HomeMy WebLinkAbout2011-02-23 e-packetSPECIAL MEE;TING
~~~~~~~5~~~
y REDEVELOPMENT AGENCY
o OF THE
c9LIFOR~lA CITY OF SOUTH SAN FRANCISCO
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, California 94083
Meeting to be held at:
MUNICIPAL SERVICES BUILDING
COMMUNITY ROOrv1
33 ARROYO DRIVE
WEDNESDAY, FEBRUARY 23, 2011
6:30 P.M.
NOTICE IS HEREBY GIVEN, pursuant to Section 549:>6 of the Government Code of the
State of California, the Redevelopment Agency of the City of South San Francisco will hold a
Special Meeting on Wednesday, the 23rd day of February, 2011, at 6:30 p.m., in the Municipal
Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California.
Purpose of the meeting:
1. Call to Order.
2. Roll Call.
3. Agenda Review.
4. Public Comments -comments are limited to items on the Special Meeting
Agenda.
5. Resolution approving an Owner Participation and Loan Agreement with
GIFFRA ENTERPRISES, LLC, approving the provision of a loan for the
Rehabilitation of aModerate-Income Residential/Mixed-use project at 226-238
Grand Avenue and authorizing the execution of documents in connection with
such financing.
6. CLOSED SESSION:
Real Property Negotiations
Pursuant to Government Code Section 54956.8
Agency Negotiator: Marty Van Duyn
Related to:
Address
Property Owner
315, 401, 411,421 Airport Blvd., David Gonzales
216 Miller, 405 C ress
204 Miller (D cleaner _
Eliades Ma Trust
201 C ress Ave Jose h Gilio
206 Baden Dolores Cale ari
210 Baden Welch Famil Partnershi
950 Linden 15 SSFDEV LLC
942 Linden And Yue
200, 206, 210 Ai ort Williams Borba
221 Ai ort David R:atto
223-25 Grand Ave. O. Romo
505 C ress Ave 505 C ~resss Ave LLC
227 Hillside Ave Basil Cavalieri
249 Hillside Ave K.J. Son
APN #011-324-200 Cal Water Service
942 Antoinette Bruce Baile
950 Antoinette Samir 1 [abash
41 Chestnut Ave. Elmo Fatica
45 Chestnut Ave Niki Tam
998 El Camino Real Louise lPetrocchi
7. Closed Session:
Real Property Negotiations
Pursuant to Government Code Section 54956.8
Agency Negotiator: Marty Van Duyn
Related to:
Address
Property Owner
340 Grand Avenue St. Vin<;ent De Paul
8. Adjournment.
SPECIAL REDEVELOPMENT AGENCY MEETING FEBRUARY 23, 2011
AGENDA PAGE 2
°~~ ~' ~ Redevelopment Agency
0
~.
Staff Repot
°gl1~o~I
DATE: February 23, 2011
TO: Redevelopment Agency Board
FROM: Marty Van Duyn, Assistant Executive Director
SUBJECT: RESOLUTION APPROVING AN OWNER. PARTICIPATION AND LOAN
AGREEMENT WITH GIFFRA ENTERPRISES, LLC. FOR THE
PROVISION OF A LOAN FOR THE REHABILITATION OF THE
PROPERTY LOCATED AT 226-238 GRAND AVENUE, IN AN AMOUNT
NOT TO EXCEED $2.5 MILLION, AND AUTHORIZING THE
EXECUTION OF ALL DOCUMENTS IN CONNECTION WITH SUCH
FINANCING
RECOMMENDATION
It is recommended that the Redevelopment Agency Board ;approve the Resolution
authorizing an Owner Participation and Loan Agreement with Giffra Enterprises, LLC.,
for the provision of a loan for the rehabilitation of the property located at 226-238 Grand
Avenue, in an amount not to exceed $2.5 million, and authorizing the execution all required
loan documents.
BACKGROUND/DISCUSSION
In 2008, the Giffra Family began a feasibility study to determine the viability of converting the
currently vacant West and Edwin (single room occupancy) Hotels into market rate apartment
units. Toward that end the owner's contracted with Garavaglia Architecture, a firm specializing in
historic hotels, to develop preliminary designs. The intent of tl~~e proposed renovation is to
improve the quality of the structures and its retail tenants. Several attempts to move the project
forward stalled due to the difficulties of renovating the historic structure to meet current code.
When the Redevelopment Agency adopted the Downtown Revitalization Strategy in 2009, the
owners wanted to work with the City to make physical improvements, upgrading their property
and retail tenants, and creating ten (10), two-bedroom units with modern amenities.
The proposed remodeling plans have seen several revisions with extensive comments from
planning, building and fire, resulting in the best possible design for the new apartment units. The
project includes two properties, owned by Giffra Enterprises, being converted into ten (10) units
(S in each building) with two bedrooms and two full bathrooms, with the larger upstairs units
having an additional half bath on the first floor. The kitchens aand dining areas are designed to be
open spaces built around the existing skylights for ambiance ar-d energy savings. The bathrooms
include amenities such as walk in showers and bath tubs, double sinks in master baths, and
upscale finishes. The two larger upper floor units include a study and decks facing north.
Staff Report
Subject: Giffra Remodel of West and Edwin Hotels
Page 2
The newly created carports are a slightly more contemporary design that blends with the
Historic architectural character of the existing building. A covered space is provided for each unit
and a residential lobby is created at the rear, by the elevators, to provide entry off the Lane and
space for bicycles and socializing.
The Design Review Board provided numerous helpful comments during several design iterations and
the Parking Place Commission granted a parking exception of 13 parking spaces, accommodating one
parking space for each of the 10 residential units. The guest parking spaces will be provided through the
City's on-and-off-street public parking spaces. To allow adegL~ate space for one accessible parking space
and one loading space, the applicant is proposing lot line adju:>tments to both properties. The Planning
Commission was generally in favor of the project, following i:> the excerpt from the minutes of the
October 15, 2009 Commission meeting in regards to the Giffra renovation project:
The Planning Commission was pleased with the general design of the project, noting its consistency
with the City's desire to increase density downtown without losing the character of the community. The
Commission was also pleased to see that the project incorporated sustainable design features.
FUNDING
These construction numbers are based on actual sub-contractor bids secured last fall. The
mechanical engineers have made last minute efforts based on iinitial plan check comments to
further value engineer the project to find additional cost savings. A revised and final bid is
expected from the contractor in the next few weeks. The project is ready to submit for formal
plan check. The Agency's loan of $2.5 million should cover rriost of the work and the owner is
contributing $250,000 toward a project contingency, above the $150,000 he has expended to date
preparing the required architectural and mechanical plans. Thf; loan will be paid in full in year 31
of the term of the Note and will generate loan re-payments of ;approximately $100,000 per year to
the Redevelopment Agency.
Total Construction Amount
ArchitecturaUEngineering
& Structural
Total Project Costs
Sources of Funds:
Redevelopment Agency Loan
Giffra Family Trust Funds
Total Sources of Funds:
Per Unit Cost
Total Owner Contribution
$ 2,537,370
$ 201,800
$ 2,739,170
$ 2,500,000
$ 250,000
$ 2,750,000
$ 274,000
$ 400,000 (Includes $150,000 expended to date for
architectural and engineering services and
the $250,000 proposed contingency)
RESOLUTION NO
REDEVELOPMENT AGENCY, CITY OF SOUTH SAN FRANCISCO,
STATE OF CALIFORNIA
A RESOLUTION APPROVING AN OWNER PARTICIPATION AND LOAN
AGREEMENT WITH GIFFRA ENTERPRISES, LLC, APPROVING THE
PROVISION OF A LOAN FOR THE REHABILITATION OF A MODERATE-
INCOME RESIDENTIAL/ MIXED-USE PROJECT AT 226-238 GRAND
AVENUE AND AUTHORIZING THE EXECUTION OF DOCUMENTS IN
CONNECTION WITH SUCH FINANCING
WHEREAS, the Redevelopment Agency of thc; City of South San Francisco
("Agency") is a redevelopment agency existing pursuant to the Community
Redevelopment Law, California Health and Safety Code Section 33000, et seq. (the
"CRL"), and pursuant to the authority granted thereunde;r, has the responsibility to carry
out the Redevelopment Plan (the "Redevelopment Plain") for the Downtown/Central
Redevelopment Project Area (the "Project Area");
WHEREAS, Giffra Enterprises, LLC, a California limited liability company
("Owner") is the owner of two currently vacant single-room occupancy hotels located in
the Project Area at 228 and 232 Grand Avenue and. known as San Mateo County
Assessor's Parcel Nos. 012-315-130 and 012-315-140 (the "Property");
WHEREAS, the Owner proposes to rehabilitate the Property into ten (10)
apartment units that will be affordable to moderate- income households (the "Project");
WHEREAS, the Project will be of benefit to the Project Area because it will
improve the streetscape appearance of the Property and will increase the supply of
housing that is affordable to moderate-income residents of the Project Area and the City;
WHEREAS, the terms and conditions for the re;habilitation and the financing of
the Project are more particularly described in a proposed Owner Participation and Loan
Agreement (the "OPA") between Agency and Owner, copies of which have been
provided to the Agency;
WHEREAS, the proposed Agency financing for the Project includes a
construction/permanent loan in the amount of Two Million Five Hundred Thousand
Dollars ($2,500,000) (the "Loan") to be funded from the Agency's Low and Moderate-
Income Housing Set-Aside Fund; and
WHEREAS, Owner and Agency staff have negotiated the terms and conditions of
(i) the OPA; (ii) an Affordable Housing Regulatory Agreement and Declaration of
Restrictive Covenants ("Regulatory Agreement") that will restrict rents for units in the
Project at affordable levels for a period of 55 years; (ii:i) a Secured Promissory Note (the
"Note") that provides for repayment of the Loan with interest; and (iv) a Deed of Trust,
1147959-1 1
Assignment of Rents, Security Agreement and Fixture Filing (the "Deed of Trust")
pursuant to which the Agency will be provided a security interest in the Property and the
Project to secure repayment of the Loan and compliance v~~ith the Regulatory Agreement.
NOW, THEREFORE, BE IT RESOLVED by the Redevelopment Agency
of the City of South San Francisco that it hereby:
1. Finds that the rehabilitation of the Property in accordance with the OPA and the
provision of the Loan for the Project will facilitate the development of housing for
moderate-income households, will be of benefit to the Prc-ject Area, will further the goals
of the Redevelopment Plan, and will be consistent with the implementation plan adopted
in connection therewith.
2. Approves the OPA, authorizes the Executive Director or his designee to execute
and deliver the OPA substantially in the form on file with the Agency Secretary.
3. Approves the provision of the Loan pursuant to the terms and conditions set forth
in the OPA.
4. Approves the Note, the Deed of Trust and the Regulatory Agreement, and
authorizes the Executive Director or his designee to execute and deliver each such
document to which the Agency is a party substantially in the form on file with the
Agency Secretary.
5. Appropriates from the Agency's Low and Moderate-Income Housing Fund
the funds necessary to fund the Loan.
6. Authorizes the Executive Director or his designee to execute and deliver such
other instruments and to take such other actions as necessary to carry out the intent of this
Resolution.
I hereby certify that the foregoing Resolution was regularly introduced and
adopted by the Redevelopment Agency of the City of South San Francisco at a meeting
held on the day of , 2011 b;y the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
Agency Secretary
1147959-1 2
OWNER PARTICIPATION AND LOAN AGREEMENT
by and between
THE REDEVELOPMENT AGENCY
OF THE CITY OF SOUTH SAN FRANCISCO
and
GIFFRA ENTERPRISES, LLC
(Renovation of West and Edwin Hotels)
2011
1422342.2
3
Exhibits
A Legal Description of Property
B Financing Plan
C Form of Memorandum of Owner Participation Agreement
D Form of Certificate of Completion
E Form of Promissory Note
F Form of Deed of Trust
G Form of Regulatory Agreement with Notice of Affordability Restrictions
1422342.2 2
THIS OWNER PARTICIPATION AND LOAN AGREEMENT (this "Agreement") is
entered into effective as of , 2011 ("Effective Date") by and between
the Redevelopment Agency of the City of South San Francisco, a public body, corporate, and
politic ("Agency") and Giffra Enterprises, LLC, a California limited liability company
("Owner"). Agency and Owner are hereinafter collectively referred to as the "Parties."
RECITALS
A. Pursuant to authority granted under Community Redevelopment Law (California
Health and Safety Code Section 33000 et seq.) ("CRL"), the Agency has responsibility to
implement the redevelopment plan adopted in 1989 by the City Council of the City of San
Francisco by Ordinance No. 1056-89 (as subsequently amended, the "Redevelopment Plan")
for the Downtown Redevelopment Project (the "Project Area").
B. Owner is the owner of fee title to the real property located in the Project Area at
228 and 236 Grand Avenue in the City of South San Francisco ("City"), and known as San
Mateo County Assessor's Parcel Nos. 012-315-130 and 012-315-140 as more particularly
described in Exhibit A attached hereto (the "Property").
C. Owner has proposed to rehabilitate the improvesments located on the Property (the
"Improvements") in order to, among other improvements, convert the existing hotel units into
apartment units that will be affordable to moderate-income households, and renovate the
common areas (all of the foregoing, collectively, the "Project").
D. Owner has requested, and Agency has agreed to provide, a loan (the "Loan")
pursuant to the terms and conditions set forth herein for the purpose of providing partial
financing for the Project.
E. The purpose of this Agreement is to effectuate 'the Redevelopment Plan by
providing for the rehabilitation of the Property as more particularly set forth herein. The Agency
has determined that (i) rehabilitation of the Property pursuant Ito this Agreement is consistent
with the Redevelopment Plan and the Implementation Plan for' the Project Area, will be of
benefit to the Project Area, and will further the goals of the Redevelopment Plan by improving
the streetscape appearance of the Improvements, and by providing affordable housing, and (ii)
the Loan is necessary to make the Project economically feasible and affordable to moderate-
income households.
F. A material inducement to the Agency to enter into this Agreement is the
agreement by Owner to rehabilitate the Property within the time periods specified herein and in
accordance with the provisions hereof, and the Agency would be unwilling to enter into this
Agreement in the absence of an enforceable commitment by Owner to complete the Project in
accordance with such provisions and within such time periods..
G. In connection with this Agreement Owner shall execute: (i) a secured
promissory note (the "Note") in the amount of the Loan, (ii) a Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing ("Deed of Trust") which shall provide Agency
with a security interest in the Property, (iii) an Affordable Housing Regulatory Agreement and
Declaration of Restrictive Covenants ("Regulatory Agreement") which shall require Project
1422342.2 3
rents to be affordable to moderate-income households for a term of not less than fifty-five (55)
years, and (iv) a Notice of Affordability Restrictions on Transi:er of Property ("Notice"). This
Agreement, the Note, the Deed of Trust, the Notice, and the Regulatory Agreement are
collectively hereinafter referred to as the "Agency Documents."
NOW, THEREFORE, in consideration of the mutual. covenants contained herein and
good and valuable consideration the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows.
ARTICLE I
DEFINITIONS
1. Definitions. The following terms shall have thf; meanings set forth in the Sections
referenced below whenever used in this Agreement and the E~:hibits attached hereto. Additional
terms are defined in the Recitals and text of this Agreement.
1.1 "Agency Documents" is defined in Recital G.
1.2 "Certificate of Completion" is defined. in Section 3.15.
1.3 "City" means the City of South San Francisco, a municipal corporation.
1.4 "City Council" means the City Council. of the City of South San
Francisco.
1.5 "Claims" is defined in Section 3.17.
1.6 "Closing Date" is defined in Section 4.1.
1.7 "Conditions of Approval" is defined in Section 3.2.
1.8 "Construction Plans" is defined in Sec;tion 3.11.
1.9 "Deed of Trust" is defined in Recital Ci.
1.10 "Environmental Laws" is defined in Section 8.4.
1.11 "Financing Plan" is defined in Section. 3.7.
1.12 "Hazardous Materials" is defined in ~~ection 8.3.
1.13 "Improvements" is defined in Recital C.
1.14 "Indemnitees" is defined in Section 3.17.
1.15 "Loan" is defined in Section 4.1.
1.16 "Note" is defined in Section 4.1.
1422342.2 4
1.17 "Notice" is defined in Recital G.
1.18 "Official Records" means the Official :f~ecords of San Mateo County.
1.19 "Permitted Exceptions" is defined in Section 4.5.
1.20 "Project" is defined in Recital C and further described in Section 3.2.
1.21 "Regulatory Agreement" is defined in Recital G.
1.22 "Title Policy" is defined in Section 4.5.
1.23 "Transfer" is defined in Section 6.2.
ARTICLE II
REPRESENTATIONS; EFFECTIVE DATE AND TERM
2.1 Owner's Representations. Owner represents and warrants to Agency as follows,
and Owner covenants that until the expiration or earlier termination of this Agreement, upon
learning of any fact or condition which would cause any of the warranties and representations in
this Section 2.1 not to be true, Owner shall immediately give vnitten notice of such fact or
condition to Agency. Owner acknowledges that Agency shall rely upon Owner's representations
made herein notwithstanding any investigation made by or on behalf of Agency.
(i) Authority. Owner is a limited liability company, duly organized and in
good standing under the laws of the State of California. Owner has the full right, power and
authority to undertake all obligations of Owner as provided herein, and the execution,
performance and delivery of this Agreement by Owner has bee-n duly authorized by all requisite
actions. The persons executing this Agreement on behalf of Owner have been duly authorized to
do so. This Agreement and the other Agency Documents constitute valid and binding
obligations of Owner, enforceable in accordance with their respective terms.
(ii) Ownership. Owner is the owner in fee c-f the Property and the
Improvements, subject only to liens, encumbrances, easements, restrictions, conditions, and other
matters of record or disclosed in writing to Agency.
(iii) No Conflict. Owner's execution, delivery and performance of its
obligations under this Agreement will not constitute a default or a breach under any contract,
agreement or order to which Owner is a party or by which it is bound.
(iv) No Litigation or Other Proceeding No litigation or other proceeding
(whether administrative or otherwise) is outstanding or has been threatened which would
prevent, hinder or delay the ability of Owner to perform its obligations under this Agreement.
1422342.2
(v) No Owner Bankruptcy, Owner is not th.e subject of a bankruptcy or
insolvency proceeding.
2.2 Effective Date: Memorandum. The obligations of Owner and Agency hereunder
shall be effective as of the Effective Date. Concurrently with l:he execution of this Agreement,
the Parties shall execute a Memorandum of this Agreement substantially in the form attached
hereto as Exhibit C which shall be recorded in the Official Records.
ARTICLE III
DEVELOPMENT OF THE PRCIJECT
3.1 The Property, Owner represents and warrants thhat as of the Effective Date: (i)
Owner possesses fee simple title to the Property, and (ii) the Property is subject to no covenant,
condition, restriction or agreement that would prevent the development of the Project in
accordance with this Agreement. If at any time the foregoing statements become untrue, the
Agency shall have the right to terminate this Agreement upon ~wr~itten notice to Owner.
3.2 Scope of Development. Owner shall rehabilitate the Property in accordance with
the terms and conditions of this Agreement and in compliance with the terms and conditions of
all approvals, entitlements and permits that the City or any other governmental body or agency
with jurisdiction over the Project or the Property has granted or issued as of the date hereof or
may hereafter grant or issue in connection with the Project, including without limitation, all
mitigation measures imposed in connection with environmental review of the Project (if any), all
requirements related to preservation of historic resources (if applicable), and all conditions of
approval imposed in connection with any entitlements, approvals or permits (all of the foregoing
approvals, entitlements, permits, mitigation measures and conditions of approval are hereafter
collectively referred to as the "Conditions of Approval").
The Project will consist of the rehabilitation of the Property, including without limitation,
the conversion of existing hotel rooms into ten (10) two-bedroom apartments, improvement of
the common areas of the structure, and the installation of covered carports.
3.2.1 Affordable Housing. Owner covenants and agrees for itself, its successors
and assigns that the Property will be subject to recorded covenants that will provide that for a
term of not less than fifty-five (55) years commencing upon thf; issuance of a final certificate of
occupancy for the Project, the residential units in the Project shall be rented at an affordable cost
to households whose income is less than or equal to one hundrf;d twenty percent (120%) of Area
Median Income (as defined in the Regulatory Agreement) in accordance with the terms hereof
and the Regulatory Agreement which the Parties shall execute substantially in the form attached
hereto as Exhibit G concurrently with the execution of this Agreement, and which shall be
recorded in the Official Records.
3.2.2 Preference for Displacees, South San Francisco Residents and Employees.
Consistent with the requirements of California Health and Safety Code Section 33411.3, Owner
shall provide persons and households of low- or moderate-income who are displaced by the
1422342.2 6
V
Project a priority in renting or purchasing units in Project. In addition, in order to ensure that
there is an adequate supply of affordable housing within the City of South San Francisco for
residents and employees of businesses within the City, to the extent permitted by law and
consistent with the program regulations for funding sources used for development of the Project,
at initial lease up, Owner shall give a preference in the rental of the residential units in the
Project to eligible households that include at least one member who lives or works in the City of
South San Francisco. In the event there are fewer eligible persons available than there are units,
units shall be made available to members of the general public.
3.3 Relocation. Persons residing on the Property shhall not be displaced before
suitable replacement housing is available in comparable replacement housing. Owner shall
ensure that all residential and commercial tenants of the Property receive all notices, benefits and
assistance to which they are entitled in accordance with California Relocation Assistance Law
(Government Code Section 7260 et seq.), all state and local 1•e~;ulations implementing such law,
and all other applicable local, state and federal laws and regulations (collectively "Relocation
Laws") relating to the displacement and relocation of eligible persons as defined in such
Relocation Laws. Any and all costs incurred in connection with the temporary and/or permanent
displacement and/or relocation of occupants of the Property, including without limitation
payments to a relocation consultant, moving expenses, and payments for temporary and
permanent relocation benefits pursuant to Relocation Laws shall be paid by Owner. Owner shall
indemnify, defend (with counsel approved by Agency) and hold harmless the Indemnitees from
and against any and all Claims arising in connection with the breach of Owner's obligations set
forth in this Section whether or not any insurance policies shall have been determined to be
applicable to any such Claims. It is further agreed that Agency and City do not and shall not
waive any rights against Owner which they may have by reason of this indemnity and hold
harmless agreement because of the acceptance by Agency, or C)wner's deposit with Agency of
any of the insurance policies described in this Agreement. Owner's indemnification obligations
set forth in this Section shall not apply to Claims arising from the gross negligence or willful
misconduct of the Indemnitees. Owner's obligations set forth in this Section 3.3 shall survive
the expiration or earlier termination of this Agreement and the :issuance of a Certificate of
Completion for the Project.
3.4 Project Approvals. Owner acknowledges and a€;rees that execution of this
Agreement by Agency does not constitute approval for the purpose of the issuance of building
permits for the Project, does not limit in any manner the discretion of City in such approval
process, and does not relieve Owner from the obligation to applly for and obtain all necessary
entitlements, approvals, and permits for the Project, including without limitation, the approval of
architectural plans, the issuance of any certificates regarding historic resources required in
connection with the Project (if any), and the completion of any required environmental review.
Owner covenants that it shall: (i) obtain all necessary permits and approvals which may
be required by Agency, City, or any other governmental agency having jurisdiction over the
Project or the Property, (ii) comply with all Conditions of Approval, (iii) comply with all
mitigation measures imposed in connection with any environmental review of the Project, and
(iv) not commence construction work on the Project prior to issuance of building permits
required for such work.
1422342.2 7
i
Agency staff shall work cooperatively with Owner to assist in coordinating the
expeditious processing and consideration of all permits, entitlements and approvals necessary for
development of the Project.
3.5 Fees. Owner shall be solely responsible for, and shall promptly pay when due, all
customary and usual fees and charges of City in connection with obtaining building permits and
other approvals for the Project, including without limitation, those related to the processing and
consideration of amendments, if any, to the current entitlements, any related approvals and
permits, environmental review, design review, architectural review, historic review, and any
subsequent approvals for the Project or the development of the Property.
3.6 Cost of Construction. Except as expressly set forth herein, Owner shall be solely
responsible for all direct and indirect costs and expenses incurred in connection with the design,
development and construction of the Project and compliance with the Conditions of Approval,
including without limitation the installation and construction. of all off-site or on-site
improvements required by City in connection therewith, and none of such costs and expenses
shall be the obligation of the Agency or the City.
3.7 Financing Plan. Owner has submitted to Agency, and Agency hereby approves a
plan for financing the Project (hereinafter, "Financing Plan"), indicating all sources of funds
necessary to pay, when due, the estimated costs of construction, including hard and soft
construction costs. Owner represents and warrants that all such funds have been firmly
committed by Owner, equity investors or lending institutions, subject only to commercially
reasonable conditions. The Financing Plan is attached hereto as Exhibit B.
