2015 Habitat for Humanity of the Coachella Valley, Inc. - Assignment, Assumption, & ModificationApril 7, 2015
Marty Hartley
Executive Director
Habitat for Humanity of Coachella Valley
P.O. Box 11738
Palm Desert, CA-92255
RE: Habitat for Humanity Affordable Housing Agreement
Dear Mr. Hartley:
On August 23, 2010, the former La Quinta Redevelopment Agency ("Agency") and
Habitat for Humanity of the Coachella Valley ("Habitat") entered into an Affordable
Housing Agreement ("AHA"). Pursuant -to the AHA, the Agency provided financial
assistance to Habitat (the "Agency Assistance") and Habitat developed two single-
family homes to be sold to income -qualified buyers at an affordable sales price.
The AHA has been amended on two occasions for purposes of providing for
Habitat's development of five additional single family homes, with additional
Agency Assistance, and increasing the amount of the Agency Assistance to be
allocated to the first two homes.
The La Quinta Housing Authority ("Authority") is the. housing successor to the
former Agency. The AHA requires that in connection with Habitat's sale of the
homes, the buyer of each home must sign a note in the amount of the Agency
Assistance allocated to the home (an "Agency Note"), a deed of trust securing
repayment of the note (an "Agency Deed of Trust"), and an affordable housing
regulatory agreement (an "Agency Regulatory Agreement"). The AHA does not
permit Habitat to sell a home for more than the amount of the Agency Assistance
allocated to the home, . but it does permit the Authority to assign the right of
payment under each Agency Note to Habitat.
Habitat completed construction of the first two homes in July, 2011. Pursuant to
the AHA, Habitat was obligated to transfer fee title to the homes to income -
qualified buyers within 90 days after completing construction, provided that if at
that time the buyers had not yet -completed all of Habitat's program requirements,
Habitat would be permitted to lease the homes to the buyers for up to one year. In
1
Marty Hartley
April 7, 2015
2012, Habitat contacted the Authority and requested permission to sell each of the
two completed homes for a price in excess of the amount of the Agency
Assistance allocated to the homes, to cover certain costs incurred by . Habitat in
constructing the two homes. The Authority agreed to consider the. request, and
the Authority's legal counsel prepared an Assignment, Assumption, and
Modification Agreement (the "Draft Modification Agreement") that would (i) permit
the homes to be sold for a price that included the additional costs incurred by
Habitat, and (ii) assign the right to collect and retain payments made by the buyers
under the Agency Notes to Habitat.
The parties reached agreement on the form of the Draft Modification Agreement (a
copy of which is enclosed with this letter), but before the Draft Modification
Agreement could be executed, there was a change in management personnel at
Habitat. Since that time, Housing Authority staff has repeatedly attempted to meet
with you to discuss an acceptable financial structure for transferring title of the
two .completed homes to the families residing in the homes. Housing Authority
staff has patiently allowed this matter to be delayed, for well over a year, as you
have worked through other housing projects and issues in other cities. At this
time, no further delays are. acceptable. As you may be aware, the Housing
Authority has various legal and equitable remedies available in the AHA and related
documents, including the Agency Deed of Trust. We have thus far sought to
cooperate with you to find an acceptable financial structure, and would prefer to
continue with this approach. To avoid staff turning this matter over to our City
Attorney, please contact Carla Triplet, Housing Coordinator at .(760) 777-7120, by
April 24, 2015 and arrange to have a meeting or call with us before May 1, 2015.
Thank you in advance for your prompt attention to this matter.
Sincerely,
s Johnson
Community Development Director
Cc: Frank J Spevacek, City Manager
Carla Triplet, Housing Coordinator
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ASSIGNMENT, ASSUMPTION, AND MODIFICATION AGREEMENT
This. ASSIGNMENT, ASSUMPTION, AND MODIFICATION AGREEMENT (this
"Agreement") is entered into by and between LA QUINTA HOUSING AUTHORITY, a public
body, corporate and politic ("Authority"), and HABITAT FOR HUMANITY OF THE
COACHELLA VALLEY, INC., a California nonprofit mutual benefit corporation ("Habitat"),
as of this day of , 2013, with reference to the following facts:
A. The former La Quinta Redevelopment Agency;
politic (the "Agency") and Habitat entered into.that certain `£for
on or about August 23, 2010, pursuant to which the Agencyprov
to Habitat; and Habitat developed two (2) single family%Zones
households at a sales price affordable to such householdss (the '`l
AHA has been amended on. two occasions ,Z 1'or :`'purposes c
development of five (5). additional single famif`es with ad
"Additional Homes"), and (ii) increasing the"', of Agency
first two (2) homes. The Original AHA, as modified b
hereinafter referred to as the "AHA,',' Unless otherwise e)
terms used herein shall have the meamnos ascribed thereto'
,a public body, corporate and
fable Housing Agreement dated
ded certain financial assistance
to be sold to income -qualified
iriginal AHA"). The Original
f O;, providing for Habitat's
iitiondf,Agency assistance (the
M
Issistance:to be allocated to the
foregoing .two amendments, is
,essly defined ll&' n all capitalized
the AHA.
