09-096 Loan Agreement, Senior Housing SolutionsLOAN AGREEMENT
Between
City of Cupertino
anti
Senior Housing Solutions
(Senior Housing Solutions Rehab, l 9953 Price Ave, Cupertino, CA)
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND EXHIBITS .........................................................................2
Section 1.1 Definitions ........................, .......................................................................... 2
Section 1.2 Exhibits ....................................................................................................... 4
ARTICLE 2 LOAN PROVISIONS ............................................................................................4
Section 2.1 Loan ............................................................................................................ 4
Section 2.2 Interest ......................................................................................................... 4
Section 2.3 Use of Loan Funds ...................................................................................... 5
Section 2.4 Security ....................................................................................................... 5
Section 2.5 Conditions Precedent to Disbursement ....................................................... 5
Section 2.6 Repayment Schedule ................................................................................... 6
ARTICLE 3 LOAN REQUIREMENTS ....................................................................................7
Section 3.1 Use of Loan Proceeds......
. 7
Section 3.2 .
.. .....................................................................
Compliance with the CDB(1 Project Agreement ...................................... ..
.. 7
Section 3.3 Financial Accountings and Post-Completion Audits ................................ .. 7
Section 3.4 Annual Operating Budget ......................................... 7
Section 3
5 ................................
Information ..
.
Section 3
6 ...............................................................................................
Records .. 7
.
Section 3.7 .....................................................................................................
CDBG Requirements .. 8
Section 3
8 ................................................................................
Hazardous Materials .. 9
.
Section 3.9 .................................................................................
Maintenance and Damage 12
Section 3
10 .........................................................................
Fees and Taxes 14
.
Section 3.11 ..........................................................................................
Notice of Litigation 14
Section 3.12 ...................................................................................
Operation of Project 14
.................................................................................. 15
Section 3.13 Nondiscrimination ............................................... 15
Section 3
14 ......................................
Transfer
.
Section 3.15 .....................................................................................................
Insurance Requirements 15
Section 3
16 ............................................................................
Anti-Lobb
in
Certificati 16
. y
g
orl ..................................................................... 17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BORROWER ..................18
Section 4.1 Representations and Wan'arities ................................................................ 18
ARTICLE 5 DEFAULT AND REMEDIES ............................................................................19
Section 5.1 Events of Default ...................................................................................... 19
Section 5.2 Remedies ................................................................................................... 21
Section 5.3 Right of Contest ........................................................................................ 22
Section 5.4 Remedies Cumulative ............................................................................... 22
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TABLE OF CONTENTS
(continued)
Page
ARTICLE 6 GENERAL PROVISIONS ..................................................................................22
Section 6.1 Relationship of Parties .............................................................................. 22
2
Section 6 ...........................................................................................
No Claims 23
.
3
Section 6 ......
Amendments ............................................................................................. 23
.
Section 6.4 Indemnification ......................................................................................... 23
Section 6.5 Non-Liability of City Officials, Employees and Agents .......................... 23
Section 6.6 No Third Party Beneficiaries .................................................................... 23
Section 6.7 Discretion Retained By City ..................................................................... 23
Section 6.8 Conflict of Interest .................................................................................... 23
Section 6.9 Notices, Demands and Communications .................................................. 24
Section 6.10 Applicable Law ......................................................................................... 25
Section 6.11 Parties Bound ............................................................................................ 25
Section 6.12 Attorneys' Fees .......................................................................................... 25
Section 6.13 Severability ............................................................................................... 25
Section 6.14 Force Majeure ........................................................................................... 25
Section 6.15 City Approval ............................................................................................ 25
16
Section 6 ...........................................................................................
Waivers 26
.
Section 6.17 ..........
Title of Parts and Sections ........................................................................ 26
Section 6.18 Entire Understanding of the Parties .......................................................... 26
Section 6.19 Multiple Originals; Counterpart ................................................................ 26
EXHIBIT A: Legal Description of the Property
EXHIBIT B: Approved Project Budget
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LOAN AGREEMENT
(Senior Housing Solutions Rehab, 't 9953 Price Ave, Cupertino, CA)
This Loan Agreement (the "Agreement") is entered into as of August 25, 2009, by and
between the City of Cupertino, a municipal corpo~°ation (the "City"), and Senior Housing
Solutions, a California nonprofit public benefit corporation ("Borrower"), with reference to the
following facts:
RECITALS
A. The City has received funds from t]he United States Department of Housing and
Urban Development ("HUD") under Title I of the Housing and Community Development Act of
1974, as amended (the "CDBG Funds"). The CDI3G Funds must be used by the City in
accordance with 24 CFR 570 et seg.
B. The Borrower has acquired that certain real property located at 19953 Price Ave,
Cupertino, CA 95014, County of Santa Clara, California, as set forth in greater detail in the legal
description attached hereto as Exhibit A (the "Property"), and intends to rehab it to provide
congregate senior housing units for up to five (5) very low-income households and/or individuals
(the "Project").
C. The Project will consist of one (1) five-bedroom unit located within the Property,
which will provide five (5) bedrooms (the "Units"'i which will be occupied by a very low income
household and/or an individual (the "Tenant"). The Project will be available to eligible senior
individuals in need of affordable housing.
D. The Borrower has applied to the Citty for a loan in the amount of Two Hundred
Thirty Nine Thousand Four Hundred Ninety One Dollars and No Cents ($239,491) (the "Loan")
to assist the Borrower in the rehabilitation of the Property.
E. The Loan will be funded with CDBG Funds, and will be evidenced by a
promissory note executed by Borrower in favor of City and secured by a deed of trust.
F. The City and HUD entered into that: certain CDBG Project Agreement pursuant to
which the City received CDBG Funds, a portion oi'which will be used to assist Borrower in the
Rehabilitation of the Property for the Project (the "CDBG Project Agreement").
G. As a condition of the Loan, the Bon•ower will execute a regulatory agreement (the
"Regulatory Agreement") which will regulate the Llnits of the Project to ensure that the Units
within the Project are occupied by and affordable t~~ very low income households or individuals
for the term of the Loan.
H. Pursuant to Section 15301 (a) of the CEQA Guidelines set forth at 14 California
Code of Regulations Section 15000 et seq.; the Project is exempt from the requirements of the
California Environmental Quality Act (Sections 2100 et seq. of the Public Resources Code).
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I. The City has completed its environmental review on the Project pursuant to the
National Environmental Policy Act (24 U.S.C. Section 4321 et seq.) and its implementing
regulations ("NEPA"), and determined that the Project is categorical exempt pursuant to 24 CFR
58.35(a)(3)(i).
J. The Borrower's use of the CDBG Funds for the rehabilitation of a single family
home for very-low income seniors is considered an eligible activity under 24 C.F.R. 570.202 and
will meet a national objective under 24 C.F.R. 570.208(a)(2)(i)(A) in that it will benefit low and
moderate income persons.
NOW, THEREFORE, in consideration of the recitals, hereof, and other mutual covenants
and promises contained herein and for other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the City and the Borrower hereby agree as follows:
ARTICLE 1 DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.
The following capitalized terms have the meanings set forth in this Section 1.1 wherever
used in this Agreement, unless otherwise provided:
(a) "Agreement" shall mean this Loan Agreement between the City and Borrower.
(b) "Approved Financing" shall mean funds obtained by the Borrower and approved
by the City for the purpose of financing the Project and disbursed in the manner set forth in the
Approved Project Budget. In addition to the Loan, the Approved Financing shall include:
(1) Revocable Grant from the City of Cupertino in the amount of One Million
Ninety Thousand Dollars ($1,090,000) in CDBG Funds (the "Cupertino Acquisition Loan");
(2) Loan from the Housing Trust of Santa Clara County in the amount of
Forty Four Thousand Nine Hundred Eighteen Dollars ($44,918) (the "Housing Trust Acquisition
Loan");
(c) "Approved Project Budget" shall mean the proforma development budget,
including sources and uses of funds, as approved by the City for the purposes of financing the
Project, and attached hereto and incorporated herein as Exhibit B.
(d) "Borrower" shall mean Senior Housing Solutions, a California nonprofit public
benefit corporation.
(e) "CDBG Funds" shall have the meaning set forth in Recital A above.
