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05-095, Cupertino Community Housing For The Disabled CAPITAL AGREEMENT BY AND BETWEEN THE CITY OF CUPERTINO, CALIFORNIA AND CUPERTINO COMMUNITY HOUSING FOR THE DISABLED This capital agreement ("AGREEMENT"), is made and entered into on this 7th day of September, 2005 ("Effective Date") by and between the CITY OF CUPERTINO, CALIFORNIA, a municipal corporation ("CITY"), and CUPERTINO COMMUNITY HOUSING FOR THE DISABLED, a non-profit housing developer ("CONTRACTOR). CITY and CONTRACTOR may herein be referred to individually as a "Party" or collectively as the "Parties" . AGREEMENT PROVISIONS The Parties agree as follows: 1. FUNDING AND APPROPRIATION Pursuant to the provisions of Title I of the Housing and Community Development Act of 1974, as amended, CITY has received COMMUNITY DEVELOPMENT BLOCK GRANT ("CDBG") funds from the United States Department of Housing and Urban Development ("HUD") as an entitlement. CITY has appropriated CDBG funds in an amount not to exceed FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450,000), for the purpose of meeting the goals and objectives outlined in Exhibit A, titled "SCOPE OF REHABILITATION WORK" ("Project"), attached and incorporated by this reference, to benefit low and very-low income CITY residents. 2. DEFINITIONS Whenever used in this AGREEMENT and its attachments, the terms below, when initially capitalized, shall have the following meanings: A. Affordabilitv Period: Shall mean the length of time this AGREEMENT is in effect and housing unit rents are controlled as set forth in Exhibit B, titled "BUDGET AND PROJECT RENTS", attached and incorporated by this reference. This period shall be for at least thirty (30) years after final payment by CITY under this AGREEMENT or issuance of a Certificate of Occupancy, whichever is later. B. Annual Income: Shall mean the income of all household members as defined in Federal regulations 24 CFR 570.3. C. Client: A person, of very low and low income, who resides in the CDBG unit subject to this agreement. D. Very Low Income Household: Shall mean a household whose Annual Income does not exceed 50% of the area median income, adjusted for household size, as determined and made available by HUD. CITY shall provide CONTRACTOR with a current schedule of Page I of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc income limits, adjusted for household size. E. Low Income Household: Shall mean a household whose Annual Income does not exceed 80% of the area median income, adjusted for household size, as determined and made available by HUD. CITY shall provide CONTRACTOR with a current schedule of income limits, adjusted for household size. F. CDBG Rents: Shall mean the maximum rents that may be charged to Clients as defined by the HUD for the CDBG Program. CITY will periodically revise these rents. G. CDBG: Shall mean the federal regulations (24 CFR Part 570), which govern the CDBG Program. This definition shall include all HUD memos and other correspondence explaining or otherwise commenting on the CDBG program. H. OMB: Shall mean the Federal Office of Management and Budget. I. Project Property: Shall mean all buildings and grounds located at 10092 Bianchi Way, Cupertino, California (APN'S 359-07-010, 359-07-019 and 359-07-020). J. Utilization Period: Shall mean the period during which CONTRACTOR may become liable for costs that are eligible for reimbursement under conditions described in Exhibit B. For this AGREEMENT, the Utilization Period is May 1, 2005 to April 30, 2006. 3. PROJECT COORDINATION A. CITY: Senior Planner (Housing Services) or his/her designee shall be the PROGRAM MANAGER for CITY and shall render overall supervision of the progress and performance of this AGREEMENT by CITY. All services agreed to be performed by CITY shall be under the overall direction of the PROGRAM MANAGER. B. CONTRACTOR: CONTRACTOR shall assign a single PROJECT DIRECTOR who shall have overall responsibility for the progress and execution of this AGREEMENT. Should circumstances or conditions subsequent to the execution of this AGREEMENT require a substitute PROJECT DIRECTOR, CONTRACTOR shall notify CITY immediately of such occurrence. PROJECT DIRECTOR and CONTRACTOR staff will cooperate with CITY'S PROGRAM MANAGER relating to the PROJECT, areas of concern, and the impact of PROJECT on residents of CITY. C. NOTICES: All notices or other correspondence required or contemplated by this AGREEMENT shall be sent to the Parties at the following addresses: CITY: Senior Planner (Housing Services) Community Development Department 10300 Torre Avenue Cupertino, CA 95014 Page 2 of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc CONTRACTOR: Executive Director Cupertino Community Housing for the Disabled 303 Vintage Park Drive, Suite 250 Foster City, CA 94404 4. OBLIGATION OF CONTRACTOR A. Organization of CONTRACTOR: CONTRACTOR shall: 1) Provide to CITY in writing, prior to the request for payment of the funds under this AGREEMENT or, thereafter during the Affordability Period, within thirty (30) days of a change in the status of any of the following: a) A copy of Articles of Incorporation under the laws of the State of California; b) A copy of the current Bylaws of the CONTRACTOR; c) Verification and documentation of Internal Revenue Service nonprofit status under Title 26, section 501(c) of the Internal Revenue Code of 1986; d) Verification and documentation of State of California Franchise Tax Board tax exempt status under Section 23701(d), of the California Revenue and Taxation Code; e) Names and addresses of current Board of Directors of CONTRACTOR; f) A copy of the adopted personnel policies and procedures including an Affirmative Action Plan if staff exceeds fifteen (15) employees; g) An organizational chart and staffing profile; and h) Any other documents required by HUD to verify compliance with the CDBG program. 2) Abide by the conflict of interest provisions in 24 CFR 85.36 and OMB Circular A- 110. In all cases not governed by these documents, 24 CFR 570.611 shall apply. These rules apply to any person currently being compensated by the CONTRACTOR for services rendered to it within the previous twelve (12) months, whether as a full or part time employee, officer, independent contractor or otherwise. Any such persons who have exercised or exercise any decision-making functions or responsibilities with respect to CITY'S administration of CDBG or gain inside information with regard to that process, are prohibited from obtaining any financial interest or benefit for themselves or those with whom they have family or business ties during their tenure with CONTRACTOR and for one year thereafter. Page 3 of13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc 3) Include on the Board of Directors representatives from a broad cross section of the community, including, those with expertise and interest in the CONTRACTOR'S services, including, as appropriate, representatives from community organizations interested in CONTRACTOR'S services, and users of CONTRACTOR'S services. 4) Open to the public all meetings of the Board of Directors, except meetings, or portions thereof, dealing with personnel or litigation matters or instruct negotiators. 5) Keep minutes, approved by the Board of Directors, of all regular and special meetings. 6) Encourage public participation in planning and implementing services provided under this AGREEMENT. 