, Jr. To Developer: San Juan Capistrano Housing Investors, L.P. c/o LINC Housing Corporation 4 Venture, Suite 275 Irvine, California 92718 With a copy to: Kaufman and Broad Multi -Housing Group, Inc. 10990 Wilshire Boulevard, 7th Floor Los Angeles, California 90024 Attn: Michael Costa John Bertero, Esq. Kaufman and Broad 5000 Hopyard Road, Suite 190 Pleasanton, California 94588 Notices personally delivered or delivered by document delivery service shall be deemed effective upon receipt. Notices mailed shall be deemed effective on the fifth business day following deposit in the United States mail. Such written notices and demands SJCARC. KB 113095 17 shall be sent in the same manner to such other addresses as either party may from time to time designate by mail. 14.2 Nonfiability of Agency Officials and Employees; Conflicts of Interest. No member, official, employee, or contractor of the Agency shall be personally liable to Developer in the event of any default or breach by the Agency or for any amount which may become due to Developer or on any obligations under the terms of this Agreement. No member, official, employee, or agent of the Agency shall have any direct or indirect interest in this Agreement nor participate in any decision relating to this Agreement which is prohibited by law. 14.3 No Agency or Partnership. The parties acknowledge that, in entering into and performing this Agreement, each is acting as an independent entity and not as an agent of the other in any respect. Nothing contained in this Agreement or in any document executed in connection herewith shall be construed as making the City or the Agency joint venturers or partners with the Developer. 14.4 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. 14.5 Cautions, Recitals and Exhibits. The Article, Section and paragraph captions and headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this Agreement, the text of which shall control. The Recitals of and the Exhibits to this Agreement are hereby incorporated into this Agreement. 14.6 Entire Agreement, Waivers and Amendments. This Agreement integrates all of the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotiations and previous agreements between the parties with respect to all or any part of the subject matter hereof. All references herein to this Agreement shall mean and include the Exhibits hereto unless the context otherwise requires. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the party to be charged, and all amendments and modifications hereto must be in writing and signed by the appropriate authorities of the Agency and Developer. 14.7 Severability. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisions are not rendered impractical to perform taking into consideration the purposes of this Agreement. In the event that all or any portion of this Agreement is found to be unenforceable, this Agreement or that portion which is found to be unenforceable shall be deemed to be a statement of intention by the SJCARC.KB 113095 W. parties; and the parties further agree that in such event, and to the maximum extent permitted by law, they shall take all steps necessary to comply with such procedures or requirements as may be necessary in order to make valid this Agreement or that portion which is found to be unenforceable. 14.8 Authority of Si nators to Bind Princi als. The persons executing this Agreement on behalf of their respective principals represent that they have been authorized to do so and that they thereby bind the principals to the terms and conditions of this Agreement. 14.9 Assignment and Transfer. a. Prohibition. The identity and qualifications of the Developer are of particular concern to the Agency. It is because of this identity and these qualifications that the Agency has entered into this Agreement with the Developer. Except as otherwise provided in this Agreement, during the term of this Agreement, no voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement by assignment or otherwise, nor shall Developer make any total or partial sale, transfer, conveyance, encumbrance to secure financing, assignment or lease of the whole or any part of the Project without the prior written approval of the agency, except as expressly set forth herein. Any purported transfer, voluntary or by operation of law, in violation of this Section 14.9 shall constitute a default hereunder and shall be void. b. Permitted Transfers. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of an assignment of this Agreement or conveyance of the Project or any part thereof, shall not be required in connection with any of the following: (i) The conveyance or dedication of any portion of the Property to the City, the Agency or other appropriate governmental agencies, or the granting of easements or permits to public utilities to facilitate the construction of the Project on the Property, or (ii) Subject to the restrictions set forth in this Agreement, the rental of units in the Project, including the rental of the Restricted Units to Qualified Lower Income and Very Low Income Households, and the rental of units to Senior Citizen occupants as provided in this Agreement, or (iii) The encumbering of the Project by Liens and Mortgages as provided in the OPA, or (iv) The transfers described in Article 10 of this Agreement for Mortgagee protection, or SJCARC.KB 113095 W, (v) The replacement of personal property and fixtures. C. Agency Consideration of -Requested Transfer. The Agency agrees that it will not unreasonably withhold approval of a request made pursuant to this Section 14.9 provided the Developer delivers written notice to the Agency requesting such approval. Such notice shall be accompanied by evidence regarding the proposed assignee's or purchaser's development, operation and management qualifications and experience and its financial commitments and resources sufficient to enable the Agency to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 14.9 and other criteria as reasonably determined by the Agency. Within thirty (30) days after the receipt of the Developer's written notice requesting Agency approval of an assignment or transfer pursuant to this Section 14.9, the Agency shall respond in writing by stating what further information, if any, the Agency requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, the Developer shall promptly furnish to the Agency such further information as may be requested. An assignment approved by the Agency pursuant to this subdivision (c) shall not be effective unless and until the proposed assignee executes and delivers to the Agency an agreement in form reasonably satisfactory to Agency's legal counsel assuming the obligations of Developer which have been assigned. Thereafter, the assignor shall remain responsible to the Agency for performance of the obligations assumed by the assignee unless the Agency releases the assignor in writing. d. Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon the Developer and the permitted successors and assigns of the Developer. Whenever the term "Developer" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. e. Changes in Partners. Notwithstanding anything contained to the contrary in this Agreement, Developer shall have the right to: (i) Admit additional limited or general partners, (ii) Permit the initial limited partner to withdraw from the Developer, and (iii) Replace the general partner of Developer for cause with another general partner who, or the principals of which, have substantial experience in owning or operating apartment projects similar to the Project. SJCARC.KB 113095 20 14.10 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written hereinabove. AGENCY: SAN JUAN CAPI a publi y, cc By: Na e: Title: G.,. p TT EST: B": Secretary APPRGVEu' S T FO By: oeys for t e San Juan Capistrano eve lopme t Agency SJCARC. KB 113095 DEVELOPER: CY, SAN JUAN CAPISTRANO HOUSING INVESTORS, L.P., a California limited partnership By: LINC Housing Corporation, General rtner By: Name: Title: c V' 21 SJCARC.KB 113095 Exhibit A Description of Property [See Exhibit A attached hereto and made a part hereof] 22 EXHIBIT "A" That portion of the Southwest quarter of Section 6 Township 8 South, Range 7 West, San Bernardino Base and Meridian, in the City of San Juan Capistrano, County of Orange, State of California, described as follows: Beginning at the intersection of the center lines of Ganado Road and the old Ortega Highway, as shown on a map filed in book 27 page 8 of Record of Surveys in the office of the County Recorder of Orange County, California, said point being the most Northerly comer of land described in the deed to Arley H. Leck and wife, recorded December 24, 1954 in book 2905 page 363 of Official Records; thence South 42 ° 02' 00" East 104.10 feet along the center line of said Ganado Road to an angle point in said land of Leck; thence South 03* 20' 10" West 169.97 feet; thence South 63* 23' 00" West 7.24 feet along the Southeasterly line of said land of Leck to the true point of beginning, said point lies on the Westerly right of way line of Rancho Viejo Road; thence South 21 ° 00' 15" East along the Westerly right of way line of Rancho Viejo Road 15.27 feet; thence leaving said right of way line, South 03° 20' 10" West 294.00 feet; thence South 74° 29' 00" West 255.73 feet; thence North 15* 28' 37" West 12.93 feet; thence North 59* 36' 20" West 20.50 feet to a point on a non -tangent curve concave Northwesterly having a radius of 25.00 feet; thence Southerly and Westerly along said curve an arc distance of 19.25 feet, through a central angle of 44° 07' 43" to a tangent line; thence South 74° 31' 23" West 51.29 feet to a tangent curve concave Northeasterly, having a radius of 25.00 feet; thence Westerly and Northerly along said curve an arc distance of 46.89 feet, through a central angle of 107* 27' 18" to a tangent line; thence North 01* 58' 40" East 87.43 feet; thence North 400 17' 45" East 36.81 feet; thence North 030 24' 18" East 65.51 feet to the Southerly line of Parcel 2 of Parcel Map No. 85-328 as filed in book 241 pages 12 and 13 of Parcel Maps, records of the County of Orange; thence North 63* 23' 00" East along the Southerly line of said parcel map 218.99 feet to the Southeasterly comer of said Parcel Map No. 85-328; thence North 16° 33' 40" West along the Easterly line of said parcel map 202.59 feet to the Southerly right of way line of Ortega Highway; thence North 68° 59' 45" East along the Southerly right of way line of Ortega Highway 124.81 feet to a tangent curve concave Southwesterly having a radius of 25.00 feet; thence Easterly and Southerly along said curve an arc distance of 39.27 feet, through a central angle of 90° 00' 00" to a tangent line, said point lying on the Westerly right of way line of Rancho Viejo Road; thence South 21* 00' 15" East along the Westerly right of way line of Rancho Viejo Road 160.67 feet to the true point of beginning. Said land is also shown as Lot 2 of Lot Line Adjustment No. 95 -PM 85-328-1, recorded October 30, 1995, as Instrument No. 95-480794, Official Records. STATE OF CALIFORNIA Lg ss. COUNTY OF j,'II?Y ` } On this day of undersigned a Notary Public in PDT" T. &awl �11 . c' before me, ,the and for said State, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(,&) whose name( -s) Peru— subscribed to the within instrument and acknowledged to me thatshut executed the same in6 herftheir authorized capacity¢ies►, and that by Iherhtheir signature(s) on the instrument the person(&) or the entity upon behalf of which the person( acted, executed the instrument. Witness my hand and official seal. JEFFREY S. NO7_AKI COMM. #1044321 X L NOTARY PUBLIC - CALIFORNIA M ORANGE COUNTY Mj Conirn. E fes WV. 6111M� �"►""�"�"►' Nt Iviolic [SEAL] STATE OF CALIFORNIA ss. COUNTY OF On this day of , 19 , before me, , the undersigned a Notary Public in and for said State, 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. [SEAL] SJCARC.KB 113095 Notary Public 23 PUBLIC AGENCY FORM OF ACKNOWLEDGEMENT (Gov't Code 40814 & Civil Code 118 1) State of California ) County of Orange ) ss. City of San Juan Capistrano ) On C mlea' l 9,? 5 ,before me,.L L. ey % X120— 1� i , City Clerk, personally appeared (� a rhe 5 -- hCG' Y4 UQh (SEAL) personally known to me to be the person(,4 whose name* is/ar-e subscribed to the within instrument and acknowledged to me that he/fey executed the same in his/heir authorized capacity(ios), and that by his/herhheir signature( on the instrument the person(s-, or the entity upon behalf of which the perso*) acted, executed the instrument. WITNESS my hand and official seal. OPTIONAL Capacity Claimed by Signer Description of Attached Document Municipal Corporate Officer Title Signer is Representing City of San .Juan C pistrano 141g,,4 c� Avez-enard Ue, (?0-Ve~-6 C f7 rAxe&lP-,- Title or 'F;pe of Documeq�-- c n `j am (,6 o s .f- c12 57'V Y 'Oe `f' Number of Pages aver 9 5 Date of Document ,.v. / ti, 4AeL- Signer(s) Other Than Named Above