3.8 Development Schedule. Owner shall commence and complete construction of the
Project and shall satisfy all other obligations of Owner under this Agreement within the time
periods set forth herein, as such time periods may be extended upon the mutual written consent
of the Parties. Subject to force majeure, Owner shall commence construction of the Project not
later than three (3) months following the Effective Date, and Owner shall diligently prosecute to
completion the Project in order to allow City to issue a final certificate of occupancy within
twenty-four (24) months following commencement of construction work. Subject to force
majeure, Owner's failure to commence or complete construction of the Project in accordance
with the time periods specified in this Section 3.8 foregoing shall be an Event of Default
hereunder.
3.9 Rights of Access. For the purpose of ensuring thhat the Project is developed in
compliance with this Agreement, Owner shall permit representatives of the Agency and the City
to enter upon the Property to inspect the Project following 24 hours written notice (except in the
case of emergency in which case such notice as may be practical under the circumstances shall
be provided).
3.10 Agency Disclaimer. Owner acknowledges that the Agency and City are under no
obligation, and neither Agency nor City undertakes or assumes any responsibility or duty to
Owner or to any third party, to in any manner review, supervise;, or inspect the progress of
construction or the operation of the Project. Owner and all third parties shall rely entirely upon
its or their own supervision and inspection in determining the quality and suitability of the
1422342.2 8
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materials and work, the performance of architects, subcontractors, and material suppliers, and all
other matters relating to the construction and operation of the ]?roject. Any review or inspection
undertaken by the Agency or the City is solely for the purpose of determining whether Owner is
properly discharging its obligations under this Agreement, and. shall not be relied upon by Owner
or any third party as a warranty or representation by the Agenc;y or the City as to the quality of
the design or construction of the Improvements or otherwise.
3.11 Construction Plans. Owner shall submit to City's Building Department detailed
construction plans for the Project (the "Construction Plans"). As used herein "Construction
Plans" means all construction documents upon which Owner and Owner's contractors shall rely
in constructing the Project (including, as applicable, landscaping, parking, pedestrian access and
common areas) and shall include, without limitation the following as applicable to the Project:
the site development plan, final architectural drawings, landscaping, exterior lighting and signage
plans and specifications, materials specifications, final elevations, and building plans and
specifications. The Construction Plans shall be based upon thf; scope of development set forth
herein and upon the approvals issued by the Agency and the City for the Project, and shall not
materially deviate therefrom without the express written consent of Agency and City. Provided
that the Construction Plans are consistent with the requirements of this Agreement, approval of
the Construction Plans by City shall be deemed approval thereof by Agency.
3.12 Construction Pursuant to Plans. Owner shall complete the Project in accordance
with the approved Construction Plans, the Conditions of Approval, and all other permits and
approvals granted by the City and/or the Agency pertaining to the Project. Owner shall comply
with all directions, rules and regulations of any fire marshal, health officer, building inspector or
other officer of every governmental agency having jurisdiction. over the Property or the Project.
Each element of the work shall proceed only after procurement of each permit, license or other
authorization that may be required for such element by any governmental agency having
jurisdiction. All design and construction work on the Project shall be performed by licensed
contractors, engineers or architects, as applicable.
3.13 Change in Construction Plans. If Owner desires to make any material change in
the approved Construction Plans, Owner shall submit the proposed change in writing to the
Agency and City for their written approval, which approval shall not be unreasonably withheld
or delayed if the Construction Plans, as modified by any proposed change, conform to the
requirements of this Agreement and any approvals issued by Agency or City after the Effective
Date. Unless a proposed change is approved by Agency within thirty (30) days, it shall be
deemed rejected. If rejected, the previously approved Construction Plans shall continue to
remain in full force and effect. Any change in the Construction Plans required in order to
comply with applicable codes shall be deemed approved, so long as such change does not
substantially nor materially change the architecture, design, :function, use, or amenities of the
Project as shown on the latest approved Construction Plans. Approval of changes to the
Construction Plans by City shall be deemed approval thereof by Agency. Nothing in this Section
is intended to or shall be deemed to modify the City's standard. plan review procedures.
3.14 Defects in Plans. Neither Agency nor City shall be responsible to Owner or to
any third party for any defect in the Construction Plans or for zmy structural or other defect in
any work done pursuant to the Construction Plans. Owner shall indemnify, defend (with counsel
1422342.2 9
11
approved by Agency) and hold harmless the Indemnitees from and against all Claims arising out
of, or relating to, or alleged to arise from or relate to defects in the Construction Plans or defects
in any work done pursuant to the Construction Plans whether or not any insurance policies shall
have been determined to be applicable to any such Claims. Owner's indemnification obligations
set forth in this Section shall survive the expiration or earlier termination of this Agreement and
the recordation of a Certificate of Completion. It is further agreed that Agency and City do not,
and shall not, waive any rights against Owner which they may have by reason of this indemnity
and hold harmless agreement because of the acceptance by Agency, or Owner's deposit with
Agency of any of the insurance policies described in this Agreement. Owner's indemnification
obligations pursuant to this Section shall not extend to Claims arising due to the gross negligence
or willful misconduct of the Indemnitees.
3.15 Certificate of Completion for Project. Promptly after completion of the Project,
issuance of a final Certificate of Occupancy by the City and the written request of Owner, the
Agency will provide an instrument ("Certificate of Completion") so certifying, provided that at
the time such certificate is requested all applicable components of the Project have been
completed. The Certificate of Completion shall be conclusive evidence that Owner has satisfied
its obligations regarding the Project.
The Certificate of Completion shall be issued substantially in the form attached hereto as
Exhibit D, and at Owner's option, shall be recorded in the Official Records. The Certificate of
Completion shall not constitute evidence of compliance with or satisfaction of any obligation of
Owner to any holder of a deed of trust or mortgage securing money loaned to finance the Project
or any part thereof and shall not be deemed a notice of completion under the California Civil
Code, nor shall such Certificate provide evidence that Owner bias satisfied any obligation that
survives the expiration of this Agreement, including, without limitation, Owner's obligations
pursuant to the Regulatory Agreement.
3.16 Equal Opportunity_ During the construction of the Project, there shall be no
discrimination on the basis of race, color, religion, creed, sex, sexual orientation, marital status,
ancestry or national origin in the hiring, firing, promoting or demoting of any person engaged in
construction of the Project, and Owner shall direct its contractors and subcontractors to refrain
from discrimination on such basis.
3.17 Prevailing Wage Requirements. To the full extent required by all applicable state
and federal laws, rules and regulations, if any, Owner and its contractors and agents shall comply
with California Labor Code Section 1720 et seq. and the regulations adopted pursuant thereto
("Prevailing Wage Laws"), and shall be responsible for carrying out the requirements of such
provisions. If applicable, Owner shall submit to Agency a plan for monitoring payment of
prevailing wages and shall implement such plan at Owner's expense.
Owner shall indemnify, defend (with counsel approved. by Agency) and hold the Agency,
the City, and their respective elected and appointed officers, oi:ficials, employees, agents,
consultants, and contractors (collectively, the "Indemnitees") harmless from and against all
liability, loss, cost, expense (including without limitation attorneys' fees and costs of litigation),
claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine,
order, and damage (all of the foregoing collectively "Claims") which directly or indirectly, in
1422342.2 10
12
whole or in part, are caused by, arise in connection with, result. from, relate to, or are alleged to
be caused by, arise in connection with, or relate to, the paymer.~t or requirement of payment of
prevailing wages (including without limitation, all claims that 'may be made by contractors,
subcontractors or other third party claimants pursuant to Labor Code Sections 1726 and 1781) or
the requirement of competitive bidding in the construction of the Project, the failure to comply
with any state or federal labor laws, regulations or standards in connection with this Agreement,
including but not limited to the Prevailing Wage Laws, or any act or omission of Owner related
to this Agreement with respect to the payment or requirement cif payment of prevailing wages or
the requirement of competitive bidding, whether or not any insurance policies shall have been
determined to be applicable to any such Claims. It is further agreed that Agency and City do not
and shall not waive any rights against Owner which they may Have by reason of this indemnity
and hold harmless agreement because of the acceptance by Agency, or Owner's deposit with
Agency of any of the insurance policies described in this Agreement. The provisions of this
Section 3.17 shall survive the expiration or earlier termination of this Agreement and the
issuance of a Certificate of Completion for the Project. Owner's indemnification obligations set
forth in this Section shall not apply to Claims arising from the gross negligence or willful
misconduct of the Indemnitees.
3.18 Compliance with Laws. Owner shall carry out and shall cause its contractors to
carry out the construction of the Project in conformity with all applicable federal, state and local
laws, rules, ordinances and regulations, including without limitation, all applicable federal and
state labor laws and standards, the City zoning and development standards, building, plumbing,
mechanical and electrical codes, all other provisions of the City's Municipal Code, and all
applicable disabled and handicapped access requirements, including without limitation, the
Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section
4450, et seq., Government Code Section 11135, et seq., and thc: Unruh Civil Rights Act, Civil
Code Section 51, et seq.. Owner shall indemnify, defend (with counsel approved by Agency) and
hold harmless the Indemnitees from and against any and all Claims arising in connection with
the breach of Owner's obligations set forth in this Section whether or not any insurance policies
shall have been determined to be applicable to any such Claims. It is further agreed that Agency
and City do not and shall not waive any rights against Owner which they may have by reason of
this indemnity and hold harmless agreement because of the acceptance by Agency, or Owner's
deposit with Agency of any of the insurance policies described in this Agreement. Owner's
indemnification obligations set forth in this Section shall not apply to Claims arising from the
gross negligence or willful misconduct of the Indemnitees. Owner's defense and
indemnification obligations set forth in this Section 3.18 shall :>urvive the expiration or earlier
termination of this Agreement and the issuance of a Certificate of Completion for the Project.
3.19 Liens and Stop Notices. Until the expiration of the term of the Regulatory
Agreement, Owner shall not allow to be placed on the Property or any part thereof any lien or
stop notice on account of materials supplied to or labor perforn~ed on behalf of Owner. If a claim
of a lien or stop notice is given or recorded affecting the Project, Owner shall within twenty (20)
days of such recording or service: (a) pay and discharge (or cause to be paid and discharged) the
same; or (b) effect the release thereof by recording and delivering (or causing to be recorded and
delivered) to the party entitled thereto a surety bond in sufficient form and amount; or (c) provide
other assurance satisfactory to Agency that the claim of lien or stop notice will be paid or
discharged.
1422342.2 11
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3.20 Ri hg t of A ency to Satisfy Liens on the Property If Owner fails to satisfy or
discharge any lien or stop notice on the Property pursuant to and within the time period set forth
in Section 3.19 above, the Agency shall have the right, but not the obligation, to satisfy any such
liens or stop notices at Owner's expense and without further notice to Owner and all sums
advanced by Agency for such purpose shall be part of the indebtedness secured by the Deed of
Trust. In such event Owner shall be liable for and shall immediately reimburse Agency for such
paid lien or stop notice. Alternatively, the Agency may require: Owner to immediately deposit
with Agency the amount necessary to satisfy such lien or claim. pending resolution thereof. The
Agency may use such deposit to satisfy any claim or lien that is adversely determined against
Owner. Owner shall file a valid notice of cessation or notice o:f completion upon cessation of
construction of the Improvements for a continuous period of thirty (30) days or more, and shall
take all other reasonable steps to forestall the assertion of clairris or liens against the Property or
the Improvements. The Agency may (but has no obligation to) record any notices of completion
or cessation of labor, or any other notice that the Agency deems necessary or desirable to protect
its interest in the Property and the Improvements.
3.21 Performance and Payment Bonds. Prior to commencement of construction
work on the Project, Owner shall cause its general contractor to deliver to the Agency copies of
payment bond(s) and performance bond(s) issued by a reputable insurance company licensed to
do business in California, each in a penal sum of not less than one hundred percent (100%) of the
scheduled cost of construction of the Project. The bonds shall name the Agency and the City as
co-obligees. In lieu of such performance and payment bonds, :subject to Agency's approval of
the form and substance thereof, Owner may submit evidence satisfactory to the Agency of the
contractor's ability to commence and complete construction of the Project in the form of an
irrevocable letter of credit, pledge of cash deposit, certificate of deposit, or other marketable
securities held by a broker or other financial institution, with signature authority of the Agency
required for any withdrawal, or a completion guaranty in a forrn and from a guarantor acceptable
to Agency. Such evidence must be submitted to Agency in approvable form in sufficient time to
allow for Agency's review and approval prior to the scheduled construction start date.
3.22 Insurance Requirements. Owner shall maintain and shall cause its contractors to
maintain all applicable insurance coverage specified in Article X.
ARTICLE IV
AGENCY FINANCIAL ASSISTANCE
4.1 Loan and Note. Agency agrees to provide a loan to Owner in the principal
amount of Two Million Five Hundred Thousand Dollars ($2,500,000) (the "Loan") upon the
terms and conditions and for the purposes set forth in this Agreement. The Loan shall be
evidenced by a Secured Promissory Note in the amount of the Loan (the "Note") dated as of the
date building permits are issued, (the "Closing Date") and executed by Owner substantially in
the form attached hereto as Exhibit E. The Note shall be secured by a Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing (the "Deed of Trust") executed by
Owner as Trustor for the benefit of Agency substantially in the form attached hereto as Exhibit
F.
1422342.2 12
,~"
4.2 Interest Rate; Payment Dates; Maturityate. Interest shall accrue on the Loan as
follows: (i) the outstanding principal balance of the Note will not bear interest during the first
two (2) years of the term of the Loan; (ii) commencing upon the second (2nd) anniversary of the
Closing Date (the "Interest Commencement Date"), the outstanding principal balance of the
Note will bear interest at three percent (3%) simple annual interest; (iii) on the eighth (gcn)
anniversary of the Interest Commencement Date (the "First interest Increase Date"), the
annual rate of interest shall increase by one percent (1%), and (iv) on each fifth (5`") anniversary
of the First Interest Increase Date, the annual rate of interest shall increase by one percent (1%);
such that the following interest rates shall apply:
Years 1-2: No interest
Years 3-10: 3% interest
Years 11-15: 4% interest
Years 16-20: 5% interest
Years 21-25: 6% interest
Years 26-30: 7% interest
Payments will be based on a 45 year amortization schedule. Nc- payments will be due during the
first two (2) years of the term of the Loan. Commencing upon the Interest Commencement
Date, monthly payments will be due and payable in accordance with the terms of the Note. The
entire outstanding principal balance of the Loan together with accrued interest and all other sums
due under the Agency Documents shall be payable in full on th.e thirtieth (30`") anniversary of
the Closing Date (the "Maturity Date"). (Provided that all payments have been timely made,
the parties estimate that the outstanding principal balance on the Maturity Date will be One
Million, Four Hundred Eighty-Five Thousand, Six Hundred :Forty-Seven Dollars ($1,485,647)).
Notwithstanding the foregoing, the Agency shall have the right: to accelerate the maturity date
and declare all sums payable under the Note immediately due and payable upon the occurrence
of an Event of Default, including without limitation, Owner's failure to commence or complete
construction of the Project within the times periods specified. in Section 3.8.
4.3 Security. As security for repayment of the Note:, Owner shall execute the Deed of
Trust in favor of Agency as beneficiary pursuant to which Agency shall be provided a lien
against Owner's interest in the Property and the Improvements. The Deed of Trust shall be dated
as of the Closing Date, shall be substantially in the form attached hereto as Exhibit F, and shall
be recorded in the Official Records on the Closing Date. The Deed of Trust may be subordinated
only to the Permitted Exceptions and such liens and encumbrances as Agency shall approve in
writing. Owner acknowledges that the Deed of Trust secures Owner's performance of Owner's
obligations pursuant to this Agreement and the Regulatory Agreement which may survive
repayment of the Note, and that the Deed of Trust shall not be reconveyed prior to Owner's
satisfaction of such obligations.
1422342.2 13
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4.4 Use and Disbursement of Proceeds. Owner shall use the proceeds of the Loan
(the "Loan Proceeds") solely and exclusively to pay for costs billed to Owner by third parties in
connection with the design and construction of the Project and such other costs related to the
Project as Agency may approve in writing. Provided that Owner has complied with all
conditions precedent to disbursement of the Loan set forth in Section 4.5 and has provided
Agency with a written requisition specifying the amount and use of the requested Loan Proceeds,
accompanied by copies of evidence of payment of bills and invoices from third parties and such
other documentation as Agency may reasonably require, the iniitial disbursement of Loan
Proceeds shall be disbursed to Owner. Subsequent disbursements shall be made no more than
once per calendar month, upon Agency's receipt of written requisitions and supporting
documentation.
4.5 Conditions to Disbursement of Loan Proceeds.
Agency's obligation to fund the Loan and disburse the Loan Proceeds is conditioned
upon the satisfaction (or Agency's waiver) of all of the following conditions:
(i) Owner's execution and delivery to Agency of this Agreement, the Note,
the Deed of Trust, the Regulatory Agreement, the Notice, and the Memorandum.
(ii) Recordation of the Memorandum, the Regulatory Agreement, the Notice,
and the Deed of Trust in the Official Records.
(iii) The issuance by an insurer satisfactory to Agency of an A.L.T.A. lender's
policy of title insurance ("Title Policy") for the benefit of Agency in the amount of the Loan,
insuring that the lien of the Deed of Trust is subject only to exceptions number through
identified in that certain Preliminary Report (Order No. )issued by
Title Company and dated ,~20_ (provided that taxes and
assessments are paid current as of the closing date), and such. other defects, liens, conditions,
encumbrances, restrictions, easements and exceptions as Agency may approve in writing
(collectively, the "Permitted Exceptions") and containing suchh endorsements as Agency may
reasonably require, with the cost of such Title Policy to be paid. by Owner. The cost of the Title
Policy shall be paid by Owner .
(iv) Owner's delivery to Agency of each of t:he following: (i) certified copies
of Owner's Certificate of Formation and Operating Agreement, (ii) certificate of good standing,
certified by the Secretary of State indicating that Owner is prof-erly organized and authorized to
do business in the State of California, and (iii) a certified resolution indicating that the persons
executing the Agency Documents on behalf of Owner have been duly authorized to do so.
(v) Owner's delivery to the Agency of evidence of property and liability
insurance coverage in accordance with the requirements set forth in Article X.
(vi) Owner's delivery to Agency of evidence reasonable satisfactory to
Agency that there are no mechanics' liens or stop notices related to the Property or the Project,
and Owner's provision to Agency of full waivers or releases of lien clams if required by Agency.
1422342.2 14
1(P
(vii) No material adverse change as determinc;d by Agency in its reasonable
judgment shall have occurred in the condition of the Property oar in the financial or other
condition of Owner since the date of this Agreement.
(viii) Owner's delivery to Agency of evidence satisfactory to Agency that
Owner has obtained all necessary entitlements, permits (includ:ing without limitation building
permits), licenses, and approvals required to develop the Project, or that the receipt of such
permits is subject only to such conditions as Agency shall reasonably approve.
(ix) Owner's delivery to Agency and Agency approval of: (i) performance
bonds or other assurance of completion reasonably acceptable 1:o Agency pursuant to the
requirements set forth in Section 3.21; and (ii) construction schedule for the Project.
(x) Agency approval of the Project budget and Financing Plan.
(xi) All other sources of financing for the project shall have closed or shall
close concurrently with Agency's initial disbursement of Loan Proceeds, and Owner shall have
delivered to Agency evidence reasonably satisfactory to Agency that Owner has secured binding
financing commitments for all Project costs.
(xii) Agency's receipt of a written requisition. from Owner specifying the
amount and use of the requested funds, accompanied by copies of third-party invoices, evidence
of Owner's payment for services rendered in connection with the Project, and such other
documentation as Agency shall reasonably require.
4.6 No Obligation to Disburse Proceeds Upon Default. Notwithstanding any other
provision of this Agreement, the Agency shall have no obligation to disburse or authorize the
disbursement of any portion of the Loan Proceeds following;
(i) the failure of any of Owner's representations and warranties made in this
Agreement or in connection with the Loan to be true and correct in all material respects;
(ii) the termination of this Agreement by mutual agreement of the Parties;
(iii) Transfer of the Property or Improvements without Agency consent
pursuant to Section 4.7;
(iv) the occurrence of an Event of Default under any Agency Document which
remains uncured beyond any applicable cure period, or the existence of any condition, event or
act which upon the giving of notice or the passage of time or both would constitute an Event of
Default under any Agency Document.
4.7 Prepayment; Acceleration; Limitations on Assi~,nment.
(a) Prepay Owner shall have the right: to prepay the Loan at any time
and from time to time, without penalty or premium, provided that any prepayment of principal
must be accompanied by interest accrued but unpaid to the date of prepayment. Prepayments
shall be applied first to accrued but unpaid interest and then to principal. Any such prepayment
1422342.2 15
~7
shall have no effect upon Owner's obligations under the Regulatory Agreement which shall
survive for the full term of the Regulatory Agreement. In no event shall any amount due under
the Note become subject to any rights of offset, deduction or counterclaim on the part of Owner.
(b) Due On Sale or Encumbrance. Unless Agency agrees otherwise in
writing, the entire unpaid principal balance and all interest and other sums accrued under the
Note shall be due and payable upon the Transfer absent the prior written consent of Agency of
all or any part of or interest in the Property or Improvements e~;cept as otherwise permitted
pursuant to this Agreement.
(c) Limitations on Assignment. Owner and its principals have represented
that they possess the necessary expertise, skill and ability to carry out the Project pursuant to this
Agreement. The qualifications, experience, financial capacity and expertise of Owner and its
principals are of particular concern to Agency. It is because of these qualifications, experience,
financial capacity and expertise that the Agency has entered into this Agreement with Owner.
No voluntary or involuntary successor, assignee or transferee of Owner shall acquire any rights
under this Agreement absent the advance written consent of Agency, and Agency shall have no
obligation to make disbursements of Loan Proceeds in the event of a Transfer absent such
written consent.
ARTICLE V
USE OF THE PROPERTY
5.1 Use; Affordable Housing. Owner covenants and agrees for itself and its
successors and assigns that the Property shall be used for a mixed use retail and multi-family
residential development in compliance with this Agreement, thc; Regulatory Agreement, and all
applicable City zoning and use restrictions. Owner agrees that throughout the term of the
Regulatory Agreement not less than ten (10) residential units in the Project shall be rented at
affordable rents to households of not more than 120% of Area Pvledian Income, in accordance
with the Regulatory Agreement.
5.2 Maintenance. Owner shall at its own expense, maintain the Property, the
Improvements and related landscaping and common areas in good physical condition, in good
repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with
all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting
the foregoing, Owner agrees to maintain the Project and the Property (including without
limitation, the residential units, common areas, landscaping, driveways, parking areas, and
walkways) in a condition free of all waste, nuisance, debris, uninaintained landscaping, graffiti,
disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps
to prevent the same from occurring on the Property or at the Project. Owner shall prevent
and/or rectify any physical deterioration of the Property and the Project and shall make all
repairs, renewals and replacements necessary to keep the Property and the improvements
located thereon in good condition and repair. Owner shall provide adequate security services
for occupants of the Project.
1422342.2 16
~S
5.3 Taxes and Assessments. Owner shall pay all real and personal property taxes,
assessments and charges and all franchise, income, payroll, withholding, sales, and other taxes
assessed against the Property and payable by Owner, at such times and in such manner as to
prevent any penalty from accruing, or any lien or charge from attaching to the Property;
provided, however, that Owner shall have the right to contest iri good faith, any such taxes,
assessments, or charges. In the event the Owner exercises its right to contest any tax,
assessment, or charge, the Owner, on final determination of the proceeding or contest, shall
immediately pay or discharge any decision or judgment renderc;d against it, together with all
costs, charges and interest.
5.4 Obligation to Refrain from Discrimination. Owner shall not restrict the rental,
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyrrcent of the Property, or any
portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability,
marital status, ancestry, or national origin of any person. Ownf;r covenants for itself and all
persons claiming under or through it, and this Agreement is made and accepted upon and subject
to the condition that there shall be no discrimination against or segregation of any person or
group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12~>26, 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 Property or part
thereof, nor shall Owner or any person claiming under or through Owner 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, of,
or for the Property or part thereof. Owner shall include such provision in all deeds, leases,
contracts and other instruments executed by Owner, and shall enforce the same diligently and in
good faith.
All deeds, leases or contracts made or entered into by Owner, its successors or assigns, as
to any portion of the Property or the Improvements shall contain the following language:
(a) In Deeds, the following language shall appear:
"(1) Grantee herein covenants by and for itself, fits successors and assigns, and all
persons claiming under or through it, 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 1:?955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
property herein conveyed nor shall the grantee ar any person claiming under or
through the grantee 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
property herein conveyed. The foregoing covenant shall run with the land.
"(2) Notwithstanding paragraph (1), with respect to familial status, paragraph
(1) shall not be construed to apply to housing for older persons, as defined in
1422342.2 1']
19
Section 12955.9 of the Government Code. With respect to familial status, nothing
in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10,
51.11 and 799.5 of the Civil Code, relating to housing for senior citizens.