7) Utilize minority and/or female owned businesses, vendors, suppliers, and contractors to the maximum extent feasible for items funded under this AGREEMENT, in accordance with CITY policy as set forth in the Minority Female Business Enterprise Statement and Procedural Guide available through the CITY'S PROGRAM MANAGER. B. Project Performance of CONTRACTOR: During CONTRACTOR shall: the Affordability Period, 1) Submit to CITY all documentation required by CITY to assure compliance with CDBG Affordability Period requirements of the Project as described in Exhibits A and B; 2) Submit to CITY by July 31 of each year an annual report, that summarizes the number of Clients Served, including their monthly rent, annual income, household size, race/ethnic heritage, and whether they are a senior, disabled, or female head of household family for the previous Fiscal Year (defined herein as the annual period July 1 through the next June 30). 3) Maintain all required insurance coverage as specified in Exhibit E, titled "BASIC INSURANCE AND BOND REQUIREMENTS FOR NON-PROFIT CONTRACTS", attached and incorporated by this reference; 4) Maintain the appearance of Project Property consistent with surrounding properties; 5) Include an acknowledgment of CITY funding and support on all appropriate Project publicity and publications using words to the effect that the Project is funded by the City of Cupertino; and, 6) Upon reasonable notice, implement any changes required by CITY, HUD, or CDBG to maintain compliance with CDBG requirements and any other applicable statutes or regulations. CITY and CONTRACTOR will seek remedies to address any changes Page 4 of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc that impact the financial viability of the project. C. Fiscal Responsibilities of CONTRACTOR: CONTRACTOR shall: 1) Appoint and submit the name of a Fiscal Officer who shall be responsible for the financial and accounting activities of the CONTRACTOR, including the receipt and disbursement of CONTRACTOR funds; 2) Establish and maintain a system of accounts that shall be in conformance with generally accepted principles of accounting for budgeted funds; 3) Document all costs by maintaining complete and accurate records of all financial transactions, including, but not limited to, contracts, invoices, time cards, cash receipts, vouchers, canceled checks, bank statements, and/or other official documentation evidencing in proper detail the nature and proprietary of all charges. 4) Perform an independent fiscal audit at least every year, in conformance with the generally accepted standard accounting principles. Such audits must identify the total funds received and disbursed and funds granted and expended relating to this AGREEMENT. The costs for such audits shall be at CONTRACTOR'S expense, unless otherwise provided for in this AGREEMENT. Copies of the completed audits must be provided to the CITY; and, 5) Assure that all accounts and documentation of fiscal activities shall be consistent with the requirements of Exhibits A-F. D. Records, Reports and Audits of CONTRACTOR 1) CONTRACTOR shall comply with all applicable federal Uniform Administrative Requirements as delineated in 24 CFR 570.489. 2) Establishment and Maintenance of Records: CONTRACTOR shall maintain records, including but not limited to books, financial records, supporting documents, statistical records, personnel, property and all other pertinent Records sufficient to reflect properly (a) all direct and indirect costs of whatever nature claimed to have been incurred and anticipated to be incurred to perform this AGREEMENT, and (b) all other matters covered by this AGREEMENT. 3) Preservation of Records: CONTRACTOR shall preserve and make available its records: 4) Examination of Records and Facilities: At any time during normal business hours and as often as may be deemed necessary, with at least five working days notice by CITY, CONTRACTOR agrees that CITY, and/or any duly authorized representatives shall, until expiration of (a) five years after the conclusion ofthe Affordability Period, or (b) such longer period as may be prescribed, have access to and the right to Page 5 of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc examine' its offices and facilities engaged in performance of this AGREEMENT and all its records with respect to all matters covered by this AGREEMENT, excepting those falling within the attorney-client. privilege, provided that in the event of a dispute regarding the applicability of the attorney work-product privilege to specific records, the Parties agree to submit the dispute to an impartial arbitrator agreeable to both Parties. Agreement regarding the arbitrator shall not be withheld unreasonably. Parties shall equally divide costs of such arbitration. CONTRACTOR also agrees that the CITY, or any duly authorized representatives, have the right to audit, examine and make excerpts or transcripts of and from, such records, and to make audits of all contracts and subcontracts, invoices, payrolls, records of personnel, conditions of employment, materials and all other data relating to matters covered by this AGREEMENT. 5) City Audits: The CITY may require an independent audit. Such audits may cover Project compliance as well as fiscal matters. CONTRACTOR will be notified in advance that an audit will be conducted. CONTRACTOR will be afforded an opportunity to respond to any audit findings, and have the responses included in the final audit findings, and have the responses included in the final audit report. Cost of such audits will be borne by the CITY. E. Faith Based Activities: In addition to, and not in substitution for, other provisions of this AGREEMENT regarding the provision of services with funds, pursuant to Title I of the Housing and Community Development Act of 1974, as amended, the CONTRACTOR: 1) Represents that it may not use the CDBG funds to engage in inherently religious activities, such as worship, religious instruction, or proselytization; and 2) If the organization engages in inherently religious activities, the activities must be offered separately, in time and location, from the CDBG funded activities; and 3) Agrees that, in connection with such services: a) It will not discriminate against any employee or applicant for employment on the basis of religion and will not limit employment on the basis of religion and will not limit employment or give preference in employment to persons on the basis of religion; b) It will not discriminate against any person applying for housing on the basis of religion and will not limit such services or give preference to persons on the basis of religion; c) CDBG funds may not be used for the acquisition, construction or rehabilitation of structures to the extent that those structures are used for inherently religious activities, such as worship, religious instruction, or prayer; Page 6 of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc 5. CONTRACT COMPLIANCE A. Monitoring and Evaluation ofProiect: Evaluation of the Project performance shall be the mutual responsibility of both Parties. CONTRACTOR shall furnish all Client and service data, statements, records, information and reports necessary for PROGRAM MANAGER to monitor, review and evaluate the performance of CONTRACTOR with respect to the Project and its components. CITY shall have the right to request the services of an outside agent to assist in any such evaluation. Such services shall be paid for by the CITY. B. Contract Noncompliance: With receipt by CITY of any information that evidences a failure or deficiency by CONTRACTOR to comply with any provision of this AGREEMENT, the CITY shall have the right to require corrective action to enforce compliance with such provision. Corrective action shall be taken if any of the following, as examples only, occur: 1) If CONTRACTOR (with or without knowledge) has made any material misrepresentation of any nature with respect to any information or date furnished to CITY in connection with the Project; 2) If there is pending litigation