HomeMy WebLinkAboutReso 58-2024 (24-350)
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LOAN AGREEMENT
This Loan Agreement (this “Agreement”) is entered into effective as of February
21, 2024 (“Effective Date”) by and between the City of South San Francisco, a municipal
corporation (the "City") and Rotary Plaza, Inc. a California nonprofit public benefit corporation
("Borrower"). The City and Borrower are hereinafter collectively referred to as the “Parties.”
RECITALS
A. Borrower desires to purchase property located in the City of South San Francisco (“Site”)
and develop affordable housing in two separate phases. Borrower proposes to subdivide the
Site into two separate legal parcels and develop the first phase as an eighty (80)-unit senior
affordable housing building at 500 Linden Avenue (“Senior Project”), and the second phase
as a sixty-five (65)-unit affordable family housing building at 522 Linden Avenue and more
particularly described in Exhibit A attached hereto (“Property”) (“Family Project”).
B. The Redevelopment Agency of the City of South San Francisco (“Redevelopment Agency”)
was established under the provisions of the Community Redevelopment Law (California
Health and Safety Code § 33000 et seq.)
C. Effective June 30, 2011, the Governor signed into law ABx1 26 which automatically
suspended redevelopment activities, and on December 29, 2011, the California State
Supreme Court upheld the provisions of ABx1 26, thereby dissolving all redevelopment
agencies on February 1, 2012.
D. The City’s Low/ Mod-Income Housing Asset Fund (“Fund 241”), which includes funds
from the City’s former Redevelopment Agency and is regulated by State Senate Bill 341, has
an excess surplus of $1,076,386 that must be encumbered by Fiscal Year 2024-2025.
E. The City has identified a critical need for development of affordable housing as evidenced by
data gathered and conclusions drawn in the City’s Housing Element and wishes to assist in
the development of the Family Project.
F. At its December 13, 2023 Regular Meeting, the South San Francisco City Council (“City
Council”) approved Resolution 187-2023, authorizing providing Borrower with a loan in the
amount of One Million, Seventy-Six Thousand, Three Hundred and Eighty-Three Dollars
($1,076,383) using Fund 241.
G. In accordance with the terms and conditions of this Agreement and accompanying Exhibits,
the City agrees to loan to Borrower the amount of One Million, Seventy-Six Thousand,
Three Hundred and Eighty-Three Dollars ($1,076,383) (“Loan”) to defray acquisition and
the predevelopment costs associated with development of the Family Project which Loan
shall be evidenced by an accompanying Promissory Note dated as of the Effective Date and
executed by Borrower substantially in the form attached hereto as Exhibit B (“Note”)
secured by an Assignment of Collateral as set forth herein in Section 1.8 and, concurrent with
Borrower’s acquisition of the Property and/or 500 Linden Avenue, a Deed of Trust in the
form attached hereto as Exhibit C (“Deed of Trust”) and regulated by a regulatory
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agreement dated as of the Effective Date and executed by Borrower substantially in the form
attached hereto as Exhibit D (“Regulatory Agreement”).
NOW THEREFORE, in consideration of their mutual undertakings and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1. THE LOAN AND DISBURSEMENT OF LOAN PROCEEDS.
1.1. Loan. The City agrees to make the Loan, and Borrower agrees to accept the same,
upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall
be evidenced by the Note. Provided that Borrower has complied with all conditions set forth in
Section 1.6, the Loan shall be disbursed in accordance with Section 1.5 hereof.
1.2. Interest; Maturity Date. Interest shall accrue on the Loan at a rate of three percent (3%)
simple interest per annum for so long as Borrower is not in default under this Agreement, the
Note, the Deed of Trust, or the Regulatory Agreement (collectively, the “Loan Obligations”).