(f) "CDBG Project Agreement" shall mean the CDBG Project Agreement between
the City and HUD pursuant to which the City received CDBG Funds, a portion of which will be
used to assist Borrower in the rehabilitation costs of the Property.
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(g) "CDBG" shall mean the Community Development Block Grant Program pursuant
to Title I of the Housing and Community Development Act of 1974, as amended (the "CDBG
Funds").
(h) "City" shall mean the City of Cupertino, a municipal corporation.
(i) "City-Assisted Unit" shall mean all of the Units to be occupied by, or if vacant
available for occupancy by, very low-income per:;ons pursuant to the Regulatory Agreement.
(j) "County" shall mean the County o:f Santa Clara in the State of California.
(k) "Deed of Trust" shall mean the deed of trust that will encumber the Project to
secure repayment of the Loan. The form of the Deed of Trust shall be provided by the City.
(1) "Default" shall have the meaning set forth in Section 5.1 below.
(m) "Hazardous Materials Claim" shall have the meaning set forth in Section 3.8
below.
(n) "Hazardous Materials Law" shall have the meaning set forth in Section 3.8 below.
(o) "Hazardous Materials" shall have the meaning set forth in Section 3.8 below.
(p) "HUD" shall have the meaning set forth in Recital A above.
(q) "Improvements" shall mean the existing improvements on the Property, including
the minor rehabilitation planned for such improvements, which will consist of four (4) two-three
bedrooms apartments with at least nine (9) transitional housing rooms, landscaping and any
ancillary improvements.
(r) "Loan Documents" shall mean this Agreement, the Note, the Regulatory
Agreement, and the Deed of Trust.
(s) "Loan" shall mean the City's loan of up to Two Hundred Thirty Nine Thousand
Four Hundred Ninety One Dollars and No Cents (;$239,491) of CDBG Funds, that the City is
lending to the Borrower pursuant to this Agreement to enable the Borrower to rehabilitate the
Property.
(t) "NEPA" shall mean the National Elivironmental Policy Act (24 U.S.C. Section
4321 et seq.) and it's implementing regulations.
(u) "Note" shall mean the promissory note that will evidence Borrower's obligation to
repay the Loan. The form of the Note shall be provided by the City.
(v) "Parties" shall mean the City and B~~rrower.
(w) "Project Agreement" shall have the meaning set forth in Recital C above.
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(x) "Project" shall mean the Property and the Improvements.
(y) "Property" shall mean the real property located in the City of Cupertino, County
of Santa Clara, California, more particularly described in the attached Exhibit A.
(z) "Regulatory Agreement" shall mean the Regulatory Agreement and Declaration
of Restrictive Covenants between the City and the Borrower associated with the Loan.
(aa) Requests for Notice of Default" shall mean the requests for notice of default for
the benefit of the City that shall be recorded by Borrower in connection with any deed of trust
secured against the Property.
(bb) "Tenant" shall mean a person or household occupying a Unit.
(cc) "Term" shall mean shall mean the term of the Loan, commencing on the date of
this Agreement and continuing for fifty-five (55) years, unless the City and Borrower extend
such term pursuant to Section 2.6(a).
(dd) "Transfer" shall have the meaning set forth in Section 3.14 below.
(ee) "Unit" shall mean one of nine (9) bedrooms in the Project subject to the
Regulatory Agreement.
Section 1.2 Exhibits.
The following exhibits are attached to this Agreement and incorporated into this
Agreement by this reference:
EXHIBIT A: Legal Description of the Property
EXHIBIT B: Approved Project Budget
ARTICLE 2 LOAN PROVISIONS
Section 2.1 Loan.
The City shall loan to the Borrower the Loan in the principal amount of up to Two
Hundred Thirty Nine Thousand Four Hundred Ninety One Dollars and No Cents ($239,491) for
the purposes set forth in Section 2.3 of this Agreement. The obligation to repay the Loan shall be
evidenced by the Note in the form provided by the City.
Section 2.2 Interest.
(a) Subject to the provisions of Section 2.2(b) below, the outstanding principal
balance of the Loan shall accrue simple interest at a rate of three percent (3%) per annum,
commencing on the date of disbursement.
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(b) In the event of a Default, interest c-n the Loan shall begin to accrue, as of the date
of Default and continuing until such time as the Loan funds are repaid in full or the Default is
cured, at the default rate of the lesser often percent (10%), compounded annually, or the highest
rate permitted by law.
Section 2.3 Use of Loan Funds.
(a) The Borrower shall use the Loan funds for rehabilitation and related soft costs that are
eligible under the applicable CDBG regulations, <<nd consistent with the Approved Project
Budget.
(b) The Borrower shall not use the Loan funds for any other purpose without the prior
written consent of the City.
(c) The Borrower shall comply with the CDBG Project Agreement in the use of the
Loan funds.
Section 2.4 Securi
(a) Borrower shall secure its obligation to repay the Loan, as evidenced by the Note, by
executing the Deed of Trust and the Regulatory Agreement, and recording the Deed of Trust and
the Regulatory Agreement as liens against the Property.
(b) The Deed of Trust and the Regulatory Agreement shall be recorded against the
Property.
Section 2.5 Conditions Precedent to Disbursement.
The City shall not be obligated to make any disbursements of Loan proceeds for the
Project or take any other action under the Loan Documents unless the following conditions
precedent are satisfied prior to each such disbursement of the Loan:
(a) There exists no Default nor any act:, failure, omission or condition that would
constitute an event of Default under this Agreement or the CDBG Project Agreement;
(b) Borrower has executed and delivered to City all documents, instruments, and
policies required under the Loan Documents;
(c) A title insurer reasonably acceptab:~e to the City is unconditionally and
irrevocably committed to issuing an ALTA Lender's Policy of insurance insuring the priority of
the Deed of Trust in the amount of the Loan, subject only to the Regulatory Agreement, and such
exceptions and exclusions as may be reasonably acceptable to the City, and containing such
endorsements as the City may reasonably require.
(d) The Deed of Trust, the Regulatory Agreement and the Requests for Notice of
Default have been recorded against the Property in the Office of the Recorder of the County of
Santa Clara.
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(e) Borrower has closed all Approved Financing described in Section 1.1(b).
(f) Borrower has furnished the City with evidence of the insurance coverage meeting
the requirements of Section 3.15 below.
(g) The Borrower has delivered to City a copy of its formation documents, evidence
that the Borrower is in good standing, and a copy of a corporate authorizing resolution
authorizing Borrower's execution of the Loan Documents.
(h) The City has determined that the undisbursed proceeds of the Loan, together with
other funds or firm commitments for the funds that the Borrower has obtained in connection with
the Project, are not less than the amount that is necessary to pay for the rehabilitation of the
Property.
(i) The City has received a written draw request from the Borrower, including
certification by the Borrower that the conditions set forth in this Section 2.5 are satisfied, and
setting forth the expenses consistent with the Approved Project Budget, the amount of funds
needed, and a copy of the bill or invoice covering the applicable cost. The Borrower shall apply
all disbursements for the purpose requested.
(j) The City has received a written draw request from the Borrower, including
certification that the conditions set forth in Section 2.5 continue to be satisfied, and setting forth
the proposed uses of funds consistent with the Approved Project Budget, the amount of funds
needed, and, where applicable, a copy of the bill or invoice covering a cost incurred or to be
incurred.
Section 2.6 Repayment Schedule.
The Loan shall be repaid as follows:
(a) The Loan and this Agreement shall have a term (the "Term") that expires on the
date fifty-five (55) years after the date of this Agreement. Notwithstanding the above, the Term
may be extended at the City's sole discretion, provided Borrower is not in default under any of
the Loan Documents.
(b) All principal and accrued interest, if any, on the Loan shall be due in full on the
earlier to occur of (i) the date of any Transfer not authorized by the City, (ii) the date of any
Default, or (iii) at the expiration of the Term.
(c) The Borrower shall have the right to prepay the Loan at any time without
premium or penalty. However, this Agreement and the Regulatory Agreement shall remain in
effect for the entire Loan Term, regardless of any prepayment.
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ARTICLE 3 LOAN REQUIREMENTS
Section 3.1 Use of Loan Proceeds.
Borrower shall use the Loan proceeds in accordance with and in a manner that is
consistent with the Home and CDBG regulations, as applicable.