with respect to the performance by CONTRACTOR or any of its duties or obligations under this AGREEMENT which may materially jeopardize or adversely affect the undertaking of or the carrying out ofthe Project; 3) If the CONTRACTOR shall have taken any action to pertaining to the Project which requires CITY approval without having obtained such approval; 4) If CONTRACTOR is in material default under the provisions of this AGREEMENT; 5) If CONTRACTOR makes improper use of CDBG funds and Project income; 6) If CONTRACTOR fails to comply with any of the terms and conditions of this AGREEMENT in such a manner as to constitute material breach thereof; or, 7) If CONTRACTOR submits to CITY any reports which are incorrect or incomplete in any material respect. C. Corrective Action: After all administrative remedies have been exhausted, CITY shall have the right to require the presence of any of CONTRACTOR'S officers at any hearing or meeting called for the purpose of considering corrective action not less than seven (7) and not more than thirty (30) calendar days of issuing such notice. CONTRACTOR will be informed of and have an opportunity to participate fully in corrective action deliberations. CITY shall forward to CONTRACTOR a set of specific corrective action recommendations relative to Project noncompliance and a timetable for implementing the Page 7 of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc specified corrective action recommendations; such timetable shall allow CONTRACTOR not less than seven (7) working days to comply with the specified corrective action recommendations. Following implementation of the corrective actions, CONTRACTOR shall forward to CITY, within the time specified by CITY, any documentary evidence required by CITY to verify that the corrective actions have been taken. In the event CONTRACTOR does not implement the corrective action timetable, CITY may: disallow all or part of the cost of the activity or action in noncompliance; provide notice of intent to terminate this AGREEMENT as specified in Section 15; and/or take other remedies that may be legally available. 6. OBLIGATIONS OF CITY A. Contract Compliance: City Staff shall provide assistance to CONTRACTOR III connection with: 1) Obtaining conformity of the Project with the CITY'S policies and procedures and all CITY codes, ordinances, directives and laws; and 2) Obtaining conformity of Project with CDBG requirements; and 3) Review of AGREEMENT for compliance purposes and evaluating Project based on annual reports received from CONTRACTOR and on-site monitoring of Client and Project Property data. B. Method of Payment: CITY shall pay a portion of the actual cost for construction of improvements on Project Property, a total sum not to exceed, FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450,000). This sum shall be subject to repayment to CITY under conditions specified in Exhibit F, titled "PROMISSORY NOTE SECURED BY DEED OF TRUST", attached and incorporated by this reference. C. Utilization of Funds: Funds shall be paid by CITY under this AGREEMENT shall only be eligible expenses incurred during the Utilization Period. The Utilization Period of this AGREEMENT shall begin on May 1, 2005 and terminate on April 30, 2006. D. Final Payment Request: CITY must receive all payment requests under this AGREEMENT prior to May 31, 2006. CITY shall have no repayment liability under this AGREEMENT after that date, and CITY may reprogram any unspent amount of the capital grant without prior notice CONTRACTOR. 7. PROJECT INCOME A. All rents or other payments collected from Project Clients during the Affordability Period shall be retained by the CONTRACTOR. These rents shall be used to further program activities at Project. Page 8 of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc B. All rents or other payments that are collected from Project Clients during the Affordability Period and that remain unspent at the conclusion of the Affordability Period shall be used by CONTRACTOR solely to further program activities at Project Property. C. Rents received subsequent to the Affordability Period shall not be subject to this AGREEMENT. 8. DISCLOSURE OF CONFIDENTIAL TENANT INFORMATION To the extent allowed by law, CITY agrees to maintain the confidentiality of any information regarding Clients or applicants for residency under this Project, or their immediate families, pursuant to this AGREEMENT, which may be obtained through application forms, interviews, tests, reports, from public agencies 9. ASSIGNABILITY AND INDEPENDENT CONTRACTOR REQUIREMENTS A. The relationship of CONTRACTOR to CITY is that of an independent contractor. CONTRACTOR has full rights to manage its employees, Tenants, and Clients, subject to the requirements of the law. All persons employed by CONTRACTOR in connection with this AGREEMENT shall be employees of CONTRACTOR and not employees of CITY in any respect. CONTRACTOR shall be responsible for all employee benefits, , including, but not limited to, statutory worker's compensation benefits. B. None of the work or services to be performed hereunder shall be delegated or subcontracted to third parties without prior written CITY approval. C. No subcontractor of CONTRACTOR will be recognized by CITY as having any employment relationship with the CITY. D. It is the understanding of the CITY that Portrait Homes, Inc. of Corona, California, has been hired by CONTRACTOR to provide construction of the PROJECT. CITY has received a copy of the Consulting Agreement between CONTRACTOR and Portrait Homes, Inc. and consents to Portrait Homes, Inc.'s role in the PROJECT. 10. COMPLIANCE WITH LAW A. Compliance: CONTRACTOR shall become familiar and comply with and cause all its subcontractors and employees, if any, to become familiar and comply with all applicable federal, state and local laws, ordinances, codes, regulations and decrees, including, but not limited to, those federal rules and regulations outlined in Exhibit D, titled "ASSURANCES", attached and incorporated by this reference. B. Assurances: Failure of CONTRACTOR, in any manner, to observe and adhere to law as described herein or as amended shall in no way relieve CONTRACTOR of its responsibility to adhere to same and CONTRACTOR herein acknowledges this Page 9 of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc responsibility. CONTRACTOR shall hold CITY, its City Council, officers, employees and boards and commissions harmless from CONTRACTOR'S failure(s) to comply with any requirement imposed on CONTRACTOR by virtue of the utilization of CITY funds. CONTRACTOR shall reimburse CITY for any disallowed costs and/ or penalties imposed on CITY because of CONTRACTOR'S failure to comply with 'all applicable federal, state and local laws, ordinances, codes, regulations and decrees. 11. TERMS AND AMENDMENTS Amendments to the terms and conditions of this AGREEMENT shall be requested in writing by the Party desiring such revision, and any such adjustment to this AGREEMENT shall be determined and effective only upon the mutual agreement in writing of the Parties hereto unless the amendments are made by HUD, in which case they will be adopted as ordered. 