Otherwise, the Loan shall accrue interest at the Default Rate, as set forth in the Note, until such
default is cured. The outstanding balance of the Loan and any other sums due under the Note
shall be payable in full on the fifty-fifth (55th) anniversary of the date of issuance of the last
certificate of occupancy or equivalent certification provided for the Family Project by the City’s
Building Official (the “Maturity Date”); provided, however, that if such date cannot be
established, the Maturity Date shall be the fifty-seventh (57th) anniversary of the Effective Date.
If HCD is a lender to the Family Project, at conversion to permanent financing, the Parties will
extend to the Maturity Date to match the maturity date of the HCD financing.
1.3. Termination for Infeasibility: Forgiveness. If any of the following circumstances arises,
and no Borrower Event of Default has occurred and is ongoing, Borrower may terminate this
Agreement by giving notice to the City prior to the Maturity Date, and the City shall forgive all
sums due under the Note:
a. Borrower is unable to acquire the Property despite commercially reasonable efforts
due to a default by the City; or
b. Borrower does not receive additional land use, planning, environmental, or building
approvals required for the development of the Family Project, despite Borrower's
good faith efforts to obtain such approval; or
c. Borrower is unable to obtain financing necessary to construct the Family Project
despite Borrower's timely and good faith efforts to obtain such financing, that may
include but is not be limited to IlG, AHSC, MHP, tax credits, bonds, conventional
mortgages or low-income housing tax credit equity, or philanthropic sources.
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1.4. Use of Loan Proceeds. The Loan shall be used solely and exclusively to defray
acquisition and the predevelopment costs for the Family Project, consistent with the
predevelopment budget attached as Exhibit E (the “Predevelopment Budget”); provided,
however, that any Loan amounts disbursed after construction closing may be used for the
construction of the Family Project.
1.5. Disbursement of Proceeds. Upon satisfaction of the conditions set forth in Section 1.5,
and provided that Borrower has provided the City copies of third-party invoices, evidence of
Borrower’s payment for services rendered in connection with the Family Project, and such other
documentation as the City may reasonably require, the City shall promptly disburse Loan
proceeds to Borrower.
1.6. Conditions Precedent to Disbursement of Funds. The City's obligation to disburse
Loan proceeds is conditioned upon satisfaction of all of the following conditions (“Loan
Proceeds):
a. Borrower’s execution and delivery to the City of this Agreement, the Note, and
Regulatory Agreement; and
b. Borrower’s delivery to the City of both of the following: (i) a certified resolution
indicating that Borrower has authorized this transaction and that the persons
executing this Agreement on Borrower’s behalf have been duly authorized to do
so, and (ii) a certified copies of Borrower’s articles of incorporation, bylaws, and
I.R.S. tax-exemption determination letter.
c. Borrower’s presentation of an updated Predevelopment Budget, as reasonably
approved by the City, accompanied by the request disbursement amount to
provide for costs incurred to date. Requests for payment shall be made quarterly.
1.7. No Obligation to Disburse Proceeds Upon Default or Termination. Notwithstanding
any other provision of this Agreement, the City shall have no obligation to disburse any portion
of the Loan to Borrower:
a. Upon the failure of any of Borrower’s representations and warranties set forth in
this Agreement to be true and correct in all material respects;
b. Following the termination of this Agreement; or
c. During the pendency of any uncured Event of Default.
1.8. Security.
a. As security for the Loan, and as part of the consideration for entering into this
Agreement, Borrower hereby assigns its rights under the Collateral, as defined
below (the "Assignment"). The Assignment shall become effective upon the
occurrence of an Event of Default or Termination for Infeasibility. The City shall
have no obligation under the Collateral unless it expressly agrees in writing to be
bound thereby. If the Assignment shall become effective, the City may use the
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Collateral for any purposes for which Borrower could have made use of the same in
the development of the Family Project. Borrower shall cooperate with the City in
the implementation of its rights under the Assignment and shall immediately deposit
the Collateral with the City if the Assignment becomes effective. As used herein,
the term "Collateral" includes the following: all architectural designs, construction,
engineering, surveying, and consulting contracts, and any and all amendments,
modifications, supplements, addenda and general conditions thereto heretofore or
hereafter entered into by Borrower and any contractor or consultant pertaining to
development of the Family Project; all plans and specifications, surveys, shop
drawings, working drawings, reports, studies, amendments, modifications, changes,
supplements, general conditions, addenda and work product thereto heretofore or
hereafter prepared by Borrower or any contractor or consultant pertaining to
development of the Family Project; all land use approvals, conditional use permits,
building permits and other governmental entitlements and approvals of any nature
obtained for the Family Project; and all financing applications or other applications
and all other tangible documents, except those of a proprietary or confidential
nature, pertaining to development of the Family Project.