Section 3.2 Compliance with the CDBG Project Agreement.
Borrower shall comply with the terms of the CDBG Project Agreement and any breach
under the CDBG Project Agreement subject to th~~ notice and cure periods set forth in Section
5.1(c) below, shall be considered a Default under this Agreement. The CDBG Project
Agreement is hereby incorporated into this Agreement by this reference.
Section 3.3 Financial Accountings and Post-Completion Audits.
No later than sixty (60) days following completion of construction of the Project,
Borrower shall provide to City a financial accounting of all sources and uses of funds for the
Project. No later than one hundred fifty (150) da}~s following completion of construction of the
Project, Borrower shall submit an audited financi:il report showing the sources and uses of all
funds utilized for the Project.
Section 3.4 Annual Operating Budget.
At the beginning of each fiscal year of the Term, Borrower shall provide to the City an
annual budget for the operation of the Project. Unless rejected by the City in writing within
fifteen (15) days after receipt of the budget, said t~udget shall be deemed accepted. If rejected by
the City in whole or in part, Borrower shall submit a new or corrected budget within thirty (30)
calendar days of notification of the City's rejection and the reasons therefor. The provisions of
this Section relating to time periods for resubmission of new or corrected budgets shall continue
to apply until such budget has been approved by the City.
Section 3.5 Information.
(a) Borrower shall provide notice to th.e City of all funding awards accepted and
declined for the funding of the Project.
(b) Borrower shall provide the City with copies of requests for disbursements or
evidence of other disbursements of funds to Borrower from other funding sources providing
assistance to Borrower in connection with the Project.
(c) Borrower shall provide any information reasonably requested by the City in
connection with the Project, including (but not limited to) any information required by HUD in
connection with Borrower's use of the Loan funds.
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Section 3.6 Records.
The Borrower shall keep and maintain at the main office of the Borrower full, complete
and appropriate books, record and accounts relating to the Project, including all such books,
records and accounts necessary or prudent to evidence and substantiate in full detail Borrower's
compliance with the terms and provisions of this Agreement. Books, records and accounts
relating to Borrower's compliance with the terms, provisions, covenants and conditions of this
Agreement shall be kept and maintained in accordance with generally accepted accounting
principles consistently applied, and shall be consistent with requirements of this Agreement. All
such books, records, and accounts shall be open to and available for inspection and copying by
the HUD, the City, its auditors or other authorized representatives at reasonable intervals during
normal business hours. Copies of all tax returns and other reports that Borrower may be required
to furnish to any governmental agency shall at all reasonable times be open for inspection by the
City at the place that the books, records and accounts of the Borrower are kept. The Borrower
shall preserve such records for a period of not less than five (5) years after the creation of such
records in compliance with all HUD records and accounting requirements including but not
limited to those set forth in 24 C.F.R. 570.506 and 570.502(b). If any litigation, claim,
negotiation, audit exception, monitoring, inspection or other action relating to the use of the
Loan is pending at the end of the completing the rehabilitation of the Property, then the Borrower
shall retain such records until such action and all related issues are resolved. Such records shall
include all invoices, receipts, and other documents related to expenditures from the Loan funds.
Records must be kept accurate and current.
Such records shall include but not be limited to:
(a) Records providing a full description of the activities undertaken with the use of
the CDBG Funds.
(b) Records demonstrating that each activity undertaken meets one of the national
objectives of the CDBG program set forth in 24 CFR 570.208;
(c) Records required to determine the eligibility of activities;
(d) Records documenting compliance with the fair housing and equal opportunity
components of the CDBG program;
(e) Financial records as required by 24 CFR 570.502, and OMB Circular A-110 (24
C.F.R. Part 84); and
(f) Other records necessary to document compliance with Subpart K of 24 CFR 570.
(g) The City shall notify Borrower of any records it deems insufficient. Borrower
shall have fifteen (15) calendar days after the receipt of such a notice to correct any deficiency in
the records specified by the City in such notice, or if a period longer than fifteen (15) days is
reasonably necessary to correct the deficiency, then Borrower shall begin to correct the
deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible.
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Section 3.7 CDBG Requirements.
(a) Borrower shall comply with all ap~~licable laws and regulations governing the use
of the Loan funds, including but not limited to the; requirements of the Regulatory Agreement
and the CDBG Project Agreement. In the event of any conflict between this Agreement and
applicable laws and regulations governing the use of the Loan funds, the applicable laws and
regulations shall govern.
(b) The laws and regulations governing the use of the Loan funds include (but are not
limited to) the following:
(1) Environmental and Historic; Preservation. Section 104(f) of the Housing
and Community Residence Act of 1974 and 24 CIiR Part 58, which prescribe procedures for
compliance with the National Environmental Poli~~y Act of 1969 (42 U.S.C. 4321-4361), and the
additional laws and authorities listed at 24 CFR 58.5.
(2) Applicability of OMB Circ~.~lars. The applicable policies, guidelines, and
requirements of OMB Circulars Nos. A-87, A-10~!, Revised, A-110, A-122, A-133, and A-128.
(3) Debarred, Suspended or Ineligible Contractors. The use of debarred,
suspended, or ineligible contractors set forth in 243 CFR part 5.
(4) Civil Rights, Housing & Community Development, and Aae
Discrimination Acts. The Fair Housing Act (42 U.S.C. 3601 et seq.), and implementing
regulations at 24 C.F.R. Part 100; Title VI of the (:ivil Rights Act of 1964 as amended; Title VIII
of the Civil Rights Act of 1968 as amended; Section 104(b) and Section 109 of Title I of the
Housing and Community Development Act of 1974 as amended; Section 504 of the
Rehabilitation Act of 1973 (29 U.S.C. 794, et seq.j; the Age Discrimination Act of 1975 (42
U.S.C. 6101, et seq.); Executive Order 11063 as amended by Executive Order 12259 and
implementing regulations at 24 C.F.R. Part 107; Executive Order 11246 as amended by
Executive Orders 11375, 12086, 11478, 12107; E~;ecutive Order 11625 as amended by
Executive Order 12007; Executive Order 12432; F;xecutive Order 12138 as amended by
Executive Order 12608.
(5) Lead-Based Paint. The regilirement of the Lead-Based Paint Poisoning
Prevention Act, as amended (42 U.S.C. 4821 et se~~.), the Residential Lead-Based Paint Hazard
Reduction Act (42 U.S.C. 4851 et seq.), and implementing regulations at 24 CFR Part 35.
(6) Relocation. The requirements of the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970, and similar state laws. If and to the extent that
development of the Project results in the permanent or temporary displacement of residential
tenants, homeowners, or businesses, then Borrower shall comply with all applicable local, state,
and federal statutes and regulations with respect to relocation planning, advisory assistance, and
payment of monetary benefits. Borrower shall be ;solely responsible for payment of any
relocation benefits to any displaced persons and any other obligations associated with complying
with such relocation laws. Borrower shall prepare ;end submit a relocation plan to the City for
approval. Borrower shall be solely responsible for payment of any relocation benefits to any
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displaced persons and any other obligations associated with complying with such relocation
laws. The Borrower shall indemnify, defend (with counsel reasonably chosen by the City), and
hold harmless the City against all claims which arise out of relocation obligations to residential
tenants, homeowners, or businesses permanently or temporarily displaced by the Project'.
(7) Discrimination against the Disabled. The requirements of Section 504 of
the Rehabilitation Act of 1973 (29 U.S.C. 794), and federal regulations issued pursuant thereto,
which prohibit discrimination against the handicapped in any federally assisted program, the
requirements of the Architectural Barriers Act of 1968 (42 U.S.C. 4151, 4157), and the
applicable requirements of Title II and/or Title III of the Americans with Disabilities Act of 1990
(42 U.S.C. 12131 et seq.), and federal regulations issued pursuant thereto.
(8) Clean Air and Water Acts. The Clean Air Act, as amended, 42 USC 1859
et seq., the Federal Water Pollution Control Act, as amended, 33 USC 1251 et seq., and the
regulations of the Environmental Protection Agency with respect thereto, at 40 CFR Part 15, as
amended from time to time.
(9) Uniform Administrative Requirements. The requirements of 24 CFR
507.502(b) regarding cost and auditing requirements.