12. INTEGRATED DOCUMENT This AGREEMENT embodies the agreement between CITY and CONTRACTOR and its terms and conditions. No verbal agreements or conversations with any officer, agent or employee of CITY prior to execution of this AGREEMENT shall affect or modify any of the terms or obligations contained in any documents comprising this AGREEMENT. Any such verbal agreement shall be considered as unofficial information and in no way binding upon CITY. 13. HOLD HARMLESS CONTRACTOR hereby releases and agrees to protect, defend, hold harmless and indemnify CITY, its City Council, its officers, employees and elected officials, boards and commissions, from and against all claims, injury, liability, loss, cost and expense, or damage, however same may be caused, including all cost and reasonable attorney's fees in providing the defense to any claim arising therefrom, for any loss of or damage to property (real and/or personal) or for personal injury to or death of any person or persons arising out of, occurring by reason of, or in any way connected with CONTRACTOR'S Project activities, or in consequence thereof, expect to the extent such claims arise from the grossly negligent or willful misconduct of the CITY, its City Council, officers, employees and elected officials, boards and commissions. 14. WHEN RIGHTS AND REMEDIES WAIVED In no even shall any payment by CITY or any acceptance or payment by the CONTRACTOR hereunder constitute or be construed to be a waiver by CITY or CONTRACOTR of any breach of covenants or conditions of this AGREEMENT or any default which may exist on the part of CITY or CONTRACTOR, and the making of any such payment while any such breach or default shall exist shall in no way impair or prejudice any right or remedy available to CITY or CONTRACTOR with respect to such breach or default. Page 10 of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc 15. TERMINATION A. Termination for Cause: Subject to the terms of Paragraph 5C, CITY may terminate this AGREEMENT for cause if the CONTRACTOR fails to perform or comply with the conditions listed below and such failure having continued incurred for thirty (30) days after receipt of written notice thereof from CITY to the CONTRACTOR: 1) CONT ACTOR fails to comply with material existing conditions of the AGREEMENT; or 2) CONTRACTOR refuses to accept any additional conditions that may be imposed by the Federal government; or 3) CONTRACTOR fails to implement required corrective actions III a timely and sufficient fashion. B. Termination for Convenience: CITY or CONTRACTOR may terminate or suspend this AGREEMENT in whole or in part when both Parties agree that the continuation of the Project would not produce beneficial results commensurate with the further expenditure of funds. Both Parties shall agree upon the termination conditions, including the Effective Date and, in the case of partial terminations, the portion to be terminated. C. Upon termination, CONTRACTOR shall not incur new obligations and shall cancel as many outstanding obligations as possible; D. Termination does not impair the CITY'S right to subsequently require repayment by CONTRACOTR for disallowed costs or other adjustments determined by audit findings. 16. MISCELLANEOUS PROVISIONS A. The Captions: The captions of the various sections, paragraphs, and subparagraphs of the AGREEMENT are for convenience only and shall not be considered nor referred to for resolving questions of interpretation. B. No Third Party Beneficiary: This AGREEMENT shall not be construed or deemed to be an agreement for the benefit of any third party or parties, and no third party or parties shall have any claim or right of action hereunder for any cause whatsoever. C. Severability Clause: In case anyone or more of the provisions contained herein shall, for any reason, be held invalid, illegal, or unenforceable in any respect, it shall not affect the validity of the other provisions which shall remain in full force and effect. D. No Pledging of CITY'S Credit: Under no circumstances shall CONTRACTOR have the authority or power to pledge the credit of CITY or incur any obligation in the name of CITY. CONTRACTOR shall save and hold harmless CITY, its City Council, its officers, Page 11 of 13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc employees, and boards and commissions for expenses arising out of this AGREEMENT. E. Venue: In the event that suit shall be brought by any Party to this AGREEMENT, the Parties agree that venue shall be exclusively vested in the state courts of the County of Santa Clara, or where otherwise appropriate, exclusively in the United States District Court, Northern District of California, San Jose, California. F. Corporation Financial Disclosure Requirements: CONTRACTOR services to be rendered under the provisions of this AGREEMENT are excluded from the requirement of filing a Financial Disclosure Statement by Title 2, California Code of Regulations, ~ 18, 700(2)(A) and (B). REMAINDER OF PAGE INTENTIANALL Y BLANK Page 12 of13 H:\-CDBG\Le Beaulieu Loan Docs\Le Beaulieu Agreement.doc The Parties to this AGREEMENT hereby indicate their acknowledgment and acceptance of the terms and conditions stated herein as evidenced by the following signatures of their duly authorized representatives. It is the intent of the Parties that this AGREEMENT shall become operative on the Effective Date as set forth on page 1. CITY OF CUPERTINO, CALIFORNIA a California Municipal Corporation APPROVED AS TO FORM: './5.05 By: CARLES KILIAN City Attorney DAVID W. KNAPP City Manager ATTEST: Address: 10300 Torre Avenue Cupertino, CA 95014 Telephone: (408) 777-3200 Facsimile: (408) 777-3333 ~~ KIMBERLY SMITH ~ ~ City Clerk "CITY" CUPERTINO COMMUNITY HOUSING FOR THE DISABLED a non- ofit Cal' rnia Corporation Title: By: Name: Address: 303 Vintage Park Drive, Suite 250 Foster City, CA 94404 Telephone: (650) 356-2900 Facsimile: (650) 357-9766 "CONTRACTOR" Page 13 of 13 K:\Le Beaulieu 202\Development 1nfo\Le Beaulieu Agreement.doc Exhibit A SCOPE OF WORK This project encompasses the rehabilitation of an existing apartment complex for the physically disabled. Le Beaulieu Apartments is a 27-unit complex located at 10092 Bianchi Way, Cupertino, CA. Below is a list of the work to be accomplished in the rehabilitation. 1. Replace existing wheelchair access ramp with a new, less visible ramp. This includes demolition, grading, foundation, retaining wall and steel ramp. Ramp will be relocated from the front of the building to the rear of the building. 2. Replace all siding and paint exterior of Building 3. This includes new windows, utility doors, gutters and flashing. 3. Office Renovation. This includes enclosing second story balcony, interior dry wall, doors, electrical, paint. 4. Upgrade interior and exterior electrical and lighting. EXHIBIT D ASSURANCES CORPORATION hereby assures and certifies that it will comply with all regulations, policies, guidelines and requirements applicable to the acceptance and use of Federal funds for this Federally- assisted program and will be responsible for implementing and complying with all relevant future changes to Federal Regulations or OMB Circulars. Specifically CORPORATION gives assurances and certifies with respect to the PROGRAM that it is in compliance with the following Regulations as defined by 24 CFR, Part 570, Subpart J; 24 CFR, Part 570, Subpart K; and will be conducted and administered in conformity with "Public Law 88.352 and Public Law 90-284. 1. 570.601. Public Law 88-352 and Public Law 90-284; affirmatively furthering fair housing; Executive Order 11063, as amended by Executive Order 12259 addresses discrimination. HUD regulations implementing Executive Order 11063 are contained in 24 CFR, Part 107. 2. 570.602. Section 109 of the Act addresses discrimination. 3. 570.603. Labor Standards. 4. 570.604. Environmental Standards. 5. 570.605. National Flood Insurance Program. 6. 570.606. Relocation, Displacement and Acquisition. 7. 570.607. Employment and Contracting Opportunities. 8. 570.608. Lead-Based Paint. 9. 570.609. Use of Debarred, Suspended, or Ineligible Contractors or Subrecipients. 10. 