B. In connection with the !AHA;f'Habitat an&Ihe:, `Agency executed that certain
Affordable Housing Agreement and Declarati
's on of%,Covenant, Conditions and Restrictions,
which was recorded in the;Official Records of therCo my of Riverside on August 30, 2010, as
Instrument No. 2010 04,14647 (the "Re2ulatory Agreement"1 f<.
C. As part of the 201 f 12 State budget bill, the California ,Legislature enacted and
the Governor signed, companion billsAB X1 26; and AB X1 27, providing for the dissolution of
each redeVelgpment agency mf the State'bt California unless the community that created the
redevelopment. agency eft Acted i&6rdinance coimm tting it to make certain payments through the
participation in a voluntary;, redevelopment program. On December 29, 2011, in California
Redevelopment Association',"",
Case No. 5194861, the California Supreme Court
upheld AB `X1,26 (the dissolution bi1.1), and struck down AB X1 27 (the "voluntary"
redevelopment`program bill). rPursuant to Health & Safety Code Section 34176(b)(2), on
January 17, 2012,`fAuthority adopted HA Resolution No.' HA 2012-002, electing to have all
rights, powers, assets; labilitiesAuties, and obligations associated with the housing activities of
the Agency transferred toAtliority as of February .1, 2012, the date of the dissolution of the
;.,
Agency. Administration of`fhe AHA and Regulatory Agreement is a housing activity of the
Agency that was transferred to Authority.
D. Pursuant to the AHA and Regulatory Agreement, (i) the financial assistance
provided to Habitat for Home 1 and Home 2 (the "Authority Assistance") will be transferred
and assigned to the Eligible Households purchasing Home 1 and Home 2, in the form of first
trust deed mortgages (collectively, the "Authority Mortgages"); (ii) Authority (as the successor
to the housing assets and activities of the Agency) agreed to assign to' Habitat Authority's right to
receive the payments on the Authority Mortgages; and (iii) Habitat agreed that the payments on
the Authority Mortgages would be the only consideration Habitat would receive from the
Eligible Households purchasing Home 1 and Home 2.
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E. Habitat incurred certain costs in acquiring the real property underlying Home 1
and Home 2 and in developing Home 1 and Home 2 (collectively, the ".Habitat Costs").*
Authority has determined that the Eligible Households purchasing Home 1 and Home 2 can
repay the Habitat Costs without causing their overall monthly and annual housing costs to exceed
an affordable housing cost.
F. The Eligible Households may be obtaining a downpayment loan from the County
of Riverside (the "County") that will be secured by a second trust deed. Habitat has determined,
that the least cumbersome manner of structuring repayment of the Habitat Costs is to allow the
Authority to include the Habitat Costs in the Authority Mortgages.
G. Habitat and Authority have determined to terminate the requirement for Habitat to
develop the Additional Homes.
H. Pursuant to the terms and conditions of this Agreement, Authority and Habitat
now wish to provide for (i) Authority's agreement that Habitat may sell Home 1 and Home 2 for
a purchase price in excess of the amount of the Authority Assistance allocated to each such
home; (ii) Habitat's ;grant of permission to Authority to include the amount of the Habitat Costs
in the Authority Mortgages, and (iii) Authority's assignment to Habitat of Authority's right to
receive monthly payments on the -Authority Mortgages, including that portion that is attributable
to the Habitat Costs, and (iv) the termination of the requirement for Habitat to develop the
Additional Homes.
NOW THEREFORE, in consideration of the foregoing Recitals, which are incorporated,
herein by this reference, and for other valuable consideration, the sufficiency of which is hereby
acknowledged by Authority and Habitat, Authority and Habitat hereby agree as follows:
1. Habitat's Purchase Price. Authority hereby agrees that Habitat may sell
Home 1 and Home 2 for a purchase price that exceeds the amount of the AuthorityAssistance
allocated to each such home; provided, however, that each such purchase price shall not exceed
the cumulative total of (i) the amount of the Authority Assistance allocated to the home, (ii) the
amount of the Habitat Costs allocated to the home, and (iii) the amount of the downpayment
assistance loan provided by the County (if any) to the Eligible Household, purchasing the home.
