AGR-7450 - MERCY HOUSING CALIFORNIA 107 LP - VILLA ST. JOSEPH 480 S BATAVIA ST - AFFORDABLE HOUSING AGREEMENTAFFORDABLE HOUSING AGREEMENT
Villa St. Joseph-480 South Batavia Street)
by and between
CITY OF ORANGE,
City,
and
MERCY HOUSING CALIFORNIA 107, L.P.
Developer
2022
TABLE OF CONTENTS
Page
Article I.SUBJECT OF AGREEMENT 1
Section 1.01 Purpose of the Agreement 1
Section 1.02 Definitions 1
Section 1.03 The Property 11
Section 1.04 The City 11
Section 1.05 The Developer 12
Section 1.06 Assignments and Transfers 12
Article II. ACQUISITION OF THE PROPERTY BY DEVELOPER 13
Section 2.01 Condition of the Property 13
Section 2.02 Acquisition of the Property by Developer 14
Article III. FINANCING 14
Section 3.01 Method of Financing 14
Section 3.02 City Assistance 14
Section 3.03 Evidence of Financing 15
Article IV. DEVELOPMENT OF THE PROPERTY 16
Section 4.01 Land Use Approvals 16
Section 4.02 Hazardous Materials 17
Section 4.03 Plans; Consruction Contract 17
Section 4.04 Construction Drawings and Related Documents 17
Section 4.05 City Approval of Plans,Drawings and Related Documents 18
Section 4.06 Cost of Construction 18
Section 4.07 Schedule of Performance 18
Section 4.08 Local, State and Federal Laws 19
Section 4.09 Nondiscrimination During Construction 20
Section 4.10 Copeland Anti-Kickback Act 20
Section 4.11 Contract Work Hours and Safety Standards Act 21
Section 4.12 Indemnification and Insurance 21
Section 4.13 Disclaimer of City Responsibility 24
Section 4.14 Permits 24
Section 4.15 Rights of Access 24
Section 4.16 Taxes, Assessments, Encumbrances and Liens 25
Section 4.17 Rights to Plans 25
Section 4.18 Release of Construction Covenants 25
Article V. USE OF THE PROPERTY 26
Section 5.01 Use As Affordable Housing 26
Section 5.02 Management Plan; Annual Project Budget; Quarterly Report 28
Section 5.03 Property Maintenance 29
Section 5.04 Obligation to Refrain from Discrimination 30
Section 5.05 Equal Employment Opportunity 31
Section 5.06 Labor, Training, and Business Opportunity 32
Section 5.07 Effect and Duration of Covenants 32
Section 5.08 Enforcement of Covenants 33
Section 5.09 Monitoring 33
Section 5.10 Agreement Containing Covenants;HOME Regulatory Agreement 33
Article VI. DEFAULTS AND REMEDIES 34
Section 6.01 Defaults -General 34
Section 6.02 Institution of Legal Actions 35
Section 6.03 Applicable Law 35
Section 6.04 Acceptance of Service of Process 35
Section 6.05 Rights and Remedies are Cumulative 35
Section 6.06 Damages 36
Section 6.07 Specific Performance 36
Section 6.08 Termination by Either Party 36
Section 6.09 Termination by Developer 36
Section 6.10 Termination by City 36
Section 6.11 Limited Recourse Obligations 36
Article VII. GENERAL PROVISIONS 37
Section 7.01 Notices 39
Section 7.02 Conflicts of Interest 39
Section 7.03 Nonliability of City Officials and Employees 39
Section 7.04 Force Majeure 39
Section 7.05 Inspection of Books and Records 40
Section 7.06 Approvals 40
Section 7.07 Real Estate Commissions 40
Section 7.08 No Third Party Beneficiaries 41
Section 7.09 Authority to Sign 41
Section 7.10 No Partnership 41
Section 7.11 Compliance With Law 41
Section 7.12 Binding Effect 41
Section 7.13 Incorporation by Reference 41
Section 7.14 Counterparts 42
Section 7.15 Construction and Interpretation of Agreement 42
Section 7.16 Entire Agreement, Waivers and Amendments 43
Section 7.17 Time for Acceptance of Agreement by City 43
ii
ATTACHMENTS
ATTACHMENT NO. 1 SITE MAP
ATTACHMENT NO.2 LEGAL DESCRIPTION
ATTACHMENT NO. 3 METHOD OF FINANCING
ATTACHMENT NO. 4 -SCHEDULE OF PERFORMANCE
ATTACHMENT NO. 5 PROJECT BUDGET
ATTACHMENT NO. 6 NOTICE OF AFFORDABILITY RESTRICTIONS
ATTACHMENT NO. 7 -AGREEMENT CONTAINING COVENANTS
ATTACHMENT NO. 8 HOME REGULATORY AGREEMENT
ATTACHMENT NO. 9 -LMIHAF NOTE
ATTACHMENT NO. 10 -IN LIEU FEES NOTE
ATTACHMENT NO. 11 -HOME NOTE
ATTACHMENT NO. 12 -CITY DEED OF TRUST
ATTACHMENT NO. 13 -ASSIGNMENT OF RENTS
ATTACHMENT NO. 14 -ASSIGNMENT OF AGREEMENTS
ATTACHMENT NO. 15 -ENVIRONMENTAL INDEMNITY
i i i
AFFORDABLE HOUSING AGREEMENT
Villa St. Joseph-480 South Batavia Street)
THIS AFFORDABLE HOUSING AGREEMENT (this "Agreement"), dated as of
2022, is entered into by and between the CITY OF ORANGE, a municipal
corporation of the State of California("City") and MERCY HOUSING CALIFORNIA 107, L.P.,
a California limited partnership("Developer"). City and Developer agree as follows:
ARTICLE I. SUBJECT OF AGREEMENT
Section 1.01 Purpose of the Agreement
The purpose of this Agreement is to provide for the City's assistance in financing the
acquisition, development and operation of forty-nine (49) affordable rental housing units for
Extremely Low Income,Very Low Income, and Low Income Senior Citizen Households, and one
1) manager's unit, through the adaptive reuse by Developer of a portion of the existing
Motherhouse(former convent)building located in an airspace parcel on the Property to be acquired
by the Developer. The development and use of the Property pursuant to this Agreement, and the
fulfillment generally of this Agreement, are in the vital and best interests of the City of Orange
and the health, safety, morals, and welfare of its residents, and in accord with the public purposes
and provisions of applicable federal,state,and local laws and requirements.Developer will acquire
an interest in the Property, consisting of a long-term lease of an airspace parcel together with fee
title to improvements therein, and City will assist Developer in paying the cost of acquiring the
Property and rehabilitating the Improvements (as defined below) and the Developer will acquire,
rehabilitate, and operate the Improvements on the Property, all in accordance with the terms and
conditions of this Agreement.
Section 1.02 Definitions
For purposes of this Agreement, the following capitalized terms will have the following
meanings:
Acquisition and Development Costs"means the total cost of acquiring the Property and
developing, constructing, and rehabilitating the Improvements thereon, as set forth in the Project
Budget.
Affiliate" means any Person directly or indirectly controlling, controlled by or under
common control with another Person. The term "control" as used in the immediately preceding
sentence, means the power to direct the management or the power to control election of the board
of directors. It will be a presumption that control with respect to a corporation or limited liability
company is the right to exercise or control, directly or indirectly,more than fifty percent(50%) of
the voting rights attributable to the controlled corporation or limited liability company, and, with
respect to any individual, partnership, trust, other entity or association, control is the possession,
indirectly or directly, of the power to direct or cause the direction of the management or policies
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Affordable Housing Agreement
Page 1
of the controlled entity.For purposes of this definition, each general partner will be considered an
Affiliate"of Developer.
Affordable Rent"has the meaning set forth in California Health and Safety Code Section
50053. Rents for the Units will not exceed the respective amounts set forth in the Agreement
Containing Covenants for each of the Units designated therein for occupancy by Extremely Low
Income, Very Low Income and Low Income Senior Citizen Households.
Agreement Containing Covenants" means the Agreement Containing Covenants
Including Rental Restrictions for each of the Units designated therein for occupancy by Extremely
Low Income, Very Low Income and Low Income Senior Citizen Households), substantially in the
form attached to this Agreement as Attachment No. 7.
Anti-Terrorism Laws" means all laws relating to terrorism or money laundering,
including, without limitation,the Currency and Foreign Transactions Reporting Act of 1970, Pub.
L.No. 91-508, 84 Stat. 1305 (1970), as amended from time to time.
Annual Project Budget"has the meaning given in paragraph b of Section 5.02.
Approved Title Conditions" means title that is subject to current property taxes and
assessments, Senior Loan, and easements and other encumbrances specifically approved by the
City Manager.
Assignment of Agreements"means a document substantially in the form attached to this
Agreement as Attachment No. 14, which is incorporated herein by this reference.
Assignment of Rents and Leases"means a document substantially in the form attached
to this Agreement as Attachment No. 13, which is incorporated herein by this reference.
City" means the City of Orange, California, a municipal corporation of the State of
California, and any assignee of or successor to its rights, powers and responsibilities.
City Deed of Trust" means the Subordinated Deed of Trust, Security Agreement and
Fixture Filing (With Assignment of Rents), in which Developer is the Trustor and City is the
Beneficiary, which secures the City Loans, substantially in the form attached to this Agreement as
Attachment No. 12.
City Loans" means, individually and collectively, the LMIHAF Loan, the In Lieu Fees
Loan, and the HOME Loan.
City Loan Documents" means the instruments described as such in the Method of
Financing.
Completion" means the point in time when all of the following will have occurred:
1) issuance of a permanent certificate of occupancy by the City of Orange; (2) recordation of a
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Notice of Completion by Developer or its contractor; (3) certification by the project architect that
construction and rehabilitation of the Improvements (with the exception of minor "punch list"
items) has been completed in a good and workmanlike manner and substantially in accordance
with the approved Plans; (4) payment, settlement or other extinguishment, discharge, release,
waiver, bonding or insuring against any mechanic's liens that have been recorded or stop notices
that have been delivered; (5) the time for Developer's contractor, suppliers and subcontractors to
file a claim pursuant to Civil Code Sections 3115-3117 has expired; (6)the Improvements comply
with the requirements of the HOME Regulations (including the property standards under 24 CFR
92.251); and (7) Developer has submitted to the City the information needed to complete the
Rental Set Up and Completion Form—HOME Program"required by HUD.
Conditions" means, with respect to the Property, the condition of the soil, geology,
improvements,the presence of known or unknown faults or defects, or Hazardous Substances, the
suitability of the Property for its intended uses, or the condition of any related public
improvements.
Construction Financing Event" means the point in time when (i) all conditions
precedent to the Construction Financing Event as set forth in the Method of Financing(Attachment
No. 3) have been satisfied; and (ii) the Construction Loan Deed of Trust and other Construction
Loan documents are recorded.
Construction Financing Event Date" means the date on which the Construction
Financing Event is scheduled to take place.
Construction Loan" means the Construction Period loan to be made to Developer by
Umpqua Bank, or another institutional lender acceptable to the City("Construction Lender") at
the time of the Construction Financing Event, secured by the Construction Loan Deed of Trust.
The Construction Loan is proposed to be made to Developer from the proceeds of certain tax-
exempt and taxable bonds as further described in the Method of Financing.
Construction Loan Deed of Trust" means the first priority deed of trust securing the
Construction Loan.
Construction Period" means the period of time commencing upon the Construction
Financing Event and ending at Conversion.
Conversion" means the point in time when the Permanent Financing has been funded,
the total Limited Partner Capital Contribution has been funded (subject to adjustment as provided
in the Limited Partnership Agreement and less that portion, not to exceed 10%, of the Limited
Partner Capital Contribution that will be funded upon receipt of Form(s) 8609), and the
Construction Loan has been repaid in full.
Developer Equity"means funds provided by Developer for payment of Acquisition and
Development Costs and does not include the Construction Loan, the Permanent Financing, the
City Loans or any other borrowed funds, and includes the Deferred Developer Fee (as defined in
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the Method of Financing), the Limited Partner Capital Contribution and other funds of the
Developer.
Environmental Indemnity" means an instrument substantially in the form attached to
this Agreement as Attachment No. 15.
Escrow Agent" means Commonwealth Land Title Company or another escrow agent
mutually acceptable to City and Developer.
Extremely Low Income" means household income that does not exceed the maximum
income set forth in California Health and Safety Code Section 50106.
