17-187 Affordable Housing Loan Agreement Stevens Creek, L.P.AFFORDABLE HOUSING LOAN AGREEMENT
STEVENS CREEK
Between
CITY OF CUPERTINO
and.
STEVENS CREEK, L.P.
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ARTICLE 1. DEFINITIONS AND EIHIBITS..........................................................................3
Section1.1
Definitions ....................................................................................................3
Section1.2
Exhibits........................................................................................................6
ARTICLE 2. LOAN PROVISIONS.............................................................................................6
Section 2.1
Loan and Applications for Additional Financing . .......................................
6
Section2.2
Interest..........................................................................................................6
Section 2.3
Use of Loan Funds.......................................................................................7
Section2.4
Security ........................................................................................................
7
Section 2.5
Subordination...............................................................................................7
Section 2.6
Conditions Precedent to Disbursement of the Loan ....................................9
Section 2.7
Term; Repayment Schedule.......................................................................10
Section 2.8
Non-Recourse............................................................................................14
Section 2.9
Use of Refinancing Proceeds.....................................................................15
Section 2.10
Use of Operating and Capital Reserves; Exit of Limited
Partner........................................................................................................
15
ARTICLE 3. LOAN REQUIREMENTS...................................................................................15
Section 3.1
Construction Reporting..............................................................................15
Section 3.2
Completion of Construction.......................................................................15
Section 3.3
Construction Pursuant to Plans and Laws; Prevailing
Wages.........................................................................................................16
Section 3.4
Construction Responsibilities....................................................................18
Section 3.5
Mechanics Liens, Stop Notices, and Notices of Completion .....................18
Section3.6
Inspections.................................................................................................19
Section 3.7
Financial Accountings and Post -Completion Audits.................................19
Section 3.8
Information and Annual Reporting............................................................19
Section3.9
Records......................................................................................................21
Section 3.10
City Audits.................................................................................................21
Section 3.11
Hazardous Materials..................................................................................21
Section 3.12
Maintenance and Damage..........................................................................23
Section 3.13
Fees and Taxes...........................................................................................24
Section 3.14
Notice of Litigation....................................................................................25
Section 3.15
Nondiscrimination......................................................................................25
Section3.16
Transfer......................................................................................................25
Section 3.17
Insurance Requirements.............................................................................26
Section 3.18
Covenants Regarding Approved Financing and Partnership
Agreement..................................................................................................27
ARTICLE 4. AFFORDABLE AND SENIOR HOUSING REQUIREMENTS .....................27
Section 4.1 Affordability Restrictions..........................................................................27
Section 4.2 Operation of Development as Senior Housing..........................................27
Section 4.3 Operation Consistent with City Guidelines...............................................28
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TABLE OF CONTENTS
(continued)
Page
Section 4.4 Marketing Plan...........................................................................................28
:: L ' `-- �Y �►- : III .: i is �Y 1 .I
.......................28
Section 5.1 Representations and Warranties.................................................................28
ARTICLE 6. DEFAULT AND REMEDIES.............................................................................30
Section 6.1 Events of Default.......................................................................................30
Section 6.2 Notice and Cure.........................................................................................32
Section6.3 Remedies....................................................................................................32
Section 6.4 Right of Contest.........................................................................................33
Section 6.5 Remedies Cumulative................................................................................33
ARTICLE 7. GENERAL PROVISIONS...................................................................................34
Section 7.1
Relationship of Parties...............................................................................34
Section7.2
No Claims..................................................................................................34
Section 7.3
Amendments..............................................................................................34
Section 7.4
Loan Documents Conflict..........................................................................34
Section 7.5
Indemnification..........................................................................................34
Section7.6
Survival......................................................................................................35
Section 7.7
Non -Liability of City Officials, Employees and Agents ...........................35
Section 7.8
No Third Party Beneficiaries.....................................................................35
Section7.9
City Agent..................................................................................................35
Section 7.10
Conflict of Interest.....................................................................................36
Section 7.11
Notices, Demands and Communications...................................................36
Section 7.12
Applicable Law and Venue........................................................................37
Section 7.13
Parties Bound.............................................................................................37
Section 7.14
Attorneys' Fees and Costs..........................................................................37
Section 7.15
Severability ................................................................................................
37
Section 7.16
Force Majeure............................................................................................38
Section7.17
City Approval.............................................................................................38
Section7.18
Waivers......................................................................................................38
Section 7.19
Title of Parts and Sections.........................................................................38
Section 7.20
Entire Understanding of the Parties...........................................................38
Section 7.21
Each Party's Role in Drafting the Agreement............................................38
Section 7.22
Multiple Originals; Counterparts...............................................................39
Exhibit A:
Legal Description of the Property
Exhibit B:
Approved Project Budget
Exhibit C:
Insurance Requirements
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AFFORDABLE HOUSING LOAN AGREEMENT
(Stevens Creek)
This Affordable Housing Loan Agreement (the "Agreement") is entered into as of
September 11, 2017 (the "Effective Date") by and between the City of Cupertino, a municipal
corporation (the "f�' ), and Stevens Creek, L.P., a California limited partnership (the
"Partnership" or the "Developer") (each individually a "Party" and together the "Parties").
RECITALS
A. The Developer owns certain real property located at 19160 Stevens Creek
Boulevard in the City of Cupertino, County of Santa Clara, as more particularly described in
Exhibit A (the "Pro "). The Developer intends to construct a senior housing development
(for residents aged sixty-two (62) years old and over) consisting of nineteen (19) units (including
one (1) unrestricted manager's unit) on the Property (the "Development"), of which eighteen (18)
units (the "Affordable Units") shall be affordable to very low and extremely low income
households with incomes between thirty percent (30%) and fifty percent (50%) of area median
income, as set forth in the Regulatory Agreement, and one unit will be assigned to the property
manager.
B. The City has created a Below Market Rate Affordable Housing Fund into which
residential and non-residential housing mitigation fees are deposited for the purpose of
increasing and preserving the supply of housing affordable to moderate, low, and very low
income households in the City.
C. In order to ensure the financial stability of the Development and to provide the
Affordable Units, the Developer wishes to borrow from the City, and the City wishes to extend
to the Developer, a loan of Three Million Six Hundred Seventy -Two Thousand Dollars
($3,672,000) (the "Loan"). The Loan will be evidenced by the Note executed by the Developer
in favor of the City and secured by the Deed of Trust, by the Option Agreement, and by the
Assignment of Documents.
D. Two Million Dollars ($2,000,000) of the Loan will be used to partially pay off a
Three Million Dollar ($3,000,000) predevelopment loan from Housing Trust Silicon Valley (the
"Original Trust Loan"), which was used to partially finance the purchase of the Property; the
remaining One Million Dollars ($1,000,000) will remain with the Development as a loan
subordinate to the Loan (the "Trust Loan").
E. The remaining One Million Six Hundred Seventy -Two Thousand Dollar
($1,672,000) portion of the Loan will be used to pay off an acquisition loan in the amount of One
Million Six Hundred Seventy -Two Thousand Dollars ($1,672,000) from Charities Housing (the
"Original Charities Housing Loan"), which was also used to partially finance the purchase of the
Property.
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F. The Loan is being made to the Developer at an interest rate below the market rate
in order to help achieve financial stability for the Development and to increase the supply of
affordable rental housing for seniors in the City.
G. In consideration for the Loan, the Developer has agreed to provide the Affordable
Units for a ninety-nine (99) year period. The City and the Developer will record the Regulatory
Agreement against the Property to ensure the affordability of the Affordable Units. Separate
regulatory agreements between the Developer and the entities providing the Approved Financing
will also be executed to ensure the affordability of Units in the Development.
H. The County of Santa Clara has issued an allotment of Article 34 authority to the
City, under Measure A as approved by the voters in November 1998, for eighteen (18) units of
low-income rental housing for use on the Property.
I. On July 5, 2016, the City Council, pursuant to Resolution No. 16-071, authorized
the Loan to the Developer in the amount of Three Million Six Hundred Seventy -Two Thousand
Dollars ($3,672,000) for the Development, on certain terms and conditions and authorized the
City Manager to execute all necessary loan documents to effect the Loan and all necessary
related loan transaction documents.
J. On May 23, 2017 the Cupertino Planning Commission recommended approval of
all discretionary entitlements for the Development, and on June 20, 2017, the Cupertino City
Council approved all discretionary entitlements for the Development, subject to certain
conditions (the "Annroved Plans"). The Approved Plans include a density bonus of five units
(the 'Density Bonus") under Government Code Section 65915 and Municipal Code Chapter
19.56 (collectively 'Density Bonus Law"). Density Bonus Law requires that the Affordable
Units remain affordable to Very Low Income Households for a fifty-five (55) year period, and
the Approved Plans require that the Affordable Units remain affordable to Very Low Income
Households for a ninety-nine (99) year period.
K. The Development is exempt from CEQA under Public Resources Code Sections
21159.21 (Exemption for Qualified Housing) and 21159.23 (Exemption for Affordable Low
Income Housing), and CEQA Guidelines Sections 15192 (Threshold Requirements for
Exemptions for Agricultural Housing, Affordable Housing, and Residential Infill Projects) and
15194 (Affordable Housing Exemption) of Title 14 of the California Code of Regulations, based
on substantial evidence introduced into the record of the Planning Commission and City Council
meetings, which is incorporated herein by this reference.
L. Defined terms used but not defined in these recitals are as defined in Article 1 of
this Agreement.
NOW, THEREFORE, the Parties agree as follows:
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AGREEMENT
The foregoing recitals are hereby incorporated by reference and made part of this Agreement.
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) "Accessibility Requirements" are defined in Section 3.3(b) below.
(b) "Affordable Units" is defined in paragraph A of the Recitals.
(c) "Agreement' is this Affordable Housing Loan Agreement.
(d) "Annual Compliance Monitoring Fee" is defined in Section 3.13(b) below.
(e) "Annual Operating Expenses" is defined in Section 2.7(e) below.
(1) "Approved Financing" means all of the following loans and equity
obtained by the Developer for the Development and included in the Approved Project Budget, in
addition to the Loan:
(1) Low-income housing tax credit capital contribution from the
Investor Limited Partner in the approximate amount of Four Million Eight Hundred Fourteen
Thousand Six Hundred Sixty -One Dollars ($4,814,661);
(2) A construction loan from a conventional lender to the Developer in
the approximate amount of Four Million Two Hundred Ninety -Five Thousand Six Hundred
Fifty -Two Dollars ($4,295,652) (the "Construction Loan");
(3) A construction/permanent loan from the County of Santa Clara
from Measure A funds in the approximate amount of Nine Hundred Sixty -Three Thousand Eight
Hundred Nineteen Dollars ($963,819) (the "County Loan"); and
(4) A construction/permanent loan from Housing Trust Silicon Valley
in the amount of One Million Dollars ($1,000,000) (the "Trust Loan").
(g) "Approved Plans" are defined in paragraph J of the Recitals.
(h) "Approved Project Budget' is the pro forma construction budget for the
Development, including sources and uses of funds and operating budget pro forma, as approved
by the City, as may be modified from time to time by mutual agreement of City and Developer.