Subdivision (d) of Section 51 and Section 1360 of the Civil Code and
subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall
apply to paragraph (1)."
(b) In Leases, the following language shall appear:
"(1) The lessee herein covenants by and for the :lessee and lessee's heirs, personal
representatives and assigns, and all persons claiming under the lessee or through
the lessee, that this lease is made subject to the c;ondition that there shall be no
discrimination against or segregation of any person or of a group of persons on
account of race, color, creed, religion, sex, sexual orientation, marital status,
national origin, ancestry or disability in the leasing, subleasing, transferring, use,
occupancy, tenure or enjoyment of the praperty herein leased nor shall the lessee
or any person claiming under or through the les~cee establish or permit any such
practice or practices of discrimination of segregation with reference to the
selection, location, number, use or occupancy oil tenants, lessees, sublessees,
subtenants, or vendees in the property herein leased.
"(2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1)
shall not be construed to apply to housing for older persons, as defined in Section
12955.9 of the Government Code. With respect to familial status, nothing in
paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11
and 799.5 of the Civil Code, relating to hausing for senior citizens. Subdivision
(d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o),
and (p) of Section 12955 of the Government Code shall apply to paragraph (1)."
(c) In Contracts, the following language shall appe~~r:
"There shall be no discrimination against or segregation of any person or group of
persons on account of any basis listed in subdiviision (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 property nor shall the transferee or
any person claiming under or through the transferee establish or permit any such
practice or practices of discrimination or segregation with reference to selection,
location, number, use or occupancy of tenants, lessee, subtenants, sublessees or
vendees of the land."
1422342.2 1 g
ARTICLE VI
LIMITATIONS ON CHANGE IN OWNERSHIP, MANAGEMENT
AND CONTROL OF DEVELOPER
6.1 Change Pursuant to this Agreement. Owner and. its principals have represented
that they possess the necessary expertise, skill and ability to carry out the rehabilitation of the
Improvements pursuant to this Agreement. The qualifications, experience, financial capacity and
expertise of Owner and its principals are of particular concern to the Agency. It is because of
these qualifications, experience, financial capacity and expertise that the Agency has entered into
this Agreement with Owner. No voluntary or involuntary succc;ssor, assignee or transferee of
Owner shall acquire any rights or powers under this Agreement:, except as expressly provided
herein.
6.2 Prohibition on Transfer. Prior to the expiration of the term of the Regulatory
Agreement, Owner shall not, except as expressly permitted by this Agreement, directly or
indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or partial
sale, transfer, conveyance, assignment hypothecation, mortgage, pledge, encumbrance or lease
(collectively, "Transfer") of the whole or any part of the Property, the Project, the
Improvements, or this Agreement, without the prior written approval of Agency, which approval
shall not be unreasonably withheld. Any such attempt to assigr- this Agreement without the
Agency's consent shall be null and void and shall confer no righhts or privileges upon the
purported assignee. In addition to the foregoing, prior to the expiration of the term of the
Regulatory Agreement, except as expressly permitted by this Agreement, Owner shall not
undergo any significant change of ownership without the prior written approval of Agency. For
purposes of this Agreement, a "significant change of ownership" shall mean a transfer of the
beneficial interest of more than twenty-five percent (25%) in a€;gregate of the present ownership
and /or control of Owner, taking all transfers into account on a cumulative basis.
6.3 Permitted Transfers. Notwithstanding any contrary provision hereof, the
prohibitions set forth in this Article shall not be deemed to prevent: (i) the granting of temporary
easements or permits to facilitate development of the Property; (ii) the dedication of any property
required pursuant to this Agreement; (iii) the lease of individual residences to tenants for
occupancy as their principal residence in accordance with the Regulatory Agreement or the lease
of commercial/retail space within the Project; or (iv) assignmer-ts creating security interests for
the purpose of financing the acquisition, construction or permanent financing of the Project or
the Property in accordance with the approved Financing Plan, car Transfers directly resulting
from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a security interest.
6.4 Requirements for Proposed Transfers. The Agency may, in the exercise of its
sole discretion, consent to a proposed Transfer of this Agreement, the Property or portion thereof
if all of the following requirements are met (provided however, the requirements of this
Section 6.4 shall not apply to Transfers described in clauses (i) through (iv) of Section 6.3):
(i) The proposed transferee demonstrates to the Agency's satisfaction that it
has the qualifications, experience and financial resources necessary and adequate as may be
1422342.2 19
2~
reasonably determined by the Agency to competently complete rehabilitation of the
Improvements and to otherwise fulfill the obligations undertaken by the Owner under this
Agreement.
(ii) The Owner and the proposed transferee shall submit for Agency review
and approval all instruments and other legal documents proposed to effect any Transfer of this
Agreement, the Property or interest therein together with such documentation of the proposed
transferee's qualifications and development capacity as the Agc;ncy may reasonably request.
(iii) The proposed transferee shall expressly assume all of the rights and
obligations of the Owner under this Agreement and the Agency Documents arising after the
effective date of the Transfer and all obligations of Owner arising prior to the effective date of
the Transfer (unless Owner expressly remains responsible for such obligations) and shall agree to
be subject to and assume all of Owner's obligations pursuant to the Conditions of Approval and
all other conditions, and restrictions set forth in this Agreement and the Regulatory Agreement.
(iv) The Transfer shall be effectuated pursuant to a written instrument
satisfactory to the Agency in form recordable in the Official Records.
Consent to any proposed Transfer may be given by the Agency's Executive
Director unless the Executive Director, in his or her discretion, refers the matter of approval to
the Agency's governing board. If a proposed Transfer has not keen approved by Agency in
writing within thirty (30) days following Agency's receipt of written request by Owner, it shall
be deemed rejected.
6.5 Effect of Transfer without A ency Conser~
6.5.1 In the absence of specific written agreerrient by the Agency, no Transfer
by Owner shall be deemed to relieve the Owner or any other party from any obligation under this
Agreement.
6.5.2 Without limiting any other remedy Agency may have under this
Agreement, or under law or equity, it shall be an Event of Default hereunder entitling Agency to
terminate this Agreement and/or exercise other remedies available pursuant to the Agency
Documents if without the prior written approval of the Agency., Owner assigns or Transfers this
Agreement or the Property in violation of this Agreement. This Section 6.5.2 shall not apply to
Transfers described in clauses (i) through (iv) of Section 6.3.
6.6 Recovery of A ency Costs. Owner shall reimburse Agency for all Agency costs,
including but not limited to reasonable attorneys' fees, incurred in reviewing instruments and
other legal documents proposed to affect a Transfer under this .Agreement and in reviewing the
qualifications and financial resources of a proposed successor, assignee, or transferee within ten
(10) days following Agency's delivery to Owner of an invoice detailing such costs.
ARTICLE VII
Reserved.
1422342.2 20
~.~.
ARTICLE VIII
ENVIRONMENTAL MATTERS
8.1 No Agency Liability; Owner's Covenants. Neither Agency nor City shall be
responsible for the cost of any soil, groundwater or other environmental remediation or other
response activities for any Hazardous Materials existing ar occurring on the Property or any
portion thereof, and Owner shall be solely responsible for all actions and costs associated with
any such activities required for the development of the Project, the Property, or any portion
thereof. Upon receipt of any notice regarding the presence, release or discharge of Hazardous
Materials in, on or under the Property, or any portion thereof, C-wner (as long as Owner owns the
property which is the subject of such notice) agrees to timely initiate and diligently pursue and
complete all appropriate response, remediation and removal actions for the presence, release or
discharge of such Hazardous Materials within such deadlines a:> specified by applicable
Environmental Laws. Owner hereby covenants and agrees that:
(i) Owner shall not knowingly permit the Project or the Property or any
portion of either to be a site for the use, generation, treatment, rnanufacture, storage, disposal or
transportation of Hazardous Materials or otherwise knowingly permit the presence or release of
Hazardous Materials in, on, under, about or from the Project or the Property with the exception
of cleaning supplies and other materials customarily used in construction, operation or
maintenance of residential property and any commercial uses developed as part of the Project,
and used, stored and disposed of in compliance with Hazardou:> Materials Laws, and
(ii) Owner shall keep and maintain the Project and the Property and each
portion thereof in compliance with, and shall not cause o~• permit the Project or the Property or
any portion of either to be in violation of, any Hazardous Materials Laws.
8.2 Environmental Indemnification. Owner shall indemnify, defend (with counsel
approved by Agency) and hold the Indemnitees harmless from and against any and all Claims
including without limitation any expenses associated with the investigation, assessment,
monitoring, response, removal, treatment, abatement or remediation of Hazardous Materials and
administrative, enforcement or judicial proceedings resulting, arising, or based directly or
indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage
or disposal or the alleged presence, release, discharge, storage or disposal of any Hazardous
Materials on, under, in or about, or the transportation of any such Hazardous Materials to or
from, the Property, or (ii) the failure of Owner, Owner's employees, agents, contractors,
subcontractors, or any person acting on behalf of any of the foregoing to comply with Hazardous
Materials Laws or the covenants set forth in Section 8.1. The foregoing indemnity shall further
apply to any residual contamination in, on, under or about the ]Property or affecting any natural
resources, and to any contamination of any property or natural resources arising in connection
with the generation, use, handling, treatment, storage, transport or disposal of any such
Hazardous Materials, and irrespective of whether any of such <rctivities were or will be
undertaken in accordance with Hazardous Materials Laws. "The provisions of this Section 8.2
shall survive the issuance of a Certificate of Completion for the Project and the expiration or
earlier termination of this Agreement.
1422342.2 21
23
8.2.1 No Limitation. Owner hereby acknowledges and agrees that Owner's
duties, obligations and liabilities under this Agreement, including, without limitation, under
Section 8.2 above, are in no way limited or otherwise affected try any information the Agency or
the City may have concerning the Property and/or the presence in, on, under or about the
Property of any Hazardous Materials, whether the Agency or the City obtained such information
from the Owner or from its own investigations. It is further agreed that Agency and City do not
and shall not waive any rights against Owner that they may have by reason of this indemnity and
hold harmless agreement because of the acceptance by Agency,. or the deposit with Agency by
Owner, of any of the insurance policies described in this Agreement.
8.3 Hazardous Materials. As used herein, the term "'Hazardous Materials" means
any substance, material or waste which is or becomes regulated by any federal, state or local
governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct
or indirect product or by-product thereof; (ii) asbestos and any material containing asbestos; (iii)
any substance, material or waste regulated by or listed (directly or by reference) as a "hazardous
substance", "hazardous material", "hazardous waste", "toxic waste", "toxic pollutant", "toxic
substance", "solid waste" or "pollutant or contaminant" in or pursuant to, or similarly identified
as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control
Act [15 U.S.C. Section 2601, et seq.]; the Comprehensive Environmental Response,
Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials
Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation
and Recovery Act [42 U.S.C. Section 6901, et seq.], the Federal Water Pollution Control Act [33
U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California
Underground Storage of Hazardous Substances Act [California Health and Safety Code Section
25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety
Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety
Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act
[California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water
Quality Control Act [California Water Code Section 13000, et ,seq.], as they now exist or are
hereafter amended, together with any regulations promulgated thereunder; (iv) any substance,
material or waste which is defined as such or regulated by any "Superfund" or "Superlien" law,
or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant
identified as hazardous or toxic and regulated under any other i°ederal, state or local
environmental law, including without limitation, asbestos, polychlorinated biphenyls, petroleum,
natural gas and synthetic fuel products and by-products.
8.4 Environmental Laws. As used herein, the term "Environmental Laws" means
all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or
common law doctrines, and provisions and conditions of permiits, licenses and other operating
authorizations regulating, or relating to, or imposing liability or standards of conduct concerning
(i) pollution or protection of the environment, including natural resources; (ii) exposure of
persons, including employees and agents, to Hazardous Materials (as defined above) or other
products, raw materials, chemicals or other substances; (iii) protection of the public health or
welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical
substances from industrial or commercial activities; (iv) the manufacture, use or introduction into
commerce of chemical substances, including without limitation, their manufacture, formulation,
labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or
1422342.2 22
2~
disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air,
surface waters, groundwaters or soil, as now or may at any later time be in effect, including but
not limited to the Toxic Substances Control Act [15 U.S.C. Secttion 2601, et seq.]; the
Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section
9601, et seq.], the Hazardous Materials Transportation Authori~:ation Act [49 U.S.C. Section
5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. Section 6901, et seq.],
the Federal Water Pollution Control Act [33 U.S.C. Section 12~~1], the Clean Air Act [42 U.S.C.
Section 7401, et seq.], the California Underground Storage of~H[azardous Substances Act
[California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances
Account Act [California Health and Safety Code Section 25300, et seq.], the California
Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California
Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section
25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code
Section 13000, et seq.], as each of the foregoing now exist or are hereafter amended, together
with any regulations promulgated thereunder.
ARTICLE IX
DEFAULTS, REMEDIES AND TERMINATION
9.1 Event of Default. The following events shall constitute an event of default on the
part of Owner ("Event of Default"):
(a) Owner fails to commence or complete construction of the Project within
the times set forth in Section 3.8, or subject to force majeure, abandons or suspends construction
of the Project prior to completion for a period of sixty (60) days or more;
(b) Owner fails to pay when due the principal and interest (if any) payable
under the Note and such failure continues for ten (10) days after Agency notifies Owner thereof
in writing;
(c) A Transfer occurs, either voluntarily or involuntarily, in violation of
Article VI.
(d) Owner fails to maintain insurance on the; Property and the Project as
required pursuant to this Agreement, and Owner fails to cure such default within ten (10) days;
(e) Subject to Owner's right to contest the fallowing charges pursuant to
Section 5.3, if Owner fails to pay prior to delinquency taxes or assessments due on the Property
or the Project or fails to pay when due any other charge that may result in a lien on the Property
or the Project, and Owner fails to cure such default within thirty (30) days of date of
delinquency, but in all events upon the imposition of any such tax or other lien;
(f) A default arises under any loan secured by a mortgage, deed of trust or
other security instrument recorded against the Property and remains uncured beyond any
applicable cure period such that the holder of such security instrument has the right to accelerate
repayment of such loan;
1422342.2 23
2S
(g) Any representation or warranty contained. in this Agreement or in any
application, financial statement, certificate or report submftted too the Agency or the City in
connection with this Agreement or Owner's request for the Loan proves to have been incorrect in
any material and adverse respect when made and continues to bye materially adverse to the
Agency or the City;
(h) If, 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"), Owner (i) commences a voluntary case or proceeding; (ii) consents to the entry of an
order for relief against Owner in an involuntary case; (iii) consents to the appointment of a
trustee, receiver, assignee, liquidator or similar official fop Owner; (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;
(i) A court of competent jurisdiction shall have made or entered any decree or
order (1) adjudging the Owner to be bankrupt or insolvent, (2) approving as properly filed a
petition seeking reorganization of the Owner or seeking any arrangement for Owner under
bankruptcy law or any other applicable debtor's relief law or statute of the United States or any
state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the Owner
in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or
liquidation of the Owner;
(j) Owner shall have assigned its assets for the benefit of its creditors (other
than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on
any substantial part of its property, unless the property so assigned, sequestered, attached or
executed upon shall have been returned or released within sixty (60) days after such event
(unless a lesser time period is permitted for cure under any other mortgage on the Property, in
which event such lesser time period shall apply under this subsection as well) or prior to any
sooner sale pursuant to such sequestration, attachment, or execution;
(k) The Owner shall have voluntarily suspended its business or Owner shall
have been dissolved or terminated;
(1) An event of default arises under any Age:ncy Document and remains
uncured beyond any applicable cure period; or
(m) Owner defaults in the performance of any term, provision, covenant or
agreement contained in this Agreement other than an obligation enumerated in this Section 9.1
and unless a shorter cure period is specified for such default, the default continues for ten (10)
days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default
after the date upon which Agency shall have given written notice of the default to Owner;
provided however, if the default is of a nature that it cannot be cured within thirty (30) days, a
Owner Event of Default shall not arise hereunder if Owner commences to cure the default within
thirty (30) days and thereafter prosecutes the curing of such de:Fault with due diligence and in
good faith to completion and in no event later than ninety (90) days after receipt of notice of the
default.
1422342.2 24
~-(p
9.2 Agency Default. An event of default on the part of Agency ("Event of Agency
Default") shall arise hereunder if Agency fails to keep, observe., or perform any of its covenants,
duties, or obligations under this Agreement, and the default continues for a period of thirty (30)
days after written notice thereof from Owner to Agency, ar in the case of a default which cannot
with due diligence be cured within thirty (30) days, Agency fails to commence to cure the default
within thirty (30) days of such notice and thereafter fails to prosecute the curing of such default
with due diligence and in good faith to completion.
9.3 Agency's Remedies and Rights Upon an Event of Owner Default. Upon the
occurrence of an Event of Default and the expiration of any applicable cure period, Agency shall
have all remedies available to it under this Agreement or under law or equity, including, but not
limited to the following, and Agency may, at its election, without notice to or demand upon
Owner, except for notices or demands required by law or expressly required pursuant to the
Agency Documents, exercise one or more of the following remedies:
(a) Accelerate and declare the balance of the Note and interest accrued
thereon immediately due and payable;
(b) Seek specific performance to enforce the terms of the Agency Documents;
(c) Foreclose on the Property pursuant to the: Deed of Trust;
(d) Pursue any and all other remedies available under this Agreement or under
law or equity to enforce the terms of the Agency Documents and Agency's rights thereunder.
9.4 Owner's Remedies Upon an Event of Age~cy Default. Upon the occurrence of an
Agency Event of Default, in addition to pursuing any other remedy allowed at law or in equity or
otherwise provided in this Agreement, Owner may bring ~n action for equitable relief seeking
the specific performance of the terms and conditions of this Agreement, and/or enjoining,
abating, or preventing any violation of such terms and conditions, and/or seeking to obtain any
other remedy consistent with the purpose of this Agreement, and may pursue any and all other
remedies available under this Agreement or under law or equity to enforce the terms of the
Agency Documents and Owner's rights thereunder.
9.5 Remedies Cumulative• No Consequential damages. Except as otherwise
expressly stated in this Agreement, the rights and remedies of tlhe Parties are cumulative, and the
exercise by either Party of one or more of such rights or remedies shall not preclude the exercise
by it, at the same or different time, of any other rights or remedies for the same or any other
default by the other Party. Notwithstanding anything to the contrary set forth herein, a Party's
right to recover damages in the event of a default shall be limited to actual damages and shall
exclude consequential damages.
9.6 Inaction Not a Waiver of Default. No failure or delay by either Party in asserting
any of its rights and remedies as to any default shall operate as a waiver of such default or of any
such rights or remedies, nor deprive either Party of its rights to institute and maintain any action
or proceeding which it may deem necessary to protect, assert: or enforce any such rights or
remedies in the same or any subsequent default.
1422342.2 25
27
ARTICLE X
INDEMNITY AND INSURANCE.
10.1 Indemnity. Owner shall indemnify, defend (with counsel approved by Agency)
and hold Indemnitees harmless from and against any and all Claims, including without
limitation, Claims arising directly or indirectly, in whole or in part, as a result of or in connection
with Owner's or Owner's contractors, subcontractors, agents or employees development,
construction, improvement, operation, ownership or maintenanc;e of the Project or the Property,
or any part thereof or otherwise arising out of or in connection with Owner's performance under
this Agreement. Owner's indemnification obligations under this Section 10.1 shall not extend to
Claims resulting solely from the gross negligence or willful misconduct of Indemnitees. The
provisions of this Section 10.1 shall survive the issuance of a Certificate of Completion for the
Project and the expiration or earlier termination of this Agreement. It is further agreed that
Agency and City do not and shall not waive any rights against Owner that they may have by
reason of this indemnity and hold harmless agreement because of the acceptance by Agency, or
the deposit with Agency by Owner, of any of the insurance policies described in this Agreement.
10.2 Liability and Workers Compensation Insurance.
(a) Owner and all contractors working on behalf of Owner on the Project shall
maintain a commercial general liability policy in the amount of One Million Dollars
($1,000,000) each occurrence, Two Million Dollars ($2,000,000) annual aggregate, together with
Three Million Dollars ($3,000,000) excess liability coverage, or such other policy limits as
Agency may require in its reasonable discretion, including coverage for bodily injury, property
damage, products, completed operations and contractual liability coverage. Such policy or
policies shall be written on an occurrence basis and shall name the Indemnitees as additional
insureds.
(b) Owner and all contractors working on behalf of Owner shall maintain a
comprehensive automobile liability coverage in the amount of (Jne Million Dollars ($1,000,000),
combined single limit including coverage for owned and non-owned vehicles and shall furnish or
cause to be furnished to Agency evidence satisfactory to Agency that Owner and any contractor
with whom Owner has contracted for the performance of work on the Property or otherwise
pursuant to this Agreement carries workers' compensation insurance as required by law.
Automobile liability policies shall name the Indemnitees as additional insureds.
(c) Upon commencement of construction work and continuing until issuance
of a Certificate of Completion, Owner and all contractors working on behalf of Owner shall
maintain a policy of builder's all-risk insurance in an amaunt not less than the full insurable cost
of the Project on a replacement cost basis naming Agency as loss payee.
(d) Owner shall maintain property insurance; covering all risks of loss (other
than earthquake), including flood (if required) for 100% of the replacement value of the Project
with deductible, if any, in an amount acceptable to Agency, naming Agency as loss payee.
(e) Companies writing the insurance required hereunder shall be licensed to
do business in the State of California. Insurance shall be placed with insurers with a current
1422342.2 26
2gj
A.M. Best's rating of no less than A: VII. The Commercial General Liability and comprehensive
automobile policies required hereunder shall name the Indemnit~ees as additional insureds.
Builder's Risk and property insurance shall name Agency and City as loss payees as their
interests may appear.
(f) Prior to commencement of construction vrork, Owner shall furnish Agency
with certificates of insurance in form acceptable to Agency evidencing the required insurance
coverage and duly executed endorsements evidencing such additional insured status. The
certificates shall contain a statement of obligation on the part of the carrier to notify City and
Agency of any material adverse change, cancellation, termination or non-renewal of the coverage
at least thirty (30) days in advance of the effective date of any such material adverse change,
cancellation, termination or non-renewal.
(g) If any insurance policy or coverage required hereunder is canceled or
reduced, Owner shall, within fifteen (15) days after receipt of notice of such cancellation or
reduction in coverage, but in no event later than the effective date of cancellation or reduction,
file with Agency and City a certificate showing that the required insurance has been reinstated or
provided through another insurance company or companies. Upon failure to so file such
certificate, Agency or City may, without further notice and at its option, procure such insurance
coverage at Owner's expense, and Owner shall promptly reimburse Agency or City for such
expense upon receipt of billing from Agency or City.
(h) Coverage provided by Owner shall be primary insurance and shall not be
contributing with any insurance, or self-insurance maintained by Agency or City, and the
policies shall so provide. The insurance policies shall contain a waiver of subrogation for the
benefit of the City and Agency. Owner shall furnish the required certificates and endorsements
to Agency prior to the commencement of construction of the Project, and shall provide Agency
with certified copies of the required insurance policies upon request of Agency.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 No Brokers. Each Party warrants and represents to the other that no person or
entity can properly claim a right to a real estate commission, brokerage fee, finder's fee, or other
compensation with respect to the transactions contemplated by this Agreement. Each Party
agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs
or liabilities arising in connection with a breach of this warranty and representation. The terms
of this Section shall survive the expiration or earlier termination of this Agreement.
11.2 Enforced Delay' Extension of Times of P~rforrr~ance. Subject to the limitations
set forth below, performance by either Party shall not be deemed to be in default, and all
performance and other dates specified in this Agreement shall be extended where delays are due
to: war, insurrection, strikes, lockouts, riots, floods, earthquakf;s, fires, casualties, acts of God,
acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, governmental
restrictions or priority, litigation, including court delays, unusually severe weather, acts or
omissions of the other Party, acts or failures to act of the City or any other public or
1422342.2 27
z~
governmental agency or entity (other than the acts or failures to act of Agency which shall not
excuse performance by Agency), or any other cause beyond the affected Party's reasonable
control. An extension of time for any such cause shall be for the period of the enforced delay
and shall commence to run from the time of the commencement of the cause, if notice by the
Party claiming such extension is sent to the other Party within thirty (30) days of the
commencement of the cause and such extension is not rejected in writing by the other Party
within ten (10) days of receipt of the notice. Neither Party shall unreasonably withhold consent
to an extension of time pursuant to this Section.
Times of performance under this Agreement may also be extended in writing by the
mutual agreement of Owner and Agency (acting in the discretion of its Executive Director unless
he or she determines in his or her discretion to refer such matter to the governing board of the
Agency). Agency and Owner acknowledge that adverse changers in economic conditions, either
of the affected Party specifically or the economy generally, changes in market conditions or
demand, and/or inability to obtain financing to complete the work of Improvements shall not
constitute grounds of enforced delay pursuant to this Sectlon. F;ach Party expressly assumes the
risk of such adverse economic or market changes and/or financiial inability, whether or not
foreseeable as of the Effective Date.