Force Majeure" or "Force Majeure Event" means the following events, provided that
they actually delay and interfere with the timely performance of the matter to which it would apply
and despite the exercise of diligence and good business practices are or would be beyond the
reasonable control of the party claiming such interference: War; insurrection; strikes; lock-outs;
riots; floods;earthquakes;fires;casualties;acts of God;acts of the public enemy; acts of terrorism,
epidemics; pandemics; quarantine restrictions; freight embargoes; lack of transportation;
governmental restrictions or priority; litigation including litigation challenging the validity of this
transaction or any element thereof; unusually severe weather; inability to secure necessary labor,
materials or tools;delays of any contractor, subcontractor, or suppliers;acts of the other party; acts
or failure to act of any Governmental Authority (except acts or failure to act of the City will not
excuse performance by the City);the imposition of any applicable moratorium by a Governmental
Authority; or any other causes which despite the exercise of diligence and good business practices
are or would be beyond the reasonable control of the party claiming such delay and interference.
Notwithstanding the foregoing,none of the foregoing events will constitute a Force Majeure Event
unless and until the party claiming such delay and interference delivers to the other party written
notice describing the event, its cause, when and how such party obtained knowledge, the date the
event commenced, and the estimated delay resulting therefrom. Any party claiming a Force
Majeure Delay will deliver such written notice within fifteen (15) days after it obtains actual
knowledge of the event.
Force Majeure Delay"means any delay in taking any action required by this Agreement,
proximately caused by the occurrence of any Force Majeure Event.
Governmental Approvals" means and includes any and all general plan amendments,
zoning approvals or changes, required approvals and certifications under the California
Environmental Quality Act, tentative and final tract maps, variances, conditional use permits,
demolition permits, excavation/foundation permits, grading permits, building permits, inspection
reports and approvals, certificates of occupancy, and other approvals, permits, certificates,
authorizations, consents, orders, entitlements, filings or registrations, and actions of any nature
whatsoever required from any Governmental Authority in order to commence and complete the
construction of the Project.
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Governmental Authority" means the United States, the State of California, the County
of Orange, the City of Orange or any other political subdivision in which the Property is located,
and any court or political subdivision,City or instrumentality having jurisdiction over the Property.
Hazardous Substances"has the meaning set forth in the Environmental Indemnity.
HOME Loan"means the loan of HOME Program funds made by the City to Developer
pursuant to this Agreement, in the amount set forth in the final approved Project Budget, not to
exceed the amount of Six Hundred Fifty-One Thousand Two Hundred Forty-Four Dollars
651,244)which is evidenced by the HOME Note and secured by the City Deed of Trust and the
other City Loan Documents having a lien on the Property that is junior in priority to the lien of the
Senior Loan Deed of Trust.
HOME Note" means the Promissory Note evidencing the HOME Loan, substantially in
the form attached to this Agreement as Attachment No. 11.
HOME Regulations"means 24 CFR Part 92, as amended from time to time.
HOME Regulatory Agreement" means the Agreement Containing HOME Program
Requirements, substantially in the form attached to this Agreement as Attachment No. 8.
HOME Rents" means maximum rents, including a reasonable utility allowance for
utilities and services (excluding telephone)as follows:
1.For each of the Very Low Income HOME Units, the rent must meet either (a) or
b) of the following rent requirements:
a) The rent does not exceed the lesser of(1) 30 percent of the annual income
of a family whose income equals 50 percent of the median income for the area, as determined by
HUD, with adjustments for smaller and larger families, as provided by HUD; (2) the fair market
rent for existing housing for comparable units in the area as established by HUD under 24 CFR
888.111; or
b) The rent does not exceed 30 percent of the family's adjusted income. If the
unit receives federal or state project-based rental subsidy and the family pays as contribution
toward rent not more than 30 percent of the family's adjusted income,then the maximum rent(i.e.,
tenant contribution plus project-based rental subsidy) is the rent allowable under the federal or
state project-based rental subsidy program.
2. For each of the Low Income HOME Units,the rent may not exceed the lesser of:
a) The fair market rent for existing housing for comparable units in the area,
as established by HUD under 24 CFR 888.111; and
b) A rent that does not exceed 30 percent of the adjusted income (as that term
is defined in 24 CFR 92.203) of a family whose annual income (as that term is defined in 24 CFR
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Affordable Housing Agreement
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92.203) equals 65 percent of the median income for the area, as determined by HUD, with
adjustments for the number of bedrooms in the unit.
HUD"means the United States Department of Housing and Urban Development.
Improvements" means the residential development to be rehabilitated and constructed
on the Property, consisting of 6 studio units, 43 one-bedroom units, 1 two-bedroom manager's
unit, and ancillary facilities, as described in plan approvals and Governmental Approvals issued
or to be issued by the City.
In Lieu Fees Funds" means a portion of the funds derived from the City's In Lieu Fee
affordable housing ordinance.
In Lieu Fees Loan" means the loan made by the City to Developer pursuant to this
Agreement, in the amount set forth in the final approved Project Budget,not to exceed the amount
of Three Hundred Seventy Two Thousand Seven Hundred Fifty-Six Dollars ($372,756) which is
evidenced by the In Lieu Fees Note and secured by the City Deed of Trust and the other City Loan
Documents having a lien on the Property that is junior in priority to the lien of the Senior Loan
Deed of Trust.
In Lieu Fees Note" means the Promissory Note evidencing the In Lieu Fees Loan,
substantially in the form attached to this Agreement as Attachment No. 10.
Investor Limited Partner"means Wincopin Circle LLLP or any other Person acceptable
to Developer and City who will be a limited partner in Developer's limited partnership pursuant
to the Limited Partnership Agreement and who will be allocated the Low Income Housing Tax
Credits and own a 99.99% interest in the Developer, and any successor and assign thereof as
permitted by the Limited Partnership Agreement.
Legal Description" means the legal description of the Property attached to this
Agreement as Attachment No. 2.
Limited Partner Capital Contribution"means the Developer Equity provided from the
allocation of the Low Income Housing Tax Credits as set forth in the Method of Financing.
Limited Partnership"means the single purpose entity referred to herein as"Developer",
formed for the syndication of the Low Income Housing Tax Credits and ownership of the Project.
Limited Partnership Agreement" means the limited partnership agreement governing
the Limited Partnership and includes the Limited Partnership Agreement as amended and restated
on the admission of the Investor Limited Partner.
LMIHAF"means the Low and Moderate Income Housing Asset Fund, established and
maintained by the City pursuant to California Health and Safety Code Sections 34176 and 34176.1.
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LMIHAF Loan" means the loan made by the City to Developer pursuant to this
Agreement, in the amount set forth in the final approved Project Budget,not to exceed the amount
of Five Hundred Seventy Six Thousand Dollars ($576,000) which is evidenced by the LMIHAF
Note and secured by the City Deed of Trust and the other City Loan Documents having a lien on
the Property that is junior in priority to the lien of the Senior Loan Deed of Trust.
LMIHAF Note"means the Promissory Note evidencing the LMIHAF Loan, substantially
in the form attached to this Agreement as Attachment No. 9.
Low Income" means the maximum income given to "lower income" households in
California Health and Safety Code Section 50079.5.
Low Income HOME Tenant" means a senior citizen household whose household
income does not exceed 80%of the area median income adjusted for household size,as determined
annually by the united states department of housing and urban development.
Low Income HOME Unit" means one of the Units designated in the HOME Regulatory
Agreement to be occupied by a Low Income HOME Tenant at HOME Rents.
Low Income Housing Tax Credits"means tax credits authorized by the Tax Reform Act
of 1986 and governed by Section 42 of the Internal Revenue Code.
Maintenance Program"has the meaning given in Section 5.03.
Management Plan"has the meaning given in paragraph a. of Section 5.02.
Managing General Partner" means Mercy Housing California 107 LLC, a California
limited liability company, and its successors and assigns permitted under the terms of this
Agreement. Mercy Housing California 107 LLC is the sole general partner of Mercy Housing
California 107, L.P.
Method of Financing"means Attachment No. 3 to this Agreement.
Notice of Affordability Restrictions"means the Notice of Affordability Restrictions on
Transfer of Real Property, substantially in the form attached to this Agreement as Attachment No.
6.
Permanent Financing" means the loans and other sources of permanent financing
identified in the Method of Financing(Attachment No. 3).
Permanent Period"means the period of time commencing at Conversion.
Permitted Transfer" means any of the following, provided (except for subsection f.
below)Developer or a general partner of Developer, or an Affiliate of such general partner,retains
day-to-day control over management and operations of the Property and the Improvements and
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further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-
Terrorism Laws:
a. An assignment of this Agreement and Developer's interests in the Property to an
Affiliate or a conveyance back from the Affiliate to Developer;
b. A conveyance of a security interest in the Property or any portion thereof or interest
therein, in connection with a Senior Loan approved by the City;
c. The inclusion of equity participation in the Project by addition of limited partners
to the Limited Partnership or similar mechanism, and any transfers of limited
partnership interests in Developer's partnership;
d. The lease for occupancy of any part of the Improvements on the Property in
accordance with this Agreement;
e. The granting of easements or permits to facilitate the development of the Property
in accordance with this Agreement;
f. The withdrawal, removal and/or replacement of a general partner of the Limited
Partnership pursuant to the terms of the Limited Partnership Agreement, or a
conveyance of Developer's interest in the Property and the Improvements and a
transfer of limited partnership interests to a general partner pursuant to the option
provided to that partner in Developer's partnership agreement,will not constitute a
default under this Agreement or any of the City Loan Documents, nor will such
actions accelerate the maturity of the City Loans, provided that, unless the
substitute general partner is an entity directly or indirectly controlled by Enterprise
Community Asset Management, Inc., any required substitute general partner is
reasonably acceptable to the City, as evidenced by the City's written consent, and
is selected with reasonable promptness; and
g. Any transfer approved in writing by City Manager or designee, at his or her sole
discretion.
Transfers described in clauses a, b, or c will be subject to the reasonable approval of the City
Manager or designee; provided that, the City approves the transfer of limited partner interests in
Developer's partnership, so long as such transfer is not a result of a resyndication of the Low
Income Housing Tax Credits and does not otherwise result in increased equity participation in
Developer, and further provided that such transfer is not to a Prohibited Person or would otherwise
violate Anti-Terrorism Laws.
Person" means an individual, partnership, limited partnership, trust, estate, association,
corporation, limited liability company, or other entity, domestic or foreign.
Plans" means the architectural and construction plans and drawings prepared on behalf
of Developer for Developer's use for the Project in accordance with this Agreement.
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Prohibited Person"means any of the following:
a. a Person that is listed in or is otherwise subject to the prohibitions of, any Executive
Order relating to money laundering or anti-terrorism;
b. a Person owned or controlled by, or acting for or on behalf of, any Person that is
listed in or is otherwise subject to the prohibitions of, any Executive Order relating
to money laundering or anti-terrorism;
c. a Person or entity with whom Developer or Investor Limited Partner is prohibited
from dealing or otherwise engaging in any transaction by Anti-Terrorism Laws;
d. a Person that is named as a"specially designated national and blocked person" on
the most current list published by the Office of Foreign Asset Control of the U.S.
Treasury Department.
Project" means the financing, planning, construction, rehabilitation and use of the
Property and the Improvements as provided in this Agreement.
Project Budget" means the schedule of sources and uses attached to this Agreement as
Attachment No. 5.
Property" means the real property described in the legal description attached to this
Agreement as Attachment No. 2, comprised of a long-term lease of an airspace parcel (the
Airspace Lease") together with fee title to improvements and fixtures located at the Airspace
Lease premises, including without limitation that certain 50 unit apartment complex and all other
buildings and structures located at the Air Space Lease premises (the"Improvements").
Quarterly Report"has the meaning given in paragraph c of Section 5.02.
Release of Construction Covenants" means the certificate to be issued by the City in
accordance with Section 4.18 of this Agreement.
Restricted Period" means the period commencing at recordation of the Agreement
Containing Covenants and continuing until the date that is fifty-five (55) years after Conversion.
Notwithstanding, the Restricted Period for the HOME Units will be as set forth in the HOME
Regulatory Agreement.
Schedule of Performance" means the document attached to this Agreement as
Attachment No. 4.
Seller Carryback Loan" means the carryback loan made to Developer by the seller of
the Improvements in connection with the agreement of the Developer to acquire the Property.
Seller Carryback Loan Deed of Trust" means the deed of trust securing the Seller
Carryback Loan.
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Senior Citizen Household" means a household where at least one person in residence
qualifies for occupancy under the California Tax Credit Allocation Committee's regulations
applicable to the Project and intends to reside in the unit as his or her primary residence on a
permanent basis, and where any other person residing in the unit is a "qualified permanent
resident"or a"permitted health care resident"as provided in the Unruh Civil Rights Act,California
Civil Code Section 51 et seq., or the Federal Fair Housing Act 42 USC Section 3607, and such
household's occupancy is in compliance with all applicable federal, state and local laws and
regulations governing the use and occupancy of the Project. All of the units shall be rented to
Senior Citizen Households.