b. Deed of Trust. In addition to the Assignment, concurrent with the Borrower’s
acquisition of the Property and/or 500 Linden Avenue, South San Francisco (APN
____), the Borrower shall record and comply with the Deed of Trust in a form
provided by the City and reasonably acceptable to the Borrower. Such Deed of Trust
shall be subordinate to Borrower’s private financing for acquisition of the Property
and/or 500 Linden Avenue, South San Francisco (APN ____) and construction of
the Family Project, to any HCD documents if required by HCD’s regulations and
Guidelines, and to any other public entity that provides funding for the Family
Project in excess of the amount of the Loan.
2. NON-DISCRIMINATION; PREFERENCES.
2.1. Non-Discrimination. Borrower covenants by and for itself and its successors and assigns
that there shall be no discrimination against or segregation of a person or of a group of persons
on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government
Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1)
of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Family Project or the
Property, nor shall Borrower or any person claiming under or through Borrower 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 in the Family Project. Deeds, leases, and contracts entered into by Borrower with
respect to the Family Project shall contain any mandatory non-discrimination language required
under the Regulatory Agreement.
2.2. Preferences. In order to ensure that there is an adequate supply of affordable housing
within the City for City residents and employees of businesses located within the City, to the
extent permitted by fair housing laws and other applicable laws, and consistent with the program
regulations for funding sources used for development of the Family Project, at initial lease up,
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Borrower shall give a preference in the Family Project to households that include at least one
member who lives or works in the City of South San Francisco. Borrower will implement any
preferences in the rental of units in the Family Project pursuant to a preference plan approved by
its lenders, investors, and the City Manager. Notwithstanding the foregoing, in the event of a
conflict between this provision and the provisions of Section 42 of the Internal Revenue Code of
1986, as amended, or any fair housing law, the provisions of such Section 42 of fair housing law
shall control.
3. ADDITIONAL COVENANTS, REPRESENTATIONS AND WARRANTIES OF
BORROWER.
3.1. Representations. Borrower represents and warrants to the City as follows:
a. Organization of the Borrower. Borrower is a duly organized nonprofit public
benefit corporation, validly existing and in good standing under the laws of the
State of California. Borrower has all requisite power and authority to develop the
Family Project, to carry on its business as now conducted, and to execute, deliver
and perform its obligations under this Agreement and the Note. Borrower has
received a determination from the Internal Revenue Service that it is exempt
from federal tax under Section 501(c)(3) of the Internal Revenue Code of 1986 as
amended.
b. Authorization of the Loan; No Violation. The execution, delivery and
performance of this Agreement and the Note have been duly authorized by
Borrower, and this Agreement and the Note, when duly executed and delivered
will constitute the valid and binding obligations of Borrower enforceable in
accordance with their respective terms. Borrower’s execution of this Agreement
and the Note and performance thereunder will not result in a breach of or
constitute a default under any agreement, indenture or other instrument to which
Borrower is a party or by which Borrower may be bound.
c. Litigation. There are no pending or to Borrower’s knowledge, threatened actions
or proceedings before any court or administrative agency which may adversely
affect the financial condition or operation of Borrower or its ability to carry out
the obligations of Borrower under this Agreement and the Note. Borrower is not
the subject of an action under federal or state Bankruptcy Law (as defined
below).