11.3 Notices. Except as otherwise specified in this Agreement, 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 Parties in accordance with this Section. All such notices shall be sent by:
(i) personal delivery, in which case notice is effective upon delivery;
(ii) 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;
(iii) 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;
(iv) facsimile transmission, in which case notice shall be deemed delivered
upon transmittal, provided that (a) a duplicate copy of the; notice is promptly delivered by first-
class or certified mail or by overnight delivery, or (b) a transmission report is generated
reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered
to have been received on the next business day if it is received after 5:00 p.m. recipient's time or
on a nonbusiness day.
Agency: Redevelopment Agency of the Cit;ry of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attention: Executive Director
Facsimile: 650-829-6623
1422342.2 28
Owner: Giffra Enterprises, LLC
240 Grand Avenue
South San Francisco, CA 94080
Attention: Greg Giffra
Facsimile: 650-239-3604
With copy to:
Ronald P. Albert
Attorney At Law
66 George Lane, Suite 101
Sausalito, CA 94965
Facsimile: 415-332-9216
11.4 Attorneys' Fees. If either Party fails to perform any of its obligations under this
Agreement, or if any dispute arises between the Parties concerning the meaning or interpretation
of any provision hereof, then the prevailing Party in any prace;eding in connection with such
dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or
establishing its rights hereunder, including, without limitation, court costs and reasonable
attorneys' fees and disbursements.
11.5 Waivers; Modification. No waiver of any breach of any covenant or provision of
this Agreement shall be deemed a waiver of any other covenant or provision hereof, and no
waiver shall be valid unless in writing and executed by the waiving Party. An extension of time
for performance of any obligation or act shall not be deemed an extension of the time for
performance of any other obligation or act, and no extension shall be valid unless in writing and
executed by the Party granting the extension. This Agreement may be amended or modified only
by a written instrument executed by the Parties.
11.6 Binding on Successors. Subject to the limitations set forth in Article 6, this
Agreement shall bind and inure to the benefit of the Parties and their respective permitted
successors and assigns. Any reference in this Agreement to a. specifically named Party shall be
deemed to apply to any permitted successor and assign of such Party who has acquired an
interest in compliance with this Agreement or under law.
11.7 Survival. All representations made by Owner hereunder and Owner's obligations
pursuant to Sections 3 3 3 14 3.17 3.18 8.2 10.1, 11.1, a_nd 11.18 shall survive the expiration
or termination of this Agreement and the issuance and recordation of a Certificate of
Completion.
11.8 Construction. The section headings and captions used herein are solely for
convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this
Agreement is the product of negotiation and compromise an the part of both Parties, and the
Parties agree, that since both Parties have participated in the :negotiation and drafting of this
1422342.2 29
31
Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.
11.9 Action or Approval. Whenever action and/or approval by Agency is required
under this Agreement, Agency's Executive Director or his or. her designee may act on and/or
approve such matter unless specifically provided otherwise, or unless the Executive Director
determines in his or her discretion that such action or approval requires referral to Agency's
Board for consideration.
11.10 Entire Agreement. This Agreement, including Exhibits A through H attached
hereto and incorporated herein by this reference, together with the other Agency Documents
contains the entire agreement between the Parties with respect to the subject matter hereof, and
supersedes all prior written or oral agreements, understandings,, representations or statements
between the Parties with respect to the subject matter hereof.
11.11 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be an original and all of which taken together shall constitute one instrument. The
signature page of any counterpart may be detached therefrom without impairing the legal effect
of the signature(s) thereon provided such signature page is attached to any other counterpart
identical thereto having additional signature pages executed by the other Party. Any executed
counterpart of this Agreement may be delivered to the other Party by facsimile and shall be
deemed as binding as if an originally signed counterpart was delivered.
11.12 Severability. If any term, provision, or condition of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement
shall continue in full force and effect unless an essential purpose of this Agreement is defeated
by such invalidity or unenforceability.
11.13 No Third Party Beneficiaries. Nothing contained in this Agreement is intended to
or shall be deemed to confer upon any person, other than the Parties and their respective
successors and assigns, any rights or remedies hereunder.
11.14 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.
11.15 Non-Liability of Officials Employees and Agents. No officer, official, employee
or agent of Agency or City shall be personally liable to Owner or its successors in interest in the
event of any default or breach by Agency or for any amount v/hich may become due to Owner or
its successors in interest pursuant to this Agreement.
11.16 Time of the Essence• Calculation of Time Periods. Time is of the essence for
each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in
computing any period of time described in this Agreement, the day of the act or event after
which the designated period of time begins to run is not to be included and the last day of the
period so computed is to be included, unless such last day is riot a business day, in which event
the period shall run until the next business day. The final day of any such period shall be
deemed to end at 5:00 p.m., local time at the Property. For purposes of this Agreement, a
1422342.2 30
32
"business day" means a day that is not a Saturday, Sunday, a federal holiday or a state holiday
under the laws of California.
11.17 Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of California withaut regard to principles of conflicts of
laws. Any action to enforce or interpret this Agreement shall lie filed in the Superior Court of
San Mateo County, California or in the Federal District Court for the Northern District of
California.
11.18 General Indemnification. Owner shall indemnify, defend (with counsel approved
by Agency) and hold harmless Indemnitees from all Claims (including without limitation,
reasonable attorneys' fees) arising in connection with any clairn, action or proceeding to attack,
set aside, void, or annul any approval by the City or the Agency or any of its agencies,
departments, commissions, agents, officers, employees ar legislative body concerning the Project
or this Agreement. The Agency will promptly notify Owner of any such claim, action or
proceeding, and will cooperate fully in the defense. The Agency and City may, within the
unlimited discretion of each, participate in the defense of any such claim, action or proceeding,
and if the Agency or City chooses to do so, Owner shall reimburse Agency and City for
reasonable attorneys' fees and expenses incurred.
SIGNATURES ON FOLLOIWING' PAGE.
1422342.2 31
33
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of
the date first written above.
AGENCY
REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO,
a public body corporate and politic
By:
Name:
Title:
ATTEST:
By:
Agency Secretary
APPROVED AS TO FORM:
By:
Agency Counsel
OWNER
GIFFRA ENTERPRISES, LLC,
a California limited liability company
By:_
Name:
Title:
1422342.2
32
3T
Exhibit A
LEGAL DESCRIPTION OF PROPERTY
(Attach legal description.)
Exhibit B
FINANCING PLAN
(Attach Project Financing Plan.)
Exhibit C
FORM OF MEMORANDUM OF OWNER PARTI(:IPATION AGREEMENT
(Attach form of Memorandum.)
Exhibit D
FORM OF CERTIFICATE OF COMPLETION
(Attach form of Certificate.)
Exhibit E
FORM OF PROMISSORY NOTE
(Attach form of Promissory Note.)
Exhibit F
FORM OF DEED OF TRUST
(Attach form of Deed of Trust.)
Exhibit G
FORM OF REGULATORY AGREEMENT AND NOTICE
(Attach form of Regulatory Agreement. and Notice.)
1422342.2 33
35
EXHIBIT A
PROPERTY
(Attach legal description.)
1422348-2
3~
EXHIBIT B
EDWIN AND WEST HOTEL RENC-VATION
FINANCING PLAN
Total Construction Amount $ 2,537,370
Architectural/Engineering
& Structural $ 201,800
Total Project Costs $ 2,739,170
Sources of Funds:
Redevelopment Agency Loan $ 2,500,000
Giffra LLC Funds $ 250;000
Total Sources of Funds: $ 2,750y000
Per Unit Cost $ 274,000
Total Owner Contribution $ 400,000
(Contingency Funds)
(Includes $150,000
expended to date by
Owner)
3~
Recording Requested by
and when Recorded, return to:
EXHBIT C
Redevelopment Agency of the City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attn: Executive Director
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
(SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE)
MEMORANDUM OF OWNER PARTICIPAtION AND LOAN AGREEMENT
This Memorandum of Owner Participation and Loan Agreement (this
"Memorandum") dated as of , 2011, is entered into by and between the
Redevelopment Agency of the City of South San Francisco, a public body, corporate, and
politic ("Agency") and Giffra Enterprises, LLC, a California limited liability company
("Owner"). Agency and Owner are hereinafter collectively referred to as the "Parties."
1. Consistent with California Community Redevelopment Law (Health & Safety Code
Section 33000 et seq.) and the Redevelopment Plah for the Downtown Redevelopment
Project Area ("Project Area"), the Parties have enured into that certain Owner
Participation and Loan Agreement dated as of the date hereof (the "OPA"), pursuant to
which Owner has agreed to rehabilitate certain real property (the "Property") located within
the Project Area and more particularly described in (Exhibit A attached hereto and
incorporated herein by this reference.
2. Among other conditions, the OPA provides that by not later than twenty-four (24)
months following the Effective Date of the OPA, Owner shall have completed rehabilitation
of the Improvements located on the Property as a mixed-used project including ten (10)
residential units that will be rented to eligible households whose incomes are less than or
equal to one hundred twenty percent (120%) of Area Median Income pursuant to the terms
of the OPA and a Regulatory Agreement and Declairatiori of Restrictive Covenants
executed by the Parties ("Regulatory Agreement") which shall be recorded in Official
Records of San Mateo County substantially concurrently herewith.
3. The OPA further provides that (i) except as permitted by the OPA, Owner shall not
voluntarily or involuntarily make or attempt any totail or partial sale, transfer, conveyance,
assignment or lease of the whole or any part of the Property or the improvements located
thereon without the prior written approval of the Agency; and (ii) any transferee of all or part
of the Property shall be subject to and shall expressly assume all of the covenants,
obligations and restrictions of the OPA which pertain to the portion of the Property
transferred, including without limitation, the provisicr'ns of the Regulatory Agreement.
4. The Parties have executed and recorded this instrument to give notice of the OPA
and the Regulatory Agreement, and the respective rights of the Parties thereunder. Copies
of the unrecorded OPA are available at the offices rJf the Agency, 400 Grand Avenue,
South San Francisco, California, and such document is incorporated by reference in its
1422348-2
entirety in this Memorandum. This Memorandum is solely for recording purposes and shall
not be construed to alter, modify, amend or supplement the OPA. In the event of any
inconsistency between this Memorandum and the OPA, the OPA shall control.
5. This Memorandum shall be interpreted and unforced in accordance with California
law without regard to principles of conflict of laws. phis Memorandum may be executed in
counterparts.
6. The OPA shall bind and inure to the benefit of the Parties and their respective
successors and assigns.
SIGNATURES ON FOLLbWING PAGE
1422348-2
3~
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum as of
the date first set forth above.
AGENCY
REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO,
A PUBLIC BODY CORPORATE AND POLITIC
By:
Name:
Title:
ATTEST:
By:
Agency Secretary
APPROVED AS TO FORM:
By:
OWNER
Agency Counsel
GIFFRA ENTERPRISES, LLC,
a California limited liability company
By:_
Name:
Title:
1422348-2
SIGNATURES MUST B~ NOTARIZED.
Exhibit A
PROPERTY
(Attach legal description.)
1422348-2
~f
STATE OF CALIFORNIA )
COUNTY OF SAN MATED)
On , 20_, before me, , (here insert name
and title of the officer), personally appeared ,who
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 capaaity(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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
STATE OF CALIFORNIA )
COUNTY OF SAN MATED)
On , 20_, before me, , (here insert name
and title of the officer), personally appeared ,who
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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
1422348-2 5
~}Z
EXHIBIT D
Recording requested by
and when recorded mail to:
Redevelopment Agency of the City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attn: Executive Director
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE &&6103, 27383
line for Recorder's use.
CERTIFICATE OF COMIPLETION
This Certificate of Completion (this "Certificate") is made by the Redevelopment
Agency of the City of South San Francisco, a public body, corporate, and politic
("Agency") effective as of , 20
RECITALS
A. Agency and Giffra Enterprises, LLC, ~ California limited liability company
("Owner") entered into that certain Owner Participan:ion and Loan Agreement (the
"OPA") dated as of , 2011 concerning the rehabilitation of certain real
property located in the City of South San Francisco, California and more particularly
described in Exhibit A attached hereto (the "Propertty"). A Memorandum of the OPA
was recorded in the Official Records of San Mateo !County ("Official Records") as
Instrument No. ,Book , Page_~____. Capitalized terms used
herein without definition shall have the meaning ascribed to such terms in the OPA.
B. Pursuant to Section 3.15 of the OPA, the Agency is required to furnish the
Owner or its successors with a Certificate of Completion upon completion of
rehabilitation of the Property in accordance with the OPA.
C. The Agency has determined that the rehabilitation of the Property has
been satisfactorily completed in accordance with the OPA.
NOW, THEREFORE, Agency hereby certifies as follows:
1. Rehabilitation of the Property has been satisfactorily completed in
conformance with the OPA.
2. All use, maintenance and nondiscriminatian covenants contained in the
OPA shall remain in effect and enforceable in accordance with the OPA. This
Certificate does not constitute evidence of Owner's compliance with those covenants in
the OPA that survive the issuance of this Certificatle, including without limitation,
compliance with the Affordable Housing Regulatory Agreement and Declaration of
Restrictive Covenants entered into pursuant to they OPA and recorded in the Official
Records as Instrument No. Book ,Page
1422349-2
~~
3. This Certificate does not constitute evidence of compliance with or
satisfaction of any obligation of Owner to any holder of a deed of trust securing money
loaned to finance the Improvements or any part therleof and does not constitute a notice
of completion under California Civil Code Section 3CD93.3.
4. Nothing contained in this instrument shall modify any provisions of the
OPA or any other document executed in connection therewith.
IN WITNESS WHEREOF, Agency has executed and issued this Certificate of
Completion as of the date first written above.
REDEVELOPMENT AGENCY OF THE
CITY OF SOUTH SAN FRANCISCO
By: FORM-DO NOT SIGN
Name:
ATTEST:
Executive Director
By: FORM- DO NOT SIGN
Agency Secretary
APPROVED AS TO FORM:
By: FORM-DO NOT SIGN
Agency Counsel
SIGNATURES MUST BE I~JOTARIZED.
1422349-2
2
~~
EXHBIT E
FORM OF SECURED PROMIISSORY NOTE
$2,500,000
South San Francisco, California
2011
FOR VALUE RECEIVED, the undersigned, ~iffra Enterprises, LLC, a California
limited liability company ("Borrower") promises to play to the Redevelopment Agency of
the City of South San Francisco, a public body, corporate and politic ("Agency"), in
lawful money of the United States of America, the principal sum of Two Million Five
Hundred Thousand Dollars ($2,500,000), or so mudh thereof as may be advanced by
Agency pursuant to the Owner Participation and Loan Agreement referred to below,
together with interest on the outstanding principal balance in accordance with the terms
and conditions described herein.
This Secured Promissory Note (this "Note") has been executed and delivered
pursuant to an Owner Participation and Loan Agreement dated as of the date hereof by
and between Borrower and Agency (the "Loan Agrleement"), and is subject to the
terms and conditions of the Loan Agreement, which are by this reference incorporated
herein and made a part hereof. Capitalized terms used but not defined herein shall
have the meaning ascribed to such terms in the Login Agreement.
This Note is secured by a Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing ("Deed of Trust") dated as of the date hereof, executed
by Borrower for the benefit of Agency and encumbering the property described therein.
Agency shall be entitled to the benefits of the securrity provided by the Deed of Trust
and shall have the right to enforce the covenants and agreements contained herein, in
the Deed of Trust, and the Loan Agreement.
1. INTEREST RATE; REPAYMENT. Interest shall accrue on the outstanding
principal balance of this Note as described in this section. Interest shall be calculated
on the basis of a year of 365 days, and charged forr the actual number of days elapsed.
No interest shall accrue during the first two (2) years of the term of this Note,
commencing upon the origination date. Commending upon the second (2nd)
anniversary of the origination date, the "Interest Commencement Date"), the
outstanding principal balance of this Note will bear'interest at three percent (3%) simple
annual interest. On the eighth (8th) anniversary of the Interest Commencement Date
(the "First Interest Increase Date"), the annual rate of interest shall increase by one
percent (1 %). On each fifth (5th) anniversary of the First Interest Increase Date, the
annual rate of interest shall increase by one percebt (1 °ro). In summary, the following
interest rates shall apply:
Years 1-2: No interest
1422346-2
~J
Years 3-10: 3% interest
Years 11-15: 4% interest
Years 16-20: 5% interest
Years 21-25: 6% interest
Years 26-30: 7% interest
2. PAYMENT DATES; MATURITY DATE. Payments will be based on a 45 year
amortization schedule. No payments will be due dining the first two (2) years of the term
of this Note. Commencing upon the first day of tha first month following the Interest
Commencement Date (defined in Section 1 above), monthly payments will be due and
payable in accordance with this Section 2. The entire outstanding principal balance of
this Note, together with accrued interest and all other sums accrued hereunder shall be
payable in full on the thirtieth (30t") anniversary of the date of this Note (the "Maturity
Date"). (Provided that all payments have been timely made, the parties estimate that
the outstanding principal balance on the Maturity Date will be One Million, Four Hundred
Eighty-Five Thousand, Six Hundred Forty-Seven Dollars ($1,485,647)). Payments shall
be credited first to any unpaid late charges and other costs and fees then due, then to
accrued interest, and then to principal. In no event shall any amount due under this
Note become subject to any rights, offset, deduction or counterclaim on the part of
Borrower.
3. DUE ON SALE OR DEFAULT. The entire uinpaid principal balance and all sums
accrued hereunder shall be immediately due and paayable upon the Transfer (as defined
in Section 6.2 of the Loan Agreement) absent Agenc~y consent, of all or any part of the
Property or the Improvements, or any interest therein, or upon the occurrence of an
Event of Default under the Agency Documents, sutDject to the expiration of any
applicable cure period. Without limiting the generality of the foregoing, this Note shall
not be assumable without Agency's prior written consent, which consent may be
granted or denied in Agency's sole discretion.
4. PREPAYMENT. Borrower may, without preimium or penalty, at any time and
from time to time, prepay all or any portion of the outstanding principal balance due
under this Note. Prepayments shall be applied first to any unpaid late charges and
other costs and fees then due, then to accrued but' unpaid interest, and then to principal.
5. MANNER OF PAYMENT. All payments on this Note shall be made to Agency at
400 Grand Avenue, South San Francisco, CA 94x80 or such other place as Agency
shall designate to Borrower in writing, or by wire tronsfer of immediately available funds
to an account designated by Agency in writing.
1422346-2 2
'I l0
6. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereundeir ("Event of Default"):
(a) Borrower fails to pay when due the priincipal and interest payable
hereunder and such failure continues for ten (10) days after Agency notifies Borrower
thereof in writing.
(b) Borrower fails to maintain insurance on the Property and the Project as
required pursuant to the Agency Documents and Borrower fails to cure such default
within 10 days.
(c) 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 pr 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.
(d) 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 o~Ficial for Borrower or substantially all
of Borrower's assets, (iii) orders the liquidation of Borrower, or (iv) issues or levies a
judgment, writ, warrant of attachment or similar profess against the Property or the
Project, and in each case the order or decree is not released, vacated, dismissed or
fully bonded within 60 days after its issuance.
(e) Borrower shall have assigned its assts for the benefit of its creditors
(other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or
execution on any substantial part of its property, unless the property so assigned,
sequestered, attached or executed upon shall have been returned or released within
sixty (60) days after such event (unless a lesser timme period is permitted for cure under
any other mortgage on the Property, in which event such lesser time period shall apply
under this subsection as well) or prior to any sooner sale pursuant to such
sequestration, attachment, or execution;
(f) Borrower shall have voluntarily suspended its business or Borrower shall
have been dissolved or terminated;
(g) A default arises under any debt instrument, secured by a mortgage or deed
of trust on the Property and remains uncured beyohd any applicable cure period such
that the holder of such instrument has the right to accelerate payment thereunder.
(h) Subject to Borrower's right to contest, the following charges pursuant to the
Agency Documents, if Borrower fails to pay prior to delinquency taxes or assessments
due on the Property or the Project or fails to pay when due any other charge that may
result in a lien on the Property or the Project, and Borrower fails to cure such default
1422346-2 '~
~-7
within thirty (30) days of date of delinquency, but in all events upon the imposition of any
such tax or other lien.
(i) Any representation or warranty contained in this Agreement or any
application, financial statement, certificate or report furnished in connection with the
Loan or in connection with any request for disbursement of Loan Proceeds proves to
have been false or misleading in any material adverse respect when made.
(j) Borrower defaults in the performance of any term, provision, covenant or
agreement (other than an obligation enumerated in this Section 6 contained in this
Note or in any other Loan Document, and unless such document specifies a different
cure period for such default, the default continues far ten (10) days in the event of a
monetary default or thirty (30) days in the event of ~ nonmonetary default after the date
upon which Agency shall have given written notice of the default to Borrower (or such
longer time as Agency may agree upon in writing), provided that in each case Borrower
commences to cure the default within thirty (30) days and thereafter prosecutes the
curing of such default with due diligence and in good faith.
7. REMEDIES. Upon the occurrence of an Event of Default hereunder, Agency
may, at its option (i) by written notice to Borrower, declare the entire unpaid principal
balance of this Note, together with all accrued interest thereon and all sums due
hereunder, immediately due and payable regardless of any prior forbearance, (ii)
exercise any and all rights and remedies available to it under applicable law, and (iii)
exercise any and all rights and remedies available to Agency under this Note and the
other Agency Documents, including without limitation the right to pursue foreclosure
under the Deed of Trust. Borrower shall pay all reasonable costs and expenses
incurred by or on behalf of Agency including, without limitation, reasonable attorneys'
fees, incurred in connection with Agency's enforcement of this Note and the exercise of
any or all of its rights and remedies hereunder and'all such sums shall be a part of the
indebtedness secured by the Deed of Trust.
8. DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall
automatically be increased without notice to the rate of ten percent (10%) per annum
(the "Default Rate"); provided however, if any payment due hereunder is not paid when
due, the Default Rate shall apply commencing upon the due date for such payment.
When Borrower is no longer in default, the Default'Rate shall no longer apply, and the
interest rate shall once again be the rate specified ~n the first paragraph of this Note.
Notwithstanding the foregoing provisions, if the interest rate charged exceeds the
maximum legal rate of interest, the rate shall be tho maximum rate permitted by law.
The imposition or acceptance of the Default Rate shall in no event constitute a waiver of
a default under this Note or prevent Agency from exercising any of its other rights or
remedies.
9. MISCELLANEOUS
9.1 WAIVER. The rights and remedies of Agency under this Note shall be
cumulative and not alternative. No waiver by Agency of any right or remedy under this
1422346-2 [~
`T
Note shall be effective unless in a writing signed by Agency. Neither the failure nor any
delay in exercising any right, power or privilege under this Note will operate as a waiver
of such right, power or privilege, and no single or partial exercise of any such right,
power or privilege by Agency will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To the
maximum extent permitted by applicable law (a) no claim or right of Agency arising out
of this Note can be discharged by Agency, in whole or in part, by a waiver or
renunciation of the claim or right unless in a writing,. signed by Agency; (b) no waiver
that may be given by Agency will be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on Borrower will be deemed to be a waiver of
any obligation of Borrower or of the right of Agency to take further action without notice
or demand as provided in this Note. Borrower hereby waives presentment, demand,
protest, notices of dishonor and of protest and all defenses and pleas on the grounds of
any extension or extensions of the time of payment or of any due date under this Note,
in whole or in part, whether before or after maturity and with or without notice.
9.2 NOTICES. Any notice required or permitted to be given hereunder shall
be given in accordance with Section 11.3 of the Loan Agreement.
9.3 SEVERABILITY. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of this Note
will remain in full force and effect. Any provision of 'this Note held invalid or
unenforceable only in part or degree will remain in Hull force and effect to the extent not
held invalid or unenforceable.
9.4 GOVERNING LAW; VENUE. This Ngte shall be governed by the laws of
the State of California without regard to principles of conflicts of laws. All persons and
entities in any manner obligated under this Note consent to the jurisdiction of any
federal or state court having in the jurisdiction in Sain Mateo County, California.
9.5 PARTIES IN INTEREST. This Note shall bind Borrower and its
successors and assigns and shall accrue to the berhefit of Agency and its successors
and assigns.
9.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in
this Note are provided for convenience only and will) not affect its construction or
interpretation.
9.7 RELATIONSHIP OF THE PARTIES. The relationship of Borrower and
Agency under this Note is solely that of borrower arhd lender, and the loan evidenced by
this Note and secured by the Deed of Trust will in r~o manner make Agency the partner
or joint venturer of Borrower.
9.8 TIME IS OF THE ESSENCE. Time is of the essence with respect to every
provision of this Note.