Senior Lender"means the maker of a Senior Loan, and an approved construction lender,
credit enhancer or construction period guaranty facility.
Senior Loan Deed of Trust" means, during the Construction Period, the Construction
Loan Deed of Trust, and during the Permanent Period,the HCD NPLH Loan and OCHCD Loans
Deeds of Trust as described in the Method of Financing(Attachment No. 3).
Senior Loan"means,during the Construction Period, the Construction Loan, and during
the Permanent Period, the HCD NPLH Loan and OCHCD Loans Deeds of Trust as described in
the Method of Financing(Attachment No. 3).
Senior Loan Documents" means, as applicable, the Construction Loan Deed of Trust,
the HCD NPLH Loan Deed of Trust, the OCHCD Loans Deed of Trust, loan agreements,
promissory notes, financing statements, guaranties, security agreements,assignments, and similar
documents and instruments to be executed by Developer in connection with a Senior Loan.
Site Map" means the document which is attached to this Agreement as Attachment No.
1.
Subordination Agreement" means an instrument in a form agreed to by the City
Manager or designee and Senior Lender, which subordinates the City Loans, but not the
Agreement Containing Covenants or the HOME Regulatory Agreement,to a Senior Loan.
Title Company" means Commonwealth Land Title Company or another title insurance
company mutually acceptable to City and Developer.
Title Insurance Policies" means and include the following ALTA extended coverage
policies of title insurance issued by the Title Company, subject to the Approved Title Conditions:
a. A lender's policy of leasehold title insurance in favor of the Construction Lender,
together with such endorsements as the Construction Lender may reasonably require, insuring the
lien of the Construction Loan, in the amount of the Construction Loan (the "Construction
Lender's Title Policy"); and
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b. A lender's policy or policies of title insurance in favor of City, together with such
endorsements as City may reasonably require, insuring the lien of the City Deed of Trust in the
cumulative amount of the City Loans (the"City's Title Policy").
Transfer"means:
a. The sale, agreement to sell,transfer or conveyance of the Property, the Project, or
any portion thereof or interest therein(including,without limitation, a beneficial interest),whether
voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale
contract or similar instrument affecting all or a portion of the Property or Project, or the lease of
all or substantially all of the Property or Project.
b. "Transfer" also includes the transfer, assignment, hypothecation or conveyance of
legal or beneficial ownership of an interest in Developer, or a conversion of Developer to an entity
form other than that of Developer at the time of execution of this Agreement, except that, a
cumulative change in ownership interest of a general partner of the Developer of forty-nine percent
49%) or less will not be deemed a"Transfer" for purposes of this Agreement.
UCC-1"means a UCC-1 Financing Agreement naming the City as creditor and Developer
as debtor.
Unit" means each of the rental housing units to be developed as part of the Project in
accordance with this Agreement.
Very Low Income"means household income that does not exceed the maximum income
set forth in California Health and Safety Code Section 50105.
Very Low Income HOME Tenant" means a tenant whose household income does not
exceed 50%of the area median income adjusted for household size, as determined annually by the
United States Department of Housing and Urban Development.
Very Low Income HOME Unit" means one of the Units designated in the HOME
Regulatory Agreement to be occupied by a Very Low Income HOME Tenant at HOME Rents.
Section 1.03 The Property
The "Property" is that property in the City of Orange as illustrated on the "Site Map"
attached hereto as Attachment No. 1) and as described in the"Legal Description of the Property"
attached hereto as Attachment No. 2).
Section 1.04 The City
a. The City is a municipal corporation of the State of California.
b. The address of the City for purposes of receiving notices pursuant to this Agreement
is as follows: 300 E. Chapman Avenue, Orange, California 92866,Attn: City Manager.
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c. "City" as used in this Agreement includes the City of Orange and any assignee or
successor to its rights, powers and responsibilities.
Section 1.05 The Developer
a. Developer is Mercy Housing California 107,L.P., a California limited partnership.
The address of Developer for purposes of receiving notices pursuant to this Agreement is as
follows:
Mercy Housing California 107, L.P.
1500 S. Grand Avenue, Suite 100
Los Angeles, California 90015
Attn: Erika Villablanca
Copies of notices to Developer will be delivered at the same time to the Investor Limited Partner
at the address provided in the LMIHAF Note.
b. Whenever the term"Developer" is used herein, such term means and includes: (1)
the Developer as of the date hereof; and(2) any assignee of or successor to its rights, powers and
responsibilities approved by the City or permitted by this Agreement.
Section 1.06 Assignments and Transfers
a. The qualifications and identity of the Developer are of particular concern to the
City.It is because of those qualifications and identity that the City has entered into this Agreement
with the Developer. No voluntary or involuntary successor in interest of the Developer will acquire
any rights or powers under this Agreement except as expressly set forth herein.
b. The Developer will not assign all or any part of this Agreement without the prior
written approval of the City.The City agrees to reasonably give such approval if, in the reasonable
determination of the City, the proposed assignee is comparable in all material respects (including
experience, character and financial capability) to the Developer. Any such change(or assignment
of this Agreement in connection therewith)will be by instruments satisfactory to the City Manager
or designee), and be subject to the approval by the City Manager(or designee) of evidence of the
proposed assignee's qualifications to meet the obligations of the Developer under this Agreement.
c. For the reasons cited above, except for any Permitted Transfer as set forth in
subsection f. in the definition of"Permitted Transfer"above, Developer represents and agrees for
itself and any successor in interest that without the prior written approval of the City, which will
not be unreasonably withheld, there will be no cumulative change in ownership interest of any
general partner of greater than 49%, by any method or means.
d. Developer will promptly notify the City of any and all changes whatsoever in the
identity of the parties in control of Developer or the degree thereof,of which it or any of its officers
have been notified or otherwise have knowledge or information. This Agreement may be
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terminated by the City, and the City may exercise its remedies pursuant to the City Loan
Documents, if there is any significant change(voluntary or involuntary) in membership, executive
management or control of Developer (other than such changes occasioned by the death or
incapacity of any individual or a Permitted Transfer). "Significant change" as used in the
preceding sentence is any change that results(directly or indirectly) in a change of the day to day
management of Developer following the date of this Agreement.
e. The Developer will not, except for Permitted Transfers or as permitted by this
Agreement, make or attempt to make a Transfer,without prior written approval of the City, except
as expressly permitted by this Agreement and the other City Loan Documents.Consent to one such
transaction will not be deemed to be a waiver of the right to require consent to future or successive
transactions. Proposed transferees must have the qualifications and financial responsibility
necessary and adequate as may be reasonably determined by the City, to fulfill Developer's
obligations undertaken in this Agreement. A proposed transferee, by instrument in writing
satisfactory to the City and in form recordable among the land records, for itself and its successors
and assigns, and for the benefit of the City must expressly assume all of Developer's obligations
under this Agreement and agree to be subject to all conditions and restrictions applicable to the
Developer in this Agreement. There must be submitted to the City for review all instruments and
other legal documents proposed to affect any such transfer; and if approved by the City its approval
will be indicated to Developer in writing.
f. In the absence of specific written agreement by the City, no Transfer, or approval
thereof by the City, will be deemed to relieve Developer or any other party from any obligations
under this Agreement.
g. Notwithstanding section 106.b., Developer will have the right to execute deeds of
trust and other instruments granting a security interest in the Property for the purposes of financing
the Acquisition and Development Costs, as described in Article III of this Agreement and the
Method of Financing attached hereto as Attachment No. 3.
ARTICLE II. ACQUISITION OF THE PROPERTY BY DEVELOPER
Section 2.01 Condition of the Property
a. No person acting on behalf of the City is authorized to make, and by execution of
this Agreement, Developer acknowledges that neither the City nor any person acting on behalf of
the City has made any representation, agreement, statement, warranty, guarantee or promise
regarding the zoning, construction, physical condition or other status or Condition of the Property,
except as otherwise expressly provided in this Agreement.
b. Developer acknowledges and agrees that, except as expressly set forth in this
Agreement, the City makes no representations and warranties, express or implied, as to the
Property,the physical condition of the Property,and any Condition which may exist on, in or under
the Property. Other than the representations and warranties set forth in this Agreement, Developer
hereby expressly acknowledges and agrees that it is relying solely upon its inspections,
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examination, and evaluation of the Property.
c. It will be the sole responsibility of Developer, at Developer's expense, to
investigate and determine all conditions of the Property and its suitability for the uses to which the
Property is to be put in accordance with this Agreement. If the conditions of the Property are not
in all respects entirely suitable for the use or uses to which the Property will be put, then it is the
responsibility and obligation of Developer, without cost to the City, to take such action or cause
such action to be taken, as may be necessary to place the Property in all respects in a condition
entirely suitable for its development and use in accordance with this Agreement.
Section 2.02 Acquisition of the Property by Developer
a. The Developer shall acquire a long-term airspace lease to the Airspace Parcel
located at the Property and fee simple merchantable title to the Improvements pertaining to the
Property on or before the time required in the Schedule of Performance, and shall pay therefor a
lease rental and purchase price not to exceed the amounts set forth for acquisition of the Property
in the approved final Project Budget. The Airspace Lease shall be approved in writing by the City
Manager or designee prior to the Construction Financing Event for consistency with the terms and
conditions of this Agreement.
b. The timely acquisition of the Property by Developer as and when required by this
Agreement shall be a condition precedent to the performance by City of any of its obligations in
this Agreement.
ARTICLE III. FINANCING
Section 3.01 Method of Financing
The Acquisition and Development Costs will be financed with a combination of sources of
financing as provided in the Method of Financing, attached to this Agreement as Attachment No.
3.
Section 3.02 City Assistance
a. City Loans. In accordance with and subject to the terms and conditions of this
Agreement, including the Method of Financing, the City agrees to lend to the Developer, and the
Developer agrees to borrow from the City, the LMIHAF Loan, the In Lieu Fees Loan, and the
HOME Loan, as described in the Method of Financing attached hereto as Attachment No. 3.At or
prior to the Construction Loan Closing, the City and Developer will execute and deliver such
instruments and documents as may be necessary to evidence and secure the City Loans, consistent
with the terms of this Agreement and the Method of Financing, and each in a form that is
acceptable to the City Manager or designee. Developer hereby warrants and agrees that Developer
will use the HOME Loan solely for the purpose of paying a portion of the construction and
rehabilitation costs for the Very Low Income Home Units and the Low Income Home Units and
for no other purpose.
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b. Gap Assistance. The parties acknowledge that the City Loans are intended to be
gap" financing, not to exceed the amount needed to bridge the gap between the total Acquisition
and Development Costs(as further described in the Method of Financing)and the maximum loans
obtainable by Developer plus an agreed amount of Developer's Equity, but in no event greater
than the loan amounts set forth in this Agreement and the approved final Project Budget. The
proceeds of the City Loans will be used exclusively to pay Acquisition and Development Costs
identified in the Project Budget (which is attached to this Agreement as Attachment No. 5 and
incorporated herein by this reference). The City Loans are subject to the terms and provisions of
the City Loan Documents, including but not limited to the LMIHAF Note, the In Lieu Fees Note,
and the HOME Note.
c. Senior Loan and Tax Credits. City agrees that the lien of the City Deed of Trust
will be subordinate to the lien of the Construction Loan Deed of Trust and, during the Permanent
Period, the HCD NPLH Loan and the OCHCD Loans Deeds of Trust. City agrees to make such
modifications to this Agreement, and the City Manager will execute such estoppel certificates, as
may reasonably be requested by the Construction Lender and the Investor Limited Partner,
provided that such modifications or certificates are consistent with the terms of this Agreement
and do not materially adversely affect the receipt of any material benefit by City hereunder. The
City Manager will execute such subordination agreements regarding the City Loans, but not the
Agreement Containing Covenants,Notice of Affordability Restrictions, or the HOME Regulatory
Agreement, as may reasonably be requested by the Construction Lender and Developer,provided
that such subordination agreements will provide the City with all rights under California Civil
Code Section 2924b and 2924c and Health and Safety Code Section 33334.14(a)(4).