3.2. Indemnification. Borrower shall indemnify, defend (with counsel approved by
the City), and hold the City and its elected and appointed officers, officials, employees,
contractors, agents, and representatives (all of the foregoing, collectively the “Indemnitees”)
harmless from and against any and all liabilities, losses, damages, fines, deficiencies,
penalties, claims, demands, suits, actions, causes of action, legal or administrative
proceedings, judgments, costs and expenses (including without limitation reasonable
attorneys’ fees and court costs) (all of the foregoing, collectively “Claims”) arising directly
or indirectly in any manner in connection with or resulting from, (a) any and all of
Borrower’s predevelopment and construction activities in connection with the Family
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Project, including without limitation, site investigations conducted by or for Borrower; (b)
any failure of any of Borrower’s representations or warranties set forth in this Agreement, or
made by Borrower in connection with the execution and delivery of this Agreement or in any
certificate furnished pursuant hereto, or in connection with any request for disbursement of
Loan proceeds to be correct in all material respects; (c) any contract for services entered into
between Borrower and a third party, or services provided to Borrower by a third party,
related to the Family Project; and (d) any claim, demand or cause of action, or any action or
other proceeding, whether meritorious or not, brought or asserted against any Indemnitee
which relates to or arises in connection with the Loan or any transaction contemplated
thereby. Borrower’s obligations under this Section shall survive the making and repayment
of the Loan and the expiration or termination of this Agreement. Borrower’s indemnity
obligations shall not apply to Claims arising solely as a result of the willful misconduct or
negligence of any of the Indemnitees.
3.3. Books and Records. The City shall have the right, during business hours and after
reasonable notice to Borrower, to request copies of, inspect, and copy Borrower's books and
records pertaining to the Property, the Family Project and the Loan. Borrower shall comply with
any request for such records within thirty (30) days. The City shall maintain the copies of
Borrower’s books and records in strict confidence except to the extent required to be disclosed
by applicable law.
4. DEFAULT AND REMEDIES.
4.1. Events of Default. The occurrence of any one or more of the following events shall
constitute an event of default hereunder (“Event of Default”):
a. Unless the Loan is forgiven pursuant to the terms of this Agreement, Borrower
fails to pay any amount due under the Note, and such failure continues for thirty
(30) days after the City notifies Borrower thereof in writing.
b. Any of Borrower’s representations or warranties contained in this Agreement, or
made by Borrower in connection with the execution and delivery of this
Agreement or in any certificate furnished pursuant hereto, or in connection with
any request for disbursement of Loan Proceeds, shall prove to have been
incorrect when made in any material respect.
c. Borrower fails to use Loan Proceeds in accordance with this Agreement or fails
to use Loan Proceeds in accordance with Borrower's request for disbursement.
d. Pursuant to or within the meaning of the United States Bankruptcy Code or any
other federal or state law relating to insolvency or relief of debtors ("Bankruptcy
Law"), Borrower, (i) commences a voluntary case or proceeding; (ii) consents to
the entry of an order for relief against Borrower in an involuntary case; (iii)
consents to the appointment of a trustee, receiver, assignee, liquidator or similar
official for Borrower; (iv) makes an assignment for the benefit of its creditors; or
(v) admits in writing its inability to pay its debts as they become due.
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e. A court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that, (i) is for relief against Borrower in an involuntary case, (ii) appoints a
trustee, receiver, assignee, liquidator or similar official for Borrower or
substantially all of such entity’s assets, (iii) orders the liquidation of Borrower,
or (iv) issues or levies a judgment, writ, warrant of attachment or similar process
against the Property and/or 500 Linden Avenue, South San Francisco (APN
____) or the Family Project , and in each case the order or decree is not released,
vacated, dismissed or fully bonded within sixty (60) days after its issuance.
f. Borrower fails to maintain insurance as required pursuant to any of the Loan
Obligations, and Borrower fails to cure such default within thirty (30) days.