(10) Training Opporlunities. The requirements of Section 3 of the Housing
and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u ("Section 3"), requiring that
to the greatest extent feasible opportunities for training and employment be given to lower
income residents of the project area and agreements for work in connection with the project be
awarded to business concerns which are located in, or owned in substantial part by persons
residing in, the areas of the project. Borrower agrees to include the following language in all
subcontracts executed under this Agreement:
a. The parties to this contract agree to comply with HUD's
regulations in 24 C.F.R. Part 135, which implement Section 3. As evidenced by their execution
of this contract, the parties to this contract certify that they are under no contractual or other
impediment that would prevent them from complying with the Part 135 regulations.
b. The contractor agrees to send to each labor organization or
representative of workers with which the contractor has a collective bargaining agreement or
other understanding, if any, a notice advising the labor organization or workers' representative of
the contractor's commitments under this Section 3 clause; and will post copies of the notice in
conspicuous places at the work site where both employees and applicants for training and
employment positions can see the notice. The notice shall describe the Section 3 preference;
shall set forth minimum number and job titles subject to hire; availability of apprenticeship and
training positions; the qualifications for each; the name and location of the person(s) taking
applications for each of the positions; and the anticipated date the work shall begin.
c. The contractor agrees to include this Section 3 clause in every
subcontract subject to compliance with regulations in 24 C.F.R. Part 135, and agrees to take
appropriate action, as provided in an applicable provision of the subcontract or in this Section 3
clause, upon a fmding that the subcontractor is in violation of the regulations in 24 C.F.R. Part
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135. The contractor will not subcontract with any subcontractor where the contractor has notice
or knowledge that the subcontractor has been found in violation of the regulations in 24 C.F.R.
Part 135.
d. The contractor will certify that any vacant employment positions,
including training positions, that are filled (1) afte;r the contractor is selected but before the
contract is executed, and (2) with persons other tr~an those to whom the regulations of 24 C.F.R.
Part 135 require employment opportunities to be directed, were not filled to circumvent the
contractor's obligations under 24 C.F.R. Part 135.
e. Noncompliance with HUD's regulations in 24 C.F.R. Part 135 may
result in sanctions, termination of this contract fol• default, and debarment or suspension from
future HUD assisted contracts.
f. With respect to work performed in connection with Section 3
covered Indian housing assistance, section 7(b) oi'the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450e) also applies to the work to be performed under this contract.
Section 7(b) requires that to the greatest extent fe~isible (i) preference and opportunities for
training and employment shall be given to Indian:;, and (ii) preference in the award of contracts
and subcontracts shall be given to Indian organiz~~tions and Indian-owned Economic Enterprises.
Parties to this contract that are subject to the provisions of Section 3 and section 7(b) agree to
comply with Section 3 to the maximum extent feasible, but not in derogation of compliance with
section 7(b).Training Opportunities.
(11) Labor Standards. The prevailing wage requirements of the Davis-Bacon
Act and implementing rules and regulations (40 L".S.C. 276a-276a-5); the Copeland "Anti-
Kickback" Act (47 USC 276(c)) which requires tYiat workers be paid at least once a week
without any deductions or rebates except permissible deductions; the Contract Work Hours and
Safety Standards Act - CWHSSA (40 USC 327-333) which requires that workers receive
"overtime" compensation at a rate of 1-1/2 times their regular hourly wage after they have
worked 40 hours in one week; and Title 29, Code of Federal Regulations, Subtitle A, parts 1.3
and 5 are the regulations and procedures issued b}~ the Secretary of Labor for the administration
and enforcement of the Davis-Bacon Act, as amended.
(12) Drug Free Work lU ace. The requirements of the Drug Free Workplace Act
of 1988 (P.L. 100-690) and implementing regulations at 24 CFR Part 24.
(13) Anti-Lobbying; Disclosure Requirements. The disclosure requirements
and prohibitions of 31 U.S.C. 1352 and implementing regulations at 24 C.F.R. Part 87.
(14) Historic Preservation. The Borrower shall comply with the historic
preservation requirements set forth in the Nationals Historic Preservation Act of 1966, as
amended (16 U.S.C. Section 470) and the procedures set forth in 36 C.F.R. Part 800.
(15) Religious Organizations. Ii~Borrower is a religious organization, as
defined by the CDBG requirements, Borrower shall comply with all conditions prescribed by
HUD for the use of CDBG funds by religious org~ulizations, including the First Amendment of
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the United States Constitution regarding church/state principles and the applicable constitutional
prohibitions set forth in 24 C.F.R. Section 570.200(j).
(16) HUD Regulations. Any other HUD regulations present or as may be
amended, added, or waived in the future pertaining to the Loan funds, including but not limited
to HUD regulations as may be promulgated regarding subrecipients.
Section 3.8 Hazardous Materials.
(a) Borrower shall keep and maintain the Property in compliance with, and shall not
cause or permit the Property to be in violation of any federal, state or local laws, ordinances or
regulations relating to industrial hygiene or to the environmental conditions on, under or about
the Property including, but not limited to, soil and ground water conditions. Borrower shall not
use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or
from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic
substances or related materials, including without limitation, any substances defined as or
included in the definition of "hazardous substances," hazardous wastes," "hazardous materials,"
or "toxic substances" under any applicable federal or state laws or regulations (collectively
referred to hereinafter as "Hazardous Materials") except such of the foregoing as may be
customarily used in construction of projects like the Project or kept and used in and about
property of this type.
(b) Borrower shall immediately advise the City in writing if at any time it receives
written notice of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against Borrower or the Property pursuant
to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous
Materials, ("Hazazdous Materials Law"); (ii) all claims made or threatened by any third party
against Borrower or the Property relating to damage, contribution, cost recovery compensation,
loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii)
above are hereinafter referred to as "Hazazdous Materials Claims"); and (iii) Borrower's
discovery of any occurrence or condition on any real property adjoining or in the vicinity of the
Property that could cause the Property or any part thereof to be classified as "border-zone
property" under the provision of California Health and Safety Code, Sections 25220 et sue. or
any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on
the ownership, occupancy, transferability or use of the Property under any Hazardous Materials
Law.
(c) The City shall have the right to join and participate in, as a party if it so elects,
any legal proceedings or actions initiated in connection with any Hazazdous Materials Claims
and to have its reasonable attorneys' fees in connection therewith paid by Borrower. Borrower
shall indemnify and hold harmless the City and its council members, supervisors, directors,
officers, employees, agents, successors and assigns from and against any loss, damage, cost,
expense or liability directly or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, dischazge, disposal, or presence of Hazardous Materials on,
under, or about the Property including without limitation: (a) all foreseeable consequential
damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the
Property and the prepazation and implementation of any closure, remedial or other required
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plans; and (c) all reasonable costs and expenses ilicurred by the City in connection with clauses
(a) and (b), including but not limited to reasonable attorneys' fees. This obligation to indemnify
shall survive termination of this Agreement.
(d) Without the City's prior written consent, which shall not be unreasonably
withheld, Borrower shall not take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Property, nor enter into any settlement agreement,
consent decree, or other compromise in respect to any Hazardous Material Claims, which
remedial action, settlement, consent decree or compromise might, in the City's reasonable
judgment, impair the value of the City's security hereunder; provided, however, that the City's
prior consent shall not be necessary in the event that the presence of Hazardous Materials on,
under, or about the Property either poses an immediate threat to the health, safety or welfare of
any individual or is of such a nature that an immediate remedial response is necessary and it is
not reasonably possible to obtain the City's conse~it before taking such action, provided that in
such event Borrower shall notify the City as soon as practicable of any action so taken. The City
agrees not to withhold its consent, where such consent is required hereunder, if either (i) a
particular remedial action is ordered by a court of competent jurisdiction, (ii) Borrower will or
may be subjected to civil or criminal sanctions or penalties if it fails to take a required action;
(iii) Borrower establishes to the reasonable satisfaction of the City that there is no reasonable
alternative to such remedial action which would result in less impairment of the City's security
hereunder; or (iv) the action has been agreed to by the City.
(e) Borrower hereby acknowledges and agrees that (i) this Section is intended as the
City's written request for information (and Borrower's response) concerning the environmental
condition of the Property as required by Californiai Code of Civil Procedure Section 726.5, and
(ii) each representation and warranty in this Agreement (together with any indemnity obligation
applicable to a breach of any such representation rind warranty) with respect to the environmental
condition of the Property is intended by the Parties to bean "environmental provision" for
purposes of California Code of Civil Procedure Sc;ction 736.