1422346-2 S
~-1
9.9
JOINT AND SEVERAL OBLIGATION. If Borrower consists of two or more
individuals, the obligations of such individuals hereuhder
1422346-2
shall be joint and several.
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of
the date first written above.
BORROWER
GIFFRA ENTERPRISES, LLC,
a California limited liability company
By:
Name:
Title:
1422346-2 '~
5~
EXHIBIT F
FORM OF DEED OF TIRUST
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attn: Executive Director
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Kecoraers use.
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING ("Deed of Trust") is made as of , 2011, by Giffra
Enterprises, LLC, a California limited liability company ("Trustor") to Title
Company as trustee ("Trustee"), for the benefit of the Riedevelopment Agency of the City of
South San Francisco, a public body, corporate, and politic ("Beneficiary").
RECITALS
A. Trustor owns fee simple title to the land described in Exhibit A attached hereto
and incorporated herein by this reference (the "Land"). The band is located within the
Downtown Redevelopment Project Area ("Project Area"). Trustor intends to rehabilitate, own
and operate amixed-use commercial/retail and affordable multifamily residential development
(the "Project") on the Land.
B. Beneficiary and Trustor have entered into an Owner Participation and Loan
Agreement dated as of the date hereof (the "OPA") pursuant to which Beneficiary will provide a
loan to Trustor in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000) (the
"Loan") for the purpose of partially financing the Project. Trustor has issued to Beneficiary a
secured promissory note dated as of the date hereof (the "Note") to evidence Trustor's obligation
to repay the Loan. A Memorandum of the OPA will be recorded in the Official Records of San
Mateo County concurrently herewith.
C. As a condition precedent to the making of the Loan, Beneficiary has required that
Trustor enter into this Deed of Trust and grant to Trustee for the benefit of Beneficiary, a lien
and security interest in the Property (defined below) to secure repayment of the Note and
performance of Trustor's obligations under the OPA and under the Loan Documents (defined
below).
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is agreed as follows:.
1422350-2
52
1. Grant in Trust. In consideration of the foregoing and for the purpose of securing payment
and performance of the Secured Obligations defined and described in Section 2, Trustor hereby
irrevocably and unconditionally grants, conveys, transfers and assigns to Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession, all estate, right, title
and interest which Trustor now has or may later acquire in and to the Land, and all of the
following, whether presently owned or hereafter acquired.:
a. All buildings, structures, and improvements, now or hereafter located or
constructed on the Land ("Improvements");
b. All appurtenances, easements, rights of way, pipes, transmission lines or wires
and other rights used in connection with the Land or the Improvements or as a means of access
thereto, whether now or hereafter owned or constructed or placed upon or in the Land or
Improvements and all existing and future privileges, rights, franchises and tenements of the
Land, including all minerals, oils, gas and other commercially valuable substances which may be
in, under or produced from any part of the Land, and all water rights, rights of way, gores or
strips of land, and any land lying in the streets, ways, and alleys, open or proposed, in front of or
adjoining the Land and Improvements (collectively, "Appurtenances");
c. All machinery, equipment, fixtures, goods and other personal property of the
Trustor, whether moveable or not, now owned or hereafter acquired by the Trustor and now or
hereafter located at or used in connection with the Land, the Improvements or Appurtenances,
and all improvements, restorations, replacements, repairs, additions or substitutions thereto
(collectively, "Equipment");
d. All existing and future leases, subleases, licenses, and other agreements relating to
the use or occupancy of all or any portion of the Land or Improvements (collectively, "Leases"),
all amendments, extensions, renewals or modifications thereof, and all rent, royalties, or other
payments which may now or hereafter accrue or otherwise become payable thereunder to or for
the benefit of Trustor, including but not limited to security deposits (collectively, "Rents");
e. All insurance proceeds and any other proceeds from the Land, Improvements,
Appurtenances, Equipment, Leases, and Rents, including without limitation, all deposits made
with or other security deposits given to utility companies, all claims or demands relating to
insurance awards which the Trustor now has or may hereafter acquire, including all advance
payments of insurance premiums made by Trustor, and all condemnation awards or payments
now or later made in connection with any condemnation or eminent domain proceeding
("Proceeds");
f. All revenues, income, rents, royalties, payments and profits produced by the
Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired
by Trustor ("Gross Revenues");
g. All architectural, structural and mechanical plans, specifications, design
documents and studies produced in connection with development of the Land and construction of
the Improvements (collectively, "Plans"); and
1422350-2 2
53
h. All interests and rights in any private or governmental grants, subsidies, loans or
other financing provided in connection with development of the Land and construction of the
Improvements (collectively, "Financing").
All of the above-referenced interests of Trustor in the Land, Improvements, Appurtenances,
Equipment, Leases, Rents, Proceeds, Gross Revenues, Plans and Financing as hereby conveyed
to Trustee or made subject to the security interest herein described are collectively referred to
herein as the "Property."
2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment
and performance of the following (collectively, the "Secured Obligations"): (i) all present and
future indebtedness evidenced by the Note and any amendment: thereof, including principal,
interest and all other amounts payable under the terms of the Note; (ii) all present and future
obligations of Trustor to Beneficiary under the Loan Documents (defined below); (iii) all
additional present and future obligations of Trustor to Beneficiary under any other agreement or
instrument acknowledged by Trustor (whether existing now or in the future) which states that it
is or such obligations are, secured by this Deed of Trust; (iv) all obligations of Trustor to
Beneficiary under all modifications, supplements, amendments, renewals, or extensions of any of
the foregoing, whether evidenced by new or additional dpcuments; and (v) reimbursement of all
amounts advanced by or on behalf of Beneficiary to protect Beneficiary's interests under this
Deed of Trust or any other Loan Document as such may be modified, supplemented, amended,
renewed or extended. The Note, the OPA, this Deed of Trust, and the Affordable Housing
Regulatory Agreement and Declaration of Restrictive Covenants ("Regulatory Agreement")
dated as of the date hereof, executed by and between Trustor and Beneficiary and recorded
substantially concurrently herewith are hereafter collectively referred to as the "Loan
Documents."
3. Assignment of Rents Issues, and Profits. Trustor hereby irrevocably, absolutely,
presently and unconditionally assigns to Beneficiary the Rents, royalties, issues, profits, revenue,
income and proceeds of the Property. This is an absolute assignment and not an assignment for
security only. Beneficiary hereby confers upon Trustor a license to collect and retain such Rents,
royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to
any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary
may terminate such license without notice to or demand upon Trustor and without regard to the
adequacy of any security for the indebtedness hereby secured, and may either in person, by
agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property
or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including
those past due and unpaid, and apply the same, less cosh and expenses of operation and
collection, including reasonable attorneys' fees, to any indebtedness secured hereby, and in such
order as Beneficiary may determine. Beneficiary's right to the rents, royalties, issues, profits,
revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary
takes possession of the Property. The entering upon and taking possession of the Property, the
collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not
cure or waive any default or notice of default hereunder or invalidate any act done pursuant to
such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the
Property and/or is collecting and applying Rents as permitted under this Deed of Trust,
1422350-2 3
5`~
Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every
right and remedy afforded any of them under this Deed of Trust and at law or in equity,
including the right to exercise the power of sale granted hereunder. Regardless of whether or not
Beneficiary, in person or by agent, takes actual possession of the Land or the Improvements,
Beneficiary shall not be deemed to be a "mortgagee in possession," shall not be responsible for
performing any obligation of Trustor under any Lease, shall not be liable in any manner for the
Property, or the use, occupancy, enjoyment or operation df any part of it, and shall not be
responsible for any waste committed by Trustor, lessees qr any third parties, or for dangerous or
defective condition of the Property or any negligence in the management, repair or control of the
Property. Absent Beneficiary's written consent, Trustor shall not accept prepayment of Rents for
any rental period exceeding one month.
4. Security Agreement. The parties intend for this Deed of~ Trust to create a lien on the
Property, and an absolute assignment of the Rents and Leases, all in favor of Beneficiary. The
parties acknowledge that some of the Property may be determined under applicable law to be
personal property or fixtures. To the extent that any Property may be or be determined to be
personal property, Trustor as debtor hereby grants to Beneficiary as secured party a security
interest in all such Property to secure payment and performance of the Secured Obligations. This
Deed of Trust constitutes a security agreement under the California Uniform Commercial Code,
as amended or recodified from time to time (the "UCC"), covering all such Property. To the
extent such Property is not real property encumbered by the lien granted above, and is not
absolutely assigned by the assignment set forth above, it is the intention of the parties that such
Property shall constitute "proceeds, products, offspring, rents, or profits" (as defined in and for
the purposes of Section 552(b) of the United States Bankruptcy Code, as such section may be
modified or supplemented) of the Land and Improvements.
5. Financing_Statements. Pursuant to the UCC, Trustor, as debtor, hereby authorizes
Beneficiary, as secured party, to file such financing statements and amendments thereof and such
continuation statements with respect thereto as Beneficiary may deem appropriate to perfect and
preserve Beneficiary's security interest in the Property and Rents, without requiring any signature
or further authorization by Trustor. If requested by Beneficiary, Trustor shall pay all fees and
costs that Beneficiary may incur in filing such documents in public offices and in obtaining such
record searches as Beneficiary may reasonably require. xf any financing statement or other
document is filed in the records normally pertaining to piersonal property, that filing shall not be
construed as in any way derogating from or impairing this Deed of Trust or the rights or
obligations of the parties under it.
Everything used in connection with the Property and/or adapted for use therein and/or which is
described or reflected in this Deed of Trust is, and at all times and for all purposes and in all
proceedings both legal or equitable shall be regarded as part of the estate encumbered by this
Deed of Trust irrespective of whether (i) any such item is physically attached to the
Improvements, (ii) serial numbers are used for the better identification of certain equipment
items capable of being thus identified in a recital contained herein or in any list filed with
Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so
filed at any time. Similarly, the mention in any such financing statement of (1) rights in or to the
proceeds of any fire andlor hazard insurance policy, or (2) any award in eminent domain
proceedings for a taking or for lessening of value, or (3) Trustor's interest as lessor in any present
1422350-2 4
or future lease or rights to income growing out of the use and/or occupancy of the property
conveyed hereby, whether pursuant to lease or otherwise, shall not be construed as in any way
altering any of the rights of Beneficiary as determined by this instrument or impugning the
priority of Beneficiary's lien granted hereby or by any other recorded document. Such mention
in any financing statement is declared to be solely for the .protection of Beneficiary in the event
any court or judge shall at any time hold, with respect to the matters set forth in the foregoing
clauses (1), (2), and (3), that notice of Beneficiary's priority of interest is required in order to be
effective against a particular class of persons, including but not limited to the federal government
and any subdivisions or entity of the federal government.
6. Fixture Filing. This Deed of Trust is intended to be and. constitutes a fixture filing
pursuant to the provisions of the UCC with respect to all of the Property constituting fixtures, is
being recorded as a fixture financing statement and filing under the UCC, and covers property,
goods and equipment which are or are to become fixtures related to the Land and the
Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real
estate records of San Mateo County and shall also operate from the date of such filing as a
fixture filing in accordance with Section 9502 and other applicable provisions of the UCC. This
Deed of Trust shall also be effective as a financing stater~pent covering minerals or the like
(including oil and gas) and accounts subject to the UCC, ras amended. Trustor shall be deemed to
be the "debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under
the UCC.
7. Trustor's Representations Warranties and Coven~nts• Rights and Duties of the Parties.
7.1 Representations and Warranties. Trustor represents and warrants that: (i) Trustor
lawfully possesses and holds a fee simple interest in the Land and the Improvements, (ii) Trustor
has good and marketable title to all of the Property; (iii) ether than as limited by the Loan
Documents, Trustor has the full and unlimited power, right and authority to encumber the
Property and assign the Rents; (iv) subject only to encumbrances of record and senior liens
permitted pursuant to the Loan Documents or otherwise approved in writing by Beneficiary
("Permitted Encumbrances"), this Deed of Trust creates a valid lien on Trustor's entire interest
in the Property; (v) except with respect to Permitted Encumbrances, Trustor owns the Property
free and clear of all deeds of trust, mortgages, security agreements, reservations of title or
conditional sales contracts, (vi) there is no financing statement affecting the Property on file in
any public office other than as disclosed in writing to Beneficiary; and (vii) the correct address of
Trustor's chief executive office is specified in Section 1(~2.
7.2 Condition of Property. Trustor represents and warrants that except as disclosed to
Beneficiary in writing, as of the date hereof: (i) Trustor has not received any notice from any
governmental authority of any threatened or pending zoning, building, fire, or health code
violation or violation of other governmental regulations concerning the Property that has not
previously been corrected, and no condition on the Land violates any health, safety, fire,
environmental, sewage, building, or other federal, state yr local law, ordinance or regulation; (ii)
no contracts, licenses, leases or commitments regarding the maintenance or use of the Property
or allowing any third party rights to use the Property are. in force; (iii) there are no threatened or
pending actions, suits, or administrative proceedings against or affecting the Property or any
portion thereof or the interest of Trustor in the Property; (iv) there are no threatened or pending
1422350-2 rj
G
condemnation, eminent domain, or similar proceedings affecting the Property or any portion
thereof; (v) Trustor has not received any notice from any insurer of defects of the Property which
have not been corrected; (vi) there are no natural or artificial conditions upon the Land or any
part thereof that could result in a material and adverse change in the condition of the Land; (vii)
all information that Trustor has delivered to Beneficiary, either directly or through Trustor's
agents, is accurate and complete; and (viii) Trustor or Trustor's agents have disclosed to
Beneficiary all material facts concerning the Property.
7.3 Authority. Trustor represents and warrants that this Deed of Trust and all other
documents delivered or to be delivered by Trustor in connection herewith: (a) have been duly
authorized, executed, and delivered by Trustor; (b) are binding obligations of Trustor; and (c) do
not violate the provisions of any agreement to which Trustor is a party or which affects the
Property. Trustor further represents and warrants that there are no pending, or to Trustor's
knowledge, threatened actions or proceedings before any court or administrative agency which
may adversely affect Trustor's ownership of the Property.
7.4 Payment and Performance of Secured Obl;i~ations. Trustor shall promptly pay
when due the principal and any interest due on the indebtedness evidenced by the Note, and shall
promptly pay and perform all other obligations of Trustor arising in connection with the Secured
Obligations or the Loan Documents in accordance with the respective terms thereof.
7.5 Use of Loan Proceeds• Preservation and lwlaintenance of Property; Compliance
with Laws. Trustor covenants that it shall use the Loan I~roceeds solely for purposes authorized
by the Loan Documents. Trustor covenants that it shall keep the Land and Improvements in good
repair and condition, and from time to time shall make necessary repairs, renewals and
replacements thereto so that the Property shall be preserved and maintained. Trustor covenants
to comply with all federal, state and local laws, regulations, ordinances and rules applicable to
the Property and the Project, including without limitation all applicable requirements of state and
local building codes and regulations, and all applicable statutes and regulations relating to
accessibility for the disabled. Trustor shall not remove, demolish or materially alter any
Improvement without Beneficiary's consent, shall complete or restore promptly and in good and
workmanlike manner any building, fixture or other improvement which may be constructed,
damaged, or destroyed thereon, and shall pay when due all claims for labor performed and
materials furnished therefor. Trustor shall use the Land and the Improvements solely for
purposes authorized by the Loan Documents, shall not commit or allow waste of the Property,
and shall not commit or allow any act upon or use of the Property which would violate any
applicable law or order of any governmental authority, nor shall Trustor bring on or keep any
article on the Property or cause or allow any condition to exist thereon which could invalidate or
which would be prohibited by any insurance coverage required to be maintained on the Property
pursuant to the Loan Documents.
7.6 Restrictions on Conveyance and Encumbrance• Acceleration. It shall be an Event
of Default hereunder if the Property, any part thereof, or interest therein is sold, assigned,
conveyed, transferred, hypothecated, leased, licensed, or encumbered in violation of the Loan
Documents or if any other Transfer (as defined in the OPA) occurs in violation of the Loan
Documents. If any such Transfer shall occur in violation of such requirements, without limiting
14223$0-2 6
~l
the provisions of Section 8 hereof, all obligations secured by this Deed of Trust, irrespective of
the maturity dates of such obligations, shall at the option of Beneficiary, and without demand,
immediately become due and payable, subject to any applicable cure period.
7.7 Inspections• Books and Records. Beneficiary and its agents and representatives
shall have the right at any reasonable time upon reasonable notice to enter upon the Land and
inspect the Property to ensure compliance with the Loan Documents. Trustor shall maintain
complete and accurate books of account and other records (including copies of supporting bills
and invoices) adequate to document the use of the Loan Proceeds and the operation of the
Property, together with copies of all written contracts, Leases and other instruments which affect
the Property. The books, records, contracts, Leases and other instruments shall be subject to
examination and inspection by Beneficiary at any reasonable time following two business days
prior notice.
7.8 Chargers Liens Taxes and Assessments. Trustor shall pay before delinquency all
taxes, levies, assessments and other charges affecting the Property that are (or if not paid may
become) a lien on all or part of the Property. Trustor may, at Trustor's expense, contest the
validity or application of any tax, levy, assessment or charge affecting the Property by
appropriate legal proceedings promptly initiated and conducted in good faith and with due
diligence, provided that (i) Beneficiary is reasonably satisfied that neither the Property nor any
part thereof or interest therein will be in danger of being sold, forfeited, or lost as a result of such
contest, and (ii) Trustor shall have posted a bond or furnished other security as may reasonably
be required from time to time by Beneficiary; and provided further that Trustor shall timely
make any payment necessary to prevent a lien foreclosure, sale, forfeiture or loss of the Property.
Trustor shall immediately discharge or cause to be discharged any lien on the Property
(other than encumbrances approved by Beneficiary as of the date hereof in writing). Trustor
shall pay when due each obligation secured by or reducible to a lien, charge or encumbrance
which now does or later may encumber or appear to encumber all or part of the Property or any
interest in it, whether or not such lien, charge or encumbrance is or would be senior or
subordinate to this Deed of Trust. Trustor shall not be required to pay any tax, levy, charge or
assessment so long as its validity is being actively contested in good faith and by appropriate
actions and/or proceedings.
7.9 Subrogation. Beneficiary shall be subrogated to the liens of all encumbrances,
whether released of record or not, which are discharged in whole or in part by Beneficiary in
accordance with this Deed of Trust.
7.10 Hazard Liabilityand Workers' Compensation Insurance. At all times during the
term hereof, at Trustor's expense, Trustor shall keep the Improvements and personal property
now existing or hereafter located on the Property insured against loss by fire, vandalism and
malicious mischief by a policy of standard fire and extended all-risk insurance. The policy shall
be written on a full replacement value basis and shall name Beneficiary as loss payee as its
interest may appear. The full replacement value of the improvements to be insured shall be
determined by the company issuing the policy at the time the policy is initially obtained. Not
more frequently than once every two (2) years, either the Trustor or the Beneficiary shall have
the right to notify the other party that it elects to have the replacement value redetermined by the
1422350-2
G
insurance company. Subject to the rights of any senior lienholder, the proceeds collected under
any insurance policy may be applied by Beneficiary to any indebtedness secured hereby and in
such order as Beneficiary may determine, or at the option of Beneficiary, the entire amount so
collected or any part thereof may be released to Trustor. Such application or release shall not
cure or waive any default or notice of default hereunder or invalidate any act done pursuant to
such notice. Notwithstanding anything to the contrary set forth herein, provided that Trustor is
not in default under any Loan Document, Trustor shall be permitted to use the proceeds of
insurance to rebuild the Improvements.
7.10.1 Trustor shall at all times during the term hereof, maintain a comprehensive
general liability insurance policy in an amount not less than One Million Dollars ($1,000,000)
each occurrence, Two Million Dollars ($2,000,000) annual aggregate, together with Three
Million Dollars ($3,000,000) excess liability coverage or such other policy limits as Agency
may require in its reasonable discretion, including coverage for bodily injury, property damage,
products, completed operations and contractual liability coverage. Such policy or policies shall
be written on an occurrence basis and shall name the Beneficiary as an additional insured.
Trustor shall maintain workers' compensation insurance as required by law.
7.10.2 Trustor shall file with Beneficiary prior to the commencement of the term
hereof, certificates (or such other proof as Beneficiary may require, including without limitation,
copies of the required insurance policies) evidencing each of the insurance policies and
endorsements thereto as required by this Section, and such certificates (or policies) shall provide
that at least thirty (30) days' prior written notice shall be provided to Beneficiary prior to the
expiration, cancellation or change in coverage under each such policy.
7.10.3 If any insurance policy required hereunder is canceled or the coverage
provided thereunder is reduced, Trustor shall, within fifteen (15) days after receipt of written
notice of such cancellation or reduction in coverage, but in no event later than the effective date
of cancellation or reduction, file with Beneficiary a certificate showing that the required
insurance has been reinstated or provided through another insurance company or companies.
Upon failure to so file such certificate, Beneficiary may, without further notice and at its option,
procure such insurance coverage at Trustor's expense, and Trustor shall promptly reimburse
Beneficiary for such expense upon receipt of billing from Beneficiary.
7.10.4 The insurance policies required hereunder shall be issued by insurance
companies authorized to do business in the State of California with a financial rating of at least A
VII status as rated in the most recent edition of Best's Key Rating Guide. Each policy of
insurance shall contain an endorsement requiring the insurer to provide at least 30 days written
notice to Beneficiary prior to change in coverage, cancellation or expiration thereof. If any
insurance policy required pursuant to the Loan Documents is canceled or the coverage provided
thereunder is reduced, Trustor shall, within ten (10) days after receipt of written notice of such
cancellation or reduction in coverage, but in no event lager than the effective date of cancellation
or reduction, file with Beneficiary a certificate showing that the required insurance has been
reinstated or provided through another insurance company or companies. Upon failure to so file
such certificate, Beneficiary may, without further notice and at its option, procure such insurance
coverage at Trustor's expense, and Trustor shall promptly reimburse Beneficiary for such
expense upon receipt of billing from Beneficiary.
i42235o-z 8
7.11 Hazardous Materials. Trustor represents and warrants that except as disclosed to
Beneficiary in writing, as of the date hereof to the best knowledge of Trustor: (i) the Land is
free and has always been free of Hazardous Materials (as defined below) and is not and has
never been in violation of any Environmental Law (as defined below); (ii) there are no buried or
partially buried storage tanks located on the Land; (iii) Trustor has received no notice, warning,
notice of violation, administrative complaint, judicial corraplaint, or other formal or informal
notice alleging that conditions on the Land are or have ever been in violation of any
Environmental Law or informing Trustor that the Land is subject to investigation or inquiry
regarding Hazardous Materials on the Land or the potential violation of any Environmental Law;
(iv) there is no monitoring program required by the Environmental Protection Agency or any
other governmental agency concerning the Land; (v) no toxic or hazardous chemicals, waste, or
substances of any kind have ever been spilled, disposed of, or stored on, under or at the Land,
whether by accident, burying, drainage, or storage in containers, tanks, holding areas, or any
other means; (vi) the Land has never been used as a dump or landfill; and (vii) Trustor has
disclosed to Beneficiary all information, records, and studies in Trustor's possession or
reasonably available to Trustor relating to the Land concerning Hazardous Materials.
Trustor shall not cause or permit any Hazardous Material (as defined below) to be
brought upon, kept, stored or used in, on, under, or about the Land by Trustor, its agents,
employees, contractors or invitees except for incidental supplies ordinarily used in connection
with the construction, rehabilitation, repair, and operation of retail/commercial and residential
developments and in compliance with all applicable laws, and shall not cause any release of
Hazardous Materials into, onto, under or through the Land. If any Hazardous Material is
discharged, released, dumped, or spilled in, on, under, or about the Land and results in any
contamination of the Land or adjacent property, or otherwise results in the release or discharge of
Hazardous Materials in, on, under or from the Land, Trustor shall promptly take all actions at its
sole expense as are necessary to comply with all Environmental Laws (as defined below).
Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and
hold Beneficiary and its elected and appointed officials, officers, agents and employees
(collectively, "Indemnitees") harmless from and against any and all loss, claim, liability, damage,
demand, judgment, order, penalty, fine, injunctive or other relief, cost, expense (including
reasonable fees and expenses of attorneys, expert witnesses, and other professionals advising or
assisting Beneficiary), action, or cause of action (all of the foregoing, hereafter individually
"Claim" and collectively "Claims") arising in connection with the breach of Trustor's covenants
and obligations set forth in this Section 7.11 or otherwise arising in connection with the presence
or release of Hazardous Materials in, on, under, or from the Property. The foregoing indemnity
includes, without limitation, all costs of investigation, assessment, containment, removal,
remediation of any kind, and disposal of Hazardous Materials, all costs of determining whether
the Land is in compliance with Environmental Laws, all costs associated with bringing the Land
into compliance with all applicable Environmental Laws, and all costs associated with claims for
damages or injury to persons, property, or natural resources.