570.610. Uniform Administrative Requirement and Cost Principles. The CITY, its Subrecipients, agencies or instrumentalities, shall comply with the policies, guidelines, and requirements of24 CFR Part 85 (Common Rule), and OMB Circulars A-I10 (Grants and Agreements with Non-Profit Organizations), A-122 (Cost Principles for Non-Profits), A-128 (Audits of State and Local Governments-implemented at 24 CFR, Part 24), and A-133 (Audits of Institutions of Higher Education and Other Non-Profit Institutions), as applicable, as they relate to the acceptance and use of Federal funds under this part. The applicable sections of24 CFR, Part 85 and OMB Circular A-I 00 are set forth at 570.502. 11. 570.611. Conflict of Interest. 12. 570.612. Executive Order 12372 allows States to establish its own process for review and comment on proposed Federal financial assistance programs, specifically the use of CDBG funds for the construction or planning of water or sewer facilities. EXHIBIT F - ASSURANCES 1 REVISED Il/l5/00 EXHIBIT E BASIC INSURANCE AND BOND REQUIREMENTS FOR NON-PROFIT CONTRACTS Definition of Contractor: The "Contractor" as the word is used herein is the party contracting with the City of Cupertino for the direct distribution of CDBG funds. If your organization will be contracting for construction work (such as general contractors building rental apartments) to undertake a Program (as defined in this Non-Profit/City Contract) then the requirements set forth herein shall be complied with by the party contracted with for construction work protecting both the non-profit and the City. Indemnity The Contractor shall indemnify, defend, and hold harmless the City of Santa Clara (hereinafter "City"), its officers, agents and employees from any loss, liability, claim, injury or damage arising out of, or in connection with performance of this Contract by Contractor and/or its agents, employees or subcontractors, excepting only loss, injury or damage caused solely by the acts or omissions of personnel employed by the City. It is the intent of the parties to this Contract to provide the broadest possible coverage for the City. The Contractor shall reimburse the City for all costs, attorneys' fees, expenses and liabilities incurred with respect to any litigation in which the Contractor is obligated to indemnify, defend and hold harmless the City under this Contract. Insurance Without limiting the Contractor's indemnification of the City, the Contractor shall provide and maintain at its own expense, during the term of this Contract, or as may be further required herein, the following insurance coverages and provisions: A. Evidence of Coverage Prior to commencement of this Contract, the Contractor shall provide on the City's own form or a form approved by the City's Insurance Manager an original plus one copy of a Certificate of Insurance certifying that coverage as required herein has been obtained and remains in force for the period required by this Contract. The contract number and project name must be stated on the Certificate of Insurance. The City's Special Endorsement form shall accompany the certificate. Individual endorsements executed by the insurance carrier may be substituted for the City's Special Endorsement form if they provide the coverage as required. In addition, a certified copy ofthe policy or policies shall be provided by the Contractor upon request. This verification of coverage shall be sent to the address as shown on the City's Certificate of Insurance form and to the Housing and Community Development Program at the address set forth in this Contract at Section VI. PROGRAM COORDINATION, Paragraph C., NOTICES. The Contractor shall not issue a Notice to Proceed with the work under this Contract until it has obtained all insurance required and such insurance has been approved by the City. This approval of insurance shall neither relieve nor decrease the liability of the Contractor. EXHIBIT E - NON-PROFITS 1 REVISED 6/8/95 B. Notice of Cancellation of Reduction of Coverage All policies shall contain a special provision for thirty (30) days prior written notice of any cancellation or reduction in coverage to be sent to the Community Development Department, 10300 Torre Avenue, Cupertino, CA 95014. C. Qualifying Insurers All policies shall be issued by companies which hold a current policy holder's alphabetic and financial size category rating of not less than A Vill, according to the current Best's Key Rating Guide, unless otherwise approved by the City's Insurance Manager. D. Insurance Required 1. Comprehensive General Liability Insurance - for bodily injury (including death) and property damage which provides limits of not less than one million dollars ($1,000,000) combined single limit (CSL) per occurrence. OR 2. Commercial General Liability Insurance - for bodily injury (including death) and property damage which provides limits as follows: a. General limit per occurrence - $1,000,000 b. General limit aggregate - $2,000,000 c. Products/Completed Operations- $1,000,000 aggregate d. Personal Injury limit - $1,000,000 If coverage is provided under a Commercial General Liability Insurance form, the carrier shall provide the City Insurance Manager with a quarterly report of the amount of aggregate limits expended to that date. If over 50% of the aggregate limits have been paid or reserved, the City may require additional coverage to be purchased by the Contractor to restore the required limits. 3. For either type of insurance, coverage shall include: a. Premises and Operations b. Products/Completed Operations with limits of one million dollars ($1,000,000) per occurrence/ aggregate to be maintained for two (2) years following acceptance of the work by the City. EXHIBIT E - NON-PROFITS 2 REVISED 6/8/95 c. Contractual Liability expressly including liability assumed under this Contract. d. Personal Injury liability. e. Independent Contractors' (Protective) liability. f. Severability of Interest clause providing that the coverage applies separately to each insured except with respect to the limits of liability. 4. For either type of insurance, coverage shall include the following endorsements, copies of which shall be provided to the City: a. Additional Insured Endorsement: Such insurance as is afforded by this policy shall also apply to the City of Cupertino, and members of the City Council, and the officers, agents and employees of the City of Cupertino, individually and collectively, as additional insureds. b. Primary Insurance Endorsement: Such insurance as is afforded by the additional insured endorsement shall apply as primary insurance, and other insurance maintained by the City of Cupertino, its officers, agents, and employees shall be excess only and not contributing with insurance provided under this policy. c. Notice of Cancellation or Change of Coverage Endorsement: This policy may not be cancelled nor the coverage reduced by the Company without 30 days prior written notice of such cancellation or reduction in coverage to the City of Cupertino at the address shown on the Certificate of Insurance. d. Contractual Liability Endorsement: This policy shall apply to liability assumed by the insured under written contract with the City of Cupertino. e. Personal Injury Endorsement: The provisions of this policy shall provide Personal Injury coverage. f. Severability of Interest Endorsement: EXHIBIT E - NON-PROFITS 3 REVISED 6/8/95 The insurance afforded by this policy shall apply separately to each insured that is seeking coverage or against whom a claim is made or a suit is brought, except with respect to the Company's limit of liability. 5. Comprehensive Automobile Liability Insurance for bodily injury (including death) and property damage which provides total limits of not less than one million dollars ($1,000,000) combined single limit per occurrence applicable to all owned, non-owned and hired vehicles. 