g. Borrower defaults in the performance of any term, provision, covenant or
agreement contained in the Loan Obligations, and unless a shorter cure period is
specified for such default, the default continues for thirty (30) days after the date
upon which the City shall have given written notice of the default to Borrower;
provided, however, that in the case of a nonmonetary default that is not
susceptible of cure within thirty (30) days, an Event of Default shall not arise
hereunder if Borrower commences to cure the default within thirty (30) days and
thereafter prosecutes the curing of such default to completion with due diligence
and in good faith, but in no event longer than one hundred twenty (120) days
from the receipt of notice of default.
4.2. Remedies. Upon the occurrence of an Event of Default, the City shall have the
following rights:
a. To exercise the remedies under the Deed of Trust (if applicable) and the
Assignment of Collateral pursuant to and as described in Section 1.8;
b. To seek a judicial declaration or order of specific performance;
c. In the case of an Event of Default arising under any Loan Obligation other than
this Agreement, to exercise the rights under that Loan Obligation; or
d. To terminate this Agreement.
Notwithstanding the forgoing, the loan is non-recourse to Borrower. Each of the remedies
provided herein is cumulative and not exclusive of, and shall not prejudice, any other remedy
provided herein or in the Note. The City may exercise any rights and remedies available at law
or in equity, in addition to, and not in lieu of, any rights and remedies expressly granted in this
Agreement; provided, however, that Borrower's obligation to repay the Loan shall be secured by
the Assignment (and following the acquisition the Deed of Trust) without recourse to Borrower.
5. MISCELLANEOUS.
5.1. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the Parties and their respective successors and assigns. Notwithstanding the foregoing, the
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City's obligation to make the Loan is personal to Borrower, and shall not be assignable by
operation of law or otherwise absent the express written consent of the City, and any such
prohibited assignment by operation of law or otherwise shall be void. The City shall not
unreasonably delay, condition, or withhold its consent to an assignment of this Agreement by
Borrower to a tax credit limited partnership in which Borrower or an affiliate of Borrower is a
general partner.
5.2. Notices. Except as otherwise specified herein, all notices to be sent pursuant to this
Agreement shall be made in writing, and sent to the Parties at their respective addresses specified
below or to such other address as a Party may designate by written notice delivered to the other
Party in accordance with this Section. All such notices shall be sent by:
a. personal delivery, in which case notice is effective upon delivery;
b. certified or registered mail, return receipt requested, in which case notice shall be
deemed delivered on receipt if delivery is confirmed by a return receipt;
c. nationally recognized overnight courier, with charges prepaid or charged to the
sender’s account, in which case notice is effective on delivery if delivery is
confirmed by the delivery service;
d. electronic mail, in which case notice shall be deemed delivered upon transmittal,
provided that, (i) a duplicate copy of the notice is promptly delivered by first-
class or certified mail or by overnight delivery (in which case notice shall be
deemed given two business days after the duplicate is deposited in the mail), or
(ii) receipt is voluntarily acknowledged by the Party to be noticed (in which case
notice shall be deemed given when acknowledged.
CITY:
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attention: City Manager
BORROWER:
Rotary Plaza, Inc.
433 Alida WaySouth San Francisco, CA 94080 Attn: Bruce Wright
5.3. Waiver, Modification and Amendment. No failure or delay on the part of the City in
exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power, or remedy preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy hereunder. No modification
or waiver of any provision of this Agreement, nor any consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in writing, and then such
waiver or consent shall be effective only in the specific instance and for the specific purpose for
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which given. No notice to or demand on Borrower in any case shall entitle Borrower to any
other or further notice or demand in similar or other circumstances unless expressly provided
herein or by law. No amendment to or modification of this Agreement shall be effective unless
and until such amendment or modification is in writing, properly approved in accordance with
applicable procedures, and executed by the Parties.