Without limiting the generality of the foregoing, Trustor shall, at Trustor's own cost and
expense, do all of the following:
i4z235o-2 9
a. pay or satisfy any judgment or decree that may be entered against any Indemnitee
or Indemnitees in any legal or administrative proceeding incident to any matters against which
Indemnitees are entitled to be indemnified under this Deed of Trust;
b. reimburse Indemnitees for any expenses paid or incurred in connection with any
matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; and
c. reimburse Indemnitees for any and all expenses, including without limitation out-
of-pocket expenses and fees of attorneys and expert witnesses, paid or incurred in connection
with the enforcement by Indemnitees of their rights under this Deed of Trust, or in monitoring
and participating in any legal or administrative proceeding.
Trustor's obligation to indemnify the Indemnitees shall. not be limited or impaired by any
of the following, or by any failure of Trustor to receive notice of or consideration for any of the
following: (i) any amendment or modification of any Laan Dacument; (ii) any extensions of
time for performance required by any Loan Document; (iii) any provision in any of the Loan
Documents limiting Beneficiary's recourse to property securing the Secured Obligations, or
limiting the personal liability of Trustor, or any other party for payment of all or any part of the
Secured Obligations; (iv) the accuracy or inaccuracy of any representation and warranty made by
Trustor under this Deed of Trust or by Trustor or any other party under any Loan Document, (v)
the release of Trustor or any other person, by Beneficiary or by operation of law, from
performance of any obligation under any Loan Document; (vi) the release or substitution in
whole or in part of any security for the Secured Obligations; and (vii) Beneficiary's failure to
properly perfect any lien or security interest given as security for the Secured Obligations.
The provisions of this Section 7.11 shall be in addition to any and all other obligations
and liabilities that Trustor may have under applicable law, and each Indemnitee shall be entitled
to indemnification under this Section without regard to whether Beneficiary or that Indemnitee
has exercised any rights against the Property or any other security, pursued any rights against any
guarantor or other party, or pursued any other rights available under the Loan Documents or
applicable law. The obligations of Trustor to indemnify the Indemnitees under this Section shall
survive any repayment or discharge of the Secured Obligations, any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the
lien of this Deed of Trust.
Without limiting any of the remedies provided in this Deed of Trust, Trustor
acknowledges and agrees that each of the provisions in this Section 7.11 is an environmental
provision (as defined in Section 736(f)(2) of the California Code of Civil Procedure) made by
Trustor relating to real property security (the "Environmental Provisions"), and that Trustor's
failure to comply with any of the Environmental Provisions will be a breach of contract that will
entitle Beneficiary to pursue the remedies provided by Section 736 of the California Code of
Civil Procedure ("Section 736") for the recovery of damages and for the enforcement of the
Environmental Provisions. Pursuant to Section 736, Beneficiary's action for recovery of
damages or enforcement of the Environmental Provisions shall not constitute an action within
the meaning of Section 726(a) of the California Code of Civil Procedure or constitute a money
judgment for a deficiency or a deficiency judgment witk~in the meaning of Sections 580a, 580b,
580d, or 726(b) of the California Code of Civil Procedure.
1422350-2 10
~l
"Hazardous Materials" means any substance, material or waste which is or becomes
regulated by any federal, state or local governmental authority, and includes without limitation
(i) petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos
and any material containing asbestos; (iii) any substance, material or waste regulated by or listed
(directly or by reference) as a "hazardous substance", "hazardous material", "hazardous waste",
"toxic waste", "toxic pollutant", "toxic substance", "solid waste" or "pollutant or contaminant"
in or pursuant to, or similarly identified as hazardous to human health or the environment in or
pursuant to, the Toxic Substances Control Act [15 U.S.C. Section 2601, et seq.]; the
Comprehensive Environmental Response, Compensation. and Liability Act [42 U.S.C. Section
9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section
5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. Section 6901, et seq.],
the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C.
Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act
[California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances
Account Act [California Health and Safety Code Section 25300, et seq.], the California
Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California
Safe Drinking Water and Toxic Enforcement Act [Califarnia Health and Safety Code Section
25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code
Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations
promulgated thereunder; (iv) any substance, material or waste which is defined as such or
regulated by any "Superfund" or "Superlien" law, or any Environmental Law; or (v) any other
substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated
under any other federal, state or local environmental law, including without limitation, asbestos,
polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by-products.
"Environmental Law" means all federal, state or local statutes, ordinances, rules,
regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions
of permits, licenses and other operating authorizations regulating, or relating to, or imposing
liability or standards of conduct concerning (i) pollution or protection of the environment,
including natural resources; (ii) exposure of persons, including employees and agents, to any
Hazardous Material (as defined above) or other products, raw materials, chemicals or other
substances; (iii) protection of the public health or welfare from the effects of by-products,
wastes, emissions, discharges or releases of chemical substances from industrial or commercial
activities; (iv) the manufacture, use or introduction into icommerce of chemical substances,
including without limitation, their manufacture, formulation, labeling, distribution,
transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or
hazardous substances or Hazardous Materials or the remediation of air, surface waters,
groundwaters or soil, as now or may at any later time be in effect, including but not limited to the
Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental
Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous
Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource
Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control
Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California
Underground Storage of Hazardous Substances Act [California Health and Safety Code Section
25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety
Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety
Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act
i4z235o-2 11
42
[California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water
Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are
hereafter amended, together with any regulations promulgated thereunder.
7.12 Notice of Claims• Defense of Security Reimbursement of Costs.
a. Notice of Claims. Trustor shall provide written notice to Beneficiary of any
uninsured or partially uninsured loss affecting the Property through fire, theft, liability, or
property damage in excess of an aggregate of Fifty Thousand Dollars ($50,000) within three
business days of the occurrence of such loss. Trustor shall ensure that Beneficiary shall receive
timely notice of, and shall have a right to cure, any default under any other financing document
or other lien affecting the Property and shall use best efforts to ensure that provisions mandating
such notice and allowing such right to cure shall be included in all such documents. Within three
business days of Trustor's receipt thereof, Trustor shall provide Beneficiary with a copy of any
notice of default Trustor receives in connection with any financing document secured by the
Property or any part thereof.
b. Defense of Security. At Trustor's sole expense, Trustor shall protect, preserve and
defend the Property and title to and right of possession of the Property, the security of this Deed
of Trust and the rights and powers of Beneficiary and Trustee created under it, against all
adverse claims.
c. Compensation• Reimbursement of Costs. Trustor agrees to pay all reasonable
fees, costs and expenses charged by Beneficiary or Trustee for any service that Beneficiary or
Trustee may render in connection with this Deed of Trust, including without limitation, fees and
expenses related to provision of a statement of obligations or related to a reconveyance. Trustor
further agrees to pay or reimburse Beneficiary for all costs, expenses and other advances which
may be incurred or made by Beneficiary or Trustee in arty efforts to enforce any terms of this
Deed of Trust, including without limitation any rights or remedies afforded to Beneficiary or
Trustee or both of them under Sections 7.18 and 8.2, whether or not any lawsuit is filed, or in
defending any action or proceeding arising under or relating to this Deed of Trust, including
reasonable attorneys' fees and other legal costs, costs of any disposition of the Property under the
power of sale granted hereunder or any judicial foreclosure, and any cost of evidence of title.
d. Notice of Changes. Trustor shall give Beneficiary prior written notice of any
change in the address of Trustor and the location of any Property, including books and records
pertaining to the Property.
7.13 Indemnification. Trustor shall indemnify, defend (with counsel reasonably
acceptable to Beneficiary), and hold harmless the Trustee and the Indemnitees (as defined in
Section 7.11) from and against all Claims arising directly or indirectly in any manner in
connection with or as a result of (a) any breach of Trustor's covenants under any Loan
Document, (b) any representation by Trustor in any Loan Document which proves to be false or
misleading in any material respect when made, (c) injury or death to persons or damage to
property or other loss occurring on the Land or in any improvement located thereon, whether
caused by the negligence or any other act or omission of Trustor or any other person or by
negligent, faulty, inadequate or defective design, building, construction or maintenance or any
1422350-2 12
~P3
other condition or otherwise, (d) any claim, demand or cau:;e of action, or any action or other
proceeding, whether meritorious or not, brought or asserted. against any Indemnitee which relates
to or arises out of the Property, or any Loan Document or any transaction contemplated thereby,
or any failure of Trustor to comply with all applicable state, federal and local laws and
regulations applicable to the Property, provided that no Indemnitee shall be entitled to
indemnification under this Section for matters caused by such Indemnitee's gross negligence or
willful misconduct. The obligations of Trustor under this Section shall survive the repayment of
the Loan and shall be secured by this Deed of Trust. Notwithstanding any contrary provision
contained herein, the obligations of Trustor under this Section shall survive any foreclosure
proceeding, any foreclosure sale, any delivery of a deed in lieu of foreclosure, and any release or
reconveyance of this Deed of Trust.
7.14. Limitation of Liability. Beneficiary shall not be directly or indirectly liable to
Trustor or any other person as a consequence of any of the following: (i) Beneficiary's exercise
of or failure to exercise any rights, remedies or powers granted to Beneficiary in this Deed of
Trust; (ii) Beneficiary's failure or refusal to perform or discharge any obligation or liability of
Trustor under any agreement related to the Property or under this Deed of Trust; (iii) any waste
committed by Trustor, the lessees of the Property or any third parties, or any dangerous or
defective condition of the Property; or (iv) any loss sustained by Trustor or any third party
resulting from any act or omission of Beneficiary in managing the Property after an Event of
Default, unless the loss is caused by the willful misconduct, gross negligence, or bad faith of
Beneficiary. Trustor hereby expressly waives and releases all liability of the types described in
this Section 7.14 and agrees that Trustor shall assert no claim related to any of the foregoing
against Beneficiary.
7.15 Insurance and Condemnation Proceeds. Subject to the rights of any senior
lienholders, any award of damages in connection with any condemnation for public use of, or
injury to the Property or any part thereof is hereby assigned and shall be paid to Beneficiary who
may apply such moneys to any indebtedness secured hereby in such order as Beneficiary may
determine, or at the option of Beneficiary the entire amourrt so collected or any part thereof may
be released to Trustor. Such application or release shall not cure or waive any default or notice of
default hereunder or invalidate any act done pursuant to such notice. Notwithstanding the
foregoing, so long as the value of Beneficiary's lien is not impaired, insurance and/or
condemnation proceeds may be used to repair and/or restore the Project.
7.16 Release Extension, Modification. At any time and from time to time, without
liability therefor and without notice, upon written request of Beneficiary and presentation of this
Deed of Trust and the Note for endorsement, Trustee may release or reconvey all or any part of
the Property, consent to the making of any map or plat of the Land or part thereof, join in
granting any easement or creating any restriction affectin€; the Property, or j oin in any extension
agreement or other agreement affecting the lien or charge hereof. At any time and from time to
time, without liability therefor and without notice, Beneficiary may (i) release any person liable
for payment of any Secured Obligation, (ii) extend the tirrie for payment or otherwise alter the
terms of payment of any Secured Obligation; (iii) accept additional real or personal property of
any kind as security for any Secured Obligation, or (iv) substitute or release any property
securing the Secured Obligations.
1422350-2 13
(o`~
7.17 Reconveyance. Upon written request of Beneficiary stating that all of the Secured
Obligations have been paid in full, and upon surrender of this Deed of Trust, and the Note,
Trustee shall reconvey, without warranty, the Property or sc- much of it as is then held under this
Deed of Trust. The recitals in any reconveyance executed under this Deed of Trust of any
matters or facts shall be conclusive proof of the truthfulness thereof. Trustor shall pay all fees of
Trustee and all recordation fees related to such reconveyanc;e.
7.18 Cure• Protection of Security. Either Beneficiary or Trustee may cure any breach
or default of Trustor, and if it chooses to do so in connection with any such cure, Beneficiary or
Trustee may also enter the Property and/or do any and all. other things which it may in its sole
discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such
other things may include: appearing in and/or defending any action or proceeding which purports
to affect the security of, or the rights or powers of Beneficiary or Trustee under, this Deed of
Trust; paying, purchasing, contesting or compromising any encumbrance, charge, lien or claim
of lien which in Beneficiary's or Trustee's sole judgment is or may be senior in priority to this
Deed of Trust, such judgment of Beneficiary or Trustee to lbe conclusive as among Beneficiary,
Trustee and Trustor; obtaining insurance and/or paying any premiums or charges for insurance
required to be carried hereunder; otherwise caring for and protecting any and all of the Property;
and/or employing counsel, accountants, contractors and otl-er appropriate persons to assist
Beneficiary or Trustee. Beneficiary and Trustee may take .any of the actions permitted under this
Section 7.18 either with or without giving notice, except for notices required under applicable
law. Any amounts disbursed by Beneficiary pursuant to this paragraph shall become additional
indebtedness secured by this Deed of Trust.
7.19 Reserved.
8. Default and Remedies.
8.1 Events of Default. Trustor acknowledges and agrees that an Event of Default
shall occur under this Deed of Trust upon the occurrence c~f any one or more of the following
events:
a. Beneficiary's declaration of an Event of Default under any Loan
Document, subject to the expiration of any applicable cure: period set forth in such document;
b. Trustor fails to perform any monetary obligation which arises under this
Deed of Trust, and does not cure that failure within ten (10) days following written notice from
Beneficiary or Trustee;
c. If Trustor's interest in the Property or any part thereof is voluntarily or
involuntarily sold, transferred, leased, encumbered, or otherwise conveyed in violation of
Section 7.6 hereof or if any other Transfer occurs in violation of the OPA and Trustor fails to
rescind such conveyance or otherwise cure such breach within the time period specified in
paragraph j below;
d. Trustor fails to maintain the insurance coverage required hereunder or
otherwise fails to comply with the requirements of ection 7.10 hereof and Trustor fails to cure
such default within the time specified in Section 7.10;
1422350-2 14
~`J~
e. Subject to Trustor's right to contest such charges as provided herein,
Trustor fails to pay taxes or assessments due on the Land or the Improvements or fails to pay any
other charge that may result in a lien on the Land or the Improvements, and Trustor fails to cure
such default within 10 days.
f. Any representation or warranty of 'I'r~ustor contained in or made in
connection with the execution and delivery of this Deed of Trust or in any certificate or
statement furnished pursuant hereto or in any other Loan Document proves to have been false or
misleading in any material adverse respect when made;
g. If, 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"), Trustor: (i) commences a voluntary case or proceeding; (ii) consents to the entry of an
order for relief against Trustor in an involuntary case;. (iii) consents to the appointment of a
trustee, receiver, assignee, liquidator or similar official for Trustor; (iv) makes an assignment for
the benefit of its creditors; or (v) admits in writing its inabiliity to pay its debts as they become
due.
h. If a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against Trustor in an involuntary case, (ii) appoints a trustee,
receiver, assignee, liquidator or similar official for Trustor or substantially all of Trustor's assets,
(iii) orders the liquidation of Trustor, or (iv) issues or levies a judgment, writ, warrant of
attachment or similar process against the Property or the Project, and in each case the order or
decree is not released, vacated, dismissed or fully bonded within 60 days after its issuance.
i. The holder of any other debt instrurr~ent secured by a mortgage or deed of
trust on the Property or part thereof declares an event of default thereunder and exercises a right
to declare all amounts due under that debt instrument immediately due and payable, subject to
the expiration of any applicable cure period set forth in such holder's documents; or
j. Trustor fails to perform any obligation arising under this Deed of Trust
other than one enumerated in this Section 8.1, and does not cure that failure either within ten (10)
days after written notice from Beneficiary or Trustee in thc; event of a monetary default, or
within thirty (30) days after such written notice in the event of a nonmonetary default, provided
that in the case of a nonmonetary default that in Beneficiary's reasonable judgment cannot
reasonably be cured within thirty (30) days, an Event of Default shall not arise hereunder if
Trustor commences to cure such default within thirty (30) days and thereafter prosecutes such
cure to completion with due diligence and in good faith anal in no event later than sixty (60) days
following receipt of notice of default.
8.2 Remedies. Subject to the applicable notice and cure provisions set forth herein, at
any time after an Event of Default, Beneficiary and Trustee shall be entitled to invoke any and all
of the rights and remedies described below, and may exercise any one or more or all, of the
remedies set forth in any Loan Document, and any other remedy existing at law or in equity or
by statute. All of Beneficiary's rights and remedies shall be cumulative, and the exercise of any
one or more of them shall not constitute an election of remedies. Beneficiary shall be entitled to
collect all expenses incurred in pursuing the remedies provided hereunder, including without
1422350-2 15
(D~
limitation reasonable attorneys' fees and costs.
a. Acceleration. Beneficiary may declaa~e any or all of the Secured
Obligations, including without limitation all sums payable under the Note and this Deed of Trust,
to be due and payable immediately.
b. Receiver. Beneficiary may apply to any court of competent jurisdiction
for, and obtain appointment of, a receiver for the Property.
c. Entry. Beneficiary, in person, by agent or by court-appointed receiver,
may enter, take possession of, manage and operate all or any part of the Property, and may also
do any and all other things in connection with those actions that Beneficiary may in its sole
discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such
other things may include: taking and possessing copies of all of Trustor's or the then owner's
books and records concerning the Property; entering into, enforcing, modifying, or canceling
Leases on such terms and conditions as Beneficiary may consider proper; obtaining and evicting
tenants; fixing or modifying Rents; collecting and receiving; any payment of money owing to
Trustor; completing any unfinished construction; and/or contracting for and making repairs and
alterations. If Beneficiary so requests, Trustor shall assemble all of the Property that has been
removed from the Land and make all of it available to Beneficiary at the site of the Land. Trustor
hereby irrevocably constitutes and appoints Beneficiary as Trustor's attorney-in-fact to perform
such acts and execute such documents as Beneficiary in its sole discretion may consider to be
appropriate in connection with taking these measures, including endorsement of Trustor's name
on any instruments.
d. UCC Remedies. Beneficiary may e:Kercise any or all of the remedies
granted to a secured party under the UCC.
e. Judicial Action. Beneficiary may bring an action in any court of
competent jurisdiction to foreclose this Deed of Trust in tree manner provided by law for
foreclosure of mortgages on real property and/or to obtain specific enforcement of any of the
covenants or agreements of this Deed of Trust.
f. Power of Sale. Under the power of sale hereby granted, Beneficiary shall
have the discretionary right to cause some or all of the Property, including any Property which
constitutes personal property, to be sold or otherwise disposed of in any combination and in any
manner permitted by applicable law.
8.3 Power of Sale. If Beneficiary elects to invoke the power of sale hereby granted,
Beneficiary shall execute or cause the Trustee to execute .a written notice of such default and of
its election to cause the Property to be sold to satisfy the obligations hereof, and shall cause such
notice to be recorded in the office of the Recorder of each County wherein the Property or some
part thereof is situated as required by law and this Deed of Trust.
Prior to publication of the notice of sale, Beneficiary shall deliver to Trustee this Deed of
Trust and the Note or other evidence of indebtedness which is secured hereby, together with a
written request for the Trustee to proceed with a sale of the Property, pursuant to the provisions
of law and this Deed of Trust.
1822350-2 16
lo~
Notice of sale having been given as then required by law, and not less than the time then
required by law having elapsed after recordation of such notice of default, Trustee, without
demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale,
either as a whole or in separate parcels and in such order as i.t may determine, at public auction to
the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee
may, and at Beneficiary's request shall, postpone sale of all or any portion of the Property by
public announcement at such time and place of sale, and from time to time thereafter may
postpone such sale by public announcement at the time and place fixed by the preceding
postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but
without any covenant or warranty, express or implied. The recitals in such deed of any matters
or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor,
Trustee, or Beneficiary, may purchase at such sale.
After deducting all costs, fees, and expenses of Trustee and of the trust hereby created,
including reasonable attorneys' fees in connection with sale, Trustee shall apply the proceeds of
sale to payment of all sums advanced or expended by Beneficiary or Trustee under the terms
hereof and all outstanding sums then secured hereby, and the remainder, if any, to the person or
persons legally entitled thereto.
Without limiting the generality of the foregoing, Tn~stor acknowledges and agrees that
regardless of whether or not a default has occurred hereunder, if an Event of Default has
occurred under the Loan Documents, and if in connection with such Event of Default
Beneficiary exercises its right to foreclose on the Property, then: (i) Beneficiary shall be entitled
to declare all amounts due under the Note immediately due and payable, and (ii) the proceeds of
any sale of the Property in connection with such foreclosure shall be used to pay all Secured
Obligations, including without limitation, the outstanding I>rincipal balance and all other
amounts due under the Note.
At any foreclosure sale, any person, including Trustor, Trustee or Beneficiary, may bid
for and acquire the Property or any part of it to the extent permitted by then applicable law.
Instead of paying cash for such property, Beneficiary may settle for the purchase price by
crediting the sales price of the property against the following obligations:
a. First, the portion of the Secured Obligations attributable to the expenses of
sale, costs of any action and any other sums for which Trustor is obligated to pay or reimburse
Beneficiary or Trustee under Section 7.12(c); and
b. Second, the remaining balance of al l other Secured Obligations in any
order and proportions as Beneficiary in its sole discretion may choose.
8.4 Trustor's Right to Reinstate. Notwithstandling Beneficiary's acceleration of the
sums secured by this Deed of Trust, Trustor shall have the; right to have any proceedings begun
by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five days before
sale of the Property pursuant to the power of sale cantaine;d in this Deed of Trust or at any time
prior to entry of a judgment enforcing this Deed of Trust iif: (a) Trustor pays Beneficiary all sums
which would be then due under the Loan Documents if the Secured Obligations had no
acceleration provision; (b) Trustor cures all breaches ofd any other covenants or agreements of
1422350-2 17
~~
Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by
Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this
Deed of Trust, and in enforcing Beneficiary's and Trustee's remedies as provided herein,
including, but not limited to, reasonable attorney's fees; and (d) Trustor takes such action as
Beneficiary may reasonably require to assure that the lien of'this Deed of Trust, Beneficiary's
interest in the Property and Trustor's obligation to pay the sums secured by this Deed of Trust
shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the
obligations secured hereby shall remain in full force and effect as if no acceleration had
occurred.
9. Trustor's Waivers. To the fullest extent permitted by law, Trustor waives: (a) all
statutes of limitations as a defense to any action or proceeding brought against Trustor by
Beneficiary; (b) the benefit of all laws now existing or which may hereafter be enacted providing
for any appraisement, valuation, stay, extension, redemption or moratorium; (c) all rights of
marshalling in the event of foreclosure; and (d) all presentrr~ents, demands for performance,
notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance
of this Deed of Trust and of the existence, creation, or incurring of new or additional
indebtedness, and demands and notices of every kind.
10. Miscellaneous Provisions.
10.1 Additional Provisions. The Loan Documents grant further rights to Beneficiary
and contain further agreements and affirmative and negative covenants by Trustor which apply
to this Deed of Trust and the Property.
10.2 Notices. Trustor requests that a copy of notice of default and notice of sale be
mailed to Trustor at the address set forth below. That address is also the mailing address of
Trustor as debtor under the UCC. Beneficiary's address set forth below is the address for
Beneficiary as secured party under the UCC. Except for any notice required under applicable
law to be given in another manner, all notices to be sent pursuant to this Deed of Trust 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 parties in
accordance with this Section. All such notices shall be ser.~t by:
a. personal delivery, in which case notice shall be deemed delivered upon
receipt;
b. certified or registered mail, return rf;ceipt requested, in which case notice
shall be deemed delivered two (2) business days after deposit, postage prepaid in the United
States mail;
c. nationally recognized overnight courier, in which case notice shall be
deemed delivered one (1) day after deposit with such courier; or
d. facsimile transmission, in which case notice shall be deemed delivered on
transmittal, provided that a transmission report is generated reflecting the accurate transmission
thereof.
1422350-2 18
[~q
Beneficiary:
Redevelopment Agency of the City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attention: Executive Director
Trustor: Giffra Enterprises, LLC
24o Grand Avenue
South San Francisco, CA 94080
Attention: Greg Giffra
Facsimile: 650-239-3604
With copy to:
Ronald P. Albert
Attorney At Law
66 George Lane, Suite ioi
Sausalito, CA 94965
Facsimile: 415-332-9216
Trustee:
10.3 Binding on Successors. The terms, cavenar~ts and conditions of this Deed of
Trust shall be binding upon and inure to the benefit of the heirs, administrators, executors,
successors in interest, transferees, and assigns of the Trustor, Beneficiary and Trustee; provided
however this Section 10.3 does not waive the provisions oi' Section 7.6.
10.4 Substitution of Trustee. Beneficiary may from time to time or at any time
substitute a trustee or trustees to execute the trust hereby created, and when any such substitution
has been filed for record in the office of the Recorder of San Mateo County, it shall be
conclusive evidence of the appointment of such trustee or trustees, and such new trustee or
trustees shall succeed to all of the powers and duties of the: Trustee named herein.