6. Worker's Compensation and Employer's Liability Insurance for: a. Statutory California Workers' Compensation coverage including a broad form all- states endorsement. b. Employer's Liability coverage for not less than one million dollars ($1,000,000) per occurrence for all employees engaged in services or operations under this Contract. c. Inclusion of the City and its governing board(s), officers, representatives, agents, and employees as additional insureds, or a waiver of subrogation. 7. Professional Errors and Omissions Liability Insurance This type of insurance should be provided by persons/entities you contract with to provide you with professional services. a. Limits of not less than one million dollars ($1,000,000). b. If this policy contains a self retention limit, it shall not be greater than ten thousand dollars ($10,000) per occurrence/event. c. This coverage shall be maintained for a minimum of two (2) years following termination of this Contract. The City must first approve any exceptions to the above requirements. 8. Bond Requirements Fidelity Bond - Before receiving compensation under this Contract, Contractor will furnish City with evidence that all officials, employees, and agents handling or having access to funds received or disbursed under this Contract, or authorized to sign or countersign checks, are covered by a BLANKET FIDELITY BOND in an amount of AT LEAST fifteen percent (15%) of the maximum financial obligation of the City cited herein. If such bond is cancelled or reduced, Contractor will notify City immediately, and City may withhold further payment to Contractor until proper coverage has been EXHIBIT E - NON-PROFITS 4 REVISED 6/8/95 obtained. Failure to give such notice may be cause for termination of this Contract, at the option of the City. 9. Special Provisions The following provisions shall apply to this Contract: a. The foregoing requirements as to the types and limits of insurance coverage to be maintained by the Contractor and any approval of said insurance by the City or its insurance consultant(s) are not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by the Contractor pursuant to this Contract, including but not limited to the provisions concerning indemnification. b. The City acknowledges that some insurance requirements contained in this Contract may be fulfilled by self-insurance on the part of the Contractor. However, this shall not in any way limit liabilities assumed by the Contractor under this Contract. The City shall approve any self-insurance in writing. c. The City reserves the right to withhold payments to the Contractor in the event of material noncompliance with the insurance requirements outlined above. d. If the Contractor fails to maintain such insurance as is called for herein, the City must order the Contractor to immediately suspend work at Contractor's expense until a new policy of insurance is in effect. EXHIBIT E - NON-PROFITS 5 REVISED 6/8/95 ADDENDUM TO EXHIBIT "E" BASIC INSURANCE AND BOND REQUIREMENTS FOR CONSTRUCTION PROJECTS USING CITY FUNDS If your organization will be contracting for construction work (such as general contractors building rental apartments) to undertake a Program (as defined in this Non-Profit/City Contract) then the requirements set forth in this Addendum to Exhibit "E" shall be complied with by the party contracted with for construction work protecting both the non-profit and the City. Indemnity The General Contractor (hereinafter referred to as "General") shall indemnify, defend, and hold harmless the City of Cupertino (hereinafter "City"), its officers, agents and employees, and the Contractor, it's officers, agents and employees from any loss, liability, claim, injury or damage arising out of, or in connection with performance of this Contract by General and/or its agents, employees or subcontractors, excepting only loss, injury or damage caused solely by the acts or omissions of personnel employed by the City or the Contractor. It is the intent of the parties to this Contract to provide the broadest possible coverage for the City and the Contractor. The General shall reimburse the City and the Contractor for all costs, attorneys' fees, expenses and liabilities incurred with respect to any litigation in which the General is obligated to indemnify, defend and hold harmless the City and the Contractor under this Contract. Insurance Without limiting the General's indemnification of the City and the Contractor, the General shall provide and maintain at its own expense, during the term of this Contract, or as may be further required herein, the following insurance coverages and provisions: A. Evidence of Coverage Prior to commencement of this Contract, the General shall provide an original plus one copy of a Certificate of Insurance certifying that coverage as required herein has been obtained and remains in force for the period required by this Contract. The contract number and project name must be stated on the Certificate of Insurance. Individual endorsements executed by the insurance carrier shall accompany the Certificate. This verification of coverage shall be sent to the Contractor at the address stated below and to the Community Development Department, 10300 Torre Avenue, Cupertino, CA 95014. The Contractor shall not issue a Notice to Proceed with the work under this Contract until it has obtained all insurance required and such insurance has been approved by the Contractor and final approval by the City. This approval of insurance shall neither relieve nor decrease the liability of the Contractor. B. Notice of Cancellation or Reduction of Coverage EXHIBIT E - NON-PROFITS 6 REVISED 6/8/95 All policies shall contain a special provision for thirty (30) days prior written notice of any cancellation or reduction in coverage to be sent to the Community Development Department as stated above, and the Contractor at the following address: Cupertino Community Housing for the Disabled Contractor's Name 303 Vintage Park Drive, Suite 250 Street Address Foster City, CA 94404 City, State, Zip C. Qualifying Insurers 1. All policies shall be issued by companies which hold a current policy holder's alphabetic and financial size category rating of not less than A Vill, according to the current Best's Key Rating Guide, unless otherwise approved by the City. 2. Surety coverage (including bid, performance and payment bonds) shall be required as follows: a. For projects in excess of $1 00,000: 1. Either a California Admitted Surety OR a current Treasury Listed Surety (Federal Register); and either a current AM. Best A IV rated Surety OR a current Standard and Poors (S&P) rating of A; 2. An admitted surety insurer which complies with the provisions of the Code of Civil Procedure, Section 995.660*; OR 3. In lieu of 1 & 2, a company of equal financial size and stability that is approved by the City's Insurance/Risk Manager. b. For projects between $25,000 and not exceeding $100,000: 1. A California Admitted Surety and either a current AM. Best B rated Surety OR a current Standard and Poors (S&P) rating ofB B; OR 2. An admitted surety insurer which complies with the provisions of the Code of Civil Procedure, Section 995.660*; * California Code of Civil Procedure Section 995.660 in summary, states that an admitted surety must provide: 1) the original, or a certified copy of instrument authorizing the person who executed the bond to do so; 2) a certified copy of the Certificate of Authority issued by the Insurance Commissioner; 3) a certificate from City Clerk of Santa Clara City that Certificate of Authority has not been surrendered, revoked, canceled, annulled or suspended; 4) a financial statement showing the assets and liabilities of the insurer at the end of the quarter calendar year, prior