Section 3.03 Evidence of Financing
a. Not later than fifteen(15)days prior to the scheduled Construction Financing Event
Date, Developer will submit to the City draft documents containing evidence satisfactory to the
City that Developer has obtained the financing necessary for the development of the Property in
accordance with this Agreement. Developer shall submit final documents containing such
evidence prior to the scheduled Construction Financing Event Date. Such evidence of financing
will include the following:
1. A copy of all loan documents relating to the Construction Loan, including
a final project budget approved by the Construction Lender, certified by the Developer to be a true
and correct copy or copies thereof.The Construction Loan Documents shall not contain conditions
which the City Manager finds unduly prohibits the disbursement of Construction Loan proceeds
prior to substantial disbursement of the City Loans (other than retainage), and Developer shall
deliver to the City Manager documentation acceptable to the City Manager (or its designee)
evidencing the satisfaction or waiver by the Construction Lender as of the Construction Financing
Event of all conditions precedent to the disbursement of Construction Loan proceeds after the
initial Construction Financing Event;
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2. Documentation acceptable to the City Manager or designee of sources of
capital sufficient to demonstrate that the Developer has adequate equity funds committed to
provide the amount of Developer Equity required by the Method of Financing;
3. A copy of the Permanent Financing commitment or commitments; and
4. A copy of the contract between the Developer and the general contractor
and contracts with major subcontractors for the construction and rehabilitation of the
Improvements, certified by the Developer to be a true and correct copy thereof.
b. The City will approve or disapprove such evidence of financing within the time
established in the Schedule of Performance. Such approval will not be unreasonably withheld or
delayed. If the City will disapprove any such evidence of financing,the City will do so by written
notice to the Developer stating the reason(s) for such disapproval.
ARTICLE IV.DEVELOPMENT OF THE PROPERTY
Section 4.01 Land Use Approvals
a. It is the responsibility of the Developer, without cost to City, to ensure that zoning
of the Property and all applicable City land use requirements will be such as to permit development
of the Property and construction and rehabilitation of the Improvements and the use, operation and
maintenance of such Improvements in accordance with the provisions of this Agreement.
b. The following will be conditions of the Construction Financing Event: (A)
Developer will submit and City Manager or designee will approve one hundred percent (100%)
complete construction drawings; and (B) Developer will obtain all entitlements, approvals,
variances and permits necessary for the construction and rehabilitation of the Improvements.
c. The City makes no warranties of any kind as to the entitlements and disclaims all
liability arising from use thereof by Developer or any third party. Developer and its architect,
engineer, and general contractor, are responsible to obtain all building permits and to ensure that
all work performed in the development of the Project is in accordance with of all applicable federal,
state, and local building codes as well as applicable construction standards, fire department
standards, utility company standards and best practices. Developer hereby waives, to the fullest
extent permitted by law, any right it may have to hold the City liable, or recover from the City, or
any of their officers, agents, or employees, for any claims or damages which shall or might occur
in connection with Developer's use of the entitlements.
d. Nothing contained herein will be deemed to entitle Developer to any City of Orange
permit or other City approval necessary for the development of the Property, or waive any
applicable City requirements relating thereto. This Agreement does not (a) grant any land use
entitlement to Developer, (b) supersede,nullify or amend any condition which may be imposed by
the City of Orange in connection with approval of the development described herein, (c) guarantee
to Developer or any other party any profits from the development of the Property, or (d) amend
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any City laws, codes, rules or regulations. This is not a Development Agreement under
Government Code Section 65864.
Section 4.02 Hazardous Materials
Prior to the Construction Financing Event Date, Developer will deliver to the City a true
and complete copy of any environmental assessments Developer has made of the Property and the
existing improvements. Developer agrees to perform, or cause to be performed, the clean-up of
any Hazardous Substances on, in,under or within the Property,without cost or expense to the City.
Developer will defend, indemnify and hold harmless the City and its officers, agents, employees,
contractors and attorneys from any claims, liability, injury, damages, costs and expenses
including, without limiting the generality of the foregoing, the cost of any required cleanup of
hazardous substances, and the cost of reasonable attorneys' fees) which may be sustained as the
result of Hazardous Materials relating to the Property. As a condition precedent to the making of
any of the City Loans,Developer will execute and deliver to the City the Environmental Indemnity
Attachment No. 15).
Section 4.03 Plans; Construction Contract
The Property will be developed in accordance with Plans approved by the City for the
development of the Project by Developer pursuant to this Agreement and permits issued by the
City. It is anticipated that Developer will contract for performance of specific activities, including
but not limited to activities such as relocation services (if necessary), site inspections, and
management of the Units. Such contracts will not in any way diminish or waive Developer's
obligations under this Agreement. The identity and qualifications of the general contractor must
be approved by the City. Developer must also submit to the City for approval copies of the
proposed contract with the general contractor and copies of any proposed subcontracts for
mechanical, electrical,plumbing,framing and other trades requested in writing by the City,which
approval will not be unreasonably withheld or delayed.
Section 4.04 Construction Drawings and Related Documents
a. Developer will prepare and submit construction drawings and related documents
for the development of the Property to the City for review (including, but not limited to,
architectural review)and written approval at the times established in the Schedule of Performance.
The construction drawings and related documents shall include but not be limited to, preliminary
and final drawings, plans and specifications. Final drawings, plans, and specifications are hereby
defined as those in sufficient detail to obtain a building permit. Any items so submitted and
approved in writing by the City will not be subject to subsequent disapproval. City approval will
not be unreasonably withheld, conditioned or delayed.
b. In the event of the disapproval by the City of any plans submitted by Developer,
City will promptly communicate in writing to Developer all reasons for such disapproval and all
requirements for subsequent approval of revised plans.
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c. During the preparation of all drawings and plans,the City staff and Developer will
hold regular progress meetings to coordinate the preparation of, submission to, and review of
construction plans and related documents by the City. The City staff and Developer will
communicate and consult informally as frequently as is necessary to ensure that the formal
submittal of any documents to the City can receive appropriate consideration.
d. If any revisions or corrections of plans approved by the City will be required by a
governmental official, authority, department or bureau having jurisdiction over the development
of the Property, Developer and the City will cooperate in efforts to obtain waiver of such
requirements or to develop a mutually acceptable alternative.
Section 4.05 City Approval of Plans,Drawings and Related Documents
As provided in Section 4.04, the City will have the right of reasonable review (including,
but not limited to, architectural review) and approval of all plans, drawings and related documents
for the development of the Property, including any proposed changes therein. The City will
approve or disapprove such plans, drawings, and related documents referred to in this Agreement
and any proposed changes therein), in writing, within the times established in the Schedule of
Performance. Any disapproval will state, in writing,the reasons for disapproval. Developer,upon
receipt of the City's disapproval will revise such portions of the plans, drawings or related
documents in a manner that satisfies the reasons for disapproval and resubmit such revised portions
to the City as soon as possible after receipt of the notice of disapproval. The City will approve or
disapprove such revised portions in the same manner and within the same times as provided in this
Section 4.05 for approval or disapproval of plans, drawings, and related documents initially
submitted to the City.
Section 4.06 Cost of Construction
a. The cost of acquiring the Property and developing, rehabilitating and constructing
the Improvements thereon will be the responsibility of the Developer, as provided in the Method
of Financing. The Acquisition and Development Costs are set forth in the Project Budget
Attachment No. 5),which will be subject to change from time-to-time as provided in the Method
of Financing. Developer will establish procurement procedures to ensure that materials and
services are obtained in a cost-effective manner.
b. Developer has proposed, and the City has approved, the Project Budget appended
to this Agreement as Attachment No. 5. Developer acknowledges that the City is relying on
Developer's experience and expertise in establishing the Acquisition and Development Costs for
the Project and Developer represents and warrants that the Project Budget is based on Developer's
best, good faith estimate of the costs to be incurred.
Section 4.07 Schedule of Performance
a. Developer and City will perform all acts respectively required of such party in this
Agreement within the times provided in the Schedule of Performance. The Schedule of
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Performance is subject to revision from time to time as mutually agreed upon in writing by
Developer and the City Manager, and such revision approval shall not be unreasonably withheld,
conditioned or delayed.
b. After the Construction Financing Event, Developer will promptly begin and
thereafter diligently prosecute to completion the rehabilitation and construction of the
Improvements as required by this Agreement. Developer will begin and complete all construction
and development within the times specified in the Schedule of Performance,with such reasonable
extensions of said times as may be granted in writing by the City, including Force Majeure Delays.
The Schedule of Performance is subject to revision from time to time as mutually agreed upon in
writing by Developer and City.
c. During periods of construction, Developer will submit to the City a written report
of the progress of the construction when and as requested by the City. The report will be in such
form and detail as may be reasonably required by the City and will include a reasonable number
of construction photographs(if requested)taken since the last report by Developer.Developer will
meet with the City as requested during construction to discuss the resolution of any concerns the
City might have. Representatives of the City will have the right to participate in weekly
construction meetings and will have the right to approve proposed finishes, colors, fixtures, and
like matters.
Section 4.08 Local, State and Federal Laws
a. Developer will carry out development, construction (as defined by applicable law)
and operation of the Improvements on the Property, including, without limitation, any and all
public works (as defined by applicable law), in conformity with all applicable local, state and
federal laws, including, without limitation, all applicable federal and state labor laws (including,
without limitation, the requirement to pay state or federal prevailing wages, if applicable).
Developer expressly covenants and warrants that,as required for disbursement of the HOME Loan,
it will comply with all applicable laws, ordinances, codes, rules and regulations of the federal
government, and all amendments thereto, including, but not limited to: Title 8 of the Civil Rights
Act of 1968 PL.90-284; Executive Order 11063 on Equal Opportunity and Housing; Section 3 of
the Housing and Urban Development Act of 1968;the Housing and Community Development Act
of 1974, as well as all requirements set forth in the HOME Regulations. Developer agrees to
comply with all applicable standards,orders,or requirements issued under section 306 of the Clean
Air Act (42 U.S.C. 1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive
Order 11738, and Environmental Protection Agency regulations (40 CFR part 15). Developer
further warrants and agrees to include or cause to be included the criteria and requirements of this
paragraph in every non-exempt contract in excess of$100,000.
b. Developer hereby expressly acknowledges and agrees that the City of Orange has
not ever previously affirmatively represented to the Developer or its contractor(s) for the
Improvements in writing or otherwise, in a call for bids or otherwise, that the work to be covered
by the bid or contract is not a "public work," as defined in Section 1720 of the Labor Code.
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Developer hereby agrees that Developer will have the obligation to provide any and all disclosures
or identifications required by Labor Code Section 1781, as the same may be enacted, adopted or
amended from time to time, or any other similar law. Developer will indemnify, protect, defend
and hold harmless the City, and its officers, employees, contractors and agents, with counsel
reasonably acceptable to City, from and against any and all loss, liability, damage, claim, cost,
expense, and/or"increased costs" (including reasonable attorneys' fees, court and litigation costs,
and fees of expert witnesses) (collectively, the "Claims") which, in connection with the
development, construction (as defined by applicable law) and/or operation of the Improvements,
including, without limitation, any and all public works (as defined by applicable law), results or
arises in any way from any of the following: (1)the noncompliance by Developer of any applicable.
local, state and/or federal law, including, without limitation, any applicable federal and/or state
labor laws (including, without limitation, the requirement to pay state prevailing wages); (2) the
implementation of Section 1781 of the Labor Code, as the same may be enacted, adopted or
amended from time to time, or any other similar law; and/or (3) failure by Developer to provide
any required disclosure or identification as required by Labor Code Section 1781, as the same may
be enacted, adopted or amended from time to time, or any other similar law.
c. It is agreed by the parties that, in connection with the development, construction
as defined by applicable law) and operation of the Improvements, including, without limitation,
any and all public works (as defined by applicable law), Developer will bear all risks of payment
or non-payment of state prevailing wages and/or Labor Code Section 1781, as the same may be
enacted, adopted or amended from time to time, and/or any other similar law. "Increased costs"
as used in this Section 4.08 will have the meaning ascribed to it in Labor Code Section 1781, as
the same may be enacted, adopted or amended from time to time.
d. The foregoing indemnity will survive termination of this Agreement and will
continue after Completion, but will exclude any Claims to the extent resulting from the gross
negligence and/or willful misconduct of the City.
Section 4.09 Nondiscrimination During Construction
Developer, for itself and its successors and assigns, agrees that during the construction of
the Improvements provided for in the Agreement,Developer will not discriminate on the basis of
race, gender, religion, national origin, ethnicity, sexual orientation, age or disability in the
solicitation, selection, hiring or treatment of any employees, contractors or consultants. Developer
understands and agrees that violation of this clause will be considered a material breach of this
Agreement and may result in termination, debarment or other sanctions. This language must be
incorporated into all contracts between Developer and any contractor or consultant, and all
contracts with any subcontractor, sub-consultant, vendor or supplier.
Section 4.10 Copeland Anti-Kickback Act
Developer will comply with the provisions of the Copeland Anti-Kick-Back Act(18 U.S.C.
874) as supplemented in the Department of Labor regulations (29 CFR Part 3), as amended.
Developer warrants and agrees to include or cause to be included this requirement in every
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nonexempt subcontract. Developer also agrees to take such action as the federal, state or local
government may direct to enforce aforesaid provisions.