10.5 Attorn~s' Fees and Costs. In any action or proceeding to foreclose this Deed of
Trust or to enforce any right of Beneficiary or of Trustee, Trustor shall pay to Beneficiary and
Trustee all costs of such action or proceeding, including reasonable attorneys' fees.
10.6 Governi~ Law' Severability• Interpretation. This Deed of Trust shall be
governed by the laws of the State of California without regard to principles of conflicts of laws.
Trustor agrees that any controversy arising under or in relation to this Deed of Trust shall be
litigated exclusively in the jurisdiction where the Land is located (the "Property Jurisdiction").
The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall
1422350-2 19
"1D
have exclusive jurisdiction over all controversies which shall. arise under or in relation to the
Loan Documents. Trustor 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. If any provision of this Deed of Trust is held
unenforceable or void, that provision shall be deemed severable from the remaining provisions,
and shall in no way affect the validity of this Deed of Trust. The captions used in this Deed of
Trust are for convenience only and are not intended to affect the interpretation or construction of
the provisions herein contained. In this Deed of Trust, whenever the context so requires, the
singular number includes the plural.
10.7 Waiver Modification and Amendment. Any waiver by Beneficiary of any
obligation of Trustor hereunder must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from any delay or failure by Beneficiary or
Trustee to take action on account of any default of Trustor. Consent by Beneficiary or Trustee to
any act or omission by Trustor shall not be construed as a consent to any other or subsequent act
or omission or to waive the requirement for Beneficiary's or Trustee's consent to be obtained in
any future or other instance. No amendment to or modification of this Deed of Trust shall be
effective unless and until such amendment or modification is in writing, executed by Trustor and
Beneficiary. Without limiting the generality of the foregoing, Beneficiary's acceptance of
payment of any sum secured hereby after its due date shall not constitute a waiver by Beneficiary
of its right either to require prompt payment when due of all other sums so secured or to declare
default for failure so to pay.
10.8 Action by Beneficiary. Except as may be otherwise specifically provided herein,
whenever any approval, notice, direction, or consent by the Beneficiary is required or permitted
under this Agreement, such action shall be in writing, and such action may be given, made or
taken by Beneficiary's Executive Director or by any persor.~ who shall have been designated by
Beneficiary's Executive Director, without further approval by the governing board of
Beneficiary. Beneficiary shall use reasonable best efforts to respond to requests for any such
approval, notice, direction, or consent in a timely manner. In any approval, consent, or other
determination by Beneficiary required hereunder, Benefici~~ry shall act reasonably and in good
faith.
10.9 Joint and Several Liability. If Trustor consists of more than one person or entity,
each shall be jointly and severally liable for the faithful performance of all of Trustor's
obligations under this Deed of Trust.
10.10 Time is of the Essence. Time is of the essence for each provision of this Deed of
Trust.
SIGNATURES ON FOLLOT+~'ING PAGE.
1422350-2 20
71
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first
written above.
TRUSTOR:
GIFFRA ENTERPRISES, LLC,
a California limited liability company
By:_
Name:
Title:
SIGNATURES MUST B~ NOTARIZED.
1422350-2 21
~ ~-.
STATE OF CALIFORNIA
COUNTY OF SAN MATED
On , 20_, before me, -, (here insert name and title of the officer),
personally appeared ,who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
STATE OF CALIFORNIA
COUNTY OF SAN MATED
On , 20_, before me, __, (here insert name and title of the officer),
personally appeared _, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribe;d 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 @ntity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State o1' California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature (Seal)
1422350-2 22
73
Exhibit A
i42235o-z
LAND
(Attach legal description.)
23
`~
EXHIBIT G
FORM OF REGULATORY AGREEMENT AND NOTICE
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of South San
Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attn: Executive Director
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder's use.
AFFORDABLE HOUSING REGUILATORY AGREEMENT
AND
DECLARATION OF RESTRICTIVE: COVENANTS
by and between
THE REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO
and
GIFFRA ENTERPHiISES, LLC
1422347.2
75
This Affordable Housing Regulatory Agreement <~nd Declaration of Restrictive
Covenants (this "Agreement") is entered into effective as of , 2011
("Effective Date") by and between the Redevelopment Agency of the City of South San
Francisco, a public body, corporate, and politic ("Agenc:y") and Giffra Enterprises, LLC,
a California limited liability company ("Owner"). Pugency and Owner are hereinafter
collectively referred to as the "Parties."
RECITALS
A. Owner is the owner of certain real property located in the City of South
San Francisco ("City") at 228 and 236 Grand Avenue, and known as San Mateo
County Assessor's Parcel Nos. 012-315-130 and 012-315-140 as more particularly
described in Exhibit A attached hereto (the "Propierty").
B. Owner intends to rehabilitate the existing improvements on the Property
and to own and operate amixed-use retail and m~~ulti-family residential project (the
"Project") on the Property in accordance with that certain Owner Participation and
Loan Agreement (the "OPA") dated as of , 2011 and executed by
and between Owner and Agency, a memorandum of which shall be recorded
substantially concurrently herewith in the Official'Records of San Mateo County
("Official Records").
C. The OPA provides that for a period. of not less than fifty-five (55) years not
less than ten (10) of the residential units in the Project: shall be rented at an affordable
cost to households whose income is less than or equal to one hundred twenty percent
(120%) of Area Median Income.
D. Subject to the conditions set forth in the OPA, Agency has agreed to
provide to Owner a loan in the amount of Two Mullion Five Hundred Thousand Dollars
($2,500,000) (the "Loan") in order to provide fin~ncinc~ for the rehabilitation of the
Project. The Loan is evidenced by a Secured Promissory Note (the "Note") executed
by Owner and dated as of the date hereof, and is secured by a Deed of Trust,
Assignment of Rents, Security Agreement and ~IXtUrE; Filing ("Deed of Trust") dated as
of the date hereof and executed by Owner for the benefit of Agency. The Deed of Trust
will be recorded in the Official Records substantially concurrently herewith.
E. As a condition to its agreement to iprovide the Loan to Owner, Agency
requires the Property to be subject to the terms, concitions and restrictions set forth
herein. Community Redevelopment Law (California Health and Safety Code Section
33000, et seq. (the "CRL")), requires the Agency to rE~quire residential rental units
assisted with funds from the Agency's low- and modE:rate-income housing fund to
remain affordable for the longest feasible time. In adldition, to the extent permitted by
the CRL, this Agreement is intended to enable the Agency to count the residential units in
the Project toward satisfaction of the Agency's housing production obligation under CRL
Section 33413(b)(2).
1422347.2 2
7~
F. The Parties have agreed to enter into and record this Agreement in order to
satisfy the conditions described in the foregoing Recitals. l~he purpose of this Agreement is
to regulate and restrict the occupancy and rents o~ the P'roject's Restricted Units for the
benefit of the Project occupants. The Parties intend the cc-venants set forth in this
Agreement to run with the land and to be binding upon Ovvner and Owner's successors and
assigns for the full term of this Agreement.
NOW THEREFORE, in consideration of the foregoing, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows.
1. Definitions. The following terms have the meanings set forth in this Section
wherever used in this Agreement or the attached e~rhibits;.
"Actual Household Size" means the actual number of persons in the applicable
household.
"Adjusted for Family Size Appropriate for the Unit" shall be determined
consistent with Section 50052.5(h) of the California Health and Safety Code and
applicable federal rules (if any).
"Affordable Rent" means the following amqunts, less a utility allowance and
such other adjustments as required pursuant to the CRL.: for units that are restricted
for rental to households with incomes of not more than Moderate Income, a monthly
rent that does not exceed one-twelfth of thirty percent (30%) of one hundred and ten
percent (110%) of Area Median Income, Adjusted for Family Size Appropriate for the
Unit; provided however, for households whose Gros Household Income exceeds
110% of AMI, Affordable Rent may be established as thirty percent (30%) of the Gross
Household Income for such household.
"Area Median Income" or "AMI" means the median income for San Mateo
County, California, adjusted for Actual Household SizE~, as determined by the U.S.
Department of Housing and Urban Development ("THUD") pursuant to Section 8 of the
United States Housing Act of 1937 and as published from time to time by the State of
California Department of Housing and Community Ievelopment ("HCD") in Section
6932 of Title 25 of the California Code of Regulations or successor provision
published pursuant to California Health and Safety Code Section 50093(c).
"Claims" is defined in Section 10.
"Eligible Household" means a household fpr which Gross Household Income
upon initial occupancy does not exceed the maximum income level for a Restricted Unit
as specified in Section 2.1.
"Gross Household Income" means the gross annual income of all adult
1422347.2 3
77
persons occupying a residential unit.
"Moderate Income" means an annual Gross Household Income that is less
than or equal to 120% of AMI, adjusted for actual housE~hold size as determined
periodically by HCD on the basis of gross annual household income and published in
the Regulations for San Mateo County.
"Regulations" means Title 25 of the Califiornia Code of Regulations.
"Restricted Unit" means a dwelling unit which is reserved for occupancy at an
Affordable Rent by a household of not more than ~ specified household income in
accordance with and as set forth in Section 2.1 and 2 2
2. Use and Affordability Restrictions. Owner hereby covenants and agrees,
for itself and its successors and assigns, that the Property shall be used solely for the
operation of a mixed-use, multifamily rental housing development in compliance with
the OPA and the requirements set forth herein. O~rner represents and warrants that it
has not entered into any agreement that would restrict or compromise its ability to comply
with the occupancy and affordability restrictions set forth in this Agreement, and Owner
covenants that it shall not enter into any agreement that is inconsistent with such
restrictions without the express written consent of Agency.
2.1 Affor_y Requirements. For a term of fifty-five (55) years commencing
upon the date of issuance of a final certificate of occupanncy for each phase of the
Project not less than ten (10) of the residential units in such phase shall be shall be
both Rent Restricted (as defined below) and occupied (or if vacant, available for
occupancy) by Eligible Households whose Gross Household Income is less than or
equal to Moderate Income.
In the event that recertification of tenant incomes indicates that the number of
Restricted Units actually occupied by Eligible Households falls below the number
reserved for each income group as specified in this Section, Owner shall rectify the
condition by renting the next available dwelling unit(s) in 1:he Project to Eligible
Household(s) until the required income mix is achieved. ,A dwelling unit shall qualify as
"Rent Restricted" if the gross rent charged for such unit does not exceed the
Affordable Rent for the applicable household income category.
Notwithstanding anything to the contrary coniainecl in this Agreement, if the
terms of financing for the Project restrict a greater number of units than restricted by
this Agreement or require stricter affordability requirements than those imposed hereby,
the requirements of such other financing shall prevail for 1:he term thereof.
2.2 Rents for Restricted Units. Rents for F~estric;ted Units shall be limited to
Affordable Rents for households of the applicable income limit in accordance with
Section 2.1. Notwithstanding the foregoing, no tenaint qualifying for a Restricted Unit
shall be denied continued occupancy of a unit in the Project because, after admission,
1422347.2
78
such tenant's adjusted income increases to exceed the qualifying limit for such
Restricted Unit. A household which at initial occupancy qualifies in a particular income
category shall be treated as continuing to be of such income category so long as the
household's Gross Household Income does not e~cceeal 140% of the applicable income
limit. In the event the Gross Household Income of a household that qualified at the
applicable income limit at initial occupancy exceeds the applicable income limit for a
unit, that unit will continue to be considered as satisfying the applicable income limit if
the unit remains Rent-Restricted.
2.2.2 If upon recertification of tenant incomes, Owner determines that a
tenant has a Gross Household Income exceeding the maximum qualifying income for
such tenant's unit, the tenant shall be permitted to continnue to occupy the unit, and
upon expiration of the tenant's lease and upon sixty (60;1 days' written notice, Owner
may increase the rent for such unit to the lesser of one-twelfth of thirty percent (30%) of
the tenant's actual Gross Household Income or the fair market rent, and Owner shall
rent the next available unit to a tenant whose household income does not exceed 120%
of AMI in order to meet the requirements of this Agreement. Notwithstanding the
above, the Borrower may choose not to renew a tenant's lease if the tenant's household
income exceeds 120% of AMI.
2.2.3 In the event of inconsistency b~twee~n the provisions of Section
2.2.1 or Section 2.2.2 and the rules applicable to the Project in connection with tax-
exempt bond financing, low-income housing tax credits or financing provided by HUD or
HCD (if any), the rules applicable pursuant to such financing source shall prevail.
2.2.4 Notice of Affordability Restrictions on Transfer of Property.
Pursuant to the requirements of California Commuryity Redevelopment Law, Owner and
Agency shall execute a Notice of Affordability Restrictions on Transfer of Property
substantially in the form attached hereto as Exhibit ,and shall cause such notice to be
recorded substantially concurrently with the recordation o~f this Agreement.
2.3 Unit Sizes Desian and Location. The Restricted Units shall be of
comparable design quality as unrestricted units in the Project, but may have reduced
interior amenities. Tenants of Restricted Units shall have access to all common facilities
of the Project equal to that of tenants of Project Units that are not Restricted Units.
2.4 Intentionally omitted.
2.5 No Condominium Conversion. Owner shall not convert the residential units
in the Project to condominium or cooperative ownership or sell condominium or
cooperative rights to the residential portion of the Project or any part thereof during the
term of this Agreement.
2.6 Non-Discrimination Compliance with Fair Hc_>usina Laws.
2.6.1 Preferences. Consistent with the requirements of California Health
1422347.2 5
7q
and Safety Code Section 33411.3, Owner shall giue first priority for the rental of
Restricted Units to Eligible Households of Low- or fWloderate-Income who have been
displaced by development of the Project. At initial Ir?ase-up, Owner shall give a
preference to Eligible Households in which at least bne member lives or works in the City
of South San Francisco, unless compliance with the foregoing criteria is prohibited by law
or by state or federal sources of financing for the Project. If there are fewer Eligible
Households than the number of such units, the unit,; will be made available to the general
public.
2.6.2 Fair Housing. Owner shall cor!nply with state and federal fair
housing laws in the marketing and rental of the units in the Project. Owner shall accept
as tenants, on the same basis as all other prospective tenants, persons who are
recipients of federal certificates or vouchers for rer7t subsidies pursuant to the existing
Section 8 program or any successor thereto.
2.6.3 Non-Discrimination. Owner shall not restrict the rental, sale, lease,
sublease, transfer, use, occupancy, tenure or enjo~meni`. of the Property, or any portion
thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability,
marital status, ancestry, or national origin of any person. Owner covenants for itself
and all persons claiming under or through it, and this Agreement is made and accepted
upon and subject to the condition that there shall b~ no discrimination against or
segregation of any person or 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 Giovern~ment Code, in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyk'nent of the Property or part thereof,
nor shall Owner or any person claiming under or through Owner establish or permit any
such practice or practices of discrimination or segrelgation with reference to the
selection, location, number, use or occupancy of terhants, lessees, subtenants,
sublessees or vendees in, of, or for the Property or part thereof. Owner shall include
such provision in all deeds, leases, contracts and other instruments executed by
Owner, and shall enforce the same diligently and in good faith.
All deeds, leases or contracts made or entered into by Owner, its successors
or assigns, as to any portion of the Property or the Improvements shall contain the
following language:
(a) (1) In Deeds, the following language shall appear:
Grantee herein covenants by and for itself, its successors and assigns,
and all persons claiming under or through it, that there shall be no
discrimination against or segregation olf 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 Govrernrr~ent Code, in the sale, lease,
1422347.2 6
U~
sublease, transfer, use, occupancy, tenure or enjoyment of the property
herein conveyed nor shall the grange or any person claiming under or
through the grantee establish or perr!nit any such practice or practices of
discrimination or segregation with re~erenc:e to the selection, location,
number, use or occupancy of tenant, les;sees, subtenants, sublessees or
vendees in the property herein conveyed. The foregoing covenant shall
run with the land."
2) Notwithstanding paragraph (1), withi respect to familial status,
paragraph (1) shall not be construed to apply to housing for older persons,
as defined in Section 12955.9 of the Government Code. With respect to
familial status, nothing in paragraph (1) shall be construed to affect
Sections 51.2, 51.3, 51.4, 51.10, 51. i 1 and 799.5 of the Civil Code,
relating to housing for senior citizens.. Subdivision (d) of Section 51 and
Section 1360 of the Civil Code and swbdivisions (n), (o), and (p) of Section
12955 of the Government Code shalt' apply to paragraph (1).
(b) (1) In Leases, the following laniguage shall appear:
The lessee herein covenants by and Ifor the lessee and lessee's heirs,
personal representatives and assignsr and all persons claiming under the
lessee or through the lessee, that this lease is made subject to the
condition that there shall be no discrirination against or segregation of
any person or of a group of persons on account of race, color, creed,
religion, sex, sexual orientation, marital stairus, national origin, ancestry or
disability in the leasing, subleasing, tr~nsfeirring, use, occupancy, tenure
or enjoyment of the property herein leased nor shall the lessee or any
person claiming under or through the lessee establish or permit any such
practice or practices of discrimination of sec~regation with reference to the
selection, location, number, use or occupancy of tenants, lessees,
sublessees, subtenants, or vendees iri the property herein leased."
(2) Notwithstanding paragraph (1), with respect to familial status,
paragraph (1) shall not be construed tb apply to housing for older persons,
as defined in Section 12955.9 of the government Code. With respect to
familial status, nothing in paragraph (1) shall) be construed to affect
Sections 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code,
relating to housing for senior citizens. Subdivision (d) of Section 51 and
Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section
12955 of the Government Code shall ajpply to paragraph (1).
(c) In Contracts
"There shall be no discrimination against or segregation of any person or
group of persons on account of any bafiis listed in subdivision (a) or (d) of
1422347.2 .~
Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926.1, subdivisioh (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 property nor shall the transferee or any person claiming
under or through the transferee establish or permit any such practice or
practices of discrimination or segregation with reference to selection,
location, number, use or occupancy bf tenants, lessee, subtenants,
sublessees or vendees of the land."
2.7 Relocation. Persons residing on the propE~rty as of the Effective Date
shall not be displaced before suitable replacement housing is available in comparable
replacement housing. Owner shall ensure that all pccup~ants of the Property receive all
notices, benefits and assistance to which they are ~ntitle~d in accordance with California
Relocation Assistance Law (Government Code Section 7260 et seq.), all state and local
regulations implementing such law, and all other applicable local, state and federal laws
and regulations (collectively "Relocation Laws") relating to the displacement and
relocation of eligible persons as defined in such Relocation Laws. Any and all costs
incurred in connection with the temporary and/or permanent displacement and/or
relocation of occupants of the Property, including wjthout limitation payments to a
relocation consultant, moving expenses, and payments for temporary and permanent
relocation benefits pursuant to Relocation Laws shall be ipaid by Owner. Owner shall
indemnify, defend (with counsel approved by Agency) and hold harmless the
Indemnitees (defined in Sect) from and against an}r and all Claims (defined in
Section 10) arising in connection with the breach of ~OwnE~r's obligations set forth in this
Section except to the extent such Claims arise from'the gross negligence or willful
misconduct of the Indemnitees. Owner's indemnification obligations set forth in this
Section 2.7 shall survive the expiration or earlier terrlnination of this Agreement.
3. Re ortin Re uirements.
3.1. Tenant Certification. Owner or Owner'S authorized agent shall obtain
from each household prior to initial occupancy of eadh Restricted Unit, and on every
anniversary thereafter, a written certificate containing all of the following in such format
and with such supporting documentation as Agency tray reasonably require:
(a) The identity of each household member;
(b) The total Gross Household Income;
Owner shall retain such certificates for not less thane three (3) years, and upon
Agency's request, shall provide copies of such certificates to Agency and make the
originals available for Agency inspection.
3.2 Annual Re ort~ Ins ections. By not later than April 30 of each year during
the term of this Agreement, Owner shall submit an animal ireport ("Annual Report") to
1422347.2 8
S2
the Agency in form satisfactory to Agency, together with a certification that the Project is
in compliance with the requirements of this Agreer~nent. The Annual Report shall, at a
minimum, include the following information for each dwelling unit in the Project: (i) unit
number; (ii) number of bedrooms; (iii) current rent and c>ther charges; (iv) dates of any
vacancies during the previous year; (v) number of ,people residing in the unit; (vi) total
Gross Household Income; (vii) documentation of sources of household income; and (viii)
the information required by Section 3.1.
Owner shall include with the Annual Report, an income recertification for each
household, documentation verifying tenant eligibility, and such additional information as
Agency may reasonably request from time to time in order to demonstrate compliance
with this Agreement. The Annual Report shall conform Ito the format requested by
Agency; provided however, during such time that the Project is subject to a regulatory
agreement restricting occupancy and/or rents pursuant 1:o requirements imposed in
connection with the use of state or federal low-incame housing tax credits ortax-exempt
financing, Owner may satisfy the requirements of this Section by providing Agency with
a copy of compliance reports required in connection witl•i such financing.
Owner shall permit representatives of Agency to enter and inspect the Property
and the Project during reasonable business hours ini order to monitor compliance with this
Agreement upon 48-hours advance notice of such visit to Owner or to Owner's
management agent.
4. Term of Aareement.
4.1 Term of Restrictions. This Agreement shall remain in effect through the
55th anniversary of the issuance of the final certificaite of occupancy for the Project,
unless the term is extended by mutual agreement of the Parties.
4.2 Effectiveness Succeeds Conveyance pf Prc~erty and Repayment of Loan.
This Agreement shall remain effective and fully binding for the full term hereof, as such
may be extended pursuant to Section 4.1, regardless of (i) any sale, assignment,
transfer, or conveyance of the Property or the Projebt or any part thereof or interest
therein, (ii) any payment, prepayment or extinguishment of the Loan or Note, or (iii) any
reconveyance of the Deed of Trust.
4.3 Reconveyance. Upon the termination of this Agreement, the Parties
agree to execute and record appropriate instruments to release and discharge this
Agreement; provided, however, the execution and r~cord~ation of such instruments shall
not be necessary or a prerequisite to the termination of this Agreement upon the
expiration of the term as such may be extended pursuant to Section 4.1.
5. Binding Upon Successors• Covenants to Rjun with the Land. Owner hereby
subjects its interest m the Property and the Project tp the covenants and restrictions set
forth in this Agreement. The Agency and Owner her?eby declare their express intent
that the covenants and restrictions set forth herein shall be deemed covenants running
1422347.2
u3
with the land and shall be binding upon and inure to the benefit of the heirs,
administrators, executors, successors in interest, transferees, and assigns of Owner and
Agency, regardless of any sale, assignment, conveyance; or transfer of the Property, the
Project or any part thereof or interest therein. Any Successor-in-interest to Owner,
including without limitation any purchaser, transferee or lessee of the Property or the
Project (other than the tenants of the individual dwlelling units within the Project) shall
be subject to all of the duties and obligations imported hereby for the full term of this
Agreement. Each and every contract, deed, ground lease or other instrument affecting or
conveying the Property or the Project or any part thereof, shall conclusively be held to
have been executed, delivered and accepted subject to the covenants, restrictions, duties
and obligations set forth herein, regardless of whether such covenants, restrictions, duties
and obligations are set forth in such contract, deed, ground lease or other instrument. If
any such contract, deed, ground lease or other instrument has been executed prior to
the date hereof, Owner hereby covenants to obtain and deliver to Agency an instrument
in recordable form signed by the parties to such contract, deed, ground lease or other
instrument pursuant to which such parties acknowledge and accept this Agreement and
agree to be bound hereby.
Owner agrees for itself and for its successors that: in the event that a court of
competent jurisdiction determines that the covenants herein do not run with the land,
such covenants shall be enforced as equitable servitudes against the Property and the
Project in favor of Agency.
6. Property Manaaement• Repair and Mainten~nce• Marketing.
6.1 Management Responsibilities. Owner shall) be responsible for all
management functions with respect to the Property and the Project, including
without limitation the selection of tenants, certifi~atiori and recertification of
household income and eligibility, evictions, collection of rents and deposits,
maintenance, landscaping, routine and extraordinaity repairs, replacement of capital
items, and security. Agency shall have no responsibility 1`or management or
maintenance of the Property or the Project.
6.2 Management Entity. Agency shall hiave the right to review and
approve the qualifications of the management entity proposed by Owner for the
Project. The contracting of management services to a management entity shall not
relieve Owner of its primary responsibility for proper pertormance of management
duties.
6.3 Repair. Maintenance and Security. Throughout the term of this
Agreement, Owner shall at its own expense, maintailn the Property and the Project in
good physical condition, in good repair, and in decerht, safe, sanitary, habitable and
tenantable living conditions in conformity with all applicable state, federal, and local laws,
ordinances, codes, and regulations. Without limiting, the foregoing, Owner agrees to
maintain the Project and the Property (including without limitation, the residential units,
common areas, meeting rooms, landscaping, driveways, parking areas and walkways)
1422347.2 10
8~
in a condition free of all waste, nuisance, debris, Unmaintained landscaping, graffiti,
disrepair, abandoned vehicles/appliances, and ill~,gal activity, and shall take all
reasonable steps to prevent the same from occurring oin the Property or at the Project.