to 30 days next preceding the date of the execution of the bond. EXHIBIT E - NON-PROFITS 7 REVISED 6/8/95 OR 3. In lieu of 1 & 2, a company of equal financial size and stability that is approved by the City's Insurance/Risk Manager. D. Insurance Required 1. Comprehensive General Liability Insurance - for bodily injury (including death) and property damage which provides limits of not less than one million dollars ($1,000,000) combined single limit (CSL) per occurrence. OR 2. Commercial General Liability Insurance - for bodily injury (including death) and property damage which provides limits as follows: a. General limit per occurrence - $1,000,000 b. General limit aggregate - $2,000,000 c. Products/Completed Operations- $1,000,000 aggregate d. Personal Injury limit - $1,000,000 If coverage is provided under a Commercial General Liability Insurance form, the carrier shall provide the City Insurance Manager with a quarterly report of the amount of aggregate limits expended to that date. If over 50% of the aggregate limits have been paid or reserved, the City may require additional coverage to be purchased by the General to restore the required limits. 3. For either type of insurance, coverage shall include: a. Premises and Operations b. Products/Completed Operations with limits of one million dollars ($1,000,000) per occurrence/aggregate to be maintained for two (2) years following acceptance of the work by the City. c. Contractual Liability expressly including liability assumed under this Contract. d. Personal Injury liability. e. Independent Contractors' (protective) liability f. Severability of Interest clause providing that the coverage applies separately to each insured except with respect to the limits of liability. EXHIBIT E - NON-PROFITS 8 REVISED 6/8/95 4. For either type of insurance, coverage shall include the following endorsements, copies of which shall be provided to the City and the Contractor: a. Additional Insured Endorsement: Insurance afforded by this policy shall also apply to the City of Cupertino and Contractor as additional insureds. b. Primary Insurance Endorsement: Insurance afforded by the additional insured endorsement shall apply as primary insurance, and other insurance maintained by the City of Cupertino and the Contractor shall be excess only and not contributing with insurance provided under this policy. c. Notice of Cancellation or Change of Coverage Endorsement: This policy may not be canceled nor the coverage reduced by the Company without 30 days prior written notice of such cancellation or reduction in coverage to the City of Cupertino CDBG Program, and the Contractor at the addresses set forth on page 10 of this Addendum. d. Severability of Interest Endorsement: The insurance afforded by this policy shall apply separately to each insured who is seeking coverage or against whom a claim is made or a suit is brought, except with respect to the Company's limit of liability. 5. Comprehensive Automobile Liability Insurance for bodily injury (including death) and property damage which provides total limits of not less than one million dollars ($1,000,000) combined single limit per occurrence applicable to all owned, non-owned and hired vehicles. 6. Worker's Compensation and Employer's Liability Insurance for: a. Statutory California Workers' Compensation coverage including a broad form all- states endorsement. b. Employer's Liability coverage for not less than one million dollars ($1,000,000) per occurrence for all employees engaged in services or operations under this Contract. 7. Work and Materials Insurance (including but not limited to Builder's Risk, Course of Construction, Installation Floater or similar first party property insurance for covering the interest of the Contractor and the City) shall be provided by the Contractor. EXHIBIT E - NON-PROFITS 9 REVISED 6/8/95 The Contractor's coverage shall provide the following: a. Coverage shall be provided on an "all-risk" basis. b. Coverage shall be provided on the work and materials which are the subject of this Contract, whether in process or manufacture or finished, including "in transit" coverage to the final agreed upon destination of delivery, and including loading and unloading operations, and such coverage shall be in force until the work and materials are accepted by the City. c. City and non-profit shall be named as additional insured as its interests may appear at the time of loss. d. Coverage shall be in an amount no less than the full replacement value of the property at the time of loss. e. The deductible shall not exceed $1,000 per occurrence unless otherwise approved by the City and shall be borne by the Contractor. f. If the construction contractor fails to maintain such insurance as is called for herein, the City shall have cause to terminate this Contract in accordance with Section V, paragraph B. 8. Bond Requirements The following bond requirements apply: a. Contract Bonds - Prior to execution of the Contract, Contractor shall file with the City on the approved forms, the two surety bonds in the amounts and for the purposes noted below, duly executed by a reputable surety company satisfactory to City, and Contractor shall pay all premiums and costs thereof and incidental thereto. Both Contractor and the sureties shall sign each bond. b. The "payment bond for public works" shall be in an amount of one hundred percent (100%) of the Contract price, as determined from the prices in the bid form, and shall insure to the benefit of persons performing labor or furnishing materials in connection with the work of the proposed Contract. This bond shall be maintained in full force and effect until all work under the Contract is completed and accepted by the City, and until all claims for materials and labor have been paid. c. The "performance bond" shall be in an amount of one hundred percent (100%) of the Contract price as ,determined from the prices in the bid form. and shall insure the faithful performance by Contractor of all work under the Contract. It shall also EXHIBIT E - NON-PROFITS 10 REVISED 6/8/95 insure the replacing of, or making acceptable, any defective materials or faulty workmanship. Should any surety or sureties be deemed unsatisfactory at any time by the City notice will be given Contractor to that effect, and Contractor shall forthwith substitute a new surety or sureties satisfactory to the City. No further payment shall be deemed due or will be made under the Contract until the new sureties qualify and are accepted by the City. All alterations, time extensions, extra and additional work, and other changes authorized by the Specifications, or any part of the Contract, may be made without securing consent of the surety or sureties on the contract bonds. 