Section 4.11 Contract Work Hours and Safety Standards Act
Developer will comply with the provisions of sections 103 and 107 of the Contract Work
Hours and Safety Standard Act(40 U.S.C. 327-330) as supplemented by the Department of Labor
regulations (29 CFR,Part 5), as amended. Developer warrants and agrees to include or cause to be
included this requirement in every nonexempt contract. Developer also agrees to take such action
as the federal, state or local government may direct to enforce aforesaid provisions.
Section 4.12 Indemnification and Insurance
a. Developer agrees to and will, to the fullest extent permitted by law, defend,
indemnify and hold the City of Orange and its officers,employees,contractors and agents harmless
from and against all claims, liability, loss, damage, costs or expenses (including reasonable
attorneys' fees and court costs) arising from or as a result of, in whole or in part, any of the
following: (1) any act or omission of Developer or its architect, engineer, contractors, suppliers, or
vendors,of any contracting tier,or anyone directly or indirectly employed by any of them,or anyone
for whose acts Developer may be liable, in connection with the performance or nonperformance of
this Agreement, including but not limited to the development, rehabilitation, marketing or use of
the Property in any way, and any plans or designs for improvements prepared by or on behalf of
Developer, including without limitation any errors or omissions with respect to such plans or
designs; (2)the breach of any obligations of Developer hereunder; and(3)the use of any products,
material or equipment furnished by Developer or its contractors, suppliers, or vendors, of any
contracting tier. Such obligation to indemnify will not be construed to negate, abridge, or otherwise
reduce other rights or obligations of indemnity which would otherwise exist as to a party or person
described in this Section. The foregoing indemnification will apply to the extent of the violation of
a legal duty, including but not limited to active or passive negligence, strict liability, breach of
contract, or intentional or willful misconduct, by Developer or its architect,contractors, suppliers,or
vendors,of any contracting tier,or anyone directly or indirectly employed'by any of them,or anyone
for whose acts Developer may be liable. Indemnitees will be entitled to recovery of attorney's fees
incurred as a result of Developer's failure to provide the defense and indemnity required by this
Section. This Section will survive the expiration or termination of this Agreement.
b. Prior to the Construction Financing Event Date (except as provided in the next
sentence), Developer will furnish or cause to be furnished to the City evidence of the following
policies of insurance, naming Developer as insured and the City as certificate holder and, except
as to the insurance described in paragraph(v),below,the City as additional insureds.The insurance
requirements set forth in this subsection b. are subject to change prior to the Construction
Financing Event Date, as needed to satisfy City's then-applicable requirements. Evidence of
insurance must include additional insured endorsements naming the City as additional insureds
and including a primary insurance and waiver of contribution clause, a separation of insureds
clause and a cancellation notice clause, in the form approved by the City.The insurance described
in paragraph (ii) will be obtained prior to the initial rent-up of the apartments. It is the mutual
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intent of the parties that the levels of insurance coverage described herein will be and remain
comparable to the level of insurance coverage that is customary with comparable operations in
Orange County. At any time during the term of the City Loans, and from time to time, either party
may provide notice to the other party that the level of insurance being maintained by Developer is
no longer comparable to the level of insurance coverage that is customary with comparable
operations in Orange County, and request that the minimum limit hereinabove designated will be
changed (either increased or decreased) accordingly. The party receiving such request will not
unreasonably withhold its consent to such change. Developer agrees that provisions of this
paragraph as to maintenance of insurance will not be construed as limiting in any way the extent
to which Developer may be held responsible for the indemnification of City or the payment of
damages to persons or property resulting from Developer's activities, activities of its tenants or
the activities of any other person or persons for which Developer is otherwise responsible.
Developer will require its insurer to waive its subrogation rights against the City and will provide
endorsements evidencing same.
1. Fire Policies: A policy or policies of insurance against loss or damage to
the Property or the Improvements and all property of an insurable nature located upon the Property,
resulting from fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such
other perils ordinarily included in extended coverage fire insurance policies. Such insurance will
be maintained in an amount not less than one hundred percent (100%) of the full insurable value
of the Improvements,as defined herein in paragraph d.
2.Rental Income Insurance: Use and occupancy or business interruption or
rental income insurance against the perils of fire, lightning, vandalism, malicious mischief, riot
and civil commotion, and such other perils ordinarily included in extended coverage fire insurance
policies, in an amount that is acceptable to Developer and the City,with a minimum loss period of
24-months.
3. General Liability Insurance: General liability insurance of at least
5,000,000 per occurrence for bodily injury, personal injury and property damage.If Commercial
General Liability insurance or other form with a general aggregate limit is used, either the general
aggregate limit shall apply separately to this project/location or the general aggregate limit shall
be twice the required occurrence limit.
4. Boiler and Machinery Insurance: Boiler and machinery insurance covering
the HVAC system for one hundred percent(100%)of the full insurable value of the HVAC system,
issued on an all risk basis,with a deductible no greater than$100,000.
5. Workers' Compensation Insurance: Developer will maintain or cause to be
maintained workers' compensation insurance issued by a responsible carrier authorized under the
laws of the State of California to insure employers against liability for compensation under the
workers' compensation laws now in force in California, or any laws hereafter enacted as an
amendment or supplement thereto or in lieu thereof. Such workers' compensation insurance will
cover all persons employed by Developer in connection with the Property and will cover liability
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within statutory limits for compensation under any such act aforesaid, based upon death or bodily
injury claims made by, for or on behalf of any person incurring or suffering injury or death in
connection with the Property or the operation thereof by Developer. Notwithstanding the forego-
ing, Developer may, in compliance with the laws of the State of California and in lieu of
maintaining such insurance, self-insure for workers' compensation in which event Developer will
deliver to City evidence that such self-insurance has been approved by the appropriate State
authorities. If Developer is required to maintain Workers' Compensation Insurance under this
paragraph, Developer will furnish the City with a certificate of waiver of subrogation under the
terms of the Workers' Compensation Insurance. Developer will require its general contractor to
waive subrogation and will require that its subcontractors waive subrogation to the extent that such
a waiver is commercially available.
c. All policies hereunder will not be subject to cancellation,reduction in coverage, or
non-renewal except after notice in writing will have been sent by registered mail addressed to the
City and the City not less than 30 days in advance of the effective date, except for cancellation for
nonpayment of premium, in which event notice will be given not less than 10 days in advance of
the effective date. All policies will name the City, Developer and/or any general contractor as
insureds, additional insureds, and/or loss payable parties as their interests may appear.
d. The term"full insurable value"as used in this Section means the actual replacement
cost(excluding the cost of excavation,foundation and footings below the lowest floor and without
deduction for depreciation) of the Improvements on the Property immediately before such casualty
or other loss, including the cost of construction, architectural and engineering fees, and inspection
and supervision. To ascertain the amount of coverage required, Developer will cause the full
insurable value to be determined from time to time by appraisal by the insurer, by the insurer's
automatic inflationary measure if acceptable to the Developer and the City,by agreement between
Developer and City or by an appraiser mutually acceptable to City and Developer, not less often
than once every three years.
e. All insurance provided under this Section will be for the benefit of Developer and
City. Developer agrees to timely pay all premiums for such insurance and, at its sole cost and
expense, to comply and secure compliance with all insurance requirements necessary for the
maintenance of such insurance. Developer agrees to submit policies of all insurance required by
this Section, or certificates and endorsements evidencing the existence thereof, to City within 30
days prior to the Construction Financing Event Date, indicating full coverage of the contractual
liability imposed hereby. Within thirty(30)days, if practicable,but in any event prior to expiration
of any such policy, copies of renewal policies, or certificates evidencing the existence thereof,will
be submitted to City. All insurance herein provided for under this Section will be effected under
policies issued by insurers of recognized responsibility, licensed or permitted to do business in the
State of California reasonably approved by City.
f. Developer must cause all contractors and subcontractors performing work relating
to the Project to maintain, at a minimum, the liability insurance and workers compensation
insurance described in this Section. Developer must also cause its architects and engineers to
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maintain Architects and Engineers Professional Liability (Errors and Omissions) insurance on a
claims made basis"in an amount of not less$1,000,000. When coverage is provided on a"claims
made basis", Developer must cause all contractors and subcontractors to continue to renew the
insurance for a period of ten (10) years after the end of the Construction Period. Such insurance
must have the same coverage and limits as the policy that was in effect during the Construction
Period, and cover Developer for all claims made by the City arising out of any acts or omissions
of Developer, or its officers, employees or agents during the Construction Period.
g. If Developer fails or refuses to procure or maintain insurance as required by this
Agreement, City will have the right, at City's election, and upon ten (10) days prior notice to
Developer,to procure and maintain such insurance. The premiums paid by City will be treated as
a loan, due from Developer, to be paid on the first day of the month following the date on which
the premiums were paid. City will give prompt notice of the payment of such premiums, stating
the amounts paid and the name of the insured(s).
Section 4.13 Disclaimer of City Responsibility
Except as provided in this Agreement, the City neither undertakes nor assumes nor will
have any responsibility or duty to Developer or to any third party to review, inspect, supervise,
pass judgment upon or inform Developer or any third party of any matter in connection with the
Property, whether with respect to the quality, adequacy or suitability of the plans, any labor,
service, equipment or material furnished to the Project, any person furnishing the same or
otherwise. Developer and all third parties will rely upon its or their own judgment regarding such
matters, and any review, inspection, supervision, exercise of judgment or information supplied to
Developer or to any third party by the City in connection with such matter is for the public purpose
of providing affordable housing, and neither Developer (except for the purposes set forth in this
Agreement) nor any third party is entitled to rely thereon. Neither may Developer or any third
party assert such review, inspection, supervision, exercise of judgment or information supplied to
Developer or to any third party as a defense to the indemnification obligation set forth in Section
4.12.a of this Agreement.
Section 4.14 Permits
Before commencement of construction or development of any buildings,structures or other
work of improvement upon any portion of the Property,Developer will, at its own expense, secure
or cause to be secured, any and all permits which may be required by the City or any other
governmental authority affected by such construction, development or work.
Section 4.15 Rights of Access
Commencing upon the Construction Financing Event Date,representatives of the City will
have the reasonable right of access to the Property, upon two (2) business days' written notice to
Developer(except in the case of an emergency, in which case City will provide such notice, if any,
as may be practical under the circumstances),without charges or fees,at normal construction hours
during the period of construction for the purposes of this Agreement, including,but not limited to,
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the inspection of the work being performed in constructing the improvements. Such
representatives of the City will be those who are so identified in writing by the City Manager.
Section 4.16 Taxes, Assessments, Encumbrances and Liens
Commencing upon the Construction Financing Event Date, Developer will pay prior to
delinquency all real estate taxes and assessments assessed and levied on or against the Property.
Prior to Completion,Developer will not place, or allow to be placed, on title to the Property or any
portion thereof, any mortgage,trust deed, encumbrance or lien not authorized by this Agreement.
In addition,Developer will remove, or will have removed, any levy or attachment made on title to
the Property (or any portion thereof), or will assure the satisfaction thereof within a reasonable
time but in any event prior to a sale thereunder. Nothing herein contained will be deemed to
prohibit the Developer from contesting the validity or amount of any tax assessment, encumbrance
or lien, or to limit the remedies available to the Developer in respect thereto.
Section 4.17 Rights to Plans
a. Subject to the rights of the beneficiary of the Construction Loan Deed of Trust, all
work product prepared pursuant to this Agreement, including (but not limited to), all Plans,
construction documents, soils tests and similar reports, permits and other entitlements are hereby
assigned to the City as security for Developer's obligations hereunder. In the event that this
Agreement is terminated by the City, Developer will, within ten (10) business days of such
termination,transmit all such work product to the City.
b. To effectuate the assignment described in paragraph a., concurrently with executing
a contract with the project architect, Developer will execute and deliver to the City an Assignment
of Agreements (the "Assignment"), substantially in the form attached to this Agreement as
Attachment No. 14 in a form that is acceptable to the City Manager, granting to the City all of
Developer's rights to: (1)the Plans prepared pursuant to this Agreement; (2)the contract between
Developer and its architect; (3) all permits relating to the Project; (4) studies and reports
concerning the Property; and similar rights and property interests.
Section 4.18 Release of Construction Covenants
a. Promptly after Completion of the Improvements, as generally and specifically
required by this Agreement, the City will furnish Developer with a Release of Construction
Covenants upon written request therefor by Developer. The City will not unreasonably withhold
such Release of Construction Covenants and such Release of Construction Covenants will be
issued so long as Developer has constructed and developed the Property in accordance with this
Agreement and substantially in accordance with the Plans approved by the City pursuant hereto.
Such Release of Construction Covenants will be, and will so state, conclusive determination of
satisfactory completion of all of the construction required by this Agreement.