Owner shall prevent and/or rectify any physical deterioration of the Property and the
Project and shall make all repairs, renewals ands replacements necessary to keep
the Property and the improvements located thereon iin good condition and repair.
Owner shall provide adequate security services fpr occupants of the Project.
6.3.1 Agencv's Right to Perform Majinternance. In the event that Owner
breaches any of the covenants contained in Section 6.3, and such default continues for
a period of ten (10) days after written notice from !#genc:y (with respect to graffiti, debris,
and waste material) or thirty (30) days after written'... notice from Agency (with respect to
landscaping, building improvements and general rrhainte~nance), then Agency, in
addition to any other remedy it may have under this Agreement or at law or in equity,
shall have the right, but not the obligation, to enter'upon the Property and pertorm all
acts and work necessary to protect, maintain, and preserve the improvements and the
landscaped areas on the Property. All costs expended by Agency in connection with
the foregoing, shall constitute an indebtedness sea,ured by the Deed of Trust, and shall
be paid by Owner to Agency upon demand. All such sums remaining unpaid thirty (30)
days following delivery of Agency's invoice therefor shall bear interest at the lesser of
10% per annum or the highest rate permitted by a~'plicable law. Notwithstanding
anything to the contrary set forth in this Section, Agency agrees that it will provide
Owner with not less than thirty (30) days' written noltice prior to undertaking any work for
which Owner will incur a financial obligation.
6.4 Marketina and Management Plan. Within ninety (90) days following the
Effective Date of this Agreement, Owner shall suf~mit for Agency review and approval,
a plan for marketing and managing the Property ("M~rketing and Management Plan" or
"Plan"). The Marketing and Management Plan shall) address in detail how Owner plans
to market the Restricted Units to prospective Eligible Households in accordance with fair
housing laws and this Agreement, Owner's tenant s~'lection criteria, and how Owner
plans to certify the eligibility of Eligible Households. 'The Plan shall also describe the
management team and shall address how the Owner anal the management entity plan
to manage and maintain the Property and the Proiect. The Plan shall include the
proposed management agreement and the form of dental agreement that Owner
proposes to enter into with Project tenants. Owner Shall abide by the terms of the
Marketing and Management Plan in marketing, managing, and maintaining the Property
and the Project, and throughout the term of this Agreement, shall submit proposed
modifications to Agency for review and approval.
6.5 Approval of Amendments. If Agency hias nc>t responded to any
submission of the Management and Marketing Plan,' the proposed management entity,
or a proposed amendment or change to any of the foregoing within 30 days following
Agency's receipt of such plan, proposal or amendment, the plan, proposal or
amendment shall be deemed approved by Agency.
1422347.2
11
6.6 Fees Taxes and Other Levies. Owner shall be responsible for payment of
all fees, assessments, taxes, charges, liens and levies applicable to the Property or the
Project, including without limitation possessory interest t<~xes, if applicable, imposed by
any public entity, and shall pay such charges prior!to delinquency. However, Owner
shall not be required to pay any such charge so lohg as (a) Owner is contesting such
charge in good faith and by appropriate proceedings, (b) Owner maintains reserves
adequate to pay any contested liabilities, and (c) oln final determination of the
proceeding or contest, Owner immediately pays or{discharges any decision or judgment
rendered against it, together with all costs, charge$ and interest.
6.7 Insurance Coveraae. Throughout theterm of this Agreement Owner shall
comply with the insurance requirements set forth in xhib~it B, and shall, at Owner's
expense, maintain in full force and effect insurance icoverage as specified in Exhibit B.
6.8 Pro a Dama a or Destruction. If arhy part of the Project is damaged or
destroyed, Owner shall repair or restore the same, consistent with the occupancy and
rent restriction requirements set forth in this Agreement. Such work shall be
commenced within 120 days after the damage or Moss occurs and shall be completed
within one year thereafter or as soon as reasonabl~r practicable, provided that
insurance proceeds are available to be applied to sjuch repairs or restoration within
such period and the repair or restoration is financially feasible. During such time that
lenders or low-income housing tax credit investors ~rovid'ing financing for the Project
impose requirements that differ from the requirements of this Section the requirements
of such lenders and investors shall prevail.
7. Recordation Subordination. This Agreement shall be recorded in the Official
Records of San Mateo County. Owner hereby repre$ents, warrants and covenants that
with the exception of easements of record, absent the written consent of Agency, this
Agreement shall not be subordinated in priority to anjy lien (other than those pertaining to
taxes or assessments), encumbrance, or other interest in the Property or the Project. If at
the time this Agreement is recorded, any interest, lien, or encumbrance has been
recorded against the Project in position superior to this Agreement, upon the request of
Agency, Owner hereby covenants and agrees to prolmptly undertake all action
necessary to clear such matter from title or to subor~inate~ such interest to this
Agreement consistent with the intent of and in accor~ance~ with this Section 7, and to
provide such evidence thereof as Agency may reasonably request. Notwithstanding
anything to the contrary set forth herein, the Agency'~agrees that pursuant to Health and
Safety Code Section 33334.14(a)(4), it will not withheld consent to reasonable requests
for subordination of this Agreement to deeds of trust'provided for the benefit of lenders
identified in the financing plan approved in connectioh with the OPA
subordination agreement includes reasonable protections to the Age P y inn thetevent of
default.
8. Transfer and Encumbrance.
8.1 Restrictions on Transfer and Encumbra ce. During the term of this
1422347.2 12
Agreement, except as permitted pursuant to the CIPA or this Agreement, Owner shall
not directly or indirectly, voluntarily, involuntarily oar by operation of law make or attempt
any total or partial sale, transfer, conveyance, assignment or lease (collectively,
"Transfer") of the whole or any part of the Properly, the Project, or the improvements
located on the Property, without the prior written cpnsent of the Agency, which approval
shall not be unreasonably withheld. In addition, prior to the expiration of the term of this
Agreement, except as expressly permitted by this ,agreement or the OPA, Owner shall
not undergo any significant change of ownership vWithout the prior written approval of
Agency. For purposes of this Agreement, a "significant change of ownership" shall
mean a transfer of the beneficial interest of more than hnrenty-five percent (25%) in
aggregate of the present ownership and /or control of Owner, taking all transfers into
account on a cumulative basis.
8.2 Permitted Transfers Notwithstanding any contrary provision hereof, the
prohibitions on Transfer set forth herein shall not b~ deemed to prevent: (i) the
granting of easements or permits to facilitate develppment of the Property; (ii) the
dedication of any property required pursuant to the' OPA; (iii) the lease of individual
dwelling units to tenants for occupancy as their principal residence in accordance with
this Agreement and the lease of retail/commercial space to retail/commercial tenants;
or (iv) assignments creating security interests for this purpose of financing the
acquisition, construction, or permanent financing of the Project or the Property in
accordance with the OPA, or Transfers directly resulting from the foreclosure of, or
granting of a deed in lieu of foreclosure of, such a security interest.
In addition, Agency will not withhold its consent to the sale, transferor other
disposition of the Project, in whole or in part, provided that (1) the Project is and shall
continue to be operated in compliance with this Agreement; (2) the transferee expressly
assumes all obligations of Owner imposed by this Aigreernent; (3) the transferee
executes all documents reasonably requested by thle AgE~ncy with respect to the
assumption of the Owner's obligations under this Agreement, and upon Agency's
request, delivers to the Agency an opinion of its coulnsel i:o the effect that such
document and this Agreement are valid, binding and enforceable obligations of such
transferee; and (4) either (A) the transferee has at Fast three years' experience in the
ownership, operation and management of low-inconhe multifamily rental housing
projects of similar size to that of the Project, without iany record of material violations of
nondiscrimination provisions or other state or federail laws or regulations applicable to
such projects, or (B) the transferee agrees to retain ~ property management firm with
the experience and record described in subclause (~).
Consent to any proposed Transfer may be gi~ien by the Agency's Executive
Director unless the Executive Director, in his or her discretion, refers the matter of
approval to the Agency's governing board. If a proposed Transfer has not been
approved by Agency in writing within thirty (30) days !,follov~ring Agency's receipt of
written request by Owner, it shall be deemed rejected.
1422347.2 13
Y~7
Owner shall reimburse Agency for all Agenjcy costs, including but not limited to
reasonable attorneys' fees, incurred in reviewing instruments and other legal
documents proposed to effect a Transfer under thus Agireement and in reviewing the
qualifications and financial resources of a proposed successor, assignee, or transferee
within ten (10) days following Agency's delivery of'an invoice detailing such costs.
8.3 Encumbrances. Owner agrees to usle best efforts to ensure that all deeds
of trust or other security instruments recorded against the Property, the Project or part
thereof for the benefit of a lender other than Agency (Third-Party Lender") shall
contain each of the following provisions: (i) Third-Marty Lender shall use its best efforts
to provide to Agency a copy of any notice of default issued to Owner concurrently with
provision of such notice to Owner; (ii) Agency shall) haves the reasonable right, but not
the obligation, to cure any default by Owner within the same period of time provided to
Owner for such cure extended by an additional 90 delays; (iii) provided that Agency has
cured any default under Third-Party Lender's deed'' of trust and other loan documents,
Agency shall have the right to foreclose Agency's Geed of Trust and take title to the
Project without acceleration of Third-Party Lender's debt:; and (iv) Agency shall have the
right to transfer the Project without acceleration of third-Party Lender's debt to a
nonprofit corporation or other entity which shall owrh and operate the Project as an
affordable rental housing Project, subject to the prig written consent of the Third-Party
Lender. Owner agrees to provide to Agency a cop ' of any notice of default Owner
receives from any Third-Party Lender within three (~) bu:>iness days following Owner's
receipt thereof.
8.4 Mort a ee Protection. No violation of', any provision contained herein shall
defeat or render invalid the lien of any mortgage or geed of trust made in good faith and
for value upon all or any portion of the Project or the Property, and the purchaser at any
trustee's sale or foreclosure sale shall not be liable i~or any violation of any provision
hereof occurring prior to the acquisition of title by sujch purchaser. Such purchaser shall
be bound by and subject to this Agreement from and after such trustee's sale or
foreclosure sale. Promptly upon determining that a )violation of this Agreement has
occurred, Agency shall give written notice to the holders of record of any mortgages or
deeds of trust encumbering the Project or the Property that such violation has occurred.
9. Default and Remedies.
9.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an event of default hereundery ("Event of Default"):
(a) The occurrence of a Transfer in violation of Section 8 hereof;
(b) Owner's failure to maintain insurance on the Property and the
Project as required hereunder, and the failure of Owrher to cure such default within 10
days;
1422347.2 14
(c) Subject to Owner's right to cointest the following charges, Owner's
failure to pay taxes or assessments due on the P
any other charge that may result in a lien on the Plropertyoor thePP~oject~and OWto pay
failure to cure such default within 30 days of delinquency; ner's
(d) A default arises under any loa',n secured by a mortgage, deed of
trust or other security instrument recorded against'the Property and remains uncured
beyond any applicable cure period such that the holder of such security instrument has
the right to accelerate repayment of such loan;
(e) An event of default has been declared under the OPA, the Note or
the Deed of Trust;
(fl Owner's default in the perForm~nce of any term, provision or
covenant under this Agreement (other than an obligation enumerated in this Subsection
9.1~, and unless such provision specifies a shorter cure period for such default, the
continuation of such default for ten (10) days in the' event of a monetary default or thirty
(30) days in the event of anon-monetary default following the date upon which Agency
shall have given written notice of the default to Owrher, or if the nature of any such non-
monetary default is such that it cannot be cured within 30 days, Owner's failure to
commence to cure the default within thirty (30) days and thereafter prosecute the curing
of such default with due diligence and in good faith,'. but in no event longer than ninety
(90) days from receipt of the notice of default.
9.2 Rem= Upon the occurrence of am Event of Default and its
continuation beyond any applicable cure period, Agency may proceed with any of the
following remedies:
A. Bring an action for equitable relief seeking the specific performance of the
terms and conditions of this Agreement, and/or enjoining, abating, or
preventing any violation of such terms end conditions, and/or seeking
declaratory relief;
B. Accelerate and declare the balance of the Note and interest accrued
thereon immediately due and payable end proceed with foreclosure under
the Deed of Trust;
C. For violations of obligations with respect to rE~nts for Restricted Units,
impose as liquidated damages a charge in a~n amount equal to the actual
amount collected in excess of the Affordable Rent;
D. Pursue any other remedy allowed at law or irr equity.
Each of the remedies provided herein is cumulative and not exclusive. The
Agency may exercise from time to time any rights anc~ remedies available to it under
applicable law or in equity, in addition to, and not in li$u of, any rights and remedies
1422347.2
15
expressly provided in this Agreement
10. Indemnity. Owner shall indemnify, defend (with counsel approved by Agency)
and hold Agency, the City, and their respective elected and a
employees, agents, and representatives (collectively, the "Indeminiteesff) harmlessials,
from and against all liability, loss, cost, expense (including without limitation attorneys'
fees and costs of litigation), claim, demand, action;, suit, judicial or administrative
proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively
"Claims") arising directly or indirectly, in whole or i
with Owner's construction, management, or operas on of the Prosert oand'thconnection
any failure to perform any obligation as and when ~`equired by th s Agreeme t. POwnetr'sr
indemnification obligations under this Section 10 shall not extend to Claims resulting
solely from the gross negligence or willful misconduct of Indemnitees. The provisions of
this Section 10 shall survive the expiration or earlier termination of this Agreement. It is
further agreed that Agency does not and shall not uvaive any rights against Owner that it
may have by reason of this indemnity and hold har~nles~; agreement because of the
acceptance by Agency, or the deposit with Agency Iby Owner, of any of the insurance
policies described in this Agreement or the OPA.
11. Miscellaneous.
11.1 Amendments. This Agreement may b,e amended or modified only by a
written instrument signed by both Parties.
11.2 No Waiver. Any waiver by Agency of alny term or provision of this
Agreement must be in writing. No waiver shall be implied from any delay or failure by
Agency to take action on any breach or default hereunder or to pursue any remedy
allowed under this Agreement or applicable law. No ~ailure or delay by Agency at any
time to require strict pertormance by Owner of an
exercise any election contained herein or any right, ~oweroor~emedy hereunde~shall
be construed as a waiver of any other provision or any succeeding breach of the same
or any other provision hereof or a relinquishment for'the future of such election.
11.3 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 parties in accordance with this
Section. All such notices shall be sent by:
(i) personal delivery, in which case notice is effective upon delivery;
(ii) certified or registered mail, return receipt requested, in which case
notice shall be deemed delivered upon receipt' if delivery is confirmed by a return
receipt;
1422347.2
16
~O
(iii) nationally recognized overnight gourier, with charges prepaid or
charged to the sender's account, in which Base notice is effective on delivery if
delivery is confirmed by the delivery servicel;
(iv) facsimile transmission, in which base notice shall be deemed delivered
upon transmittal, provided that (a) a duplica'Ite copy of the notice is promptly
delivered by first-class or certified mail or b~ overnight delivery, or (b) a
transmission report is generated reflecting the accurate transmission thereof.
Any notice given by facsimile shall be consigered to have been received on the
next business day if it is received after 5:00'p.m. recipient's time or on a
nonbusiness day.
Agency: Redevelopment Agency of the City ~of South San Francisco
400 Grand Avenue
South San Francisco, CA 940$0
Attention: Executive Director
Owner: Giffra Enterprises, LLC
240 Grand Avenue
South San Francisco, CA 9400
Attention: Greg Giffra
Facsimile: 650-239-3604
With copy to:
Ronald P. Albert
Attorney At Law
66 George Lane, Suite 101
Sausalito, CA 94965
Facsimile: 415-332-9216
11.4 Further Assurances. The Parties shall execute, acknowledge and deliver
to the other such other documents and instruments, .and take such other actions, as
either shall reasonably request as may be necessar~r to carry out the intent of this
Agreement.
11.5 Parties Not Co-Venturers. Nothing in this Agreement is intended to or
shall establish the Parties as partners, co-venturers, or principal and agent with one
another.
11.6 Action by the Agency. Except as may be otherwise specifically provided
herein, whenever any approval, notice, direction, consent or request by the Agency is
1422347.2 17
91
required or permitted under this Agreement, such action shall be in writing, and such
action may be given, made or taken by the Agency Executive Director or by any person
who shall have been designated by the Agency E~cecutive Director, without further
approval by the governing board of the Agency.
11.7 Non-Liability of Agency and Aaency Officials Employees and Aaents. No
member, official, employee or agent of the Agencyr or the City shall be personally liable
to Owner or any successor in interest, in the evenf~ of any default or breach by the
Agency, or for any amount of money which may b$come due to Owner or its successor
or for any obligation of Agency under this Agreement.
11.8 Headin s~ Construction. The headings of the sections and paragraphs of
this Agreement are for convenience only and shall'not be used to interpret this
Agreement. The language of this Agreement shall be construed as a whole according
to its fair meaning and not strictly for or against any Party.
11.9 Time is of the Essence. Time is of the essence in the performance of this
Agreement.
11.10 Governina Law. This Agreement shad be construed in accordance with
the laws of the State of California without regard to principles of conflicts of law.
11.11 Attorneys' Fees and Costs. If any legal or administrative action is
brought to interpret or enforce the terms of this Agreertnent, the revailin
entitled to recover all reasonable attorneys' fees and costs in urred in such a tionbe
11.12 Severability. If any provision of this Agreerent is held invalid, illegal, or
unenforceable by a court of competent jurisdiction„ the validity, legality, and
enforceability of the remaining provisions shall not bie affected or impaired thereby.
11.13 Entire Agreement Exhibits. This Agreement, together with the OPA, the
Note and the Deed of Trust contains the entire agreement of Parties with respect to the
subject matter hereof, and supersedes all prior oral br written agreements between the
Parties with respect thereto. Exhibits A through C, ~'ttached hereto are incorporated
herein by this reference.
11.14 Counterparts. This Agreement may bey executed in multiple counterparts,
each of which shall be an original and all of which together shall constitute one
agreement.
SIGNATURES ON FOLLOtM~NG PAGE
1422347.2 18
qZ
IN WITNESS WHEREOF, the Parties have executed this Affordable Housing
Regulatory Agreement and Declaration of Restrictive Covenants as of the date first
written above.
OWNER
GIFFRA ENTERPRISES, LLC,
a California limited liability company
By:
Name:
Title:
AGENCY
REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO,
a public body corporate and politic
By:
Name:
Title:
ATTEST:
By:
Agency Secretary
APPROVED AS TO FORM:
By:
Agency Counsel
SIGNATURES MUST BE NOTA;14/ZED
1422347.2 19
q3
STATE OF CALIFORNIA
COUNTY OF SAN MATED
On , 20_, before me, _, (here insert name and title of the
officer), personally appeared -
ofsatisfactory evidence to be the person(s) whose name(s) is~are subscribed to the within nst ument ands
acknowledged to me that he/she/they executed the same in hi!s/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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
STATE OF CALIFORNIA
COUNTY OF SAN MATED
On , 20_, before me, __, (here insert name and title of the
officer), personally appeared _, who 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 tlhe entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
1422347.2 20
~~
Exhibit A
PROPERTY
1422347.2
(Attach legal description.)
21
~S
Exhibit
INSURANCE REQUIRIEMENTS
Prior to initiating work on the Project and continuing through throughout the term
of this Agreement, Owner shall obtain and maintainh the following policies of insurance:
(a) a commercial general liability policy irk the amount of One Million Dollars
($1,000,000) each occurrence, Two Million Dollars K$2,000,000) annual aggregate,
together with Three Million Dollars $3,000,
( 000) excess liability coverage, or such other
policy limits as Agency may require in its reasonably discretion, including coverage for
bodily injury, property damage, products, completed operations and contractual liability
coverage. Such policy or policies shall be written o~ an occurrence basis and shall
name the Indemnitees as additional insureds.
(b) a comprehensive automobile liability cioverage in the amount of One
Million Dollars ($1,000,000), combined single limit including coverage for owned and
non-owned vehicles and shall furnish or cause to b~ furnished to Agency evidence
satisfactory to Agency that Owner and any contractor with whom Owner has contracted
for the performance of work on the Property or othehnrise pursuant to this Agreement
carries workers' compensation insurance as required by law. Automobile liability
policies shall name the Indemnitees as additional insureds.
(c) Upon commencement of construction end continuing until issuance of a
Certificate of Completion, Owner and all contractors'working on behalf of Owner shall
maintain a policy of builder's all-risk insurance in an amount not less than the full
insurable cost of the Project on a replacement cost basis naming Agency as loss
payee.
(d) Owner shall maintain property insurance covering all risks of loss (other
than earthquake), including flood (if required) for 100(% of the replacement value of the
Project with deductible, if any, in an amount acceptable to Agency, naming Agency as
loss payee.
(e) Companies writing the insurance required hereunder shall be licensed to
do business in the State of California. Insurance shall) be placed with insurers with a
current A.M. Best's rating of no less than A: VII. The (Commercial General Liability and
comprehensive automobile policies required hereundeer shall name the Indemnitees as
additional insureds. Builder's Risk and property insurance shall name Agency and City
as loss payees as their interests may appear.
(fl Prior to commencement of construction,. Owner shall furnish Agency with
certificates of insurance in form acceptable to Agency, evidencing the required
insurance coverage and duly executed endorsements evidencing such additional
1422347.2 22
q ~v
insured status. The certificates shall contain a statement of obligation on the part of the
carrier to notify City and Agency of any material adverse change, cancellation,
termination or non-renewal of the coverage at least thirty (30) days in advance of the
effective date of any such material adverse change, cancellation, termination or non-
renewal.
(g) If any insurance policy or coverage required hereunder is canceled or
reduced, Owner shall, within fifteen (15) days after receipt of notice of such cancellation
or reduction in coverage, but in no event later than the effective date of cancellation or
reduction, file with Agency and City a certificate showing that the required insurance
has been reinstated or provided through another insurance company or companies.
Upon failure to so file such certificate, Agency or Ciky may, without further notice and at
its option, procure such insurance coverage at Owner's expense, and Owner shall
promptly reimburse Agency or City for such expense upon receipt of billing from Agency
or City.
(h) Coverage provided by Owner shall be primary insurance and shall not be
contributing with any insurance, orself-insurance maintained by Agency or City, and the
policies shall so provide. The insurance policies shill contain a waiver of subrogation
for the benefit of the City and Agency. Owner shall i`urnish the required certificates and
endorsements to Agency prior to the commencemernt of construction of the Project, and
shall provide Agency with certified copies of the required insurance policies upon
request of Agency.
1422347.2 23
q~
Exhibit C
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of
South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attn: Executive Director
Space above this line for Recorder's use.
NOTICE OF AFFORDABILITY RESTRICTIONS ON
TRANSFER OF PR pERTY
THIS NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF
PROPERTY (this "Notice") is dated as of
that certain real property located at 228 and 236 Grind Avenue0n South Sanrence to
Francisco, California, known as San Mateo County assessor's Parcel Nos. 012-315-
130 and 012-315-140, and more particularly described in Exhibit A attached hereto (the
"Property").
1. The Redevelopment Agency of the CilGy of South San Francisco, a public
body, corporate, and politic ("Agency") and Giffra Ehterprises, LLC, a California limited
liability company ("Owner") have entered into that certain Affordable Housing
Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory
Agreement") dated as of , 2011 and recorded in the Official Records of
San Mateo County substantially concurrently herewith.
2. The Regulatory Agreement requires not less thhan ten (10) of the residential units
developed on the Property to be rented at affordable'rents to households whose
income is less than or equal to one hundred twenty plercent (120%) of Area Median.
3. The restrictions set forth in the Regulatory Agreement will be in effect for a
period of fifty-five (55) years, commencing on the date of issuance of a final certificate
of occupancy for each phase of the Project developed on the Property.
This Notice is intended to provide notice of documents that affect title to the Property.
Reference should be made to the Regulatory Agreemlent for a more detailed description
of all matters described in this Notice. In the event o~ any conflict between the terms of
this Notice and the terms of the Regulatory Agreement, the Regulatory Agreement shall
prevail.
1922347.2 24
-t8
This Notice is being recorded and filed in compliance with California Health and
Safety Code Section 33334.3(f)(3) and (4), and shill be indexed by the Agency and the
current owner of the Property.
IN WITNESS WHEREOF, Owner and Agency have executed this Notice as of
the date first written above.
OWNER
GIFFRA ENTERPRISES, LLC,
a California limited liability company
By:_
Name:
Title:
REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO,
a public body corporate and politic
By:
Name:
Title:
ATTEST:
By:
Agency Secretary
APPROVED AS TO FORM:
By:
Agency Counsel
1422347.2 25
q~
Exhibit A
PROPERTY
1422347.2
(Attach legal description.)
26
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