(f) In the event that any portion of the Property is determined to be "environmentally
impaired" (as that term is defined in California Cade of Civil Procedure Section 726.5(e)(3)) or
to bean "affected parcel" (as that term is defined in California Code of Civil Procedure Section
726.5(e)(1)), then, without otherwise limiting or in any way affecting the City's or the trustee's
rights and remedies under the Deed of Trust, the City may elect to exercise its rights under
California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such
environmentally impaired or affected portion of tlne Property and (2) exercise (a) the rights and
remedies of an unsecured creditor, including reduction of its claim against the Borrower to
judgment, and (b) any other rights and remedies permitted by law. For purposes of determining
the City's right to proceed as an unsecured creditor under California Code of Civil Procedure
Section 726.5(a), the Borrower shall be deemed to have willfully permitted or acquiesced in a
release or threatened release of hazardous material s, within the meaning of California Code of
Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials
was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any
portion of the Property and the Borrower knew or should have known of the activity by such
lessee, occupant, or user which caused or contributed to the release or threatened release. All
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13
costs and expenses, including (but not limited to) attorneys' fees, incurred by the City in
connection with any action commenced under this paragraph, including any action required by
California Code of Civil Procedure Section 726.5(b) to determine the degree to which the
Property is environmentally impaired, plus interest thereon at the lesser of ten percent (10%) or
the maximum rate permitted by law, until paid, shall be added to the indebtedness secured by the
Deed of Trust and shall be due and payable to the City upon its demand made at any time
following the conclusion of such action.
Section 3.9 Maintenance and Damage.
(a) During the course of both construction and operation of the Project, Borrower
shall maintain the Project and the Property in good repair and in a neat, clean and orderly
condition. If there arises a condition in contravention of this requirement, and if Borrower has
not cured such condition within thirty (30) days after receiving a City notice of such a condition,
then in addition to any other rights available to the City, the City shall have the right to perform
all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance
against the Property.
(b) Subject to the requirements of senior lenders, and if economically feasible in the
City's reasonable judgment, if any improvement now or in the future on the Property is damaged
or destroyed, then Borrower shall, at its cost and expense, diligently undertake to repair or
restore such improvement consistent with the plans and specifications approved by the City with
such changes as have been approved by the City. Such work or repair shall be commenced no
later than the later of one hundred twenty (120) days after the damage or loss occurs or thirty
(30) days following receipt of the insurance proceeds, and shall be completed within one (1) yeaz
thereafter. Any insurance proceeds collected for such damage or destruction shall be applied to
the cost of such repairs or restoration and, if such insurance proceeds shall be insufficient for
such purpose, then Borrower shall make up the deficiency.
Section 3.10 Fees and Taxes.
Borrower shall be solely responsible for payment of all fees, assessments, taxes, changes,
and levies imposed by any public authority or utility company with respect to the Property or the
Project to the extent owned by Borrower, and shall pay such charges prior to delinquency.
However, Borrower shall not be required to pay and discharge any such charge so long as (a) the
legality thereof is being contested diligently and in good faith and by appropriate proceedings,
and (b) if requested by the City, Borrower deposits with the City any funds or other forms of
assurance that the City in good faith from time to time determines appropriate to protect the City
from the consequences of the contest being unsuccessful.
Section 3.11 Notice of Liti ag tom.
Borrower shall promptly notify the City in writing of any litigation materially affecting
Borrower or the Property and of any claims or disputes that involve a material risk of such
litigation.
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Section 3.12 Operation of Project.
(a) Promptly after completion of construction, the Borrower shall operate the Project
as a very low income transitional housing development consistent with (i) HUD's requirements
for use of the CDBG Funds, and (ii) the Regulatory Agreement.
(b) Before leasing any Unit in the Project, the Borrower shall submit its proposed
form of lease agreement for the City's review and approval. The term of the form of lease
agreement shall be for no less than one (1) year, except by mutual agreement between Borrower
and the Tenant. Any Borrower termination of a le;ase or refusal to renew must be preceded by
not less than thirty (30) days written notice to the tenant by the Borrower.
(c) Before leasing any Unit, the Borrower must provide the City, for its review and
approval, with the Borrower's written tenant selection plan.
(d) The Borrower must determine the income eligibility of each Tenant in an Unit.
The Borrower shall certify each Tenant's income on an annual basis.
(e) The maximum household income of a Tenant occupying an Unit in the Project,
and the total charges for rent, utilities, and related services to each Tenant occupying an Unit,
shall be maintained as provided in the Regulatory Agreement.
Section 3.13 Nondiscrimination.
All of the Units shall be available for occupancy on a continuous basis to members of the
general public who are homeless and income eligible. The Borrower shall not give preference to
any particular class or group of persons in renting the Units or any part of the Project, except to
the extent required by the Regulatory Agreement. The Borrower covenants by and for itself and
its successors and assigns that there shall be no discrimination against or segregation of a person
or of a groups of persons on account of race, color, religion, creed, age, disability, sex, sexual
orientation, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property, nor shall the Borrower or any person claiming
under or through the Borrower establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vende~es in the Property. The foregoing covenant
shall run with the land.
Section 3.14 Transfer.
(a) For purposes of this Agreement, "Transfer" shall mean any sale, assignment, or
transfer, whether voluntary or involuntary, of (i) alry rights and/or duties under this Agreement,
and/or (ii) any interest in the Project, including (bu.t not limited to) a fee simple interest, a joint
tenancy interest, a life estate, a partnership interest, a leasehold interest, a security interest, or an
interest evidenced by a land contract by which possession of the Project is transferred and
Borrower retains title. The term "Transfer" shall exclude the leasing of any Unit in the Project to
an occupant in compliance with the Regulatory Agreement.
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(b) No Transfer shall be permitted without the prior written consent of the City,
which the City may withhold in its sole discretion. The Loan shall automatically accelerate and
be due in full upon any unauthorized Transfer.
(c) The City approves the grant of the security interests in the Property described in
Section 1.1(d) above.
Section 3.15 Insurance Requirements.
The Borrower shall maintain the following insurance coverage throughout the Term of
the Loan:
(a) Worker's Compensation insurance to the extent required by law, including
Employer's Liability coverage, with limits not less than One Million Dollars ($1,000,000) each
accident.
(b) Comprehensive General Liability insurance with limits not less than Two Million
Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and Property
Damage, including coverages for Contractual Liability, Personal Injury, Broadform Property
Damage, Products and Completed Operations.
(c) Comprehensive Automobile Liability insurance with limits not less than One
Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and
Property Damage, including coverages for owned, non-owned and hired vehicles, as applicable;
provided, however, that if the Borrower does not own or lease vehicles for purposes of this
Agreement, then no automobile insurance shall be required.
(d) Builders' risk insurance during the course of construction, and upon completion of
construction, Property insurance covering the Project, in form appropriate for the nature of such
property, covering all risks of loss, excluding earthquake, for one hundred percent (100%) of the
replacement value, with deductible, if any, acceptable to the City, naming the City as a Loss
Payee, as its interests may appear. Flood insurance shall be obtained if required by applicable
federal regulations.
(e) Blanket Fidelity Bond covering all officers and employees, for loss of Loan
proceeds caused by dishonesty, in an amount not less than One Hundred Thousand Dollars
($100,000) naming the City a Loss Payee, as its interests may appear.
(f) The Borrower shall ensure that any architect, design professional, engineer,
consultant, and any other professional services provided to the Project carries professional
liability insurance for errors and omissions with a limit of no less than One Million Dollars
($1,000,000). Before any such professional begins work on the Project, the Borrower shall
deliver to the City certificate(s) of insurance; on a binder followed within thirty (30) days by a
certificate of insurance, evidencing the required coverage. The insurance required by this
subsection shall name as additional insured, the City, its officers, agents and employees and
members of the City Council.
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(g) The Borrower shall cause any gene;ral contractor, agent, or subcontractor working
on the Project under direct contract with the Borrower or subcontract to maintain insurance of
the types and in at least the minimum amounts described in subsections (a), (b), and (c) above,
except that the limit of liability for comprehensive; general liability insurance for subcontractors
shall be One Million Dollars ($1,000,000), and shall require that such insurance shall meet all of
the general requirements of subsections (g), (h) arld (i) below, including, without limitation, the
requirement of subsection (i). Liability and Comprehensive Automobile Liability insurance to
be maintained by such contractors and agents pur;;uant to this subsection shall name as additional
insureds the City, its officers, agents, employees and members of the City Council.
(h) The required insurance shall be provided under an occurrence form, and Borrower
shall maintain the coverage described in subsections (a) through (d) continuously so long as the
Note is outstanding. Should any of the required insurance be provided under a form of coverage
that includes an annual aggregate limit or provide~~ that claims investigation or legal defense
costs are included in such annual aggregate limit, such annual aggregate limit shall be three times
the occurrence limits specified above.
(i) Comprehensive General Liability, Comprehensive Automobile Liability and
Property insurance policies shall be endorsed to n,~me as an additional insured the City and its
officers, agents, employees and members of the City Council.
(j) All policies and bonds shall be endorsed to provide thirty (30) days' prior written
notice of cancellation, reduction in coverage, or ir.~tent not to renew to the address established for
notices to the City.
Section 3.16 Anti-Lobbying Certificatioli.
The Borrower certifies, to the best of Borrower's knowledge or belief, that:
(a) No Federal appropriated funds have been paid or will be paid, by or on behalf of
it, to any person for influencing or attempting to ilifluence an officer or employee of any agency,
a Member of Congress, an officer or employee of Congress, or an employee of a Member of
Congress in connection with the awarding of any ]Federal contract, the making of any Federal
grant, the making of any Federal loan, the enterin€; into of any cooperative agreement, and the
extension, continuation, renewal, amendment, or modification of any Federal contract, grant,
loan, or cooperative agreement;
(b) If any funds other than Federal appropriated funds have been paid or will be paid
to any person for influencing or attempting to influence an officer or employee of any agency, a
Member of Congress, an officer or employee of Congress, or an employee of a Member of
Congress in connection with the Federal contract, grant, loan, or cooperative agreement, it will
complete and submit Standard Form-LLL, Disclo~;ure Form to Report Lobbying, in accordance
with its instructions.
(c) This certification is a material representation of fact upon which reliance was
placed when this Agreement was made or entered into. Submission of this certification is a
prerequisite for making or entering into this Agreement imposed by Section 1352, Title 31, U.S.
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Code. Any person who fails to file the required certification shall be subject to a civil penalty of
not less than Ten Thousand Dollars ($10,000) and no more than One Hundred Thousand Dollars
($100,000) for such failure.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 4.1 Representations and Warranties.
Borrower hereby represents and warrants to the City as follows:
(a) Organization. Borrower is a duly organized California nonprofit public benefit
corporation, validly existing and in good standing under the laws of the State of California and
has the power and authority to own its property and carry on its business as now being
conducted.
(b) Authority of Borrower. Borrower has full power and authority to execute and
deliver this Agreement and to make and accept the borrowings contemplated hereunder, to
execute and deliver the Loan Documents and all other documents or instruments executed and
delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and
observe the terms and provisions of all of the above.
(c) Authority of Persons Executing Documents. This Agreement and the Loan
Documents and all other documents or instruments executed and delivered, or to be executed and
delivered, pursuant to this Agreement have been executed and delivered by persons who are duly
authorized to execute and deliver the same for and on behalf of Borrower, and all actions
required under Borrower's organizational documents and applicable governing law for the
authorization, execution, delivery and performance of this Agreement and the Loan Documents
and all other documents or instruments executed and delivered, or to be executed and delivered,
pursuant to this Agreement, have been duly taken.
(d) Valid Binding Agreements. This Agreement and the Loan Documents and all
other documents or instruments which have been executed and delivered pursuant to or in
connection with this Agreement constitute or, if not yet executed or delivered, will when so
executed and delivered constitute, legal, valid and binding obligations of Borrower enforceable
against it in accordance with their respective terms.
(e) No Breach of Law or Agreement. Neither the execution nor delivery of this
Agreement and the Loan Documents or of any other documents or instruments executed and
delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any
provision, condition, covenant or other term hereof or thereof, will conflict with or result in a
breach of any statute, rule or regulation, or any judgment, decree or order of any court, board,
commission or agency whatsoever binding on Borrower, or any provision of the organizational
documents of Borrower, or will conflict with or constitute a breach of or a default under any
agreement to which Borrower is a party, or will result in the creation or imposition of any lien
upon any assets or property of Borrower, other than liens established pursuant hereto.
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(f) Compliance With Laws; Consents and A royals. The Project will comply with
all applicable laws, ordinances, rules and regulati~~ns of federal, state and local governments and
agencies and with all applicable directions, rules Auld regulations of the fire marshal, health
officer, building inspector and other officers of ar.~y such government or agency.
(g) Pending Proceedings. Borrower is not in default under any law or regulation or
under any order of any court, board, commission or agency whatsoever, and there are no claims,
actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or the Project, at law or in equity, before or by any court, board, commission
or agency whatsoever which might, if determined adversely to Borrower, materially affect
Borrower's ability to repay the Loan or impair the security to be given to the City pursuant
hereto.
(h) Title to Land. At the time of recordation of the Deed of Trust, Borrower will have
good and marketable fee title to the Project and there will exist thereon or with respect thereto no
mortgage, lien, pledge or other encumbrance of arty character whatsoever other than liens for
current real property taxes and liens in favor of the City or approved in writing by the City.
(i) Financial Statements. The financial statements of Borrower and other financial
data and information furnished by Borrower to the; City fairly and accurately present the
information contained therein. As of the date of this Agreement, there has not been any adverse,
material change in the financial condition of Borrower from that shown by such financial
statements and other data and information.
(j) Sufficient Funds. Borrower holds :sufficient funds and/or binding commitments
for sufficient funds to complete the acquisition of the Property and the construction or
rehabilitation of the Project in accordance with the; plans and specifications approved by the City.
(k) Taxes. Borrower and its subsidiaries have filed all federal and other material tax
returns and reports required to be filed, and have F~aid all federal and other material taxes,
assessments, fees and other governmental charges levied or imposed upon them or their income
or the Property otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in accordance
with generally accepted accounting principles. There is no proposed tax assessment against
Borrower or any of its subsidiaries that could, if made, be reasonably expected to have a material
adverse effect upon the Property, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of the Borrov~~er and its subsidiaries, taken as a whole,
which would be expected to result in a material impairment of the ability of Borrower to perform
under any Loan Document to which it is a party, or a material adverse effect upon the legality,
validity, binding effect or enforceability against Borrower of any Loan Document.
ARTICLE 5 DEFAULT AND REMEDIES
Section 5.1 Events of Default.
Each of the following shall constitute a "Dc;fault" by Borrower under this Agreement:
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(a) Failure to Rehabilitate. Failure of Borrower to rehabilitate the Property within
one yeaz (365 days) after the execution of the Agreement.
(b) Failure to Make Payment. Failure to repay the principal and any interest on the
Loan within ten (10) days of receipt of written notice from the City that such payment is due
pursuant to the Loan Documents.
(c) Breach of Covenants. Failure by Borrower to duly perform, comply with, or
observe any of the conditions, terms, or covenants of any of the Loan Documents, and such
failure having continued uncured for thirty (30) days after receipt of written notice thereof from
the City to the Borrower or, if the breach cannot be cured within thirty (30) days, the Borrower
shall not be in breach so long as Borrower is diligently undertaking to cure such breach and such
breach is cured within ninety (90) days; provided, however, that if a different period or notice
requirement is specified under any other section of this Article 5, the specific provisions shall
control.
(d) Default Under Other Loans. Failure to make any payment or perform any of
Borrower's covenants, agreements, or obligations under the documents evidencing and securing
the Approved Financing following expiration of all applicable notice and cure periods.