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b. The Release of Construction Covenants will be in such form as to permit it to be
recorded in the official records of Orange County. No Release of Construction Covenants will be
recorded for less than the completed Improvements and development of the entire Property.
c. If the City refuses or fails to furnish a Release of Construction Covenants for the
Property after written request from Developer,the City will, within thirty (30) days of the written
request, provide Developer with a written statement of the reasons the City refused or failed to
furnish a Release of Construction Covenants. The statement will also contain the City's opinion
of the action Developer must take to obtain a Release of Construction Covenants. If the reason for
such refusal is confined to the immediate availability of specific items or materials for landscaping,
and/or minor items,the City will issue its Release of Construction Covenants upon the posting of
a bond by Developer with the City in an amount representing a fair value of the work not yet
completed. If the City will have failed to provide such written statement within said 30-day period,
Developer will be deemed to have received the Release of Construction Covenants.
d. The Release of Construction Covenants will not constitute evidence of compliance
with or satisfaction of any obligation of Developer to the beneficiary of the Construction Loan
Deed of Trust or any other Person. The Release of Construction Covenants is not a notice of
completion as referred to in Section 3093 of the California Civil Code.
ARTICLE V. USE OF THE PROPERTY
Section 5.01 Use As Affordable Housing
a. Developer covenants and agrees (for itself, its successors, its assigns, and every
successor in interest to the Property or any part thereof)that Developer, its successors and assigns
will use the Property exclusively to provide affordable housing for Extremely Low Income, Very
Low Income, and Low Income Senior Citizen Households (except for one staff/manager's unit),
in conformance with the Agreement Containing Covenants and the HOME Regulatory Agreement
including common areas associated therewith. No change in the use of the Property will be
permitted without the prior written approval of the City, exercised in the sole discretion of the City.
b. The Very Low Income HOME Units and the Low Income HOME Units must be
operated in accordance with the following requirements:
1. The Very Low Income HOME Units and the Low Income HOME Units
will be designated as floating HOME units. Prior to lease-up of the Project, Developer must
identify the street address and unit number of the units that will be operated as Very Low Income
HOME Units and Low Income HOME Units. Proposed changes to such units must be approved
in advance by the City. Each substituted unit must be comparable in terms of size, features, and
number of bedrooms to the originally designated HOME unit.
2.The maximum monthly rent(including a reasonable utility allowance)may
not exceed HOME Rents as set forth in Section 1.02 of this Agreement. The HOME rent limits
published by HUD will include average occupancy per unit and adjusted income assumptions.
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3. In accordance with the formula set forth in 24 CFR 92.252(e) and as
required by 24 CFR 92.504 (c)(3)(ix), rents will remain affordable to Very Low Income HOME
Tenants and Low Income HOME Tenants pursuant to this Agreement for not less than fifteen(15)
years for rehabilitated HOME units and not less than twenty (20) years for newly constructed
HOME units, following the date of issuance of a final Certificate of Occupancy by the City of
Orange.
4. Failure to comply with the affordability requirements of this Agreement or
the HOME Regulatory Agreement, subject to the notice and cure periods in Section 6.01, is an
event of default under the terms of the HOME Loan. Pursuant to the HOME Note evidencing the
HOME Loan, the HOME Loan will be due and payable, subject to the notice and cure periods in
Section 6.01, if the housing does not meet the affordability requirements of this Agreement and
the HOME Regulatory Agreement.
5. Developer must submit its rent schedule and utility allowances thirty (30)
days prior to initial rental of the units and on an annual basis thereafter. The City will review and
approve or disapprove the proposed rent schedule and utility allowances for compliance with the
maximum rent limitations contained in 24 CFR 92.252.
6. The City has provided Developer with current HUD income and rent limits
to Developer, and will provide Developer with updated HUD income and rent limits as they
become available.
7. Developer will be responsible for ensuring that the current operative HOME
income and rent limits in effect at the time of the tenant's rental application will be used to
determine initial tenant eligibility and conformance with HOME affordability requirements and
that each tenant recertification is conducted using current HOME income and rent limits to assure
compliance with HOME Regulations.
8. Income determination and rental rate adjustments will occur upon annual
lease renewal. Any increase in rents for HOME-assisted units is subject to the provisions of
existing leases, including the provision that rents may not be adjusted until leases are renewed.
Developer must provide tenants with not less than thirty (30) days prior written notice before
implementing any increase in rents.
9. Developer agrees that prior to the initial lease-up of the Project, Developer
will consult with and obtain the approval of the City in developing an affirmative marketing plan
for renting the Units. The affirmative marketing plan must comply with the requirements of 24
CFR 92.351.
10. No officer, employee, agent, official, consultant, or immediate family
member of Developer (or immediate family member of an officer, employee, agent, official, or
consultant of Developer)may occupy a HOME-assisted unit.
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c. The City and its successors and assigns will have the right to monitor and enforce
the covenants contained in this Section 5.01. Developer covenants that it will comply with the
monitoring program established by the City to enforce said covenants. In complying with such
monitoring program, Developer or its agent will prepare and submit to the City an annual
occupancy report, financial information and income verification documents for each tenant and all
supporting documentation, on forms provided by the City, setting forth the required information
for the preceding year. On an annual basis, Developer or its agent will additionally submit to the
City evidence of each tenant's continuing eligibility to occupy the unit. The City will review such
reports for certification of continuing affordability of Units and eligibility of tenants.
Section 5.02 Management Plan; Annual Project Budget; Quarterly Report
a. Within the time set forth therefor in the Schedule of Performance, Developer will
submit to the City Manager a Management Plan reasonably acceptable to the City Manager,
describing the proposed plan for managing and operating the Property, including policies and
procedures to assure accessibility to persons with disabilities. The City will provide Developer a
draft Management Plan which Developer shall use to prepare the final Management Plan submitted
to the City. Developer will manage and operate the Property in accordance with the approved
Management Plan, including such amendments as may be approved in writing from time to time
by the Developer and the City Manager or designee, for the entire Restricted Period.
b. In addition,the Developer will submit on or before the first day of each fiscal year
of the Restricted Period an estimated annual budget for management of the Property(the"Annual
Project Budget") in accordance with the Management Plan. The Annual Project Budget will
include all necessary operating expenses, current maintenance charges, expenses of reasonable
upkeep and repairs, taxes and special assessment levies, prorated amount required for insurance
and all other expenses incident to the operation of the Project;and will show the expected revenues
to pay such expenses, including annual debt service requirements and reserve fund deposits and
balances. The Annual Project Budget,including any amendments proposed by the Developer,will
be subject to the approval of the City Manager, which approval will not be unreasonably withheld
or delayed.
c. Beginning on the date of first occupancy, for each fiscal year of the Restricted
Period, Developer will also submit on a quarterly basis a quarterly report for the management of
the Property(the"Quarterly Report")in a form that is reasonably acceptable to the City Manager.
The Quarterly Report will include a profit and loss statement, budget to date figures, and
occupancy report. Developer's failure to timely submit the Quarterly Reports, after the City has
provided written notice to Developer and at least thirty (30) days to cure such failure, will cause
the imposition of a monetary penalty of$500 to be paid to the City. The City Manager, in his or
her sole discretion may waive the requirement of the Quarterly Report for one or more quarterly
reporting periods. However, such waiver will not operate to waive any subsequent requirement of
the Quarterly Report for the Restricted Period upon written notice to Developer by the City
Manager.
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d. The Agreement Containing Covenants and the HOME Regulatory Agreement will
contain appropriate provisions implementing this Section 5.02.
Section 5.03 Property Maintenance
a. Within the time set forth therefor in the Schedule of Performance, the Developer
will prepare and submit to the City Manager or designee for review and approval a program (the
Maintenance Program") for the exterior and interior maintenance of the Property and the
Improvements. The City will provide Developer a draft Maintenance Program which Developer
shall use to prepare the final Maintenance Program submitted to the City.
b. The Maintenance Program will describe in reasonable detail the standards to be
followed in maintaining the interior and exterior of the Improvements, including a schedule
indicating the proposed frequency of each element of maintenance,and will include,at a minimum,
the following: periodic cleaning of the interior and exterior of the Improvements, including
windows; removing graffiti; removing debris and waste materials and otherwise maintaining
indoor and outdoor areas of the Property; maintaining any lawns, plants, shrubs and trees or other
landscaping planted on the Property; performing inspections of all exterior features to determine
whether repairs are required; conducting periodic protective treatments such as rust removal and
caulking; conducting repairs to facades, roof, doors, windows and other exterior features;
maintaining fencing and other security devices and systems; periodic repainting of the exterior;
periodic repainting of the interior units and common areas; periodic replacing of the interior unit
carpets; checking building systems, including, but not limited to the heating and cooling systems,
smoke alarms and water heaters; checking interior unit appliances; and monitoring interior unit
bathrooms for mold/mildew. The Maintenance Program, including any amendments proposed by
the Developer, will be subject to the reasonable approval of the City Manager.
c. At all times during the Restricted Period,the Developer will maintain the Property
and the Improvements in accordance with the approved Maintenance Program. To implement this
requirement,Developer agrees to budget sufficient funds to pay for all reasonably anticipated costs
as indicated in the Annual Project Budget). In the event the Developer fails to maintain the
Property and the Improvements in accordance with the approved Maintenance Program, and does
not cure such failure within thirty (30) days following notice from the City, with such additional
time as may be reasonably necessary to cure such default provided that Developer has commenced
to cure within such thirty(30) day period and is diligently prosecuting the cure to completion,the
City will have the right, but not the obligation, to enter the Property, correct any violation, and
hold the Developer responsible for the cost thereof, and such cost, until paid,will constitute a lien
on the Property, which lien shall at all times be subject and subordinate to the Construction Loan
Deed of Trust and any other lien granted to Construction Lender in connection with the
Construction Loan. Prior to undertaking any work to correct any such maintenance deficiency,the
City will provide written notice that the Developer must correct the deficiency within a reasonable
time. The Developer will have a reasonable time in which to comply following such notice from
the City.
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d. The Agreement Containing Covenants and the HOME Regulatory Agreement will
contain appropriate provisions implementing this Section 5.03.
Section 5.04 Obligation to Refrain from Discrimination
a. Developer covenants and agrees for itself, its successors and its assigns in interest
to the Property or any part thereof; that there will be no discrimination against or segregation of
any person, or group of persons, on account of race, color, creed, religion, sex, sexual orientation,
marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the Property, nor will Developer itself or any person claiming under or
through it establish or permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendees of the Property.
b. All deeds, leases or contracts will contain or be subject to substantially the
following nondiscrimination or nonsegregation clauses:
1. In deeds: "The grantee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons claiming under or through
them,that there will 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 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 premises herein conveyed, nor will
the grantee or any person claiming under or through him or her, establish or permit any 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 premises herein conveyed.
The foregoing covenants will run with the land."
Notwithstanding the preceding paragraph,the provisions relating to discrimination
on the basis of familial status will not be construed to apply to housing for older persons,as defined
in Section 12955.9 of the Government Code nor 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 will also apply to the preceding paragraph.
2. In leases: "The lessee herein covenants by and for himself or herself; his or
her heirs, executors, administrators, and assigns, and all persons claiming under or through him or
her, and this lease is made and accepted upon and subject to the following conditions:
That there will 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 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the leasing, subleasing,transferring,use,occupancy,tenure,or enjoyment of the premises herein
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leased nor will the lessee himself or herself, or any person claiming under or through him or her,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants,
or vendees in the premises herein leased."
Notwithstanding the preceding paragraph,the provisions relating to discrimination
on the basis of familial status will not be construed to apply to housing for older persons,as defined
in Section 12955.9 of the Government Code nor 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 will also apply to the preceding paragraph.
3. In contracts: There will 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 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 land, nor
will the transferee itself or any person claiming under or through him or her, establish or permit
any such practice or practices of discrimination or segregation with reference to the selection,
location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of the
land."
Section 5.05 Equal Employment Opportunity
During the term of this'Agreement, Developer agrees as follows:
a. Developer will not discriminate against any employee or applicant for employment
because of race, color, religion, sex, or national origin(s). Developer will take affirmative action
to ensure the applicants are employed,and that employees are treated during employment,without
regard to their race, color, religion, sex or national origin(s). Such action shall include, but not be
limited to, the following: employment, upgrading, demotion, or transfer, recruitment or
recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and
selection for training, including apprenticeship. Developer agrees to post in conspicuous places,
available to employees and applicants for employment, notices setting forth the provisions of this
nondiscrimination clause.
b. Developer will, in all solicitations or advertisements for employees placed by or on
behalf of Developer, state that all qualified applicants will receive consideration for employment
without regard to race, color, religion, sex, or national origin.
c. Developer will send to each labor union or representative of workers with which he
has a collective bargaining agreement or other contract or understanding, a notice advising the
labor union or worker's representative of Developer's commitments under Section 202 of
Executive Order No. 11246 of September 24, 1965, and shall post copies of the notice in
conspicuous places available to employees and applicants for employment.