The Approved Project Budget as of this date is attached as Exhibit B.
394U6\2131160.11
(i) "Assignment of Documents" is defined in Section 2.4(c) below.
0) "CEQA" is the California Environmental Quality Act.
(lc) "Charities Housing" is Charities Housing Development Corporation of
Santa Clara County, a California nonprofit public benefit corporation.
(1) "City" is defined in the first paragraph of this Agreement.
(m) "City Loan Percentage" is defined in Section 2.7(e) below.
(n) "Closing" is the closing of the Loan, which shall occur upon the
satisfaction of the conditions contained in Section 2.6.
(o) "Construction Closing" is the closing of all required financing for the
construction of the Development.
(p) "Deed of Trust" is the deed of trust of even date herewith, among the
Developer, as trustor, Old Republic Title Company, as trustee, and the City, as beneficiary, that
will encumber the Development to secure repayment of the Loan and performance of all
covenants of the Loan Documents.
(q) 'Default" is defined in Section 6.1 below.
(r) 'Default Rate" is defined in Section 2.2(b) below.
(s) 'Density Bonus" is defined in paragraph J of the Recitals.
(t) 'Density Bonus Law" is defined in paragraph J of the Recitals.
(u) 'Developer" is defined in the first paragraph of this Agreement.
(v) 'Development" is defined in paragraph A of the Recitals.
(w) "DIR" is the California Department of Industrial Relations.
(x) "Effective Date" is defined in the first paragraph of this Agreement.
(y) "Fifteen Year Compliance Period" is defined in Section 3.16(d) below.
(z) "Final Cost Certification" is defined in Section 3.7(b) below.
(aa) "Gross Revenue" is defined in Section 2.7(e) below.
(bb) "Hazardous Materials" is defined in Section 3.11(a) below.
(cc) "Hazardous Materials Claims" is defined in Section 3.11(b) below.
(dd) "Hazardous Materials Law" is defined in Section 3.11(b) below.
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(ee) "hidemnitees" is defined in Section 7.5(a) below.
(ff) 'Investor Limited Partner" means the investor entity that will enter the
Partnership as its limited partner prior to the Construction Closing, and its successors and
assigns.
(gg) "Lenders' Share of Residual Receipts" is defined in Section 2.7(e) below.
(hh) "Loan" is defined in paragraph C of the Recitals.
(ii) "Loan Documents" are this Agreement, the Note, the Regulatory
Agreement, the Option Agreement, the Deed of Trust, and the Assignment of Documents.
(jj) "Modification Fee" is defined in Section 3.13(c) below.
(kk) "Net Proceeds of Refinancing" is defined in Section 2.9 below.
(11) "Note" is the promissory note of even date herewith between the
Developer and the City evidencing the Developer's obligation to repay the Loan.
(mm) "Notice of Completion" is the Notice of Completion executed by the
Developer in the form specified in California Civil Code Section 8182.
(nn) "Option" means the City's option to purchase all of Developer's right, title
and interest in and to the Property on the terms set forth in the Option Agreement.
(oo) "Option Agreement" means that certain Option to Purchase Agreement
granting the City s Option.
Recitals.
(pp) "Original Charities Housing Loan" is defined in paragraph E of the
(qq) "Original Trust Loan" is defined in paragraph D of the Recitals.
(rr) "Parties" are the City and the Developer. Each is a "Party".
(ss) "Partnership" is defined in the first paragraph of this Agreement.
(tt) "Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership governing the operation and organization of the Partnership to be executed
by the partners of the Partnership.
(uu) "Property" is defined in paragraph A of the Recitals.
(vv) "Regulatory Agreement" is the Regulatory Agreement and Declaration of
Restrictive Covenants to be entered into between the City and the Developer in connection with
the Loan to be recorded at the Closing against the Property.
(ww) "Residual Receipts" is defined in Section 2.7(e) below.
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(xx) "Senior Lender" is defined in Section 2.5(a) below.
(yy) "Senior Loan" is defined in Section 2.5(a) below.
(zz) "Term" is defined in Section 2.7(a) below.
(aaa) "Transfer" is defined in Section 3.16(a) below.
(bbb) "Trust Loan" is defined in paragraph D of the Recitals.
(ccc) "Unit' means one of the nineteen (19) rental housing dwelling units to be
constructed on the Property.
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
Exhibit C:
Insurance Requirements
ARTICLE 2.
LOAN PROVISIONS
Section 2.1 Loan and Applications for Additional Financine.
Subject to the terms and conditions in this Agreement and the other Loan Documents, the
City shall loan to the Developer the Loan in the principal amount of Three Million Six Hundred
Seventy -Two Thousand Dollars ($3,672,000) for the purposes set forth in Section 2.3 of this
Agreement. The obligation to repay the Loan shall be evidenced by the Note.
Section 2.2 Interest.
(a) Interest. Subject to subsection (b) below, simple interest shall accrue on
the outstanding principal balance of the Loan from the date of disbursement at a rate of three
percent (3%) per annum.
(b) Default Interest. In the event of a Default, interest on the Loan shall begin
to accrue, as of the date of Default and continuing until such time as the Loan is repaid in full or
the Default is cured, at the default rate of the lesser of eight percent (8%) per annum,
compounded annually and the highest rate permitted by law (the "Default Rate").
394\16\2131160.11
Section 2.3 Use of Loan Funds.
(a) Purchase of Property. The Developer shall use the Loan to repay the
Original Charities Housing Loan and Two Million Dollars ($2,000,000) of the Original Trust
Loan used to acquire the Property.
(b) No Other Uses. The Developer shall not use the Loan for any other
purposes without the prior written consent of the City.
Section 2.4 Securi
(a) The Developer shall secure its obligation to repay the Loan, as evidenced
by the Note, by executing the Deed of Trust and recording it as a lien against the Property senior
in lien priority to all other deeds of trust recorded against the Property. The Developer shall also
cause or permit the Regulatory Agreement to be recorded against the Property in a position
superior to all deeds of trust recorded against the Property.
(b) As further consideration and security for the Loan, Developer hereby
grants to the City an Option to purchase all of Developer's right, title and interest in and to the
Property on the terms set forth in the Option Agreement.
(c) As further consideration and security for the Loan, the Developer hereby
assigns to the City its rights and obligations with respect to certain agreements, plans,
specifications, other documents, and approvals, pursuant to an Assignment of Agreements, Plans
and Specifications, and Approvals (the "Assignment of Documents"). The assignments set forth
in the Assignment of Documents shall become effective immediately upon the occurrence of a
Default (as defined below in Section 6.1). The City shall not have any obligation under any
contracts or agreements assigned pursuant to the Assignment of Documents until the City
expressly agrees in writing to be bound by such contracts or agreements. Upon Default, the City
may use any of the foregoing assigned documents pursuant to the Assignment of Documents for
any purpose for which the Developer could have used them for development of the
Development, and the Developer shall cooperate with the City to implement the Assignment of
Documents and shall immediately deposit with the City for the City's use all the agreements,
plans and specifications, approvals and other documents that are the subject of the Assignment of
Documents.
Section 2.5 Subordination.
(a) The Deed of Trust or the Regulatory Agreement may be subordinated to
other loans approved by the City for construction and permanent financing (in each case, a
"Senior Loan"), provided that the Developer has satisfied all of the conditions contained in
Section 2.6 and all of the conditions set forth in this Section 2.5. Notwithstanding this Section
2.5, the Deed of Trust and Regulatory Agreement shall at all times remain senior to the Trust
Loan and the County Loan.
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(1) All of the proceeds of the proposed Senior Loan, less any
transaction costs, must be used to provide construction or permanent financing for the
Development;
(2) The proposed lender (each, a "Senior Lender") must be a state or
federally chartered financial institution, a nonprofit corporation or a public entity that is not
affiliated with Developer or any of the Developer's affiliates, other than as a depositor or a
lender;
(3) Developer must demonstrate to the City's reasonable satisfaction
that subordination of the Deed of Trust or Regulatory Agreement is necessary to secure adequate
acquisition, construction, or permanent financing to ensure the viability of the Development,
including the operation of the Development as affordable housing, as required by the Loan
Documents. To satisfy this requirement, Developer must provide to the City, in addition to any
other information reasonably required by the City, evidence demonstrating that the proposed
amount of the Senior Loan is necessary to provide adequate construction or permanent financing
to ensure the viability of the Development, and adequate financing for the Development would
not be available without the proposed subordination;
(4) The subordination agreement(s) must be structured to minimise the
risk that the Deed of Trust or Regulatory Agreement would be extinguished as a result of a
foreclosure by the Senior Lender or other holder of the Senior Loan. To satisfy this requirement,
the subordination agreement must provide the City with adequate rights to cure any defaults by
Developer, including: (a) providing the City or its successor with copies of any notices of
default at the same time and in the same manner as provided to Developer; and (b) providing the
City with a cure period of at least sixty (60) days to cure any default;
(5) No subordination may limit the effect of the Deed of Trust or
Regulatory Agreement before a foreclosure, nor require consent of the holder of the Senior Loan
to exercise of any remedies by the City under the Loan Documents;
(6) The subordination(s) described in this Section may be effective
only during the original term of the Senior Loan and any extension of its term or refinancing
approved in writing by the City; and
(7) In the event there is a foreclosure of the Property or deed in lieu of
foreclosure, the Regulatory Agreement shall be revived according to its original terms. The
Regulatory Agreement is a City land use requirement that is a condition of the Approved Plans
and Density Bonus Law. Any subordination agreement applicable to the Regulatory Agreement
shall provide that the Affordable Units unconditionally shall continue to be provided as required
by the Regulatory Agreement and that each successor claiming through a deed of trust shall,
within ninety (90) days after taking title to the Property, execute a new Regulatory Agreement
approved by the City and consistent with the provisions of this Agreement, the Approved Plans,
and Density Bonus Law, evidencing the obligation to continue to provide the Affordable Units
for the Term of the Regulatory Agreement.
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(b) Determination. Upon a determination by the City Attorney that the
conditions in this Section have been satisfied, the City Manager or his/her designee will be
authorized to execute the approved subordination agreement.
Section 2.6 Conditions Precedent to Disbursement of the Loan.
(a) Maximum Disbursement. The maximum amount of funds to be disbursed
pursuant to this Section 2.6 shall not exceed the amount of the Loan.
(b) Conditions Precedent to Disbursement of the Loan. The City shall not be
obligated to make any disbursements of the Loan or take any other action under the Loan
Documents unless all of the following conditions precedent are satisfied prior to each such
disbursement of Loan funds:
(1) There exists no Default nor any act, failure, omission or condition
that would constitute an event of Default under this Agreement;
(2) The Developer is the fee owner of the Property or will become the
fee owner of the Property concurrently with the Closing;
(3) The Developer has obtained all discretionary approvals required to
construct the Development, including all City zoning and land use approvals;
(4) The Developer has delivered to the City a copy of a Partnership
resolution authorizing the Developer's execution of the Loan Documents;
(5) The Developer has delivered to the City copies of the formation
documents for the Partnership, including, without limitation, the certificate of limited partnership
and the Partnership Agreement, or the initial Agreement of Limited Partnership;
(6) The Developer has delivered to the City a certificate of status for
the Partnership dated within thirty (30) days of the Effective Date;
(7) There exists no material adverse change in the financial condition
of the Developer from that shown by the financial statements and other data and information
furnished by the Developer to the City prior to the date of this Agreement;
(8) The Developer has furnished the City with evidence of the
insurance coverage meeting the requirements of Section 3.17 and Exhibit C below;
(9) The Developer has caused to be executed and delivered to the City
all Loan Documents and any other instruments and policies required under the Loan Documents;
(10) The Deed of Trust, the Regulatory Agreement, and the Option
Agreement will be recorded against the Property in the Office of the Recorder for the County of
Santa Clara concurrently with the Closing;
(11) The Developer and all Contractors, as defined in the Assignment
of Documents, have executed and delivered to the City the Assignment of Documents;
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(12) The Housing Trust Silicon Valley has signed a subordination
agreement reasonably acceptable to the City subordinating the Trust Loan to the City Loan;
(13) A title insurer reasonably acceptable to the City is unconditionally
and irrevocably committed to issuing an LP-10 2006 ALTA Lender's Policy of title insurance
insuring the priority of the Deed of Trust in the amount of Three Million Six Hundred Seventy -
Two Thousand Dollars ($3,672,000), subject only to such exceptions and exclusions as may be
reasonably acceptable to the City, and containing such endorsements as the City may reasonably
require. The Developer shall provide whatever documentation (including an indemnification
agreement), deposits or surety is reasonably required by the title company in order for the City's
Deed of Trust to be senior in lien priority to all other liens, except liens approved in writing by
City;
(14) The Developer has provided to the City and the City has approved
the Approved Project Budget;
(15) The funds requested do not exceed the maximum disbursement
specified in Section 2.6(a);
(16) The Developer has provided, and the City has approved, a schedule
of financing approvals and construction schedule for the Development that demonstrates that the
Developer intends to obtain tax credit financing and begin construction within two (2) years from
the date of the Closing;
(17) The Developer has fittnished the City with a Phase I environmental
assessment of the Property and such additional reports as required by the Phase I assessment, for
the City's reasonable approval;
(18) The Developer has provided, and the City has approved, an
appraisal for the Property prepared at Developer's expense, completed or updated within ninety
(90) days of the Closing, demonstrating that the value of the Property is sufficient to support the
principal amount of the Loan;
(19) The Developer has paid, or will pay concurrently with the Closing,
the City's legal fees incurred in connection with the making of the Loan.
(20) The City has received a written draw request from the Developer,
including certification that the condition set forth in Section 2.6(b)(i) continues to be satisfied,
the amount of funds needed, and evidence of receipt of the funds from the Original Trust Loan
and the Original Charities Housing Loan for purchase of the Property.
Section 2.7 Term, Repayment Schedule.
(a) Term.
(1) The Loan and this Agreement shall have a term that commences on
the Effective Date and expires on the earlier of. (a) December 31, 2019 if, by this date, the
Construction Closing has not yet taken place; or (b) the date fifty-five (55) years from the date of
issuance of the last certificate of occupancy or equivalent certification provided by the Building
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Division of the City for the Affordable Units (the "Term"), provided, however, if a record of the
City's certification cannot be located or established, the Term will expire on the fifty-seventh
(57th) anniversary of the Effective Date. The City Manager in his/her sole discretion may
approve a one (1) year extension of the Term upon the written request of the Developer.
(2) Upon the expiration of the Term, this Agreement and the rights and
obligations of the Parties under this Agreement shall terminate, except as provided in Section 7.6
of this Agreement, which states that certain obligations of the Developer shall survive the
expiration of the Term and the termination of this Agreement, including without limitation the
obligations contained in Sections 3.3(c), 3.3(d), 3.11(c), 3.15, 4.2, and 7.5 below.
(b) Payment in Full of Loan. All principal and accrued interest 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, subject to all applicable notice and cure periods; or (iii) the
expiration of the Term. The Loan shall be deemed satisfied upon transfer of the Property to the
City or its assignee pursuant to the Option Agreement.
(c) Annual Payments. After the completion of construction of the
Development, no later than April 30th of each calendar year, the Developer shall make
repayments of the Loan for that prior calendar year in an amount equal to the City Loan
Percentage of the Lenders' Share of Residual Receipts. The payments shall be credited first
against accrued interest and then against outstanding principal of the Loan, and shall be
accompanied by the Developer's report of Residual Receipts (including an independent auditor's
report regarding the auditor's review of Gross Revenue and Annual Operating Expenses). The
Developer shall provide the City with any documentation reasonably requested by the City to
substantiate the Developer's determination of Residual Receipts.
(d) Prepayment. The Developer shall have the right to prepay the Loan at any
time without penalty. However, the Deed of Trust will remain in effect for the entire Term and
the Regulatory Agreement will remain in effect for its entire ninety-nine (99) year term,
regardless of any prepayment or Transfer.
(e) Definitions. The following definitions shall apply for purposes of this
Section IT
(1) "Annual Operating Expenses", with respect to a particular calendar
year during the Term, means the following costs reasonably and actually incurred for operation
and maintenance of the Development to the extent that they are consistent with an annual
independent audit performed by a certified public accountant using generally accepted
accounting principles:
(A) Property taxes and assessments imposed on the
Development;
(B) Debt service currently due on a non -optional basis
(excluding debt service due from residual receipts or surplus cash of the Development) on
permanent loans that are part of the Approved Financing;
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(C) Property management fees and reimbursements, excluding
incentive management fees, not to exceed fees and reimbursements which are standard in the
industry, and pursuant to a management contract approved by the City;
(D) Deferred developer fee, if any, paid to any entity or entities
providing development services to the Development, provided that the total amount of developer
fee not exceed the amount set forth in the Approved Project Budget;
(E) Any Annual Compliance Monitoring Fee adopted by the
City, as set forth in Section 3.13(b) below;
(F) Premiums for insurance required for the Development to
satisfy the requirements of this Agreement and any lender of Approved Financing;
(G) Utility services not paid for directly by tenants, including
water,.sewer, and trash collection;
(I1) Maintenance and repair expenses and services, and
administrative costs that are included in the approved operating budget;
(1) Any annual license or certificate of occupancy fees
required for operation of the Development;
(J) Security services;
(K) Service provider fees for tenant social services, provided
the City has approved, in writing, the plan and budget for such services before such services
begin;
(L) Advertising and marketing;
(M) Cash deposited into reserves for capital replacements of the
Development in the amount required by Senior Lenders, or if there are no Senior Lender
requirements, an amount consistent with California Tax Credit Allocation Committee standards;
(N) Cash deposited into an operating reserve for the
Development in an amount required by Senior Lenders, or if there are no Senior Lender
requirements, an amount consistent with California Tax Credit Allocation Committee standards;
(0) Extraordinary operating costs specifically approved in
writing by the City;
(P) Payments of deductibles in connection with casualty
insurance claims not normally paid from reserves, the amount of uninsured losses actually
replaced, repaired or restored, and not normally paid from reserves, and other ordinary and
reasonable operating expenses not listed above; and
(Q) Management fees to the partners of the Developer,
including an Investor Limited Partner asset management fee and partnership management fees in
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the amount of Twenty -Five Thousand Dollars ($25,000) per year in the aggregate, increasing by
three percent (3%) per annum, payable to any partner or affiliate of any partner of the Developer.
Asset management fees and partnership management fees may not exceed a cumulative amount
of Twenty -Five Thousand Dollars ($25,000) (subject to an annual increase of three percent (3%))
and may only be paid during the fifteen (15)-year compliance period as described in Section
42(i)(1) of the Internal Revenue Code of 1986, as amended; provided, however, such fees may
convert to an asset/partnership management fee payable to the general partner of the Developer
after the fifteen (15)-year compliance period in an amount to be approved by the City. Unpaid
partnership management fees and asset management fees may accrue in any year to the extent
not paid.
Annual Operating Expenses shall not include the following: depreciation,
amortization, depletion or other non -cash expenses or any amount expended from a reserve
account.
(2) "City Loan Percentage" means one hundred percent (100%) of the
Lenders' Share of Residual Receipts. The Trust Loan will not be repaid through Residual
Receipts.
(3) "Gross Revenue," with respect to a particular calendar year during
the Term, means all revenue, income, receipts, and other consideration actually received from
operation and leasing of the Development. "Gross Revenue" shall include, but not be limited to:
all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments
received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index
adjustments and any other rental adjustments to leases or rental agreements resulting in actual
income; proceeds from vending and laundry room machines; the proceeds of business
interruption or similar insurance; subject to the rights of Senior Lenders, the proceeds of casualty
insurance to the extent not utilized to repair or rebuild the Development (or applied toward the
cost of recovering such proceeds) and not payable to the Senior Lenders; and condemnation
awards for a taking of part or all of the Development for a temporary period. "Gross Revenue"
shall also include the fair market value of any goods or services provided in consideration for the
leasing or other use of any portion of the Development. "Gross Revenue" shall not include
tenants' security deposits, loan proceeds, capital contributions, interest income earned on
reserves, provided that the interest shall be considered reserve funds and is being used for the
purposes for which the applicable reserve was established; lender impounds, provided that the
interest is held by the lender and used for the purposes of the impound account; or similar
advances.
(4) "Lenders' Share of Residual Receipts" means fifty percent (50%)
of Residual Receipts.
(5) "Residual Receipts", with respect to a particular calendar year
during the Term, means the amount by which Gross Revenue (as defined above) exceeds Annual
Operating Expenses (as defined above).
(f) Residual Receipts Calculation. In connection with the annual payments
required by Section 23(c), within one hundred twenty (120) days of the end of the Developer's
fiscal year, the Developer shall furnish to the City an audited statement duly certified by an
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independent firm of certified public accountants approved by the City, setting forth in reasonable
detail the computation and amount of Residual Receipts during the preceding calendar year.
(g) Books and Records.
(1) The Developer shall keep and maintain on the Property, or at its
principal place of business, or elsewhere with the City's written consent, full, complete and
appropriate books, records and accounts relating to the Development, including all such books,
records and accounts necessary or prudent to evidence and substantiate in full detail the
Developer's calculation of Residual Receipts. Books, records and accounts relating to the
Developer'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 which provide
for the calculation of Residual Receipts on a cash basis. All such books, records, and accounts
shall be open to and available for inspection by the City, its auditors or other City authorized
representatives at reasonable intervals during normal business hours. Copies of all tax returns
and other reports that the Developer may be required to furnish 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 Developer are kept. The Developer shall preserve records on which any
statement of Residual Receipts is based for a period of not less than five (5) years after such
statement is rendered, and for any period during which there is an audit undertaken pursuant to
subsection (ii) below then pending.
(2) The receipt by the City of any statement pursuant to Section 2.7(c)
above or any payment by the Developer or acceptance by the City of any loan repayment for any
period shall not bind the City as to the correctness of such statement or such payment. Within
three (3) years after the receipt of any such statement, the City or any designated agent or
employee of the City at any time shall be entitled to audit the Residual Receipts and all books,
records, and accounts pertaining thereto. Such audit shall be conducted during normal business
hours at the principal place of business of the Developer and other places where records are kept.
Immediately after the completion of an audit, the City shall deliver a copy of the results of such
audit to the Developer. If it shall be determined as a result of such audit that there has been a
deficiency in a loan repayment to the City, then such deficiency shall become immediately due
and payable with interest at the non -default rate set forth in the Note (unless Developer's failure,
refusal, or repeated failure to correctly calculate or submit the repayment constitutes an event of
default, in which case interest shall be paid at the Default Rate), determined as of and accruing
from the date that said payment should have been made. In addition, if the Developer's auditor's
statement for any calendar year shall be found to have understated Residual Receipts by more
than five percent (5%) and at least Five Thousand Dollars ($5,000), and the City is entitled to
any additional Loan repayment as a result of said understatement, then the Developer shall pay,
in addition to the interest charges referenced hereinabove, all of the City's reasonable costs and
expenses connected with any audit or review of the Developer's accounts and records.
Section 2.8 Non -Recourse.
Except as provided below, neither Developer, nor any partner of Developer shall have
any direct or indirect personal liability for payment of the principal of, and interest on, the Loan.
Following recordation of the Deed of Trust, the sole recourse of the City with respect to the
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principal of, and interest on, the Note shall be to the property described in the Deed of Trust;
provided, however, that nothing contained in the foregoing limitation of liability shall: (a) limit
or impair the enforcement against all such security for the Note of all the rights and remedies of
the City thereunder; or (b) be deemed in any way to impair the right of the City to assert the
unpaid principal amount of the Note as demand for money within the meaning and intendment of
Section 431.70 of the California Code of Civil Procedure or any successor provision thereto. The
foregoing limitation of liability is intended to apply only to the obligation for the repayment of
the principal of, and payment of interest on the Note. Except as hereafter set forth, nothing
contained herein is intended to relieve the Developer of its obligation to indemnify the City
under the Loan Documents, or liability for: (1) fraud or willful misrepresentation; (2) the failure
to pay taxes, assessments or other charges which may create liens on the Property that are
payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such
taxes, assessments or other charges); (3) the fair market value of any personal property or
fixtures removed or disposed of by the Developer other than in accordance with the Deed of
Trust; and (4) the misappropriation of any proceeds under any insurance policies or awards
resulting from condemnation or the exercise of the power of eminent domain or by reason of
damage, loss or destruction to any portion of the Property.
Section 2.9 Use of Refinancing Proceeds.
The City shall receive fifty percent (50%) of the Net Proceeds of Refinancing of
any refinancing approved in writing by the City and shall not be credited against the payments
set forth in Section 2.7 above. "Net Proceeds of Refinancing" is defined as proceeds remaining
after accounting for the payment of refinancing costs, the use of proceeds invested in the
Development (including funding an operating reserve for the Development), and the takeout of
Approved Financing, all subject to City approval.
Section 2.10 Use of Operating and Capital Reserves, Exit of Limited Partner.
In no case may a limited partner exiting the Partnership be entitled to receive the
Development's operating reserves and capital replacement reserves upon exit.
ARTICLE 3.
LOAN REQUIREMENTS
Section 3.1 Construction Reporting.
During construction of the Development, Developer shall provide to the City, on a
monthly basis, copies of construction inspection reports and draw reports provided to
construction lenders, at the same time as those reports are provided to construction lenders and
regardless of whether the City is at the time being requested to make construction disbursements.
Section 3.2 Completion of Construction.
Developer shall diligently prosecute construction of the Development to completion, and
shall cause the completion of the Development no later than required by the California Tax
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Credit Allocation Committee placed -in-service deadline associated with the Approved
Financing, or such later date as the City may approve.
Section 3.3 Construction Pursuant to Plans and Laws, Prevailing Wages.
(a) Compliance with Project Documents. Developer shall construct the
Development in conformance with the Approved Plans, Approved Financing, and Approved
Project Budget and consistent with the plans and specifications utilized to obtain City permits.
Developer shall notify the City in a timely manner of any changes in the work required to be
performed under this Agreement, including any additions, changes, or deletions to the plans and
specifications approved by the City.
(b) Compliance with Laws. Developer shall cause all construction work to be
performed in compliance with, without limitation: (i) all applicable laws, ordinances, rules and
regulations of federal, state, county or municipal governments or agencies now in force or that
may be enacted hereafter, including without limitation and to the extent applicable, state
prevailing wages pursuant to Labor Code Section 1770 et sec., and the regulations pursuant
thereto, as further set forth in subsection (c) below; (ii) all applicable federal and state
accessibility requirements, including but not limited to the Fair Housing Act; Section 504 of the
Rehabilitation Act of 1973 and its implementing regulations at 24 CFR 8, the Uniform Federal
Accessibility Standards; Title II and/or Title III of the Americans with Disabilities Act; and Title
24 of the California Code of Regulations (collectively the "Accessibility Requirements"), as
further set forth in subsection (d) below; and (iii) all directions, rules and regulations of any fire
marshal, health officer, building inspector, or other officer of every governmental agency now
having or hereafter acquiring jurisdiction. The work shall proceed only after procurement of
each permit, license, or other authorization that may be required by any governmental agency
having jurisdiction, and Developer shall be responsible to the City for the procurement and
maintenance thereof, as may be required of Developer and all entities engaged in work on the
construction.
(c) Prevailing Wages.
(1) This Agreement has been prepared with the intention that the City
assistance under this Agreement meets the exception set forth in Labor Code Section
1720(c)(6)(E) to the general requirement that state prevailing wages be paid in connection with
construction work that is paid for in whole or in part out of public funds; provided, however, that
nothing in this Agreement constitutes a representation or warranty by either Party regarding the
applicability to the Approved Financing of the provisions of Labor Code Section 1720 et seg.,
and the hiring of apprentices pursuant to Labor Code Sections 1777.5 et sue.
(2) If state prevailing wages are applicable to the Approved Financing
or Approved Project Budget, the Developer shall:
(A) pay, and shall cause any consultants or contractors to pay,
prevailing wages in the construction of the Development as those wages are determined pursuant
to California Labor Code Section 1720 et seq.;
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(B) cause any consultants or contractors to employ apprentices
as required by California Labor Code Section 1777.5 et sea., and the implementing regulations
of the Department of Industrial Relations (the "DIR"), and to comply with the other applicable
provisions of California Labor Code Sections 1720 et sea., 1777.5 et sea., and implementing
regulations of the DIR;
(C) keep and retain, and shall cause any consultants and
contractors to keep and retain, such records as are necessary to determine if such prevailing
wages have been paid as required pursuant to California Labor Code Section 1720 et seq., and
apprentices have been employed are required by California Labor Code Section 1777.5 et seq.;
(D) post at the Property, or shall cause the contractor to post at
the Property, the applicable prevailing rates of per diem wages. Copies of the currently
applicable current per diem prevailing wages are available from DIR;
(E) cause contractors and subcontractors constructing the
Development to be registered as set forth in California Labor Code Section 1725.5;
(F) cause its contractors and subcontractors, in all calls for
bids, bidding materials and the construction contract documents for the construction of the
Development to specify that:
i. no contractor or subcontractor may be listed on a
bid proposal nor be awarded a contract for the construction of the Development unless registered
with the DIR pursuant to California Labor Code Section 1725.5; and
ii. the construction of the Development is subject to
compliance monitoring and enforcement by the DIR.
(G) provide the City all information required by California
Labor Code Section 1773.3 as set forth in the DIWs online form PWC-100 within 2 days of the
award of any contract (https://www.dir.ca.gov/pwc100extl);
(II) cause its contractors to post job site notices, as prescribed
by regulation by the DIR; and
(1) cause its contractors to furnish payroll records required by
California Labor Code Section 1776 directly to the Labor Commissioner, at least monthly in the
electronic format prescribed by the Labor Commissioner.
(3) The Developer shall indemnify, hold harmless and defend (with
counsel reasonably acceptable to the City) the City against any claim for damages,
compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any
person or entity (including the Developer, its contractor and subcontractors) to pay prevailing
wages as determined pursuant to California Labor Code Sections 1720 et M., to employ
apprentices pursuant to California Labor Code Sections 1777.5 et sue., to meet the conditions of
California Labor Code Section 1771.4, and implementing regulations of the DIR, or to comply
with the other applicable provisions of California Labor Code Sections 1720 et sea.. 1777.5 et
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sue., and 1771.4, and the implementing regulations of the DIR, in connection with the
construction of the Development or any other work undertaken or in connection with the
Property. The requirements in this subsection (c) shall survive the repayment of the Loan and the
reconveyance of the Deed of Trust.
(d) Accessibility Requirements. Prior to issuance of any building permit for
the Development, the Developer must provide certification from the Development architect or
qualified accessibility specialist that the construction plans are in conformance with all
Accessibility Requirements. Developer shall design and construct the Development in
compliance with the Accessibility Requirements and shall provide the City with a certification
from the Development architect that, to the best of the architect's knowledge, the Development
complies with all Accessibility Requirements applicable to the Development. Developer shall
indemnify, hold harmless and defend (with counsel reasonably acceptable to the City) the City
against any claim for damages, compensation, fines, penalties or other amounts arising out of the
failure or alleged failure of any person or entity (including Developer, its architect, contractor,
and subcontractors) to construct the Development in accordance with the Accessibility
Requirements. The requirements in this subsection (d) shall survive the repayment of the Loan
and the reconveyance of the Deed of Trust.
Section 3.4 Construction Responsibilities.
(a) It shall be the responsibility of Developer to coordinate and schedule the
construction work to be performed so that commencement and completion of the construction
will take place in accordance with this Agreement.
(b) Developer shall be solely responsible for all aspects of Developer's
conduct in connection with the construction of the Development, including (but not limited to)
the quality and suitability of the plans and specifications, the supervision of construction work,
and the qualifications, financial condition, and performance of all architects, engineers,
contractors, subcontractors, suppliers, consultants, and property managers. Any review or
inspection undertaken by the City with reference to the construction of the Development is solely
for the purpose of determining whether Developer is properly discharging its obligations to the
City and should not be relied upon by Developer or by any third parties as a warranty or
representation by the City as to the quality of the design or construction of the Development.
(c) Until such time as Developer has received a final inspection from the City
for the completed Development, Developer shall provide the City with quarterly progress reports
regarding the status of the construction of the Development.
Section 3.5 Mechanics Liens, Stop Notices, and Notices of Completion.
(a) If any claim of lien is filed against the Property or a stop notice affecting
the Loan is served on the City or any other lender or other third party in connection with the
Development, then Developer shall, within thirty (30) days after such filing or service, either pay
and fully discharge the lien or stop notice, effect the release of such lien or stop notice by
delivering to the City a surety bond in sufficient form and amount, or provide the City with other
assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged.
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(b) If Developer fails to discharge any lien, encumbrance, charge, or claim in
the manner required in this Section, then in addition to any other right or remedy, the City may
(but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at
Developer's expense. Alternately, the City may require Developer to immediately deposit with
the City the amount necessary to satisfy such lien or claim and any costs, pending resolution
thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined
against Developer.
(c) Developer shall file a valid notice of cessation or Notice of Completion
upon cessation of construction on the Development for a continuous period of thirty (30) days or
more, and take all other reasonable steps to forestall the assertion of claims of lien against the
Property. Developer authorizes the City, but without any obligation, to record any Notices of
Completion or cessation of labor, or any other notice that the City deems necessary or desirable
to protect its interest in the Property.
Section 3.6 Inspections.
Developer shall permit and facilitate, and shall require its contractors to permit and
facilitate, observation and inspection of the construction by the City and by public authorities
during reasonable business hours for the purposes of determining compliance with this
Agreement.
Section 3.7 Financial Accountines and Post -Completion Audits.
(a) No later than sixty (60) days following completion of construction of the
Development, the Developer shall provide to the City for its review and approval a financial
accounting of all sources and uses of funds for the Development.
(b) No later than one hundred fifty (150) days following completion of
construction of the Development, the Developer shall submit an audited financial report showing
the sources and uses of all funds utilized for the Development. This requirement may be
satisfied by providing the Final Cost Certification to the City. "Final Cost Certification" means
the Final Cost Certification Sources and Uses of Funds prepared by the Developer for the
Development that: (i) the Developer submits to California Tax Credit Allocation Committee;
and (ii) has been prepared using generally accepted accounting standards in effect in the United
States of America from time to time, consistently applied.
Section 3.8 Information and Annual Reyortine.
(a) The Developer shall provide any information reasonably requested by the
City in connection with the Developer's use of the Loan funds and the use of the Property for the
Affordable Units. In particular, upon occupancy, the Developer shall provide the City with the
annual reports required by the Regulatory Agreement, including but not limited to reports
regarding the Development's rent and occupancy levels, as well as the annual operating budget.
Without limitation, the Developer shall provide the City no later than the ninetieth (90's) day
after the close of each calendar year following the Effective Date (and no later than December 1
for the operating budget and replacement budgets for the following year), hardcopies and PDF
copies of the following documents:
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(1) Before and after completion of construction of the Development:
(A) insurance certificates detailing all coverage required under
Section 3.16 and Exhibit C below;
(B) evidence of payment of property taxes or property tax
exemption for the Development, as applicable;
(C) audited financial statements for the Development; and
(D) and audited financial statements for the Developer's general
partner(s), limited partner(s), and, if applicable, sponsor.
(2) After completion of the Development:
(A) an occupancy report from the Developer including: (i) the
verified income, household size, and ethnicity of tenants of the Development; (ii) the Affordable
Unit size, rent amount and whether these rents include utilities for all Affordable Units in the
Development; and (iii) the date tenancy commenced for each Affordable Unit, as may be further
described in the Regulatory Agreement;
(B) a management report detailing the activities of the
management agent;
(C) a list of any substantial physical defects in the Units,
including a description of any major repair or maintenance work undertaken or needed in the
previous year and measures taken to maintain the Units in a safe and sanitary condition in
accordance with applicable codes;
(D) the operating reserve balance;
(E) the replacement reserve balance;
(F) the proposed annual operating budget for the subsequent
fiscal year; and
(G) the proposed annual replacement budget for the subsequent
fiscal year.
(b) Substitution of Monitoring and Compliance Reports Prepared for Other
Financing Programs. If similar reports on some or all of the Units are required for regulatory
compliance with other financing programs, those reports may be deemed satisfactory for the
purpose of this Section 3.8 by the City, with respect to the portion of the requirements of this
Section covered by such reports, provided that copies are provided on an annual basis to the City
with an owner certification addressed to the City certifying that the Developer has complied with
this Agreement.
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Section 3.9 Records.
(a) The Developer shall keep and maintain at the Development, or elsewhere
with the City's written consent, full, complete and appropriate books, record and accounts
relating to the Development, including all such books, records and accounts necessary or prudent
to evidence and substantiate in full detail the Developer's compliance with the terms and
provisions of this Agreement. The Developer shall appoint and submit to the City the name of a
fiscal agent who shall be responsible for the financial and accounting activities of the Developer.
Books, records and accounts shall be consistent with requirements of this Agreement. All such
books, records, and accounts shall be open to and available for audit, inspection and copying by
the City, their auditors or other authorized representatives at reasonable intervals during normal
business hours. Copies of all tax returns and other reports that the Developer may be required to
famish 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 Developer are kept. The Developer shall
preserve such records for a period of not less than five (5) years after the creation of such
records. 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 record retention period stated
herein, then the Developer 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.
(b) The City shall notify the Developer of any records it deems insufficient.
The Developer 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 the Developer shall begin
to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably
possible.
(c) If so directed by the City, upon termination of this Agreement, the
Developer shall cause all records, accounts, documentation, and all other materials relevant to
the Agreement to be delivered to the City as depository.
Section 3.10 City Audits.
The Developer shall comply with any reasonable demand by the City for an audit of the
Developer's activities related to this Agreement, the Development, or the Affordable Units. The
City may make audits of any conditions relating to this Agreement.
Section 3.11 Hazardous Materials.
(a) Developer 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.
Developer 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
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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 and operation of projects like the
Development or kept and used in and about residential property of this type.
(b) Developer 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 Developer or the Property
pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any
Hazardous Materials, ("Hazardous Materials Law"); (ii) all claims made or threatened by any
third party against Developer 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 "Hazardous Materials Claims"); and (iii)
Developer'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 of it to be subject to any
restrictions on the ownership, occupancy, transferability, or use of the Property under any
Hazardous Materials Law, including without limitation, under the provisions of California
Health and Safety Code, Sections 25220 et seg. or any regulation adopted under Sections 25220
et. sea.
(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 Hazardous Materials
Claims and to have its reasonable attorneys' fees in connection therewith paid by Developer.
Developer shall indemnify and hold harmless the City and its board 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, discharge, disposal, or presence of Hazardous Materials on,
under, or about the Property including without limitation: (1) all foreseeable consequential
damages; (2) the costs of any required or necessary repair, cleanup or detoxification of the
Property and the preparation and implementation of any closure, remedial or other required
plans; and (3) all reasonable costs and expenses incurred by the City in connection with clauses
(1) and (2), including but not limited to reasonable attorneys' fees and consultant's fees. This
indemnification applies whether or not any government agency has issued a cleanup order.
Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision
include, but are not limited to: (i) losses attributable to diminution in the value of the Property;
(ii) loss or restriction of use of rentable space on the Property; (iii) adverse effect on the
marketing of any rental space on the Property; and (iv) penalties and fines levied by, and
remedial or enforcement actions of any kind issued by any regulatory agency (including but not
limited to the costs of any required testing, remediation, repair, removal, cleanup or
detoxification of the Property and surrounding properties). This obligation to indemnify shall
survive termination of this Agreement.
(d) Without the City's prior written consent, which shall not be unreasonably
withheld, the Developer 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
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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 consent before taking such action, provided that in
such event the Developer 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 (i) a
particular remedial action is ordered by a court of competent jurisdiction, (ii) the Developer will
or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action;
(iii) the Developer 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) The Developer hereby acknowledges and agrees that: (i) this Section is
intended as the City's written request for information (and the Developer's response) concerning
the environmental condition of the Property as required by California 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 and warranty) with
respect to the environmental condition of the Property is intended by the Parties to be an
"environmental provision" for purposes of California Code of Civil Procedure Section 736.
(f) In the event that any portion of the Property is determined to be
"environmentally impaired" (as that term is defined in California Code of Civil Procedure
Section 726.5(e)(3)) or to be an "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: (i) waive its lien on such
environmentally impaired or affected portion of the Property; and (ii) exercise, (a) the rights and
remedies of an unsecured creditor, including reduction of its claim against the Developer 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 Developer shall be deemed to have willfully permitted or acquiesced in a
release or threatened release of Hazardous Materials, 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 Developer 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
costs and expenses, including (but not limited to) reasonable 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 Default Rate, 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 3.12 Maintenance and Damage.
(a) During the course of both construction and operation of the Development,
the Developer shall maintain the Development 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
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if the Developer 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) If economically feasible in the City's reasonable judgment after
consultation with the Developer, if any improvement now or in the future on the Property is
damaged or destroyed, then the Developer shall, at its cost and expense, diligently undertake to
repair or restore such improvement consistent with the plans and specifications for the
Development. Such work or repair shall be commenced no later than the later of one hundred
twenty (120) days, or such longer period approved by the City in writing, after the damage or
loss occurs or thirty (30) days following receipt of the insurance or condemnation proceeds, and
shall be complete within one (1) year thereafter. In the event that any improvement is damaged
or destroyed during construction of the Development, the City shall permit the Developer to
extend the construction completion date. Any insurance or condemnation proceeds collected for
such damage or destruction shall be applied to the cost of such repairs or restoration and, if such
insurance or condemnation proceeds shall be insufficient for such purpose, then the Developer
shall make up the deficiency. If the Developer does not make repairs, then any insurance or
condemnation proceeds collected for such damage or destruction shall be promptly delivered to
the City as a special repayment of the Loan, subject to the rights of the Senior Lenders, if any.
Section 3.13 Fees and Taxes.
(a) The Developer shall be solely responsible for payment of all fees,
assessments, taxes, charges, and levies imposed by any public authority or utility company with
respect to the Property or the Development to the extent owned by the Developer, and shall pay
such charges prior to delinquency. However, the Developer shall not be required to pay and
discharge any such charge so long as: (i) the legality thereof is being contested diligently and in
good" faith and by appropriate proceedings; and (ii) if requested by the City, the Developer
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.
(b) The Developer shall pay any annual compliance monitoring fee (the
"Annual Compliance Monitoring Fee") adopted by the City for administration of the Loan.
(c) The Developer shall pay any fee adopted by the City for amendments or
modifications to the Loan or any Loan Document requested by the Developer after the
Construction Closing (the "Modification Fee").
(d) The Developer shall pay for the City's legal fees incurred in connection
with the making of the Loan.
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Section 3.14 Notice of Litigation.
The Developer shall promptly notify the City in writing of any litigation which has the
potential to materially affect the Developer or the Property or the Development and of any
claims or disputes that involve a material risk of such litigation.
Section 3.15 Nondiscrimination.
(a) Developer covenants by and for itself and its successors and assigns that
there shall be no discrimination against or segregation of a person or of a group of persons on
account of race, color, religion, creed, age, disability, sex, sexual orientation, marital status,
family status, source of income, ancestry or national origin, HIV/AIDS, or any other arbitrary
basis in the construction, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of
the Property, nor shall Developer or any person claiming under or through Developer establish or
permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the Property. Notwithstanding the above, with respect to familial status, the above
should not be construed to apply to housing for older persons as defined in Section 12955.9 of
the Government Code and other applicable sections of the Civil Code as identified in Health and
Safety Code Section 33050(b). The foregoing covenant shall run with the land.
(b) The requirements in this Section shall survive the repayment of the Loan,
and the reconveyance of the Deed of Trust.
Section 3.16 Transfer.
(a) For purposes of this Agreement, "Transfer" is any sale, assignment, or
transfer, whether voluntary or involuntary, of. (1) any rights or duties under this Agreement; or
(2) any interest in the Development, including (but 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 Development is transferred and
the Developer retains title. "Transfer" shall exclude the leasing of any single Unit in the
Development to an occupant and the transfer of an easement interest in the Property for utility
purposes. The City Manager or his/her designee is authorized to execute assignment and
assumption agreements on behalf of the City to implement any approved Transfer.
(b) City is entering into this Agreement based on the experience, skill, and
ability to perform of Developer. The Developer recognizes that its qualifications and identity are
of particular concern to the City, in view of (1) the importance of affordable housing to the
general welfare of the community; (2) the reliance by the City upon the unique qualifications and
ability of the Developer to ensure the quality of the affordability, use, operation, and
maintenance of the Development; (3) the requirement that the Development be used for
affordable housing; and (4) Developer's representation that the Development is not to be
acquired or used for speculation, but only for operation by the Developer in accordance with the
Regulatory Agreement.
(c) No Transfer not specifically authorized in this Section 3.16 shall be
permitted without the prior written consent of the City, which the City may withhold in its sole
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discretion. Except for Transfers specifically authorized in this Section 3.16, the Loan shall
automatically accelerate and be due in full upon any Transfer made without the prior written
consent of the City.
(d) The City hereby approves the following future Transfers so long as the
City is notified of the Transfer in writing within ten (10) business days of the Transfer, and each
approved Transfer is consistent with the provisions below:
(1) Future Transfers of the limited partner interest in the Partnership
provided that: (i) such Transfers do not affect the timing and amount of the Investor Limited
Partner capital contributions provided for in the Partnership Agreement; (ii) the limited partner
exiting the Partnership receives no portion of the Development's operating reserves or capital
replacement reserves; and (iii) in subsequent Transfers, an affiliate of the initial Investor Limited
Partner has an interest in the transferee and serves as a managing member or managing general
partner of the successor limited partner.
(2) Transfer of the Property from the Developer to Charities Housing,
or a non-profit affiliate of Charities Housing, and an assumption of the Loan by such transferee
at the end of the fifteen (15) year compliance period as described in Section 42(i)(1) of the
Internal Revenue Code of 1986, as amended (the "Fifteen Year Compliance Period"), provided
that: (i) such Transfer is pursuant to an option or right of fast refusal agreement referenced in
the Partnership Agreement; and (ii) the transferee expressly assumes the obligations of the
Developer under the Loan Documents, utilizing a form of assignment and assumption agreement
provided by the City.
(3) The purchase of the Investor Limited Partner (and any special
limited partner) interest by Charities Housing, or a non-profit affiliate of Charities Housing, at
the end of the Fifteen Year Compliance Period, provided that such Transfer is pursuant to an
option or right of first refusal agreement referenced in the Partnership Agreement.
(4) In the event the general partner of the Developer is removed by the
limited partner of the Developer for cause following default under the Partnership Agreement,
the removal of the general partner and the Transfer of the general partner interest to: (i) a
501(c)(3) tax exempt nonprofit corporation or other entity with a 501(c)(3) tax exempt nonprofit
corporation member or partner, that is selected by the Investor Limited Partner and approved by
the City in its reasonable discretion; and (ii) the Investor Limited Partner or an affiliate thereof,
but only for a period not to exceed ninety (90) days from the date of removal of the general
partner, during which time such entity shall diligently seek a replacement general partner
meeting the requirements of subsection (i) in this paragraph.
Section 3.17 Insurance Requirements.
The Developer shall maintain insurance coverage throughout the Term of the Loan and
the Regulatory Agreement consistent with the provisions shown in Exhibit C, Insurance
Requirements.
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Section 3.18 Covenants Regarding Approved Financing and Partnership Agreement.
(a) Developer shall promptly pay the principal and interest when due on any
Approved Financing.
(b) Developer shall promptly notify the City in writing of the existence of any
default under any documents evidencing Approved Financing, whether or not a default has been
declared by the lender, and any defaults under the Partnership Agreement, and provide the City
with copies of any notice of default.
(c) Developer may not amend, modify, supplement, cancel or terminate the
Partnership Agreement or any documents related to any loan that is part of the Approved
Financing without the prior written consent of the City except for amendments solely to
effectuate Transfers permitted under Section 3.16 above or to correct scrivener's errors.
Developer shall provide the City copies of all amendments, modifications, and supplements to
the Partnership Agreement and any document related to any loan that is part of the Approved
Financing.
(d) Developer may not incur any indebtedness of any kind other than
Approved Financing or encumber the Development with any liens without the prior written
consent of the City.
(e) The Partnership Agreement may not include any provisions that conflict
with the provisions of this Agreement, including, without limitation, the Residual Receipts
payment provisions of Section 2.7 above.
ARTICLE 4.
AFFORDABLE AND SENIOR HOUSING REQUIREMENTS
Section 4.1 Affordability Restrictions.
In consideration for the Loan to be provided to the Developer on below -market terms, the
Developer hereby agrees that eighteen (18) Units shall be affordable to very low and extremely
low households for ninety-nine (99) years and as further specified in the Regulatory Agreement
and other regulatory agreements between the Developer and providers of the Approved
Financing. The Developer shall record against the Property, prior to the disbursement of any
Loan funds, the Regulatory Agreement.
Section 4.2 Operation of Development as Senior Housing.
As proposed by the Developer, the Development shall be operated at all times in
compliance with the provisions of. (a) the Unruh Act, including but not limited to California
Civil Code Sections 51.2, 51.3 and 51.4 which relate to the requirements for lawful senior
housing; (b) the United States Fair Housing Act, as amended, 42 U.S.C. Section 3607(b) and 24
CFR 100.304, which relate to lawful senior housing; (c) the California Fair Employment and
Housing Act, Government Code Section 12900 et seq., which relates to lawful senior housing;
and (d) any other applicable law or regulation (including the Americans with Disabilities Act, to
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the extent applicable to the Development). Developer shall develop and implement applicable
age and other verification procedures to ensure compliance with the requirements of this Section.
The Developer shall provide the City with a copy of its written verification procedures. The
Developer agrees to indemnify, protect, hold harmless, and defend (by counsel reasonably
satisfactory to the City) Indemnitees (as defined in Section 7.5) from all claims arising out of the
Developer's failure to comply with applicable legal requirements related to housing for seniors
and persons with disabilities excluding claims resulting from the gross negligence or willful
misconduct of the City. The indemnity provisions of this subsection shall survive expiration of
the Term or other termination of this Agreement.
Section 4.3 Operation Consistent with City Guidelines.
Developer will operate the Development in conformance with the City's Policy and
Procedures Manual for Administering Deed Restricted Affordable Housing Units (the "BMR
Manual"), except as may be required by regulations of the California Tax Credit Allocation
Commission, as mutually agreed by the City and the Developer, or as specified in the Regulatory
Agreement.
Section 4.4 Marketing Plan.
(a) As further described in the Regulatory Agreement, no later than ninety
(90) days before the commencement of marketing the Units, the Developer shall submit to the
City for approval its plan for marketing the Affordable Units as required pursuant to the
Regulatory Agreement. The plan shall include the Developer's written tenant selection and
affirmative marketing plan consistent with the Regulatory Agreement.
(b) Upon receipt of the marketing plan, the City shall promptly review the
marketing plan and shall approve or disapprove it within thirty (30) days after submission
provided, however, that if the City provides no response within thirty (30) days, the marketing
plan shall be deemed approved. If the marketing plan is not approved, the Developer shall
submit a revised marketing plan within thirty (30) days, which approval shall be granted or
denied within thirty (30) days after submission in accordance with the procedures set forth
above.
(c) The Developer's marketing materials shall identify the City as a source of
funding for the Affordable Units.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER
Section 5.1 Representations and Warranties.
The Developer hereby represents and warrants to the City as follows and acknowledges,
understands, and agrees that the representations and warranties set forth in this Article 5 are
deemed to be continuing during all times when any portion of the Loan remains outstanding:
(a) Organization. The Developer is a duly organized California limited
partnership, validly existing and in good standing under the laws of the State of California and
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has the power and authority to own its property and carry on its business as now being
conducted.
(b) Authority of the Developer. The Developer 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 the Developer, and
all actions required under the Developer'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 the Developer
enforceable against it in accordance with their respective terms.
(e) No Breach of Law or Agreement. Neither the execution nor delivery of
Us 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 the Developer, or any provision of the
organizational documents of the Developer, or will conflict with or constitute a breach of or a
default under any agreement to which the Developer is a party, or will result in the creation or
imposition of any lien upon any assets or property of the Developer, other than liens established
pursuant hereto.
(1) Compliance with Laws, Consents and Approvals. The construction and
operation of the Development will comply with all applicable laws, ordinances, rules and
regulations of federal, state and local governments and agencies and with all applicable
directions, rules and regulations of officers of any government or agency.
(g) Pending Proceedings. The Developer 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 the Developer,
threatened against or affecting the Developer or the Development, at law or in equity, before or
by any court, board, commission or agency whatsoever which might, if determined adversely to
the Developer, materially affect the Developer's ability to repay the Loan or impair the security
to be given to the City pursuant hereto.
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(h) Title to Land. At the time of recordation of the Deed of Trust, the
Developer will have acquired the Property in fee, and there will exist thereon or with respect
thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever other than
liens for current real property taxes and liens in favor of the City or approved Senior Loans,
except for liens approved in writing by the City.
(i) Financial Statements. The financial statements of the Developer and other
financial data and information furnished by the Developer 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 the Developer from that shown by such
financial statements and other data and information.
0) Taxes. The Developer has filed all federal and other material tax returns
and reports required to be filed, and has paid all federal and other material taxes, assessments,
fees and other governmental charges levied or imposed upon the Developer or the Developer's
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 the Developer 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 Developer, taken as a whole, which would be expected to result in
a material impairment of the ability of the Developer 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 the Developer of any Loan Document.
(k) Hazardous Materials. To the best of Developer's knowledge, except as
disclosed in writing by Developer to the City prior to the date of this Agreement: (i) no
Hazardous Material has been disposed of, stored on, discharged from, or released to or from, or
otherwise now exists in, on, under, or around, the Property; (ii) neither the Property nor
Developer is in violation of any Hazardous Materials Law; and (iii) neither the Property nor
Developer is subject to any existing, pending or threatened Hazardous Materials Claims.
(1) Sufficient Funds. At Construction Closing, Developer will hold sufficient
funds or binding commitments for sufficient funds to complete the construction of the
Development in accordance with the terms of this Agreement.
ARTICLE 6.
DEFAULT AND REMEDIES
Section 6.1 Events of Default.
Unless the Property is transferred to the City or its assignee pursuant to the Option
Agreement, each of the following shall constitute a "Default" by the Developer under this
Agreement:
(a) Failure to Complete Construction Closing. Failure of Developer to
complete the Construction Closing for the Development within two (2) years from the date of the
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Closing. The Construction Closing deadline may be extended by up to one (1) year upon written
request by the Developer and approval by the City Manager in his/her sole discretion.
(b) Failure to Complete Construction. Failure of Developer to complete
construction of the Development within two (2) years of Construction Closing, subject to force
majeure delays.
(c) Failure to Make Payment. Failure to repay the principal and any interest
on the Loan within fifteen (15) days after receipt of written notice from the City that such
payment is due pursuant to the Loan Documents.
(d) Breach of Covenants. Failure by the Developer to duly perform, comply
with, or observe any of the conditions, terms, or covenants of any of the Loan Documents.
(e) Default Under Other Loans. A default is declared under any other
financing for the Development by the lender of such financing.
(f) Insolvency. A court having jurisdiction shall have made or entered any
decree or order: (1) adjudging the Developer to be bankrupt or insolvent; (2) approving as
properly filed a petition seeking reorganization of the Developer or seeking any arrangement for
the Developer under the bankruptcy law or any other applicable debtor's relief law or statute of
the United States or any state or other jurisdiction; (3) appointing a receiver, trustee, liquidator,
or assignee of the Developer in bankruptcy or insolvency or for any of their properties; or (4)
directing the winding up or liquidation of the Developer, if any such decree or order described in
clauses (1) to (4), inclusive, shall have continued unstayed or undischarged for a period of ninety
(90) calendar days; or the Developer 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 (1) to (4), 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.
(g) Assignment; Attachment. The Developer shall have assigned its assets for
the benefit of its creditors or suffered a sequestration or attachment of or execution on any
substantial part of its property, unless the property so assigned, sequestered, attached or executed
upon shall have been returned or released within ninety (90) calendar 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 paragraph shall act to accelerate automatically, without the
need for any action by the City, the indebtedness evidenced by the Note.
(h) Suspension; Termination. The Developer shall have voluntarily
suspended its business or, shall have been dissolved or terminated.
(i) Liens on Property or the Development. There shall be filed any claim of
lien (other than liens approved in writing by the City) against the Property or the Development or
any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to
withhold proceeds of the Loan and the continued maintenance of said claim of lien or notice to
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withhold for a period of twenty (20) days, without discharge or satisfaction thereof or provision
therefor (including, without limitation, the posting of bonds) reasonably satisfactory to the City.
0) Condemnation. The condemnation, seizure, or appropriation of all or the
substantial part of the Property or the Development other than by the City.
(k) Unauthorized Transfer. Any Transfer other than as permitted by
Section 3.16
(1) Failure to Timely Lease. Failure of the Developer to initially lease all of
the Units within eighteen (18) months of the recordation of the Notice of Completion.
(m) Representation or Warranty Incorrect. Any Developer 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 or when later due to be performed.
In the event that the Developer is a limited partnership or limited liability company, then
the occurrence of any of the events set forth in subsections (c), (e), (f), or (g) by the Developer's
general partner or managing member, as applicable, shall also constitute a Default under this
Agreement.
Section 6.2 Notice and Cure.
The City shall give written notice to the Developer specifying the nature of the violation
giving rise to the Default. If the violation is not corrected to the satisfaction of City within a
reasonable period of time, not longer than thirty (30) days after the date the notice is mailed, or
within such further time as the City reasonably determines is necessary to correct the violation,
the City may declare a Default under this Agreement by written notice to the Developer.
However, if a different period or notice requirement is specified under any other provision of this
Article 6, the specific provisions shall control; and if the Term expires or if the Developer is in
default under any financing secured by the Property, the City may declare a Default upon
expiration of the Term or upon receipt of any notice given to the City pursuant to Civil Code
Section 2924b or through any other means and may exercise its rights as provided in the Loan
Documents and in this Article 6.
Section 6.3 Remedies.
The occurrence of any Default following the expiration of all applicable notice and cure
periods will, either at the option of the City 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) Exercise of Option. The City shall have the right to exercise or to assign
its Option under the Option Agreement on the terms and conditions provided in the Option
Agreement whether upon expiration of the Term or if the City declares a Default under this
Agreement. The granting of the Option under the Option Agreement to the City shall not impair
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or limit the City's ability to exercise any other rights or remedies granted to the City in this
Agreement.
(b) Acceleration of Note. The City shall have the right to cause all
indebtedness of the Developer to the City under this Agreement and the Note, together with any
accrued interest thereon, to become immediately due and payable. The Developer waives all
right to presentment, demand, protest or notice of protest or dishonor. The 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 parry under the law, including the Uniform Commercial Code, and
including foreclosure under the Deed of Trust. The Developer shall be liable to pay the City on
demand all reasonable expenses, costs and fees (including, without limitation, reasonable
attorneys 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.
(c) Specific Performance; Action at Law. The City shall have the right to
mandamus or other suit, action, or proceeding at law or in equity to require the Developer to
perform its obligations and covenants under the Loan Documents, including without limitation
the right to enforce the exercise of the Option Agreement by specific performance, or to enjoin
acts on things which may be unlawful or in violation of the provisions of the Loan Documents.
(d) Right to Cure at the Developer's Expense. The City shall have the right
(but not the obligation) to cure any monetary default by the Developer under a loan other than
the Loan. The Developer agrees to reimburse the City for any funds advanced by the City to
cure a monetary default by the Developer upon demand therefor, together with interest thereon at
the lesser of the maximum rate permitted by law and the Default Rate from the date of
expenditure until the date of reimbursement.
Section 6.4 Right of Contest.
The Developer 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 6.5 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 the Developer 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.
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ARTICLE 7.
GENERAL PROVISIONS
Section 7.1 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 the Developer or
its agents, employees or contractors, and the Developer 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. The Developer 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 the acquisition, construction, and operation of the Development, the Developer 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 solely responsible for similar
matters relating to their employees. The Developer shall be solely responsible for its own acts
and those of its agents and employees.
Section 7.2 No Claims.
Nothing contained in this Agreement shall create or justify any claim against the City by
any person that the Developer may have employed or with whom the Developer 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 the purchase of the Property, the
construction or operation of the Development, and the Developer shall include similar
requirements in any contracts entered into for the construction or operation of the Development.
Section 7.3 Amendments.
No alteration or variation of the terms of this Agreement shall be valid unless made in
writing by the Parties. The City Manager is authorized to execute on behalf of the City
amendments to the Loan Documents or amended and restated Loan Documents so long as the
City Council first approves any material change in the amount or terms of this Agreement.
Developer shall pay any adopted Modification Fee to the City if Developer requests amendments
or modifications to the Loan or any Loan Documents.
Section 7.4 Loan Documents Conflict.
In the event of any conflict among the Loan Documents, the most restrictive requirements
shall apply.
Section 7.5 Indemnification.
(a) To the full extent permitted by law, the Developer shall indemnify, defend
at its own expense, and hold the City and its elected officials, officers, employees and agents in
34
394\16\2131160.11
their official capacity (collectively "Indemnitees") harmless against any and all claims, suits,
actions, losses and liability. of every kind, nature and description made against it and expenses
(including reasonable attorneys' fees) which arise out of or in connection with this Agreement,
including but not limited to the purchase of the Property, development, construction, marketing
and operation of the Development, except to the extent such claim arises from the grossly
negligent or willful misconduct of the City or Indemnitees. Each Party shall notify the other
Party immediately in writing of any claim or damage related to activities performed under this
Agreement. The Parties shall cooperate with each other in the investigation and disposition of
any claim arising out of the activities under this Agreement, providing that nothing shall require
either Parry to disclose any documents, records or communications that are protected under the
attorney -client privilege or attorney work product privilege.
(b) The provisions of this Section shall survive the expiration of the Term, the
reconveyance of the Deed of Trust, and any release of part or all of the Property from the
burdens of this Agreement.
Section 7.6 Survival.
Notwithstanding anything in this Agreement to the contrary, the following provisions of
this Agreement - shall survive and remain in effect following expiration of the Term or
termination of this Agreement for so long as necessary to give them full force and effect with
respect to claims or rights of City arising prior to the expiration of the Term or termination:
(a) Section 3.3(c) (compliance with prevailing wage laws);
(b) Section 3.3(d) (compliance with Accessibility Requirements);
(c) Section 3.11(c) (Hazardous Materials claims);
(d) Section 3.15 (nondiscrimination);
(e) Section 4.2 (compliance with laws regarding senior citizen housing); and
(f) Section 7.5 (Indemnification).
Section 7.7 Non -Liability of City Officials. Employees and Agents.
No member, official, employee or agent of the City shall be personally liable to the
Developer in the event of any default or breach by the City or for any amount which may
become due to the Developer or its successor or on any obligation under the terms of this
Agreement.
Section 7.8 No Third Party Beneficiaries.
There shall be no third parry beneficiaries to this Agreement.
Section 7.9 City Agent.
35
394\16,2131160.11
The City, in its sole discretion, may assign its rights and responsibilities to a third party
agent in the performance of this Agreement.
Section 7.10 Conflict of Interest.
(a) Except for approved eligible administrative or personnel costs, no person
described in subsection (b) below who exercises or 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 a decision -making process or gain inside information with regard to
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. The Developer shall exercise due diligence to ensure
that the prohibition in this Section is followed.
(b) The conflict of interest provisions of subsection (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. Without limitation, the following individuals are specifically
ineligible to rent a Unit in the Development: City employees and officials, and their immediate
family members, who have policy -making authority or influence regarding City housing
programs and do not qualify as having a remote interest as provided by the California
Government Code; and the Developer and its officers and employees, and their immediate family
members.
(c) In accordance with Government Code Section 1090 and the Political
Reform Act, Government Code Section 87100 et sue., no person who is a director, officer,
partner, trustee or employee or consultant of the Developer, or immediate family member of any
of the preceding, shall make or participate in a decision made by the City or a City 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 the
Developer. Interpretation of this Section shall be governed by the definitions and provisions used
in the Political Reform Act, Government Code Section 87100 et sec ., its implementing
regulations manual and codes, and Government Code Section 1090.
Section 7.11 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:
Developer: Stevens Creek, L.P.
c/o Charities Housing
36
394\16\2131160.11
1400 Parlonoor Avenue, Suite 190
San Jose, CA 95126
Attention: Executive Director
City: City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
Attention: City Manager
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). Any notice
sent to Developer will also be sent to Developer's Investor Limited Partner at an address to be
provided to the City by the Investor Limited Partner.
Section 7.12 Applicable Law and Venue.
This Agreement shall be governed by and construed in accordance with California law.
Venue shall be Santa Clara County.
Section 7.13 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 the Developer and its successors and assigns in the Property and the Development for
the entire Term, and the benefit hereof shall inure to the benefit of the City and its successors and
assigns.
Section 7.14 Attorneys' Fees and Costs.
In any action brought to enforce this Agreement, the prevailing party shall be entitled to
all costs and expenses of suit, including reasonable attorneys' fees. This section shall be
interpreted in accordance with California Civil Code Section 1717 and judicial decisions
interpreting that statute.
Section 7.15 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.
37
394\16,2131160.11
Section 7.16 Force Majeure.
In addition to specific provisions of this Agreement, performance by either Party shall not
be deemed to be in Default where delays or defaults are due to war, insurrection, strikes, lock-
outs, riots, floods, earthquakes, fires, quarantine restrictions, freight embargoes, or court order.
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 receipt of
the notice. In no event shall the City be required to agree to cumulative delays in excess of one
hundred eighty (180) days. Notwithstanding this Section, the dates for performance provided in
Section 2.7(a)(i) above may not be extended except as specifically provided in that Section.
Section 7.17 City Approval.
The City has authorized the City Manager to execute the Loan Documents and deliver
such approvals or consents as are required by this Agreement, and to execute estoppel
certificates concerning the status of the Loan and the existence of the Developer defaults under
the Loan Documents. 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
standard applies.
Section 7.18 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 the Developer or to pursue any remedy allowed under this Agreement or
applicable law. Any extension of time granted to the Developer 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 the Developer 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 7.19 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 7.20 Entire Understanding of the Parties.
This Agreement constitutes the entire understanding and agreement of the Parties with
respect to the Loan. If there is any conflict between this Agreement and any other Loan
Documents, the most restrictive provisions shall control.
Section 7.21 Each Partv's Role in Drafting the Agreement.
Each Parry to this Agreement has had an opportunity to review the Agreement, confer
with legal counsel regarding the meaning of the Agreement, and negotiate revisions to the
38
394%1612131160.11
Agreement. Accordingly, neither Parry shall rely upon Civil Code Section 1654 in order to
interpret any uncertainty in the meaning of the Agreement.
Section 7.22 Multiple Originals; Countemarts.
This Agreement may be executed in multiple originals, each of which is deemed to be an
original, and may be signed in counterparts.
[Signatures on following page.]
39
394\16\2131160.11
WHEREAS, this Agreement has been entered into by the undersigned as of the date first
above written.
APPROVED AS TO FO BY:
Rand h Ho , City Attorney
CITY:
CITY OF 7CINO, a municipal corporation
By:
avid Brandt, City Manager
DEVELOPER:
STEVENS CREEK, L.P., a California limited
partnership
By: Stevens Creek Charities LLC,
a California limited liability company,
its general partner
By: Charities Housing Development
Corporation of Santa Clara County,
its sole member and manager
iE
40
394%16,2131160.11
Signed in Counterpart
Daniel Wu
Executive Director
WHEREAS, this Agreement has been entered into by the undersigned as of the date first
above written.
APPROVED AS TO FORM BY:
Signed in Counterpart
Randolph Hom, City Attorney
CITY:
CITY OF CUPERTINO, a municipal corporation
Signed in Counterpart
David Brandt, City Manager
DEVELOPER:
STEVENS CREEK, L.P., a California limited
partnership
By: Stevens Creek Charities LLC,
a California limited liability company,
its general partner
By: Charities Housing Development
Corporation of Santa Clara County,
its sole member and man er
B
Daniel Wu
Executive Director
40
394\16\2131160.11
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The land referred to is situated in the County of Santa Clara, City of Cupertino, State of
California, and is described as follows:
Begriming at the point of Intersection of the Southerly line of Stevens Creek Road, as established
by the Deed from Kenneth M. Coykendall, et ux, to County of Santa Clara, a body of politic and
corporate and political subdivision of the State of California, dated May 02, 1947, recorded June
19, 1947, Book 1436 of Official Records, Page 525, with the Westerly line of that certain 68.29
acre tract of land described in the Deed to H.G. Coykendall dated February 10, 1909, recorded in
Book 344 of Deeds, Page 27; thence along said line of Steven Creek Road, North 89' 44' East,
79.20 feet to the boundary line established in the Agreement by and between Victor F. Corsiglia
and Sarah T. Corsiglia, his wife, as joint tenants, Katherine Esterby Maynard Coykendall and
Kenneth M. Coydendall, also known as Kemmeth m. Coydenall, her husband, as joint tenants,
August Pearson and Hanna B. Pearson, and F.A. Pestarino and Aida M. Pertarno, his wife, as
joint tenants, dated December 9, 1948, recorded January 03, 1949, Book 1727 of Official
Records, Page 52; thence along said boundary line, South 000 23' 12" East, 308.69 feet to an
angle point therein; thence continuing along said boundary line, South 890 37' West, 79.20 feet
to a point on the Westerly line of said 68.29 acre tract which bears South 000 23' 12" East, from
the point of beginning; thence along the Westerly line of said 68.29 acre tract, North 00' 23' 12"
West, 308.85 feet to the point of beginning and being a portion of the Quinto Rancho.
APN: 375-07-001
A-1
394\16\2131160.11
APPROVED PROJECT BUDGET
B-1
394\16\2131160.11
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EXHIBIT C
INSURANCE REQUIREMENTS
C-1
394\16\2131160.11
EXHIBIT C
INSURANCE REQUIREMENTS
A. Required Policies and Limits. The following insurance policies and
limits are required for this Contract:
(1) Commercial General Liability CCGL') Insurance: The CGL policy
must be issued on an occurrence basis, written on a comprehensive
general liability form, and must include coverage for liability arising from
Contractor's or its subcontractor's acts or omissions in the performance of
the Work, including contractor's protected coverage, blanket contractual,
completed operations, vehicle coverage and employer's non -ownership
liability coverage, with limits of at least $2,000,000 per occurrence and
$4,000,000 in the aggregate. The CGL policy must protect against any
and all liability for personal injury, death, or property damage or
destruction arising directly or indirectly in the performance of the
Contract. The CGL coverage may be arranged under a single policy for
the full limits required or by a combination of underlying policies with the
balance provided by excess or umbrella policies, provided each such
policy complies with the requirements set forth in this Contract.
a. It will be a requirement under this agreement that any
available insurance proceeds broader than or in excess of the
specified minimum insurance coverage requirements and/or limits
will be made available to the Additional Insured and will be (1) the
minimum coverage and limits specified in this agreement; or (2) the
broader coverage and maximum limits of coverage of any
Insurance policy, whichever is greater.
b. The Additional Insured coverage under the Contractor's
policy will be "primary and non-contributory" and will not seek
contribution from the City's insurance or self-insurance and will be
at least as broad as CG 20 0104 12.
C. The limits of Insurance required in this agreement may be
satisfied by a combination of primary and umbrella or excess
Insurance. Any umbrella or excess Insurance will contain or be
endorsed to contain a provision that such coverage will also apply
on a primary and non-contributory basis for the benefit of City (if
agreed to in a written contract or agreement) before the City's
own insurance or self-insurance will be called upon to protect it as
a named insured.
Contractor will maintain insurance as required by this contract to the fullest
amount allowed by law and will maintain insurance for a minimum of five
394\16\22057852
[As Amended for this Contract Only]
years following the completion of this project. In the event
contractor fails to obtain or maintain completed operations
coverage as required by this agreement, the City at its sole
discretion may purchase the coverage required and the cost will
be paid by the contractor.
(2) Comprehensive Automobile Liability Insurance: The
automobile liability policy must be issued on an occurrence basis,
with limits of at least $1,000,000 per occurrence for bodily injury
and $1,000,000 per occurrence for property damage, or
combined single limit of $1,000,000 per occurrence, covering
owned, non -owned and hired automobiles.
(3) Workers' Compensation Insurance and Employer's Liability
Insurance: The workers' compensation and employer's liability
policy or policies must comply with the requirements of the
California Workers' Compensation Insurance and Safety Act,
providing coverage of at least $1,000,000 or as otherwise
required by the statute. If Contractor is self -insured, Contractor
must provide its Certificate of Permission to Self -Insure, duly
authorized by the DIR.
B. Builder's Risk Insurance. Upon closing of the
construction financing for the project, and prior to commencing any
construction work, Contractor must provide builder's risk insurance:
Builder's Risk coverage is required for this Contact.
The builder's risk policy must be issued for course of construction on an
occurrence basis, for all-risk coverage on a 100% completed value basis on
the insurable portion of the Project for the benefit of City, and name the City as
a loss payee as its interest may appear. If the Project does not involve new or
major reconstruction, the City may elect, acting in its sole discretion, to accept
an installation floater policy instead of builders risk. The installation floater
policy must provide property damage coverage for any building, structure,
machinery, or equipment damaged, impaired, broken, or destroyed during the
performance of the Work, including during transit, installation, and testing at
the City's site.
C. Surety Bonds. Upon closing of the construction financing for the
project, and prior to commencing any construction work,
Contractor shall provide the following Surety Bonds:
•
394\16\22057852
2. Performance Bond
3. Payment Bond
4. Maintenance Bond
The Payment Bond and Performance Bond shall be in a sum equal to the
contract price. If the Performance Bond provides for a one-year warranty a
separate Maintenance Bond is not necessary. If the warranty period specified
in the contracts is for longer than one (1) year a Maintenance Bond equal to
ten percent (10%) of the contract price is required. Bonds shall be duly
executed by a responsible corporate surety, authorized to issue such bonds in
the State of California and secured through an authorized agent with an office
in California.
D. Property Insurance. Property Insurance against all risks of loss,
at full replacement cost with no coinsurance penalty provision. Interruption of
Business insurance- Lessee shall, at its sole cost and expense, maintain
business interruption insurance by which the minimum monthly rent will be
paid to Lessor for a period of up to
(1) year if the premises are destroyed or rendered inaccessible by a risk
insured against by a policy of standard fire and extended coverage insurance,
with vandalism and malicious mischief endorsements.
E. Additional Insureds. City, including its City Council, boards and
commissions, officers, officials, agents, employees, consultants and
volunteers, must be named as additional insureds under Contractor's
insurance policies required under this section, except under the worker's
compensation policy. The naming of an additional insured will not affect any
recovery to which the additional insured would be entitled to under the policy if
not named as an additional insured. An additional insured will not be held liable
for any premium, deductible portion of any loss, or expense of any nature
under the policy or any extension thereof. Any other insurance held by an
additional insured will not be required to contribute anything toward any loss or
expense covered by Contractor's insurance.
F. Notice. Each certificate of insurance must state that the
coverage afforded by the policy or policies is in force and will not be reduced,
cancelled or allowed to expire without at least 30 days advance written notice
to City, unless due to non-payment of premiums, in which case ten days
advance written notice must be provided to City. Such notice must be sent to
City via certified mail and addressed to the attention of the City Manager.
G. Waiver of Subrogation. Each required policy must include an
endorsement providing that the carrier agrees to waive any right of
394\1612205785 7
subrogation it may have against City.
H. Required Endorsements. The CGL policy, the automobile
liability policy and the builder's risk or installation floater policy, if required, must
include the following endorsements:
(1) The inclusion of more than one insured will not operate to
impair the rights of one insured against another, and the
coverages afforded will apply as though separate policies have
been issued to each insured.
(2) The insurance provided is primary and no insurance held or
owned by City may be called upon to contribute to a loss.
(3) This policy does not exclude explosion, collapse,
underground excavation hazard, or removal of lateral
support.
I. Forms of Certificates of Insurance and Endorsements. Each
certificate of insurance and endorsement must provide the name and policy
number of each carrier and policy, using a form and format acceptable to City.
J. Subcontractors. Contractor must ensure that each
subcontractor maintains the same insurance coverage required under this
section with respect to its performance of Work on the Project, including those
requirements related to the naming of additional insureds and waivers of
subrogation.
394\16\22057851