(e) Insolvency. A court having jurisdiction shall have made or entered any decree or
order (i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly filed a
petition seeking reorganization of Borrower or seeking any arrangement for Borrower under the
bankruptcy law or any other applicable debtor's relief law or statute of the United States or any
state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Borrower
in bankruptcy or insolvency or for any of their properties, (iv) directing the winding up or
liquidation of Borrower, if any such decree or order described in clauses (i) to (iv), inclusive,
shall have continued unstayed or undischazged for a period of ninety (90) days; or (v) Borrower
shall have admitted in writing its inability to pay its debts as they fall due or shall have
voluntarily submitted to or filed a petition seeking any decree or order of the nature described in
clauses (i) to (iv), inclusive. The occurrence of any of the events of Default in this paragraph
shall act to accelerate automatically, without the need for any action by the City, the
indebtedness evidenced by the Note.
(f) Assig~lment; Attachment. Borrower shall have assigned its assets for the benefit
of its creditors or suffered a sequestration or attachment of or execution on any substantial pazt of
its property, unless the property so assigned, sequestered, attached or executed upon shall have
been returned or released within ninety (90) days after such event or, if sooner, prior to sale
pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of
default in this pazagraph shall act to accelerate automatically, without the need for any action by
the City, the indebtedness evidenced by the Note.
(g) Suspension; Termination. Borrower shall have voluntarily suspended its business
or, if Borrower is a partnership, the partnership shall have been. dissolved or terminated, other
than a technical termination of the partnership for tax purposes.
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(h) Liens on Property and the Pr~ect. There shall be filed any claim of lien (other
than liens approved in writing by the City) against the Project or any part thereof, or any interest
or right made appurtenant thereto, or the service c-f any notice to withhold proceeds of the Loan
and the continued maintenance of said claim of lien or notice to withhold for a period of twenty
(20) days without discharge or satisfaction thereo f or provision therefor (including, without
limitation, the posting of bonds) satisfactory to th~~ City.
(i) Condemnation. The condemnation, seizure, or appropriation of all or the
substantial part of the Property and the Project.
(j) Unauthorized Transfer. Any Transfer other than as permitted by Section 3.14.
(k) Representation or Warranty Incorrect. Any Borrower representation or warranty
contained in this Agreement, or in any application, financial statement, certificate, or report
submitted to the City in connection with any of the Loan Documents, proving to have been
incorrect in any material respect when made. Aft~:r issuance of the Certificate of Completion,
Default may be declared under this subsection only if the failure of representation or warranty
also has a material adverse effect on the operation of the Project.
Section 5.2 Remedies.
The occurrence of any Default hereunder following the expiration of all applicable notice
and cure periods will, either at the option of the C ity or automatically where so specified, relieve
the City of any obligation to make or continue the Loan and shall give the City the right to
proceed with any and all remedies set forth in this Agreement and the Loan Documents,
including but not limited to the following:
(a) Acceleration of Note. The City sh<<ll have the right to cause all indebtedness of
the Borrower to the City under this Agreement an~i the Note, together with any accrued interest
thereon, to become immediately due and payable. The Borrower waives all right to presentment,
demand, protest or notice of protest or dishonor. '['he City may proceed to enforce payment of
the indebtedness and to exercise any or all rights afforded to the City as a creditor and secured
party under the law including the Uniform Commercial Code, including foreclosure under the
City Deed of Trust. The Borrower shall be liable ro pay the City on demand all reasonable
expenses, costs and fees (including, without limitation, reasonable attorney's fees and expenses)
paid or incurred by the City in connection with the: collection of the Loan and the preservation,
maintenance, protection, sale, or other disposition of the security given for the Loan.
(b) Specific Performance. The City shall have the right to mandamus or other suit,
action or proceeding at law or in equity to require Borrower to perform its obligations and
covenants under the Loan Documents or to enjoin acts on things which may be unlawful or in
violation of the provisions of the Loan Documents.
(c) Right to Cure at Borrower's Expense. The City shall have the right (but not the
obligation) to cure any monetary default by Borrower under a loan other than the Loan. The
Borrower agrees to reimburse the City for any funds advanced by the City to cure a monetary
default by Borrower upon demand therefore, together with interest thereon at the lesser of the
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maximum rate permitted by law or ten percent (10%) per annum from the date of expenditure
until the date of reimbursement.
(d) Special Remedy for Breach of Use Requirement. Pursuant to 24 CFR
570.503(b)(7)(ii), if after completion of construction of the Project, the Borrower ceases to use
the Units to primarily benefit very low income persons, the City shall have the right to require
the Borrower to pay to the City an amount equal to the current market value of the Property (as
determined by appraisal) less any portion of that value attributable to non-City Loan funds used
for the Project of the Project (based on a pro-rata allocation of funds used by Borrower in its
development of the Project). Funds recovered from Borrower pursuant to this subsection shall
be credited against amounts outstanding under the Note.
Section 5.3 Right of Contest.
Borrower shall have the right to contest in good faith any claim, demand, levy, or
assessment the assertion of which would constitute a Default hereunder. Any such contest shall
be prosecuted diligently and in a manner unprejudicial to the City or the rights of the City
hereunder.
Section 5.4 Remedies Cumulative.
No right, power, or remedy given to the City by the terms of this Agreement or the Loan
Documents is intended to be exclusive of any other right, power, or remedy; and each and every
such right, power, or remedy shall be cumulative and in addition to every other right, power, or
remedy given to the City by the terms of any such instrument, or by any statute or otherwise
against Borrower and any other person. Neither the failure nor any delay on the part of the City
to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or
partial exercise by the City of any such right or remedy preclude any other or further exercise of
such right or remedy, or any other right or remedy.
ARTICLE 6 GENERAL PROVISIONS
Section 6.1 Relationship of Parties.
Nothing contained in this Agreement shall be interpreted or understood by any of the
Parties, or by any third persons, as creating the relationship of employer and employee, principal
and agent, limited or general partnership, or joint venture between the City and Borrower or its
agents, employees or contractors, and Borrower shall at all times be deemed an independent
contractor and shall be wholly responsible for the manner in which it or its agents, or both,
perform the services required of it by the terms of this Agreement. Borrower has and retains the
right to exercise full control of employment, direction, compensation, and discharge of all
persons assisting in the performance of services under the Agreement. In regards to its
predevelopment, development and operational activities related to the Property and the Project,
Borrower shall be solely responsible for all matters relating to payment of its employees,
including compliance with Social Security, withholding, and all other laws and regulations
governing such matters, and shall include requirements in each contract that contractors shall be
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solely responsible for similar matters relating to their employees. Borrower shall be solely
responsible for its own acts and those of its agent:; and employees.
Section 6.2 No Claims.
Nothing contained in this Agreement shall create or justify any claim against the City by
any person that Borrower may have employed or with whom Borrower may have contracted
relative to the purchase of materials, supplies or equipment, or the furnishing or the performance
of any work or services with respect to predevelopment, development and operational activities
related to the Property and the Project, and Borro~~ver shall include similar requirements in any
contracts entered into for the its predevelopment activities, the construction of the Improvements,
or the operation of the Project.
Section 6.3 Amendments.
No alteration or variation of the terms of t}us Agreement shall be valid unless made in
writing by the Parties.
Section 6.4 Indemnification.
The Borrower shall indemnify, defend and hold the City harmless against all claims made
against it and expenses (including reasonable attol•neys' fees) which arise out of or in connection
with the predevelopment activities related to the Project, development, construction, marketing
and operation of the Project, except to the extent such claim arises from the grossly negligent or
willful misconduct of the City, its agents, and its employees. The provisions of this Section 6.4
shall survive the expiration of the Term and the reconveyance of the Deed of Trust.
Section 6.5 Non-Liability of City Officials, Employees and A ents.
No member, official, employee or agent of'the City shall be personally liable to Borrower
in the event of any default or breach by the City ol• for any amount which may become due to
Borrower or its successor or on any obligation under the terms of this Agreement.
Section 6.6 No Third Party Beneficiaries.
There shall be no third party beneficiaries to this Agreement.
Section 6.7 Discretion Retained By Cih~.
The City's execution of this Agreement in no way limits the discretion of the City in the
permit and approval process in connection with development of the Project.
Section 6.8 Conflict of Interest.
(a) Except for approved eligible administrative or personnel costs, no person
described in Section 6.8(b) below who exercises o~° has exercised any functions or
responsibilities with respect to the activities funded pursuant to this Agreement or who is in a
position to participate in adecision-making process or gain inside information with regard to
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such activities, may obtain a personal or financial interest or benefit from the activity, or have an
interest in any contract, subcontract or agreement with respect thereto, or the proceeds
thereunder, either for themselves or those with whom they have family or business ties, during,
or at any time after, such person's tenure. Borrower shall exercise due diligence to ensure that
the prohibition in this Section 6.8(a) is followed.
(b) The conflict of interest provisions of Section 6.8(a) above apply to any person
who is an employee, agent, consultant, officer, or any immediate family member of such person,
or any elected or appointed official of the City, or any person related within the third (3rd)
degree of such person.
(c) In accordance with Government Code Section 1090 and the Political Reform Act,
Government Code section 87100 et sew., no person who is a director, officer, partner, trustee or
employee or consultant of the Borrower, or immediate family member of any of the preceding,
shall make or participate in a decision, made by the County or a County board, commission or
committee, if it is reasonably foreseeable that the decision will have a material effect on any
source of income, investment or interest in real property of that person or Borrower.
Interpretation of this section shall be governed by the definitions and provisions used in the
Political Reform Act, Government Code Section 87100 et seg., its implementing regulations
manual and codes, and Government Code Section 1090.
Section 6.9 Notices. Demands and Communications.
Formal notices, demands, and communications between the Parties shall be sufficiently
given if and shall not be deemed given unless dispatched by registered or certified mail, postage
prepaid, return receipt requested, or delivered by express delivery service, return receipt
requested, or delivered personally, to the principal office of the Parties as follows:
City:
Community Development Department
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014-3255
Attention: Senior Planner
Borrower:
Senior Housing Solutions
512 Valley Way
Milpitas, California 95035
Attention: Executive Director
Such written notices, demands and communications may be sent in the same manner to such
other addresses as the affected Party may from time to time designate by mail as provided in this
Section. Receipt shall be deemed to have occurred on the date shown on a written receipt as the
date of delivery or refusal of delivery (or attempted delivery if undeliverable).
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Section 6.10 Applicable Law.
This Agreement shall be governed by California law.
Section 6.11 Parties Bound.
Except as otherwise limited herein, the provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties and their heirs, executors, administrators, legal
representatives, successors, and assigns. This Agreement is intended to run with the land and
shall bind Borrower and its successors and assign;; in the Property and the Project for the entire
Term, and the benefit hereof shall inure to the benefit of the City and its successors and assigns.
Section 6.12 Attornevs' Fees.
If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing
Party will have the right to recover its reasonable attorneys' fees and costs of suit from the other
Party.
Section 6.13 Severability.
If any term of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the provisions shall continue in full force and effect
unless the rights and obligations of the Parties have been materially altered or abridged by such
invalidation, voiding or unenforceability.
Section 6.14 Force Majeure.
In addition to specific provisions of this A~~eement, performance by either Party shall not
be deemed to be in default where delays or defaults aze due to waz; insurrection; strikes; lock-
outs; riots; floods; earthquakes; fires; quarantine restrictions; freight embazgoes; lack of
transportation; or court order; or any other similaz causes beyond the control or without the fault
of the Party claiming an extension of time to perform. An extension of time for any cause will
be deemed granted if notice by the Party claiming such extension is sent to the other within ten
(10) days from the commencement of the cause and such extension of time is not rejected in
writing by the other Party within ten (10) days of t~eceipt of the notice. In no event shall the City
be required to agree to cumulative delays in excess; of one hundred eighty (180) days.
Section 6.15 City Approval.
Whenever this Agreement calls for City approval, consent, or waiver, the written
approval, consent, or waiver of the City Manager or his designee shall constitute the approval,
consent, or waiver of the City, without further authorization required from the City Council. The
City hereby authorizes the City Manager or his designee to deliver such approvals or consents as
aze required by this Agreement, or to waive requir~;ments under this Agreement, on behalf of the
City. Any consents or approvals required under this Agreement shall not be unreasonably
withheld or made, except where it is specifically provided that a sole discretion standazd applies.
The City Manager or his designee is also hereby alrthorized to approve, on behalf of the City,
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requests by Borrower for reasonable extensions of time deadlines set forth in this Agreement.
The City shall not unreasonably delay in reviewing and approving or disapproving any proposal
by Borrower made in connection with this Agreement.
Section 6.16 Waivers.
Any waiver by the City of any obligation or condition in this Agreement must be in
writing. No waiver will be implied from any delay or failure by the City to take action on any
breach or default of Borrower or to pursue any remedy allowed under this Agreement or
applicable law. Any extension of time granted to Borrower to perform any obligation under this
Agreement shall not operate as a waiver or release from any of its obligations under this
Agreement. Consent by the City to any act or omission by Borrower shall not be construed to be
a consent to any other or subsequent act or omission or to waive the requirement for the City's
written consent to future waivers.
Section 6.17 Title of Parts and Sections.
Any titles of the sections or subsections of this Agreement are inserted for convenience of
reference only and shall be disregarded in interpreting any part of the Agreement's provisions.
Section 6.18 Entire UnderstandingLofthe Parties.
This Agreement and the documents referenced herein constitute the entire understanding
and agreement of the Parties with respect to the Loan.
Section 6.19 Multiple Originals• Counterpart.
This Agreement may be executed in multiple originals, each of which is deemed to be an
original, and may be signed in counterparts.
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WHEREAS, this Agreement has been entered into by the undersigned as of the date first
above written.
APPROVED AS TO FORM:
By:
Its: City Attorney
CITY:
CITY OF CUP RTINO, a municipal corporation
BY~ _ W c`~.3 ~ - ~
Its: City Manager
BORROWER:
SENIOR HOU
nonpro-f~t•p
B:y:
it>: ~ ~
alifornia
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Exhiibit B
Price Avenue Senior Residence --- Project Developmet Budget
Item Total Project
Costs Residential Costs Residential Costs Analysis
per unit
5 units per sq ft
1860 per bdre
5 bdnns
land cost or value (purchased Jan 2009) 0 0 0
demolition 7,500 7,500
legal p
existing improvements value 0 0 0
off site improvements
relocation expenses
NEW CONSTRUCTION
site work 111,395 111,395 22,279 60 22,279
structures
general requirements 17,562 17,562 3,512 9 3,512
contractor overhead 38,379 38,379 7,676 21 7,676
contractor profit 8,024 8,024 1,605 4 1,605
subtotal new construction
SOFT COSTS 175,360 175,360 35,072 94 35,072
Total architectural costs 21,400 21,400 4,280 12 4,280
Const. Interest & fees
permanent financing costs 867 867 173 0 173
Lender Legal Pd. By Applicant
Other Legal - Specity
Capitalized Rent Reserves
capitalized operating reserve 0 0 0 0
capitalized replacement reserves
appraisial 0 0 0
Survey 8 Engineering
consturction contigency 23,949 23,949 4,790 13 4,790
TCAC App/AIIocJMonitor Fees
Environmental Audit
Local Dev, Impace Tees
Permit Processing Fees
Capital Fees
Marketing
fumsihsings 0 0 0 0
other (insect, permits, insurance) 5,250 5,250 1,050 3 1,050
Other -specify
Broker Fees Paid by Owner
ConsultanUProcessing Agent
Subtotal soft costs
DEVELOPER COSTS 51,466 51,468 10,293 28 10,293
Project Administration 0 0 0 0
Developer overhead/profit 0 0 0 0
Const. Mngmt. Oversite 5,165 5,165 1,033 3 1,033
subtotal deve/opercost 5,165 5,165 1,033 3 1,033
TOTAL PROJECT COST 239,491 239,491 47,898 129 47,898
Total Developer Fee (equals subtotal "Developer Costs")
CUPERTINO
August 31, 2009
OFFICE OF THE CIT`f CLERK
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3223 • FAX: (408) 777-3366
WEBSITE: www.cupefino.org
Senior Housing Solutions Rehab
19953 Price Avenue
Cupertino, CA 95014
To Wham It May Concern:
A fully executed copy of your agreement witrl the City of Cupertino is enclosed. If you
have any questions or need additional inforrrlation, please contact the Community
Development Department at (408) 777-3308.
Sincerely,
CITY CLERK'S OFFICE
Enclosure
Cc: Neil H. Sekhri
Gibson, Dunn & Crutcher
555 Mission Street, Suite 3000
San Francisco, CA 94105