5.4. Further Assurances. The Parties shall execute, acknowledge and deliver to the other
such other documents and instruments, and take such other actions, as either shall reasonably
request as may be necessary to carry out the intent of this Agreement.
5.5. Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish
the Parties as partners, co-venturers, or principal and agent with one another.
5.6. Action by the City. Except as may be otherwise specifically provided herein, whenever
any approval, notice, direction, consent or request by the City is required or permitted under this
Agreement, such action shall be in writing, and such action may be given, made or taken by the
City Manager or by any person who shall have been designated by the City Manager, without
further approval by the City Council unless the City Manager determines in his or her discretion
that such action requires such approval.
5.7. Non-Liability of City and City Officials, Employees and Agents. No member, official,
employee or agent of the City shall be personally liable to Borrower, or any successor in interest,
in the event of any default or breach by the City, or for any amount of money which may become
due to Borrower or its successor or for any obligation of the City under this Agreement.
5.8. No Third Party Beneficiaries. There shall be no third party beneficiaries to this
Agreement.
5.9. Captions; Construction. The headings of the sections and paragraphs of this Agreement
have been inserted for convenience only and shall not be used to construe this Agreement. The
language of this Agreement shall be construed as a whole according to its fair meaning and
consistent with the purposes for which the Parties entered into this Agreement, and not strictly
for or against any Party. Time is of the essence in the performance of this Agreement.
5.10. Governing Law; Venue. This Agreement shall be construed and enforced in
accordance with the laws of the State of California without regard to principles of conflicts of
law. The Parties consent to the jurisdiction of any federal or state court in the jurisdiction in
which the Property is located (the “Property Jurisdiction”). Borrower agrees that any
controversy arising under or in relation to this Agreement shall be litigated exclusively in courts
having jurisdiction in the Property Jurisdiction. Borrower irrevocably consents to service,
jurisdiction, and venue of such courts for any such litigation and waives any other venue to
which it might be entitled by virtue of domicile, habitual residence or otherwise.
5.11. Attorneys' Fees. In the event any legal action is commenced to interpret or to enforce
the terms of this Agreement or to collect damages as a result of any breach thereof, the Party
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prevailing in any such action shall be entitled to recover against the other Party all reasonable
attorneys’ fees and costs incurred in such action.
5.12. Severability. If any term of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force
and effect unless the rights and obligations of the Parties are materially altered or abridged by
such invalidation, voiding or unenforceability.
5.13. Entire Agreement; Exhibits. The Loan Obligations, contain the entire agreement
between the Parties with respect to the subject matter hereof. This Agreement supersedes all
prior oral or written agreements between the Parties with respect thereto. Exhibits attached
hereto are incorporated herein by this reference.
5.14. Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.
5.15. Electronic Sjgnature. The Parties may deliver executed copies of this Agreement to
each other by electronic mail (including pdf or any electronic signature complying with the U.S.
federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any
such signature delivered shall be deemed to have been duly and validly delivered and be valid
and effective for all purposes. No party may raise the use of any image transmission device or
method or the fact that any signature was transmitted as an image as a defense to the
enforcement of this Agreement.
SIGNATURES ON FOLLOWING PAGE.
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IN WITNESS WHEREOF, the Parties have executed this Loan Agreement as of the date first
written above.
CITY OF SOUTH SAN FRANCISCO,
a municipal corporation
By: _______________________________
Name: _______________________________
City Manager
ATTEST:
By: ___________________________
City Clerk
APPROVED AS TO FORM:
By: ___________________________
City Attorney
BORROWER:
ROTARY PLAZA, INC.
a California nonprofit public benefit corporation
By: _______________________________
Name: _______________________________
A–1
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EXHIBIT A
Legal Description of Property
B–1
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EXHIBIT B
Form of Promissory Note
B–2
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EXHIBIT C
Form of Deed of Trust
B–3
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EXHIBIT D
Form of Regulatory Agreement
B–4
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EXHIBIT E
Predevelopment Budget