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d. Developer will comply with all provisions of Executive Order 11246 of September
24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor.
e. Developer will furnish all information and reports required by Executive Order
11246 of September 24, 1965, and by the rules, regulations, and orders of the Secretary of Labor,
or pursuant thereto, and will permit access to its books, records, and accounts by the City and the
Secretary of Labor for purposes of investigation to ascertain compliance with such rules,
regulations, and order.
f. If Developer is found to be in noncompliance with the nondiscrimination clauses
of this Agreement or with any of such rules,regulations or orders,this Agreement may be canceled,
terminated or suspended in whole or in part and Developer may be declared ineligible for further
Government contracts in accordance with procedures authorized in Executive Order 11246 of
September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided
in Executive Order 11246 of September 24, 1965 or by rule, regulations, or order of the Secretary
of Labor or as otherwise provided by law.
g. Developer will include the provisions of paragraphs (a)through (g) of this Section
5.05 in every contract or purchase order related to the Project unless exempted by rules,
regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order
11246 of September 24, 1965, so that such provisions will be binding upon each contractor or
vendor providing services related to the Project. Developer will take such action with respect to
any contract or purchase order as the City may direct as a means of enforcing such provisions,
including sanctions for noncompliance.
Section 5.06 Labor, Training, and Business Opportunity
Developer agrees to comply with the federal regulations governing training, employment
and business opportunities, including but not limited to Section 3 of the Housing and Urban
Development Act of 1968,to the extent such regulations apply to Developer. Compliance with the
provisions of Section 3, the regulations set forth in 24 Code of Federal Regulations and all
applicable rules and orders of the Department of Housing and Urban Development issued
thereunder prior to the execution of this Agreement will be a condition precedent to federal
financial assistance being provided to the Project as well as a continuing condition, binding upon
the applicant or recipient for such assistance, its successors, and assigns. Failure to fulfill these
requirements will subject Developer, its contractors and subcontractors, its successors, and assigns
to those sanctions specified by 24 Code of Federal Regulations as well as with any and all
applicable amendments thereto.
Section 5.07 Effect and Duration of Covenants
The covenants established in this Agreement will run with the land, without regard to
technical classification and designation, and will be for the benefit and in favor of City and its
successors and assigns. The covenants described in this Part 5 will commence upon the
Construction Financing Event Date and will be set forth in the Agreement Containing Covenants
and the HOME Regulatory Agreement and will remain in effect for the respective periods specified
therein.
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Section 5.08 Enforcement of Covenants
The City is deemed to be the beneficiary of the terms and provisions of this Agreement and
the covenants herein, both for and in its own right and for the purposes of protecting the interests
of the community and the public, for whose benefit this Agreement and the covenants running
with the land have been provided. The City will have the right if the covenants contained in this
Agreement are breached and such breach is not cured within the time periods set forth in Section
6.01, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or
other proper proceedings, including but not limited to an action for specific performance, to
enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and
covenants are entitled.
Section 5.09 Monitoring
a. The parties acknowledge that, due to the City's use of Low and Moderate Income
Housing Asset Fund,this Agreement is subject to the provisions of Health and Safety Code section
33418, which provides for the City to monitor, on an ongoing basis, any housing affordable to
persons and families of low or moderate income developed or otherwise made available pursuant
to any provisions of applicable statute. As part of this monitoring, City will require Developer to
submit an annual report to the City. The annual reports will include for each rental unit the rental
rate and the income and family size of the occupants... The income information required by this
section will be supplied by the tenant in a certified statement of a form provided by the City.
Developer will submit to the City on an annual basis the report required by Section 33418.
Developer will provide for the submission of such information in its lease or occupancy agreement
with tenants.
b. On an annual basis, Developer will submit to the City information on rents and
occupancy of the Very Low Income HOME Units and the Low Income HOME Units to
demonstrate compliance with the income and affordability requirements of 24 CFR 92.252 and
this Agreement. Developer must also provide the City with information regarding HOME-unit
substitution and filling of vacancies sufficient to demonstrate that the Project remains in
compliance with HOME rental occupancy requirements.
Section 5.10 Agreement Containing Covenants; HOME Regulatory Agreement
Concurrently with the Construction Financing Event Date,Developer and City will execute
and deposit with the Escrow Agent an Agreement Containing Covenants substantially in the form
attached to this Agreement as Attachment No.7,and a HOME Regulatory Agreement substantially
in the form attached to this Agreement as Attachment No. 8.
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ARTICLE VI.DEFAULTS AND REMEDIES
Section 6.01 Defaults- General
a. Subject to the Force Majeure Delay, as provided in Section 7.04 and the cure
periods provided herein, failure or delay by either party to perform any term or provision of this
Agreement constitutes a default under this Agreement. The party who fails or delays must
immediately commence to cure, correct or remedy such failure or delay and will complete such
cure, correction or remedy with reasonable diligence.
b. The injured party will give written notice of default to the party in default,
specifying the default complained of by the injured party. Failure or delay in giving such notice
will not constitute a waiver of any default, nor will it change the time of default. Except as
otherwise expressly provided in this Agreement, any failures or delays by either party in asserting
any of its rights and remedies as to any default will not operate as a waiver of any default or of any
such rights or remedies. Delays by either party in asserting any of its rights and remedies will not
deprive either party of its right to institute and maintain any actions or proceedings which it may
deem necessary to protect, assert or enforce any such rights or remedies.
c. If a monetary event of default occurs, prior to exercising any remedies hereunder,
the injured party will give the party in default written notice of such default. The party in default
will have a period of ten (10) days after such notice is given within which to cure the default prior
to exercise of remedies by the injured party.
d. If a non-monetary event of default occurs, prior to exercising any remedies
hereunder, the injured party will give the party in default notice of such default. If the default is
reasonably capable of being cured within thirty(30)days,the party in default will have such period
to effect a cure prior to exercise of remedies by the injured party.If the default is such that it is not
reasonably capable of being cured within thirty (30) days, and the party in default (i) initiates
corrective action within said period, and (ii) diligently, continually, and in good faith works to
effect a cure as soon as possible, then the party in default will have such additional time as is
reasonably necessary to cure the default prior to exercise of any remedies by the injured party, but
in no event to exceed a period of one hundred eighty(180) days after such notice is given.
e. If Developer fails to take corrective action or cure the default within a reasonable
time, the City will give the Senior Lender and, as provided in paragraph f., below, the Investor
Limited Partner notice thereof. Subject to the terms of the Limited Partnership Agreement, the
Investor Limited Partner may take such action, including removing and replacing the general
partner or managing member of the Developer with a substitute general partner or member, who
will effect a cure within a reasonable time thereafter in accordance with the foregoing provisions.
The City agrees to accept cures tendered by any Senior Lender or Investor Limited Partner within
the cure periods provided herein.Additionally, in the event the Senior Lender or Investor Limited
Partner is precluded from curing a non-monetary default due to a bankruptcy, injunction,or similar
proceeding by or against Developer or the general partner of Developer,the City agrees to forbear
from completing a foreclosure (judicial or nonjudicial) during the period during which the Senior
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Lender or Investor Limited Partner is so precluded from acting, not to exceed ninety (90) days,
provided such Investor Limited Partner and Senior Lender are otherwise in compliance with the
foregoing provisions. In no event will the City be precluded from exercising remedies if its rights
become or are about to become materially jeopardized by any failure to cure a default or the default
is not cured within one hundred eighty(180) days after the first notice of default is given.
f.City will send to the Investor Limited Partner a copy of all notices of default and
all other notices that City sends to Developer, at the address for the Investor Limited Partner
provided in the LMIHAF Note. The City agrees to accept cure by the Investor Limited Partner on
behalf of Developer of any default hereunder on the same terms as cure by Developer.
Section 6.02 Institution of Legal Actions
Subject to the notice and cure provisions of Section 6.01, in addition to any other rights or
remedies (and except as otherwise provided in this Agreement), either party may institute legal
action to cure, correct or remedy any default, to recover damages for any default, or to obtain any
other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted
in the Superior Court of the County of Orange, State of California, in any other appropriate court
of that county, or in the United States District Court for the Central District of California.
Section 6.03 Applicable Law
The laws of the State of California will govern the interpretation and enforcement of this
Agreement, without reference to the principles relating to conflicts of laws.
Section 6.04 Acceptance of Service of Process
a. If legal action is commenced by the Developer against the City, service of process
on the City will be made by personal service upon the City Manager, or in such other manner as
may be provided by law.
b. If legal action is commenced by the City against the Developer, service of process
on the Developer will be made by personal service upon the Developer(or upon a general partner,
managing member or officer of the Developer) and will be valid whether made within or without
the State of California, or in such manner as may be provided by law.
Section 6.05 Rights and Remedies are Cumulative
Except with respect to rights and remedies expressly declared to be exclusive in this
Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party
of one or more of such rights or remedies will not preclude the exercise by it, at the same or
different times, of any other rights or remedies for the same default or any other default by the
other party.
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Section 6.06 Damages
If either party defaults with regard to any of the provisions of this Agreement, subject to
the notice and cure provisions of Section 6.01 and the non-recourse provisions of Section 6.11,the
defaulting party will be liable to the non-defaulting party for any damages caused by such default,
and the non-defaulting party may, after such notice and opportunity to cure (but not before)
commence an action for damages against the defaulting party with respect to such default.
Section 6.07 Specific Performance
If either party defaults with regard to any of the provisions of this Agreement, subject to
the notice and cure provisions of Section 6.01, the non-defaulting party, at its option, may, after
such notice and opportunity to cure(but not before) commence an action for specific performance
of the terms of this Agreement pertaining to such default.
Section 6.08 Termination by Either Party
Prior to the Construction Financing Event Date,either party will have the right to terminate
this Agreement in the event(i)the other party is in default of any material term or provision of this
Agreement, and, following notice, fails to cure such default within the time provided in Section
6.01or (ii) the parties mutually determine that, despite using good faith commercially reasonable
efforts, Developer will be unable to obtain the necessary financing for the Project.
Section 6.09 Termination by Developer
Prior to the Construction Financing Event Date, subject to the notice and cure provisions
of Section 6.01, Developer will have the right to terminate this Agreement, by providing written
notice to the City, in the event of a default by City pursuant to this Agreement.
Section 6.10 Termination by City
a. In accordance with 24 CFR 85.43 and subject to applicable notice and cure periods,
suspension or termination of this Agreement may occur if Developer materially fails to comply
with any term of the award of HOME Funds, and the award may be terminated for convenience in
accordance with 24 CFR 85.44, subject to applicable notice and cure periods.
b. Subject to the notice and cure provisions of Section 6.01, the City will have the
right, prior to the Construction Financing Event Date, to terminate this Agreement, by providing
written notice to Developer, in the event of a default by Developer or failure of any condition
precedent to the occurrence of the Construction Financing Event which is in the control of
Developer, including but not limited to the following:
1. Developer fails to submit to the City evidence of financing or fails to satisfy
any other condition precedent to the occurrence of the Construction Financing Event as provided
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in the Method of Financing within the time established therefor in the Schedule of Performance;
or
2. Developer(or any successor in interest) assigns or attempts to assign any of
Developer's rights in and to the Property or any portion thereof or interest therein, or this
Agreement or any portion hereof, except as permitted by this Agreement; or
3. Except for a Permitted Transfer,there is substantial change in the ownership
of the Developer,or with respect to the identity of the parties in control of Developer, or the degree
thereof contrary to the provisions of Section 1.06.b. of this Agreement; or
4. Developer fails to submit any of the reports, plans, drawings and related
documents required by this Agreement by the respective dates provided in this Agreement.
c. After the Construction Financing Event, but before Completion, City will have the
additional right to terminate this Agreement in the event any of the following defaults will occur:
1. Developer fails to commence construction of the Improvements as required
by this Agreement and such breach is not cured within the time provided in Section 6.01 of this
Agreement; or
2. Developer abandons or substantially suspends construction of the
improvements and such breach is not cured within the time provided in Section 6.01 of this
Agreement; or
3. Developer assigns or attempts to assign this Agreement, or any rights
herein, or transfer, or suffer any involuntary transfer of the Property, or any part thereof, in
violation of this Agreement, and such breach is not cured within the time provided in Section 6.01
of this Agreement; or
4. Developer otherwise materially breaches this Agreement, and such breach
is not cured within the time provided in Section 6.01 of this Agreement.
d. Notwithstanding the foregoing, the City will have the right to terminate this
Agreement upon a final determination by state or federal court or the California Fair Political
Practices Commission, subject to cure rights or appeal, of a criminal, material, and/or repeated
violation of local, state, or federal campaign finance laws by Developer or a general partner of
Developer or a member of such general partner or an officer or other Person exercising
management or control over such member.
Section 6.11 Limited Recourse Obligations
a. Subject to the provisions and limitations of this Section 6.11,the obligation to repay
the City Loans is a nonrecourse obligation of the Developer. Developer and each general partner
or limited partner of Developer will not have any personal liability for repayment of the City
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Loans, except as provided in this Section 6.11.The sole recourse of City will be the exercise of its
rights against the Property and other security for the City Loans. Provided, however, that the
foregoing will not(a) constitute a waiver of an obligation evidenced by the LMIHAF Note,the In
Lieu Fees Note, the HOME Note, or City Deed of Trust; (b) limit the right of the City to name
Developer as a party defendant in an action or suit for judicial foreclosure and sale under the
LMIHAF Note, the In Lieu Fees Note, the HOME Note or the City Deed of Trust or an action or
proceeding thereunder so long as no judgment in the nature of a deficiency judgment will be asked
for or taken against Developer; (c)release or impair the LMIHAF Note,the In Lieu Fees Note,the
HOME Note, or the City Deed of Trust; (d)prevent or in any way hinder the City from exercising,
or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect
of the exercise of, any other remedy against the mortgaged Property or any other instrument
securing the City Loans or as prescribed by law or in equity in case of default; (e) prevent or in
any way hinder the City from exercising, or constitute a defense, an affirmative defense, a
counterclaim, or other basis for relief in respect of the exercise of, its remedies in respect of
deposits, insurance proceeds, condemnation awards or other monies or other collateral or letters
of credit securing the City Loans; or (f) relieve Developer of its obligations under an indemnity
delivered by Developer to the City. The foregoing provisions of this paragraph are limited by the
provision that in the event of the occurrence of a default, Developer and its successors and assigns
will have personal liability hereunder for any deficiency judgment, but only if and to the extent
Developer, its principals, shareholders, partners or its successors and assigns received rentals,
other revenues, or other payments or proceeds in respect of the mortgaged Property after the
occurrence of such default,which rentals, other revenues, or other payments or proceeds have not
been used for the payment of ordinary and reasonable operating expenses of the mortgaged
Property, ordinary and reasonable capital improvements to the mortgaged Property, debt service,
real estate taxes in respect of the mortgaged Property and basic management fees,but not incentive
fees, payable to an entity or person unaffiliated with Developer in connection with the operation
of the mortgaged Property, which are then due and payable. Notwithstanding the first sentence of
this paragraph,the City may recover directly from Developer or from any other party:
1. damages, costs and expenses incurred by the City as a result of fraud or
criminal act or acts of Developer or a partner, shareholder, officer, director or employee of
Developer, or of a member or general or limited partner of Developer, or of a general or limited
partner of such member or general or limited partner;
2. damages, costs and expenses incurred by the City as a result of
misappropriation of funds provided for the construction of the Improvements,rents and revenues
from the operation of the Improvements or proceeds of insurance policies or condemnation
proceeds;
3. any and all amounts owing by Developer pursuant to the indemnification
regarding Hazardous Substances under the Environmental Indemnity, and
4.all court costs and attorneys' fees reasonably incurred in enforcing or
collecting upon any of the foregoing exceptions(provided that city will pay developer's reasonable
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court costs and attorneys' fees if developer is the prevailing party in such enforcement or collection
action).
ARTICLE VII. GENERAL PROVISIONS
Section 7.01 Notices
Formal notices, demands and communications between the City and the Developer and
Investor Limited Partner will be sufficiently given if dispatched by registered or certified mail,
postage prepaid, return receipt requested,to the principal offices of the City and the Developer, as
designated in Section 1.04 and 0 hereof, and to the Investor Limited Partner at the address given
in the LMIHAF Note. Such written notices, demands and communications may be sent in the
same manner to such other addresses as either party may from time to time designate by mail as
provided in this Section 7.01. Any notice that is transmitted by electronic facsimile transmission
followed by delivery of a"hard" copy, will be deemed delivered upon its transmission; any notice
that is personally delivered(including by means of professional messenger service, courier service
such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed
received on the documented date of receipt by the recipient;and any notice that is sent by registered
or certified mail, postage prepaid, return receipt required will be deemed received on the date of
receipt thereof.
Section 7.02 Conflicts of Interest
a. No member, official or employee of the City will have any personal interest, direct
or indirect, in this Agreement nor will any such member, official or employee participate in any
decision relating to the Agreement which affects his or her personal interests or the interests of
any corporation, partnership or association in which he or she is, directly or indirectly, interested.
b. Developer warrants that it has not paid or given, and will not pay or give, any third
party any money or other consideration for obtaining this Agreement.
Section 7.03 Nonliability of City Officials and Employees
No member, official, employee or consultant of the City will be personally liable to the
Developer, or any successor in interest, in the event of any default or breach by the City or for any
amount which may become due to the Developer or to its successor, or on any obligations under
the terms of this Agreement.
Section 7.04 Force Majeure
In addition to specific provisions of this Agreement,performance by either party hereunder
will not be deemed to be in default where delays or defaults are due to Force Majeure Events.
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Section 7.05 Inspection of Books and Records
a. Developer will maintain complete, accurate, and current records pertaining to the
Property for a period of five (5)years after the creation of such records, and shall permit any duly
authorized representative of the City to inspect and copy records, during regular business hours
upon reasonable advance notice. Records must be kept accurate and current.
b. The City reserves the right to inspect, monitors, and observe work and services
performed by Developer at any and all reasonable times.
c. The City reserves the right to audit the records of Developer any time during the
performance of this Agreement and for a period of five years after final payment is made under
this Agreement.
d. If required, Developer will provide the City with a certified audit of Developer's
records representing the January 1 —December 31 fiscal year during which the Project becomes
Complete, pursuant to the requirements of OMB Circular A-133.
e. Access will be immediately granted to the City, HUD, the Comptroller General of
the United States, or any of their duly authorized representatives to any books, documents, papers,
and records of Developer or its contractors for the purpose of performing audits and examinations
or making copies and transcriptions. This requirement must be included in all contracts and
subcontracts.
Section 7.06 Approvals
a. Except as otherwise expressly provided in this Agreement, approvals required of
City or Developer in this Agreement, including the attachments hereto, will not be unreasonably
withheld or delayed. All approvals will be in writing. Except as otherwise expressly provided in
this Agreement, failure by either party to approve a matter within the time provided for approval
of the matter will not be deemed a disapproval, and failure by either party to disapprove a matter
within the time provided for approval of the matter will not be deemed an approval.
b. Except as otherwise expressly provided in this Agreement, approvals required of
the City will be deemed granted upon the written approval of the City Manager or designee. City
agrees to provide notice to Developer of the name of the City Manager's designee on a timely
basis, and to provide updates from time to time. Notwithstanding the foregoing,the City Manager
or designee may, in his or her sole discretion, refer to the governing body of the City any item
requiring City approval; otherwise, "City approval" means and refer to approval by the City
Manager or designee.
Section 7.07 Real Estate Commissions
Neither the City nor the Developer will be liable for any real estate commissions,brokerage
fees or finder fees which may arise from this transaction. The City and the Developer each
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represent to the other that it has employed no broker, agent, or finder in connection with this
transaction.
Section 7.08 No Third Party Beneficiaries
This Agreement is made solely and specifically between the City and Developer and their
respective successors and assigns; and, except as expressly provided otherwise in this Agreement,
no other person will have any rights, interest or claims under this Agreement or be entitled to any
benefits under or on account of this Agreement as a third party beneficiary or otherwise.
Section 7.09 Authority to Sign
Developer hereby represents that each person executing this Agreement on behalf of
Developer has full authority to do so and to bind Developer to perform pursuant to the terms and
conditions of this Agreement.
Section 7.10 No Partnership
Nothing contained in this Agreement will be deemed or construed to create a partnership,
joint venture, or any other similar relationship between the parties hereto or cause City to be
responsible in any way for the debts or obligations of Developer or any other Person.
Section 7.11 Compliance With Law
Developer agrees to comply with all the requirements now in force, or which may hereafter
be in force, of all municipal, county, state and federal authorities, pertaining to the development
and use of the Property and the Improvements, as well as operations conducted thereon. The
judgment of any court of competent jurisdiction, or the admission of Developer in any action or
proceeding, whether City be a party thereto or not,that Developer has violated any such ordinance
or statute in the development and use of the Property will be conclusive of that fact as between
City and Developer.
Section 7.12 Binding Effect
This Agreement,and the terms,provisions,promises,covenants and conditions hereof,will
be binding upon and will inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
Section 7.13 Incorporation by Reference
Each of the attachments and exhibits attached hereto is incorporated herein by this
reference.
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Section 7.14 Counterparts
This Agreement may be executed by each party on a separate signature page, and when the
executed signature pages are combined, will constitute one single instrument.
Section 7.15 Construction and Interpretation of Agreement
a. The language in all parts of this Agreement will in all cases be construed simply,
as a whole and in accordance with its fair meaning and not strictly for or against any party. The
parties hereto acknowledge and agree that this Agreement has been prepared jointly by the parties
and has been the subject of arm's length and careful negotiation over a considerable period of time,
that each party has been given the opportunity to independently review this Agreement with legal
counsel,and that each party has the requisite experience and sophistication to understand, interpret,
and agree to the particular language of the provisions hereof. Accordingly, in the event of an
ambiguity in or dispute regarding the interpretation of this Agreement,this Agreement will not be
interpreted or construed against the party preparing it, and instead other rules of interpretation and
construction will be utilized.
b. If any term or provision of this Agreement, the deletion of which would not
adversely affect the receipt of any material benefit by any party hereunder, will be held by a court
of competent jurisdiction to be invalid or unenforceable,the remainder of this Agreement will not
be affected thereby and each other term and provision of this Agreement will be valid and
enforceable to the fullest extent permitted by law. It is the intention of the parties hereto that in
lieu of each clause or provision of this Agreement that is illegal, invalid, or unenforceable, there
be added as a part of this Agreement an enforceable clause or provision as similar in terms to such
illegal, invalid, or unenforceable clause or provision as may be possible.
c. The captions of the articles, sections and subsections herein are inserted solely for
convenience and under no circumstances are they or any of them to be treated or construed as part
of this instrument.
d. References in this instrument to this "Agreement" mean, refer to and include this
instrument as well as any riders, exhibits, addenda and attachments hereto (which are hereby
incorporated herein by this reference) or other documents expressly incorporated by reference in
this instrument. Any references to any covenant, condition, obligation, and/or undertaking
herein," "hereunder," or "pursuant hereto" (or language of like import) means, refer to, and
include the covenants, obligations, and undertakings existing pursuant to this instrument and any
riders, exhibits, addenda, and attachments or other documents affixed to or expressly incorporated
by reference in this instrument.
e. As used in this Agreement, and as the context may require, the singular includes
the plural and vice versa, and the masculine gender includes the feminine and vice versa.
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Section 7.16 Entire Agreement, Waivers and Amendments
a. This Agreement will be executed in three duplicate originals each of which is
deemed to be an original. This Agreement will constitute the entire understanding and agreement
of the parties.
b. This Agreement integrates all of the terms and conditions mentioned herein or
incidental hereto, and supersedes all negotiations or previous agreements between the parties with
respect to all or any part of the Property.
c. All waivers of the provisions of this Agreement must be in writing and signed by
the appropriate authorities of the City or the Developer, and all amendments hereto must be in
writing and signed by the appropriate authorities of the City and the Developer. This Agreement
and any provisions hereof may be amended by mutual written agreement by the Developer and the
City.
Section 7.17 Time for Acceptance of Agreement by City
This Agreement, when executed by Developer and delivered to City, must be authorized,
executed and delivered by City within sixty (60) days after date of signature by Developer or this
Agreement may be terminated by Developer upon written notice to City.The effective date of this
Agreement will be the date when this Agreement has been executed by City.
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IN WITNESS WHEREOF, City and Developer have signed this Agreement as of the date
first written above.
CITY"
CITY OF ORANGE, a municipal corporation of the
State of California
By: %tom
12A. p%, 't r Mo.V orr
R
ATTEST:
Pamela Coleman, City Clerk
APPROVED AS TO FORM:
ary z, City A orney
SIGNATURES CONTINUE ON NEXT PAGE]
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DEVELOPER"
Mercy Housing California 107, L.P.,
a California limited partnership
By: Mercy Housing California 107 LLC,
a California limited liability company,
its general partner
By: Mercy Housing Calwest,
a California nonprofit public benefit
corporation, its sole member/manager
By: OL.C.Q o-ke
Erika Villablanca,
Vice President
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