2. Habitat Grant of Permission. Habitat hereby grants permission to the
Authority to include the Habitat Costs in the Authority Mortgages, including, without limitation,
the right to take back a note evidencing such costs from the Eligible Households purchasing
Home 1 and Home 2 and the right -to require said Eligible Households. to sign a deed of trust
securing repayment of the Habitat Costs.
3. Authority Assignment. Subject to Habitat's continued compliance with
the AHA, the Regulatory Agreement, and this Agreement, Authority hereby assigns to Habitat
Authority's right to receive "Monthly Installment Payments" from the Eligible Households that
purchase Home 1 and Home 2, as set forth in Section 3 of the Promissory Note Secured by Deed
of Trust executed or to be executed by each such Eligible Household (collectively, the
"Authority Notes"), and Habitat hereby accepts such assignment and agrees to timely comply
with all of the terms and covenants of the AHA, the Regulatory Agreement, and this Agreement.
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Habitat hereby acknowledges and agrees that (i) upon any default of Habitat under the AHA, the
Regulatory Agreement, or this Agreement which has not been cured within thirty (30) days after
receipt of written notice by Authority, Authority's assignment to Habitat pursuant to this Section
3 may be terminated by Authority; and (ii) the Authority's assignment effected pursuant to this.
Section 3 shall be limited to the Authority's right to receive Monthly Installment Payments, and
nothing herein shall be construed as an assignment by Authority of any other rights of Authority
under the Authority Notes, including, without limitation, Authority's right to receive payments
required to be paid by an Eligible Household pursuant to Section 4 of the applicable Authority
Note. Notwithstanding the foregoing, however, in the event the Authority terminates the
assignment granted hereunder, Habitat shall nevertheless continue to have the right to collect
from the Eligible Households that purchase Home 1 and Home 2 the portion of the Monthly.
Installment Payments attributable to the Habitat Costs. In such event, Habitat and Authority
agree to'cooperate to implement such payment structure.
4. Habitat Use of Payments. Notwithstanding anything herein, in the AHA,
or in the Regulatory Agreement to the contrary, until such time as Habitat has. completed
construction of all of the Homes required to be constructed by Habitat pursuant to the AHA (e.g.,
Homes 1-7), all portions of the payments Habitat receives under the Authority Notes that are
allocable to the Authority Assistance shall be retained by Habitat in a separate fund and utilized
by Habitat solely for development of affordable housing within the City of La Quinta.
5. Effect of Acceleration, Foreclosure, and/or Payment of Liquidated
Damages. In the event that Authority' accelerates the repayment under an Authority Note,
forecloses the deed of trust securing repayment under an Authority Note, and/or receives
liquidated damages from an Eligible Household in connection with said Eligible Household's
sale of Home 1 or Home 2 (any of the foregoing, a "Default Event"), Authority shall apply the
proceeds Authority receives with respect to the Default Event, less all costs Authority incurs in
connection with the Default Event (including, without limitation, the costs of any enforcement
actions taken in advance of the Default Event), as a mortgage assistance loan to an Eligible
Buyer purchasing a home from Habitat in the City of. La Quinta.
6. Miscellaneous. This Agreement shall be binding on and inure to the
benefit of the parties and their respective successors and assigns. The paragraph headings of this
Agreement are for convenient reference only and shall not be used in interpreting this
Agreement.
7. California Law. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of California, without regard to conflict of law
principles.
8. Counterparts. This Agreement may be executed in counterparts, each of
which, when this Agreement has been signed by the parties hereto, shall be deemed an original,
and such counterparts shall constitute one and the same instrument.
9. Severability. If any term, provision, condition or covenant of this
Agreement or its application to any party or circumstances shall be held, to any extent, invalid or
unenforceable, the remainder of this Agreement, or the application of the term, provision,
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condition or covenant to persons or circumstances other than those as to whom or which it is
held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the
fullest extent permitted by law and consistent with the mutual intent of the parties as expressed
herein.
10. Attorney's Fees. In the event of any action between Authority and
Habitat seeking enforcement of any of the terms and conditions to this agreement, the prevailing
party in such action shall be awarded, in addition to damages, injunctive or other relief, its
reasonable costs and expenses, including without limitation its expert witness fees and
reasonable attorney's fees.
[End — signature page follows]
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