9. Special Provisions The following provisions shall apply to this Contract: a. The foregoing requirements as to the types and limits of insurance coverage to be maintained by the General and any approval of said insurance by the City or the Contractor are not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by the General pursuant to this Contract, including but not limited to the provisions concerning indemnification. b. The Contractor reserves the right to withhold payments to the General in the event of material noncompliance with the insurance requirements outlined above. c. The Contractor shall notify the City Community Development Department promptly of all losses or claims over $25,000 resulting from work performed under this contract, or any products/completed operations loss or claim against the contractor resulting from any of the contractor's work. EXHIBIT E - NON-PROFITS 11 REVISED 6/8/95 Exhibit F CUPERTINO COMMUNITY HOUSING FOR THE DISABLED LE BEAULIEU APARTMENTS PROMISSORY NOTE SECURED BY DEED OF TRUST 1. Principal For value received, CUPERTINO COMMUNITY HOUSING FOR THE DISABLED, a non- profit corporation existing in the County of Santa Clara under the laws of the State of California ("CONTRACTOR") promises to pay to the order of the CITY OF CUPERTINO, a municipal corporation under the laws of the State of California ("CITY"), the sum of FOUR HUNDRED FIFTY THOUSAND DOLLARS AND NO/100 ($450,000.00) at the Office of the Director of Administrative Services of the City of Cupertino, 10300 Torre Avenue, Cupertino, CA 95014, or such other place as CITY may from time to time designate, together with accrued interest from the date of this Note of the unpaid principal at the applicable rate as set forth in Paragraph 3. This Note is issued pursuant to, entitled to the benefits of, and referred to as the "City Note" in that certain "CAPITAL GRANT AGREEMENT BY AND BETWEEN THE CITY OF CUPERTINO, CALIFORNIA, AND CUPERTINO COMMUNITY HOUSING FOR THE DISABLED", dated September 7,2005 ("Contract") under the Community Development Block Grant program (CDBG), pursuant to Title I of the Housing and Community Development Act of 1974, as amended. This Contract provides that CONTRACTOR is the recipient of certain CDBG funds, to rehabilitate a 27- unit affordable apartment complex at 10092 Bianchi Way, APN'S 359-07-010, 359-07-019 and 359-07-020, Cupertino, California ("Project Property"), and provide housing for low- income households. This Note, the Deed of Trust, the Contract and any future amendments to that contract are collectively referred to as the "Loan Documents". 2. Payment Dates CONTRACTOR shall pay the principal and interest provided for herein as follows: a Principal and accumulated interest, an all other amounts payable by CONTRACTOR under the Loan Documents, shall be immediately due and payable, at the option of CITY, any time prior to conclusion of the Affordability Period as defined in the Contract if any one or more ofthe following Events of Default have occurred: (1) the sale, transfer, or other disposition by CONTRACTOR of any portion of Project Property, without the prior written consent of CITY; or (2) a change in use by CONTRACTOR of the Proj ect Property, without the prior written consent of the CITY; or (3) failure to file annual reports as specified in the Contract; or (4) foreclosure by any lienholder on Project Property; or (5) attachment of any additional liens on Project Property without the prior written consent of the CITY; or (6) failure to cure any non-compliance with CDBG regulations after noticing as specified in the Contract; or (7) any other material contract specified in the Contract. b For all Events of Default, CITY shall give written notice to CONTRACTOR of any Event of Default by specifying: (a) the nature of the event of deficiency giving rise to the Default; (b) the action required to cure the deficiency, if any action to cure is possible; and (c) a date, which shall not be less than thirty (30) calendar days from the date of receipt of the notice or the date the notice was refused (ten [10] calendar days with respect to a payment default), by which such action to cure must be taken or if a cure is not possible within thirty (30) days, to begin such cure and diligently prosecute such to completion. c The entire principal and accumulated interest shall be considered paid if full if any of the contingencies described in Paragraph 2a. above has not occurred prior to the conclusion of the Affordability Period as defined in the Contract. In such an instance, no payment by CONTRACTOR to CITY shall be required. 3. Interest Rate and Accumulated Interest Absent and Event of Default hereunder, the outstanding principal amount of the City Loan shall bear simple interest at the rate of three percent (3%) per year, beginning on the first (1 st) anniversary date of this Note and extending through the thirtieth (30th) anniversary date of this Note. Interest shall accumulate at the rate of THIRTEEN THOUSAND FIVE HUNDRED AND NOIlOO DOLLARS ($13,500.00) per year, based on the loan amount of FOUR HUNDRED FIFTY THOUSAND AND NOll 00 DOLLARS ($450,000.00). The maximum interest accumulation shall be FOUR HUNDRED FIVE THOUSAND AND NOIlOO DOLLARS ($405,000.00), as ofthe end of the thirtieth (30th) year ofthe term of the City Loan and the maximum amount owed to the City shall be EIGHT HUNDRED FIFTY FIVE THOUSAND AND NO/I00 DOLLARS ($855,000.00). 4. . Lawful Money Principal and interest are payable in lawful money of the United States of America. 5. Applications of Payments, Late Charges a Any payments received by CITY pursuant to the terms of this Note shall be applied: first to sums other than principal and interest due to CITY pursuant to the Loan Documents; next to the payment of all interest accrued to the date of such payment; and the balance, if any, to the payment of principal. b If any payment of interest and/or principal is not received by the CITY with five (5) business days following the due date thereof, then in addition to the remedies conferred upon the CITY pursuant to Section 7 thereof and the other Loan Documents, (1) a late charge of four percent (4%) of the amount due and unpaid will be added to the delinquent amount to compensate CITY for the expense of handling the delinquency, and (2) the amount due and unpaid, including the late charge, shall bear interest at the lesser of the higher annual rate which may lawfully be charged and collected under applicable law on the obligation evidenced by this Note or an annual rate which shall be four percent (4%) 10. Attorney's Fees Should any legal proceeding be commenced between the Parties to enforce any of the provisions of this Note, the prevailing Party in such a proceeding shall be entitled, in addition to such other relief as shall be granted, to a reasonable sum for attorney's fees which shall be determined by the court or forum in such a proceeding or in a separate action brought for that purpose. The CITY'S right to such fees shall not be limited to or by its representation by staff counsel, and such representation shall be valued at customary and reasonable rates for private sector legal services. 11. Relationship of Parties It is the intent of the Parties that the relationship evidenced by this Note shall be deemed to be one of debtor/creditor, and not of partnership or joint venture. 12. Severability Every provision of this Note is intended to be severable. In the event any term of provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any reason whatsoever, such illegality shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. l3. Interest Rate Limitation It is the intent of CONTRACTOR and CITY in the execution of this Note and all other instruments securing this Note that the loan evidenced hereby by exempt from the restrictions of the usury laws of the State of California. The CITY and CONTRACTOR stipulate and agree that none of the terms and provisions contained herein or in any of the loan instruments shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of California. In such event, if the CITY shall collect monies which are deemed to constitute interest which would otherwise increase .the effective interest rate on the Note to a rate in excess of such maximum rate shall, at the option of the CITY, be credited to the payment of the sums due hereunder or returned to CONTRACTOR. 14. Amendments This Note may not be modified or amended except by an instrument in writing expressing such intention executed by the Parties sought to be bound thereby, which writing must be so firmly attached to this Note so as to become a permanent part thereof. 15. Number and Gender In this Note, the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires.