2011 Coral Mountain Partners - Affordable HousingDISPOSITION AND DEVELOPMENT AGREEMENT
By and Between
LA QUINTA REDEVELOPMENT AGENCY
and
CORAL MOUNTAIN PARTNERS, L.P.
Dated as of January 4, 2011
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1 1 11838 07 001 /0411 1
TABLE OF CONTENTS
Page
1.
DEFINITIONS AND INTERPRETATION .............................................
I....................... I
1.1 Defined Terms................................................................................................1
1.2 Singular and Plural Terms..............................................................................7
1.3 Accounting Principles.....................................................................................7
1.4 References and Other Terms...........................................................................7
1.5 Attachments Incorporated...............................................................................7
2.
PARTIES..........................................................................................................................
8
2.1 Agency............................................................................................................
8
2.2 Developer..................................................................................................I.....8
3.
SCHEDULE OF PERFORMANCE.................................................................................8
4.
LAND USE ENTITLEMENTS........................................................................................8
5.
PERMISSION TO ENTER PROPERTY.........................................................................8
6.
FINANCING PLAN FOR THE PROJECT......................................................................9
6.1 Financing Plan...............................................................................I................9
6.2 Agency Loan ...................................................................................................9
6.3 Financing Applications.................................................................................12
6.4 Project Budget...............................................................................................12
6.5 Final Project Budget.....................................................................................12
6.6 Developer Efforts to Minimize Agency Cost...............................................12
6.7 Financing Commitments...............................................................................13
6.8 Developer Right to Terminate......................................................................13
6.9 Agency Right to Terminate...........................................................................13
6.10 Developer Fee...............................................................................................14
6.11 Cost Savings Obligation............................................................I..................14
7.
GROUND LEASE OF PROPERTY..............................................................................15
7.1 Agreement.....................................................................................................15
7.2 Conditions for Agency's Benefit..................................................................15
7.3 Condition for Developer's Benefit................................................................17
7.4 Developer Right to Terminate......................................................I...............19
7.5 Agency Right to Terminate...........................................................................19
7.6 Waiver of Conditions....................................................................................19
7.7"AS-IS".........................................................................................................19
7.8 Developer Right to Terminate......................................................................19
8.
PROPERTY CLOSING; ESCROW EXPENSES..........................................................20
8.1 Property Closing
20
8.2 Expenses of Developer.................................................................................
21
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Page
8.3
Instruction to Escrow Holder Regarding Waiver of Transfer Taxes and
RecordingFees..............................................................................................21
8.4
Broker's Commissions..................................................................................21
9. OTHER
ESCROW INSTRUCTIONS............................................................................21
9.1
Funds in Escrow............................................................................................21
9.2
Failure to Close.............................................................................................21
9.3
Amendments.................................................................................................22
9.4
Notices..........................................................................................................22
9.5
Liability.........................................................................................................22
10. DEVELOPMENT OF THE PROJECT..........................................................................22
10.1
Scope of Development..................................................................................22
10.2
Site Development Permit..............................................................................22
10.3
Review and Approval of Plans, Drawings, and Related Documents ............
22
10.4
Cost of Development.. ..................................................................................
23
10.5
Indemnity......................................................................................................
23
10.6
Insurance Requirements................................................................................23
10.7
Remedies for Defaults Re: Insurance...........................................................26
10.8
Obligation to Repair and Restore Damage Due to Casualty Covered by
Insurance.......................................................................................................26
10.9
City and Other Governmental Agency Permits............................................26
10.10
Rights of Access...........................................................................................27
10.11
Compliance with Laws; Compliance with Prevailing Wage Laws ..............27
10.12
Anti-Discrimination......................................................................................30
10.13
Taxes and Assessments.................................................................................30
10.14
Right of the Agency to Satisfy Other Liens on the Property(s)....................30
10.15
Nonliability of Agency.................................................................................30
10.16
Release of Construction Covenants..............................................................31
11. AFFORDABILITY
COVENANTS................................................................................32
12. GENERAL
REPRESENTATIONS, WARRANTIES AND COVENANTS.................32
12.1
Developer's Formation, Qualification and Compliance...............................32
12.2
Litigation.......................................................................................................32
12.3
Developer's Covenants Regarding Adjacent Property.................................32
12.4
Agency..........................................................................................................
32
13. DEFAULTS
AND REMEDIES.....................................................................................33
13.1
Event of Default............................................................................................33
13.2
No Waiver.....................................................................................................33
13.3
Rights and Remedies are Cumulative...........................................................33
13.4
Attorneys' Fees.............................................................................................33
13.5
Reimbursement of Agency...........................................................................34
14. NOTICES........................................................................................................................34
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Page
15. ASSIGNMENT...............................................................................................................35
15.1
Generally Prohibited.....................................................................................35
15.2
Release of Developer....................................................................................
36
16. ADMINISTRATION
......................................................................................................36
17. MISCELLANEOUS
.......................................................................................................36
17.1
Counterparts..................................................................................................36
17.2
Prior Agreements; Amendments...................................................................36
17.3
Governing Law.............................................................................................
36
17.4
Acceptance of Service of Process.................................................................36
17.5
Severability of Provisions .............................................................................36
17.6
Headings.......................................................................................................36
17.7
Time of the Essence......................................................................................
36
17.8
Conflict of Interest........................................................................................37
17.9
Warranty Against Payment of Consideration...............................................37
17.10
Nonliability of Agency Officials and Employees.........................................37
17.11
Force Majeure ...............................................................................................37
17.12
Nondiscrimination Covenants.......................................................................37
17.13
Consents and Approvals...............................................................................39
List of Attachments
Legal Description and Depiction of the Property
2 -
Schedule of Performance
3 -
Scope of Development
4 -
Form of Assignment of Plans and Contract
5 -
Form of Disbursement Request
6 -
Form of Agency Note
7 -
Form of Agency Deed of Trust
8 -
Project Budget
9 -
Form of Ground Lease
10 -
Form of Agency Regulatory Agreement
1 1 -
Form of Notice of Affordability
12 -
Form of Release of Construction Covenants
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1111838.07 a01/04A I
DISPOSITION AND DEVELOPMENT AGREEMENT
THIS DISPOSITION AND DEVELOPMENT AGREEMENT (the "Agreement") is
made and entered into as of January 4, 2011 (the "Effective Date"), by and between the
LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic
(the "Agency"), and CORAL MOUNTAIN PARTNERS, L.P., a California limited partnership
(the "Developer"), with reference to the following:
RECITALS
A. Agency owns fee title to that certain real property located southeast of the
intersection of Dune Palms Road and Highway 111, in the City of La Quinta, County of
Riverside, State of California (the "Property').
B. Pursuant to the California Community Redevelopment Law, Agency is required
to expend a certain portion of the taxes which are allocated to it pursuant to Health and Safety
Code Section 33670 for the purposes of increasing, improving, and preserving the community's
supply of low- and moderate -income housing available at affordable housing costs (the "Housing
Set -Aside Funds").
C. The Parties intend, in this Agreement, to set forth the terms and conditions
relating to (i) the Agency's lease of the Property to Developer, (ii) Developer's design,
construction, and operation on the Property of an affordable rental housing development, and
Developer's installation of certain public improvements, and (iii) the Agency's provision of a
loan to Developer to assist Developer to fulfill its obligations hereunder.
D. Agency's lease of the Property to Developer and provision of financial assistance
to the Developer, and Developer's design, construction, and operation thereon of an affordable
rental housing development pursuant to the terms of this Agreement are in the vital and best
interest of Agency and the City of La Quinta, and the health, safety, morals and welfare of its
residents, and in accord with the public purposes and provisions of applicable federal, state and
local laws and requirements under which the redevelopment of the Property has been undertaken.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and
conditions herein contained, Agency and Developer hereto agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. As used in this Agreement, capitalized terms are defined where
first used or as set forth in this Section 1.L Capitalized terms used in an attachment attached
hereto and not defined therein shall also have the meanings set forth in this Section I.I.
"Affiliate" means any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Developer which, if
Developer is a partnership or limited liability company, shall include each of the constituent
members or partners, respectively thereof. The term "control" as used in the immediately
preceding sentence, means, with respect to a person that is a corporation, the right to the
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exercise, directly or indirectly, of more than fifty percent (50%) of the voting rights attributable
to the shares of the controlled corporation, and, with respect to a person that is not a corporation,
the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled person.
"Agency" means the La Quinta Redevelopment Agency, a public body, corporate and
politic.
"Agency Deed of Trust" means a deed of trust encumbering Developer's leasehold
interest in the Property, substantially in the form attached hereto and incorporated herein as
Attachment No. 7, to be executed by Developer pursuant to Section 6.2 in order to secure
repayment of the Agency Note.
"Agency Loan" has the meaning set forth in Section 6.2.
"Agency Note" means a promissory note substantially in the form attached hereto and
incorporated herein as Attachment No. 6, to be executed by Developer in favor of Agency to
evidence the obligation of Developer to repay the Agency Loan.
"Agency Regulatory Agreement" means a regulatory agreement substantially in the
form attached hereto and incorporated herein as Attachment No. 10, which will establish certain
restrictive covenants against the Property.
"Agency Title Policy" has the meaning set forth in Section 7.2(r).
"Building Permit" means all permits issued by City and required for commencement of
construction of the Project.
"Business Day" means a weekday on which La Quinta City Hall is open to conduct the
public's business.
"City" means the City of La Quinta, California.
"Construction Contract" has the meaning set forth in Section 7.2(d).
"Construction Lender" means the lender that provides construction financing for the
Project. If the Project is financed through issuance of the Tax -Exempt Bonds, then Construction
Lender shall be understood to mean the institution or institutions that hold such Tax -Exempt
Bonds through the construction period (e.g., until a "conversion date"). The Construction Lender
may or may not also be the Take -Out Lender. The Construction Lender shall be an Institutional
Lender.
"Construction Loan" means the construction loan for the Project secured by the
Construction Loan Security Documents. If the Project is financed through issuance of the Tax -
Exempt Bonds, then Construction Loan shall be understood to mean the proceeds of such Tax -
Exempt Bonds.
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"Construction Loan Security Loan Documents" means the documents and instruments
required by the Construction Lender to secure the Construction Loan.
"Construction Portion of Agency Loan" means the portion of the Agency Loan to be
disbursed to Developer to assist Developer to construct the Project, in an amount to be set forth
in the Project Budget approved by the Agency.
"County" means the County of Riverside, California.
"Conversion Date" has the meaning set forth in the Construction Loan Security
Documents, or, if such term is not defined therein, means the date the Construction Loan
converts from construction loan to permanent loan.
"Developer" has the meaning set forth in the opening paragraph of this Agreement.
"Developer Title Policy" has the meaning set forth in Section 7.3(h).
"Escrow" means the escrow through which the Property Closing is conducted.
"Escrow Holder" means Nations Title Company, with its offices located at 78060 Calle
Estado, La Quinta, CA 92253.
"Event of Default" has the meaning set forth in Section 13.1.
"Executive Director" means the Executive Director of Agency or his or her designee.
"Final Construction Documents" means the final plans, drawings and specifications
upon which the Building Permit is issued.
"General Contractor" has the meaning set forth in Section 7.2(c).
"Governmental Requirements" means all laws, ordinances, statutes, codes, rules,
regulations, orders and decrees, of the United States, the State of California, the County of
Riverside, the City and of any other political subdivision, agency or instrumentality exercising
jurisdiction over Agency, Developer, or the Project.
"Ground Lease" means a ground lease substantially in the form attached hereto and
incorporated herein as Attachment No. 9, to be executed by Developer and Agency to set forth
the terms and conditions for Agency's lease of the Property to Developer.
"Hazardous Materials" means any substance, material, or waste which is or becomes
regulated by any local governmental authority, the State of California, or the United States
Government, including, but not limited to, any material or substance which is (i) defined as a
"hazardous waste", "acutely hazardous waste", "extremely hazardous waste", or "restricted
hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of
the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control
Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and
Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account
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Act), (iii) defined as a "hazardous material", "hazardous substance", or "hazardous waste" under
Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under
Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground
Storage of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) polychlorinated byphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Code of Regulations, Chapter 20, (ix) designated as
"hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section
1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), (xi)
defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., (xii) methyl -tertiary
butyl ether, (xiii) perchlorate or (xiv) any other substance, whether in the form of a solid, liquid,
gas or any other form whatsoever, which by any governmental requirements either requires
special handling in its use, transportation, generation, collection, storage, handling, treatment or
disposal, or is defined as "hazardous" or harmful to the environment. For purposes hereof,
"Hazardous Materials" excludes materials and substances in quantities as are commonly used in
the construction and operation of an apartment complex, provided that such materials and
substances are used in accordance with all applicable laws.
"Housing Development" means an affordable rental housing development consisting of
one hundred seventy-six (176) residential dwelling units and all required on -site improvements
that will remain privately owned and that are necessary to serve the Housing Development.
"Housing Development Architect" means John Vuksic, of Prest Vuksic Architects, or
such other architect or architectural firm as may be approved by the Executive Director.
"Housing Development Budget" means the preliminary budget materials attached
hereto and incorporated herein as Attachment No. 8.
"Indemnitees" means the Agency, City, and their respective officers, officials, members,
employees, representatives, agents and volunteers.
"Institutional Lender" means any of the following institutions having assets or deposits
in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a California
chartered bank; a bank created and operated under and pursuant to the laws of the United States
of America; an "incorporated admitted insurer" (as that term is used in Section 1100.1 of the
California Insurance Code); a "foreign (other state) bank" (as that term is defined in
Section 1700(1) of the California Financial Code); a federal savings and loan association (Cal.
Fin. Code Section 8600); a commercial finance lender (within the meaning of Sections 2600 et
seq. of the California Financial Code); a "foreign (other nation) bank" provided it is licensed to
maintain an office in California, is licensed or otherwise authorized by another state to maintain
an agency or branch office in that state, or maintains a federal agency or federal branch in any
state (Section 1716 of the California Financial Code); a bank holding company or a subsidiary of
a bank holding company which is not a bank (Section 3707 of the California Financial Code); a
trust company, savings and loan association, insurance company, investment banker; college or
university; pension or retirement fund or system, either governmental or private, or any pension
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or retirement fund or system of which any of the foregoing shall be trustee, provided the same be
organized under the laws of the United States or of any state thereof, and a Real Estate
Investment Trust, as defined in Section 856 of the Internal Revenue Code of 1986, as amended,
provided such trust is listed on either the American Stock Exchange or the New York Stock
Exchange. Citibank, N.A. is hereby deemed to be an Institutional Lender, but has not yet been
selected by Developer as the Construction Lender or Take -Out Lender.
"Investor" means the purchaser of the Tax Credits.
"Land Use Entitlements" has the meaning set forth in Section 4.
"Management Agreement" has the meaning set forth in Section 7.2(n).
"Memorandum of Ground Lease" means the Memorandum of Unrecorded Ground
Lease to record in the Official Records pursuant to Section 1.4 of the Ground Lease.
"Notice of Affordability" means a Notice of Affordability Restrictions on Transfer of
Property substantially in the form attached hereto and incorporated herein as Attachment No. 11,
to be executed by Agency and Developer and recorded in the Official Records to notify members
of the public regarding the affordability restrictions for the Project.
"Notices" has the meaning set forth in Section 14 hereof.
"Official Records" means the Official Records of the County.
"Outside Closing Date" means September 30, 2012.
"Permitted Encumbrances" means the Construction Loan Security Documents and
such other exceptions to title approved by the Executive Director.
"Post -Construction Portion of Agency Loan" means the portion of the Agency Loan to
be disbursed by Agency to pay down the Construction Loan at the Conversion Date, in an
amount to be set forth in the Project Budget approved by the Agency.
"Predevelopment Portion of Agency Loan" means the portion of the Agency Loan to
be disbursed to Developer to pay for predevelopment expenses incurred in connection with the
Housing Development, in an amount not to exceed Two Million Four Hundred Twenty -One
Thousand Nine Hundred Seventy -Eight Dollars ($2,421,978.).
"Project" means the Developer's construction of the Housing Development and Public
Improvements in accordance with this Agreement, including, without limitation, in accordance
with the Scope of Development and the Final Construction Documents.
"Project Budget" shall mean that certain budget attached hereto and incorporated herein
as Attachment No. 8.
"Project Costs" means all costs of any nature incurred in connection with the planning,
design, and development of the Project.
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"Project Documents" means, collectively, this Agreement, the Ground Lease, the
Agency Note, the Agency Deed of Trust, the Agency Regulatory Agreement, the Notice of
Affordability, the Memorandum of Ground Lease, and any other agreement, document or
instrument that Developer and Agency enter into pursuant to this Agreement or in order to
effectuate the purposes of this Agreement.
"Project Financing" has the meaning set forth in Section 6.1.
"Project Financing Disbursement Agreement" means an agreement among the
Agency, Developer, Construction Lender, and Investor on the order of disbursement of the
Project Financing and the method and manner of disbursement of the Agency Loan.
"Property" means that certain real property legally described and depicted in
Attachment No. 1, which is attached hereto and incorporated herein by this reference.
"Property Closing" means closing of the Project Financing (except that the
Predevelopment Portion of Agency Loan may be disbursed prior to the Property Closing),
execution of the Ground Lease and delivery of possession of the Property to Developer pursuant
thereto.
"Public Improvements" means all on- and off -site improvements that (i) are required to
be constructed to serve the Housing Development and (ii) will be dedicated to the City of La
Quinta upon Developer's completion thereof. The Public Improvements are described in the
Scope of Development.
"Public Improvements Contract" has the meaning set forth in Section 7.2(f).
"Public Improvements Contractor" has the meaning set forth in Section 7.2(f).
"Redevelopment Plan" means the Redevelopment Plan for Project Area No. 2, which
was approved by the City Council of City by Ordinance No. 139, adopted on or about May 16,
1989, as the same has been amended from time to time.
"Release of Construction Covenants" means a release document substantially in the
form attached hereto and incorporated herein as Attachment No. 12, to be executed by Agency
and recorded in the Official Records upon Developer's completion of the Project, as described in
Section 10.16.
"Request for Notice" has the meaning set forth in Section 7.2(p)
"Schedule of Performance" means the Schedule of Performance attached hereto and
incorporated herein as Attachment No. 2.
"Scope of Development" means the Scope of Development attached hereto and
incorporated herein as Attachment No. 3.
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"Sources and Uses of Funds Statement" means the Sources and Uses of Funds
Statement attached to the Project Budget, as such statement may be amended pursuant to this
Agreement.
"Take -Out Lender" means the lending institution that makes the Take -Out Loan. If the
Project is financed through issuance of Tax -Exempt Bonds, then Take -Out Lender shall be
understood to mean the institution that holds or institutions that hold such Tax -Exempt Bonds
from and after the construction period (e.g, from and after the Conversion Date). The Take -Out
Lender may or may not also be the Construction Lender. The Take -Out Lender shall be an
Institutional Lender.
"Take -Out Loan" means the long-term loan made by the Take -Out Lender to Developer
in order to take out the Construction Loan. If the Project is financed through issuance of Tax -
Exempt Bonds, then Take -Out Loan shall be understood to mean the proceeds of such Tax -
Exempt Bonds.
"Tax Credits" has the meaning set forth in Section 6.1(b).
"Tax Credit Funds" has the meaning set forth in Section 7.2(b)(ii).
"Tax -Exempt Bonds" has the meaning set forth in Section 6.1(a).
"Title Company" means First American Title Insurance Company or such other title
insurance company as may be agreed to by Developer and Executive Director.
1.2 Singular and Plural Terms. Any defined term used in the plural in this Agreement
shall refer to all members of the relevant class and any defined term used in the singular shall
refer to any of the members of the relevant class.
1.3 Accounting Principles. Any accounting term used and not specifically defined in
this Agreement shall be construed, and all financial data required to be submitted under this
Agreement shall be prepared, in conformity with generally accepted accounting principles
applied on a consistent basis or in accordance with such other principles or methods as are
reasonably acceptable to Agency.
1.4 References and Other Terms. References herein to Articles, Sections and
Attachments shall be construed as references to this Agreement unless a different document is
named. References to subparagraphs shall be construed as references to the same Section in
which the reference appears. The terms "including" and "include" mean "including (include)
without limitation."
1.5 Attachments Incorporated. All attachments to this Agreement, as now existing
and as the same may from time to time be modified, are incorporated herein by this reference.
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2. PARTIES
2.1 Agency. Agency is the La Quinta Redevelopment Agency and any successor to
its rights, powers and responsibilities. The principal offices of the Agency are located at 78-495
Calle Tampico, La Quinta, California 92253.
2.2 Developer. Developer is Coral Mountain Partners, L.P., a California limited
partnership and any successor to its rights, powers, and responsibilities. The principal offices of
the Developer are located at 46753 Adams Street, La Quinta, CA 92253.
3. SCHEDULE OF PERFORMANCE
The Schedule of Performance sets forth the times by which the parties are required to
perform certain obligations under this Agreement.
4. LAND USE ENTITLEMENTS
Developer shall be responsible for processing through the City any and all land use
entitlements necessary to allow Developer to develop the Property in the manner required by this
Agreement including, without limitation, a site development permit (collectively, the "Land Use
Entitlements"). Agency, without any cost or expense to the Agency other than as may be
expressly provided in the Project Budget, agrees to reasonably assist Developer to secure said
Land Use Entitlements.
5. PERMISSION TO ENTER PROPERTY
Agency shall permit Developer and Developer's representatives and agents to enter onto
the Property commencing on the Effective Date and continuing for a period of ninety (90) days
thereafter ("Due Diligence Period"), for purposes of examining, inspecting and investigating the
Property, including any foundations, soil, subsurface soils, drainage, seismic and other
geological and topographical matters, location of asbestos, toxic substances, Hazardous
Materials, if any, and, at Developer's sole and absolute discretion, determining whether the
Property is acceptable to Developer; provided, however, in no event shall Developer conduct any
intrusive testing procedures on the Property without the prior written consent of Agency, which
consent may not be unreasonably withheld. Developer and Developer's representatives and
agents shall also be entitled to enter onto the Property to conduct additional examinations and
investigations at any time after expiration of the Due Diligence Period and through the Property
Closing upon the notification and conditions described below. Developer shall provide to
Agency a copy of all reports, studies and test results prepared by Developer's consultants.
Developer shall notify Agency, in writing, at least twenty-four (24) hours prior to any entry by
Developer or Developer's representatives on the Property. Agency shall have the right, but not
the obligation, to accompany the Developer during such investigations. As a condition of such
entry, Developer shall (i) conduct all work or studies in a diligent, expeditious, and safe manner
and not allow any dangerous or hazardous conditions to occur on the Property during or after the
investigation, (ii) comply with all applicable laws and governmental regulations; (iii) keep the
Property free and clear of all materialmen's liens, lis pendens and other liens arising out of the
entry and work performed under this paragraph; (iv) maintain or assure maintenance of workers'
compensation insurance (or state approved self-insurance) on all persons entering the property in
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the amounts required by the State of California; (v) provide to Agency prior to initial entry a
certificate of insurance evidencing that Developer and/or the persons entering the Property have
procured and have in effect commercial general liability insurance that satisfies the requirements
set forth in Section 10.6 hereof. Any preliminary work undertaken pursuant to this Section 5
shall be undertaken only after securing any necessary permits from the appropriate governmental
agencies. Developer shall, in a timely manner, repair any and all damage to the Property caused
by such inspections or investigations and shall indemnify and defend the Indemnitees for any
liability arising from the entries of Developer and its representatives and agents on the Property
pursuant to this Section 5. Notwithstanding Developer's right to enter the Property after
expiration of the Due Diligence Period pursuant to the second sentence in this Section 5,
Developer shall notify Agency in writing on or before the expiration of the Due Diligence Period
of Developer's approval or disapproval of the physical and environmental condition of the
Property and Developer's investigations with respect thereto. Developer's disapproval shall
constitute Developer's election to terminate this Agreement and cancel the Escrow. Developer's
failure to deliver notice to Agency on or before the expiration of the Due Diligence Period shall
be conclusively deemed Developer's approval thereof and Developer shall be deemed to have
waived its termination/cancellation right set forth in this Section 5.
6. FINANCING PLAN FOR THE PROJECT
6.1 Financing Plan. It is contemplated that Developer will finance the Project (the
"Project Financing") through a combination of:
(a) Tax -Exempt Bonds. Tax-exempt multifamily housing mortgage revenue
bonds to be issued by Agency (the "Tax -Exempt Bonds");
(b) Tax Credits. Developer equity, consisting of equity raised by the sale to
reputable investors of state and/or federal low-income housing credit consistent with the Tax -
Exempt Bonds and obtained pursuant to 26 U.S.C. §42 (the "Tax Credits"); and
(c) Agency Loan. The Agency Loan, as more particularly provided in Section
6.2 below.
6.2 AgencyLoan. Subject to the terms and conditions of this Agreement, Agency
agrees to make a loan to Developer in the principal amount of up to Twenty -Nine Million
Dollars ($29,000,000.00) (the "Agency Loan") to be used to fund construction of the Housing
Development. The Agency Loan shall be evidenced by the Agency Note and shall be secured by
the Agency Deed of Trust. No portion of the Predevelopment Portion of the Agency Loan shall
be disbursed to Developer until the conditions set forth in Section 6.2(a) below have been
satisfied.
(a) Conditions Precedent to Disbursement of Predevelopment Portion of
Agency Loan. Agency's obligation to disburse any portion of the Predevelopment Portion of
Agency Loan to Developer shall be subject to satisfaction of the following conditions:
(i) Agency Note. Developer shall have duly executed the Agency
Note and delivered it to Agency or the Escrow Holder.
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(ii) Total Project Cost. Nothing shall have come to the attention of
Developer and/or Agency to indicate that the Project cannot be completed at a
cost consistent with the Project Budget and, if there has been such an indication,
Developer has provided evidence, reasonably satisfactory to the Executive
Director, of the availability of funding sources other than the Agency to complete
the Project. If Developer becomes aware of any such information, Developer
shall promptly give notice thereof to Agency.
(iii) Organizational Documents. The Executive Director has received
and approved a copy of such portions of the organizational documents (e.g.,
partnership agreement) of Developer or Developer's successor -in -interest as the
Executive Director deems reasonably necessary to document the power and
authority of the organization to perform its obligations under this Agreement.
Developer has also made full disclosure to Agency of the names and addresses of
all persons and entities that have a beneficial interest in Developer.
(iv) Representations and Warranties. The representations of Developer
contained in this Agreement shall be correct in all material respects as of the date
of the disbursement as though made on and as of that date and, if requested by the
Executive Director, Agency shall have received a certificate to that effect signed
by Developer.
(v) Insurance. Developer shall have submitted to Agency and Agency
shall have approved Developer's evidence of the liability insurance required
pursuant to Section 10.6 hereof.
(vi) No Default. No Event of Default by Developer shall then exist,
and no event shall then exist which, with the giving of notice or the passage of
time or both, would constitute an Event of Default by Developer and, if requested
by Executive Director, Agency shall have received a certificate to that effect
signed by Developer.
(b) Conditions Precedent to Disbursement of Construction Portion of Agencv
Loan. Agency's obligation to disburse any portion of the Construction Portion of Agency Loan
to Developer shall be subject to satisfaction of the following conditions:
(i) Conditions to Predevelopment Portion of Agency Loan. All of the
conditions precedent set forth in Section6.2(a) to Agency's obligation to disburse
portions of the Predevelopment Portion of Agency Loan shall have been satisfied
or waived by the Agency.
(ii) Conditions to Ground Lease. All of the conditions precedent set
forth in Section 7.2 to Agency's obligation to ground lease the Property to
Developer shall have been satisfied, or waived by the Agency.
(iii) Total Project Cost. Nothing shall have come to the attention of
Developer and/or Agency to indicate that the Project cannot be completed at a
cost consistent with the Project Budget and, if there has been such an indication,
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Developer has provided evidence, reasonably satisfactory to Executive Director,
of the availability of funding sources other than the Agency to complete the
Project. If Developer becomes aware of any such information, Developer shall
promptly give notice thereof to Agency.
(iv) Project Financing Disbursement Agreement. The Project
Financing Disbursement Agreement shall have been fully executed, and shall
provide for disbursement of a portion of the Construction Loan, as shown on the
Financing Plan, to fund the Public Improvements and Housing Development prior
to the disbursement of any portion of the Construction Portion of Agency Loan.
(v) Representations and Warranties. The representations of Developer
contained in this Agreement shall be correct in all material respects as of the date
of the disbursement as though made on and as of that date and, if requested by the
Executive Director, Agency shall have received a certificate to that effect signed
by Developer.
(vi) No Default. No Event of Default by Developer shall then exist,
and no event shall then exist which, with the giving of notice or the passage of
time or both, would constitute an Event of Default by Developer and, if requested
by Executive Director, Agency shall have received a certificate to that effect
signed by Developer.
(c) Disbursement Requests. The Predevelopment Portion of Agency Loan
and Construction Portion of Agency Loan shall be disbursed on a line -item by line -item basis in
accordance with the Project Budget and the Project Financing Disbursement Agreement. In no
event shall Agency have any obligation to disburse any amount for any item in excess of the
amount allocated to such item in the Project Budget, unless approved, in writing, by the
Executive Director; provided, however, that upon completion and payment of all work for a
particular line item, Developer may move any amounts remaining in such line to any other line
item where payment for work has not been completed, and no Agency consent shall be required
therefor. Disbursement shall be made only upon Developer's written request in the form
attached hereto as Attachment No. 5 (a "Disbursement Request") showing all costs that
Developer intends to fund with such disbursement, itemized in such detail as the Executive
Director may reasonably require, accompanied in each case by (a) invoices and lien releases (if
such work could give rise to mechanic's or materialmen's liens) reasonably satisfactory to the
Executive Director, including in any event conditional lien releases executed by each contractor
and subcontractor who has received any payment for work performed, and (b) all other
documents and information reasonably required by the Executive Director. Agency agrees to
fund each Disbursement Request within twenty-one (21) days after Agency's receipt of the
Disbursement Request in completed form with all required supporting documentation, and
determination by Agency that all of the conditions to disbursement set forth in this Section 6.2(c)
have been satisfied, or waived by Agency.
(d) Manner of Disbursement. Agency may make any disbursement (i) by
check payable to Developer; (ii) on a voucher basis; (iii) by check payable jointly to Developer
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and any contractor, subcontractor other claimant; or (iv) by any other means reasonably selected
by the Executive Director.
(e) Post -Construction Portion of Agency Loan. Agency shall disburse to
Escrow Holder the Post -Construction Portion of Agency Loan and shall instruct Escrow Holder
to disburse the same to the Construction Lender to pay down the Construction Loan at the
Conversion Date. Upon the written request of Developer, Agency shall provide to Developer an
update to the Source of Funds Letter on or after the Conversion Date.
(f) Waiver of Conditions. The conditions set forth in Sections 6.2(a) and
6.2(b) are for Agency's benefit only and the Executive Director may waive all or any part of
such rights by written notice to Developer.
6.3 Financing Applications. Developer shall pursue the Project Financing by taking
all of the following actions:
(a) CDLAC Application. Developer shall prepare for filing a complete
application to the California Debt Limit Allocation Committee ("CDLAC") for an allocation for
the Tax -Exempt Bonds by the time required in the Schedule of Performance.
(b) Tax -Exempt Bonds Placement. Developer shall apply to reputable
institutional lenders for the private placement of the Tax Exempt Bonds in order to provide
Construction and Take -Out financing for the Project; and
(c) Investor Selection. Developer shall apply to reputable institutional
investors to act as the Investor.
6.4 Project Budget. The Project Budget includes all of the following: (i) a detailed
budget; (ii) a Sources and Uses of Funds Statement; (iii) a Cash Flow Projection; and (iv) a First
Year Operating Budget. Until the Property Closing, Developer, if, as and when additional
information becomes available, shall promptly revise the documents comprising the Project
Budget to reflect the best information then available to Developer, and shall submit the proposed
revisions to the Executive Director for review and approval.
6.5 Final Project Budget. Prior to the Property Closing, Agency, Developer,
Construction Lender and Investor shall agree on the final project budget and, once approved,
such final project budget shall replace the Project Budget attached in Attachment No. 8 and shall
thereafter be the Project Budget.
6.6 Developer Efforts to Minimize Agency Cost. In order to minimize the principal
amount of the Agency Loan, Developer agrees to use commercially reasonable efforts to finance
the Project in the manner that yields the largest part possible of the costs to develop the Housing
Development from sources other than the Agency Loan. Accordingly, Developer shall (i) make
commercially reasonable efforts to obtain an allocation for the long-term Tax -Exempt Bonds in
principal amount consistent with the Sources of Uses of Funds Statement; (ii) make
commercially reasonable efforts to obtain the Tax Credits in principal amount consistent with the
Sources and Uses of Funds Statement and to sell such Tax Credits to a reputable institutional
investor at the highest price and on the best terms reasonably possible, assuming typical
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corporate guaranties and payment of developer fee in accordance with the approved Project
Budget; and (iii) make commercially reasonable efforts to obtain the largest Take -Out Loan
reasonably supportable by the Project.
6.7 Financing Commitments. Not later than the time provided in the Schedule of
Performance, Developer shall submit to Executive Director for approval (i) preliminary
commitments for the Project Financing, including, without limitation, bids received from
qualified parties for the Tax Credits as the result of a competitive bidding process; and (ii) a draft
Project Financing Disbursement Agreement acceptable to Developer, Construction Lender and
Investor.
6.8 Developer Right to Terminate.
(a) Failure to Obtain Allocation. Prior to the Property Closing, Developer, if
it is not then in material default under this Agreement (subject to the notice and cure provisions
of Section 13.1), may terminate this Agreement by giving thirty (30) days' written notice to
Agency if, despite having made commercially reasonable efforts and by the time provided in the
Schedule of Performance, it has been unable to obtain from CDLAC an allocation for Tax -
Exempt Bonds under the application filed pursuant to Section 6.3, above.
(b) Failure to Obtain Other Project Financing. Prior to the Property Closing,
Developer, if it is not then in material default under this Agreement (subject to the notice and
cure provisions of Section 13.1), may terminate this Agreement by giving thirty (30) days'
written notice to Agency if, despite having obtained from CDLAC an allocation for Tax -Exempt
Bonds and despite having made commercially reasonable efforts, it has been unable, by the time
provide in the Schedule of Performance, to obtain the balance of the Project Financing approved
by the Agency in accordance with this Agreement.
6.9 Agency Right to Terminate.
(a) Failure to Obtain Allocation. Prior to the Property Closing, Agency, if it is
not then in material default under this Agreement (subject to the notice and cure provisions of
Section 13.1), may terminate this Agreement by giving written notice to Developer if Developer,
by the time provided in the Schedule of Performance, fails to obtain from CDLAC an allocation
for Tax -Exempt Bonds under the application filed pursuant to Section 6.3, above.
(b) Failure to Obtain Other Project Financing. Prior to the Property Closing,
Agency, if it is not then in material default under this Agreement (subject to the notice and cure
provisions of Section 13.1), may terminate this Agreement by giving thirty (30) days' written
notice to Developer if Developer, despite having obtained from CDLAC an allocation for Tax -
Exempt Bonds, has been unable, by the time provided in the Schedule of Performance, to obtain
the balance of the Project Financing approved by the Agency in accordance with this Agreement.
(c) Project Infeasibility. If, prior to the Property Closing, (a) it becomes
reasonably evident to Agency that the Project cannot be constructed within the Project Budget,
and (b) Developer is unwilling or unable to make up the shortfall from funds from a source other
than the Agency and reasonably acceptable to the Executive Director, then Agency, provided
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that it is not then in default under this Agreement, may terminate this Agreement by written
notice to Developer.
6.10 Developer Fee. The parties acknowledge and agree that Developer shall not be
entitled to any fee for developing the Project except as expressly set forth in the Project Budget.
6.11 Cost Savings Obligation. Developer hereby agrees to provide and pay to Agency
a "Cost Savings" payment for the Housing Development in an amount to be determined based on
the "Audit" (as those terms are described in subparagraph (a) below) to be conducted upon
completion of construction of the Project.
(a) Audit to Determine Cost Savings Amount. The actual amount of Cost
Savings to be paid to Agency shall be determined after the Audit, as hereafter described, and the
amount of such Cost Savings shall be equal to the amount by which the total sources of
permanent financing for the Project (which financing includes, but is not limited to, the Agency
Loan, the Take -Out Loan, and the equity raised by the sale of the Tax Credits) exceed the costs
of development incurred for the Project (which costs include, but are not limited to, the hard and
soft costs incurred by Developer to perform predevelopment activities and construct the Project,
and the amount spent to reduce the principal balance of the Construction Loan to the principal
balance of the Take -Out Loan). Within sixty (60) days following the completion of lease -up of
the Project, Developer shall cause its certified public accountant(s) to perform a final audit of the
costs of development of the Project in accordance with the requirements of the Tax Credits and
generally accepted accounting principles ("GAAP") and generally accepted auditing standards
(herein referred to as "Audit"). If the Audit determines that the total sources of permanent
financing for the Project (which financing includes, but is not limited to, the Agency Loan, the
Take -Out Loan, and the equity raised by the sale of the Tax Credits) exceed Developer's total
costs to develop the Project (which costs include, but are not limited to, the hard and soft costs
incurred by Developer to perform predevelopment activities and construct the Project, and the
amount spent to reduce the principal balance of the Construction Loan to the principal balance of
the Take -Out Loan), such excess shall be considered the "Cost Savings" for the Project.
(b) Cost Savings Payment as Payment of Principal on Agency Loan. The
Cost Savings for the Project, once determined by the Audit pursuant to Section 6.11(a) above
and subject to Section 6.11(c) below, shall be due and paid by Developer to Agency and
allocated and credited as a principal payment on the Agency Loan, as and when paid.
(c) Timing of Payment of Cost Savings. Subject to the approval of TCAC if
such approval is required by TCAC, the Cost Savings for the Project shall become due and
payable by Developer to Agency after receipt by Developer of the final Tax Credit equity and
completion of construction, but not later than sixty (60) days after Developer receives its final
Tax Credit equity payment for the Project, and such Cost Savings shall be paid in a lump sum as
a principal payment toward the Agency Loan balance.
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7. GROUND LEASE OF PROPERTY
7.1 Agreement. Agency, subject to the conditions set forth in Section 7.2 below,
agrees to ground lease to Developer, and Developer, subject to the conditions set forth in Section
7.3 below, agrees to ground lease from Agency, the Property pursuant to the Ground Lease.
7.2 Conditions for Agency's Benefit. Agency's obligation to ground lease the
Property to Developer shall be subject to satisfaction of the following conditions precedent:
(a) Final Approval of Project Budget. The Executive Director, Developer,
Construction Lender and Investor shall have approved the Project Budget, including, without
limitation, the amount of the Development Fee and the terms and conditions of payment thereof.
(b) Evidence of Project Financing. The Executive Director has received and
reasonably approved the following:
(j) Construction Loan. True and complete copies of the Construction
Loan documents evidencing the obligation of an Institutional Lender, subject only
to reasonable and customary conditions, to make the Construction Loan to
Developer.
(ii) Tax Credit Financing. Documentary evidence reasonably
acceptable to the Executive Director that Developer has committed, or caused to
be committed, funds from the sale of the Tax Credits (the "Tax Credit Funds") to
construction of the Project, which commitment may be subject only to reasonable
and customary conditions.
(iii) Take -Out Loan Commitment. A commitment from an Institutional
Lender, subject only to reasonable and customary conditions, pursuant to which
said lender agrees to make a permanent loan to Developer, with a term of not less
than fifteen (15) years, in sum sufficient, when added to any Tax Credit Funds to
be disbursed for such purpose, to take-out any existing short-term financing.
(iv) Disbursement of Agency Loan. A Project Financing Disbursement
Agreement shall have been fully executed and a copy thereof delivered to
Agency.
(c) General Contractor. The general contractor for the Project (the "General
Contractor") shall have been approved by the Executive Director. The Agency hereby approves
Consolidated Contracting as the General Contractor, provided that the financial status, principal
personnel and management, and reputation of Consolidated Contracting does not adversely
change during the period commencing on the Effective Date and ending on the date of the
Property Closing.
(d) Construction Contract. Agency shall have received a true and complete
copy of a contract by and between Developer and the General Contractor pursuant to which the
General Contractor has agreed to construct the Housing Development at a cost consistent with
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the costs set forth therefor in the Project Budget (the "Construction Contract') and the Executive
Director shall have approved said Construction Contract.
(e) Final Construction Documents. City shall have approved the Final
Construction Documents for the Project and Agency has received a full set thereof.
(f) Public Improvements Contractor; Public Improvements Contract. The
contractor selected by Developer to construct the Public Improvements (the "Public
Improvements Contractor") shall have been approved by the Executive Director, and Agency
shall have received a true and complete copy of a contract by and between Developer and the
Public Improvements Contractor pursuant to which the Public Improvements Contractor has
agreed to construct the Public Improvements at a cost consistent with the costs set forth therefor
in the Project Budget, (the "Public Improvements Contract"), which Public Improvements
Contract shall have been approved by the Executive Director.
(g) Completion Bond. If the Construction Lender or the Investor require that
a completion bond be posted by the General Contractor and/or by the Public Improvements
Contractor, then such completion bond shall name Agency as a co -obligee.
(h) Completion Guaranty. If the Construction Lender or the purchaser of the
Tax Credits require a completion guaranty from Developer, or any Affiliate thereof, then Agency
shall have also received a completion guaranty from Developer in similar form and content.
(i) Building Permit. The Building Permit for the Project shall have issued or
shall be ready to issue upon only payment of a sum certain.
0) Construction to Commence. The Executive Director shall be reasonably
satisfied that construction of the Project will commence not later than ten (10) days after the
Property Closing and will thereafter be completed in a diligent and continuous manner.
(k) Assignment of Final Construction Documents. Developer shall, by an
instrument substantially in the form attached hereto and incorporated herein as Attachment No.
4, have conditionally assigned to Agency the Final Construction Documents for the Project,
which assignment shall be subordinated to any pledge or assignment to the Construction Lender.
Developer shall have also delivered to Agency, in the'form included as part of said Attachment
No. 4, the written consent of the other party to each such Final Construction Document to said
assignment, including, without limitation, to the use by Agency of the Final Construction
Documents, as well as the ideas, designs, and concepts contained within them.
(1) Assignment of Construction Contract. Developer shall, by an instrument
substantially in the form attached hereto and incorporated herein as Attachment No. 4, have
conditionally assigned to Agency the Construction Contract, including obtaining the consent
thereto of the General Contractor, which assignment shall be subordinated to any pledge or
assignment to the Construction Lender.
(m) Management Plan. Executive Director has received from Developer and
reasonably approved a comprehensive management plan for the Project.
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(n) Management Agreement. Executive Director shall have received and
reasonably approved an executed agreement by and between Developer and a property manager
approved by the Agency for management of the Project (the "Management Agreement"), which
Management Agreement shall be consistent with this Agreement and the requirements of Section
7 of the Agency Regulatory Agreement.
(o) [Intentionally Omitted]
(p) Request for Notice of Default. Escrow Holder shall be ready to record a
request for notice of default pursuant to Civil Code Section 2924(b), requesting that any
beneficiaries of liens senior to the Agency Deed of Trust and Agency Regulatory Agreement
notify Agency of any default under the instrument creating the lien (the "Request for Notice").
(q) Documents Executed. Developer shall have duly executed the Ground
Lease, Memorandum of Ground Lease, Agency Deed of Trust, Agency Regulatory Agreement,
and Notice of Affordability, with signatures acknowledged (as applicable) and deposited them
into Escrow.
(r) Title Policy. Title Company is prepared to issue its LP-10 loan policy of
title insurance naming Agency as the insured, in a policy amount not less than the principal
amount of the Agency Loan, showing Developer as holding leasehold title to the Property and
insuring the Agency Deed of Trust to be a valid lien on the Property subject only to exceptions
approved by the Agency (the "Agency Title Policy").
(s) Representations and Warranties. The representations of Developer
contained in this Agreement shall be correct in all material respects as of the Property Closing as
though made on and as of that date and, if requested by the Executive Director, Agency shall
have received a certificate to that effect signed by Developer.
(t) No Default, No Event of Default by Developer shall then exist, and no
event shall then exist which, with the giving of notice or the passage of time or both, would
constitute an Event of Default by Developer and, if requested by the Executive Director, Agency
shall have received a certificate to that effect signed by Developer.
7.3 Condition for Developer's Benefit. Developer's obligation to ground lease the
Property from Agency shall be subject to satisfaction of the following conditions precedent:
(a) Land Use Entitlements. The Property shall be satisfactorily entitled for
the land use required by this Agreement.
(b) Property Vacant. The Property shall be free of any occupants.
(c) Project Budget. The Executive Director, Developer, Construction Lender,
and Investor shall have approved the Project Budget.
(d) Building Permit. The Building Permit for the Project shall have issued or
is ready to issue upon only payment of a sum certain.
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(e) Evidence of Project Financing. The Executive Director has received and
reasonably approved the following:
(i) Construction Loan. True and complete copies of the Construction
Loan documents evidencing the obligation of an Institutional Lender, subject only
to reasonable and customary conditions, to make the Construction Loan to
Developer.
(ii) Tax Credit Financing. Documentary evidence reasonably
acceptable to the Executive Director that Developer has committed, or caused to
be committed, the Tax Credit Funds, which commitment may be subject only to
reasonable and customary conditions.
(iii) Take -Out Loan Commitment. A commitment from an Institutional
Lender (including, without limitation, the Construction Lender), subject only to
reasonable and customary conditions, pursuant to which said lender agrees to
make a permanent loan to Developer (or to convert the Construction Loan to its
permanent phase), with a term of not less than fifteen (15) years, in sum
sufficient, when added to any Tax Credit Funds to be disbursed for such purpose,
to take-out (or convert) any existing short-term financing.
(iv) Disbursement of Agency Loan. A Project Financing Disbursement
Agreement shall have been fully executed and a copy thereof delivered to
Developer.
(f) Update to Source of Funds Letter. Agency shall have provided to
Developer an update to the Source of Funds Letter.
(g) Condition of Title. Developer shall have approved of the condition of title
to the Property. With respect thereto, Developer shall, within fifteen (15) days after the Effective
Date, cause the Title Company to provide to Developer a Preliminary Title Report, with copies
of all exceptions noted therein (the "Report"). Developer also intends to obtain a survey of the
Property. Developer shall have thirty (30) days after the Effective Date to notify Agency of
approval or disapproval of any of the exceptions in the Report or of anything shown by the
Survey. If Developer objects to any exception or exceptions in the Report or anything shown by
the Survey, Agency shall notify Developer within ten (10) days whether or not Agency will
cause such exception, or such objectionable item shown by the Survey, to be removed by the
Property Closing. If Agency declines to cause any such exception or such objectionable item
shown by the Survey, to be removed, Developer shall, within ten (10) days, elect either to waive
the exception and/or objection or terminate this Agreement by written notice to Agency. From
and after the Effective Date and continuing until the earlier of (i) the Close of the Property
Escrow; and (ii) termination of this Agreement, the Agency shall not further encumber the
Property with additional exceptions to title or matters which would be shown on a Survey,
without the Developer's prior written consent.
(h) Title Insurance. The Title Company shall be prepared to issue its ALTA
leasehold form policy of title insurance, with liability in the amount of the total of the equity
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raised from the sale of the Tax Credits plus the principal amounts of the Take -Out Loan and
Agency Loan, showing leasehold title to the Property and fee title to the improvements located
thereon vested in Developer, subject only to the lien of the Construction Loan Security
Documents, the Project Documents, and such other exceptions as Developer previously approved
(the "Developer Title Policy").
(i) No Default. No Event of Default by Agency shall then exist, and no event
shall then exist which, with only the giving of notice or the passage of time or both, would
constitute an Event of Default by Agency.
7.4 Developer Right to Terminate. Prior to the Property Closing, Developer, if it is
not then in material default under this Agreement (subject to the notice and cure provisions of
Section 13.1), may terminate this Agreement by giving thirty (30) days' written notice to Agency
if, by the time provided in the Schedule of Performance, any of the conditions set forth in
Section 7.3 have not been satisfied.
7.5 Agency Right to Terminate. Prior to the Property Closing, Agency, if it is not
then in material default under this Agreement (subject to the notice and cure provisions of
Section 13.1), may terminate this Agreement by giving thirty (30) days' written notice to
Developer if, by the time provided in the Schedule of Performance, any of the conditions set
forth in Section 7.2 have not been satisfied.
7.6 Waiver of Conditions. The conditions set forth in Section 7.2 are for Agency's
benefit only and the Executive Director may waive all or any part of such rights by written notice
to Developer. The conditions set forth in Section 7.3 are for Developer's benefit only and
Developer may waive all or any part of such rights by written notice to Agency.
7.7 "AS -IS". Developer acknowledges and agrees that it is leasing the Property
solely in reliance on its own investigation, and that no representations and/or warranties of any
kind whatsoever, express or implied, have been made by Agency, or by its officers, employees,
representatives or agents. Subject to Section 7.8, Developer further acknowledges and agrees
that Developer will be leasing the Property in "AS IS" condition with all faults and conditions
then existing in and on the Property, whether known or unknown; provided that the foregoing
shall not constitute a release of Agency under any statute or common law theory.
Notwithstanding the foregoing, Agency acknowledges and agrees that neither this Section 7.7,
nor any other term, provision or condition of this Agreement obligates Developer, as between it
and Agency, and prior to the Property Closing, to remediate, or to incur any cost to remediate,
any Hazardous Materials that were released or existed on the Property prior to the Property
Closing. In the event that Hazardous Materials are so discovered, disposition of the situation
shall be governed by the conditions set forth in Section 7.8. Developer acknowledges and agrees
that, as between it and Agency, nothing in this Agreement or in the Ground Lease shall ever be
deemed, construed or interpreted to obligate Agency to remediate, or to incur any expense to
remediate, any Hazardous Materials discovered on the Property either before or after the
Property Closing unless and until Agency expressly agrees to do so in writing.
7.8 Developer Right to Terminate. If, prior to the expiration of the Due Diligence
Period, Developer discovers Hazardous Materials the cost of remediation of which exceeds the
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limits of any applicable insurance policy, then Developer, subject to the condition set forth
below, shall have the right, prior to the Property Closing, to terminate this Agreement by thirty
(30) days' notice to Agency. Developer's right so to terminate this Agreement shall be subject to
the condition precedent that Developer first have (a) submitted to Agency any and all
information then available to Developer as to the nature and scope of the Hazardous Materials
discovered and as to the cost estimated to remediate them, if any such cost estimate exists, and
(b) offered to Agency the right, within fifteen (15) days after receipt of said statement, or such
longer period of time as may reasonably be required by Agency to obtain competitive bids for
the work, to elect, at its sole and absolute discretion, to cause such work to be performed, at
Agency's sole cost and expense, to the reasonable satisfaction of Developer. If Agency so elects
and causes such work to be performed as soon as reasonably possible, then Developer shall not
have the right to terminate this Agreement under this Section 7.8.
8. PROPERTY CLOSING; ESCROW EXPENSES
8.1 Property Closing. Upon receipt by the Escrow Holder of (i) the Memorandum of
Ground Lease, and (ii) all other funds and documents required to conduct the Property Closing in
accordance with this Agreement, and when the conditions precedent described in Section 7.2
have been satisfied or waived by the Executive Director, and the conditions precedent described
in Section 7.3 have been satisfied or waived by Developer, the Escrow Holder shall take all of
the following actions:
(a) Recordation. Escrow Holder shall, in the following order, record in the
Official Records:
(i) the Memorandum of Ground Lease;
(ii) the Agency Regulatory Agreement;
(iii) the Construction Loan Security Documents;
(iv) the Agency Deed of Trust;
(v) the Request for Notice;
(vi) the Notice of Affordability; and
(vii) such other documents required to close the Escrow in accordance
with this Agreement;
(b) Deliveries to A¢ency. Escrow Holder shall deliver to Agency:
(i) a conformed copy of each of the documents recorded pursuant to
paragraph (a) above;
(ii) the Agency Title Policy;
(c) Deliveries to Developer. Escrow Holder shall deliver to Developer:
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(i) a conformed copy of the Memorandum of Ground Lease; and
(ii) the Developer Title Policy.
8.2 Expenses of Developer. Developer shall pay: (a) any and all documentary
transfer taxes and recording fees arising from the leasehold conveyance of the Property from
Agency to Developer by the Ground Lease, (b) the Escrow fee, (c) the premium for the Agency
Title Policy and Developer Title Policy, and (d) all such other costs and expenses related to the
Escrow and not expressly provided for herein.
8.3 Instruction to Escrow Holder Regarding Waiver of Transfer Taxes and Recording
Fees. The Escrow Holder is hereby instructed to seek such waivers and exemptions from
transfer taxes and recording fees as are available pursuant to Revenue and Taxation Code Section
11922 and Government Code Sections 6103 and 27383, respectively.
8.4 Broker's Commissions. Developer represents and warrants that it has not
engaged any broker, agent or finder in connection with this Agreement, and Developer agrees to
indemnify, protect, hold harmless, and defend the Indemnitees from any claim by any brokers,
agents or finders retained by Developer.
9. OTHER ESCROW INSTRUCTIONS
9.1 Funds in Escrow. All funds received in the Escrow shall be deposited by the
Escrow Holder in a general escrow account with any state or national bank doing business in the
State of California and reasonably approved by the Executive Director and Developer, and such
funds may be combined with other escrow funds of the Escrow Holder. All disbursements shall
be made on the basis of a thirty (30) day month.
9.2 Failure to Close. If the Property Closing does not occur on or before the Outside
Closing Date (subject to Section 17.11 below), any party who then shall have fully performed the
acts to be performed before the conveyance of a leasehold interest may, in writing, demand the
return of its money, papers, or documents from the Escrow Holder. No demand for return shall
be recognized until fifteen (15) days after the Escrow Holder (or the party making such demand)
shall have mailed copies of such demand to the other party. Objections, if any, shall be raised by
written notice to the Escrow Holder and to the other party within the fifteen (15) day period, in
which event the Escrow Holder is authorized to hold all money, papers and documents until
instructed by mutual agreement of the parties or, upon failure thereof, by a court of competent
jurisdiction. If no such demands are made, the Escrow Holder shall conduct the Property
Closing as soon as possible.
If objections are raised in the manner provided above, the Escrow Holder shall not be
obligated to return any such money, papers or documents except upon the written instructions of
both the Executive Director and Developer, or until the party entitled thereto has been
determined by a final decision of a court of competent jurisdiction. If no such objections are
made within said fifteen (15) period, the Escrow Holder shall immediately return the demanded
money, papers or documents.
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9.3 Amendments. Any amendment to these Escrow instructions shall be in writing
and signed by the Executive Director or Agency Counsel and Developer. At the time of any
amendment, the Escrow Holder shall agree to carry out its duties as the Escrow Holder under
such amendment.
9.4 Notices. All Notices from the Escrow Holder to Agency or Developer shall be
given in the manner provided in Section 14.
9.5 Liability. The liability of the Escrow Holder under this Agreement is limited to
performance of the obligations imposed upon it under Sections 6, 8 and 9.
10. DEVELOPMENT OF THE PROJECT
10.1 Scope of Development. The Developer shall construct the Project on the Property
in accordance with the Scope of Development. Subject to Section 17.11 below, the Developer
shall commence and complete construction of the Project on the Property by the respective times
established therefore in the Schedule of Performance. The Scope of Development shall be
deemed to include any plans and specifications submitted to the City and/or Agency for
approval, and shall incorporate or show compliance with all mitigation measures.
10.2 Site Development Permit. By the time set forth therefor in the Schedule of
Performance, the Developer shall prepare and submit to the City for its approval an application
for a Site Development Permit and related documents which conform to the requirements of the
City and which contain the overall plan for development of the Project in sufficient detail to
enable the City to evaluate the proposal for conformity to the requirements of the La Quinta
Municipal Code and this Agreement. The landscaping and finish grading plans shall be prepared
by a professional landscape architect or registered civil engineer who may be the same firm as
the Developer's architect or civil engineer. During the preparation of all drawings and plans,
staff of the Agency and the Developer shall hold regular progress meetings to coordinate the
preparation of, submission to, and review of drawings, plans and related documents by the City.
The staff of the Agency and the Developer shall communicate and consult informally as
frequently as is necessary to insure that the formal submittal of any documents to the Agency can
receive prompt and speedy consideration.
10.3 Review and Approval of Plans Drawings and Related Documents. The Agency
and the City shall have the right to conduct all planning for the Project, including plan check, and
review of all plans and submissions, including any changes therein. During each stage of the
processing of plans for the Project, the Agency and the City shall have the right to require
additional information and the Agency shall advise the Developer, in writing, if any submittal of
plans or drawings is not substantially complete or not in accordance with City/Agency
procedures and/or requirements. If the Agency or the City determines that such a submittal is
not substantially complete or not in accordance with procedures, such tender shall not be deemed
to constitute a submittal for purposes of satisfying the Schedule of Performance. If the
Developer desires to make any material changes in the construction plans after their approval by
the Agency and/or the City, the Developer shall submit the proposed change to the Agency and
the City for their approval. If the construction plans, as modified by the proposed change,
conform to the requirements of this Section 10.3 and the Scope of Development, the Agency
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shall approve,. and shall use commercially reasonable efforts to cause City to approve, the
proposed change, and shall notify the Developer in writing within thirty (30) days after
submission to the Agency and the City.
10.4 Cost of Development. With the exception of the Agency Loan that the Agency
has agreed to provide Developer hereunder to assist Developer with the costs to construct the
Housing Development all Project Costs shall be borne exclusively by the Developer. The
Developer shall also bear all costs related to discharging the duties of the Developer set forth in
this Agreement. The Developer shall be responsible for all fees associated with development of
the Project, including, but not limited to, school facilities fees and development impact fees.
Notwithstanding anything herein to the contrary, no Agency Loan proceeds shall be used
to fund the construction of the Public Improvements. Developer shall fund the construction of
such improvements with funds received from other Project Financing funding sources. The
Public Improvements shall be constructed pursuant to the Public Improvements Contract, which
shall be separate and distinct from the Construction Contract.
10.5 Indemnity. Developer shall defend (by counsel satisfactory to Agency), assume
all responsibility for and hold the Agency and the City, and their respective officers, officials,
members, agents, representatives, and employees, harmless from all claims or suits for, and
damages to, property and injuries to persons, including accidental death (including expert
witness fees, attorneys fees and costs), which may be caused by the activities or performance of
Developer or any of Developer's employees, agents, representatives, contractors, or
subcontractors under (i) this Agreement, (ii) the making of the Agency Loan; (iii) a claim,
demand or cause of action that any person has or asserts against Developer; (iv) any act or
omission of Developer, any of Developer's contractors, subcontractors or material suppliers,
engineers, architects or other persons with respect to the Property; or (v) the leasehold,
occupancy or use of the Property by Developer, whether such damage shall accrue or be
discovered before or after termination of this Agreement. The obligations and indemnifications
in this Section 10.5 shall constitute covenants running with the land.
10.6 Insurance Requirements.
(a) Commencing on the date of the Property Closing and continuing
throughout the term of the Ground Lease, the Developer shall procure and maintain, at its sole
cost and expense, in a form and content satisfactory to the Agency's Executive Director, the
following policies of insurance:
(i) Commercial General Liability Insurance covering bodily injury,
property damage, personal injury and advertising injury written on a per -
occurrence and not a claims -made basis containing the following minimum limits:
(i) general aggregate limit of Three Million Dollars ($3,000,000); (ii) products -
completed operations aggregate limit of Three Million Dollars ($3,000,000); (iii)
personal and advertising injury limit of One Million Dollars ($1,000,000); and
(iv) each occurrence limit of One Million Dollars ($1,000,000). Said policy shall
include the following coverages: (i) blanket contractual liability (specifically
covering the indemnification clause contained in Section 10.5 hereof); (ii)
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products and completed operations; (iii) independent contractors; (iv) Owner's
broad form property damage; (v) severability of interest; (vi) cross liability; and
(vii) property damage liability arising out of the so-called "XCU" hazards
(explosion, collapse and underground hazards). The policy shall be endorsed to
have the general aggregate apply to this Project only.
(ii) A policy of worker's compensation insurance in such amount as
will fully comply with the laws of the State of California and which shall
indemnify, insure, and provide legal defense for the Agency and the Developer
against any loss, claim or damage arising from any injuries or occupational
diseases occurring to any worker employed by or any persons retained by the
Developer in the course of carrying out the work or services contemplated in this
Agreement, and Employers Liability Insurance in an amount not less than One
Million Dollars ($1,000,000) combined single limit for all damages arising from
each accident or occupational disease.
(iii) A policy of comprehensive automobile liability insurance written
on a per -occurrence basis in an amount not less than Three Million Dollars
($3,000,000) combined single limit covering all owned, non -owned, leased and
hired vehicles used in connection with the Work.
(b) Commencing on the Date of the Property Closing and continuing until the
Agency issues a Release of Construction Covenants for the Project, the Developer shall procure
and maintain, at its sole cost and expense, in a form and content satisfactory to the Agency's
Executive Director, Builder's Risk (course of construction) insurance coverage in an amount
equal to the full cost of the hard construction costs of the Project. Such insurance shall cover, at
a minimum: all work, materials, and equipment to be incorporated into the Project; the Project
during construction; the completed Project until such time as the City issues a final certificate of
occupancy for the Project, and storage and transportation risks. Such insurance shall
protect/insure the interests of Developer/owner and all of Developer's contractor(s), and
subcontractors, as each of their interests may appear. If such insurance includes an exclusion for
"design error," such exclusion shall only be for the object or portion which failed. Agency shall
be a loss payee under such policy or policies and such insurance shall contain a replacement cost
endorsement
(c) Developer shall cause any general contractor with whom it has contracted
for the performance of work on the Property to secure, prior to commencing any activities
hereunder and maintain insurance that satisfies all of the requirements of this Section 10.6.
(d) Commencing on the date Agency issues a Release of Construction
Covenants, and continuing throughout the term of the Ground Lease, Developer shall procure
and maintain, at its sole cost and expense, in a form and content satisfactory to Agency's
Executive Director, the following types of insurance:
(i) Insurance against fire, extended coverage, vandalism, and
malicious mischief, and such other additional perils, hazards, and risks as now are
or may be included in the standard "all risk" form in general use in Riverside
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County, California, with the standard form fire insurance coverage in an amount
equal to full actual replacement cost thereof, as the same may change from time to
time. The above insurance policy or policies shall include coverage for
earthquakes to the extent generally and commercially available at commercially
reasonable rates, if such insurance is generally obtained for affordable housing
developments in the counties of Riverside or San Bernardino. Agency shall be a
loss payee under such policy or policies and such insurance shall contain a
replacement cost endorsement.
(ii) Business interruption and extra expense insurance to protect
Developer and Agency covering loss of revenues and/or extra expense incurred
by reason of the total or partial suspension or delay of, or interruption in, the
operation of the Project caused by loss or damage to, or destruction of, any part of
the insurable real property structures or equipment as a result of the perils insured
against under the all risk physical damage insurance, covering a period of
suspension, delay or interruption of at least twelve (12) months, in an amount not
less than the amount required to cover such business interruption and/or extra
expense loss during such period.
(iii) Boiler and machinery insurance in the aggregate amount of the full
replacement value of the equipment typically covered by such insurance.
(e) The following additional requirements shall apply to all of the above
policies of insurance:
(i) All of the above policies of insurance shall be primary insurance
and, except the Worker's Compensation, Employer Liability insurance, and
automobile liability insurance, shall name the Indemnitees as additional insureds
on an ISO Form CG 20:10 (current version) or substantially similar form and not
an ISO Form CG 20:09. The insurer shall waive all rights of subrogation and
contribution it may have against the Indemnitees and their respective insurers.
All of said policies of insurance shall provide that said insurance may not be
amended or cancelled without providing thirty (30) days' prior written notice to
the Agency. In the event any of said policies of insurance are cancelled, the
Developer shall, prior to the cancellation date, submit new evidence of insurance
in conformance with this Section to the Executive Director. Not later than the
Effective Date, the Developer shall provide the Executive Director with
Certificates of Insurance or appropriate insurance binders evidencing the above
insurance coverages and said Certificates of Insurance or binders shall be subject
to the reasonable approval of the Executive Director.
(ii) The policies of insurance required by this Agreement shall be
satisfactory only if issued by companies of recognized good standing authorized
to do business in California, rated "A-" or better in the most recent edition of Best
Rating Guide, The Key Rating Guide or in the Federal Register, and only if they
are of a financial category Class VII or better, unless such requirements are
waived by the Executive Director, in consultation with the City's Risk Consultant
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through the California Joint Powers Insurance Authority, due to unique
circumstances.
(iii) The Executive Director, in consultation with the City's Risk
Consultant through the California Joint Powers Insurance Authority, is hereby
authorized to reduce or otherwise modify Developer's insurance requirements set
forth herein in the event they collectively determine, in their sole and absolute
discretion, that such reduction or modification is consistent with reasonable
commercial practices.
(iv) The Developer agrees that the provisions of this Section shall not
be construed as limiting in any way the Agency's right to indemnification or the
extent to which the Developer may be held responsible for the payment of
damages to any persons or property resulting from the Developer's activities or
the activities of any person or persons for which the Developer is otherwise
responsible.
10.7 Remedies for Defaults Re: Insurance. In addition to any other remedies the
Agency may have, if Developer commits a default hereunder by failing to provide or maintain
any insurance policies or policy endorsements to the extent and within the time herein required,
the Agency may at its sole option, and after delivery of written notice to Developer and
expiration of a fifteen (15) day cure period, obtain such insurance and deduct the amount of the
premium for such insurance from any sums due to Developer by the Agency from the Agency
Loan; provided, however, that if Agency's Executive Director reasonably determines that the
Developer, Property, and/or Project will be uninsured or under -insured in the absence of such
insurance, then Agency need not provide for any cure period in its notice of default to Developer,
but may instead obtain such insurance immediately upon its provision of such notice. Exercise
of the remedy set forth herein, however, is an alternative to other remedies the Agency may have
and is not the exclusive remedy for Developer's failure to maintain insurance or secure
appropriate endorsements.
10.8 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance.
If the Project shall be totally or partially destroyed or rendered uninhabitable by fire or other
casualty required to be insured against by Developer, Developer shall promptly proceed to obtain
all available insurance proceeds and, to the extent proceeds are available, take all steps necessary
to begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly and
diligently commence the repair or replacement of the Project to substantially the same condition
as it existed prior to the casualty and Developer shall complete or cause to be completed the
same as soon as possible thereafter so that the Project can be operated in accordance with this
Agreement. The Agency shall cooperate with Developer, at no expense to the Agency, in
obtaining any governmental permits required for the repair, replacement, or restoration.
10.9 City and Other Governmental Agency Permits. Before commencement of
construction or development of any buildings, structures or other works of improvement upon
the Property or in connection with the construction of any Public Improvement, the Developer
shall, at its own expense, secure or cause to be secured any and all permits which may be
required by the City or any other governmental agency affected by or with jurisdiction over such
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construction, development or work. Developer shall pay all necessary fees and timely submit to
the City Final Construction Documents with final corrections to obtain a Building Permit; the
Agency will, without obligation to incur liability or expense therefor, use its reasonable efforts to
expedite issuance of building permits and certificates of occupancy for construction that meets
the requirements of the La Quinta Municipal Code.
10.10 Rights of Access. For purposes of assuring compliance with this Agreement,
representatives of the Agency and the City shall have the right of access to the Property without
charges or fees, at normal business hours during the construction of the Project, including, but
not limited to, the inspection of the work being performed in constructing the Project, so long as
they comply with all safety rules. Such representatives of the Agency or of the City shall be
those who are so identified in writing by the Executive Director of the Agency. The Agency
shall hold the Developer harmless from any bodily injury or related damages arising out of the
activities of the Agency and the City as referred to in this Section 10.10.
10.11 Compliance with Laws: Compliance with Prevailing Wage Laws.
(a) Compliance with Laws. The Developer shall carry out the construction,
development and operation of the Project in conformity with all applicable laws, including all
applicable state labor standards, City zoning and development standards, building, plumbing,
mechanical and electrical codes, and all other provisions of the City's Municipal Code, and all
applicable disabled and handicapped access requirements, including without limitation the
Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section
4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil
Code Section 51, et seq., and any other applicable Governmental Requirements.
(b) Compliance with Prevailing Wage Laws.
(i) Developer shall carry out the construction through completion of
the Project and the overall development of the Property in conformity with all
applicable federal, state and local labor laws and regulations, including, without
limitation, if applicable, the requirements to pay prevailing wages under federal
law (the Davis -Bacon Act, 40 U.S.C. Section 3141, et seq., and the regulations
promulgated thereunder set forth at 29 CFR Part 1 (collectively, "Davis -Bacon"))
and California law (Labor Code Section 1720, et seq.). The parties acknowledge
that a financing structure utilizing certain federal and/or state funding sources and
financing scenarios may trigger compliance with applicable state and federal
prevailing wage laws and regulations. Subject to the subparagraph (ii) below,
which requires Developer to pay prevailing wages for construction of the Public
Improvements, Developer shall determine the applicability of federal, state and
local prevailing wage laws based upon the final financing structure and sources of
funding of the Project, as approved by the Agency Executive Director.
(ii) Notwithstanding anything herein to the contrary, Developer hereby
expressly acknowledges and agrees that the Agency hereby states to Developer
and its contractor(s) for the construction or development of the Public
Improvements, that the construction or development of the Public Improvements
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is a "public work" as defined in Section 1720 of the Labor Code. Developer shall
have the obligation to provide any and all disclosures or identifications required
by Labor Code Section 1781 and/or by Davis Bacon, as the same may be
amended from time to time, or any other similar law or regulation. Developer
shall indemnify, protect, pay for, defend and hold harmless the Indemnitees, with
legal counsel reasonably acceptable to Agency and City, from and against any and
all loss, liability, damage, claim, cost, expense and/or "increased costs" (including
reasonable attorneys' fees, court and litigation costs, and fees of expert witnesses)
which, in connection with the development or construction (as defined by
applicable law) of the Public Improvements, including, without limitation, any
and all public works (as defined by applicable law), results or arises in any way
from any of the following: (1) the noncompliance by Developer or its contractor
with any applicable local, state and/or federal law or regulation, including,
without limitation, any applicable federal and/or state labor laws or regulations
(including, without limitation, if applicable, the requirement to pay state and/or
federal prevailing wages and hire apprentices); (2) the implementation of Section
1781 of the Labor Code and/or Davis Bacon, as the same may be amended from
time to time, or any other similar law or regulation; and/or (3) failure by
Developer to provide any required disclosure or identification as required by
Labor Code Section 1781 and/or Davis Bacon, as the same may be amended from
time to time, or any other similar law or regulation. It is agreed by the parties
that, in connection with the development and construction (as defined by
applicable law) of the Public Improvements, including, without limitation, any
and all public works (as defined by applicable law), Developer shall bear all risks
of payment or non-payment of prevailing wages under California law and/or the
implementation of Labor Code Section 1781, as the same may be amended from
time to time, and/or any other similar law. The foregoing indemnity shall survive
termination of this Agreement and shall continue after completion of the
construction and development of the Public Improvements by Developer.
(iii) Subject to the representations and warranties set forth in
subparagraph (iv) below, the Developer shall be solely responsible, expressly or
impliedly and legally and financially, for determining and effectuating
compliance with all applicable federal, state and local public works requirements,
prevailing wage laws, and labor laws and standards, and, except as provided in
subparagraph (iv) below, the Agency makes no representation, either legally
and/or financially, as to the applicability or non -applicability of any federal, state
and local laws to the construction of the Housing Development, including all
onsite improvements. The Developer expressly, knowingly and voluntarily
acknowledges and agrees that neither the Agency nor City have previously
represented to the Developer or to any representative, agent or Affiliate of
Developer, or any contractor(s) or any subcontractor(s) for the construction or
development of the Project, in writing or otherwise, in a call for bids or otherwise,
that the work and construction of the Housing Development is (or is not) a "public
work," as defined in Section 1720 of the Labor Code or under Davis -Bacon.
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(iv) Notwithstanding the foregoing, the Agency hereby represents and
warrants to the Developer, its successors and assigns, that all funds used by the
Agency in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, funds used and to be used by the Agency to
acquire each and every component of the Property, funds used and to be used to
pay for relocation and demolition of existing improvements on the Property, if
any, and funds used and to be used to fund the Agency Loan, are completely and
accurately described in the letter prepared by Frank Spevacek dated January 4,
2011, which was delivered to Developer prior to the Effective Date (the "Source
of Funds Letter"), as such Source of Funds Letter shall be updated pursuant to
Section 7.3(f) of this Agreement, and upon the written request of Developer,
made at any time during the term hereof. The Agency understands and agrees
that the Developer will materially rely on the foregoing warranties in its
determination as to whether prevailing wages are required in the construction of
the Housing Development pursuant to California law or Davis -Bacon and
specifically, without limitation, whether the funds used by the Agency in
connection with this Agreement and the transactions contemplated hereby solely
constitute moneys from a Low and Moderate Income Housing Fund established
pursuant to Section 33334.3 of the California Health and Safety Code, all within
the meaning of Section 1720(c)(4) of the California Labor Code.
(v) The Developer knowingly and voluntarily agrees that the
Developer shall have the obligation to provide any and all disclosures or
identifications as required by Labor Code Section 1781 and/or by Davis Bacon, as
the same may be amended from time to time, or any other similar law or
regulation. If and only if the representation and warranty provided by the Agency
to the Developer in subparagraph (iv) above remains true, correct and complete in
every respect, the Developer shall indemnify, protect, pay for, defend and hold
harmless the Indemnitees, with legal counsel reasonably acceptable to City and
Agency, from and against any and all loss, liability, damage, claim, cost, expense
and/or "increased costs" (including reasonable attorneys fees, court and litigation
costs, and fees of expert witnesses) which, in connection with the development,
construction (as defined by applicable law) and/or operation of the Housing
Development, including, without limitation, any and all public works (as defined
by applicable law), results or arises in any way from any of the following: (i) the
noncompliance by the Developer or its contractor with any applicable local, state
and/or federal law or regulation, including, without limitation, any applicable
federal and/or state labor laws or regulations (including, without limitation, if
applicable, the requirement to pay state and/or federal prevailing wages and hire
apprentices); (ii) the implementation of Section 1781 of the Labor Code and/or of
Davis Bacon, as the same may be amended from time to time, or any other similar
law or regulation; and/or (iii) failure by the Developer to provide any required
disclosure or identification as required by Labor Code Section 1781 and/or by
Davis Bacon, as the same may be amended from time to time, or any other similar
law or regulation. If and only if the representation and warranty provided by the
Agency to the Developer in subparagraph (iv) above remains true, correct and
complete in every respect, it is agreed by the parties that, in connection with the
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development and construction (as defined by applicable law or regulation) of the
Housing Development, including, without limitation, any and all public works (as
defined by applicable law or regulation), the Developer shall bear all risks of
payment or non-payment of prevailing wages under applicable federal, state and
local law or regulation and/or the implementation of Labor Code Section 1781
and/or by Davis Bacon, as the same may be amended from time to time, and/or
any other similar law or regulation. The foregoing indemnity shall survive
termination of this Agreement and shall continue after completion of the
construction and development of the Housing Development by the Developer.
(vi) "Increased costs," as used in this Section 10.11, shall have the
meaning ascribed to it in Labor Code Section 1781, as the same may be amended
from time to time.
10.12 Anti -Discrimination. Pursuant to Section 33050 of the California Community
Redevelopment Law, the Developer for itself and its successors and assigns, agrees, that in the
construction of the Project on the Property or other performance under this Agreement, the
Developer shall not discriminate against any employee or applicant for employment on any basis
listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of
Section 12955 and Section 12955.2 of the Government Code.
10.13 Taxes and Assessments. Developer shall pay prior to delinquency all real estate
taxes and assessments on the Property so long as the Developer retains any interest thereon.
Notwithstanding the above, the Developer shall have the right to contest the validity or amounts
of any tax, assessment, or encumbrance available to the Developer in respect thereto, or obtain
any available exemptions.
10.14 Right of the Agency to Satisfy Other Liens on the Property(s). At any time prior
to the completion of construction, and after the Developer has had written notice and has failed
after a reasonable time, but in any event not less than forty-five (45) days, to challenge, cure,
adequately bond against, or satisfy any liens or encumbrances on the Property which are not
otherwise permitted under this Agreement, the Agency shall have the right but no obligation to
satisfy any such liens or encumbrances. Notwithstanding the above, the Developer shall have the
right to contest the validity or amounts of any tax, assessment, or encumbrance available to the
Developer in respect thereto.
10.15 Nonliability of Agency. Developer acknowledges and agrees that:
(a) Agency neither undertakes nor assumes any responsibility to review,
inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter in
connection with the Project, including matters relating to: (i) the Final Construction Documents,
(ii) architects, contractors, subcontractors and materialmen, or the workmanship of or materials
used by any of them, and/or (iii) the progress of the Project and its conformity with the Final
Construction Documents; and Developer shall rely entirely on its own judgment with respect to
such matters and acknowledge that any review, inspection, supervision, approval or information
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supplied to Developer by Agency in connection with such matters is solely for the protection of
Agency and that neither Developer nor any third party is entitled to rely on it;
(b) Notwithstanding any other provision of this Agreement: (i) Agency is not
a partner, joint venturer, alter -ego, manager, controlling person or other business associate or
participant of any kind of Developer and Agency does not intend to ever assume any such status;
(ii) Agency shall not be deemed responsible for or a participant in any acts, omissions or
decisions of Developer;
(e) Agency shall not be directly or indirectly liable or responsible for any loss
or injury of any kind to any person or property resulting from any construction on, or occupancy
or use of, the Property whether arising from: (i) any defect in any building, grading, landscaping
or other onsite or offsite improvement; (ii) any act or omission of Developer or any of
Developer's agents, employees, contractors, licensees or invitees; or (iii) from and after the
Property Closing any accident on the Property or any fire or other casualty or hazard thereon not
caused by the Indemnitees; and
(d) By accepting or approving anything required to be performed or given to
Agency under this Agreement, including any certificate, financial statement, survey, appraisal or
insurance policy, Agency shall not be deemed to have warranted or represented the sufficiency
or legal effect of the same, and no such acceptance or approval shall constitute a warranty or
representation by Agency to anyone.
10.16 Release of Construction Covenants. Promptly after completion of construction of
the Project by Developer in conformity with this Agreement, Agency shall furnish Developer
with a Release of Construction Covenants upon written request therefor by Developer. Agency
shall not unreasonably withhold such Release of Construction Covenants. Such Release of
Construction Covenants shall be a conclusive determination of satisfactory completion of the
construction required by this Agreement and the Release of Construction Covenants shall so
state. The Release of Construction Covenants shall be in the form attached hereto as Attachment
No. 12 or such other similar form as to permit it to be recorded in the Official Records. If
Agency refuses or fails to furnish a Release of Construction Covenants for the Project after
written request from Developer, Agency shall, within fifteen (15) days of written request
therefor, provide Developer with a written statement of the reasons Agency refused or failed to
furnish the requested Release of Construction Covenants. The statement shall also contain
Agency's opinion of the actions Developer must take to obtain the Release of Construction
Covenants. If the reason for such refusal is confined to the immediate unavailability of specific
items of materials for landscaping or other minor "punch list" items, Agency shall issue its
Release of Construction Covenants upon the posting of cash, a bond, or other security acceptable
to Agency in Agency's sole discretion by Developer with Agency in an amount representing the
fair value of the work not yet completed, and Developer shall thereafter complete the "punch
list" work within sixty (60) days of issuance of the Release of Construction Covenants.
A Release of Construction Covenants shall not constitute evidence of compliance with or
satisfaction of any obligation of Developer to any holder of any mortgage or any insurer of a
mortgage securing money loaned to finance the improvements, or any part of this Agreement, or
a release of any obligations under this Agreement which survives issuance of the Release of
882/015610-0047 -3 1-
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Construction Covenants. A Release of Construction Covenants is not a notice of completion as
referred to in the California Civil Code Section 3093.
11. AFFORDABILITY COVENANTS
As more particularly provided in the Agency Regulatory Agreement, for a period of fifty-
five (55) years, (i) thirty-six (36) of the dwelling units in the Project shall be rented to households
whose incomes do not exceed the qualifying limits under California law for "very low income
households" as established by HUD, and as published periodically by HCD; (ii) one hundred
thirty-eight (138) of the dwelling units in the Project shall be rented to households whose incomes
do not exceed the qualifying limits under California law for "lower income households" as
established by HUD, and published periodically by HCD; and (iii) two (2) of the dwelling units in
the Project (which units shall be the two (2) on -site manager's units) shall be rented to households
whose incomes do not exceed the qualifying limits under California law for "persons and families
of moderate income" as established by HUD, and as published periodically by HCD.
12. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
12.1 Developer's Formation Qualification and Compliance. Developer represents and
warrants that (a) it is validly existing and in good standing under the laws of the State of
California, (b) it has all requisite authority to conduct its business and own and lease its
properties, (c) it has all requisite authority to execute and perform its obligations under this
Agreement, (d) this Agreement is binding upon Developer in accordance with its terms, and (e)
the individuals executing this Agreement on behalf of Developer are duly authorized to execute
and deliver this Agreement on behalf of Developer.
12.2 Litigation. Developer represents and warrants that there are no actions, lawsuits
or proceedings pending or, to the best of Developer's knowledge, threatened against or affecting
Developer, the adverse outcome of which could have a material adverse affect on Developer's
ability to perform its obligations under this Agreement.
12.3 Developer's Covenants Regarding Adjacent Property. Developer acknowledges
that Agency intends to sell the adjacent real property located directly to the north of the Property
and identified as Parcel 1 of Lot Line Adjustment No. 2010-508, which was approved by the La
Quinta Planning Department on November 16, 2010, and recorded in the Official Records on
December 2, 2010, as Instrument No. 2010-0575516 (the "Adjacent Property"), to a commercial
developer for development and subsequent operation thereon of a commercial use, including,
without limitation, for possible use as an automobile dealership that would include, without
limitation, sales facilities, a vehicle showroom, and service and repair facilities (the
"Commercial Use"). Developer covenants that it will not, directly or indirectly, object to any
applications or City and/or Agency approvals related to the Commercial Use. Agency shall not
unreasonably withhold its consent to, and shall cooperate with, any request by Developer to
remove dirt from the Adjacent Property for use as fill on the Property.
12.4 Agency. Agency represents and warrants that (a) it is validly existing and in
good standing under the laws of the State of California, (b) it has all requisite authority to
conduct its business and own and lease its properties, (c) it has all requisite authority to execute
882/015610-0047 -32-
1111838 07 a01/04/11
and perform its obligations under this Agreement, (d) this Agreement is binding upon Agency in
accordance with its terms, and (e) the individuals executing this Agreement on behalf of Agency
are duly authorized to execute and deliver this Agreement on behalf of Agency.
13. DEFAULTS AND REMEDIES
13.1 Event of Default. Any of the following events or occurrences with respect to
either party shall constitute a material breach of this Agreement and, after the expiration of any
applicable cure period, shall constitute an "Event of Default" by such party:
(a) The failure by either party to pay any amount in full when it is due under
this Agreement, if the failure has continued for a period of fifteen (15) days after the party
entitled to payment demands in writing that the other party cure that failure.
(b) The failure by either party to perform any other obligation under this
Agreement, including, without limitation, under the other Project Documents, if the failure has
continued for a period of thirty (30) days after demand in writing that such party cure the failure.
If, however, by its nature the failure cannot reasonably be cured within thirty (30) days, such
party may have such longer period of time as is reasonably necessary to cure the failure,
provided that such party commence said cure within said thirty (30)-day period, and thereafter
diligently prosecute said cure to completion within ninety (90) days thereafter.
13.2 No Waiver. Except as otherwise expressly provided in this Agreement, any
failure or delay by any party in asserting any of its rights or remedies as to any default shall not
operate as a waiver of any default, or of any such rights or remedies, or deprive any such party of
its right to institute and maintain any actions or proceedings which it may deem necessary to
protect, assert or enforce any such rights or remedies.
13.3 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this
Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party
of one or more of such rights or remedies shall not preclude the exercise by it, at the same time
or different times, of any other rights or remedies for the same default or any other default by
another party.
13.4 Attorneys' Fees. If either party to this Agreement is required to initiate or defend
litigation in any way connected with this Agreement, the prevailing party in such litigation, in
addition to any other relief which may be granted, whether legal or equitable, shall be entitled to
reasonable attorneys' fees. If either party to this Agreement is required to initiate or defend
litigation with a third party because of the violation of any term or provision of this Agreement
by the other party, then the party so litigating shall be entitled to reasonable attorneys' fees from
the other party to this Agreement. Attorneys' fees shall include attorney's fees on any appeal,
and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for
investigating such action, retaining expert witnesses, taking depositions and discovery, and all
other necessary costs incurred with respect to such litigation. All such fees shall be deemed to
have accrued on commencement of such action and shall be enforceable whether or not such
action is prosecuted to judgment.
882/015610-0047 -33-
1111838.07 a01/04/11
13.5 Reimbursement of Agency. Subject to Section 13.4, Developer shall, within
fifteen (15) days after written demand, reimburse Agency for all costs reasonably incurred by
Agency (including the reasonable fees and expenses of attorneys, accountants, appraisers and
other consultants) in connection with Agency enforcement of the Project Documents and all
related matters, including, without limitation, the following: (a) Agency's commencement of,
appearance in, or defense of any action or proceeding purporting to affect the rights or
obligations of the parties to any Project Document; and (b) all claims, demands, causes of action,
liabilities, losses, and other costs against which Agency is indemnified under the Project
Documents. Such reimbursement obligations shall bear interest from the date occurring fifteen
(15) days after Agency makes written demand to Developer at the rate of ten percent (10%) per
annum. Such reimbursement obligations shall survive termination of this Agreement.
14. NOTICES
All notices, consents, demands, approvals and other communications (the "Notices") that
are given pursuant to this Agreement shall be in writing to the appropriate party and shall be
deemed to have been fully given when delivered, including delivery by reputable commercial
delivery service that provides a receipt with the time and date of delivery, or if deposited in the
United States mail, certified or registered, postage prepaid, within two (2) days after deposit. All
Notices shall be addressed as follows:
If to Developer: Coral Mountain Partners, L.P.
46753 Adams Street,
La Quinta, CA 92253
Phone No.: (760) 771-3345
Facsimile No.: (760) 771-0686
Attention: Robert High
with a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Phone No.: 213-239-8088
Facsimile No.: 213-559-0733
Attention: Lance Bocarsly
882/015610-0047 -34-
1111838.07 01/04/11
If to Agency: Notices Delivered by U.S. Mail:
La Quinta Redevelopment Agency
P.O. Box 1504
La Quinta, CA 92247
Phone No.: 760-777-7031
Facsimile No.: 760-777-7101
Attention: Executive Director
Notices Delivered Personally or by Courier:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, California 92253
Phone No.: 760-777-7031
Facsimile No.: 760-777-7101
Attention: Executive Director
with a copy to Rutan & Tucker, LLP
611 Anton, Suite 1400
Costa Mesa, CA 92626
Phone No.: 714-641-5100
Facsimile No.: 714-546-9035
Attention: M. Katherine Jenson, Esq.
Addresses for notice may be changed from time to time by notice to all other parties.
Notwithstanding that Notices shall be deemed given when delivered, the non -receipt of any
Notice as the result of a change of address of which the sending party was not notified shall be
deemed receipt of such Notice.
15. ASSIGNMENT
15.1 Generally Prohibited. Except as otherwise expressly provided to the contrary in
this Agreement, Developer shall not assign any of its rights or delegate any of its duties under
this Agreement, nor shall any changes occur with respect to the ownership and/or control of
Developer, including, without limitation, stock transfers, sales of issuances, or transfers, sales or
issuances of membership or ownership interests, or statutory conversions, without the prior
written consent of the Executive Director, which consent may be withheld in his or her sole and
absolute discretion. Any such assignment or delegation without such consent shall, at Agency's
option, be void. Notwithstanding the foregoing, however, (i) Developer may admit the Investor
as a 99.99% Tax Credit limited partner without obtaining any consent, and such Investor may
assign its interests as a 99.99% Tax Credit limited partner to a subsequent reputable institutional
investor without any consent; and (ii) the Investor may remove the general partner for a default
under the Partnership Agreement, provided the replacement general partner is reasonably
acceptable to Agency. For purposes of this Section 15.1, if the Investor transfers to an entity in
which the Investor or an affiliated entity controlled by the Investor is the general partner or
managing member such transferee entity shall be deemed to be a "reputable institutional
investor."
882/015610-0047 -35-
1111838.07 .01/04/11
15.2 Release of Developer. Upon any such assignment made in compliance with
Section 15.1 above, Developer shall be released from any liability under this Agreement arising
from and after the date of such assignment.
16. ADMINISTRATION
Following approval of this Agreement by Agency, this Agreement shall be administered
and executed on behalf of Agency by the Executive Director. The Executive Director shall have
the authority to issue interpretations, waive terms and conditions, and enter into amendments of
this Agreement (including, without limitation, to the Schedule of Performance) on behalf of
Agency provided that such actions do not substantially change the uses or development
permitted on the Property or materially add to the costs of Agency provided herein. All other
waivers or amendments shall require the formal consent of Agency.
17. MISCELLANEOUS
17.1 Counterparts. This Agreement may be executed in counterparts, all of which,
taken together, shall be deemed to be one and the same document.
17.2 Prior Agreements; Amendments. This Agreement contains the entire agreement
between Agency and Developer with respect to the Property, and all prior negotiations,
understandings and agreements are superseded by this Agreement. No modification of this
Agreement (including waivers of rights and conditions) shall be effective unless in writing and
signed by the party against whom enforcement of such modification is sought, and then only in
the specific instance and for the specific purpose given. Agency agrees to make reasonable
modifications to this Agreement that are necessary to finance the development of the Project.
17.3 Governing _Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of California, without regard to
conflict of law principles.
17.4 Acceptance of Service of Process. In the event that any legal action is
commenced by Developer against Agency, service of process on Agency shall be made by
personal service upon the Executive Director or in such other manner as may be provided by
law. In the event that any legal action is commenced by Agency against Developer, service of
process on Developer shall be made in such manner as may be provided by law.
17.5 Severability of Provisions. No provision of this Agreement that is held to be
unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of
this Agreement are hereby declared to be severable.
17.6 Headings. Article and section headings are included in this Agreement for
convenience of reference only and shall not be used in construing this Agreement.
17.7 Time of the Essence. Time is of the essence of this Agreement.
882/015610-0047 -36-
1111838 07 A1/04/11
17.8 Conflict of Interest. No member, official or employee of Agency shall have any
direct or indirect interest in this Agreement, nor participate in any decision relating to this
Agreement which is prohibited by law.
17.9 Warranty Against Payment of Consideration. Developer warrants that it has not
paid or given, and will not pay or give, any third person any money or other consideration for
obtaining this Agreement.
17.10 Nonliability of Agency Officials and Employees. No member, official or
employee of Agency shall be personally liable to Developer, or any successor in interest, in the
event of any default or breach by Agency or for any amount which may become due to
Developer or successor, or on any obligation under the terms of this Agreement.
17.11 Force Ma eure. In addition to specific provisions of this Agreement, performance
by either party hereunder shall not be deemed to be in default where delays or defaults are due to
war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God or
other deities; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes;
litigation beyond the reasonable control of a party; unusually severe weather; inability, despite
commercially reasonable efforts, to secure necessary labor, materials or tools; delays of any
contractor, subcontractor or supplier beyond the reasonable control of a party; acts of the other
party; acts or the failure to act of any public or governmental entity (except that acts or the
failure to act of Agency shall not excuse performance by Agency); or any other acts or causes
beyond the reasonable control of the party claiming an extension of time to perform. An
extension of time for any such cause shall be for the period of the enforced delay and shall
commence to run from the time of the commencement of the cause, if notice by the party
claiming such extension is sent to the other party within thirty (30) days of the commencement of
the cause. Force Majeure shall serve also to extend the time by which any condition, for the
benefit of either party, shall be satisfied under this Agreement. Notwithstanding any provision of
this Agreement to the contrary, the lack of funding or difficulty obtaining financing to complete
the Project shall not constitute grounds of enforced delay pursuant to this Section.
17.12 Nondiscrimination Covenants. Developer covenants by and for itself and any
successors in interest that there shall be no discrimination against or segregation of, any person
or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of
the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m)
and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government
Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property,
nor shall the grantee or any person claiming under or through him or her, establish or permit any
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property.
The foregoing covenants shall run with the land.
Developer shall refrain from restricting the rental, sale or lease of the Property on any of
the bases listed above in this Section 17.12. All such deeds, leases or contracts shall contain or
be subject to substantially the following nondiscrimination or nonsegregation clauses:
882/015610-0047 _37-
1I I1838.a7 01/04/11
(a) In deeds: "The grantee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons claiming under or through
them, that there shall be no discrimination against or segregation of, any person or group of
persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through him or her, establish or
permit any practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
premises herein conveyed. The foregoing covenants shall run with the land."
(b) In leases: "The lessee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons claiming under or through
him or her, and this lease is made and accepted upon and subject to the following conditions:
"That there shall be no discrimination against or segregation of any
person or group of persons, on account of any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code,
as those bases are defined in Sections 12926, 12926. 1, subdivision
(m) and paragraph (1) of subdivision (p) of Section 12955, and
Section 12955.2 of the Government Code, in the leasing,
subleasing, transferring, use, occupancy, tenure, or enjoyment of
the premises herein leased nor shall the lessee himself or herself, or
any person claiming under or through him or her, establish or
permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use,
or occupancy, of tenants, lessees, sublessees, subtenants, or
vendees in the premises herein leased."
(c) In contracts: "There shall be no discrimination against or segregation of,
any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section
12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of
the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment
of the premises which are the subject of this Agreement, nor shall the grantee or any person
claiming under or through him or her, establish or permit any practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The
foregoing covenants shall run with the land."
The covenants established in this Section 17.12 shall, without regard to technical
classification and designation, be binding for the benefit and in favor of Agency and its
successors and assigns, and shall remain in effect in perpetuity.
882/015610-0047 _38_
1111838,07 001/04/11
17.13 Consents and Approvals. Unless otherwise expressly set forth in this Agreement,
any consents or approvals to be given by a party under this Agreement shall not be unreasonably
withheld, conditioned or delayed.
[End of Agreement — Signature page follows]
882/015610-0047 -39-
1111838.07 a01/04/1I
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed.
"Developer"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
By: Highway I I I Apts Member, LLC,
a California limited liability
company,
its member
By:
Michael J. Shovlin, Member
"Agency"
LA QUINTA REDEVELOPMENT
AGENCY, a public body, corporate aDd
polif /
By:
Executive Director
APPROVED AS TO FORM:
RUTAN & TUCKER, LP
e cy oun el �-
862/015610-0047 —40-
1111838,07 s01/04/11
ATTACHMENTS
Legal Description and Depiction of the Property
2
Schedule of Performance
3
Scope of Development
4
Form of Assignment of Plans and Contract
5
Form of Disbursement Request
6
Form of Agency Note
7
Form of Agency Deed of Trust
g
Project Budget
9
Form of Ground Lease
10 -
Form of Agency Regulatory Agreement
11 -
Form of Notice of Affordability
12 -
Form of Release of Construction Covenants
882/01561 M047 -41 -
1111838 07 a01 /041l I
ATTACHMENT NO. 1
LEGAL DESCRIPTION OF PROPERTY
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO, 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01°53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16-09-07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18-02-50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
8821D15610-0047 ATTACHMENT NO. I
II1]838,07 e01,04111
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90°09'34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS
882/015610-0047 ATTACHMENT NO. 1
1111838.07 a01/04/11
DEPICTION OF PROPERTY
N. LINE SE t/4 P.O.C.
SEC. 29, T.5 ., a E. Y4 COR. SEC- 29,
14.52' N 89'268L E 2650.59' r 55., R.7E., S.B.M.
R.7E., S.B.M. g62.68' I"�wY. 117�_
331.34' 57.30' _ 60.93' 1656.57' F
N 89'5806, E 662.65'
N — — O
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SEC. 29 SE 1/4, SEC. 29.
T.55., R.7E., S.B.M.
N 89'48'22" W
331,07 5 89'4 E 662.14 S'LY LINE
PM 33960
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182/015610-0047 ATTACHMENT NO. I
1111838.07 a01/04/11
ATTACHMENT NO.2
SCHEDULE OF PERFORMANCE
Task/Event
1. Developer prepares and submits to City
application for Site Development Permit.
2. SPDA considered by Architecture and Land
Committee.
3. Planning Commission public hearing
regarding Site Development Permit
application.
4. City Council public hearing regarding Site
Development Permit application.
5. Developer submits precise grading plan for
plan check.
6. Developer obtains approval of precise
grading plan.
7. Developer submits to City for plan check
the Final Construction Documents.
8. Developer submits applications for building
permits.
9. Developer and Agency open Escrow.
10. Developer obtains allocation of Tax -
Exempt Bonds.
Time for Performance
By April 5, 2011.
By June 22, 2011.
By July 12, 2011.
By August 2, 2011.
By October 8, 2011.
By December 30, 2011.
Not later than March 15, 2012
By March 27, 2012.
Not later than sixty (60) days prior to the
proposed Property Closing.
By July 2, 2012.
11. Developer submits to Agency preliminary By July 10, 2012.
commitment for the Project Financing and
draft Project Financing Disbursement
Agreement.
12. Developer submits to Agency final Project August 24, 2012.
Financing Disbursement Agreement
13. Developer submits to Agency Evidence August 24, 2012.
Financing Commitments.
882/015610.0047 ATTACHMENT NO. 2
1111838.07 a01/04/1I
14. Developer causes the conditions set forth
in Section 7.2 to be satisfied and the
Property Closing shall occur.
15. Developer commences construction of
Project.
16. Developer completes construction of
Project.
17. Developer commences leasing the Units
18. Developer completes leasing of all Units.
Upon satisfaction of the conditions set
forth in Section 7.2, but not later than the
Outside Closing Date.
Within 10 days after the Property Closing,
but not later than by September 3, 2012.
By February 25, 2014.
Not later than by February 27, 2014.
Not later than by March 23, 2015.
It is understood that the foregoing Schedule is subject to all of the terms and
conditions of the text of the Agreement, including, without limitation, Section 17.11. The
summary of items of performance in the Schedule is not intended to supersede or modify any
more complete description in the text; in the event of any conflict or inconsistency between this
Schedule and text of the Agreement, the text of the Agreement shall govern. Subject to Section
17.11, times of performance under this Agreement may be extended by mutual written
agreement of Agency and Developer. The Executive Director of Agency shall have the authority
on behalf of Agency to approve extensions of time, with the exception of any extension that
would result in the Outside Closing Date, the date to commence construction of the Project, or
the date to complete construction of the Project, being extended by more than one hundred
twenty (120) days.
981/015610-0047 _2_
1111838.07 a01/04/11
ATTACHMENT NO. 3
SCOPE OF DEVELOPMENT
PROJECT DESCRIPTION
The Project will consist of the development of a 176-unit affordable multi -family apartment
project, located southeast of the intersection of Dune Palms Road and Highway 111 in the City
of La Quinta.
The proposed 176-unit development will consist of the following unit mix:
40 1-bedroom/lbath
82 2-bedroom/l bath
54 3-bedroom/2 bath
176 total units
Unit amenities will consist of:
• Energy STAR rated appliances
• Energy efficient lighting
• Low flow faucets
• Water conserving water closets
• Ceiling fans
• Granite kitchen countertops
• Fully equipped kitchens (e.g., refrigerator, dishwasher, oven, and stovetop)
• Master bedroom with adjoining bath
• High efficiency HVAC units
The parking provision consists of 352 spaces, of which not less than 176 spaces are covered, and
not less than 8 spaces are handicapped access spaces.
Project amenities will include a pool, recreation area, open space, walks, parking drive, and a
Resident Services Center, which will contain the management office and a laundry room.
Developer shall provide oversight and coordination of resident services. Resident services will
include the following:
892/015610-0047 ATTACHMENT NO. 3
1111838 07 a01/04/11
An after -school tutoring program for school age children. Specific programs and
age limitations to be determined by the demographic requirement of the residents
• Educational workshops for the adults on such topics as financial literacy, job
readiness skills, computer training, and English as a second language.
• A monthly newsletter to keep residents informed about community activities.
DEVELOPMENTSTANDARDS
All of the development standards in the Dune Palms Road and Highway I I I Specific
Plan, as well as the following development standards, shall apply to the Project:
A. Building Setbacks. Minimum building setbacks for building and parking areas
shall be as required by the Redevelopment Plan and approved by the Agency, and shall conform
to the La Quinta Municipal Code (the "City Code").
B. Building Coverage. The amount of land within the Property covered by buildings
shall be as required by the Redevelopment Plan and local zoning.
C. Building Height. Buildings shall not exceed the height as may be limited by the
Redevelopment Plan and local zoning.
D. Landscaping. Landscaping shall be subject to approval by the City's Planning
Department prior to planting.
E. Utilities. Sewer drainage and utility lines, conduits or systems shall not be
constructed or maintained above the ground level of the Property. Storm drainage for all hard
surfaced areas shall be drained or may be sheet flowed to storm sewers. All non -polluted waste
water, such as waste air conditioning water, shall be drained to the storm or sanitary drainage
systems as permitted by local codes.
F. Stormwater Treatment and Retention. Stormwater treatment and retention
facilities and improvements shall be constructed for the Housing Development's storm water
runoff to be routed to the Coachella Valley Water District evacuation channel, per the
requirements set forth in any permits issued for the Project, including, without limitation, a site
development permit, and all conditions of approval issued in connection therewith.
G. Building Materials. All exterior walls shall be painted or covered by the
Developer with colors) and materials subject to approval by the City's Community
Development Department. In satisfaction of this requirement, the Developer shall submit a color
and materials board for approval by the Agency.
H. Green Building Requirements.
Property
• Protect glazing on south and west elevations
• Separate sidewalks from roadways
882/015610-0047 -2-
1111878 07 a01/04/11
• Provide bicycle storage
• Provide smart weather based irrigation controllers
• Minimize turf
• Specify drought tolerant plants that require minimal shearing
• Provide outdoor gathering places
• Community garden
• Recycle during construction (80% divert min. is the goal)
Water Efficiency
• Low -flow fixtures
• Dual -flush toilets
• Water -efficient dishwashers and laundry appliances
• Eliminate hose bibs on patios
• Drip Irrigation
• Hot Water recirculation system in units
Energy Efficiency and Renewable Energy
• Passive solar design
• Incorporate solar photovoltaics
• Programmable thermostats
• Natural ventilation
• Ceiling fans in all bedrooms and living rooms
• High efficiency water heaters with circ system
• Extensive day lighting and high efficiency lighting (energy star)
• High efficiency appliances (energy star)
• Radiant barrier roof sheeting or cool roof technology
• Low-e windows
• Strategic tree planting to provide some seasonal shading
Durability and Resource -Efficiency
• Maximum use of locally -sourced materials
• Paper -less drywall in high moisture areas
• Drain or automatic shutoff valves in all laundry areas
• Durable low maintenance exterior materials (example steel vs wood for columns)
• No vinyl windows
• Recycling or organic composting incorporated into design
Indoor Environmental Health
• Non -toxic, low/no-VOC wood composites, adhesives, paints and finishes
• Formaldehyde free cabinets, shelving and trim
• Outdoor venting of bathrooms
• Automatic and delay on bathroom exhaust
• Paperless drywall wet areas (mold prevention)
882/015610-0047 -3-
1111838.07 .01/04/11
Hard surface and hypo -allergenic floor coverings
Operations
• Operation and maintenance manuals for management and residents
• Green and sustainable education for management and residents
I. Building Design. The Project shall be constructed such that the Project shall
conform to the La Quinta Municipal Code, and shall be effectively and aesthetically designed.
PUBLIC IMPROVEMENTS AND UTILITIES
The Developer, at its own cost and expense, shall provide or cause to be provided the
Public Improvements. The Public Improvements shall include street, drainage, and utilities
improvements, as required by the City pursuant to the usual City building permit requirements
for on- and off -site improvements to residential development, and/or as required as a condition
of approval to any permit or approval required by the City in connection with the development of
the Project and shall include, but not be limited to, the construction of "A" Street street
improvements to allow access to the Housing Development and adjacent real property. The
roadway shall be constructed to a minimum width of 30 feet, measured curb -to -curb, pursuant to
City roadway standards. Improvements also include parkway landscaping on both sides and 6
foot wide sidewalk on east side.
All of such improvements shall be completed within the time set forth for the completion
of the Project in the Schedule of Performance.
AMENDMENTS
Any material change, as reasonably determined by the Agency, in this Scope of
Development or in the approved site plan which affects the size, quality, or type of development
proposed for the Property shall require the written approval of the Agency, which approval may
be contingent upon the review and renegotiation of all of the economic and financial terms of
this Agreement and such other matters as the Agency shall deem appropriate.
It shall be up to the discretion of the Agency Executive Director whether a proposed
material change to this Scope of Development requires approval by the Agency Board or
whether such change may be approved in writing by the Agency Executive Director.
88M15610-0047 -4-
1111838.07 .01/04/11
ATTACHMENT NO.4
ASSIGNMENT OF ARCHITECTURAL AGREEMENTS
[See following document]
11118 807aan ATTACHMENT NO. 4
IIIIBi8 07 a01/04/II
ASSIGNMENT OF ARCHITECTURAL AGREEMENTS
AND PLANS AND SPECIFICATIONS
FOR VALUE RECEIVED, the undersigned, CORAL MOUNTAIN PARTNERS, L.P., a
California limited partnership ("Developer"), assigns to LA QUINTA REDEVELOPMENT
AGENCY, a public body, corporate and politic ("Agency"), all of its right, title and interest in
and to:
1. All architectural, design, engineering and development agreements, and any and
all amendments, modifications, supplements, addenda and general conditions thereto
(collectively, "Architectural Agreements"), and
2. All plans and specifications, blueprints, sketches, shop drawings, working
drawings, landscape plans, utilities plans, soils reports, noise studies, environmental assessment
reports, and grading plans, and all amendments, modifications, changes, supplements, general
conditions and addenda thereto (collectively, "Plans and Specifications"), heretofore or hereafter
entered into or prepared by any architect, engineer or other person or entity (collectively,
"Architect"), for or on behalf of Developer in connection with the Real Property described on
Exhibit "A" attached hereto. The Plans and Specifications, as of the date hereof, are those which
Developer have heretofore, or will hereafter deliver to Agency. The Architectural Agreements
include, but are not limited to, the architectural agreement or contract between to Mn and
{M-- \/uk-,ic �W{nr: dated ]•10•o`j 1+%d4w�w�o,1g•2S•lo aWtw^ V
This ASSIGNMENT OF ARCHITECTURAL AGREEMENTS AND PLANS AND
SPECIFICATIONS ("Assignment") constitutes a present, absolute and unconditional assignment
to Agency.
Developer acknowledges that by accepting this Assignment, Agency does not assume any
of Developer's obligations under the Architectural Agreements with respect to the Plans and
Specifications.
Developer represents and warrants to Agency that: (a) no default by Developer, or event
which would constitute a default by Developer after notice or the passage of time, or both, exists
with respect to said Architectural Agreements, and (b) all copies of the Architectural Agreements
and Plans and Specifications delivered to Agency are complete and correct. Developer has not
assigned any of its rights under the Architectural Agreements or with respect to the Plans and
Specifications. Notwithstanding the foregoing, this Assignment shall be subordinated to any
assignment required to be made by Developer to the "Construction Lender" (as that term is
defined in that certain Disposition and Development Agreement entered into by and between
Agency and Developer on or about January 4, 2011 (the "DDA")) at the close of the "Property
Escrow" (as that term is defined in the DDA).
This Assignment shall be governed by the laws of the State of California, except to the
extent that federal laws preempt the laws of the State of California, and Developer consents to
the jurisdiction of any federal or state court within the State of California having proper venue
for the filing and maintenance of any action arising hereunder and agrees that the prevailing
882 015610-0047
11118J8-07.01,04/11 -1-
party in any such action shall be entitled, in addition to any other recovery, to reasonable
attorneys' fees and costs.
This Assignment shall be binding upon and inure to the benefit of the heirs, legal
representatives, assigns, and successors -in -interest of Developer and Agency.
The attached Architect's/Engineer's Consent and Exhibit "A" are incorporated by
reference. ,
Executed y on 2011.
"Developer"
Date: 12011
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
By: Highway I I I Apts Member, LLC,
a California limited liability
company, its member
By:
Michael J. Shovlfn, Member
"Agency"
LA QUINTA REDEVELOPMENT
AGENCY
Date: 12011 B
, a public boydy�corporate rd
p
� y
Executive Director
A
Agency Secret
APPROVED AS TO FORM:
ROTAN & TUCKER, LLP
Agency Counsel
882,015610-0047
1 HI
-2-
party in any such action shall be entitled, in addition to any other recovery, to reasonable
attorneys' fees and costs.
This Assignment shall be binding upon and inure to the benefit of the heirs, legal
representatives, assigns, and successors -in -interest of Developer and Agency.
The attached Architect's/Engineer's Consent and Exhibit "A" are incorporated by
reference. N Execute on 8' i I—t
4 2011.
"Developer"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
Date: O - fo 2011
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
By: Highway 11 I Apts Member, LLC,
a California limited liability
company, its member
By:
Michael J. Shov n, Member
"Agency„
LA QUINTA REDEVELOPMENT
AGENCY, a public body, corporate and
politic
2011 'By:
Executive Director
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
ROT & TUCK R, P
Ag ncy Cou el _..
HHNOISG I d0047
1111938.0 aOlf4A 1 -2-
ARCHITECT'S/ENGINEER'S CONSENT
The undersigned architect and/or engineer (collectively referred to as "Architect") hereby
consents to the foregoing Assignment to which this Architect's/Engineer's Consent ("Consent")
is a part, and acknowledges that there presently exists no unpaid claims due to the
Architect/Engineer arising out of the preparation and delivery of the Plans and Specifications to
��L*i�bun%�i✓�h9vs l r _ and/or the performance of the Architect's obligations under the Architectural
Agreements described in the Assignment.
�pYai kMU>h Architect agrees that, by virtue of the foregoing Assignment, Agency has succeeded to all
of p L.P. 's right, title and interest in, to and under the Architectural Agreements and the
Plans and Specifications and, therefore, so long as the Architect continues to receive the
compensation called for under the Architectural Agreements, Agency and its successors and
assigns may, at their option, use and rely on the Plans and Specifications for the purposes for
which they were prepared, and Architect will continue to perform its obligations under the
Architectural Agreements for the benefit and account of Agency and its successors and assigns in
the same manner as if performed for the benefit or account of(I_0o4 yb(ovxFw,r) in the absence of
the Assignment. PWY47 t ,p.
Architect warrants and presents that it/he has no knowledge of any prior assignment(s) of
any interest in either the Plans and Specifications and/or the Architectural Agreements. Except
as otherwise defined herein, the terms used herein shall have the meanings given them in the
Assignment.
Executed on 2011.
"Architect"
I
Phone No.:
Fax No.:
882,015610-0047 _
1111838.07 01104111
.r .
EXHIBIT "A"
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01053'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16-09-07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18`02'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18002'50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
1121015610-0047
1111838.07.01,04/11 EXHIBIT A
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90°09'34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29.
THENCE SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS
882/015610-0042
1111838,07 AL04n I EXHIBIT A
ATTACHMENT NO.5
DISBURSEMENT REQUEST FORM
[See following document]
882/015610.0047 ATTACHMENT NO. 5
III 1838 07 AWN/11
DISBURSEMENT REQUEST FORM
Property Address: , La Quinta, California
Disbursement No.
The undersigned, on behalf of CORAL MOUNTAIN PARTNERS, L.P., hereby
requests a disbursement in the amount, and on the date, set forth below, pursuant to that certain
Disposition and Development Agreement (the "Agreement") dated as of January 4, 2011,
between LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic
("Agency"), and CORAL MOUNTAIN PARTNERS, L.P., a California limited partnership
("Developer"). Capitalized terms used and not otherwise defined herein shall have the meanings
set forth for them in the Agreement.
REQUEST AMOUNT:
REQUEST DATE:
Developer hereby represents and warrants to Agency that:
1. The requested disbursement shall be applied to pay costs in accordance with the
itemized Payment Request attached hereto.
2. All costs shown in all prior Disbursement Requests (and Payment Requests) have
been paid in full, Developer has received valid lien releases or waivers from all contractors,
subcontractors and materialmen with respect to all payments made for work and materials if the
work or materials could give rise to a mechanic's or a materialmen's lien against the Property,
and Developer has no knowledge of any mechanic's lien claims against the Property.
3. The work is being performed in substantial conformance with the Scope of
Development, and all applicable governmental requirements, and the work has progressed to the
point indicated on the attached Payment Request.
4. The attached Payment Request is an accurate and complete statement of all
amounts previously paid or now due and all amounts expected to be incurred in connection with
the completion of the work.
5. All representations and warranties in the Agreement and the other Project
Documents are true and correct in all material respects as of the date of this request as if made on
and as of the date of this request. No Event of Default by Developer remains uncured, and no
event has occurred which, with the giving of notice or the passage of time or both, would
constitute an Event of Default by Developer.
DATE:
Designated Representative
882/01561 aoo47
n 11838 07 aO1/04/11
Contractor hereby certifies that Paragraphs 2 (with respect to costs covered by
Contractor's Contract), 3 (with respect to work covered by Contractor's Contract), 4 (with
respect to costs and work covered by Contractor's Contract) and 5, above, are true to the best of
Contractor's knowledge.
Contractor
PAYMENT APPROVED:
Agency Inspector Agency Officer
APPROVED CHANGE ORDERS:
Order No. Work Item Amount
Approved Date
882/015610-0047 _2_
1111838,07 A1/04111
ATTACHMENT NO.6
AGENCY NOTE
[See following document]
182/015610-0047 ATTACHMENT NO. 6
1111838 07 aOIM/I I
AGENCY LOAN PROMISSORY NOTE
$29,000,000.00
2011
La Quinta, California
FOR VALUE RECEIVED, CORAL MOUNTAIN PARTNERS, L.P., a California
limited partnership (`Borrower"), as maker and obligor, promises to pay to the LA QUINTA
REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), as holder
and beneficiary, or order, at Agency's office at P.O. Box 1504, La Quinta, California 92247, or
such other place as Agency may designate in writing, the sum of (a) Twenty -Nine Million
Dollars ($29,000,000.00), or so much thereof as may be disbursed hereunder ("Note Amount"),
and (b) all costs and expenses payable hereunder, in currency of the United States of America,
which at the time of payment is lawful for the payment of public and private debts.
1. Agreement. This Agency Loan Promissory Note ("Note") is given in accordance
with that certain Disposition and Development Agreement executed by Agency and Borrower, as
"Developer," dated as of January 4, 2011 ("Agreement"). The rights and obligations of
Borrower and Agency under this Note shall be governed by the Agreement and by the additional
terms set forth in this Note. In the event of any inconsistencies between the terms of this Note
and the terms of the Agreement or any other document related to the Note Amount, the terms of
this Note shall prevail. Unless otherwise defined herein, capitalized terms used herein shall have
the meanings ascribed to them in the Agreement. An Event of Default by Developer under any
of the provisions of the Agreement, and/or a default under any and all attachments and all
breakout documents executed, attested and/or recorded in implementation of the Agreement,
including, without limitation, the Agency Deed of Trust, Agency Regulatory Agreement, and
Ground Lease, or the income and/or rent restrictions as set forth in the Tax 'Credit Regulatory
Agreement (collectively, the "Transaction Documents") shall, after the expiration of any cure
period under the respective agreement or document, be a default under this Note (a "Default"),
and a default under this Note, after notice and expiration of a fifteen (15) day cure period, shall
be an Event of Default under the Agreement and a default under the Transaction Documents.
2. Interest. The Note Amount shall bear simple interest at one percent (1%) per
annum.
3. Repayment of Note Amount. The Note Amount shall be paid by the Borrower's
annual payment to Agency of an amount equal to fifty percent (50%) of the Residual Receipts
from operation of the Housing Development, as determined by a Residual Receipts calculation
from the operation of the Housing Development the preceding calendar year.
Annual Residual Receipts payments shall be made by the Borrower bycashier's check
and shall be delivered on or before May I for each year during the term of this Note commencing
in the first fiscal year following the Conversion Date until the Note Amount and all unpaid
interest thereon has been repaid in full. Additionally, the Note Amount shall be paid by any or
all of the following: (i) fifty percent (50%) of the Refinancing Net Proceeds immediately upon
any refinancing of the loans secured by the Property (or any part thereof), and (ii) one hundred
882/015610-0047
1111838.07 u01104/11 4 -
percent (100%) of the Transfer Net Proceeds immediately upon any transfer in whole or in part
of the Housing Development.
As used herein, "Affiliate" means any person or entity directly or indirectly, through one
or more intermediaries, controlling, controlled by or under common control with Borrower
which, if Borrower is a partnership or limited liability company, shall include each of the
constituent members or partners, respectively thereof. The term "control" as used in the
immediately preceding sentence, means, with respect to a person that is a corporation, the right
to the exercise, directly or indirectly, of more, than fifty percent (50%) of the voting rights
attributable to the shares of the controlled corporation, and, with respect to a person that is not a
corporation, the possession, directly or indirectly, of the power to direct or cause the direction of
the management or policies of the controlled person.
As used herein, "Annual Financial Statement" shall mean each certified financial
statement of Borrower for the Housing Development using generally accepted accounting
principles ("GAAP"), as separately accounted for this Housing Development, including
Operating Expenses and Annual Project Revenue, prepared annually at Borrower's expense, by
an independent certified public accountant reasonably acceptable to Agency, as well as the
Residual Receipts Report.
As used herein, "Annual Project Revenue" means all gross income and all revenues of
any kind from the Housing Development in a calendar year, of whatever form or nature, whether
direct or indirect, with the exception of the items excluded below, actually received by or paid to
or for the account or benefit of Borrower or any Affiliate of Borrower or any of their agents or
employees, from any and all sources, resulting from or attributable to the ownership, operation,
leasing and occupancy of the Housing Development, determined on the basis of generally
accepted accounting principles applied on a consistent basis, and shall include, but not be limited
to: (i) gross rentals paid by tenants of the Housing Development under leases, and payments and
subsidies of whatever nature, including without limitation any payments, vouchers or subsidies
from the U.S. Department of Housing and Urban Development or any other person or
organization, received on behalf of tenants under their leases, (ii) amounts paid by residents of
the Housing Development to Borrower or any Affiliate of Borrower on account of Operating
Expenses for further disbursement by Borrower or such Affiliate to a third party or parties,
(iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses, concessions,
vending machines, coin laundry and similar sources, (v) other fees, charges or payments not
denominated as rental but payable to Borrower in connection with the rental of office, retail,
storage, or other space in the Housing Development, (vi) consideration received in whole or in
part for the cancellation, modification, extension or renewal of leases, and (vii) interest and other
investment earnings on security deposits, reserve accounts and other Housing Development
accounts to the extent disbursed for other than the purpose of the reserve. Notwithstanding the
foregoing, gross income shall not include the following items: (a) security deposits from tenants
(except when applied by Borrower to rent or other amounts owing by tenants); (b) capital
contributions to Borrower by its members, partners or shareholders (including capital
contributions required to pay any Deferred Developer Fee); (c) condemnation or insurance
proceeds; (d) funds received from any source actually and directly used for initial development
of the Housing Development; (e) receipt by an Affiliate of management fees or other bona fide
882/015610-0042
111183 807 W 1/04/11 -2-
arms -length payments for reasonable and necessary Operating Expenses associated with the
Housing Development, including but not limited to, any Partnership Related Fees; (f) Transfer
Net Proceeds; or (g) Refinancing Net Proceeds.
As used herein "Capital Replacement Reserve" shall have the meaning ascribed thereto in
the Agency Regulatory Agreement.
As used herein, "CPI Adjustment" means the increase in the cost of living index, as
measured by the Consumer Price Index for all urban consumers, Los Angeles -Anaheim -
Riverside statistical area, all items (1982-84 = 100) published by the United States Department
of Labor, Bureau of Labor Statistics ("CPI") in effect as of the date on which the Certificate of
Occupancy is issued for the Housing Development to the CPI in effect as of the date on which an
adjustment is made. If such index is discontinued or revised, such other index with which such
index is replaced (or if not replaced, another index which reasonably reflects and monitors
consumer prices) shall be used in order to obtain substantially the same results as would have
been obtained if the discontinued index had not been discontinued or revised. If the CPI is
changed so that the base year is other than 1982-84, the CPI shall be converted in accordance
with the conversion factor published by the United States Department of Labor, Bureau of Labor
Statistics.
As used herein, "Debt Service" shall mean payments made in a calendar year pursuant to
the approved Construction Loan or the Take -Out Loan, as applicable, obtained for the
construction/development, and ownership of the Project pursuant to Section 6.7 of the
Agreement or any permitted refinancing or modification thereof, but excluding payments made
pursuant to this Note.
As used herein, "Deferred Developer Fee" shall mean the portion of the Borrower's
development fee, if any, that is payable out of the Annual Project Revenue and not from capital
sources, as set forth in the Housing Development Budget. Disbursement of the Deferred
Developer Fee (all or any part thereof) shall be subject to the provisions of the next paragraph.
In connection with Borrower's eligibility to disburse all or any part of the Deferred
Developer Fee, in the event the cost of completing the Project exceeds the amount set forth in the
final Budget; then, to the extent necessary, the funds otherwise available to pay the developer fee
from capital sources shall be expended and used to pay the remaining costs of completing the
Project to the extent necessary to ensure the completion of the Project and the balance of the
developer fee shall be paid as Deferred Developer Fee in accordance with the priority set forth in
the Partnership Agreement, and/or payable from the proceeds of any approved refinancing or
transfer of the Property and/or the Housing Development. In no event shall Borrower be eligible
for disbursement of the Deferred Developer Fee or any part thereof prior to completion of the
Project, as approved by the Executive Director as evidenced by the issuance by the Agency of
the Release of Construction Covenants.
As used herein, "Operating Expenses" shall mean actual, reasonable and customary (for
comparable high quality rental housing developments in Riverside County) costs, fees and
expenses directly incurred, paid, and attributable to the operation, maintenance and management
1821015610-0047
1111838.07 a01/04/11
of the Housing Development in a calendar year, which are in accordance with the annual
Operating Budget approved by Agency pursuant to Section 9 of the Agency Regulatory
Agreement, including, without limitation, painting, cleaning, repairs, alterations, landscaping,
utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal
property taxes, assessments, insurance, security, advertising and promotion, janitorial services,
cleaning and building supplies, purchase, repair, servicing and installation of appliances,
equipment, fixtures and furnishings, fees and expenses of property management, fees and
expenses of accountants, attorneys and other professionals, repayment of any completion or
operating loans made to Borrower, its approved successors or assigns, and other actual,
reasonable and customary operating costs which are directly incurred and paid by Borrower, but
which are not paid from or eligible to be paid from the Operating Reserve or any other reserve
accounts. In addition, Operating Expenses shall include a social services fee in the amount of
Twenty -Two Thousand Dollars ($22,000) for calendar year 2011, which shall be increased
annually by three percent (3%) per year, provided Borrower provides the social services
described in the Tenant Services Agreement that was included in Borrower's tax credit
application. Operating Expenses shall not include any of the following: (i) salaries of
employees of Borrower or Borrower's general overhead expenses, or expenses, costs and fees
paid to an Affiliate of Borrower, to the extent any of the foregoing exceed the expenses, costs or
fees that would be payable in a bona fide arms' length transaction between unrelated parties in
the Riverside County area for the same work or services; (ii) any amounts paid directly by a
tenant of the Housing Development to a third party in connection with expenses which, if
incurred by Borrower, would be Operating Expenses; (iii) optional or elective payments with
respect to the Construction Loan; (iv) any payments with respect to any Project -related loan or
financing that has not been approved by the Agency; (v) expenses, expenditures, and charges of
any nature whatsoever arising or incurred by Borrower prior to completion of the Housing
Development with respect to the development of the Housing Development, or any portion
thereof, including, without limitation, all predevelopment and preconstruction activities
conducted by Borrower in connection with the Housing Development, including without
limitation, the preparation of all plans and the performance of any tests, studies, investigations or
other work, and the construction of the Housing Development and any on site or off site work in
connection therewith; or (vi) depreciation, amortization, and accrued principal and interest
expense on deferred payment debt.
As used herein, "Operating Reserve" means an operating reserve for the Housing
Development (i) initially consisting of not less than Four Hundred Ninety -Five Thousand Dollars
($495,000) (or such greater amount required under either of the Additional Regulatory
Agreements, or under the Partnership Agreement) set aside in a separate interest -bearing trust
account, commencing upon the rental of the units in the Housing Development, and (ii)
replenished to Four Hundred Ninety -Five Thousand Dollars ($495,000) from annual deposits of
the Annual Project Revenue, to the extent available, such that the balance of the Operating
Reserve consists of not less than four (4) months of projected Operating Expenses, adjusted
annually by the CPI Adjustment (unless otherwise agreed to by Developer and Agency) or as
required under the Partnership Agreement (or such greater amount required under either of the
Additional Regulatory Agreements, or under the Partnership Agreement), provided in no event
shall the balance in such account exceed a sum equal to one (1) year of Debt Service for the
Housing Development (or such greater amount required under the Tax Credit Regulatory
Agreement, pursuant to any of the Approved Financing or under the Partnership Agreement).
882/015610-0047
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As used herein, "Partnership Agreement" means the agreement which sets forth the terms
of the Borrower's limited partnership, as such agreement may be amended from time to time.
As used herein, "Partnership Related Fees" means partnership fees actually incurred
pursuant to the terms of the Partnership Agreement, which are reasonable and customary to
developer/owner entities for similar projects in Southern California, and.may include, but shall
not exceed: (i) a general partner(s) (administrative and/or managing partner(s)) partnership
management fee payable to the general partner(s) (ii) a limited partner asset management fee
payable to the investor limited partner; and (iii) an annual audit fee in and for any calendar year.
In no event shall the annual fees for (i) and (ii) above cumulatively exceed Forty Thousand
Dollars ($40,000.00), but such fees in (i) and (ii) may be increased annually by the CPI
Adjustment. In the event insufficient Annual Project Revenues exist to provide for payment of
all or part of the specific Partnership Related Fees listed above, no interest shall accrue on the
unpaid portions of such Partnership Related Fees, but the unpaid balance of such fees alone will
be added to the Partnership Related Fees due in the following year.
As used herein, "Refinancing Net Proceeds" means the proceeds of any approved
refinancing of the Construction Loan or other approved financing secured by the Property, net of
the following actual costs and fees incurred: (i) the amount of the financing which is satisfied
out of such proceeds, (ii) reasonable and customary costs and expenses incurred in connection
with the refinancing, (iii) the balance, if any, of the Deferred Developer Fee, (iv) the balance, if
any, of authorized loans to the Housing Development made by the limited partners of Borrower,
including interest at the rate set forth in the Partnership Agreement for such loans, (v) the
balance, if any, of authorized operating loans or development loans made by the general partners
of a limited partnership that succeeds to Borrower's interest in the Agreement and the Housing
Development, including interest at the rate set forth in the Partnership Agreement for such loans,
(vi) the return of capital contributions, if any, to the Project made by the general partners of a
limited partnership that succeeds to Borrower's interest in the Agreement and the Housing
Development that were used to pay the Deferred Developer Fee, (vii) the amount of proceeds
required to be reserved for the repair, rehabilitation, reconstruction or refurbishment of the
Housing Development; and (viii) the payment to general partner of Borrower of a refinancing
fee, which is agreed to be set at three percent (3%) of the amount of the approved refinancing.
As used herein, "Reserve Deposits" shall mean any payments to the Capital Replacement
Reserve account and payments to the Operating Reserve account pursuant to Sections 10 and 11,
respectively, of the Agency Regulatory Agreement.
As used herein, "Residual Receipts" shall mean Annual Project Revenue less the sum of:
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve;
(iv) Reserve Deposits to the Operating Reserve;
(v) Partnership Related Fees;
882101561"04 i _5
I 111838 07 A 1/04/11
(vi) Deferred Developer Fees;
(vii) Property management fee for the Housing Development which remains unpaid
after payment of Operating Expenses, if any;
(viii) Unpaid Tax Credit adjustment amounts, if any, pursuant to the Partnership
Agreement;
(ix) Repayment of loans to the Project, if any, made by the limited partner(s) of
Borrower pursuant to the Partnership Agreement, including interest at the rate set forth in
Borrower's limited partnership agreement, for eligible development and/or operating expense
deficits or other eligible loans (provided that if made during the compliance period Borrower
shall provide to Executive Director documentation showing the propriety of such loan(s) and if
made subsequent to the expiration of the compliance period each such loan must be reasonably
approved by the Executive Director before being provided to the Project after review of
documentation provided by Borrower showing propriety of such loans);
(x) Repayment to the administrative and/or managing general partners of Borrower
for loans to the Project for development advance(s) pursuant to the Partnership Agreement,
operating deficit advance(s) pursuant to the Partnership Agreement), credit adjuster payment(s)
pursuant to the Partnership Agreement), and/or Development Fee advance(s) pursuant to the
Partnership Agreement, and with all such loans to be repaid without interest (provided that if
made during the compliance period Borrower shall provide to Executive Director documentation
showing the propriety of such loan(s) and if made subsequent to the expiration of the compliance
period each such loan must be reasonably approved by the Executive Director before being
provided to the Project after review of documentation provided by Borrower showing propriety
of such loans);
(xi) Repayment to the administrative and/or managing general partners of Borrower of
certain loans made to the Project after the expiration or earlier termination of the Partnership
Agreement to cover shortfalls in funding for Operating Expenses in excess of the Operating
Expenses included in the approved annual Operating Budget for the year in which such loan is
made (if at all), all such loans to be repaid without interest (provided that if made during the
compliance period Borrower shall provide to Executive Director documentation showing the
propriety of such loan(s) and if made subsequent to the expiration of the compliance period each
such loan must be reasonably approved by the Executive Director before being provided to the
Project after review of documentation provided by Borrower showing propriety of such loans);
and
(xii) Capital contributions to the Project, if any, made by the general partners of
Borrower that were used to pay the Developer Fee.
In the event any calculation of Annual Project Revenue less subsections (i) through (xii)
inclusive above results in a negative number, then Residual Receipts shall be zero ($0) for that
year and shall not carry over to the next or any other subsequent year.
In addition, none of the fees, costs, expenses, or items described above in calculation of
Residual Receipts shall include any duplicate entry/item, or double accounting for a cost item.
88U015610-0047
1111838 07 a01104111
For example, an audit fee incurred by Borrower and deducted or included above in subsection (i)
for Operating Expenses shall not also be deducted or included in subsection (v) for Partnership
Related Fees in the calculation of Residual Receipts. The calculation of Residual Receipts shall
be conducted at Borrower's sole cost and expense, by a third party auditor and submitted to
Borrower annually, along with Borrower's payment of Residual Receipts.
As used herein, "Transfer Net Proceeds" shall mean the proceeds of any sale or other
transfer, in whole or part, of the Property or Borrower's interests therein, net only of (i) the
reasonable and customary costs and expenses incurred in connection with such transfer; (ii) the
amount of the financing which is satisfied out of such proceeds, (iii) the balance, if any, of the
Deferred Developer Fee, (iv) the balance, if any, of loans to the Project made by the limited
partners of Borrower, including interest thereon as provided in the Partnership Agreement, (v)
the balance, if any, of operating loans or development loans made by the general partners of
Borrower, including interest thereon as provided in the Partnership Agreement, (vi) the return of
capital contributions, if any, to the Project made by the general partners of Borrower that were
used to pay the Deferred Developer Fee, and (vii) the payment to the general partner of Borrower
of a disposition fee set forth in the Partnership Agreement, which is agreed to be set at three
percent (3%) of the amount of the approved transfer.
4. Security. Prior to Borrower's purchase of the Property, Borrower's obligations
under this Note and the Agreement shall be secured by that certain Assignment of Architectural
Agreements and Plans and Specifications executed by Borrower in favor of Agency pursuant to
the Agreement.
Borrower's obligations under this Note and the Agreement shall, at all times subsequent
to the purchase of the Property by Borrower during which any amount remains outstanding
hereunder, be secured by the Agency Deed of Trust, which Agency Deed of Trust shall only be
subordinated to approved deed(s) of trust for the Construction Loan and such encumbrances
approved by the Agency in writing, pursuant to a written subordination agreement in a form
approved by Agency counsel. Upon execution of the same, the terms of the Agency Deed of
Trust are incorporated herein and made a part hereof to the same extent and with the same force
and effect as if fully set forth herein.
5. Maturity. This Note shall be due and payable on the date of expiration of the
term of the Ground Lease, as such term may be extended pursuant to the terms thereof, or earlier
termination thereof.
6. Application of Payments. All payments shall be applied (i) first, to costs and
fees owing under this Note, (ii) second, to the payment of unpaid accrued interest owing under
this Note for each calendar year in which no payment was made by Borrower pursuant to Section
3 above, (iii) third, to the payment of accrued interest for the preceding calendar year, and (iv)
fourth, to payment of principal.
7. Waivers.
(a) Borrower expressly agrees that this Note or any payment hereunder may
be extended from time to time at Agency's sole discretion and that Agency may accept security
882/015610-0047
I I11838 07 a01104l11 -7-
in consideration for any such extension or release any security for this Note at its sole discretion
all without in any way affecting the liability of Borrower.
(b) No extension of time for payment of this Note made by agreement by
Agency with any person now or hereafter liable for the payment of this Note shall operate to
release, discharge, modify, change or affect the original liability of Borrower under this Note,
either in whole or in part.
(c) The obligations of Borrower under this Note shall be absolute and
Borrower waives any and all rights to offset, deduct or withhold any payments or charges due
under this Note for any reasons whatsoever.
(d) Borrower waives presentment, demand, notice of protest and nonpayment,
notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or
interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the
rights or interests in or to properties securing this Note, and the benefit of any exemption under
any homestead exemption laws, if applicable.
(e) No previous waiver and no failure or delay by Agency in acting with
respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach,
default, or failure or condition under this Note, the Agency Deed of Trust or the obligations
secured thereby. A waiver of any term of this Note, the Agency Deed of Trust or of any of the
obligations secured thereby must be made in writing and shall be limited to the express written
terms of such waiver.
8. Attorneys' Fees and Costs. Borrower agrees that if any amounts due under this
Note are not paid when due, Borrower will pay all costs and expenses of collection and
reasonable attorneys' fees paid or incurred in connection with the collection or enforcement of
this Note, whether or not suit is filed.
9. Joint and Several Obligation. This Note is the joint and several obligation of all
makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs,
successors and assigns.
10. Amendments and Modifications. This Note may not be changed orally, but
only by an amendment approved by Agency and evidenced in a writing signed by Borrower and
by Agency.
11. Agency May Assign. Agency may, at its option, assign its right to receive
payment under this Note without necessity of obtaining the consent of the Borrower.
12. Borrower Assignment Prohibited. In no event shall Borrower assign or transfer
any portion of this Note without the prior express written consent of Agency, which consent shall
not unreasonably be withheld, except pursuant to a transfer that is authorized under Section 15 of
the Agreement.
13. Acceleration and Other Remedies. Upon the occurrence of a Default, Agency
may, at Agency's option, declare the outstanding principal amount of this Note, together with the
982/015610-0047
111183807 OVO4/11
then accrued and unpaid interest thereon and other charges hereunder, and all other sums secured
by the Agency Deed of Trust, to be due and payable immediately, and upon such declaration,
such principal and interest and other sums shall immediately become and be due and payable
without demand or notice, all as further set forth in the Agency Deed of Trust. All costs of
collection, including, but not limited to, reasonable attorneys' fees and all expenses incurred in
connection with protection of, or realization on, the security for this Note, may be added to the
principal hereunder, and shall accrue interest as provided herein. Agency shall at all times have
the right to proceed against any portion of the security for this Note in such order and in such
manner as Agency may consider appropriate, without waiving any rights with respect to any of
the security. Any delay or omission on the part of Agency in exercising any right hereunder,
under the Agreement or under the Agency Deed of Trust shall not operate as a waiver of such
right, or of any other right. No single or partial exercise of any right or remedy hereunder or
under the Agreement or any other document or agreement shall preclude other or further
exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of
any sum payable hereunder, or part thereof, after the due date of such payment shall not be a
waiver of Agency's right to either require prompt payment when due of all other sums payable
hereunder or to declare a Default for failure to make prompt or complete payment.
14. Alternate Rate. Upon the occurrence of any Default, or upon the maturity hereof
(by acceleration or otherwise), the entire unpaid principal sum, at the option of Agency, shall
bear interest, from the date of occurrence of such Default or maturity and after judgment and
until collection, at the "Alternate Rate", such rate being the highest interest rate then permitted
by law. Interest calculated at the Alternate Rate, when and if applicable, shall be due and
payable immediately without notice or demand. Borrower agrees that in the event of any
Default, Agency will incur additional expense in servicing the loan evidenced by this Note and
will suffer damage and loss resulting from such Default. Borrower agrees that in such event
Agency shall be entitled to damages for the detriment caused thereby, which damages are
extremely difficult and impractical to ascertain. Therefore, Borrower agrees that the Alternate
Rate (as applied to the unpaid principal balance, accrued interest, fees, costs and expenses
incurred) is a reasonable estimate of such damages to Agency, and Borrower agrees to pay such
sum on demand.
15. Consents. Borrower hereby consents to: (a) any extension (whether one or
more) of the time of payment under this Note, (b) the release or surrender or exchange or
substitution of all or any part of the security, whether real or personal, or direct or indirect, for
the payment hereof, (c) the granting of any other indulgences to Borrower, and (d) the taking or
releasing of other or additional parties primarily or contingently liable hereunder. Any such
extension, release, surrender, exchange or substitution may be made without notice to Borrower
or to any endorser, guarantor or surety hereof, and without affecting the liability of said parties
hereunder.
16. Interest Rate Limitation. Agency and Borrower stipulate and agree that none of
the terms and provisions contained herein or in any of the loan instruments shall ever be
construed to create a contract for the use, forbearance or detention of money requiring payment
of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of
the State of California. In such event, if any holder of this Note shall collect monies which are
deemed to constitute interest which would otherwise increase the effective interest rate on this
182/015610-0047
1111838.07 a01/04/11 _9_
Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of
California, all such sums deemed to constitute interest in excess of such maximum rate shall, at
the option of such holder, be credited to the payment of the sums due hereunder or returned to
Borrower.
17. Successors and Assigns. Whenever "Agency" is referred to in this Note, such
reference shall be deemed to include the La Quinta Redevelopment Agency and its successors
and assigns, including, without limitation, any successor to its rights, powers, and
responsibilities, and any subsequent assignee or holder of this Note. All covenants, provisions
and agreements by or on behalf of Borrower, and on behalf of any makers, endorsers, guarantors
and sureties hereof which are contained herein shall inure to the benefit of Agency and Agency's
successors and assigns.
18. Miscellaneous. Time is of the essence hereof. This Note shall be governed by
and construed under the laws of the State of California except to the extent Federal laws preempt
the laws of the State of California. Borrower irrevocably and unconditionally submits to the
jurisdiction of the Superior Court of the State of California for the County of Riverside or the
United States District Court of the Central District of California, as Agency may deem
appropriate, in connection with any legal action or proceeding arising out of or relating to this
Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue.
19. Non -Recourse Obligation. Borrower and its partners shall not be personally
liable for the payment of this Note or for the payment of any deficiency established after judicial
foreclosure or trustee's sale; provided, however, that the foregoing shall not in any way affect
any rights Agency may have (as a secured party or otherwise) hereunder or under the Agreement
or Agency Deed of Trust to recover directly from Borrower any amounts, or any funds, damages
or costs (including without limitation reasonable attorneys' fees and costs) incurred by Agency
as a result of fraud, intentional misrepresentation or bad faith, waste, and any costs and expenses
incurred by Agency in connection therewith (including without limitation reasonable attorneys'
fees and costs).
20. Accounting.
(a) Accounting Terms and Determinations. Unless otherwise specified
herein, (i) all accounting terms used herein shall be interpreted, (ii) all accounting determinations
hereunder shall be made, and (c) all books, records and financial statements required to be
delivered hereunder shall be prepared, in accordance with GAAP, consistently applied, except
for changes approved by Agency.
(b) Financial Reporting and Accounting Covenants. Borrower shall permit
the representatives of Agency at any time or from time to time, upon three (3) business days'
notice and during nonnal business hours, to inspect, audit, and copy all of Borrower's books,
records, and accounts relating to the Property. Borrower shall furnish or cause to be furnished to
Agency the following:
(i) Annual Financial Statement. Borrower shall submit to Agency,
on or before May 1 of each year commencing in the first year after the issuance of the first
11
2/01561 M047
I 1 11838 07 a01104111 "1 0-
certificate of occupancy for the Housing Development, an Annual Financial Statement, with
respect to the Housing Development that has been reviewed by an independent certified public
accountant, together with an expressed written opinion of the certified public accountant that
such Annual Financial Statement presents the financial position, results of operations, and cash
flows of the Housing Development fairly and in accordance with GAAP.
(ii) Tax Returns. As soon as available, but in no event later than
thirty (30) days after the time of filing with the Internal Revenue Service, the federal tax returns
(and supporting schedules, if any) of Borrower.
(iii) Audit Reports. Not later than ten (10) days after receipt thereof
by Borrower, copies of all reports submitted to Borrower by independent public accountants in
connection with each annual, interim or special audit of the financial statements of Borrower,
made by such accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit. If any such audit report results in Borrower
restating Residual Receipts upward for any fiscal year, then Borrower shall accompany delivery
of such audit report to Agency with the additional payment to Agency resulting from said
restatement pursuant to Section 3 of this Note. If any such audit report results in Borrower
restating Residual Receipts downward for any fiscal year, Borrower may carry forward the
overpayment made to Agency pursuant to such Section 3 as a credit against payments thereunder
in subsequent fiscal years.
(c) Late Payment. If any annual payment required pursuant to Section 3
above is not received by Agency within ten (10) calendar days after payment is due, Borrower
shall pay to Agency a late charge of five percent (5%) of such payment, such late charge to be
immediately due and payable without demand by Agency.
(d) Dispute Regarding Annual Financial Statement. If Agency disputes
any Annual Financial Statement, Agency shall notify Borrower of such dispute within sixty (60)
days after receipt of an Annual Financial Statement and the parties shall cause their
representatives to meet and confer concerning the dispute and to use all reasonable efforts to
reach a mutually acceptable resolution of the matter in question within thirty (30) days after
Agency's notice of such dispute. If the parties are unable to reach a mutually acceptable
resolution within such thirty (30) day period, then, within twenty (20) days after the expiration of
such period, Borrower and Agency shall appoint a national firm of certified public accountants to
review the dispute and to make a determination as to the matter in question within thirty (30)
days after such appointment. If the parties cannot, within ten (10) days, agree upon the firm to
be appointed, then, upon the application of either party, such firm shall be appointed by the
Presiding Judge of the Superior Court for the County of Riverside, California. Such firm's
determination shall be final and binding upon the parties. Such firm shall have full access to the
books, records and accounts of Borrower and the Property.
(e) Underpayment.. If any audit by Agency reports an underpayment by
Borrower on this Note, Borrower shall pay the amount of such underpayment, together with the
late charge set forth in Section 20(c) of this Note, to Agency within ten (10) days after written
notice thereof to Borrower or, in the event of a dispute, after timely notice to Borrower of the
resolution of such dispute by the independent firm of certified public accountants, as the case
8821015610-0047 -11-
11 It 839.07 .01,104111
may be, and if such underpayment amounts to more than five percent (5%) of the disputed
payment for the period audited, then, notwithstanding anything to the contrary in this section,
Borrower shall pay to Agency, within ten (10) days after written demand, Agency's reasonable
costs and expenses in conducting such audit and exercising its rights under this Section 20 of this
Note.
BORROWER:
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
Date: `/' U 2011 By: Highway 111 Apts Member, LLC,
a California limited liability
company, its member/
By: ca�L
MicTWI J. Sho in, Member
882/015610-0047
1111838.07 a01/04/1I -12-
ATTACHMENT NO.7
AGENCY DEED OF TRUST
[See following document]
11118 807a0a ATTACHMENT NO. 7
1111838.0] e01/04/II
RECORDING REQUESTED BY:
AND WHEN RECORDED RETURN TO:
La Quinta Redevelopment Agency
P.O. Box 1504
La Quinta, California 92247
Attention: Executive Director
APN:
[Free Recording Requested
Government Code Sections 6103 and 273831
LEASEHOLD DEED OF TRUST
WITH ASSIGNMENT OF RENTS
This DEED OF TRUST, dated as of , 2011 for identification purposes
only, is made by and among CORAL MOUNTAIN PARTNERS, L.P., a California limited
partnership ("Trustor"), FIRST AMERICAN TITLE INSURANCE COMPANY, a California
corporation ("Trustee"), and LA QUINTA REDEVELOPMENT AGENCY, a public body,
corporate and politic ("Beneficiary").
Trustor grants, transfers and assigns to Trustee in trust, upon the trusts, covenants,
conditions and agreements and for the uses and purposes hereinafter contained, with power of
sale, and right of entry and possession, all of its title and interest in that real property (the
"Property") in the City of La Quinta, County of Riverside, State of California, described in
Exhibit A attached hereto and incorporated herein by this reference.
Together with Beneficiary's interest in all buildings, structures and improvements of
every nature whatsoever now or hereafter situated on the Property; and
Together with the rents, issues and profits thereof; and together with all buildings and
improvements of every kind and description now or hereafter erected or placed thereon, and all
fixtures, including but not limited to all gas and electric fixtures, engines and machinery,
radiators, heaters, furnaces, heating equipment, laundry equipment, steam and hot-water boilers,
stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and
other plumbing and heating fixtures, mantles, cabinets, refrigerating plant and refrigerators,
whether mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings,
screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings
shall to the extent permitted by law be deemed to be permanently affixed to and a part of the
realty; and
Together with all building materials and equipment now or hereafter delivered to said
premises and intended to be installed therein; and
Together with all plans, drawings, specifications, and articles of personal property now or
hereafter attached to or used in and about the building or buildings now erected or hereafter to be
erected on the Property which are necessary to the completion and comfortable use and
occupancy of such building or buildings for the purposes for which they were or are to be
erected, including all other goods and chattels and personal property as are ever used or
882/015610-0047 _
1111838.07 a01/04/11 -1
furnished in operating a building, or the activities conducted therein, similar to the one herein
described and referred to, and all renewals or replacements thereof or articles in substitution
therefor, whether or not the same are, or shall be attached to said building or buildings in any
manner.
To have and to hold the property hereinbefore described (including the Property and all
appurtenances), all such property being referred to collectively herein as the "Property," to
Trustee, its successors and assigns forever.
FOR THE PURPOSE of securing (1) payment of indebtedness of Trustor to the
Beneficiary in the principal sum of TWENTY-NINE MILLION DOLLARS ($29,000,000) (the
"Agency Loan"), evidenced by a promissory note dated 2011 between Trustor
and Beneficiary (the "Agency Loan Note"), together with all sums due thereunder including
interest and other charges; and (2) the performance of each agreement of Trustor in this Deed of
Trust and the Agency Loan Note, including, without limitation, that certain Disposition and
Development Agreement entered into by and between Trustor and Beneficiary on or about
January 4, 2011 (the "DDA"), that certain Ground Lease entered into by and between Trustor
and Beneficiary on or about the same date hereof, and that certain Affordable Housing
Regulatory Agreement entered into by and between Trustor and Beneficiary on or about the
same date hereof (collectively, the "Agency Loan Documents"). Said Agency Loan Note and all
of its terms are incorporated herein by reference and this conveyance shall secure any and all
extensions, amendments, modifications or renewals thereof however evidenced, and additional
advances of the Agency Loan evidenced by any note reciting that it is secured hereby.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
1. That it will pay the Agency Loan Note at the time and in the manner provided
therein;
2. That it will not permit or suffer the use of any of the Property for any purpose
other than the use for which the same was intended at the time this Deed of Trust was executed,
namely, as affordable rental housing;
3. That the Agency Loan Note is incorporated herein and made a part of this Deed of
Trust. Upon default under the Agency Loan Note or this Deed of Trust, Beneficiary, at its option,
may declare the whole of the indebtedness secured hereby to be due and payable;
4. That all rents, profits and income from the Property covered by this Deed of Trust
are hereby assigned to Beneficiary for the purpose of discharging the debt hereby secured.
Permission is hereby given to Trustor so long as no default exists hereunder, to collect such
rents, profits and income;
5. That upon default hereunder, Beneficiary shall be entitled to the appointment of a
receiver by any court having jurisdiction, without notice, to take possession and protect the
Property described herein and operate same and collect the rents, profits and income therefrom;
6. That Trustor will keep the improvements now existing or hereafter erected on the
Property insured against loss by fire and such other hazards, casualties and contingencies as may
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be required in writing from time to time by Beneficiary, and all such insurance shall be
evidenced by standard fire and extended coverage insurance policy or policies, in the amount of
the replacement value of the improvements. Such policies shall be endorsed with a standard
mortgage clause with loss payable to Beneficiary subordinate to the rights and interest of the
beneficiary of the deed of trust securing the Senior Loan, as described in paragraph 31, below)
and certificates thereof together with copies of original policies shall be deposited with
Beneficiary;
7. To pay, before delinquency, any taxes and assessments affecting said Property
when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof
which appear to be prior or superior hereto, all costs, fees and expenses of this Trust unless
exemption is obtained therefrom;
8. To keep said Property in good condition and repair, not to remove or demolish
any buildings thereon, to complete or restore promptly and in good and workmanlike manner any
building which may be constructed, damaged, or destroyed thereon and to pay when due all
claims for labor performed and materials furnished therefor (unless contested in good faith if
Trustor provides security satisfactory to Beneficiary that any amounts found to be due will be
paid and no sale of the Property or other impairment of the security hereunder will occur); to
comply with all laws affecting said Property or requiring any alterations or improvements to be
made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act
upon said Property in violation of law and/or covenants, conditions and/or restrictions affecting
said Property; not to permit or suffer any alteration of or addition to the buildings or
improvements hereafter constructed in or upon said Property without the consent of Beneficiary;
9. To appear in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses,
including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or
proceeding in which Beneficiary or Trustee may appear;
10. Should Trustor fail to make any payment or do any act as herein provided, then
Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligation hereof, may make or do the same in
such manner and to such extent as either may deem necessary to protect the security hereof.
Beneficiary or Trustee, being authorized to enter upon said Property for such purposes, may
commence, appear in and/or defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest or
compromise any encumbrance, charge, or lien which in the judgment of either appears to be
prior or superior hereto; and, in exercising any such powers, may pay necessary expenses,
employ counsel, and pay counsel's reasonable fees;
11. Beneficiary shall have the right to pay fire and other property insurance premiums
when due should Trustor fail to make any required premium payments. All such payments made
by Beneficiary shall be added to the principal sum secured hereby;
12. To pay immediately and without demand all sums so expended by Beneficiary or
Trustee, under permission given under this Deed of Trust, with interest from date of expenditure
at the rate specified in the Agency Loan Note;
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13. That the Agency Loan advanced hereunder is to be used in the development of the
Property; and upon the failure of Trustor to keep and perform such covenants, the principal sum
and all arrears of interest, and other charges provided for in the Agency Loan Note shall, at the
option of Beneficiary, become due and payable, anything contained herein to the contrary
notwithstanding;
14. Trustor further covenants that it will not voluntarily create, suffer or permit to be
created against the Property, subject to this Deed of Trust, any lien or liens (other than the lien of
a deed of trust recorded prior in time and right to this Deed of Trust and/or the lien of a deed of
trust to which Trustor has expressly agreed to subordinate the lien of this Deed of Trust) except
as authorized by Beneficiary, and further that it will keep and maintain the Property free from the
claims of all persons supplying labor or materials which will enter into the construction of any
and all buildings now being erected or to be erected on the Property;
15. That any and all improvements made or about to be made upon the Property, and
all plans and specifications, comply with all applicable municipal ordinances and regulations and
all other regulations made or promulgated, now or hereafter, by lawful authority, and that the
same will upon completion comply with all such municipal ordinances and regulations and with
the rules of the applicable fire rating or inspection organization, bureau, association or office;
16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing
representative of Beneficiary a charge not to exceed that permitted by law for providing a
statement regarding the obligation secured by this Deed of Trust as provided by Section 2954,
Article 2, Chapter 2, Title 14, Division 3 of the California Civil Code.
IT IS MUTUALLY AGREED THAT:
17. Subject to any cure rights under the DDA, if the construction of any
improvements as herein referred to shall not be carried on with reasonable diligence, or shall be
discontinued at any time for any reason other than events of Force Majeure pursuant to
Paragraph 36 hereof, Beneficiary, after due notice to Trustor or any subsequent owner, is hereby
invested with full and complete authority to enter upon the Property, employ watchmen to
protect such improvements from depredation or injury and to preserve and protect the personal
property therein, and to continue any and all outstanding contracts for the erection and
completion of said building or buildings, to make and enter into any contracts and obligations
wherever necessary, either in its own name or in the name of Trustor, and to pay and discharge
all debts, obligations and liabilities incurred thereby. All such sums so advanced by Beneficiary
(exclusive of advances of the principal of the indebtedness secured hereby) shall be added to the
principal of the indebtedness secured hereby and shall be secured by this Deed of Trust and shall
be due and payable on demand;
18. In the event of any fire or other casualty to the Project or eminent domain
proceedings resulting in condemnation of the Project or any part thereof, Trustor shall have the
right to rebuild the Project, and to use all available insurance or condemnation proceeds therefor,
provided that (a) such proceeds are sufficient to rebuild the Project in a manner that provides
adequate security to Beneficiary for repayment of the Agency Loan or if such proceeds are
insufficient then Trustor shall have funded any deficiency, (b) Beneficiary shall have the right to
approve plans and specifications for any major rebuilding and the right to approve disbursements
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of insurance or condemnation proceeds for rebuilding under a construction escrow or similar
arrangement, and (c) no material default then exists under the Agency Loan Note or this Deed of
Trust. If the casualty or condemnation affects only part of the Project and total rebuilding is
infeasible, then proceeds may be used for partial rebuilding and partial repayment of the Agency
Loan in a manner that provides adequate security for repayment of the remaining balance of the
Agency Loan. The rights of the Beneficiary to any insurance proceeds or condemnation awards
pursuant to this paragraph 18 are and shall be subject to the prior right to any insurance proceeds
or condemnation awards of the beneficiary of the deed of trust securing the Senior Loan, as
described in paragraph 31;
19. Upon default by Trustor in making any payments provided for herein or in the
Agency Loan Note secured hereby, and if such default is not made good within fifteen (15) days
after notice from Beneficiary, or if Truster shall fail to perform any covenant or agreement in
this Deed of Trust within thirty (30) days after written demand therefor by Beneficiary (or, in the
event that more than thirty (30) days is reasonably required to cure such default, should Trustor
fail to promptly commence such cure, and diligently prosecute same to completion), Beneficiary
may declare all sums secured hereby immediately due and payable by delivery to Trustee of
written declaration of default and demand for sale, and of written notice of default and of
election to cause the Property to be sold, which notice Trustee shall cause to be duly filed for
record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with
Trustee this Deed of Trust, the Agency Loan Note and all documents evidencing expenditures
secured hereby;
20. After the lapse of such time as may then be required by law following the
recordation of said notice of default, and notice of sale having been given as then required by
law, Trustee, without demand on Truster, shall sell Trustor's interest in said Property at the time
and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such
order as it may determine at public auction to the highest bidder for cash in lawful money of the
United States, payable at time of sale. Trustee may postpone sale of all or any portion of said
interest by public announcement at the time and place of sale, and from time to time thereafter
may postpone the sale by public announcement at the time fixed by the preceding postponement.
Trustee shall deliver to the purchaser its deed conveying Trustor's interest in the property so
sold, but without any covenant or warranty, express or implied. The recitals in the deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including
Truster, Trustee or Beneficiary, may purchase at the sale. Trustee shall apply the proceeds of sale
to payment of (1) the expenses of such sale, together with the reasonable expenses of this trust
including therein reasonable Trustee's fees or attorneys' fees for conducting the sale, and the
actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any
search and/or other evidence of title procured in connection with such sale and revenue stamps
on Trustee's deed; (3) all sums expended under the terms hereof, not then repaid, with accrued
interest at the rate specified in the Agency Loan Note; (4) all other sums then secured hereby;
and (5) the remainder, if any, to the person or persons legally entitled thereto;
21. Beneficiary may from time to time substitute a successor or successors to any
Trustee named herein or acting hereunder to execute this Deed of Trust. Upon such appointment,
and without conveyance to the successor trustee, the latter shall be vested with all title, powers,
and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment
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and substitution shall be made by written instrument executed by Beneficiary, containing
reference to this Deed of Trust and its place of record, which, when duly recorded in the proper
office of the county or counties in which the property is situated, shall be conclusive proof of
proper appointment of the successor trustee;
22. The pleading of any statute of limitations as a defense to any and all obligations
secured by this Deed of Trust is hereby waived to the full extent permissible by law;
23. Upon written request of Beneficiary stating that all sums secured hereby have
been paid, and upon surrender of this Deed of Trust and the Agency Loan Note to Trustee for
cancellation and retention and upon payment of its fees, Trustee shall reconvey, without
warranty, the property then held hereunder. The recitals in such reconveyance of any matters of
fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may
be described as "the person or persons legally entitled thereto";
24. The trust created hereby is irrevocable by Trustor;
25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto,
their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term
"Beneficiary" shall include not only the original Beneficiary hereunder but also any successor to
Beneficiary's rights, powers, and responsibilities, and any future owner and holder including
pledgees, of the Agency Loan Note secured hereby. In this Deed of Trust, whenever the context
so requires, the masculine gender includes the feminine and/or neuter, and the singular number
includes the plural. All obligations of each Truster hereunder are joint and several;
26. Trustee accepts this trust when this Deed of Trust, duly executed and
acknowledged, is made public record as provided by law. Except as otherwise provided by law,
Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of
any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless
brought by Trustee;
27. The undersigned Trustor requests that copies of any notice of default and of any
notice of sale hereunder be mailed to it at Coral Mountain Partners, L.P., 46753 Adams Street,
La Quinta, CA 92253 and to:
Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Phone No.: 213-239-8088
Facsimile No.: 213-559-0733
Attention: Lance Bocarsly
28. Trustor agrees, at any time after receipt of a written request from Beneficiary, to
furnish to Beneficiary a detailed statement in writing of income, rents, profits, and operating
expenses of the premises, and the names of the occupants and tenants in possession, together
with the expiration dates of their leases and full information regarding all rental and occupancy
agreements, and the rents provided for by such leases and rental and occupancy agreements, and
such other information regarding the Property and their use as may be requested by Beneficiary.
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29. The full principal amount outstanding plus accrued but unpaid interest thereon,
shall be due and payable on the earlier to occur of the following:
(a) Sale, transfer, assignment or refinancing of the Property as provided
further in this paragraph 29; unless: (i) in the case of a sale in which the sale proceeds are
insufficient to repay in full the Agency Loan, the Beneficiary approves such sale and the
purchaser assumes the balance of the Agency Loan in accordance with the terms of the Agency
Loan Note; or (ii) in the case of a refinancing in which the refinancing proceeds are insufficient
to repay in full the Agency Loan, the Beneficiary approves such refinancing and the Borrower
remains obligated pursuant to the terms of the Note.
(b) In order to induce Beneficiary to make the loan evidenced hereby, Trustor
agrees that in the event of any transfer of the Property without the prior written consent of
Beneficiary (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of
foreclosure, by the holder of the deed of trust securing the Senior Loan), Beneficiary shall have
the absolute right at its option, without prior demand or notice, to declare all sums secured
hereby immediately due and payable. Consent to one such transaction shall not be deemed to be
a waiver of the right to require consent to future or successive transactions. Beneficiary may
grant or deny such consent in its sole discretion and, if consent should be given, any such
transfer shall be subject to this paragraph 29, and any such transferee shall assume all obligations
hereunder and agree to be bound by all provisions contained herein. Such assumption shall not,
however, release Trustor from any liability thereunder without the prior written consent of
Beneficiary.
(c) As used herein, "transfer" includes the sale, agreement to sell, transfer or
conveyance of Trustor's leasehold interest in the Property, or any portion thereof or interest
therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any
installment land sale contract or similar instrument affecting all or a portion of the Property, or
the lease of all or substantially all of the Property. "Transfer" shall not include the leasing of
individual residential units on the Property or any transfers of the limited partnership interests in
Trustor or any replacement of a general partner of Trustor by its limited partner pursuant to the
agreement that sets forth the terms of the Trustor's limited partnership (the "Partnership
Agreement").
(d) The term "Sale" means any transfer, assignment, conveyance or lease
(other than to a tenant for occupancy) of Trustor's leasehold interest in the Property and/or the
improvements thereon, or any portion thereof, or any interest therein by the Trustor, but excludes
any purchase option agreement given to Trustor's general partner(s). Sale includes a sale in
condemnation or under threat thereof. Sale does not include dedications and grants of easements
to public and private utility companies of the kind customary in real estate development. Sale
shall also not include any transfers of the limited partnership interests in Trustor or any
replacement of a general partner of Trustor by its limited partner pursuant to the Partnership
Agreement.
Notwithstanding anything to the contrary contained in this Deed of Trust or in the
Agency Loan Note, prior to declaring any default or taking any remedy permitted under this
Deed of Trust, the Agency Loan Note or applicable law based upon an alleged default,
(the "Investor") shall have a period of not less than
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thirty (30) days to cure such alleged default; provided, however, if in order to cure such default
the Investor reasonably believes that it must remove a general partner of Trustor, or all of them,
pursuant to the Partnership Agreement, the Investor shall so notify Beneficiary and so long as the
Investor is reasonably and diligently attempting to remove the general partner or general
partners, the Investor shall have until the date thirty (30) days after the effective date of the
removal of the general partner or general partners to cure such default.
30. Truster shall permit Beneficiary and its agents or representatives, to inspect the
Property at any and all reasonable times, with twenty-four (24) hours advance notice. Inspections
shall be conducted so as not to interfere with the tenants' use and enjoyment of the Property.
31. It is hereby expressly agreed and acknowledged by Trustor and Beneficiary that
this Deed of Trust is a second and subordinate deed of trust, and that the Agency Loan secured
hereby, and the Agency Loan Note are subject and subordinate only to the deed of trust securing
a loan to Trustor in original principal amount of $ in which
("Senior Lender") is the Beneficiary, including
any loan that refinances the balance of the Senior Loan or an assignment of the Senior Loan
(collectively referred to as the "Senior Loan").
32. For purposes of this Deed of Trust, "Hazardous Materials" means any substance,
material, or waste which is or becomes regulated by any local governmental authority, the State
of California, or the United States Government, including, but not limited to, any material or
substance which is (i) defined as a "hazardous waste", "acutely hazardous waste", "extremely
hazardous waste", or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or
listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter
6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section
25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -
Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material", "hazardous
substance", or "hazardous waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv)
defined as a "hazardous substance" under Section 25281 of the California Health and Safety
Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum,
(vi) asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as
"hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code
of Regulations, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311
of the Clean Water Act (33 U.S.C. Section t317), (x) defined as a "hazardous waste" pursuant to
Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.
(42 U.S.C. Section 6903), (xi) defined as "hazardous substances" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section
9601 et seq., (xii) methyl -tertiary butyl ether, (xiii) Perchlorate or (xiv) any other substance,
whether in the form of a solid, liquid, gas or any other form whatsoever, which by any
governmental requirements either requires special handling in its use, transportation, generation,
collection, storage, handling, treatment or disposal, or is defined as "hazardous" or harmful to the
environment. For purposes hereof, "Hazardous Materials" excludes materials and substances in
quantities as are commonly used in the construction and operation of an apartment complex
provided that such materials and substances are used in accordance with all applicable laws.
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33. In addition to the general and specific representations, covenants and warranties
set forth in this Deed of Trust or otherwise, Truster represents, covenants and warrants, with
respect to Hazardous Materials, as follows:
(a) Neither Truster nor, to the best knowledge of Trustor, any other person,
has ever caused or permitted any Hazardous Materials to be manufactured, placed, held, located
or disposed of on, under or at the Property or any part thereof, and neither the Property nor any
part thereof, or any property adjacent thereto, has ever been used (whether by Truster or, to the
best knowledge of the Truster, by any other person) as a manufacturing site, dump site or storage
site (whether permanent or temporary) for any Hazardous Materials;
(b) Truster hereby agrees to indemnify Beneficiary, its officers, employees,
contractors and agents, and hold Beneficiary, its officers, employees, contractors and agents
harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and
claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against
Beneficiary, its officers, employees, contractors or agents for, with respect to, or as a direct or
indirect result of, the presence or use, generation, storage, release, threatened release or disposal
of Hazardous Materials on or under the Property or the escape, seepage, leakage, spillage,
discharge, emission or release of any Hazardous Materials from the Property (including, without
limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising
under CERCLA, any so-called "Superfund" or "Superlien" law, or any other federal, state or
local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous Materials), caused by
Truster.
(c) Truster has not received any notice of (i) the happening of any event
involving the use, spillage, discharge or cleanup of any Hazardous Materials ("Hazardous
Discharge") affecting Truster or the Property or (ii) any complaint, order, citation or notice with
regard to air emissions, water discharges, noise emissions or any other environmental, health or
safety matter affecting Trustor or the Property ("Environmental Complaint") from any person or
entity, including, without limitation, the United States Environmental Protection Agency
("EPA"). If Trustor receives any such notice after the date hereof, then Trustor will give, within
seven (7) business days thereafter, oral and written notice of same to Beneficiary.
(d) Without limitation of Beneficiary's rights under this Deed of Trust,
Beneficiary shall have the right, but not the obligation, to enter onto the Property or to take such
other actions as it deems necessary or advisable to clean up, remove, resolve or minimize the
impact of, or otherwise deal with, any such Hazardous Materials or Environmental Complaint
upon its receipt of any notice from any person or entity, including without limitation, the EPA,
asserting the existence of any Hazardous Materials or an Environmental Complaint on or
pertaining to the Property which, if true, could. result in an order, suit or other action against
Trustor affecting any part of the Property by any governmental agency or otherwise which, in the
sole opinion of Beneficiary, could jeopardize its security under this Deed of Trust. All reasonable
costs and expenses incurred by Beneficiary in the exercise of any such rights shall be secured by
this Deed of Trust and shall be payable by Trustor upon demand together with interest thereon at
a rate equal to the highest rate payable under the Agency Loan Note secured hereby.
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34. The following shall be an "Event of Default:"
(a) Failure of Trustor to pay, when due, principal and interest and any other
sums or charges on the Agency Loan Note, in accordance with the provisions set forth in the
Agency Loan Note and such failure is not cured within fifteen (15) days after receipt of written
notice from Beneficiary; or
(b) A violation of the terms, conditions or covenants of the Agency Loan
Note, this Deed of Trust, the DDA, Agency Regulatory Agreement, or Ground Lease
35. Subject to the extensions of time set forth in paragraph 36, and subject to the
further provisions of this paragraph 35 and of paragraphs 37 and 38, failure or delay by the
Trustor to perform any term or provision of this Deed of Trust constitutes a default under this
Deed of Trust. The Trustor must immediately commence to cure, correct, or remedy such failure
or delay and shall complete such cure, correction or remedy with reasonable diligence.
(a) The Beneficiary shall give written notice of default to the Trustor with a
copy to the limited partners of Trustor for which Beneficiary has been supplied with address for
notice, specifying the default complained of by the Beneficiary. Delay in giving such notice
shall not constitute a waiver of any default nor shall it change the time of default.
(b) The Trustor shall not be in default so long as it endeavors to complete
such cure, correction or remedy with reasonable diligence, provided such cure, correction or
remedy is completed within thirty (30) days after receipt of written notice (or such additional
time as may be reasonably necessary to correct the cause).
(c) Any failures or delays by the Beneficiary in asserting any of its rights and
remedies as to any default shall not operate as a waiver of any default or of any such rights or
remedies. Delays by the Beneficiary in asserting any of its rights and remedies shall not deprive
the Beneficiary of its right to institute and maintain any actions or proceedings which it may
deem necessary to protect, assert, or enforce any such rights or remedies.
36. Notwithstanding specific provisions of this Deed of Trust, performance hereunder
shall not be deemed to be in default where delays or defaults are due to: war; insurrection;
strikes; lock -outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of
the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation;
governmental restrictions or priority; litigation; unusually severe weather; inability to secure
necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party;
acts or failure to act of the Beneficiary, or any other public or governmental agency or entity
(except that any act or failure to act of Beneficiary shall not excuse performance by Beneficiary);
or any other causes beyond the reasonable control or without the fault of the party claiming an
extension of time to perform. An extension of time for any such cause shall be for the period of
the enforced delay and shall commence to run from the time the party claiming such extension
gives notice to the other party, provided notice by the party claiming such extension is given
within thirty (30) days after the commencement of the cause. Times of performance under this
Deed of Trust may also be extended in writing by the Beneficiary and Trustor.
37. If a monetary event of default occurs under the terms of the Agency Loan Note or
this Deed of Trust, prior to exercising any. remedies thereunder Beneficiary shall give Trustor
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written notice of such default. Trustor shall have a period of fifteen (15) days after such notice is
given within which to cure the default prior to exercise of remedies by Beneficiary under the
Agency Loan Note and this Deed of Trust.
38. If a non -monetary event of default occurs under the terms of the Agency Loan
Note or this Deed of Trust, prior to exercising any remedies hereunder or thereunder, Beneficiary
shall give Truster notice of such default. If the default is reasonably capable of being cured
within thirty (30) days, Trustor shall have such period to effect a cure prior to exercise of
remedies by the Beneficiary under the Agency Loan Note and this Deed of Trust. If the default is
such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (a)
initiates corrective action within said period, and (b) diligently, continually, and in good faith
works to effect a cure as soon as possible, then Trustor shall have such additional time as is
reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. In no
event shall Beneficiary be precluded from exercising remedies if its security becomes or is about
to become materially jeopardized by any failure to cure a default or the default is not cured
within one hundred eighty (180) days after the first notice of default is given.
39. Beneficiary shall provide those limited partners of Trustor for which Beneficiary
has been supplied with address for notice with a copy of any written notice provided to Trustor
under the terms of the Agency Loan Documents. In the event of a monetary event of default,
Trustor's limited partners shall have a period of fifteen (15) days after receipt of such notice, or
such longer period of time as may be set forth in the Agency Loan Documents, to cure the
default prior to exercise of any remedy by Beneficiary. In the event a non -monetary event of
default occurs under any Agency Loan Document, Trustor's limited partners shall have a period
of thirty (30) days after receipt of such notice, or such longer period of time as may be set forth
in the Agency Loan Documents, to cure the default prior to exercise of any remedy by
Beneficiary. Notwithstanding anything to the contrary contained in the Agency Loan
Documents, Beneficiary hereby agrees that any cure of any default made or tendered by
Trustor's limited partners shall be deemed to be a cure by Trustor and shall be accepted or
rejected on the same basis as if such cure were made or tendered by Trustor.
40. Subject to paragraph 36, Trustor, upon the occurrence of an Event of Default as
described in paragraph 34 that has not been cured with the applicable cure period set forth in
paragraph 37 or 38, shall be obligated to repay the Agency Loan and, subject to the nonrecourse
provision of the Agency Loan Note, Beneficiary may seek to enforce payment of any and all
amounts due by Trustor pursuant to the terms of the Agency Loan Note.
41. All expenses (including reasonable attorneys' fees and costs and allowances)
incurred in connection with an action to foreclose, or the exercise of any other remedy provided
by this Deed of Trust, including the curing of any Event of Default, shall be the responsibility of
Trustor.
42. Except as provided in paragraph 31, each successor owner of an interest in the
Property, other than through foreclosure, deed in lieu of foreclosure or an owner who takes an
interest in the Property after a foreclosure has occurred, shall take its interest subject to this Deed
of Trust.
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43. Notwithstanding anything to the contrary herein, Beneficiary agrees that this
Deed of Trust is and shall be subordinate to any extended low-income housing commitment (as
such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the "Extended Use
Agreement') recorded against the Property; provided that such Extended Use Agreement, by its
terms, will terminate upon foreclosure or upon a transfer of the Property by instrument in lieu of
foreclosure in accordance with said Section 42(h)(6)(B).
"Trustor"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
Date: 2011 By: Highway I I I Apts Member, LLC,
a California limited liability
company, its member
1.0
Michael J. Shovlin, Member
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1111838 07 a01/04/11
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
[To be recorded against Trustor's interest under the Ground Lease.]
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 0000810" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01053'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16-09-07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18002'50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
882/015610-0047 EXHIBIT A
11118.18.07 .01/04/11
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90°09'34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21,18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS
882/015610-0047 EXHIBIT A
1111838.07 a01104111
ATTACHMENT NO.8
PROJECT BUDGET
[see following pages]
182/015610-0047 ATTACHMENT NO. 8
111193&07 a01/04/II
CORAL MOUNTAIN APARTMENTS 176UNITS
SOURCE of FUNDS
CONSTRUCTION PERIOD
Per Unit
Tax Exempt Bonds
24,000,000
136,364
Tax Credit Equity
2,683,316
15,246
Advance on Agency Loan
20,887,344
118,678
Deferred Costs to Penn Loan Close
2,779,610
15,793
Additional Construction Sources
TOTAL CONTT SOURCES
50,350,270
286,081
PERMANENT OPERATIONS
Permanent 1st Mortgage
7,933,689
45,078
Tax Credit Equity
13,418,581
76,231
Total Agency Loan
29,000,000
164,773
TOTAL PERM SOURCES
50,350,270
286,081
USES OF FUNDS
Land & Buildings
Basis
Per Unit
Purchase Price
N / A
Legal
$
25,000
XXXXXX
$
142
Title, & Escrow
$
25,000
XXXXXX
$
142
Construction
"On Site" Sitework
$
5,000,000
$
5,000,000
$
28,409
"Off Site" Improvements
$
1,400,000
XXXXXX
$
7,955
Buildings
$
21,801,801
S
21,801,801
$
123,874
Gen Cond, POH, Bonds, Ins, etc
$
4,441,784
$
4,441,784
$
25,237
Construction Contingency
S
2,611,487
$
2,611,487
$
14,838
Soft Costs
Architecture & Engineering
$
1,543,400
$
1,543,400
$
8,769
Includes Eng. Reports, Studies
3rd Party Studies & Reports
$
27,000
S
27,000
$
153
Insurance
$
325000
$
325,000
$
1,847
Real Estate Taxes
$44,371
$
44.371
$
252
Tax Credit Fees
$
88,577
XXXXXX
$
503
Title, Escrow & Recording
$
55.000
$
55,000
$
313
Site Security
$
60,000
$
60,000
$
341
Legal&Accounting
$
202,000
S
172,000
$
1,148
Models & Furnishings, Equipt
$
165,000
$
165,000
$
938
Wing & Leasing
$
95,000
XXXXXX
$
540
Consultants/Estimation
$
65,000
$
65,000
$
369
Misc Other costs
$
35,000
$
35,000
$
199
Permits&Fees
$
3,567,637
S
3,567,637
$
20,271
Soft Cost Contingency
$
501,839
$301,103
$
2,851
Development Overhead
$
650,000
$
650,000
$
3,693
Development Profit
$
1,850,000
S
1,850.000
$
10.511
Construction Financing Costs
Bond Issuance
$
629,559
$
629,559
$
3,577
Construction Interest
$
2,340,000
$
2.340,000
$
13,295
Construction Lender Costs
S
68,000
$
68,000
$
386
Lease up Interest and Carry
$
1,300,000
XXXXXX
$
7,386
Bridge Loan Fees and Interest
$
31,500
S
31.500
$
179
Permanent Financing Costs
$
2,385
Bond Issuance
$
419,706
XXXXXX
Title & Recording
$
12,000
XXXXXX
$
68
Syndication Costs
$
40,000
$
227
Project Reserves
Capitalized Reserves
$
929.610
XXXXXX
$
5,282
Subtotal Project Costs
$
50,350,270
$
45,784,642
$
286,081
Project Contingency
S
-
$
-
TOTAL PROJECT COSTS: $ 50,350,270 $ 45,784,642 $ 286,081
881/015610-0047 _
I11183807 a0I/04/1I
:SOURCES of FUNDS _ _
Bldg permits to Start
PROJECT SOURCES OF FUNDS Project Totals Pradevelopmarl of constuctian 0 • 50%Completion 50 •100 % Completion F$O
Tax Exempt Bonds Const $ 24,000,000 $ 20.702.204 $ 3,297.796
Tax Exempt Bonds Perm 7,933,689
Tax Credit Equity $ 13,416,581 $ - $ - $ 2,683,316AgencyLoan $ 29:000,000 $ 2,421,978 $ 5,031,755 $ $ 12,140,412
'. USES OF FUNDS ;,.�
_.. _..
_ __..___._
_..__
Bldg
____. ._
permits to Start
--- .__
Land & Buildings
Project Totals
PredevelopmeM
of Construction
0 •60%Completion
50 •10VI Completion
Lease
UP/Perm Loan
Purchase Price
$
25,000
$
25,000
$
-
$
$
$
Legal
Title, & Escrow
$
25,000
$
-
$
25,000
$
$
$
Construction
$
-
$
6250,000
$ 750p00
$
"On Site" Sitoomk
$
6.000,000
$
-
$
-
$
1,190,000
$ 210,000
$
-
'Off Ste' improvements
$
1,400.000
$
-
$
-
$
9,810.810
$ 11,990.991
IS
Buildngs
$
21.601,801
$
-
$
-
$
2,665,070
$ 1.776713
$
_
Can Cond, POH, Bonds. Ins, etc
$
4,441,784
$
-
$
-
$
1,175,169
$ 1436,318
$
Construction Contingency
$
2,611,487
$
-
Soft Casts
Architecture & Engineering
$
1,543,400
$
1,389.060
$
-
$
77,170
$ 77,170
$
Incl Eng, Reports, Sludles
3rd Party Studies & Reports
$
27.000
It
24,300
$
-
$
2,700
$
$
$
IS
_
Insurance
$
325.000
$
32,500
$
260.000
$
32,500
$ 44,371
$
Real Estate Taxes
$
44.371
$
-
$
-
$
$
$ 70,861
$
-
Tax Credit Fees
$
88.577
$
17,715
$
-
$
$
Title,Escrow&Recording
$
55,000
$
-
$
55,000
$
$
-
18,000
$ 18,000
$
24,000
Site Security
$
60,000
$
$
-
141,400
$
$
20,200
$
10,100
$ 10,100
$
20,200
Legal & Accounting
$
202,000
$
$ 165,000
$
Vocals & Furnishings
$
165,000
$
-
$
$
$ 47.500
$
47,500
MMing&Leasing
$
95,000
$
-
$
-
$
13,000
$
$
Miss Consultaras/Esimalion
$
65,000
$
52.000
$
-
$
7,000
$ 7C00
$
3,500
Mlic
$
35,000
$
17,500
It
-
$
$
Permits &Fees
$
3,567,537
$
96.326
$
3,471.311
$
-
$
'
Soft Cos! Contingency
$
501,839
$
351.287
$
100,366
$
50,186
$
Development Overhead
$
650,000
$
97,500
$
162,500
$
162.500
$ 162,500
$
$
65,000
1,665,000
Development Profit
$
1,050,000
$
-
$
-
$
$ 185A00
Construction Financing Costs
$ -
$
Bondlssuance
$
629,559
$
94,434
$
535,125
$
$
-
1,170,000
$ 1.170.000
$
Construction l rierest
$
2,340.000
$
-
$
-
$
68,000
$ -
$
_
Construction Lander Costs
$
68,000
$
-
$
-
$
$
1.300,OW
Lease up Interest and Carry
$
1,300.000
$
-
$
-
$
$
_
$
Bridge Loan Fees and Interest
$
31,500
$
-
$
31,500
Permmrenl Financing Costs
356750
$
$ -
$
-
Bond Issuance
$
419,706
$
62,956
$
$
12000
Title & Recording
$
12,000
$
$
'
Syndication Costs
$
40,000
$
20,000
$
20,000
$
-
$
Project Reserves
-
$
$
-
$
$
929,610
Capitalized Reserves
$
929,610
It
Subtotal Project Costs
$
-
ProJecl Contingency
$
-
882/015610-0047
III1838.07 a0l10411I
ATTACHMENT NO.9
GROUND LEASE
[See following document]
11118 8.07 a01/ ATTACHMENT NO. 9
1111838.07 a01/04/II
GROUND LEASE
By and Between
LA QUINTA REDEVELOPMENT AGENCY
"Landlord"
and
CORAL MOUNTAIN PARTNERS, L.P.
Dated as of
182/015610-0047
1111838 07 A1/04/11
"Tenant"
GROUND LEASE
This GROUND LEASE ("Ground Lease") dated as of
("Effective Date"), is entered into by and between LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic ("Landlord"), and CORAL MOUNTAIN PARTNERS, L.P., a
California limited partnership ("Tenant').
RECITALS
A. Landlord is a California redevelopment agency organized and existing under the
California Community Redevelopment Law (Section 33000 et seq. of the Health and Safety Code).
B. Tenant is controlled by an experienced owner, developer and manager of affordable
housing for low and moderate -income families.
C. Landlord is the owner of certain real property situated in the City of La Quinta,
County of Riverside, State of California, and legally described in Exhibit "A", which is attached
hereto and incorporated herein by this reference ("Property").
D. Landlord entered into a Disposition and Development Agreement with Tenant dated
as of January 4, 2011 ("Agreement').
E. The Agreement provides for Landlord to ground lease the Property to Tenant, and for
Tenant to construct and operate a one hundred seventy-six (176) unit multifamily apartment project
with all of such units restricted for occupancy by very low income, lower income, and moderate
income families (the "Project').
F. All conditions precedent to the parties entering into this Ground Lease have been
satisfied or waived.
G. This Ground Lease is in the vital and best interests of the City of La Quinta,
California, and the health, safety and welfare of its residents.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and
conditions herein contained, Landlord and Tenant agree as follows:
ARTICLE 1. LEASE OF THE PROPERTY
1.1 Ground Lease of the Property; Acquisition of Improvements. Landlord leases the
Property to Tenant, and Tenant hires the Property from Landlord, on the terms and conditions as set
forth in this Ground Lease. Pursuant to the Agreement and subject to the provisions of Section 5.3
hereof, Tenant will concurrent with the Effective Date of this Ground Lease acquire fee title to all
Improvements on the Property and shall hold fee title to such Improvements during the Term hereof.
1.2 Purpose of Ground Lease. The purpose of this Ground Lease is to provide for the
construction, maintenance, management and operation of the Project as a 176-unit multifamily
apartment project. Tenant will not occupy or use the Property, nor permit the Property to be
occupied or used, nor do or permit anything to be done in or on the Property, in whole or in part, for
any other purpose.
882/015610-0047 -1-
1111838,07 a01/04/11
1.3 Recorded Encumbrances. This Ground Lease, the interests of Landlord and Tenant
hereunder, and the Property, are in all respects subject to and bound by all of the covenants,
conditions, restrictions, reservations, rights, rights -of -way and easements of record prior to the
recordation of this Ground Lease.
1.4 Memorandum of Ground Lease. A short form Memorandum of Unrecorded
Ground Lease referring to this Ground Lease, substantially in the form attached hereto and
incorporated herein as "Exhibit B", shall be executed by Landlord and Tenant concurrently herewith,
and recorded in the Official Records of the County of Riverside, California ("Official Records").
ARTICLE 2. DEFINITIONS.
Capitalized terms used herein are defined where first used in this Ground Lease and/or as set
forth in this Article 2.AI1 capitalized terms not defined herein shall have the same meanings ascribed
to them in the Agreement. For the purpose of supplying such definitions, the Agreement,
notwithstanding anything contained therein or herein to the contrary, shall not merge with this
Ground Lease.
"Affiliate" means any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Tenant which, if Tenant is a
partnership or limited liability company, shall include each of the constituent members or partners,
respectively thereof. The term "control" as used in the immediately preceding sentence, means, with
respect to a person that is a corporation, the right to the exercise, directly or indirectly, of more than
fifty percent (50%) of the voting rights attributable to the shares of the controlled corporation, and,
with respect to a person that is not a corporation, the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of the controlled person.
"Agency Loan" means that certain loan made by Landlord to Tenant in the original principal
amount of Twenty -Nine Million Dollars ($29,000,000).
"Agency Loan Note" means that certain promissory note made by Tenant in favor of
Landlord on or about , 2011, evidencing the Agency Loan.
"Agreement" means the Disposition and Development Agreement between Landlord and
Tenant, dated as of January 4, 2011.
"Annual Project Revenue" means all gross income and all revenues of any kind from the
Housing Development in a calendar year, of whatever form or nature, whether direct or indirect, with
the exception of the items excluded below, actually received by or paid to or for the account or
benefit of Tenant or any Affiliate of Tenant or any of their agents or employees, from any and all
sources, resulting from or attributable to the ownership, operation, leasing and occupancy of the
Housing Development, determined on the basis of generally accepted accounting principles applied
on a consistent basis, and shall include, but not be limited to: (i) gross rentals paid by tenants of the
Housing Development under leases, and payments and subsidies of whatever nature, including
without limitation any payments, vouchers or subsidies from HUD or any other person or
organization, received on behalf of tenants under their leases, (ii) amounts paid by residents of the
Property to Tenant or any Affiliate of Tenant on account of Operating Expenses for further
disbursement by Tenant or such Affiliate to a third party or parties, (iii) late charges and interest paid
on rentals, (iv) rents and receipts from licenses, concessions, vending machines, coin laundry and
882/015610-0047 -2-
1111838.07 a01/04/11
similar sources, (v) other fees, charges or payments not denominated as rental but payable to Tenant
in connection with the rental of office, retail, storage, or other space in the Housing Development,
(vi) consideration received in whole or in part for the cancellation, modification, extension or
renewal of leases, and (vii) interest and other investment earnings on security deposits, reserve
accounts and other Housing Development accounts to the extent disbursed for other than the purpose
of the reserve. Notwithstanding the foregoing, gross income shall not include the following items:
(a) security deposits from tenants (except when applied by Tenant to rent or other amounts owing by
tenants); (b) capital contributions to Tenant by its members, partners or shareholders (including
capital contributions required to pay any deferred developer fee); (c) condemnation or insurance
proceeds; (d) funds received from any source actually and directly used for initial development of the
Housing Development; (e) receipt by an Affiliate of management fees or other bona fide arms -length
payments for reasonable and necessary Operating Expenses associated with the Housing
Development, including but not limited to, any Partnership Related Fees; or (f) Transfer Net
Proceeds and/or Refinancing Net Proceeds.
"Approved Financing" means the financing approved by the Landlord pursuant to Section
6.7 of the Agreement, obtained by Tenant for the construction/development and ownership of the
Project.
"Award" means any compensation or payment made or paid for the Total, Partial or
Temporary Taking of all of any part of or interest in the Property and/or the Improvements, whether
pursuant to judgment, agreement or otherwise.
"Capital Improvements" means all work and improvements with respect to the Property for
which costs and expenses may be capitalized in accordance with GAAP.
"Capital Replacement Reserve" shall have the meaning ascribed thereto in the Regulatory
Agreement.
"Certificate of Occupancy" means the final certificate of occupancy issued by the City for
the Project.
"City" means the City of La Quinta, a California municipal corporation and charter city.
"Commencement Date" means the date upon which the Memorandum of Ground Lease is
recorded in the Official Records of the County of Riverside.
"Construction Load" refers to the loan from a Mortgagee (or consortium of Mortgagees)
authorized pursuant to Section 17.1 hereof, the proceeds of which are used to perform the
construction of the Project.
"CPI Adjustment" means the increase in the cost of living index, as measured by the
Consumer Price Index for all urban consumers, Los Angeles -Anaheim -Riverside statistical area, all
items (1982-84 = 100) published by the United States Department of Labor, Bureau of Labor
Statistics("CPI") in effect as of the date on which the Certificate of Occupancy is issued to the CPI in
effect as of the date on which an adjustment is made. If such index is discontinued or revised, such
other index with which such index is replaced (or if not replaced, another index which reasonably
reflects and monitors consumer prices) shall be used in order to obtain substantially the same results
as would have been obtained if the discontinued index had not been discontinued or revised. If the
887J015610-0047 -3-
1111838.07 a01/04/1I
CPI is changed so that the base year is other than 1982-84, the CPI shall be converted in accordance
with the conversion factor published by the United States Department of Labor, Bureau of Labor
Statistics.
"Debt Service" means payments made in a calendar year pursuant to the Approved
Financing obtained for the construction/development and ownership of the Project or any permitted
refinancing or modification thereof, but excluding Rent.
"Deferred Developer Fees" means any deferred developer fee allowable under the
Approved Financing.
"Event of Default" has the meaning set forth in Article 20.
"Executive Director" means the Executive Director of Landlord or his or her designee.
"First Mortgage -Construction Financing" means a loan in an amount not less than Twenty
Million Dollars ($20,000,000) from a Mortgagee to be secured by a leasehold deed of trust in first
(1st) lien position against the Tenant's leasehold interest in the Property.
"Foreclosure Transferee" shall mean any Mortgagee or other transferee of the leasehold
interest under this Ground Lease as a result of a judicial foreclosure, non -judicial foreclosure or
assignment of the leasehold in lieu of foreclosure.
"Housing Development" means an affordable rental housing development consisting of
one hundred seventy-six (176) residential dwelling units and all required on -site improvements
that will remain privately owned and that are necessary to serve the Housing Development.
"Impositions" means all taxes (including, without limitation, sales and use taxes);
assessments (including, without limitation, all assessments for public improvements or benefits
whether or not commenced or completed prior to the Commencement Date and whether or not to be
completed within the Term); water, sewer or other rents, rates and charges; excises; levies; license
fees; permit fees; inspection fees and other authorization fees and other charges; in each case whether
general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all
interests and penalties thereon), which are attributable or applicable to any portion of the Term and
may be assessed, levied, confirmed or imposed on or in respect of, or be a lien upon (a) the Property
or the Improvements, or any part thereof, or any estate, right or interest therein, (b) any occupancy,
use or possession of or activity conducted on the Property or the Improvements, or any part thereof,
or (c) this Ground Lease. The term "Impositions" shall also include any and all increases in the
foregoing, whether foreseen or unforeseen, ordinary or extraordinary, including, without limitation,
any increase in real property taxes resulting from a sale of the Property by Landlord.
"Improvements" means all buildings, structures and other improvements, including the
building fixtures thereon, now located on the Property or hereafter constructed on the Property; all
landscaping, fencing, walls, paving, curbing, drainage facilities, lighting, parking areas, roadways
and similar site improvements now located or hereafter placed upon the Property.
"Institutional Lender" means any of the following institutions having assets or deposits in
the aggregate of not less than One Hundred Million Dollars ($100,000,000): a California chartered
bank; a bank created and operated under and pursuant to the laws of the United States of America; an
882/015610-0047 -4-
1111838.07 a01/04/11
"incorporated admitted insurer" (as that term is used in Section 1100.1 of the California Insurance
Code); a "foreign (other state) bank" (as that term is defined in Section 1700(1) of the California
Financial Code); a federal savings and loan association (Cal. Fin. Code Section 8600); a commercial
finance lender (within the meaning of Sections 2600 et seq. of the California Financial Code); a
"foreign (other nation) bank" provided it is licensed to maintain an office in California, is licensed or
otherwise authorized by another state to maintain an agency or branch office in that state, or
maintains a federal agency or federal branch in any state (Section 1716 of the California Financial
Code); a bank holding company or a subsidiary of a bank holding company which is not a bank
(Section 3707 of the California Financial Code); a trust company, savings and loan association,
insurance company, investment banker; college or university; pension or retirement fund or system,
either governmental or private, or any pension or retirement fund or system of which any of the
foregoing shall be trustee, provided the same be organized under the laws of the United States or of
any state thereof; and a Real Estate Investment Trust, as defined in Section 856 of the Internal
Revenue Code of 1986, as amended, provided such trust is listed on either the American Stock
Exchange or the New York Stock Exchange. Citibank, N.A. is hereby deemed to be an Institutional
Lender.
"Insurance Requirements" means all terns of any insurance policy covering or applicable
to the Property or the Improvements, or any part thereof, all requirements imposed by the issuer of
any such policy, and all orders, rules, regulations and other requirements of the National Board of
Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the
Property or the Improvements, or any part thereof, or any use or condition of the Property or the
Improvements, or any part thereof.
"Investor" means the limited partner of Tenant.
"Maintenance Standards" means those standards set forth in Article 10 hereof.
"Memorandum of Ground Lease" refers to the memorandum of unrecorded ground lease
which has been recorded as described in Section 1.4.
"Mortgage" has the meaning set forth in Section 17.1 of this Ground Lease.
"Mortgagee" has the meaning set forth in Section 17.1 of this Ground Lease.
"Notice of Intended Taking" means any notice or notification on which a reasonably
prudent person would rely and which said person would interpret as expressing an existing intention
of Taking as distinguished from a mere preliminary inquiry or proposal. It includes, without
limitation, the service of a condemnation summons and complaint on a party to this Ground Lease.
The notice is considered to have been received when a party to this Ground Lease receives from the
condemning agency or entity a notice of intent to take, in writing, containing a description or map of
the taking which reasonably defines the extent of the taking.
"Official Records" means the Official Records of Riverside County, California.
"Operating Budget" means an operating budget for the Project, which budget shall be
subject to the annual written approval of Landlord in accordance with Section 9 of the Regulatory
Agreement.
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"Operating Expenses" means actual, reasonable and customary (for comparable high
quality multifamily residential developments in Riverside County) costs, fees and expenses directly
incurred, paid, and attributable to the operation, maintenance and management of the Housing
Development in a calendar year, including, without limitation: painting, cleaning, repairs, alterations,
landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and
personal property taxes, assessments, insurance, security, advertising and promotion, janitorial
services, cleaning and building supplies, purchase, repair, servicing and installation of appliances,
equipment, fixtures and furnishings, fees and expenses of property management, fees and expenses
of accountants, attorneys and other professionals, repayment of any completion or operating loans
made to Tenant, its approved successors or assigns, and other actual, reasonable and customary
operating costs which are directly incurred and paid by Tenant, but which are not paid from or
eligible to be paid from the operating reserve or other reserve accounts. In addition, Operating
Expenses shall include a social services fee in the amount of Twenty -Two Thousand Dollars
($22,000) for calendar year 2011, which shall be increased annually by three percent (3%) per year,
provided Tenant provides the social services described in the Tenant Services Agreement that was
included in Tenant's tax credit application. Operating Expenses shall not include any of the
following: (i) salaries of employees of Tenant or Tenant's general overhead expenses, or expenses,
costs and fees paid to an Affiliate of Tenant, to the extent any of the foregoing exceed the expenses,
costs or fees that would be payable in a bona fide arms' length transaction between unrelated parties
in the Riverside County area for the same work or services; (ii) any amounts paid directly by a tenant
of the Housing Development to a third party in connection with expenses which, if incurred by
Tenant, would be Operating Expenses; (iii) optional or elective payments with respect to the First
Mortgages or the Second Mortgage; (iv) any payments with respect to any Project -related loan or
financing that has not been approved by the Landlord; (v) expenses, expenditures, and charges of any
nature whatsoever, arising or incurred by Tenant prior to completion of the Project with respect to the
development of the Project, or any portion thereof, including, without limitation, all predevelopment
and preconstruction activities conducted by Tenant in connection with the Project, including without
limitation, the preparation of all plans and the performance of any tests, studies, investigations or
other work, and the construction and any on -site or off -site work in connection therewith; or (vi)
depreciation, amortization, and accrued principal and interest expense on deferred payment debt.
"Operating Reserve" shall have the meaning ascribed thereto in the Regulatory Agreement.
"Partial Taking" means any taking of the fee title of the Property and/or the Improvements
that is not either a Total, Substantial or Temporary'raking.
"Partnership Agreement" means the agreement which sets forth the terms of the Tenant's
limited partnership, as such agreement may be amended from time to time.
"Partnership Related Fees" means partnership fees actually incurred pursuant to the terns
of the Partnership Agreement, which are reasonable and customary to developer/owner entities for
similar projects in Southern California, and may include, but shall not exceed: (i) a general partner(s)
(administrative and/or managing partner(s)) partnership management fee payable to the general
partner(s) (ii) a limited partner asset management fee payable to the investor limited partner; and (iii)
an annual audit fee in and for any calendar year. In no event shall the annual fees for (i) and (ii)
above cumulatively exceed Forty Thousand Dollars ($40,000.00), but such fees in (i) and (ii) may be
increased annually by the CPI Adjustment. In the event insufficient Annual Project Revenues exist
to provide for payment of all or part of the specific Partnership Related Fees listed above, no interest
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shall accrue on the unpaid portions of such Partnership Related Fees, but the unpaid balance of such
fees alone will be added to the Partnership Related Fees due in the following year.
"Plans" means the plans and specifications for the construction of the Project, a set of which,
initialed by Tenant, are on file in the offices of Landlord.
"Potential Default" means any condition or event which, with the lapse of time or the giving
of notice, or both, would constitute an Event of Default.
"Project" means Tenant's construction of the Housing Development and certain public
improvements, all as more particularly described in the Agreement.
"Property" has the meaning set forth in Recital C above.
"Redevelopment Plan" means the Redevelopment Plan for Project Area No. 2, adopted by
Ordinance No. 139 of the City Council of the City on May 16, 1989, as the same has been amended
from time to time.
"Refinancing Net Proceeds" means the proceeds of any approved refinancing of the
Approved Financing secured by the Property, net of the following actual costs and fees incurred:(i)
the amount of the financing which is satisfied out of such proceeds, (ii) reasonable and customary
costs and expenses incurred in connection with the refinancing, (iii) the balance, if any, of the
Deferred Developer Fee, (iv) the balance, if any, of authorized loans to the Project made by the
limited partners of Tenant, including interest at the rate set forth in the Partnership Agreement for
such loans, (v) the balance, if any, of authorized operating loans or development loans made by the
general partners of a limited partnership that succeeds to Tenant's interest in the Agreement and the
Project, including interest at the rate set forth in the Partnership Agreement for such loans, (vi) the
return of capital contributions, if any, to the Project made by the general partners of a limited
partnership that succeeds to Tenant's interest in the Agreement and the Project that were used to pay
the Deferred Developer Fee, (vii) the amount of proceeds required to be reserved for the repair,
rehabilitation, reconstruction or refurbishment of the Project; and (viii) the payment to general
partner of Tenant of a refinancing fee, which is agreed to be set at three percent (3%) of the amount
of the approved refinancing..
"Regulatory Agreement" means that certain Regulatory Agreement executed by and
between Tenant, as "Developer," and Landlord, as "Agency," on even date herewith, which
Regulatory Agreement was recorded in the Official Records.
"Rent" means the rent payable pursuant to Article 4 of this Ground Lease.
"Rental Period" means each of the calendar years throughout the Lease Term. The first
Rental Period shall commence upon the issuance of the Certificate of Occupancy and terminate upon
the December 31 of that year; each Rental Period thereafter shall commence on January 1 and
terminate on December 31.
"Rent Payment Date" means the May 1 of each year following the end of each Rental
Period; the first Rent Payment Date shall occur on the May 1 after the expiration of the first Rental
Period.
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"Reserve Deposits" means any payments to the Capital Replacement Reserve account and
the Operating Reserve account pursuant to Sections 10 and 11, respectively, of the Regulatory
Agreement.
"Residual Receipts" shall mean Annual Project Revenue less the sum of.
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve;
(iv) Reserve Deposits to the Operating Reserve;
(v) Partnership Related Fees;
(vi) Deferred Developer Fees;
(vi) Property management fee for the Housing Development which remains
unpaid after payment of Operating Expenses, if any;
(viii) Unpaid Tax Credit adjustment amounts, if any, pursuant to the Partnership
Agreement;
(ix) Repayment of loans to the Project, if any, made by the limited partner(s) of
Tenant pursuant to the Partnership Agreement, including interest at the rate set forth in the
Partnership Agreement for such loans, for eligible development and/or operating expense deficits or
other eligible loans (provided that if made during the compliance period Tenant shall provide to
Executive Director documentation showing the propriety of such loan(s) and if made subsequent to
the expiration of the compliance period each such loan must be reasonably approved by the
Executive Director before being provided to the Project after review of documentation provided by
Tenant showing propriety of such loans);
(x) Repayment to the administrative and/or managing general partners of Tenant
for loans to the Project for development advance(s) pursuant to the Partnership Agreement, operating
deficit advance(s) pursuant to the Partnership Agreement), credit adjuster payment(s) pursuant to the
Partnership Agreement), and/or Development Fee advance(s) pursuant to the Partnership Agreement,
and with all such loans to be repaid without interest (provided that if made during the compliance
period Tenant shall provide to Executive Director documentation showing the propriety of such
loan(s) and if made subsequent to the expiration of the compliance period each such loan must be
reasonably approved by the Executive Director before being provided to the Project after review of
documentation provided by Tenant showing propriety of such loans);
(xi) Repayment to the administrative and/or managing general partners of Tenant
of certain loans made to the Project after the expiration or earlier termination of the Partnership
Agreement to cover shortfalls in funding for Operating Expenses in excess of the Operating
Expenses included in the approved annual Operating Budget for the year in which such loan is made
(if at all), all such loans to be repaid without interest (provided that if made during the compliance
period Tenant shall provide to Executive Director documentation showing the propriety of such
loan(s) and if made subsequent to the expiration of the compliance period each such loan must be
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reasonably approved by the Executive Director before being provided to the Project after review of
documentation provided by Tenant showing propriety of such loans); and
(xii) Capital contributions to the Project, if any, made by the general partners of
Tenant that were used to pay the Developer Fee.
In the event any calculation of Annual Project Revenue less subsections (i) through (xii)
inclusive above results in a negative number, then Residual Receipts shall be zero ($0) for that year
and shall not carry over to the next or any other subsequent year.
In addition, none of the fees, costs, expenses, or items described above in calculation of
Residual Receipts shall include any duplicate entry/item, or double accounting for a cost item. For
example, an audit fee incurred by Tenant and deducted or included above in subsection (i) for
Operating Expenses shall not also be deducted or included in subsection (v) for Partnership Related
Fees in the calculation of Residual Receipts. The calculation of Residual Receipts shall be conducted
at Tenant's sole cost and expense, by a third party auditor and submitted to Tenant annually, along
with Tenant's payment of Residual Receipts.
"Substantial Taking" means the taking of so much of the Property and/or the Improvements
that the portion of the Property and/or the Improvements not taken cannot be repaired or
reconstructed, taking into consideration the amount of the award available for repair or
reconstruction, so as to constitute a complete, rentable structure, capable of producing a
proportionately fair and reasonable net annual income after payment of all Operating Expenses, and
all other charges payable under this Ground Lease, and after performance of all covenants and
conditions required by Tenant by law and under this Ground Lease.
"Take -Out Loan" refers to the loan, if any, from Citibank, N.A., or from another lender
acceptable to the Executive Director of Landlord, pursuant to which said lender agrees to make a
take-out loan for the purpose of paying all amounts due under the Construction Loan.
"Taking" means a taking or damaging, including severance damage, by eminent domain or
by inverse condemnation or for any public or quasi -public use under any statute. The taking may
occur as a result of a transfer pursuant to the recording of a final order in condemnation, a voluntary
transfer or conveyance to the taking authority under threat of condemnation, or a transfer while
condemnation proceedings are pending. Unless otherwise provided, the taking shall be deemed to
occur as of the earlier of (a) the date actual physical possession is taken by the condemnor, or (b) the
date on which the right to compensation and damages accrues under the law applicable to the
Property and/or the Improvements. A taking as used in this Ground Lease does not include the
voluntary dedication of any portion of the Property necessary to obtain building permits or to comply
with any other applicable governmental rule, regulation or statute; nor does it include the enactment
of any law, ordinance or regulation which may affect the use or value of the Property but which does
not involve an actual taking of any portion thereof. Eminent domain actions filed by Landlord
against former owners of portions of the Property and pending as of the Commencement Date shall
not be deemed, construed or interpreted as a Taking under this Ground Lease.
"Tax Credits" means Low Income Housing Tax Credits granted pursuant to Section 42 of
the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058,
23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq.
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"Tax Credit Regulatory Agreement" means the regulatory agreement which may be
required to be recorded against the Property with respect to the issuance of Tax Credits for the
Project.
"Temporary Taking" means a taking of all or any part of the Property and/or the
Improvements for a term certain which term is specified at the time of taking. Temporary Taking
does not include a taking which is to last for an indefinite period or a taking which will terminate
only upon the happening of a specified event unless it can be determined at the time of the taking
substantially when such event will occur. If a taking for an indefinite term should take place, it shall
be treated as a Total, Substantial or Partial Taking in accordance with the definitions set forth herein.
"Term" has the meaning set forth in Article 3 of this Ground Lease.
"Total Taking" means the taking of the fee title to all of the Property.
"Transaction Documents" means, collectively, the Agreement and the Regulatory
Agreement.
"Transfer Net Proceeds" shall mean the proceeds of any sale or other transfer, in whole or
part, of the Property or Tenant's interests therein, net only of (i) the reasonable and customary costs
and expenses incurred in connection with such transfer; (ii) the amount of the financing which is
satisfied out of such proceeds, (iii) the balance, if any, of the Deferred Developer Fee, (iv) the
balance, if any, of loans to the Project made by the limited partners of Tenant, including interest
thereon as provided in the Partnership Agreement, (v) the balance, if any, of operating loans or
development loans made by the general partners of Tenant, including interest thereon as provided in
the Partnership Agreement, (vi) the return of capital contributions, if any, to the Project made by the
general partners of Tenant that were used to pay the Deferred Developer Fee, and (vii) the payment
to the general partner of Tenant of a disposition fee set forth in the Partnership Agreement, which is
agreed to be set at three percent (3%) of the amount of the approved transfer.
ARTICLE 3. TERM.
The term of this Ground Lease ("Term") shall commence on the date of recordation of the
Memorandum of Ground Lease in the Official Records ("Commencement Date"), and shall continue
thereafter until the earlier to occur of. -(a) December 31, 2070, and the (b) fifty-fifth (55th)
anniversary of the date seventy-five percent (75%) of the units have been leased to and occupied by
income -qualified tenants in accordance with the terms of the Regulatory Agreement.
Notwithstanding the foregoing, the Term may be extended for two (2) additional ten (10)
year periods, provided Tenant notifies Landlord in writing of Tenant's desire to so extend at least
six (6) months prior to expiration of the Term, as it may have been extended pursuant to the
terms hereof. In such event, the Landlord and Tenant shall meet and confer to determine
whether to so extend and whether any modifications to the terms and provisions hereof are
necessary. If each of Landlord and Tenant agree, in their sole and absolute discretion, to any
such extension, including to any such additional terms and modifications, then the Term of this
Ground Lease shall be so extended, and except for any modifications agreed to, all other terms
and conditions of this Ground Lease shall apply and be in effect during any such extension
period.
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ARTICLE 4. RENT.
4.1 Rent.
4.1.1 Initial Rent. On each Rent Payment Date, Tenant shall pay to Landlord
Rent in the nominal sum of One Dollar ($1.00).
4.1.2 Rent Adjustment. Upon the later to occur of (i) full payment of the
Agency Loan Note or (ii) the twentieth (20th) anniversary of the Commencement Date, the Rent
due under this Ground Lease shall be reset based on the fair market value of the remaining
leasehold interest under this Ground Lease (taking into account the restrictions set forth in the
Regulatory Agreement, hereinafter referred to as the "Recorded Restrictions" as independently
appraised and at an annual rental based on a percentage of such appraised value as determined by
a qualified, independent appraiser (conducted by a certified appraiser reasonably acceptable to
Executive Director and Tenant), who shall take into account the cumulative amounts which have
been actually paid to the Landlord as Rent under this Ground Lease, including without limitation
taking into consideration the remaining balance, if any, on the Agency Loan as of the time of the
appraisal, and including a reasonable return on investment of between six percent (6%) and eight
percent (8%). Such independent appraisal shall determine the fair market value of the Property,
at its highest and best use (but taking the Recorded Restrictions into account), at the time of such
appraisal but shall also take into consideration an overall fair market ground lease rent over the
55-year Term of this Ground Lease with an objective that Landlord receive over such 55-year
term cumulatively a fair market value ground lease rent (taking the Recorded Restrictions into
account), under this Ground Lease. In such regard, if the Rent paid to date has underpaid,
cumulatively, toward achieving a fair market ground lease rent (taking the Recorded Restrictions
into account), over the 55-year Term of this Ground Lease, then the appraiser shall take that fact
into consideration when determining an adjusted fair market Rent for the remainder of the Term.
Likewise, if the Rent paid to date has been overpaid, cumulatively, toward achieving a fair
market ground lease rent (taking the Recorded Restrictions into account) over the 55-year Term,
then the appraiser shall take that fact into consideration when determining the adjusted Rent for
the remainder of the Term.
This adjusted annual rent for the remaining Term of this Ground Lease, as determined by
the independent appraiser as described above, with the Rent due and required to be paid annually
under this Ground Lease shall be re -adjusted to the lesser of (1) such appraised rent for the
Property (to be increased by 20% every five (5) years to account for inflation), or (2) fifty
percent (50%) of the Residual Receipts for the Housing Development. In any year, if the
appraised value rent (to be increased by 20% every five (5) years to account for inflation)
exceeds fifty percent (50%) of the Residual Receipts for the Housing Development, the amount
by which such appraised value rent (increased by 20% every five (5) years to account for
inflation) exceeds 50 percent (50%) of the Residual Receipts for the Housing Development to be
paid pursuant to this Section 4.1 in a given year shall accrue and be carried over and added to the
amount of the Rent to be paid in later years by Tenant.
Additionally, the adjusted annual rent shall include all of the following: (i) fifty percent
(50%) of the Refinancing Net Proceeds immediately upon any refinancing of the loans secured
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by the Property (or any part thereof), and (ii) one hundred percent (100%) of the Transfer Net
Proceeds immediately upon any transfer in whole or in part of the Housing Development.
4.2 Payment of Rent. All rent that becomes due and payable pursuant to this Ground
Lease shall be paid to Landlord at the address listed in Section 23.1 or such other place as the
Landlord may from time to time designate by written notice to the Tenant without notice or
demand, and without setoff, counterclaim, abatement, deferment, suspension or deduction.
Except as expressly provided herein or in the Agreement, under no circumstances or conditions,
whether now existing or hereafter arising, or whether beyond the present contemplation of the
parties, shall Landlord be expected or required to make any payment of any kind whatsoever or
to perform any act or obligation whatsoever or be under any obligation or liability hereunder or
with respect to the Property.
4.3 Right to Audit. Tenant shall keep full and accurate books of account, records
and other pertinent data with respect to operations of the Housing Development. Such books of
account, records, and other pertinent data shall be kept for a period of three (3) years after the
end of each Rental Period.
Landlord shall be entitled within two (2) years after the end of each Rental Period to
inspect and examine all of Tenant's books of account, records, and other pertinent data. Tenant
shall cooperate fully with Landlord in making the inspection. Landlord shall also be entitled,
also within two (2) years after the end of each Rental Period, to an independent audit of Tenant's
books of account, records, and other pertinent data.
4.4 Utilities. Tenant shall be responsible for the payment of all water, gas, electricity,
refuse collection and disposal, and all other utilities used by Tenant on the Property. Landlord
expressly has no obligation regarding provision of or payment for utilities serving the Property.
4.5 Taxes and Assessments.
4.5.1 Notice of Possessory Interest; Payment of Taxes and Assessments on
Value of Entire Property. In accordance with California Revenue and Taxation Code Section
107.6(a), Landlord notices Tenant that by entering into this Ground Lease, a possessory interest
subject to assessment and collection of property taxes may be created. Tenant or other party in
whom the possessory interest is vested may be subject to the payment of property taxes levied on
such interest. If possessory interest taxes are assessed, Tenant agrees it is responsible for
payment thereof and Landlord has no obligation or liability of any kind or nature relating to
payment of property taxes. Tenant shall, at its sole cost and expense, seek exemption from, or
contest the payment of, assessments and the collection of property taxes pursuant to Revenue and
Taxation Code Section 214, or a successor statute. During the pendency of such contest or
request, Tenant's non-payment of assessments or taxes when due shall not constitute a default
hereunder if (i) the validity of such assessments and taxes are actively contested in good faith
and by appropriate proceedings, (ii) Tenant has demonstrated to Landlord's reasonable
satisfaction that leaving such assessments or taxes unpaid pending the outcome of such
proceedings could not result in conveyance of the Property in satisfaction of such assessments or
taxes or otherwise impair Landlord's estates in the Property, (iii) Tenant has furnished Landlord
with a bond or other security satisfactory to Landlord in an amount not less than 100% of the
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applicable claim (including interest and penalties) and (iv) upon the final disposition of such
proceedings, Tenant shall promptly pay all taxes and assessments then due, inclusive of any
unpaid accrued penalties and interest. Landlord is a tax exempt public entity and no property
taxes will be or are legally assessable against its fee interest.
4.5.2 Payment of Taxes. Subject to any applicable exemptions, Tenant is
responsible for and shall pay the real property and/or possessory interest taxes applicable to the
Property during the term of this Ground Lease. All such payments shall be made prior to the
delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory
evidence that such taxes have been paid or that an exemption from such taxes has been obtained.
If any such taxes paid by Tenant shall cover any period of time prior to or after the expiration of
the Term, Tenant's share of such taxes shall be equitably prorated to cover only the period of
time within the tax fiscal year during which this Ground Lease shall be in effect, and Landlord
shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes,
Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to
Landlord within ten (10) days after demand from Landlord together with interest at the rate set
forth in Section 4.6.
4.5.3 Definition. As used herein, the term "real property tax" shall include any
form of real estate tax or assessment (including, without limitation, on possessory interests),
general, special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income, or estate taxes)
imposed on the Property or any interest (including, without limitation, possessory interests)
therein by any authority having the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, fire, street, drainage or other
improvement district thereof, as against any legal or equitable interest of Landlord or Tenant in
the Property or in the real property of which the Property are a part, as against Landlord's right
to rent or other income therefrom, and as against Landlord's business of leasing the Property.
The term "real property tax" shall also include any tax, fee, levy, assessment or charge (i) in
substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included
within the definition of "real property tax," or (ii) the nature of which was hereinbefore included
within the definition of "real property tax," or (iii) which is imposed as a result of a transfer,
either partial or total, of Landlord's interest in the Property or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of such transfer, or (v)
which is imposed by reason of this lease transaction, any modifications or changes hereto, or any
transfers hereof.
4.5.4 Personal Property. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant contained in the Property or elsewhere. When possible, Tenant shall cause
said trade fixtures, furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Landlord.
4.5.5 Apportionment. If any of Tenant's said personal property shall be
assessed with Landlord's real property, first Tenant shall advise the County of Riverside Tax
Assessor and Tax Collector of the same in writing, and Tenant shall pay Landlord the taxes
attributable to Tenant not later than the later of (a) ten (10) days after receipt of a written
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statement setting forth the taxes applicable to Tenant's property or (b) fifteen (15) days prior to
the date said taxes are due and payable.
4.6 Overdue Interest. Any amount due to Landlord, if not paid when due and on or
before expiration of the period for cure as set forth herein, after Landlord's delivery of notice
thereof to the Tenant, shall bear interest from the date due until paid at the lower of:(a) the
reference or prime rate of Bank of America, N.T. & S.A., in effect from time to time plus three
percent (3%); or (b) the highest rate of interest allowed under applicable usury law.
ARTICLE 5. POSSESSION OF PROPERTY.
5.1 Acceptance of Premises. Tenant hereby accepts the Property and acknowledges
that the Property is in the condition called for by the Agreement and this Ground Lease.
5.2 Ownership of Improvements. Unless otherwise provided herein, during the
Term of this Ground Lease, as it may be extended pursuant to the terms hereof, fee title to all
Improvements, now existing or later made, on the Property are and shall be vested in Tenant as
set forth in Article 11 hereof.
5.3 Surrender of Property.
5.3.1 Expiration or Termination. Tenant agrees that on the expiration or
earlier termination of the Term, as it may be extended pursuant to the terms hereof, the leasehold
estate hereby granted to Tenant may be terminated by Landlord. Upon such termination, the
leasehold estate shall be forfeited and shall revert to Landlord, its successors and assigns, and all
Improvements on the Property shall become the property of Landlord, its successors and assigns,
free and clear from any liens or claims whatsoever (other than non -monetary liens previously
approved or otherwise accepted in writing by Landlord), in good condition, reasonable wear and
tear excepted without further compensation therefor from Landlord to Tenant or any other
person. Following any such expiration or termination, Tenant shall execute, acknowledge and
deliver to Landlord a quitclaim deed, or other document required by a reputable title company,
conveying all Tenant's right, title, and interest in and to the Property and Improvements to
Landlord. In the event Tenant receives a written default notice relating to or arising from any
Construction Loan, Take -Out Loan or any mortgage, deed of trust or security instrument secured
by the leasehold interest granted hereunder, the Property or the Improvements, or from the Tax
Credit Allocation Committee or the Internal Revenue Service, then Tenant shall provide written
notice of such alleged default to the Executive Director within five (5) days of receipt thereof.
Tenant hereby irrevocably appoints Landlord as Tenant's agent and attorney -in -fact (such
agency being coupled with an interest), and as such agent and attorney -in -fact Landlord may,
without the obligation to do so, in Tenant's name, or in the name of Landlord, prepare, execute
and file or record such statements, applications and other documents necessary to create, perfect
or preserve any of Landlord's interests and rights in or to the Property and any of the
Improvements, and, upon the earlier expiration or termination of the Term, take any other action
required of Tenant. Notwithstanding any other provisions herein, unless the Low Income
Housing Tax Credit Extended Use Agreement is terminated pursuant to Internal Revenue Code
Section 42(h)(6)(E)(i)(I) or otherwise as permitted by the Internal Revenue Code, Landlord, and
its successors and assigns specifically agree that upon any termination of this Ground Lease prior
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to the end of the Low Income Housing Tax Credit Extended Use Period, Landlord, and its
successors and assigns shall, for the balance of the term of the Low Income Housing Tax Credit
Extended Use Period, continue to operate the Property such that
(_) of the units in the Housing Development shall be leased to households who, at the time of
initial occupancy, have incomes of no more than sixty percent (60%) of the area median income,
adjusted for family size, and that the rents charged such tenants shall not exceed the maximum
low income housing tax credit rents for such households.
5.3.2 Condition. On expiration or earlier termination of the Term and in
furtherance of the provisions relating to surrender of the Property set forth in Section 5.3.1
above, Tenant shall peaceably and quietly leave and surrender the Property and the
Improvements to Landlord in good order, condition and repair, reasonable wear and tear and
obsolescence excepted. Tenant shall leave in place and in good order, condition and repair, all
fixtures and machinery; except (if Tenant is not then in default under this Ground Lease) Tenant
shall have the right to remove only Tenant -owned appliances, other unattached equipment,
furniture and merchandise that Tenant shall have installed, which removal must be done without
damage to the Property or Improvements. Landlord shall have the right to have the Property and
the Improvements inspected at Tenant's cost to determine whether the Property and the
Improvements have been properly maintained, repaired and restored in accordance with the
terms of this Ground Lease. That notwithstanding and subject to the exception of the
environmental indemnities which shall survive any termination in perpetuity, Tenant shall not be
responsible for the interior physical condition of individual occupied apartments on the
termination or expiration of this Ground Lease.
5.3.3 Delivery of Documents. Contemporaneous with the expiration or earlier
termination of the Term, as it may be extended pursuant to the terms hereof, and subject to the
provisions of Sections 5.3.1 and 5.3.2 hereof, Tenant shall immediately deliver to Landlord the
following:
(a) Such documents, instruments and conveyances as Landlord may
reasonably request to enable Landlord's ownership of the Property and the Improvements to be
reflected of record, including, without limitation, a quitclaim deed in recordable form to the
Property and the Improvements.
(b) If requested by Landlord, a lender's policy of title insurance (as
provided in Section 7.2(r) of the Agreement), surety bond, or other security reasonably
acceptable to Landlord insuring against all claims and liens against the Property and the
Improvements other than those incurred by Landlord or accepted by Landlord in writing.
(c) All construction plans, surveys, permits, existing contracts for
services, maintenance, operation, and any other documents relating to use, operation,
management, and maintenance of the Improvements as may be in effect and/or in the possession
of Tenant at the time and from time to time thereafter.
(d) All documents and instruments required to be delivered by Tenant
to Landlord pursuant to this Section shall be in form reasonably satisfactory to Landlord,
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including without limitation such documents and instruments shall be complete, originals or true
copies, and legible.
5.4 Abandonment. Tenant shall not abandon or vacate the Property or the
Improvements at any time during the Term. If Tenant shall abandon, vacate or otherwise
surrender the Property or the Improvements, or be dispossessed (other than dispossession as the
result of a Substantial Taking or a Taking and subject to Section 22.1 below) thereof by process
of law or otherwise, the same shall constitute a default under this Ground Lease on the part of
Tenant and, in addition to any other remedy available on the part of Landlord, any of Tenant's
property left in, upon or about the Property or the Improvements (except for underground storage
tanks) shall, at Landlord's option, be deemed to be abandoned and shall become the property of
Landlord. The appointment of a receiver pursuant to a Mortgagee's exercise of its rights under a
Mortgage, or the foreclosure of a Mortgage, shall not be a default under this Section.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
6.1 Landlord's Representations. Landlord represents and warrants to Tenant it
owns the Property in fee simple and has the power and authority to enter into this Ground Lease
and perform all obligations and agreements incidental or pertinent to the Ground Lease.
Landlord makes no representation or warranty with respect to the condition of the Property or its
fitness or availability for any particular use, and Landlord shall not be liable for any latent or
patent defect therein. Landlord represents and warrants to tenant as follows:
(A) Landlord. Landlord is a public body, corporate and politic, organized and
existing pursuant to the Community Redevelopment Law (Health and
Safety Code Section 33000, et seg.), which has been authorized to transact
business pursuant to action of the City. The execution, performance and
delivery of this Ground Lease by Landlord has been fully authorized by all
requisite actions on the part of Landlord.
(B) No Conflict. To the best of Landlord's knowledge, Landlord's execution,
delivery and performance of its obligations under this Ground Lease will
not constitute a default or a breach under any contract, agreement or order
to which Landlord is a party or by which it is bound.
(C) No Landlord Bankruptcy. Landlord is not the subject of a bankruptcy
proceeding.
As used herein, "Landlord's knowledge" shall be limited to the actual knowledge of
Douglas R. Evans, Assistant City Manager -Development Services, with no duty of inquiry or
investigation.
6.2 Tenant's Representations. Tenant represents and warrants to Landlord it has
examined the Property and acknowledges that it hereby accepts possession of the Property in its
"AS IS" condition, with all faults and defects, including, without limitation, any physical
condition or environmental condition of the Property. Tenant represents and warrants to
Landlord as follows:
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(A) Tenant. Tenant is a duly organized limited partnership formed within and
in good standing under the laws of the State of California. Upon request
by Landlord, Tenant shall deliver to Landlord true and complete copies of
the original documents evidencing the organization of Tenant, as amended
to the date of this Ground Lease. Tenant has full right, power and lawful
authority to undertake all obligations as provided herein and the execution,
performance and delivery of this Ground Lease by Tenant have been fully
authorized by all requisite actions on the part of Tenant.
(B) No Conflict. To the best of Tenant's knowledge, Tenant's execution,
delivery and performance of its obligations under this Ground Lease will
not constitute a default or a breach under any contract, agreement or order
to which Tenant is a party or by which it is bound.
(C) No Tenant Bankruptcy. Tenant is not the subject of a bankruptcy
proceeding.
Tenant shall, upon learning of any fact or condition which would cause any of the
warranties and representations in this Section not to be true, immediately give written notice of
such fact or condition to Landlord.
ARTICLE 7. CONSTRUCTION OF THE IMPROVEMENTS.
7.1 Construction. Tenant shall construct the Improvements in accordance with plans
and specifications (the "Plans") approved by Landlord pursuant to the Agreement. All
Improvements, including the Public Improvements, shall be constructed in a good and
workmanlike manner using materials of good quality and in substantial compliance with this
Ground Lease, and shall comply with all applicable governmental permits, laws, ordinances and
regulations.
7.2 Construction Cost. With the exception of the "Agency Loan" provided to
Tenant pursuant to the Agreement, Tenant shall bear the entire and sole cost of constructing the
Improvements, including all fees and mitigation measures.
7.3 Landlord's Right to Discharge Lien. If Tenant does not cause to be recorded
the bond described in California Civil Code Section 3143 or otherwise protect the Property under
any alternative or successor statute, and a final judgment has been entered against Tenant by a
court of competent jurisdiction for the foreclosure of a mechanic's, materialmen's, contractor's,
or subcontractor's lien claim, and if Tenant fails to stay the execution of the judgment by lawful
means or to pay the judgment, Landlord shall have the right, but not the duty, subject to the
notice and cure rights of Mortgagees and the Investor set forth elsewhere in this Ground Lease,
to pay or otherwise discharge, stay, or prevent the execution of any such judgment or lien or
both. Tenant shall reimburse Landlord for all sums paid by Landlord under this Section, together
with all Landlord's reasonable attorneys' fees and costs, plus interest on those sums, fees, and
costs from the date of payment until the date of reimbursement at the rate set forth in Section 4.7,
7.4 Notice of Non -Responsibility. After the recordation of the Certificate of
Completion for the Improvements in the Official Records, Tenant shall provide Landlord with
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prior written notice of not less than fifteen (15) days before commencing construction of any
structural alteration of the Improvements, or any non-structural alteration which will cost more
than Ten Thousand Dollars ($10,000), and shall permit Landlord to record and post appropriate
notices of non -responsibility on the Property. The foregoing Ten Thousand Dollar ($10,000)
limitation shall be increased each calendar year by the CPI Adjustment.
7.5 Notice of Completion. On completion of construction of the Improvements,
Tenant shall file or cause to be filed a notice of completion. Tenant hereby appoints Landlord as
Tenant's attorney -in -fact to file the notice of completion on Tenant's failure to do so after the
work of improvement has been substantially completed.
7.6 Subsequent Alterations. Following completion of the construction of the
Improvements in accordance with the Plans, Tenant may from time to time, at its sole expense,
make improvements and other alterations to the Property which Tenant reasonably determines to
be beneficial. Tenant shall not make any alteration or improvement to the Property, the cost of
which exceeds Fifty Thousand Dollars ($50,000), without Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed. The foregoing dollar amount
limitations shall be increased each calendar year by the CPI Adjustment. Tenant shall timely pay
any obligation incurred by Tenant with respect to any such alterations or improvements that
could become a lien against the Property and shall defend, indemnify and hold Landlord
harmless in connection therewith.
ARTICLE 8. USE OF THE PROPERTY.
8.1 Covenant to Use in Accordance with Redevelopment Plan, City Municipal
Code, Regulatory Agreement, and this Ground Lease. Tenant covenants and agrees for itself,
its successors, assigns, and every successor in interest to Tenant's interest in the Property or any
part thereof, that Tenant shall devote the Property to the uses specified in the Redevelopment
Plan, the Regulatory Agreement and this Ground Lease until the expiration of the Term hereof,
as it may be extended pursuant to the terms hereof, as applicable to the Property. All uses
conducted on the Property, including, without limitation, all activities undertaken by Tenant
pursuant to this Ground Lease, shall conform to the Redevelopment Plan and all applicable
provisions of the La Quinta Municipal Code. The foregoing covenants shall run with the land.
8.2 Covenant to Pay Taxes and Assessments. Tenant shall pay prior to delinquency
all ad valorem real estate taxes, special taxes, assessments and special assessments levied against
the Property, subject to Tenant's right to contest any such tax in good faith and any property tax
exemptions.
8.3 Covenants Regarding Nondiscrimination. Tenant covenants by and for itself
and any successors in interest that there shall be no discrimination against or segregation of any
person, or group of persons on any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any
part thereof, nor shall Tenant, or any person claiming under or through him or her, establish or
permit any such practice or practices of discrimination or segregation with reference to the
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selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the Property, or any part thereof. The foregoing covenants shall run with the land.
Tenant agrees for itself and any successor in interest that Tenant shall refrain from
restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the
Property, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national
origin of any person. All such deeds, leases or contracts shall contain or be subject to
substantially the following nondiscrimination or nonsegregation clauses:
(A) In deeds:"The grantee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons
claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of
any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease,
transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through
him or her, establish or permit any practice or practices of discrimination
or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
premises herein conveyed. The foregoing covenants shall run with the
land."
(B) In leases:"The lessee herein covenants by and for himself or herself, his or
her heirs, executors, administrators, and assigns, and all persons claiming
under or through him or her, and this lease is made and accepted upon and
subject to the following conditions:"That there shall be no discrimination
against or segregation of any person or group of persons, on account of
any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the leasing, subleasing,
transferring, use, occupancy, tenure, or enjoyment of the premises herein
leased nor shall the lessee himself or herself, or any person claiming under
or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or
vendees in the premises herein leased."
(C) In contracts pertaining to the realty:"There shall be no discrimination
against or segregation of, any person or group of persons on account of
any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926. 1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease,
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transfer, use, occupancy, tenure, or enjoyment of the premises which are
the subject of this agreement, nor shall the grantee or any person claiming
under or through him or her, establish or permit any practice or practices
of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or
vendees in the premises herein conveyed. The foregoing covenants shall
run with the land."
The covenants established in this Lease shall, without regard to technical classification
and designation, be binding for the benefit and in favor of the Landlord, its successors and
assigns, the City and any successor in interest to the Property, together with any property
acquired by the Tenant pursuant to this Agreement, or any part thereof. The covenants against
discrimination shall remain in effect in perpetuity.
ARTICLE 9. INSURANCE.
9.1 Tenant's Insurance. Without limiting Landlord's right to indemnification,
Tenant shall secure and maintain insurance coverage as set forth in this Article 9.
9.2 Commercial General and Automobile Liability; Worker's Compensation.
Commencing on the Effective Date and continuing throughout the term of this Ground Lease, the
Tenant shall procure and maintain, at its sole cost and expense, in a form and content satisfactory
to the Landlord's Executive Director, the following policies of insurance:
(A) Commercial General Liability Insurance covering bodily injury, property
damage, personal injury and advertising injury written on a per -occurrence
and not a claims -made basis containing the following minimum limits:(i)
general aggregate limit of Three Million Dollars ($3,000,000.00); (ii)
products -completed operations aggregate limit of Three Million Dollars
($3,000,000.00); (iii) personal and advertising injury limit of One Million
Dollars ($1,000,000.00); and (iv) each occurrence limit of One Million
Dollars ($1,000,000.00).Said policy shall include the following
coverages:(i) blanket contractual liability (specifically covering the
indemnification clause contained in Section 8 below); (ii) products and
completed operations; (iii) independent contractors; (iv) Owner's broad
form property damage; (v) severability of interest; (vi) cross liability; and
(vii) property damage liability arising out of the so-called "XCU" hazards
(explosion, collapse and underground hazards).The policy shall be
endorsed to have the general aggregate apply to this Project only.
(B) A policy of worker's compensation insurance in such amount as will fully
comply with the laws of the State of California and which shall indemnify,
insure, and provide legal defense for the Landlord and the Tenant against
any loss, claim or damage arising from any injuries or occupational
diseases occurring to any worker employed by or any persons retained by
the Tenant in the course of carrying out the work or services contemplated
in this Ground Lease, and Employers Liability Insurance in an amount not
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less than One Million Dollars ($1,000,000) combined single limit for all
damages arising from each accident or occupational disease.
(C) A policy of comprehensive automobile liability insurance written on a per -
occurrence basis in an amount not less than Three Million Dollars
($3,000,000.00) combined single limit covering all owned, non -owned,
leased and hired vehicles used in connection with the Work.
9.3 Builders Risk. Commencing on the Effective Date and continuing until the
Landlord issues a Release of Construction Covenants for the Project, the Tenant shall procure
and maintain, at its sole cost and expense, in a form and content satisfactory to the Landlord's
Executive Director, Builder's Risk (course of construction) insurance coverage in an amount
equal to the full cost of the hard construction costs of the Project. Such insurance shall cover, at
a minimum: all work, materials, and equipment to be incorporated into the Project; the Project
during construction; the completed Project until such time as the City issues a final certificate of
occupancy for the Project, and storage and transportation risks. Such insurance shall
protect/insure the interests of Tenant/owner and all of Tenant's contractor(s), and subcontractors,
as each of their interests may appear. If such insurance includes an exclusion for "design error,"
such exclusion shall only be for the object or portion which failed. Landlord shall be a loss
payee under such policy or policies and such insurance shall contain a replacement cost
endorsement.
9.4 Property; Business Interruption; Boiler and Machinery Insurance.
Commencing on the date Agency issues a Release of Construction Covenants for the Project and
continuing throughout the term of the Ground Lease, the Developer shall procure and maintain,
at its sole cost and expense, in a form and content satisfactory to the Agency's Executive
Director, the following insurance:
(A) Insurance against fire, extended coverage, vandalism, and malicious
mischief, and such other additional perils, hazards, and risks as now are or
may be included in the standard "all risk" form in general use in Riverside
County, California, with the standard form fire insurance coverage in an
amount equal to full actual replacement cost thereof, as the same may
change from time to time. The above insurance policy or policies shall
include coverage for earthquakes to the extent generally and commercially
available at commercially reasonable rates, if such insurance is generally
obtained for affordable housing developments in the counties of Riverside
and San Bernardino. Agency shall be a loss payee under such policy or
policies and such insurance shall contain a replacement cost endorsement.
(B) Business interruption and extra expense insurance to protect Tenant and
Landlord covering loss of revenues and/or extra expense incurred by
reason of the total or partial suspension or delay of, or interruption in, the
operation of the Project caused by loss or damage to, or destruction of, any
part of the insurable real property structures or equipment as a result of the
perils insured against under the all risk physical damage insurance,
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covering a period of suspension, delay or interruption of at least twelve
(12) months, in an amount not less than the amount required to cover such
business interruption and/or extra expense loss during such period.
(C) Boiler and machinery insurance in the aggregate amount of the full
replacement value of the equipment typically covered by such insurance.
9.5 Contractor Insurance Requirements. Tenant shall cause any general contractor
with whom it has contracted for the performance of work on the Property to secure, prior to
commencing any activities hereunder and maintain insurance that satisfies all of the requirements
of this Section 9.
9.6 Additional Requirements. The following additional requirements shall apply to
all of the above policies of insurance:
(A) All of the above policies of insurance shall be primary insurance and,
except the Worker's Compensation, Employer Liability insurance, and
automobile liability insurance, shall name the Landlord, City and their
respective officers, officials, members, employees, agents, and
representatives (collectively, "Landlord and City and Landlord and City
Personnel") as additional insureds on an ISO Form CG 20:10 (current
version) or substantially similar form and not an ISO Form CG 20:09.The
insurer shall waive all rights of subrogation and contribution it may have
against Landlord and City and Landlord and City Personnel and their
respective insurers. All of said policies of insurance shall provide that
said insurance may not be amended or cancelled without providing thirty
(30) days' prior written notice to the Landlord. In the event any of said
policies of insurance are cancelled, the Tenant shall, prior to the
cancellation date, submit new evidence of insurance in conformance with
this Section to the Executive Director. Not later than the Effective, the
Tenant shall provide the Executive Director with Certificates of Insurance
or appropriate insurance binders evidencing the above insurance coverages
and said Certificates of Insurance or binders shall be subject to the
reasonable approval of the Executive Director.
(B) The policies of insurance required by this Ground Lease shall be
satisfactory only if issued by companies of recognized good standing
authorized to do business in California, rated "A-" or better in the most
recent edition of Best Rating Guide, The Key Rating Guide or in the
Federal Register, and only if they are of a financial category Class VII or
better, unless such requirements are waived by the Executive Director, in
consultation with the City's Risk Consultant through the California Joint
Powers Insurance Authority, due to unique circumstances.
(C) The Executive Director, in consultation with the City's Risk Consultant
through the California Joint Powers Insurance Authority, is hereby
authorized to reduce or otherwise modify Tenant's insurance requirements
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set forth herein in the event they collectively determine, in their sole and
absolute discretion, that such reduction or modification is consistent with
reasonable commercial practices.
(D) The Tenant agrees that the provisions of this Section shall not be
construed as limiting in any way the Landlord's right to indemnification or
the extent to which the Tenant may be held responsible for the payment of
damages to any persons or property resulting from the Tenant's activities
or the activities of any person or persons for which the Tenant is otherwise
responsible.
9.7 Remedies for Defaults Re: Insurance. addition to any other remedies Landlord
may have if Tenant fails to provide or maintain any insurance policies or policy endorsements to
the extent and within the time herein required, Landlord may, at its sole option, after fifteen (15)
days Notice to Tenant:
(A) Obtain such insurance and charge Tenant the amount of the premium for
such insurance, in which event Tenant shall promptly remit such sum to
Landlord; provided, however, if Landlord's Executive Director reasonably
determines that the Tenant, Property and/or Project will be uninsured or
underinsured in the absence of such insurance then Landlord need not
provide for any cure period in its notice to Tenant but may instead obtain
such insurance immediately upon its provision of such notice;
(B) Withhold any payment(s) which become due to Tenant hereunder until
Tenant demonstrates compliance with the requirements hereof; and
(C) Declare Tenant in Default and exercise its rights and remedies under this
Ground Lease.
Exercise of any of the above remedies, however, is an alternative to other remedies
Landlord may have and is not the exclusive remedy for Tenant's failure to maintain insurance or
secure appropriate endorsements.
Nothing herein contained shall be construed as limiting in any way the extent to which
Tenant may be held responsible for payment of damages to persons or property resulting from
Tenant's contractors or any subcontractor's performance under this Ground Lease.
9.8 Indemnification. Tenant shall defend, indemnify, assume all responsibility for,
and hold Landlord, its officers, employees and agents, harmless from, all claims, demands,
damages, defense costs (including attorneys' fees and costs) or liability of any kind or nature
relating to the subject matter of this Ground Lease or the implementation hereof, including but
not limited to any damages to property or injuries to persons, including accidental death, arising
out of or in connection with Tenant's activities, acts, errors, omissions, performance or work
under this Ground Lease, whether such activities or performance thereof be by Tenant or by
anyone directly or indirectly employed, controlled or contracted by Tenant and whether such
damage shall accrue or be discovered before or after termination of this Ground Lease. Tenant
shall not be liable for any such claims, demands, damages, defense costs, or liability, including
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any damages to property or injuries to persons, to the extent occasioned by the active negligence
or willful misconduct of Landlord or its designated agents or employees.
ARTICLE 10. MAINTENANCE; REPAIRS
Tenant shall maintain the Property and all improvements thereon, including lighting and
signage, in good condition, free of debris, waste and graffiti, and in compliance with the terms of
the Redevelopment. Plan and all applicable provisions of the City of La Quinta Municipal Code,
and in accordance with the HUD Housing Quality Standards. Tenant shall maintain in
accordance with the "Maintenance Standards," as hereinafter defined, the improvements and
landscaping on the Property. Such Maintenance Standards shall apply to all buildings, signage,
lighting, landscaping, irrigation of landscaping, architectural elements identifying the Property
and any and all other improvements on the Property. To accomplish the maintenance, Tenant
shall either staff or contract with and hire licensed and qualified personnel to perform the
maintenance work, including the provision of labor, equipment, materials, support facilities, and
any and all other items necessary to comply with the requirements of this Ground Lease.
Tenant and its maintenance staff, contractors or subcontractors shall comply with the
following standards (the "Maintenance Standards"):
(A) The Property shall be maintained in conformance and in compliance with
the approved plans and permits, and reasonable maintenance standards for
similar, neighboring structures, including but not limited to painting and
cleaning of all exterior surfaces and other exterior facades comprising all
private improvements and public improvements to the curb line. The
Property shall be maintained in good condition and in accordance with the
custom and practice generally applicable to comparable apartment
complexes.
(B) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree
and shrub pruning; trimming and shaping of trees and shrubs to maintain a
healthy, natural appearance and safe road conditions and visibility, and
irrigation coverage; replacement, as needed, of all plant materials; control
of weeds in all planters, shrubs, lawns, ground covers, or other planted
areas; and staking for support of trees.
(C) Clean-up maintenance shall include, but not be limited to: maintenance of
all sidewalks, paths and other paved areas in clean and weed -free
condition; maintenance of all such areas clear of dirt, mud, trash, debris or
other matter which is unsafe or unsightly; removal of all trash, litter and
other debris from improvements and landscaping prior to mowing;
clearance and cleaning of all areas maintained prior to the end of the day
on which the maintenance operations are performed to ensure that all
cuttings, weeds, leaves and other debris are properly disposed of by
maintenance workers.
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Upon Landlord's written notification to Tenant of any maintenance deficiency, Tenant
shall have thirty (30) days within which to correct, remedy or cure the deficiency, or such longer
period as is reasonably necessary to complete the cure, provided such correction, remedy, or cure
is commenced within such thirty (30) day period and diligently proceed to completion. If the
written notification states the problem is urgent relating to the public health and safety of the
City or Landlord, then Tenant shall have forty-eight (48) hours to rectify the problem, or such
longer period as is reasonably necessary to complete the cure. In the event Tenant does not
maintain the Property in the manner set forth herein and in accordance with the Maintenance
Standards, Landlord shall have, in addition to any other rights and remedies hereunder, the right
to maintain the Property, or to contract for the correction of such deficiencies, after Notice to
Tenant, and Tenant shall be responsible for the payment of all such costs incurred by Landlord.
ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVE-
MENTS.
11.1 Ownership During Term.
11.1.1 Improvements. Subject to the provisions of Sections 5.3.1 and 5.3.2
hereof, all Improvements on the Property as permitted or required by this Ground Lease shall,
during the Term, be and remain the property of Tenant, and Landlord shall not have title thereto.
Tenant shall not, however, demolish, remove, sell, encumber, lease, assign or otherwise convey
any Improvements from the Property except as permitted herein.
11.1.2 Personal Property. All personal property, furnishings, fixtures and
equipment, including, without limitation, Tenant -owned appliances, which are not so affixed to
the Property or the buildings thereon as to require substantial damage to the buildings upon
removal thereof shall constitute personal property including, but not limited to:(a) functional
items related to the everyday operations of the Property; (b) personal property furnishings,
fixtures and equipment of the nature or type deemed by law as permanently resting upon or
attached to the buildings or land by any means, including, without limitation, cement, plaster,
nails, bolts or screws, or essential to the ordinary and convenient use of the Property and the
Improvements. If Tenant is not then in default under this Ground Lease, at any time during the
Term and at termination thereof, Tenant shall have the right to remove any and all such personal
property, furnishings, fixtures and equipment; provided, that Tenant repairs any damage to the
Property or the Improvements caused by such removal.
11.1.3 Basic Building Systems. For purposes of this Ground Lease, the personal
property, furnishings, Fixtures and equipment described in this Section 11.1 shall not include
those major building components or fixtures necessary for operation of the basic building
systems such as, but not limited to, the elevators, plumbing, sanitary fixtures, heating and central
air-cooling system.
11.2 Ownership at Expiration or Termination.
11.2.1 Property of Landlord. In accordance with provisions of Sections 5.3.1
and 5.3.2 hereof, and except as provided in Section 11.2.2, all Improvements which constitute or
are a part of the Property shall become (without the payment of compensation to Tenant or
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others) the property of Landlord free and clear of all claims and encumbrances on such
Improvements by Tenant, and anyone claiming under or through Tenant, except for such title
exceptions permitted or required during the Term with Landlord's prior written consent. Tenant
shall then quitclaim to Landlord any and all rights, interests and claims to the Improvements.
Tenant agrees to and shall defend, indemnify and hold Landlord harmless from and against all
liability and loss which may arise from the assertion of any such claims and any encumbrances
on such Improvements (except to the extent such claims arise due to Landlord's actions) and
except for such title exceptions permitted or required during the Term.
11.2.2 Removal by Tenant. Tenant shall not be required or permitted to remove
the Improvements, or any of them, at the expiration or sooner termination of the Term; provided,
however, that, subject to the provisions of Section 5.3.2 hereof, within thirty (30) days following
the expiration or sooner termination of the Term, Tenant may remove all personal property,
furniture, and equipment.
11.2.3 Unremoved Property. Any personal property, furnishings or equipment
not removed by Tenant pursuant to Section 11.2.2 hereof, shall, without compensation to Tenant,
become Landlords' property, free and clear of all claims to or against them by Tenant or any
third person, firm or entity arising by, through or under Tenant.
11.2.4 Maintenance and Repair of Improvements. Subject to the provisions of
this Ground Lease concerning condemnation, alterations and damage and destruction, Tenant
agrees to assume full responsibility for the operation and maintenance of the Property and the
Improvements and all fixtures and furnishings thereon or therein throughout the Term hereof
without expense to Landlord, and to perform all repairs and replacements necessary to maintain
and preserve the Property, the Improvements, fixtures and furnishings in a decent, safe and
sanitary condition consistent with good practices and in compliance with all applicable laws.
Tenant agrees that Landlord shall not be required to perform any maintenance, repairs or
services, or to assume any expense not specifically assumed herein in connection with the
Property and the Improvements thereon unless specifically required under the terms of this
Ground Lease.
Except as otherwise provided in this Section 11.2 and in Section 11.4, the condition of
the Improvements required to be maintained hereunder upon completion of the work of
maintenance or repair shall be equal in value, quality and use to the condition of such
Improvements before the event giving rise to the work.
11.3 Waste. Subject to the alteration rights of Tenant and damage and destruction or
condemnation of the Property or any part thereof, Tenant shall not commit or suffer to be
committed any waste of the Property or the Improvements, or any part thereof.
Tenant agrees to keep the Property and the Improvements clean and clear of refuse and
obstructions, and to dispose properly of all garbage, trash and rubbish.
11.4 Alteration of Improvements. Except as provided in Section 7.1, Tenant shall
not make or permit to be made any material exterior alteration of, addition to or change in, the
Improvements which would affect the exterior elevations (including materials selection and
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color) or the size, bulk and scale of the Property, other than routine maintenance and repairs, nor
demolish all or any part of the Improvements, without the prior written consent of Landlord.
Nothing herein shall prohibit interior alterations or decorations, or the removal and replacement
of interior improvements consistent with the specified use of the Property. In requesting consent
for such exterior improvements as required by the foregoing, Tenant shall submit to Landlord
detailed plans and specifications of the proposed work and an explanation of the need and
reasons thereof. Tenant may make such other improvements, alterations, additions or changes to
the Improvements which do not materially affect the exterior elevations (including materials
selection and color) or the size, bulk and scale thereof without Landlord's prior written consent.
Notwithstanding the prohibition in this Section 11.4, Tenant may make such changes,
repairs, alterations, improvements, renewals or replacements to the exterior elevations, materials,
size, bulk or scale of the Improvements as are required (a) by reason of any law, ordinance,
regulation or order of a competent government authority, (b) for the continued safe and orderly
operation of the Property, or (c) to continue to receive the Tax Credits or any other government
funding that may be available to the Project.
ARTICLE 12. SIGNS AND MARKETING.
Tenant shall not place or suffer to be placed on the Property or upon the roof or any
exterior door or wall or on the exterior or interior of any window of the Improvements, any sign,
awning, canopy, marquee, advertising matter, decoration, lettering or other thing of any kind
(exclusive of the signs, awnings and canopies, if any, which may be provided for in the Plans)
without the written consent of the Executive Director first had and obtained.
ARTICLE 13. DAMAGE OR DESTRUCTION OF PROPERTY OR IMPROVE-
MENTS.
13.1 Tenant's Repair Obligation.
13.1.1 In case of damage to or destruction of the Property or the Improvements,
or any part thereof, by fire or other cause at any time during the Term of this Ground Lease,
Tenant, if and to the extent insurance proceeds are available, shall restore the same as nearly as
possible to their value, condition and character immediately prior to such damage or destruction.
Such restoration shall be commenced with due diligence and in good faith, and prosecuted with
due diligence and in good faith, unavoidable delays excepted.
13.1.2 In case of damage to or destruction of the Improvements by fire or other
cause resulting in a loss exceeding in the aggregate Ten Thousand Dollars ($10,000), Tenant
shall promptly give written notice thereof to Landlord.
13.1.3 In the event insurance proceeds are insufficient to restore the Property or
the Improvements to its/their value, condition and character immediately prior to such damage or
destruction, then Landlord shall have the right to terminate this Ground Lease by providing
written notice thereof to Tenant.
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13.2 Tenant's Restoration of Premises.
13.2.1 If, during the Term, the Improvements are damaged or destroyed, and the
total amount of loss does not exceed thirty-three percent (33%) of the replacement value of the
Improvements, Tenant shall make the loss adjustment with the insurance company insuring the
loss, with the approval of Landlord, which approval shall not be unreasonably withheld or
delayed. The proceeds shall be paid directly to a Mortgagee, if any, and if there is not a
Mortgagee, to Landlord and Tenant for the sole purpose of making the restoration of the
Improvements in accordance with this Article 13.
13.2.2 If, during the Term, the Improvements are damaged or destroyed, and the
total amount of loss exceeds thirty-three percent (33%) of the replacement value of the
Improvements, Tenant shall make the loss adjustment with the insurance company insuring the
loss, with the approval of Landlord, which approval shall not be unreasonably withheld or
delayed, and the insurance company shall immediately pay the proceeds to a Mortgagee, if any,
and if there is not a Mortgagee, then to a bank or trust company designated by Landlord and
approved by Tenant (such Mortgagee or other institution, the "Insurance Trustee"), which
approval shall not be unreasonably withheld or delayed. All sums deposited with the Insurance
Trustee shall be held for the following purposes and the Insurance Trustee shall have the
following powers and duties:
(a) The sums shall be paid in installments by the Insurance Trustee to
the contractor retained by Tenant and approved by Landlord as construction progresses, for
payment of the cost of restoration. A ten percent (10%) retention fund shall be established that
will be paid to the contractor on completion of restoration, payment of all costs, expiration of all
applicable lien periods, and proof that the Property and the Improvements are free of all
mechanics' liens and lienable claims;
(b) Payments shall be made on presentation of certificates or vouchers
from the architect or engineer retained by Tenant and approved by Landlord (which approval
shall not be unreasonably withheld, conditioned or delayed) showing the amount due. If the
Insurance Trustee, in its reasonable discretion, determines that the certificates or vouchers are
being improperly approved by the architect or engineer retained by Tenant, the Insurance Trustee
shall have the right to appoint an architect or an engineer to supervise construction and to make
payments on certificates or vouchers approved by the architect or engineer retained by the
Insurance Trustee. The reasonable expenses and charges of the architect or engineer retained by
the Insurance Trustee shall be paid by the Insurance Trustee out of the trust fund;
(c) If, after the work of restoration has commenced, the sums held by
the Insurance Trustee are not sufficient to pay the actual cost of restoration, Tenant shall deposit
the amount of the deficiency with the Insurance Trustee within ten (10) days after receipt of
request for payment of such amount from the Insurance Trustee, which request shall be made by
the Insurance Trustee promptly after it is determined there will be a deficiency;
(d) If the Insurance Trustee has received notice from Landlord that the
Tenant is in default under this Ground Lease, then, subject to the lien of a Mortgagee's Mortgage
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and the Mortgagee's prior written consent, the Insurance Trustee shall pay to Landlord an
amount sufficient to cure such default as specified in Landlord's notice to the Insurance Trustee;
(e) Any amounts remaining after making the payments hereinabove
referred to in clauses (a), (b) and (c) shall be paid to any leasehold Mortgagee to the extent (a)
required by any Mortgage and (b) such leasehold Mortgagee makes written demand therefor to
the Insurance Trustee;
(f) Any undisbursed funds remaining after compliance with all of the
provisions of this Section 13.2 shall, if and to the extent required by any Mortgage, be delivered
to the Mortgagee, and if there is no leasehold Mortgagee, to Tenant; and
(g) All actual costs and charges of the Insurance Trustee shall be paid
by Tenant. If the Insurance Trustee resigns or for any reason is unwilling to act or continue to
act, Landlord shall substitute a new Insurance Trustee in the manner described in this Section.
13.2.3 Both parties shall promptly execute all documents and perform all acts
reasonably required by the Insurance Trustee to perform its obligations under this Section 13.2.
13.3 Procedure for Restoring Improvements.
13.3.1 If and to the extent Tenant is obligated to restore the Improvements
pursuant to this Article 13, Tenant shall restore the Improvements substantially in accordance
with the Plans, to the extent insurance proceeds are available. Within forty-five (45) days after
the date of such damage or destruction, Tenant, at its cost, shall prepare and deliver to Landlord
final plans and specifications and working drawings complying with applicable laws that will be
necessary for such restoration. Such plans and specifications shall specify differences from the
Plans. The plans and specifications and working drawings are subject to the approval of
Landlord only insofar as they vary from the Plans. Landlord shall have twenty (20) days after
receipt of the plans and specifications and working drawings to either approve or disapprove the
plans and specifications and working drawings and return them to Tenant. If Landlord
disapproves the plans and specifications and working drawings, Landlord shall notify Tenant of
its objections in writing, specifying the objections clearly and stating what modifications are
required for Landlord's approval. Tenant acknowledges that the plans and specifications and
working drawings shall be subject to approval of the appropriate government bodies and that
they will be prepared in such a manner as to obtain that approval.
13.3.2 The restoration shall be accomplished as follows:
(a) Tenant shall complete the restoration within eighteen (18) months
after final plans and specifications and working drawings have been approved by the appropriate
government bodies and all required permits have been obtained.
(b) Tenant shall retain a licensed contractor that is bondable. The
contractor shall be required to carry public liability and property damage insurance, builders risk
insurance, standard fire and extended coverage insurance, with vandalism and malicious
mischief endorsements, during the period of construction in accordance with Article 9.Such
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insurance shall contain waiver of subrogation clauses in favor of Landlord and Tenant in
accordance with the provisions of and to the extent required by Section 9.6.
(c) Tenant shall notify Landlord of the date of commencement of the
restoration not later than ten (10) days before commencement of the restoration to enable
Landlord to post and record notices of non -responsibility. The contractor retained by Tenant
shall not commence construction until a completion bond and a labor and materials bond have
been delivered to Landlord to insure completion of the construction.
(d) Tenant shall accomplish the restoration in a manner that will cause
the least inconvenience, annoyance, and disruption to the Property and the Improvements.
(e) On completion of the restoration Tenant shall immediately record a
notice of completion.
(f) The restoration shall not be commenced until sums sufficient to
cover the cost of restoration are placed with the Insurance Trustee as provided in Section 13.2.
13.4 Mortgagee Protection. The following provisions are for the protection of a
Mortgagee and shall, notwithstanding anything contained in this Ground Lease to the contrary,
control:
13.4.1 Insurance. Any insurance proceeds payable from any policy of insurance
(other than liability insurance) required by the Ground Lease shall be paid to and applied by the
Mortgagees, if any, in accordance with their respective Mortgage. Each Mortgagee, if any, shall
have the right to participate in all adjustments, settlements, negotiations or actions with the
insurance company regarding the amount and allocation of any such insurance proceeds. Any
insurance policies permitted or required by this Ground Lease shall name each Mortgagee, if
any, as an additional insured or loss payee, as appropriate, if required by such Mortgagees.
13.4.2 Restoration. Tenant shall have no obligation to restore or repair the
Improvements following the occurrence of any casualty for which insurance is not required
under this Ground Lease. The Mortgagee, if any and if it exercises any of its remedies set forth
in this Ground Lease to acquire the leasehold estate hereunder, shall have no obligation to restore
or repair damage to the Improvements that cost in excess of available insurance proceeds.
Tenant shall have no obligation to restore or repair damage to the Improvements if the casualty
occurs during the last five (5) years of the Ground Lease term. In the event such a loss occurs in
the last five (5) years, then, at the election of Tenant, with the prior written consent of the
Mortgagee, if any, insurance proceeds shall be used, first, to clear the Property of the damaged
Improvements and any debris, and second, to reduce or pay in full the Mortgage, with any excess
being payable as provided in this Ground Lease.
ARTICLE 14. EMINENT DOMAIN.
14.1 Notice. The party receiving any notice of the kind specified in this Section 14.1
shall promptly give the other party notice of the receipt, contents and date of the notice received.
For purposes of this Article 14, the term "Notice" shall include:
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(a) Notice of Intended Taking;
(b) Service of any legal process relating to condemnation of the
Property or the Improvements;
(c) Notice in connection with any proceedings or negotiations with
respect to such condemnation; or
(d) Notice of intent or willingness to make or negotiate a private
purchase, sale or transfer in lieu of condemnation.
14.2 Representation in Proceedings or Negotiations. Landlord and Tenant shall
each have the right to represent their respective interests in each proceeding or negotiation with
respect to a Taking or intended Taking and to make full proof of their claims. No agreements or
settlement with or sale or transfer to the condemning authority shall be made without the consent
of Landlord, but, as to its reversionary interest only, Landlord may enter into such agreement,
settlement, sale or transfer without the consent of Tenant. Landlord and Tenant each agree to
execute and deliver to the other any instruments which may be required to effectuate or facilitate
the provisions of this Ground Lease relating to condemnation.
14.3 Total Taking.
14.3.1 In the event of a Total Taking, this Ground Lease shall terminate as of the
date of the Taking.
14.3.2 If this Ground Lease is terminated pursuant to this Section 14.3, the
Award for such Taking shall be apportioned and distributed as follows:
(a) First, to the Mortgagees, if any, to the extent of their respective
Mortgages;
(b) Second, to Landlord, a sum equal to the fair market value of the
Landlord's fee interest in the Property (subject to the remaining Term and the Rent reserved) on
the date immediately preceding the Taking or threat of condemnation, as determined by the
appraisal method set forth in Section 14.9.The parties shall commence said appraisal by the
earlier of ten (10) days after Tenant's receipt of a Notice of Intended Taking or ten (10) days
after the date of the Taking;
(c) Third, to Tenant, a sum equal to the fair market value of the
Improvements made by Tenant as of the date immediately preceding the Taking or threat of
condemnation plus the residual value of the Term, subject to Rent reserved, plus any part of the
Award attributable to the Tax Credits and any other governmental funding provided to the
Project, other than funding provided to the Project by Landlord;
(d) Fourth, to Landlord, the remainder, if any.
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14.4 Substantial Taking.
14.4.1 In the event of a Taking that does not constitute a Total Taking, Partial
Taking, or Temporary Taking, Landlord and Tenant shall meet and confer to determine whether
the Taking is material and, in the event Landlord and Tenant determine that such Taking is
material, then, subject to the rights of the Mortgagees, either of Landlord or Tenant may
terminate this Ground Lease. In the event Landlord and Tenant do not agree as to whether the
Taking is material, then such decision shall be made solely by the Agency, in the Agency's
reasonable judgment. In such event, if Agency determines that the Taking is material, then,
subject to the rights of the Mortgagees, Landlord may terminate this Ground Lease. In the event
this Ground Lease is terminated pursuant to this Section 14.4.1, the terminating party shall give
written notice of its election to terminate to the other party within thirty (30) days after the
parties have met and conferred.
14.4.2 In the event this Ground Lease is terminated pursuant to Section 14.4.1
above, such termination shall be as of the time when the Taking entity takes possession of the
portion of the Property and the Improvements taken. In such event, the Award for such
Substantial Taking (including any award for severance, consequential or other damages which
will accrue to the portion of the Property and/or the Improvements not taken) shall be
apportioned and distributed as follows:
(a) First, to the Mortgagees, if any, to the extent of their respective
Mortgages;
(b) Second, to Landlord, a sum equal to the fair market value of the
Property taken (subject to the remaining Term and Rent reserved) on the date immediately
preceding the Taking as determined by the appraisal process provided for in Section 14.9
commenced as provided in Section 14.3.2;
(c) Third, to Landlord, an amount equal to the portion of the award for
severance, consequential or other damages which accrued to the portion of the Property or
Improvements not taken;
(d) Fourth, to Tenant, a sum equal to the fair market value of the
Improvements made by Tenant as of the date immediately preceding the Taking or threat of
condemnation, plus the residual value of the Term, subject to Rent reserved, plus any part of the
Award attributable to the Tax Credits and any other governmental funding provided to the
Project, other than funding provided to the Project by Landlord;
(e) Fifth, to Landlord, the remainder, if any.
14.5 Partial Taking.
14.5.1 In the event of a Partial Taking, this Ground Lease shall continue in full
force and effect, and there shall be no abatement in or reduction of any of Tenant's obligations
hereunder.
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14.5.2 The Award for such Partial Taking shall be apportioned and distributed
first to the Mortgagees, if any, to the extent of their respective Mortgages, then to Landlord and
Tenant in proportion to the fair market value of their respective interests; provided, however, that
any part of the Award attributable to the Tax Credits or other governmental funding provided to
the Project, other than funding provided to the Project by Landlord, shall belong to Tenant.
14.5.3 Any Award for severance, consequential or other damages which accrues
by reason of the Partial Taking to the portion of the Property or the Improvements not taken shall
be distributed first to the Mortgagees, if any, to the extent of their respective Mortgages, and the
remainder, if any, shall be payable to Landlord and Tenant in proportion to the fair market value
of their respective interests.
14.6 Obligation to Repair on Partial Taking. Promptly after any Partial Taking,
Tenant shall, to the extent of the Award received by Tenant and in the manner specified in the
provisions of this Ground Lease, repair, alter, modify or reconstruct the Improvements and/or
other improvements on the Property so as to make them usable for the designated purpose and
capable of producing a fair and reasonable net income.
14.7 Temporary Taking.
14.7.1 In the event of a Temporary Taking of the whole or any part of the
Property and/or Improvements, the Term shall not be reduced or affected in any way and Tenant
shall continue to pay in full any sum or sums of money and charges herein reserved and provided
to be paid by Tenant, and, subject to the other provisions of this Section 14.7, Tenant shall be
entitled to any Award or payment for the temporary use of the Property and/or Improvements
prior to the termination of this Ground Lease and Landlord shall be entitled to any award or
payment for such use after the termination of this Ground Lease.
14.7.2 If, after the occurrence of a temporary taking, possession of the Property
and/or Improvements shall revert to Tenant prior to the expiration of the Term, Tenant shall, to
the extent of the amount of any award or payment, unless at such time there remains less than
five (5) years in the Term, restore the Property and/or Improvements and in all other respects
indemnify and hold Landlord harmless from the effects of such Taking so that the Property
and/or Improvements in every respect shall upon completion of such restoration be in the same
condition as they were prior to the taking thereof.
14.7.3 Any Award or payment for damages or cost of restoration made on or
after the termination of this Ground Lease shall be paid first to the Mortgagees, if any, to the
extent of their respective Mortgages, then to Landlord absolutely, together with the remaining
balance of any other funds paid to Tenant for such damages or cost of restoration and Tenant
shall thereupon be excused from any obligation to restore the Property and/or Improvements
upon the termination of such Temporary Taking except that any obligation that may have
accrued for Tenant to restore the Property and/or Improvements prior to the commencement of
said Temporary Taking shall continue to be the obligation of Tenant
14.8 Mortgagee Protection. Notwithstanding anything contained in this Ground
Lease to the contrary, any and all condemnation proceeds shall be paid first to the Mortgagees, if
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any, to be applied to reduce their respective Mortgages if required by the applicable mortgage
documents.
14.9 Appraisal. Whenever an appraisal of the Property is called for under the terms of
this Ground Lease, the parties shall use the following procedure:
14.9.1 Appointment of Appraiser. Within ten (10) days after notice from
Landlord to Tenant, Landlord and Tenant shall each appoint an MAI appraiser to participate in
the appraisal process provided for in this Section 14.9 and shall give written notice thereof to the
other party. Upon the failure of either party so to appoint, the nondefaulting party shall have the
right to apply to the Superior Court of Riverside County, California, to appoint an appraiser to
represent the defaulting party. Within ten (10) days of the parties' appointment, the two (2)
appraisers shall jointly appoint a third MAI appraiser and give written notice thereof to Landlord
and Tenant, or if within ten (10) days of the appointment of said appraisers the two (2) appraisers
shall fail to appoint a third, then either party hereto shall have the right to make application to
said Superior Court to appoint such third appraiser.
14.9.2 Determination of Fair Market Value.
(a) Within thirty (30) days after the appointment of the third appraiser,
the appraisers shall determine the fair market value of the Property and the Improvements in
accordance with the provisions hereof, and shall execute and acknowledge their determination of
fair market value in writing and cause a copy thereof to be delivered to each of the parties hereto.
(b) The appraisers shall determine the fair market value of the
Property and the Improvements as of the date of Landlord's notice referred to in Section 14.9.1
above, based on sales of comparable property in the area in which the Property is located, subject
to the restrictions encumbering the Property. If, however, in the judgment of a majority of the
appraisers, no such comparable sales are available, then the appraisal shall be based on the
assumption that the Property is available for immediate sale and development for the purposes
and at the density and intensity of development permitted under the zoning, subdivision and land
use planning ordinances and regulations applicable to the Property in effect on the
Commencement Date of this Ground Lease, and any changes or amendments thereto or
modification or variance from the provisions thereof or conditional use permits which could
reasonably be anticipated to have been granted or approved as of the date of this Ground Lease.
Notwithstanding anything contained herein to the contrary, if the appraisal, for the particular
purposes for which it is being done, should reasonably reflect the rent restrictions imposed on the
Property pursuant to the Regulatory Agreement, then such rent restrictions shall be taken into
consideration by the appraisers.
(c) If a majority of the appraisers are unable to agree on fair market
value within thirty (30) days of the appointment of the third appraiser, the three (3) appraisals
shall be added together and their total divided by three (3).The resulting quotient shall be the fair
market value of the Property and the Improvements. If, however, the low appraisal and/or high
appraisal is or are more than ten percent (10%) lower and/or higher than the middle appraisal, the
low and/or high appraisal shall be disregarded. If only one appraisal is disregarded, the
remaining two appraisals shall be added together and their total divided by two (2).The resulting
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quotient shall be the fair market value of the Property and the Improvements. If both the low and
high appraisals are disregarded, the middle appraisal shall be the fair market value of the
Property.
14.9.3 Payment of Fees. Each of the parties hereto shall (a) pay for the services
of its appointee, (b) pay one-half (1/2) of the fee charged by the appraiser selected by their
appointees, and (c) pay one-half (1/2) of all other proper costs of the appraisal.
ARTICLE 15. COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
15.1 Compliance With Laws. Tenant shall comply with (i) all ordinances, regulations
and standards of the City, Landlord, County of Riverside, any regional governmental entity,
State of California, and federal government applicable to the Property; (ii) all rules and
regulations of any assessment district of the City with jurisdiction over the Property; and (iii) all
applicable labor standards of California law and federal law; and (iv) the requirements of
California law and federal law with respect to the employment of undocumented workers or
illegal aliens.
15.2 Indemnity. Tenant shall save, protect, defend, indemnify and hold harmless
Landlord and the City and their respective officers, officials, members, employees, agents, and
representatives from and against any and all liabilities, suits, actions, claims, demands, penalties,
damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs or
expenses (including, without limitation, consultants' fees, investigation and laboratory fees,
reasonable attorneys' fees and remedial and response costs) (the foregoing are hereinafter
collectively referred to as "Liabilities") which may now or in the future be incurred or suffered
by Landlord or City or their respective officers, officials, members, employees, agents, or
representatives by reason of, resulting from, in connection with, or existing in any manner
whatsoever as a direct or indirect result of (i) Tenant's placement on or under the Property of any
Hazardous Materials or Hazardous Materials Contamination, (ii) the escape, seepage, leakage,
spillage, discharge, emission or release from the Property of any Hazardous Materials or
Hazardous Materials Contamination that occurs after the Commencement Date, or (iii) any
Liabilities incurred under any Governmental Requirements relating to the acts described in the
foregoing clauses (i) and (ii).
For the purposes of this Ground Lease, unless the context otherwise specifies or requires,
the following terms shall have the meanings herein specified:
The term "Hazardous Materials" shall mean any substance, material, or waste which is or
becomes regulated by any local governmental authority, the City, the County of Riverside, the
State of California, a regional governmental authority, or the United States Government,
including, but not limited to, any material or substance which is (i) defined as a "hazardous
waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115,
25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter
6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous
material," "hazardous substance," or "hazardous waste" under Section 25501 of the California
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Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix)
designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C.
§ 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 etseq. (42 U.S.C. § 6903) or (xi) defined as
"hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. For purposes hereof, "Hazardous
Materials" excludes materials and substances in quantities as are commonly used in the
construction and operation of an apartment complex, provided that such materials and substances
are used in accordance with all applicable laws.
The term "Hazardous Materials Contamination" shall mean the contamination (whether
presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or
other elements on, in or of the Property by Hazardous Materials, or the contamination of the
buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a
result of Hazardous Materials at any time emanating from the Property.
The term "Governmental Requirements" shall mean all past, present and future laws,
ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state,
the county, the city, or any other political subdivision in which the Property is located, and any
other state, county city, political subdivision, agency, instrumentality or other entity exercising
jurisdiction over the Property.
15.3 Duty to Prevent Hazardous Material Contamination. Tenant shall take
commercially reasonable action to prevent the release of any Hazardous Materials into the
environment. Such precautions shall include compliance with all Governmental Requirements
with respect to Hazardous Materials. In addition, Tenant shall install and utilize such equipment
and implement and adhere to such procedures as are consistent with the standards generally
applied by apartment complexes in Riverside County, California as respects the disclosure,
storage, use, removal, and disposal of Hazardous Materials.
15.4 Obligation of Tenant to Remediate Premises. Notwithstanding the obligation
of Tenant to indemnify Landlord, City, and their respective officers, officials, members,
employees, agents, and representatives pursuant to Section 15.2, and provided no Hazardous
Materials exist on the Property as a result of Landlord's action, Tenant shall, at its sole cost and
expense, promptly take (i) all actions required by any federal, state, regional, or local
governmental agency or political subdivision or any Governmental Requirements and (ii) all
actions necessary to make full economic use of the Property for the purposes contemplated by
the Regulatory Agreement, the Agreement, and this Ground Lease, which requirements or
necessity arise from the presence upon, about or beneath the Property, of any Hazardous
Materials or Hazardous Materials Contamination. Such actions shall include, but not be limited
to, the investigation of the environmental condition of the Property, the preparation of any
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feasibility studies or reports and the performance of any cleanup, remedial, removal or
restoration work.
15.5 Environmental Inquiries. Tenant, when it has received any notices of violation,
notices to comply, citations, inquiries, clean-up or abatement orders, or cease and desist orders
related to Hazardous Materials or Hazardous Materials Contamination, or when Tenant is
required to report to any governmental agency any violation or potential violation of any
Governmental Requirement pertaining to Hazardous Materials or Hazardous Materials
Contamination, shall concurrently notify the Executive Director, and provide to him/her a copy
or copies, of the environmental permits, disclosures, applications, entitlements or inquiries
relating to the Property, the notices of violation, notices to comply, citations, inquiries, clean-up
or abatement orders, cease and desist orders, reports filed pursuant to self -reporting
requirements, and reports filed or applications made pursuant to any Governmental Requirement
relating to Hazardous Materials and underground tanks, and Tenant shall report to the Executive
Director, as soon as possible after each incident, any unusual, potentially important incidents.
In the event of a responsible release of any Hazardous Materials into the environment,
Tenant shall, as soon as possible after it becomes aware of the release, furnish to the Executive
Director a copy of any and all reports relating thereto and copies of all correspondence with
governmental agencies relating to the release. Upon request of the Executive Director, Tenant
shall furnish to the Executive Director a copy or copies of any and all other environmental
entitlements or inquiries relating to or affecting the Property including, but not limited to, all
permit applications, permits and reports including, without limitation, those reports and other
matters which may be characterized as confidential.
ARTICLE 16. ASSIGNMENT.
Because of the importance that Landlord places on Tenant's qualification, expertise and
identity, and the reliance Landlord makes upon Tenant's ability to construct and operate the
Project, during the Term, Tenant shall not assign or attempt to assign this Ground Lease or any
right herein, except to such transferees as approved or permitted pursuant to Section 15 of the
Regulatory Agreement. Notwithstanding the foregoing, Tenant may sublease the units to low,
moderate, and very low income households as provided in the Agreement and the Regulatory
Agreement.
ARTICLE 17. MORTGAGES.
17.1 Ground Leasehold Mortgages. Notwithstanding anything to the contrary
contained elsewhere herein, at all times during the Term, Tenant shall have the right to mortgage,
pledge, deed in trust, assign rents, issues and profits and/or collaterally (or absolutely for
purposes of security if required by any lender) assign its interest in this Ground Lease, or
otherwise encumber this Ground Lease, and/or the interest of Tenant hereunder, in whole or in
part, and any interests or rights appurtenant to this Ground Lease, and to assign or pledge the
same as security for any debt (the holder of any such mortgage, pledge or other encumbrance,
and the beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the
mortgage, pledge, deed of trust or other instrument hereafter referred to as "Mortgage"), upon
and subject to each and all of the terms and conditions listed in Paragraphs (a) — (c) below. As
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used in this Ground Lease, the term "Mortgage" includes the Agency Loan, and the term
"Mortgagee" includes Landlord, as the beneficiary under the Agency Loan Note:
(a) Prior to the issuance of a Release of Construction Covenants by
Landlord, Mortgages entered into by Tenant shall be limited in purpose to and shall not exceed
the amount necessary and appropriate to develop the Improvements, and to acquire and install
equipment and fixtures thereon. Said amount shall include all hard and soft costs of acquisition,
development, construction, lease -up and operation of the Improvements. After the recordation of
the Release of Construction Covenants, the limitation contained in this subsection shall no longer
apply.
(b) Any permitted Mortgages entered into by Tenant are to be
originated only by Institutional Lenders approved in writing by Landlord, which approval will
not be unreasonably conditioned, delayed or withheld. Landlord shall state the reasons for any
such disapproval.
(c) All rights acquired by said Mortgagee shall be subject to each and
all of the covenants, conditions and restrictions set forth in this Ground Lease, and to all rights of
Landlord thereunder, none of which covenants, conditions and restrictions is or shall be waived
by Landlord by reason of the giving of such Mortgage.
If Tenant encumbers its leasehold estate by way of a Mortgage as permitted
herein, and should Landlord be advised in writing of the name and address of the Mortgagee,
then this Ground Lease shall not be terminated or canceled on account of any Event of Default
by Tenant in the performance of the terms, covenants or conditions hereof until Landlord shall
have complied with the provisions of this Ground Lease as to the Mortgagee's rights to cure. In
addition, no cancellation, surrender, termination, amendment or modification of this Ground
Lease shall be effective without the written consent of each Mortgagee and the Investor.
17.2 Landlord's Forbearance and Right to Cure Defaults on Ground Leasehold
Mortgages.
(a) Landlord will give to any Mortgagee, at such address as is
specified by the Mortgagee in accordance with Section 23.1 hereof, a copy of each notice or
other communication with respect to any claim that a default exists or is about to exist from
Landlord to Tenant hereunder at the time of giving such notice or communication to Tenant, and
Landlord will give to the Mortgagee a copy of each notice of any rejection of this Ground Lease
by any trustee in bankruptcy of Tenant. Landlord will not exercise any right, power or remedy
with respect to any Event of Default hereunder, and no notice to Tenant of any such Event of
Default and no termination of this Ground Lease in connection therewith shall be effective,
unless Landlord has given to the Mortgagee written notice or a copy of its written notice to
Tenant of such Event of Default or any such termination, as the case may be, and an opportunity
to cure as provided below. Each such notice to a Mortgagee shall be given by U.S. certified
mail, postage prepaid, return receipt requested, and shall be effective upon receipt.
(b) In the event the leasehold estate hereunder shall be acquired by
foreclosure, trustee's sale or deed, or assignment in lieu of foreclosure of a Mortgage, the
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purchaser at such sale or the transferee by such assignment and its successors as holders of the
leasehold estate hereunder shall not be liable for any past due Rent, if any, or other obligations
hereunder accruing after its or their subsequent sale or transfer of such leasehold estate and such
purchaser or transferee and its successors shall be entitled to transfer such estate or interest one
time without consent or approval of Landlord. Additionally, in the event the leasehold estate
hereunder shall be acquired by foreclosure, trustee's sale or deed, or assignment in lieu of
foreclosure of a Mortgage, the purchaser at such sale or the transferee by such assignment and its
successors as holders of the leasehold estate hereunder shall only be liable for payment of Rent
pursuant to Section 4.1 becoming due with respect to the period during which such purchaser,
transferee or other successor is the holder of the leasehold estate hereunder. This Section shall
also apply to the rights of a Mortgagee in connection with the entry into a New Ground Lease
under Section 17.10 and to the appointment of a receiver on behalf of a Mortgagee.
17.3 Limited Liability of Mortgagee for Prior Indemnified Acts. A Mortgagee
shall not be obligated to assume the liability of Tenant for any indemnities arising for a period
prior to the Mortgagee's acquisition of the leasehold estate created under this Ground Lease or
after such Mortgagee disposes of such leasehold estate.
17.4 Landlord Cooperation. Landlord covenants and agrees that it will act and fully
cooperate with Tenant in connection with Tenant's right to grant leasehold mortgages as
hereinabove provided. At the request of Tenant or any proposed or existing Mortgagee,
Landlord shall promptly execute and deliver (i) any documents or instruments reasonably
requested to evidence, and/or acknowledge the rights of the Mortgagees as herein provided; and
(ii) an estoppel certificate certifying the status of this Ground Lease and Tenant's interest herein
and such matters as are reasonably requested by Tenant or such Mortgagees. Such estoppel
certificate shall include, but not be limited to, certification by Landlord that (a) this Ground
Lease is unmodified and in full force and effect (or, if modified, state the nature of such
modification and certify that this Ground Lease, as so modified, is in full force and effect), (b) all
rents currently due under the Ground Lease have been paid (or, if unpaid, the period and amount
of any arrearages, penalties, interest and other charges), (c) there are not, to Landlord's
knowledge, any uncured Events of Default on the part of Tenant under the Ground Lease or
facts, acts or omissions which with the giving of notice or passing of time, or both, would
constitute an Event of Default (or, if there is a default, the nature and scope of the default).Any
such estoppel certificate may be conclusively relied upon by any proposed or existing leasehold
Mortgagee or assignee of Tenant's interest in this Ground Lease.
17.5 No Subordination of Landlord's Interest. Landlord's fee interest in the
Property -shall be senior to, and not be subordinated to, any financing obtained by Tenant in
connection with the Property.
17.6 Priority. This Ground Lease, and any extensions, renewals or replacements
thereof, and any sublease entered into by Tenant as sublessor, and any Mortgage or other
encumbrance now or hereafter recorded by any Mortgagee shall be superior to any future
mortgages, deeds of trust or similar encumbrances placed by Landlord on the Property and to any
lien right, if any, of Landlord on the buildings, and any furniture, fixtures, equipment or other
personal property of Tenant upon the Property or any interest of Landlord in sublease rentals or
similar agreements.
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17.7 Claims. Landlord and Tenant shall deliver to each Mortgagee written notice of
any litigation or arbitration proceedings between the parties or involving the Property or this
Ground Lease. Any Mortgagee shall have the right, at its option and its expense, to intervene
and become a party to any such proceedings. If a Mortgagee elects not to intervene or become a
party, Landlord shall deliver to said Mortgagee prompt written notice of and a written copy of
any award, decision or settlement agreement made in connection with any such proceeding.
17.8 Further Amendments. Landlord and Tenant shall cooperate in including in this
Ground Lease by suitable amendment from time to time any provision which may be reasonably
requested by any proposed Mortgagee for the purpose of implementing the mortgagee protection
provisions contained in this Ground Lease and allowing the Mortgagee reasonable means to
protect or preserve the lien of its Mortgage upon the occurrence of a default under the terms of
this Ground Lease. Landlord and Tenant each agree to execute and deliver (and to acknowledge
for recording purposes, if necessary) any agreement reasonably required to effect any such
amendment.
17.9 Loan Obligations. Nothing contained in this Ground Lease shall relieve Tenant
of its obligations and responsibilities under any Mortgage loans and Mortgage loan documents to
operate the Project as set forth therein.
17.10 Liens and Encumbrances Against Tenant's Interest in the Leasehold Estate
(a) Tenant (and Foreclosure Trustee, if applicable) shall have the right
to encumber the leasehold estate created by this Ground Lease and the Improvements with one or
more deeds of trust or mortgages, in conformance with the requirements of Section 17.1 hereof.
(b) Tenant shall not have the right to encumber Landlord's fee interest
in the Property or Landlord's reversionary interest in the Improvements.
(c) For as long as there is any lien securing any Mortgage loans:
(1) Landlord shall not agree to any mutual termination or
cancellation of, or accept any surrender of this Ground Lease, nor shall Landlord consent to any
amendment or modification of this Ground Lease, in each case without the prior written consent
of each Mortgagee which has an outstanding Mortgage loan. Tenant may not exercise any right
to terminate this Ground Lease without the prior written consent of each Mortgagee.
(2) Notwithstanding any default by Tenant under this Ground
Lease, Landlord shall have no right to terminate this Ground Lease unless Landlord shall have
given each Mortgagee which have an outstanding Mortgage loan written notice of such default
and such Mortgagees shall have failed to remedy such default or acquire Tenant's leasehold
estate created by this Ground Lease or commence foreclosure or other appropriate proceedings
as set forth in, and within the time specified by, this Section.
(3) Each Mortgagee which has an outstanding Mortgage loan
shall have the right, but not the obligation, at any time to pay any or all of the Rent due pursuant
to the terms of this Ground Lease, and do any other act or thing required of Tenant by the terms
of this Ground Lease, to prevent termination of this Ground Lease. Each Mortgagee and its
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agents and contractors shall have a right to enter the Property for purposes of accomplishing the
foregoing, so long as such Mortgagee indemnifies and holds Landlord harmless from any and all
liability arising from such entry upon the Property. Each Mortgagee shall have sixty (60) days
after receipt of written notice from Landlord describing a default by Tenant to cure the default.
All payments so made and all things so done shall be as effective to prevent a termination of this
Ground Lease as the same would have been if made and performed by Tenant instead of by
Mortgagee(s).
(4) In addition to the cure period provided in paragraph (3)
above, if the default is such that possession of the Property may be reasonably necessary to
remedy the default, each Mortgagee which has an outstanding Mortgage loan shall have such
additional time after the expiration of such sixty (60) day period as such Mortgagee may
reasonably require to remedy such default, provided that (i) such Mortgagee shall have fully
cured any default in the payment of any monetary obligations of Tenant under this Ground Lease
within such sixty (60) day period and shall continue to pay currently such monetary obligations
when the same are due, and (ii) within one hundred twenty (120) days after receipt of Landlord's
notice of default, such Mortgagee shall have acquired Tenant's leasehold estate hereunder or
commenced foreclosure or other appropriate proceedings, and shall be diligently prosecuting the
same.
(5) Any default under this Ground Lease which by its nature
cannot be remedied by any Mortgagee shall be deemed to be remedied if (i) within one hundred
twenty (120) days after receiving written notice from Landlord describing the default, or prior
thereto, any Mortgagee shall have acquired Tenant's leasehold estate or commenced foreclosure
or other appropriate proceedings, (ii) the Mortgagee shall diligently prosecute any such
proceedings to completion, (iii) the Mortgagee shall have fully cured any default in the payment
of any monetary obligations of Tenant hereunder which does not require possession of the
Property, and (iv) after gaining possession of the Property, the Mortgagee shall perform all other
obligations of Tenant hereunder capable of performance by the Mortgagee when the obligations
are due.
(6) If a Mortgagee is prohibited, stayed or enjoined by any
bankruptcy, insolvency or other judicial proceedings involving Tenant from commencing or
prosecuting foreclosure or other appropriate proceedings, the times specified for commencing or
prosecuting such foreclosure or other proceedings shall be extended for the period of such stay
prohibition or injunction; provided that any Mortgagee shall have fully cured any default in the
payment of any monetary obligations of Tenant under this Ground Lease and shall continue to
pay currently such monetary obligations when the same fall due (subject to the notice and cure
provision contained herein).
(7) Landlord shall deliver, by U.S. certified mail, postage
prepaid, return receipt requested, to each Mortgagee which has any outstanding Mortgage loan a
duplicate copy of all notices which Landlord may from time to time give to Tenant pursuant to
this Ground Lease.
(9) In the event any Foreclosure Transferee becomes Tenant
under this Ground Lease by means of foreclosure or assignment of the leasehold interest
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hereunder in lieu of foreclosure or pursuant to any new lease obtained under paragraph (9)
below, that Foreclosure Transferee shall be personally liable under this Ground Lease or such
new lease only for the period of time that Foreclosure Transferee remains Tenant thereunder, and
that Foreclosure Transferee's right to assign this Ground Lease or such new lease shall not be
subject to the restrictions set forth in this Ground Lease. Nothing in this Section shall be
construed to obligate any Foreclosure Transferee to remedy any default of Tenant, and any
failure of any Mortgagee to complete any such cure after commencing the same shall not give
rise to any liability of any Mortgagee to Landlord or Tenant.
(9) If this Ground Lease is terminated, whether by foreclosure,
order of a bankruptcy court or otherwise, upon written request by any Mortgagee given within
sixty (60) days after Landlord gives written notice of such termination to each Mortgagee,
Landlord shall enter into a new lease of the Property with the Mortgagee for the remainder of the
Term with the same agreements, covenants, reversionary interests and conditions (except for any
requirements which have been fulfilled by Tenant prior to termination) as are contained in this
Ground Lease and with priority equal to this Ground Lease, which new lease shall be effective as
of the date of termination of the original Ground Lease; provided, however, that a requesting
Mortgagee shall promptly cure any defaults by Tenant reasonably susceptible to cure by the
Mortgagee. The Tenant under the new lease shall have the same right, title and interest in and to
all Improvements located on the Property as Tenant had under the terminated Ground Lease
immediately prior to its termination. Landlord shall by quitclaim deed or by the terms of the new
lease convey to the Mortgagee, title to the improvements, if any, which become vested in
Landlord as a result of the termination of the Ground Lease. The Mortgagee shall be responsible
for all costs reasonably incurred by Landlord in connection with the preparation and execution of
such new lease.
(10) The Investor of Tenant shall have the same rights to receive
notices of default and to cure as any Mortgagee authorized under this paragraph (c).
(11) Landlord shall include in this Ground Lease by suitable
amendment from time to time any provision which may reasonably be requested by any
Mortgagee for the purpose of implementing the mortgagee -protection provisions contained in
this Ground Lease and allowing such Mortgagee reasonable means to protect or preserve the lien
of the leasehold mortgage and the value of its security. Any such amendment shall not in any
way affect the Term under this Ground Lease nor otherwise in any material respect adversely
affect any rights of Landlord under this Ground Lease.
(12) The parties shall not amend this Ground Lease without the
consent of the Mortgagees and Investor of Tenant. Landlord shall not terminate this Ground
Lease without the Investor's consent prior to the expiration of the fifteen (15) year Tax Credit
compliance period described in Section 42(i)(1) of the Internal Revenue Code of 1986, as
amended (the "Code").
(13) No Mortgagee shall be required to perform any act which is
not susceptible to performance by a Mortgagee, such as to cure a filing or condition of
bankruptcy or insolvency or to cure or commence the cure of any default which is Tenants'
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failure to pay any lien, charge or encumbrance which is junior in priority to the Mortgagee's
encumbrance.
(d) Any Mortgage created pursuant to subsection (a) of this Section
shall be subject to the provisions of this Ground Lease and all rights of Landlord under this
Ground Lease.
(e) No Mortgagee or its designee or transferee shall be or become
liable to Landlord as an assignee of this Ground Lease or otherwise unless it expressly assumes
by written instrument executed by Landlord and the Mortgagee or its designee or transferee such
liability (in which event the Mortgagee's, designee's or transferee's liability shall be limited to
the period of time during which it is the owner of the leasehold estate created hereby) and no
assumption shall be inferred from or result from acceptance of an estoppel certificate from
Landlord, acceptance of a Mortgage of Tenant's leasehold estate, or by foreclosure or other
appropriate proceedings in the nature thereof or as the result of any other action or remedy
provided for by such Leasehold Mortgage or other instrument or from a conveyance from Tenant
pursuant to which the purchaser at foreclosure or grantee shall acquire the rights and interest of
Tenant under the terms of this Ground Lease. If any Mortgagee (or its affiliate or nominee)
acquires the Property by foreclosure or deed in lieu of foreclosure, or obtains a new lease under
this Section 17, the Rent shall be One Dollar ($1.00) for each Rental Period until the
"Conversion Date" (as defined in the first mortgage loan documents); thereafter, the Rent
payable shall be fifty percent (50%) of the Residual Receipts, if any, for the subject Rental
Period, except that Operating Expenses, Debt Service, Reserve Deposits and Partnership Related
Fees shall be calculated based upon the actual amounts of operating expenses, debt service,
reserve deposits and partnership related fees, respectively, incurred by the Tenant (without
giving effect the limitations contained in the definitions of those terms or other provisions of this
Lease). Additionally, the Rent shall include all of the following:(i) fifty percent (50%) of the
Refinancing Net Proceeds immediately upon any refinancing of the Project (or part thereof), and
(ii) one hundred percent (100%) of the Transfer Net Proceeds immediately upon any transfer in
whole or in part of the Project. Further, in such event, the requirements concerning compliance
with applicable regulations of the California Tax Credit Allocation Committee and applicable
requirements of the Tax Credit Regulatory Agreement in Article 18.1 shall automatically have no
further force or effect (and this Ground Lease shall be construed as if those requirements had
never been included in this Ground Lease).
(f) On transfer of this Ground Lease at any foreclosure sale, or upon
creation of a new Ground Lease, any or all of the following Events of Default relating to the
prior owner of the Ground Lease shall be deemed cured:
(1) Attachment, execution or other judicial levy upon the
Ground Lease;
(2) Assignment of the Ground Lease for the direct or indirect
benefit of creditors of the prior Tenant;
(3) Judicial appointment of a receiver or similar officer to take
possession of the Ground Lease;
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(4) Filing a petition by, for or against Tenant under any chapter
of the federal Bankruptcy Act or any federal or state debtor relief statute, as amended; and
(5) Any other defaults personal to Tenant and/or not otherwise
reasonably curable by Mortgagee.
(g) A Foreclosure Transferee shall succeed to all interest of Tenant in
any security or other deposits or other impound payments paid by Tenant to Landlord, except to
the extent such security or other deposit or impound payment is used by Landlord to cure an
Event of Default of Tenant hereunder.
(h) Foreclosure of any Mortgage or any sale thereunder, whether by
judicial proceedings or by virtue of any power of sale contained in such Mortgage, or any
conveyance of the leasehold estate under this Ground Lease from Tenant to a Foreclosure
Transferee in lieu of foreclosure or other appropriate proceedings in the nature thereof, shall not
require the consent of Landlord or constitute a breach of any provision or a default under this
Ground Lease. Landlord shall recognize the Foreclosure Transferee as the Tenant under this
Ground Lease following any such transfer, subject to the obligations of the Foreclosure
Transferee to comply with this Ground Lease.
17.11 Cost of Loans to be Paid by Tenant. The Tenant affirms that it shall bear all of
the costs and expenses in connection with (i) the preparation and securing of the Mortgage loans,
(ii) the delivery of any instruments and documents and their filing and recording, if required, (iii)
all taxes and charges payable in connection with the Mortgage loans, and (iv) all costs
reasonably incurred by Landlord in making any amendments of this Lease requested by Tenant
or Mortgagees.
17.12 No Merger. There shall be no merger, without the consent of the Mortgagee
under any Mortgage, of the leasehold estate and the fee estate in the Property merely because
both estates are acquired or become vested in the same person or entity.
17.13 Transfer Rights. Foreclosure of any Mortgage, or any sale thereunder, whether
by judicial proceedings or by virtue of any power contained in the Mortgage, or any conveyance
of the leasehold estate hereunder from Tenant to any Mortgagee or an affiliate of Mortgagee or
entity controlled by Mortgagee, through, or in lieu of, foreclosure or other appropriate
proceedings in the nature thereof, shall not require the consent of Landlord or constitute a breach
of any provision of or a default under this Ground Lease, and upon such foreclosure, sale or
conveyance, Landlord shall recognize the purchaser or other transferee in connection therewith
as the Tenant hereunder. The Foreclosure Transferee may transfer to another party one time
without the approval of Landlord. Any further assignments shall require the approval of the
Landlord, which shall not unreasonably be withheld, conditioned, or delayed.
ARTICLE 18. SUBLEASING.
18.1 Subleasing of Property. All subleases made by Tenant to residents of units in
the Project ("Resident Leases") shall be in compliance with the applicable (if any) regulations of
the California Tax Credit Allocation Committee and the applicable (if any) requirements of the
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Tax Credit Regulatory Agreement, and shall be subject to the following provisions and
restrictions:
18.1.1 Each Resident Lease shall contain a provision, satisfactory to Landlord,
requiring the Subtenant to attorn to Landlord upon (a) an Event of Default by Tenant under this
Ground Lease, and (b) receipt by such Subtenant of written notice of such Event of Default and
instructions to make such Subtenant's rental payments to Landlord.
18.1.2 On any termination of this Ground Lease prior to the expiration of the
Term, all of Tenant's interest as sublessor under any and all existing valid and enforceable
Resident Leases for which Landlord has issued a non -disturbance agreement shall be deemed
automatically assigned, transferred and conveyed to Landlord and subtenants under such
Resident Leases shall be deemed to have attorned to Landlord. Landlord shall thereafter be
bound on such Resident Leases to the same extent Tenant, as sublessor, was bound thereunder
and Landlord shall have all the rights under such Resident Leases that Tenant, as sublessor, had
under such Resident Leases; provided, however, that any amendments to any such Resident
Lease made after the issuance of a non -disturbance agreement to a subtenant shall not be binding
on Landlord.
18.1.3 Each Resident Lease shall expressly provide that it is subject to each and
all of the covenants, conditions, restrictions and provisions of this Ground Lease.
18.2 Rights of Mortgagees. Notwithstanding anything contained in this Ground
Lease to the contrary, all attornment provisions applicable to the Landlord shall also be
applicable to a Mortgagee and, as between Landlord and the Mortgagee, the Mortgagee shall
have priority in any attornment situation.
ARTICLE 19. PERFORMANCE OF TENANT'S COVENANTS.
19.1 Right of Performance. If Tenant shall at any time fail to pay any Imposition or
other charge in accordance with Article 4 hereof, within the time period therein permitted, or
shall fail to pay for or maintain any of the insurance policies provided for in Article 9 hereof,
within the time therein permitted, or to make any other payment or perform any other act on its
part to be made or performed hereunder, within the time permitted by this Ground Lease, then
Landlord, after thirty (30) days' written notice to Tenant (or, in case of an emergency, on such
notice, or without notice, as may be reasonable under the circumstances) and without waiving or
releasing Tenant from any obligation of Tenant hereunder, may (but shall not be required to):
(a) pay such Imposition or other charge payable by Tenant pursuant to
the provisions of Article 4 hereof, or
(b) pay for and maintain such insurance policies provided for in
Article 9 hereof, or
(c), make such other payment or perform such other act on Tenant's
part to be made or performed as in this Ground Lease provided.
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19.1.2 Rights of Mortgagees. Notwithstanding anything in this Ground Lease to
the contrary, all of the performance rights available to Landlord under Section 19.1 shall also be
available to any Mortgagee.
19.2 Reimbursement and Damages. All sums paid by Landlord pursuant to Section
19.1 and all costs and expenses incurred by Landlord in connection with the performance of any
such act, together with interest thereon at the rate provided in Section 4.7 from the respective
dates of Landlord's making of each such payment or incurring of each such cost or expense,
shall constitute additional Rent payable by Tenant under this Ground Lease and shall be paid by
Tenant to Landlord on demand. Landlord shall not be limited in the proof of any damages which
Landlord may claim against Tenant arising out of or by reason of Tenant's failure to provide and
keep in force insurance as aforesaid, to the amount of the insurance premium or premiums not
paid or incurred by Tenant and which would have been payable upon such insurance, but
Landlord shall also be entitled to recover as damages for such breach, the uninsured amount of
any loss (to the extent required to be insured against pursuant to the terms of this Ground Lease
of any deficiency in the insurance required by the provisions of this Ground Lease), damages,
costs and expenses of suit, including reasonable attorneys' fees, suffered or incurred by reason of
damage to, or destruction of, the Improvements, occurring during any period in which Tenant
shall have failed or neglected to provide insurance as aforesaid.
ARTICLE 20. EVENTS OF DEFAULT; REMEDIES.
20.1 Events of Default. Any one or all of the following events shall, subject to
Section 22.1, constitute an Event of Default hereunder:
20.1.1 If Tenant shall default in the payment of any Rent when and as the same
becomes due and payable and such default shall continue for more than fifteen (15) days after
Landlord shall have given written notice thereof to Tenant; or
20.1.2 If Tenant shall materially default under one or more of the Transaction
Documents, and such default is not timely cured within the greater of thirty (30) days after
Landlord has given Tenant written notice of such default or such longer period as may be granted
Tenant under such document to cure such default; or
20.1.3 The abandonment or vacation of the Property by Tenant for a period of
thirty (30) days after prior written notice thereof by Landlord; or
20.1.4 The entry of any decree or order for relief by any court with respect to
Tenant, or any assignee or transferee of Tenant (hereinafter "Assignee"), in any involuntary case
under the Federal Bankruptcy Code or any other applicable federal or state law; or the
appointment of or taking possession by any receiver, liquidator, assignee, trustee, sequestrator or
other similar official of Tenant or any Assignee (unless such appointment is in connection with a
Mortgagee's exercise of its remedies under its Mortgage), or of any substantial part of the
property of Tenant or such Assignee, or the ordering or winding up or liquidating of the affairs of
Tenant or any Assignee and the continuance of such decree or order unstayed and in effect for a
period of ninety (90) days or more (whether or not consecutive); or the commencement by
Tenant or any such Assignee of a voluntary proceeding under the Federal Bankruptcy Code or
982/015610-0047 -46-
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any other applicable state or federal law or consent by Tenant or any such Assignee to the entry
of any order for relief in an involuntary case under any such law, or consent by Tenant or any
such Assignee to the appointment of or taking of possession by a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of Tenant or any such Assignee, or of any
substantial property of any of the foregoing, or the making by Tenant or any such Assignee of
any general assignment for the benefit of creditors; or Tenant or any such Assignee takes any
other voluntary action related to the business of Tenant or any such Assignee or the winding up
of the affairs of any of the foregoing.
20.1.5 If Tenant shall materially default in the performance of or compliance
with any other term, covenant or condition of this Ground Lease (other than as set forth in
Sections 20.1.1 and 20.1.2) and such default shall continue for more than thirty (30) days after
Landlord shall have given written notice thereof to Tenant, provided, however, if cure of such
default reasonably requires more than thirty (30) days, then, provided that Tenant commences to
cure within such thirty (30) day period and thereafter diligently and continuously prosecutes the
cure to completion, Tenant shall not be in default.
20.1.6 Notwithstanding anything to the contrary contained in this Ground Lease,
prior to declaring any default or taking any remedy permitted under this Ground Lease or
applicable law based upon an alleged default under this Ground Lease by Tenant, Landlord shall
deliver written notice to Tenant's limited partners of Tenant's failure to cure such default, and
Tenant's limited partners shall have an additional period of not less than (a) ten (10) days from
the date of such notice to cure such alleged default if of a monetary nature, and (b) thirty (30)
days from the date of such notice to cure such alleged default if of a nonmonetary nature;
provided, however, if in order to cure such a default the limited partners must remove the general
partner of Tenant, the limited partner shall so notify Landlord and so long as the limited partner
is diligently and continuously attempting to so remove such general partner, the limited partner
shall have until the date thirty (30) days after the effective date of the removal of the general
partner or general partners to cure such default.
Nothing herein shall be deemed to permit Landlord to terminate this Ground Lease
without the Investor's consent prior to expiration of the fifteen (15) year Tax Credit compliance
period described in Section 42(i)(1) of the Code.
20.2 Remedies.
20.2.1 If an Event of Default shall occur and continue as aforesaid, then in
addition to any other remedies available to Landlord at law or in equity, but subject to Article 17,
Landlord shall have the immediate option to terminate this Ground Lease and bring suit against
Tenant and recover as an award in such suit or arbitration proceeding the following:
(a) the worth at the time of award of the unpaid rent and all other sums
due hereunder which had been earned at the time of termination;
(b) the worth at the time of award of the amount by which the unpaid
rent and all other sums due hereunder which would have been earned after termination until the
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1111838 07 AIJ04/11
time of award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(c) the worth at the time of award of the amount by which the unpaid
rent and all other sums due hereunder for the balance of the Term after the time of award exceeds
the amount of such rental loss that Tenant proves could be reasonably avoided;
(d) any other amount necessary to compensate Landlord for all the
detriment proximately caused by the Tenant's failure to perform its obligations under this
Ground Lease or which in the ordinary course of things could be likely to result therefrom; and
(e) such amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable California law.
20.2.2 The "worth at the time of the award" of the amounts referred to in
Subparagraphs 20.2.1(a) and 20.2.1(b) above shall be computed by allowing interest at the rate
provided in Section 4.7 as of the date of the award. The "worth at the time of award" of the
amount referred to in subparagraph 20.2.1(c) above shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).
20.3 Receipt of Rent, No Waiver of Default. The receipt by Landlord of the rents or
any other charges due to Landlord, with knowledge of any breach of this Ground Lease by
Tenant or of any default on the part of Tenant in the observance or performance of any of the
conditions or covenants of this Ground Lease, shall not be deemed to be a waiver of any
provisions of this Ground Lease. No acceptance by Landlord of a lesser sum than the rents or
any other charges then due shall be deemed to be other than on account of the earliest installment
of the rents or other charges due, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment of rent or charges due be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance of such installment or pursue any other remedy provided in this
Ground Lease. The receipt by Landlord of any rent or any other sum of money or any other
consideration paid by Tenant after the termination of this Ground Lease, or after giving by
Landlord of any notice hereunder to effect such termination, shall not, except as otherwise
expressly set forth in this Ground Lease, reinstate, continue, or extend the term of this Ground
Lease, or destroy, or in any manner impair the efficacy of any such notice of termination as may
have been given hereunder by Landlord to Tenant prior to the receipt of any such sum of money
or other consideration, unless so agreed to in writing and signed by Landlord. Neither
acceptance of the keys nor any other act or thing done by Landlord or by its agents or employees
during the Term shall be deemed to be an acceptance of a surrender of the Property or the
Improvements, excepting only an agreement in writing signed by Landlord accepting or agreeing
to accept such a surrender.
20.4 Effect on Indemnification. Notwithstanding the foregoing, nothing contained in
this Article 20 shall be construed to limit Landlord's and/or the City's right to indemnification as
otherwise provided in this Ground Lease.
882/01561 M047 _48_
1111838.07 a01/04/11
ARTICLE 21. PERMITTED CONTESTS.
Tenant, at no cost or expense to Landlord, may contest (after prior written notice to
Landlord), by appropriate legal proceedings conducted with due diligence, the amount or validity
or application, in whole or in part, of any Imposition or lien, provided that (a) in the case of liens
of mechanics, materialmen, suppliers or vendors, or Impositions or liens therefor, such
proceedings shall suspend the collection thereof from Landlord, and shall suspend a foreclosure
against the Property and/or the Improvements, or any interest therein, or any Rent, if any, (b)
neither the Property or the Improvements, nor any part thereof or interest therein, or the Rent, if
any, or any portion thereof, would be in any danger of being sold, forfeited or lost by reason of
such proceedings, and (c) Tenant shall have furnished to Landlord, if requested, a bond or other
security, satisfactory to Landlord. If Tenant shall fail to contest any such matters, or to give
Landlord security as hereinabove provided, Landlord may, but shall not be obligated to, contest
the matter or settle or compromise the same without inquiring into the validity or the
reasonableness thereof. Landlord, at the sole cost and expense of Tenant, will cooperate with
Tenant and execute any documents or pleadings legally required for any such contest.
ARTICLE 22. FORCE MAJEURE.
22.1 Delay of Performance. Subject to Paragraph 23.2 below, any prevention, delay,
nonperformance or stoppage by Tenant due to any of the following causes shall be excused: any
regulation, order, act, restriction or requirement or limitation imposed by any federal, state,
municipal or foreign government or any department or agency thereof, or civil or military
authority; acts of God; acts or omissions of Landlord or its agents or employees; fire, explosion
or floods; strikes, walkouts or inability to obtain materials; war, terrorism, riots, sabotage or civil
insurrection; or any other causes beyond the reasonable control of Tenant.
22.2 Notice and Cure Requirements. No prevention, delay, or stoppage of
performance shall be excused unless:
(a) Tenant notifies Landlord within thirty (30) days of such
prevention, delay or stoppage that it is claiming excuse of its obligations under this Article 22;
and
(b) Tenant diligently proceeds within thirty (30) days of the
conclusion of such prevention, delay or stoppage to cure the condition causing the prevention,
delay or stoppage; and
(c) Tenant effects such cure within a reasonable time.
ARTICLE 23. GENERAL PROVISIONS.
23.1 Notices. Written notices, demands and communications between Landlord and
Tenant shall be sufficiently given if (i) delivered by hand, (ii) delivered by reputable same -day or
overnight messenger service that provides a receipt showing date and time of delivery, or (iii)
dispatched by registered or certified mail, postage prepaid, return receipt requested, to the
principal offices of Landlord and Tenant at the addresses specified in this Section 23.1.Such
written notices, demands and communications may be sent in the same manner to such other
882/015610-0047 -49-
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addresses as either party may from time to time designate by mail as provided in this Section
23.1.
Any written notice, demand, or communication shall be deemed received immediately if
delivered by hand or delivered by messenger in accordance with the preceding paragraph, and
shall be deemed received on the third (3rd) day from the date it is postmarked if delivered by
registered or certified mail in accordance with the preceding paragraph.
If to Tenant: Coral Mountain Partners, L.P.
46753 Adams Street
La Quinta, CA 92253
Phone No.: (760) 771-3345
Facsimile No.: (760) 771-0686
Attention: Robert High
with a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Phone No.:213-239-8088
Facsimile No.:213-559-0733
Attention: Lance Bocarsly
If to Landlord: Notices Delivered by U.S. Mail:
La Quinta Redevelopment Agency
P.O. Box 1504
La Quinta, CA92247
Phone No.: 760-777-7031
Facsimile No.: 760-777-7101
Attention: Executive Director
Notices Delivered Personally or by Courier:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, Califomia92253
Phone No.: 760-777-7031
Facsimile No.: 760-777-7101
Attention: Executive Director
with a copy to Rutan & Tucker, LLP
611 Anton, Suite 1400
Costa Mesa, CA92626
Phone No.: 714-641-5100
Facsimile No.: 714-546-9035
Attention: M. Katherine Jenson, Esq.
Addresses for notice may be changed from time to time by notice to all other parties.
Notwithstanding that Notices shall be deemed given when delivered, the non -receipt of any
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Notice as the result of a change of address of which the sending party was not notified shall be
deemed receipt of such Notice.
23.2 Certificates. Landlord or Tenant, as the case may be, shall execute, acknowledge
and deliver to the other, promptly upon request by Landlord, Tenant, a Mortgagee or Investor, a
Certificate of Landlord or Tenant, as the case may be, certifying (a) that this Ground Lease is
unmodified and in full force and effect (or, if there have been modifications, that the Ground
Lease is in full force and effect, as modified, and stating the date of each instrument so
modifying the Ground Lease), (b) the date, if any, through which the Rent, if any, has been paid,
(c) whether there are then existing any offsets or defenses against the enforcement of any term
hereof on the part of Tenant to be performed or complied with (and, if so, specifying the same),
and (d) whether any default exists hereunder and, if any such default exists, specifying the nature
and period of existence thereof and what action Landlord or Tenant, as the case may be, is taking
or proposes to take with respect thereto and whether notice thereof has been given to the party in
default. Any Certificate may be relied upon by any prospective purchaser, transferee, mortgagee
or trustee under a deed of trust or leasehold estate in the Property or any part thereof or of
Landlord's or Tenant's interest under this Ground Lease. Tenant will also deliver to Landlord,
promptly upon request, such information with respect to the Property or any part thereof as from
time to time may reasonably be requested.
23.3 No Merger of Title. There shall be no merger of this Ground Lease or the
leasehold estate created by this Ground Lease with any other estate in the Property or any part
thereof by reason of the fact that the same person, firm, corporation or other entity may acquire
or own or hold, directly or indirectly:(a) this Ground Lease or the leasehold estate created by this
Ground Lease or any interest in this Ground Lease or in any such leasehold estate, and (b) any
other estate in the Property and the Improvements or any part thereof or any interest in such
estate, and no such merger shall occur unless and until all persons, corporations, firms and other
entities, including any leasehold Mortgagee or leasehold Mortgagees, having any interest
(including a security interest) in (i) this Ground Lease or the leasehold estate created by this
Ground Lease, and (ii) any other estate in the Property or the Improvements or any part thereof
shall join in a written instrument effecting such merger and shall duly record the same.
23.4 Utility Services. Tenant shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at any time rendered to
or in connection with the Property or the Improvements, or any part thereof, and shall comply
with all contracts existing on the date hereof or subsequently executed by Tenant relating to any
such services, and will do all other things required for the maintenance and continuance of all
such services.
23.5 Quiet Enjoyment. Tenant, upon paying the Rent, if any, and other charges
herein provided for and upon performing and complying with all covenants, agreements, terms
and conditions of this Ground Lease to be performed or complied with by it, shall lawfully and
quietly hold, occupy and enjoy the Property during the term of this Ground Lease without
hindrance or molestation by Landlord, or any person or persons claiming through Landlord.
23.6 No Claims Against Landlord. Nothing contained in this Ground Lease shall
constitute any consent or request by Landlord, express or implied, for the performance of any
982/015610-0047 _51 _
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labor or services or the furnishing of any materials or other property in respect of the Property or
any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against Landlord or its interest in the Property
in respect thereof.
23.7 Inspection. Landlord and its authorized representatives may enter the Property or
any part thereof at all reasonable times for the purpose of inspecting, servicing or posting
notices, protecting the Property or the Improvements, or for any other lawful purposes. That
notwithstanding, Landlord may only enter residential units after giving Tenant three (3) days
prior written notice and subject to all rights of such tenants.
23.8 No Waiver by Landlord. To the extent permitted by applicable law, no failure
by Landlord to insist upon the strict performance of any term hereof or to exercise any right,
power or remedy consequent upon a default under this Ground Lease, and no acceptance of rent
during the continuance of any such default, shall constitute a waiver of any such default or of any
such term. No waiver of any default shall affect or alter this Ground Lease, which shall continue
in full force and effect, or the rights of Landlord with respect to any other then existing or
subsequent default.
23.9 Holding Over. In the event Tenant shall hold over or remain in possession of the
Property or the Improvements with the consent of Landlord after the expiration of the Term, such
holding over or continued possession shall create a tenancy for month -to -month only, upon the
same terms and conditions as are herein set forth so far as the same are applicable.
23.10 Exculpation of Tenant's Personal Liability. Notwithstanding anything to the
contrary provided in this Ground Lease, including, without limitation, the remedies provisions
set forth in Section 20.2 above, it is specifically understood and agreed that there shall be no
personal liability or obligation on the part of any partner of Tenant or any assignee or successor
in interest of the partners of Tenant hereunder (including, without limitation, any mortgagee,
trustee or beneficiary under any mortgage or deed of trust which may acquire Tenant's interest
under this Ground Lease through foreclosure or deed in lieu of foreclosure or any purchaser at a
foreclosure sale) with respect to the provisions of this Ground Lease relating to the payment of
Rent or performance of any other obligations under this Ground Lease; but that Landlord and all
those claiming by, through or under Landlord, its successors and assigns, shall look solely to the
interest of Tenant, its successors and assigns in this Ground Lease and the Improvements, for the
satisfaction of each and every provision and each and every right, privilege or remedy of
Landlord or any other party, in the event of any breach or default of Tenant or any assignee or
successor in interest of any of the provisions made by or to be performed by the Tenant.
However, Tenant acknowledges and agrees that this exculpation of personal liability of the
partners of Tenant for the payment of Rent shall in no way limit the exercise of Landlord's other
remedies, including, without limitation, termination of this Ground Lease.
23.11 No Partnership. Anything contained herein to the contrary notwithstanding,
Landlord does not in any way or for any purpose become a partner of Tenant in the conduct of its
business, or otherwise, or a joint venturer or member of a joint enterprise with Tenant hereunder.
882/015610-0047 -52-
III1838.07 a01/0411I
23.12 Remedies Cumulative. The various rights, options, elections and remedies of
Landlord and Tenant, respectively, contained in this Ground Lease shall be cumulative and no
one of them shall be construed as exclusive of any other, or of any right, priority or remedy
allowed or provided for by law and not expressly waived in this Ground Lease.
23.13 Attorney's Fees. In the event of a dispute between the parties arising out of or in
connection with this Ground Lease, whether or not such dispute results in arbitration or
litigation, the prevailing party (whether resulting from settlement before or after arbitration or
litigation is commenced) shall be entitled to have and recover from the losing party reasonable
attorneys' fees and costs of suit, including expert witness fees, incurred by the prevailing party.
23.14 Time Is of The Essence. Time is of the essence of this Ground Lease and all of
the terms, provisions, covenants and conditions hereof.
23.15 Survival of Representations, Warranties and Covenants. The respective
representations, warranties and covenants contained herein shall survive the Commencement
Date and continue throughout the Term, as it may be extended pursuant to the terms hereof.
23.16 Construction of Agreement. This Ground Lease shall be construed in
accordance with the substantive laws of the State of California, without regard to the choice of
law rules thereof. The rule of construction that a document be construed strictly against its
drafter shall have no application to this Ground Lease.
23.17 Severability. If one or more of the provisions of this Ground Lease shall be held
to be illegal or otherwise void or invalid, the remainder of this Ground Lease shall not be
affected thereby and shall remain in full force and effect to the maximum extent permitted under
applicable laws and regulations.
23.18 Entire Agreement: Modification. This Ground Lease contains the entire
agreement of the parties with respect to the matters discussed herein. This Ground Lease may be
amended only by an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extensions or discharge is sought.
23.19 Binding Effect and Benefits. This Ground Lease shall inure to the benefit of and
be binding on the parties hereto and their respective successors and assigns. Except as otherwise
set forth herein, nothing in this Ground Lease, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Ground Lease.
23.20 Further Assurances. Each party hereto will promptly execute and deliver such
additional agreement, assignments, endorsements and other documents as the other party hereto
may reasonably request to carry out the purposes of this Ground Lease.
23.21 Counterparts. This Ground Lease may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same Ground Lease.
882/015610-0047 -53-
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23.22 Number and Gender. Whenever the singular number is used in this Ground
Lease and required by the context, the same shall include the plural, and the masculine gender
shall include the feminine and neuter genders.
23.23 Conflicts. The parties acknowledge that certain provisions of this Ground Lease
overlap and conflict with the provisions of the Agreement or complete missing information in the
Agreement. It is the intention of the parties that this Ground Lease and the Agreement be read
consistently. To the extent conflicting provisions exist in this Ground Lease and the Agreement,
the provisions of this Ground Lease shall control over the conflicting or incomplete provision in
the Agreement.
23.24 Incorporation by Reference. Every Exhibit attached to this Ground Lease and
referred to herein is hereby incorporated by reference.
23.25 Consent Rights. Unless otherwise expressly provided in this Ground Lease, all
approvals or consents of Landlord (or Landlord's Executive Director), Tenant or any Mortgagee
shall not be unreasonably withheld, conditioned or delayed.
[end — signatures on next page]
882/015610-0047 -54-
1111838 07 a01104/11
IN WITNESS WHEREOF, the undersigned have executed this Ground Lease as of the
date first above written.
2011
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Agency Counsel
"Landlord"
LA QUINTA REDEVELOPMENT
AGENCY, a public body, corporate and
politic
Its: Executive Director
"Tenant"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
Date: 12011 By: Highway I I I Apts Member, LLC,
a California limited liability
company, its member
Michael J. Shovlin, Member
882/015610-0047 _55_
1111838.07 Al/04/I1
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60,93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01 °53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°09'07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18-02-50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
882/015610-0047 EXHIBIT A
I 111838,07 .01 Non 1
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90-09-34", AN ARC DISTANCE OF
314,72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500,13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048-22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS
882/015610-0047 EXHIBIT A
,111838 07 eD1/04/11
EXHIBIT `B"
MEMORANDUM OF LEASE
(See following document)
882/019610-0047 EXHIBIT B
1111838,07 a01/04/11
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
La Quinta Redevelopment Agency
P.O. Box 1504
La Quinta, CA 92247
Attn: Executive Director
:From Recording tee rursuam to
Government Code Section 27383
MEMORANDUM OF UNRECORDED GROUND LEASE
This MEMORANDUM OF UNRECORDED GROUND LEASE ("Memorandum") is
hereby entered into as of by and between LA QUINTA
REDEVELOPMENT AGENCY, a public body, corporate and politic ("Landlord"), and CORAL
MOUNTAIN PARTNERS, L.P., a California limited partnership ("Tenant').
RECITALS
A. Landlord and Tenant have entered into a "Ground Lease" dated concurrently
herewith for that certain real property owned by the Landlord (the "Property"), which provides for
the construction, maintenance, management and operation of a 176-unit affordable multifamily
apartment project, to be made available long term at an affordable housing cost (the "Project').The
Property is legally described in Exhibit "A," which is attached hereto and incorporated herein by this
reference. A copy of the Ground Lease is available for public inspection at the office of the City
Clerk of the City of La Quinta, 78-495 Calle Tampico, La Quinta, CA 92253.
B. The term of the Ground Lease commences on the date of recordation of this
Memorandum of Unrecorded Ground Lease in the Official Records of Riverside County and
continues until the earlier to occur of (a) December 31, 2070, or (b) the fifty-fifth (55th) anniversary
of the date seventy-five percent (75%) of the units have been leased to and are occupied by income -
qualified tenants at affordable rents. The term may be extended by agreement of Landlord and
Tenant for two additional ten (10) year periods.
C. The Ground Lease provides that a short form memorandum of the Ground Lease shall
be executed and recorded in the Official Records of Riverside County, California.
NOW, THEREFORE, the parties hereto certify as follows:
Landlord, pursuant to the Ground Lease, hereby leases the Property to the Tenant upon the
terms and conditions provided for therein. This Memorandum of Lease is not a complete summary
of the Ground Lease, and shall not be used to interpret the provisions of the Ground Lease.
[end - signatures on next page]
882/015610-0047
1111838.07 a01/04/11
2011
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Agency Counsel
Date: 2011
"Landlord"
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
0
Its: Executive Director
"Tenant"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
882/015610-0047 _2_
1111838.07 a01/04/11
By: Highway 111 Apts Member, LLC,
a California limited liability
company, its member
IC
Michael J. Shovlin, Member
State of California
County of Riverside
On , before me,
(insert name and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
State of California
County of Riverside
On
before me,
(Seal)
(insert name and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
882/01 %10-0045 _3 _
1111838 0] a01/04/11
EXHIBIT A TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01-53-43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16-09-07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18002'50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
182/015610-0047 EXHIBIT A
I I H 838 07 A l /04/11
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90-09-34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89*48-22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662,14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
882/015610-0047 EXHIBIT A
I111838.07 Al/04/11
ATTACHMENT NO. 10
AGENCY REGULATORY AGREEMENT
[See following document]
882/015610-0047 ATTACHMENT NO. 10
1111836 07 a01104111
REQUESTED BY
AND WHEN RECORDED MAIL TO:
La Quinta Redevelopment Agency
P.O. Box 1504
La Quinta, California 92247
Attn: Executive Director
it is exempt from a recording fee pursuant to
Government Code Sections 6103 and 27383.
AFFORDABLE HOUSING REGULATORY AGREEMENT
This AFFORDABLE HOUSING REGULATORY AGREEMENT (this "Regulatory
Agreement"), dated for purposes of identification only as of (the "Date of
Regulatory Agreement"), is entered by and between the LA QUINTA REDEVELOPMENT
AGENCY, a public body, corporate and politic, (the "Agency"), and CORAL MOUNTAIN
PARTNERS, L.P., a California limited partnership (the "Developer").
RECITALS
The following recitals are a substantive part of this Regulatory Agreement; all capitalized
terms set forth in the Recitals shall have the meanings ascribed to such terms in Section 1 hereof.
A. The Agency and the Developer have entered into that certain Disposition and
Development Agreement concerning Developer's construction of the Project at the Property (the
"DDA").
B. Copies of the DDA are available for inspection and copying as a public record in
the office of the Agency Secretary located at 78-495 Calle Tampico, La Quinta, California,
92253.
C. The DDA provides, among other things, that (i) Agency provide Developer with a
leasehold interest in the Property, (ii) Developer construct the Project and thereafter operate the
Housing Development, and (iii) the Parties execute and record this Regulatory Agreement
against the Property.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. DEFINITIONS.
"Additional Regulatory Agreements" means, collectively, the Bond Regulatory
Agreement and the Tax Credit Regulatory Agreement.
"Affiliate" means any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Developer which, if
Developer is a partnership or limited liability company, shall include each of the constituent
members or partners, respectively thereof. The term "control" as used in the immediately
preceding sentence, means, with respect to a person that is a corporation, the right to the
882,015b 10-0047
1111838.07 01/04/1I
exercise, directly or indirectly, of more than fifty percent (50%) of the voting rights attributable
to the shares of the controlled corporation, and, with respect to a person that is not a corporation,
the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled person.
"Affordability Period" means the period commencing upon the date on which the
Release of Construction Covenants is recorded in the Official Records of Riverside County,
California and ending on the earlier to occur of (a) December 31, 2070, or (b) the fifty-fifth (55` )
anniversary of the date seventy-five percent (75%) of the Affordable Units in the Housing
Development have been leased to and occupied by Eligible Tenants at an Affordable Rent.
Notwithstanding the foregoing, if the term of the Ground Lease is extended pursuant to the terms
thereof, the Affordability Term shall automatically be extended to be coterminous therewith.
"Affordable Units" means the following one hundred seventy-six (176) rental units in
the Housing Development:
(i) forty (40), one (1) bedroom, one (1) bath units;
eighty-two (82), two (2) bedroom, one (1) bath units; and
(iii) fifty-four (54), three (3) bedroom, two (2) bath units.
"Affordable Rent" means the maximum Monthly Rent that may be charged to and paid
by Very Low Income Households, Lower Income Households, and Moderate Income
Households, as applicable, for the Affordable Units as annually determined pursuant to Health
and Safety Code Section 50053(b), as of the date hereof, and the regulations promulgated
pursuant to and incorporated therein.
"Agency" means the La Quinta Redevelopment Agency, a public body, corporate and
politic, exercising governmental functions and powers and organized and existing under the
California Community Redevelopment Law, and any assignee of or successor to its rights,
powers and responsibilities. The Executive Director of Agency, or his or her designee,
(hereinafter defined as the "Executive Director") shall represent Agency in all matters pertaining
to this Regulatory Agreement. Whenever a reference is made herein to an action or approval to
be undertaken by Agency, the Executive Director is authorized to act unless this Regulatory
Agreement specifically provides otherwise or the context should otherwise require.
"Agency Deed of Trust" means that certain deed of trust executed by Developer, as
"Trustor," in favor of Agency, as "Beneficiary," securing Developer's repayment under the
Agency Note.
"Agency Loan" means the loan provided by the Agency to Developer pursuant to the
DDA to develop the Project.
"Agency Note" means that certain Agency Loan Promissory Note executed by
Developer on or about , that evidences Developer's obligation to repay the Agency
Loan.
8821015610-0047 -2-
1111838,07 a01104111
"Annual Project Revenue" has the meaning ascribed thereto in the Agency Note.
"Approved Financing" means generally, the financing approved by the Agency
pursuant to Section 6.7 of the DDA obtained by Developer for the acquisition of a leasehold
interest in the Property and the construction/development and ownership of the Project. In
addition, "Approved Financing" shall include any refinancing of the Approved Financing which
has been approved by Agency.
"Approved Pro Forma" means that certain pro forma created in connection with the
Project Budget attached to the DDA.
"Bond Regulatory Agreement" means the regulatory agreement which may be required
to be recorded against the Property with respect to the issuance of tax-exempt multi -family
housing revenue bonds.
"Capital Replacement Reserve" means a capital replacement reserve for the Project
(i) initially consisting of not less than Zero Dollars ($0.00), (or such greater amount required
under either of the Additional Regulatory Agreements, or under the Partnership Agreement) set
aside in a separate interest -bearing trust account, commencing upon the rental of the Affordable
Units, and (ii) replenished from annual deposits of Forty -Four Thousand Dollars ($44,000) of
Annual Project Revenue, adjusted annually by the CPI Adjustment (unless otherwise agreed to
by Developer and Agency) or as required under the Partnership Agreement (or such greater
amount required under either of the Additional Regulatory Agreements, or under the Partnership
Agreement).
"Certification of Continuing Program Compliance" means an annual recertification
form substantially in the form attached hereto and incorporated herein as Exhibit E.
"Certificate of Occupancy" means the final certificate of occupancy issued by the City
for the completion of construction of the Project.
"City" means the City of La Quinta, a California municipal corporation and charter city.
"Community Redevelopment Law" is codified as California Health and Safety Code
Section 33000 et seq.
"Construction Financing" means a loan in an amount not less than Twenty Million
Dollars ($20,000,000) from an Institutional Lender to be secured by a leasehold deed of trust in
first (1 st) lien position against the Property.
"CPI Adjustment' means the increase in the cost of living index, as measured by the
Consumer Price Index for all urban consumers, Los Angeles -Anaheim -Riverside statistical area,
all items (1982-84 = 100) published by the United States Department of Labor, Bureau of Labor
Statistics ("CPI") in effect as of the date on which the Certificate of Occupancy is issued to the
CPI in effect as of the date on which an adjustment is made. If such index is discontinued or
revised, such other index with which such index is replaced (or if not replaced, another index
which reasonably reflects and monitors consumer prices) shall be used in order to obtain
substantially the same results as would have been obtained if the discontinued index had not
882/015610-0047 -3-
1111838.07 a01/04/1I
been discontinued or revised. If the CPI is changed so that the base year is other than 1982-84,
the CPI shall be converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics.
"Date of Regulatory Agreement" is defined in the initial paragraph hereof.
°DDA" is defined in Recital A hereof.
"Default" means the failure of a Party to perform any action or covenant required by the
DDA or hereunder within the time periods provided in the DDA or hereunder, respectively,
following notice and opportunity to cure, as set forth in Section 13.1 of the DDA and Section
16.01 hereof, respectively.
"Developer" means Coral Mountain Partners, L.P., a California limited partnership, and
any permitted assignees of Developer.
"Eligible Tenant" means, with respect to a Low Income Unit, a Lower Income
Household; with respect to a Moderate Income Unit, a Moderate Income Household; and with
respect to a Very Low Income Unit, a Very Low Income Household.
"Environmental Laws" means (i) Sections 25115, 25117, 25122.7 or 25140 of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law))
(ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code,
Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Article 9 or
Article l 1 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (vi) Section
311 of the Clean Water Act (33 U.S.C. §1317), (vii) Section 1004 of the Resource Conservation
and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903) or (viii) Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601 et
seq.
"Executive Director" means the Executive Director of the Agency, or his or her
designee.
"Governmental Requirements" means all laws, ordinances, statutes, codes, rules,
regulations, orders and decrees, of the United States, the State of California, the County of
Riverside, the City and of any other political subdivision, agency or instrumentality exercising
jurisdiction over Agency, Developer, or the Project.
"Ground Lease" means that certain Ground Lease entered into by and between the
Agency and Developer concurrently herewith.
"Hazardous Materials" means any substance, material, or waste which is or becomes
regulated by any local governmental authority, the State of California, or the United States
Government, including, but not limited .to, any material or substance which is (i) defined as a
"hazardous waste", "acutely hazardous waste", "extremely hazardous waste", or "restricted
182/015610-0047 -4-
1111838 07 a01/04/1I
hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of
the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control
Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and
Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account
Act), (iii) defined as a "hazardous material", "hazardous substance", or "hazardous waste" under
Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under
Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground
Storage of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) polychlorinated byphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Code of Regulations, Chapter 20, (ix) designated as
"hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section
1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), (xi)
defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., (xii) methyl -tertiary
butyl ether, (xiii) perchlorate, or (xiv) any other substance, whether in the form of a solid, liquid,
gas or any other form whatsoever, which by any Governmental Requirements either requires
special handling in its use, transportation, generation, collection, storage, handling, treatment or
disposal, or is defined as "hazardous" or harmful to the environment. For purposes hereof,
"Hazardous Materials" excludes materials and substances in quantities as are commonly used in
constructing and operating apartment complexes, provided such materials and substances are
used in accordance with all applicable laws.
°`HCD" means the California Department of Housing and Community Development.
"Housing Development" means an affordable rental housing development consisting of
one hundred seventy-six (176) residential dwelling units and all required on -site improvements
that will remain privately owned and that are necessary to serve the Housing Development.
"HUD" means the United States Department of Housing and Urban Development.
"Institutional Lender" means any of the following institutions having assets or deposits
in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a California
chartered bank; a bank created and operated under and pursuant to the laws of the United States
of America; an "incorporated admitted insurer" (as that term is used in Section 1100.1 of the
California Insurance Code); a "foreign (other state) bank" (as that term is defined in
Section 1700(1) of the California Financial Code); a federal savings and loan association (Cal.
Fin. Code Section 8600); a commercial finance lender (within the meaning of Sections 2600 et
seq. of the California Financial Code); a "foreign (other nation) bank" provided it is licensed to
maintain an office in California, is licensed or otherwise authorized by another state to maintain
an agency or branch office in that state, or maintains a federal agency or federal branch in any
state (Section 1716 of the California Financial Code); a bank holding company or a subsidiary of
a bank holding company which is not a bank (Section 3707 of the California Financial Code); a
trust company, savings and loan association, insurance company, investment banker; college or
university; pension or retirement fund or system, either governmental or private, or any pension
or retirement fund or system of which any of the foregoing shall be trustee, provided the same be
882/015610-0047 -5-
1111838 07 A1/04/11
organized under the laws of the United States or of any state thereof; and a Real Estate
Investment Trust, as defined in Section 856 of the Internal Revenue Code of 1986, as amended,
provided such trust is listed on either the American Stock Exchange or the New York Stock
Exchange. is hereby deemed to be an Institutional Lender.
"Legal Description" means that certain legal description of the Property which is
attached hereto and incorporated herein as Exhibit B.
"Lower Income Household" means those person(s) or households whose income does
not exceed the qualifying limit for "lower income households" pursuant to Health and Safety
Code Section 50079.5, which, as of the date of this Regulatory Agreement means persons and
families whose income does not exceed the qualifying limit for lower income households as
established and amended from time to time pursuant to Section 8 of the United States Housing
Act of 1937, as published from time to time by HCD in the California Code of Regulations.
"Low Income Unit" means the one hundred thirty-eight (138) Affordable Units that are
required to be rented to and occupied by Lower Income Households. Thirty-one (31) of such
units shall contain one (1) bedroom and one (1) bathroom; sixty-four (64) of such units shall
contain two (2) bedrooms and two (2) bathrooms; and forty-three (43) of such units shall contain
three (3) bedrooms and two (2) bathrooms.
"Map" means a map depicting the Property which is attached hereto and incorporated
herein as Exhibit A.
"Marketing Plan" means a marketing plan for the rental of the Affordable Units which
provides, to the extent authorized by applicable federal, state or local laws or regulations, that a
preference be given to tenants who are currently residents of the City, or currently work in the
City, or who have been displaced by redevelopment activities of the Agency in the
implementation of the Redevelopment Plan or any other redevelopment plan of the Agency. The
Marketing Plan shall include a tenant selection system in conformance with fair housing laws
and the Tax Credit Rules which establishes a chronological waiting list system for selection of
tenants. Agency shall have approved the Marketing Plan, in its reasonable discretion, as one of
the Agency's conditions to the Property Closing.
"Moderate Income Household" means those person(s) or households whose income
does not exceed the qualifying limits for "persons and families of moderate income" pursuant to
Health and Safety Code Section 50093, which, as of the date of this Regulatory Agreement
means persons and families whose income exceeds the income limit for lower income
households, but does not exceed the income limit for persons and families of low or moderate
income as established and amended from time to time pursuant to Section 8 of the United States
Housing Act of 1937, as published from time to time by HCD in the California Code of
Regulations.
"Moderate Income Units" means the two (2) Affordable Units that shall be used for on -
site management, and that are required to be rented to and occupied by Moderate Income
Households. The Moderate Income Units shall each contain two (2) bedrooms and two (2)
bathrooms.
882/015610-0047 _6-
1111838 07 a01/04/11
"Monthly Rent" means the total of monthly payments for (a) use and occupancy of each
Affordable Unit and land and facilities associated therewith, (b) any separately charged fees or
service charges assessed by Developer which are required of all tenants, other than security
deposits, (c) a reasonable allowance for an adequate level of service of utilities not included in
(a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating,
cooking and refrigeration fuels, but not including telephone or cable service, and (d) possessory
interest, taxes or other fees or charges assessed for use of the land and facilities associated
therewith by a public or private entity other than Developer. In the event that all utility charges
are paid by the landlord rather than the tenant, no utility allowance shall be deducted from the
rent.
"Notice" means a notice in the form prescribed by Section 17.01 hereof.
"Operating Budget" means an operating budget for the Housing Development, which
budget shall be subject to the annual written approval of Agency in accordance with Section 9.01
hereof.
"Operating Expenses" has the meaning ascribed thereto in the Agency Note.
"Operating Reserve" means an operating reserve for the Housing Development (i)
initially consisting of not less than Four Hundred Ninety -Five Thousand Dollars ($495,000) (or
such greater amount required under either of the Additional Regulatory Agreements, or under the
Partnership Agreement) set aside in a separate interest -bearing trust account, commencing upon
the rental of the Affordable Units, and (ii) replenished to Four Hundred Ninety -Five Thousand
Dollars ($495,000) from annual deposits of the Annual Project Revenue, to the extent available,
such that the balance of the Operating Reserve consists of not less than four (4) months of
projected Operating Expenses, adjusted annually by the CPI Adjustment (unless otherwise
agreed to by Developer and Agency) or as required under the Partnership Agreement(or such
greater amount required under either of the Additional Regulatory Agreements, or under the
Partnership Agreement), provided in no event shall the balance in such account exceed a sum
equal to one (1) year of debt service for the Housing Development (or such greater amount
required under the Tax Credit Regulatory Agreement, pursuant to any of the Approved Financing
or under the Partnership Agreement).
"Outside Construction Commencement Date" means that date which is ten (10) days
after the Property Closing Date.
"Parties" means jointly, Agency and Developer; Agency and Developer are each a
"Party."
"Partnership Agreement" means the agreement which sets forth the terms of the
Developer's limited partnership, as such agreement may be amended from time to time.
"Partnership Related Fees" means partnership fees actually incurred pursuant to the
terms of the Partnership Agreement, which are reasonable and customary to developer/owner
entities for similar projects in Southern California, and may include, but shall not exceed: (i) a
general partner(s) (administrative and/or managing partner(s)) partnership management fee
payable to the general partner(s) (ii) a limited partner asset management fee payable to the
882/015610-0047 -7-
1111838.07 .01/04/II
investor limited partner; and (iii) an annual audit fee in and for any calendar year. In no event
shall the annual fees for (i) and (ii) above cumulatively exceed Forty Thousand Dollars
($40,000), but such fees in (i) and (ii) may be increased annually by the CPI. In the event
insufficient Annual Project Revenues exist to provide for payment of all or part of the specific
Partnership Related Fees listed above, no interest shall accrue on the unpaid portions of such
Partnership Related Fees, but the unpaid balance of such fees alone will be added to the
Partnership Related Fees due in the following year.
"Permanent Financing" means a loan in an amount not to exceed the amount of the
Construction Financing from an Institutional Lender to be secured by a leasehold deed of trust
against the Property which replaces the Construction Financing upon the Developer's completion
of the construction of the Project.
"Project" means the Developer's construction of the Housing Development and Public
Improvements in accordance with this Agreement, including, without limitation, in accordance
with the Scope of Development and the Final Construction Documents.
"Property" means that certain real property (i) consisting of approximately 9.3 acres, (ii)
generally located at the southeast corner of Dune Palms Road and Highway 111, (iii) depicted on
the Map, and (iv) described in the Legal Description.
"Property Closing" means generally, the closing for the Approved Financing (except
that certain portions of the Agency Loan may be disbursed to Developer prior to the Property
Closing pursuant to the terms of the DDA), and particularly, the time and day that this
Regulatory Agreement and the Memorandum of Ground Lease are filed for record with the
Riverside County Recorder.
"Property Closing Date" means the date on which the Property Closing occurs.
"Public Improvements" means all on- and off -site improvements that (i) are required to
be constructed to serve the Housing Development and (ii) will be dedicated to the City of La
Quinta upon Developer's completion thereof. The Public Improvements are described in the
Scope of Development attached to the DDA as Attachment No. 3.
"Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project,
adopted by Ordinance No. 139 of the City Council of the City adopted on May 16, 1989, as the
same has been amended from time to time, which is incorporated herein by reference.
"Redevelopment Plan Termination Date" means the date on which the Redevelopment
Plan terminates with respect to the Property.
"Redevelopment Project" means Project Area No. 2, adopted by the City pursuant to
the Redevelopment Plan.
"Regulatory Agreement" means this Regulatory Agreement.
"Release of Construction Covenants" means the document which evidences
Developer's satisfactory completion of construction of the Project, as set forth in Section 10.16
I82/015610-0047 -g_
1111838.07 a01/04/11
of the DDA, substantially in the form which is attached thereto as Attachment No. 12 and
incorporated therein by reference.
"Scope of Development" means that certain Scope of Development which is attached to
the DDA as Attachment No. 3 and incorporated therein by reference. The Scope of
Development describes the scope, amount and quality of the construction to be done by
Developer pursuant to the terms and conditions of the DDA and this Regulatory Agreement.
"Tax Credits" means Low Income Housing Tax Credits granted pursuant to Section 42
of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5,
17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq.
"Tax Credit Regulatory Agreement" means the regulatory agreement which may be
required to be recorded against the Property with respect to the issuance of Tax Credits for the
Project.
"Tax Credit Rules" means Section 42 of the Internal Revenue Code and/or California
Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California
Health and Safety Code Section 50199, et seq., and the rules and regulations implementing the
foregoing, as the same may be amended from time to time.
"TCAC" means the California Tax Credit Allocation Committee.
"Very Low Income Household" means those person(s) or households whose income
does not exceed the qualifying limit for "very low income households" pursuant to Health and
Safety Code Section 50105, which, as of the date of this Regulatory Agreement means persons
and families whose income does not exceed the qualifying limit for very low income households
as established and amended from time to time pursuant to Section 8 of the United States Housing
Act of 1937, as published from time to time by HCD in the California Code of Regulations.
"Very Low Income Units" means the thirty-six (36) Affordable Units that are required
to be rented to and occupied by Very Low Income Households. Nine (9) of such units shall
contain one (1) bedroom and one (1) bathroom; sixteen (16) of such units shall contain two (2)
bedrooms and two (2) bathrooms; and eleven (11) of such units shall contain three (3) bedrooms
and two (2) bathrooms.
SECTION 2. COVENANTS REGARDING CONSTRUCTION OF THE
IMPROVEMENTS.
Developer shall carry out the design, construction, and operation of the Project in
conformity with all applicable laws, including all applicable state labor standards, the City
zoning and development standards, building, plumbing, mechanical and electrical codes, and all
other provisions of the City of La Quinta Municipal Code, all applicable disabled and
handicapped access requirements, including without limitation the accessibility standards
pursuant to 24 CFR part 8, the Americans With Disabilities Act, 42 U.S.C. Section 12101, et
seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the
Unruh Civil Rights Act, Civil Code Section 51, et seq., the Federal Housing Quality Standards,
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the lead based paint requirements of Title X, and 24 CFR part 35, and other applicable
Governmental Requirements.
2.01 Nondiscrimination in Employment. Developer certifies and agrees that all
persons employed or applying for employment by it and all subcontractors, bidders and
vendors, are and will be treated equally by it without discrimination or segregation on
account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government
Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code, and in compliance with Title VII of the Civil Rights Act of 1964, 42
U.S.C. Section 2000, et seq., the Federal Equal Pay Act of 1963, 29 U.S.C. Section
206(d), the Age Discrimination in Employment Act of 1967, 29 U.S.C. Section 621, et
seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. Section 1324b, et seq.,
42 U.S.C. Section 1981, the California Fair Employment and Housing Act, Cal.
Government Code Section 12900, et seq., the California Equal Pay Law, Cal. Labor Code
Section 1197.5, Cal. Government Code Section 11135, the Americans with Disabilities
Act, 42 U.S.C. Section 12101, et seq., and all other antidiscrimination laws and
regulations of the United States and the State of California as they now exist or may
hereafter be amended. Developer shall allow representatives of Agency access to its
employment records related to this Regulatory Agreement during regular business hours
to verify compliance with these provisions when so requested by Agency.
2.02 Levies and Attachments on Property. After recordation of the
Memorandum of Ground Lease, Developer shall remove or have removed any levy or
attachment made on the Property or any part thereof, or assure the satisfaction thereof
within a reasonable time. Nothing herein shall be deemed to prohibit Developer from
contesting the validity or amount of any levy or attachment nor to limit the remedies
available to Developer with respect thereto.
2.03 Mechanics Liens and Stop Notices After recordation of the
Memorandum of Ground Lease, Developer shall remove or have removed any mechanics
lien or stop notice made on the Property or any part thereof, or assure the satisfaction
thereof as provided herein. If a claim of a lien or stop notice is given or recorded
affecting construction of the Project, Developer shall within thirty (30) days of such
recording or service or within thirty (30) days of Agency's demand whichever last
occurs:
(a) pay and discharge the same; or
(b) affect the release thereof by recording and delivering to Agency a surety
bond in sufficient form and amount, or otherwise; or
(c) provide Agency with other assurance which Agency deems, in its
reasonable discretion, to be satisfactory for the payment of such lien or bonded stop notice and
for the full and continuous protection of Agency from the effect of such lien or bonded stop
notice.
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SECTION 3. COVENANTS REGARDING USE.
3.01 Covenants To Use In Accordance With Redevelopment Plan City
Municipal Code And DDA. Developer covenants and agrees for itself, its successors,
assigns, and every successor in interest to Developer's interest in the Property or any part
thereof, that Developer shall devote the Property to the uses specified in the
Redevelopment Plan, the City Municipal Code and this Regulatory Agreement until the
later of (i) the expiration of the Redevelopment Plan, as applicable to the Property, or (ii)
the termination of Developer's right to occupy the Property under the Ground Lease. All
uses conducted on the Property, including, without limitation, all activities undertaken by
Developer pursuant to this Regulatory Agreement, shall conform to the Redevelopment
Plan and all applicable provisions of the La Quinta Municipal Code. The foregoing
covenants shall run with the land.
3.02 Covenant Regarding Specific Uses. Developer covenants and agrees for
itself, its successors, assigns, and every successor in interest to Developer's interest in the
Property or any part thereof, that Developer shall use the Property to operate the Housing
Development until the expiration of the Affordability Period.
3.03 Covenants Regarding Term And Priority Of Agreement. This Regulatory
Agreement shall remain in effect throughout the Affordability Period, notwithstanding
the payment in full of the Agency Loan. Developer's performance under this Regulatory
Agreement is secured by the Agency Deed of Trust and Developer shall not be entitled to
a reconveyance of the Agency Deed of Trust prior to the expiration of the Affordability
Period; provided that, upon Developer's repayment of the Agency Loan, Developer shall
be entitled to a partial reconveyance of the Agency Deed of Trust solely to release
therefrom Developer's obligations to repay such loan. This Regulatory Agreement shall
unconditionally be and remain at all times prior and superior to the liens created by the
Tax Credit Regulatory Agreement, the Bond Regulatory Agreement, and any other
documents related to any of the foregoing and all of the terms and conditions contained
therein and to the lien of any new mortgage debt which is for the purpose of refinancing
all or any part of the Construction Financing.
SECTION 4. COVENANTS REGARDING AFFORDABLE UNITS.
Developer shall provide for the Affordable Units in accordance with this Section.
4.01 Residential Use. Without the Agency's prior written consent, which
consent may be given or withheld in its sole and absolute discretion, none of the
Affordable Units in the Housing Development will at any time be utilized on a transient
basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house,
rooming house, nursing home, hospital, sanitarium, or trailer court or park, nor shall the
Affordable Units be used as a place of business except as may otherwise be allowed by
applicable law.
4.02 Provision of Affordable Units. Developer shall make available, restrict
occupancy to, and rent the Affordable Units to Eligible Tenants at Affordable Rents
throughout the Affordability Period.
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4.03 Selection of Tenants. Developer shall be responsible for the selection of
tenants for the Affordable Units in compliance with all lawful and reasonable criteria, as
set forth in the Marketing Plan. Developer shall not refuse to lease to a holder of a
certificate of family participation under 24 CFR part 882 (Rental Certificate Program) or
a rental voucher under 24 CFR part 887 (Rental Voucher Program) or to the holder of a
comparable document evidencing participation in a Section 8 program or other tenant -
based assistance program, who is otherwise qualified to be a tenant in accordance with
the approved tenant selection criteria.
4.04 Occupancy By Eligible Tenant. An Affordable Unit occupied by an
Eligible Tenant who qualified as an Eligible Tenant at the commencement of the
occupancy shall be treated as occupied by an Eligible Tenant until a recertification of
such Eligible Tenant's income in accordance with Section 4.07 below demonstrates that
such tenant no longer qualifies as an Eligible Tenant at the applicable income level. An
Affordable Unit previously occupied by an Eligible Tenant and then vacated shall be
considered occupied by an Eligible Tenant until the Affordable Unit is reoccupied,
provided Developer uses its best efforts to re -lease the vacant Affordable Unit to an
Eligible Tenant. Any vacated Affordable Unit shall be held vacant until re -leased to an
Eligible Tenant. Developer shall take any or all of the following actions, as necessary, to
locate Eligible Tenants for the Housing Development:(i) notification to the City of the
available Affordable Unit; and (ii) advertisement of the available Affordable Unit in a
newspaper of general circulation in the City.
4.05 Income Computation and Certification. Immediately prior to an Eligible
Tenant's occupancy of an Affordable Unit, Developer shall obtain an Income
Computation and Certification Form in the form attached hereto and incorporated herein
as Exhibit "C", or on a similar form required by either of the Additional Regulatory
Agreements if Developer obtains the Tax Credits and issuance of the Tax -Exempt Bonds,
and such form requires inclusion of the same information as required in Exhibit "C",
from each such Eligible Tenant dated no more than 90 days prior to the date of initial
occupancy in the Housing Development by such Eligible Tenant. In addition, Developer
shall provide such further information as may be reasonably required in the future by the
Agency for purposes of verifying a tenant's status as an Eligible Tenant. Developer shall
use good faith efforts to verify that the income provided by an applicant is accurate by
taking the following steps as a part of the verification process:(i) obtain three (3) pay
stubs for the most recent pay periods; (ii) obtain a written verification of income and
employment from the applicant's current employer; (iii) obtain an income verification
form from the Social Security Administration, California Department of Social Services,
and/or California Employment Development Department if the applicant receives
assistance from any of said agencies; (iv) if an applicant is unemployed or did not file a
tax return for the previous calendar year, obtain other evidence and/or verification of such
applicant's total income received during the calendar year from any source, taxable or
nontaxable, or such other information as is satisfactory to the Agency. Developer shall
maintain in its records each Income Computation and Certification Form obtained
pursuant to this section for a minimum of five (5) years.
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4,06 Rental Priority. Subject to the requirements of local, state and federal fair
housing laws, and any funding obtained by Developer to operate and/or develop the
Housing Development that has been approved by Agency, during the term of this
Regulatory Agreement, Developer shall use its reasonable commercial efforts to lease the
Affordable Units to credit -worthy Eligible Tenants in the following order of priority: (a)
who have been or will be displaced by an Agency activity, or (b) who live and/or work in
the City of La Quinta. Should multiple tenants be equally eligible (as to income, credit
history, and other nondiscriminatory criteria) and qualified to rent a unit, Developer shall
rent available Affordable Units to Eligible Tenants on a first -come, first -served basis.
4.07 Recertification. Within sixty (60) days prior to the first anniversary date
of the occupancy of an Affordable Unit by an Eligible Tenant, and on each anniversary
date thereafter, Developer shall recertify the income of such Eligible Tenant by obtaining
a completed Income Recertification Form, in the form attached hereto and incorporated
herein as Exhibit "D", based upon the current income of each known occupant of the
Affordable Unit; provided, however, that if Developer obtains the Tax Credits and
issuance of the Tax -Exempt Bonds, and either of the Additional Regulatory Agreements
requires Developer to obtain a recertification form which requires inclusion of the same
information as required in Exhibit "D", then Developer shall not be deemed to be in
default hereunder if during the term of such Additional Regulatory Agreement Developer
obtains from each Eligible Tenant the recertification form required pursuant to said
Additional Regulatory Agreement.
If, after renting a Very Low Income Unit, the household income increases above the
income level permitted for the Very Low Income Unit, but meets the income level permitted for
a Low Income Unit, the household shall continue to be permitted to reside in such Unit provided
that Developer shall increase the rent for that Very Low Income Unit to the rent level designated
for a Low Income Unit, and shall restrict and designate as a Very Low Income Unit the next
available Affordable Unit with the same number of bedrooms that is not already designated
hereunder as a Very Low Income Unit.
If, after renting to a Very Low Income Unit or a Low Income Unit, the household
increases above the income level permitted for a Low Income Unit, but does not exceed the
income level permitted for a Moderate Income Unit, the household shall continue to be permitted
to reside in such Affordable Unit, and Developer shall increase the rent for that Affordable Unit
to the rent level designated for a Moderate Income Unit.
If, after renting an Affordable Unit, the household income increases above the income
level permitted for a Moderate Income Unit, that household may not be permitted to remain in
the unit unless requiring such household to move will violate the Tax Credit Rules. In such
event, Developer shall notify Agency in writing of such occurrence, and shall inform Agency of
(1) its plans for removing the household from the Affordable Unit, or (2) the specific rule in the
Tax Credit Rules that prohibits such action providing written evidence of the same.
4.08 Certification of Continuing Program Compliance. During the term of this
Regulatory Agreement, on or before each May 1 following the date Agency issues a
Release of Construction Covenants for the Project, Developer shall annually advise the
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Agency of the occupancy of the Housing Development during the preceding calendar
year by delivering a Certification of Continuing Program Compliance in the form
attached hereto and incorporated herein as Exhibit "E", stating (i) the Affordable Units of
the Housing Development which have been rented to and are occupied by Eligible
Tenants and (ii) that to the knowledge of Developer either (a) no unremedied default has
occurred under this Regulatory Agreement, or (b) a default has occurred, in which event
said certification shall describe the nature of the default and set forth the measures being
taken by the Developer to remedy such default.
4.09 Leases• Rental Agreements for Affordable Units. Developer shall submit
a standard lease form, which shall comply with the requirements of this Regulatory
Agreement, to Agency for its approval. Agency shall reasonably approve such lease
form upon finding that such lease form is consistent with this Regulatory Agreement.
Developer shall enter into a written lease, in the form approved by Agency, with each
tenant/tenant household of the Affordable Units. Notwithstanding any other provisions
required pursuant to this Regulatory Agreement to be included in any such lease form,
the lease form shall include a disclosure that the property located immediately to the
north of the Housing Development is contemplated to be sold to a commercial developer
for development and subsequent operation of a commercial use, including, without
limitation, for possible use as an automobile dealership that would include, without
limitation, sales facilities, vehicle showroom, and service and repair facilities. Developer
shall not make any material revisions to such form until such revisions have been
approved by Agency.
4.10 Reliance on Tenant Representations. Each tenant lease shall contain a
provision to the effect that Developer has relied on the income certification and
supporting information supplied by the tenant in determining qualification for occupancy
of the Affordable Unit, and that any material misstatement in such certification (whether
or not intentional) will be cause for immediate termination of such lease.
4.11 Monitoring and Record Keeping. Representatives of Agency shall be
entitled to enter the Property during normal business hours, upon at least twenty-four (24)
hours notice, to monitor compliance with this Regulatory Agreement, to inspect the
records of the Property, and to conduct an independent audit or inspection of such
records. Developer agrees to cooperate with Agency in making the Property and all
Affordable Units thereon available for such inspection or audit. Developer agrees to
maintain records in a businesslike manner, and to maintain copies of original tenant
certifications for fifteen (15) years (or such longer period as required under the Tax
Credit Rules) and all other records pertaining to the Housing Development for five (5)
years.
4.12 Remedy For Violation of Rental Requirements.
(a) It shall constitute a default for Developer to charge or accept for any
Affordable Unit rent amounts in excess of the amount provided for in Section 4.02 of this
Regulatory Agreement. In the event that Developer charges or receives such higher rental
amounts, Developer shall be required to reimburse the tenant that occupied said Affordable Unit
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at the time the excess rent was received for the entire amount of such excess rent received,
provided that such tenant can be found following reasonable inquiry, and to pay to such tenant
interest on said excess amount, at the rate of six percent (6%) per annum, for the period
commencing on the date the first excess rent was received from said tenant and ending on the
date reimbursement is made to the tenant. For purposes of this Section 4.12, "reasonable
inquiry" shall include Developer's review of information provided by the tenant as part of the
tenant's application, and forwarding information provided by the tenant, and Developer's
reasonable attempts to contact the tenant and any other persons listed in either of such
documents. If, after such reasonable inquiry, Developer is unable to locate the tenant, Developer
shall pay all of such amounts otherwise to be paid to the tenant to the Agency.
(b) Except as otherwise provided in this Regulatory Agreement, it shall
constitute a default for Developer to knowingly (or without investigation as required herein)
initially rent any Affordable Unit to a tenant who is not an Eligible Tenant. In the event
Developer violates this Section, in addition to any other equitable remedy Agency shall have for
such default. Developer, for each separate violation, shall be required to pay to Agency an
amount equal to (i) the greater of (A) the total rent Developer received from such ineligible
tenant, or (B) the total rent Developer was entitled to receive for renting that Affordable Unit,
plus (ii) any relocation expenses incurred by Agency or the City as a result of Developer having
rented to such ineligible person. The terms of this Section shall not apply if Developer rents to
an ineligible person as a result of such person's fraud or misrepresentation.
(c) It shall constitute a default for Developer to knowingly (or without
investigation as required herein) rent an Affordable Unit in violation of the leasing preference
requirements of Section 4.06 of this Regulatory Agreement. In the event Developer violates this
Section, in addition to any other equitable remedy Agency shall have for such default,
Developer, for each separate violation, shall be required to pay Agency an amount equal to two
(2) months of rental charges.
THE PARTIES HERETO AGREE THAT THE AMOUNTS SET FORTH IN THIS SECTION
4.12 (THE "DAMAGE AMOUNTS") CONSTITUTE A REASONABLE APPROXIMATION
OF THE ACTUAL DAMAGES THAT AGENCY WOULD SUFFER DUE TO THE
DEFAULTS BY DEVELOPER SET FORTH IN THIS SECTION 4.12, CONSIDERING ALL
OF THE CIRCUMSTANCES EXISTING ON THE DATE OF REGULATORY AGREEMENT,
INCLUDING THE RELATIONSHIP OF THE DAMAGE AMOUNTS TO THE RANGE OF
HARM TO AGENCY AND ACCOMPLISHMENT OF AGENCY'S PURPOSE OF
ASSISTING IN THE PROVISION OF AFFORDABLE HOUSING TO ELIGIBLE TENANTS
THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT
PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE
AMOUNTS SET FORTH IN THIS SECTION 4.12 SHALL BE THE SOLE MONETARY
DAMAGES REMEDY FOR THE DEFAULTS SET FORTH IN THIS SECTION 4.12, BUT
NOTHING IN THIS SECTION 4.12 SHALL BE INTERPRETED TO LIMIT AGENCY'S
REMEDY FOR SUCH DEFAULT TO SUCH A DAMAGES REMEDY AND IN THAT
REGARD AGENCY MAY DECLARE A DEFAULT UNDER THE TERMS OF THE
AGENCY NOTE, THE GROUND LEASE, THE DDA, OR OTHER AGREEMENTS
ENTERED INTO BY AND BETWEEN AGENCY AND DEVELOPER.IN PLACING ITS
INITIALS AT THE PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY
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CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT
THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL WHO HAS EXPLAINED
THE CONSEQUENCES OF THE LIQUIDATED DAMAGES PROVISION AT OR PRIOR TO
THE TIME EACH EXECUTED THIS REGULATORY AGREEMENT.
DEVELOPER'S INITIALS: AGENCY'S INITIALS:
4.13 Relationship to Tax Credit Regulatory Agreement and Bond Regulatory
Agreement. Notwithstanding any other provisions of this Regulatory Agreement and
subject to the following sentence, to the extent that the provisions related to tenant
selection, tenant income levels and unit rent levels set forth in either of the Additional
Regulatory Agreements are less restrictive than those provisions set forth in this Section
4, then the provisions set forth in this Section 4 shall govern and control. To the extent of
any inconsistency between this Regulatory Agreement and either of the Additional
Regulatory Agreements regarding Affordable Rent for the Affordable Units, the more
restrictive agreement or covenants shall prevail unless compliance with such more
restrictive provisions would violate the provisions of the less restrictive document.
Developer agrees to perform all of Developer's obligations under this Regulatory
Agreement, and under the Additional Regulatory Agreements. In the event Agency is prevented
by a final, non -appealable order of a court of competent jurisdiction in a lawsuit involving the
Project, or by an applicable and binding published appellate opinion, or by a final, non -
appealable order of a regulatory body having jurisdiction, from enforcing, for any reason, the
affordability restrictions set forth in this Regulatory Agreement or in the DDA, then in such
event Agency shall be a third -party beneficiary under the Additional Regulatory Agreements,
and shall have full authority to enforce any breach or default by Developer thereunder in the
same manner as though it were a breach or default hereunder. Without Agency's prior written
consent, which consent may be withheld in Agency's sole and absolute discretion, Developer
shall not consent to any amendment of or modification to either of the Additional Regulatory
Agreements which (i) shortens the term of the affordability restrictions on the Affordable Units
or (ii) modifies the affordability mix.
SECTION 5. COVENANT TO PAY TAXES AND ASSESSMENTS.
Developer shall pay prior to delinquency all ad valorem real estate taxes, special taxes,
assessments and special assessments levied against the Property, subject to Developer's right to
contest any such tax in good faith and any property tax exemption.
SECTION 6. COVENANTS REGARDING MAINTENANCE.
Developer shall maintain the Property and all improvements thereon, including lighting
and signage, in good condition, free of debris, waste and graffiti, and in compliance with the
terms of the Redevelopment Plan and all applicable provisions of the City of La Quinta
Municipal Code, and in accordance with the HUD Housing Quality Standards. Developer shall
maintain the improvements and landscaping on the Property in accordance with the
"Maintenance Standards," as hereinafter defined. Such Maintenance Standards shall apply to all
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buildings, signage, lighting, landscaping, irrigation of landscaping, architectural elements
identifying the Property and any and all other improvements on the Property. To accomplish the
maintenance, Developer shall either staff or contract with and hire licensed and qualified
personnel to perform the maintenance work, including the provision of labor, equipment,
materials, support facilities, and any and all other items necessary to comply with the
requirements of this Regulatory Agreement.
Developer and its maintenance staff, contractors or subcontractors shall comply with the
following standards (the "Maintenance Standards"):
(a) The Property shall be maintained in good condition and in accordance
with the custom and practice generally applicable to comparable high quality, well -managed
apartment complexes, including but not limited to painting and cleaning of all exterior surfaces
and other exterior facades comprising all private improvements and public improvements to the
curbline.
(b) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning;
trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road
conditions and visibility, and irrigation coverage; replacement, as needed, of all plant materials;
control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking
for support of trees.
(c) Clean-up maintenance shall include, but not be limited to: maintenance of
all sidewalks, paths and other paved areas in clean and weed -free condition; maintenance of all
such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal
of all trash, litter and other debris from improvements and landscaping prior to mowing;
clearance and cleaning of all areas maintained prior to the end of the day on which the
maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris
are properly disposed of by maintenance workers.
Upon Agency's written notification to Developer of any maintenance deficiency,
Developer shall have thirty (30) days within which to correct, remedy or cure the deficiency, or
such longer period as is reasonably necessary to complete the cure, provided Developer
commences the correction, remedy, or cure within such thirty (30) day period and diligently
pursues such correction, remedy, or cure to completion.
SECTION 7. COVENANTS REGARDING MANAGEMENT.
Developer shall provide for the management of the Housing Development in accordance
with this Section.
7.01 Property Manager. Developer shall manage or cause the Housing
Development, and all appurtenances thereto that are a part of the Housing Development,
to be managed in a prudent and business -like manner, consistent with property
management standards for other comparable high quality, well -managed rental housing
projects and commercial developments in Riverside County, California. Developer may
contract with a property management company or property manager to operate and
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maintain the Housing Development in accordance with the terms of this Section
("Property Manager"); provided, however, the selection and hiring of the Property
Manager (and each successor or assignee) is and shall be subject to prior written approval
of Agency. Developer shall conduct due diligence and background evaluation of any
potential outside property manager or property management company to evaluate
experience, references, credit worthiness, and related qualifications as a property
manager. Any proposed property manager shall have prior experience with projects and
properties comparable to the Housing Development and the references and credit record
of such manager/company shall be investigated (or caused to be investigated) by
Developer prior to submitting the name and qualifications of such proposed property
manager to Agency for review and approval. A complete and true copy of the results of
such background evaluation shall be provided to Agency. Approval of a Property
Manager by Agency shall not be unreasonably delayed and shall be in Agency's
reasonable discretion, and Agency shall use good faith efforts to respond as promptly as
practicable in order to facilitate effective and ongoing management of the Housing
Development. Furthermore, the identity and retention of any approved Property Manager
shall not be changed without the prior written approval of Agency, which approval shall
not be unreasonably delayed, and shall be in Agency's reasonable discretion. The
selection by Developer of any new Property Manager also shall be subject to the
foregoing requirements.
7.02 Management Plan. Prior to and as one of Agency's conditions to the
Property Closing under the DDA, Developer shall have prepared and submitted to
Agency for review and approval an updated and supplemented management plan which
includes a detailed plan and strategy for long-term marketing for the Affordable Units,
operation, maintenance, repair and security of the Housing Development, method of
selection of tenants, rules and regulations for tenants, and other rental policies for the
Affordable Units (the "Management Plan"). Subsequent to approval of the Management
Plan by Agency, the ongoing management and operation of the Housing Development
shall be in compliance with the approved Management Plan. Developer and Property
Manager may from time to time submit to Agency proposed amendments to the
Management Plan, which are also subject to the prior written approval of Agency.
7.03 Social Services. Developer shall provide a variety of social services at the
Housing Development; such social services are subject to the prior written approval of
the Executive Director, in his or her reasonable discretion. Developer shall use its best
efforts to create a comprehensive social service program that is targeted to the needs of
the residents of the Housing Development which shall include, in addition to all of the
services listed in Developer's application for Tax Credits, the following services: after
school programs of an ongoing nature for school age children, and the availability of a
bona fide services coordinator or social worker to the tenants. Any substantive change in
the scope, amount, or type of supportive services to be provided at the Property shall be
subject to prior reasonable approval of Agency. Agency shall respond to any such
changes within thirty (30) days after submittal to Agency by Developer.
7.04 Gross Mismanagement. In the event of "Gross Mismanagement" (as that
term is defined below) of the Affordable Units or any part of the Housing Development,
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Agency shall have and retain the authority to direct and require any condition(s), acts, or
inactions of Gross Mismanagement to cease and/or be corrected immediately, and further
to direct and require the immediate removal of the Property Manager and replacement
with a new qualified and approved Property Manager, if such condition(s) is/are not
ceased and/or corrected after expiration of thirty (30) days from the date of Notice from
Agency. If such condition(s) acts, or inactions of gross mismanagement do persist
beyond such period, Agency shall have the sole and absolute right to immediately and
without further notice to Developer (or to Property Manager or any other person/entity)
replace the Property Manager with a new property manager of Agency's selection at the
sole cost and expense of Developer. If Developer takes steps to select a new property
manager that selection is subject to the requirements set forth above for selection of a
Property Manager.
For purposes of this Regulatory Agreement, the term "Gross Mismanagement" shall
mean management of any part of the Housing Development in a manner which materially
violates the terms and/or intention of this Regulatory Agreement to operate a high quality, well -
managed residential complex, and shall include, but is not limited to, any one or more of the
following:
(a) knowingly leasing Affordable Units to tenants who exceed the prescribed
income levels;
(b) knowingly allowing the tenants of Affordable Units to exceed the
prescribed occupancy levels without taking immediate action to stop such overcrowding;
(c) underfunding Capital Replacement or Operating Reserve accounts, unless
funds are not available to deposit in such accounts;
(d) failing to timely maintain the Housing Development in accordance with
the Management Plan and the manner prescribed herein;
(e) failing to submit timely and/or adequate annual reports to Agency as
required herein;
(f) committing fraud or embezzlement with respect to Housing Development
funds, including without limitation funds in the reserve accounts;
(g) failing to reasonably cooperate with the County Sheriff or other local law
enforcement agency(ies) with jurisdiction over the Housing Development, in maintaining a
crime -free environment within the Housing Development;
(h) failing to reasonably cooperate with the Fire District or other local public
safety agency(ies) with jurisdiction over the Housing Development, in maintaining a safe
environment within the Housing Development;
(i) failing to reasonably cooperate with the La Quinta Planning & Building
Department, including the Code Enforcement Division, or other local health and safety
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enforcement agency(ies) with jurisdiction over the Housing Development, in maintaining a safe
environment within the Housing Development; and
0) spending funds from the Capital Reserve account(s) for items that are not
defined as capital costs under the standards imposed by generally accepted accounting principles
(GAAP) (and/or, as applicable, generally accepted auditing principles.)
Notwithstanding the requirements of the Property Manager to correct any condition of
Gross Mismanagement as described above, Developer is obligated and shall use its best efforts to
correct any defects in property management or operations at the earliest feasible time and, if
necessary, to replace the Property Manager as provided above. Developer shall include
advisement and provisions of the foregoing requirements and requirements of this Regulatory
Agreement within any contract between Developer and its Property Manager.
7.05 Code Enforcement. Developer acknowledges and agrees Agency and the
City and their employees and authorized agents shall have the right to conduct code
compliance and/or code enforcement inspections of the Housing Development and the
individual Affordable Units, both exterior and interior, at reasonable times and upon
reasonable notice (not less than 48 hours prior notice) to Developer and/or an individual
tenant. If such notice is provided by Agency, City or their representative(s) to Developer,
then Developer (or its Property Manager) shall immediately and directly advise tenants of
such upcoming inspection and cause access to the area(s) and/or units to be made
available and open for inspection. Developer shall include express advisement of such
inspection rights within the lease/rental agreements for each Affordable Unit in order for
each and every tenant and tenant household to be aware of this inspection right.
SECTION 8. COVENANTS REGARDING NONDISCRIMINATION.
Developer covenants by and for itself and any successors in interest that there shall be no
discrimination against or segregation of any person, or group of persons on any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property, or any part thereof, nor shall Developer, or any
person claiming under or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees of the Property, or any part thereof. The
foregoing covenants shall run with the land.
Developer agrees for itself and any successor in interest that Developer shall refrain from
restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the
Property, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national
origin of any person. All such deeds, leases or contracts shall contain or be subject to
substantially the following nondiscrimination or nonsegregation clauses:
(a) In deeds:"The grantee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons claiming under or through
them, that there shall be no discrimination against or segregation of, any person or group of
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persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through him or her, establish or
permit any practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
premises herein conveyed. The foregoing covenants shall run with the land."
(b) In leases:"The lessee herein covenants by and for himself or herself, his or
her heirs, executors, administrators, and assigns, and all persons claiming under or through him
or her, and this lease is made and accepted upon and subject to the following conditions:"That
there shall be no discrimination against or segregation of any person or group of persons, on
account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as
those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing,
subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor
shall the lessee himself or herself, or any person claiming under or through him or her, establish
or permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or
vendees in the premises herein leased."
(c) In contracts pertaining to the realty:"There shall be no discrimination
against or segregation of, any person or group of persons on account of any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use,
occupancy, tenure, or enjoyment of the premises which are the subject of this agreement, nor
shall the grantee or any person claiming under or through him or her, establish or permit any
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises
herein conveyed. The foregoing covenants shall run with the land."
The covenants established in this Regulatory Agreement shall, without regard to technical
classification and designation, be binding for the benefit and in favor of the Agency, its
successors and assigns, the City and any successor in interest to the Property, together with any
property acquired by the Developer pursuant to this Regulatory Agreement, or any part thereof.
The covenants against discrimination shall remain in effect in perpetuity.
SECTION 9. OPERATING BUDGET OR ANNUAL BUDGET; ANNUAL AND
QUARTERLY REPORTS
9.01 Operating Budget. Developer shall submit to Agency on or before
December I of each year during the Affordability Period an operating budget for the
Housing Development ("Operating Budget" or "Annual Budget'), which budget,
including the format thereof, shall be subject to the written approval of the Executive
Director or designee, which approval shall not be unreasonably withheld or conditioned
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so long as such budget is not inconsistent with this Regulatory Agreement. The
Executive Director's discretion in review and approval of each proposed annual
Operating Budget or Annual Budget shall include, without limitation, authority to review
individual categories, line items, and accounts, such as the following: extent, type, and
amount for social services at or associated with the Housing Development; existing
balance(s) in and proposed deposits to the Capital Replacement Reserve to evaluate
shortfalls and/or cumulative unexpended/unencumbered deposits (provided that required
annual deposits thereto are not required to exceed $250/per unit); conformity of any
annual authorized increases in the Partnership Related Fees with the increases permitted
in the definition of "Residual Receipts" (as that term is defined in the Agency Note);
reasonableness and conformity to prevailing market rates in Riverside County and rates
and fees for goods and services to be provided by Developer or any Affiliate thereof. In
the event Developer requires an amendment to an approved Annual Budget during an
applicable year of the Affordability Period, then Developer shall submit a written request
to the Executive Director explaining the requested amendment and reasons therefor; the
Executive Director shall reasonably review and approve (or disapprove) each request for
an amendment to an approved Annual Budget. The Executive Director shall
communicate to Developer his or her reasonable approval or disapproval of a proposed
annual Operating Budget or Annual Budget within thirty (30) days after receipt thereof;
as to each amendment, the Executive Developer shall communicate to Developer his or
her reasonable approval or disapproval within fifteen (15) days after receipt of a complete
submittal requesting an amendment to an approved Annual Budget. In the event the
Executive Director fails to approve a proposed annual Operating Budget or Annual
Budget within thirty (30) days after receipt thereof, Developer may operate the Housing
Development in accordance with such proposed annual Operating Budget or Annual
Budget until the Executive Director notifies Developer that such proposed annual
Operating Budget or Annual Budget is not approved; provided, however, that in such
case any expenditure made by Developer prior to the Executive Director's notification
that the proposed annual Operating Budget or Annual Budget is not approved shall be
deemed an approved expenditure. If the Executive Director fails to approve or
disapprove a proposed annual Operating Budget or Annual Budget within the time set
forth in this Section 9.01, Developer may give written notice to the Executive Director
demanding that such proposed annual Operating Budget or Annual Budget be either
approved or disapproved within ten (10) days following the Executive Director's receipt
of such notice.
9.02 Annual Reports. Developer covenants and agrees to submit to the Agency
an annual report (the "Annual Report"), which shall include the information required by
California Health & Safety Code Section 33418.The Annual Report shall include for each
Affordable Unit the rental rate and the income and family size of the occupants. The
Developer shall submit the Annual Report on or before February 15 of the year following
the year covered by the Annual Report. The Developer shall provide for the submission
of household information and certification in its leases with tenants.
9.03 Quarterly Reports. Beginning on the date of first occupancy, and for each
fiscal year thereafter during the term of this Regulatory Agreement, Developer shall also
submit on a quarterly basis a quarterly report for the management of the Property (the
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"Quarterly Report").The Quarterly Report shall include a profit and loss statement,
budget to date figures, and occupancy report and shall clearly show Housing
Development revenues, operation expenses, deposits to and withdrawals from the
Housing Development's Capital Replacement Reserve and cash flow available for
residual receipts payments. The Quarterly Report shall be in a form that is reasonably
acceptable to the Executive Director. The Executive Director, in his/her sole discretion
may waive the requirement of the Quarterly Report for one or more quarterly reporting
periods. However, such waiver shall not operate to waive any subsequent requirement of
the Quarterly Report for the Affordability Period. After receipt of such certified financial
statements for the Housing Development, Agency may request additional financial
analysis or obtain a third party review at Agency's own expense, of financial statements
for the Housing Development to verify the accuracy of the payments by Developer on the
Agency Note or the required deposits into the Capital Replacement Reserve.
SECTION 10. COVENANTS REGARDING CAPITAL REPLACEMENT RESERVE.
Promptly upon the issuance of the Certificate of Occupancy, the Developer shall establish
the Capital Replacement Reserve. Funds in the Capital Replacement Reserve shall be used only
for capital repairs, improvements, and replacements to the Housing Development fixtures and
equipment which are normally capitalized under generally accepted accounting principles. The
non -availability of funds in the Capital Replacement Reserve does not in any manner relieve or
lessen Developer's obligation to undertake any and all necessary capital repairs, improvements,
or replacements and to continue to maintain the Housing Development in the manner prescribed
herein. Not less than once per year, Developer, at its expense, shall submit to Agency an
accounting for the Capital Replacement Reserve. Capital repairs to and replacement of the
Housing Development shall include only those items with a long useful life, including without
limitation the following: carpet and drape replacement; appliance replacement; exterior painting,
including exterior trim; hot water heater replacement; plumbing fixtures replacement, including
tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement;
asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree
replacement; irrigation pipe and controls replacement; sewer line replacement; water line
replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and
upgrade work; miscellaneous motors and blowers; common area furniture replacement; and
common area repainting.
SECTION I L COVENANTS REGARDING OPERATING RESERVE.
Promptly upon the issuance of the Certificate of Occupancy, the Developer shall establish
the Operating Reserve. The Operating Reserve shall be used to cover shortfalls between Annual
Project Revenue and actual operating expenses, but shall in no event be used to pay for capital
items or capital costs properly payable from the Capital Replacement Reserve. Developer shall,
not less than once per every twelve (12) months, submit to Agency evidence reasonably
satisfactory to the Agency of compliance herewith.
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SECTION 12. EFFECT OF VIOLATION OF THE TERMS AND PROVISIONS OF
THIS REGULATORY AGREEMENT AFTER COMPLETION OF
CONSTRUCTION.
Agency is deemed the beneficiary of the terms and provisions of this Regulatory
Agreement and of the covenants running with the land, for and in its own right and for the
purposes of protecting the interests of the community and other parties, public or private, in
whose favor and for whose benefit this Regulatory Agreement and the covenants running with
the land have been provided, without regard to whether Agency has been, remains or is an owner
of any land or interest therein in the Property or in the Housing Development. Agency shall have
the right, if this Regulatory Agreement or any of the covenants herein are breached, to exercise
all rights and remedies, and to maintain any actions or suits at law or in equity or other proper
proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this
Regulatory Agreement and covenants may be entitled. The City is hereby deemed to be a third
party beneficiary of this Regulatory Agreement and the covenants contained herein with the
right, but not the obligation, to enforce the terms hereof. Except as provided in the following
sentence, the covenants contained in this Regulatory Agreement shall remain in effect until the
expiration of the Affordability Period. The covenants regarding discrimination as set forth in
Section 8 shall remain in effect in perpetuity.
SECTION 13. COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
13.01 Compliance With Laws. Developer shall comply with (i) all ordinances,
regulations and standards of the City, Agency, County of Riverside, any regional
governmental entity, State of California, and federal government applicable to the
Property; (ii) all rules and regulations of any assessment district of the City with
jurisdiction over the Property; and (iii) all applicable labor standards of California law
and federal law; and (iv) the requirements of California law and federal law with respect
to the employment of undocumented workers or illegal aliens.
13.02 Indemnity. Developer shall save, protect, defend, indemnify and hold
harmless Agency and the City and their respective officers, officials, members,
employees, agents, and representatives from and against any and all liabilities, suits,
actions, claims, demands, penalties, damages (including, without limitation, penalties,
fines and monetary sanctions), losses, costs or expenses (including, without limitation,
consultants' fees, investigation and laboratory fees, reasonable attorneys' fees and
remedial and response costs) (the foregoing are hereinafter collectively referred to as
"Liabilities") which may now or in the future be incurred or suffered by Agency or City
or their respective officers, officials, members, employees, agents, or representatives by
reason of, resulting from, in connection with, or existing in any manner whatsoever as a
direct or indirect result of (i) Developer's placement on or under the Property of any
Hazardous Materials or Hazardous Materials Contamination, (ii) the escape, seepage,
leakage, spillage, discharge, emission or release from the Property of any Hazardous
Materials or Hazardous Materials Contamination that occurs after the Property Closing
Date, or (iii) any Liabilities incurred under any Governmental Requirements relating to
the acts described in the foregoing clauses (i) and (ii).
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1111838.07 a01/04/1I
For the purposes of this Regulatory Agreement, unless the context otherwise specifies or
requires, the following terms shall have the meanings herein specified:
The term "Hazardous Materials" shall mean any substance, material, or waste which is or
becomes regulated by any local governmental authority, the City, the County of Riverside, the
State of California, a regional governmental authority, or the United States Government,
including, but not limited to, any material or substance which is (i) defined as a "hazardous
waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115,
25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter
6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous
material," "hazardous substance," or "hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix)
designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C.
§ 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903) or (xi) defined as
"hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.For purposes hereof, "Hazardous
Materials" excludes materials and substances in quantities as are commonly used in the
construction and operation of apartment complexes, provided such materials and substances are
used in accordance with applicable laws.
The term "Hazardous Materials Contamination' shall mean the contamination (whether
presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or
other elements on, in or of the Property by Hazardous Materials, or the contamination of the
buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a
result of Hazardous Materials at any time emanating from the Property.
The term "Governmental Requirements" shall mean all past, present and future laws,
ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state,
the county, the city, or any other political subdivision in which the Property is located, and any
other state, county city, political subdivision, agency, instrumentality or other entity exercising
jurisdiction over the Property.
13.03 Duty o Prevent Hazardous Material Contamination. Developer shall take
commercially reasonable action to prevent the release of any Hazardous Materials into
the environment. Such precautions shall include compliance with all Governmental
Requirements with respect to Hazardous Materials. In addition, Developer shall install
and utilize such equipment and implement and adhere to such procedures as are
consistent with the standards generally applied by apartment complexes in Riverside
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County, California as respects the disclosure, storage, use, removal, and disposal of
Hazardous Materials.
13.04 Obligation of Developer to Remediate Premises. Notwithstanding the
obligation of Developer to indemnify Agency, City, and their respective officers,
officials, members, employees, agents, and representatives pursuant to Section 13.02, and
provided no Hazardous Materials exist on the Property as a result of the Agency's
actions, Developer shall, at its sole cost and expense, promptly take (i) all actions
required by any federal, state, regional, or local governmental agency or political
subdivision or any Governmental Requirements and (ii) all actions necessary to make full
economic use of the Property for the purposes contemplated by this Regulatory
Agreement and the DDA, which requirements or necessity arise from the presence upon,
about or beneath the Property, of any Hazardous Materials or Hazardous Materials
Contamination. Such actions shall include, but not be limited to, the investigation of the
environmental condition of the Property, the preparation of any feasibility studies or
reports and the performance of any cleanup, remedial, removal or restoration work.
13.05 Environmental Inquiries. Developer, when it has received any notices of
violation, notices to comply, citations, inquiries, clean-up or abatement orders, or cease
and desist orders related to Hazardous Materials or Hazardous Materials Contamination,
or when Developer is required to report to any governmental agency any violation or
potential violation of any Governmental Requirement pertaining to Hazardous Materials
or Hazardous Materials Contamination, shall concurrently notify the Executive Director,
and provide to him/her a copy or copies, of the environmental permits, disclosures,
applications, entitlements or inquiries relating to the Property, the notices of violation,
notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist
orders, reports filed pursuant to self -reporting requirements, and reports filed or
applications made pursuant to any Governmental Requirement relating to Hazardous
Materials and underground tanks, and Developer shall report to the Executive Director, as
soon as possible after each incident, any unusual, potentially important incidents.
In the event of a responsible release of any Hazardous Materials into the environment,
Developer shall, as soon as possible after it becomes aware of the release, furnish to the
Executive Director a copy of any and all reports relating thereto and copies of all correspondence
with governmental agencies relating to the release. Upon request of the Executive Director,
Developer shall furnish to the Executive Director a copy or copies of any and all other
environmental entitlements or inquiries relating to or affecting the Property including, but not
limited to, all permit applications, permits and reports including, without limitation, those reports
and other matters which may be characterized as confidential.
SECTION 14. INSURANCE REQUIREMENTS.
14.01 Commercial General Automobile Liability' Worker's Compensation.
Commencing on the Property Closing Date and continuing throughout the term of the
Ground Lease, the Developer shall procure and maintain, at its sole cost and expense, in a
form and content satisfactory to the Agency's Executive Director, the following policies
ofinsurance:
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(a) Commercial General Liability Insurance covering bodily injury, property
damage, personal injury and advertising injury written on a per -occurrence and not a claims -
made basis containing the following minimum limits:(i) general aggregate limit of Three Million
Dollars ($3,000,000.00); (ii) products -completed operations aggregate limit of Three Million
Dollars ($3,000,000.00); (iii) personal and advertising injury limit of One Million Dollars
($1,000,000.00); and (iv) each occurrence limit of One Million Dollars ($1,000,000.00).Said
policy shall include the following coverages:(i) blanket contractual liability (specifically
covering the indemnification clause contained below); (ii) products and completed operations;
(iii) independent contractors; (iv) Owner's broad form property damage; (v) severability of
interest; (vi) cross liability; and (vii) property damage liability arising out of the so-called
"XCU" hazards (explosion, collapse and underground hazards).The policy shall be endorsed to
have the general aggregate apply to this Project only.
(b) A policy of worker's compensation insurance in such amount as will fully
comply with the laws of the State of California and which shall indemnify, insure, and provide
legal defense for the Agency and the Developer against any loss, claim or damage arising from
any injuries or occupational diseases occurring to any worker employed by or any persons
retained by the Developer in the course of carrying out the work or services contemplated in this
Regulatory Agreement, and Employers Liability Insurance in an amount not less than One
Million Dollars ($1,000,000) combined single limit for all damages arising from each accident or
occupational disease.
(c) A policy of comprehensive automobile liability insurance written on a per -
occurrence basis in an amount not less than Three Million Dollars ($3,000,000.00) combined
single limit covering all owned, non -owned, leased and hired vehicles used in connection with
the Work.
14.02 Builder's Risk. Commencing on the Property Closing Date and
continuing until the Agency issues a Release of Construction Covenants for the Project,
the Developer shall procure and maintain, at its sole cost and expense, in a form and
content satisfactory to the Agency's Executive Director, Builder's Risk (course of
construction) insurance coverage in an amount equal to the full cost of the hard
construction costs of the Project. Such insurance shall cover, at a minimum: all work,
materials, and equipment to be incorporated into the Project; the Project during
construction; the completed Project until such time as the City issues a final certificate of
occupancy for the Housing Development, and storage and transportation risks. Such
insurance shall protect/insure the interests of Developer/owner and all of Developer's
contractor(s), and subcontractors, as each of their interests may appear. If such insurance
includes an exclusion for "design error," such exclusion shall only be for the object or
portion which failed. Agency shall be a loss payee under such policy or policies and such
insurance shall contain a replacement cost endorsement.
14.03 Property; Business Interruption• Boiler and Machinery Insurance.
Commencing on the date Agency issues a Release of Construction Covenants for the
Project and continuing throughout the term of the Ground Lease, the Developer shall
procure and maintain, at its sole cost and expense, in a form and content satisfactory to
the Agency's Executive Director, the following insurance:
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(a) Insurance against fire, extended coverage, vandalism, and malicious
mischief, and such other additional perils, hazards, and risks as now are or may be included in
the standard "all risk" form in general use in Riverside County, California, with the standard
form fire insurance coverage in an amount equal to full actual replacement cost thereof, as the
same may change from time to time. The above insurance policy or policies shall include
coverage for earthquakes to the extent generally and commercially available at commercially
reasonable rates, if such insurance is generally obtained for affordable housing developments in
the counties of Riverside and San Bernardino. Agency shall be a loss payee under such policy or
policies and such insurance shall contain a replacement cost endorsement.
(b) Business interruption and extra expense insurance to protect Agency and
Developer covering loss of revenues and/or extra expense incurred by reason of the total or
partial suspension or delay of, or interruption in, the operation of the Housing Development
caused by loss or damage to, or destruction of, any part of the insurable real property structures
or equipment as a result of the perils insured against under the all risk physical damage
insurance, covering a period of suspension, delay or interruption of at least twelve (12) months,
in an amount not less than the amount required to cover such business interruption and/or extra
expense loss during such period.
14.04 (C) Boiler and machinery insurance in the aggregate amount of the full
replacement value of the equipment typically covered by such insurance.
14.05 Contract Insurance Requirements. Developer shall cause any general
contractor with whom it has contracted for the performance of work on the Property to
secure, prior to commencing any activities hereunder and maintain insurance that satisfies
all of the requirements of this Section 14.
14.06 Additional Requirements. The following additional requirements shall
apply to all of the above policies of insurance:
(a) All of the above policies of insurance shall be primary insurance and,
except the Worker's Compensation, Employer Liability insurance, and automobile liability
insurance, shall name the Agency, City and their respective officers, officials, members,
employees, agents, and representatives (collectively, "Agency and City and Agency and City
Personnel") as additional insureds on an ISO Form CG 20:10 (current version) or substantially
similar form and not an ISO Form CG 20:09.The insurer shall waive all rights of subrogation and
contribution it may have against Agency and City and Agency and City Personnel and their
respective insurers. All of said policies of insurance shall provide that said insurance may not be
amended or cancelled without providing thirty (30) days' prior written notice to the Agency. In
the event any of said policies of insurance are cancelled, the Developer shall, prior to the
cancellation date, submit new evidence of insurance in conformance with this Section to the
Executive Director. Not later than the Effective, the Developer shall provide the Executive
Director with Certificates of Insurance or appropriate insurance binders evidencing the above
insurance coverages and said Certificates of Insurance or binders shall be subject to the
reasonable approval of the Executive Director.
(b) The policies of insurance required by this Regulatory Agreement shall be
satisfactory only if issued by companies of recognized good standing authorized to do business
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in California, rated "A-" or better in the most recent edition of Best Rating Guide, The Key
Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or
better, unless such requirements are waived by the Executive Director, in consultation with the
City's Risk Consultant through the California Joint Powers Insurance Authority due to unique
circumstances.
(c) The Executive Director, in consultation with the City's Risk Consultant
through the California Joint Powers Insurance Authority, is hereby authorized to reduce or
otherwise modify Developer's insurance requirements set forth herein in the event they
collectively determine, in their sole and absolute discretion, that such reduction or modification
is consistent with reasonable commercial practices.
(d) The Developer agrees that the provisions of this Section shall not be
construed as limiting in any way the Agency's right to indemnification or the extent to which the
Developer may be held responsible for the payment of damages to any persons or property
resulting from the Developer's activities or the activities of any person or persons for which the
Developer is otherwise responsible.
14.07 Indemnification. Developer shall defend (by counsel satisfactory to
Agency), assume all responsibility for and hold the Agency and the City, and their
respective officers, officials, members, agents, representatives, and employees, harmless
from all claims or suits for, and damages to, property and injuries to persons, including
accidental death (including expert witness fees, attorneys fees and costs), which may be
caused by the activities or performance of Developer or any of Developer's employees,
agents, representatives, contractors, or subcontractors under (i) this Regulatory
Agreement, (ii) a claim, demand or cause of action that any person has or asserts against
Developer; (iii) any act or omission of Developer, any contractor, subcontractor or
material supplier, engineer, architect or other person with respect to the Property; or (iv)
the leasehold, occupancy or use of the Property by Developer, whether such damage shall
accrue or be discovered before or after termination of this Regulatory Agreement. The
obligations and indemnifications in this Section 14.07 shall constitute covenants running
with the land.
SECTION 15. ASSIGNMENT.
15.01 Generally Prohibited. Except as otherwise expressly provided to the
contrary in this Regulatory Agreement, Developer shall not assign any of its rights or
delegate any of its duties under this Regulatory Agreement, nor shall any changes occur
with respect to the ownership and/or control of Developer, including, without limitation,
stock transfers, sales of issuances, or transfers, sales or issuances of membership or
ownership interests, or statutory conversions, without the prior written consent of the
Executive Director, which consent may be withheld in his or her sole and absolute
discretion. Any such assignment or delegation without such consent shall, at Agency's
option, be void. Notwithstanding the foregoing, however, (i) Developer may admit
Developer's Tax Credit investor as a 99.99% Tax Credit limited partner without
obtaining any consent, and such Tax Credit investor may assign its interests as a 99.99%
Tax Credit limited partner to a subsequent reputable institutional investor without any
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consent; and (ii) the Tax Credit investor may remove the general partner for a default
under the Partnership Agreement, provided the replacement general partner is reasonably
acceptable to Agency. For purposes of this Section 15.01, if the Tax Credit investor
transfers to an entity in which the Tax Credit investor or an affiliated entity controlled by
the Tax Credit investor is the general partner or managing member such transferee entity
shall be deemed to be a "reputable institutional investor."
15.02 Release of Developer. Upon any such assignment made in compliance
with Section 15.01 above, Developer shall be released from any liability under this
Regulatory Agreement arising from and after the date of such assignment.
SECTION 16. DEFAULTS AND REMEDIES.
16.01 Default. Subject to the extensions of time set forth in Section 17.02 of this
Regulatory Agreement, failure by either Party to perform any action or covenant required
by this Regulatory Agreement or under the DDA or under the Ground Lease within the
time periods provided herein and therein following Notice and failure to cure as
described hereafter, constitutes a "Default" under this Regulatory Agreement. A Party
claiming a Default shall give written Notice of Default to the other Party specifying such
Default. Except as otherwise expressly provided in this Regulatory Agreement or in the
DDA or in the Ground Lease, the claimant shall not institute any proceeding against any
other Party, and the other Party shall not be in Default if such party within thirty (30)
days from receipt of such Notice, cures, corrects or remedies such failure or delay, or if
such Default cannot reasonably be cured within thirty (30) days, such Party commences
such cure within thirty (30) days of receipt of such Notice and thereafter diligently
prosecutes such cure to completion.
16.02 Remedies; Institution of Legal Actions. Developer's sole remedy for
Agency's breach of this Regulatory Agreement shall be to institute an action at law or
equity to seek specific performance of the terms of this Regulatory Agreement.
Developer shall not be entitled to recover damages for any Default of Agency hereunder.
Agency shall be entitled to seek any remedy available at law and in equity for
Developer's breach of this Regulatory Agreement. All legal actions must be instituted in
the Superior Court of the County of Riverside, State of California, or in the United States
District Court for District of California in which Riverside County is located.
16.03 Termination byA eg ncy. In the event that Developer is in Default of this
Regulatory Agreement, the DDA, or the Ground Lease and (i) such Default is material
and (ii) Developer fails to cure such Default within the time set forth in Section 16.01
hereof, then Agency may, at Agency's option, terminate this Regulatory Agreement.
16.04 Acceptance of Service of Process. In the event that any legal action is
commenced by Developer against Agency, service of process on Agency shall be made
by personal service upon the Executive Director or in such other manner as may be
provided by law. In the event that any legal action is commenced by Agency against
Developer, service of process on Developer shall be made in such manner as may be
provided by law.
882/015610-0047 -30-
1111838.07 a01/04/11
16.05 Rights and Remedies Are Cumulative. Except as otherwise expressly
stated in this Regulatory Agreement, the rights and remedies of the Parties are
cumulative, and the exercise by either Party of one or more of such rights or remedies
shall not preclude the exercise by it, at the same or different times, of any other rights or
remedies for the same Default or any other Default by the other Party.
16.06 Inaction Not a Waiver of Default. Any failures or delays by either Party
in asserting any of its rights and remedies as to any Default shall not operate as a waiver
of any Default or of any such rights or remedies, or deprive either such Party of its right
to institute and maintain any actions or proceedings which it may deem necessary to
protect, assert or enforce any such rights or remedies.
16.07 Applicable Law. The internal laws of the State of California shall govern
the interpretation and enforcement of this Regulatory Agreement, without regard to
conflict of law principles.
SECTION 17. GENERAL PROVISIONS.
17.01 Notices. Demands and Communications Between the Parties. Any
notices, requests, demands, documents, approvals or disapprovals given or sent under this
Regulatory Agreement from one Party to another (collectively, "Notices") may be
personally delivered, delivered by reputable courier that provides a receipt with the date
and time of delivery, transmitted by facsimile (FAX) transmission, or deposited with the
United States Postal Service for mailing, postage prepaid, to the address of the other
Party as stated in this Section, and shall be deemed to have been given or sent at the time
of personal delivery, delivery by courier, or FAX transmission or, if mailed, on the
second day following the date of deposit in the course of transmission with the United
States Postal Service. Notices shall be sent as follows:
If to Agency: Notices Delivered by U.S. Mail:
La Quinta Redevelopment Agency
P.O. Box 1504
La Quinta, CA92247
Phone No.: 760-777-7031
Facsimile No.: 760-777-7101
Attention: Executive Director
Notices Delivered Personally or by Courier:
La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, Califomia92253
Phone No.: 760-777-7031
Facsimile No.: 760-777-7101
Attention: Executive Director
882/015610-0047 -31-
1111836 07 a01/04/1I
With copies to: Rutan & Tucker, LLP
611 Anton, Suite 1400
Costa Mesa, CA92626
Phone No.: 714-641-5100
Facsimile No.: 714-546-9035
Attention: M. Katherine Jenson, Esq.
If to Developer: Coral Mountain Partners, L.P.
46753 Adams Street
La Quinta, CA 92253
Phone No.: (760) 771-3345
Facsimile No.: (760) 771-0686
Attention: Robert High
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Phone No.:213-239-8088
Facsimile No.:213-559-0733
Attention: Lance Bocarsly
17.02 Enforced Delay• Extension of Times of Performance. In addition to
specific provisions of this Regulatory Agreement, performance by either Party hereunder
shall not be deemed to be in Default, and all performance and other dates specified in this
Regulatory Agreement shall be extended, where delays or Defaults are due to: war;
insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God;
acts of the public enemy; epidemics; quarantine; restrictions; freight embargoes; lack of
transportation; governmental restrictions or priority; litigation; unusually severe weather;
inability to secure necessary labor, materials or tools; delays of any contractor,
subcontractor or supplier; acts or omissions of the other Party; acts or failures to act of
the City or any other public or governmental agency or entity (other than the acts or
failures to act of Agency which shall not excuse performance by Agency); or any other
causes beyond the control or without the fault of the Party claiming an extension of time
to perform. Notwithstanding anything to the contrary in this Regulatory Agreement, an
extension of time for any such cause shall be for the period of the enforced delay and
shall commence to run from the time of the commencement of the cause, if notice by the
Party claiming such extension is sent to the other party within ten (10) days of the
commencement of the cause. Times of performance under this Regulatory Agreement
may also be extended in writing by the mutual agreement of Agency and Developer.
Notwithstanding any provision of this Regulatory Agreement to the contrary, the lack of
funding to complete the construction of the Project shall not constitute grounds of
enforced delay pursuant to this Section.
17.03 Relationship Between Agency and Developer. It is hereby acknowledged
by Developer that the relationship between Agency and Developer is not that of a
partnership or joint venture and that Agency and Developer shall not be deemed or
892/015610-0047 -32-
1111838 07 a01/04/I1
construed for any purpose to be the agent of the other. Accordingly, except as expressly
provided herein or in the Attachments hereto, Agency shall have no rights, powers, duties
or obligations with respect to the development, operation, maintenance or management of
the Housing Development. Developer agrees to indemnify, hold harmless and defend
Agency from any claim made against Agency arising from a claimed relationship of
partnership or joint venture between Agency and Developer with respect to the
development, operation, maintenance or management of the Property or the Housing
Development, except to the extent occasioned by the active negligence or willful
misconduct of Agency or its designated agents or employees.
17.04 No Third Party Rights. With the exception of the City, the Parties intend
that no rights nor remedies be granted to any third party as a beneficiary of this
Regulatory Agreement or of any covenant, duty, obligation or undertaking established
herein.
17.05 Agency Approvals and Actions. Whenever a reference is made herein to
an action or approval to be undertaken by Agency, the Executive Director is authorized to
act on behalf of Agency unless this Regulatory Agreement specifically provides
otherwise or the context should require otherwise.
17.06 Counterparts. This Regulatory Agreement may be signed in multiple
counterparts which, when signed by all Parties, shall constitute a binding agreement.
17.07 Integration. This Regulatory Agreement contains the entire understanding
between the parties relating to the transaction contemplated by this Regulatory
Agreement. Each Party is entering this Regulatory Agreement based solely upon the
representations set forth herein and upon each Party's own independent investigation of
any and all facts such party deems material. This Regulatory Agreement constitutes the
entire understanding and agreement of the Parties, notwithstanding any previous
negotiations or agreements between the parties or their predecessors in interest with
respect to all or any part of the subject matter hereof.
17.08 Real Estate Brokerage Commission. Agency and Developer each
represent and warrant to the other that no broker or finder is entitled to any commission
or finder's fee in connection with this transaction, and each agrees to defend and hold
harmless the other from any claim to any such commission or fee resulting from any
action on its part.
17.09 Attorneys' Fees. In any action between the Parties to interpret, enforce,
reform, modify, rescind, or otherwise in connection with, any of the terms or provisions
of this Regulatory Agreement, the prevailing Party in the action shall be entitled, in
addition to damages, injunctive relief, or any other relief to which it might be entitled,
reasonable costs, expenses including, without limitation, litigation costs, reasonable
attorneys' fees, and expert witness fees.
17.10 Titles and Captions. Titles and captions are for convenience of reference
only and do not define, describe or limit the scope or the intent of this Regulatory
892/015610-0047 -33-
1111838 07 Al/04/II
Agreement or of any of its terms. Reference to section numbers are to sections in this
Regulatory Agreement, unless expressly stated otherwise.
17.11 Interpretation. As used in this Regulatory Agreement, masculine,
feminine or neuter gender and the singular or plural number shall each be deemed to
include the others where and when the context so dictates. The word "including" shall be
construed as if followed by the words "without limitation."This Regulatory Agreement
shall be interpreted as though prepared jointly by both Parties.
17.12 No Waiver. All waivers of the provisions of this Regulatory Agreement
must be in writing by the appropriate authorities of Developer and Agency. A waiver by
either Party of a breach of any of the covenants, conditions or agreements under this
Regulatory Agreement to be performed by the other Party shall not be construed as a
waiver of any succeeding breach of the same or other covenants, agreements, restrictions
or conditions of this Regulatory Agreement.
17.13 Modifications. Any alteration, change or modification of or to this
Regulatory Agreement, in order to become effective, shall be made in writing and in each
instance signed on behalf of each Party.
17.14 Severability. If any term, provision, condition or covenant of this
Regulatory Agreement or its application to any party or circumstances shall be held, to
any extent, invalid or unenforceable, the remainder of this Regulatory Agreement, or the
application of the term, provision, 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.
17.15 Computation of Time. The time in which any act is to be done under this
Regulatory Agreement is computed by excluding the first day (such as the day escrow
opens), and including the last day, unless the last day is a holiday or Saturday or Sunday,
and then that day is also excluded. The term "holiday" shall mean all holidays as
specified in Section 6700 and 6701 of the California Government Code. If any act is to
be done by a particular time during a day, that time shall be Pacific Time Zone time.
17.16 Legal Advice. Each Party represents and warrants to the other the
following: they have carefully read this Regulatory Agreement, and in signing this
Regulatory Agreement, they do so with full knowledge of any right which they may
have; they have received independent legal advice from their respective legal counsel as
to the matters set forth in this Regulatory Agreement, or have knowingly chosen not to
consult legal counsel as to the matters set forth in this Regulatory Agreement; and, they
have freely signed this Regulatory Agreement without any reliance upon any agreement,
promise, statement or representation by or on behalf of the other Party, or their respective
agents, employees, or attorneys, except as specifically set forth in this Regulatory
Agreement, and without duress or coercion, whether economic or otherwise.
17.17 Time of Essence. Time is expressly made of the essence with respect to
the performance by Agency and Developer of each and every obligation and condition of
this Regulatory Agreement.
882/015610-0047
111183807 A 1/04/11 - -34-
17.18 Cooperation. Each Party agrees to cooperate with the other in this
transaction and, in that regard, to sign any and all documents which may be reasonably
necessary, helpful, or appropriate to carry out the purposes and intent of this Regulatory
Agreement including, but not limited to, releases or additional agreements.
17.19 Conflicts of Interest. No member, official or employee of Agency shall
have any personal interest, direct or indirect, in this Regulatory Agreement, nor shall any
such member, official or employee participate in any decision relating to the Regulatory
Agreement which affects his personal interests or the interests of any corporation,
partnership or association in which he is directly or indirectly interested.
17.20 Non -Liability of Officials and Employees of Agency. No member, official
or employee of Agency shall be personally liable to Developer, or any successor in
interest, in the event of any Default or breach by Agency or for any amount which may
become due to Developer or its successors, or on any obligations under the terms of this
Regulatory Agreement. Developer hereby waives and releases any claim it may have
against the members, officials or employees of Agency with respect to any Default or
breach by Agency or for any amount which may become due to Developer or its
successors, or on any obligations under the terms of this Regulatory Agreement.
Developer makes such release with full knowledge of Civil Code Section 1542 and
hereby waives any and all rights thereunder to the extent of this release, if such Section
1542 is applicable. Section 1542 of the Civil Code provides as follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor."
Developer's Initials
[End — signatures on next page]
882M15610-0047 -35-
1111838.07 .01104111
IN WITNESS WHEREOF, the parties have executed this Regulatory Agreement as of
the respective dates set forth below.
"Developer"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
Date: 2011 By: Highway I I I Apts Member, LLC,
a California limited liability
company, its member
By:
Michael J. Shovlin, Member
"Agency"
LA QUINTA REDEVELOPMENT
AGENCY, a public body, corporate and
politic
Date: 2011 By:
Executive Director
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Agency Counsel
182/015610-0049
1111838.07 a01/04/11 -36-
State of California )
County of Riverside )
On before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
1 certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
State of California )
County of Riverside )
On , before me,
(insert name and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Si
882/015610-0047 -3 %-
1111838 07 a01/04/11
(Seal)
EXHIBIT A
MAP
ATTACHMENT 1
DEPICTION OF PROPERTY
N. LINE SE 1 4 P.O.C.
1452• SEC. 29, T.S N 69'39'16" E 2650.59' E. 1/4 COR. SEC. 29.
R.7E.. S.B.M. I S., R.7E., S.B.M.
662.65' HWY. _
331.34' 57.30' —_ — �60.93' 1656.57' 16
N 89'58'06" E 662.65' N
N S. R/W LINE O
HWY. 111 PER
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882/015610-0047 EXHIBIT A
1111838 07 a01 /04/ 11
EXHIBIT B
LEGAL DESCRIPTION OF THE SITE
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01053'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°09'07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18002'50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
882/015610-0047 EXHIBIT B
I111838 07 a01/04/11
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90009'34", AN ARC DISTANCE OF
314,72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00°08'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS
882/015610-0047 EXHIBIT B
1111838.07 a01/04/11
EXHIBIT C
INCOME COMPUTATION AND CERTIFICATION FORM
(See following document)
181/015610-0047 EXHIBIT C
111[818,07 Al/04/II
CITY OF LA QU►NTA REDEVELOPMENT AGENCY
78-495 Calle Tampico, La Quinta, CA92253
INCOME COMPUTATION AND CERTIFICATION FORM
(Affordable Housing Eligibility for Renter Occupied Unit
PART I. PROPERTY FINANCED WITH GOVERNMENT ASSISTANCE
Property Address:
PART ►I. TENANT HOUSEHOLD INFORMATION
Date of Birth Soc. Sec. # Relationship
TOTAL NUMBER OF PERSONS IN HOUSEHOLD: (Please list information on other household members below)
Mailing Address:
Telephone Numbers: Work(____)
Home L__)
PART ❑I. GROSS HOUSEHOLD INCOME Complete the following, attach copies of required verification as specified
below. Attach a note explaining any significant changes in household income between the previous year and the current year.
INFORMATION IS REQUIRED FOR ALL MEMBERS OF THE HOUSEHOLD AGE 18 OR OLDER REGARDLESS OF
WHETHER THEY CONTRIBUTE TO THE COSTS OF THE HOUSEHOLD. If you are not required to file a tax return,
please indicate this in Part V by your signature.
ANN INCOME
ANN INCOME
INCOME SOURCES
for owner
others in hshld
VERIFICATIONS (needed for file)
A. Employment earnings
Last tax return & last 3 pay stubs,
employer verification
B. Self-employment earnings
Last 2 tax returns & current financial strut
C. Social Security (OASDI)
Annual award letter
D. Supplemental Security Income (SSI)
Annual award letter
E. Public assistance (AFDC, general
Current benefit statement
assistance, unemployment, etc.)
F. Pension (s)
Annual award letter, year end stmt, W-2
G. Interest income
Last 2 statements for all accounts
H. Investment income (stocks, bonds,
real estate, etc.)
Last 2 statements for all accounts
1. Room rental
Rental agreement, copies of checks, etc.
J. Other income (list type/source)
K.TOTAL INCOME (sum of A thru J)
12 months = mo. income
882/015610-0047
1111838.07 A1/04111
PART IV. PROPERTY STATUS
Will this property be your primary residence?
Will someone other than the individuals listed above be occupying this property?.
If yes - Name of occupants:
Telephone Number: Mailing Address:
My/our housing expenses are as follows:
(.Monthly tenant rent_
2.Average monthly utilities
PART V. TENANT CERTIFICATION
I/We understand that after the initial eligibility determination, completion of monitoring forms is required on an annual basis.
I/We certify that I/we have disclosed all information pertaining to my/our application and that the information presented in the
foregoing Sections I through IV is true and accurate to the best of my (our) knowledge.
Tenant Date
Tenant Date
For more information regarding this application, please contact management staff at (760)
Comments:
FOR OFFICE USE ONLY
Information verified
Income category
Maximum allowable annual income (9% of median)
Applicant's annual income gross monthly max housing costs
Management Staff Date
882/015610-0047 _�-
1111838.07 a01/04/11
WIVU11lM
INCOME RECERTIFICATION FORM
(See following document)
882/015610-0047 EXHIBIT D
1111838.07 .01/04/II
PART I.
LA QUINTA REDEVELOPMENT AGENCY
78-495 Calle Tampico, La Quinta, CA 92253
INCOME RECERTIFICATION FORM
(Renter Occupied Unit)
GENERAL INFORMATION
Property Owner Name
Renter Name
Property Address
La Quinta, CA9225
Has there been a change
month period?
YesONo( )
(If yes, please explain)
PART II. UNIT INFORMATION
5. Number of Bedrooms
6. Number of Occupants
Names:
[oil
in ownership of this property during the preceding 12
PART III. AFFIDAVIT OF RENTER
1, , and I, , as renters of units assisted
pursuant to the La Quinta Redevelopment Agency's (the "Agency")
Affordable Housing Program (the `Program"), do hereby represent and warrant that the
following computation includes all income (I/we) anticipate receiving for the 12-month period
commencing on January 1, 20_ (including the renter(s) and all family members of the
renters):
(a) amount of wages, salaries, overtime pay, commissions, fees,
tips and bonuses, and payments in lieu of earnings, such as
unemployment and disability compensation, worker's compensation
and severance pay (before payroll deduction)
(b) net income from business or profession or rental of property
(without deduction for repayment of debts or expansion of business)
(c) interest and dividends
(d) periodic receipts such as social security, annuities, pensions,
retirement funds, insurance policies, disability or death benefits,
alimony, child support, regular contributions or gifts
from persons not occupying unit
(e) public assistance allowance or grant plus excess of maximum
allowable for shelter or utilities over the actual allowance for
such purposes —
112/015610-0047 _ 1
1111838,07 .01/04/11
(f) regular and special pay and allowances of a member of
armed services (whether or not living in the dwelling)
who is head of the family or spouse _
Subtotal (a) through (f)
LESS: Portion of above items which are income of a family member
who is less than 18 years old or a full-time student
TOTAL ELIGIBLE INCOME
NOTE: The following items are not considered income: casual or sporadic gifts;
amounts specifically for or in reimbursement of medical expenses; lump sum payment
such as inheritances, insurance payments, capital gains and settlement for personal or
property losses; educational scholarships paid directly to the student or educational
institution; government benefits to a veteran for education; special pay to a serviceman
head of family away from home and under hostile fire; foster child care payments; value
of coupon allotments for purpose of food under Food Stamp Act of 1964 which is in
excess of amount actually charged the eligible household; relocation payments under
Title II of Uniform Relocation Assistance and Real Property Acquisition Policies Act of
1970; payments received pursuant to participation in the following programs: VISTA,
Service Learning Programs, and Special Volunteer Programs, SCORE, ACE, Retired
Senior Volunteer Program, Foster Grandparent Program, Older American Community
Services Program, and National Volunteer Program to Assist Small Business Experience.
2. This affidavit is made with the knowledge that it will be relied upon by the
Landlord and the Agency to determine maximum income for eligibility and (I/we)
warrant that all information set forth in this Part III is true, correct and complete
and based upon information (I/we) deem reliable and that the estimate contained
in'paragraph 1 is reasonable and based upon such investigation as the undersigned
deemed necessary.
3. (I/We) will assist the Landlord and the Agency in obtaining any information or
documents required to verify the statements made in this Part III and have
attached hereto a copy of our federal income tax return for the last year
(20_J.
4. (I/We) acknowledge that (I/we) have been advised that the making of any
misrepresentation or misstatement in this affidavit will constitute a material
breach of (my/our) agreement with the Landlord to rent the unit and will
additionally enable the Agency to initiate and pursue all applicable legal and
equitable remedies with respect to the unit and to me/us.
B. (My/Our) monthly housing expenses are limited to the following:
1. Base rent
2. Average Monthly Utilities
3. Other (explain)
(I/We) understand that completion of monitoring forms is required on an annual basis and agree
to notify the La Quinta Redevelopment Agency in writing of any change in ownership or rental
of the unit.(I/We) do hereby swear under penalty of perjury that the foregoing statements are true
and correct.
Date
Renter(s)
882/015610-0047 -2-
1111878 07 a01/04/11
EXHIBIT E
FORM OF CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
(See following document)
182/015610-0047 EXHIBIT E
1111838.07 a01/04/1I
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
The undersigned, being duly authorized to execute this certificate on behalf of
, owner of the Project, hereby represents
and warrants that:
1. He/she has read and is thoroughly familiar with the provisions of the Affordable
Housing Regulatory Agreement between the La Quinta Redevelopment Agency and Coral
Mountain Partners, L.P.
2. As of June 30, 20, the following number of residential units in the Project (i)
are currently occupied by tenants qualifying as Very Low Income Households at Affordable
Rents; (ii) are currently occupied by Low Income Households at Affordable Rents; (iii) are
currently occupied by Moderate Income Tenants at Affordable Rent; or (iv) are currently vacant
and being held available for occupancy by Eligible Tenants and have been so held continuously
since the date Eligible Tenants vacated such unit, as indicated:
i. Units occupied by Very Low Income Households
ii. Units occupied by Low Income Households
Units occupied by Moderate Income Households
iv. vacant units
3. The unit number, unit size, rental amount charged and collected, number of
occupants, and the income of the occupants for each Affordable Unit in the Project are set forth
on the attached list. All Affordable Units in the Project are rented at Affordable Rent.
DEVELOPER NAME
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
20_
(Printed name and title)
882/015610-0047 _
1111938.07 a01/04/11 I
ATTACHMENT NO. 11
NOTICE OF AFFORDABILITY RESTRICTIONS
[See following document]
11118 807Aa� ATTACHMENT NO. 11
II11838 07 n01/04/II
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
La Quinta Redevelopment Agency
P.O. Box 1504
La Quinta, CA 92247
Attn: Executive Director
Exempt From Recording Fee Pursuant to Government
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and
title companies, and other persons, regarding affordable housing restrictions on
the real property described in this Notice: Affordable housing restrictions have
been recorded with respect to the property described below (referred to in this
Notice as the "Property") which require that the Property be developed as an
affordable rental development_ and that all of the units be rented to and occupied by
persons and households of limited income at affordable rents.
Title of Document Containing Affordable Housing Restrictions:
Affordable Housing Regulatory Agreement ("Agreement").
Parties to Agreement: Coral Mountain Partners, L.P., a California limited
partnership ("Developer"), and the La Quinta Redevelopment Agency, a public
body, corporate and politic ("Agency").
The Agreement is recorded concurrently with this Notice, in the Official
Records of Riverside County.
Legal Description of Property: See Exhibit "A" attached hereto and
incorporated herein by this reference.
Property Location: Southeast intersection of Dune Palms Road and
Highway 111.
Assessor's Parcel Numbers of Property: 649-030-016 and 649-030-017.
1 82/0156 1 MOO
1111838.07 a01/04/11
Summary of Agreement:
o The Agreement requires the Developer to develop a one hundred
seventy-six (176) unit rental housing development on the Property,
which property is being leased by Developer from Agency;
o The Agreement restricts the rental of (i) thirty-six (36) units to
households whose annual income does not exceed the qualifying
limits under California law for "very low income households"; one
hundred thirty-eight (138) units to households whose annual income
does not exceed the qualifying limits under California law for "lower
income households"; and two (2) units to households whose annual
income does not exceed the qualifying limits under California law for
"persons and families of moderate income", all as established by
HUD, and as published periodically by HCD.
o The Regulatory Agreement restricts the rents that may be charged to
such households to the maximum amount of rent, including a
reasonable utility allowance, that does not exceed the rent permitted to
be charged to the applicable household, as the case may be,
determined pursuant to Health and Safety Code Section 50053(b).
o The term of the Agreement is fifty-five (55) years, commencing on
the date seventy-five percent (75%) of the units have been leased to
income -eligible tenants at affordable rents; provided that the term may
be extended for up to twenty (20) additional years, as further provided
in the Agreement.
This Notice does not contain a full description of the details of all of the
terms and conditions of the Agreement. You will need to obtain and read the
Agreement to fully understand the restrictions and requirements which apply to the
Property.
This Notice is being recorded and filed in compliance with Health and
Safety Code Section 33334.3(f)(3) and (4), and shall be indexed against the
Developer, who will own fee title to the improvements during the term of the
Developer's leasehold interest in the Property, and the Agency.
[signatures on next page]
882/015610-0047 1111838.07 n01/04/11 -2_
"Agency"
LA QUINTA REDEVELOPMENT
AGENCY, a public body, corporate and
politic
Date: 2011 By:
Executive Director
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Agency Legal Counsel
182/015610-0047 _
11118}8.07.01/04/11 _3
State of California )
County of Riverside )
On before me, , Notary Public,
(here insert name and title of the officer)
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument, and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf
of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(seal)
882/015610-0047
1111838.07 a01/04/I1 _4_
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
Real property in the City of La Quinta, County of Riverside, State of California,
described as follows:
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01°53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°09'07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18002'50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
04]
111183
807a0 104/I I EXHIBIT A
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90009'34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34' EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS
1 82/0 156 10-0047 EXHIBIT A
1111838.07 a01/04/11
ATTACHMENT NO. 12
RELEASE OF CONSTRUCTION COVENANTS
[See following document]
11118 807aan� ATTACHMENT NO. 12
I l l l ft36.07 a�VOAA I
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
LA QUINTA REDEVELOPMENT AGENCY
P.O. Box 1504
La Quinta, CA 92247
Attention: Executive Director
(Space Above for Recorder's Use)
Exempt from Recordation Fee per Gov. Code § 27383
RELEASE OF CONSTRUCTION COVENANTS
This RELEASE OF CONSTRUCTION COVENANTS ("Release") is made this
day of , by the LA QUINTA REDEVELOPMENT AGENCY, a public
body, corporate and politic ("Agency"), in favor of CORAL MOUNTAIN PARTNERS, L.P., a
California limited partnership ("Developer").
RECITALS
A. Developer is the owner of that certain real property located in the City of La
Quinta, County of Riverside, State of California, more particularly described in the legal
description attached hereto as Exhibit "A" ("Property").
B. On or about January 4, 2011, Agency and Developer entered into that certain
Disposition and Development Agreement ("DDA") which provides for Developer to develop on
the Property a one hundred seventy-six (176) unit rental affordable housing development and
certain on- and off -site public improvements, more particularly described therein as the
"Project."
C. Pursuant to the DDA, Agency is required to furnish Developer with this Release
upon request by Developer after completion of construction of the Project.
D. The issuance by Agency of this Release shall be conclusive evidence that
Developer has complied with the terms of the DDA pertaining to the construction of the Project.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated
herein by this reference, the parties hereto agree as follows:
1. As provided in the DDA, Agency does hereby certify that the construction of the
Project has been satisfactorily performed and completed, and that such development and
construction work complies with the DDA.
2. This Release does not constitute evidence of compliance with or satisfaction of
any obligation of Developer to any holder of a mortgage or any insurer of a mortgage security
money loaned to finance the work of construction of improvements, and development of the
Property, or any part of thereof.
1 82/0156 1 M047
,111838,07 a01/04/11 "1"
3. This Release is not a notice of completion as referred to in Section 3093 of the
California Civil Code.
4. This Release does not terminate any other agreement or document executed by
Developer in connection with the DDA, including, without limitation, that certain Affordable
Housing Regulatory Agreement recorded on , as Instrument No.
, in the Official Records of the County of Riverside (the "Official
Records"), that certain Ground Lease entered into by and between Developer and Agency on or
about as referenced in that certain Memorandum of Unrecorded Ground Lease
recorded on , as Instrument No. , in the Official Records,
and that certain Deed of Trust recorded on as Instrument No.
in the Official Records, all of which shall survive recordation of this Release.
above.
IN WITNESS WHEREOF, Agency has executed this Release as of the date set forth
LA QUINTA REDEVELOPMENT AGENCY,
a public body, corporate and politic
Date: By:
THOMAS P. GENOVESE, Executive Director
ATTEST:
Agency Secretary
882/01561 M047 _
1111838.07 a01/04/11 —�
State of California
County of Riverside
On , before me,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
182/015610-0047
1111838.07 a01/04/11 _3_
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
Real property in the City of La Quinta, County of Riverside, State of California,
described as follows:
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89°39'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01 °53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°09'07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18002'50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
182/015610-0047
1111838 07 .01/04/11 -4-
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90009'34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
182/015610-0047
1111838.07 a01/04/11 -5-
AGENCY LOAN PROMISSORY NOTE
$29,000,000.00
o� — AQ 2011
La Quinta, California
FOR VALUE RECEIVED, CORAL MOUNTAIN PARTNERS, L.P., a California
limited partnership ("Borrower"), as maker and obligor, promises to pay to the LA QUINTA
REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), as holder
and beneficiary, or order, at Agency's office at P.O. Box 1504, La Quinta, California 92247, or
such other place as Agency may designate in writing, the sum of (a) Twenty -Nine Million
Dollars ($29,000,000.00), or so much thereof as may be disbursed hereunder ("Note Amount"),
and (b) all costs and expenses payable hereunder, in currency of the United States of America,
which at the time of payment is lawful for the payment of public and private debts.
1. Agreement. This Agency Loan Promissory Note ("Note") is given in accordance
with that certain Disposition and Development Agreement executed by Agency and Borrower, as
"Developer," dated as of January 4, 2011 ("Agreement"). The rights and obligations of
Borrower and Agency under this Note shall be governed by the Agreement and by the additional
terms set forth in this Note. In the event of any inconsistencies between the terms of this Note
and the terms of the Agreement or any other document related to the Note Amount, the terms of
this Note shall prevail. Unless otherwise defined herein, capitalized terms used herein shall have
the meanings ascribed to them in the Agreement. An Event of Default by Developer under any
of the provisions of the Agreement, and/or a default under any and all attachments and all
breakout documents executed, attested and/or recorded in implementation of the Agreement,
including, without limitation, the Agency Deed of Trust, Agency Regulatory Agreement, and
Ground Lease, or the income and/or rent restrictions as set forth in the Tax Credit Regulatory
Agreement (collectively, the "Transaction Documents") shall, after the expiration of any cure
period under the respective agreement or document, be a default under this Note (a "Default"),
and a default under this Note, after notice and expiration of a fifteen (15) day cure period, shall
be an Event of Default under the Agreement and a default under the Transaction Documents.
2. Interest. The Note Amount shall bear simple interest at one percent (1%) per
annum.
3. Repayment of Note Amount. The Note Amount shall be paid by the Borrower's
annual payment to Agency of an amount equal to fifty percent (50%) of the Residual Receipts
from operation of the Housing Development, as determined by a Residual Receipts calculation
from the operation of the Housing Development the preceding calendar year.
Annual Residual Receipts payments shall be made by the Borrower by cashier's check
and shall be delivered on or before May I for each year during the term of this Note commencing
in the first fiscal year following the Conversion Date until the Note Amount and all unpaid
interest thereon has been repaid in full. Additionally, the Note Amount shall be paid by any or
all of the following: (i) fifty percent (50%) of the Refinancing Net Proceeds immediately upon
any refinancing of the loans secured by the Property (or any part thereof), and (ii) one hundred
882/01561 M047
I 111838,07 a0 VO4/11 _1
percent (100%) of the Transfer Net Proceeds immediately upon any transfer in whole or in part
of the Housing Development.
As used herein, "AJrliate"means any person or entity directly or indirectly, through one
or more intermediaries, controlling, controlled by or under common control with Borrower
which, if Borrower is a partnership or limited liability company, shall include each of the
constituent members or partners, respectively thereof. The term "control" as used in the
immediately preceding sentence, means, with respect to a person that is a corporation, the right
to the exercise, directly or indirectly, of more. than fifty percent (50%) of the voting rights
attributable to the shares of the controlled corporation, and, with respect to a person that is not a
corporation, the possession, directly or indirectly, of the power to direct or cause the direction of
the management or policies of the controlled person.
As used herein, "Annual Financial Statement" shall mean each certified financial
statement of Borrower for the Housing Development using generally accepted accounting
principles ("GAAP"), as separately accounted for this Housing Development, including
Operating Expenses and Annual Project Revenue, prepared annually at Borrower's expense, by
an independent certified public accountant reasonably acceptable to Agency, as well as the
Residual Receipts Report.
As used herein, "Annual Project Revenue" means all gross income and all revenues of
any kind from the Housing Development in a calendar year, of whatever form or nature, whether
direct or indirect, with the exception of the items excluded below, actually received by or paid to
or for the account or benefit of Borrower or any Affiliate of Borrower or any of their agents or
employees, from any and all sources, resulting from or attributable to the ownership, operation,
leasing and occupancy of the Housing Development, determined on the basis of generally
accepted accounting principles applied on a consistent basis, and shall include, but not be limited
to: (i) gross rentals paid by tenants of the Housing Development under leases, and payments and
subsidies of whatever nature, including without limitation any payments, vouchers or subsidies
from the U.S. Department of Housing and Urban Development or any other person or
organization, received on behalf of tenants under their leases, (ii) amounts paid by residents of
the Housing Development to Borrower or any Affiliate of Borrower on account of Operating
Expenses for further disbursement by Borrower or such Affiliate to a third party or parties,
(iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses, concessions,
vending machines, coin laundry and similar sources, (v) other fees, charges or payments not
denominated as rental but payable to Borrower in connection with the rental of office, retail,
storage, or other space in the Housing Development, (vi) consideration received in whole or in
part for the cancellation, modification, extension or renewal of leases, and (vii) interest and other
investment earnings on security deposits, reserve accounts and other Housing Development
accounts to the extent disbursed for other than the purpose of the reserve. Notwithstanding the
foregoing, gross income shall not include the following items: (a) security deposits from tenants
(except when applied by Borrower to rent or other amounts owing by tenants); (b) capital
contributions to Borrower by its members, partners or shareholders (including capital
contributions required to pay any Deferred Developer Fee); (c) condemnation or insurance
proceeds; (d) funds received from any source actually and directly used for initial development
of the Housing Development; (e) receipt by an Affiliate of management fees or other bona fide
882'015610-0047
1111838 07 .01 i 04111 -2-
arms -length payments for reasonable and necessary Operating Expenses associated with the
Housing Development, including but not limited to, any Partnership Related Fees; (f) Transfer
Net Proceeds; or (g) Refinancing Net Proceeds.
As used herein "Capital Replacement Reserve" shall have the meaning ascribed thereto in
the Agency Regulatory Agreement.
As used herein, "CPI Adjustment" means the increase in the cost of living index, as
measured by the Consumer Price Index for all urban consumers, Los Angeles -Anaheim -
Riverside statistical area, all items (1982-84 = 100) published by the United States Department
of Labor, Bureau of Labor Statistics ("CPI") in effect as of the date on which the Certificate of
Occupancy is issued for the Housing Development to the CPI in effect as of the date on which an
adjustment is made. If such index is discontinued or revised, such other index with which such
index is replaced Ivor if not replaced, another index which reasonably reflects and monitors
consumer prices) shall be used in order to obtain substantially the same results as would have
been obtained if the discontinued index had not been discontinued or revised. If the CPI is
changed so that the base year is other than 1982-84, the CPI shall be converted in accordance
with the conversion factor published by the United States Department of Labor, Bureau of Labor
Statistics.
As used herein, "Debt Service" shall mean payments made in a calendar year pursuant to
the approved Construction Loan or the Take -Out Loan, as applicable, obtained for the
construction/development, and ownership of the Project pursuant to Section 6.7 of the
Agreement or any permitted refinancing or modification thereof, but excluding payments made
pursuant to this Note.
As used herein, "Deferred Developer Fee" shall mean the portion of the Borrower's
development fee, if any, that is payable out of the Annual Project Revenue and not from capital
sources, as set forth in the Housing Development Budget. Disbursement of the Deferred
Developer Fee (all or any part thereof) shall be subject to the provisions of the next paragraph.
In connection with Borrower's eligibility to disburse all or any part of the Deferred
Developer Fee, in the event the cost of completing the Project exceeds the amount set forth in the
final Budget; then, to the extent necessary, the funds otherwise available to pay the developer fee
from capital sources shall be expended and used to pay the remaining costs of completing the
Project to the extent necessary to ensure the completion of the Project and the balance of the
developer fee shall be paid as Deferred Developer Fee in accordance with the priority set forth in
the Partnership Agreement, and/or payable from the proceeds of any approved refinancing or
transfer of the Property and/or the Housing Development. In no event shall Borrower be eligible
for disbursement of the Deferred Developer Fee or any part thereof prior to completion of the
Project, as approved by the Executive Director as evidenced by the issuance by the Agency of
the Release of Construction Covenants.
As used herein, "Operating Expenses" shall mean actual, reasonable and customary (for
comparable high quality rental housing developments in Riverside County) costs, fees and
expenses directly incurred, paid, and attributable to the operation, maintenance and management
882/015610-0047 -3-
1111888.07 a01/04/II
of the [Mousing Development in a calendar year, which are in accordance with the annual
Operating Budget approved by Agency pursuant to Section 9 of the Agency Regulatory
Agreement, including, without limitation, painting, cleaning, repairs, alterations, landscaping,
utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal
property taxes, assessments, insurance, security, advertising and promotion, janitorial services,
cleaning and building supplies, purchase, repair, servicing and installation of appliances,
equipment, fixtures and furnishings, fees and expenses of property management, fees and
expenses of accountants, attorneys and other professionals, repayment of any completion or
operating loans made to Borrower, its approved successors or assigns, and other actual,
reasonable and customary operating costs which are directly incurred and paid by Borrower, but
which are not paid from or eligible to be paid from the Operating Reserve or any other reserve
accounts. In addition, Operating Expenses shall include a social services fee in the amount of
Twenty -Two Thousand Dollars ($22,000) for calendar year 2011, which shall be increased
annually by three percent (3%) per year, provided Borrower provides the social services
described in the Tenant Services Agreement that was included in Borrower's tax credit
application. Operating Expenses shall not include any of the following: (i) salaries of
employees of Borrower or Borrower's general overhead expenses, or expenses, costs and fees
paid to an Affiliate of Borrower, to the extent any of the foregoing exceed the expenses, costs or
fees that would be payable in a bona fide arms' length transaction between unrelated parties in
the Riverside County area for the same work or services; (ii) any amounts paid directly by a
tenant of the Housing Development to a third party in connection with expenses which, if
incurred by Borrower, would be Operating Expenses; (iii) optional or elective payments with
respect to the Construction Loan; (iv) any payments with respect to any Project -related loan or
financing that has not been approved by the Agency; (v) expenses, expenditures, and charges of
any nature whatsoever arising or incurred by Borrower prior to completion of the Housing
Development with respect to the development of the Housing Development, or any portion
thereof, including, without limitation, all predevelopment and preconstruction activities
conducted by Borrower in connection with the Housing Development, including without
limitation, the preparation of all plans and the performance of any tests, studies, investigations or
other work, and the construction of the Housing Development and any on site or off site work in
connection therewith; or (vi) depreciation, amortization, and accrued principal and interest
expense on deferred payment debt.
As used herein, "Operating Reserve" means an operating reserve for the Housing
Development (i) initially consisting of not less than Four Hundred Ninety -Five Thousand Dollars
($495,000) (or such greater amount required under either of the Additional Regulatory
Agreements, or under the Partnership Agreement) set aside in a separate interest -bearing trust
account, commencing upon the rental of the units in the Housing Development, and (ii)
replenished to Four Hundred Ninety -Five Thousand Dollars ($495,000) from annual deposits of
the Annual Project Revenue, to the extent available, such that the balance of the Operating
Reserve consists of not less than four (4) months of projected Operating Expenses, adjusted
annually by the CPI Adjustment (unless otherwise agreed to by Developer and Agency) or as
required under the Partnership Agreement (or such greater amount required under either of the
Additional Regulatory Agreements, or under the Partnership Agreement), provided in no event
shall the balance in such account exceed a sum equal to one (1) year of Debt Service for the
Housing Development (or such greater amount required under the Tax Credit Regulatory
Agreement, pursuant to any of the Approved Financing or under the Partnership Agreement).
881.1015610-0047
111183807 .01/04/11 -4
As used herein, "Partnership Agreement" means the agreement which sets forth the terms
of the Borrower's limited partnership, as such agreement may be amended from time to time.
As used herein, "Partnership Related Fees" means partnership fees actually incurred
pursuant to the teens of the Partnership Agreement, which are reasonable and customary to
developer/owner entities for similar projects in Southern California, and.may include, but shall
not exceed: (i) a general partner(s) (administrative and/or managing partner(s)) partnership
management fee payable to the general partner(s) (ii) a limited partner asset management fee
payable to the investor limited partner; and (iii) an annual audit fee in and for any calendar year.
In no event shall the annual fees for (i) and (ii) above cumulatively exceed Forty Thousand
Dollars ($40,000.00), but such fees in (i) and (ii) may be increased annually by the CPI
Adjustment. In the event insufficient Annual Project Revenues exist to provide for payment of
all or part of the specific Partnership Related Fees listed above, no interest shall accrue on the
unpaid portions of such Partnership Related Fees, but the unpaid balance of such fees alone will
be added to the Partnership Related Fees due in the following year.
As used herein, "Refinancing Net Proceeds" means the proceeds of any approved
refinancing of the Construction Loan or other approved financing secured by the Property, net of
the following actual costs and fees incurred: (i) the amount of the financing which is satisfied
out of such proceeds, (ii) reasonable and customary costs and expenses incurred in connection
with the refinancing, (iii) the balance, if any, of the Deferred Developer Fee, (iv) the balance, if
any, of authorized loans to the Housing Development made by the limited partners of Borrower,
including interest at the rate set forth in the Partnership Agreement for such loans, (v) the
balance, if any, of authorized operating loans or development loans made by the general partners
of a limited partnership that succeeds to Borrower's interest in the Agreement and the Housing
Development, including interest at the rate set forth in the Partnership Agreement for such loans,
(vi) the return of capital contributions, if any, to the Project made by the general partners of a
limited partnership that succeeds to Borrower's interest in the Agreement and the Housing
Development that were used to pay the Deferred Developer Fee, (vii) the amount of proceeds
required to be reserved for the repair, rehabilitation, reconstruction or refurbishment of the
Housing Development; and (viii) the payment to general partner of Borrower of a refinancing
fee, which is agreed to be set at three percent (3%) of the amount of the approved refinancing.
As used herein, "Reserve Deposits" shall mean any payments to the Capital Replacement
Reserve account and payments to the Operating Reserve account pursuant to Sections 10 and 11,
respectively, of the Agency Regulatory Agreement.
As used herein, "Residual Receipts" shall mean Annual Project Revenue less the sum of:
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve;
(iv) Reserve Deposits to the Operating Reserve;
(v) Partnership Related Fees;
181/015510-0047
1 1 11838 07 a01 /0411 1 _ 5
(vi) Deferred Developer Fees;
(vii) Property management fee for the Housing Development which remains unpaid
after payment of Operating Expenses, if any;
(viii) Unpaid Tax Credit adjustment amounts, if any, pursuant to the Partnership
Agreement;
(ix) Repayment of loans to the Project, if any, made by the limited partner(s) of
Borrower pursuant to the Partnership Agreement, including interest at the rate set forth in
Borrower's limited partnership agreement, for eligible development and/or operating expense
deficits or other eligible loans (provided that if made during the compliance period Borrower
shall provide to Executive Director documentation showing the propriety of such loan(s) and if
made subsequent to the expiration of the compliance period each such loan must be reasonably
approved by the Executive Director before being provided to the Project after review of
documentation provided by Borrower showing propriety of such loans);
(x) Repayment to the administrative and/or managing general partners of Borrower
for loans to the Project for development advance(s) pursuant to the Partnership Agreement,
operating deficit advance(s) pursuant to the Partnership Agreement), credit adjuster payment(s)
pursuant to the Partnership Agreement), and/or Development Fee advance(s) pursuant to the
Partnership Agreement, and with all such loans to be repaid without interest (provided that if
made during the compliance period Borrower shall provide to Executive Director documentation
showing the propriety of such loan(s) and if made subsequent to the expiration of the compliance
period each such loan must be reasonably approved by the Executive Director before being
provided to the Project after review of documentation provided by Borrower showing propriety
of such loans);
(xi) Repayment to the administrative and/or managing general partners of Borrower of
certain loans made to the Project after the expiration or earlier termination of the Partnership
Agreement to cover shortfalls in funding for Operating Expenses in excess of the Operating
Expenses included in the approved annual Operating Budget for the year in which such loan is
made (if at all), all such loans to be repaid without interest (provided that if made during the
compliance period Borrower shall provide to Executive Director documentation showing the
propriety of such loan(s) and if made subsequent to the expiration of the compliance period each
such loan must be reasonably approved by the Executive Director before being provided to the
Project after review of documentation provided by Borrower showing propriety of such loans);
and
(xii) Capital contributions to the Project, if any, made by the general partners of
Borrower that were used to pay the Developer Fee.
In the event any calculation of Annual Project Revenue less subsections (i) through (xii)
inclusive above results in a negative number, then Residual Receipts shall be zero ($0) for that
year and shall not carry over to the next or any other subsequent year.
In addition, none of the fees, costs, expenses, or items described above in calculation of
Residual Receipts shall include any duplicate entry/item, or double accounting for a cost item.
"1/0156 10-0047
111183807 W 1 /04111 _6_
For example, an audit fee incurred by Borrower and deducted or included above in subsection (i)
for Operating Expenses shall not also be deducted or included in subsection (v) for Partnership
Related Fees in the calculation of Residual Receipts. The calculation of Residual Receipts shall
be conducted at Borrower's sole cost and expense, by a third party auditor and submitted to
Borrower annually, along with Borrower's payment of Residual Receipts.
As used herein, "Transfer Nei Proceeds" shall mean the proceeds of any sale or other
transfer, in whole or part, of the Property or Borrower's interests therein, net only of (i) the
reasonable and customary costs and expenses incurred in connection with such transfer; (ii) the
amount of the financing which is satisfied out of such proceeds, (iii) the balance, if any, of the
Deferred Developer Fee, (iv) the balance, if any, of loans to the Project made by the limited
partners of Borrower, including interest thereon as provided in the Partnership Agreement, (v)
the balance, if any, of operating loans or development loans made by the general partners of
Borrower, including interest thereon as provided in the Partnership Agreement, (vi) the return of
capital contributions, if any, to the Project made by the general partners of Borrower that were
used to pay the Deferred Developer Fee, and (vii) the payment to the general partner of Borrower
of a disposition fee set forth in the Partnership Agreement, which is agreed to be set at three
percent (3%) of the amount of the approved transfer.
4. Security. Prior to Borrower's purchase of the Property, Borrower's obligations
under this Note and the Agreement shall be secured by that certain Assignment of Architectural
Agreements and Plans and Specifications executed by Borrower in favor of Agency pursuant to
the Agreement.
Borrower's obligations under this Note and the Agreement shall, at all times subsequent
to the purchase of the Property by Borrower during which any amount remains outstanding
hereunder, be secured by the Agency Deed of Trust, which Agency Deed of Trust shall only be
subordinated to approved deed(s) of trust for the Construction Loan and such encumbrances
approved by the Agency in writing, pursuant to a written subordination agreement in a form
approved by Agency counsel. Upon execution of the same, the terms of the Agency Deed of
Trust are incorporated herein and made a part hereof to the same extent and with the same force
and effect as if fully set forth herein.
5. Maturity. This Note shall be due and payable on the date of expiration of the
term of the Ground Lease, as such term may be extended pursuant to the terms thereof, or earlier
termination thereof.
6. Application of Payments. All payments shall be applied (i) first, to costs and
fees owing under this Note, (ii) second, to the payment of unpaid accrued interest owing under
this Note for each calendar year in which no payment was made by Borrower pursuant to Section
3 above, (iii) third, to the payment of accrued interest for the preceding calendar year, and (iv)
fourth, to payment ofprincipal.
7. Waivers.
(a) Borrower expressly agrees that this Note or any payment hereunder may
be extended from time to time at Agency's sole discretion and that Agency may accept security
882/015610-0047
11It838.07 .01/04/11 -7-
in consideration for any such extension or release any security for this Note at its sole discretion
all without in any way affecting the liability of Borrower.
(b) No extension of time for payment of this Note made by agreement by
Agency with any person now or hereafter liable for the payment of this Note shall operate to
release, discharge, modify, change or affect the original liability of Borrower under this Note,
either in whole or in part.
(c) The obligations of Borrower under this Note shall be absolute and
Borrower waives any and all rights to offset, deduct or withhold any payments or charges due
under this Note for any reasons whatsoever.
(d) Borrower waives presentment, demand, notice of protest and nonpayment,
notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or
interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the
rights or interests in or to properties securing this Note, and the benefit of any exemption under
any homestead exemption laws, if applicable.
(e) No previous waiver and no failure or delay by Agency in acting with
respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach,
default, or failure or condition under this Note, the Agency Deed of Trust or the obligations
secured thereby. A waiver of any term of this Note, the Agency Deed of Trust or of any of the
obligations secured thereby must be made in writing and shall be limited to the express written
terms of such waiver.
8. Attorneys' Fees and Costs. Borrower agrees that if any amounts due under this
Note are not paid when due, Borrower will pay all costs and expenses of collection and
reasonable attorneys' fees paid or incurred in connection with the collection or enforcement of
this Note, whether or not suit is filed.
9. Joint and Several Obligation. This Note is thejoint and several obligation of all
makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs,
successors and assigns.
10. Amendments and Modifications. This Note may not be changed orally, but
only by an amendment approved by Agency and evidenced in a writing signed by Borrower and
by Agency.
11. Agency May Assign. Agency may, at its option, assign its right to receive
payment under this Note without necessity of obtaining the consent of the Borrower.
12. Borrower Assignment Prohibited. In no event shall Borrower assign or transfer
any portion of this Note without the prior express written consent of Agency, which consent shall
not unreasonably be withheld, except pursuant to a transfer that is authorized under Section 15 of
the Agreement.
13. Acceleration and Other Remedies. Upon the occurrence of a Default, Agency
may, at Agency's option, declare the outstanding principal amount of this Note, together with the
112/015610-0047 g-
11 11838 07 a01 /04/11
then accrued and unpaid interest thereon and other charges hereunder, and all other sums secured
by the Agency Deed of Trust, to be due and payable immediately, and upon such declaration,
such principal and interest and other sums shall immediately become and be due and payable
without demand or notice, all as further set forth in the Agency Deed of Trust. All costs of
collection, including, but not limited to, reasonable attorneys' fees and all expenses incurred in
connection with protection of, or realization on, the security for this Note, may be added to the
principal hereunder, and shall accrue interest as provided herein. Agency shall at all times have
the right to proceed against any portion of the security for this Note in such order and in such
manner as Agency may consider appropriate, without waiving any rights with respect to any of
the security. Any delay or omission on the part of Agency in exercising any right hereunder,
under the Agreement or under the Agency Deed of Trust shall not operate as a waiver of such
right, or of any other right. No single or partial exercise of any right or remedy hereunder or
under the Agreement or any other document or agreement shall preclude other or further
exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of
any sum payable hereunder, or part thereof, after the due date of such payment shall not be a
waiver of Agency's right to either require prompt payment when due of all other sums payable
hereunder or to declare a Default for failure to make prompt or complete payment.
14. Alternate Rate. Upon the occurrence of any Default, or upon the maturity hereof
(by acceleration or otherwise), the entire unpaid principal sum, at the option of Agency, shall
bear interest, from the date of occurrence of such Default or maturity and after judgment and
until collection, at the "Alternate Rate", such rate being the highest interest rate then permitted
by law. Interest calculated at the Alternate Rate, when and if applicable, shall be due and
payable immediately without notice or demand. Borrower agrees that in the event of any
Default, Agency will incur additional expense in servicing the loan evidenced by this Note and
will suffer damage and loss resulting from such Default. Borrower agrees that in such event
Agency shall be entitled to damages for the detriment caused thereby, which damages are
extremely difficult and impractical to ascertain. Therefore, Borrower agrees that the Alternate
Rate (as applied to the unpaid principal balance, accrued interest, fees, costs and expenses
incurred) is a reasonable estimate of such damages to Agency, and Borrower agrees to pay such
sum on demand.
15. Consents. Borrower hereby consents to: (a) any extension (whether one or
more) of the time of payment under this Note, (b) the release or surrender or exchange or
substitution of all or any part of the security, whether real or personal, or direct or indirect, for
the payment hereof, (c) the granting of any other indulgences to Borrower, and (d) the taking or
releasing of other or additional parties primarily or contingently liable hereunder. Any such
extension, release, surrender, exchange or substitution may be made without notice to Borrower
or to any endorser, guarantor or surety hereof, and without affecting the liability of said parties
hereunder.
16. Interest Rate Limitation. Agency and Borrower stipulate and agree that none of
the terms and provisions contained herein or in any of the loan instruments shall ever be
construed to create a contract for the use, forbearance or detention of money requiring payment
of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of
the State of California. In such event, if any holder of this Note shall collect monies which are
deemed to constitute interest which would otherwise increase the effective interest rate on this
882/015610-0047
It 11838,07 a01/04/11 -9
Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of
California, all such sums deemed to constitute interest in excess of such maximum rate shall, at
the option of such holder, be credited to the payment of the sums due hereunder or returned to
Borrower.
17. Successors and Assigns. Whenever "Agency" is referred to in this Note, such
reference shall be deemed to include the La Quinta Redevelopment Agency and its successors
and assigns, including, without limitation, any successor to its rights, powers, and
responsibilities, and any subsequent assignee or holder of this Note. All covenants, provisions
and agreements by or on behalf of Borrower, and on behalf of any makers, endorsers, guarantors
and sureties hereof which are contained herein shall inure to the benefit of Agency and Agency's
successors and assigns.
18. Miscellaneous. Time is of the essence hereof. This Note shall be governed by
and construed under the laws of the State of California except to the extent Federal laws preempt
the laws of the State of California. Borrower irrevocably and unconditionally submits to the
jurisdiction of the Superior Court of the State of California for the County of Riverside or the
United States District Court of the Central District of California, as Agency may deem
appropriate, in connection with any legal action or proceeding arising out of or relating to this
Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue.
19. Non -Recourse Obligation. Borrower and its partners shall not be personally
liable for the payment of this Note or for the payment of any deficiency established after judicial
foreclosure or trustee's sale; provided, however, that the foregoing shall not in any way affect
any rights Agency may have (as a secured party or otherwise) hereunder or under the Agreement
or Agency Deed of Trust to recover directly from Borrower any amounts, or any funds, damages
or costs (including without limitation reasonable attorneys' fees and costs) incurred by Agency
as a result of fraud, intentional misrepresentation or bad faith, waste, and any costs and expenses
incurred by Agency in connection therewith (including without limitation reasonable attorneys'
fees and costs).
20. Accounting.
(a) Accounting Terms and Determinations. Unless otherwise specified
herein, (i) all accounting terms used herein shall be interpreted, (ii) all accounting determinations
hereunder shall be made, and (c) all books, records and financial statements required to be
delivered hereunder shall be prepared, in accordance with GAAP, consistently applied, except
for changes approved by Agency.
(b) Financial Reporting and Accounting Covenants. Borrower shall permit
the representatives of Agency at any time or from time to time, upon three (3) business days'
notice and during nonnal business hours, to inspect, audit, and copy all of Borrower's books,
records, and accounts relating to the Property. Borrower shall furnish or cause to be furnished to
Agency the following:
(i) Annual Financial Statement. Borrower shall submit to Agency,
on or before May 1 of each year commencing in the first year after the issuance of the first
81)M 5610-0047
1111838 07 ,0 105/ I 1 - 10-
certificate of occupancy for the Housing Development, an Annual Financial Statement, with
respect to the Housing Development that has been reviewed by an independent certified public
accountant, together with an expressed written opinion of the certified public accountant that
such Annual Financial Statement presents the financial position, results of operations, and cash
flows of the Housing Development fairly and in accordance with GAAP.
(ii) Tax Returns. As soon as available, but in no event later than
thirty (30) days after the time of filing with the Internal Revenue Service, the federal tax returns
(and supporting schedules, if any) of Borrower.
(iii) Audit Reports. Not later than ten (10) days after receipt thereof
by Borrower, copies; of all reports submitted to Borrower by independent public accountants in
connection with each annual, interim or special audit of the financial statements of Borrower,
made by such accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit. If any such audit report results in Borrower
restating Residual Receipts upward for any fiscal year, then Borrower shall accompany delivery
of such audit report to Agency with the additional payment to Agency resulting from said
restatement pursuant to Section 3 of this Note. If any such audit report results in Borrower
restating Residual Receipts downward for any fiscal year, Borrower may carry forward the
overpayment made to Agency pursuant to such Section 3 as a credit against payments thereunder
in subsequent fiscal years.
(c) Late Payment. If any annual payment required pursuant to Section 3
above is not received by Agency within ten (10) calendar days after payment is due, Borrower
shall pay to Agency a late charge of five percent (5%) of such payment, such late charge to be
immediately due and payable without demand by Agency.
(d) Dispute Regarding Annual Financial Statement. If Agency disputes
any Annual Financial Statement, Agency shall notify Borrower of such dispute within sixty (60)
days after receipt of an Annual Financial Statement and the parties shall cause their
representatives to meet and confer concerning the dispute and to use all reasonable efforts to
reach a mutually acceptable resolution of the matter in question within thirty (30) days after
Agency's notice of such dispute. If the parties are unable to reach a mutually acceptable
resolution within such thirty (30) day period, then, within twenty (20) days after the expiration of
such period, Borrower and Agency shall appoint a national firm of certified public accountants to
review the dispute and to make a determination as to the matter in question within thirty (30)
days after such appointment. If the parties cannot, within ten (10) days, agree upon the firm to
be appointed, then, upon the application of either party, such firm shall be appointed by the
Presiding Judge of the Superior Court for the County of Riverside, California. Such firm's
determination shall be final and binding upon the parties. Such firm shall have full access to the
books, records and accounts of Borrower and the Property.
(e) Underpayment. If any audit by Agency reports an underpayment by
Borrower on this Note, Borrower shall pay the amount of such underpayment, together with the
late charge set forth in Section 20(c) of this Note, to Agency within ten (10) days after written
notice thereof to Borrower or, in the event of a dispute, after timely notice to Borrower of the
resolution of such dispute by the independent firm of certified public accountants, as the case
882/015610-0047
11 11838 07 a01!04/11 ' l 1-
may be, and if such underpayment amounts to more than five percent (5%) of the disputed
payment for the period audited, then, notwithstanding anything to the contrary in this section,
Borrower shall pay to Agency, within ten (10) days after written demand, Agency's reasonable
costs and expenses in conducting such audit and exercising its rights under this Section 20 of this
Note.
Date: `/' U 2011
882/0156)0-0047
1111838 07 a01/04/11 - 12-
BORROWER:
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
By: Highway 1 I 1 Apts Member, LLC,
a California limited liability
company, its member
By: _ r
Micbatl J. Sho in, Member
" 1 V;5 113 4 U V IL IG 1
LP-1
File #
State of California
Secretary of State
ENDORSED - FILED
in the office of the Secretary of State
of the State of California
Certificate of Limited Partnership
DEC 2 4 2010
This Space For Filing Use Only
A $70,00 filing fee must accompany this forth.
Important— Read instructions before completing this form.
Entity Name (End the name with the words "Limited Partnership" or the abbreviation "LP" or 1,1R.")
L NAME OF LIMITED PARTNERSHIP
Coral Mountain Partners, L.P.
Initial Designated Office Address (Do not abbreviate the name of the city.)
2. ADDRESS OF INITIAL DESIGNATED OFFICE IN CALIFORNIA CITY STATE ZIP CODE
46-753 Adams La Quinta CA 92253
Initial Agent For Service of Process (If the Initial agent is an Individual, the agent must reside In California and both Items 3 and 4 must be
completed. If the initial agent is a corporation, the agent must have on file with the California Secretary of State a certificate pursuant to Corporations
Code section 1505 and Item 3 must be completed (leave Item 4 blank).
3. NAME OF INITIAL AGENT FOR SERVICE OF PROCESS
John E. Durso
4. IF AN INDIVIDUAL, ADDRESS OFINTFIAL AGENT FOR SERVICE OF PROCESS INCA CITY STATE ZIP CODE
4199 Campus Drive, Suite 550 Irvine CA 92612
General Partners (Enter the names and addresses of all the general partners. Attach additional pages, if necessary.)
Be, NAME ADDRESS CITY STATE ZIP CODE
Coral Mountain AGP, LLC 46.753 Adams La Quinta CA 92253
51,. NAME ADDRESS CITY STATE ZIP CODE
Additional Information
e. ADDITIONAL INFORMATION SET FORTH ON THE ATTACHED PAGES, IF ANY, IS INCORPORATED HEREIN BY THIS REFERENCE AND MADE APART
OF THIS CERTIFICATE.
Execution (This certificate must be signed by all of the general partners. If additional signature space is necessary, the signatures maybe made on
an attachment to this certificate.)
7. 1 DECLARE I AM THE PERSON WHO EXECUTED THIS INSTRUMENT. WHICH EXECUTION IS MY ACTAND GEED.
DATE
SEE ATTACHED
SIGNATURE OF GENERAL PARTNER TYPE OR PRINT NAME OF GENERAL PARTNER
SIGNATURE OF GENERAL PARTNER TYPE OR PRINT NAME OF GENERAL PARTNER
LP-1 (REV 0117010) APPROVED BY SECRETARY OF STATE
7.
By:
SIGNATM PAGE
TO
CERTIFICATE OF LIMITED PARTNERSHIP
(FORM LP -I)
OF
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
K ,/Ife gmg Partners, Inc., a California corporation,
a member of Coral Mountain AGP, LLC, the general partner of Coral Mountain Partners, L.P.,
a California limited partnership
Michael Shovlin, Manager,
Flwy 1 I I Apts Member LLC, a California limited liability company,
a member of Coral Mountain AGP, LLC, the general partner of Coral Mountain Partners, L.P.,
a California limited partnership
Date:December-A ,2010
$=05].1
SIGNATURE PAGE
TO
CERTIFICATE OF LIMITED PARTNERSHIP
(FORM LP-1)
OF
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
7.
By:
John E. Durso, President,
KD Housing Partners, Inc., a California corporation,
a member of Coral Mountain AGP, LLC, the general partner of Coral Mountain Partners, LP.,
a California limited partnership
Micha-eFShoylin, Manager,
Hwy 11 i Apts Member LLC, a California limited liability company,
a member of Coral Mountain AGP, LLC, the general partner of Coral Mountain Partners, L.P.,
a California limited partnership
Date:DeoemberZ, 2010
5 26253.1
I hereby certify that the foregoing
' is full, Prue and ct oforrect copy of ihse
anginal record in the custody of Ilia
CAllfomla Sooretary of Stet" office.
JAN i 1 2011(f
onto,
e `.
DEBRA BOWEN, Secretary of State
CORAL MOUNTAIN PARTNERS, LP
Hwy 111 Apts Member LLC
Michael J. Shovlin
71084 Tamarisk Lane
Rancho Mirage, CA 92270
KD Housing Partners, Inc.
John Durso
46753 Adams Street
La Quinta, CA 92253
P.O. Box 1504
78-495 CALLE TAMPICO (760) 777-7000
LA QuINTA, CALIFORNIA 92253 FAX (760) 777-7101
June 13, 2011
Mr. Robert High
Coral Mountain Partners, L.P.
46753 Adams Street
La Quinta, CA 92253
Re: Revision to Schedule of Performance in Coral Mountain Partners DDA
Dear Mr. High:
As you know, Coral Mountain Partners, L.P. ("Coral Mountain") and the La Quinta
Redevelopment Agency ("Agency") entered into a Disposition and Development
Agreement ("DDA") on January 4, 2011. Attachment No. 2 to the DDA contains a
detailed Schedule of Performance. Task/Event 4 of the Schedule of Performance
states that by August 2, 2011, the City Council will hold a public hearing regarding
Coral Mountain's Site Development Permit application.
Because Site Development Permit applications are not generally considered by the
City Council at a public hearing, the Agency prefers that Task/Event 4 be deleted
from the Schedule of Performance, and that a new Task/Event 3 be added that
reads: "Site Development Permit considered by Agency Board at Study Session,"
with a corresponding Time for Performance of July 5, 2011.
Pursuant to Section 16 of the DDA, the Agency Executive Director has the
authority to issue interpretations, waive provisions, and enter into certain
amendments of the DDA. If you agree to this revision, please arrange for the
execution below of Coral Mountain, and return the original signature of Coral
Mountain to my attention.
Please call me at 760-777-7100 if you have any questions.
Sincerely,
Thomas P. Genovese
Agency Executive Director
L'J
By execution below, Coral Mountain hereby agrees to the foregoing change to
Task/Event 4 of the DDA.
CORAL MOUNTAIN PARTNERS, L.P., a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
By: Highway 111 Apts Member, LLC,
a California limited
dd]liiaabbility company, its member
Michae J. Sh lin, ember
cc: Les Johnson, Planning Director, City of La Quinta
Ah Michael Shovlin, Coral Mountain Partners, L.P.
Allison LeMoine-Bui, Rutan & Tucker
Lance Bocarsly, Bocarsly Emden Cowan Esmail & Arndt LLP
ATTACHMENT NO. 2,
SCHEDULE OF PERFORMANCE
Task/Event
1. Developer prepares and submits to City
application for Site Development Permit.
2. SDPA considered by Architecture and Land
Committee.
3. SDPA considered by Redevelopment
Agency as Study Session.
4. Planning Commission public hearing
regarding Site Development Permit
application.
5. Developer submits precise grading plan for
plan check.
6. Developer obtains approval of precise
grading plan.
7. Developer submits to City for plan check
the Final Construction Documents.
8. Developer submits applications for building
permits.
9. Developer and Agency open Escrow.
10. Developer obtains allocation of Tax -
Exempt Bonds.
11. Developer submits to Agency preliminary
commitment for the Project Financing and
draft Project Financing Disbursement
Agreement.
12. Developer submits to Agency final Project
Financing Disbursement Agreement
13. Developer submits to Agency Evidence
Financing Commitments.
Time for Performance
By April 5, 2011.
By June 22, 2011.
By July 5, 2011.
By July 12, 2011.
By October 8, 2011.
By December 30, 2011.
Not later than March 15, 2012
By March 27, 2012.
Not later than sixty (60) days prior to the
proposed Property Closing.
By July 2, 2012.
By July 10, 2012.
August 24, 2012.
August 24, 2012.
8821015610-0047
2163779.1 a06/10/11
11
14. Developer causes the conditions set forth
in Section 7.2 to be satisfied and the
Property Closing shall occur.
15. Developer commences construction of
Project.
16. Developer completes construction of
Project.
17. Developer commences leasing the Units
18. Developer completes leasing of all Units.
Upon satisfaction of the conditions set
forth in Section 7.2, but not later than the
Outside Closing Date.
Within 10 days after the Property Closing,
but not later than by September 3, 2012.
By February 25, 2014.
Not later than by February 27, 2014.
Not later than by March 23, 2015.
It is understood that the foregoing Schedule is subject to all of the terms and
conditions of the text of the Agreement, including, without limitation, Section 17.11. The
summary of items of performance in the Schedule is not intended to supersede or modify any
more complete description in the text; in the event of any conflict or inconsistency between this
Schedule and text of the Agreement, the text of the Agreement shall govern. Subject to Section
17.11, times of performance 'under this Agreement .may be extended by mutual written
agreement of Agency and Developer. The Executive Director of Agency shall have the authority
on behalf of Agency to approve extensions of time, with the exception of any extension that
would result in the Outside Closing Date, the date to commence construction of the Project, or
the date to complete construction of the Project, being extended by more than one hundred
twenty (120) days.
882/015610-0047
2163779.1 a06/10/I1 -2-
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
La Quinta Housing Authority
Box P.O. Box 1504
La Quinta, California 92247
Attention: Secretary
P,pN ,j 00 -02I)- 0SL(
DOC # 2012-0105932
03/07/2012 02:38P Fee:NC
Page i of 8
Recorded in Official Records
County of Riverside
Larry W. Ward
Assessor, County Clerk 8 Recorder
111111111111IIH 11111111111111111111111111111111111
S R U I PAGE SIZE DA MISC LONG RFD COPY
L 131) D--
M A L 1 465 1 426 1 PLRNCOR*SMFCHGEMM
)S
SPACE ABOVE THIS LINE FOR RECORDER'S USE
(EXEMPT FROM RECORDERS FEE PURSUANT TO GOVERNMENT CODE SECTIONS 27383 AND 6103)
QUITCLAIM DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the
CITY OF LA QUINTA, a California municipal corporation and charter city, as Successor
Agency to the former La Quinta Redevelopment Agency (the "Successor Agency"), do(es)
hereby remise, release and forever quitclaim to LA QUINTA HOUSING AUTHORITY, a public
body, corporate and politic ("Authority"), all of its right, title, and interest in and to the real
property in -the City of La Quinta, County of Riverside, State of California, described in
Exhibit "A" attached hereto and incorporated herein by reference (the "Property).
Authority, on behalf of itself and its successors and assigns to all or any portion of the
Property, hereby covenants and agrees as follows:
1. Nondiscrimination Covenants. That there shall be no discrimination
against or segregation of any person, or group of persons on any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926,
12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section
12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the Property, or any part thereof, nor shall Authority, or any person claiming under
or through him or her, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees or vendees of the Property, or any part thereof. The foregoing
covenants shall run with the land.
2. Nondiscrimination Clauses in Agreements. Authority agrees for itself and
any successor in interest that Authority shall refrain from restricting the rental, sale, or lease of
any portion of the Property, or contracts relating to the Property, on the basis of race, color,
creed, religion, sex, marital status, ancestry, or national origin of any person. All such deeds,
leases or contracts shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
i. In deeds: "The grantee herein covenants by and for himself or
herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or
through them, that there shall be no discrimination against or segregation of, any person or group
of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
882/015610-0047
3073731.1 a03/06/12 _1_
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through him or her, establish or
permit any practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
premises herein conveyed. The foregoing covenants shall run with the land."
ii. In leases: "The lessee herein covenants by and for himself or
herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or
through him or her, and this lease is made and accepted upon and subject to the following
conditions: "That there shall be no discrimination against or segregation of any person or group
of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises
herein leased nor shall the lessee himself or herself, or any person claiming under or through him
or her, establish or permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees,
subtenants, or vendees in the premises herein leased."
iii. In'6ontracts relating to the sale, transfer, or leasing of the land or
any interest therein: "There shall be no discrimination against or segregation of, any person or
group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (in) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which
are the subject of this agreement, nor shall the grantee or any person claiming under or through
him or her, establish or permit any practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with
the land."
The foregoing nondiscrimination covenants shall remain in effect in perpetuity.
[Signatures on next page]
882/015610-0047 _
3073731.1 a03/06/12 -2
"Successor Agency"
CITY OF LA QUINTA, a California municipal
corporation and charter city, as Successor
Agency to -the -former La Quinta
Redevelopment Agency
By:��—
interim
ATTEST:
.S�
Susan Maysels, Interim City Clerk
APPROVED AS TOFORM:
T 7
66 Attorney
"Authority"
City Manager
LA QUINTA HOUSING AUTHORITY, a
public Ib1od-y, corpora e and politic
V
By: _--.
Interim Executive Director
ATTEST: [�
Secretary
APPROVED AS TO FORM:
RUTAN & TUC ' R
A ity ouns \\
882/015610-0047 _
307373 Ll a03/06/12 _3
State of California )
1
County of Riverside )
—On-March 7, 2012, before me, SUSAN MAYSELS, Notary Public, personally
appeared MARK WEISS who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within
instrument, and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. `'""""""" gU3AN-MAYSELS
/� �� , , COMM. #1844479
�%+ V ' Y X NOTARY PUBLIC • CALIFORNIA
RIVERSIDE COUNTY
Signature --> Conumsson 'es APR132013+
(seal)
DOCUMENT:
QUITCLAIM DEED for Parcel 2 of Exhibit B of Lot Line Adjustment 2010-508
disclosed by Grant Deed recorded 12/2/2010 DOC# 2010-575516.
ME
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS`
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 0000810" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO' THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01'53-43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16.09-07 AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18002'50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
982/0156IG-0047 3073731.1 a03/06/12 -5-
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90-0934", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
-_ THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22 EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 ,FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008-10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
Said land is shown as Parcel 2 of Exhibit `B" of Lot Line Adjustment No .2010-508 as
disclosed by Grant Deed recorded December 2, 2010, as Instrument No. 2010-575516, of the
Official Records of the County of Riverside.
882/015610-0047 _6-
3073731.1 a03/06/12
AUTHORITY'S ACCEPTANCE
This is to certify that the interest in real property conveyed by the Quitclaim Deed dated
t�AKOI 7 , 2012 from the CITY OF LA QUINTA, a California municipal
_=-- --corporation and charter city,- as--Successor_.Agency -to the former- La. Quinta Redevelopment.
Agency, to the LA QUINTA HOUSING AUTHORITY, a public body, corporate and politic (the
"Authority"), is hereby accepted by the undersigned officer or agent on behalf of the Authority
pursuant to authority conferred by Resolution No. 2012-002, adopted by the Governing Board of
the La Quinta Housing Authority on January 17, 2012, and the Authority consents to recordation
thereof by its duly authorized officer.
,6 / f a
Dated: Y1�1/tt� %' ZD(y By: 1�c1 G
Interim Executive Director
882/015610-0047
3073731.1 a03106/12 -7-
State of California
County of Riverside
- --On--March 7, 2012, before me, SUSAN MAYSELS, Notary Public, personally
appeared MARK WEISS who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within
instrument, and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. r SUSAN MAYSEIS
COMM. #1844479
NOTARY PUBLIC • CALIFORNIA�
RIVERSIDE COUNTY
Signature C=ngV ' APR13,2013+
(seal)
DOCUMENT:
AUTHORITY'S ACCEPTANCE of Quitclaim Deed from City/SA to Housing
Authority.
IN
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment") is
entered into by and between CITY OF LA QUINTA, a California municipal corporation and
charter city, as Successor Agency to the former La Quinta Redevelopment Agency ("Assignor"),
and LA QUINTA HOUSING AUTHORITY ("Assignee"), as of this '1 4-day of March, 2012,
with reference to the following facts:
A. La Quinta Redevelopment Agency, a public body, corporate and politic
("Agency") and Coral Mountain Partners, L.P., a California limited partnership ("Coral
Mountain"), entered into that certain Disposition and Development Agreement dated January 4,
2011, pursuant to which the Agency agreed to lease to Coral Mountain certain real property
located in the City of La Quinta, and to provide Coral Mountain with certain financial assistance,
and Coral Mountain agreed to construct and operate on said real property a rental affordable
housing development (the "DDA").
B. On June 28, 2011, the Governor signed Assembly Bill 26 ("ABxl 26") and
Assembly Bill 27 ("ABxI 27") from the 2011-12 First Extraordinary Session of the California
Legislature. ABxI 26 immediately suspended all redevelopment agency activities, except
continued performance of "enforceable obligations," and set forth a process to dissolve
redevelopment agencies and end redevelopment in California. ABxI 27 provided a "voluntary
alternative redevelopment program," which would have allowed redevelopment agencies to
remain in existence and continue redevelopment, if remittance payments were made to cover the
State of California's budget shortfall for fiscal year 2011-12 and were made in subsequent fiscal
years to cover State costs. A lawsuit was filed, challenging the constitutionality of both ABxI 26
and 27. The California Supreme Court upheld the constitutionality of ABxI 26, revising the
effective dates of certain provisions, and struck down as unconstitutional ABxI 27. (California
Redevelopment Assn. v. Matosantos (2011) 53 Cal.4`s 231 ("CRA Case"). ABx1 26 is chapter 5,
Statutes 2011, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) of Division 24 of the Health and Safety Code. Under the CRA
Case, all redevelopment agencies dissolved February 1, 2012. Pursuant to Health and Safety
Code section 341710), added by Part 1.85 of Division 24, and City Council Resolution No.
2012-002, the City is the "Successor Agency" to the Agency. Pursuant to Health and Safety
Code section 34176(b)(2), added by Part 1.85 of Division 24, and La Quinta Housing Authority
Resolution No. 2012-002, Assignee is the "housing successor" to the Agency, and as such all of
the rights, powers, assets, liabilities, duties, and obligations associated with the housing activities
of the Agency (other than the amounts in the Agency's former low and moderate income housing
fund) are to be transferred to the Assignee, and allowing the Assignee to enforce affordability
covenants and related activities pursuant to applicable provision of the Community
Redevelopment Law (Part I of Division 24 of the Health and Safety Code).
C. The DDA is a housing asset and function of the former Agency. In furtherance of
La Quinta Housing Authority Resolution No. 2012-002 and Health and Safety Code section
34176(b)(2), Assignor now desires to assign and transfer to Assignee, and Assignee desires to
accept from Assignor, all of Assignor's right, title and interest in and to the DDA.
882/015610-0047
3073866.1 a03/06/12 -1-
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, Assignor and Assignee agree as follows:
1. Assignment. Assignor hereby assigns, conveys, transfers and delivers to
Assignee all of Assignor's right, title, and interest in and to the DDA, and Assignee hereby
accepts such assignment and agrees to assume performance of all terms, covenants and
conditions occurring or arising under the DDA as of the date of this Assignment.
2. Assumption of Oblittations. By acceptance of this Assignment, Assignee
hereby agrees to assume all of Assignor's right, title, and interest in and to the DDA, and
Assignee agrees to timely discharge, perform or cause to be performed and to be bound by all of
the liabilities, duties and obligations imposed in connection with the DDA from and after the
date of this Assignment to the same extent as if Assignee had been the original party thereto.
3. Further Assurances. Each party hereto hereby agrees to execute any
additional documents, and take any further actions necessary to effect or evidence the assignment
and assumption set forth in Section 1 and Section 2 above.
4. Miscellaneous. This Assignment shall be binding on and inure to the
benefit of the parties and their respective successors and assigns. The paragraph headings of this
Assignment are for convenient reference only and shall not be used in interpreting this
Assignment.
5. California Law. This Assignment shall be governed by and interpreted in
accordance with the internal laws of the State of California, without regard to conflict of law
principles.
88VOI5610-0047
3073866.1 a03/06/12 -2-
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of
the date and year first above written.
"Assignor"
CITY OF LA QUINTA, a California municipal
corporation and charter city, as Successor
Agency to the former La Quinta
Redevelopment' Agency
Its: Interim City Manager
ATTEST:
��ti4'1��v
Susan Maysels, InteriPh City Clerk
"Assignee"
LA QUINTA HOUSING AUTHORITY, a
public body, corporate
\and politic
By:
Its: Interim Executive Director
ATTEST:
Secretary, La Quinta HcUsing Authority
APPROVED AS TO FORM:
882/015610-0047
3073866.1 a03/06/12 -3-
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CORAL-2 OP ID: SH
I's� CERTIFICATE OF LIABILITY INSURANCE 1
DAYS08113D/YYVL7
6113/12
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS
CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES
BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED
REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.
IMPORTANT: if the certificate holder Is an ADDITIONAL INSURED, the policy(les) must be endorsed. If SUBROGATION IS WAIVED, subject to
the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the
certificato holder in HEM of such endorsemen s .
PDUCERISU Varian Insurance Services 818-763.9365
12166 Riverside Drive 818-762.2242
Valley VEllag6, CA 01607
Thomas R Hayes
cxa°uE:
➢xoNIlliE Ho
•Mal91111
NURSES:
DJSURE 8 AFFORDING COVERAGE
INSURERA: Gemini Insurance Company
INBURERa.Starr Indemnl
NAIL$
INSURED Coral Mountain Partners LP
and Optlmus Construction, Inc.
46753 Adams Street
10833
38318
INSURERC: Westchester Surplus Lines
10172
INSURER D:
LaQulnta, CA 92253
INSURER E:
INSURERF:
nnvcnwn.-n
vveenaevea CERTiFIIiA It NUMRFR-
1\Gv l I vim IYUIT40cm
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY
PERIOD
INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT W1TH RESPECT TO WHICH
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED
HEREIN IS SUBJECT
THIS
EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
TO ALL
THE TERMS,
INSAm am TYPE OF INSURANCE POLICY NUMBER MMNCDIYYYY MMD XP
LIMITB
GENERAL LIABILITY
EACHOCCURRENCE $
2,000,00
A X COMMERCIAL GENERAL LIABILITY X X CWPO01081 08/23/12 08123/14
PREMISES $
100,00
CLAIMS-LUOE aOCCUR
MED EXP(Any one ) S
10,00
PERSONAL S ADV INJURY S
1,000,00
GENERAL AGGREGATE S
2,000,00
GENL AGGREGATE LIMIT APPLIES PER:
PRODUCTS-COMPIOP AGO $
2,000,00
POLICY PR X LOC
g
AUTOMOBILE
LIABILITY
81 GLE LIMIT
aeINNED
n
ANY AUTO
BODILY INJURY(Perpe")
$
ALL OWNED SCHEDULED
AUTOS AUTOS
BODILY INJURY(ParaWdem)
$
NON
HIRED AUTOS AUTOS-OWNED
-
PPOP R U E
$
$
UMBRELLA LIAR
IX
OCCUR
EACH OCCURRENCE
$
10,000,0010
X
AGGREGATE
$
10,000,00
B
IULCE83LIA9
CIA!MsMADE
X
X
SISCCCLO1883212
08/23/12
00/23/14
DEG RETENTION
$
WORKERS COMPENSATION
WC STATU- OTH-
ANDEMPLOYERVLIABILITY YIN
E.L. EACH ACCIDENT
$
ANY PROPRIETORNARTNEILEXECUTNE
OFFICEIUMEMBER EXCLUDED?
NIA
E.L. DISEASE -EA EMPLOYE
$
(Mandatory In NMI
ITYyeBss deaciasunder
DE84rRIPTION OF OPERATIONS below
E.L. DISEASE -POLICY IIMR
$
C
Excess of Above
G24311406001
06/23H2
O8123114
Excess of
above
16,000,00
DESCRIPTION OF OPERATIONS/ LOCATIONS [VEHICLES Mach AOORD 10/, Addmonal Remarks Schedule, ITmore apace la required)
RE: Coral Mountain Partners, L.P., 79-625 Vista Coralina, La Guinta, Ca.
Additional INsured reads: La Quinta Housing Authority, the City of La Quinta
their respeotive officers, officials, members, employees, representatives,
agents and volunteers. Insurance is Primary and Non Contributory with any
other insurance. 30 days notice of cancellation except 10 days for Non
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE
La Quinta Housing Authority & THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN
g ty ACCORDANCE WITH THE POLICY PROVISIONS.
The City of La Quinta, Its
Directors, Employees & Agents AUTHORIZED REPRESENTATIVE
P. O, Box 1504—
La Quinta, CA 82247 T�rlJ�O�
01888.2010 ACORD CORPORATION. All
ACORD 26 (2010106) The ACORD name and logo are registered marks of ACORD
POLICY NUMBER: VCWP001081
COMMERCIAL GENERAL LIABILITY
CG 2010 07 04
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
ADDITIONAL INSURED - OWNERS, LESSEES OR
CONTRACTORS - SCHEDULED PERSON OR
ORGANIZATION
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
SCHEDULE
Name Of Additional Insured Person(s)
Lane
of La Quints, Its Directors, Employees and La Quints, CA. 92247
Agents
p. O. Box 1504
La Quints, CA.92247
A. Section 11 — Who Is An Insured is amended to
include as an additional insured the person(s) or
organization(s) shown in the Schedule, but only
with respect to liability for "bodily injury", "property
damage" or "personal and advertising injury"
caused, in whole or in part, by:
1. Your acts or omissions; or
2. The acts or omissions of those acting on your
behalf;
In the performance of your ongoing operations for
the additional insured(s) at the location(s) desig-
nated above.
will be shown
B. With respect to the insurance afforded to these
additional Insureds, the following additional exclu-
sions apply:
This Insurance does not apply to "bodily injury" or
"property damage" occurring after:
1. All work, including materials, parts or equip-
ment furnished in connection with such work,
on the project (other than service, maintenance
or repairs) to be performed by or on behalf of
the additional insured(s) at the location of the
covered operations has been completed; or
2. That portion of "your work" out of which the
injury or damage arises has been put to its in-
tended use by any person or organization oth-
er than another contractor or subcontractor
engaged in performing operations for a prin-
cipal as a part of the some project.
CG 2010 07 04 0ISO Properties, Inc., 2004 Page 1 of 1 O
Policy Number. VCWP001081 CG 24 0410 93
Insured Name: Coral Mountain Partners, LP
Number: 1 Effective Date: 08 / 2 3 / 3
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY
WAIVER OF TRANSFER OF RIGHTS OF RECOVERY
AGAINST OTHERS TO US
This endorsement modifies insurance provided under the following:
SCHEDULE
Name of Person or Organization: La Quinta Housing Authority, City of La Quinta their respective
Officers, Officials, Members, Employees, Representatives, Agents and Volunteers
(If no entry appears above, information re uired to complete this endorsement will be shown in the Dec-
larations as applicable to this endorsement
The TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US Condition (Section IV —
COMMERCIAL GENERAL LIABILITY CONDITIONS) is amended by the addition of the following:
We waive any right of recovery we may have against the person or organization shown in the Schedule
above because ogpayments we make for injury or damage arising out of your ongoing operations or
"your work" done under a contract with that person or organization and included in the 'products -
completed operations hazard". This waiver applies only to the person or organization shown in the
Schedule above.
CG 24 0410 93 Copyright, Insurance Services Office, Inc., 1992 Page 1 of 1 13
Polley Nmnber: VCIVP001081 VE 03 581108
Insured Name:CORAL MOUNTAIN PARTNERS LP
Number: 22 Effective Date: 08/23/2012
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
PRIMARY/NONCONTRIBUTORY
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART
If you are required by a written contract to provide primary insurance then this policy shall be
primary and non-contributory and condition 4, Other Insurance, as shown under Section IV on
form CG 00 01 12 07, does not apply but only with respect to coverage provided by this policy
for the additional named insured in the schedule.
Additional Premium: Included
VE 03 58 1108 Page 1 of I
AC R o OP ID: 3H
EVIDENCE OF COMMERCIAL PROPERTY INSURANCE Doeitsi201�2
THIS EVIDENCE OF COMMERCIAL PROPERTY INSURANCE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS
UPON THE ADDITIONAL INTEREST NAMED BELOW. THIS EVIDENCE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER
THE COVERAGE AFFORDED BY THE POLICIES BELOW, THIS EVIDENCE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN
THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE ADDITIONAL INTEREST.
PRppONNOUCCCER NgMIE, Dp g pNONE ,818.763-9366 COM MYNAMEMDADM38 Nae No: 10172
I U VSITTsa InanranCe ServICe6 s
1216E Rivaraida Drlvw 1Westchester Surplus LITIBS
AlC No a7G•/tl2-ZL4i XOpRESS-yanss®Isuvensa.wm IF MULTIPLE COMPANIES, COMPLETE SEPARATE FORM FOR EACH
CODE: SVB CODE: POLICYTYPE
cusyom ER 10 a: CORAL•2
CUSTOM
NAMED INSURED AND ADDRESS _ LOANNUMBER POLICY NUAIBER
Coral Mountain Partners LP
d8]W Adams Street TBD
LaQulnts, CA 92263 EFFECTIVE GATE E%PIRATIONDATE
COMINUEDUMIL
08/23/12 08/23/14 TERMINATEDIF CHECKED
ADDITIONAL NAMED INSURED($! THIS REPLACES PRIOR EVIDENCE DATED:
PROPERTY INFORMATION Use REMARKS on page 2, If mores ace Is required) ® BUILDING OR ❑ BUSINESS PERSONAL PROPERTY
LOCATIONIDESCRIPTION GUILDERS RISK
79-625 Vista Coralina Lane
LaQuinta. CA 02253
THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING
ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS EVIDENCE OF PROPERTY INSURANCE MAY
BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS
OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
r.nVFRAr:F IMFrTRIIIIATIYTN v
COMMERCIAL PROPERTY COVERAGE AMOUNT OF INSURANCE: $33310000
DED:10000
YES
NO
WA
❑ BUSINESS INCOME ❑RENTALVALUE
X
HYES,LIMIT: Actual Loss Suafained; a ofmoNhs:
BLANKET COVERAGE
X
IIYES, Indicate value(s) reported on Property idenaRed above:$
TERRORISM COVERAGE
X
Attach Disclosure Nona I DEC
IS THERE A TERRORISM -SPECIFIC EXCLUSIONS
X
IS DOMESTIC TERRORISM EXCLUDED$
X
LIMITED FUNGUS COVERAGE
X
If YES, LIMIT: DED:
FUNGUS EXCLUSION (if 'YES*. specify organ'uationb form used)
X
REPLACEMENT COST
X
AGREED VALUE
X
COINSURANCE
I X
DYES, %
EQUIPMENT BREAKDOWN(IfApplimble)
X
I
IIYES, LIMIT: 33,310,000 DED: 10,000
ORDINANCEORLAW -Coverage for loss to undamaged Donlon of Mdg
X
-DemolaionCosts
X
If YES, LIMIT: 260000 DED: 10,000
- Ina. Coal of Construction
X
If YES, LIMIT: 250,000 DED: 10000
EARTH MOVEMENT (it Applicable) -
X
If YES, LIMIT: DED:
FLOOD(IlAppllable)
X
It YES, LIMIT: DED.-
WIND I HAIL (it StMect to Different Provisions)
X
UYES, LIMIT: DED:
PERMISSION TO WAIVE SUBROGATION IN FAVOR OF MORTGAGE
HOLDER PRIOR TO LOSS
X
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE
DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS.
Ann1T16NAl INTFRFST
MORTGAGEE
X LENDERS LOSSPAYABLE
COMRACTOFSALE
LENDER SERVICWO AGENT NAME AND ADDRESS
KA10Z ANDAUDRESS
La Qulnta Housing Authority _
and the City of La Qulnta
MWTH2RIZEDWRE9ENTATIVE
P. O. Box 1604
La Qulnta, CA 92247
7,42
ACORD 28 (2009112) Page 1 of 2 ® 2003.2009 ACORD CORPORATION. All rights reserved.
The ACORD name and logo are registered marks of ACORD
If more
0 Soft Cost Including Rental Income; Completed Value Form;
m to Occupy; Wind damage Is not excluded; Temporary
a: $250,000; Property in Transit $260,000; Temporary Storage:
No protective safeguards or warranties apply, Property
Includes supplies, fixtures,machinery, scaffolding & forme,
no and underground work, sidewalks & paving.30 days notice of
on except 10 days for non payment of premium
AUVHU za (zee9liz) Page 2 of z
OPTIM-1 OP ID: SH
,a►`o�rn� CERTIFICATE OF LIABILITY INSURANCE DA 8111Dm2
08113172
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS
CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES
BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(Sh AUTHORIZED
REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.
IMPORTANT: If the certificate holder Is an ADDITIONAL INSURED, the pollcy(les) must be endorsed. If SUBROGATION IS WAIVED, subject to
the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the
certificate holder In lieu of such endorsemen s .
PRODUCER 818-763-9365
ISU Vanes Insurance Services 818-762.2242
12155 Riverside Drive
Valley villagg9, CA 91007
Thomas RHeyes
NAMEAT Susan Hodge
PN NE ,818,763.9365 A� ; 8118.762-2242
aoDREss: susanh lsuvansa.com
INSURE SAFFORDINGCOVERAGE
NAICA
INSURER A: State Compensation Fund
35076
INSURED Optimus Construction Inc.
440 Western Ave. #202
Glendale, CA 91201
INSURER a: Golden Eagle
10836
INSURER c:Scotlsdale Insurance Company
41297
INSURER D:
INSURER E I
INSURER F•
COVERAGES CERTIFICATE NUMBER: REVISION NUMBER:
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD
INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,
EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
INSR
L
TYPE OF INSURANCE
POLICY NUMBER
D YEFF
POD E%P
LIMITS
GENERAL LIABILITY
COMMERCIAL GENERAL LIABILITY
CLAIMSlMDE 0OCCUR
EACH OCCURRENCE
S
PREMISES(Ea rr rr
E
_
MEDEXP(Anyone eraon)
S
PERSONAL& ADV INJURY
$
GENERAL AGGREGATE
$
GENL AGGREGATE
POLICYn
LIMIT APPLIES PER:
PRO- LOC
PRODUCTS•COMPIOPAGG
$
S
B
AUTOMOBILE LIABILITY
X ANY AUTO
AALL
UTOS OWNED SCHEDULED
AUTOS
NON -OWNED
HIREDAUTOS AUTOS
X
24CC28612920
10/23111
10/23112
IT
COMBINED SINGLE LIRA Itle 1
If 11000,09
BODILY INJURY(Perparam)
S
BODILY INJURY(Per eccidantl
E
P UFtKITtDA Ut
S
S
C
X
UMBRELLA WO
EXCESS LIAR
X
OCCUR
CIABASMAOE
LS00077682
11121111
10/21/12
EACH OCCURRENCE
S 5,000,00
AGGREGATE
S 6,000,00
DED I I RETENTION I
S
A
WORKERS COMPENSATION
AND EMPLOYERS' LIABILITY
ANY PRRAff BEREXCLUDEOTXECU� Y❑
OFFICE(Mandatory In NH)
Ifyye3RIPT10N OF OPERATIONS below dow.0 undar
OESt
N/A
X
19000506.10
09101/12
09/01/13
X WC TATU- OTH-
E.LEACH ACCIDENT
S 1,000,00
E.L. DISEASE -EA EMPLOYEE
S 1,000,09
EL. DISEASE • POLICY LIMIT
If1,999,99
DESCRIPTION OF OPERATIONS / LOCATIONS I VEHICLES (Attach ACORD 101, AddliNnal RetrarW ScheduH, Nmore *PON If required)
RE:Coral Mountain Parnters,L.P.79=625 Vista Corallna,La Quinta,CA Additional
reads: La Quinta Housing Authority, the City of La Quint&, their respective
officers, officials, members, employees, representatives, agents and
volunteers. Insurance is Primary and Non Contributory with any other
insurance 30 days notice of cancellation except 10 days for Non Payment
La Quanta Housing Authority
City of La Quinta
P. O. Box 1504
La Quinta, CA 92247
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE
THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED W
ACCORDANCE WITH THE POLICY PROVISIONS.
AUTHORIZED REPRESENTATIVE
ACORD 26 (201Of06)
01988.2010 ACORD
The ACORD name and logo are registered marks of ACORD
reserved.
Recorded at the Request of
Old Republic Title Company
Oakland
t(�� nl
RECORDING REQUESTED BY:
AND WHEN RECORDED RETURN
La Quinta Housing Authority
P.O. Box 1504
La Quints, California 92247
Attention: Executive Director
APN:
DOC # 2012-0412615
08/29/2012 03:25P Fee:NC
Page 1 of 16
Recorded in Official Records
County of Riverside
Larry W. Ward
Assessor, County Clerk & Recorder
1111111111111111111III11111111111111111III11111III 1111
S R U PAGE SIZE DA I MISC I LONG RFD COPY
M A L 465 426 PCOR NCOR SMF CH E% M
T: CTY UNI U0.2
[Free Recording Requested
Government Code Sections 6103 and 27383]
LEASEHOLD DEED OF TRUST
WITH.ASSIGNMENT OF RENTS pfi2
This DEED OF TRUST, dated as of August 1, 2012 for identification purposes only, is
made by and among CORAL MOUNTAIN PARTNERS, L.P., a California limited partnership
("Trustor"), OLD REPUBLIC TITLE COMPANY, a California corporation ("Trustee"), and
LA QUINTA HOUSING AUTHORITY, a public body, corporate and politic ("Beneficiary").
Trustor grants, transfers and assigns to Trustee in trust, upon the trusts, covenants,
conditions and agreements and for the uses and purposes hereinafter contained, with power of
sale, and right of entry and possession, all of its title and interest in that real property (the
"Property") in the City of La Quints, County of Riverside, State of California, described in
Exhibit A attached hereto and incorporated herein by this reference.
Together with Beneficiary's interest in all buildings, structures and improvements of
every nature whatsoever now or hereafter situated on the Property; and
Together with the rents, issues and profits thereof, and together with all buildings and
improvements of every kind and description now or hereafter erected or placed thereon, and all
fixtures, including but not limited to all gas and electric fixtures, engines and machinery,
radiators, heaters, furnaces, heating equipment, laundry equipment, steam and hot-water boilers,
stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and
other plumbing and heating fixtures, mantles, cabinets, refrigerating plant and refrigerators,
whether mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings,
screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings
shall to the extent permitted by law be deemed to be permanently affixed to and a part of the
realty; and
Together with all building materials and equipment now or hereafter delivered to said
premises and intended to be installed therein; and
Together with all plans, drawings, specifications, and articles of personal property now or
hereafter attached to or used in and about the building or buildings now erected or hereafter to be
erected on the Property which are necessary to the completion and comfortable use and
occupancy of such building or buildings for the purposes for which they were or are to be
erected, including all other goods and chattels and personal property as are ever used or
furnished in operating a building, or the activities conducted therein, similar to the one herein
described and referred to, and all renewals or replacements thereof or articles in substitution
8821015610-0047
3790196.3 a0827/12
therefor, whether or not the same are, or shall be attached to said building or buildings in any
manner.
To have and to hold the property hereinbefore described (including the Property and all
appurtenances), all such property being referred to collectively herein as the "Property," to
Trustee, its successors and assigns forever.
FOR THE PURPOSE of securing (1) payment of indebtedness of Trustor to the
Beneficiary in the principal sum of TWENTY-NINE MILLION DOLLARS ($29,000,000) (the
"Authority Loan"), evidenced by that certain Amended and Restated Authority Loan Promissory
Note dated August 1, 2012 between Trustor and Beneficiary (the "Authority Loan Note"),
together with all sums due thereunder including interest and other charges; and (2) the
performance of each agreement of Trustor in this Deed of Trust and the Authority Loan Note,
including, without limitation, that certain Disposition and Development Agreement entered into
by and between Trustor and the former La Quinta Redevelopment Agency, a public body,
corporate and politic (the "Agency"), on or about January 4, 2011 (the "DDA"), and that certain
Ground Lease entered into by and between Trustor and Beneficiary on or about the same date
hereof (collectively, the "Authority Loan Documents"). Said Authority Loan Note and all of its
terms are incorporated herein by reference and this conveyance shall secure any and all
extensions, amendments, modifications or renewals thereof however evidenced, and additional
advances of the Authority Loan evidenced by any note reciting that it is secured hereby.
Pursuant to Assembly Bill 26 from the 2012-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2012 ("ABxl 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was filed, challenging the constitutionality of ABxl 26
and companion bill ABxI 27 (which would have allowed redevelopment agencies to remain in
existence and continue redevelopment, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality of ABxI 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxl 27.
(California Redevelopment Assn. v. Matosantos (2012) 53 Ca1.4th 231. ABxl 26 is chapter 5,
Statutes 2012, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of the Health and Safety Code.
Pursuant to Health and Safety Code Section 341710), added by Part 1.85, the City of La Quinta
("City") is the "successor agency" to the Agency. On January 3, 2012, the La Quinta City
Council adopted Resolution No. 2012-002, pursuant to which the City elected (a) to be the
"successor agency" to the Agency, and (b) to have the Authority be the "housing successor" to
the Agency. On January 17, 2012, the Authority adopted HA Resolution No. 2012-002,
affirmatively electing to be the "housing successor" to the Agency.
Pursuant to Health and Safety Code section 34175(b), added by Part 1.85, all assets,
contracts, and properties of the Agency, including the Property, were transferred to the control of
the City, as the successor agency to the Agency, on February 1, 2012. The Property is a housing
asset of the former Agency, the DDA is an obligation of the former Agency associated with the
housing activities of the former Agency, and administration of the DDA is a housing activity of
the former Agency. Pursuant to Health and Safety Code Section 34177(g), added by Part 1.85,
on March 7, 2012, the City, in its capacity as the successor agency to the former Agency, (i)
882/015610-0047
3780196.3 a0828/12
assigned all of the City's right, title and interest in and to the DDA to the Authority, pursuant to
that certain Assignment and Assumption Agreement entered into by and between the City, as
assignor, and the Authority, as assignee, and (ii) transferred all of its interests in and to the
Property to the Authority.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
That it will pay the Authority Loan Note at the time and in the manner provided
therein;
2. That it will not permit or suffer the use of any of the Property for any purpose
other than the use for which the same was intended at the time this Deed of Trust was executed,
namely, as affordable rental housing;
3. That the Authority Loan Note is incorporated herein and made a part of this Deed
of Trust. Upon default under the Authority Loan Note or this Deed of Trust, Beneficiary, at its
option, may declare the whole of the indebtedness secured hereby to be due and payable;
4. That all rents, profits and income from the Property covered by this Deed of Trust
are hereby assigned to Beneficiary for the purpose of discharging the debt hereby secured.
Permission is hereby given to Trustor so long as no default exists hereunder, to collect such
rents, profits and income;
5. That upon default hereunder, Beneficiary shall be entitled to the appointment of a
receiver by any court having jurisdiction, without notice, to take possession and protect the
Property described herein and operate same and collect the rents, profits and income therefrom;
6. That Trustor will keep the improvements now existing or hereafter erected on the
Property insured against loss by fire and such other hazards, casualties and contingencies as may
be required in writing from time to time by Beneficiary, and all such insurance shall be
evidenced by standard fire and extended coverage insurance policy or policies, in the amount of
the replacement value of the improvements. Such policies shall be endorsed with a standard
mortgage clause with loss payable to Beneficiary subordinate to the rights and interest of the
beneficiary of the deed of trust securing the Senior Loan, as described in paragraph 31, below)
and certificates thereof together with copies of original policies shall be deposited with
Beneficiary;
7. To pay, before delinquency, any taxes and assessments affecting said Property
when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof
which appear to be prior or superior hereto, all costs, fees and expenses of this Trust unless
exemption is obtained therefrom;
8. To keep said Property in good condition and repair, not to remove or demolish
any buildings thereon, to complete or restore promptly and in good and workmanlike manner any
building which may be constructed, damaged, or destroyed thereon and to pay when due all
claims for labor performed and materials furnished therefor (unless contested in good faith if
Trustor provides security satisfactory to Beneficiary that any amounts found to be due will be
paid and no sale of the Property or other impairment of the security hereunder will occur); to
comply with all laws affecting said Property or requiring any alterations or improvements to be
882/015610-0047
3780196.3 a08/28/12
made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act
upon said Property in violation of law and/or covenants, conditions and/or restrictions affecting
said Property; not to permit or suffer any alteration of or addition to the buildings or
improvements hereafter constructed in or upon said Property without the consent of Beneficiary;
9. To appear in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses,
including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or
proceeding in which Beneficiary or Trustee may appear;
10. Should Trustor fail to make any payment or do any act as herein provided, then
Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligation hereof, may make or do the same in
such manner and to such extent as either may deem necessary to protect the security hereof.
Beneficiary or Trustee, being authorized to enter upon said Property for such purposes, may
commence, appear in and/or defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest or
compromise any encumbrance, charge, or lien which in the judgment of either appears to be
prior or superior hereto; and, in exercising any such powers, may pay necessary expenses,
employ counsel, and pay counsel's reasonable fees;
11. Beneficiary shall have the right to pay fire and other property insurance premiums
when due should Trustor fail to make any required premium payments. All such payments made
by Beneficiary shall be added to the principal sum secured hereby;
12. To pay immediately and without demand all sums so expended by Beneficiary or
Trustee, under permission given under this Deed of Trust, with interest from date of expenditure
at the rate specified in the Authority Loan Note;
13. That the Authority Loan advanced hereunder is to be used in the development of
the Property; and upon the failure of Trustor to keep and perform such covenants, the principal
sum and all arrears of interest, and other charges provided for in the Authority Loan Note shall,
at the option of Beneficiary, become due and payable, anything contained herein to the contrary
notwithstanding;
14. Trustor further covenants that it will not voluntarily create, suffer or permit to be
created against the Property, subject to this Deed of Trust, any lien or liens (other than the lien of
a deed of trust recorded prior in time and right to this Deed of Trust and/or the lien of a deed of
trust to which Trustor has expressly agreed to subordinate the lien of this Deed of Trust) except
as authorized by Beneficiary, and further that it will keep and maintain the Property free from the
claims of all persons supplying labor or materials which will enter into the construction of any
and all buildings now being erected or to be erected on the Property;
15. That any and all improvements made or about to be made upon the Property, and
all plans and specifications, comply with all applicable municipal ordinances and regulations and
all other regulations made or promulgated, now or hereafter, by lawful authority, and that the
same will upon completion comply with all such municipal ordinances and regulations and with
the rules of the applicable fire rating or inspection organization, bureau, association or office;
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16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing
representative of Beneficiary a charge not to exceed that permitted by law for providing a
statement regarding the obligation secured by this Deed of Trust as provided by Section 2954,
Article 2, Chapter 2, Title 14, Division 3 of the California Civil Code.
IT IS MUTUALLY AGREED THAT:
17. Subject to any cure rights under the DDA, if the construction of any
improvements as herein referred to shall not be carried on with reasonable diligence, or shall be
discontinued at any time for any reason other than events of Force Maieure pursuant to
Paragraph 36 hereof, Beneficiary, after due notice to Trustor or any subsequent owner, is hereby
invested with full and complete authority to enter upon the Property, employ watchmen to
protect such improvements from depredation or injury and to preserve and protect the personal
property therein, and to continue any and all outstanding contracts for the erection and
completion of said building or buildings, to make and enter into any contracts and obligations
wherever necessary, either in its own name or in the name of Trustor, and to pay and discharge
all debts, obligations and liabilities incurred thereby. All such sums so advanced by Beneficiary
(exclusive of advances of the principal of the indebtedness secured hereby) shall be added to the
principal of the indebtedness secured hereby and shall be secured by this Deed of Trust and shall
be due and payable on demand;
18. In the event of any fire or other casualty to the Project or eminent domain
proceedings resulting in condemnation of the Project or any part thereof, Trustor shall have the
right to rebuild the Project, and to use all available insurance or condemnation proceeds therefor,
provided that (a) such proceeds are sufficient to rebuild the Project in a manner that provides
adequate security to Beneficiary for repayment of the Authority Loan or if such proceeds are
insufficient then Trustor shall have funded any deficiency, (b) Beneficiary shall have the right to
approve plans and specifications for any major rebuilding and the right to approve disbursements
of insurance or condemnation proceeds for rebuilding under a construction escrow or similar
arrangement, and (c) no material default then exists under the Authority Loan Note or this Deed
of Trust. If the casualty or condemnation affects only part of the Project and total rebuilding is
infeasible, then proceeds may be used for partial rebuilding and partial repayment of the
Authority Loan in a manner that provides adequate security for repayment of the remaining
balance of the Authority Loan. The rights of the Beneficiary to any insurance proceeds or
condemnation awards pursuant to this paragraph 18 are and shall be subject to the prior right to
any insurance proceeds or condemnation awards of the beneficiary of the deed of trust securing
the Senior Loan, as described in paragraph 31;
19. Upon default by Trustor in making any payments provided for herein or in the
Authority Loan Note secured hereby, and if such default is not made good within fifteen (15)
days after notice from Beneficiary, or if Trustor shall fail to perform any covenant or agreement
in this Deed of Trust within thirty (30) days after written demand therefor by Beneficiary (or, in
the event that more than thirty (30) days is reasonably required to cure such default, should
Trustor fail to promptly commence such cure, and diligently prosecute same to completion),
Beneficiary may declare all sums secured hereby immediately due and payable by delivery to
Trustee of written declaration of default and demand for sale, and of written notice of default and
of election to cause the Property to be sold, which notice Trustee shall cause to be duly filed for
record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with
Trustee this Deed of Trust, the Authority Loan Note and all documents evidencing expenditures
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secured hereby;
20. After the lapse of such time as may then be required by law following the
recordation of said notice of default, and notice of sale having been given as then required by
law, Trustee, without demand on Trustor, shall sell Trustor's interest in said Property at the time
and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such
order as it may determine at public auction to the highest bidder for cash in lawful money of the
United States, payable at time of sale. Trustee may postpone sale of all or any portion of said
interest by public announcement at the time and place of sale, and from time to time thereafter
may postpone the sale by public announcement at the time fixed by the preceding postponement.
Trustee shall deliver to the purchaser its deed conveying Trustor's interest in the property so
sold, but without any covenant or warranty, express or implied. The recitals in the deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including
Trustor, Trustee or Beneficiary, may purchase at the sale. Trustee shall apply the proceeds of sale
to payment of (1) the expenses of such sale, together with the reasonable expenses of this trust
including therein reasonable Trustee's fees or attorneys' fees for conducting the sale, and the
actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any
search and/or other evidence of title procured in connection with such sale and revenue stamps
on Trustee's deed; (3) all sums expended under the terms hereof, not then repaid, with accrued
interest at the rate specified in the Authority Loan Note; (4) all other sums then secured hereby;
and (5) the remainder, if any, to the person or persons legally entitled thereto;
21. Beneficiary may from time to time substitute a successor or successors to any
Trustee named herein or acting hereunder to execute this Deed of Trust. Upon such appointment,
and without conveyance to the successor trustee, the latter shall be vested with all title, powers,
and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment
and substitution shall be made by written instrument executed by Beneficiary, containing
reference to this Deed of Trust and its place of record, which, when duly recorded in the proper
office of the county or counties in which the property is situated, shall be conclusive proof of
proper appointment of the successor trustee;
22. The pleading of any statute of limitations as a defense to any and all obligations
secured by this Deed of Trust is hereby waived to the full extent permissible by law;
23. Upon written request of Beneficiary stating that all sums secured hereby have
been paid, and upon surrender of this Deed of Trust and the Authority Loan Note to Trustee for
cancellation and retention and upon payment of its fees, Trustee shall reconvey, without
warranty, the property then held hereunder. The recitals in such reconveyance of any matters of
fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may
be described as "the person or persons legally entitled thereto";
24. The trust created hereby is irrevocable by Trustor;
25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto,
their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term
"Beneficiary" shall include not only the original Beneficiary hereunder but also any successor to
Beneficiary's rights, powers, and responsibilities, and any future owner and holder including
pledgees, of the Authority Loan Note secured hereby. In this Deed of Trust, whenever the
context so requires, the masculine gender includes the feminine and/or neuter, and the singular
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number includes the plural. All obligations of each Trustor hereunder are joint and several;
26. Trustee accepts this trust when this Deed of Trust, duly executed and
acknowledged, is made public record as provided by law. Except as otherwise provided by law,
Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of
any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless
brought by Trustee;
27. The undersigned Trustor requests that copies of any notice of default and of any
notice of sale hereunder be mailed to it at Coral Mountain Partners, L.P., 46753 Adams Street,
La Quinta, CA 92253 and to:
Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Phone No.: (213) 239-8088
Facsimile No.: (213) 559-0733_
Attention: Lance Bocarsly
Hamilton USBCDC Investments, L.P.
1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
Phone No.: (314) 335-2600
Facsimile No.: (314) 335-2601
Attention: Project Manager
U.S. Bancorp Community Development Corporation
1307 Washington Avenue; Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
Phone No.: (314) 335-2600
Facsimile No.: (314) 335-2601
Attention: Director of Asset Management
Jana Cohen Bathe, Esq.
SNR Denton
233 South Wacker Drive, Suite 7800
Chicago, IL 60606
Phone No.: (312) 876-7967
Facsimile No.: (312) 876-7934
28. Trustor agrees, at any time after receipt of a written request from Beneficiary, to
furnish to Beneficiary a detailed statement in writing of income, rents, profits, and operating
expenses of the premises, and the names of the occupants and tenants in possession, together
with the expiration dates of their leases and full information regarding all rental and occupancy
agreements, and the rents provided for by such leases and rental and occupancy agreements, and
such other information regarding the Property and their use as may be requested by Beneficiary.
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29. The full principal amount outstanding plus accrued but unpaid interest thereon,
shall be due and payable on the earlier to occur of the following:
(a) Sale, transfer, assignment or refinancing of the Property as provided
further in this paragraph 29; unless: (i) in the case of a sale in which the sale proceeds are
insufficient to repay in full the Authority Loan, the Beneficiary approves such sale and the
purchaser assumes the balance of the Authority Loan in accordance with the terms of the
Authority Loan Note; or (ii) in the case of a refinancing in which the refinancing proceeds are
insufficient to repay in full the Authority Loan, the Beneficiary approves such refinancing and
the Borrower remains obligated pursuant to the terms of the Note.
(b) In order to induce Beneficiary to make the loan evidenced hereby, Trustor
agrees that in the event of any transfer of the Property without the prior written consent of
Beneficiary (other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of
foreclosure, by the holder of the deed of trust securing the Senior Loan), Beneficiary shall have
the absolute right at its option, without prior demand or notice, to declare all sums secured
hereby immediately due and payable. Consent to one such transaction shall not be deemed to be
a waiver of the right to require consent to future or successive transactions. Beneficiary may
grant or deny such consent in its sole discretion and, if consent should be given, any such
transfer shall be subject to this paragraph 29, and any such transferee shall assume all obligations
hereunder and agree to be bound by all provisions contained herein. Such assumption shall not,
however, release Trustor from any liability thereunder without the prior written consent of
Beneficiary.
(c) As used herein, "transfer" includes the sale, agreement to sell, transfer or
conveyance of Trustor's leasehold interest in the Property, or any portion thereof or interest
therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any
installment land sale contract or similar instrument affecting all or a portion of the Property, or
the lease of all or substantially all of the Property. "Transfer" shall not include the leasing of
individual residential units on the Property or any transfers of the limited partnership interests in
Trustor or any replacement of a general partner of Trustor by its limited partner pursuant to the
agreement that sets forth the terms of the Trustor's limited partnership (the "Partnership
Agreement").
(d) The term "Sale" means any transfer, assignment, conveyance or lease
(other than to a tenant for occupancy) of Trustor's leasehold interest iw the Property and/or the
improvements thereon, or any portion thereof, or any interest therein by the Trustor, but excludes
any purchase option agreement given to Trustor's general partner(s). Sale includes a sale in
condemnation or under threat thereof. Sale does not include dedications and grants of easements
to public and private utility companies of the kind customary in real estate development. Sale
shall also not include any transfers of the limited partnership interests in Trustor or any
replacement of a general partner of Trustor by its limited partner pursuant to the Partnership
Agreement.
Notwithstanding anything to the contrary contained in this Deed of Trust or in the
Authority Loan Note, prior to declaring any default or taking any remedy permitted under this
Deed of Trust, the Authority Loan Note or applicable law based upon an alleged default,
Hamilton USBCDC Investments, L.P. (the "Investor") shall have a period of not less than thirty
(30) days to cure such alleged default; provided, however, if in order to cure such default the
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Investor reasonably believes that it must remove a general partner of Trustor, or all of them,
pursuant to the Partnership Agreement, the Investor shall so notify Beneficiary and so long as the
Investor is reasonably and diligently attempting to remove the general partner or general
partners, the Investor shall have until the date thirty (30) days after the effective date of the
removal of the general partner or general partners to cure such default.
30. Trustor shall permit Beneficiary and its agents or representatives, to inspect the
Property at any and all reasonable times, with twenty-four (24) hours advance notice. Inspections
shall be conducted so as not to interfere with the tenants' use and enjoyment of the Property.
31. It is hereby expressly agreed and acknowledged by Trustor and Beneficiary that
this Deed of Trust is a second and subordinate deed of trust, and that the Authority Loan secured
hereby, and the Authority Loan Note are subject and subordinate only to the deed of trust
securing a loan to Trustor in original principal amount of Twenty -Four Million Four Hundred
Thousand Dollars ($24,400,000) in which Citibank, N.A., a national banking association
("Senior Lender") is the Beneficiary, including any loan that refinances the balance of the Senior
Loan or an assignment of the Senior Loan (collectively referred to as the "Senior Loan").
32. For purposes of this Deed of Trust, "Hazardous Materials" means any substance,
material, or waste which is or becomes regulated by any local governmental authority, the State
of California, or the United States Government, including, but not limited to, any material or
substance which is (i) defined as a "hazardous waste", "acutely hazardous waste", "extremely
hazardous waste", or `restricted hazardous waste" under Section 25115, 25117 or 25122.7, or
listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter
6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section
25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -
Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material", "hazardous
substance", or "hazardous waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv)
defined as a "hazardous substance" under Section 25281 of the California Health and Safety
Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum,
(vi) asbestos, (vii) polychlorinated biphenyls, (viii) listed under Article 9 or defined as
"hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code
of Regulations, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311
of the Clean Water Act (33 U.S.C. Section 1317), (x) defined as a "hazardous waste" pursuant to
Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.
(42 U.S.C. Section 6903), (xi) defined as "hazardous substances" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section
9601 et seq., (xii) methyl -tertiary butyl ether, (xiii) perchlorate or (xiv) any other substance,
whether in the form of a solid, liquid, gas or any other form whatsoever, which by any
governmental requirements either requires special handling in its use, transportation, generation,
collection, storage, handling, treatment or disposal, or is defined as "hazardous" or harmful to the
environment. For purposes hereof, "Hazardous Materials" excludes materials and substances in
quantities as are commonly used in the construction and operation of an apartment complex
provided that such materials and substances are used in accordance with all applicable laws.
33. In addition to the general and specific representations, covenants and warranties
set forth in this Deed of Trust or otherwise, Trustor represents, covenants and warrants, with
882/015610-0047 -(�-
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respect to Hazardous Materials, as follows:
(a) Neither Trustor nor, to the best knowledge of Trustor, any other person,
has ever caused or permitted any Hazardous Materials to be manufactured, placed, held, located
or disposed of on, under or at the Property or any part thereof, and neither the Property nor any
part thereof, or any property adjacent thereto, has ever been used (whether by Trustor or, to the
best knowledge of the Trustor, by any other person) as a manufacturing site, dump site or storage
site (whether permanent or temporary) for any Hazardous Materials;
(b) Trustor hereby agrees to indemnify Beneficiary, its officers, employees,
contractors and agents, and hold Beneficiary, its officers, employees, contractors and agents
harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and
claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against
Beneficiary, its officers, employees, contractors or agents for, with respect to, or as a direct or
indirect result of, the presence or use, generation, storage, release, threatened release or disposal
of Hazardous Materials on or under the Property or the escape, seepage, leakage, spillage,
discharge, emission or release of any Hazardous Materials from the Property (including, without
limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising
under CERCLA, any so-called "Superfund" or "Superlien" law, or any other federal, state or
local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous Materials), caused by
Trustor.
(c) Trustor has not received any notice of (i) the happening of any event
involving the use, spillage, discharge or cleanup of any Hazardous Materials ("Hazardous
Discharge") affecting Trustor or the Property or (ii) any complaint, order, citation or notice with
regard to air emissions, water discharges, noise emissions or any other environmental, health or
safety matter affecting Trustor or the Property ("Environmental Complaint") from any person or
entity, including, without limitation, the United States Environmental Protection Agency
("EPA"). If Trustor receives any such notice after the date hereof, then Trustor will give, within
seven (7) business days thereafter, oral and written notice of same to Beneficiary.
(d) Without limitation of Beneficiary's rights under this Deed of Trust,
Beneficiary shall have the right, but not the obligation, to enter onto the Property or to take such
other actions as it deems necessary or advisable to clean up, remove, resolve or minimize the
impact of, or otherwise deal with, any such Hazardous Materials or Environmental Complaint
upon its receipt of any notice from any person or entity, including without limitation, the EPA,
asserting the existence of any Hazardous Materials or an Environmental Complaint on or
pertaining to the Property which, if true, could result in an order, suit or other action against
Trustor affecting any part of the Property by any governmental agency or otherwise which, in the
sole opinion of Beneficiary, could jeopardize its security under this Deed of Trust. All reasonable
costs and expenses incurred by Beneficiary in the exercise of any such rights shall be secured by
this Deed of Trust and shall be payable by Trustor upon demand together with interest thereon at
a rate equal to the highest rate payable under the Authority Loan Note secured hereby.
34. The following shall be an "Event of Default:"
(a) Failure of Trustor to pay, when due, principal and interest and any other
sums or charges on the Authority Loan Note, in accordance with the provisions set forth in the
882/015610-0047 _10_
3780196.3 a08/28/12
Authority Loan Note and such failure is not cured within fifteen (15) days after receipt of written
notice from Beneficiary; or
(b) A violation of the terms, conditions or covenants of the Authority Loan
Note, this Deed of Trust, the DDA, Authority Regulatory Agreement, or Ground Lease
35. Subject to the extensions of time set forth in paragraph 36, and subject to the
further provisions of this paragraph 35 and of paragraphs 37 and 38, failure or delay by the
Trustor to perform any term or provision of this Deed of Trust constitutes a default under this
Deed of Trust. The Trustor must immediately commence to cure, correct, or remedy such failure
or delay and shall complete such cure, correction or remedy with reasonable diligence.
(a) The Beneficiary shall give written notice of default to the Trustor with a
copy to the limited partners of Trustor for which Beneficiary has been supplied with address for
notice, specifying the default complained of by the Beneficiary. Delay in giving such notice
shall not constitute a waiver of any default.
(b) The Trustor shall not be in default so long as it endeavors to complete
such cure, correction or remedy with reasonable diligence, provided such cure, correction or
remedy is completed within thirty (30) days after receipt of written notice (or such additional
time as may be reasonably necessary to correct the cause).
(c) Any failures or delays by the Beneficiary in asserting any of its rights and
remedies as to any default shall not operate as a waiver of any default or of any such rights or
remedies. Delays by the Beneficiary in asserting any of its rights and remedies shall not deprive
the Beneficiary of its right to institute and maintain any actions or proceedings which it may
deem necessary to protect, assert, or enforce any such rights or remedies.
36. Notwithstanding specific provisions of this Deed of Trust, performance hereunder
shall not be deemed to be in default where delays or defaults are due to: war; insurrection;
strikes; lock -outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of
the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation;
governmental restrictions or priority; litigation; unusually severe weather; inability to secure
necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party;
acts or failure to act of the Beneficiary, or any other public or governmental agency or entity
(except that any act or failure to act of Beneficiary shall not excuse performance by Beneficiary);
or any other causes beyond the reasonable control or without the fault of the party claiming an
extension of time to perform. An extension of time for any such cause shall be for the period of
the enforced delay and shall commence to run from the time the party claiming such extension
gives notice to the other party, provided notice by the party claiming such extension is given
within thirty (30) days after the commencement of the cause. Times of performance under this
Deed of Trust may also be extended in writing by the Beneficiary and Trustor.
37. If a monetary event of default occurs under the terms of the Authority Loan Note
or this Deed of Trust, prior to exercising any remedies thereunder Beneficiary shall give Trustor
written notice of such default. Trustor shall have a period of fifteen (15) days after such notice is
given within which to cure the default prior to exercise of remedies by Beneficiary under the
Authority Loan Note and this Deed of Trust.
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38. If a non -monetary event of default occurs under the terms of the Authority Loan
Note or this Deed of Trust, prior to exercising any remedies hereunder or thereunder, Beneficiary
shall give Trustor notice of such default. If the default is reasonably capable of being cured
within thirty (30) days, Trustor shall have such period to effect a cure prior to exercise of
remedies by the Beneficiary under the Authority Loan Note and this Deed of Trust. If the default
is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (a)
initiates corrective action within said period, and (b) diligently, continually, and in good faith
works to effect a cure as soon as possible, then Trustor shall have such additional time as is
reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. In no
event shall Beneficiary be precluded from exercising remedies if its security becomes or is about
to become materially jeopardized by any failure to cure a default or the default is not cured
within one hundred eighty (180) days after the first notice of default is given.
39. Beneficiary shall provide those limited partners of Trustor for which Beneficiary
has been supplied with address for notice with a copy of any written notice provided to Trustor
under the terns of the Authority Loan Documents. In the event of a monetary event of default,
Trustor's limited partners shall have a period of fifteen (15) days after receipt of such notice, or
such longer period of time as may be set forth in the Authority Loan Documents, to cure the
default prior to exercise of any remedy by Beneficiary. In the event a non -monetary event of
default occurs under any Authority Loan Document, Trustor's limited partners shall have a
period of thirty (30) days after receipt of such notice, or such longer period of time as may be set
forth in the Authority Loan Documents, to cure the default prior to exercise of any remedy by
Beneficiary. Notwithstanding anything to the contrary contained in the Authority Loan
Documents, Beneficiary hereby agrees that any cure of any default made or tendered by
Trustor's limited partners shall be deemed to be a cure by Trustor and shall be accepted or
rejected on the same basis as if such cure were made or tendered by Trustor.
40. Subject to paragraph 36, Trustor, upon the occurrence of an Event of Default as
described in paragraph 34 that has not been cured with the applicable cure period set forth in
paragraph 37 or 38, shall be obligated to repay the Authority Loan and, subject to the
nonrecourse provision of the Authority Loan Note, Beneficiary may seek to enforce payment of
any and all amounts due by Trustor pursuant to the terms of the Authority Loan Note.
41. All expenses (including reasonable attorneys' fees and costs and allowances)
incurred in connection with an action to foreclose, or the exercise of any other remedy provided
by this Deed of Trust, including the curing of any Event of Default, shall be the responsibility of
Trustor.
42. Except as provided in paragraph 31, each successor owner of an interest in the
Property, other than through foreclosure, deed in lieu of foreclosure or an owner who takes an
interest in the Property after a foreclosure has occurred, shall take its interest subject to this Deed
of Trust.
43. Notwithstanding anything to the contrary herein, Beneficiary agrees that this
Deed of Trust is and shall be subordinate to any extended low-income housing commitment (as
such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the "Extended Use
Agreement") recorded against the Property; provided that such Extended Use Agreement, by its
terms, will terminate upon foreclosure or upon a transfer of the Property by instrument in lieu of
foreclosure in accordance with said Section 42(h)(6)(B).
8821015610-0047 -12-
3780196.3 a0828/12
"Trustor"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company,
administrative eenerat narner
By: KD Hou i Part ers, Inc.,
a Calif corpo ation, its manager
Date: 0 2012 By:
By: WCH Affordable VIII, LLC,
a California limited liability company,
managing general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
Date:
2012 By: a
Sandra C. Gibbons,
Chief Financial Officer
982/015610-0047 -13-
3780196.3 a08Q7/12
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
ss.
COUNTY OF LOS ANGELES )
On August 27, 2012, before me, R. Shupe, Notary Public, personally appeared John Durso and
Sandra C. Gibbons,
who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) *re subscribed to the
within instrument and acknowledged to me that ffWp* a/they
executed the same in hWlof?r/their authorized capacity(ies),
and that by h4l"r/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s)
R.SNUPE acted, executed the instrument.
Commission ♦ 104352 1 certify under PENALTY OF PERJURY under the laws of the
Notary Public • countYla State of California that the foregoing is true and
San Francisco County 9 9
M Comm. Ea ires Nor 25. 2014po correct.
WITNESS my hand and official seal.
Place Notary Seal Above n _ „ " Signature of Notary Public
ORDER NO.: 1117011827.1
EXHIBIT A
The land referred to is situated in the County of Riverside, City of La Quinta, State of California,
and is described as follows:
Leasehold estate as created by that certain Ground Lease dated Auguso , 2012, made by
and between La Quinta Housing Authority, a public body, corporate and politic, as lessor, and
Coral Mountain Partners, L.P., a California limited partnership, as lessee, for the term of 55
years and upon the terms and conditions contained in said lease and subject to provisions
contained in the lease which limit the right of possession, a Memorandum thereof recorded
-a c�- 2012, Instrument No. 2012- Cr)c{Ia.(�0°I in and to the following:
In the City of La Quinta, County of Riverside, State of California, that portion of the West half, of
the East half and the East half of the West half of the Northwest quarter of the Southeast
quarter of Section 29, Township 5 South, Range 7 fast, San Bernardino Base and Meridian,
more particularly described as follows:
Commencing at the East quarter corner of said Section 29; thence South 891 39' 16" West
along the North line of said Southeast quarter, a distance of 1,656.57 feet to the Northeast
corner of said West half of the East half of the Northwest quarter of the Southeast quarter of
Section 29; thence South 001 08' 10" East along the East line of said West half of the East half
of the Northwest quarter of the Southeast quarter Section 29, a distance of 60.93 feet to the;
South right-of-way line of Highway 111 as granted to the City of La Quinta per Instrument No.
2007-0076267 recorded February 1, 2007 and re -recorded February 14, 2007 as Instrument
No. 2007-0103255, O.R.
Thence continuing South 000 08' 10" East along said East line a distance of 626.13 feet to the
beginning of a non -tangent curve, concave Northerly, having a radius of 300.00 feet, a radial
line to said point bears South 010 53' 43" West, and the true point of beginning,,
Thence leaving said East line and Westerly along the arc.of said curve, through a central angle
of 160 09' 07", an arc distance of 84.57 feet to the beginningof a reverse curve concave,
Southerly, having a radius of 300.00 feet, a radial line to said point bears North 180 02' 50"
East; thence Westerly along the arc of said curve through a central angle of 180 02' 50", an arc
distance of 94.50 feet; thence North 900 00' 00" West a distance of 264.78 feet to the
beginning of a tangent curve, concave Southeasterly, having a radius of 200.00 feet;
Thence Southwesterly along the arc of said curve, through a central angle of 900 09' 34", an
arc distance of 314.72 feet; thence non -tangent to said curve South 89° 50' 26" West, a
distance of 21.18 feet to the West line of said East half of the West half of the Northwest
quarter of the Southeast quarter of Section 29; thence South 000 09' 34" East along said West
line, a distance of 500.13 feet to the South line of said Northwest quarter of the Southeast
quarter of Section 29; thence South 890 48' 22" East along said South line a distance of 662 14
feet to said East line of the West half of the East half of the Northwest quarter of the Southeast
quarter of Section 29; thence North 000 18' 10" West along said East line, a distance of 673.63
feet to the true point of beginning.
Said land is also shown as Parcel 2 of Lot line Adjustment No. 2010-508 as Disclosed by Grant
Deed recorded December 2, 2010, as Instrument No. 2010-575516, of Official Records.
APN: 600-020-054
DOC # 2012-0412609
08/29/2012 03:28P Fee:36.00
Page 1 of 8 Doe T Tax Paid
Recorded at the Request of Recorded in Official Records
Old Republic Title Company County of Riverside
Oakland Assessor, Larry J. Counky Clerk &Recorder
i 11� 1 19�
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
La Quinta Housing Authority S R U PAGE I SIZE DA MISC LONG RFD COPY
P.O. Box 1504
La Quinta, CA 92247 M A L 1 465 1 426 PCOR NCOR SMF NCHG E%AM
Attn: Executive Director ��//�� O� h
(,�- T: d.V CTY UNI
1�2 - Exempt veer cent od Fee ursion 27 t to 2�
Government Code Section 27353 �J
—M,6# O29 39
MEMORANDUM OF UNRECORDED GROUND LEASE O
This MEMORANDUM OF UNRECORDED GROUND LEASE ("Memorandum") is -L
hereby entered into as of August 1, 2012 by and between LA QUINTA HOUSING
AUTHORITY, a public body, corporate and politic ("Landlord"), and CORAL MOUNTAIN
PARTNERS, L.P., a California limited partnership ("Tenant').
RECITALS
A. Landlord and Tenant have entered into a "Ground Lease" dated concurrently
herewith for that certain real property owned by the Landlord (the "Property"), which provides
for the construction, maintenance, management and operation of a 176-unit affordable
multifamily apartment project, to be made available long term at an affordable housing cost (the
"Project').The Property is legally described in Exhibit "A." which is attached hereto and
incorporated herein by this reference. A copy of the Ground Lease is available for public
inspection at the office of the City Clerk of the City of La Quinta, 78-495 Calle Tampico, La
Quinta, CA 92253.
B. The term of the Ground Lease commences on the date of recordation of this
Memorandum of Unrecorded Ground Lease in the Official Records of Riverside County and
continues until the earlier to occur of (a) December 31, 2070, or (b) the fifty-fifth (55th)
anniversary of the date seventy-five percent (75%) of the units have been leased to and are
occupied by income -qualified tenants at affordable rents. The term may be extended by
agreement of Landlord and Tenant for two additional ten (10) year periods.
C. The Ground Lease provides that a short form memorandum of the Ground Lease
shall be executed and recorded in the Official Records of Riverside County, California.
NOW, THEREFORE, the parties hereto certify as follows:
Landlord, pursuant to the Ground Lease, hereby leases the Property to the Tenant upon
the terns and conditions provided for therein. This Memorandum of Lease is not a complete
summary of the Ground Lease, and shall not be used to interpret the provisions of the Ground
Lease.
[end - signatures on next page]
882/015610-0047
4100224.1 e0827/12
executed in counterpart
"Tenant"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company,
administrative geneX4 partner
IC�
Inc.,
n, its manager
Date: 2012 By: ILA
JohO Quo, President
By: WCH Affordable VIII, LLC,
a California limited liability company,
managing general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
q manager
Date: U 2012 By: ) �' �Ijjk
Sandra C. Gibbons,
Chief Financial Officer
'82/015610-0047 _3_
4100224.1 4OM7/12 -
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
ss.
COUNTY OF LOS ANGELES )
On August 27, 2012, before me, R. Shupe, Notary Public, personally appeared John Durso and
Sandra C. Gibbons,
who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that hVspre/they
executed the same in "r/their authorized capacity(ies),
and that by hid/h*/their signature(s) on the instrument the
R. - - - person(s), or the entity upon behalf of which the person(s)
Commission i 1914352 acted, executed the instrument.
Notary Public - California
Son Francisco county I certify under PENALTY OF PERJURY under the laws of the lify Comm. Ea Tres Nov25, 2010+ State of California that the foregoing paragraph is true and
correct.
WITNESS my hand and official seal.
Place Notary Seal Above , , Signature of Notary Public .
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
Date: 2012 By:
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Its: Executive Director
[signatures continued on next page]
882/015610-0047 _
4100224.1 a08/27/12 _2
Iwo- �■ �;
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
i rranK J. Jpevace K, txecutive UIrector
[signatures continued on next page]
882/015610-0047
4100224.1 a0827/12
State of California
County of Riverside
On LM, Z7 xo l L before me, St4 A 1j MA YS EIS
i (insert name and title of the officer)
Notary Public, personally appeared T RAO, Ji srg� AGEk
who proved to me on the basis of satisfactory evidence to be the person(R) whose name(N) is/arr
subscribed to the within instrument and acknowledged to me that he/o4ei+e�6 executed the same
in his/kerftheir authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(e) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
St)SAN M�AYSELS
WITNESS my hand and official seal.
,COMM.Ity�7 x
g NOTARY P �c C&IFORNA
OUNTY
'g� O EI iresARR13 200
inw
Signature
(Seal)
State of California )
County of Riverside )
On
before me,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
882/015610-0047
4100224.1 a08/27/12
EXHIBIT A TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER -OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID.
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01°53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16-09-07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18-02-50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
882/015610-0047
4100224.1 a08/27/12
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90009'34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34' EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048*22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
882/015610-0047
4100224.1 a08/27/12
DOC # 2012-0412611
0
RecordLd at the Request of 08/29/2012 03:25P Fee:NC
Olo Repcolic Title Company Page t of 53
Oakland Recorded in Official Records
ll��' County of Riverside
����"l?
t �I U " Larry W. Ward
REQUESTED BY Assessor, County Clerk & Recorder
AND WHEN RECORDED MAIL TO: Ll 1111111111111111111111111111111111111111111111111111111
La Quinta Housing Auorit
Q gthY S R U PAGE SIZE DA MISC LONG RFD COPY
H
P.O. Box 1504
La Quinta, California 92247 exnm
Attn: Executive Director M A L 1 465 1 426 PCOR NCOR SMF NCHG
C (AIL T: CTY UNI ou�
This document is exempt from a recording fee pursuant to ,ram,/
Government Code Sections 6103 and 27383. le
AFFORDABLE HOUSING REGULATORY AGREEMENT M
This AFFORDABLE HOUSING REGULATORY AGREEMENT (this "Regulatory
Agreement"), dated for purposes of identification only as of August 1, 2012 (the "Date of
Regulatory Agreement"), is entered by and between the LA QUINTA HOUSING
AUTHORITY, a public body, corporate and politic, (the "Authority"), and CORAL
MOUNTAIN PARTNERS, L.P., a California limited partnership (the "Developer").
RECITALS
The following recitals are a substantive part of this Regulatory Agreement; all capitalized
terms set forth in the Recitals shall have the meanings ascribed to such terms in Section 1 hereof.
A. The Developer and the former La Quinta Redevelopment Agency ("Agency")
entered into that certain Disposition and Development Agreement concerning Developer's
construction of the Project at the Property (the "DDA").
B. Pursuant to Assembly Bill 26 from the 2012-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2012 ("ABxl 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was filed, challenging the constitutionality of ABxl 26
and companion bill ABxI 27 (which would have allowed redevelopment agencies to remain in
existence and continue redevelopment, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality of ABxl 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxI 27.
(California Redevelopment Assn. v. Matosantos (2012) 53 CalAth 231. ABxl 26 is chapter 5,
Statutes 2012, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of the Health and Safety Code.
Pursuant to Health and Safety Code Section 341710), added by Part 1.85, the City of La Quinta
("City") is the "successor agency" to the Agency. On January 3, 2012, the La Quints City
Council adopted Resolution No. 2012-002, pursuant to which the City elected (a) to be the
"successor agency" to the Agency, and (b) to have the Authority be the "housing successor" to
the Agency. On January 17, 2012, the Authority adopted HA Resolution No. 2012-002,
affirmatively electing to be the "housing successor" to the Agency.
examW in oounterpart
882/015610-0047
3786108.4 a0827/12
Pursuant to Health and Safety Code section 34175(b), added by Part 1.85, all assets,
contracts, and properties of the Agency, including the Property, were transferred to the control of
the City, as the successor agency to the Agency, on February 1, 2012. The Property is a housing
asset of the former Agency, the DDA is an obligation of the former Agency associated with the
housing activities of the former Agency, and administration of the DDA is a housing activity of
the former Agency. Pursuant to Health and Safety Code Section 34177(g), added by Part 1.85,
on March 7„ 2012, the City, in its capacity as the successor agency to the former Agency, (i)
assigned all of the City's right, title and interest in and to the DDA to the Authority, pursuant to
that certain Assignment and Assumption Agreement entered into by and between the City, as
assignor, and the Authority, as assignee, and (ii) transferred all of its interests in and to the
Property to the Authority.
C. Copies of the DDA are available for inspection and copying as a public record in
the office of the Authority Secretary located at 78-495 Calle Tampico, La Quinta, California,
92253.
D. The DDA provides, among other things, that (i) Authority provide Developer with
a leasehold interest in the Property, (ii) Developer construct the Project and thereafter operate the
Housing Development, and (iii) the Parties execute and record this Regulatory Agreement
against the Property.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS.
"Additional Regulatory Agreements" means, collectively, the Bond Regulatory
Agreement and the Tax Credit Regulatory Agreement.
"Affiliate" means any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Developer which, if
Developer is a partnership or limited liability company, shall include each of the constituent
members or partners, respectively thereof. The term "control" as used in the immediately
preceding sentence, means, with respect to a person that is a corporation, the right to the
exercise, directly or indirectly, of more than fifty percent (50%) of the voting rights attributable
to the shares of the controlled corporation, and, with respect to a person that is not a corporation,
the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled person.
"Affordability Period" means the period commencing upon the date on which the
Release of Construction Covenants is recorded in the Official Records of Riverside Count,
California and ending on the earlier to occur of (a) December 31, 2070, or (b) the fifty-fifth (551 )
anniversary of the date seventy-five percent (75%) of the Affordable Units in the Housing
Development have been leased to and occupied by Eligible Tenants at an Affordable Rent.
Notwithstanding the foregoing, if the term of the Ground Lease is extended pursuant to the terms
thereof, the Affordability Term shall automatically be extended to be coterminous therewith.
"Affordable Units" means the following one hundred seventy-six (176) rental units in
the Housing Development:
882/015610-0047 _
3786108.4 a08/27/12 -2
(i) forty (40), one (1) bedroom, one (1) bath units;
(ii) eighty-two (82), two (2) bedroom, one (1) bath units; and
(iii) fifty-four (54), three (3) bedroom, two (2) bath units.
"Affordable Rent" means the maximum Monthly Rent that may be charged to and paid
by Very Low Income Households, Lower Income Households, and Moderate Income
Households, as applicable, for the Affordable Units as annually determined pursuant to Health
and Safety Code Section 50053(b), as of the date hereof, and the regulations promulgated
pursuant to and incorporated therein.
"Annual Project Revenue" means all gross income and all revenues of any kind from
the Housing Development in a calendar year, of whatever form or nature, whether direct or
indirect, with the exception of the items excluded below, actually received by or paid to or for
the account or benefit of Developer or any Affiliate of Developer or any of their agents or
employees, from any and all sources, resulting from or attributable to the ownership, operation,
leasing and occupancy of the Housing Development, determined on the basis of generally
accepted accounting principles applied on a consistent basis, and shall include, but not be limited
to: (i) gross rentals paid by tenants of the Housing Development under leases, and payments and
subsidies of whatever nature, including without limitation any payments, vouchers or subsidies
from the U.S. Department of Housing and Urban Development or any other person or
organization, received on behalf of tenants under their leases, (ii) amounts paid by residents of
the Housing Development to Developer or any Affiliate of Developer on account of Operating
Expenses for further disbursement by Developer or such Affiliate to a third party or parties,
(iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses, concessions,
vending machines, coin laundry and similar sources, (v) other fees, charges or payments not
denominated as rental but payable to -Developer in connection with the rental of office, retail,
storage, or other space in the Housing Development, (vi) consideration received in whole or in
part for the cancellation, modification, extension or renewal of leases, and (vii) interest and other
investment earnings on security deposits, reserve accounts and other Housing Development
accounts to the extent disbursed for other than the purpose of the reserve. Notwithstanding the
foregoing, gross income shall not include the following items: (a) security deposits from tenants
(except when applied by' Developer to rent or other amounts owing by tenants); (b) capital
contributions to Developer by its members, partners or shareholders (including capital
contributions required to pay any Deferred Developer Fee); (c) condemnation or insurance
proceeds; (d) funds received from any source actually and directly used for initial development
of the Housing Development; (e) receipt by an Affiliate of management fees or other bona fide
arms -length payments for reasonable and necessary Operating Expenses associated with the
Housing Development, including but not limited to, any Partnership Related Fees; (f) Transfer
Net Proceeds; or (g) Refinancing Net Proceeds.
"Approved Financing" means generally, the financing approved by the Authority
pursuant to Section 6.7 of the DDA obtained by Developer for the acquisition of a leasehold
interest in the Property and the construction/development and ownership of the Project. In
addition, "Approved Financing" shall include any refinancing of the Approved Financing which
has been approved by Authority.
882/015610-0047 3786108.4 a08/27/12 -3-
"Approved Pro Forma" means that certain pro forma created in connection with the
Project Budget attached to the DDA.
"Authority" means the La Quinta Housing Authority, a public body, corporate and
politic, exercising governmental functions and powers and organized and existing under the
California Housing Authorities Law, and any assignee of or successor to its rights, powers and
responsibilities. The Executive Director of Authority, or his or her designee, (hereinafter defined
as the "Executive Director") shall represent Authority in all matters pertaining to this Regulatory
Agreement. Whenever a reference is made herein to an action or approval to be undertaken by
Authority,. the Executive Director is authorized to act unless this Regulatory Agreement
specifically provides otherwise or the context should otherwise require.
"Authority Deed of Trust" means that certain deed of trust executed by Developer, as
"Trustor," in favor of Authority, as "Beneficiary," securing Developer's repayment under the
Authority Note.
"Authority Loan" means the loan provided by the Authority to Developer pursuant to
the DDA to develop the Project.
"Authority Note" means that certain Amended and Restated Authority Loan Promissory
Note executed by Developer on or about the same date hereof, that evidences Developer's
obligation to repay the Authority Loan.
"Bond Regulatory Agreement" means the regulatory agreement which may be required
to be recorded against the Property with respect to the issuance of tax-exempt multi -family
housing revenue bonds.
"Capital Replacement Reserve" means a capital replacement reserve for the Project
(i) initially consisting of not less than Zero Dollars ($0.00), (or such greater amount required
under either of the Additional Regulatory Agreements, or under the Partnership Agreement) set
aside in a separate interest -bearing trust account, commencing upon the rental of the Affordable
Units, and (ii) replenished from annual deposits of Forty -Four Thousand Dollars ($44,000) of
Annual Project Revenue to the extent available after payment of Operating Expenses and Debt
Service, adjusted annually by the CPI Adjustment (unless otherwise agreed to by Developer and
Authority) or as required under the Partnership Agreement (or such greater amount required
under either of the Additional Regulatory Agreements, or under the Partnership Agreement).
"Certification of Continuing Program Compliance" means an annual recertification
form substantially in the form attached hereto and incorporated herein as Exhibit E.
"Certificate of Occupancy" means the final certificate of occupancy issued by the City
for the completion of construction of the Project.
"City" means the City of La Quinta, a California municipal corporation and charter city.
"Construction Financing" means a loan in an amount not less than Twenty -Four
Million Four Hundred Thousand Dollars ($24,400,000) from an Institutional Lender to be
secured by a leasehold deed of trust in first (1st) lien position against the Property.
882/015610-0047 _
3786108.4 a08/27/12 -4
"CPI Adjustment" means the increase in the cost of living index, as measured by the
Consumer Price Index for all urban consumers, Los Angeles -Anaheim -Riverside statistical area,
all items (1982-84 = 100) published by the United States Department of Labor, Bureau of Labor
Statistics ("CPI") in effect as of the date on which the Certificate of Occupancy is issued to the
CPI in effect as of the date on which an adjustment is made. If such index is discontinued or
revised, such other index with which such index is replaced (or if not replaced, another index
which reasonably reflects and monitors consumer prices) shall be used in order to obtain
substantially the same results as would have been obtained if the discontinued index had not
been discontinued or revised. If the CPI is changed so that the base year is other than 1982-84,
the CPI shall be converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics.
"Date of Regulatory Agreement" is defined in the initial paragraph hereof.
"DDA" is defined in Recital A hereof.
"Debt Service" shall mean payments made in a calendar year pursuant to the approved
Construction Financing or the Permanent Financing, as applicable, obtained for the construction/
development, and ownership of the Project and approved by the Authority pursuant to Section
7.2(b) of the DDA or any permitted refinancing or modification thereof, but excluding payments
made pursuant to the Authority Note.
"Default" means the failure of a Party to perform any action or covenant required by the
DDA or hereunder within the time periods provided in the DDA or hereunder, respectively,
following notice and opportunity to cure, as set forth in Section 13.1 of the DDA and Section
16.01 hereof, respectively.
"Developer" means Coral Mountain Partners, L.P., a California limited partnership, and
any permitted assignees of Developer.
"Deferred Developer Fee" shall mean the portion of the Developer's development fee,
if any, that is payable out of the Annual Project Revenue and not from capital sources, as set
forth in the Housing Development Budget. Disbursement of the Deferred Developer Fee (all or
any part thereof) shall be subject to the provisions of the next paragraph.
In connection with Developer's eligibility to disburse all or any part of the Deferred
Developer Fee, in the event the cost of completing the Project exceeds the amount set forth in the
final Budget; then, to the extent necessary, the funds otherwise available to pay the developer fee
from capital sources shall be expended and used to pay the remaining costs of completing the
Project to the extent necessary to ensure the completion of the Project and the balance of the
developer fee shall be paid as Deferred Developer Fee in accordance with the priority set forth in
the Partnership Agreement, and/or payable from the proceeds of any approved refinancing or
transfer of the Property and/or the Housing Development. In no event shall Developer be
eligible for disbursement of the Deferred Developer Fee or any part thereof prior to completion
of the Project, as approved by the Executive Director as evidenced by the issuance by the
Authority of the Release of Construction Covenants.
882/015610-0047 _
3786108.4 a08/27/12 -5
"Eligible Tenant" means, with respect to a Low Income Unit, a Lower Income
Household; with respect to a Moderate Income Unit, a Moderate Income Household; and with
respect to a Very Low Income Unit, a Very Low Income Household.
"Environmental Laws" means (i) Sections 25115, 25117, 25122.7 or 25140 of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)),
(ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code,
Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Article 9 or
Article I 1 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (vi) Section
311 of the Clean Water Act (33 U.S.C. § 1317), (vii) Section 1004 of the Resource Conservation
and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903) or (viii) Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601 et
seq.
"Executive Director" means the Executive Director of the Authority, or his or her
designee.
"Governmental Requirements" means all laws, ordinances, statutes, codes, rules,
regulations, orders and decrees, of the United States, the State of California, the County of
Riverside, the City and of any other political subdivision, agency or instrumentality exercising
jurisdiction over Authority, Developer, or the Project.
"Ground Lease" means that certain Ground Lease entered into by and between the
Authority and Developer concurrently herewith.
"Hazardous Materials" means any substance, material, or waste which is or becomes
regulated by any local governmental authority, the State of California, or the United States
Government, including, but not limited to, any material or substance which is (i) defined as a
"hazardous waste", "acutely hazardous waste", "extremely hazardous waste", or "restricted
hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of
the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control
Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and
Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account
Act), (iii) defined as a "hazardous material", "hazardous substance", or "hazardous waste" under
Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under
Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground
Storage of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) polychlorinated byphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Code of Regulations, Chapter 20, (ix) designated as
"hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section
1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), (xi)
defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental
882/015610-0047
3786108.4 a08/27/12 -6-
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., (xii) methyl -tertiary
butyl ether, (xiii) perchlorate, or (xiv) any other substance, whether in the form of a solid, liquid,
gas or any other form whatsoever, which by any Governmental Requirements either requires
special handling in its use, transportation, generation, collection, storage, handling, treatment or
disposal, or is defined as "hazardous" or harmful to the environment. For purposes hereof,
"Hazardous Materials" excludes materials and substances in quantities as are commonly used in
constructing and operating apartment complexes, provided such materials and substances are
used in accordance with all applicable laws.
"HCD" means the California Department of Housing and Community Development.
"Housing Development" means an affordable rental housing development consisting of
one hundred seventy-six (176) residential dwelling units and all required on -site improvements
that will remain privately owned and that are necessary to serve the Housing Development.
"HUD" means the United States Department of Housing and Urban Development.
"Institutional Lender" means any of the following institutions having assets or deposits
in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a California
chartered bank; a bank created and operated under and pursuant to the laws of the United States
of America; an "incorporated admitted insurer" (as that term is used in Section 1100.1 of the
California Insurance Code); a "foreign (other state) bank" (as that term is defined in
Section 1700(1) of the California Financial Code); a federal savings and loan association (Cal.
Fin. Code Section 8600); a commercial finance lender (within the meaning of Sections 2600 et
seq. of the California Financial Code); a "foreign (other nation) bank" provided it is licensed to
maintain an office in California, is licensed or otherwise authorized by another state to maintain
an agency or branch office in that state, or maintains a federal agency or federal branch in any
state (Section 1716 of the California Financial Code); a bank holding company or a subsidiary of
a bank holding company which is not a bank (Section 3707 of the California Financial Code); a
trust company, savings and loan association, insurance company, investment banker; college or
university; pension or retirement fund or system, either governmental or private, or any pension
or retirement fund or system of which any of the foregoing shall be trustee, provided the same be
organized under the laws of the United States.or of any state thereof-, and a Real Estate
Investment Trust, as defined in Section 856 of the Internal Revenue Code of 1986, as amended,
provided such trust is listed on either the American Stock Exchange or the New York Stock
Exchange. Each of the California Municipal Finance Authority and Citbank, N.A. is hereby
deemed to be an Institutional Lender.
"Legal Description" means that certain legal description of the Property which is
attached hereto and incorporated herein as Exhibit B.
"Lower Income Household" means those person(s) or households whose income does
not exceed the qualifying limit for "lower income households" pursuant to Health and Safety
Code Section 50079.5, which, as of the date of this Regulatory Agreement means persons and
families whose income does not exceed the qualifying limit for lower income households as
established and amended from time to time pursuant to Section 8 of the United States Housing
Act of 1937, as published from time to time by HCD in the California Code of Regulations.
892/015610-0047 _
3786108.4 a08/27/12 -7
"Low Income Unit" means the one hundred thirty-eight (138) Affordable Units that are
required to be rented to and occupied by Lower Income Households. Thirty-one (31) of such
units shall contain one (1) bedroom and one (1) bathroom; sixty-four (64) of such units shall
contain two (2) bedrooms and two (2) bathrooms; and forty-three (43) of such units shall contain
three (3) bedrooms and two (2) bathrooms.
"Map" means a map depicting the Property which is attached hereto and incorporated
herein as Exhibit A.
"Marketing Plan" means a marketing plan for the rental of the Affordable Units which
provides, to the extent authorized by applicable federal, state or local laws or regulations, that a
preference be given to tenants who are currently residents of the City, or currently work in the
City, or who have been displaced by redevelopment activities of the Authority in the
implementation of the Redevelopment Plan or any other redevelopment plan of the Authority.
The Marketing Plan shall include a tenant selection system in conformance with fair housing
laws and the Tax Credit Rules which establishes a chronological waiting list system for selection
of tenants. Authority shall have approved the Marketing Plan, in its reasonable discretion, as one
of the Authority's conditions to the Property Closing.
"Moderate Income Household" means those person(s) or households whose income
does not exceed the qualifying limits for "persons and families of moderate income" pursuant to
Health and Safety Code Section 50093, which, as of the date of this Regulatory Agreement
means persons and families whose income exceeds the income limit for lower income
households, but does not exceed the income limit for persons and families of low or moderate
income as established and amended from time to time pursuant to Section 8 of the United States
Housing Act of 1937, as published from time to time by HCD in the California Code of
Regulations.
"Moderate Income Units" means the two (2) Affordable Units that shall be used for on -
site management, and that are required to be rented to and occupied by Moderate Income
Households. The Moderate Income Units shall each contain two (2) bedrooms and two (2)
bathrooms.
"Monthly Rent" means the total of monthly payments for (a) use and occupancy of each
Affordable Unit and land and facilities associated therewith, (b) any separately charged fees or
service charges assessed by Developer which are required of all tenants, other than security
deposits, (c) a reasonable allowance for an adequate level of service of utilities not included in
(a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating,
cooking and refrigeration fuels, but not including telephone or cable service, and (d) possessory
interest, taxes or other fees or charges assessed for use of the land and facilities associated
therewith by a public or private entity other than Developer. In the event that all utility charges
are paid by the landlord rather than the tenant, no utility allowance shall be deducted from the
rent.
"Notice" means a notice in the form prescribed by Section 17.01 hereof.
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3786108.4 a0827/12 -g
"Operating Budget" means an operating budget for the Housing Development, which
budget shall be subject to the annual written approval of Authority in accordance with Section
9.01 hereof.
"Operating, Expenses" shall mean actual, reasonable and customary (for comparable
high quality affordable rental housing developments in Riverside County) costs, fees and
expenses directly incurred, paid, and attributable to the operation, maintenance and management
of the Housing Development in a calendar year, which are in accordance with the annual
Operating Budget approved by Authority pursuant to Section 9 of this Agreement, including,
without limitation, painting, cleaning, repairs, alterations, landscaping, utilities, refuse removal,
certificates, permits and licenses, sewer charges, real and personal property taxes, assessments,
insurance, security, advertising and promotion, janitorial services, cleaning and building
supplies, purchase, repair, servicing and installation of appliances, equipment, fixtures and
fumishings, fees and expenses of property management, fees and expenses of accountants,
attorneys and other professionals, repayment of any completion or operating loans made to
Developer, its approved successors or assigns, and other actual, reasonable and customary
operating costs which are directly incurred and paid by Developer, but which are not paid from
or eligible to be paid from the Operating Reserve or any other reserve accounts. In addition,
Operating Expenses shall include a social services fee in the amount of Twenty -Two Thousand
Dollars ($22,000) for calendar year 2011, which shall be increased annually by three percent
(3%) per year, provided Developer provides the social services described in the Tenant Services
Agreement that was included in Developer's tax credit application. Operating Expenses shall not
include any of the following: (i) salaries of employees of Developer or Developer's general
overhead expenses, or expenses, costs and fees paid to an Affiliate of Developer, to the extent
any of the foregoing exceed the expenses, costs or fees that would be payable in a bona fide
arms' length transaction between unrelated parties in the Riverside County area for the same
work or services; (ii) any amounts paid directly by a tenant of the Housing Development to a
third party in connection with expenses which, if incurred by Developer, would be Operating
Expenses; (iii) optional or elective payments with respect to the Construction Loan; (iv) any
payments with respect to any Project -related loan or financing that has not been approved by the
Authority; (v) expenses, expenditures, and charges of any nature whatsoever arising or incurred
by Developer prior to completion of the Housing Development with respect to the development
of the Housing Development, or any portion thereof, including, without limitation, all
predevelopment and preconstruction activities conducted by Developer in connection with the
Housing. Development, including without limitation, the preparation of all plans and the
performance of any tests, studies, investigations or other work, and the construction of the
Housing Development and any on site or off site work in connection therewith; or (vi)
depreciation, amortization, and accrued principal and interest expense on deferred payment debt.
"Operating Reserve" means an operating reserve for the Housing Development (i)
initially consisting of not less than Four Hundred Ninety -Five Thousand Dollars ($495,000) (or
such greater amount required under either of the Additional Regulatory Agreements, or under the
Partnership Agreement) set aside in a separate interest -bearing trust account, commencing upon
the rental of the Affordable Units, and (ii) replenished to Four Hundred Ninety -Five Thousand
Dollars ($495,000) from annual deposits of the Annual Project Revenue, to the extent available
after payment of Operating Expenses and Debt Service, such that the balance of the Operating
Reserve consists of not less than four (4) months of projected Operating Expenses, adjusted
'82/015610-0047
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annually by the CPI Adjustment (unless otherwise agreed to by Developer and Authority) or as
required under the Partnership Agreement(or such greater amount required under either of the
Additional Regulatory Agreements, or under the Partnership Agreement), provided in no event
shall the balance in such account exceed a sum equal to one (1) year of debt service for the
Housing Development (or such greater amount required under the Tax Credit Regulatory
Agreement, pursuant to any of the Approved Financing or under the Partnership Agreement).
"Outside Construction Commencement Date" means that date which is ten (10) days
after the Property Closing Date.
"Parties" means jointly, Authority and Developer; Authority and Developer are each a
"
Party.,>
"Partnership Agreement" means the agreement which sets forth the terms of the
Developer's limited partnership, as such agreement may be amended from time to time.
"Partnership Related Fees" means partnership fees actually incurred pursuant to the
terms of the Partnership Agreement, which are reasonable and customary to developer/owner
entities for similar projects in Southern California, and may include, but shall not exceed: (i) a
general partner(s) (administrative and/or managing partner(s)) partnership management fee
payable to the general partner(s) (ii) a limited partner asset management fee payable to the
investor limited partner; and (iii) an annual audit fee in and for any calendar year. In no event
shall the annual fees for (i) and (ii) above cumulatively exceed Forty Thousand Dollars
($40,000), but such fees in (i) and (ii) may be increased annually by the CPI. In the event
insufficient Annual Project Revenues exist to provide for payment of all or part of the specific
Partnership Related Fees listed above, no interest shall accrue on the unpaid portions of such
Partnership Related Fees, but the unpaid balance of such fees alone will be added to the
Partnership Related Fees due in the following year.
"Permanent Financing" means a loan in an amount not to exceed the amount of the
Construction Financing from an Institutional Lender to be secured by a leasehold deed of trust
against the Property which replaces the Construction Financing upon the Developer's completion
of the construction of the Project.
"Project" means the Developer's construction of the Housing Development and Public
Improvements in accordance with this Agreement, including, without limitation, in accordance
with the Scope of Development and the Final Construction Documents.
"Property" means that certain real property (i) consisting of approximately 9.3 acres, (ii)
generally located at the southeast corner of Dune Palms Road and Highway 111, (iii) depicted on
the Map, and (iv) described in the Legal Description.
"Property Closing" means generally, the closing for the Approved Financing (except
that certain portions of the Authority Loan may be disbursed to Developer prior to the Property
Closing pursuant to the terms of the DDA), and particularly, the time and day that this
Regulatory Agreement and the Memorandum of Ground Lease are filed for record with the
Riverside County Recorder.
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3786108.4a08/27/12
"Property Closing Date" means the date on which the Property Closing occurs.
"Public Improvements" means all on- and off -site improvements that (i) are required to
be constructed to serve the Housing Development and (ii) will be dedicated to the City of La
Quinta upon Developer's completion thereof The Public Improvements are described in the
Scope of Development attached to the DDA as Attachment No. 3.
"Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project,
adopted by Ordinance No. 139 of the City Council of the City adopted on May 16, 1989, as the
same has been amended from time to time, which is incorporated herein by reference.
"Redevelopment Plan Termination Date" means the date on which the Redevelopment
Plan terminates with respect to the Property.
"Redevelopment Project" means Project Area No. 2, adopted by the City pursuant to
the Redevelopment Plan.
"Refinancing Net Proceeds" means the proceeds of any approved refinancing of the
Construction Financing or other approved financing secured by the Property, net of the following
actual costs and fees incurred: (i) the amount of the financing which is satisfied out of such
proceeds, (ii) reasonable and customary costs and expenses incurred in connection with the
refinancing, (iii) the balance, if any, of the Deferred Developer Fee, (iv) the balance, if any, of
authorized loans to the Housing Development made by the limited partners of Developer,
including interest at the rate set forth in the Partnership Agreement for such loans, (v) the
balance, if any, of authorized operating loans or development loans made by the general partners
of a limited partnership that succeeds to Developer's interest in the DDA and the Housing
Development, including interest at the rate set forth in the Partnership Agreement for such loans,
(vi) the balance, if any, of any unpaid Partnership Related Fees, (vii) any amounts owed to the
Investor pursuant to the Partnership Agreement, (viii) the return of capital contributions, if any,
to the Project made by the general partners of a limited partnership that succeeds to Developer's
interest in the DDA and the Housing Development that were used to pay the Deferred Developer
Fee, (ix) the amount of proceeds required to be reserved for the repair, rehabilitation,
reconstruction or refurbishment of the Housing Development; and (x) the payment to general
partner of Developer of a refinancing fee, which is agreed to be set at three percent (3%) of the
amount of the approved refinancing.
"Regulatory Agreement" means this Regulatory Agreement.
"Release of Construction Covenants" means the document which evidences
Developer's satisfactory completion of construction of the Project, as set forth in Section 10.16
of the DDA, substantially in the form which is attached thereto as Attachment No. 12 and
incorporated therein by reference.
"Scope of Development" means that certain Scope of Development which is attached to
the DDA as Attachment No. 3 and incorporated therein by reference. The Scope of
Development describes the scope, amount and quality of the construction to be done by
Developer pursuant to the terms and conditions of the DDA and this Regulatory Agreement.
882/015610-0047 -11-
3786108.4 a08/27/12
"Tax Credits" means Low Income Housing Tax Credits granted pursuant to Section 42
of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5;
17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq.
"Tax Credit Regulatory Agreement" means the regulatory agreement which may be
required to be recorded against the Property with respect to the issuance of Tax Credits for the
Project.
"Tax Credit Rules" means Section 42 of the Internal Revenue Code and/or California
Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California
Health and Safety Code Section 50199, et seq., and the rules and regulations implementing the
foregoing, as the same may be amended from time to time.
"TCAC" means the California Tax Credit Allocation Committee.
"Transfer Net Proceeds" shall mean the proceeds of any sale or other transfer, in whole
or part, of the Property or Developer's interests therein, net only of (i) the reasonable and
customary costs and expenses incurred in connection with such transfer; (ii) the amount of the
financing which is satisfied out of such proceeds, (iii) the balance, if any, of the Deferred
Developer Fee, (iv) the balance, if any, of loans to the Project made by the limited partners of
Developer, including interest thereon as provided in the Partnership Agreement, (v) the balance,
if any, of operating loans or development loans made by the general partners of Developer,
including interest thereon as provided in the Partnership Agreement, (vi) the return of capital
contributions, if any, to the Project made by the general partners of Developer that were used to
pay the Deferred Developer Fee, and (vii) the payment to the general partner of Developer of a
disposition fee set forth in the Partnership Agreement, which is agreed to be set at three percent
(3%) of the amount of the approved transfer. Notwithstanding anything herein to the contrary,
Transfer Net Proceeds shall not be required to be paid in connection with a transfer or sale that
consists only of (a) the removal of the general partner of the Developer, or (b) the transfer or sale
of the interests of the Investor provided such transfer or sale is consistent with the Partnership
Agreement and with the terms of the Authority Regulatory Agreement.
"Very Low Income Household" means those person(s) or households whose income
does not exceed the qualifying limit for "very low income households" pursuant to Health and
Safety Code Section 50105, which, as of the date of this Regulatory Agreement means persons
and families whose income does not exceed the qualifying limit for very low income households
as established and amended from time to time pursuant to. Section 8 of the United States Housing
Act of 1937, as published from time to time by HCD in the California Code of Regulations.
"Very Low Income Units" means the thirty-six (36) Affordable Units that are required
to be rented to and occupied by Very Low Income Households. Nine (9) of such units shall
contain one (1) bedroom and one (1) bathroom; sixteen (16) of such units shall contain two (2)
bedrooms and two (2) bathrooms; and eleven (11) of such units shall contain three (3) bedrooms
and two (2) bathrooms.
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3786108.4 a08/27/12
2. COVENANTS REGARDING CONSTRUCTION OF THE IMPROVEMENTS.
Developer shall carry out the design, construction, and operation of the Project in
conformity with all applicable laws, including all applicable state labor standards, the City
zoning and development standards, building, plumbing, mechanical and electrical codes, and all
other provisions of the City of La Quinta Municipal Code, all applicable disabled and
handicapped access requirements, including without limitation the accessibility standards
pursuant to 24 CFR part 8, the Americans With Disabilities Act, 42 U.S.C. Section 12101, et
seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the
Unruh Civil Rights Act, Civil Code Section 51, et seq., the Federal Housing Quality Standards,
the lead based paint requirements of Title X, and 24 CFR part 35, and other applicable
Governmental Requirements.
a. Nondiscrimination in Employment. Developer certifies and agrees that all
persons employed or applying for employment by it and all subcontractors, bidders and
vendors, are and will be treated equally by it without discrimination or segregation on
account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government
Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code, and in compliance with Title VII of the Civil Rights Act of 1964, 42
U.S.C. Section 2000, et seq., the Federal Equal Pay Act of 1963, 29 U.S.C. Section
206(d), the Age Discrimination in Employment Act of 1967, 29 U.S.C. Section 621, et
seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. Section 1324b, et seq.,
42 U.S.C. Section 1981, the California Fair Employment and Housing Act, Cal.
Government Code Section 12900, et seq., the California Equal Pay Law, Cal. Labor Code
Section 1197.5, Cal. Government Code Section 11135, the Americans with Disabilities
Act, 42 U.S.C. Section 12101, et seq., and all other antidiscrimination laws and
regulations of the United States and the State of California as they now exist or may
hereafter be amended. Developer shall allow representatives of Authority access to its
employment records related to this Regulatory Agreement during regular business hours
to verify compliance with these provisions when so requested by Authority.
b. Levies and Attachments on Property. After recordation of the
Memorandum of Ground Lease, Developer shall remove or have removed any levy or
attachment made on the Property or any part thereof, or assure the satisfaction thereof
within a reasonable time. Nothing herein shall be deemed to prohibit Developer from
contesting the validity or amount of any levy or attachment nor to limit the remedies
available to Developer with respect thereto.
C. Mechanics Liens and Stop Notices. After recordation of the
Memorandum of Ground Lease, Developer shall remove or have removed any mechanics
lien or stop notice made on the Property or any part thereof, or assure the satisfaction
thereof as provided herein. If a claim of a lien or stop notice is given or recorded
affecting construction of the Project, Developer shall within thirty (30) days of such
recording or service or within thirty (30) days of Authority's demand whichever last
occurs:
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3786108.4 a08/27/12
i) pay and discharge the same; or
ii) affect the release thereof by recording and delivering to Authority a surety
bond in sufficient form and amount, or otherwise; or
iii) provide Authority with other assurance which Authority deems, in its
reasonable discretion, to be satisfactory for the payment of such lien or bonded stop notice and
for the full and continuous protection of Authority from the effect of such lien or bonded stop
notice.
3. COVENANTS REGARDING USE.
a. Covenants To Use In Accordance With Redevelopment Plan, City
Municipal Code And DDA. Developer covenants and agrees for itself, its successors,.
assigns, and every successor in interest to Developer's interest in the Property or any part
thereof, that Developer shall devote the Property to the uses specified in the
Redevelopment Plan, the City Municipal Code and this Regulatory Agreement until the
later of (i) the expiration of the Redevelopment Plan, as applicable to the Property, or (ii)
the termination of Developer's right to occupy the Property under the Ground Lease. All
uses conducted on the Property, including, without limitation, all activities undertaken by
Developer pursuant to this Regulatory Agreement, shall conform to the Redevelopment
Plan and all applicable provisions of the La Quinta Municipal Code. The foregoing
covenants shall run with the land.
b. Covenant Regarding Specific Uses. Developer covenants and agrees for
itself, its successors, assigns, and every successor in interest to Developer's interest in the
Property or any part thereof, that Developer shall use the Property to operate the Housing
Development until the expiration of the Affordability Period.
C. Covenants Regarding Term And Priority Of Agreement. This Regulatory
Agreement shall remain in effect throughout the Affordability Period, notwithstanding
the payment in full of the Authority Loan. This Regulatory Agreement shall
unconditionally be and remain at all times prior and superior to the liens created by the
Tax Credit Regulatory Agreement, the Bond Regulatory Agreement, and any other
documents related to any of the foregoing and all of the terms and conditions contained
therein and to the lien of any new mortgage debt which is for the purpose of refinancing
all or any part of the Construction Financing.
4. COVENANTS REGARDING AFFORDABLE UNITS.
Developer shall provide for the Affordable Units in accordance with this Section.
a. Residential Use. Without the Authority's prior written consent, which
consent may be given or withheld in its sole and absolute discretion, none of the
Affordable Units in the Housing Development will at any time be utilized on a transient
basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house,
rooming house, nursing home, hospital, sanitarium, or trailer court or park, nor shall the
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3786108.4 a08/27/12 -14-
Affordable Units be used as a place of business except as may otherwise be allowed by
applicable law.
b. Provision of Affordable Units. Developer shall make available, restrict
occupancy to, and rent the Affordable Units to Eligible Tenants at Affordable Rents
throughout the Affordability Period.
C. Selection of Tenants. Developer shall be responsible for the selection of
tenants for the Affordable Units in compliance with all lawful and reasonable criteria, as
set forth in the Marketing Plan. Developer shall not refuse to lease to a holder of a
certificate of family participation under 24 CFR part 882 (Rental Certificate Program) or
a rental voucher under 24 CFR part 887 (Rental Voucher Program) or to the holder of a
comparable document evidencing participation in a Section 8 program or other tenant -
based assistance program, who is otherwise qualified to be a tenant in accordance with
the approved tenant selection criteria.
d. Occupancy By Eligible Tenant. An Affordable Unit occupied by an
Eligible Tenant who qualified as an Eligible Tenant at the commencement of the
occupancy shall be treated as occupied by an Eligible Tenant until a recertification of
such Eligible Tenant's income in accordance with Section 4.07 below demonstrates that
such tenant no longer qualifies as an Eligible Tenant at the applicable income level. An
Affordable Unit previously occupied by an Eligible Tenant and then vacated shall be
considered occupied by an Eligible Tenant until the Affordable Unit is reoccupied,
provided Developer uses its best efforts to re -lease the vacant Affordable Unit to an
Eligible Tenant. Any vacated Affordable Unit shall be held vacant until re -leased to an
Eligible Tenant. Developer shall take any or all of the following actions, as necessary, to
locate Eligible Tenants for the Housing Development:(i) notification to the City of the
available Affordable Unit; and (ii) advertisement of the available Affordable Unit in a
newspaper of general circulation in the City.
e. Income Computation and Certification. Immediately prior to an Eligible
Tenant's occupancy of an Affordable Unit, Developer shall obtain an Income
Computation and Certification Form in the form attached hereto and incorporated herein
as Exhibit "C", or on a similar form required by either of the Additional Regulatory
Agreements if Developer obtains the Tax Credits and issuance of the Tax -Exempt Bonds,
and such form requires inclusion of the same information as required in Exhibit "C",
from each such Eligible Tenant dated no more than 90 days prior to the date of initial
occupancy in the Housing Development by such Eligible Tenant. In addition, Developer
shall provide such further information as may be reasonably required in the future by the
Authority for purposes of verifying a tenant's status as an Eligible Tenant. Developer
shall use good faith efforts to verify that the income provided by an applicant is accurate
by taking the following steps as a part of the verification process:(i) obtain three (3) pay
stubs for the most recent pay periods; (ii) obtain a written verification of income and
employment from the applicant's current employer; (iii) obtain an income verification
form from the Social Security Administration, California Department of Social Services,
and/or California Employment Development Department if the applicant receives
assistance from any of said agencies; (iv) if an applicant is unemployed or did not file a
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3786108.4 a0827/12
tax return for the previous calendar year, obtain other evidence and/or verification of such
applicant's total income received during the calendar year from any source, taxable or
nontaxable, or such other information as is satisfactory to the Authority. Developer shall
maintain in its records each Income Computation and Certification Form obtained
pursuant to this section for a minimum of five (5) years.
f. Rental Priority. Subject to the requirements of local, state and federal fair
housing laws, and any funding obtained by Developer to operate and/or develop the
Housing Development that has been approved by Authority, during the term of this
Regulatory Agreement, Developer shall use its reasonable commercial efforts to lease the
Affordable Units to credit -worthy Eligible Tenants in the following order of priority: (a)
who have been or will be displaced by an Authority activity, or (b) who live and/or work
in the City of La Quinta. Should multiple tenants be equally eligible (as to income, credit
history, and other nondiscriminatory criteria) and qualified to rent a unit, Developer shall
rent available Affordable Units to Eligible Tenants on a first -come, first -served basis.
g. Recertification. Within sixty (60) days prior to the first anniversary date
of the occupancy of an Affordable Unit by an Eligible Tenant, and on each anniversary
date thereafter, Developer shall recertify the income of such Eligible Tenant by obtaining
a completed Income Recertification Form, in the form attached hereto and incorporated
herein as Exhibit "D", based upon the current income of each known occupant of the
Affordable Unit; provided, however, that if Developer obtains the Tax Credits and
issuance of the Tax -Exempt Bonds, and either of the Additional Regulatory Agreements
requires Developer to obtain a recertification form which requires inclusion of the same
information as required in Exhibit "D", then Developer shall not be deemed to be in
default hereunder if during the term of such Additional Regulatory Agreement Developer
obtains from each Eligible Tenant the recertification form required pursuant to said
Additional Regulatory Agreement.
If, after renting a Very Low Income Unit, the household income increases above the
income level permitted for the Very Low Income Unit, but meets the income level permitted for
a Low Income Unit, the household shall continue to be permitted to reside in such Unit provided
that Developer shall increase the rent for that Very Low Income Unit to the rent level designated
for a Low Income Unit, and shall restrict and designate as a Very Low Income Unit the next
available Affordable Unit with the same number of bedrooms that is not already designated
hereunder as a Very Low Income Unit.
If, after renting to a Very Low Income Unit or a Low Income Unit, the household
increases above the income level permitted for a Low Income Unit, but does not exceed the
income level permitted for a Moderate Income Unit, the household shall continue to be permitted
to reside in such Affordable Unit, and Developer shall increase the rent for that Affordable Unit
to the rent level designated for a Moderate Income Unit.
If, after renting an Affordable Unit, the household income increases above the income
level permitted for a Moderate Income Unit, that household may not be permitted to remain in
the unit unless requiring such household to move will violate the Tax Credit Rules. In such
event, Developer shall notify Authority in writing of such occurrence, and shall inform Authority
'82/015610-0047 -16-
3786108.4 a0827/12
of (1) its plans for removing the household from the Affordable Unit, or (2) the specific rule in
the Tax Credit Rules that prohibits such action providing written evidence of the same.
h. Certification of Continuing Program Compliance. During the term of this
Regulatory Agreement, on or before each May 1 following the date Authority issues a
Release of Construction Covenants for the Project, Developer shall annually advise the
Authority of the occupancy of the Housing Development during the preceding calendar
year by delivering a Certification of Continuing Program Compliance in the form
attached hereto and incorporated herein as Exhibit "E", stating (i) the Affordable Units of
the Housing Development which have been rented to and are occupied by Eligible
Tenants and (ii) that to the knowledge of Developer either (a) no unremedied default has
occurred under this Regulatory Agreement, or (b) a default has occurred, in which event
said certification shall describe the nature of the default and set forth the measures being
taken by the Developer to remedy such default.
i. Leases; Rental Agreements for Affordable Units. Developer shall submit
a standard lease form, which shall comply with the requirements of this Regulatory
Agreement, to Authority for its approval. Authority shall reasonably approve such lease
form upon finding that such lease form is consistent with this Regulatory Agreement.
Developer shall enter into a written lease, in the form approved by Authority, with each
tenant/tenant household of the Affordable Units. Notwithstanding any other provisions
required pursuant to this Regulatory Agreement to be included in any such lease form,
the lease form shall include a disclosure that the property located immediately to the
north of the Housing Development is contemplated to be sold to a commercial developer
for development and subsequent operation of a commercial use, including, without
limitation, for possible use as an automobile dealership. Developer shall not make any
material revisions to such form until such revisions have been approved by Authority.
j. ,Reliance on Tenant Representations. Each tenant lease shall contain a
provision to the effect that Developer has relied on the income certification and
supporting information supplied by the tenant in determining qualification for occupancy
of the Affordable Unit, and that any material misstatement in such certification (whether
or not intentional) will be cause for immediate termination of such lease.
k. Monitoring and Record Keening. Representatives of Authority shall be
entitled to enter the Property during normal business hours, upon at least twenty-four (24)
hours notice, to monitor compliance with this Regulatory Agreement, to inspect the
records of the Property, and to conduct an independent audit or inspection of such
records. Developer agrees to cooperate with Authority in making the Property and all
Affordable Units thereon available for such inspection or audit. Developer agrees to
maintain records in a businesslike manner, and to maintain copies of original tenant
certifications for fifteen (15) years (or such longer period as required under the Tax
Credit Rules) and all other records pertaining to the Housing Development for five (5)
years.
882/015610-0047 _17_
3786108.4 a08/27/12
1. Remedy For Violation of Rental Requirements.
i) It shall constitute a default for Developer to charge or accept for any
Affordable Unit rent amounts in excess of the amount provided for in Section 4.02 of this
Regulatory Agreement. In the event that Developer charges or receives such higher rental
amounts, Developer shall be required to reimburse the tenant that occupied said Affordable Unit
at the time the excess rent was received for the entire amount of such excess rent received,
provided that such tenant can be found following reasonable inquiry, and to pay to such tenant
interest on said excess amount, at the rate of six percent (6%) per annum, for the period
commencing on the date the first excess rent was received from said tenant and ending on the
date reimbursement is made to the tenant. For purposes of this Section 4.12, `reasonable
inquiry" shall include Developer's review of information provided by the tenant as part of the
tenant's application, and forwarding information provided by the tenant, and Developer's
reasonable attempts to contact the tenant and any other persons listed in either of such
documents. If, after such reasonable inquiry, Developer is unable to locate the tenant, Developer
shall pay all of such amounts otherwise to be paid to the tenant to the Authority.
ii) Except as otherwise provided in this Regulatory Agreement, it shall
constitute a default for Developer to knowingly (or without investigation as required herein)
initially rent any Affordable Unit to a tenant who is not an Eligible Tenant. In the event
Developer violates this Section, in addition to any other equitable remedy Authority shall have
for such default, Developer, for each separate violation, shall be required to pay to Authority an
amount equal to (i) the greater of (A) the total rent Developer received from such ineligible
tenant, or (B) the total rent Developer was entitled to receive for renting that Affordable Unit,
plus (ii) any relocation expenses incurred by Authority or the City as a result of Developer
having rented to such ineligible person. The terms of this Section shall not apply if Developer
rents to an ineligible person as a result of such person's fraud or misrepresentation.
iii) It shall constitute a default for Developer to knowingly (or without
investigation as required herein) rent an Affordable Unit in violation of the leasing preference
requirements of Section 4.06 of this Regulatory Agreement. In the event Developer violates this
Section, in addition to any other equitable remedy Authority shall have for such default,
Developer, for each separate violation, shall be required to pay Authority an amount equal to two
(2) months of rental charges.
THE PARTIES HERETO AGREE THAT THE AMOUNTS SET FORTH IN THIS SECTION
4.12 (THE "DAMAGE AMOUNTS") CONSTITUTE A REASONABLE APPROXIMATION
OF THE ACTUAL DAMAGES THAT AUTHORITY WOULD SUFFER DUE TO THE
DEFAULTS BY DEVELOPER SET FORTH IN THIS SECTION 4.12, CONSIDERING ALL
OF THE CIRCUMSTANCES EXISTING ON THE DATE OF REGULATORY AGREEMENT,
INCLUDING THE RELATIONSHIP OF THE DAMAGE AMOUNTS TO THE RANGE OF.
HARM TO AUTHORITY AND ACCOMPLISHMENT OF AUTHORITY'S PURPOSE OF
ASSISTING IN THE PROVISION OF AFFORDABLE HOUSING TO ELIGIBLE TENANTS
THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT
PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE
AMOUNTS SET FORTH- IN THIS SECTION 4.12 SHALL BE THE SOLE MONETARY
DAMAGES REMEDY FOR THE DEFAULTS SET FORTH IN THIS SECTION 4.12, BUT
882/OI5610-0047
3786108.4 a08/27/12 -18-
NOTHING IN THIS SECTION 4.12 SHALL BE INTERPRETED TO LIMIT AUTHORITY'S
REMEDY FOR SUCH DEFAULT TO SUCH A DAMAGES REMEDY AND IN THAT
REGARD AUTHORITY MAY DECLARE A DEFAULT UNDER THE TERMS OF THE
AUTHORITY NOTE, THE GROUND LEASE, THE DDA, OR OTHER AGREEMENTS
ENTERED INTO BY AND BETWEEN AUTHORITY AND DEVELOPER.IN PLACING ITS
INITIALS AT THE PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY
CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT
THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL WHO HAS EXPLAINED
THE CONSEQUENCES OF THE LIQUIDATED DAMAGES PROVISION AT OR PRIOR TO
THE TIME EACH EXECUTF^THIS REGULATORY AGREEMENT.
DEVELOPER'S,'MA1,S: AUTHORITY'S INITIALS:
in. Ketamnstup to 1 ax ureait Kegmatory AUeement ana nona KeRwatory
Agreement. Notwithstanding any other provisions of this Regulatory Agreement and
subject to the following sentence, to the extent that the provisions related to tenant
selection, tenant income levels and unit rent levels set forth in either of the Additional
Regulatory Agreements are less restrictive than those provisions set forth in this Section
4, then the provisions set forth in this Section 4 shall govern and control. To the extent of
any inconsistency between this Regulatory Agreement and either of the Additional
Regulatory Agreements regarding Affordable Rent for the Affordable Units, the more
restrictive agreement or covenants shall prevail unless compliance with such more
restrictive provisions would violate the provisions of the less restrictive document.
Developer agrees to perform all of Developer's obligations under this Regulatory
Agreement, and under the Additional Regulatory Agreements. In the event Authority is
prevented by a final, non -appealable order of a court of competent jurisdiction in a lawsuit
involving the Project, or by an applicable and binding published appellate opinion, or by a final,
non -appealable order of a regulatory body having jurisdiction, from enforcing, for any reason,
the affordability restrictions set forth in this Regulatory Agreement or in the DDA, then in such
event Authority shall be a third -party beneficiary under the Additional Regulatory Agreements,
and shall have full authority to enforce any breach or default by Developer thereunder in the
same manner as though it were a breach or default hereunder. Without Authority's prior written
consent, which consent may be withheld in Authority's sole and absolute discretion, Developer
shall not consent to any amendment of or modification to either of the Additional Regulatory
Agreements which (i) shortens the term of the affordability restrictions on the Affordable Units
or (ii) modifies the affordability mix.
5. COVENANT TO PAY TAXES AND ASSESSMENTS.
Developer shall pay prior to delinquency all ad valorem real estate taxes, special taxes,
assessments and special assessments levied against the Property, subject to Developer's right to
contest any such tax in good faith and any property tax exemption.
'82/015610-0047
3786108 4 e08/87/12 -19-
NOTHING IN THIS SECTION 4.12 SHALL BE INTERPRETED TO LIMIT AUTHORITY'S
REMEDY FOR SUCH DEFAULT TO SUCH A DAMAGES REMEDY AND IN THAT
REGARD AUTHORITY MAY DECLARE A DEFAULT UNDER THE TERMS OF THE
AUTHORITY NOTE, THE GROUND LEASE, THE DDA, OR OTHER AGREEMENTS
ENTERED INTO BY AND BETWEEN AUTHORITY AND DEVELOPER.IN PLACING ITS
INITIALS AT THE PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY
CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT
THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL WHO HAS EXPLAINED
THE CONSEQUENCES OF THE LIQUIDATED DAMAGES PROVISION AT OR PRIOR TO
THE TIME EACH EXECUTED THIS REGULATORY AGREEMENT.
DEVELOPER'S INITIALS
AUTIJORITY'S
in. Relationship to Tax Credit Regulatory Agreement and Bond Regulatory
Agreement. Notwithstanding any other provisions of this Regulatory Agreement and
subject to the following sentence, to the extent that the provisions related to tenant
selection, tenant income levels and unit rent levels set forth in either of the Additional
Regulatory Agreements are less restrictive than those provisions set forth in this Section
4, then the provisions set forth in this Section 4 shall govern and control. To the extent of
any inconsistency between this Regulatory Agreement and either of the Additional
Regulatory Agreements regarding Affordable Rent for the Affordable Units, the more
restrictive agreement or covenants shall prevail unless compliance with such more
restrictive provisions would violate the provisions of the less restrictive document.
Developer agrees to perform all of Developer's obligations under this Regulatory
Agreement, and under the Additional Regulatory Agreements. In the event Authority is
prevented by a final, non -appealable order of a court of competent jurisdiction in a lawsuit
involving the Project, or by an applicable and binding published appellate opinion, or by a final,
non -appealable order of a regulatory body having jurisdiction, from enforcing, for any reason,
the affordability restrictions set forth in this Regulatory Agreement or in the DDA, then in such
event Authority shall be a third -party beneficiary under the Additional Regulatory Agreements,
and shall have full authority to enforce any breach or default by Developer thereunder in the
same manner as though it were a breach or default hereunder. Without Authority's prior written
consent, which consent may be withheld in Authority's sole and absolute discretion, Developer
shall not consent to any amendment of or modification to either of the Additional Regulatory
Agreements which (i) shortens the term of the affordability restrictions on the Affordable Units
or (ii) modifies the affordability mix.
5. COVENANT TO PAY TAXES AND ASSESSMENTS.
Developer shall pay prior to delinquency all ad valorem real estate taxes, special taxes,
assessments and special assessments levied against the Property, subject to Developer's right to
contest any such tax in good faith and any property tax exemption.
8821015610-0047 -19-
3786108.4 a08R7/12
6. COVENANTS REGARDING MAINTENANCE.
Developer shall maintain the Property and all improvements thereon, including lighting
and signage, in good condition, free of debris, waste and graffiti, and in compliance with the
terms of the Redevelopment Plan and all applicable provisions of the City of La Quinta
Municipal Code, and in accordance with the HUD Housing Quality Standards. Developer shall
maintain the improvements and landscaping on the Property in accordance with the
"Maintenance Standards," as hereinafter defined. Such Maintenance Standards shall apply to all
buildings, signage, lighting, landscaping, irrigation of landscaping, architectural elements
identifying the Property and any and all other improvements on the Property. To accomplish the
maintenance, Developer shall either staff or contract with and hire licensed and qualified
personnel to perform the maintenance work, including the provision of labor, equipment,
materials, support facilities, and any and all other items necessary to comply with the
requirements of this Regulatory Agreement.
Developer and its maintenance staff, contractors or subcontractors shall comply with the
following standards (the "Maintenance Standards"):
i) The Property shall be maintained in good condition and in accordance
with the custom and practice generally applicable to comparable high quality, well -managed
apartment complexes, including but not limited to painting and cleaning of all exterior surfaces
and other exterior facades comprising all private improvements and public improvements to the
curbline.
ii) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning;
trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road
conditions and visibility, and irrigation coverage; replacement, as needed, of all plant materials;
control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking
for support of trees.
iii) Clean-up maintenance shall include, but not be limited to: maintenance of
all sidewalks, paths and other paved areas in clean and weed -free condition; maintenance of all
such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal
of all trash, litter and other debris from improvements and landscaping prior to mowing;
clearance and cleaning of all areas maintained prior to the end of the day on which the
maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris
are properly disposed of by maintenance workers.
Upon Authority's written notification to Developer of any maintenance deficiency,
Developer shall have thirty (30) days within which to correct, remedy or cure the deficiency, or
such longer period as is reasonably necessary to complete the cure, provided Developer
commences the correction, remedy, or cure within such thirty (30) day period and diligently
pursues such correction, remedy, or cure to completion.
882/015610-0047 _20_
3786108,4 a08/27/12
7. COVENANTS REGARDING MANAGEMENT.
Developer shall provide for the management of the Housing Development in accordance
with this Section.
a. Projerty Manager. Developer shall manage or cause the Housing
Development, and all appurtenances thereto that are a part of the Housing Development,
to be managed in a prudent and business -like manner, consistent with property
management standards for other comparable high quality, well -managed rental housing
projects and commercial developments in Riverside County, California. Developer may
contract with a property management company or property manager to operate and
maintain the Housing Development in accordance with the terns of this Section
("Property Manager"); provided, however, the selection and hiring of the Property
Manager (and each successor or assignee) is and shall be subject to prior written approval
of Authority. Developer shall conduct due diligence and background evaluation of any
potential outside property manager or property management company to evaluate
experience, references, credit worthiness, and related qualifications as a property
manager. Any proposed property manager shall have prior experience with projects and
properties comparable to the Housing Development and the references and credit record
of such manager/company shall be investigated (or caused. to be investigated) by
Developer prior to submitting the name and qualifications of such proposed property
manager to Authority for review and approval. A complete and true copy of the results
of such background evaluation shall be provided to Authority. Approval of a Property
Manager by Authority shall not be unreasonably delayed and shall be in Authority's
reasonable discretion, and Authority shall use good faith efforts to respond as promptly as
practicable in order to facilitate effective and ongoing management of the Housing
Development. Furthermore, the identity and retention of any approved Property Manager
shall not be changed without the prior written approval of Authority, which approval
shall not be unreasonably delayed, and shall be in Authority's reasonable discretion. The
selection by Developer of any new Property Manager also shall be subject to the
foregoing requirements. The Authority hereby approves Hyder & Company as the initial
Property Manager
b. Management Plan. Prior to and as one of Authority's conditions to the
Property Closing under the DDA, Developer shall have prepared and submitted to
Authority for review and approval an updated and supplemented management plan which
includes a detailed plan and strategy for long-term marketing for the Affordable Units,
operation, maintenance, repair and security of the Housing Development, method of
selection of tenants, rules and regulations for tenants, and other rental policies for the
Affordable Units (the "Management Plan").Subsequent to approval of the Management
Plan by Authority, the ongoing management and operation of the Housing Development
shall be in compliance with the approved Management Plan. Developer and Property
Manager may from time to time submit to Authority proposed amendments to the
Management Plan, which are also subject to the prior written approval of Authority.
C. Social Services. Developer shall provide a variety of social services at the
Housing Development; such social services are subject to the prior written approval of
882/015610-0047
3786108.4 a08/27/12
-21-
the Executive Director, in his or her reasonable discretion. Developer shall use its best
efforts to create a comprehensive social service program that is targeted to the needs of
the residents of the Housing Development which shall include, in addition to all of the
services listed in Developer's application for Tax Credits, the following services: after
school programs of an ongoing nature for school age children, and the availability of a
bona fide services coordinator or social worker to the tenants. Any substantive change in
the scope, amount, or type of supportive services to be provided at the Property shall be
subject to prior reasonable approval of Authority. Authority shall respond to any such
changes within thirty (30) days after submittal to Authority by Developer. Authority
hereby approves of the social service program set forth in Developer's application for
Tax Credits.
d. Gross Mismanagement. In the event of "Gross Mismanagement" (as that
term is defined below) of the Affordable Units or any part of the Housing Development,
Authority shall have and retain the authority to direct and require any condition(s), acts,
or inactions of Gross Mismanagement to cease and/or be corrected immediately, and
further to direct and require the immediate removal of the Property Manager and
replacement with a new qualified and approved Property Manager, if such condition(s)
is/are not ceased and/or corrected after expiration of thirty (30) days from the date of
Notice from Authority. If such condition(s) acts, or inactions of gross mismanagement
do persist beyond such period, Authority shall have the sole and absolute right to
immediately and without further notice to Developer (or to Property Manager or any
other person/entity) replace the Property Manager with a new property manager of
Authority's selection at the sole cost and expense of Developer. If Developer takes steps
to select a new property manager that selection is subject to the requirements set forth
above for selection of a Property Manager.
For purposes of this Regulatory Agreement, the term "Gross Mismanagement" shall
mean management of any part of the Housing Development in a manner which materially
violates the terms and/or intention of this Regulatory Agreement to operate a high quality, well -
managed residential complex, and shall include, but is not limited to, any one or more of the
following:
i) knowingly leasing Affordable Units to tenants who exceed the prescribed
income levels;
ii) knowingly allowing the tenants of Affordable Units to exceed the
prescribed occupancy levels without taking immediate action to stop such overcrowding;
iii) underfunding Capital Replacement or Operating Reserve accounts, unless
funds are not available to deposit in such accounts;
iv) failing to timely maintain the Housing Development in accordance with
the Management Plan and the manner prescribed herein;
v) failing to submit timely and/or adequate annual reports to Authority as
required herein;
882/015610-0047
3786108.4 a08/27/12
-22-
vi) committing fraud or embezzlement with respect to Housing Development
funds, including without limitation funds in the reserve accounts;
vii) failing to reasonably cooperate with the County Sheriff or other local law
enforcement agency(ies) with jurisdiction over the Housing Development, in maintaining a
crime -free environment within the Housing Development;
viii) failing to reasonably cooperate with the Fire District or other local public
safety agency(ies) with jurisdiction over the Housing Development, in maintaining a safe
environment within the Housing Development;
ix) failing to reasonably cooperate with the La Quinta Planning & Building
Department, including the Code Enforcement Division, or other. local health and safety
enforcement agency(ies) with jurisdiction over the Housing Development, in maintaining a safe
environment within the Housing Development; and
x) spending funds from the Capital Reserve account(s) for items that are not
defined as capital costs under the standards imposed by generally accepted accounting principles
(GAAP) (and/or, as applicable, generally accepted auditing principles.)
Notwithstanding the requirements of the Property Manager to correct any condition of
Gross Mismanagement as described above, Developer is obligated and shall use its best efforts to
correct any defects in property management or operations at the earliest feasible time and, if
necessary, to replace the Property Manager as provided above. Developer shall include
advisement and provisions of the foregoing requirements and requirements of this Regulatory
Agreement within any contract between Developer and its Property Manager.
e. Code Enforcement. Developer acknowledges and agrees Authority and
the City and their employees and authorized agents shall have the right to conduct code
compliance and/or code enforcement inspections of the Housing Development and the
individual Affordable Units, both exterior and interior, at reasonable times and upon
reasonable notice (not less than 48 hours prior notice) to Developer and/or an individual
tenant. If such notice is provided by Authority, City or their representative(s) to
Developer, then Developer (or its Property Manager) shall immediately and directly
advise tenants of such upcoming inspection and cause access to the area(s) and/or units to
be made available and open for inspection. Developer shall include express advisement
of such inspection rights within the lease/rental agreements for each Affordable Unit in
order for each and every tenant and tenant household to be aware of this inspection right.
8. COVENANTS REGARDING NONDISCRIMINATION.
Developer covenants by and for itself and any successors in interest that there shall be no
discrimination against or segregation of any person, or group of persons on any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property, or any part thereof, nor shall Developer, or any
person claiming under or through him or her, establish or permit any such practice or practices of
882/015610-0047 -23-
3786108.4 a0827/12
��II
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees of the Property, or any part thereof. The
foregoing covenants shall run with the land.
Developer agrees for itself and any successor in interest that Developer shall refrain from
restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the
Property, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national
origin of any person. All such deeds, leases or contracts shall contain or be subject to
substantially the following nondiscrimination or nonsegregation clauses:
i) In deeds:"The grantee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons claiming under or through
them, that there shall be no discrimination against or segregation of, any person or group of
persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through him or her, establish or
permit any practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
premises herein conveyed. The foregoing covenants shall run with the land."
ii) In leases:"The lessee herein covenants by and for himself or herself, his or
her heirs, executors, administrators, and assigns, and all persons claiming under or through him
or her, and this lease is made and accepted upon and subject to the following conditions:"That
there shall be no discrimination against or segregation of any person or group of persons, on
account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as
those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing,
subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor
shall the lessee himself or herself, or any person claiming under or through him or her, establish
or permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or
vendees in the premises herein leased."
iii) In contracts pertaining to the realty:"There shall be no discrimination
against or segregation of, any person or group of persons on account of any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use,
occupancy, tenure, or enjoyment of the premises which are the subject of this agreement, nor
shall the grantee or any person claiming under or through him or her, establish or permit any
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises
herein conveyed. The foregoing covenants shall run with the land."
882/015610-0047 -24-
3786108.4 a08/27/12
The covenants established in this Regulatory Agreement shall, without regard to technical
classification and designation, be binding for the benefit and in favor of the Authority, its
successors and assigns, the City and any successor in interest to the Property, together with any
property acquired by the Developer pursuant to this Regulatory Agreement, or any part thereof.
The covenants against discrimination shall remain in effect in perpetuity.
9. OPERATING BUDGET OR ANNUAL BUDGET; ANNUAL AND QUARTERLY
REPORTS
a. Operating Budget. Developer shall submit to Authority on or before
December 1 of each year during the Affordability Period an operating budget for the
Housing Development ("Operating Budget" or "Annual Budget"), which budget,
including the format thereof, shall be subject to the written approval of the Executive
Director or designee, which approval shall not be unreasonably withheld or conditioned
so long as such budget is not inconsistent with this Regulatory Agreement. The
Executive Director's discretion in review and approval of each proposed annual
Operating Budget or Annual Budget shall include, without limitation, authority to review
individual categories, line items, and accounts, such as the following: extent, type, and
amount for social services at or associated with the Housing Development; existing
balance(s) in and proposed deposits to the Capital Replacement Reserve to evaluate
shortfalls and/or cumulative unexpended/unencumbered deposits (provided that required
annual deposits thereto are not required to exceed $250/per unit); conformity of any
annual authorized increases in the Partnership Related Fees with the increases permitted
in the definition of "Residual Receipts" (as that term is defined in the Authority Note);
reasonableness and conformity to prevailing market rates in Riverside County and rates
and fees for goods and services to be provided by Developer or any Affiliate thereof In
the event Developer requires an amendment to an approved Annual Budget during an
applicable year of the Affordability Period, then Developer shall submit a written request
to the Executive Director explaining the requested amendment and reasons therefor; the
Executive Director shall reasonably review and approve (or disapprove) each request for
an amendment to an approved Annual Budget. The Executive Director shall
communicate to Developer his or her reasonable approval or disapproval of a proposed
annual Operating Budget or Annual Budget within thirty (30) days after receipt thereof;
as to each amendment, the Executive Developer shall communicate to Developer his or
her reasonable approval or disapproval within fifteen (15) days after receipt of a complete
submittal requesting an amendment to an approved Annual Budget. In the event the
Executive Director fails to approve a proposed annual Operating Budget or Annual
Budget within thirty (30) days after receipt thereof, Developer may operate the Housing
Development in accordance with such proposed annual Operating Budget or Annual
Budget until the Executive Director notifies Developer that such proposed annual
Operating Budget or Annual Budget is not approved; provided, however, that in such
case any expenditure made by Developer prior to the Executive Director's notification
that the proposed annual Operating Budget or Annual Budget is not approved shall be
deemed an approved expenditure. If the Executive Director fails to approve or
disapprove a proposed annual Operating Budget or Annual Budget within the time set
forth in this Section 9.01, Developer may give written notice to the Executive Director
demanding that such proposed annual Operating Budget or Annual Budget be either
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approved or disapproved within ten (10) days following the Executive Director's receipt
of such notice.
b. Annual Reports. Developer covenants and agrees to submit to the
Authority an annual report (the "Annual Report"), which shall include the information
required by California Health & Safety Code Section 33418.The Annual Report shall
include for each Affordable Unit the rental rate and the income and family size of the
occupants. The Developer shall submit the Annual Report on or before February 15 of
the year following the year covered by the Annual Report. The Developer shall provide
for the submission of household information and certification in its leases with tenants.
C. Quarterly Reports. Beginning on the date of first occupancy, and for each
fiscal year thereafter during the term of this Regulatory Agreement, Developer shall also
submit on a quarterly basis a quarterly report for the management of the Property (the
"Quarterly Report").The Quarterly Report shall include a profit and loss statement,
budget to date figures, and occupancy report and shall clearly show Housing
Development revenues, operation expenses, deposits to and withdrawals from the
Housing Development's Capital Replacement Reserve and cash flow available for
residual receipts payments. The Quarterly Report shall be in a form that is reasonably
acceptable to the Executive Director. The Executive Director, in his/her sole discretion
may waive the requirement of the Quarterly Report for one or more quarterly reporting
periods. However, such waiver shall not operate to waive any subsequent requirement of
the Quarterly Report for the Affordability Period. After receipt of such certified financial
statements for the Housing Development, Authority may request additional financial
analysis or obtain a third party review at Authority's own expense, of financial statements
for the Housing Development to verify the accuracy of the payments by Developer on the
Authority Note or the required deposits into the Capital Replacement Reserve.
10. COVENANTS REGARDING CAPITAL REPLACEMENT RESERVE.
Promptly upon the issuance of the Certificate of Occupancy, the Developer shall establish
the Capital Replacement Reserve. Funds in the Capital Replacement Reserve shall be used only
for capital repairs, improvements, and replacements to the Housing Development fixtures and
equipment which are normally capitalized under generally accepted accounting principles. The
non -availability of funds in the Capital Replacement Reserve does not in any manner relieve or
lessen Developer's obligation to undertake any and all necessary capital repairs, improvements,
or replacements and to continue to maintain the Housing Development in the manner prescribed
herein. Not less than once per year, Developer, at its expense, shall submit to Authority an
accounting for the Capital Replacement Reserve. Capital repairs to and replacement of the
Housing Development shall include only those items with a long useful life, including without
limitation the following: carpet and drape replacement; appliance replacement; exterior painting,
including exterior trim; hot water heater replacement; plumbing fixtures replacement, including
tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement;
asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree
replacement; irrigation pipe and controls replacement; sewer line replacement; water line
replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and
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upgrade work; miscellaneous motors and blowers; common area furniture replacement; and
common area repainting.
11. COVENANTS REGARDING OPERATING RESERVE.
Promptly upon the issuance of the Certificate of Occupancy, the Developer shall establish
the Operating Reserve. The Operating Reserve shall be used to cover shortfalls between Annual
Project Revenue and actual operating expenses, but shall in no event be used to pay for capital
items or capital costs properly payable from the Capital Replacement Reserve. Developer shall,
not less than once per every twelve (12) months, submit to Authority evidence reasonably
satisfactory to the Authority of compliance herewith.
12. EFFECT OF VIOLATION OF THE TERMS AND PROVISIONS OF THIS
REGULATORY AGREEMENT AFTER COMPLETION OF CONSTRUCTION.
Authority is deemed the beneficiary of the terms and provisions of this Regulatory
Agreement and of the covenants running with the land, for and in its own right and for the
purposes of protecting the interests of the community and other parties, public or private, in
whose favor and for whose benefit this Regulatory Agreement and the covenants running with
the land have been provided, without regard to whether Authority has been, remains or is an.
owner of any land or interest therein in the Property or in the Housing Development. Authority
shall have the right, if this Regulatory Agreement or any of the covenants herein are breached, to
exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other
proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries
of this Regulatory Agreement and covenants may be entitled. The City is hereby deemed to be a
third party beneficiary of this Regulatory Agreement and the covenants contained herein with the
right, but not the obligation, to enforce the terms hereof. Except as provided in the following
sentence, the covenants contained in this Regulatory Agreement shall remain in effect until the
expiration of the Affordability Period. The covenants regarding discrimination as set forth in
Section 8 shall remain in effect in perpetuity.
13. COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
a. Compliance With Laws. Developer shall comply with (i) all ordinances,
regulations and standards of the City, Authority, County of Riverside, any regional
governmental entity, State of California, and federal government applicable to the
Property; (ii) all rules and regulations of any assessment district of the City with
jurisdiction over the Property; and (iii) all applicable labor standards of California law
and federal law; and (iv) the requirements of California law and federal law with respect
to the employment of undocumented workers or illegal aliens.
b. Indemnity. Developer shall save, protect, defend, indemnify and hold
harmless Authority and the City and their respective officers, officials, members,
employees, agents, and representatives from and against any and all liabilities, suits,
actions, claims, demands, penalties, damages (including, without limitation, penalties,
fines and monetary sanctions), losses, costs or expenses (including, without limitation,
consultants' fees, investigation and laboratory fees, reasonable attorneys' fees and
remedial and response costs) (the foregoing are hereinafter collectively referred to as
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"Liabilities") which may now or in the future be incurred or suffered by Authority or City
or their respective officers, officials, members, employees, agents, or representatives by
reason of, resulting from, in connection with, or existing in any manner whatsoever as a
direct or indirect result of (i) Developer's placement on or under the Property of any
Hazardous Materials or Hazardous Materials Contamination, (ii) the escape, seepage,
leakage, spillage, discharge, emission or release from the Property of any Hazardous
Materials or Hazardous Materials Contamination that occurs after the Property Closing
Date, or (iii) any Liabilities incurred under any Governmental Requirements relating to
the acts described in the foregoing clauses (i) and (ii).
For the purposes of this Regulatory Agreement, unless the context otherwise specifies or
requires, the following terms shall have the meanings herein specified:
The term "Hazardous Materials" shall mean any substance, material, or waste which is or
becomes regulated by any local governmental authority, the City, the County of Riverside, the
State of California, a regional governmental authority, or the United States Government,
including, but not limited to, any material or substance which is (i) defined as a "hazardous
waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115,
25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter
6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous
material," "hazardous substance," or "hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix)
designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C.
§ 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903) or (xi) defined as
"hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.For purposes hereof, "Hazardous
Materials" excludes materials and substances in quantities as are commonly used in the
construction and operation of apartment complexes, provided such materials and substances are
used in accordance with applicable laws.
The term "Hazardous Materials Contamination" shall mean the contamination (whether
presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or
other elements on, in or of the Property by Hazardous Materials, or the contamination of the
buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a
result of Hazardous Materials at any time emanating from the Property.
The term "Governmental Requirements" shall mean all past, present and future laws,
ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state,
the county, the city, or any other political subdivision in which the Property is located, and any
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other state, county city, political subdivision, agency, instrumentality or other entity exercising
jurisdiction over the Property.
C. Duty to Prevent Hazardous Material Contamination. Developer shall take
commercially reasonable action to prevent the release of any Hazardous Materials into
the environment. Such precautions shall include compliance with all Governmental
Requirements with respect to Hazardous Materials. In addition, Developer shall install
and utilize such equipment and implement and adhere to such procedures as are
consistent with the standards generally applied by apartment complexes in Riverside
County, California as respects the disclosure, storage, use, removal, and disposal of
Hazardous Materials.
d. Obligation of Developer to Remediate Premises. Notwithstanding the
obligation of Developer to indemnify Authority, City, and their respective officers,
officials, members, employees, agents, and representatives pursuant to Section 13.02, and
provided no Hazardous Materials exist on the Property as a result of the Authority's
actions, Developer shall, at its sole cost and expense, promptly take (i) all actions
required by any federal, state, regional, or local governmental agency or political
subdivision or any Governmental Requirements and (ii) all actions necessary to make full
economic use of the Property for the purposes contemplated by this Regulatory
Agreement and the DDA, which requirements or necessity arise from the presence upon,
about or beneath the Property, of any Hazardous Materials or Hazardous Materials
Contamination. Such actions shall include, but not be limited to, the investigation of the
environmental condition of the Property, the preparation of any feasibility studies or
reports and the performance of any cleanup, remedial, removal or restoration work.
e. Environmental Inquiries. Developer, when it has received any notices of
violation, notices to comply, citations, inquiries, clean-up or abatement orders, or cease
and desist orders related to Hazardous Materials or Hazardous Materials Contamination,
or when Developer is required to report to any governmental agency any violation or
potential violation of any Governmental Requirement pertaining to Hazardous Materials
or Hazardous Materials Contamination, shall concurrently notify the Executive Director,
and provide to him/her a copy or copies, of the environmental permits, disclosures,
applications, entitlements or inquiries relating to the Property, the notices of violation,
notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist
orders, reports filed pursuant to self -reporting requirements, and reports filed or
applications made pursuant to any Governmental Requirement relating to Hazardous
Materials and underground tanks, and Developer shall report to the Executive Director, as
soon as possible after each incident, any unusual, potentially important incidents.
In the event of a responsible release of any Hazardous Materials into the environment,
Developer shall, as soon as possible after it becomes aware of the release, furnish to the
Executive Director a copy of any and all reports relating thereto and copies of all correspondence
with governmental agencies relating to the release. Upon request of the Executive Director,
Developer shall furnish to the Executive Director a copy or copies of any and all other
environmental entitlements or inquiries relating to or affecting the Property including, but not
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limited to, all permit applications, permits and reports including, without limitation, those reports
and other matters which may be characterized as confidential.
14. INSURANCE REQUIREMENTS.
Developer shall retain and maintain insurance in accordance with the terms of Article 9
of the Ground Lease.
15. ASSIGNMENT.
a. Generally Prohibited. Except as otherwise expressly provided to the
contrary in this Regulatory Agreement, Developer shall not assign any of its rights or
delegate any of its duties under this Regulatory Agreement, nor shall any changes occur
with respect to the ownership and/or control of Developer, including, without limitation,
stock transfers, sales of issuances, or transfers, sales or issuances of membership or
ownership interests, or statutory conversions, without the prior written consent of the
Executive Director, which consent may be withheld in his or her sole and absolute
discretion. Any such assignment or delegation without such consent shall, at Authority's
option, be void. Notwithstanding the foregoing, however, (i) Developer may admit
Developer's Tax Credit investor as a 99.99% Tax Credit limited partner without
obtaining any consent, and such Tax Credit investor may assign its interests as a 99.99%
Tax Credit limited partner to a subsequent reputable institutional investor without any
consent; and (ii) the Tax Credit investor may remove the general partner for a default
under the Partnership Agreement, provided the replacement general partner is (a)
reasonably acceptable to Authority, or (b) an Affiliate of the Tax Credit investor. For
purposes of this Section 15.01, if the Tax Credit investor transfers to an entity in which
the Tax Credit investor or an affiliated entity controlled by the Tax Credit investor is the
general partner or managing member such transferee entity shall be deemed to be a
"reputable institutional investor."
b. Release of Developer. Upon any such assignment made in compliance
with Section 15.01 above, Developer shall be released from any liability under this
Regulatory Agreement arising from and after the date of such assignment.
16. DEFAULTS AND REMEDIES.
a. Default. Subject to the extensions of time set forth in Section 17.02 of this
Regulatory Agreement, failure by either Party to perform any action or covenant required
by this Regulatory Agreement or under the DDA or under the Ground Lease within the
time periods provided herein and therein following Notice and failure to cure as
described hereafter, constitutes a "Default" under this Regulatory Agreement. A Party
claiming a Default shall give written Notice of Default to the other Party specifying such
Default. Except as otherwise expressly provided in this Regulatory Agreement or in the
DDA or in the Ground Lease, the claimant shall not institute any proceeding against any
other Party, and the other Party shall not be in Default if such party within thirty (30)
days from receipt of such Notice, cures, corrects or remedies such failure or delay, or if
such Default cannot reasonably be cured within thirty (30) days, such Party commences
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such cure within thirty (30) days of receipt of such Notice and thereafter diligently
prosecutes such cure to completion.
b. Remedies: Institution of Legal Actions. Developer's sole remedy for
Authority's breach of this Regulatory Agreement shall be to institute an action at law or
equity to seek specific performance of the terms of this Regulatory Agreement.
Developer shall not be entitled to recover damages for any Default of Authority
hereunder. Authority shall be entitled to seek any remedy available at law and in equity
for Developer's breach of this Regulatory Agreement. All legal actions must be
instituted in the Superior Court of the County of Riverside, State of California, or in the
United States District Court for District of California in which Riverside County is
located.
C. Termination by Authority. In the event that Developer is in Default of this
Regulatory Agreement, the DDA, or the Ground Lease and (i) such Default is material
and (ii) Developer fails to cure such Default within the time set forth in Section 16.01
hereof, then Authority may, at Authority's option, terminate this Regulatory Agreement.
d. Acceptance of Service of Process. In the event that any legal action is
commenced by Developer against Authority, service of process on Authority shall be
made by personal service upon the Executive Director or in such other manner as may be
provided by law. In the event that any legal action is commenced by Authority against
Developer, service of process on Developer shall be made in such manner as may be
provided by law.
e. Rights and Remedies Are Cumulative. Except as otherwise expressly
stated in this Regulatory Agreement, the rights and remedies of the Parties are
cumulative, and the exercise by either Party of one or more of such rights or remedies
shall not preclude the exercise by it, at the same or different times, of any other rights or
remedies for the same Default or any other Default by the other Party.
f. Inaction Not a Waiver of Default. Any failures or delays by either Party
in asserting any of its rights and remedies as to any Default shall not operate as a waiver
of any Default or of any such rights or remedies, or deprive either such Party of its right
to institute and maintain any actions or proceedings which it may deem necessary to
protect, assert or enforce any such rights or remedies.
g. Applicable Law. The internal laws of the State of California shall govern
the interpretation and enforcement of this Regulatory Agreement, without regard to
conflict of law principles.
17. GENERAL PROVISIONS.
a. Notices Demands and Communications Between the Parties. Any
notices, requests, demands, documents, approvals or disapprovals given or sent under this
Regulatory Agreement from one Party to another (collectively, "Notices") may be
personally delivered, delivered by reputable courier that provides a receipt with the date
and time of delivery, transmitted by facsimile (FAX) transmission, or deposited with the
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United States Postal Service for mailing, postage prepaid, to the address of the other
Party as stated in this Section, and shall be deemed to have been given or sent at the time
of personal delivery, delivery by courier, or FAX transmission or, if mailed, on the
second day following the date of deposit in the course of transmission with the United
States Postal Service. Notices shall be sent as follows:
If to Authority: Notices Delivered by U.S. Mail:
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Phone No.: 760-777-7031
Facsimile No.: 760-777-7101
Attention: Executive Director
Notices Delivered Personally or by Courier:
La Quinta Housing Authority
78-495 Calle Tampico
La Quinta, Califomia92253
Phone No.: 760-777-7031
Facsimile No.: 760-777-7101
Attention: ,Executive Director
With copies to: Rutan & Tucker, LLP
611 Anton, Suite 1400
Costa Mesa, CA92626
Phone No.: 714-641-5100
Facsimile No.: 714-546-9035
Attention: M. Katherine Jenson, Esq.
If to Developer: Coral Mountain Partners, L.P.
46753 Adams Street
La Quinta, CA 92253
Phone No.: (760) 771-3345
Facsimile No.: (760) 771-0686
Attention: Robert High
With copies to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Phone No.:213-239-8088
Facsimile No.:213-559-0733_
Attention: Lance Bocarsly
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Hamilton USBCDC Investments, L.P.
1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
Phone No.: (314) 335-2600
Facsimile No.: (314) 335-2601
Attention: Project Manager
U.S. Bancorp Community Development Corporation
1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
Phone No.: (314) 335-2600
Facsimile No.: (314) 335-2601
Attention: Director of Asset Management
Jana Cohen Barbe, Esq.
SNR Denton
233 South Wacker Drive, Suite 7800
Chicago, IL 60606
Phone No.: (312) 876-7967
Facsimile No.: (312) 876-7934
b. Enforced Delay; Extension of Times of Performance. In addition to
specific provisions of this Regulatory Agreement, performance by either Party hereunder
shall not be deemed to be in Default, and all performance and other dates specified in this
Regulatory Agreement shall be extended, where delays or Defaults are due to: war;
insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God;
acts of the public enemy; epidemics; quarantine; restrictions; freight embargoes; lack of
transportation; governmental restrictions or priority; litigation; unusually severe weather;
inability to secure necessary labor, materials or tools; delays of any contractor,
subcontractor or supplier; acts or omissions of the other Party; acts or failures to act of
the City or any other public or governmental agency or entity (other than the acts or
failures to act of Authority which shall not excuse performance by Authority); or any
other causes beyond the control or without the fault of the Party claiming an extension of
time to perform. Notwithstanding anything to the contrary in this Regulatory Agreement,
an extension of time for any such cause shall be for the period of the enforced delay and
shall commence to run from the time of the commencement of the cause, if notice by the
Party claiming such extension is sent to the other party within ten (10) days of the
commencement of the cause. Times of performance under this Regulatory Agreement
may also be extended in writing by the mutual agreement of Authority and Developer.
Notwithstanding any provision of this Regulatory Agreement to the contrary, the lack of
funding to complete the construction of the Project shall not constitute grounds of
enforced delay pursuant to this Section.
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C. Relationship Between Authority and Developer. It is hereby
acknowledged by Developer that the relationship between Authority and Developer is not
that of a partnership or joint venture and that Authority and Developer shall not be
deemed or construed for any purpose to be the agent of the other. Accordingly, except as
expressly provided herein or in the Attachments hereto, Authority shall have no rights,
powers, duties or obligations with respect to the development, operation, maintenance or
management of the Housing Development. Developer agrees to indemnify, hold
harmless and defend Authority from any claim made against Authority arising from a
claimed relationship of partnership or joint venture between Authority and Developer
with respect to the development, operation, maintenance or management of the Property
or the Housing Development, except to the extent occasioned by the active negligence or
willful misconduct of Authority or its designated agents or employees.
d. No Third Party Rights. With the exception of the City, the Parties intend
that no rights nor remedies be granted to any third party as a beneficiary of this
Regulatory Agreement or of any covenant, duty, obligation or undertaking established
herein.
e. Authority pprovals and Actions. Whenever a reference is made herein to
an action or approval to be undertaken by Authority, the Executive Director is authorized
to act on behalf of Authority unless this Regulatory Agreement specifically provides
otherwise or the context should require otherwise.
f. Counterparts. This Regulatory Agreement may be signed in multiple
counterparts which, when signed by all Parties, shall constitute a binding agreement.
g. Inte rag tion. This Regulatory Agreement contains the entire understanding
between the parties relating to the transaction contemplated by this Regulatory
Agreement. Each Party is entering this Regulatory Agreement based solely upon the
representations set forth herein and upon each Party's own independent investigation of
any and all facts such party deems material. This Regulatory Agreement constitutes the
entire understanding and agreement of the Parties, notwithstanding any previous
negotiations or agreements between the parties or their predecessors in interest with
respect to all or any part of the subject matter hereof.
h. Real Estate Brokerage Commission. Authority and Developer each
represent and warrant to the other that no broker or finder is entitled to any commission
or finder's fee in connection with this transaction, and each agrees to defend and hold
harmless the other from any claim to any such commission or fee resulting from any
action on its part.
i. Attorneys' Fees. In any action between the Parties to interpret, enforce,
reform, modify, rescind, or otherwise in connection with, any of the terms or provisions
of this Regulatory Agreement, the prevailing Party in the action shall be entitled, in
addition to damages, injunctive relief, or any other relief to which it might be entitled,
reasonable costs, expenses including, without limitation, litigation costs, reasonable
attorneys' fees, and expert witness fees.
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j. Titles and Captions. Titles and captions are for convenience of reference
only and do not define, describe or limit the scope or the intent of this Regulatory
Agreement or of any of its terms. Reference to section numbers are to sections in this
Regulatory Agreement, unless expressly stated otherwise.
k. Interpretation. As used in this Regulatory Agreement, masculine,
feminine or neuter gender and the singular or plural number shall each be deemed to
include the others where and when the context so dictates. The word "including" shall be
construed as if followed by the words "without limitation."This Regulatory Agreement
shall be interpreted as though prepared jointly by both Parties.
1. No Waiver. All waivers of the provisions of this Regulatory Agreement
must be in writing by the appropriate authorities of Developer and Authority. A waiver
by either Party of a breach of any of the covenants, conditions or agreements under this
Regulatory Agreement to be performed by the other Party shall not be construed as a
waiver of any succeeding breach of the same or other covenants, agreements, restrictions
or conditions of this Regulatory Agreement.
in. Modifications. Any alteration, change or modification of or to this
Regulatory Agreement, in order to become effective, shall be made in writing and in each
instance signed on behalf of each Party.
n. Severability. If any term, provision, condition or covenant of this
Regulatory Agreement or its application to any party or circumstances shall be held, to
any extent, invalid or unenforceable, the remainder of this Regulatory Agreement, or the
application of the term, provision, 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.
o. Computation of Time. The time in which any act is to be done under this
Regulatory Agreement is computed by excluding the first day (such as the day escrow
opens), and including the last day, unless the last day is a holiday or Saturday or Sunday,
and then that day is also excluded. The term "holiday" shall mean all holidays as
specified in Section 6700 and 6701 of the California Government Code. If any act is to
be done by a particular time during a day, that time shall be Pacific Time Zone time.
P. Legal Advice. Each Party represents and warrants to the other the
following: they have carefully read this Regulatory Agreement, and in signing this
Regulatory Agreement, they do so with full knowledge of any right which they may
have; they have received independent legal advice from their respective legal counsel as
to the matters set forth in this Regulatory Agreement, or have knowingly chosen not to
consult legal counsel as to the matters set forth in this Regulatory Agreement; and, they
have freely signed this Regulatory Agreement without any reliance upon any agreement,
promise, statement or representation by or on behalf of the other Party, or their respective
agents, employees, or attorneys, except as specifically set forth in this Regulatory
Agreement, and without duress or coercion, whether economic or otherwise.
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q. Time of Essence. Time is expressly made of the essence with respect to
the performance by Authority and Developer of each and every obligation and condition
of this Regulatory Agreement.
r. Cooperation. Each Party agrees to cooperate with the other in this
transaction and, in that regard, to sign any and all documents which may be reasonably
necessary, helpful, or appropriate to carry out the purposes and intent of this Regulatory
Agreement including, but not limited to, releases or additional agreements.
S. Conflicts of Interest. No member, official or employee of Authority shall
have any personal interest, direct or indirect, in this Regulatory Agreement, nor shall any
such member, official or employee participate in any decision relating to the Regulatory
Agreement which affects his personal interests or the interests of any corporation,
partnership or association in which he is directly or indirectly interested.
t. Non -Liability of Officials and Employees of Authority. No member,
official or employee of Authority shall be personally liable to Developer, or any
successor in interest, in the event of any Default or breach by Authority or for any
amount which may become due to Developer or its successors, or on any obligations
under the terms of this Regulatory Agreement. Developer hereby waives and releases
any claim it may have against the members, officials or employees of Authority with
respect to any Default or breach by Authority or for any amount which may become due
to Developer or its successors, or on any obligations under the terms of this Regulatory
Agreement. Developer makes such release with full knowledge of Civil Code Section
1542 and hereby waives any and all rights thereunder to the extent of this release, if such
Section 1542 is applicable. Section 1542 of the Civil Code provides as follows:
"A g er release does not extend to claims which the creditor
doe o lam w or suspect to exist in his or her favor at the time of
e ce ti g release, which if known by him or her must have
lv ected his or her settlement with the debtor."
[End — signatures on next page]
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IN WITNESS WHEREOF, the parties have executed this Regulatory Agreement as of
the respective dates set forth below.
Date: '� ri> 2012
Date: 6/ , 2012
"Developer"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
administrative gerpqkl partner
By: KD Ho 'ng Pers, Inc.,
a Cal' is co oration, its manager
M
President
By: WCH Affordable VIII, LLC,
a California limited liability company,
managing general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
mana er
By: B
Sandra C. Gibbons,
Chief Financial Officer
[Signatures continued on next page]
882/015610-0047 _37_
3796108.4 a080/12
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
ss.
COUNTY OF LOS ANGELES )
On August 27, 2012, before me, R. Shupe, Notary Public, personally appeared John Durso and
Sandra C. Gibbons,
who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) *are subscribed to the
within instrument and acknowledged to me that hliqso/they
executed the same in hfs/h�r/their authorized capacity(ies),
and that by ftI /h�/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
R. SN
Commission I 1914952 1 certify under PENALTY OF PERJURY under the laws of the
elly Notary Putlic • California State of California that the foregoing paragraph is true and
San Francisco County correct.
Comm. E ires Nov 25, 201�
WITNESS m hand and official seal.
Place Notary Seal Above n , Signature of Notary Public
"Authority"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
ATTEST:
Authority Secretary SW�AMaA156�>
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
882/015610-0047 -s ti-
3786108.4 a08/27/12
i rranK J. 5pevacek, Executive Director
"Authority"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
Date: 2012
Executive Director
ATTEST:
Authority Secretary
APPROVED AS TO
RUTXN & TUCKEF
(N1- �ct�t�✓V
882/015610-0047 _38_
3786108.4 a08/27/12
State of California
County of Riverside
On aA* y7, 7 d I Z— before me, SOAM V - t AYS EL
(insert name and title of the officer)
Notary Public, personally appeared FKA4k 5MAC9K
who proved to me on the basis of satisfactory evidence to be the person(e) whose name(#) is/aye
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
hisA&erhdr authorized capacity(ibs), and that by his/her/their signature(o) on the instrument the
person(a), or the entity upon behalf of which the person f ej acted, executed the instrument.
certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
882/015610-0047 _40_
3786108.4 a08/27/12
-- SUSAN MAYSELS
COMM.4t84C479 ><
ft NOT RNERSIDECOUNTY a�
Comnisaon Er fires APR 13 2013 +
(Seal)
EXHIBIT A
MAP
ATTACHMENT 1
DEPICTKN OF PROPERTY
N. L114E SE 1/4 PAC
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882/015610-0047 EXHIBIT A
3786108.4 a08/27/12
ORDER NO.: 1117011827.1
EXHIBIT t
The land referred to is situated in the County of Riverside, City of La Quinta, State of California,
and is described as follows:
Leasehold estate as created by that certain Ground Lease dated August 1 2012, made by
and between La Quinta Housing Authority, a public body, corporate and politic, as lessor, and
Coral Mountain Partners, L.P., a California limited partnership, as lessee, for the term of 55
years and upon the terms and conditions contained in said lease and subject to provisions
contained in the lease which limit the right of possession, a Memorandum thereof recorded
&2L al — . 2012, Instrument No. 2012- crS` VXG09 , in and to the following:
In the City of La Quinta, County of Riverside, State of California, that portion of the West half of
the East half and the East half of the West half of the Northwest quarter of the Southeast
quarter of Section 29, Township 5 South, Range 7 East, San Bernardino Base and Meridian,
more particularly described as follows:
Commencing at the East quarter corner of said Section 29; thence South 890 39' 16" West
along the North line of said Southeast quarter, a distance of 1,656.57 feet to the Northeast
corner of said West half of the East half of the Northwest quarter of the Southeast quarter of
Section 29; thence South 000 08' 10" East along the East line of said West half of the East half
of the Northwest quarter of the Southeast quarter Section 29, a distance of 60.93 feet to the
South right-of-way line of Highway 111 as granted to the City of La Quinta per Instrument No.
2007-0076267 recorded February 1, 2007 and re -recorded February 14, 2007 as Instrument
No. 2007-0103255, O.R.;
Thence continuing South 000 08' 10" East along said East line a distance of 626.13 feet to the
beginning of a non -tangent curve, concave Northerly, having a radius of 300.00 feet, a radial
line to said point bears South 010 53' 43" West, and the true point of beginning;
Thence leaving said East line and Westerly along the arc of said curve, through a central angle
of 160 09' 07", an arc distance of 84.57 feet to the beginning of a reverse curve concave
Southerly, having a radius of 300.00 feet, a radial line to said point bears North 180 02' 50"
East; thence Westerly along the arc of said curve through a central angle of 180 02' 50", an arc
distance of 94.50 feet; thence North 900 00' 00" West a distance of 264.78 feet to the
beginning of a tangent curve, concave Southeasterly, having a radius of 200.00 feet;
Thence Southwesterly along the arc of said curve, through a central angle of 900 09' 34", an
arc distance of 314.72 feet; thence non -tangent to said curve South 890 50' 26" West, a
distance of 21.18 feet to the West line of said East half of the West half of the Northwest
quarter of the Southeast quarter of Section 29; thence South 000 09' 34" East along said West
line, a distance of 500.13 feet to the South line of said Northwest quarter of the Southeast
quarter of Section 29; thence South 890 48' 22" East along said South line a distance of 662.14
feet to said East line of the West half of the East half of the Northwest quarter of the Southeast
quarter of Section 29; thence North 000 18' 10" West along said East line, a distance of 673.63
feet to the true point of beginning.
Said land is also shown as Parcel 2 of Lot line Adjustment No. 2010-508 as Disclosed by Grant
Deed recorded December 2, 2010, as Instrument No. 2010-575516, of Official Records.
APN: 600-020-054
EXHIBIT C
INCOME COMPUTATION AND CERTIFICATION FORM
(See following document)
882/015610-0047 EXHIBIT C
3786108.4 a08/27/12
CITY OF LA QUINTA HOUSING AUTHORITY
78-495 Calle Tampico, La Quinta, CA92253
INCOME COMPUTATION AND CERTIFICATION FORM
(Affordable Housing Eligibility for Renter Occupied Unit
PART I. PROPERTY FINANCED WITH GOVERNMENT ASSISTANCE
Property Address:
PART I1. TENANT HOUSEHOLD INFORMATION
Date of Birth Soc. Sec. # Relationship
TOTAL NUMBER OF PERSONS IN HOUSEHOLD: (Please list information on other household members below)
Mailing Address:
Telephone'Numbers: Work(---)
Home(_)
PART III. GROSS HOUSEHOLD INCOME Complete the following, attach copies of required verification as specified
below. Attach a note explaining any significant changes in household income between the previous year and the current year.
INFORMATION IS REQUIRED FOR ALL MEMBERS OF THE HOUSEHOLD AGE 18 OR OLDER REGARDLESS OF
WHETHER THEY CONTRIBUTE TO THE COSTS OF THE HOUSEHOLD. If you are not required to file a tax return,
please indicate this in Part V by your signature.
ANN INCOME
ANN INCOME
INCOME SOURCES
for owner
others in hshld
VERIFICATIONS (needed for file)
A. Employment earnings
Last tax return & last 3 pay stubs,
employer verification
B. Self-employment earnings
Last 2 tax returns & current financial strut
C. Social Security (OASDI)
Annual award letter
D. Supplemental Security Income (SSI)
Annual award letter
E. Public assistance (AFDC, general
Current benefit statement
assistance, unemployment, etc.)
F. Pension (s)
Annual award letter, year end stint, W-2
G. Interest income
Last 2 statements for all accounts
H. Investment income (stocks, bonds,
real estate, etc.)
Last 2 statements for all accounts
I. Room rental
Rental agreement, copies of checks, etc.
J. Other income (listtype/source)
K.TOTAL INCOME (sum of A thru J)
12 months = me. income
882/015610-0047 _1
3786108.4 a08/27/12
PART IV. PROPERTY STATUS
Will this property be your primary residence?
Will someone other than the individuals listed above be occupying this property?
If yes - Name of occupants:
Telephone Number:
My/our housing expenses are as follows:
1.Monthly tenant rent
2.Average monthly utilities
Mailing Address:
PART V. TENANT CERTIFICATION
I/We understand that after the initial eligibility determination, completion of monitoring forms is required on an annual basis.
I/We certify that I/we have disclosed all information pertaining to my/our application and that the information presented in the
foregoing Sections I through IV is true and accurate to the best of my (our) knowledge.
Tenant Date
Tenant Date
For more information regarding this application, please contact management staff at (760)
FOR OFFICE USE ONLY
Information verified
Income category
Maximum allowable annual income ( a/o of median)
Applicant's annual income gross monthly max housing costs
Comments:
Management Staff Date
882/015610-0047
3786108.4 a08/27/12
1*1411113tall
INCOME RECERTIFICATION FORM
(See following document)
882/015610A047 EXHIBIT D
3786108.4 a0827/12
LA QUINTA HOUSING AUTHORITY
78-495 Calle Tampico, La Quinta, CA 92253
INCOME RECERTIFICATION FORM
(Renter Occupied Unit)
PART I. GENERAL INFORMATION
Property Owner Name
2. Renter Name
Property Address
La Quinta, CA92253(Please include P.O. Box No. if applicable)
4. Has there been a change
month period?
Yes( )No( )
(If yes, please explain)_
PART II. UNIT INFORMATION
5. Number of Bedrooms
6. Number of Occupants
Names:
in ownership of this property during the preceding 12
PART III. AFFIDAVIT OF RENTER
I, , and I, as renters of units assisted
pursuant to the La Quinta Housing Authority's (the "Authority")
Affordable Housing Program (the "Program"), do hereby represent and warrant that the
following computation includes all income (1/we) anticipate receiving for the 12-month period
commencing on January 1, 20_ (including the renter(s) and all family members of the
renters):
(a) amount of wages, salaries, overtime pay, commissions, fees,
tips and bonuses, and payments in lieu of earnings, such as
unemployment and disability compensation, worker's compensation
and severance pay (before payroll deduction)
(b) net income from business or profession or rental of property
(without deduction for repayment of debts or expansion of business)_
(c)
(d)
(e)
interest and dividends
periodic receipts such as social security, annuities, pensions,
retirement funds, insurance policies, disability or death benefits,
alimony, child support, regular contributions or gifts
from persons not occupying unit
public assistance allowance or grant plus excess of maximum
allowable for shelter or utilities over the actual allowance for
such purposes
882/015610-0047 _ 1
3786108 4 a08/27/12
(f) regular and special pay and allowances of a member of
armed services (whether or not living in the dwelling)
who is head of the family or spouse
Subtotal (a) through (f)
LESS: Portion of above items which are income of a family member
who is less than 18 years old or a full-time student
TOTAL ELIGIBLE INCOME _
NOTE: The following items are not considered income: casual or sporadic gifts;
amounts specifically for or in reimbursement of medical expenses; lump sum payment
such as inheritances, insurance payments, capital gains and settlement for personal or
property losses; educational scholarships paid directly to the student or educational
institution; government benefits to a veteran for education; special pay to a serviceman
head of family away from home and under hostile fire; foster child care payments; value
of coupon allotments for purpose of food under Food Stamp Act of 1964 which is in
excess of amount actually charged the eligible household; relocation payments under
Title II of Uniform Relocation Assistance and Real Property Acquisition Policies Act of
1970; payments received pursuant to participation in the following programs: VISTA,
Service Learning Programs, and Special Volunteer Programs, SCORE, ACE, Retired
Senior Volunteer Program, Foster Grandparent Program, Older American Community
Services Program, and National Volunteer Program to Assist Small Business Experience.
2. This affidavit is made with the knowledge that it will be relied upon by the
Landlord and the Authority to determine maximum income for eligibility and
(Uwe) warrant that all information set forth in this Part III is true, correct and
complete and based upon information (I/we) deem reliable and that the estimate
contained in paragraph 1 is reasonable and based upon such investigation as the
undersigned deemed necessary.
3. (I/We) will assist the Landlord and the Authority in obtaining any information or
documents required to verify the statements made in this Part III and have
attached hereto a copy of our federal income tax return for the last year
(20_).
4. (I/We) acknowledge that (I/we) have been advised that the making of any
misrepresentation or misstatement in this affidavit will constitute a material
breach of (my/our) agreement with the Landlord to rent the unit and will
additionally enable the Authority to initiate and pursue all applicable legal and
equitable remedies with respect to the unit and to me/us.
B. (My/Our) monthly housing expenses are limited to the following:
Base rent
2. Average Monthly Utilities
3. Other (explain)
(I/We) understand that completion of monitoring forms is required on an annual basis and agree
to notify the La Quinta Housing Authority in writing of any change in ownership or rental of the
unit.(I/We) do hereby swear under penalty of perjury that the foregoing statements are true and
correct.
Date
Renter(s)
882/015610-0047 -2-
3786108.4 a0827/12
EXHIBIT E
FORM OF CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
882/015610-0047
3796108.4 a0827/12
(See following document)
EXHIBIT E
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
The undersigned, being duly authorized to execute this certificate on behalf of
owner of the Project, hereby represents
and warrants that:
1. He/she has read and is thoroughly familiar with the provisions of the Affordable
Housing Regulatory Agreement between the La Quinta Housing Authority and Coral Mountain
Partners, L.P.
2. As of June 30, 20_,.the following number of residential units in the Project (i)
are currently occupied by tenants qualifying as Very Low Income Households at Affordable
Rents; (ii) are currently occupied by Low Income Households at Affordable Rents; (iii) are
currently occupied by Moderate Income Tenants at Affordable Rent; or (iv) are currently vacant
and being held available for occupancy by Eligible Tenants and have been so held continuously
since the date Eligible Tenants vacated such unit, as indicated:
Units occupied by Very Low Income Households
ii. Units occupied by Low Income Households
iii. Units occupied by Moderate Income Households
iv. vacant units
3. The unit number, unit size, rental amount charged and collected, number of
occupants, and the income of the occupants for each Affordable Unit in the Project are set forth
on the attached list. All Affordable Units in the Project are rented at Affordable Rent.
DEVELOPER NAME
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
Dated: 20_
(Printed name and title)
882/015610-0047
3786108.4 a0827/12
RECORDING REQUESTED BY
OLD REPUBLIC TITLE COMPANY
ESCROW #: 1117011827-JM
APN #: 600-020-054
WHEN RECORDED MAIL TO
La Quinta Housing Authority
PO Box 1504
La Quinta, CA 92247
DOC # 2012-0412616
08/29/2012 03:25P Fee:18.00
Page 1 of 1
Recorded in Official Records
County of Riverside
Larry W. Ward
Assessor, County Clerk & Recorder
11111111111111111111111111111111111111111111111111111111
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CTY
REQUEST FOR COPY OF NOTICE OF DEFAULT
7N
IN ACCORDANCE WITH SECTION 2924B, CIVIL CODE OF THE STATE OF CALIFORNIA, REQUEST IS HEREBY MADE
THAT A COPY OF ANY NOTICE OF DEFAULT AND A COPY OF ANY NOTICE OF SALE UNDER THE DEED OF TRUST
-—RECORDED-ON--- — -August 29,-2012— --- - — — - -- _ _ - -- - - - --- - - -.
IN BOOK/REEL of Official Records
AT PAGE/IMAGE
SERIES NUMBER
COUNTY OF
EXECUTED BY
IN WHICH
AND
BE MAILED TO
WHOSE ADDRESS IS
State of California
as Trustor(s)
is named Trustee
tamed Beneficiary
NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE WILL BE SENT ONLY TO THE
ADDRESS CONTAINED IN THIS RECORDED REQUEST. IF YOUR ADDRESS CHANGES, A NEW REQUEST MUST BE
RECORDED. Wkilk"
Juli
State of California
County of Alameda
On 28th day of August, 2012 before me, E. Cotter a Notary Public, personally appeared Julie Massey, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized cepacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: E. COTTER
Name: E. Cotter ,:.�•. ii COMM. #1821981 m
I' NOTARV PUBLIC - CALIFORNIA M
(typed or printed) (Seal) % F}'% ALAMEDA COUNTY
Comm, F res November 9, 20t2�
FTGIS-220 2/94
Page 1 of 1
tkm"tr.'yj. Document A312TM - 2010
Conforms with The American Institute of Architects AIA Document 312
Performance Bond
Bond #: 024042645
CONTRACTOR:
(Name, legal status and address)
Optimus Construction, Inc.
440 Western Ave., Suite 202
Glendale, CA 91201
OWNER:
(Name, legal status and address)
Coral Mountain Partners, L.P.
46-735 Adams Street
La Quints, CA 92253
CONSTRUCTION CONTRACT
Date: July 17, 2012
SURETY:
(Name, legal status andprincipal place of business)
Liberty Mutual Insurance Company
450 Plymouth Road, Suite 400
Plymouth Meeting, PA 19462
Mailing Address for Notices
Liberty Mutual insurance Company
Attention: Surety Claims Department
1001 4th Avenue, Suite 1700
Seattle, WA 98154
This document has important legal
consequences. Consultation with
an attorney Is encouraged with
respect to its completion or
modification.
Any singular reference to
Contractor, Surety, Owner or
other party shall be considered
plural where applicable.
Amount: $ 31,602,594.00 Thirty-one Million Six Hundred Two Thousand Five Hundred Ninety-four Dollars And Zero Cents
Description:
(Name and location)
Coral Mountain Apartments 2010-130; 79-625 Vista Coralina Lane, La Quinta, CA 92253
BOND
Date: August 16, 2012
(Not earlier than Construction Contract Date)
Amount: $ 31,602,594.00 Thirty-one Million Six Hundred Two Thousand Five Hundred Ninety-four Dollars And Zero Cents
Modifications to this Bond: None See Section 16
CONTRACTOR AS PRINCIPAL
Company: (Corporate Seal)
Optimus Construction, Inc.
SURETY
Company: (Corporate Seal)
Liberty Mutual Insurance Company
Signature: `
Name
and Title:
Tim M. Finnegan, Attorney -in -Fact
(Any additional signatures appear on the last page of this Performance Bond.)
(FOR BJFORMATION ONLY —Name, address and telephone)
AGENT or BROKER:
OWNER'S REPRESENTATIVE:
(Architect, Engineer or otherparty.)
Prest Vuksic Architects
S-18521AS al10
§ 1 The Contractor and Surety, jointly and severally, bind themselves, their heirs, executors, administrators, successors and assigns to the Owner for
the performance of the Construction Contract, which is incorporated herein by reference.
§ 2 If the Contractor performs the Construction Contract, the Surety and the Contractor shall have no obligation under this Bond, except when
applicable to participate in a conference as provided in Section 3.
§ 3 If there is no Owner Default under the Construction Contract, the Surety's obligation under this Bond shall arise after
the Owner first provides notice to the Contractor and the Surety that the Owner is considering declaring a Contractor Default. Such
notice shall indicate whether the Owner is requesting a conference among the Owner, Contractor and Surety to discuss the
Contractor's performance. If the Owner does not request a conference, the Surety may, within five (5) business days after receipt of
the Owner's notice, request such a conference. If the Surety timely requests a conference, the Owner shall attend. Unless the Owner
agrees otherwise, any conference requested under this Section 3.1 shall be held within ten (10) business days of the Surety's receipt
of the Owner's notice. if the Owner, the Contractor and the Surety agree, the Contractor shall be allowed a reasonable time to
perform the Construction Contract, but such an agreement shall not waive the Owner's right, if any, subsequently to declare a
Contractor Default;
the Owner declares a Contractor Default, terminates the Construction Contract and notifies the Surety; and
the Owner has agreed to pay the Balance of the Contract Price in accordance with the terns of the Construction Contract to the
Surety or to a contractor selected to perform the Construction Contract.
.2
.3
§ 4 Failure on the part of the Owner to comply with the notice requirement in Section 3.1 shall not constitute a failure to comply with a condition
precedent to the Surety's obligations, or release the Surety from its obligations, except to the extent the Surety demonstrates actual prejudice.
§ 5 When the Owner has satisfied the conditions of Section 3, the Surety shall promptly and at the Surety's expense take one of the following actions:
§ 5.1 Arrange for the Contractor, with the consent of the Owner, to perform and complete the Construction Contract;
§ 5.2 Undertake to perform and complete the Construction Contract itself, through its agents or independent contractors;
§ 5.3 Obtain bids or negotiated proposals from qualified contractors acceptable to the Owner for a contract for performance and completion of the
Construction Contract, arrange for a contract to be prepared for execution by the Owner and a contractor selected with the Owner's concurrence, to be
secured with performance and payment bonds executed by a qualified surety equivalent to the bonds issued on the Construction Contract, and pay to
the Owner the amount of damages as described in Section 7 in excess of the Balance of the Contract Price incurred by the Owner as a result of the
Contractor Default, or
§ 5.4. Waive its right to perform and complete, arrange for completion, or obtain a new contractor and with reasonable promptness under the
circumstances:
.1 After investigation, determine the amount for which it may be liable to the Owner and, as soon as practicable after the amount is
determined, make payment to the Owner; or -
.2 Deny liability in whole or in part and notify the Owner, citing the reasons for denial.
§ 6 If the Surety does not proceed as provided in Section 5 with reasonable promptness, the Surety shall be deemed to be in default on this Bond
seven days after receipt of an additional written notice from the Owner to the Surety demanding that the Surety perform its obligations under this
Bond, and the Owner shall be entitled to enforce any remedy available to, the Owner. If the Surety proceeds as provided in Section 5.4, and the
Owner refuses the payment or the Surety has denied liability, in whole or in part, without further notice the Owner shall be entitled to enforce any
remedy available to the Owner. - -
5-18521AS 8110
§ 7 If the Surety elects to act under Section 5.1, 5.2 or 5.3, then the responsibilities of the Surety to the Owner shall not be greater than those of the
Contractor under the Construction Contract, and the responsibilities of the Owner to the Surety shall not be greater than those of the Owner under the
Construction Contract. Subject to the commitment by the Owner to pay the Balance of the Contract Price, the Surety is obligated, without
duplication, for
.1 the responsibilities of the Contractor for correction of defective work and completion of the Construction Contract;
.2 additional legal, design professional and delay costs resulting from the Contractor's Default, and resulting from the actions or
failure to act of the Surety under Section 5; and -
.3 liquidated damages, or if no liquidated damages are specified in the Construction Contract, actual damages caused by delayed
performance or non-performance of the Contractor.
§ 8 If the Surety elects to act under Section 5.1, 5.3 or 5.4, the Surety's liability is limited to the amount of this Bond.
§ 9 The Surety shall not be liable to the Owner or others for obligations of the Contractor that are unrelated to the Construction Contract, and the
Balance of the Contract Price shall not be reduced or set off on account of any such unrelated obligations. No right of action shall accrue on this
Bond to any person or entity other than the Owner or its heirs, executors, administrators, successors and assigns.
§ 10 The Surety hereby waives notice of any change, including changes of time, to the Construction Contract or to related subcontracts, purchase
orders and other obligations.
§ 11 Any proceeding, legal or equitable, under this Bond may be instituted in any court of competentjurisdiction in the location in which the work or
part of the work is located and shall be instituted within two years after a declaration of Contractor Default or within two years after the Contractor
ceased working or within two years after the Surety refuses or fails to perform its obligations under this Bond, whichever occurs first. If the
provisions of this Paragraph are void or prohibited by law, the minimum period of limitation available to sureties as a defense in the jurisdiction of
the suit shall be applicable.
§ 12 Notice to the Surety, the Owner or the Contractor shall be mailed or delivered to the address shown on the page on which their signature
appears.
§ 13 When this Bond has been furnished to comply with a statutory or other legal requirement in the location where the construction was to be
performed, any provision in this Bond conflicting with said statutory or legal requirement shall be deemed deleted herefrom and provisions
conforming to such statutory or other legal requirement shall be deemed incorporated herein. When so furnished, the intent is that this Bond shall be
construed as a statutory bond and not as a common law bond.
§ 14 Definitions
§ 14.1 Balance of the Contract Price. The total amount payable by the Owner to the Contractor under the Construction Contract after all proper
adjustments have been made, including allowance to the Contractor of any amounts received or to be received by the Owner in settlement of
insurance or other claims for damages to which the Contractor is entitled, reduced by all valid and proper payments made to or on behalf of the
Contractor under the Construction Contract.
§ 14.2 Construction Contract. The agreement between the Owner and Contractor identified on the cover page, including all Contract Documents
and changes made to the agreement and the Contract Documents. _
§ 14.3 Contractor Default. Failure of the Contractor, which has not been remedied or waived, to perform or otherwise to comply with a material
tern of the Construction Contract. - -
§ 14.4 Owner Default. Failure of the Owner, which has not been remedied or waived, to pay the Contractor as required under the Construction
Contract or to perform and complete or comply with the other material terms of the Construction Contract.
§ 14.5 Contract Documents. All the documents that comprise the agreement between the Owner and Contractor.
§ 15 If this Bond is issued for an agreement between a Contractor and subcontractor, the tern Contractor in this Bond shall be deemed to be
Subcontractor and the term Owner shall be deemed to be Contractor.
5-18521AS 8110
§ 16 Modifications to this bond are as follows:
(Space is provided below for additional signatures of added parttes, other than those appearing on the cover page)
CONTRACTOR AS PRINCIPAL SURETY
Company: _ (Cohporate Seal) Company: (Coipornte Seat)
Signature: Signature:
Name and Title: Name and Title:
Address Address _
S•1852IAS 8110
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
State of California
County of Los Angeles
On 08/16/12
personally appeared Tim M.
before me, Lupe Villarreal, Notary Public
(Here inset! name an ode o t ie o Icer)
who proved to me on the basis of satisfactory evidence to be the person(* whose name bscribed
to the within instrument and aclmowl ed to me thaloe hdtfrep'executed the same
authorized capacity(y), and that by�l�et=o Me
signature( on flue instrument the person(Bq, or the entity
upon behalf of which the person($ acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
0" 41LL6R�
WITNESS my hand and official seal. naNQbR O 19!{rT70
wr Public • C.clolt9c
A%" Could,
Nc Nov
I lure of Notary Public @Etall
Lupe Villa eat
ADDITIONAL OPTIONAL INFORMATION
DESCRIPTION OF THE ATTACHED DOCUMENT
(Title ar description of attached document)
(Title or description of attached document continued)
Number of Pages Document Date
A dNona 1 Donation)
CAPACITY CLAIMED BY THE SIGNER
Individual (s)
Corporate Officer
(Title)
Partner(s)
Attorney -in -Fact
Trustee(s)
Other
2009 version CAPA v1210.07800-873-9865 www.NotaryClasses.cmu
INSTRUCTIONS FOR COMPLETING THIS FORM
Any m k eutedgment completed in Wifania nnud commit verbiage —1113' as
allow, above in fhe notary sectim+ a' a separate aclna n had orna fain ..out be
property completed and attached to that dtnoou. The only exception is if a
document 9 to be recorded onside ofCalifornln. In such instarcer, arty alterentive
acknowledgment verbiage as may be printed an such a docmnent so long as rife
verbiage does not require ate naay to do something that it illegal)or a notay in
California (fe eertWing rile look in Led aimcity of the signer). Please check the
decontrol arrefgly for proem notarial wartlng and attach thisfmnr ifreq+dred.
• Stale and County information must be the State end County whose the document
signers) personally appeared before am notary public for acknowledgment.
• Daft of notarization must be Ile daft that the gig-am(s) personally appeared
which must also be the same dare the acknowledgment is completed.
• Tim notary public must prig his or her name as it appears within his or her
commission followed by a comma and then year title (notary public).
• print the morsels) ofdocument signer(s) who personally appear at the time of
notariralion.
• Indicate the erect singular or plural forms by causing off incorrect favors (Le
he Ishetd"-. islare) or cireling ate correct forms. Failure to correctly indicate
(his information may lead to rejection ofdo noven recording.
• The notary reset impression must be clear and phologmphically reproducible.
Impression must not cover text or linm if seal impression smudges, re -seal if a
sufficient am pencils, otrerwiee complete a different acknowledgment fine.
• SigmWre office notary public must match the signature on file with the office of
fire county clock.
4 Additional mcounation is not required but could help to ensure this
acknowledgrent is not misused or groched to a different document.
b Indicate file or typo of attached document number of pages and date.
•e Indicate die capacity claimed by the signer. If lite claimed capacity is a
corporate officer, indicate (be title (i.e. CEO. CFO, Secretary).
• Securely attach Otis document to the signed document
S-40671GE 9/09 XDP
THIS POWER OF ATTORNEY IS NOT VALID UNLESS IT IS PRINTED ON RED BACKGROUND. 5093681
This Power of Attorney limits the acts of those named herein, and they have no authority to bind the Company except in the manner and to the
extent herein stated.
LIBERTY MUTUAL INSURANCE COMPANY
BOSTON,MASSACHUSETTS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That Liberty Mutual Insurance Company (the "Company'), a Massachusetts stock insurance company, pursuant to and by authority of the By-law and
Authorization hereinafter set forth, does hereby name, constitute and appoint TIM M. TOMKO, ERIC C. THORSEN, TIM M. FINNEGAN, LOPE VILLARREAL,
SHARON L. TUPPER, TESSA A. ROMERO, ALL OF THE CITY OF GLENDALE, STATE OF CALIFORNIA...................................................................................................
, each individually if there be more than one named, its true and lawful attomey-In-fact to make, execute, seal, acknowledge and deliver, for and on
its behalf as surety and as its act and deed, any and all undertakings, bonds, recognizances and other surety obligations and the execution of such
undertakings, bonds, recognizances and other surety obligations, in pursuance of these presents, shall be as binding upon the Company as if they had
been duly signed by the president and attested by the secretary of the Company in their own proper persons.
That this power is made and executed pursuant to and by authority of the following By-law and Authorization:
ARTICLE XIII - Execution of Contracts: Section 5. Surety Bonds and Undertakings.
Any officer of the Company authorized for that purpose in writing by the chairman or the president, and subject to such limitations as the
chairman or the president may prescribe, shall appoint such atlomeys-in-fact, as may be necessary to act in behalf of the Company to make,
execute, seal, acknowledge and deliver as surely any and all undertakings, bonds, recognizances and other surety obligations. Such attorneys -
in -fact, subject to the limitations set forth in their respective powers of attorney, shall have full power to bind the Company by their signature and.
execution of any such instruments and to attach thereto the seat of the Company. When so executed suchinstruments shall be as binding as If
signed by the president and attested by the secretary.
By the following instrument the chairman or the president has authorized the officer or other official named therein to appoint attorneys -in -fact
Pursuant to Article Al I, Section 5 of the By-laws, David M. Carey, an official of Liberty Mutual Insurance Company, is hereby authorized to
appoint such attorneys -in -tact as may be necessary to act in behalf of the Company to make, execute, seal, acknowledge and deliver as surety
any and all undertakings, bonds, recegnizances and other surety obligations. All Powers of Attorney attested to or executed by David M. Carey
in his capacity as an officer or official of Liberty Mutual Insurance Company, whether before, on or after the date of the Authorization, including
without limitation Powers of Attomey attested to or executed as Assistant Secretary of Liberty Mutual Insurance Company, are hereby ratified
and approved.
That the By-law and the Authorization set forth above are true copies thereof and are now in full force and effect.
IN WITNESS WHEREOF, this Power of Attorney has been subscribed byan authorized officer or official of the Company and the corporate seal of Liberty Z,
Mutual Insurance Company has been affixed thereto in Plymouth Meeting, Pennsylvania this day of 121h day of January 0,
2012
�„�
LIBERTY MUTUAL INSURANCE COMPANY
d
�
vr?a
L
g
13
k
David M. Carey, istant Secretary
w
COMMONWEALTH OF PENNSYLVANIA as
O
COUNTY OF MONTGOMERY
On this 121h day of January 1 2012 , before me, a Notary Public, personally came David M. Carev, to me known, and R
acknowledged that he is an Assistant Secretary of Liberty Mutual Insurance Company; that he knows the seal of said corporation; and that he executed >
the above Power of Attorney and affixed the corporate seal of Liberty Mutual Insurance Company thereto with the authority and at the direction of said t
V
corporation. f+q�
IN TESTIMONY WHER - IhaYS.Par'e o subscribed my name and affixed my notarial seal at Plymouth Meeting, Pennsylvania, on the day and year c
first above written. Q= r,oHwF . t'r r_ . --, u
kl"U-:1
By �.r/Lrks�/ W.(iwRi G
,r - e a 6. Tere a Pastels, Notary
CERTIFICATE°�SYr4xS\�'1. /Y. ?n.= ':�,"" :.no--•;yana= tPublic
I, the undersigned AssistaryY�crpfa�l-Iberty Mutual Insurance Company, do hereby certify that the original power of attorney of which the foregoing is
a full, true and correct copy, Is force and effect on the date of this certificate; and I do further certify that the officer or official who executed the said
power of attorney is an Assistant Secretary specially authorized by the chairman or the president to appoint attomeys-in-fact as provided in Article All,
Section 5 of the By-laws of Liberty Mutual Insurance Company.
This certificate and the above power of attorney may be signed by facsimile or mechanically reproduced signatures under andby authority of the following
vote of the board of directors of Liberty Mutual Insurance Company at a meeting duly called and held on the 12th day of March, 1980.
VOTED that the facsimile or mechanically reproduced signature of any assistant secretary of the company, wherever appearing upon a certified
copy of any power of attorney issued by the company in connection with surety bonds, shall be valid and binding upon the company with the
same force and effect as though manually affixed.
IN TEOTIMONY WHEREOF, I have hereunto subscribed my name and affixed the corporate seal of the said company, this l& day of
i
Gregory W. Davenport, Assistant Secretary
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
CIVIL CODE 9 1189
State of California
County of XaLs %JYl92LL4 J}
On ,A4X , d;?, /,2 before me, PA� AV/, %%%sePrl /cNavrva.n
ate ere Inma en0 ❑Oa of Na cer -T—
personally appeared
--------------------
f N Et C01AAN
ComlNxim 11111841192
Ea % NowryPublk - California
Los Angeles County
Carom. r 11 20131
who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged
to me that he/shetthey executed the same in
his/herttheir authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Plain Notary Seal Above 5lpnelure of Notary PuEllc
OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
Document Date:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
Corporate Officer — Title(s):
❑ Individual
❑ Partner — ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Col
❑ Other:
Number of
orate Officer — Title(s):
❑ Individual
❑ Partner — ❑ Limited ❑ General Top of thumb here
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
El Other:
Signer Is Representing:
V W10 Natlonal Notary Assoclatlon • neuonauvwary.arg • rwv-w --I . - , I-------- ---• r
r► t
Payment Bond
CONTRACTOR:
(Name, legal status and address)
Optimus Construction, Inc.
440 Western Ave., Suite 202
Glendale, CA 91201
OWNER:
(Name, legal stalirs and address)
Coral Mountain Partners, L.P.
46-735 Adams Street
La Quints, CA 92253
Document A312TM - 2010
Conforms with The American Institute of Architects AIA Document 312
CONSTRUCTION CONTRACT
Date: July 17, 2012. _
Bond #: 024042645
SURETY:
(Name, legal status and principal place of business)
Liberty Mutual Insurance Company
450 Plymouth Road, Suite 400
Plymouth Meeting, PA 19462
Mailing Address for Notices
Liberty Mutual Insurance Company
Attention: Surety Claims Department
1001 4th Avenue, Suite 1700
Seattle, WA 98154
This document has important legal
consequences. Consultation with
an attorney is encouraged with
respect to its completion or
modification.
Any singular reference to
Contractor, Surety, Owner or
other party shall be considered
plural where applicable.
Amount; $ 31,602,594.00 Thirty-one Million Six Hundred Two Thousand Five Hundred Ninety-four Dollars And Zero Cents
Description:
(Name and location)
Coral Mountain Apartments 2010-130; 79-625 Vista Coralina Lane, La Quints, CA 92253
BOND
Date: August 16, 2012
(Not earlier than Construction Contract Date)
Amount: $ 31,602,594.00 Thirty-one Million Six Hundred Two Thousand Five Hundred Ninety-four Dollars And Zero Cents
Modifications to this Bond: ❑ None See Section 18
CONTRACTOR AS PRINCIPAL
Company: (Corporate Seal)
Optimus Conslructiga, Inc.
Signature:
SURETY
Company: - (Corporate Seal)
Liberty Mutual Insurance Company
Signature:
Name
and Title:
Tim M. Finnegan, Attorney -in -Fact
(Airy additional signatures appear on the last page of this Payment Bond.)
(FOR INFORMATION ONLY — Name, address and telephone)
AGENT or BROKER:
OWNER'S REPRESENTATIVE:
(Architect, Engineer or other parry)
Prest Vuksic Architects
S-2149/AS 8/10
§ 1 The Contractor and Surety, jointly and severally, bind themselves, their heirs, executors, administratms, successors and assigns to the Owner to
pay for labor, materials and equipment furnished for use in the performance of the Construction Contract, which is incorporated herein by reference,
subject to the following terns.
§ 2 If the Contractor promptly makes payment of all sums due to Claimants, and defends, indemnifies and holds harmless the Owner from claims,
demands, liens or suits by any person or entity seeking payment for labor, materials or equipment furnished for use in the performance of the
Construction Contract, then the Surety and the Contractor shall have no obligation under this Bond.
§ 3 If there is no Owner Default under the Construction Contract, the Surety's obligation to the Owner under this Bond shall arise after the Owner
has promptly notified the Contractor and the Surety (at the address described in Section 13) of claims, demands, liens or suits against the Owner or
the Owner's property by any person or entity seeking payment for labor, materials or equipment furnished for use in the performance of the
Construction Contract and tendered defense of such claims, demands, liens or suits to the Contractor and the Surety.
§ 4 When the Owner has satisfied the conditions in Section 3, the Surety shall promptly and at the Surety's expense defend, indemnify and hold
harmless the Owner against a duly tendered claim, demand, lien or suit.
§ 5 The Surety's obligations to a Claimant under this Bond shall arise after the following:
§ 5.1 Claimants, who do not have a direct contract with the Contractor,
.1 have furnished a written notice of non-payment to the Contractor, stating with substantial accuracy the amount claimed and the
name of the party to whom the materials were, or equipment was, furnished or supplied or for whom the labor was done or
performed, within ninety (90) days after having last performed labor or last furnished materials or equipment included in the Claim;
and
.2 have sent a Claim to the Surety (at the address described in Section 13).
§ 5.2 Claimants, who are employed by or have a direct contract with the Contractor, have sent a Claim to the Surety (at the address described in
Section 13).
§ 61f a notice of non-payment required by Section 5.1.1 is given by the Owner to the Contractor, that is sufficient to satisfy a Claimant's obligation
to furnish a written notice of non-payment under Section 5.1.1.
§ 7 When a Claimant has satisfied the conditions of Sections 5.1 or 5.2, whichever is applicable, the Surety shall promptly and at the Surety's
expense take the following actions:
§ 7.1 Send an answer to the Claimant, with a copy to the Owner, within sixty (60) days after receipt of the Claim, stating the amounts that are
undisputed and the basis for challenging any amounts that are disputed; and
§ 7.2 Pay or arrange for payment of any undisputed amounts
§ 7.3 The Surety's failure to discharge its obligations under Section 7.1 or Section 7.2 shall not be deemed to constitute a waiver of defenses the
Surety or Contractor may have or acquire as to a Claim, except as to undisputed amounts for which the Surety and Claimant have reached agreement.
If, however, the Surety fails to discharge its obligations under Section 7.1 or Section 7.2, the Surety shall indemnify the Claimant for the reasonable
attorney's fees the Claimant incurs thereafter to recover any sums found to be due and owing to the Claimant.
§ 8 The Surety's total obligation shall not exceed the amount of this Bond, plus the amount of reasonable attorneys fees provided under Section 7.3,
and the amount of this Bond shall be credited for any payments made in good faith by the Surety.
§ 9 Amounts owed by the Owner to the Contractor under the Construction Contract shall be used for the performance of the Construction Contract
and to satisfy claims, if any, under any construction performance bond. By the Contractor furnishing and the Owner accepting this Bond, they agree
that all funds earned by the Contractor in the performance of the Construction Contract are dedicated to satisfy obligations of the Contractor and
Surety under this Bond, subject to the Owner's priority to use the funds for the completion of the work.
5-2149/AS 8/10
§ 10 The Surety shall not be liable to the Owner, Claimants or others for obligations of the Contractor that are unrelated to the Construction Contract.
The Owner shall not be liable for the payment of any costs or expenses of any Claimant under this Bond, and shall have under this Bond no
obligation to make payments to, or give notice on behalf of, Claimants or otherwise have any obligations to Claimants under this Bond.
§ 11 The Surety hereby waives notice of any change, including changes of time, to the Construction Contract or to related subcontracts, purchase
orders and other obligations. - -
§ 12 No suit or action shall be commenced by a Claimant under this Bond other than in a court of competentjurisdiction in the state in which the
project that is the subject of the Construction Contract is located or after the expiration of one year from the date (1) on which the Claimant sent a
Claim to the Surety pursuant to Section 5.1.2 or 5.2, or (2) on which the last labor or service was performed by anyone or the last materials or
equipment were furnished by anyone under the Construction Contract, whichever of (1) or (2) first occurs. If the provisions of this Paragraph are void
or prohibited bylaw, the minimum period of limitation available to sureties as a defense in the jurisdiction of the suit shall be applicable.
§ 13 Notice and Claims to the Surety, the Owner or the Contractor shall be mailed or delivered to the address shown on the page on which thew
signature appears. Actual receipt of notice or Claims, however accomplished, shall be sufficient compliance as of the date received.
§ 14 When this Bond has been furnished to comply with a statutory or other legal requirement in the location where the construction was to be
performed, any provision in this Bond conflicting with said statutory or legal requirement shall be deemed deleted herefrom and provisions
conforming to such statutory or other legal requirement shall be deemed incorporated herein. When so furnished, the intent is that this Bond shall be
construed as a statutory bond and not as a common law bond. -
§ 15 Upon request by any person or entity appearing to be a potential beneficiary of this Bond, the Contractor and Owner shall promptly furnish a
copy of this Bond or shall permit a copy to be made. .
§ 16 Definitlons -
§ 16.1 Claim. A written statement by the Claimant including at a minimum:
.1 . the name of the Claimant;
.2 - the name of the person for whom the labor was done, or materials or equipment furnished;
.3 a copy of the agreement or purchase order pursuant to which labor, materials or equipment was furnished for use in the
performance of the Construction Contract;
.4 a brief description of the labor, materials or equipment furnished;
.5 the date on which the Claimant last performed labor or last furnished materials or equipment for use in the performance of the
Construction Contract;
.6 the total amount earned by the Claimant for labor, materials or equipment furnished as of the date of the Claim;
.7 the total amount of previous payments received by the Claimant; and
.8 the total amount due and unpaid to the Claimant for labor, materials or equipment furnished as of the date of the Claim.
§ 16.2 Claimant. An individual or entity having a direct contract with the Contractor or with a subcontractor of the Contractor to furnish labor,
materials or equipment for use in the performance of the Construction Contmct. The terry Claimant also includes any individual or entity that has
rightfully asserted a claim under an applicable mechanids lien or similar statute against the real property upon which the Project is located. The intent
of this Bond shall be to include without limitation in the terms "labor, materials or equipment' that part of water, gas, power, light, heat, oil, gasoline,
telephone service or rental equipment used in the Construction Contract, architectural and engineering services required for performance of the work
of the Contractor and the Contractor's subcontractors, and all other items for which a mechanic's lien may be asserted in the jurisdiction where the
labor, materials or equipment were furnished.
§ 16.3 Construction Contract The agreement between the Owner and Contractor identified on the cover page, including all Contract Documents
and all changes made to the agreement and the Contract Documents.
5-21491AS 8I10
§ 16.4 Owner Default. Failure of the Owner, which has not been remedied or waived, to pay the Contractor as required under the Construction
Contract or to perform and complete or comply with the other material terms of the Construction Contract.
§ 16.5 Contract Documents. All the documents that comprise the agreement between the Owner and Contractor.
§ 17 If this Bond is issued for an agreement between a Contractor and subcontractor, the tern Contractor in this Bond shall be deemed to be
Subcontractor and the tern Owner shall be deemed to be Contractor.
§ 18 Modifications to this bond are as follows:
(Space is provided below for additional signatures of added parties, other than those appearing on the cover page.)
CONTRACTOR AS PRINCIPAL SURETY
Company: (Corporate Seal) Company:
Signature: Signature:
Name and Title: Name and
Address - Address
(Cm porate Seal)
S-21491AS 8110
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
State of California
County of Los Angeles
On 08/16/12
before me, Lupe Villarreal, Notary Public
(Here insert tome and title of the officer)
personally appeared Tim M. Finnegan ,
who proved to me on the basis of satisfactory evidence to be the personk) whose nameoit5omubscribed
to the within instrument and acknowledged to me that(gsheAkey-executed the same intjokefAhetr-
authorized capacity(ip), and that by � signature(o on the instrument the person(,A, or the entity
upon behalf of which the person ffl ac ell, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
LOUPE VILLARREAL
WITNESS my hand and official seal. Commission * 1057770
Notary Public • CalNerals
Los Angeles County
Comm. E Ires Nov 19201 5
of Notary Public -
Lupe Villarreal
ADDITIONAL OPTIONAL INFORMATION
DESCRIPTION OF THE ATTACHED DOCUMENT
(Title or description of attached document)
(Title or description of attached dophmem[ continued)
Number of Pages Document Date
(Additional information)
CAPACITY CLAIMED BY THE SIGNER
Individual(s)
Corporate Officer
(Title)
Partner(s)
❑ Attorney -in -Fact
®Trustee(s)
Other
2009 Version CAPA v12.10.07 800-873-9865 www.NotaryC1113802.com
INSTRUCTIONS FOR COMPLETING THIS FORM
Any acbmwledgment completed in California must contain verbinge exactly as
appears above tit Ike notary section or a separate ack,mhriedgment form anal be
properly cmnpleted and attached to that docrmnent. 27re silly coceptiou is if a
document is to be recorded muside of Cal forma. In such instances. any alternative
acl000rWi rxsnl vebiage, as may be printed an such a donmmemt so long as the
verb/age does not require the notary to do something that is illegal for a ,story at
Calfo'nla (i.e. certiing the mdhorked capacity offing sigma). Please check the
document carefrdfy for proper notarial wading and attach tldsfo rn ifregmired.
• State and County infcrnation must be the Slate and County where We document
signer(&) personally appeared before the notary public for acknowledgment
• Date of notarization most be the date that the signer(s) personally appeared
which moat also be the an= data the acknowledgment is completed.
• The notary public must print his or her name as it appears within his or her
commission followed by a comma and than your title (notary public).
• Print the rmme(&) of document signer(s) who personally appear at the tine of
notarization.
• Indicate the correct singular or plural forms by crossing off incorrect forms (i.e.
he Isbehhey, is/are) or circling the cannot farms. Failure to correctly indicate
this information may lead to rejection ofdocumert recording.
• The aomry seal impression most be clear and pimtogmphically reproducible.
Impression must not cover text or limes. If seal impression smudges, re -seal if a
sufficient am permits, otherwise complete a different acknowledgment faun.
• Signature of the notary public must match the signature on ale with tie office of
it. county clerk.
Q Additional information is not required but could help to ensure this
acl nowled�rent is not misused or attached to a different document.
¢ Indicate title or type of attached document, number of pages and dare.
O Indicate the capacity claimed by the signer. If the claimed capacity is a
corporate officer, indicate the title (i.e. CEO, CFO, Secretary).
• Securely attach this document to the signed document
S-40671GE 9109 XDP
THIS POWER OF ATTORNEY IS NOT VALIDUNLESS IT IS PRINTED ON RED BACKGROUND. 5093680
This Power of Attorney limits the acts of those named herein, and they have no authority to bind the Company except In the manner and to the
extent herein stated.
LIBERTY MUTUAL INSURANCE COMPANY
BOSTON,MASSACHUSETTS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That Liberty Mutual Insurance Company (the "Company"), a Massachusetts stock insurance company, pursuant to and by authority of the By-law and
Authorization hereinafter set forth, does hereby name, constitute and appoint TIM M. TOMKO, ERIC C. THORSEN, TIM M. FINNEGAN, LUPE VILLARREAL,
SHARON L. TUPPER, TESSA A. ROMERO, ALL OF THE CITY OF GLENDALE, STATE OF CALIFORNIA...................................................................................................
, each individually if there be more than one named, its true and lawful attorney -in -fact to make, execute, seal, acknowledge and deliver, for and on
its behalf as surety and as its act and deed, any and all undertakings, bonds, recognizances and other surety obligations and the execution of such
undertakings, bonds, recognizances and other surety obligations, in pursuance of these presents, shall be as binding upon the Company as if they had
been duly signed by the president and attested by the secretary of the Company In their own proper persons.
That this power is made and executed pursuant to and by authority of the following By-law and Authorization:
ARTICLE XIII - Execution of Contracts: Section 5. Surety Bonds and Undertakings.
Any officer of the Company authorized for that purpose in writing by the chairman or the president, and subject to such limitations as the
chairman or the president may prescribe, shall appoint such attomeys-in-fact, as may be necessary to act in behalf of the Company to make,
execute, seal, acknowledge and deliver as surety any and all undertakings, bonds, recognizances and other surely obligations. Such attorneys -
in -fact, subject to the limitations set forth in their respective powers of attorney,shall have full power to bind the Company by their signature and
execution of any such instruments and to attach thereto the seal of the Company. When so executed such instruments shall be as binding as if
signed by the president and attested by the secretary.
By the following instrument the chairman or the president has authorized the officer or other official named therein to appoint attomeys-in-fad:
.Pursuant to Article XIII, Section 5 of the By-laws. David M. Carey, an official of Liberty Mutual Insurance Company, is hereby authorized to
appoint such attomeys-in-fact as may be necessary to act in behalf of the Company to make, execute, seal,acknowledge and deliver as surety
any and all undertakings, bonds, moognizances and other surety obligations. All Powers of Attorney attested to or executed by David M. Carey
in his capacity as an officer or official of Liberty Mutual Insurance Company, whether before, on or after the date of the Authorization, including
Without limitation Powers of Attorney attested to or executed as Assistant Secretary of Liberty Mutual Insurance Company, are hereby ratified
and approved.
That the By-law and the Authorization set forth above are true copies thereof and are now in full force and effect.
IN WITNESS WHEREOF, this Power of Attorney has been subscribed by an authorized officer or official of the Company and the corporate seal of Liberty
Mutual Insurance Company has been affixed thereto in Plymouth Meeting, Pennsylvania this day of 12th day of January
2012
vary LIBERTY MUTUAL INSURANCE COMPANY
David M. Gamy, Pftistant Secretary
COMMONWEALTH OF-PENNSYLVANIA so
COUNTY OF MONTGOMERY
On this 12th day of January 2012 , before me, a Notary Public, personally came David M Care , to me known, and m
acknowledged that he is an Assistant Secretary of Liberty Mutual Insurance Company; that he knows the seal of said corporation; and that he executed >
the above Power of Attorney and affixed the corporate seal of Liberty Mutual Insurance Company thereto with the authority and at the direction of said .Gc
..
corporation. E
IN TESTIMONY WHEROE'JihayrbsO subscribed my name and affixed my notarial seal at Plymouth Meeting, Pennsylvania, on the day and year
first above written & F
N iatP<; Mx I I /L4/I� u
.•4 r s Ps.a la u Q
By
Tere a Pastella, Notary Public
CERTIFICATE
I, the undersigned Assists Pi Si r t iBf , @@ly&rty Mutual Insurance Company, do hereby certify that the original power of attorney of which the foregoing is
a full, true and correct copy, isin Il:forde and effect on the date of this certificate; and I do further certify that the officer or official who executed the said
power of attorney is an Assistant Secretary specially authorized by the chairman or the president to appoint attorneys -in -tact as provided in Article XIII,
Section 5 of the By-laws of Liberty Mutual Insurance Company.
This certificate and the above power of attorney may be signed by facsimile or mechanically reproduced signatures under and by authority of the following
vote of the board of directors of Liberty Mutual Insurance Company at a meeting duly called and held on the 121h day of March, 1980.
VOTED that the facsimile or mechanically reproduced a'Unnature of any assistant secretary of the company, Wherever appearing upon a certified
copy of any power of attorney issued by the company In connection with surely bonds, shall be valid and binding upon the company with the
same force and effect as though manually affixed.
IN TE �TI�M�O��ry.j�/ft{�YWHEREOF, I have hereunto subscribed my flame and affixed the corporate seal of the said company, this I0� day of
P
Gregory W.'Davenport. Assistant Secretary
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California
County of / 0�
CIVIL CODE it 118e
On .2 / before me,LSXa ApO.`lOnAG� �i✓07k
Gate Hare Inee me antl Tiea of ibe OXkar
personally appeared _� 0 g c>e oe� qi,o
�amecs) a —
who proved proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
SHAKEHAIELCONIAN I certify under PENALTY OF PERJURY under the
Comtmsslon as 1644192 laws of the State of California that the foregoing
Notary Public • CtlNomia paragraph is true and correct.
Los Angeles County
61111 Comm. Expires Ant It.2013 WITNESS my hand and official seal.
Sign lure-<� G�[ /S�L�—�
Place Notary Seal Above Signature of Notary Public
OPTIONAL
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and could prevent fraudulent removal and reattachment of this form to another document. /
Description of Attached Document
Title or Type of Document:
Document Date: Number of
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signers)
Signer's Name:
❑ Corporate Officer — Title(s):
❑ Individual
❑ Partner — ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservat
❑ Other:
Signer Is�resentinq-
PZ-brporate Officer — Title(s):
❑ Individual
❑ Partner — ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer Is Representing:
RIGHT TH UP0 B P RINT
OF SIGNER
O 2070 National NotaryAssociation - Na8omiNotery.org - 1-800-US NOTARY (1-50040T&8827) Item
Bond No: 024042645
DUAL OBLIGEE RIDER
WHEREAS, Heretofore, and on or about the 17th day of
Optimus Construction, Inc.
as Optimus Construction, Inc. entered into a written agreement wil
for Coral Mountain
in accordance with drawings and specifications prepared by Prest Vuksic Architects
, herein referred to as the Contract, and
WHEREAS,
and Libertv:
Inc.
to said Owner, as Obligee, their
2012
as Principal,
as Surety,
tvment Bond
and
WHEREAS, The Obligee has requested the Principal and Surety to join with the Obligee in the execution and delivery
of this Rider, and the Principal and Surety have agreed so to do upon the conditions herein stated.
NOW, THEREFORE, in consideration of One Dollar and the other good and valuable considerations, receipt of which
is hereby acknowledged, the undersigned hereby agree as follows:
The Performance Bond and Payment Bond aforesaid shall be and it is hereby amended as follows:
1. The name of the entities listed on "Attachment A"
shall be added to said Bonds as an additional Obligee
2. The rights of the entities listed on "Attachment A" I, as an additional Obligee, shall be subject to the
following conditions: (a) The Surety shall not be liable under this Bond to the Obligees, or either of them, unless the
Obligees, or either of them shall make payments to the Principal strictly in accordance with the terms of said contract as
to payments and shall perform all the other obligations to be performed under said contract at the time and in the
manner therein set forth, (b) The aggregate liability of the Surety under this Bond to the Owners, as their interests may
appear, is limited to the penal sum of this Bond, (c) The Surety may, at its option, make any payments under this Bond
by check issued jointly to any or all obligees
3. Surety agrees that any change order issued in accordance with the general conditions of the contract, which change
order increases the total contract price, shall be binding upon Surety and covered under the Bonds without notice to or
any act by Surety.
4. Except as herein modified, said Performance Bond and Payment Bond shall be and remain in full force and effect.
Signed, sealed and dated this day of
Coral Mountain Partners, L.P.
By:
Liberty Mutual Insurance Company
Tim M. Finnegan, Attorney -in -Fact
intentionally left blank, please see next page
By:
intentionally left blank, please see next page
By:
S-4349ILM 2198
XDP
Dual Obligee Rider
Bond No.: 024042645
Optimus Construction, Inc.
Citibank N.A.
CC Transaction Management Group/Post closing
By:
Michael r�5
U�ce �r�sr eh-�
U.S. Bancorp Community
Development Corporation (and its permitted
successor and assigns)
141
Hamilton USBCDC Investments, L.P.,
a California limited partnership
La Qu nWHousing Authority and the City of
La Ouinta, its Directors, Employees and Agents
Page 2 of 3
City I3'dTf9g—eir, City of La Quints, and
Executive Director, La Quinta Housing Authority
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California
County of U��f�.,� ss.
On � J/p- before me, X d - •V�bjlt� _
Data Noma and title of Officer le g..'Jatw Doe, Notary Public')
personally appeared
si KMAN
Commission 0196595
5 z
Notary Public - California sy
Ventura County
Nij Comm. Ea Tres Jan 7, 2016 r
E'personally known to me
❑ proved to me on the basis of satisfactory
evidence
to be the person(s) whose name(s) is/are
subscribed to the within instrument and
acknowledged to me that he/she/they executed
the same in his/her/their authorized
capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my h d and official seal.
Signature of Notary Public
OPTIONAL
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fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
Document Date:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer
Signer's Name:
❑ Individual
❑ Corporate Officer—Ti s):
❑ Partner — ❑ Limit ❑ General
❑ Attorney -in -Fa
❑ Trustee
❑ G
luard ian or Conservator
❑ Ot :
Is Representing:
Number of Pages:
RIGHT THUMBPRINT
OFSIGNER.
01999 National Notary Association • 9350 De Solo Ave., PO. Box 24b2 • Cbatswonb, CA 91313 2402 • www.nationalnotaryorg Prod. No. 5907 Reorder: Call Toll Free 1-800 878-5827
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California
County of Los Anpieles
On August 30, 201 2)efore me, Rutzel Castillo. Notary Public
Date Here Insert Name antl Title of the Officer '
personally appeared John x HuW
Names of Signer(s)
RUTZEL CASTILLO
Commission r 1929117 e
Notary Public - California z
Los Angeles County s
Ullill Comm. Ex Tres Mar 19. 2015
Place Notary Seal Above
who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws
of the State of California that the foregoing paragraph is
true and correct.
WITNESS my h d and off icial/seal.
��
Signature
Signature of Notary Public
OPTIONAL
Though the intormation below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
Document Date:
Signer(s) Other Than
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Individual
❑ Corporate Officer —Till
❑ Partner —❑ Limited ❑ General _
❑ Attorney in Fact
❑ Trustee Top of thumb here
❑ Guardian or Conservator
❑ Other:
Signer Is Representing:
Number of Pages:
Signer's Nar
❑ Individual
❑ Corporate Officer — Title(s):
❑ Partner — ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer Is Representing:
02007 National Notary Association•9350 De Soto Ave., P.O. Box M2•Chatswortti, CA 91313-2,t02•e NaGona,Notaryorg Item a5907 Reortler: Call Toll -Free 1- 876-6827
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
State of California
County of Los Angeles
On 08/16/12
before me, Lupe Villarreal, Notary Public
(Here insert name and title of the of ricer)
personally appeared Tim M. Finnegan
who proved to me on the basis of satisfactory evidence to be the person(W whose name ubscribed
to the within instrument and aclmowl,qked to me that fpslx/lheq-executed the same in Woherftheir
authorized capacity(ibo, and that by signature(,o' on the instrument the person(; or the entity
upon behalf of which the persi _ , ac rd, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
P IIIAA
WITNESS my hand and official seal. Catplile0lon M 1987770
/� / 81" PutNk • C tllt0mle
Y %�R%a�.P�— L_ M 0 foi E pet County 1
Sillnatureof Notary Public
Lupe Villarreal
ADDITIONAL OPTIONAL INFORMATION
DESCRIPTION OF THE ATTACHED DOCUMENT
(Title or description of attached document)
(Title or description of attached document continued)
Number of Pages Document Date
(Additional infinto L
CAPACITY CLAIMED BY THE SIGNER
❑ Individual (s)
❑ Corporate Officer
(Title)
u�H�lj Attnmey-in-Fact
Trustee(s)
Other
2008 Version CAPA v12.10.07800-873-9865 www.NotaryCluetLeom
INSTRUCTIONS FOR COMPLETING THIS FORM
Any acbrowledgment conteleted as California slut contain wo binge ascot/y ar
appears above in the [stray section m' a separWe acknowledgment form snort be
properly conip/eted and attached to that docummnt, the only esceplion Is If a
docummrt is to be recorded notable ofCaglornia. In such irslanom, city alleriatim
acbrmvledgsent verbiage as may be printed on such a document so long its the
verbiage does not rerpalre the notary to do something that is illegal for a salary in
California (i.e. certifying the andusbal mpachy ofthe signer). Please check the
document careJdlyfarproper notarial wording mid attach 1hisfooh ifreguired.
• State sal County information must be the State and County where the document
signer(s) personally appeared before the notary public for acknowledgment.
• Dale of notarization most be the dale that the signer(s) personally appeared
which must also be fire same data the acknowledgment is completed.
• 77m notary public must print his or her cane as it appears within his or her
commission followed by a comma and then year title (notary public).
• Print flit insists) ofdocument signer(s) who personally appear at the time of
nutar'wntion.
• Indicate the correct singular or plum) forms by missing off incorrect fours (i.e.
he tdieaheys u/ats) or circling the correct fauns. Failure to correctly indicate
this information may lead to miee6on of document recording.
• 7be salary sal impression must be clear and photographically reproducible.
Impression must not cover text or lines. if seal impression smudges, re -seal if a
sufficient arm permits, otherwise complete a different acknowledgment form.
• Signature offlre nursry public must match the signature on file wifli the office of
the county clerk.
•? Additioml information is not required but could help to ensum this
acknowledgmein is not misused or attached to a different document.
or Indicate title or type of attached document, number of pages and date.
C• Indicate the capacity claimed by the signer. If the claimed capacity is a
corporate officer, indicate the title (i.e. CEO. CFO, Secretary).
• Securely attach this document to the signed document
S-4067/GE 9fO9 - XDP
THIS POWER OF ATTORNEY IS NOT VALID UNLESS IT IS PRINTED ON RED BACKGROUND. 5093682
This Power of Attorney limits the acts of those named herein, and they have no authority to bind the Company except In the manner and to the
extent herein stated.
LIBERTY MUTUAL INSURANCE COMPANY
BOSTON, MASSACHUSETTS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That Liberty Mutual Insurance Company (the "Company), a Massachusetts stock insurance company, pursuant to and by authority of the By-law and
Authorization hereinafter set forth, does hereby name, Constitute and appoint TIM M. TOMKO, ERIC C. THORSEN, TIM M. FINNEGAN, LUPE VILLARREAL,
SHARON L. TUPPER, TESSA A. ROMERO, ALL OF THE CITY OF GLENDALE, STATE OF CALIFORNIA...................................................................................................
, each individually if there be more than one named, its true and lawful attorney -in -fact to make, execute, seal, acknowledge and deliver, for and on
its behalf as surety and as its act and deed, any and all undertakings, bonds, recognizances and other surety obligations and the execution of such
undertakings, bonds, recognizances and other surely obligations, in pursuance of these presents, shall be as binding upon the Company as if they had
been duly signed by the president and attested by the secretary of the Company in their own proper persons.
That this power is made and executed pursuant to and by authority of the following By-law and Authorization:
ARTICLE XIII -Execution of Contracts: Section 5. Surely Bonds and Undertakings.
Any officer of the Company authorized for that purpose in writing by the chairman or the president, and subject to such limitations as the
chairman or the president may prescribe, shall appoint such attorneys -in -fact, as may be necessary to act in behalf of the Company to make,
execute, seal, acknowledge and deliver as surety any and all undertakings, bonds, recognizances and other surety obligations. Such attorneys -
in -fact, subject to the limitations set forth in their respective powers of attorney, shall have full power to bind the Company by their signature and
execution of any such instruments and to attach thereto the seal of the Company. When so executed such instruments shall be as binding as if
signed by the president and attested by the secretary.
By the following instrument the chairman or the president has authorized the officer or other official named therein to appoint attorneys -in -fact:
Pursuant to Article XIII, Section 5 of the By-laws, David M. Carey, an official of Liberty Mutual Insurance Company, is hereby authorized to
appoint such attorneys -in -fact as may he necessary to act in behalf of the Company to make, execute, seal, acknowledge and deliver as surety
.any and all undertakings, bonds, recognizances and other surety obligations. All Powers of Attorney attested to or executed by David M. Carey
in his capacity as an officer or official of Liberty Mutual Insurance Company, whether before, on or after the date of the Authorization, including
without limitation Powers of Attorney attested to or executed as Assistant Secretary of Liberty Mutual Insurance Company, are hereby ratified
and approved.
That the By-law and the Authorization set forth above are true copies thereof and are now in full force and. effect.
IN WITNESS WHEREOF, this Power of Attorney has been subscribed by an authorized officer or official of the Company and the corporate seal of Liberty
Mutual insurance Company has been affixed thereto in Plymouth Meeting, Pennsylvania this day of 12th day of January
2012
kn LIBERTY MUTUAL INSURANCE COMPANY
BY
David M. Carey, Asiistant Secretary
COMMONWEALTH OF PENNSYLVANIA as
COUNTY OF MONTGOMERY
On this 12th day of January 1 2012 , before me, a Notary Public, personally came David M. Carev, to me known, and
acknowledged that he is an Assistant Secretary of Liberty Mutual Insurance Company; that he knows the seal of said corporation; and that he executed
the above Power of Attorney and affixed the corporate seal of Liberty Mutual Insurance Company thereto with the authority and at the direction of said
corporation.
IN TESTIMONY WHEREpffJlha�%g hbibilnto subscribed my name and affixed my notarial seal at Plymouth Meeting, Pennsylvania, on the day and year r�
first above written I/tr4: �caor1wu `i\
~ir' P lilaT rvP Gl
of y f , e , , + mr B t-.
o l,lp ' 01 '"•, " rZ._;,, Tere a Pastella, Notary Public
CERTIFICATE ,_'
I, the undersigned, Assisfa t+So,
ta Itf •i6e Mutual Insurance Com an , do hemb certi that the orl inal ower of attome of which the foregoing is
SK ,�- rtY P Y Y fY 9 P Y e9 9
a full, true and correct copy, Isulf rde and effect on the date of this certificate; and I do further certify that the officeror official who executed the said
power of attorney is an Assistant Secretary specially authorized by the chairman or the president to appoint attorneys -in -tact as provided in Article XIII,
Section 5 of the By-laws of Liberty Mutual Insurance Company.
This certificate and the above power of attorney may be signed by facsimile or mechanically reproduced signatures under and by authority of the following
vote of the board of directors of Liberty Mutual Insurance Company at a meeting duly called and held on the 121hday of March, 1980.
VOTED that the facsimile or mechanically reproduced signature Of any assistant secretary of the company, wherever appearing upon a certified
copy of any power of attorney issued by the company in connector with surety bonds, shall be valid and binding upon the company with the
same force and effect as though manually affixed.
IN—TE�IMOH
°NY WHEREOF, I �h�av�e hereunto subscribed dry name and affixed the corporate seal of the said company, this � day of
V w1�
1 `l
Gregory W. DavenpoSecretary __
State of California
County of Riverside
On September 10, 2012, before me, SUSAN MAYSELS, Notary Public,
personally appeared FRANK J. SPEVACEK who proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. """"--- U" gUSAN MAYSELS
coMM.Ot8"479
NOTARY PUBLIC • CALIFORNIA
�
RIVERSIDE COUNTY
Signature CommssrmEi ' sAPR73,2013 +
(seal)
DOCUMENT:
DUAL OBLIGEE RIDER — BOND NO. 024042645 re: agreement between
Coral Mountain Partners LP and Optimus Construction for Coral Mountain
apartments
Attachment A
1.) Citibank N.A.
CC Transaction Management Group/Post closing
390 Greenwich Street, 2°d Fl.
New York, NY 10013
2.) U.S. Bancorp Community Development Corporation
(and its permitted successor and assigns)
1307 Washington Avenue, Suite 300
St. Louis, MO 63103
3.) Hamilton USBCDC Investments, L.P.
a California limited partnership
1640 Sepulveda Blvd., Suite 425
Los Angeles, CA 90025
4.) La Quinta Housing Authority and the City of La Quinta
Its Directors, Employees and Agents
P.O. Box 1504
La Quinta, CA 92247
Page 3 of 3
irrus
CONS TRUCTION INC.
440 Western Ave., Ste. 202
Glendale, CA 91201
(818)550-8411, Fax(818) 550-9411
TO: City of La Quinta
Susan Maysels, City Clerk
78495 Calle Tampico
La Quinta, CA 92253
DATE: 9/27/2012
LETTER OF TRANSMITTAL
TITLE OF PROJECT: Coral Mountain
We transmit herewith the following information:
❑ Pay Application
❑ Proposal/Agreement
❑ Change Order
These are transmitted as checked below:
® For your files
❑ For your approval
❑ For Bidding
Remarks: For your records.
❑ Specifications/Manuals
❑ Drawings
® Payment & Performance pB.ond d"
41� pv^�
❑ To be corrected
❑ To be executed
❑ To be returned
1
,I
Optimus Construction, Inc.
By: Emily Geller
�/2F�/ Z p / Z- �iltlm�tic.,aC � � �0�✓V"� b'G. (/I iVrn/�'n,(.�
utu • Document A312TM - 2010
Conforms with The American institute of Architects AIA Document 312
Payment Bond
Bond
#: 024042645
CONTRACTOR:
SURETY:
(Name, legal status and address)
(Name, legal status and principal place of business)
Optimus Construction, Inc.
Liberty Mutual Insurance Company
440 Western Ave., Suite 202
450 Plymouth Road, Suite 400
Glendale, CA 91201
Plymouth Meeting, PA 19462
This document has important legal
consequences. Consultation with
Mailing Address for Notices
an attorney is encouraged with
Liberty Mutual Insurance Company
respect to its completion or
Attention: Surety Claims Department
modification.
OWNER:
1001 4th Avenue,, Suite 1700
Any singular reference to
(Name, legal status and address) -
Seattle, WA 98154
Contractor, Surety, Owner or
Coral Mountain Partners, L.P.
other parry shall be considered
46-736 Adams Street
plural where applicable.
La Quinta, CA 92253
CONSTRUCTION CONTRACT
Date: July 17, 2012.
Amount: $ 31,602,594.00 Thirty-one Million Six Hundred Two Thousand Five Hundred Ninety-four Dollars And Zero Cents
Description:
(Name and location)
Coral Mountain Apartments 2010-130; 79-625 Vista Coralina Lane, La Quints, CA 92253
BOND
Date: August 16, 2012
(Not earlier than Construction Contract Date)
Amount: $ 31,602,594.00 Thirty-one Million SIX Hundred Two Thousand Five Hundred Ninety-four Dollars And Zero Cents
Modifications to this Bond: 0 None F1 See Section 18
CONTRACTOR AS PRINCIPAL
Company: (Corporate Seal)
SURETY
Company: (Corporate Seal)
Liberty Mutual Insurance Company
Signature:
Name
and Title:
Tim M. Finnegan, Attomey-in-Fad
(Any additional signatures appear on the last page of this Payment Bond.)
(FOR INFORMATION ONLY — Name, address and teleplwne)
AGENT or BROKER:
S-21491AS 8110
OWNER'S REPRESENTATIVE:
(Architect, Engineer or other party.)
Prest Vuksic Architects
§ 1 The Contractor and Surety, jointly and severally, bind themselves, their heirs, executors, administrators, successors and assigns to the Owner to
pay for labor, materials and equipment famished for use in the performance of the Construction Contract, which is incorporated herein by reference,
subject to the following terms.
§ 2 If the Contractor promptly makes payment of all sums due to Claimants, and defends, indemnifies and holds harmless the Owner from claims,
demands, liens or suits by any person or entity seeking payment for labor, materials or equipment furnished for use in the performance of the
Construction Contract, then the Surety and the Contractor shall have no obligation under this Bond.
§ 3 If there is no Owner Default under the Construction Contract, the Surety's obligation to the Owner under this Bond shall arise after the Owner
has promptly notified the Contractor and the Surety (at the address described in Section 13) of claims, demands, liens or suits against the Owner or
the Owner's property by any person or entity seeking payment for labor, materials or equipment furnished for use in the performance of the
Construction Contract and tendered defense of such claims, demands, liens or suits to the Contractor and the Surety.
§ 4 When the Owner has satisfied the conditions in Section 3, the Surety shall promptly and at the Surety's expense defend, indemnify and hold
harmless the Owner against a duly tendered claim, demand, lien or suit.
§ 5 The Surety's obligations to a Claimant under this Bond shall arise after the following:
§ 5.1 Claimants, who do not have a direct contract with the Contractor,
.1 have furnished a written notice of non-payment to the Contractor, stating with substantial accuracy the amount claimed and the
name of the party to whom the materials were, or equipment was, famished or supplied or for whom the labor was done or
performed, within ninety (90) days after having last performed labor or last famished materials or equipment included in the Claim;
and
.2 have sent a Claim to the Surety (at the address described in Section 13).
§ 5.2 Claimants, who are employed by or have a direct contract with the Contractor, have sent a Claim to the Surety (at the address described in
Section 13). -
§ 6 If a notice of non-payment required by Section 5.1.1 is given by the Owner to the Contractor, that is sufficient to satisfy a Claimant's obligation
to furnish a written notice of non-payment under Section 5.1.1.
§ 7 When a Claimant has satisfied the conditions of Sections 5.1 or 5.2, whichever is applicable, the Surety shall promptly and at the Surety's
expense take the following actions:
§ 7.1 Send an answer to the Claimant, with a copy to the Owner, within sixty (60) days after receipt of the Claim, stating the amounts that are
undisputed and the basis for challenging any amounts that are disputed; and
§ 7.2 Pay or arrange for payment of any undisputed amounts
§ 7.3 The Surety's failure to discharge its obligations under Section 7.1 or Section 7.2 shall not be deemed to constitute a waiver of defenses the
Surety or Contractor may have or acquire as to aClaim, except as to undisputed amounts for which the Surety and Claimant have reached agreement
If, however, the Surety fails to discharge its obligations under Section 7.1 or Section 7.2, the Surety shall indemnify the Claimant for the reasonable
attorney's fees the Claimant incurs thereafter to recover any sums found to be due and owing to the Claimant.
§ 8 The Surety's total obligation shall not exceed the amount of this Bond, plus the amount of reasonable attorney's fees provided under Section 7.3,
and the amount of this Bond shall be credited_for any payments made in good faith by the Surety.
§ 9 Amounts owed by the Owner to the Contractor under the Construction Contract shall be used for the performance of the Construction Contract
and to satisfy claims, if any, under any construction performance bond. By the Contractor furnishing and the Owner accepting this Bond, they agree
that all funds earned by the Contractor in the performance of the Construction Contract are dedicated to satisfy obligations of the Contractor and
Surety under this Bond, subject to the Owner's priority to use the funds for the completion of the work.
5-2149/AS all
§ 10 The Surety shall not be liable to the Owner, Claimants or others for obligations of the Contractor that are unrelated to the Construction Contract.
The Owner shall not be liable for the payment of any costs or expenses of any Claimant under this Bond, and shall have under this Bond no
obligation to make payments to, or give notice on behalf of, Claimants or otherwise have any obligations to Claimants under this Bond.
§ 11 The Surety hereby waives notice of any change, including changes of time, to the Construction Contract or to related subcontracts, purchase
orders and other obligations.
§ 12 No suit or action shall be commenced by a Claimant under this Bond other than in a court of competent jurisdiction in the state in which the
project that is the subject of the Construction Contract is located or after the expiration of one year from the date (1) on which the Claimant sent a
Claim to the Surety pursuant to Section 5.1.2 or 5.2, or (2) on which the last labor or service was performed by anyone or the last materials or
equipment were furnished by anyone under the Construction Contract, whichever of (1) or(2)first occurs. if the provisions of this Paragraph are void
or prohibited by law, the minimum period of limitation available to sureties as a defense in the jurisdiction of the suit shall be applicable.
§ 13 Notice and Claims to the Surety, the Owner or the Contractor shall be mailed or delivered to the address shown on the page on which their
signature appears. Actual receipt of notice or Claims, however accomplished, shall be sufficient compliance as of the date received.
§ 14 When this Bond has been furnished to comply with a statutory or other -legal requirement in the location where the construction was to be
performed, any provision in this Bond conflicting with said statutory or legal requirement shall be deemed deleted herefi•om and provisions
conforming to such statutory or other legal requirement shall be deemed incorporated herein. When so furnished, the intent is that this Bond shall be
construed as a statutory bond and not as a common law bond. -
§ 15 Upon request by any person or entity appearing to be a potential beneficiary of this Bond, the Contractor and Owner shall promptly furnish a
copy of this Bond or shall permit a copy to be made. .
§ 16 Deflnitlons
§ 16.1 Claim. A written statement by the Claimant including at a minimum: "
.1 the name of the Claimant;
.2 the name of the person for whom the labor was done, or materials or equipment famished;
.3 a copy of the agreement or purchase order pursuant to which labor, materials or equipment was furnished for use in the
performance of the Construction Contract;
.4 a brief description of the labor, materials or equipment furnished;
.5 the date on which the Claimant last performed labor or last furnished materials or equipment for use in the performance of the
Construction Contract;
.6 the total amount earned by the Claimant for labor, materials or equipment furnished as of the date of the Claim;
.7 the total amount of previous payments received by the Claimant; and
.6 the total amount due and unpaid to the Claimant fm labor, materials or equipment furnished as of the date of the Claim.
§ 16.2 Claimant. An individual or entity having a direct contract with the Contractor or with a subcontractor of the Contractor to furnish labor,
materials or equipment for use in the performance of the Construction Contract. The term Claimant also includes any individual or entity that has
rightfully asserted a claim under an applicable mechanic's lien or similar statute against the real property upon which the Project is located. The intent
of this Bond shall be to include without limitation in the terms "labor, materials or equipment" that part of water, gas, power, light, heat, oil, gasoline,
telephone service or rental equipment used in the Construction Contract, architectural and engineering services required for performance of the work
of the Contractor and the Contractor's subcontractors, and all other items for which a mechanic's lien may be asserted in the jurisdiction where the
labor, materials or equipment were famished.
§ 16.3 Construction Contract. The agreement between the Owner and Contractor identified on the cover page, including all Contract Documents
and all changes made to the agreement and the Contract Documents.
S-2149/AS 6/10
§ 16.4 Owner Default Failure of the Owner, which has not been remedied or waived, to pay the Contractor as required under the Construction
Contract or to perform and complete or comply with the other material terms of the Construction Contract.
§ 16.5 Contract Documents. All the documents that comprise the agreement between the Owner and Contractor.
§ 17 If this Bond is issued for an agreement between a Contractor and subcontractor, the term Contractor in this Bond shall be deemed to be
Subcontractor and the term Owner shall be deemed to be Contractor. -
§ 18 Modifications to this bond are as follows:
(Space is provided belowfor additional signatitres of added parties, other than those appearing on the cover page)
CONTRACTOR AS PRINCIPAL SURETY
Company: (Corporate Seal) Company:
Signature: Signature:
Name and Title: Name and'
Address Address
(Corporate Seal)
S-2149/AS 8/10
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
State of California
County of Los Angeles
On 08/16/12 before me, Lupe Villarreal, Notary Public
(Here insert name and toe at le wet
personally appeared Tim M.
who proved to me on the basis of satisfactory evidence to be the person0o whose name I ubscribed
to the within instrument and acknowledged to me thatgakeatliep�executed the same in�
authorized capacity(ills), and that by C3koAWiieiP signature(y4 on the instrument the person(g, or the entity
upon behalf of which the person(44 ac ed, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
Mosel
LUPE VIIIARREAI
WITNESS my hand and official seal.
Commiaalon * 1957770
Notary Public • California
Loo Angela County
Siglilifirre of Notary Public
Y Comm. Ea Ires Nov 19 E015
Lupe Villarreal
ADDITIONAL OPTIONAL INFORMATION
DESCRIPTION OF THE ATTACHED DOCUMENT
(Title or description of attached documeat)
(Title or description of attached document continued)
Number of Pages Document Date
(Additional information)
CAPACITY CLAIMED BY THE SIGNER
❑ Individual (a)
Corporate Officer
(Title)
Partner(s)
❑ Attorney -in -Fact
®Trustee(s)
Other
2008 Version CAPA r12.10.07 800-873-9865 www.NolaryCleama.c sm
INSTRUCTIONS FOR COMPLETING THIS FORM
Ary acnmwledgment completed in Calif onin mrsl contain verbiage exactly as
appears above lit the notary section or a separate aehnravledgnseni jam most be
properly completed and attached to that document The only exception is if a
docnuact is to be recorded outside ofCalijonda. Asuch instances, any alternative
aclamis edgment verbiage as may be printed as such a doaonent so long as the
verbiage does net require the nolmy to do sanetbing that is illegalfor a notary in
California C.m certifying the authorized capactry, ofthe signer). Pkase check floe
dacanent mrefrdly for prnper omlarinhuording and attach ddsfona lfr'equb ed.
• State and County information mustbe the State and County where the document
signer(s) personally appeared before the notary public for acknowledgment
• Date of notarization must be the date that the signer(s) personally appeared
which meal also be are same date the acknowledgment is completed.
• The notary public most print his or her name as it appears within his or her
commission followed by a comma and then your title (notary public).
• Print the mme(s) ofdocumenl signers) who personally appear at die time of
notarization.
• Indicate the correct singular or plum[ forms by crowing off incorrect forms (i.e.
he /slrWlwy; is/am) or circling the cannot ferns. Failure to correctly indicate
this information may lead to rejection ofdocument recording.
• The notary seal impression must be clear and photographically reproducible.
Impression must not cover text or lines. If seal impression smudges, re -seal if a
sufficient area permits, otherwise canplek a different acknowledgment form.
• Signature of the notary public must march [lie signature on file with the office of
the county clerk
8 Additional information is art rN.imd but could help to ensure this
acknewledgrnenl is am misused or atached to a different document.
ry Indicate title or type of attached document, number of pages and dare.
h Indicate the capacity claimed by the signer. if the claimed capacity is a
corporate ofceq indicate the title (i.e. CEO, CFO, Secretary).
• Severely attach this document to the signed document
9-4067/GE 9/09 - XDP
THIS POWER OF ATTORNEY IS NOT VALID UNLESS IT IS PRINTED ON RED BACKGROUND. 5093680
This Power of Attorney limits the acts of those named herein, and they have no authority to bind the Company except in the manner and to the
extent herein stated.
LIBERTY MUTUAL INSURANCE COMPANY
BOSTON, MASSACHUSETTS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That Liberty Mutual Insurance Company (the "Company"), a Massachusetts stock insurance company, pursuant to and by authority of the By-law and
Authorization hereinafter set forth, does hereby name, constitute and appoint TIM M. TOMKO, ERIC C. THORSEN, TIM M. FINNEGAN, LUPE VILLARREAL,
SHARON L. TUPPER, TESSA A. ROMERO, ALL OF THE CITY OF GLENDALE, STATE OF CALIFORNIA...................................................................................................
, each individually if there be more than one named, its true and lawful attorney -in -fact to make, execute, seal, acknowledge and deliver, for and on
its behalf as surety and as its act and deed, any and all undertakings, bonds, recognizances and other surety obligations and the execution of such
undertakings, bonds, recognizances and other surety obligations, in pursuance of these presents, shall be as binding upon the Company as if they had
been duly signed by the president and attested by the secretary of the Company in their own proper persons.
That this power is made and executed pursuant to and by authority of the following By-law and Authorization:
ARTICLE XIII - Execution of Contracts: Section 5. Surety Bonds and Undertakings.
Any officer of the Company authorized for that purpose in writing by the chairman or the president, and subject to such limitations as the
chairman or the president may prescribe, shall appoint such attomeys-in-fact, as may be necessary to act in behalf of the Company to make,
execute, seal, acknowledge and deliver as surety any and all undertakings, bonds, recognizances and other surety obligations.. Such attorneys -
in -fact, subject to the limitations set forth In their respective powers of attorney, shall have full power to bind the Company by their signature and
execution of any such. instruments and to attach thereto the seal of the Company. When so executed such instruments shall be as binding as if
signed by the president and attested by the secretary.
By the following instrument the chairman or the president has authorized the officer or other official named therein to appoint attorneys -in -fact:
N
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.Pursuant to Article XIII, Section 5 of the By-laws, David M. Carey, an official of Liberty Mutual Insurance Company, is hereby authorized to
appoint such attorneys -in -fact as may be necessary to act in behalf of the Company to make, execute, seal,acknowledge and deliver as surety
m
any and all undertakings, bonds, recognizances and other surety obligations. All Powers of Attorney attested to or executed by David M. Carey
c
in his capacity as an officer or official of Liberty Mutual Insurance Company, whether before, on or after the date of the Authorization, including
m 0
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without limitation Powers of Attorney attested to or executed as Assistant Secretary of Liberty Mutual Insurance Company, are hereby ratified
U I` -
and approved.
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>
That the By-law and the Authorization set forth above are two copies thereof and are now in full force and effect.
EE
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IN WITNESS WHEREOF, this Power of Attorney has been subscribed by an authorized officer or official of the Company and the corporate seal of Liberty
9
y Mutual Insurance Company has been affixed thereto in Plymouth Meeting, Pennsylvania this day of 721h day of January ,
21 2012
C e uqk LIBERTY MUTUAL INSURANCE COMPANY
e By f
H David M. Carey,istant Secretary
COMMONWEALTH OF'PENNSYLVANIA as
«. COUNTY OF MONTGOMERY
On this 12th day of January 1 2012 before me, a Notary Public, personally came David M. Carev, to me known, and
acknowledged that he is an Assistant Secretary of Liberty Mutual Insurance Company; that he knows the seal of said corporation; and that he executed
the above Power of Attorney and affixed the corporate seal of Liberty Mutual Insurance Company thereto with the authority and at the direction of said
corporation.
IN TESTIMONY WHER O QtJ4Sfesubscribed my name and affixed my notarial seal at Plymouth Meeting, Pennsylvania, on the day and year
first above written. S�>^..c%oNWEyC
12-u1 i
�.Y T151 F� 5 f10t.i I
Tere a Pastella, Notary Public
CERTIFICATE '�'.�.GaN,SYt', ` .,�: _.= .... �. r:.. ;,aa•:
I, the undersigned, Assistartt�$ fggr)jiG�P '16erty Mutual Insurance Company, do hereby certify that the original power of attorney of which the foregoing is
a full, true and correct copy, I 'in full,force and effect on the date of this certificate; and I do further certify that the officer or official who executed the said
power of attorney is an Assistant Secretary specially authorized by the chairman or the president to appoint attorneys -in -fad as provided in Article XIII,
Section 5 of the By-laws of Liberty Mutual Insurance Company.
This certificate and the above power of attorney may be signed by facsimile or mechanically reproduced signatures under and by authority of the following
vote of the board of directors of Liberty Mutual Insurance Company at a meeting duly called and held on the 12th day of March, 1980.
VOTED that the facsimile or mechanically reproduced signature of any assistant secretary of the company, wherever appearing upon a certified
copy of any power of attorney issued by the company in connection with surely bonds, shall be valid and binding upon the company with the
same force and effect as though manually affixed.
IN TE TIM . OrJY WHEREOF, I have hereunto subscribed my name and affixed Hie corporate seal of the said company, this day of
'1012
Gregory W.'Davenport, Assistant Secretary
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CALIFORNIA• ;ACKNOWLEDGMENT CIVIL CODE it 21,9Z
y. MMI
)1
F
State of e I County of
r V 4e�
before me,(
;)J
• I r�
personally appeared r • _ �Y
?:
SHAKEN ME 16"4 AN
Cominlnlon 11fi14192
1%7Nohry Public • CeiiforNe
LOB Angeles COusly
MICOMM. Ee Iree r 11 2013
Place Nah" Seal Above
who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in
hislher/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and
official seal.
Sign tore: n`!}'��� < i
OPTIONAL Signature of No ary Public
Though the information below is not required by law, it may prove valuable to persons relying an the document
and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
Document Date:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Corporate Officer — Title(s):
❑ Individual
e
❑ Partner — ❑ Limited ❑ General Top,
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservat
❑ Other:
Signer Is Wresenting
Number of
Officer — TIOe(s):
❑ Individual
❑ Partner — ❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer Is Representing:
RIGHT THUMBPRINT
L
0 M10 National Notary Association - NatlonalNolary.org • 1-800-US NOTARY (1-800-e7&6827) hem #5 7
R"-�
Document A312TM - 2010
Conforms with The American Institute of Architects AIA Document 312
Performance Bond
CONTRACTOR:
(Name, legal status and address)
Optimus Construction, Inc.
440 Western Ave., Suite 202
Glendale, CA 91201
OWNER:
(Name, legal status and address)
Coral Mountain Partners, L.P.
46-735 Adams Street
La Quints, CA 92253
CONSTRUCTION CONTRACT
Date: July 17, 2012
Bond #:024042645
SURETY:
(Name, legal status and principal place of business)
Liberty Mutual Insurance Company
450 Plymouth Road, Suite 400
Plymouth Meeting, PA 19462
This document has Important legal
consequences. Consultation with
Mailing Address for Notices
an attorney Is encouraged with
Liberty Mutual Insurance Company
respect to its completion or
Attention: Surety Claims Department
modification.
1001 4th Avenue, Suite 1700
Any singular reference to
Seattle, WA98154
Contractor, Surety, Owner or
other party shall be wnsidered
plural where applicable.
Amount: $ 31,602,594.00 Thirty-one Million Six Hundred Two Thousand Five Hundred Ninety-four Dollars And Zero Cents
Description:
(Name and location)
Coral Mountain Apartments 2010-130; 79-625 Vista Coralina Lane, La Quinta, CA 92253
BOND
Date: August 16, 2012
(Not earlier than Construction Contract Date)
Amount: $ 31,602,594.00 Thirty-one Million Six Hundred Two Thousand Five Hundred Ninety-four Dollars And Zero Cents
Modifications to this Bond: None See Section 16
CONTRACTOR AS PRINCIPAL
Company: (Corporate Seal)
Optimus Construction, Inc.
SURETY
Company: (Corporate Seal)
Liberty Mutual Insurance Company
Signature:•
Name
and Title:
Tim M. Finnegan, Attorney -in -Fact
(Any additional signatures appear on the last page of this Performance Bond)
(FOR BJFORMA T70N ONLY —Name, address and telephone)
AGENT or BROKER:
OWNER'S REPRESENTATIVE:
(Architect, Engineer or other party:)
Prest Vuksic Architects
S-1852IAS 8/10
§ 1 The Contractor and Surety, jointly and severally, bind themselves, their heirs, executors, administrators, successors and assigns to the Owner for
the performance of the Construction Contract, which is incorporated herein by reference.
§ 2 If the Contractor performs the Construction Contract, the Surety and the Contractor shall have no obligation under this Bond, except when
applicable to participate in a conference as provided in Section 3.
§ 3 If there is no Owner Default under the Construction Contract, the Surety's obligation under this Bond shall arise after
.1 the Owner first provides notice to the Contractor and the Surety that the Owner is considering declaring a Contractor Default. Such
notice shall indicate whether the Owner is requesting a conference among the Owner, Contractor and Surety to discuss the
Contractor's performance. If the Owner does not request a conference, the Surety may, within five (5) business days after receipt of
the Owners notice, request such a conference. If the Surety timely requests a conference, the Owner shall attend. Unless the Owner
agrees otherwise, any conference requested under this Section 3.1 shall be held within ten (10) business days of the Surety's receipt
of the Owner's notice. If the Owner, the Contractor and the Surety agree, the Contractor shall be allowed a reasonable time to
perform the Construction Contract, but such an agreement shall not waive the Owner's right, if any, subsequently to declare a
. Contractor Default;
.2 the Owner declares a Contractor Default, terminates the Construction Contract and notifies the Surety; and
.3 the Owner has agreed to pay the Balance of the Contract Price in accordance with the terms of the Construction Contract to the
Surety or to a contractor selected to perform the Construction Contract.
§ 4 Failure on the part of the Owner to comply with the notice requirement in Section 3.1 shall not constitute a failure to comply with a condition
precedent to the Surety's obligations, or release the Surety from its obligations, except to the extent the Surety demonstrates actual prejudice.
§ 5 When the Owner has satisfied the conditions of Section 3, the Surety shall promptly and at the Surety's expense take one of the following actions:
§ 5.1 Arrange for the Contractor, with the consent of the Owner, to perform and complete the Construction Contract;
§ 5.2 Undertake to perform and complete the Construction Contract itself, through its agents or independent contractors;
§ 5.3 Obtain bids or negotiated proposals from qualified contractors acceptable to the Owner for a contract for performance and completion of the
Construction Contract, arrange for a contract to be prepared for execution by the Owner and a contractor selected with the Owner's concurrence, to be
secured with performance and payment bonds executed by a qualified surety equivalent to the bonds issued on the Construction Contract, and pay to
the Owner the amount of damages as described in Section 7 in excess of the Balance of the Contract Price incurred by the Owner as a result of the
Contractor Default; or
§ 5.4. Waive its right to perform and complete, arrange for completion, or obtain a new contractor and with reasonable promptness under the
circumstances:
.1 After investigation, determine the amount for which it may be liable to the Owner and, as soon as practicable after the amount is
determined, make payment to the Owner; or
.2 Deny liability in whole or in part and notify the Owner, citing the reasons for denial.
§ 6 If the Surety does not proceed as provided in Section 5 with reasonable promptness, the Surety shall be deemed to be in default on this Bond
seven days after receipt of an additional written notice from the Owner to the Surety demanding that the Surety perform its obligations under this
Bond, and the Owner shall be entitled to enforce any remedy available to the Owner. If the Surety proceeds as provided in Section 5.4, and the
Owner refuses the payment or the Surety has denied liability, in whole or in part, without further notice the Owner shall be entitled to enforce any
remedy available to the Owner.
5-1852IAS 8I10
§ 7 If the Surety elects to act under Section 5.1, 5.2 or 5.3, then the responsibilities of the Surety to the Owner shall not be greater than those of the
Contractor under the Construction Contract, and the responsibilities of the Owner to the Surety shall not be greater than those of the Owner under the
Construction Contract. Subject to the commitment by the Owner to pay the Balance of the Contract Price, the Surety is obligated, without
duplication, for
.1 the responsibilities of the Contractor for correction of defective work and completion of the Construction Contract;
.2 additional legal, design professional and delay costs resulting from the Contractor's Default, and resulting from the actions or
failure to act of the Surety under Section 5; and
.3 liquidated damages, or if no liquidated damages are specified in the Construction Contract, actual damages caused by delayed
performance or non-performance of the Contractor.
§ 8 If the Surety elects to act under Section 5.1, 5.3 or 5.4, the Surety's liability is limited to the amount of this Bond.
§ 9 The Surety shall not be liable to the Owner or others for obligations of the Contractor that are unrelated to the Construction Contract, and the
Balance of the Contract Price shall not be reduced or set off on account of any such unrelated obligations. No right of action shall accrue on this
Bond to any person or entity other than the Owner or its heirs, executors, administrators, successors and assigns.
§ 10 The Surety hereby waives notice of any change, including changes of time, to the Construction Contract or to related subcontracts, purchase
orders and other obligations.
§ 11 Any proceeding, legal or equitable, under this Bond may be instituted in any court of competentjurisdiction in the location in which the work or
part of the work is located and shall be instituted within two years after a declaration of Contractor Default or within two years after the Contractor
ceased working or within two years after the Surety refuses or fails to perform its obligations under this Bond, whichever occurs fast If the
provisions of this Paragraph are void or prohibited by law, the minimum period of limitation available to sureties as a defense in the jurisdiction of
the suit shall be applicable.
§ 12 Notice to the Surety, the Owner or the Contractor shall be mailed or delivered to the address shown on the page on which their signature
appears.
§ 13 When this Bond has been furnished to comply with a statutory or other legal requirement in the location where the construction was to be
performed, any provision in this Bond conflicting with said statutory or legal requirement shall be deemed deleted hereftom and provisions
conforming to such statutory or other legal requirement shall be deemed incorporated herein When ao furnished, the intent is that this Bond shall be
construed as a statutory bond and not as a common law bond.
§ 14 Definitions
§ 14.1 Balance of the Contract Price. The total amount payable by the Owner to the Contractor under the Construction Contract after all proper
adjustments have been made, including allowance to the Contractor of any amounts received or to be received by the Owner in settlement of
insurance or other claims for damages to which the Contractor is entitled, reduced by all valid and proper payments made to or on behalf of the
Contractor under the Construction Contract.
§ 14.2 Construction Contract. The agreement between the Owner and Contractor identified on the cover page, including all Contract Documents
and changes made to the agreement and the Contract Documents.
§ 14.3 Contractor Default. Failure of the Contractor, which has not been remedied or waived, to perform or otherwise to comply with a material
tens of the Construction Contract.
§ 14.4 Owner Default. Failure of the Owner, which has not been remedied or waived, to pay the Contractor as required under the Construction
Contract or to perform and complete or comply with the other material terns of the Construction Contract.
§ 14.5 Contract Documents. All the documents that comprise the agreement between the Owner and Contractor.
§ 15 If this Bond is issued for an agreement between a Contractor -and subcontractor, the tern Contractor in this Bond shall be deemed to be
Subcontractor and the term Owner shall be deemed to be Contractor.
S-1852IAS 8I10
§ 16 Modifications to this bond are as follows:
(Space is provided below for additional signatures of added parties, other than those appearing on the corer page)
CONTRACTOR AS PRINCIPAL SURETY
Company: (Corporate Sea[) Company: (Corporate Seal)
Signature: _
Name and Title:
Address
Signature:
Name and Title:
Address
5-18521AS 8110
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
State of California
County of Los Angeles
On 08/16/12 before me, Lupe Villarreal, Notary Public
(Here insert name and title of die officer)
personally appeared Tim M.
who proved to me on the basis of satisfactory evidence to be the person(* whose nalne(*Ar bscribed
to the within instrument and acknow1pked to me that®skefl§ep'executed the same '
authorized capacity(I�E), and that b hr herkkeir signature(l j on the instrument the person(A�, or the entity
upon behalf of which the person($ acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct,
wtun t
WITNESS my hand and official seal.
La_
AapW Coo*
9 ture of Notary Public
Lupe Villa --real
ADDITIONAL OPTIONAL INFORMATION
DESCRIPTION OF THE ATTACHED DOCUMENT
(Title or description of attached document)
(Title or description of attached document continued)
Number of Pages Document Date
(Additional r onnanon
CAPACITY CLAIMED BY THE SIGNER
Individual(s)
Corporate Officer
(Title)
Partner(s)
Attorney -in -Fact
Trustee(s)
Other
2008 Version CAPA v12.10.07 900-873-9965 www.NotaryClassmeran
INSTRUCTIONS FOR COMPLETING THIS FORM
Any admorefedgrnerl completed in Calbbnria brut cousin, verbiage =city as
appeus above in ilia tarmry section or a separate acbmirledgnrent form mist be
ptnpedy cienTided and attached to that docnmert. The only eregation Is if a
decreased is on, be recorded outside ofCalfornia. hr such insmncer, any alternative
acteowledgmern verbiage as nary be praised on such a decunmrs so long as ilia
verbiage does nit require the notary to do something that is fllegat for a rotary in
California (i.e. cen(tfying she muhorked capacity of the signer). Please check the
docummumrefidlyforpropenrotnrial wading and attach thirfami ijrequired.
• State and County information must be the State and County where the document
signer(&) personally appeared before the notary public for acknowledgment.
• pate of notarization mast be the date Oat We signals) personally appeared
which must else be the same date gte acknowledgment is completed.
• 71ro notary public must print his or her came as it ratings within his or her
commission followed by a assume and then year gtle (notary public).
• Print die camels) ofdocument signers) who personally appear at the time of
notarinflon.
• Indicate the correct singular or plural fauns by gassing off incorma forms (i.e.
he hbefNey; is/ere) or circling the correct forms. Failure to conectly indicate
this information may lead to rejection of document recording.
• The rotary rein impression must be clear and photographically reproducible.
Impression must trot cover text or lines. If seal impression smudger, m-scat if a
sufficient cow permits, odrawise, complete a different acknowledgment farm,
• Signature of Oro notary public mum match the signature on file with the office of
Oro county clerk
•i Additional information is not required but could help to easum this
acknmvledg�rest is not misused or attached to a different document.
0 Indicate title a type ofa,ached document, number of pages and date.
6 Indicate the capacity claimed by ilia signer. if the claimed capacity is a
corporate officer, indicate the title (i.e. CEO,CFO, Secretary).
• Securely much Otis document m the signed document
S-40671GE 9109 XDP
THIS POWER OF ATTORNEY IS NOT VALID UNLESS IT IS PRINTED ON RED BACKGROUND. 5093681
This Power of Attorney limits the acts of those named herein, and they have no authority to bind the Company except in the manner and to the
extent herein stated. `
LIBERTY MUTUAL INSURANCE COMPANY
BOSTON,MASSACHUSETTS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That Liberty Mutual Insurance Company (the "Company), a Massachusetts stock insurance company, pursuant to and by authority of the By-law and
Authorization hereinafter set forth, does hereby name, constitute and appoint Tim M. TOMKO, ERIC C. THORSEN, Tim M. FINNEGAN, LUPE VILLARREAL,
SHARON L. TUPPER, TESSA A. ROMERO, ALL OF THE CITY OF GLENDALE, STATE OF CALIFORNIA................................................... _..... .........................................
, each individually If there be more than one named, its true and lawful attorney -in -fact to make, execute, seal, acknowledge and deliver, for and on
its behalf as surety and as its act and deed, any and allundertakings, bonds, recognizances and other surety obligations and the execution of such
undertakings, bonds, recognizances and other surely obligations, In pursuance of these presents, shall be as binding upon the Company as if they had
been duly signed by the president and attested by the secretary of the Company in their own proper persons.
That this power is made and executed pursuant to and by authority of the following By-law and Authorization:
ARTICLE XIII - Execution of Contracts: Section 5. Surety Bonds and Undertakings.
Any officer of the Company authorized for that purpose in writing by the chairman or the president, and subject to such limitations as the
chairman or the president may prescribe, shall appoint such attorneys -in -fact, as may be necessary to act in behalf of the Company to make,
execute, seal, acknowledge and deliver as surety any and all undertakings, bonds, recognizances and other surety obligations. Such attorneys -
in -fact, subject to the limitations set forth in their respective powers of attorney, shall have full power to bind the Company by their signature and
execution of any such instruments and to attach thereto the seal of the Company. When so executed such instruments shall be as binding as if
signed by the president and attested by the secretary.
By the following instrument the chairman or thepresident has authorized the officer or other official named therein to appoint attorneys -in -fact
Pursuant to Article Al I, Section 5 of the By-laws, David M. Carey, an official of Liberty Mutual Insurance Company, is hereby authorized to
appoint such attorneys -in -fact as may be necessary to act In behalf of the Company to make, execute, seal, acknowledge and deliver as surety
.any and all undertakings, bonds, recognizances and other surely obligations. All Powers of Attorney attested to or executed by David M. Carey
in his capacity as an officer or official of Liberty Mutual Insurance Company, whether before, on or after the date of the Authorization, including
without limitation Powers of Attorney attested to or executed as Assistant Secretary of Liberty Mutual Insurance Company, are hereby ratified
and approved.
That the By-law and the Authorization set forth above are true copies thereof and are new in full force and effect.
IN WITNESS WHEREOF, this Power of Attorney has been subscribed byan authorized officer or official of the Company and the corporate seal of Liberty
Mutual Insurance Company has been affixed thereto in Plymouth Meeting, Pennsylvania this day of 12th day of January
2012
I�ox„ LIBERTY. MUTUAL INSURANCE COMPANY
'q'3a 6i
�bdm-'.Gv�O By.
David M. Carey, istant Secretary
COMMONWEALTH OF PENNSYLVANIA ss
COUNTY OF MONTGOMERY
On this 121h day of January 2012 before me, a .Notary Public, personally came David M. Carev, to me known, and
acknowledged that he is an Assistant Secretary of Liberty Mutual Insurance Company; that he knows the seal of said corporation; and that he executed
the above Power of Attorney and affixed the corporate seal of Liberty Mutual Insurance Company thereto with the authority and at the direction of said
corporation. ,q
IN TESTIMONY WHER frJflla�„n s o subscribed my name and affixed my notarial seal at Plymouth Meeting, Pennsylvania, on the day and year
first above written r" oHW"'°*
.4r
C p UI a nanN I B
r.+r yi, t,p w d2G�A y-
CERTIFICATE e cc •ty s{•,, Ar. n •` r-�ixnne Tere a Pastels. Notary Public
��q, y:1�sr
I, the undersigned, Assist ant$'y- a(ierty Mutual Insurance Company, do hereby certify that the original power of attorney of which the foregoing is
a full, two and correct oopy,lls in full to and effect on the date of this certificate; and I do further certify that the officer or official who executed the said
power of attorney Is an Assistant Secretary specially authorized by the chairman or the president to appoint attorneys -.in -fact as provided in Article XIII,
Section 5 of the By-laws of Liberty Mutual Insurance Company.
This certificate and the above power of attorney may be signed by facsimile or mechanically reproduced signatures under andby authority of the following
vote of the board of directors of Liberty Mutual Insurance Company at a meeting duly called and held on the 12th day of March, 1980.
VOTED that the facsimile or mechanically reproduced signature of any assistant secretary of the company, wherever appearing upon a certified
copy of any power of attorney issued by the company In connection with surety bonds, shall be valid and binding upon the company with the
same force and effect as though manually affixed.
IN TTIMO Y WHEREOF have hereunto subscribed my name and affixed the corporate seal of the said company, this ki day of
Gregory W. Davenport, Assistant Secretary
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
CIVIL COM § 1188
State of California / l
County of /,g S AA:4 9&3 Ji
On , /a before me, �Q�+u �0� cyrvccn
Date era Irl6ed Name and 1 twwltvotttmr
personally appeared
1I ElC01pAN
Cameisslal/1041102
Nary Public - Cslifornls
Los Angeles County
Colour. rot Apr 11 2019
who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the
person(s) acted, executed the Instrument.
I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signatur�
Plaza Notary Seal Above Signature of Notary Imam
OPTIONAL
Though the Information below is not required by law, It may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
Document Date:
Signer(s) Other Than Named Above: _
Capacity(les) Claimed by Signer(s)
Signer's Name:
❑ Corporate Officer — Title(s): _
❑ Individual
❑ Partner — ❑ Umted ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Consery
❑ Other:
Number of
,426porate Officer — Title(s):
❑ Individual BOOr •
❑ Partner — ❑ Limited ❑ General Top of thumb here
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer Is Representing:
C 2010 National Notary Association • NallonaWotary.org • 1-8W--US NOTARY (1-800-876-6827) It.. #5907
Bond No: 024042645
DUAL OBLIGEE RIDER
WHEREAS, Heretofore, and on or about the 17th day of
Optimus Construction, Inc.
as Optimus Construction, Inc. entered into a written agreement wi
for Coral Mountain
in accordance with drawings and specifications prepared by Prest Vulcsic Architects
herein referred to as the Contract, and
WHEREAS, Optimus
and Liberty Mutual H
made executed and
and
Inc.
to said Owner. as
2012
as Principal,
as Surety,
wment Bond
WHEREAS, The Obligee has requested the Principal and Surety to join with the Obligee in the execution and delivery
of this Rider, and the Principal and Surety have agreed so to do upon the conditions herein stated.
NOW, THEREFORE, in consideration of One Dollar and the other good and valuable considerations, receipt of which
is hereby acknowledged, the undersigned hereby agree as follows:
The Performance Bond and Payment Bond aforesaid shall be and it is hereby amended as follows:
1. The name of the entities listed on "Attachment A"
shall be added to said Bonds as an additional Obligee.
2. The rights of the entities listed on "Attachment A" , as an additional Obligee, shall be subject to the
following conditions: (a) The Surety shall not be liable under this Bond to the Obligees, or either of them, unless the
Obligees, or either of them shall make payments to the Principal strictly in accordance with the terms of said contract as
to payments and shall perform all the other obligations to be performed under said contract at the time and in the
manner therein set forth, (b) The aggregate liability of the Surety under this Bond to the Owners, as their interests may
appear, is limited to the penal sum of this Bond, (c) The Surety may, at its option, make any payments under this Bond
by check issued jointly to any or all obligees
3. Surety agrees that any change order issued in accordance with the general conditions of the contract, which change
order increases the total contract price, shall be binding upon Surety and covered under the Bonds without notice to or
any act by Surety.
4. Except as herein modified, said Performance Bond and Payment Bond shall be and remain in full force and effect.
Signed, sealed and dated this
day of
By:
Coral Mountain Partners, L.P.
Liberty Mutual Insurance Company
By: /L,�•���r
Tim M. Finnegan, Attorney -in -Fact
intentionally left blank, please see next page
By:
intentionally left blank, please see next page
S-43491M 2t96
XDP
Dual Obligee Rider
Bond No.: 024042645
Optimus Construction, Inc.
Citibank N.A.
CC Transaction Management Group/Post closing
By: y
T+5: Vicel�rA &+}-
U.S. Bancorp Community
Development Corporation (and its permitted
successor and assigns)
By:
Hamilton USBCDC Investments, L.P.,
a California limited partnership
M
La Qui6ta Housing Authority and the City of
La Quinta, its Directors, Employees and Agents
Page 2 of 3
City nager City of La Quinta, and
Execu rector, La Quinta Housing Authority
Attachment A
1.) Citibank N.A.
CC Transaction Management Group/Post closing
390 Greenwich Street, 2nd Fl.
New York, NY 10013
2.) U.S. Bancorp Community Development Corporation
(and its permitted successor and assigns)
1307 Washington Avenue, Suite 300
St. Louis, MO 63103
3.) Hamilton USBCDC Investments, L.P.
a California limited partnership
1640 Sepulveda Blvd., Suite 425
Los Angeles, CA 90025
4.) La Quinta Housing Authority and the City of La Quinta
Its Directors, Employees and Agents
P.O. Box 1504
La Quinta, CA 92247
Page 3 of 3
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California
ss.
County of V/ �i' (y�
On/(i5d T al 701� before me, (c/tla ii. �Qr�7reZ
7 Oate Name and Tile of Office, (e.g., 'Jane Doe, Notary Public')
personally appeared
Names) of Signens)
ersonally known to me
❑ proved to me on the basis of satisfactory
evidence
to be the person(s) whose name(s) is/are
LpppylNEZ subscribed to the within instrument and
CYgrtlt - acknowledged to me that he/she/they executed
Commission C� rrall
potary Public • � the same in his/her/their authorized
Ventura County capacity(ies), and that by his/her/their
Comm. Ex ire$ Jan 72011i
, signatures) on the instrument the person(s), or
the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
i,na4
40-�
signs ure of Notary Publl
OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document: /
Document Date: Number f Pages:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer
Signer's Name:
❑ Individual Top of thumb here
❑ Corporate Officer —Title(s):
❑ Partner —❑ Limited ❑ eral
❑ Attorney -in -Fact
❑ Trustee
❑ Guardian onservator
❑ Other:
Si er Is Representing:
01999 Narmnal Notary Associaten • 93W De Bob, Ave.. P0. Box 2402 • Chatsvro,lh, CA 91313-2402 • www.nalonalnotary.on, Prot. No. 5907 Remtler. Call Toll -Free 1-600-875 6827
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
c��Y„cii,.q�i_. .c�<,:ai_-neq .:ski �t �.,.i-�..:��t n� �i»1.,-au��..a? �: ��.:�.;�.,-3.'_�S �t��> c�S � .�irs�.. _3..n.',.:s a�_:� � es��_=�.a>••e.�._s�. ai!c�.
State of California
County of T-as Aniquales
On before me, Rutzel Castillo, Notary Public
Date Here Insert Name and TAe of the OHlcer '
personally appeared John Hu key
Names) of Signers)
RUTZEl CA9TILL0
Commission a 1929117
Rotary POW - Calitornia
Comm. EAX (113 Marr 19 2015
who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/herRheir signature(s) on the
instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws
of the State of California that the foregoing paragraph is
true and correct.
WITNESS my nd and official seal.`�Z�2��v`^
Place NotarySeal Above Signature
Signature of Notary Public
OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
64; (Lk 4I4-
�
Document Date: v -✓ Number of Pages:
Signer(s) Other Than Named A ove:
Capacity(ies) Claimed by Signer(s)
Signer's Name:
❑ Individual
❑ Corporate Officer—Title(s):
❑ Partner —❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer Is Representing:
RIGHTTHUMBPRINT
OF SIGNER
in
Signer's Nat
❑ Individual
❑ Corporate Officer —Title(s):
❑ Partner —❑ Limited ❑ General
❑ Attorney in Fact
❑ Trustee
❑ Guardian or Conservator
❑ Other:
Signer Is Representing:
RIGHTTHUMBPRINT
OF SIGNER
LN
0207 National Notary Association • 9350 De Soto Ave., P.O. Bw 2Q2 •Chatsworth, CA 91313-2402-w NationalNotary.org Item #5907 Reorder: Call Toll -Free 1b0U876EB27
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
State of California
County of Los Angeles
On 08/16/12 before me, Lupe Villarreal, Notary Public
(Here insert name and title of the officer)
personally appeared Tim M. Finnegan
who proved to me on the basis of satisfactory evidence to be the person(W whose name ubscribed
to the within instrument and acknowl ed to me that(p olt nyexecuted the salve in '
authorized capacity(y, and that by i�e signature(vf on the instrument the person(91f, or the entity
upon behalf of which the persi -, ac ed, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
LL
WITNESS my hand and official seal. n # 1A81 m
el • Calltomlo
ounty
Loseln County
Signature of Notary Public
(NE:lies N 1 1
Lupe Villarreal
Amr1'IONAL OPTIONAL INFORMATION
DESCRIPTION OF THE ATTACHED DOCUMENT
(Title or description of attached document)
(Title or description of attached document continued)
Number of Pages Document Date
(Additional information)
CAPACITY CLAIMED BY THE SIGNER
❑ individual (s)
❑ Corporate Officer
(Title)
❑ Partnet(s)
Attorney -in -Fact
Trustees)
Other
2008 version CAPA v12.10.07900-873-9865 www.NotaryClasses.wm
INSTRUCTIONS FOR COMPLETING THIS FORM
Any aehrowledgrnma completed in CNfforria must contain verbiage exactly as
appears above in the notary session or a separate aclmowledgnhent form nnut be
properly completed road attached to that domnneirt. 75e only exception is if.
document is to be recorded marries ofCa/ifornia. In such fnslaucer. may alternative
achrow/edgnmd verbiage as may be in hired on stack a document so long as the
verbiage does not ouTdre rim notary to do something that is Illegal for a notary in
California (i.e. cenEying the authorized capacity of the sigaei). Please check the
document oureftd(vforproper amarial wording mid attach this form 1fregnired.
• Stem and County information must be the State and County where the document
signers) personally appeared before the notary public for acknowledgment.
• Dote of notarization must be the dam that the signer(s) personally appeared
which must also be the same date the acknowledgment is completed.
• Tlie notary public must print his or her name as it appears within his or her
commission followed by a comma and then your title (notary public).
• Print We name(s) ofdoci ment signer(s) who personally appear at the time of
notarization.
• indicate the comet singular or plural fors by crossing off incorrect forms (i.e.
he /sheahe� iI m) or circling the contest fors. Failure to correctly indicate
this inforetion may lead to rejection of document recording.
• The notary seal impression must be clear and photographically reproducible.
Impression must act cover tut or lines. If seal impression smudges, re -seal if a
sufficient area permits, otherwise complete a different acknowledgment form.
• Signature of the notary public must match the signature on file with the office of
the county clerk.
•e Addidonal information is not required but could help to ensure this
acknowledgment is not misused or atached to a difrerent document.
et Indicate title or type of snachod document number ofpages and dale.
•'I Indicant the capacity claimed by the signer. if the claimed capacity is a
corporate officer, indicate the title (i.e. CEO. CFO, Secretary).
• Securely allach this document to tie signed document
5-4067/GE 9109 gpP
State of California )
)
County of Riverside 1
On September 10, 2012, before me, SUSAN MAYSELS, Notary Public,
personally appeared FRANK J. SPEVACEK who proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
SUSAN MAYSELS
COMM. A18W79
NOTARY PUBLIC a CALIFORNIA Z
Signature WVERSM COUNTY
CmainaMAPR l 2013+
(seal)
DOCUMENT:
DUAL OBLIGEE
Coral Mountain
apartments
RIDER — BOND NO. 024042645 re: agreement between
Partners LP and Optimus Construction for Coral Mountain
THIS POWER OF ATTORNEY IS NOT VALID UNLESS IT IS PRINTED ON RED BACKGROUND. 5093682
This Power of Attorney limits the acts of those named herein, and they have no authority to bind the Company except in the manner and to the
extent herein stated.
LIBERTY MUTUAL INSURANCE COMPANY
BOSTON,MASSACHUSETTS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That Liberty Mutual Insurance Company (the 'Company'), a Massachusetts stock insurance company, pursuant to and by authority of the By-law and
Authorization hereinafter set forth, does hereby name, constitute and appoint TIM M. TOMKO, ERIC C. THORSEN, TIM M. FINNEGAN, LUPE VILLARREAL,
SHARON L. TUPPER, TESSA A. ROMERO, ALL OF THE CITY OF GLENDALE, STATE OF CALIFORNIA...................................................................................................
, each individually if there be more than one named, its true and lawful attorney -in -fad to make, execute, seal, acknowledge and deliver, for and on
its behalf as surety and as its act and deed, any and all undertakings, bonds, recognizances and other surety obligations and the execution of such
undertakings, bonds, recognizances and other surety obligations, in pursuance of these presents, shall be as binding upon the Company as if they had
been duly signed by the president and attested by the secretary of the Company in their own proper persons.
That this power is made and executed pursuant to and by authority of the following By-law and Authorization:
ARTICLE XIII -Execution of Contracts: Section 5. Surety Bonds and Undertakings.
Any officer of the Company authorized for that purpose in writing by the chairman or the president, and subject to such limitations as the
chairman or the president may prescribe, shall appoint such attorneys -in -fact, as may be necessary to act in behalf of the Company to make,
execute, seal, acknowledge and deliver as surety any and all undertakings, bonds, recognizances and other surety obligations. Such attorneys -
in -fact, subject to the limitations set forth In their respective powers of attorney, shall have full power to bind the Company by their signature and
execution of any such instruments and to attach thereto the seal of the Company. When so executed such instruments shall be as binding as if
signed by the president and attested by the secretary.
By the following instrument the chairman or thepresident has authorized the officer or other official named therein to appoint attorneys -in -fact
Pursuant to Article XIII, Section 5 of the By-laws, David M. Carey, an official of Liberty Mutual Insurance Company, is hereby authorized to
appoint such attorneys -in -fad as may be necessary to ad in behalf of the Company to make, execute, seal, acknowledge and deliver as surety
.any and all undertakings, bonds, recognizances and other surety obligations. All Powers ofAttomey attested to or executed by David M. Carey
in his capacity as an officer profficial of Liberty Mutual Insurance Company, whether before, on or after the date of the Authorization, including
without limitation Powers of Attorney attested to or executed as Assistant Secretary of Liberty Mutual Insurance Company, are hereby ratified
and approved.
That the By-law and the Authorization set forth above are true copies thereof and are now in full force and effect.
IN WITNESS WHEREOF, this Power of Attorney has been subscribed by an authorized officer or official of the Company and the corporate seal of Liberty.
Mutual insurance Company has been affixed thereto in Plymouth Meeting, Pennsylvania this day of 121h day of January ,
2012
LIBERTY MUTUAL INSURANCE COMPANY
By zf arY 1
David M.M. Carey, Secretary
COMMONWEALTH OF PENNSYLVANIA as
COUNTY OF MONTGOMERY
On this 12th day of January 2012 before me, a Notary Public, personally came David M. Carey, to me known, and
acknowledged that he is an Assistant Secretary of Liberty Mutual Insurance Company; that he knows the seal of said corporation; and that he executed
the above Power of Attorney and affixed the corporate seal of Liberty Mutual Insurance Company thereto with the authority and at the direction of said
corporation. p '�.,
IN TESTIMONY WHEREp�jlhay �Itxptko subscribed my name and affixed my notarial seal at Plymouth Meeting, Pennsylvania, on the day and year
first above written I�"p%oHwr, �e
7
Of I R' .o, wn 1 n a x ,lYy By
„ a r r re zoi� TareaRastella, NotaryPublic
CERTIFICATE
II *.bra tV Ss{, T�
I, the undersi ned Assislarl� , �iiertyMutual Insurance Company, do hereby certify that the original power of attorney of which the foregoing is
a full, true and correct copy, Is'in, uIt for and effect on the date of this certificate; and I do further certify that the officer or official who executed the said
power of attorney is an Assistant Secretary specially authorized by the chairman or the president to appoint attorneys -in -fact as provided in Article All,
Section 5 of the By-laws of Liberty Mutual Insurance Company.
This cerfificate and the above power of attorney may be signed by facsimile or mechanically reproduced signatures under and by authority of the following
vote of the board of directors of Liberty Mutual Insurance Company at a meeting duly called and held on the 12th day of March, 1980.
VOTED that the facsimile or mechanically reproduced signature of any assistant secretary of the company, wherever appearing upon a certified
copy of any power of attorney issued by the company in connection withsurety bonds, shall be valid and binding upon the company with the
same force and effect as though manually affixed.
IN T TIMON WHEREOF, I have hereunto subscribed my name and affixed the corporate seal of the said company, this f day of
Gregory W: Davenport, Assistant Secretary
GROUND LEASE
By and Between
LA QUINTA HOUSING AUTHORITY
"Landlord"
and
CORAL MOUNTAIN PARTNERS, L.P.
"Tenant"
Dated as of August 1, 2012
882/015610-0047
3967235.5 a09/07/12
TABLE OF CONTENTS
Page
ARTICLE 1. LEASE OF THE PROPERTY..............................................................................2
1.1
Ground Lease of the Property; Acquisition of Improvements ..............................2
1.2
Purpose of Ground Lease......................................................................................2
1.3
Recorded Encumbrances.......................................................................................2
1.4
Memorandum of Ground Lease............................................................................2
ARTICLE2.
DEFINITIONS......................................................................................................3
ARTICLE3.
TERM.................................................................................................................12
ARTICLE4.
RENT..................................................................................................................13
4.1
Rent.....................................................................................................................13
4.2
Payment of Rent..................................................................................................14
4.3
Right to Audit.....................................................................................................14
4.4
Utilities................................................................................................................14
4.5
Taxes and Assessments.......................................................................................14
4.6
Overdue Interest..................................................................................................16
ARTICLE 5.
POSSESSION OF PROPERTY.........................................................................16
5.1
Acceptance of Premises......................................................................................16
5.2
Ownership of Improvements...............................................................................16
5.3
Surrender of Property..........................................................................................16
5.4
Abandonment......................................................................................................18
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES...................................................18
6.1
Landlord's Representations................................................................................18
6.2
Tenant's Representations....................................................................................18
ARTICLE 7.
CONSTRUCTION OF THE IMPROVEMENTS..............................................19
7.1
Construction........................................................................................................19
7.2
Construction Cost................................................................................................19
7.3
Landlord's Right to Discharge Lien...................................................................19
7.4
Notice of Non-Responsibility.............................................................................19
7.5
Notice of Completion..........................................................................................20
7.6
Subsequent Alterations.......................................................................................20
ARTICLE 8.
USE OF THE PROPERTY.................................................................................20
8.1
Covenant to Use in Accordance with Redevelopment Plan, City
Municipal Code, Regulatory Agreement, and this Ground Lease
......................20
8.2
Covenant to Pay Taxes and Assessments...........................................................20
8.3
Covenants Regarding Nondiscrimination...........................................................20
ARTICLE9.
INSURANCE......................................................................................................22
9.1
Tenant's Insurance..............................................................................................22
882/015610-0047
3967235.5 a09/07/12
-i-
Page
9.2 Commercial General and Automobile Liability; Worker's
Compensation.....................................................................................................22
9.3 Builders Risk.......................................................................................................23
9.4 Property; Business Interruption; Boiler and Machinery Insurance.....................23
9.5 Contractor Insurance Requirements....................................................................24
9.6 Additional Requirements....................................................................................24
9.7 Remedies for Defaults Re: Insurance.................................................................25
9.8 Indemnification...................................................................................................25
ARTICLE 10. MAINTENANCE; REPAIRS.............................................................................26
ARTICLE 11.
OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS ...........27
11.1
Ownership During Term.....................................................................................27
11.2
Ownership at Expiration or Termination............................................................27
11.3
Waste...................................................................................................................28
11.4
Alteration of Improvements................................................................................28
ARTICLE 12.
SIGNS AND MARKETING..............................................................................29
ARTICLE 13.
DAMAGE OR DESTRUCTION OF PROPERTY OR
IMPROVEMENTS.............................................................................................29
13.1
Tenant's Repair Obligation.................................................................................29
13.2
Tenant's Restoration of Premises.......................................................................30
13.3
Procedure for Restoring Improvements..............................................................31
13.4
Mortgagee Protection..........................................................................................32
ARTICLE 14.
EMINENT DOMAIN.........................................................................................33
14.1
Notice..................................................................................................................33
14.2
Representation in Proceedings or Negotiations..................................................33
14.3
Total Taking........................................................................................................33
14.4
Substantial Taking..............................................................................................34
14.5
Partial Taking......................................................................................................35
14.6
Obligation to Repair on Partial Taking...............................................................35
14.7
Temporary Taking..............................................................................................35
14.8
Mortgagee Protection..........................................................................................36
14.9
Appraisal.............................................................................................................36
ARTICLE 15.
COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS ..................37
15.1
Compliance With Laws.......................................................................................37
15.2
Indemnity............................................................................................................
37
15.3
Duty to Prevent Hazardous Material Contamination..........................................38
15.4
Obligation of Tenant to Remediate Premises.....................................................39
15.5
Environmental Inquiries......................................................................................39
ARTICLE 16.
ASSIGNMENT...................................................................................................39
ARTICLE17.
MORTGAGES....................................................................................................40
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Page
17.1
Ground Leasehold Mortgages.............................................................................40
17.2
Landlord's Forbearance and Right to Cure Defaults on Ground
LeaseholdMortgages..........................................................................................41
17.3
Limited Liability of Mortgagee for Prior Indemnified Acts...............................41
17.4
Landlord Cooperation.........................................................................................42
17.5
No Subordination of Landlord's Interest............................................................42
17.6
Priority................................................................................................................
42
17.7
Claims.................................................................................................................42
17.8
Further Amendments..........................................................................................43
17.9
Loan Obligations.................................................................................................43
17.10
Liens and Encumbrances Against Tenant's Interest in the Leasehold
Estate...................................................................................................................43
17.11
Cost of Loans to be Paid by Tenant....................................................................47
17.12
No Merger...........................................................................................................47
17.13
Transfer Rights....................................................................................................47
17.14
Tenant's Personal Property.................................................................................47
17.15
Two or More Mortgagees...................................................................................48
ARTICLE18.
SUBLEASING....................................................................................................48
18.1
Subleasing of Property........................................................................................48
18.2
Rights of Mortgagees..........................................................................................48
ARTICLE 19.
PERFORMANCE OF TENANT'S COVENANTS...........................................48
19.1
Right of Performance..........................................................................................48
19.2
Reimbursement and Damages.............................................................................49
ARTICLE 20.
EVENTS OF DEFAULT; REMEDIES..............................................................49
20.1
Events of Default................................................................................................49
20.2
Remedies.............................................................................................................51
20.3
Receipt of Rent, No Waiver of Default..............................................................51
20.4
Effect on Indemnification...................................................................................
52
ARTICLE 21.
PERMITTED CONTESTS.................................................................................52
ARTICLE 22.
FORCE MAJEURE............................................................................................52
22.1
Delay of Performance.........................................................................................52
22.2
Notice and Cure Requirements...........................................................................52
ARTICLE 23.
GENERAL PROVISIONS.................................................................................53
23.1
Notices................................................................................................................53
23.2
Certificates..........................................................................................................
55
23.3
No Merger of Title..............................................................................................55
23.4
Utility Services....................................................................................................56
23.5
Quiet Enjoyment.................................................................................................56
23.6
No Claims Against Landlord..............................................................................56
23.7
Inspection............................................................................................................
56
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Page
23.8
No Waiver by Landlord......................................................................................
56
23.9
Holding Over......................................................................................................56
23.10
Exculpation of Tenant's Personal Liability........................................................56
23.11
No Partnership....................................................................................................57
23.12
Remedies Cumulative.........................................................................................57
23.13
Attorney's Fees...................................................................................................
57
23.14
Time Is of The Essence.......................................................................................57
23.15
Survival of Representations, Warranties and Covenants....................................57
23.16
Construction of Agreement.................................................................................
57
23.17
Severability.........................................................................................................57
23.18
Entire Agreement: Modification.........................................................................57
23.19
Binding Effect and Benefits................................................................................58
23.20
Further Assurances..............................................................................................58
23.21
Counterparts........................................................................................................58
23.22
Number and Gender............................................................................................58
23.23
Conflicts..............................................................................................................58
23.24
Incorporation by Reference.................................................................................
58
23.25
Consent Rights....................................................................................................58
23.26
Third Parry Beneficiary .......................................................................................58
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GROUND LEASE
This GROUND LEASE ("Ground Lease") dated as of August 1, 2012 ("Effective
Date"), is entered into by and between LA QUINTA HOUSING AUTHORITY, a public body,
corporate and politic ("Landlord"), and CORAL MOUNTAIN PARTNERS, L.P., a California
limited partnership ("Tenant').
RECITALS
A. Landlord is a public body, corporate and politic, organized and existing under the
California Housing Authorities Law (California Health and Safety Code Section 34200 et seq.).
B. Tenant is controlled by an experienced owner, developer and manager of
affordable housing for low and moderate -income families.
C. Landlord is the owner of certain real property situated in the City of La Quinta,
County of Riverside, State of California, and legally described in Exhibit "A", which is attached
hereto and incorporated herein by this reference ("Property").
D. On or about January 4, 2011, the former La Quinta Redevelopment Agency
("Agency") entered into a Disposition and Development Agreement with Tenant dated as of
January 4, 2011 (the "Agreement'), which provided for the Agency, as then -owner of the
Property, to ground lease the Property to Tenant, and for Tenant to construct and operate thereon
a one hundred seventy-six (176) unit multifamily apartment project with all of such units
restricted for occupancy by very low income, lower income, and moderate income families (the
"Project').
E. Pursuant to Assembly Bill 26 from the 2012-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2012 ("ABxI 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was filed, challenging the constitutionality of ABxI 26
and companion bill ABxI 27 (which would have allowed redevelopment agencies to remain in
existence and continue redevelopment, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality of ABxI 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxI 27.
(California Redevelopment Assn. v. Matosantos (2012) 53 Ca1.4th 231. ABxI 26 is chapter 5,
Statutes 2012, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of the Health and Safety Code.
Pursuant to Health and Safety Code Section 341710), added by Part 1.85, the City of La Quinta,
a California municipal corporation and charter city ("City"), is the "successor agency" to the
Agency. On January 3, 2012, the La Quinta City Council adopted Resolution No. 2012-002,
pursuant to which the City elected (a) to be the "successor agency" to the Agency, and (b) to
have the Landlord be the "housing successor" to the Agency. On January 17, 2012, the Landlord
adopted HA Resolution No. 2012-002, affirmatively electing to be the "housing successor" to the
Agency.
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Pursuant to Health and Safety Code section 34175(b), added by Part 1.85, all assets,
contracts, and properties of the Agency, including the Property, were transferred to the control of
the City, as the successor agency to the Agency, on February 1, 2012. The Property is a housing
asset of the former Agency, the DDA is an obligation of the former Agency associated with the
housing activities of the former Agency, and administration of the DDA, including all of the
attachments thereto, is a housing activity of the former Agency. Pursuant to Health and Safety
Code Section 34177(g), added by Part 1.85, on March 7, 2012, the City, in its capacity as the
successor agency to the former Agency, (i) assigned all of the City's right, title and interest in
and to the DDA to the Landlord, pursuant to that certain Assignment and Assumption Agreement
entered into by and between the City, as assignor, and the Landlord, as assignee, and (ii)
transferred all of its interests in and to the Property to the Landlord, who is now the fee owner of
good and marketable title to the Property. Concurrently herewith, Landlord has executed an
Estoppel Certificate clarifying, modifying, and affirming the DDA.
F. All conditions precedent to the parties entering into this Ground Lease have been
satisfied or waived.
G. This Ground Lease is in the vital and best interests of the City of La Quinta,
California, and the health, safety and welfare of its residents.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and
conditions herein contained, Landlord and Tenant agree as follows:
ARTICLE 1. LEASE OF THE PROPERTY
1.1 Ground Lease of the Property; Acquisition of Improvements. Landlord leases
the Property to Tenant, and Tenant leases the Property from Landlord, on the terms and
conditions as set forth in this Ground Lease. Pursuant to the Agreement and subject to the
provisions of Section 5.3 hereof, Tenant will concurrent with the Effective Date of this Ground
Lease acquire fee title to all Improvements on the Property and shall hold fee title to such
Improvements during the Term hereof.
1.2 Purpose of Ground Lease. The purpose of this Ground Lease is to provide for
the construction, maintenance, management and operation of the Project as a 176-unit
multifamily apartment project. Tenant will not occupy or use the Property, nor permit the
Property to be occupied or used, nor do or permit anything to be done in or on the Property, in
whole or in part, for any other purpose.
1.3 Recorded Encumbrances. This Ground Lease, the interests of Landlord and
Tenant hereunder, and the Property, are in all respects subject to and bound by all of the
covenants, conditions, restrictions, reservations, rights, rights -of -way and easements of record
prior to the recordation of this Ground Lease.
1.4 Memorandum of Ground Lease. A short form Memorandum of Unrecorded
Ground Lease referring to this Ground Lease, substantially in the form attached hereto and
incorporated herein as "Exhibit B", shall be executed by Landlord and Tenant concurrently
herewith, and recorded in the Official Records of the County of Riverside, California ("Official
Records").
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ARTICLE 2. DEFINITIONS.
Capitalized terms used herein are defined where first used in this Ground Lease and/or as
set forth in this Article 2.All capitalized terms not defined herein shall have the same meanings
ascribed to them in the Agreement. For the purpose of supplying such definitions, the
Agreement, notwithstanding anything contained therein or herein to the contrary, shall not merge
with this Ground Lease.
"Affiliate" means any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Tenant which, if Tenant
is a partnership or limited liability company, shall include each of the constituent members or
partners, respectively thereof The term "control' as used in the immediately preceding
sentence, means, with respect to a person that is a corporation, the right to the exercise, directly
or indirectly, of more than fifty percent (50%) of the voting rights attributable to the shares of the
controlled corporation, and, with respect to a person that is not a corporation, the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of the controlled person.
"Agreement" means the Disposition and Development Agreement between Landlord, as
the housing successor to the Agency, and Tenant, dated as of January 4, 2011.
"Annual Project Revenue" means all gross income and all revenues of any kind from
the Housing Development in a calendar year, of whatever form or nature, whether direct or
indirect, with the exception of the items excluded below, actually received by or paid to or for
the account or benefit of Tenant or any Affiliate of Tenant or any of their agents or employees,
from any and all sources, resulting from or attributable to the ownership, operation, leasing and
occupancy of the Housing Development, determined on the basis of generally accepted
accounting principles applied on a consistent basis, and shall include, but not be limited to: (i)
gross rentals paid by tenants of the Housing Development under leases, and payments and
subsidies of whatever nature, including without limitation any payments, vouchers or subsidies
from HUD or any other person or organization, received on behalf of tenants under their leases,
(ii) amounts paid by residents of the Property to Tenant or any Affiliate of Tenant on account of
Operating Expenses for further disbursement by Tenant or such Affiliate to a third party or
parties, (iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses,
concessions, vending machines, coin laundry and similar sources, (v) other fees, charges or
payments not denominated as rental but payable to Tenant in connection with the rental of office,
retail, storage, or other space in the Housing Development, (vi) consideration received in whole
or in part for the cancellation, modification, extension or renewal of leases, and (vii) interest and
other investment earnings on security deposits, reserve accounts and other Housing Development
accounts to the extent disbursed for other than the purpose of the reserve. Notwithstanding the
foregoing, gross income shall not include the following items: (a) security deposits from tenants
(except when applied by Tenant to rent or other amounts owing by tenants); (b) capital
contributions to Tenant by its members, partners or shareholders (including capital contributions
required to pay any deferred developer fee); (c) condemnation or insurance proceeds; (d) funds
received from any source actually and directly used for initial development of the Housing
Development; (e) receipt by an Affiliate of management fees or other bona fide arms -length
payments for reasonable and necessary Operating Expenses associated with the Housing
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Development, including but not limited to, any Partnership Related Fees; or (f) Transfer Net
Proceeds and/or Refinancing Net Proceeds.
"Approved Financing" means the financing approved by the Landlord pursuant to
Section 6.7 of the Agreement, obtained by Tenant for the construction/development and
ownership of the Project, and includes, but is not limited to, the Construction Loan and the Take -
Out Loan.
"Authority Loan" means that certain loan made by Landlord to Tenant in the original
principal amount of Twenty -Nine Million Dollars ($29,000,000).
"Authority Loan Note" means that certain Amended and Restated Authority Loan
Promissory Note made by Tenant in favor of Landlord, on or about the date of execution hereof,
evidencing the Authority Loan.
"Award" means any compensation or payment made or paid for the Total, Partial or
Temporary Taking of all of any part of or interest in the Property and/or the Improvements,
whether pursuant to judgment, agreement or otherwise.
"Capital Improvements" means all work and improvements with respect to the Property
for which costs and expenses may be capitalized in accordance with GAAP.
"Capital Replacement Reserve" shall have the meaning ascribed thereto in the
Regulatory Agreement.
"Certificate of Occupancy" means the final certificate of occupancy issued by the City
for the Project.
"City" means the City of La Quinta, a California municipal corporation and charter city.
"Commencement Date" means the first date upon which all of the following have
occurred: (i) this Ground Lease has been fully executed and Landlord has delivered possession
of the Property to Tenant; (ii) Tenant has executed, with signatures acknowledged, and delivered
to Landlord, for recordation in the Official Records, the Memorandum of Ground Lease, the
Regulatory Agreement, a Leasehold Deed of Trust with Assignment of Rents substantially in the
form attached to the Agreement as Attachment No. 7, and a Notice of Affordability Restrictions
on Transfer of Property, substantially in the form attached to the Agreement as Attachment No.
11; and (iii) all of Tenant's financing for the Project, including, without limitation, the
Construction Loan, has closed.
"Construction Loan" refers to the loan from a Mortgagee (or consortium of Mortgagees)
authorized pursuant to Section 17.1 hereof, the proceeds of which are used to perform the
construction of the Project, and includes, but is not limited to, the First Mortgage Construction
Financing.
"CPI Adjustment" means the increase in the cost of living index, as measured by the
Consumer Price Index for all urban consumers, Los Angeles -Anaheim -Riverside statistical area,
all items (1982-84 = 100) published by the United States Department of Labor, Bureau of Labor
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Statistics("CPI") in effect as of the date on which the Certificate of Occupancy is issued to the
CPI in effect as of the date on which an adjustment is made. If such index is discontinued or
revised, such other index with which such index is replaced (or if not replaced, another index
which reasonably reflects and monitors consumer prices) shall be used in order to obtain
substantially the same results as would have been obtained if the discontinued index had not
been discontinued or revised. If the CPI is changed so that the base year is other than 1982-84,
the CPI shall be converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics.
"Debt Service" means payments made in a calendar year pursuant to the Approved
Financing obtained for the construction/development and ownership of the Project or any
permitted refinancing or modification thereof, but excluding Rent.
"Deferred Developer Fees" means any deferred developer fee allowable under the
Approved Financing.
"Event of Default" has the meaning set forth in Article 20.
"Executive Director" means the Executive Director of Landlord or his or her designee.
"First Mortgage -Construction Financing" means a loan from the California Municipal
Finance Authority ("Governmental Lender") in the maximum principal amount of $24,400,000
evidenced by that certain Multifamily Note, dated as of August 1, 2012, made by Tenant payable
to the order of Governmental Lender and that certain Borrower Loan Agreement, dated as of
August 1, 2012, between Tenant and Governmental Lender, and secured by, among other things,
that certain Multifamily Leasehold Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing in first (Ist) lien position against the Tenant's leasehold interest in the Property,
executed by Tenant for the benefit of Governmental Lender, each of which documents are being
assigned by Governmental Lender to Citibank, N.A.
"Foreclosure Transferee" shall mean any Mortgagee or other transferee of the leasehold
interest under this Ground Lease as a result of a judicial foreclosure, non judicial foreclosure or
assignment of the leasehold in lieu of foreclosure.
"Housing Development" means an affordable rental housing development consisting of
one hundred seventy-six (176) residential dwelling units and all required on -site improvements
that will remain privately owned and that are necessary to serve the Housing Development.
"Impositions" means all taxes (including, without limitation, sales and use taxes);
assessments (including, without limitation, all assessments for public improvements or benefits
whether or not commenced or completed prior to the Commencement Date and whether or not to
be completed within the Term); water, sewer or other rents, rates and charges; excises; levies;
license fees; permit fees; inspection fees and other authorization fees and other charges; in each
case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every
character (including all interests and penalties thereon), which are attributable or applicable to
any portion of the Term and may be assessed, levied, confirmed or imposed on or in respect of,
or be a lien upon (a) the Property or the Improvements, or any part thereof, or any estate, right or
interest therein, (b) any occupancy, use or possession of or activity conducted on the Property or
882/015610-0047
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-5-
the Improvements, or any part thereof, or (c) this Ground Lease. The term "Impositions" shall
also include any and all increases in the foregoing, whether foreseen or unforeseen, ordinary or
extraordinary, including, without limitation, any increase in real property taxes resulting from a
sale of the Property by Landlord.
"Improvements" means all buildings, structures and other improvements, including the
building fixtures thereon, now located on the Property or hereafter constructed on the Property;
all landscaping, fencing, walls, paving, curbing, drainage facilities, lighting, parking areas,
roadways and similar site improvements now located or hereafter placed upon the Property.
"Institutional Lender" means any of the following institutions having assets or deposits
in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a California
chartered bank; a bank created and operated under and pursuant to the laws of the United States
of America; an "incorporated admitted insurer" (as that term is used in Section 1100.1 of the
California Insurance Code); a "foreign (other state) bank" (as that term is defined in Section
1700(1) of the California Financial Code); a federal savings and loan association (Cal. Fin. Code
Section 8600); a commercial finance lender (within the meaning of Sections 2600 et seq. of the
California Financial Code); a "foreign (other nation) bank" provided it is licensed to maintain an
office in California, is licensed or otherwise authorized by another state to maintain an agency or
branch office in that state, or maintains a federal agency or federal branch in any state (Section
1716 of the California Financial Code); a bank holding company or a subsidiary of a bank
holding company which is not a bank (Section 3707 of the California Financial Code); a trust
company, savings and loan association, insurance company, investment banker; college or
university; pension or retirement fund or system, either governmental or private, or any pension
or retirement fund or system of which any of the foregoing shall be trustee, provided the same be
organized under the laws of the United States or of any state thereof; and a Real Estate
Investment Trust, as defined in Section 856 of the Internal Revenue Code of 1986, as amended,
provided such trust is listed on either the American Stock Exchange or the New York Stock
Exchange. Each of the California Municipal Finance Authority and Citibank, N.A. is hereby
deemed to be an Institutional Lender.
"Insurance Requirements" means all terms of any insurance policy covering or
applicable to the Property or the Improvements, or any part thereof, all requirements imposed by
the issuer of any such policy, and all orders, rules, regulations and other requirements of the
National Board of Fire Underwriters (or any other body exercising similar functions) applicable
to or affecting the Property or the Improvements, or any part thereof, or any use or condition of
the Property or the Improvements, or any part thereof.
"Investor" means Hamilton USBCDC Investments, L.P., which is the limited partner of
Tenant, and its successors and assigns.
"Maintenance Standards" means those standards set forth in Article 10 hereof.
"Memorandum of Ground Lease" refers to the memorandum of unrecorded ground
lease which has been recorded as described in Section 1.4.
"Mortgage" has the meaning set forth in Section 17.1 of this Ground Lease.
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"Mortgagee" has the meaning set forth in Section 17.1 of this Ground Lease.
"Notice of Intended Taking" means any notice or notification on which a reasonably
prudent person would rely and which said person would interpret as expressing an existing
intention of Taking as distinguished from a mere preliminary inquiry or proposal. It includes,
without limitation, the service of a condemnation summons and complaint on a party to this
Ground Lease. The notice is considered to have been received when a party to this Ground
Lease receives from the condemning agency or entity a notice of intent to take, in writing,
containing a description or map of the taking which reasonably defines the extent of the taking.
"Official Records" means the Official Records of Riverside County, California.
"Operating Budget" means an operating budget for the Project, which budget shall be
subject to the annual written approval of Landlord in accordance with Section 9 of the
Regulatory Agreement.
"Operating Expenses" means actual, reasonable and customary (for comparable high
quality affordable multifamily residential developments in Riverside County) costs, fees and
expenses directly incurred, paid, and attributable to the operation, maintenance and management
of the Housing Development in a calendar year, including, without limitation: painting, cleaning,
repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses, sewer
charges, real and personal property taxes, assessments, insurance, security, advertising and
promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing and
installation of appliances, equipment, fixtures and furnishings, fees and expenses of property
management, fees and expenses of accountants, attorneys and other professionals, repayment of
any completion or operating loans made to Tenant, its approved successors or assigns, and other
actual, reasonable and customary operating costs which are directly incurred and paid by Tenant,
but which are not paid from or eligible to be paid from the operating reserve or other reserve
accounts. In addition, Operating Expenses shall include a social services fee in the amount of
Twenty -Two Thousand Dollars ($22,000) for calendar year 2011, which shall be increased
annually by three percent (3%) per year, provided Tenant provides the social services described
in the Tenant Services Agreement that was included in Tenant's tax credit application. Operating
Expenses shall not include any of the following: (i) salaries of employees of Tenant or Tenant's
general overhead expenses, or expenses, costs and fees paid to an Affiliate of Tenant, to the
extent any of the foregoing exceed the expenses, costs or fees that would be payable in a bona
fide arms' length transaction between unrelated parties in the Riverside County area for the same
work or services; (ii) any amounts paid directly by a tenant of the Housing Development to a
third party in connection with expenses which, if incurred by Tenant, would be Operating
Expenses; (iii) optional or elective payments with respect to the First Mortgages or the Second
Mortgage; (iv) any payments with respect to any Project -related loan or financing that has not
been approved by the Landlord; (v) expenses, expenditures, and charges of any nature
whatsoever, arising or incurred by Tenant prior to completion of the Project with respect to the
development of the Project, or any portion thereof, including, without limitation, all
predevelopment and preconstruction activities conducted by Tenant in connection with the
Project, including without limitation, the preparation of all plans and the performance of any
tests, studies, investigations or other work, and the construction and any on -site or off -site work
882/015610-0047
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in connection therewith; or (vi) depreciation, amortization, and accrued principal and interest
expense on deferred payment debt.
"Operating Reserve" shall have the meaning ascribed thereto in the Regulatory
Agreement.
"Partial Taking" means any taking of the fee title of the Property and/or the
Improvements that is not either a Total, Substantial or Temporary Taking.
"Partnership Agreement" means the agreement which sets forth the terms of the
Tenant's limited partnership, as such agreement may be amended from time to time.
"Partnership Related Fees" means partnership fees actually incurred pursuant to the
terms of the Partnership Agreement, which are reasonable and customary to developer/owner
entities for similar projects in Southern California, and may include, but shall not exceed: (i) a
general partner(s) (administrative and/or managing partner(s)) partnership management fee
payable to the general partner(s) (ii) a limited partner asset management fee payable to the
investor limited partner; and (iii) an annual audit fee in and for any calendar year. In no event
shall the annual fees for (i) and (ii) above cumulatively exceed Forty Thousand Dollars
($40,000.00), but such fees in (i) and (ii) may be increased annually by the CPI Adjustment. In
the event insufficient Annual Project Revenues exist to provide for payment of all or part of the
specific Partnership Related Fees listed above, no interest shall accrue on the unpaid portions of
such Partnership Related Fees, but the unpaid balance of such fees alone will be added to the
Partnership Related Fees due in the following year.
"Plans" means the plans and specifications for the construction of the Project, a set of
which, initialed by Tenant, are on file in the offices of Landlord.
"Potential Default" means any condition or event which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
"Project" means Tenant's construction of the Housing Development and certain public
improvements, all as more particularly described in the Agreement.
"Property" has the meaning set forth in Recital C above.
"Redevelopment Plan" means the Redevelopment Plan for Project Area No. 2, adopted
by Ordinance No. 139 of the City Council of the City on May 16, 1989, as the same has been
amended from time to time.
"Refinancing Net Proceeds" means the proceeds of any approved refinancing of the
Approved Financing secured by the Property, net of the following actual costs and fees
incurred:(i) the amount of the financing which is satisfied out of such proceeds, (ii) reasonable
and customary costs and expenses incurred in connection with the refinancing, (iii) the balance,
if any, of the Deferred Developer Fee, (iv) the balance, if any, of authorized loans to the Project
made by the limited partners of Tenant, including interest at the rate set forth in the Partnership
Agreement for such loans, (v) the balance, if any, of authorized operating loans or development
loans made by the general partners of a limited partnership that succeeds to Tenant's interest in
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the Agreement and the Project, including interest at the rate set forth in the Partnership
Agreement for such loans, (vi) the balance, if any, of any unpaid Partnership Related Fees, (vii)
any amounts owed to the Investor pursuant to the Partnership Agreement, (viii) the return of
capital contributions, if any, to the Project made by the general partners of a limited partnership
that succeeds to Tenant's interest in the Agreement and the Project that were used to pay the
Deferred Developer Fee, (ix) the amount of proceeds required to be reserved for the repair,
rehabilitation, reconstruction or refurbishment of the Project; and (x) the payment to general
partner of Tenant of a refinancing fee, which is agreed to be set at three percent (3%) of the
amount of the approved refinancing..
"Regulatory Agreement" means that certain Regulatory Agreement executed by and
between Tenant, as "Developer," and Landlord, as "Authority," on even date herewith, which
Regulatory Agreement was recorded in the Official Records.
"Rent" means the rent payable pursuant to Article 4 of this Ground Lease.
"Rental Period" means each of the calendar years throughout the Lease Term. The first
Rental Period shall commence upon the issuance of the Certificate of Occupancy and terminate
upon the December 31 of that year; each Rental Period thereafter shall commence on January 1
and terminate on December 31.
"Rent Payment Date" means the May 1 of each year following the end of each Rental
Period; the first Rent Payment Date shall occur on the May 1 after the expiration of the first
Rental Period.
"Reserve Deposits" means any payments to the Capital Replacement Reserve account
and the Operating Reserve account pursuant to Sections 10 and 11, respectively, of the
Regulatory Agreement.
"Residual Receipts" shall mean Annual Project Revenue less the sum of
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve;
(iv) Reserve Deposits to the Operating Reserve;
(v) Partnership Related Fees;
(vi) Deferred Developer Fees;
(vi) Property management fee for the Housing Development which remains
unpaid after payment of Operating Expenses, if any;
(viii) Amy amounts owed to the Investor, including, without limitation, Unpaid
Tax Credit adjustment amounts, if any, pursuant to the Partnership Agreement;
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(ix) Repayment of loans to the Project, if any, made by the limited partner(s)
of Tenant pursuant to the Partnership Agreement, including interest at the rate set forth in the
Partnership Agreement for such loans, for eligible development and/or operating expense deficits
or other eligible loans (provided that if made during the compliance period Tenant shall provide
to Executive Director documentation showing the propriety of such loan(s) and if made
subsequent to the expiration of the compliance period each such loan must be reasonably
approved by the Executive Director before being provided to the Project after review of
documentation provided by Tenant showing propriety of such loans);
(x) Repayment to the administrative and/or managing general partners of
Tenant for loans to the Project for development advance(s) pursuant to the Partnership
Agreement, operating deficit advance(s) pursuant to the Partnership Agreement), credit adjuster
payment(s) pursuant to the Partnership Agreement), and/or Development Fee advance(s)
pursuant to the Partnership Agreement, and with all such loans to be repaid without interest
(provided that if made during the compliance period Tenant shall provide to Executive Director
documentation showing the propriety of such loan(s) and if made subsequent to the expiration of
the compliance period each such loan must be reasonably approved by the Executive Director
before being provided to the Project after review of documentation provided by Tenant showing
propriety of such loans);
(xi) Repayment to the administrative and/or managing general partners of
Tenant of certain loans made to the Project after the expiration or earlier termination of the
Partnership Agreement to cover shortfalls in funding for Operating Expenses in excess of the
Operating Expenses included in the approved annual Operating Budget for the year in which
such loan is made (if at all), all such loans to be repaid without interest (provided that if made
during the compliance period Tenant shall provide to Executive Director documentation showing
the propriety of such loan(s) and if made subsequent to the expiration of the compliance period
each such loan must be reasonably approved by the Executive Director before being provided to
the Project after review of documentation provided by Tenant showing propriety of such loans);
and
(xii) Capital contributions to the Project, if any, made by the general partners of
Tenant that were used to pay the Developer Fee.
In the event any calculation of Annual Project Revenue less subsections (i) through (xii)
inclusive above results in a negative number, then Residual Receipts shall be zero ($0) for that
year and shall not carry over to the next or any other subsequent year.
In addition, none of the fees, costs, expenses, or items described above in calculation of
Residual Receipts shall include any duplicate entry/item, or double accounting for a cost item.
For example, an audit fee incurred by Tenant and deducted or included above in subsection (i)
for Operating Expenses shall not also be deducted or included in subsection (v) for Partnership
Related Fees in the calculation of Residual Receipts. The calculation of Residual Receipts shall
be conducted at Tenant's sole cost and expense, by a third party auditor and submitted to Tenant
annually, along with Tenant's payment of Residual Receipts.
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"Substantial Taking" means the taking of so much of the Property and/or the
Improvements that the portion of the Property and/or the Improvements not taken cannot be
repaired or reconstructed, taking into consideration the amount of the award available for repair
or reconstruction, so as to constitute a complete, rentable structure, capable of producing a
proportionately fair and reasonable net annual income after payment of all Operating Expenses,
and all other charges payable under this Ground Lease, and after performance of all covenants
and conditions required by Tenant by law and under this Ground Lease.
"Take -Out Loan" refers to the loan, if any, from Citibank, N.A., or from another lender
acceptable to the Executive Director of Landlord, pursuant to which said lender agrees to make a
take-out loan for the purpose of paying all amounts due under the Construction Loan or the
conversion of the Construction Loan to permanent phase financing.
"Taking" means a taking or damaging, including severance damage, by eminent domain
or by inverse condemnation or for any public or quasi -public use under any statute. The taking
may occur as a result of a transfer pursuant to the recording of a final order in condemnation, a
voluntary transfer or conveyance to the taking authority under threat of condemnation, or a
transfer while condemnation proceedings are pending. Unless otherwise provided, the taking
shall be deemed to occur as of the earlier of (a) the date actual physical possession is taken by
the condemnor, or (b) the date on which the right to compensation and damages accrues under
the law applicable to the Property and/or the Improvements. A taking as used in this Ground
Lease does not include the voluntary dedication of any portion of the Property necessary to
obtain building permits or to comply with any other applicable governmental rule, regulation or
statute; nor does it include the enactment of any law, ordinance or regulation which may affect
the use or value of the Property but which does not involve an actual taking of any portion
thereof. Eminent domain actions filed by Landlord against former owners of portions of the
Property and pending as of the Commencement Date shall not be deemed, construed or
interpreted as a Taking under this Ground Lease.
"Tax Credits" means Low Income Housing Tax Credits granted pursuant to Section 42
of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5,
17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq.
"Tax Credit Regulatory Agreement" means the regulatory agreement which may be
required to be recorded against the Property with respect to the issuance of Tax Credits for the
Project.
"Temporary Taking" means a taking of all or any part of the Property and/or the
Improvements for a term certain which term is specified at the time of taking. Temporary
Taking does not include a taking which is to last for an indefinite period or a taking which will
terminate only upon the happening of a specified event unless it can be determined at the time of
the taking substantially when such event will occur. If a taking for an indefinite term should take
place, it shall be treated as a Total, Substantial or Partial Taking in accordance with the
definitions set forth herein.
"Term" has the meaning set forth in Article 3 of this Ground Lease.
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"Total Taking" means the taking of the fee title to all of the Property.
"Transaction Documents" means, collectively, the Agreement and the Regulatory
Agreement.
"Transfer Net Proceeds" shall mean the proceeds of any sale or other transfer, in whole
or part, of the Property or Tenant's interests therein, net only of (i) the reasonable and customary
costs and expenses incurred in connection with such transfer; (ii) the amount of the financing
which is satisfied out of such proceeds, (iii) the balance, if any, of the Deferred Developer Fee,
(iv) the balance, if any, of loans to the Project made by the limited partners of Tenant, including
interest thereon as provided in the Partnership Agreement, (v) the balance, if any, of operating
loans or development loans made by the general partners of Tenant, including interest thereon as
provided in the Partnership Agreement, and (vi) the return of capital contributions, if any, to the
Project made by the general partners of Tenant that were used to pay the Deferred Developer
Fee. Notwithstanding anything herein to the contrary, Transfer Net Proceeds shall not be
required to be paid in connection with a transfer or sale that consists only of (a) the removal of
the general partner of the Tenant, or (b) the transfer or sale of the interests of the investor limited
partner provided such transfer or sale is consistent with the Partnership Agreement and with the
terms of the Regulatory Agreement.
ARTICLE 3. TERM.
The term of this Ground Lease ("Term") shall commence on the Commencement Date,
and shall continue thereafter until the earlier to occur of. (a) December 31, 2070, and the (b) fifty-
fifth (55th) anniversary of the date seventy-five percent (75%) of the units have been leased to
and occupied by income -qualified tenants in accordance with the terms of the Regulatory
Agreement.
Notwithstanding the foregoing, the Term may be extended for two (2) additional ten (10)
year periods, provided Tenant notifies Landlord in writing of Tenant's desire to so extend at least
six (6) months prior to expiration of the Term, as it may have been extended pursuant to the
terms hereof. In such event, the Landlord and Tenant shall meet and confer to determine
whether to so extend and whether any modifications to the terms and provisions hereof are
necessary. If each of Landlord and Tenant agree, in their sole and absolute discretion, to any
such extension, including to any such additional terms and modifications, then the Term of this
Ground Lease shall be so extended, and except for any modifications agreed to, all other terms
and conditions of this Ground Lease shall apply and be in effect during any such extension
period.
The Landlord shall provide the Mortgagee notice in the event the Tenant fails to extend
the Term of this Ground Lease by the time set forth in the immediately preceding paragraph and,
notwithstanding said failure, the Mortgagee shall have the right to extend the Term on behalf of
the Tenant during the 30 day period following Mortgagee's receipt of such notice.
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ARTICLE 4. RENT.
4.1 Rent.
4.1.1 Initial Rent. On each Rent Payment Date, Tenant shall pay to Landlord
Rent in the nominal sum of One Dollar ($1.00).
4.1.2 Rent Adjustment. Upon the later to occur of (i) full payment of the
Authority Loan Note or (ii) the twentieth (20th) anniversary of the Commencement Date, the
Rent due under this Ground Lease shall be reset based on the fair market value of the remaining
leasehold interest under this Ground Lease (taking into account the restrictions set forth in the
Regulatory Agreement, hereinafter referred to as the "Recorded Restrictions" as independently
appraised and at an annual rental based on a percentage of such appraised value as determined by
a qualified, independent appraiser (conducted by a certified appraiser reasonably acceptable to
Executive Director and Tenant), who shall take into account the cumulative amounts which have
been actually paid to the Landlord as Rent under this Ground Lease, including without limitation
taking into consideration the remaining balance, if any, on the Authority Loan as of the time of
the appraisal, and including a reasonable return on investment of between six percent (6%) and
eight percent (8%). Such independent appraisal shall determine the fair market value of the
Property, at its highest and best use (but taking the Recorded Restrictions into account), at the
time of such appraisal but shall also take into consideration an overall fair market ground lease
rent over the 55-year Term of this Ground Lease with an objective that Landlord receive over
such 55-year term cumulatively a fair market value ground lease rent (taking the Recorded
Restrictions into account), under this Ground Lease. In such regard, if the Rent paid to date has
underpaid, cumulatively, toward achieving a fair market ground lease rent (taking the Recorded
Restrictions into account), over the 55-year Term of this Ground Lease, then the appraiser shall
take that fact into consideration when determining an adjusted fair market Rent for the remainder
of the Term. Likewise, if the Rent paid to date has been overpaid, cumulatively, toward
achieving a fair market ground lease rent (taking the Recorded Restrictions into account) over
the 55-year Tenn, then the appraiser shall take that fact into consideration when determining the
adjusted Rent for the remainder of the Term.
This adjusted annual rent for the remaining Term of this Ground Lease, as determined by
the independent appraiser as described above, with the Rent due and required to be paid annually
under this Ground Lease shall be re -adjusted to the lesser of (1) such appraised rent for the
Property (to be increased by 20% every five (5) years to account for inflation), or (2) fifty
percent (50%) of the Residual Receipts for the Housing Development. In any year, if the
appraised value rent (to be increased by 20% every five (5) years to account for inflation)
exceeds fifty percent (50%) of the Residual Receipts for the Housing Development, the amount
by which such appraised value rent (increased by 20% every five (5) years to account for
inflation) exceeds 50 percent (50%) of the Residual Receipts for the Housing Development to be
paid pursuant to this Section 4.1 in a given year shall accrue and be carried over and added to the
amount of the Rent to be paid in later years by Tenant.
Additionally, the adjusted annual rent shall include all of the following: (i) fifty percent
(50%) of the Refinancing Net Proceeds immediately upon any refinancing of the loans secured
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by the Property (or any part thereof), and (ii) one hundred percent (100%) of the Transfer Net
Proceeds immediately upon any transfer in whole or in part of the Housing Development.
4.2 Payment of Rent. All rent that becomes due and payable pursuant to this Ground
Lease shall be paid to Landlord at the address listed in Section 23.1 or such other place as the
Landlord may from time to time designate by written notice to the Tenant without notice or
demand, and without setoff, counterclaim, abatement, deferment, suspension or deduction.
Except as expressly provided herein or in the Agreement, under no circumstances or conditions,
whether now existing or hereafter arising, or whether beyond the present contemplation of the
parties, shall Landlord be expected or required to make any payment of any kind whatsoever or
to perform any act or obligation whatsoever or be under any obligation or liability hereunder or
with respect to the Property.
4.3 Right to Audit. Tenant shall keep full and accurate books of account, records
and other pertinent data with respect to operations of the Housing Development. Such books of
account, records, and other pertinent data shall be kept for a period of three (3) years after the
end of each Rental Period.
Landlord shall be entitled within two (2) years after the end of each Rental Period to
inspect and examine all of Tenant's books of account, records, and other pertinent data. Tenant
shall cooperate fully with Landlord in making the inspection. Landlord shall also be entitled,
also within two (2) years after the end of each Rental Period, to an independent audit of Tenant's
books of account, records, and other pertinent data.
4.4 Utilities. Tenant shall be responsible for the payment of all water, gas, electricity,
refuse collection and disposal, and all other utilities used by Tenant on the Property. Landlord
expressly has no obligation regarding provision of or payment for utilities serving the Property.
4.5 Taxes and Assessments.
4.5.1 Notice of Possessory Interest; Payment of Taxes and Assessments on
Value of Entire Property. In accordance with California Revenue and Taxation Code Section
107.6(a), Landlord notices Tenant that by entering into this Ground Lease, a possessory interest
subject to assessment and collection of property taxes may be created. Tenant or other party in
whom the possessory interest is vested may be subject to the payment of property taxes levied on
such interest. If possessory interest taxes are assessed, Tenant agrees it is responsible for
payment thereof and Landlord has no obligation or liability of any kind or nature relating to
payment of property taxes. Tenant shall, at its sole cost and expense, seek exemption from, or
contest the payment of, assessments and the collection of property taxes pursuant to Revenue and
Taxation Code Section 214, or a successor statute. During the pendency of such contest or
request, Tenant's non-payment of assessments or taxes when due shall not constitute a default
hereunder if (i) the validity of such assessments and taxes are actively contested in good faith
and by appropriate proceedings, (ii) Tenant has demonstrated to Landlord's reasonable
satisfaction that leaving such assessments or taxes unpaid pending the outcome of such
proceedings could not result in conveyance of the Property in satisfaction of such assessments or
taxes or otherwise impair Landlord's estates in the Property, (iii) Tenant has furnished Landlord
with a bond or other security satisfactory to Landlord in an amount not less than 100% of the
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applicable claim (including interest and penalties) and (iv) upon the final disposition of such
proceedings, Tenant shall promptly pay all taxes and assessments then due, inclusive of any
unpaid accrued penalties and interest. Landlord is a tax exempt public entity and no property
taxes will be or are legally assessable against its fee interest.
4.5.2 Payment of Taxes. Subject to any applicable exemptions, Tenant is
responsible for and shall pay the real property and/or possessory interest taxes applicable to the
Property during the term of this Ground Lease. All such payments shall be made prior to the
delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory
evidence that such taxes have been paid or that an exemption from such taxes has been obtained.
If any such taxes paid by Tenant shall cover any period of time prior to or after the expiration of
the Term, Tenant's share of such taxes shall be equitably prorated to cover only the period of
time within the tax fiscal year during which this Ground Lease shall be in effect, and Landlord
shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes,
Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to
Landlord within ten (10) days after demand from Landlord together with interest at the rate set
forth in Section 4.6.
4.5.3 Definition. As used herein, the term "real property tax" shall include
any form of real estate tax or assessment (including, without limitation, on possessory interests),
general, special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income, or estate taxes)
imposed on the Property or any interest (including, without limitation, possessory interests)
therein by any authority having the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, fire, street, drainage or other
improvement district thereof, as against any legal or equitable interest of Landlord or Tenant in
the Property or in the real property of which the Property are a part, as against Landlord's right
to rent or other income therefrom, and as against Landlord's business of leasing the Property.
The term "real property tax" shall also include any tax, fee, levy, assessment or charge (i) in
substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included
within the definition of "real property tax," or (ii) the nature of which was hereinbefore included
within the definition of "real property tax," or (iii) which is imposed as a result of a transfer,
either partial or total, of Landlord's interest in the Property or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of such transfer, or (v)
which is imposed by reason of this lease transaction, any modifications or changes hereto, or any
transfers hereof.
4.5.4 Personal Property. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant contained in the Property or elsewhere. When possible, Tenant shall cause
said trade fixtures, furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Landlord.
4.5.5 Apportionment. If any of Tenant's said personal property shall be
assessed with Landlord's real property, first Tenant shall advise the County of Riverside Tax
Assessor and Tax Collector of the same in writing, and Tenant shall pay Landlord the taxes
attributable to Tenant not later than the later of (a) ten (10) days after receipt of a written
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statement setting forth the taxes applicable to Tenant's property or (b) fifteen (15) days prior to
the date said taxes are due and payable.
4.6 Overdue Interest. Any amount due to Landlord, if not paid when due and on or
before expiration of the period for cure as set forth herein, after Landlord's delivery of notice
thereof to the Tenant, shall bear interest from the date due until paid at the lower of(a) the
reference or prime rate of Bank of America, N.T. & S.A., in effect from time to time plus three
percent (3%); or (b) the highest rate of interest allowed under applicable usury law.
ARTICLE 5. POSSESSION OF PROPERTY.
5.1 Acceptance of Premises. Tenant hereby accepts the Property and acknowledges
that the Property is in the condition called for by the Agreement and this Ground Lease.
5.2 Ownership of Improvements. Unless otherwise provided herein, during the
Term of this Ground Lease, as it may be extended pursuant to the terms hereof, fee title to all
Improvements, now existing or later made, on the Property are and shall be vested in Tenant as
set forth in Article 11 hereof.
5.3 Surrender of Property.
5.3.1 Expiration or Termination. Tenant agrees that on the expiration or
earlier termination of the Term, as it may be extended pursuant to the terms hereof, the leasehold
estate hereby granted to Tenant may be terminated by Landlord. Upon such termination, the
leasehold estate shall be forfeited and shall revert to Landlord, its successors and assigns, and all
Improvements on the Property shall become the property of Landlord, its successors and assigns,
free and clear from any liens or claims whatsoever (other than non -monetary liens previously
approved or otherwise accepted in writing by Landlord), in good condition, reasonable wear and
tear excepted without further compensation therefor from Landlord to Tenant or any other
person. Following any such expiration or termination, Tenant shall execute, acknowledge and
deliver to Landlord a quitclaim deed, or other document required by a reputable title company,
conveying all Tenant's right, title, and interest in and to the Property and Improvements to
Landlord. In the event Tenant receives a written default notice relating to or arising from any
Construction Loan, Take -Out Loan or any mortgage, deed of trust or security instrument secured
by the leasehold interest granted hereunder, the Property or the Improvements, or from the Tax
Credit Allocation Committee or the Internal Revenue Service, then Tenant shall provide written
notice of such alleged default to the Executive Director within five (5) days of receipt thereof.
Tenant hereby irrevocably appoints Landlord as Tenant's agent and attorney -in -fact (such
agency being coupled with an interest), and as such agent and attorney -in -fact Landlord may,
without the obligation to do so, in Tenant's name, or in the name of Landlord, prepare, execute
and file or record such statements, applications and other documents necessary to create, perfect
or preserve any of Landlord's interests and rights in or to the Property and any of the
Improvements, and, upon the earlier expiration or termination of the Term, take any other action
required of Tenant. Notwithstanding any other provisions herein, unless the Low Income
Housing Tax Credit Extended Use Agreement is terminated pursuant to Internal Revenue Code
Section 42(h)(6)(E)(i)(I) or otherwise as permitted by the Intemal Revenue Code, Landlord, and
its successors and assigns specifically agree that upon any termination of this Ground Lease prior
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to the end of the Low Income Housing Tax Credit Extended Use Period, Landlord, and its
successors and assigns shall, for the balance of the term of the Low Income Housing Tax Credit
Extended Use Period, continue to operate the Property such that forty percent (40%) of the units
in the Housing Development shall be leased to households who, at the time of initial occupancy,
have incomes of no more than sixty percent (60%) of the area median income, adjusted for
family size, and that the rents charged such tenants shall not exceed the maximum low income
housing tax credit rents for such households.
5.3.2 Condition. On expiration or earlier termination of the Term and in
furtherance of the provisions relating to surrender of the Property set forth in Section 5.3.1
above, Tenant shall peaceably and quietly leave and surrender the Property and the
Improvements to Landlord in good order, condition and repair, reasonable wear and tear and
obsolescence excepted. Tenant shall leave in place and in good order, condition and repair, all
fixtures and machinery; except (if Tenant is not then in default under this Ground Lease) Tenant
shall have the right to remove only Tenant -owned appliances, other unattached equipment,
furniture and merchandise that Tenant shall have installed, which removal must be done without
damage to the Property or Improvements. Landlord shall have the right to have the Property and
the Improvements inspected at Tenant's cost to determine whether the Property and the
Improvements have been properly maintained, repaired and restored in accordance with the
terms of this Ground Lease. That notwithstanding and subject to the exception of the
environmental indemnities which shall survive any termination in perpetuity, Tenant shall not be
responsible for the interior physical condition of individual occupied apartments on the
termination or expiration of this Ground Lease.
5.3.3 Delivery of Documents. Contemporaneous with the expiration or
earlier termination of the Term, as it may be extended pursuant to the terms hereof, and subject
to the provisions of Sections 5.3.1 and 5.3.2 hereof, Tenant shall immediately deliver to
Landlord the following:
(a) Such documents, instruments and conveyances as Landlord may
reasonably request to enable Landlord's ownership of the Property and the Improvements to be
reflected of record, including, without limitation, a quitclaim deed in recordable form to the .
Property and the Improvements.
(b) If requested by Landlord, a lender's policy of title insurance (as
provided in Section 7.2(r) of the Agreement), surety bond; or other security reasonably
acceptable to Landlord insuring against all claims and liens against the Property and the
Improvements other than those incurred by Landlord or accepted by Landlord in writing.
(c) All construction plans, surveys, permits, existing contracts for
services, maintenance, operation, and any other documents relating to use, operation,
management, and maintenance of the Improvements as may be in effect and/or in the possession
of Tenant at the time and from time to time thereafter.
(d) All documents and instruments required to be delivered by Tenant
to Landlord pursuant to this Section shall be in form reasonably satisfactory to Landlord,
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including without limitation such documents and instruments shall be complete, originals or true
copies, and legible.
5.4 Abandonment. Tenant shall not abandon or vacate the Property or the
Improvements at any time during the Term. If Tenant shall abandon, vacate or otherwise
surrender the Property or the Improvements, or be dispossessed (other than dispossession as the
result of a Substantial Taking or a Taking and subject to Section 22.1 below) thereof by process
of law or otherwise, the same shall constitute a default under this Ground Lease on the part of
Tenant and, in addition to any other remedy available on the part of Landlord, any of Tenant's
property left in, upon or about the Property or the Improvements (except for underground storage
tanks, if any, placed within the Property by Tenant) shall, at Landlord's option, be deemed to be
abandoned and shall become the property of Landlord. The appointment of a receiver pursuant
to a Mortgagee's exercise of its rights under a Mortgage, or the foreclosure of a Mortgage, shall
not be a default under this Section.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
6.1 Landlord's Representations. Landlord represents and warrants to Tenant it
owns the Property in fee simple and has the power and authority to enter into this Ground Lease
and perform all obligations and agreements incidental or pertinent to the Ground Lease.
Landlord makes no representation or warranty with respect to the condition of the Property or its
fitness or availability for any particular use, and Landlord shall not be liable for any latent or
patent defect therein. Landlord represents and warrants to tenant as follows:
(A) Landlord. Landlord is a public body, corporate and politic, organized and
existing pursuant to the Housing Authorities Law (Health and Safety Code
Section 34200 et seq.), which has been authorized to transact business
pursuant to action of the City. The execution, performance and delivery of
this Ground Lease by Landlord has been fully authorized by all requisite
actions on the part of Landlord.
(B) No Conflict. To the best of Landlord's knowledge, Landlord's execution,
delivery and performance of its obligations under this Ground Lease will
not constitute a default or a breach under any contract, agreement or order
to which Landlord is a party or by which it is bound.
(C) No Landlord Bankruptcy. Landlord is not the subject of a bankruptcy
proceeding.
As used herein, "Landlord's knowledge" shall be limited to the actual knowledge of
Frank Spevacek, Executive Director, with no duty of inquiry or investigation.
6.2 Tenant's Representations. Tenant represents and warrants to Landlord it has
examined the Property and acknowledges that it hereby accepts possession of the Property in its
"AS IS" condition, with all faults and defects, including, without limitation, any physical
condition or environmental condition of the Property. Tenant represents and warrants to
Landlord as follows:
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(A) Tenant. Tenant is a duly organized limited partnership formed within and
in good standing under the laws of the State of California. Upon request
by Landlord, Tenant shall deliver to Landlord true and complete copies of
the original documents evidencing the organization of Tenant, as amended
to the date of this Ground Lease. Tenant has full right, power and lawful
authority to undertake all obligations as provided herein and the execution,
performance and delivery of this Ground Lease by Tenant have been fully
authorized by all requisite actions on the part of Tenant.
(B) No Conflict. To the best of Tenant's knowledge, Tenant's execution,
delivery and performance of its obligations under this Ground Lease will
not constitute a default or a breach under any contract, agreement or order
to which Tenant is a party or by which it is bound.
(C) No Tenant Bankruptcy. Tenant is not the subject of a bankruptcy
proceeding.
Tenant shall, upon learning of any fact or condition which would cause any of the
warranties and representations in this Section not to be true, immediately give written notice of
such fact or condition to Landlord.
ARTICLE 7. CONSTRUCTION OF THE IMPROVEMENTS.
7.1 Construction. Tenant shall construct the Improvements in accordance with plans
and specifications (the "Plans") approved. by Landlord pursuant to the Agreement. All
Improvements, including the Public Improvements, shall be constructed in a good and
workmanlike manner using materials of good quality and in substantial compliance with this
Ground Lease, and shall comply with all applicable governmental permits, laws, ordinances and
regulations.
7.2 Construction Cost. With the exception of the "Authority Loan" provided to
Tenant pursuant to the Agreement, Tenant shall bear the entire and sole cost of constructing the
Improvements, including all fees and mitigation measures.
7.3 Landlord's Right to Discharge Lien. If Tenant does not cause to be recorded
the bond described in California Civil Code Section 3143 or otherwise protect the Property under
any alternative or successor statute, and a final judgment has been entered against Tenant by a
court of competent jurisdiction for the foreclosure of a mechanic's, materialmen's, contractor's,
or subcontractor's lien claim, and if Tenant fails to stay the execution of the judgment by lawful
means or to pay the judgment, Landlord shall have the right, but not the duty, subject to the
notice and cure rights of Mortgagees and the Investor set forth elsewhere in this Ground Lease,
to pay or otherwise discharge, stay, or prevent the execution of any such judgment or lien or
both. Tenant shall reimburse Landlord for all sums paid by Landlord under this Section, together
with all Landlord's reasonable attorneys' fees and costs, plus interest on those sums, fees, and
costs from the date of payment until the date of reimbursement at the rate set forth in Section 4.7.
7.4 Notice of Non -Responsibility. After the recordation of the Certificate of
Completion for the Improvements in the Official Records, Tenant shall provide Landlord with
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prior written notice of not less than fifteen (15) days before commencing construction of any
structural alteration of the Improvements, or any non-structural alteration which will cost more
than Twenty Thousand Dollars ($20,000), and shall permit Landlord to record and post
appropriate notices of non -responsibility on the Property. The foregoing Ten Thousand Dollar
($10,000) limitation shall be increased each calendar year by the CPI Adjustment.
7.5 Notice of Completion. On completion of construction of the Improvements,
Tenant shall file or cause to be filed a notice of completion. Tenant hereby appoints Landlord as
Tenant's attorney -in -fact to file the notice of completion on Tenant's failure to do so after the
work of improvement has been substantially completed.
7.6 Subsequent Alterations. Following completion of the construction of the
Improvements in accordance with the Plans, Tenant may from time to time, at its sole expense,
make improvements and other alterations to the Property which Tenant reasonably determines to
be beneficial. Tenant shall not make any alteration or improvement to the Property, the cost of
which exceeds Fifty Thousand Dollars ($50,000), without Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed. The foregoing dollar amount
limitations shall be increased each calendar year by the CPI Adjustment. Tenant shall timely pay
any obligation incurred by Tenant with respect to any such alterations or improvements that
could become a lien against the Property and shall defend, indemnify and hold Landlord
harmless in connection therewith.
ARTICLE 8. USE OF THE PROPERTY.
8.1 Covenant to Use in Accordance with Redevelopment Plan, City Municipal
Code, Regulatory Agreement, and this Ground Lease. Tenant covenants and agrees for itself,
its successors, assigns, and every successor in interest to Tenant's interest in the Property or any
part thereof, that Tenant shall devote the Property to the uses specified in the Redevelopment
Plan, the Regulatory Agreement and this Ground Lease until the expiration of the Term hereof,
as it may be extended pursuant to the terms hereof, as applicable to the Property. All uses
conducted on the Property, including, without limitation, all activities undertaken by Tenant
pursuant to this Ground Lease, shall conform to the Redevelopment Plan and all applicable
provisions of the La Quinta Municipal Code. The foregoing covenants shall run with the land.
8.2 Covenant to Pay Taxes and Assessments. Tenant shall pay prior to delinquency
all ad valorem real estate taxes, special taxes, assessments and special assessments levied against
the Property, subject to Tenant's right to contest any such tax in good faith and any property tax
exemptions.
8.3 Covenants Regarding Nondiscrimination. Tenant covenants by and for itself
and any successors in interest that there shall be no discrimination against or segregation of any
person, or group of persons on any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any
part thereof, nor shall Tenant, or any person claiming under or through him or her, establish or
permit any such practice or practices of discrimination or segregation with reference to the
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selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the Property, or any part thereof. The foregoing covenants shall run with the land.
Tenant agrees for itself and any successor in interest that Tenant shall refrain from
restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the
Property, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national
origin of any person. All such deeds, leases or contracts shall contain or be subject to
substantially the following nondiscrimination or nonsegregation clauses:
(A) In deeds: "The grantee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons
claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of
any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926. 1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease,
transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through
him or her, establish or permit any practice or practices of discrimination
or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
premises herein conveyed. The foregoing covenants shall run with the
land."
(B) In leases: "The lessee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons
claiming under or through him or her, and this lease is made and accepted
upon and subject to the following conditions:"That there shall be no
discrimination against or segregation of any person or group of persons,
on account of any basis listed in subdivision (a) or (d) of Section 12955 of
the Government Code, as those bases are defined in Sections 12926,
12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section
12955, and Section 12955.2 of the Government Code, in the leasing,
subleasing, transferring, use, occupancy, tenure, or enjoyment of the
premises herein leased nor shall the lessee himself or herself, or any
person claiming under or through him or her, establish or permit any such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants, lessees,
sublessees, subtenants, or vendees in the premises herein leased."
(C) In contracts pertaining to the realty: "There shall be no discrimination
against or segregation of, any person or group of persons on account of
any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926. 1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease,
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transfer, use, occupancy, tenure, or enjoyment of the premises which are
the subject of this agreement, nor shall the grantee or any person claiming
under or through him or her, establish or permit any practice or practices
of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or
vendees in the premises herein conveyed. The foregoing covenants shall
run with the land."
The covenants established in this Lease shall, without regard to technical classification
and designation, be binding for the benefit and in favor of the Landlord, its successors and
assigns, the City and any successor in interest to the Property, together with any property
acquired by the Tenant pursuant to this Agreement, or any part thereof. The covenants against
discrimination shall remain in effect in perpetuity.
ARTICLE 9. INSURANCE.
9.1 Tenant's Insurance. Without limiting Landlord's right to indemnification,
Tenant shall secure and maintain insurance coverage as set forth in this Article 9.
9.2 Commercial General and Automobile Liability; Worker's Compensation.
Commencing on the Effective Date and continuing throughout the term of this Ground Lease, the
Tenant shall procure and maintain, at its sole cost and expense, in a form and content satisfactory
to the Landlord's Executive Director, the following policies of insurance:
(A) Commercial General Liability Insurance covering bodily injury, property
damage, personal injury and advertising injury written on a per -occurrence
and not a claims -made basis containing the following minimum limits:(i)
general aggregate limit of Three Million Dollars ($3,000,000.00); (ii)
products -completed operations aggregate limit of Three Million Dollars
($3,000,000.00); (iii) personal and advertising injury limit of One Million
Dollars ($1,000,000.00); and (iv) each occurrence limit of One Million
Dollars ($ 1,000,000.00). Said policy shall include the following
coverages:(i) blanket contractual liability (specifically covering the
indemnification clause contained in Section 8 below); (ii) products and
completed operations; (iii) independent contractors; (iv) Owner's broad
form property damage; (v) severability of interest; (vi) cross liability; and
(vii) property damage liability arising out of the so-called "XCU" hazards
(explosion, collapse and underground hazards).The policy shall be
endorsed to have the general aggregate apply to this Project only.
(B) A policy of worker's compensation insurance in such amount as will fully
comply with the laws of the State of California and which shall indemnify,
insure, and provide legal defense for the Landlord and the Tenant against
any loss, claim or damage arising from any injuries or occupational
diseases occurring to any worker employed by or any persons retained by
the Tenant in the course of carrying out the work or services contemplated
in this Ground Lease, and Employers Liability Insurance in an amount not
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less than One Million Dollars ($1,000,000) combined single limit for all
damages arising from each accident or occupational disease.
(C) A policy of comprehensive automobile liability insurance written on a per -
occurrence basis in an amount not less than Three Million Dollars
($3,000,000.00) combined single limit covering all owned, non -owned,
leased and hired vehicles used in connection with the Work.
9.3 Builders Risk. Commencing on the Effective Date and continuing until the
Landlord issues a Release of Construction Covenants for the Project, the Tenant shall procure
and maintain, at its sole cost and expense, in a form and content satisfactory to the Landlord's
Executive Director, Builder's Risk (course of construction) insurance coverage in an amount
equal to the full cost of the hard construction costs of the Project. Such insurance shall cover, at
a minimum: all work, materials, and equipment to be incorporated into the Project; the Project
during construction; the completed Project until such time as the City issues a final certificate of
occupancy for the Project, and storage and transportation risks. Such insurance shall
protect/insure the interests of Tenant/owner and all of Tenant's contractor(s), and subcontractors,
as each of their interests may appear. If such insurance includes an exclusion for "design
error," such exclusion shall only be for the object or portion which failed. Landlord shall be a
loss payee under such policy or policies and such insurance shall contain a replacement cost
endorsement.
9.4 Property; Business Interruption; Boiler and Machinery Insurance.
Commencing on the date Landlord issues a Release of Construction Covenants for the Project
and continuing throughout the term of this Ground Lease, the Tenant shall procure and maintain,
at its sole cost and expense, in a form and content satisfactory to the Landlord's Executive
Director, the following insurance:
(A) Insurance against fire, extended coverage, vandalism, and malicious
mischief, and such other additional perils, hazards, and risks as now are or
may be included in the standard "all risk" form in general use in Riverside
County, California, with the standard form fire insurance coverage in an
amount equal to full actual replacement cost thereof, as the same may
change from time to time. The above insurance policy or policies shall
include coverage for earthquakes to the extent generally and commercially
available at commercially reasonable rates, if such insurance is generally
obtained for affordable housing developments in the counties of Riverside
and San Bernardino. Landlord shall be a loss payee under such policy or
policies and such insurance shall contain a replacement cost endorsement.
(B) Business interruption and extra expense insurance to protect Tenant and
Landlord covering loss of revenues and/or extra expense incurred by
reason of the total or partial suspension or delay of, or interruption in, the
operation of the Project caused by loss or damage to, or destruction of, any
part of the insurable real property structures or equipment as a result of the
perils insured against under the all risk physical damage insurance,
covering a period of suspension, delay or interruption of at least twelve
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(12) months, in an amount not less than the amount required to cover such
business interruption and/or extra expense loss during such period.
(C) Boiler and machinery insurance in the aggregate amount of the full
replacement value of the equipment typically covered by such insurance.
9.5 Contractor Insurance Requirements. Tenant shall cause any general contractor
with whom it has contracted for the performance of work on the Property to secure, prior to
commencing any activities hereunder and maintain insurance that satisfies all of the requirements
of this Section 9.
9.6 Additional Requirements. The following additional requirements shall apply to
all of the above policies of insurance:
(A) All of the above policies of insurance shall be primary insurance and,
except the Worker's Compensation, Employer Liability insurance, and
automobile liability insurance, shall name the Landlord, City and their
respective officers, officials, members, employees, agents, and
representatives (collectively, "Landlord and City and Landlord and City
Personnel") as additional insureds on an ISO Form CG 20:10 (current
version) or substantially similar form and not an ISO Form CG 20:09.The
insurer shall waive all rights of subrogation and contribution it may have
against Landlord and City and Landlord and City Personnel and their
respective insurers. All of said policies of insurance shall provide that
said insurance may not be amended or cancelled without providing thirty
(30) days' prior written notice to the Landlord. In the event any of said
policies of insurance are cancelled, the Tenant shall, prior to the
cancellation date, submit new evidence of insurance in conformance with
this Section to the Executive Director. Not later than the Effective, the
Tenant shall provide the Executive Director with Certificates of Insurance
or appropriate insurance binders evidencing the above insurance coverages
and said Certificates of Insurance or binders shall be subject to the
reasonable approval of the Executive Director.
(B) The policies of insurance required by this Ground Lease shall be
satisfactory only if issued by companies of recognized good standing
authorized to do business in California, rated "A-" or better in the most
recent edition of Best Rating Guide, The Key Rating Guide or in the
Federal Register, and only if they are of a financial category Class VII or
better, unless such requirements are waived by the Executive Director, in
consultation with the City's Risk Consultant through the California Joint
Powers Insurance Authority, due to unique circumstances.
(C) The Executive Director, in consultation with the City's Risk Consultant
through the California Joint Powers Insurance Authority, is hereby
authorized to reduce or otherwise modify Tenant's insurance requirements
set forth herein in the event they collectively determine, in their sole and
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absolute discretion, that such reduction or modification is consistent with
reasonable commercial practices.
(D) The Tenant agrees that the provisions of this Section shall not be
construed as limiting in any way the Landlord's right to indemnification or
the extent to which the Tenant may be held responsible for the payment of
damages to any persons or property resulting from the Tenant's activities
or the activities of any person or persons for which the Tenant is otherwise
responsible.
9.7 Remedies for Defaults Re: Insurance. In addition to any other remedies
Landlord may have if Tenant fails to provide or maintain any insurance policies or policy
endorsements to the extent and within the time herein required, Landlord may, at its sole option,
after fifteen (15) days Notice to Tenant and Investor:
(A) Obtain such insurance and charge Tenant the amount of the premium for
such insurance, in which event Tenant shall promptly remit such sum to
Landlord; provided, however, if Landlord's Executive Director reasonably
determines that the Tenant, Property and/or Project will be uninsured or
underinsured in the absence of such insurance then Landlord need not
provide for any cure period in its notice to Tenant but may instead obtain
such insurance immediately upon its provision of such notice;
(B) Withhold any payment(s) which become due to Tenant hereunder until
Tenant demonstrates compliance with the requirements hereof; and
(C) Declare Tenant in Default and exercise its rights and remedies under this
Ground Lease.
Exercise of any of the above remedies, however, is an alternative to other remedies
Landlord may have and is not the exclusive remedy for Tenant's failure to maintain insurance or
secure appropriate endorsements.
Nothing herein contained shall be construed as limiting in any way the extent to which
Tenant may be held responsible for payment of damages to persons or property resulting from
Tenant's contractors or any subcontractor's performance under this Ground Lease.
9.8 Indemnification. Tenant shall defend, indemnify, assume all responsibility for,
and hold Landlord, its officers, employees and agents, harmless from, all claims, demands,
damages, defense costs (including attorneys' fees and costs) or liability of any kind or nature
relating to the subject matter of this Ground Lease or the implementation hereof, including but
not limited to any damages to property or injuries to persons, including accidental death, arising
out of or in connection with Tenant's activities, acts, errors, omissions, performance or work
under this Ground Lease, whether such activities or performance thereof be by Tenant or by
anyone directly or indirectly employed, controlled or contracted by Tenant and whether such
damage shall accrue or be discovered before or after termination of this Ground Lease. Tenant
shall not be liable for any such claims, demands, damages, defense costs, or liability, including
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any damages to property or injuries to persons, to the extent occasioned by the active negligence
or willful misconduct of Landlord or its designated agents or employees.
ARTICLE 10. MAINTENANCE; REPAIRS
Tenant shall maintain the Property and all improvements thereon, including lighting and
signage, in good condition, free of debris, waste and graffiti, and in compliance with the terms of
the Redevelopment Plan and all applicable provisions of the City of La Quinta Municipal Code,
and in accordance with the HUD Housing Quality Standards. Tenant shall maintain in
accordance with the "Maintenance Standards," as hereinafter defined, the improvements and
landscaping on the Property. Such Maintenance Standards shall apply to all buildings, signage,
lighting, landscaping, irrigation of landscaping, architectural elements identifying the Property
and any and all other improvements on the Property. To accomplish the maintenance, Tenant
shall either staff or contract with and hire licensed and qualified personnel to perform the
maintenance work, including the provision of labor, equipment, materials, support facilities, and
any and all other items necessary to comply with the requirements of this Ground Lease.
Tenant and its maintenance staff, contractors or subcontractors shall comply with the
following standards (the "Maintenance Standards"):
(A) The Property shall be maintained in conformance and in compliance with
the approved plans and permits, and reasonable maintenance standards for
similar, comparable neighboring structures, including but not limited to
painting and cleaning of all exterior surfaces and other exterior facades
comprising all private improvements and public improvements to the curb
line. The Property shall be maintained in good condition and in
accordance with the custom and practice generally applicable to
comparable apartment complexes.
(B) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree
and shrub pruning; trimming and shaping of trees and shrubs to maintain a
healthy, natural appearance and safe road conditions and visibility, and
irrigation coverage; replacement, as needed, of all plant materials; control
of weeds in all planters, shrubs, lawns, ground covers, or other planted
areas; and staking for support of trees.
(C) Clean-up maintenance shall include, but not be limited to: maintenance of
all sidewalks, paths and other paved areas in clean and weed -free
condition; maintenance of all such areas clear of dirt, mud, trash; debris or
other matter which is unsafe or unsightly; removal of all trash, litter and
other debris from improvements and landscaping prior to mowing;
clearance and cleaning of all areas maintained prior to the end of the day
on which the maintenance operations are performed to ensure that all
cuttings, weeds, leaves and other debris are properly disposed of by
maintenance workers.
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Upon Landlord's written notification to Tenant of any maintenance deficiency, Tenant
shall have thirty (30) days within which to correct, remedy or cure the deficiency, or such longer
period as is reasonably necessary to complete the cure, provided such correction, remedy, or cure
is commenced within such thirty (30) day period and diligently proceed to completion. If the
written notification states the problem is urgent relating to the public health and safety of the
City or Landlord, then Tenant shall have forty-eight (48) hours to rectify the problem, or such
longer period as is reasonably necessary to complete the cure. In the event Tenant does not
maintain the Property in the manner set forth herein and in accordance with the Maintenance
Standards, Landlord shall have, in addition to any other rights and remedies hereunder, the right
to maintain the Property, or to contract for the correction of such deficiencies, after Notice to
Tenant, and Tenant shall be responsible for the payment of all such costs incurred by Landlord.
ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS.
11.1 Ownership During Term.
11.1.1 Improvements. Subject to the provisions of Sections 5.3.1 .and 5.3.2
hereof, all Improvements on the Property as permitted or required by this Ground Lease shall,
during the Term, be and remain the property of Tenant, and Landlord shall not have title thereto.
Tenant shall not, however, demolish, remove, sell, encumber, lease, assign or otherwise convey
any Improvements from the Property except as permitted herein.
11.1.2 Personal Property. All personal property, furnishings, fixtures and
equipment, including, without limitation, Tenant -owned appliances, which are not so affixed to
the Property or the buildings thereon as to require substantial damage to the buildings upon
removal thereof shall constitute personal property including, but not limited to:(a) functional
items related to the everyday operations of the Property; (b) personal property furnishings,
fixtures and equipment of the nature or type deemed by law as permanently resting upon or
attached to the buildings or land by any means, including, without limitation, cement, plaster,
nails, bolts or screws, or essential to the ordinary and convenient use of the Property and the
Improvements. If Tenant is not then in default under this Ground Lease, at any time during the
Term and at termination thereof, Tenant shall have the right to remove any and all such personal
property, furnishings, fixtures and equipment; provided, that Tenant repairs any damage to the
Property or the Improvements caused by such removal.
11.1.3 Basic Building Systems. For purposes of this Ground Lease, the
personal property, furnishings, fixtures and equipment described in this Section 11.1 shall not
include those major building components or fixtures necessary for operation of the basic building
systems such as, but not limited to, the elevators, plumbing, sanitary fixtures, heating and central
air-cooling system.
11.2 Ownership at Expiration or Termination.
11.2.1 Property of Landlord. In accordance with provisions of Sections 5.3.1
and 5.3.2 hereof, and except as provided in Section 11.2.2, all Improvements which constitute or
are a part of the Property shall become (without the payment of compensation to Tenant or
others) the property of Landlord free and clear of all claims and encumbrances on such
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Improvements by Tenant, and anyone claiming under or through Tenant, except for such title
exceptions permitted or required during the Term with Landlord's prior written consent. Tenant
shall then quitclaim to Landlord any and all rights, interests and claims to the Improvements.
Tenant agrees to and shall defend, indemnify and hold Landlord harmless from and against all
liability and loss which may arise from the assertion of any such claims and any encumbrances
on such Improvements (except to the extent such claims arise due to Landlord's actions) and
except for such title exceptions permitted or required during the Term.
11.2.2 Removal by Tenant. Tenant shall not be required or permitted to
remove the Improvements, or any of them, at the expiration or sooner termination of the Term;
provided, however, that, subject to the provisions of Section 5.3.2 hereof, within thirty (30) days
following the expiration or sooner termination of the Term, Tenant may remove all personal
property, furniture, and equipment.
11.2.3 Unremoved Property. Any personal property, furnishings or
equipment not removed by Tenant pursuant to Section 11.2.2 hereof, shall, without
compensation to Tenant, become Landlords' property, free and clear of all claims to or against
them by Tenant or any third person, firm or entity arising by, through or under Tenant.
11.2.4 Maintenance and Repair of Improvements. Subject to the provisions
of this Ground Lease concerning condemnation, alterations and damage and destruction, Tenant
agrees to assume full responsibility for the operation and maintenance of the Property and the
Improvements and all fixtures and furnishings thereon or therein throughout the Term hereof
without expense to Landlord, and to perform all repairs and replacements necessary to maintain
and preserve the Property, the Improvements, fixtures and furnishings in a decent, safe and
sanitary condition consistent with good practices and in compliance with all applicable laws.
Tenant agrees that Landlord shall not be required to perform any maintenance, repairs or
services, or to assume any expense not specifically assumed herein in connection with the
Property and the Improvements thereon unless specifically required under the terms of this
Ground Lease.
Except as otherwise provided in this Section 11.2 and in Section 11.4, the condition of
the Improvements required to be maintained hereunder upon completion of the work of
maintenance or repair shall be equal in value, quality and use to the condition of such
Improvements before the event giving rise to the work.
11.3 Waste. Subject to the alteration rights of Tenant and damage and destruction or
condemnation of the Property or any part thereof, Tenant shall not commit or suffer to be
committed any waste of the Property or the Improvements, or any part thereof.
Tenant agrees to keep the Property and the Improvements clean and clear of refuse and
obstructions, and to dispose properly of all garbage, trash and rubbish.
11.4 Alteration of Improvements. Except as provided in Section 7.1, Tenant shall
not make or permit to be made any material exterior alteration of, addition to or change in, the
Improvements which would affect the exterior elevations (including materials selection and
color) or the size, bulk and scale of the Property, other than routine maintenance and repairs, nor
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demolish all or any part of the Improvements, without the prior written consent of Landlord.
Nothing herein shall prohibit interior alterations or decorations, or the removal and replacement
of interior improvements consistent with the specified use of the Property. In requesting consent
for such exterior improvements as required by the foregoing, Tenant shall submit to Landlord
detailed plans and specifications of the proposed work and an explanation of the need and
reasons thereof. Tenant may make such other improvements, alterations, additions or changes to
the Improvements which do not materially affect the exterior elevations (including materials
selection and color) or the size, bulk and scale thereof without Landlord's prior written consent.
Notwithstanding the prohibition in this Section 11.4, Tenant may make such changes,
repairs, alterations, improvements, renewals or replacements to the exterior elevations, materials,
size, bulk or scale of the Improvements as are required (a) by reason of any law, ordinance,
regulation or order of a competent government authority, (b) for the continued safe and orderly
operation of the Property, or (c) to continue to receive the Tax Credits or any other government
funding that may be available to the Project.
ARTICLE 12. SIGNS AND MARKETING.
Tenant shall not place or suffer to be placed on the Property or upon the roof or any
exterior door or wall or on the exterior or interior of any window of the Improvements, any sign,
awning, canopy, marquee, advertising matter, decoration, lettering or other thing of any kind
(exclusive of the signs, awnings and canopies, if any, which may be provided for in the Plans)
without the written consent of the Executive Director first had and obtained.
ARTICLE 13. DAMAGE OR DESTRUCTION OF PROPERTY OR
IMPROVEMENTS.
13.1 Tenant's Repair Obligation.
13.1.1 In case of damage to or destruction of the Property or the Improvements,
or any part thereof, by fire, earthquake, flood, act of God or other casualty (any of the foregoing,
a "Casualty") at any time during the Term of this Ground Lease, Tenant, if and to the extent
insurance proceeds are available, shall restore the same as nearly as possible to their value,
condition and character immediately prior to such damage or destruction. Such restoration shall
be commenced with due diligence and in good faith, and prosecuted with due diligence and in
good faith, unavoidable delays excepted.
13.1.2 In case of damage to or destruction of -the Improvements by Casualty
resulting in a loss exceeding in the aggregate Ten Thousand Dollars ($10,000), Tenant shall
promptly give written notice thereof to Landlord.
13.1.3 In the event insurance proceeds are insufficient to restore the Property or
the Improvements to its/their value, condition and character immediately prior to such damage or
destruction, then, with the consent and approval of Citibank, N.A. in its capacity as Mortgagee
(but only during such time as the Construction Loan or Take -Out Loan remain unpaid), Landlord
shall have the right to terminate this Ground Lease by providing written notice thereof to Tenant.
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13.1.4 In the event that the entire Improvements or so much of the
Improvements as to render the balance unusable by Tenant, as reasonably determined by Tenant,
shall be damaged or destroyed by Casualty, then, with the consent and approval of Citibank,
N.A. in its capacity as Mortgagee (but only during such time as the Construction Loan or Take -
Out Loan remain unpaid), Tenant shall have the right to terminate this Ground Lease by written
notice thereof to Landlord.
13.2 Tenant's Restoration of Premises.
13.2.1 If, during the Term, the Improvements are damaged or destroyed by a
Casualty, and the total amount of loss does not exceed thirty-three percent (33%) of the
replacement value of the Improvements, Tenant shall make the loss adjustment with the
insurance company insuring the loss, with the approval of Landlord, which approval shall not be
unreasonably withheld or delayed. The proceeds shall be paid directly to a Mortgagee, if any,
and if there is not a Mortgagee, to Landlord and Tenant for the sole purpose of making the
restoration of the Improvements in accordance with this Article 13.
13.2.2 If, during the Term, the Improvements are damaged or destroyed by a
Casualty, and the total amount of loss exceeds thirty-three percent (33%) of the replacement
value of the Improvements, Tenant shall make the loss adjustment with the insurance company
insuring the loss, with the approval of Landlord, which approval shall not be unreasonably
withheld or delayed, and the insurance company shall immediately pay the proceeds to a
Mortgagee, if any, and if there is not a Mortgagee, then to a bank or trust company designated by
Landlord and approved by Tenant (such Mortgagee or other institution, the "Insurance Trustee"),
which approval shall not be unreasonably withheld or delayed. All sums deposited with the
Insurance Trustee shall be held for the following purposes and the Insurance Trustee shall have
the following powers and duties:
(a) The sums shall be paid in installments by the Insurance Trustee to
the contractor retained by Tenant and approved by Landlord as construction progresses, for
payment of the cost of restoration. A ten percent (10%) retention fund shall be established that
will be paid to the contractor on completion of restoration, payment of all costs, expiration of all
applicable lien periods, and proof that the Property and the Improvements are free of all
mechanics' liens and lienable claims;
(b) Payments shall be made on presentation of certificates or vouchers
from the architect or engineer retained by Tenant and approved by Landlord (which approval
shall not be unreasonably withheld, conditioned or delayed) showing the amount due. If the
Insurance Trustee, in its reasonable discretion, determines that the certificates or vouchers are
being improperly approved by the architect or engineer retained by Tenant, the Insurance Trustee
shall have the right to appoint an architect or an engineer to supervise construction and to make
payments on certificates or vouchers approved by the architect or engineer retained by the
Insurance Trustee. The reasonable expenses and charges of the architect or engineer retained by
the Insurance Trustee shall be paid by the Insurance Trustee out of the trust fund;
(c) If, after the work of restoration has commenced, the sums held by
the Insurance Trustee are not sufficient to pay the actual cost of restoration, Tenant shall deposit
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the amount of the deficiency with the Insurance Trustee within ten (10) days after receipt of
request for payment of such amount from the Insurance Trustee, which request shall be made by
the Insurance Trustee promptly after it is determined there will be a deficiency;
(d) If the Insurance Trustee has received notice from Landlord that the
Tenant is in default under this Ground Lease, then, subject to the lien of a Mortgagee's Mortgage
and the Mortgagee's prior written consent, the Insurance Trustee shall pay to Landlord an
amount sufficient to cure such default as specified in Landlord's notice to the Insurance Trustee;
(e) Any amounts remaining after making the payments hereinabove
referred to in clauses (a), (b) and (c) shall be paid to any leasehold Mortgagee to the extent (a)
required by any Mortgage and (b) such leasehold Mortgagee makes written demand therefor to
the Insurance Trustee;
(f) Any undisbursed funds remaining after compliance with all of the
provisions of this Section 13.2 shall, if and to the extent required by any Mortgage, be delivered
to the Mortgagee, and if there is no leasehold Mortgagee, to Tenant; and
(g) All actual costs and charges of the Insurance Trustee shall be paid
by Tenant. If the Insurance Trustee resigns or for any reason is unwilling to act or continue to
act, Landlord shall substitute a new Insurance Trustee in the manner described in this Section.
13.2.3 Both parties shall promptly execute all documents and perform all acts
reasonably required by the Insurance Trustee to perform its obligations under this Section 13.2.
13.3 Procedure for Restoring Improvements.
13.3.1 If and to the extent Tenant is obligated to restore the Improvements
pursuant to this Article 13, Tenant shall restore the Improvements substantially in accordance
with the Plans, to the extent insurance proceeds are available. Within forty-five (45) days after
the date of such damage or destruction, Tenant, at its cost, shall prepare and deliver to Landlord
final plans and specifications and working drawings complying with applicable laws that will be
necessary for such restoration. Such plans and specifications shall specify differences from the
Plans. The plans and specifications and working drawings are subject to the approval of
Landlord only insofar as they vary from the Plans. Landlord shall have twenty (20) days after
receipt of the plans and specifications and working drawings to either approve or disapprove the
plans and specifications and working drawings and return them to Tenant. If Landlord
disapproves the plans and specifications and working drawings, Landlord shall notify Tenant of
its objections in writing, specifying the objections clearly and stating what modifications are
required for Landlord's approval. Tenant acknowledges that the plans and specifications and
working drawings shall be subject to approval of the appropriate government bodies and that
they will be prepared in such a manner as to obtain that approval.
13.3.2 The restoration shall be accomplished as follows:
(a) Tenant shall complete the restoration within eighteen (18) months
after final plans and specifications and working drawings have been approved by the appropriate
government bodies and all required permits have been obtained.\
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(b) Tenant shall retain a licensed contractor that is bondable. The
contractor shall be required to carry public liability and property damage insurance, builders risk
insurance, standard fire and extended coverage insurance, with vandalism and malicious
mischief endorsements, during the period of construction in accordance with Article 9.Such
insurance shall contain waiver of subrogation clauses in favor of Landlord and Tenant in
accordance with the provisions of and to the extent required by Section 9.6.
(c) Tenant shall notify Landlord of the date of commencement of the
restoration not later than ten (10) days before commencement of the restoration to enable
Landlord to post and record notices of non -responsibility. The contractor retained by Tenant
shall not commence construction until a completion bond and a labor and materials bond have
been delivered to Landlord to insure completion of the construction.
(d) Tenant shall accomplish the restoration in a manner that will cause
the least inconvenience, annoyance, and disruption to the Property and the Improvements.
(e) On completion of the restoration Tenant shall immediately record a
notice of completion.
(f) The restoration shall not be commenced until sums sufficient to
cover the cost of restoration are placed with the Insurance Trustee as provided in Section 13.2.
13.4 Mortgagee Protection. The following provisions are for the protection of a
Mortgagee and shall, notwithstanding anything contained in this Ground Lease to the contrary,
control:
13.4.1 Insurance. Any insurance proceeds payable from any policy of
insurance (other than liability insurance) required by the Ground Lease shall be paid to and
applied by the Mortgagees, if any, in accordance with their respective Mortgage. Each
Mortgagee, if any, shall have the right to participate in all adjustments, settlements, negotiations
or actions with the insurance company regarding the amount and allocation of any such
insurance proceeds. Any insurance policies permitted or required by this Ground Lease shall
name each Mortgagee, if any, as an additional insured or loss payee, as appropriate, if required
by such Mortgagees.
13.4.2 Restoration. Tenant shall have no obligation to restore or repair the
Improvements following the occurrence of any Casualty for which insurance is not required
under this Ground Lease. The Mortgagee, if any and if it exercises any of its remedies set forth
in this Ground Lease to acquire the leasehold estate hereunder, shall have no obligation to restore
or repair damage to the Improvements that cost in excess of available insurance proceeds.
Tenant shall have no obligation to restore or repair damage to the Improvements if the Casualty
occurs during the last five (5) years of the Ground Lease term. In the event such a loss occurs in
the last five (5) years, then, at the election of Tenant, with the prior written consent of the
Mortgagee, if any, insurance proceeds shall be used, first, to clear the Property of the damaged
Improvements and any debris, and second, to reduce or pay in full the Mortgage, with any excess
being payable as provided in this Ground Lease.
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13.4.3 Termination. Neither Tenant nor Landlord shall have the right to
terminate this Ground Lease without first obtaining the written consent of Citibank, N.A. in its
capacity as Mortgagee (but only during such time as the Construction Loan or Take -Out Loan
remain unpaid).
ARTICLE 14. EMINENT DOMAIN.
14.1 Notice. The party receiving any notice of the kind specified in this Section 14.1
shall promptly give the other party notice of the receipt, contents and date of the notice received.
For purposes of this Article 14, the term "Notice" shall include:
(a) Notice of Intended Taking;
(b) Service of any legal process relating to condemnation of the
Property or the Improvements;
(c) Notice in connection with any proceedings or negotiations with
respect to such condemnation; or
(d) Notice of intent or willingness to make or negotiate a private
purchase, sale or transfer in lieu of condemnation.
14.2 Representation in Proceedings or Negotiations. Landlord and Tenant shall
each have the right to represent their respective interests in each proceeding or negotiation with
respect to a Taking or intended Taking and to make full proof of their claims. No agreements or
settlement with or sale or transfer to the condemning authority shall be made without the consent
of Landlord, but, as to its reversionary interest only, Landlord may enter into such agreement,
settlement, sale or transfer without the consent of Tenant. Landlord and Tenant each agree to
execute and deliver to the other any instruments which may be required to effectuate or facilitate
the provisions of this Ground Lease relating to condemnation. Neither Tenant nor Landlord shall
have the right to terminate this Ground Lease without first obtaining the written consent of
Citibank, N.A. in its capacity as Mortgagee (but only during such time as the Construction Loan
or Take -Out Loan remain unpaid).
14.3 Total Taking.
14.3.1 In the event of a Total Taking, this Ground Lease shall terminate as of
the date of the Taking.
14.3.2 If this Ground Lease is terminated pursuant to this Section 14.3, the
Award for such Taking shall be apportioned and distributed as follows:
(a) First, to the Mortgagees, if any, to the extent of their respective
Mortgages;
(b) Second, to Landlord, a sum equal to the fair market value of the
Landlord's fee interest in the Property (subject to the remaining Term and the Rent reserved) on
the date immediately preceding the Taking or threat of condemnation, as determined by the
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appraisal method set forth in Section 14.9.The parties shall commence said appraisal by the
earlier of ten (10) days after Tenant's receipt of a Notice of Intended Taking or ten (10) days
after the date of the Taking;
(c) Third, to Tenant, a sum equal to the fair market value of the
Improvements made by Tenant as of the date immediately preceding the Taking or threat of
condemnation plus the residual value of the Term, subject to Rent reserved, plus any part of the
Award attributable to the Tax Credits and any other governmental funding provided to the
Project, other than funding provided to the Project by Landlord;
(d) Fourth, to Landlord, the remainder, if any.
14.4 Substantial Taking.
14.4.1 In the event of a Taking that does not constitute a Total Taking, Partial
Taking, or Temporary Taking, Landlord and Tenant shall meet and confer to determine whether
the Taking is material and, in the event Landlord and Tenant determine that such Taking is
material, then, with the consent and approval of Citibank, N.A. in its capacity as Mortgagee (but
only during such time as the Construction Loan or Take -Out Loan remain unpaid), and subject to
any other rights of the Mortgagees, either of Landlord or Tenant may terminate this Ground
Lease. In the event Landlord and Tenant do not agree as to whether the Taking is material, then
such decision shall be made solely by the Landlord, in the Landlord's reasonable judgment. In
such event, if Landlord determines that the Taking is material, then, subject to the consent and
approval and rights of Citibank, N.A. in its capacity as Mortgagee (but only during such time as
the Construction Loan or Take -Out Loan remain unpaid); and subject to any other rights of the
Mortgagees, Landlord may terminate this Ground Lease. In the event this Ground Lease is
terminated pursuant to this Section 14.4.1, the terminating party shall give written notice of its
election to terminate to the other party within thirty (30) days after the parties have met and
conferred.
14.4.2 In the event this Ground Lease is terminated pursuant to Section 14.4.1
above, such termination shall be as of the time when the Taking entity takes possession of the
portion of the Property and the Improvements taken. In such event, the Award for such
Substantial Taking (including any award for severance, consequential or other damages which
will accrue to the portion of the Property and/or the Improvements not taken) shall be
apportioned and distributed as follows:
(a) First, to the Mortgagees, if any, to the extent of their respective
Mortgages;
(b) Second, to Landlord, a sum equal to the fair market value of the
Property taken (subject to the remaining Term and Rent reserved) on the date immediately
preceding the Taking as determined by the appraisal process provided for in Section 14.9
commenced as provided in Section 14.3.2;
(c) Third, to Landlord, an amount equal to the portion of the award for
severance, consequential or other damages which accrued to the portion of the Property or
Improvements not taken;
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(d) Fourth, to Tenant, a sum equal to the fair market value of the
Improvements made by Tenant as of the date immediately preceding the Taking or threat of
condemnation, plus the residual value of the Term, subject to Rent reserved, plus any part of the
Award attributable to the Tax Credits and any other governmental funding provided to the
Project, other than funding provided to the Project by Landlord;
(e) Fifth, to Landlord, the remainder, if any.
14.5 Partial Taking.
14.5.1 In the event of a Partial Taking, this Ground Lease shall continue in full
force and effect, and there shall be no abatement in or reduction of any of Tenant's obligations
hereunder.
14.5.2 The Award for such Partial Taking shall be apportioned and distributed
first to the Mortgagees, if any, to the extent of their respective Mortgages, then to Landlord and
Tenant in proportion to the fair market value of their respective interests; provided, however, that
any part of the Award attributable to the Tax Credits or other governmental funding provided to
the Project, other than funding provided to the Project by Landlord, shall belong to Tenant.
14.5.3 Any Award for severance, consequential or other damages which
accrues by reason of the Partial Taking to the portion of the Property or the Improvements not
taken shall be distributed first to the Mortgagees, if any, to the extent of their respective
Mortgages, and the remainder, if any, shall be payable to Landlord and Tenant in proportion to
the fair market value of their respective interests.
14.6 Obligation to Repair on Partial Taking. Promptly after any Partial Taking,
Tenant shall, to the extent of the Award received by Tenant and in the manner specified in the
provisions of this Ground Lease, repair, alter, modify or reconstruct the Improvements and/or
other improvements on the Property so as to make them usable for the designated purpose and
capable of producing a fair and reasonable net income.
14.7 Temporary Taking.
14.7.1 In the event of a Temporary Taking of the whole or any part of the
Property and/or Improvements, the Term shall not be reduced or affected in any way and Tenant
shall continue to pay in full any sum or sums of money and charges herein reserved and provided
to be paid by Tenant, and, subject to the other provisions of this Section 14.7, Tenant shall be
entitled to any Award or payment for the temporary use of the Property and/or Improvements
prior to the termination of this Ground Lease and Landlord shall be entitled to any award or
payment for such use after the termination of this Ground Lease.
14.7.2 If, after the occurrence of a temporary taking, possession of the Property
and/or Improvements shall revert to Tenant prior to the expiration of the Term, Tenant shall, to
the extent of the amount of any award or payment, unless at such time there remains less than
five (5) years in the Term, restore the Property and/or Improvements and in all other respects
indemnify and hold Landlord harmless from the effects of such Taking so that the Property
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and/or Improvements in every respect shall upon completion of such restoration be in the same
condition as they were prior to the taking thereof.
14.7.3 Any Award or payment for damages or cost of restoration made on or
after the termination of this Ground Lease shall be paid first to the Mortgagees, if any, to the
extent of their respective Mortgages, then to Landlord absolutely, together with the remaining
balance of any other funds paid to Tenant for such damages or cost of restoration and Tenant
shall thereupon be excused from any obligation to restore the Property and/or Improvements
upon the termination of such Temporary Taking except that any obligation that may have
accrued for Tenant to restore the Property and/or Improvements prior to the commencement of
said Temporary Taking shall continue to be the obligation of Tenant.
14.8 Mortgagee Protection. Notwithstanding anything contained in this Ground
Lease to the contrary, any and all condemnation proceeds shall be paid first to the Mortgagees, if
any, to be applied to reduce their respective Mortgages if required by the applicable mortgage
documents.
14.9 Appraisal. Whenever an appraisal of the Property is called for under the terms of
this Ground Lease, the parties shall use the following procedure:
14.9.1 Appointment of Appraiser. Within ten (10) days after notice from
Landlord to Tenant, Landlord and Tenant shall each appoint an MAI appraiser to participate in
the appraisal process provided for in this Section 14.9 and shall give written notice thereof to the
other party. Upon the failure of either party so to appoint, the nondefaulting party shall have the
right to apply to the Superior Court of Riverside County, California, to appoint an appraiser to
represent the defaulting party. Within ten (10) days of the parties' appointment, the two (2)
appraisers shall jointly appoint a third MAI appraiser and give written notice thereof to Landlord
and Tenant, or if within ten (10) days of the appointment of said appraisers the two (2) appraisers
shall fall to appoint a third, then either party hereto shall have the right to make application to
said Superior Court to appoint such third appraiser.
14.9.2 Determination of Fair Market Value.
(a) Within thirty (30) days after the appointment of the third appraiser,
the appraisers shall determine the fair market value of the Property and the Improvements in
accordance with the provisions hereof, and shall execute and acknowledge their determination of
fair market value in writing and cause a copy thereof to be delivered to each of the parties hereto.
(b) The appraisers shall determine the fair market value of the
Property and the Improvements as of the date of Landlord's notice referred to in Section 14.9.1
above, based on sales of comparable property in the area in which the Property is located, subject
to the restrictions encumbering the Property. If, however, in the judgment of a majority of the
appraisers, no such comparable sales are available, then the appraisal shall be based on the
assumption that the Property is available for immediate sale and development for the purposes
and at the density and intensity of development permitted under the zoning, subdivision and land
use planning ordinances and regulations applicable to the Property in effect on the
Commencement Date of this Ground Lease, and any changes or amendments thereto or
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modification or variance from the provisions thereof or conditional use permits which could
reasonably be anticipated to have been granted or approved as of the date of this Ground Lease.
Notwithstanding anything contained herein to the contrary, if the appraisal, for the particular
purposes for which it is being done, should reasonably reflect the rent restrictions imposed on the
Property pursuant to the Regulatory Agreement, then such rent restrictions shall be taken into
consideration by the appraisers.
(c) If a majority of the appraisers are unable to agree on fair market
value within thirty (30) days of the appointment of the third appraiser, the three (3) appraisals
shall be added together and their total divided by three (3).The resulting quotient shall be the fair
market value of the Property and the Improvements. If, however, the low appraisal and/or high
appraisal is or are more than ten percent (10%) lower and/or higher than the middle appraisal, the
low and/or high appraisal shall be disregarded. If only one appraisal is disregarded, the
remaining two appraisals shall be added together and their total divided by two (2).The resulting
quotient shall be the fair market value of the Property and the Improvements. If both the low and
high appraisals are disregarded, the middle appraisal shall be the fair market value of the
Property.
14.9.3 Payment of Fees. Each of the parties hereto shall (a) pay for the
services of its appointee, (b) pay one-half (1/2) of the fee charged by the appraiser selected by
their appointees, and (c) pay one-half (1/2) of all other proper costs of the appraisal.
ARTICLE 15. COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
15.1 Compliance With Laws. Tenant shall comply with (i) all ordinances, regulations
and standards of the City, Landlord, County of Riverside, any regional governmental entity,
State of California, and federal government applicable to the Property; (ii) all rules and
regulations of any assessment district of the City with jurisdiction over the Property; and (iii) all
applicable labor standards of California law and federal law; and (iv) the requirements of
California law and federal law with respect to the employment of undocumented workers or
illegal aliens.
15.2 Indemnity. Tenant shall save, protect, defend, indemnify and hold harmless
Landlord and the City and their respective officers, officials, members, employees, agents, and
representatives from and against any and all liabilities, suits, actions, claims, demands, penalties,
damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs or
expenses (including, without limitation, consultants' fees, investigation and laboratory fees,
reasonable attorneys' fees and remedial and response costs) (the foregoing are hereinafter
collectively referred to as "Liabilities") which may now or in the future be incurred or suffered
by Landlord or City or their respective officers, officials, members, employees, agents, or
representatives by reason of, resulting from, in connection with, or existing in any manner
whatsoever as a direct or indirect result of (i) Tenant's placement on or under the Property of any
Hazardous Materials or Hazardous Materials Contamination, (ii) the escape, seepage, leakage,
spillage, discharge, emission or release from the Property of any Hazardous Materials or
Hazardous Materials Contamination that occurs after the Commencement Date, or (iii) any
Liabilities incurred under any Governmental Requirements relating to the acts described in the
foregoing clauses (i) and (ii).
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For the purposes of this Ground Lease, unless the context otherwise specifies or requires,
the following terms shall have the meanings herein specified:
The term "Hazardous Materials" shall mean any substance, material, or waste which is or
becomes regulated by any local governmental authority, the City, the County of Riverside, the
State of California, a regional governmental authority, or the United States Government,
including, but not limited to, any material or substance which is (i) defined as a "hazardous
waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115,
25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a. "hazardous
substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter
6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous
material," "hazardous substance," or "hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix)
designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C.
§ 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903) or (xi) defined as
"hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. For purposes hereof, "Hazardous
Materials" excludes materials and substances in quantities as are commonly used in the
construction and operation of an apartment complex, provided that such materials and substances
are used in accordance with all applicable laws.
The term "Hazardous Materials Contamination" shall mean the contamination (whether
presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or
other elements on, in or of the Property by Hazardous Materials, or the contamination of the
buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a
result of Hazardous Materials at any time emanating from the Property.
The term "Governmental Requirements" shall mean all past, present and future laws,
ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state,
the county, the city, or any other political subdivision in which the Property is located, and any
other state, county city, political subdivision, agency, instrumentality or other entity exercising
jurisdiction over the Property.
15.3 Duty to Prevent Hazardous Material Contamination. Tenant shall take
commercially reasonable action to prevent the release of any Hazardous Materials into the
environment. Such precautions shall include compliance with all Governmental Requirements
with respect to Hazardous Materials. In addition, Tenant shall install and utilize such equipment
and implement and adhere to such procedures as are consistent with the standards generally
applied by apartment complexes in Riverside County, California as respects the disclosure,
storage, use, removal, and disposal of Hazardous Materials.
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15.4 Obligation of Tenant to Remediate Premises. Notwithstanding the obligation
of Tenant to indemnify Landlord, City, and their respective officers, officials, members,
employees, agents, and representatives pursuant to Section 15.2, and provided no Hazardous
Materials exist on the Property as a result of Landlord's action, Tenant shall, at its sole cost and
expense, promptly take (i) all actions required by any federal, state, regional, or local
governmental agency or political subdivision or any Governmental Requirements and (ii) all
actions necessary to make full economic use of the Property for the purposes contemplated by
the Regulatory Agreement, the Agreement, and this Ground Lease, which requirements or
necessity arise from the presence upon, about or beneath the Property, of any Hazardous
Materials or Hazardous Materials Contamination. Such actions shall include, but not be limited
to, the investigation of the environmental condition of the Property, the preparation of any
feasibility studies or reports and the performance of any cleanup, remedial, removal or
restoration work.
15.5 Environmental Inquiries. Tenant, when it has received any notices of violation,
notices to comply, citations, inquiries, clean-up or abatement orders, or cease and desist orders
related to Hazardous Materials or Hazardous Materials Contamination, or when Tenant is
required to report to any governmental agency any violation or potential violation of any
Governmental Requirement pertaining to Hazardous Materials or Hazardous Materials
Contamination, shall concurrently notify the Executive Director, and provide to him/her a copy
or copies, of the environmental permits, disclosures, applications, entitlements or inquiries
relating to the Property, the notices of violation, notices to comply, citations, inquiries, clean-up
or abatement orders, cease and desist orders, reports filed pursuant to self -reporting
requirements, and reports filed or applications made pursuant to any Governmental Requirement
relating to Hazardous Materials and underground tanks, and Tenant shall report to the Executive
Director, as soon as possible after each incident, any unusual, potentially important incidents.
In the event of a responsible release of any Hazardous Materials into the environment,
Tenant shall, as soon as possible after it becomes aware of the release, furnish to the Executive
Director a copy of any and all reports relating thereto and copies of all correspondence with
governmental agencies relating to the release. Upon request of the Executive Director, Tenant
shall furnish to the Executive Director a copy or copies of any and all other environmental
entitlements or inquiries relating to or affecting the Property including, but not limited to, all
permit applications, permits and reports including, without limitation, those reports and other
matters which may be characterized as confidential.
ARTICLE 16. ASSIGNMENT.
Because of the importance that Landlord places on Tenant's qualification, expertise and
identity, and the reliance Landlord makes upon Tenant's ability to construct and operate the
Project, during the Term, Tenant shall not assign or attempt to assign this Ground Lease or any
right herein, except to such transferees as approved or permitted pursuant to Section 15 of the
Regulatory Agreement. Notwithstanding the foregoing, Tenant may sublease the units to low,
moderate, and very low income households as provided in the Agreement and the Regulatory
Agreement.
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ARTICLE 17. MORTGAGES.
17.1 Ground Leasehold Mortgages. Notwithstanding anything to the contrary
contained elsewhere herein, at all times during the Term, Tenant shall have the right to mortgage,
pledge, deed in trust, assign rents, issues and profits and/or collaterally (or absolutely for
purposes of security if required by any lender) assign its interest in this Ground Lease, or
otherwise encumber this Ground Lease, and/or the interest of Tenant hereunder, in whole or in
part, and any interests or rights appurtenant to this Ground Lease, and to assign or pledge the
same as security for any debt (the holder of any such mortgage, pledge or other encumbrance,
and the beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the
mortgage, pledge, deed of trust or other instrument hereafter referred to as "Mortgage"), upon
and subject to each and all of the terms and conditions listed in Paragraphs (a) — (c) below. As
used in this Ground Lease, the term "Mortgage" includes the Authority Loan, the Construction
Loan and the Take -Out Loan, and the term "Mortgagee" includes Landlord, as the beneficiary
under the Authority Loan Note, and Citibank, N.A. and California Municipal Finance Authority
under the Construction Loan and Take -Out Loan (as applicable):
(a) Prior to the issuance of a Release of Construction Covenants by
Landlord, Mortgages entered into by Tenant shall be limited in purpose to and shall not exceed
the amount necessary and appropriate to develop the Improvements, and to acquire and install
equipment and fixtures thereon. Said amount shall include all hard and soft costs of acquisition,
development, including, but not limited to payment of a development fee to the Project developer
and funding of all reserves in accordance with the terms of the Regulatory Agreement and the
Partnership Agreement, construction, lease -up and operation of the Improvements. After the
recordation of the Release of Construction Covenants, the limitation contained in this subsection
shall no longer apply.
(b) Any permitted Mortgages entered into by Tenant are to be
originated only by Institutional Lenders approved in writing by Landlord, which approval will
not be unreasonably conditioned, delayed or withheld. Landlord shall state the reasons for any
such disapproval.
(c) All rights acquired by said Mortgagee shall be subject to each and
all of the covenants, conditions and restrictions set forth in this Ground Lease, and to all rights of
Landlord thereunder, none of which covenants, conditions and restrictions is or shall be waived
by Landlord by reason of the giving of such Mortgage.
If Tenant encumbers its leasehold estate by way of a Mortgage as permitted herein, and
should Landlord be advised in writing of the name and address of the Mortgagee, then this
Ground Lease shall not be terminated or canceled on account of any Event of Default by Tenant
in the performance of the terms, covenants or conditions hereof until Landlord shall have
complied with the provisions of this Ground Lease as to the Mortgagee's rights to cure. In
addition, no cancellation, surrender, termination, amendment or modification of this Ground
Lease shall be effective without the written consent of each Mortgagee and the Investor.
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17.2 Landlord's Forbearance and Right to Cure Defaults on Ground Leasehold
Mortgages.
(a) Landlord will give to any Mortgagee and Investor, at such address
as is specified by the Mortgagee in accordance with Section 23.1 hereof, a copy of each notice or
other communication with respect to any claim that a default exists or is about to exist from
Landlord to Tenant hereunder at the time of giving such notice or communication to Tenant, and
Landlord will give to the Mortgagee and Investor a copy of each notice of any rejection of this
Ground Lease by any trustee in bankruptcy of Tenant. Landlord will not exercise any right,
power or remedy with respect to any Event of Default hereunder, and no notice to Tenant of any
such Event of Default and no termination of this Ground Lease in connection therewith shall be
effective, unless Landlord has given to the Mortgagee and Investor written notice or a copy of its
written notice to Tenant of such Event of Default or any such termination, as the case may be,
and an opportunity to cure as provided below. Each such notice to a Mortgagee and to the
Investor shall be given by U.S. certified mail, postage prepaid, return receipt requested, and shall
be effective upon receipt.
(b) In the event the leasehold estate hereunder shall be acquired by
foreclosure, trustee's sale or deed, or assignment in lieu of foreclosure of a Mortgage, the
purchaser at such sale or the transferee by such assignment and its successors as holders of the
leasehold estate hereunder shall not be liable for any past due Rent, if any, or other obligations
hereunder accruing after its or their subsequent sale or transfer of such leasehold estate and such
purchaser or transferee and its successors shall be entitled to transfer such estate or interest one
time without consent or approval of Landlord. Additionally, in the event the leasehold estate
hereunder shall be acquired by foreclosure, trustee's sale or deed, or assignment in lieu of
foreclosure of a Mortgage, the purchaser at such sale or the transferee by such assignment and its
successors as holders of the leasehold estate hereunder shall only be liable for payment of Rent
pursuant to Section 4.1 becoming due with respect to the period during which such purchaser,
transferee or other successor is the holder of the leasehold estate hereunder. This Section shall
also apply to the rights of a Mortgagee in connection with the entry into a New Ground Lease
under Section 17.10 and to the appointment of a receiver on behalf of a Mortgagee.
(c) Notwithstanding anything herein to the contrary, Landlord will
give to U.S. Bancorp Community Development Corporation ("USBCDC"), which is the limited
partner of the Investor, at such address as is specified by USBCDC in accordance with Section
23.1 hereof, a copy of each notice or other communication with respect to any claim that a
default exists or is about to exist from Landlord to Tenant hereunder at the time of giving such
notice or communication to Tenant, and Landlord will give to USBCDC a copy of each notice of
any rejection of this Ground Lease by any trustee in bankruptcy of Tenant, and USBCDC will
have the same cure rights hereunder as any Mortgagee. Each such notice to USBCDC shall be
given by U.S. certified mail, postage prepaid, return receipt requested, and shall be effective
upon receipt.
17.3 Limited Liability of Mortgagee for Prior Indemnified Acts. A Mortgagee
shall not be obligated to assume the liability of Tenant for any indemnities arising for a period
prior to the Mortgagee's acquisition of the leasehold estate created under this Ground Lease or
after such Mortgagee disposes of such leasehold estate.
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17.4 Landlord Cooperation. Landlord covenants and agrees that it will act and fully
cooperate with Tenant in connection with Tenant's right to grant leasehold mortgages as
hereinabove provided. At the request of Tenant or any proposed or existing Mortgagee,
Landlord shall, within ten business days after request, execute and deliver (i) any documents or
instruments reasonably requested to evidence, and/or acknowledge the rights of the Mortgagees
as herein provided; and (ii) an estoppel certificate certifying the status of this Ground Lease and
Tenant's interest herein, including whether or not this Ground Lease is in force and effect. If this
Ground Lease is in force and effect, such estoppel certificate shall include and such matters as
are reasonably requested by Tenant or such Mortgagees, including, but not be limited to,
certification by Landlord that (a) this Ground Lease is unmodified and in full force and effect
(or, if modified, state the nature of such modification, provide Mortgagee with an executed copy
of the modification agreement and certify that this Ground Lease, as so modified, is in full force
and effect), (b) all rents currently due under the Ground Lease have been paid (or, if unpaid, the
period and amount of any arrearages, penalties, interest and other charges), (c) there are not, to
Landlord's knowledge, any uncured Events of Default on the part of Tenant under the Ground
Lease or facts, acts or omissions which with the giving of notice or passing of time, or both,
would constitute an Event of Default (or, if there is a default, the nature and scope of the
default), (d) there are not, to Landlord's knowledge, any uncured default on the part of Landlord
under the Ground Lease or facts, acts or omissions which with the giving of notice or passing of
time, or both, would constitute a default by Landlord (or, if there is a default, the nature and
scope of the default), (e) whether there are any setoffs, defenses or counterclaims against
enforcement of the obligations of Landlord hereunder known to Landlord, and (f) if such request
is made by a Mortgagee, that the Mortgage provided by the Mortgagee constitutes Approved
Financing pursuant to the Agreement. Any such estoppel certificate may be conclusively relied
upon by any proposed or existing leasehold Mortgagee or assignee of Tenant's interest in this
Ground Lease.
17.5 No Subordination of Landlord's Interest. Landlord's fee interest in the
Property shall be senior to, and not be subordinated to, any financing obtained by Tenant in
connection with the Property.
17.6 Priority. This Ground Lease, and any extensions, renewals or replacements
thereof, and any sublease entered into by Tenant as sublessor, and any Mortgage or other
encumbrance now or hereafter recorded by any Mortgagee shall be superior to any future
mortgages, deeds of trust or similar encumbrances placed by Landlord on the Property and to any
lien right, if any, of Landlord on the buildings, and any furniture, fixtures, equipment or other
personal property of Tenant upon the Property or any interest of Landlord in sublease rentals or
similar agreements._
17.7 Claims. Landlord and Tenant shall deliver to each Mortgagee written notice of
any litigation or arbitration proceedings between the parties or involving the Property or this
Ground Lease. Any Mortgagee shall have the right, at its option and its expense, to intervene
and become a party to any such proceedings. If a Mortgagee elects not to intervene or become a
party, Landlord shall deliver to said Mortgagee prompt written notice of and a written copy of
any award, decision or settlement agreement made in connection with any such proceeding.
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17.8 Further Amendments. Landlord and Tenant shall cooperate in including in this
Ground Lease by suitable amendment from time to time any provision which may be reasonably
requested by the Investor or by any proposed Mortgagee for the purpose of implementing the
Investor and mortgagee protection provisions contained in this Ground Lease and allowing the
Investor reasonable means to protect its interests in the Project and Property, and the Mortgagee
reasonable means to protect or preserve the lien of its Mortgage, upon the occurrence of a default
under the terms of this Ground Lease. Landlord and Tenant each agree to execute and deliver
(and to acknowledge for recording purposes, if necessary) any agreement reasonably required to
effect any such amendment.
17.9 Loan Obligations. Nothing contained in this Ground Lease shall relieve Tenant
of its obligations and responsibilities under any Mortgage loans and Mortgage loan documents to
operate the Project as set forth therein.
17.10 Liens and Encumbrances Against Tenant's Interest in the Leasehold Estate.
(a) Tenant (and Foreclosure Trustee, if applicable) shall have the right
to encumber the leasehold estate created by this Ground Lease and the Improvements with one or
more deeds of trust or mortgages, in conformance with the requirements of Section 17.1 hereof.
(b) Tenant shall not have the right to encumber Landlord's fee interest
in the Property or Landlord's reversionary interest in the Improvements.
(c) For as long as there is any lien securing any Mortgage loans:
(1) Landlord shall not agree to any mutual termination or
cancellation of, or accept any surrender of this Ground Lease, nor shall Landlord consent to any
amendment or modification of this Ground Lease, in each case without the prior written consent
of each Mortgagee which has an outstanding Mortgage loan. Tenant may not exercise any right
to terminate this Ground Lease without the prior written consent of each Mortgagee.
(2) Notwithstanding any default by Tenant under this Ground
Lease, Landlord shall have no right to terminate this Ground Lease unless Landlord shall have
given each Mortgagee which have an outstanding Mortgage loan written notice of such default
and such Mortgagees shall have failed to remedy such default or acquire Tenant's leasehold
estate created by this Ground Lease or commence foreclosure or other appropriate proceedings
as set forth in, and within the time specified by, this Section.
(3) Each Mortgagee which has an outstanding Mortgage loan
shall have the right, but not the obligation, at any time to pay any or all of the Rent due pursuant
to the terms of this Ground Lease, and do any other act or thing required of Tenant by the terms
of this Ground Lease, to prevent termination of this Ground Lease. Each Mortgagee and its
agents and contractors shall have a right to enter the Property for purposes of accomplishing the
foregoing, so long as such Mortgagee indemnifies and holds Landlord harmless from any and all
liability arising from such entry upon the Property. Each Mortgagee shall have sixty (60) days
after receipt of written notice from Landlord describing a default by Tenant to cure the default.
All payments so made and all things so done shall be as effective to prevent a termination of this
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Ground Lease as the same would have been if made and performed by Tenant instead of by
Mortgagee(s).
(4) In addition to the cure period provided in paragraph (3)
above, if the default is such that possession of the Property may be reasonably necessary to
remedy the default, each Mortgagee which has an outstanding Mortgage loan shall have such
additional time after the expiration of such sixty (60) day period as such Mortgagee may
reasonably require to remedy such default, provided that (i) such Mortgagee shall have fully
cured any default in the payment of any monetary obligations of Tenant under this Ground Lease
within such sixty (60) day period and shall continue to pay currently such monetary obligations
when the same are due, and (ii) within one hundred twenty (120) days after receipt of Landlord's
notice of default, such Mortgagee shall have acquired Tenant's leasehold estate hereunder or
commenced foreclosure or other appropriate proceedings, and shall be diligently prosecuting the
same.
(5) Any default under this Ground Lease which by its nature
cannot be remedied by any Mortgagee shall be deemed to be remedied if (i) within one hundred
twenty (120) days after receiving written notice from Landlord describing the default, or prior
thereto, any Mortgagee shall have acquired Tenant's leasehold estate or commenced foreclosure
or other appropriate proceedings, (ii) the Mortgagee shall diligently prosecute any such
proceedings to completion, (iii) the Mortgagee shall have fully cured any default in the payment
of any monetary obligations of Tenant hereunder which does not require possession of the
Property, and (iv) after gaining possession of the Property, the Mortgagee shall perform all other
obligations of Tenant hereunder capable of performance by the Mortgagee when the obligations
are due.
(6) If a Mortgagee is prohibited, stayed or enjoined by any
bankruptcy, insolvency or other judicial proceedings involving Tenant from commencing or
prosecuting foreclosure or other appropriate proceedings, the times specified for commencing or
prosecuting such foreclosure or other proceedings shall be extended for the period of such stay
prohibition or injunction; provided that any Mortgagee shall have fully cured any default in the
payment of any monetary obligations of Tenant under this Ground Lease and shall continue to
pay currently such monetary obligations when the same fall due (subject to the notice and cure
provision contained herein).
(7) Landlord shall deliver, by U.S. certified mail, postage
prepaid, return receipt requested, to each Mortgagee which has any outstanding Mortgage loan a
duplicate copy of all notices which Landlord may from time to time give to Tenant pursuant to
this Ground Lease.
(8) In the event any Foreclosure Transferee becomes Tenant
under this Ground Lease by means of foreclosure or assignment of the leasehold interest
hereunder in lieu of foreclosure or pursuant to any new lease obtained under paragraph (9)
below, that Foreclosure Transferee shall be personally liable under this Ground Lease or such
new lease only for the period of time that Foreclosure Transferee remains Tenant thereunder, and
that Foreclosure Transferee's right to assign this Ground Lease or such new lease shall not be
subject to the restrictions set forth in this Ground Lease. Nothing in this Section shall be
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construed to obligate any Foreclosure Transferee to remedy any default of Tenant, and any
failure of any Mortgagee to complete any such cure after commencing the same shall not give
rise to any liability of any Mortgagee to Landlord or Tenant.
(9) If this Ground Lease is terminated, whether by foreclosure,
order of a bankruptcy court or otherwise, upon written request by any Mortgagee given within
sixty (60) days after Landlord gives written notice of such termination to each Mortgagee,
Landlord shall enter into a new lease of the Property with the Mortgagee for the remainder of the
Term with the same agreements, covenants, reversionary interests and conditions (except for any
requirements which have been fulfilled by Tenant prior to termination) as are contained in this
Ground Lease and with priority equal to this Ground Lease, which new lease shall be effective as
of the date of termination of the original Ground Lease; provided, however, that a requesting
Mortgagee shall promptly cure any defaults by Tenant reasonably susceptible to cure by the
Mortgagee. The Tenant under the new lease shall have the same right, title and interest in and to
all Improvements located on the Property as Tenant had under the terminated Ground Lease
immediately prior to its termination. Landlord shall by quitclaim deed or by the terms of the new
lease convey to the Mortgagee, title to the improvements, if any, which become vested in
Landlord as a result of the termination of the Ground Lease. The Mortgagee shall be responsible
for all costs reasonably incurred by Landlord in connection with the preparation and execution of
such new lease.
(10) The Investor of Tenant shall have the same rights to
receive notices of default and to cure as any Mortgagee authorized under this paragraph (c).
,(11) Landlord shall include in this Ground Lease by suitable
amendment from time to time any provision which may reasonably be requested by any
Mortgagee for the purpose of implementing the mortgagee -protection provisions contained in
this Ground Lease and allowing such Mortgagee reasonable means to protect or preserve the lien
of the leasehold mortgage and the value of its security. Any such amendment shall not in any
way affect the Term under this Ground Lease nor otherwise in any material respect adversely
affect any rights of Landlord under this Ground Lease.
(12) The parties shall not amend this Ground Lease without the
consent of the Mortgagees and Investor of Tenant. Landlord shall not terminate this Ground
Lease without the Investor's consent prior to the expiration of the fifteen (15) year Tax Credit
compliance period described in Section 42(i)(1) of the Internal Revenue Code of 1986, as
amended (the "Code").
(13) No Mortgagee shall be required to perform any act which is
not susceptible to performance by a Mortgagee, such as to cure a filing or condition of
bankruptcy or insolvency or to cure or commence the cure of any default which is Tenants'
failure to pay any lien, charge or encumbrance which is junior in priority to the Mortgagee's
encumbrance.
(d) Any Mortgage created pursuant to subsection (a) of this Section
shall be subject to the provisions of this Ground Lease and all rights of Landlord under this
Ground Lease.
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(e) No Mortgagee or its designee or transferee shall be or become
liable to Landlord as an assignee of this Ground Lease or otherwise unless it expressly assumes
by written instrument executed by Landlord and the Mortgagee or its designee or transferee such
liability (in which event the Mortgagee's, designee's or transferee's liability shall be limited to
the period of time during which it is the owner of the leasehold estate created hereby) and no
assumption shall be inferred from or result from acceptance of an estoppel certificate from
Landlord, acceptance of a Mortgage of Tenant's leasehold estate, or by foreclosure or other
appropriate proceedings in the nature thereof or as the result of any other action or remedy
provided for by such Leasehold Mortgage or other instrument or from a conveyance from Tenant
pursuant to which the purchaser at foreclosure or grantee shall acquire the rights and interest of
Tenant under the terms of this Ground Lease. If any Mortgagee (or its affiliate or nominee)
acquires the Property by foreclosure or deed in lieu of foreclosure, or obtains a new lease under
this Section 17, the Rent shall be One Dollar ($1.00) for each Rental Period until the
"Conversion Date" (as defined in the first mortgage loan documents); thereafter, the Rent
payable shall be fifty percent (50%) of the Residual Receipts, if any, for the subject Rental
Period, except that Operating Expenses, Debt Service, Reserve Deposits and Partnership Related
Fees shall be calculated based upon the actual amounts of operating expenses, debt service,
reserve deposits and partnership related fees, respectively, incurred by the Tenant (without
giving effect the limitations contained in the definitions of those terms or other provisions of this
Lease).Additionally, the Rent shall include all of the following:(i) fifty percent (50%) of the
Refinancing Net Proceeds immediately upon any refinancing of the Project (or part thereof), and
(ii) one hundred percent (100%) of the Transfer Net Proceeds immediately upon any transfer in
whole or in part of the Project. Further, in such event, subject to the rule set forth in Section
42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended, or any successor rule, the
requirements concerning compliance with applicable regulations of the California Tax Credit
Allocation Committee and applicable requirements of the Tax Credit Regulatory Agreement in
Article 18.1 shall automatically have no further force or effect (and this Ground Lease shall be
construed as if those requirements had never been included in this Ground Lease).
(f) On transfer of this Ground Lease at any foreclosure sale, or upon
creation of a new Ground Lease, any or all of the following Events of Default relating to the
prior owner of the Ground Lease shall be deemed cured:
(1) Attachment, execution or other judicial levy upon the
Ground Lease;
(2) Assignment of the Ground Lease for the direct or indirect
benefit of creditors of the prior Tenant;
(3) Judicial appointment of a receiver or similar officer to take
possession of the Ground Lease;
(4) Filing a petition by, for or against Tenant under any chapter
of the federal Bankruptcy Act or any federal or state debtor relief statute, as amended; and
(5) Any other defaults personal to Tenant and/or not otherwise
reasonably curable by Mortgagee.
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(g) A Foreclosure Transferee shall succeed to all interest of Tenant in
any security or other deposits or other impound payments paid by Tenant to Landlord, except to
the extent such security or other deposit or impound payment is used by Landlord to cure an
Event of Default of Tenant hereunder.
(h) Foreclosure of any Mortgage or any sale thereunder, whether by
judicial proceedings or by virtue of any power of sale contained in such Mortgage, or any
conveyance of the leasehold estate under this Ground Lease from Tenant to a Foreclosure
Transferee in lieu of foreclosure or other appropriate proceedings in the nature thereof, shall not
require the consent of Landlord or constitute a breach of any provision or a default under this
Ground Lease. Landlord shall recognize the Foreclosure Transferee as the Tenant under this
Ground Lease following any such transfer, subject to the obligations of the Foreclosure
Transferee to comply with this Ground Lease.
17.11 Cost of Loans to be Paid by Tenant. The Tenant affirms that it shall bear all of
the costs and expenses in connection with (i) the preparation and securing of the Mortgage loans,
(ii) the delivery of any instruments and documents and their filing and recording, if required, (iii)
all taxes and charges payable in connection with the Mortgage loans, and (iv) all costs
reasonably incurred by Landlord in making any amendments of this Lease requested by Tenant
or Mortgagees.
17.12 No Merger. There shall be no merger, without the consent of the Mortgagee
under any Mortgage, of the leasehold estate and the fee estate in the Property merely because
both estates are acquired or become vested in the same person or entity.
17.13 Transfer Rights. Foreclosure of any Mortgage, or any sale thereunder, whether
by judicial proceedings or by virtue of any power contained in the Mortgage, or any conveyance
of the leasehold estate hereunder from Tenant to any Mortgagee or an affiliate of Mortgagee or
entity controlled by Mortgagee, through, or in lieu of, foreclosure or other appropriate
proceedings in the nature thereof, shall not require the consent of Landlord or constitute a breach
of any provision of or a default under this Ground Lease, and upon such foreclosure, sale or
conveyance, Landlord shall recognize the purchaser or other transferee in connection therewith
as the Tenant hereunder. The Foreclosure Transferee may transfer to another party one time
without the approval of Landlord. Any further assignments shall require the approval of the
Landlord, which shall not unreasonably be withheld, conditioned, or delayed.
17.14 Tenant's Personal Property. In the event of any default by Tenant under this
Ground Lease or any Approved Financing loan documents that has not been cured after written
notice to Tenant and expiration of the applicable cure period, Landlord will allow Citibank, N.A.
in its capacity as Mortgagee (but only during such time as the Construction Loan or Take -Out
Loan remain unpaid) to enforce its lien and security interest in Tenant's personal property
located at the Property and Landlord will allow Mortgagee to assemble and remove all of
Tenant's personal property located on the Property. Landlord hereby waives any landlord's lien
it might hold, statutory, constitutional, contractual or otherwise, in any personal property owned
or leased by Tenant and now or hereafter located on the Property. If so requested by Tenant,
Landlord shall execute a waiver of any right, title or interest or right to seize any of Tenant's
personal property on the Property that may be subject to a lien or security interest in favor of
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Mortgagee or a seller of Tenant's personal property or creditor holding a security interest in such
personal property.
17.15 Two or More Mortgagees. Any Mortgages permitted hereunder may consist of
two (2) or more separate loans or other financing arrangements from two (2) or more
Mortgagees. In the event two (2) or more Mortgagees each exercise their rights under this
Ground Lease and there is a conflict that renders it impossible to comply with all requests of
Mortgagees, the Mortgagee whose Mortgage would have senior priority in the event of a
foreclosure shall prevail.
ARTICLE 18. SUBLEASING.
18.1 Subleasing of Property. All subleases made by Tenant to residents of units in
the Project ("Resident Leases") shall be in compliance with the applicable (if any) regulations of
the California Tax Credit Allocation Committee and the applicable (if any) requirements of the
Tax Credit Regulatory Agreement, and shall be subject to the following provisions and
restrictions:
18.1.1 Each Resident Lease shall contain a provision, satisfactory to Landlord,
requiring the Subtenant to attorn to Landlord upon (a) an Event of Default by Tenant under this
Ground Lease, and (b) receipt by such Subtenant of written notice of such Event of Default and
instructions to make such Subtenant's rental payments to Landlord.
18.1.2 On any termination of this Ground Lease prior to the expiration of the
Term, all of Tenant's interest as sublessor under any and all existing valid and enforceable
Resident Leases for which Landlord has issued a non -disturbance agreement shall be deemed
automatically assigned, transferred and conveyed to Landlord and subtenants under such
Resident Leases shall be deemed to have attorned to Landlord. Landlord shall thereafter be
bound on such Resident Leases to the same extent Tenant, as sublessor, was bound thereunder
and Landlord shall have all the rights under such Resident Leases that Tenant, as sublessor, had
under such Resident Leases; provided, however, that any amendments to any such Resident
Lease made after the issuance of a non -disturbance agreement to a subtenant shall not be binding
on Landlord.
18.1.3 Each Resident Lease shall expressly provide that it is subject to each and
all of the covenants, conditions, restrictions and provisions of this Ground Lease.
18.2 Rights of Mortgagees. Notwithstanding anything contained in this Ground
Lease to the contrary, all attornment provisions applicable to the Landlord shall also be
applicable to a Mortgagee and, as between Landlord and the Mortgagee, the Mortgagee shall
have priority in any attornment situation.
ARTICLE 19. PERFORMANCE OF TENANT'S COVENANTS.
19.1 Right of Performance. If Tenant shall at any time fail to pay any Imposition or
other charge in accordance with Article 4 hereof, within the time period therein permitted, or
shall fail to pay for or maintain any of the insurance policies provided for in Article 9 hereof,
within the time therein permitted, or to make any other payment or perform any other act on its
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part to be made or performed hereunder, within the time permitted by this Ground Lease, then
Landlord, after thirty (30) days' written notice to Tenant (or, in case of an emergency, on such
notice, or without notice, as may be reasonable under the circumstances) and without waiving or
releasing Tenant from any obligation of Tenant hereunder, may (but shall not be required to):
(a) pay such Imposition or other charge payable by Tenant pursuant to
the provisions of Article 4 hereof, or
(b) pay for and maintain such insurance policies provided for in
Article 9 hereof, or
(c) make such other payment or perform such other act on Tenant's
part to be made or performed as in this Ground Lease provided.
19.1.2 Rights of Mortgagees and Investor. Notwithstanding anything in this
Ground Lease to the contrary, all of the performance rights available to Landlord under Section
19.1 shall also be available to any Mortgagee and to the Investor.
19.2 Reimbursement and Damages. All sums paid by Landlord pursuant to Section
19.1 and all costs and expenses incurred by Landlord in connection with the performance of any
such act, together with interest thereon at the rate provided in Section 4.7 from the respective
dates of Landlord's making of each such payment or incurring of each such cost or expense,
shall constitute additional Rent payable by Tenant under this Ground Lease and shall be paid by
Tenant to Landlord on demand. Landlord shall not be limited in the proof of any damages which
Landlord may claim against Tenant arising out of or by reason of Tenant's failure to provide and
keep in force insurance as aforesaid, to the amount of the insurance premium or premiums not
paid or incurred by Tenant and which would have been payable upon such insurance, but
Landlord shall also be entitled to recover as damages for such breach, the uninsured amount of
any loss (to the extent required to be insured against pursuant to the terms of this Ground Lease
of any deficiency in the insurance required by the provisions of this Ground Lease), damages,
costs and expenses of suit, including reasonable attorneys' fees, suffered or incurred by reason of
damage to, or destruction of, the Improvements, occurring during any period in which Tenant
shall have failed or neglected to provide insurance as aforesaid.
ARTICLE 20. EVENTS OF DEFAULT; REMEDIES.
20.1 Events of Default. Any one or all of the following events shall, subject to
Section 22.1, constitute an Event of Default hereunder:
20.1.1 If Tenant shall default in the payment of any Rent when and as the same
becomes due and payable and such default shall continue for more than fifteen (15) days after
Landlord shall have given written notice thereof to Tenant; or
20.1.2 If Tenant shall materially default under one or more of the Transaction
Documents, and such default is not timely cured within the greater of thirty (30) days after
Landlord has given Tenant written notice of such default or such longer period as may be granted
Tenant under such document to cure such default; or
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20.1.3 The abandonment or vacation of the Property by Tenant for a period of
thirty (30) days after prior written notice thereof by Landlord; or
20.1.4 The entry of any decree or order for relief by any court with respect to
Tenant, or any assignee or transferee of Tenant (hereinafter "Assignee"), in any involuntary case
under the Federal Bankruptcy Code or any other applicable federal or state law; or the
appointment of or taking possession by any receiver, liquidator, assignee, trustee, sequestrator or
other similar official of Tenant or any Assignee (unless such appointment is in connection with a
Mortgagee's exercise of its remedies under its Mortgage), or of any substantial part of the
property of Tenant or such Assignee, or the ordering or winding up or liquidating of the affairs of
Tenant or any Assignee and the continuance of such decree or order unstayed and in effect for a
period of ninety (90) days or more (whether or not consecutive); or the commencement by
Tenant or any such Assignee of a voluntary proceeding under the Federal Bankruptcy Code or
any other applicable state or federal law or consent by Tenant or any such Assignee to the entry
of any order for relief in an involuntary case under any such law, or consent by Tenant or any
such Assignee to the appointment of or taking of possession by a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of Tenant or any such Assignee, or of any
substantial property of any of the foregoing, or the making by Tenant or any such Assignee of
any general assignment for the benefit of creditors; or Tenant or any such Assignee takes any
other voluntary action related to the business of Tenant or any such Assignee or the winding up
of the affairs of any of the foregoing.
20.1.5 If Tenant shall materially default in the performance of or compliance
with any other term, covenant or condition of this Ground Lease (other than as set forth in
Sections 20.1.1 and 20.1.2) and such default shall continue for more than thirty (30) days after
Landlord shall have given written notice thereof to Tenant, provided, however, if cure of such
default reasonably requires more than thirty (30) days, then, provided that Tenant commences to
cure within such thirty (30) day period and thereafter diligently and continuously prosecutes the
cure to completion, Tenant shall not be in default.
20.1.6 Notwithstanding anything to the contrary contained in this Ground
Lease, prior to declaring any default or taking any remedy permitted under this Ground Lease or
applicable law based upon an alleged default under this Ground Lease by Tenant, Landlord shall
deliver written notice to Tenant's limited partners of Tenant's failure to cure such default, and
Tenant's limited partners shall have an additional period of not less than (a) ten (10) days from
the date of such notice to cure such alleged default if of a monetary nature, and (b) thirty (30)
days from the date of such notice to cure such alleged default if of a nonmonetary nature;
provided, however, if in order to cure such a default the limited partners must remove the general
partner of Tenant, the limited partner shall so notify Landlord and so long as the limited partner
is diligently and continuously attempting to so remove such general partner, the limited partner
shall have until the date thirty (30) days after the effective date of the removal of the general
partner or general partners to cure such default.
Nothing herein shall be deemed to permit Landlord to terminate this Ground Lease
without the Investor's consent prior to expiration of the fifteen (15) year Tax Credit compliance
period described in Section 42(i)(1) of the Code.
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20.2 Remedies.
20.2.1 If an Event of Default shall occur and continue as aforesaid, then in
addition to any other remedies available to Landlord at law or in equity, but subject to Article 17,
Landlord shall have the immediate option to terminate this Ground Lease and bring suit against
Tenant and recover as an award in such suit or arbitration proceeding the following:
(a) the worth at the time of award of the unpaid rent and all other sums
due hereunder which had been earned at the time of termination;
(b) the worth at the time of award of the amount by which the unpaid
rent and all other sums due hereunder which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(c) the worth at the time of award of the amount by which the unpaid
rent and all other sums due hereunder for the balance of the Term after the time of award exceeds
the amount of such rental loss that Tenant proves could be reasonably avoided;
(d) any other amount necessary to compensate Landlord for all the
detriment proximately caused by the Tenant's failure to perform its obligations under this
Ground Lease or which in the ordinary course of things could be likely to result therefrom; and
(e) such amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable California law.
20.2.2 The "worth at the time of the award" of the amounts referred to in
Subparagraphs 20.2.1(a) and 20.2.1(b) above shall be computed by allowing, interest at the rate
provided in Section 4.7 as of the date of the award. The "worth at the time of award" of the
amount referred to in subparagraph 20.2.1(c) above shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).
20.3 Receipt of Rent, No Waiver of Default. The receipt by Landlord of the rents or
any other charges due to Landlord, with knowledge of any breach of this Ground Lease by
Tenant or of any default on the part of Tenant in the observance or performance of any of the
conditions or covenants of this Ground Lease, shall not be deemed to be a waiver of any
provisions of this Ground Lease. No acceptance by Landlord of a lesser sum than the rents or
any other charges then due shall be deemed to be other than on account of the earliest installment
of the rents or other charges due, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment of rent or charges due be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance of such installment or pursue any other remedy provided in this
Ground Lease. The receipt by Landlord of any rent or any other sum of money or any other
consideration paid by Tenant after the termination of this Ground Lease, or after giving by
Landlord of any notice hereunder to effect such termination, shall not, except as otherwise
expressly set forth in this Ground Lease, reinstate, continue, or extend the term of this Ground
Lease, or destroy, or in any manner impair the efficacy of any such notice of termination as may
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have been given hereunder by Landlord to Tenant prior to the receipt of any such sum of money
or other consideration, unless so agreed to in writing and signed by Landlord. Neither
acceptance of the keys nor any other act or thing done by Landlord or by its agents or employees
during the Term shall be deemed to be an acceptance of a surrender of the Property or the
Improvements, excepting only an agreement in writing signed by Landlord accepting or agreeing
to accept such a surrender.
20.4 Effect on Indemnification. Notwithstanding the foregoing, nothing contained in
this Article 20 shall be construed to limit Landlord's and/or the City's right to indemnification as
otherwise provided in this Ground Lease.
ARTICLE 21. PERMITTED CONTESTS.
Tenant, at no cost or expense to Landlord, may contest (after prior written notice to
Landlord), by appropriate legal proceedings conducted with due diligence, the amount or validity
or application, in whole or in part, of any Imposition or lien, provided that (a) in the case of liens
of mechanics, materialmen, suppliers or vendors, or Impositions or liens therefor, such
proceedings shall suspend the collection thereof from Landlord, and shall suspend a foreclosure
against the Property and/or the Improvements, or any interest therein, or any Rent, if any, (b)
neither the Property or the Improvements, nor any part thereof or interest therein, or the Rent, if
any, or any portion thereof, would be in any danger of being sold, forfeited or lost by reason of
such proceedings, and (c) Tenant shall have furnished to Landlord, if requested, a bond or other
security, satisfactory to Landlord. If Tenant shall fail to contest any such matters, or to give
Landlord security as hereinabove provided, Landlord may, but shall not be obligated to, contest
the matter or settle or compromise the same without inquiring into the validity or the
reasonableness thereof. Landlord, at the sole cost and expense of Tenant, will cooperate with
Tenant and execute any documents or pleadings legally required for any such contest.
ARTICLE 22. FORCE MAJEURE.
22.1 Delay of Performance. Subject to Paragraph 23.2 below, any prevention, delay,
nonperformance or stoppage by Tenant due to any of the following causes shall be excused: any
regulation, order, act, restriction or requirement or limitation imposed by any federal, state,
municipal or foreign government or any department or agency thereof, or civil or military
authority; acts of God; acts or omissions of Landlord or its agents or employees; fire, explosion
or floods; strikes, walkouts or inability to obtain materials; war, terrorism, riots, sabotage or civil
insurrection; or any other causes beyond the reasonable control of Tenant.
22.2 Notice and Cure Requirements. No prevention, delay, or stoppage of
performance shall be excused unless:
(a) Tenant notifies Landlord within thirty (30) days of such
prevention, delay or stoppage that it is claiming excuse of its obligations under this Article 22;
and
(b) Tenant diligently proceeds within thirty (30) days of the
conclusion of such prevention, delay or stoppage to cure the condition causing the prevention,
delay or stoppage; and
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(c) Tenant effects such cure within a reasonable time.
ARTICLE 23. GENERAL PROVISIONS.
23.1 Notices. Written notices, demands and communications between Landlord and
Tenant shall be sufficiently given if (i) delivered by hand, (ii) delivered by reputable same -day or
overnight messenger service that provides a receipt showing date and time of delivery, or (iii)
dispatched by registered or certified mail, postage prepaid, return receipt requested, to the
principal offices of Landlord and Tenant at the addresses specified in this Section 23.1.Such
written notices, demands and communications may be sent in the same manner to such other
addresses as either party may from time to time designate by mail as provided in this Section
23.1.
Any written notice, demand, or communication shall be deemed received immediately if
delivered by hand or delivered by messenger in accordance with the preceding paragraph, and
shall be deemed received on the third (3rd) day from the date it is postmarked if delivered by
registered or certified mail in accordance with the preceding paragraph.
If to Tenant: Coral Mountain Partners, L.P.
46753 Adams Street
La Quinta, CA 92253
Phone No.: (760) 771-3345
Facsimile No.: (760) 771-0686
Attention: Robert High
with copies to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Phone No.: (213) 239-8088
Facsimile No.: (213) 559-0733
Attention: Lance Bocarsly
Hamilton USBCDC Investments, L.P
1640 S. Sepulveda Boulevard, Suite 425
Los Angeles, CA 90025
Phone No.: (310) 575-3543
Facsimile No.: (310) 575-3563
Attention: Project Manager
U.S. Bancorp Community Development Corporation
1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
Phone No.: (314) 335-2600
Facsimile No.: (314) 335-2601
Attention: Director of Asset Management
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SNR Denton
233 South Wacker Drive, Suite 7800
Chicago, IL 60606
Phone No.: (312) 876-7967
Facsimile No.: (312) 876-7934
Attention: Jana Cohen Barbe, Esq.
Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
Loan # 10-7044852
Facsimile: (212) 723-8642
Attention: Desk Head, Transaction Management Group
Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Loan # 10-7044852
Phone No.: (805) 557-0930
Facsimile: (805) 557-0924
Attention: Operations Manager/Asset Manager
Citibank, N.A.
One Sansome Street, 26th Floor
San Francisco, CA 94104
Loan # 10-7044852
Facsimile: (415) 627-6387
Attention: Sanjay Sharma
Citibank, N.A.
388 Greenwich Street
New York, New York 10013
Loan # 10-7044852
Facsimile: (212) 723-8939
Attention: General Counsel's Office
If to Landlord: Notices Delivered by U.S. Mail:
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Phone No.: (760) 777-7031
Facsimile No.: (760) 777-7101
Attention: Executive Director
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Notices Delivered Personally or by Courier:
La Quinta Housing Authority
78-495 Calle Tampico
La Quinta, CA 92253
Phone No.: (760) 777-7031
Facsimile No.: (760) 777-7101
Attention: Executive Director
with a copy to Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Phone No.: (714) 641-5100
Facsimile No.: (714) 546-9035
Attention: M. Katherine Jenson, Esq.
Addresses for notice may be changed from time to time by notice to all other parties.
Notwithstanding that Notices shall be deemed given when delivered, the non -receipt of any
Notice as the result of a change of address of which the sending party was not notified shall be
deemed receipt of such Notice.
23.2 Certificates. Landlord or Tenant, as the case may be, shall execute, acknowledge
and deliver to the other, promptly upon request by Landlord, Tenant, a Mortgagee or Investor, a
Certificate of Landlord or Tenant, as the case may be, certifying (a) that this Ground Lease is
unmodified and in full force and effect (or, if there have been modifications, that the Ground
Lease is in full force and effect, as modified, and stating the date of each instrument so
modifying the Ground Lease), (b) the date, if any, through which the Rent, if any, has been paid,
(c) whether there are then existing any offsets or defenses against the enforcement of any term
hereof on the part of Tenant to be performed or complied with (and, if so, specifying the same),
and (d) whether any default exists hereunder and, if any such default exists, specifying the nature
and period of existence thereof and what action Landlord or Tenant, as the case may be, is taking
or proposes to take with respect thereto and whether notice thereof has been given to the party in
default. Any Certificate may be relied upon by any prospective purchaser, transferee, mortgagee
or trustee under a deed of trust or leasehold estate in the Property or any part thereof or of
Landlord's or Tenant's interest under this Ground Lease. Tenant will also deliver to Landlord,
promptly upon request, such information with respect to the Property or any part thereof as from
time to time may reasonably be requested.
23.3 No Merger of Title. There shall be no merger of this Ground Lease or the
leasehold estate created by this Ground Lease with any other estate in the Property or any part
thereof by reason of the fact that the same person, firm, corporation or other entity may acquire
or own or hold, directly or indirectly:(a) this Ground Lease or the leasehold estate created by this
Ground Lease or any interest in this Ground Lease or in any such leasehold estate, and (b) any
other estate in the Property and the Improvements or any part thereof or any interest in such
estate, and no such merger shall occur unless and until all persons, corporations, firms and other
entities, including any leasehold Mortgagee or leasehold Mortgagees, having any interest
(including a security interest) in (i) this Ground Lease or the leasehold estate created by this
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Ground Lease, and (ii) any other estate in the Property or the Improvements or any part thereof
shall join in a written instrument effecting such merger and shall duly record the same.
23.4 Utility Services. Tenant shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at any time rendered to
or in connection with the Property or the Improvements, or any part thereof, and shall comply
with all contracts existing on the date hereof or subsequently executed by Tenant relating to any
such services, and will do all other things required for the maintenance and continuance of all
such services.
23.5 Quiet Enjoyment. Tenant, upon paying the Rent, if any, and other charges
herein provided for and upon performing and complying with all covenants, agreements, terms
and conditions of this Ground Lease to be performed or complied with by it, shall lawfully and
quietly hold, occupy and enjoy the Property during the term of this Ground Lease without
hindrance or molestation by Landlord, or any person or persons claiming through Landlord.
23.6 No Claims Against Landlord. Nothing contained in this Ground Lease shall
constitute any consent or request by Landlord, express or implied, for the performance of any
labor or services or the furnishing of any materials or other property in respect of the Property or
any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against Landlord or its interest in the Property
in respect thereof.
23.7 Inspection. Landlord and its authorized representatives may enter the Property or
any part thereof at all reasonable times for the purpose of inspecting, servicing or posting
notices, protecting the Property or the Improvements, or for any other lawful purposes. That
notwithstanding, Landlord may only enter residential units after giving Tenant three (3) days
prior written notice and subject to all rights of such tenants.
23.8 No Waiver by Landlord. To the extent permitted by applicable law, no failure
by Landlord to insist upon the strict performance of any term hereof or to exercise any right,
power or remedy consequent upon a default under this Ground Lease, and no acceptance of rent
during the continuance of any such default, shall constitute a waiver of any such default or of any
such term. No waiver of any default shall affect or alter this Ground Lease, which shall continue
in full force and effect, or the rights of Landlord with respect to any other then existing or
subsequent default.
23.9 Holding Over. In the event Tenant shall hold over or remain in possession of the
Property or the Improvements with the consent of Landlord after the expiration of the Term, such
holding over or continued possession shall create a tenancy for month -to -month only, upon the
same terms and conditions as are herein set forth so far as the same are applicable.
23.10 Exculpation of Tenant's Personal Liability. Notwithstanding anything to the
contrary provided in this Ground Lease, including, without limitation, the remedies provisions
set forth in Section 20.2 above, it is specifically understood and agreed that there shall be no
personal liability or obligation on the part of any partner of Tenant or any assignee or successor
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in interest of the partners of Tenant hereunder (including, without limitation, any mortgagee,
trustee or beneficiary under any mortgage or deed of trust which may acquire Tenant's interest
under this Ground Lease through foreclosure or deed in lieu of foreclosure or any purchaser at a
foreclosure sale) with respect to the provisions of this Ground Lease relating to the payment of
Rent or performance of any other obligations under this Ground Lease; but that Landlord and all
those claiming by, through or under Landlord, its successors and assigns, shall look solely to the
interest of Tenant, its successors and assigns in this Ground Lease and the Improvements, for the
satisfaction of each and every provision and each and every right, privilege or remedy of
Landlord or any other party, in the event of any breach or default of Tenant or any assignee or
successor in interest of any of the provisions made by or to be performed by the Tenant.
However, Tenant acknowledges and agrees that this exculpation of personal liability of the
partners of Tenant for the payment of Rent shall in no way limit the exercise of Landlord's other
remedies, including, without limitation, termination of this Ground Lease.
23.11 No Partnership. Anything contained herein to the contrary notwithstanding,
Landlord does not in any way or for any purpose become a partner of Tenant in the conduct of its
business, or otherwise, or a joint venturer or member of a joint enterprise with Tenant hereunder.
23.12 Remedies Cumulative. The various rights, options, elections and remedies of
Landlord and Tenant, respectively, contained in this Ground Lease shall be cumulative and no
one of them shall be construed as exclusive of any other, or of any right, priority or remedy
allowed or provided for by law and not expressly waived in this Ground Lease.
23.13 Attorney's Fees. In the event of a dispute between the parties arising out of or in
connection with this Ground Lease, whether or not such dispute results in arbitration or
litigation, the prevailing party (whether resulting from settlement before or after arbitration or
litigation is commenced) shall be entitled to have and recover from the losing party reasonable
attorneys' fees and costs of suit, including expert witness fees, incurred by the prevailing party.
23.14 Time Is of The Essence. Time is of the essence of this Ground Lease and all of
the terms, provisions, covenants and conditions hereof.
23.15 Survival of Representations, Warranties and Covenants. The respective
representations, warranties and covenants contained herein shall survive the Commencement
Date and continue throughout the Term, as it may be extended pursuant to the terms hereof.
23.16 Construction of Agreement. This Ground Lease shall be construed in
accordance with the substantive laws of the State of California, without regard to the choice of
law rules thereof. The rule of construction that a document be construed strictly against its
drafter shall have no application to this Ground Lease.
23.17 Severability. If one or more of the provisions of this Ground Lease shall be held
to be illegal or otherwise void or invalid, the remainder of this Ground Lease shall not be
affected thereby and shall remain in full force and effect to the maximum extent permitted under
applicable laws and regulations.
23.18 Entire Agreement: Modification. This Ground Lease contains the entire
agreement of the parties with respect to the matters discussed herein. This Ground Lease may be
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amended only by an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extensions or discharge is sought.
23.19 Binding Effect and Benefits. This Ground Lease shall inure to the benefit of and
be binding on the parties hereto and their respective successors and assigns. Except as otherwise
set forth herein, nothing in this Ground Lease, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Ground Lease.
23.20 Further Assurances. Each party hereto will promptly execute and deliver such
additional agreement, assignments, endorsements and other documents as the other party hereto
may reasonably request to carry out the purposes of this Ground Lease.
23.21 Counterparts. This Ground Lease may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same Ground Lease.
23.22 Number and Gender. Whenever the singular number is used in this Ground
Lease and required by the context, the same shall include the plural, and the masculine gender
shall include the feminine and neuter genders.
23.23 Conflicts. The parties acknowledge that certain provisions of this Ground Lease
overlap and conflict with the provisions of the Agreement or complete missing information in the
Agreement. It is the intention of the parties that this Ground Lease and the Agreement be read
consistently. To the extent conflicting provisions exist in this Ground Lease and the Agreement,
the provisions of this Ground Lease shall control over the conflicting or incomplete provision in
the Agreement.
23.24 Incorporation by Reference. Every Exhibit attached to this Ground Lease and
referred to herein is hereby incorporated by reference.
23.25 Consent Rights. Unless otherwise expressly provided in this Ground Lease, all
approvals or consents of Landlord (or Landlord's Executive Director), Tenant or any Mortgagee
shall not be unreasonably withheld, conditioned or delayed.
23.26 Third Party Beneficiary. Each Mortgagee shall be a third party beneficiary of
the rights and benefits granted to Mortgagees under this Ground Lease. Neither the Tenant nor
the Landlord shall be deemed to be a third party beneficiary of the rights granted hereunder to a
Mortgagee and no Mortgagee shall have any obligation to the Tenant or the Landlord to account
for any decision, action or election it may take or the exercise of its rights hereunder, nor shall
any Mortgagee have any duty to the Tenant or the Landlord to exercise any right hereunder in
any particular manner or order, other than that which such Mortgagee, in its sole discretion (but
in any event subject to the terms of this Ground Lease) shall deem appropriate and in its own
best interests.
[end — signatures on next page]
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IN WITNESS WHEREOF, the undersigned have executed this Ground Lease as of the
date first above written.
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate anqy4itic
[signatures continued on next page]
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3967235.5 a08/27/12
IN WITNESS WHEREOF, the undersigned have executed this Ground Lease as of the
date first above written.
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
Date: 2012 By:
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
Its: Executive Director
[signatures continued on next page]
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Date: 2012
Date:
2012
"Tenant"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC;
a California limited liability company,
administrative general partner
ma
882/015610-0047 _60_
3967235.5 a08127/12
: i1
Inc.,
n, its manager
By:
Joh7 0, President
WCH Affordable VIII, LLC,
a California limited liability company,
managing general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
By:
Sandra C. Gibbons,
Chief Financial Officer
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14,2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01-53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16-09-07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18-02-50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
882/015610-0047
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THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90009'34", AN ARC. DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34' EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 8904822" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
882/015610-0047 3967235.5 a09/07/12 -2-
EXHIBIT "B"
tul Do 0 W LOW 1el [""M0
(See following document)
882/015610-0047
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Attn: Executive Director
From Recording Fee Pursuant to
Government Code Section 27383
MEMORANDUM OF UNRECORDED GROUND LEASE
This MEMORANDUM OF UNRECORDED GROUND LEASE ("Memorandum") is
hereby entered into as of August 1, 2012 by and between LA QUINTA HOUSING
AUTHORITY, a public body, corporate and politic ("Landlord"), and CORAL MOUNTAIN
PARTNERS, L.P., a California limited partnership ("Tenant').
RECITALS
A. Landlord and Tenant have entered into a "Ground Lease" dated concurrently
herewith for that certain real property owned by the Landlord (the "Property"), which provides
for the construction, maintenance, management and operation of a 176-unit affordable
multifamily apartment project, to be made available long term at an affordable housing cost (the
"Project").The Property is legally described in Exhibit "A." which is attached hereto and
incorporated herein by this reference. A copy of the Ground Lease is available for public
inspection at the office of the City Clerk of the City of La Quinta, 78-495 Calle Tampico, La
Quinta, CA 92253.
B. The term of the Ground Lease commences on the date of recordation of this
Memorandum of Unrecorded Ground Lease in the Official Records of Riverside County and
continues until the earlier to occur of (a) December 31, 2070, or (b) the fifty-fifth (55th)
anniversary of the date seventy-five percent (75%) of the units have been leased to and are
occupied by income -qualified tenants at affordable rents. The term may be extended by
agreement of Landlord and Tenant for two additional ten (10) year periods.
C. The Ground Lease provides that a short form memorandum of the Ground Lease
shall be executed and recorded in the Official Records of Riverside County, California.
NOW, THEREFORE, the parties hereto certify as follows:
Landlord, pursuant to the Ground Lease, hereby leases the Property to the Tenant upon
the terms and conditions provided for therein. This Memorandum of Lease is not a complete
summary of the Ground Lease, and shall not be used to interpret the provisions of the Ground
Lease.
[end - signatures on next page]
882/015610-0047
3967235.5 a09/07/12
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
Date: 2012 By:
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
Its: Executive Director
[signatures continued on next page]
882/015610-0047 39672355 a09/07/12 -2-
"Tenant"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company,
administrative general partner
By: KD Housing Partners, Inc.,
a California corporation, its manager
2012 By:
John Durso, President
By: WCH Affordable VIII, LLC,
a California limited liability company,
managing general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
Date: 2012 By:
Sandra C. Gibbons,
Chief Financial Officer
882/015610-0047
3967235.5 a09/07/12 -3-
State of California
County of Riverside
On before me,
(insert name and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
State of California
County of Riverside
On before me,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
882/015610-0047
3967235.5 a09/07/12 -4-
EXHIBIT A TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01°53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16-09-07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18002'50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF200.00 FEET;
882/015610-0047
3967235.5 a09/07/12
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90009'34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 0000934" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINEOF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22 EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483'SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
882/015610-0047 _
3967235.5 a09/07/12 -2
hEtiarded at the Request of
(31
6 1%ptt lie Title Company
WHEN RECORDED I AIL TO:
Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
Attention: Joanne Marcino
Citi # 10-7044852
CERTIFIED A TRUE COPY OF THE ORIGINAL
RECORDED IN THE OFFICIAL RECORDS OF
RIVERSIDE COUNTY ON August 28, 2012
Under Recorder's Serial No. 2012-041201
Old R public Title Company
By: l�
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (this "Agreement") dated August 1, 2012, is
made by and between the LA QUINTA HOUSING AUTHORITY, a public body, corporate
and politic (the "Junior Lender") and CITIBANK, N.A., a national banking association
("Senior Lender").
RECITALS:
A. Coral Mountain Partners, L.P., a California limited partnership ("Borrower") has
applied to the California Municipal Finance Authority, a joint exercise of powers authority duly
organized and existing under the laws of the State of California ("Governmental Lender"), for
a loan in the maximum principal amount of $24,400,000 (the "Senior Loan"), for. the
acquisition, construction, rehabilitation, development, equipping and/or operation of a 176-unit
multifamily residential project located in the City of La Quinta, County of Riverside, California,
known or to be known as the Coral Mountain Apartments (the "Project").
B. The Senior Loan is evidenced by that certain Multifamily Note, dated as of
August 23, 2012, in the maximum principal amount of $24,400,000, made by Borrower payable
to the order of Governmental Lender (as the same may from time to time be extended,
consolidated, substituted for, modified, increased, amended, restated and/or supplemented, the
"Senior Note"), and that certain Borrower Loan Agreement, dated as of the date hereof, between
Borrower and Governmental Lender (the "Borrower Loan Agreement").
C. The Senior Loan is secured by, among other things, that certain Multifamily
Leasehold Deed of Trust,, Assignment of Rents, Security Agreement and Fixture Filing, dated as
of the date hereof, executed by Borrower for the benefit of Governmental Lender (as the same
may from time to time be extended, consolidated, substituted for, modified, increased, amended
and supplemented, the "Senior Security Instrument") which Senior Security Instrument
encumbers the Property (as defined below).
D. Borrower has requested that Senior Lender enter into that certain Funding Loan
Agreement, dated as of the date hereof, between Governmental Lender and Senior Lender,
11726691-v8 executed In counterpart
WHEN RECORDED MAIL TO:
Citibank, N.A.
Transaction Management Group/Post Closing
390 Greenwich Street, 2nd Floor
New York, New York 10013
Attention: Joanne Marcino
Citi # 10-7044852
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (this "Agreement') dated August 1, 2012, is
made by and between the LA QUINTA HOUSING AUTHORITY, a public body, corporate
and politic (the "Junior Lender") and CITIBANE, N.A., a national banking association
("Senior Lender").
RECITALS:
A. Coral Mountain Partners, L.P., a California limited partnership (`Borrower") has
applied to the California Municipal Finance Authority, a joint exercise of powers authority duly
organized and existing under the laws of the State of California ("Governmental Lender",), for
a loan in the maximum principal amount of $24,400,000 (the "Senior Load'), for the
acquisition, construction, rehabilitation, development, equipping and/or operation of a 176-unit
multifamily residential project located in the City of La Quinta, County of Riverside, California,
known or to be known as the Coral Mountain Apartments (the "Project').
B. The Senior Loan is evidenced by that certain Multifamily Note, dated as of
August 23, 2012, in the maximum principal amount of $24,400,000, made by Borrower payable
to the order of Governmental Lender (as the same may from time to time be extended,
consolidated, substituted for, modified, increased, amended, restated and/or supplemented, the
"Senior Note"), and that certain Borrower Loan Agreement, dated as of the date hereof, between
Borrower and Governmental Lender (the "Borrower Loan Agreement').
C. The Senior Loan is secured by, among other things, that certain Multifamily
Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as
of the date hereof, executed by Borrower for the benefit of Governmental Lender (as the same
may from time to time be extended, consolidated, substituted for, modified, increased, amended
and supplemented, the "Senior Security Instrument") which Senior Security Instrument
encumbers the Property (as defined below).
D. Borrower has requested that Senior Lender enter into that certain Funding Loan
Agreement, dated as of the date hereof, between Governmental Lender and Senior Lender,
11728691-v8
pursuant to which Senior Lender will make a loan to Governmental Lender (the "Funding
Loan"), the proceeds of which will be used to make the Senior Loan to Borrower.
E. The Senior Note, the Senior Security Instrument and the Borrower Loan
Agreement will each be assigned by Governmental Lender to Senior Lender to secure the
Funding Loan. The Borrower and Senior Lender have entered into that certain Construction
Funding Agreement dated as of the date hereof (the "Construction Funding Agreement")
regarding the manner in which the Project will be completed and paid for.
F. Citibank, N.A. (together with its successors and assigns, "Servicer"), will act as
the initial servicer of the Senior Loan.
G. Junior Lender is making a loan (the "Junior Loan") to Borrower in the original
principal amount of $29,000,000, which Junior Loan is evidenced by a certain Amended and
Restated Authority Loan Promissory Note, dated on or about the same date hereof, to Junior
Lender (the "Junior Note") and secured by, or to be secured by, that certain Leasehold Deed of
Trust with Assignment of Rents (the "Junior Security Instrument"), dated on or about the
same date hereof, and recorded concurrently herewith in the Official Records of Riverside
County, encumbering the Property, and will be advanced to Borrower pursuant to that certain
Disposition and Development Agreement dated January 4, 2011 (the "Junior Loan
Agreement"), between Borrower and the former La Quinta Redevelopment Agency ("Agency").
H. Pursuant to Assembly Bill 26 from the 2012-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2012 ("ABxl 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was filed, challenging the constitutionality of ABxI 26
and companion bill ABxI 27 (which would have allowed redevelopment agencies to remain in
existence and continue redevelopment, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality of ABxI 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxI 27.
(California Redevelopment Assn. v. Matosamos (2012) 53 Cal.4th 231. ABxI 26 is Chapter 5,
Statutes 2012, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of the Health and Safety Code.
Pursuant to Health and Safety Code Section 341710), added by Part 1.85, the City of La Quinta
("City") is the "successor agency" to the Agency. On January 3, 2012, the La Quinta City
Council adopted Resolution No. 2012-002, pursuant to which the City elected (a) to be the
"successor agency" to the Agency, and (b) to have the Junior Lender be the "housing successor"
to the Agency. On January 17; 2012, the Junior Lender adopted HA Resolution No. 2012-002,
affirmatively electing to be the "housing successor" to the Agency.
I. Pursuant to Health and Safety Code section 34175(b), added by Part 1.85, all
assets, contracts, and properties of the Agency, including the Property, were transferred to the
control of the City, as the successor agency to the Agency, on February 1, 2012. The Property is
a housing asset of the former Agency, the Junior Loan Agreement is an obligation of the former
Agency associated with the housing activities of the former Agency, and administration of the
Junior Loan Agreement is a housing activity of the former Agency. Pursuant to Health and
Subordination Agmment. 2 Coral Mountain Apartments
t
Safety Code Section 34177(g), added by Part 1.85, on March 7, 2012, the City, in its capacity as
the successor agency to the former Agency, (i) assigned all of the City's right, title and interest in
and to the Junior Loan Agreement to the Junior Lender, pursuant to that certain Assignment and
Assumption Agreement entered into by and between the City, as assignor, and the Junior Lender,
as assignee, and (ii) transferred all of its interests in and to the Property to the Junior Lender.
J. As a condition to the making of the Senior Loan, Senior Lender requires that
Junior Lender execute and deliver this Agreement prior to Junior Lender disbursing additional
proceeds of the Junior Loan and Borrower granting the Junior Security Instrument.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated
herein by this reference, and the mutual benefits accruing to the parties hereto, the receipt and
sufficiency of which are hereby acknowledged, and to induce the making of the Senior Loan and
to induce Senior Lender to consent to Junior Lender disbursing additional proceeds of the Junior
Loan, and the Junior Security Instrument, Junior Lender hereby agrees as follows:
1. Definitions. Capitalized terms used but not defined in this Agreement shall have
the meanings ascribed thereto in the Senior Security Instrument. As used in this Agreement, the
terms set forth below shall have the respective meanings indicated:
"Affordable Housing Covenants" means (i) the Affordable Housing Regulatory
Agreement (the "La Quinta Regulatory Agreement") by and between Junior Lender and
Borrower, dated on or about the same date hereof, recorded concurrently herewith in the Official
Records of Riverside County, and (ii) the Notice of Affordability Restrictions on Transfer of
Property, dated on or about the same date hereof, and recorded concurrently herewith in the
Official Records of Riverside County.
"Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency,
composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit of
creditors, or custodianship action or proceeding under any federal or state law with respect to
Borrower, any guarantor of any of the Senior Indebtedness, any of their respective properties, or
any of their respective partners, members, officers, directors, or shareholders.
"Casualty" means the occurrence of damage to or loss of any of the Property by fire or
other casualty.
"Condemnation" means any proposed or actual condemnation or other taking, or
conveyance in lieu thereof, of all or any part of the Property, whether direct or indirect.
"Enforcement Action" means the acceleration of all or any part of the Junior
Indebtedness, the advertising of or commencement of any foreclosure or trustee's sale
proceedings, the exercise of any power of sale, the acceptance of a deed or assignment in lieu of
foreclosure or sale, the collecting of Rents, the obtaining of or seeking of the appointment of a
receiver, the seeking of default interest, the taking of possession or control of any of the
Property, the commencement of any suit or other legal, administrative, or arbitration proceeding
based upon the Junior Note or any other of the Junior Loan Documents, the exercising of any
banker's lien or rights of set-off or recoupment, or the taking of any other enforcement action
Subordination Agreement 3 Coral Mountain Apartments
t
against Borrower, any other party liable for any of the Junior Indebtedness or obligated under
any of the Junior Loan Documents, or. the Property.
"Enforcement Action Notice" means a written notice from Junior Lender to Senior
Lender, given following a Junior Loan Default and the expiration of any notice or cure periods
provided for such Junior Loan Default in the Junior Loan Documents, setting forth in reasonable
detail the Enforcement Action proposed to be taken by Junior Lender.
"Junior Indebtedness" means all indebtedness of any kind at any time evidenced or
secured by, or arising under, the Junior Loan Documents, whether incurred, arising or accruing
before or after the filing of any Bankruptcy Proceeding.
"Junior Loan Default" means any act, failure 'to act, event, condition, or occurrence
which constitutes, or which with the giving of notice or the passage of time, or both, would
constitute, an "Event of Default" as defined in the Junior Security Instrument.
"Junior Loan Documents" means, collectively, the Junior Note, the Junior Security
Instrument, the Junior Loan Agreement and all other documents evidencing, securing or
delivered in connection with the Junior Loan, all of which are listed on Exhibit B attached
hereto, together with such modifications, amendments and supplements thereto as are approved
in writing by Senior Lender prior to their execution. The Affordable Housing Covenants shall
not be deemed to be Junior Loan Documents.
"Loss Proceeds" means all monies received or to be received under any insurance policy,
from any condemning authority, or from any othersource, as a result of any Condemnation or
Casualty.
"Person" means any individual, corporation, limited liability company, partnership, joint
venture, estate, trust, unincorporated association, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.
"Property" means the Borrower's interest in (i) the land and improvements known or to.
be known as Coral Mountain Apartments, located in the City of La Quinta, County of Riverside,
California, which Property is more particularly described on Exhibit A attached hereto, and (ii)
all furniture, fixtures and equipment located at such apartments and other property, accounts,
deposits and rights and interests of Borrower encumbered by the Senior Security Instrument
and/or the other Senior Loan Documents.
"Senior Indebtedness" means all indebtedness of any kind at any time evidenced or
secured by, or arising under, the Senior Loan Documents, whether incurred, arising or.accruing
before or after the filing of any Bankruptcy Proceeding.
"Senior Loan Documents" means, collectively, the Senior Note, Senior Security
Instrument, the Borrower Loan Agreement, the Construction Funding Agreement, and all of the
other documents, instruments and agreements now or hereafter evidencing, securing or otherwise
executed in connection with the Senior Loan, as the same may from time to time, be extended,
subordination Agreement - 4 Coral Mountain Apartments
consolidated, substituted for, modified, increased, amended and supplemented in accordance
with the provisions of this Agreement.
"Senior Loan Default" means any act, failure to act, event, condition, or occurrence
which constitutes, or which with the giving of notice or the passage of time, or both, would
constitute, an "Event of Default' as defined in the Senior Security Instrument.
2. Junior Loan and Junior Loan Documents are Subordinate; Acts by Senior
Lender do not Affect Subordination.
(a) Junior Lender hereby covenants and agrees on behalf of itself and its
successors and permitted assigns that the Junior Indebtedness is and shall at all times
continue to be, subordinate, subject and inferior (in payment and priority) to the prior
payment in full of the Senior Indebtedness, and that the liens, rights, payment interests,
priority interests and security interests granted to Junior Lender in connection with the
Junior Loan and under the Junior Loan Documents are, and are hereby expressly
acknowledged to be in all respects and at all times, subject, subordinate and inferior in all
respects to the liens, rights, payment, priority and security interests granted to Senior
Lender under the Senior Loan and the Senior Loan Documents and the terms, covenants,
conditions, operations and effects thereof.
(b) Except as expressly set forth herein, including, without limitation, in the
following sentence, repayment of the Junior Indebtedness, is and shall be postponed and
subordinated to repayment in full of the Senior Loan. Prior to a Senior Loan Default
(regardless of whether such Senior Loan Default occurs prior to or during the pendency
of a Bankruptcy Proceeding), Junior Lender shall be entitled to receive and retain
payments made pursuant to and in accordance with the terms of the Junior Loan
Documents; provided, however, that no such payment is made more than ten (10) days in
advance of the due date thereof. Junior Lender agrees that from and after such time as it
has received from either Senior Lender or Borrower written notice that a Senior Loan
Default then exists (which has not been expressly waived in writing by Senior Lender) or
otherwise has actual knowledge of such a Senior Loan Default, Junior Lender shall not
receive or accept any payments under the Junior Loan. If (i) Junior Lender receives any
payment, property, or asset of any kind or in any form on account of the Junior
Indebtedness (including, without limitation, any proceeds from any Enforcement Action)
after a Senior Loan Default of which Junior Lender has actual knowledge or has been
given notice of, or (ii) Junior Lender receives, voluntarily or involuntarily, by operation
of law or otherwise, any payment, property, or asset in or in connection with any
Bankruptcy Proceeding, such payment, property, or asset will be received and held in
trust for Senior Lender. Junior Lender will promptly remit, in kind and properly
endorsed as necessary, all such payments, properties, and assets to Senior Lender. Senior
Lender shall apply any payment, asset, or property so received from Junior Lender to the
Senior Indebtedness in such order, amount (with respect to any asset or property other
than immediately available funds), and manner as Senior Lender shall determine in its
sole and absolute discretion.
Subordination Agreement _ 5 Coral Mountain Apartments
(c) Without limiting the complete subordination of the Junior Indebtedness to
the payment in full of the Senior Indebtedness (which complete subordination. is subject
to the second sentence in paragraph (b) above), in any Bankruptcy Proceeding, upon any
payment or distribution (whether in cash, property, securities, or otherwise) to creditors
(i) the Senior Indebtedness shall first be paid in full in cash before Junior Lender shall be
entitled to receive any payment or other distribution on account of or in respect of the
Junior Indebtedness, and (ii) until all of the Senior Indebtedness is paid in full in cash,
any payment or distribution to which Junior Lender would be entitled but for this
Agreement (whether in cash, property, or other assets) shall be made to Senior Lender.
(d) The subordination of the Junior Indebtedness shall continue in the event
that any payment under the Senior Loan Documents (whether by or on behalf of
Borrower, as proceeds of security or enforcement of any right of set-off or otherwise) is
for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set aside
or required to be paid to Borrower, a trustee, receiver or other similar party under any
bankruptcy, insolvency, receivership or similar law. In such event, the Senior
Indebtedness or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding to the extent of any repayment, return, or other action, as if
such payment on account of the Senior Indebtedness had not been made.
(e) The subordination of the Junior Loan Documents and of the Junior
Indebtedness shall apply and continue notwithstanding (i) the actual date and time of
execution, delivery, recording, filing or perfection of the Senior Security Instrument and
other Senior Loan Documents and of the Junior Security Instrument and other Junior
Loan Documents, and (ii) the availability of any collateral to Senior Lender, including the
availability of any collateral other than the Property.
(f) By reason of, and without in any way limiting, the full subordination of
the Junior Indebtedness and the Junior Loan Documents provided for in this Agreement
(which full subordination is subject to the second sentence in paragraph (b) above), all
rights and claims of Junior Lender under the Junior Security Instrument or under the
Junior Loan Documents in or to the Property or any portion thereof, the proceeds thereof,
the Leases thereof, the Rents, issues and profits therefrom, and the Loss Proceeds payable
with respect thereto, are expressly subject and subordinate in all respects to the rights and
claims of Senior Lender under the Senior Loan Documents in and to the Property or any
portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues and profits
therefrom, and the Loss Proceeds payable with respect thereto.
(g) If Junior Lender, by indemnification, subrogation or otherwise, shall
acquire any lien, estate, right or other interest in any of the Property, that lien, estate,
right or other interest shall be fully subject and subordinate to the receipt by Senior
Lender of payment in full of the Senior Indebtedness, and to the Senior Loan Documents,
to the same_ extent as the Junior Indebtedness and the Junior Loan Documents are
subordinate pursuant to this Agreement subject to Section 2(k) hereof and the proviso
found in the last sentence of Section 5(a) hereof.
Subordination Agreement .. 6 Coral Mountain Apartments
(h) At the request of the Borrower or the Senior Lender, Junior Lender agrees
to subordinate the Junior Loan and the Junior Loan Documents to new indebtedness
incurred by the Borrower to refinance and pay in full the Senior Loan and to any loan
documents related to such refinancing; provided, however, that Senior Lender may not
without the prior written consent of Junior Lender, execute any such loan documents that
would result in a new loan with a principal amount that exceeds the outstanding balance
then -owed under the Senior Loan Documents or execute any amendment of the Senior
Loan Documents which increases the outstanding principal amount of the Senior Loan,
except to reflect advances hereafter made for purposes of protecting or further securing
the lien of the Senior Security Instrument, curing default by the Borrower under the
Senior Loan Documents or for any other purposes expressly permitted by the Senior
Security Instrument. Junior Lender agrees to execute a subordination agreement
recognizing the rights of the lender providing such refinancing, which subordination
agreement shall be on substantially the same terms as this Agreement, and to execute
such other documents as may reasonably be required by the Senior Lender or the lender
providing such refinancing.
(i) In confirmation, and not as a condition, of the subordination of the Junior
Indebtedness and the Junior Loan Documents provided for in this Agreement, Junior
Lender shall place on or attach to the Junior Note a notice to the following effect, and
shall provide Senior Lender with a copy of the Junior Note showing such notice:
"The indebtedness evidenced by this Note is and shall be subordinate in
right of payment to the prior payment in full of all amounts then due and
payable (including, but not limited to, all amounts due and payable by
virtue of any default or acceleration or upon maturity) with respect to the
indebtedness evidenced by the Note (as defined by that certain
Multifamily Leasehold Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing by the Borrower in favor of the California
Municipal Finance Authority and assigned to Citibank, N.A.), in the
original maximum principal amount of $24,400,000, executed by
Borrower and payable to the California Municipal Finance Authority and
endorsed to Citibank, N.A. ("Senior Lender") to the extent, subject to the
limitations, and in the manner provided in that certain Subordination
Agreement, dated as of August 1, 2012, by and between the Senior Lender
and the holder of this Note (the "Subordination Agreement"). The rights
and remedies of the payee and each subsequent holder of this Note shall
be deemed, by virtue of such holder's acquisition of this Note, to have
agreed to perform and observe all of the terms, covenants and conditions
to be performed or observed by the "Junior Lender" under the
Subordination Agreement."
0) Junior Lender hereby acknowledges and agrees that Senior Lender may,
without the consent or approval of Junior. Lender, agree with Borrower to extend,
consolidate, modify, increase or amend any or all the Senior Loan Documents and
otherwise act or fail to act with respect to any matter set forth in any Senior Loan
Document (including, without limitation, the exercise of any rights or remedies, waiver,
Subordination Agreement 7 Coral Mountain Apartments
forbearance or delay in enforcing any rights or remedies, the declaration of acceleration,
the declaration of defaults or events of default, the release, in whole or in part, of any
collateral or other property, and any consent, approval or waiver), and all such
extensions, consolidations, modifications; amendments acts and omissions shall not
release, impair or otherwise affect Junior Lender's obligations and agreements hereunder;
provided, however, that no such extension, consolidation, modification, amendment, act
or omission shall increase the outstanding principal amount of the Senior Loan without
the prior written consent of the Junior Lender, except to reflect advances hereafter made
for purposes of protecting or further securing the lien of the Senior Security Instrument,
curing default by the Borrower under the Senior Loan Documents or for any other
purposes expressly permitted by the Senior Security. Instrument.
(k) Senior Lender covenants and agrees on behalf of itself and its successors
and permitted assigns that the Senior Loan Documents are and shall at all times continue
to be, subordinate, subject and inferior to the La Quinta Regulatory Agreement, and that
the liens, rights, and interests granted to Senior Lender in connection with the Senior
Loan and under the Senior Loan Documents are, and are hereby expressly acknowledged
to be in all respects and at all times, subject, subordinate and inferior in all respects to the
encumbrances and rights granted to JuniorLender under the La Quinta Regulatory
Agreement and the terms, covenants, conditions, operations and effects. thereof.
3. Junior Lender Agreements.
(a) Without the prior written consent of Senior Lender in each instance, Junior
Lender shall not (i) amend, modify, waive, extend, renew or replace any provision of any
of the Junior Loan Documents, or (ii) pledge, assign, transfer, convey, or sell any interest
in the Junior Indebtedness or any of the Junior Loan Documents to a non -governmental
entity; or (iii) accept any payment on account of the Junior Indebtedness other than a
regularly scheduled payment of interest or principal and interest made not earlier than ten
(10) days prior to the due date thereof or a prepayment authorized by the Senior Lender
pursuant to the terms of the Construction Funding Agreement; or (iv) take any action
which has the effect of increasing the Junior 'Indebtedness; or (v) appear in, defend or
bring any action in: connection with the Property; or (vi) take any action concerning
environmental matters affecting the Property. Regardless of any contrary provision in the
Junior Loan Documents, Junior Lender shall not collect payments for the purpose of
escrowing for any cost or expense related to the Property or for any portion of the Junior
Indebtedness.
(b) Senior Lender shall have the right, but shall not have any obligation, to
cure any Junior Loan Default until sixty (60) days following Senior Lender's receipt of
an Enforcement Action Notice given by Junior Lender as a consequence of the Junior
Loan Default. Senior Lender shall not be subrogated to the rights of Junior Lender under
the Junior Loan Documents by reason of Senior Lender having cured any Junior Loan
Default. However, Junior Lender acknowledges that all amounts advanced or expended
by Senior Lender to cure a Junior Loan Default shall be added to and become a part of
the Senior Indebtedness pursuant to the terms of the Senior Security. Instrument.
Subordination Agrmnent - 5 Coral Mountain Apartments
(c) Senior Lender shall have the approval, consent and oversight rights in
connection with any insurance claims relating to the Property and any decisions regarding
the use of insurance proceeds after a casualty loss or condemnation awards, as provided
to a Mortgagee under the terms of the Ground Lease by and between Junior Lender and
Borrower dated on or about the same date hereof.
(d) Junior Lender agrees that, notwithstanding any provision to the contrary
contained in the Junior Loan Documents, in any action commenced to enforce the
obligation of Borrower to pay any portion of the Junior Indebtedness, the judgment shall
not be enforceable personally against Borrower or Borrower's assets, and the recourse of
Junior Lender for the collection of the Junior Indebtedness shall be limited to actions
against the Property and the rents, profits, issues, products, and income from the
Property.
(e) Junior Lender shall not commence or join with any other creditor in
commencing any Bankruptcy Proceeding involving Borrower, and Junior Lender shall
not initiate and shall not be a party to any action, motion or request, in a Bankruptcy
Proceeding involving any other person or entity, which seeks the consolidation of some
or all of the assets of Borrower into such Bankruptcy Proceeding. In the event of any
Bankruptcy Proceeding relating to Borrower or the Property or, in the event of any
Bankruptcy Proceeding relating to any other person or entity into which (notwithstanding
the covenant in the first sentence of this clause) the assets or interests of Borrower are
consolidated, then in either event, the Senior Loan shall first be paid in full before Junior
Lender shall be entitled to receive and retain any payment or distribution in respect to the
Junior Loan. Junior Lender agrees that (i) Senior Lender shall receive all payments and
distributions of every kind or character in respect of the Junior Loan to which Junior
Lender would otherwise be entitled, but for the subordination provisions of this
Agreement (including without limitation, any payments or distributions during the
pendency of a Bankruptcy Proceeding involving Borrower or the Property) until the
Senior Loan is paid in full, and (ii) the subordination of the Junior Loan and the Junior
Loan Documents shall not be affected in any way by Senior Lender electing, under
Section l I l I(b) of the federal bankruptcy code, to have its claim treated as being a fully
secured claim. In addition, Junior Lender hereby covenants and agrees that, in
connection with a Bankruptcy Proceeding involving Borrower, neither Junior Lender nor
any of its affiliates shall (i) make or participate in a loan facility to or for the benefit of
Borrower on a basis that is senior to or pari passu with the liens and interests held by
Senior Lender pursuant to the Senior Loan Documents, (ii) not vote affirmatively in favor
of any plan of reorganization or liquidation unless Senior has also voted affirmatively in
favor of such plan, and (iii) not contest the continued accrual of interest on the Senior
Indebtedness, in accordance with and at the rates specified in the Senior Loan
Documents, both for periods before and for periods after the commencement of such
Bankruptcy Proceedings.
(f) Junior Lender covenants and agrees that the effectiveness of this
Agreement and the rights of Senior Lender hereunder shall be in no way impaired,
affected, diminished or released by any renewal or extension of the time of payment of
the Senior Loan, by any delay, forbearance, failure, neglect or refusal of Senior Lender in
Subordination Agreement 9 Coral Mountain Apartments
3
enforcing payment thereof or in enforcing the lien of or attempting to realize upon the
Senior Loan Documents or any other security which may have been given or may
hereafter be given for the Senior Loan, by any waiver or failure to exercise any right or
remedy under the Senior Loan Documents, or by any other act or failure to act by Senior
Lender. Junior Lender acknowledges that Senior Lender, at its sole option, may release
all or any portion of the Property from the lien of the Senior Security Instrument; and
may release or waive any guaranty, surety or indemnity providing additional collateral to
Senior Lender, and Junior Lender hereby waives any legal or equitable right in respect of
marshaling it might have, in connection with any release of all or any portion of the
Property by Senior Lender, to require the separate sales of any portion of the Property or
to require Senior Lender to exhaust its remedies against any portion of the Property or
any other collateral before proceeding against any other portion of the Property or other
collateral (including guarantees) for the Senior Loan. Senior Lender may pursue all
rights and remedies available to it under the Senior Loan Documents, at law, or in equity,
regardless of. any Enforcement Action Notice or Enforcement Action by Junior Lender.
At any time or from time to time and any number of times, without notice to Junior
Lender and or
affecting the liability of Junior Lender, (a) the time for payment of
the Senior Indebtedness may be extended or the Senior Indebtedness may be renewed in
whole or in part; (b) the time for Borrower's performance of or compliance with any
covenant or agreement contained in the Senior Loan Documents, whether presently
existing or hereinafter entered into, may be extended or such performance or compliance
may be waived; (c) the maturity of the Senior Indebtedness may be accelerated as
provided in the Senior Loan Documents; (d) any Senior Loan Document may be
modified or amended by Senior Lender and Borrower in any respect, subject to the
provisions of Section 20); and (e) any security for the Senior Indebtedness may be
modified, exchanged, surrendered or otherwise dealt with or additional security may be
pledged or mortgaged for the Senior Indebtedness. If, after the occurrence of a Senior
Loan Default, Senior Lender acquires title to any of the Property pursuant to a mortgage
foreclosure conducted in accordance with applicable law, the lien, operation, and effect
of the Junior Security Instrument and other Junior Loan Documents automatically shall
terminate with respect to such Property upon Senior Lender's acquisition of title.
(g) Junior Lender acknowledges that it entered into the transactions
contemplated by the Junior Loan Documents and that Junior Lender made the Junior
Loan to Borrower without reliance upon any information or advice from Senior Lender.
Junior Lender made its own underwriting analysis in connection with the Junior Loan, its
own credit review of Borrower, and investigated all matters pertinent, in Junior Lender's
judgment, to its determination to make the. Junior Loan to Borrower. Junior Lender
acknowledges that it was represented by competent counsel in connection with this
Agreement.
(h) Junior Lender hereby represents and warrants that, as of the date hereof,
$29,000,000 of the Junior Loan proceeds has been disbursed to Borrower or deposited
into a Project escrow account. Junior Lender hereby further represents and warrants that:
(i) Junior Lender is now the owner and holder of the Junior Loan Documents; (ii) the
Junior Loan Documents are now in full force and effect; (iii) the Junior Loan Documents
have not been modified or amended; (iv) no default or event which, with the passing of
Subordination Agreement 10 Conl Mountain Apartments
time or giving of notice would constitute a default, under the Junior Loan Documents has
occurred; (v) the current outstanding principal balance of the Junior Loan is $29,000,000
(vi) no scheduled monthly payments under the Junior Loan Documents have been or will
be prepaid except with the prior written consent of Senior Lender; (vii) none of the rights
of Junior Lender under any of the Junior Loan Documents are subject to the rights of any
third parties, by way of subrogation, indemnification or otherwise; and (viii) there are no
other Junior Loan Documents other than those listed on Exhibit B hereto. Borrower
further represents and warrants that it has provided to Senior Lender a true, complete, and
correct copy of all the Junior Loan Documents.
(i) Junior Lender hereby agrees that notwithstanding anything to the contrary
in the Junior Loan Documents, for so long as the Senior Loan is outstanding, the maturity
date of the Junior Note shall occur no earlier than one (1) month after the maturity date of
the Senior Note.
4. Modification of Certain Provisions in La Quinta Regulatory Agreement
Upon Foreclose. Notwithstanding the provisions of Section 2(k) of this Agreement, in the event
of a foreclosure of the Senior Security Instrument, the following sections of the La Quinta
Regulatory Agreement shall be amended and modified as follows:
(a) The definition of Operating Reserve is replaced, in its entirety, with the
following:
"Operating Reserve" means an operating reserve for the Housing
Development to be funded to the amount of Four Hundred Ninety -Five
Thousand Dollars ($495,000) from annual deposits of remaining Annual
Project Revenue after payment of Operating Expenses and Debt Service,
such that the balance of the Operating Reserve consists of not less than
four (4) months of projected Operating Expenses, adjusted annually by the
CPI Adjustment (unless otherwise agreed to by Developer and Authority),
provided in no event shall the balance in such account exceed a sum equal
to one (1) year of debt service for the Housing Development (or such
greater amount required under the Tax Credit Regulatory Agreement,
pursuant to any of the Approved Financing or under the Partnership
Agreement). Notwithstanding the foregoing, until such time as the
Operating Reserve is fully funded, Developer's requirement to fund the
Operating Reserve shall be limited to fifty percent (50%) of Annual
Project Revenue, after payment of Operating Expenses and Debt Service.
(b) Section 6 shall be replaced, in its entirety, with the following:
6. COVENANTS REGARDING MAINTENANCE.
Developer shall maintain the Property and all improvements
thereon, including landscaping, lighting and signage, in good condition,
free of debris, waste and graffiti, and in compliance with the terms of the
Redevelopment Plan and all applicable provisions of the City of La Quinta
Subordination Ageement 11 Coral Mountain Apartments
Municipal Code, and in accordance with the HUD Housing Quality
Standards.
(c) Section 7 shall be replaced, in its entirety, with the following:
7.. COVENANTS REGARDING MANAGEMENT.
Developer shall provide for the management of the Housing
Development in accordance with this Section.
a. Property Manager. Developer shall manage or cause the
Housing Development, and all appurtenances thereto that are a part of the
Housing Development, to be managed in a prudent and business -like
manner, consistent with property management standards for other
comparable high quality, well -managed rental housing projects and
commercial developments in Riverside County, California. Developer
may contract with a property management company or property manager
to operate and maintain the Housing Development in accordance with the
terms of this Section ("Property Manager"). Developer shall conduct due
diligence and background evaluation of any potential outside property
manager or property management company to evaluate experience,
references, credit worthiness, and related qualifications as a property
manager. Any proposed property manager shall have prior experience
with projects and properties comparable to the Housing Development and
the references and credit record of such manager/company shall be
investigated (or caused to be investigated) by Developer prior to
Developer's retention of such proposed property manager. The selection
by Developer of any new Property Manager also shall be subject to the
foregoing requirements.
b. Management Plan. Developer shall manage and operate
the Housing Development in compliance with the Management Plan
approved by Authority pursuant to the DDA. Developer and Property
Manager may from time to time submit to Authority proposed
amendments to the Management Plan, which are subject to the prior
written approval of Authority, which approval shall not be unreasonably
withheld or conditioned.
C. Social Services. Developer shall provide a variety of social
services at the Housing Development. Developer shall use its best efforts
to create a comprehensive social service program that is targeted to the
needs of the residents of the Housing Development which shall include the
following services: after school programs of an ongoing nature for school
age children, and the availability of a bona fide services coordinator or
social worker to the tenants.
Subordination Agreement 12 Coral Mountain Apartments
d. Code Enforcement. Developer acknowledges and agrees
Authority and the City and their employees and authorized agents shall
have the right to conduct code compliance and/or code enforcement
inspections of the Housing Development and the individual Affordable
Units, both exterior and interior, at reasonable times and upon reasonable
notice (not less than 48 hours prior notice) to Developer and/or an
individual tenant. If such notice is provided by Authority, City or their
representative(s) to Developer, then Developer (or its Property Manager)
shall immediately and directly advise tenants of such upcoming inspection
and cause access to the area(s) and/or units to be made available and open
for inspection. Developer shall include express advisement of such
inspection rights within the lease/rental agreements for each Affordable
Unit in order for each and every tenant and tenant household to be aware
of this inspection right.
(d) Section 9 shall be replaced, in its entirety, with the following:
9. OPERATING BUDGET OR ANNUAL BUDGET; ANNUAL
REPORTS
a. Operating Budget. Developer shall submit to Authority on
or before December 1 of each year during the Affordability Period an
operating budget for the Housing Development ("Operating Budget" or
"Annual Budget"). In the event Developer requires an amendment to an
approved Annual Budget during an applicable year of the Affordability
Period, then Developer shall submit a written notice thereof to the
Authority explaining the amendment and reasons therefor. The Developer
agrees to meet and confer with the Authority in the event the Authority
has any questions or concerns relating to a submitted budget.
b. Annual Reports. Developer covenants and agrees to submit
to the Authority an annual report (the "Annual Report"), which shall
include the information required by California Health & Safety Code
Section 33418. The Annual Report shall include for each Affordable Unit
the rental rate and the income and family size of the occupants. The
Developer shall submit the Annual Report on or before February 15 of the
year following the year covered by the Annual Report. The Developer
shall provide for the submission of household information and
certification in its leases with tenants.
5. Standstill Agreement; Right to Cure Senior Loan Default.
(a) Until such time as any of the Senior Indebtedness has been repaid in full
and the Senior Security Instrument has been released and discharged, Junior Lender shall
not without the prior written consent of Senior Lender, which may be withheld in Senior
Lender's sole and absolute discretion, take any Enforcement Action, including, without
Subordination Agreement 13 Coral Mountain Apartments
limitation (i) accelerate the Junior Loan, (ii) exercise any of Junior Lender's remedies
under the Junior Security Instrument or any of the other Junior Loan Documents
(including, without limitation, the commencement of any judicial or non judicial action
of proceeding (a) to enforce any obligation of Borrower under any of the Junior Loan
Documents, (b) to collect any monies payable to Borrower, (c) to have a receiver
appointed to collect any monies payable to Borrower; or (d) to foreclose the lien(s)
created by the Junior Security Instrument) or (iii) file or join in the filing of any
involuntary Bankruptcy Proceeding against Borrower or any person or entity which owns
a direct or indirect interest in Borrower, until at least sixty (60) days following Senior
Lender's receipt of an Enforcement Action Notice given by Junior Lender as a
consequence of the Junior Loan Default; provided, however, that such limitation on the
remedies of Junior Lender shall not derogate or otherwise limit Junior Lender's rights,
following an event of default under the Junior Loan Documents to (a) compute interest on
all amounts due and payable under the Junior Loan at the default rate described in the
Junior Loan Documents, (b) compute prepayment premiums and late charges, (c) enforce
against any person, other than Borrower and any guarantors or indemnitors under the
Senior Loan Documents, any guaranty of the obligations of Borrower under the Junior
Loan, and (d) to enforce the Affordable Housing Covenants.
(b) Senior Lender shall, simultaneously with the sending of any notice of a
Senior Loan Default to Borrower, send to Junior Lender a copy of said notice under the
Senior Loan Documents; provided, however, failure to do so shall not affect the validity
of such notice with respect to Borrower or any obligation of Borrower to Senior Lender
and shall not affect the relative priorities between the Senior Loan and the Junior Loan as
set forth herein. Borrower covenants and agrees to forward to Junior Lender, within three
(3) business days of Borrower's receipt thereof, a copy of any notice of a Senior Loan
Default Borrower receives from Senior Lender.
(c) Junior Lender shall have the right, but shall have no obligation, to cure
any Senior Loan Default; provided, if Junior Lender shall elect to cure any such Default,
it shall so notify Senior Lender and shall commence and complete such curing within any
applicable notice or grace period, if'any, as Borrower is permitted by the terms of the
Senior Loan Documents to cure such Senior Loan Default. Junior Lender shall not be
subrogated to the. rights of Senior Lender under the Senior Loan Documents by reason of
Junior Lender having cured any Senior Loan Default. However, Senior Lender
acknowledges that, to the extent so provided in the Junior Loan Documents, amounts
advanced or expended by Junior Lender to cure a Senior Loan Default may be added to
and become a part of the Junior Indebtedness.
(d) Junior Lender agrees that, notwithstanding any contrary provision
contained in the Junior Loan Documents, a Senior Loan Default shall not constitute a
default under the Junior Loan Documents if no other default occurred under the Junior
Loan Documents.
(e) Junior Lender acknowledges that any conveyance or other transfer of title
to the Property pursuant to a foreclosure of the Junior Security Instrument (including a
conveyance or other, transfer of title pursuant to the exercise of a power of sale contained
Subordination Agrament 14 - Coral Mountain Apartments
in the Junior Security Instrument), or any deed or assignment in lieu of foreclosure or
similar arrangement, shall be subject to the transfer provisions of the Senior Loan
Documents; and the person (including Junior Lender) who acquires title to the Property
pursuant to the foreclosure proceeding (or pursuant to the exercise of a power of sale
contained in the Junior Security Instrument) shall not be deemed to be automatically
approved by Senior Lender.
6. Insurance. Junior Lender agrees that all original policies of insurance required
pursuant to the Senior Security Instrument shall be held by Senior Lender. The preceding
sentence shall not preclude Junior Lender from requiring that (i) it be named as an additional
insured under all policies of liability insurance maintained by Borrower with respect to the
Property; or (ii) it be named as a loss payee, as its interest may appear, under all policies of
property damage insurance maintained by Borrower with respect to the Property, provided such
action does not affect the priority of payment of the proceeds of property damage insurance
under the Senior Security Instrument.
7. Default. Junior Lender and Borrower acknowledge and agree that a default by
either such party under this Agreement shall, at the sole option of Senior Lender, constitute a
default under the Senior Loan Documents. Each party hereto acknowledges that in the event any
party fails to comply with its obligations hereunder, the other parties shall have all rights
available at law and in equity, including the right to obtain specific performance of the
obligations of such defaulting party and injunctive relief. No failure or delay on the part of any
party hereto in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or remedy hereunder.
8. Enforcement Costs. Borrower and Junior Lender agree to reimburse Senior
Lender for any and all costs and expenses (including reasonable attorneys' fees) incurred by
Senior Lender in connection with enforcing its rights against Junior Lender under this
Agreement.
9. Notices. Any notice which any party hereto may be required or may desire to
give hereunder shall be deemed to have been given and shall be effective only if it is in writing
and (i) delivered personally, (ii) mailed, postage prepaid, by United State registered or certified
mail, return receipts requested, (iii) delivered by reputable overnight express courier that
provides a receipt with the date and time of delivery, or (iv) sent by telecopier, in each instance
addressed as follows:
To Junior Lender: Notices Delivered by U.S. Mail
La Quinta Housing Authority -
P.O. Box 1504
La Quinta, CA 92247
Phone No.: (760) 777-7031
Facsimile: (760) 777-7101
Attention: Executive Director
Subordination Agreement 15 Coral Mountain Apartments
Delivered Personally or by Courier:
La Quints, Housing Authority
78-495 Calle Tampico
La Quinta, CA 92253
Phone No.: (760) 777-7031
Facsimile: (760) 777-7101
Attention: Executive Director
and with a copy to: Rutan & Tucker, LLP
611 Anton Boulevard, 14a' Floor
Costa Mesa, CA 92626
Phone No.: (714) 641-5100
Facsimile: (714) 546-9035
Attention: M. Katherine Jenson, Esq.
If to Senior Lender: Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
Attention: Desk Head, Transaction Management Group
Loan # 10-7044852
Facsimile: (212) 723-8642
AND
Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Loan # 10-7044852
Facsimile: (805) 557-0924
AND
Citibank, N.A.
One Sansome Street, 26th Floor
San Francisco, California 94104
Attention: Sanjay Sharma
Loan # 10-7044852
Facsimile: (415) 627-6387
I ►17
Citibank, N.A.
388 Greenwich Street
New York, New York 10013
Subordination Ageement 16 - Coral Mountain Apartments
Attention: General Counsel's Office
Loan # 10-7044852
Facsimile: (212) 723-8939
If to the Borrower: Coral Mountain Partners, L.P.
c/o KD Housing Partners
4199 Campus Drive, Suite 550
Irvine, CA 92612
Attention: John Durso
Facsimile: (949) 854-7105
and with a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street, 70th Floor
Los Angeles, CA 90071
Attention: Lance Bocarsly
Facsimile: (213) 559-0733
AND
Western Community Housing, Inc.
151 Kalmus Drive, Suite J-5
Costa Mesa, CA 92626
Attention: Graham Espley-Jones
Facsimile: (714) 549-4600
AND
Cox, Castle & Nicholson LLP
555 California Street, loth Floor
San Francisco, CA 94104
Attention: Ofer Elitzer
Facsimile: (415) 392-4250
or at such other addresses or to the attention of such other persons as may from time to time be
designated by the party to be addressed by written notice to the other in the manner herein
provided. Notices, demands and requests given in the manner aforesaid shall be deemed
sufficiently served or given for all purposes hereunder when received or when delivery is refused
or when the same are returned to sender for failure to be called for.
10. WAIVER OF TRIAL BY JURY. TO THE MAXIMUM EXTENT
PERMITTED UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO (A)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN
THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY
SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL
Subordination Agreement 17 Coral Mountain Apartments
BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
11. Term. The term of this Agreement shall commence on the date hereof and shall
continue until the earliest to occur of the following events: (i) the payment of all of the principal
of, interest on and other amounts payable under the Senior Loan Documents; (ii) the -payment of
all of the principal of, interest on and other amounts payable under the Junior Loan Documents,
other than by reason of payments which Junior Lender is obligated to remit to Senior Lender
pursuant to the terms hereof; (iii) the acquisition by Senior Lender of title to the Property
pursuant to a foreclosure, or a deed in lieu of foreclosure, of (or the exercise of a power of sale
contained in) the Senior Security Instrument; or (iv) the acquisition by Junior Lender of title to
the Property pursuant to a foreclosure, or a deed in lieu of foreclosure, of (or the exercise of a
power of sale contained in) the Junior Security Instrument, but only if such acquisition of title
does not violate any of the terms of this Agreement.
12. Miscellaneous.
(a) Junior Lender shall, within ten (10) business days following a request
from Senior Lender, provide Senior Lender with a written statement setting forth the then
current outstanding principal balance of the Junior Loan, the aggregate accrued and
unpaid interest under the Junior Loan, and stating whether, to the knowledge of Junior
Lender, any default or event of default exists under the Junior Loan; and containing such
other information with respect to the Junior Indebtedness as Senior Lender may
reasonably require. Upon notice from Senior Lender from time to time, Junior Lender
shall execute and deliver such additional instruments and documents, and shall take such
actions, as are reasonably required by Senior Lender in order to further evidence or
effectuate the provisions and intent of this Agreement.
(b) Junior Lender shall give Senior Lender a concurrent copy of each notice of
a Junior Loan Default or other material notice given by Junior Lender under the Junior
Loan Documents.
(c) This Agreement shall bind and inure to the benefit of all successors and
assigns of Junior Lender and Senior Lender. Senior Lender may'assign its interest in the
Senior Loan Documents without notice to or consent of Junior Lender, provided,
however, Senior Lender shall endeavor to provide notice to Junior Lender of any such
assignment following the assignment. Junior Lender may only assign its rights and
interests hereunder to a non -governmental entity following the prior written consent of
Senior Lender, which consent may be withheld or conditioned in its sole and absolute
discretion. Junior Lender shall provide written notice to Senior Lender prior to assigning
its interest to any governmental entity.
(d) Senior Lender hereby consents to the Junior Loan and the Junior Loan
Documents; provided, however, that this Agreement does not constitute an approval by
Senior Lender of the .terms of the Junior Loan Documents. Junior Lender hereby
consents to the Senior Loan and the Senior Loan Documents; provided, however, that this
SubWiwfion Agament 18 - Core] Momtain Apartments
Agreement does not constitute an approval by Junior Lender of the terms of the Senior
Loan Documents.
(e) This Agreement may be executed in multiple counterparts, each of which
shall constitute an original document and all of which together shall constitute one
agreement.
(f) IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION,
MATTERS OF CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER, THIS AGREEMENT HAS
BEEN ENTERED INTO AND DELIVERED IN, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE WHERE
THE PROPERTY IS LOCATED, WITHOUT GIVING EFFECT TO ANY
PRINCIPLES OF CONFLICTS OF LAW.
(g) Time is of the essence in the performance of every covenant and
agreement contained in this Agreement.
(h) If any provision or remedy set forth in this Agreement for any reason shall
be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or remedy of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable provision or
remedy had never been set forth herein, but only to the extent of such invalidity, illegality
or unenforceability.
(i) Each party hereto hereby represents and warrants that this Agreement has
been duly authorized, executed and delivered by it and constitutes a legal, valid and
binding agreement enforceable in all material respects in accordance with its terms.
0) Borrower hereby acknowledges and consents to the execution of this
Agreement, and agrees to be bound by the provisions hereof that are applicable to
Borrower. Solely as between Senior Lender and Junior Lender, all of the signatories
below hereby agree that to the extent of any conflict between the terms and provisions of
this Agreement and the terms and provisions of the Senior Loan Documents and/or the
Junior Loan Documents respectively, the terms and provisions of this Agreement shall
govern and control. By executing this Agreement in the place provided below, Borrower
hereby (i) acknowledges the provisions hereof, (ii) agrees not to take any action
inconsistent with Senior Lender's rights or Junior Lender's rights under this Agreement,
(iii) waives and relinquishes to the maximum extent permitted by law any and all rights,
defenses and claims now existing or hereinafter accruing relating to Junior Lender's
forbearance from exercising any rights and remedies pursuant to Section 5 of this
Agreement, including, without limitation, any defenses based on the statute of limitations
or any equitable defenses, such as laches, and (iv) acknowledges and agrees that (A) this
Agreement is entered into for the sole protection and benefit of Senior Lender and Junior
Lender (and their respective successors, assigns and participants), and no other person
(including Borrower) shall have any benefits, rights or remedies under or by reason of
this Agreement, (B) nothing in this Agreement is intended, or shall be construed to,
Subordination Agreement 19 Coral Mountain Apartments
relieve or discharge the obligations or liabilities of any third party (including Borrower
under the Senior Loan Documents and the Junior Loan Documents), (c) neither of them
nor any of their affiliates shall be, or be deemed to be, beneficiaries of any of the
provisions hereof or have any rights hereunder whatsoever, and (D) no provision of this
Agreement is intended to, or shall be construed to, give any such third party (including
Borrower) any right subrogating to the rights of, or action against, Senior Lender or
Junior Lender.
(k) No amendment, supplement, modification, waiver or termination of this
Agreement shall be effective against any party unless such amendment,, supplement,
modification, waiver or termination iscontained in a writing signed by such party.
(1) No party other than Senior Lender and Junior Lender shall have any rights
under, or be deemed a beneficiary of any of the provisions of, this Agreement.
(m) Nothing herein or in any of the Senior Loan Documents or Junior Loan
Documents shall be deemed to constitute Senior Lender as a joint venturer or partner of
Junior Lender.
13. Special Provisions.
(a) Notwithstanding any provision of the Subordinate Loan Documents to the
contrary, any removal or appointment of the Borrower's managing agent in respect of the
Property or changes to the management plan or management agreement in respect of the
Property, including any removal or appointment by the Junior Lender under the terms of
the Subordinate Loan Documents or changes required by the Subordinate Loan
Documents, shall not be effective until the Senior Lender has approved the replacement
manager and the manager has been installed and the Senior Lender has approved the
management plan or management agreement all of which approvals by Senior Lender
shall not be unreasonably withheld, conditioned or delayed.
(b) Funds held by the Senior Lender or any other lender as a capital
replacement reserve relating to the Property will be counted towards the capital
replacement reserve requirements under the La Quinta Regulatory Agreement.
(c) Section 15 of the La Quinta Regulatory Agreement shall not prohibit
conveyance or other transfer of title to the Property pursuant to a foreclosure of the
Senior Security Instrument (including a conveyance or other transfer of title pursuant to
the exercise of a power of sale contained in the Senior Security Instrument), or any deed
or assignment in lieu of foreclosure or similar arrangement or a one-time subsequent
transfer to another party.
14. Attached Exhibits.
The following Exhibits are attached to this Agreement and are incorporated by reference
herein as if more fully set forth in the text hereof.
Exhibit A — Legal Description
subordination Agreement 20 Cord Mountain Apartments
Exhibit B — Junior Loan Documents
The terms of this Agreement are modified and supplemented as set forth in said Exhibits.
To the extent of any conflict or inconsistency between the terms of said Exhibits and the text of
this Agreement, the terms of said Exhibits shall be controlling in all respects.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Subordination Agreement 21 Coral Mountain Apartments
IN WITNESS WHEREOF, the undersigned have duly executed and' delivered this
Subordination Agreement or caused this Subordination Agreement to be duly executed and
delivered by their respective authorized representatives as of the date first set forth above. The
undersigned intend that this instrument shall be deemed to be signed and delivered as a sealed
instrument.
JUNIOR LENDER:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and_politic
Title:
ATTEST: -
%�4 h
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
SubordinafionAgra ent S-1 Coral Mountain Apartmrnts
IN WITNESS WHEREOF, the undersigned have duly executed and' delivered this
Subordination Agreement or caused this Subordination Agreement to be duly executed and
delivered :by, their, respective.authorized,representatives asof thc. date first set forth. above. The.
undersigned intend that this instrument shall be deemed to be signed and delivered as a sealed
instrument.
JUNIOR LENDER:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
ilk TEST:
Authority Secretary
Su�� MA03
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
Subordination Agreement S-1 Coral Mountain Apartments
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Subordination Agreement or caused this Subordination Agreement to be duly executed and
delivered by their respective authorized representatives as of the date first set ford, above. The
u idersigned-tntend that this instrument "shall be deemed"io be'signed' and delivered as a sealed
instrument.
JUNIOR LENDER:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
By:
Name:
Title: Executive Director
ATTEST:
Authority Secretary
APPROVED AS TO FORM,
Subordination Agreement $-1 - 'Coral Mountain Apartments
SENIOR LENDER:
CITIBANK, N.A., a national banking association
By: fOLla.
Name: Brian Dale
Title: Vice President
Subordin Ginn Agreement S-2 Coral Mountain Apartments
California All -Purpose Acknowledgment
State y Cali rnia
County of
� P
t
On %i%
Personally appeared
who proved to me on the basis of satisfactory evidence to be the person4whose nameK
is/are subscribed to the within Instrument and acknowledged to me that he/sW!Ody executed
the same in his/herr"Peir authorized capacity(), and that by his/ttef/their signatures) on the
instrument the personss;j', or the entity upon behalf of which the person(practed, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws
of the State of California that the foregoing paragraph is _ _ s. MIGNT
.....
true and correct. Commission # t 081754
Notary Public - California - i
z
WITNESS my hand d official seal. t a
Los Angeles County
My Comm. Expires Apr2. 2014
OPTIONAL INFORMATION
.1(Ihouq!: lira rrdarrrrabr..0 in !his sec ion i5 not requn td ny !s:•, !! could ryz: v!±n! !n!+rlu!an! nlmuvn! and rna;rsc:hmr nt n7
lNis arrkrrJ:roled�]n!enc M ;m er.;;n!h;;rised dreumenL:nrLnap p: ove use4d !) persons rviying nil ;he ;Washed dncu+neal
Description of Attached Document
The preceding Certificate of Acknouviedgmeril Is atta�C.thed to a
documen btled/for thepurposeof 3
containing_ pages, and dated
The signer(s) capacity or authority is/are as:
❑ IndMdual(s)
❑ Adomeyan•fact
❑ CorporateOffcer(s)
C Guamian/Conservalor
❑ Partner-Limited/General
❑ Tmslee(s)
Other.
representing:
Proved to me an the basis of satisfactory evidence:
❑ farm(s) of identification ❑ credible vAtnese(es)
Notarial event is detailed in notary Journal on:
Page#_ Entry#_
Notary
Other
❑ Additional Signer rl Signer(s) Thumbprinls(s)
ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE:
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC, a California
limited liability company, its administrative
general partner
By: KD Ho sing artners, Inc., a California
torpor on, its anager
By:
Nam urso
Title: President
,_ _..... ___... By: _:_WCH_Affordable VM, LLC, a_California
limited liability company, its managing
general partner
By: Western Community Housing, Inc., a
California nonprofit public benefit
corporation, its sole member and
manager /l
By: i/ r�
-Name: Sandra C. Gibbons
Title: Chief Financi a] Officer
Subordination Agreement S-3 Coral Mountain Apartments
California All -Purpose Acknowledgment
State of Calfarnia J n p
County of l S.S.
On b 1/ 1 Z— before me, LqA'A1aL-L'4b—fLjPju :doZc G
personally appeared U� yr
S �t�n o� C. Cl,) `D
w�o proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
,jg/are subscribed to the within instrument and acknowledged to me that tu?,"Ahey executed
the same in hislfyefltheir authorized capacity(ies), and that by hidlj*Itheir signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws _
of the State of California that the foregoing paragraph Is _ _ _ s: +-�[[
-true and correct. * '� Commission WRIGHTI 1891754 L
z a r Notary Puhlic California D
WITNESS my hand a d official seal.
.,� Los Angeles County
OPTIONAL INFORMATION
Although lhr infant: ticn it this secnrn is not mquir?rt Sy law, it;:rgdrl prcver.I rravdulent rn-nlUvalanr/ reaharhmerri or
fins arckru:ae;igmenl fnam un.-,nlhuri=ed 00clono taw!insrypr::vreusehd lopmron.srv1yt'1,'j un the attached dnrwr,cnl
Description of Attached Document
The preceding Certificate of Acknowledgm t is a shed to a
docu ent tilled/for the purpose of SLL �✓ w a L�i
containing_ pages, and dated
The signer(s) capacity or authority istare as:
❑ Individual(s)
❑ Agomey-in-fact
❑ Corporale Officers)
G Guardian/Conservator
❑ Partner-Limited/General
❑ Truslee(s)
7 Other.
representing:
Method of stoner Identification
Proved to me on the bests at satisfactory evidence:
❑ ronn(a) of identitiution ❑ vedible vdtness(es)
Notarial event is detailed In notary journal on:
Page#_ Entry*_
Notary untact
❑ Additional Signer ❑ Signer(s) Thumbprints(e)
iWhV-'4 - atAt't'k
GENERAL ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
I� )
COUNTY OF �� )
On August 17, 2012 before me, 5145M MAY561 S , Notary
Public, personally appeared fRArltcJ•SP¢JACak-who proved to me on the basis of satisfactory
evidence to be the person(lr) whose name(a) is/are subscribed to the within instrument and
acknowledged to me that he/ehe/6wy executed the same in hisAwrftheir authorized capacity(iev),
and that by hisAr &4hok signature(s) on the instrument the person(&), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ofNotal ublic
SUSAN MAYSELS
COMM, 91 U444I
$ NOTARY PUBLIC • CALIFORNIA1
. RNERSIDE COUNTY
eesAPR13 P013 +
(Seal)
Subordination Agreement - Coral Mountain Apartnunts
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of La Quinta, County of Riverside, State of California, described as
follows:
In the City of La Quinta, County of Riverside, State of California, that portion of the West half
of the East half and the East half of'the West half of the Northwest quarter of the Southeast
quarter of Section 29, Township'5 `South, Range 7„East,: San Bernardino Base and Meridian,
more particularly described as follows:
Commencing at the East quarter comer of. said Section 29; thence South 89e 39' 16" West along
the North line of said Southeast quarter, a distance of 1,656.57 feet to the'Northeast corner of
said West half of the East half of the Northwest quarter of the Southeast quarter of Section 29;
thence South 00° 08' 10" East along the East line of said West half of the East half of the
Northwest quarter of the Southeast quarter Section 29, a distance of 60.93 feet to the South right-
of-way line of Highway 111 as granted to the City of La Quinta per Instrument No. 2007-
0076267 recorded February 1, 2007 and re -recorded February 14, 2007 as Instrument No. 2007-
0103255, O.R.;
Thence contifiuing South 00° 08' 10" East along said East line a distance of 626.13 feet to the
beginning of anon tangent curve::Coneave Northerly, having a radius of 300.00 feet, a radial line
to said pomt:bears South 01 °3':43'.'''West, and the true point of beginning;
Thence leaving said East line and Westerly along the arc of said curve, through a central angle of
16e 09' 07", an arc distance of 84.57 feet to the beginning of a reverse curve concave Southerly,
having a radius of 300.00 feet, a radial line to said point bears North 18' 02' 50" East; thence
Westerly along the arc of said curve through a central angle of 18e 02' 50", an arc distance of
94.50 feet; thence North 90' 00' 00" West a distance of 265.78 feet to the beginning of a tangent
curve, concave Southeasterly, having a radius of 200.00 feet;
Thence Southwesterly along the arc of said curve, through a central angle of 90° 09' 34", an arc
distance of 314.72 feet; thence non -tangent to said curve South 890 50' 26" West, a distance of
21.18 feet to the West line of said East half of the West half of the Northwest quarter of the
Southeast quarter of Section 29; thence South 00' 09' 34" East along said West line, a distance
of 500.13 feet to the South line of said Northwest quarter of the Southeast quarter of Section 29;
thence South 89e 48' 22" East along said South line a distance of 662.14 feet to said East line of
the West half of the East half of the Northwest quarter of the Southeast quarter of Section 29;
thence North 000 18' 10" West along said East line, a distance of 673.63 feet to the true point of
beginning. Said land is also shown as Parcel 2 of Lot line Adjustment No. 2010-508 as Disclosed
by Grant Deed recorded December 2, 2010, as Instrument No. 2010-575516, of Official Records.
APN: 600-020-054
Subordination Agreement A- I Coral Mountain Apartments
EXHIBIT B
JUNIOR LOAN DOCUMENTS
1. Promissory Note, dated on or about the same date hereof, made by Borrower to Junior
Lender, as the housing successor to the Agency.
2. Leasehold Deed of Trust with Assignment of Rents, dated on or about the same date
hereof, by Borrower, as Trustor, for the benefit of Junior Lender.
3. Disposition and Development Agreement dated January 4, 2011, between Borrower and
Junior Lender, as the housing successor to the Agency.
4. Assignment of Architectural Agreements and Plans and Specifications, executed on or
about the same date hereof, by Borrower in favor of Junior Lender, as the housing
successor to the Agency.
Subordination Agreement B-1 Coral Mountain Apartments
Recorded at the Request of
Old Republic Title Company
Oakland `11'koinj
RECORDING REQUESTED BY: CERTIFIED A TRUE COPY OF THE ORIGINAL
Coral Mountain Partners, L.P. RECORDED IN THE OFFICIAL RECORDS OF
RIVERSIDE COUNTY ON August 28, 2012
WHEN:RECORDED RETURN..TO: - Under Recorder's Serial No. 2012-04126 10
Orrick, Herrington & Sutcliffe LLP Old Repu 'c Title Company
405 Howard Street By. kK1
San Francisco, CA 94105
Attention: Thomas A. Downey, Esq.
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
By and Between
CALIFORNIA MUNICIPAL FINANCE AUTHORITY,
as Issuer
and,
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership,
as Owner
Dated as of August 1, 2012
Relating to
CALIFORNIA MUNICIPAL FINANCE AUTHORITY
MULTIFAMILY HOUSING REVENUE NOTE
(CORAL MOUNTAIN APARTMENTS)
2012 SERIES A
OHSUSA:750909060.3
TABLE OF CONTENTS
Section 1.
- Definitions and Interpretation ......... .......... ...:::..........
Section2.
Representations, Covenants and Warranties of the Owner.......
Section 3.
Qualified Residential Rental Project .........................................
Section 4.
Low Income Tenants; Reporting Requirements .......................
Section 5.
Tax -Exempt Status of Note .......................................................
Section 6.
Requirements of the Housing Law ...........................................
Section 7.
Requirements of the Issuer........................................................
Section 8.
Modification of Covenants.......................................................
Section 9.
Indemnification; Other Payments .............................................
Section 10.
Consideration............................................................................
SectionIL
Reliance
Section 12.
.....................................................................................
Transfer of the Project ............. .................
Section13.
.......... I... I .............. I...
Term
Section 14.
..........................................................................................
Covenants to Run With the Land ..............................................
Section 15.
Burden and Benefit...................................................................
Section 16.
Uniformity; Common Plan .......................................................
Page
................... 6
........................... 7
................. I......... 8
......................... 10
.................... I.... I 1
................12
........................13
........:...............13
........................ 15
........................15
........................ 15
.17
........................17
........................ 18
18
Section.1.7._..
—Default;-Enforcement ...............................................................................:............18
Section18.
[Reserved]............................................................................................................19
Section 19.
Recording Filing
and ............................................................................................19
Section20.
Payment of Fees...................................................................................................
19
Section 21.
Governing Law; Venue
........................................................................................
21
Section 22.
Amendments; Waivers.........................................................................................
21
Section23.
Notices.................................................................................................................
21
Section24.
Severability
Section 25.
...............................:..........................................................................22
Multiple Counterparts
.......................
................................................ .............. ..... 22
Section 26.
Limitation on Liability .........................
.............:......... .... ............. ........................22
Section 27.
Third -Party Beneficiary .................................................................................
...... 23
EXHIBIT A LEGAL DESCRIPTION OF PROJECT SITE
EXHIBIT B FORM OF VERIFICATION OF INCOME
EXHIBIT C COMPLETION CERTIFICATE
EXHIBIT D CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
EXHIBIT E CERTIFICATE AS TO COMMENCEMENT OF QUALIFIED PROJECT
PERIOD
-i-
OHSUSA:750909060.3
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE
COVENANTS (as supplemented and amended from time to time, this "Regulatory Agreement")
is made and entered into as of August 1, 2012, by and between the CALIFORNIA MUNICIPAL
FINANCE AUTHORITY, a joint exercise of powers agency duly organized and existing under
the laws of the State of California (together with any successor to its rights, duties and
obligations, the "Issuer") and CORAL MOUNTAIN PARTNERS, L.P., a California limited
partnership, duly organized, validly existing and in good standing under the laws of the State of
California (together with any successor to its rights, duties and obligations hereunder and as
owner of the Project identified herein, the "Owner").
WITNESSETH:
WHEREAS, pursuant to Chapter 5 of Division 7 of Title I of the California Government
Code (the "Act") and in compliance with Chapter 7 of Part 5 of Division 31 of the California
Health and Safety Code (the "Housing Law', the Issuer proposes to execute and deliver its
Multifamily Housing Revenue Note (Coral Mountain Apartments) 2012 Series A (the "Note"),
--pursuant- to -a --Funding Loan Agreement, dated as of August 1-2012 (the "Funding Loan
Agreement', between Citibank, N.A., as Funding Lender (the "Fundi p Lender"), and the
Issuer, the proceeds of which will be utilized to fund a loan to the Owner (the "Loan") pursuant
to the Borrower Loan Agreement of even date herewith (as supplemented and amended from
time to time, the "Borrower Loan Agreement"), between the Owner and the Issuer, in order to
enable the Owner to finance the acquisition, construction and development of a 176-unit
multifamily rental housing project to be known as Coral Mountain Apartments, to be located on
the real property site, described in Exhibit A hereto (as further described herein, the "Project');
WHEREAS, in order to assure the Issuer and the holders of the Note that interest on the
Note will be excluded from gross income for federal income tax purposes under Section 103 of
the Internal Revenue Code of 1986 (the "Code"), and to satisfy the public purposes for which the
Governmental Lender Note is authorized to be issued under the Act and the Housing Law, and to
satisfy the purposes of the Issuer in determining to execute and deliver the Governmental Lender
Note, certain limits on the occupancy of units in the Project need to be established and certain
other requirements need to be met;
NOW, THEREFORE, in consideration of the delivery of the Governmental Lender Note
by the Issuer and the mutual covenants and undertakings set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Issuer
and the Owner hereby agree as follows:
Section 1. Definitions and Interpretation. Unless the context otherwise requires, the
capitalized terms used herein shall have the respective meanings assigned to them in the recitals
hereto, in this Section 1, or in the Borrower Loan Agreement.
OHSUSA:750909060.3
"Administrator" means the Issuer or any administrator or program monitor appointed by
the Issuer to administer this Regulatory Agreement, and any successor administrator appointed
by the Issuer.
"Area" means the Metropolitan Statistical Area or County, as applicable, in which the
Project is located, as defined by the United States Department of Housing and Urban
Development.
"Area Median Gross Income" means the median gross income for the Area, as
determined by the Secretary of the Treasury in a manner consistent with determination of lower -
income families and area median gross income under Section 8 of the Housing Act and
Section 3009a of the Housing and Economic Recovery Act of 2008, including adjustments for
family size (or, if such program under Section 8 is terminated, under such program in effect
immediately before such termination), or as otherwise required under Section 142 of the Code
and the Housing Law.
"Available Units" means residential units in the Project that are actually occupied and
residential units in the Project that are vacant and have been occupied at least once after
becoming available for occupancy, provided that (a) a residential unit that is vacant on the later
of (i) the date the Project is acquired or (ii) the delivery date of the Governmental Lender Note is
not an Available Unit and -does -not become an Available Unit until it has been -occupied for the
first time after such date, and (b)a.residential unit that is not available for occupancy due to
renovations is not an Available Unit and does not become an Available Unit until it has been
occupied for the first time after the renovations are completed.
"CDLAC" means the California Debt Limit Allocation Committee or its successors.
"CDLAC Conditions" has the meaning given such term in Section 7(e).
"Certificate of Continuing Program Compliance" means the Certificate to be filed by the
Owner with the Administrator, on behalf of the Issuer, pursuant to Section 4(f) hereof, which
shall be substantially in the form attached as EXHIBIT D hereto or in such other comparable
form as may be provided by the Issuer to the Owner, or as otherwise approved by the Issuer.
"City" means the City of La Quinta, California.
"Closing Date" is expected to be on or about August 29, 2012, the date the Governmental
Lender Note is executed and delivered to the initial purchaser thereof.
"Completion Certificate" means the Certificate of Completion of the Owner in the form
attached hereto as EXHIBIT C.
"Conversion Date" means the date on which the Loan converts from the construction
phase to the permanent phase.
"County" means the -County of Riverside, California.`
2
OHSUSA:750909060.3
"Deed of Trust" means the "Security Instrument" as such term is defined in the Funding
Loan Agreement.
"Gross Income" in ans the adjusted income, of a; person, (together with ,the_ adjusted _
income of all persons 18 years of age or older who intend to reside with such person in one
residential unit) as calculated in a manner consistent with determinations of lower income
families and Area Median Gross Income under Section 8 of the Housing Act (or, if such program
is terminated, under such program in effect immediately before such termination), or as
otherwise required under Section 142 of the Code and the Housing Law.
"Housing Act" means the United States Housing Act of 1937, as amended, or its
successor.
"Housing Lmv" means Chapter 7 of Part 5 of Division 31 of the California Health and
Safety Code, as amended.
"Investor Limited Partner" means Hamilton USBCDC Investments, L.P., a California
limited partnership, and its successors and assigns.
"Issuer Annual Fee" means (1) for the first year the Governmental Lender Note is
..........
outstanding, 8 basis points times the original aggregate_ principal amount of the Governmental
Lender Note and (2) thereafter, the greater of (i) 8 basis points times the then currently
outstanding principal amount of the Governmental Lender Note on the first day of the month in
which the anniversary of the issuance date occurs or (ii) Four Thousand Dollars. For purposes of
this definition, the full original principal amount of the Governmental Lender Note will be
deemed to have been drawn down and outstanding on the Closing Date, and shall only be
reduced by the principal amount of the Governmental Lender Note that has been paid; provided,
further, that where the Governmental Lender Note is subject to conversion from a construction
term to a permanent term, the annual fee will be based on the original outstanding principal
amount of the Governmental Lender Note until such conversion, notwithstanding any prior
prepayments of the Governmental Lender Note, and following the conversion date, will be based
on the outstanding principal amount of the Governmental Lender Note as of the first day of the
month in which the anniversary of the issuance date occurs, but in no event less than $4,000 per
year.
"Issuer Issuance Fee" means $41,625.
"Low Income Tenant" means individuals or families whose income does not exceed 60%
of the Area Median Gross Income; provided, however, that if all the occupants of an Available
Unit are students (as defined in Section 152(f)(2) of the Code) who fail to be described in
Section 42(i)(3)(D) of the Code, the occupants of that Unit shall in no event be deemed to be
"Low Income Tenants." The income of individuals and Area Median Gross Income shall be
detemtined by the Secretary of the Treasury in a manner consistent with determinations of lower
income families and Area Median Gross Income under Section 8 of the Housing Act (or, if such
program is terminated, under such program in effect immediately before such termination).
Determinations under the preceding sentence shall include adjustments for family size as
prescribed under Section 8 of the Housing Act.
OHSUSA:750909060.3
"Low Income Unit" means the units in the Project required to be rented to, or held
available for occupancy by, Low Income Tenants pursuant to Section 4(a) hereof.
_ _.,."Managerl-'..,menus-geproperty-manager:meeting-_the requirements-of-Section.7(g) hereof.__._
Hyder & Company, is hereby approved as the initial Manager.
"Project" means the 176-unit multifamily rental housing development to be located in the
City of La Quinta, California, on the real property site described in EXHIBIT A hereto,
consisting of those facilities, including real property, structures, buildings, fixtures or equipment
situated thereon, as it may at any time exist, the acquisition, construction and development of
which facilities are to be financed, in whole or in part, from the proceeds of the execution and
delivery of the Note or the proceeds of any payment by the Owner pursuant to the Borrower
Loan Agreement, and any real property, structures, buildings, fixtures or equipment acquired in
substitution for, as a renewal or replacement of, or a modification or improvement to, all or any
part of the facilities described in the Borrower Loan Agreement.
"Project Costs", "Cost', "Costs" or "Costs of the Project' means with respect to the
Project, the costs chargeable to the Project in accordance with generally accepted accounting
principles including without limitation, the cost of acquisition, rehabilitation, construction,
restoration, repair, alteration, improvement and extension of any building, structure, facility or
other improvement; stored materials for construction -work-in progress the cost of machinery and
equipment; the cost of the real property on which the Project is constructed, rights -in -lands,
easements, privileges, agreements franchises, utility extensions, disposal facilities, access roads
and site development necessary or useful and convenient for the Project or in connection
therewith; financing costs, including, but not limited to, costs of execution and delivery of the
Note, engineering and inspection. costs; fees paid to the developer of the Project; organization,
administrative, insurance, legal, operating, letter of credit and other expenses of the Issuer or the
Owner actually incurred prior to and during construction or development; and all such other
expenses as may be necessary or incidental to the financing, acquisition, construction,
development or completion of the Project, including, but not limited to, interest expense incurred
prior to completion of the Project, insurance premiums payable by the Owner, taxes and other
governmental charges levied on the Project.
"Qualified Project Costs" means "Good Costs" as such term is defined in the Tax
Certificate,
"Qualified Project Period" means the period beginning on the first day on which at least
ten percent (10%) of the units in the Project are first occupied and ending on the later of the
following:
(A) the date that is fifteen (15) years after the date on which at least fifty
percent (509/6) of the units in the Project are first occupied;
(B) the first date on which no Tax -Exempt private activity bonds with respect
to the Project are outstanding;
(C) the date on which any assistance provided with respect to the Project
under Section 8 of the Housing Act terminates; or
4
014SUSA:750909060.3
(D) such later date as set forth in Section 7 of this Regulatory Agreement.
"Regulations" means the Income Tax Regulations of the Department of the Treasury
applicable under the Code from time to time.
"Regulatory Agreement" means this Regulatory Agreement and Declaration of
Restrictive Covenants, as it may be supplemented and amended from time to time.
"Rental Payments" means the monthly rental payments paid by the occupant of a unit,
excluding any supplemental rental assistance to the occupant from the State, the federal
government, or any other public agency, but including any mandatory fees or charges imposed
on the occupant by the Owner as a condition of occupancy of the unit.
"Tax Certificate" means the Tax Certificate and Agreement dated the Closing Date,
executed and delivered by the Issuer and the Owner, as amended or supplemented from time to
time.
"Tax -Exempt" means with respect to interest on any obligations of a state or local
_ govcmment,..including_the_Note,..ihat_such_interest is excluded from grossincomefor federal -- - -
income tax purposes; provided, however, that such interest may be includable as an item of tax
preference or otherwise includable directly or indirectly for purposes of calculating other tax
liabilities, including any alternative minimum tax or environmental tax, under the Code.
"Transfer" means the, conveyance, assignment, sale or other disposition of all or any
portion of the Project; and shall also include, without limitation to the foregoing, the following:
(1) an installment sales agreement wherein Owner agrees to sell the Project or any part thereof
for a price to be paid in installments; and (2) an agreement by the Owner leasing all or a
substantial part of the Project to one or more persons or entities pursuant to a single or related
transactions.
"ilerifucatiouu of Income" means a Verification of Income in the form attached as
EXHIBIT B hereto or in such other comparable form as may be provided by the Issuer to the
Owner, or as otherwise approved by the Issuer.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement,
words of any gender shall be construed to include each other gender when appropriate and words
of the singular number shall be construed to include the plural number, and vice versa, when
appropriate. This Regulatory Agreement and all the terns and provisions hereof shall be
construed to effectuate the purposes set forth herein and to sustain the validity hereof.
The titles and headings of the sections of this Regulatory Agreement have been inserted
for convenience of reference only, and are not to be considered a part hereof and shall not in any
way modify or restrict any of the terms or provisions hereof or be considered or given any effect
in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any
question of intent shall arise.
5
OIISUSA:750909060.3
The parties to this Regulatory Agreement acknowledge that each party and their
respective counsel have participated in the drafting and revision of this Regulatory Agreement.
Accordingly, the parties agree that any rule of construction to the effect that ambiguities are to be
resolved-- against the -drafting=party-shall not apply--in--the interpretation of -this -Regulatory
Agreement or any supplement or exhibit hereto.
Section 2. Representations. Covenants and Warranties of the Owner.
(a) The Owner hereby incorporates herein, as if set forth in full herein, each of the
representations, covenants and warranties of the Owner contained in the Tax Certificate and the
Borrower Loan Agreement relating to the Project.
(b) The Owner hereby represents and warrants that the Project is located entirely
within the City.
(c) The Owner acknowledges, represents and warrants that it understands the nature
and structure of the transactions contemplated by this Regulatory Agreement; that it is familiar
with the provisions of all of the documents and instruments relating to the Governmental Lender
Note to which it is a party or of which it is a beneficiary; that it understands the financial and
legal risks inherent in such transactions; and that it has not relied on the Issuer for any guidance
— - or -expertise -in analyzing the financial or other consequences -of such financing transactions or
otherwise relied on the Issuer in any manner except to execute the Governmental Lender Note in
order to provide funds to assist the Owner in constructing and developing the Project.
(d) The Owner's reasonable expectations respecting the total cost of the acquisition,
construction and development of the Project and the disbursement of Note proceeds are
accurately set forth in the Tax Certificate dated as of the Closing Date.
(e) The Owner shall proceed with due . diligence to complete the acquisition,
construction and development of the Project and expects to expend the maximum authorized
amount of the proceeds of the Loan for Project Costs prior to August 1, 2015.
(f) The statements made in the various certificates delivered by the Owner to the
Issuer or the Funding Lender are true and correct in all material respects.
(g) Less than twenty-five percent (25°/n) of the proceeds of the Tax -Exempt Note
shall be used, directly or indirectly, for the acquisition of land.
(h) The Owner (and any person related to it within the meaning of Section 147(a)(2)
of the Code) will not take or omit to take, as is applicable, any action if such action or omission .
would in any way cause the proceeds from the execution and delivery of the Note to be applied
in a manner contrary to the requirements of the Funding Loan Agreement, the Borrower Loan
Agreement or this Regulatory Agreement.
(i) At least ninety-seven (97%) of the proceeds of the Tax -Exempt Note, including
interest earnings thereon, will be disbursed for Qualified Project Costs.
OHSUSA:750909D603
(j) An amount not in excess of two percent (2%) of the proceeds of the Tax -Exempt
Note will be used for costs of issuance of the execution and delivery of the Note, all within the
meaning of section 147(g)(1) of the Code. For this purpose, if the fees of the original purchaser
of the-Tax=ExemptNote-are=retained as a-discounfon-the-purchase of the -Tax -Exempt Note; -such
retention shall be deemed to be an expenditure of proceeds of the Tax -Exempt Note for said fees.
(k) No proceeds of the Tax -Exempt Note shall be used directly or indirectly to
provide any airplane, skybox or other private luxury box, health club facility, facility used for
gambling or store the principal business of which is the sale of alcoholic beverages for
consumption off premises.
The Owner agrees that the terms of the Tax Certificate shall control over any inconsistent
provision set forth in this Section 2.
Section 3. Oualified Residential Rental Project. The Owner hereby acknowledges
and agrees that the Project is to be owned, managed and operated as a "residential rental project"
(within the meaning of Section 142(d) of the Code) for a term equal to the Qualified Project
Period. To that end, and for the term of this Regulatory Agreement, the Owner hereby
represents, covenants, warrants and agrees as follows:
-----(a)------The -Project- -will- -be-constructedi -developed and operated for thepurposeof -
providing multifamily residential rental property. The Owner will own, manage and operate the
Project as a project to provide multifamily residential rental property comprised of a building or
structure or several interrelated buildings or structures, together with any functionally related and
subordinate facilities, and no other facilities, in accordance with Section 142(d) of the Code,
Section LI03-8(b) of the Regulations and the provisions of the Act and the Housing Law, and in
accordance with such requirements as may be imposed thereby on the Project from time to time.
(b) All of the dwelling units in the Project (except for not more than two units set
aside for a resident manager or other administrative use) will be similarly constructed units, and
each dwelling unit in the Project will contain complete separate and distinct facilities for living,
sleeping, eating, cooking and sanitation for a single person or a family, including a sleeping area,
bathing and sanitation facilities and cooking facilities equipped with a cooking range,
refrigerator and sink.
(c) None of the dwelling units in the Project will at any time be utilized on a transient
basis or rented for a period of less than thirty (30) consecutive days, or will ever be used as a
hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital,
sanitarium, rest home or trailer court or park; provided that the use of certain units for tenant
guests on an intermittent basis shall not be considered transient use for purposes of this
Regulatory Agreement.
(d) No part of the Project will at any time during the Qualified Project Period be
owned by a cooperative housing corporation, nor shall the Owner take any steps in connection
with a conversion to such ownership or use, and the Owner will not take any steps in connection
with a conversion of the Project to condominium ownership during the Qualified Project Period
(except that the Owner may obtain final map approval and the Final Subdivision Public Report
OHSUSA:750909060.3
from the California Department of Real Estate and may file a condominium plan with the
County).
All, -of-the.-Available:-Units-in the-Prcject:will-be: available- for•rental--during the---- - -
period beginning on the date hereof and ending on the termination of the Qualified Project
Period on a continuous, "first -come, first -served" basis to members of the general public; and the
Owner will not give preference to any particular class or group in renting the dwelling units in
the Project, except to the extent that dwelling units are required to be leased or rented in such a
manner that they constitute Low Income Units.
(f) The Project consists of a parcel or parcels that are contiguous except for the
interposition of a road, street or stream, and all of the facilities of the Project comprise a single
geographically and functionally integrated project for residential rental property, as evidenced by
the ownership, management, accounting and operation of the Project.
(g) No dwelling unit in the Project shall be occupied by the Owner; provided,
however, that if the Project contains five (5) or more dwelling units, this provision shall not be
construed to prohibit occupancy of not more than one dwelling unit by a resident manager or
maintenance personnel, any of whom may be the Owner.
(h) The Owner shall deliver -to -the -Administrator and the Funding Lender (i) on the
date of the completion of the construction and development of the Project, a duly executed and
completed Completion Certificate in the form attached hereto. as EXHIBIT C, and (ii) within
thirty (30) days after the date on which 50% of the dwelling units in the Project are occupied, a
written notice in the form attached as EXHIBIT E hereto providing the information requested
therein.
Section 4. Low Income Tenants,• Reoortine Requirements. Pursuant to the:
requirements of the Code, the Owner hereby represents; warrants and covenants as follows:
(a) During the Qualified Project Period, no less than forty percent (401/o) of the total
number of completed units in the Project shall at all times be occupied by Low Income Tenants.
For the purposes of this paragraph (a), a vacant unit that was most recently occupied by a Low
Income Tenant is treated as a Low Income Unit until reoccupied, other than for a temporary
period of not more than thirty-one (31) days, at which time the character of such unit shall be
redetermined.
(b) No tenant qualifying as a Low Income Tenant upon initial occupancy shall be
denied continued occupancy of a unit in the Project because, after admission, the aggregate
Gross Income of all tenants in the unit occupied by such Low Income Tenant increases to exceed
the qualifying limit for a Low Income Unit. However, should the aggregate Gross Income of
tenants in a Low Income Unit, as of the most recent determination thereof, exceed one hundred
forty percent (140%) of the applicable income limit for a Low Income Unit occupied by the same
number of tenants, the next available unit of comparable or smaller size must be rented to
(or held vacant and available for immediate occupancy by) Low Income Tenant(s). The unit
occupied by such tenants whose aggregate Gross Income exceeds such applicable income limit
shall continue to be treated as a Low Income Unit for purposes of the 40% requirement of
OHSUSA:7509090603
Section 4(a) hereof unless and until an Available Unit of comparable or smaller size is rented to
persons other than Low Income Tenants:
(c) --.--For-the-Qualified=Project-Period,-the-Owner•,will-obtain;-complete-and-maintain on
file Verifications of Income for each Low Income Tenant, including (i) a Verification of Income
in the form attached hereto as EXHIBIT B dated immediately prior to the initial occupancy of
such Low Income Tenant in the unit, and (ii) thereafter, an annual Verification of Income in the
form attached hereto as EXHIBIT B with respect to each Low Income Tenant. In lieu of
obtaining an annual Verification of Income, the Owner may, with respect to any particular
twelve-month period ending July 1 of each year, deliver to the Administrator no later than
fifteen (15) days after such date, a certification that as of July 1, no residential unit in the Project
was occupied within the preceding twelve (12) months by a new resident whose income
exceeded the limit applicable to Low Income Tenants upon admission to the Project. The
Administrator may at any time and in its sole and absolute discretion notify the Owner in writing
that it will no longer accept certifications of the Owner made pursuant to the preceding sentence
and that the Owner will thereafter be required to obtain an annual Verification of Income for
tenants. The Owner also will provide such additional information as may be required in the
future by the Code, the State or the Issuer, as the same may be amended from time to time, or in
such other form and manner as may be required by applicable rules, rulings, policies, procedures,
Regulations or other official statements now or hereafter promulgated, proposed or made by the
Department of the Treasury or the Internal Revenue Service with respect to Tax -Exempt
obligations. Upon request of the Administrator or the Issuer, copies of Verification of Income
for Low Income Tenants commencing or continuing occupancy of a Low Income Unit shall be
submitted to the Administrator or the Issuer, as requested.
(d) The Owner shall make a good faith effort to verify that the income information
provided by an applicant in a Verification of Income is accurate by taking one or more of the
following steps as a part of the verification process: (1) obtain pay stubs for the three most
recent pay periods, (2) obtain an income tax return for the most recent tax year, (3) obtain a
credit report or conduct a similar type credit search, (4) obtain an income verification from the
applicant's current employer, (5) obtain an income verification from the Social Security
Administration and/or the .California Department of Social Services if the applicant receives
assistance from either of such agencies, or (6) if the applicant is unemployed and does not have
an income tax return, obtain another form of independent verification reasonably acceptable to
the Issuer.
(e) The Owner will maintain complete and accurate records pertaining to the Low
Income Units' and will permit, upon reasonable prior notice, any duly authorized representative
of the Issuer, the Department of the Treasury or the Internal Revenue Service to inspect the
books and records of the Owner pertaining to the Project, including those records pertaining to
the occupancy of the Low Income Units.
(f) The Owner will prepare and submit to the Administrator, on behalf of the Issuer,
annually, on or before February 1 of each year, a Certificate of Continuing Program Compliance
executed by the Owner in substantially the form attached hereto as EXHIBIT D; provided,
however, at the direction of the Issuer, the Owner will prepare and submit to the Administrator,
on behalf of the Issuers quarterly, on or before January 1, April 1, July 1 and October I of each
0
OBSUSA:750909060.3
year, a Certificate of Continuing Program Compliance executed by the Owner in substantially
the form attached hereto as EXHIBIT D. During the Qualified Project Period, the Owner shall
submit a completed Internal Revenue Code Form 8703 or such other, annual certification as
required by -the: Code -with -respect -to the -Project; to -the -Secretary-of•the-Treasury on -or -before -
March 31 of each year (or such other date as may be required by the Code).
(g) For the Qualified Project Period, all tenant leases or rental agreements shall be
subordinate to this Regulatory Agreement and the Deed of Trust. All leases pertaining to Low
Income Units shall contain clauses, among others, wherein each tenant who occupies a Low
Income Unit: (i) certifies the accuracy of the statements made by such tenant in the Verification
of Income; (ii) agrees that the family income and other eligibility requirements shall be deemed
substantial and material obligations of the tenancy of such tenant, that such tenant will comply
promptly with all requests for information with respect thereto from the Owner the Issuer or the
Administrator on behalf of the Issuer, and that the failure to provide accurate. information in the
Verification of Income or refusal to comply with a request for information with respect thereto
shall be deemed a violation of a substantial obligation of the tenancy of such tenant;
(iii) acknowledges that the Owner has relied on the statements made by such tenant in the
Verification of Income and supporting information supplied by the Low Income Tenant in
determining qualification for occupancy of a Low Income Unit, and that any material
misstatement in such certification (whether or not intentional) will be cause for immediate
termination of such lease or rental agreement; and (iv) agrees that the tenant's income is subject
to annual certification in accordance with Section 4(c) and that if upon any such certification the
aggregate Gross Income of tenants in such unit exceeds the applicable income limit under
Section 4(b), the unit occupied by such tenant may cease to qualify as a Low Income Unit and
such unit's rent may be subject to increase.
For purposes of this Section 4, no unit occupied by a residential manager shall be treated
as a rental unit during the time of such occupation.
Section S. Tax -Exempt Status of Note. The Owner and the Issuer, as applicable,
each hereby represents, warrants and agrees as follows:
(a) The Owner and the Issuer will not knowingly take or permit, or omit to take or
cause to be taken, as is appropriate, any action that would adversely affect the Tax -Exempt
nature of the interest on the Note and, if either of them should take or permit, or omit to take or
cause to be taken, any such action, it will take all lawful actions necessary to rescind or correct
such actions or omissions promptly upon obtaining knowledge thereof.
(b) The Owner and the Issuer, at the expense of the Owner, will file of record such
documents and take such other steps as are necessary, in the written opinion of Bond Counsel
filed with the Issuer (with a copy to the Owner), in order to insure that the requirements and
restrictions of this Regulatory Agreement will be binding upon all owners of the Project,
including, but not limited to, the execution and recordation of this Regulatory Agreement in the
real property records of the County.
10
OHSUSA:750909060.3
Section 6. Requirements of the Housing Law. In addition to the other requirements
set forth herein, the Owner hereby agrees that it shall comply with each of the requirements of
Section 52080 of the Housing Law, including the following:
(a) Not less than forty percent (40%) of the total number of units in the Project shall
be Low Income Units. The units made available to meet this requirement shall be of comparable
quality and offer a range of sizes and numbers of bedrooms comparable to the units that are
available to other tenants in the Project.
(b) The Rental Payments .for the Low Income Units paid by the tenants thereof
(excluding any ,supplemental rental assistance from the State, the federal government or any
other public agency to those tenants or on behalf of those units) shall not exceed one -twelfth
(I/I2'h) of thirty percent (30%) of an amount equal to sixty percent (60%) of the Area Median
Gross Income.
(c) The Owner shall accept as tenants, on the same basis as all other prospective
tenants, low-income persons who are recipients of federal certificates or vouchers for rent
subsidies pursuant to the existing program under Section 8 of the Housing Act. The Owner shall
not permit any selection criteria to be applied to Section 8 certificate or voucher holders that is
more burdensome than the criteria applied to all other prospective tenants.
(d) The units reserved for occupancy as required by Section 4(a) shall remain
available on a priority basis for occupancy at all times on and after the Closing Date and
continuing through the Qualified Project Period.
(e) During the three (3) years prior to the expiration of the Qualified Project Period,
the Owner shall continue to make available, to eligible households, Low Income Units that have
been vacated to the same extent that nonreserved units are made available to noneligible
households.
(f) Following the expiration or termination of the Qualified Project Period, except in
the event of foreclosure and prepayment of the Governmental Lender Note, deed in lieu of
foreclosure, eminent domain; or action of a federal agency preventing enforcement, units
reserved for occupancy as required by subsection (a) of this Section shall remain available to any
eligible tenant occupying a reserved unit at the date of such expiration or termination, at the rent
determined by subsection (b) of this Section, until the earliest of (1) the household's income
exceeds one hundred forty percent (140°/o) of the maximum eligible income specified above,
(2) the household voluntarily moves or is evicted for good cause (as defined in the Housing
Law), (3) thirty (30) years after the date of the commencement of the Qualified Project Period, or
(4) the Owner pays the relocation assistance and benefits to, households as provided in .
Section 7264(b) of the California Government Code.
(g) Except as set forth in Section 13 hereof, the covenants and conditions of this
Regulatory Agreementshall be binding upon successors in interest of the Owner.
(h) This Regulatory Agreement shall be recorded in the office of the County recorder,
and shall be recorded in the grantor -grantee index under the name of the Owner as grantor and
under the name of the Issuer as grantee.
II
OHSUSA:750909060.3
Section 7. Requirements of the Issuer. In addition to other requirements set forth
herein and to the extent not prohibited by the requirements set forth in Sections 4 through 6
hereof, the Owner hereby agrees to comply with each of the requirements of the Issuer set forth
,inthis-Section 7;as-fbllows-.--.__. _.._.......
(a) For the duration of the Qualified Project Period, notwithstanding any retirement
of the Governmental Lender Note or termination of the Borrower Loan Agreement, the Owner
will pay to the Issuer all of the amounts required to be paid by the Owner under the Borrower
Loan Agreement and will indemnify the Issuer as provided in Section 9.
(b) All tenant lists, applications and waiting lists relating to the Project shall at all
times be kept separate and identifiable from any other business of the Owner and shall be
maintained as required by the Issuer, in a reasonable condition for proper audit and subject to
examination during business hours by representatives of the Issuer upon reasonable advance
notice to the Owner.
(c) The Owner acknowledges that the Issuer has appointed the Administrator to
administer this Regulatory Agreement and to monitor performance by the Owner of the terms,
provisions and requirements hereof The Owner shall comply with any reasonable request made
by the Administrator or the Issuer to deliver to any such Administrator, in addition to or instead
of the Issuer, any reports; notices or other documents required to be. -delivered pursuant hereto
and to make the Project and the books and records with respect thereto available for inspection
by the Administrator as an agent of the Issuer. The fees and expenses of the Administrator shall
be paid by the Issuer-
(d) For purposes of Section 6(b), the, base rents shall be adjusted for household size,
to the extent permitted by law.
(e) The Owner shall comply with the conditions set forth in EXHIBIT A to that
certain CDLAC Resolution No. 12-042 relating to the Project and adopted on May 16, 2012 (the
"CDLAC Conditions"), as they may be modified or amended from time to time, which
conditions are incorporated herein by reference and made a part hereof. The Owner will prepare
and submit to the Administrator, not later than March 1 of each year (or such other date as shall
be required by CDLAC), until the end of the Qualified Project Period, a Certificate of
Continuing Program Compliance, in substantially the form attached to the CDLAC Conditions,
executed by an authorized representative of the Owner. The Issuer and the Administrator shall
have no obligation to monitor the Owner's compliance with the CDLAC Conditions. The Owner
shall timely provide to the Issuer such information as is requested by the Issuer to comply with
any reporting requirements applicable to it with respect to the Bonds or the Project under any
federal or State law or regulation, including without limitation, CDLAC regulations.
(f) Except as otherwise provided in Section 13 of this Regulatory Agreement, .this
Regulatory Agreement shall terminate on the date fifty-five (55) years after the Closing Date, as
required by the CDLAC Conditions.
(g) The Owner represents and warrants, and agrees that at all times the Project shall
be managed by a property manager that has at least three (3) years' experience in the ownership,
12
OHSUSA:750909060,3
operation and management of similar size rental housing projects, and at least one year's
experience in the ownership, operation and management of rental housing projects containing
below market rate units, without any record of material violations of discrimination restrictions
-or--other-state or -federal- laws or -regulations -or local governmentalrequirements applicable to
such projects.
Any of the foregoing requirements of the Issuer contained in this Section 7 (except (e)
and (f) above, which may only be waived with the consent of CDLAC) may be expressly waived
by the Issuer, in its sole discretion, in writing, but (i) no waiver by the Issuer of any requirement
of ibis Section 7 shall, or shall be deemed to, extend to or affect any other provision of this
Regulatory Agreement except to the extent the Issuer has received an opinion of Bond Counsel
that any such provision is not required by the Act and the Housing Law and may be waived
without adversely affecting the exclusion from gross income of interest on the Governmental
Lender Note for federal income tax purposes; and (ii) any requirement of this Section 7 shall be
void and of no force and effect if the Issuer and the Owner receive a written opinion of Bond
Counsel to the effect that compliance with any such requirement would cause interest on the
Governmental Lender Note to cease to be Tax -Exempt or to the effect that compliance with such
requirement would be in conflict with the Act, the Housing Law or any other state or federal law.
Section 8. Modification of Covenants. The Owner and the Issuer hereby agree as
follows:
--
(a) To the extent any amendments to the Act, the Housing Law, the Regulations or
the Code shall, in the written opinion of Bond Counsel filed with the Issuer and the Owner,
retroactively impose requirements upon the ownership or operation of the Project more
restrictive than those imposed by this Regulatory Agreement, and if such requirements are
applicable to the Project and compliance therewith is necessary to maintain the validity of, or the
Tax -Exempt status of interest on the Note, this Regulatory Agreement shall be deemed to be
automatically amended to impose such additional or more restrictive requirements.
(b) To the extent that the Act, the Housing Law, the Regulations or the Code, or any
amendments thereto, shall, in the written opinion of Bond Counsel filed with the Issuer and the
Owner, impose requirements upon the ownership or operation of the Project less restrictive than
imposed by this Regulatory Agreement, this Regulatory Agreement may be amended or
modified to provide such less restrictive requirements but only by written amendment signed by
the Issuer, at its sole discretion, and the Owner, with the consent of the Funding Lender, and only
upon receipt by the Issuer of the written opinion of Bond Counsel to the effect that such
amendment will not affect the Tax -Exempt status of interest on the Note or violate the
requirements of the Housing Law, and otherwise in accordance with Section 22 hereof.
(c) The Owner and the Issuer shall execute, deliver and, if applicable, file of record
any and all documents and instruments necessary to effectuate the intent of this Section 8.
Section 9. Indemnification; Other Payments. To the fullest extent permitted by law,
the Owner agrees to indemnify, hold harmless and defend the Issuer and each of its officers,
governing members, directors, officials, employees, attorneys, agents, and program participants
(collectively, the "Indemnified Parties"), against any and all losses, damages, claims, actions,
13
OHSUSA:7509090603
liabilities, costs and expenses of any conceivable nature, kind or character (including, without
limitation, reasonable attorneys' fees, litigation and court costs, amounts paid in settlement and
amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may
.:.become-1 subject:: -under: or,.any.-statutory.--law-(including-federal--or-state�`seeurities-laws)=or-at- -
common Iaw or otherwise, arising out of or based upon or in any way relating to:
(i) the Note, the Funding Loan Agreement, the Borrower Loan Agreement,
the Regulatory Agreement or the Tax Certificate and all documents related thereto, or the
execution or amendment hereof or thereof or in connection with transactions
contemplated hereby or thereby, including the issuance, sale, resale or remarketing of the
Governments] Lender Note, including any Secondary Market Transactions;
(ii) any act or omission of the Owner or any of its agents, contractors,
servants, employees or licensees in connection with the Loan or the Project, the operation
of the Project, or the condition, environmental or otherwise, occupancy, use, possession,
conduct or management of work done in or about,or from the planning, design,
acquisition, installation, construction or development of, the Project or any part thereof;
(iii) any lien or charge upon payments by the Owner to the Issuer or any taxes
(including, without limitation, all ad valorem taxes and sales taxes), assessments;
- impositionsandother charges imposed on the Issuer in respect of any portion of the
Project;
(iv) any violation of any environmental law, rule or regulation with respect to,
or the release of any toxic substance or hazardous material from, the Project or any part
thereof;
(v) the prepayment, in whole or in part, of the Note;
(vi) any untrue statement or misleading statement or alleged untrue statement
or alleged misleading statement of a material fact contained in any offering statement or
disclosure document for the Governmental Lender Note or any of the documents relating
to the Note, or any omission or alleged omission from any offering statement or
disclosure document for the Note of any material fact necessary to be stated therein in
order to make the statements made therein, in the light of the circumstances under which
they were made, not misleading; or
(vii) any declaration of taxability of interest on the Note, or allegations
(or regulatory inquiry) that interest on the Note is taxable for federal tax purposes;
except to the extent such damages are caused by the willful misconduct of such Indemnified
Party. In the event that any action or proceeding is brought against any Indemnified Party with
respect to which indemnity may be sought hereunder, the Owner, upon written notice from the
Indemnified Party, shall assume the investigation and defense thereof, including the employment
of counsel selected by the Indemnified Party, and shall assume the payment of all expenses
related thereto, with full power to litigate, compromise or settle the same in its sole discretion;
provided that the Indemnified Party shall have the right to review and approve or disapprove any
such compromise or settlement. Each Indemnified Party shall have the right to employ separate
14
OHSnSA:7509090603
counsel in any such action or proceeding and participate in the investigation and defense thereof,
and the Owner shall pay the reasonable fees and expenses of such separate counsel; provided,
however, that such Indemnified Party may only employ separate counsel at the expense of the
Owner if -in -the judgment.of such 4ndemnified, Party a conflict of interest exists by reason of -
common representation or if all parties commonly represented do not agree as to the action
(or inaction) of counsel. In addition to the foregoing, the Owner shall pay upon demand all of
the fees and expenses paid or incurred by the Issuer in enforcing the provisions hereof.
The rights of any persons to indemnity pursuant to this Section 9 and the rights to
payment of fees and reimbursements of expenses pursuant to Section 20 of this Regulatory
Agreement shall survive the final payment or prepayment of the Governmental Lender Note and
shall survive the term of this Regulatory Agreement, but only as to claims arising from events
occurring during the term of this Regulatory Agreement.
Nothing contained in this Section 9 shall cause the obligation of the Owner to pay
principal and interest on the Borrower Note or amounts owing with respect to the Governmental
Lender Note to be a recourse obligation of the Owner.
Section 10. Consideration. The Issuer has agreed to execute and deliver the Note to
provide funds to lend to the Owner to finance the Project, all for the purpose, among others, of
-- - inducing the Owner to -acquire, construct develop and operate the Project. In consideration of
the execution and delivery of the Note by the Issuer, the Owner has entered into this Regulatory
Agreement and has agreed to restrict the uses to which this Project can be put on the terms and
conditions set forth herein.
Section 11. Reliance. The Issuer and the Owner hereby recognize and agree that the
representations and covenants set forth herein may be relied upon by all persons, including but
not limited to the Administrator, interested in the legality and validity of the Note, in the
exemption from California personal income taxation of interest on the Note and in the Tax -
Exempt status of the interest on the Note. In performing their duties and obligations hereunder,
the Issuer and the Administrator may rely upon statements and certificates of the Low Income
Tenants, and upon audits of the books and records of the Owner pertaining to the Project. In
addition, the Issuer may consult with counsel, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered by the Issuer
hereunder in good faith and in conformity with such opinion.
Section 12. Transfer of the Project. For the Qualified Project Period, the Owner shall
not Transfer the Project, in whole or in part, without the prior written consent of the Issuer,
which consent shall not be unreasonably withheld or delayed if the following conditions are
satisfied: (A) the receipt by the Issuer of evidence acceptable to the Issuer that (1) the Owner
shall not be in default hereunder or under the Borrower Loan Agreement, if in effect (which may
be evidenced by a Certificate of Continuing Program Compliance), or the transferee undertakes
to cure any defaults of the Owner to the reasonable satisfaction of the Issuer; (2) the continued
operation of the Project shall comply with the provisions of this Regulatory Agreement;
(3) either (a) the transferee or its Manager has at least three years' experience in the ownership,
operation and management of similar size rental housing projects, and at least one year's
experience in the ownership, operation and management of rental housing projects containing
15
OHSUSA:750909060.3
below -market -rate units subject to required income and/or rent restrictions, without any record of
material violations of discrimination restrictions or other state or federal laws or regulations or
local governmental requirements applicable to such projects, or (b) the transferee agrees to retain
---- -- • - a= =Manager -=with::-the--experience---and - record- described in subelaWe (a) -above; or - (cy the -
transferring Owner or its management company will continue to manage the Project, or another
management company reasonably acceptable to the Issuer will manage, for at least one year
following such Transfer and, if applicable, during such period the transferring .Owner or its
management company will provide training to the transferee and its manager in the
responsibilities relating to the Low Income Units; and (4) the person or entity that is to acquire
the Project does not have pending against it, and does not have a history of significant and
material building code violations or complaints concerning the maintenance, upkeep, operation,
and regulatory agreement compliance of any of its projects as identified by any local, state or
federal regulatory agencies; (B) the execution by the transferee of any document reasonably
requested by the Issuer with respect to the assumption of the Owner's obligations under this
Regulatory Agreement and the Borrower Loan Agreement (if then in effect), including without
limitation an instrument of assumption hereof and thereof, and delivery to the Issuer of an
opinion of such transferee's counsel to the effect that each such document and this Regulatory
Agreement are valid, binding and enforceable obligations of such transferee, subject to
bankruptcy and other standard limitations affecting creditor's rights; (C) receipt by the Issuer of
an opinion of Bond Counsel to the effect that any such Transfer. will not. adversely_ affect_ the
Tax -Exempt status of interest on the Note; and (D) receipt by the Issuer of all fees and/or
expenses then currently due and payable to the Issuer by the Owner.
It is hereby expressly stipulated and agreed that any Transfer of the Project in violation of
this Section 12 shall be null, void and without effect, shall cause a reversion of title to the
Owner, and shall be ineffectiveto relieve the Owner of its obligations under this Regulatory
Agreement. The written consent of the Issuer to any Transfer of the Project shall constitute
conclusive evidence that the Transfer is not in violation of this Section 12. Nothing in this
Section shall affect any provision of any other document or instrument between the Owner and
any other party requires the Owner to satisfy certain conditions or obtain the prior written
consent of such other party in order to Transfer the Project. Upon any Transfer that complies
with this Regulatory Agreement, the Owner shall be fully released from its obligations hereunder
to the extent such obligations have been fully assumed in writing by the transferee of.the Project.
The foregoing notwithstanding, the Project may be transferred pursuant to a foreclosure,
exercise of power of sale or deed in lieu of foreclosure or comparable conversion under the Deed
of Trust without the consent of the Issuer or compliance with the provisions of this Section 12.
The Issuer hereby consents to transfers permitted by the Deed of Trust including; without
limitation, the transfer of limited partnership interests in the Owner and the removal and
replacement of the general partner of the Owner with an affiliate of the Investor Limited Partner.
For the Qualified Project Period, the Owner shall not: (1) encumber any of the Project or
grant commercial leases of any part thereof (except for laundry leases), or permit the
conveyance, transfer or encumbrance of any part of the Project, except for (A) Permitted
Encumbrances, or (B) a Transfer in accordance with the terms of this Regulatory Agreement, in
each case upon receipt by the Issuer of an opinion of Bond Counsel to the effect that such action
will not adversely affect the Tax -Exempt status of interest on the Note (provided that such
16
OHSUSA:7509090603
opinion will not be required with respect to any encumbrance, lease or transfer relating to a
commercial operation or ancillary facility that will be available for tenant use and is customary
to the operation of multifamily housing .developments similar to the Project); (2) demolish any
part -of.-the::Project-on substantially -subtract -from -any real -or -personal property -of the -Project, - -- •-
except to the extent that what is demolished or removed is replaced with comparable property or
such demolition or removal is otherwise permitted by the Borrower Loan Agreement or the Deed
of Trust; or (3) permit the use of the dwelling accommodations of the Project for any purpose
except rental residences.
Section 13. Term. This Regulatory Agreement and all and several of the terms hereof
shall become effective upon its execution and delivery, and shall remain in firll force and effect
for the period provided herein and shall terminate as to any provision not otherwise provided
with a specific termination date and shall terminate in its entirety at the end of the Qualified
Project Period, it being expressly agreed and understood that the provisions hereof are intended
to survive the payment of the Note and discharge of the Funding Loan Agreement and the
Borrower Loan Agreement.
The terms of this Regulatory Agreement to the contrary notwithstanding, the
requirements of this Regulatory Agreement shall terminate and be of no further force and effect
in the event of involuntary noncompliance with the provisions of this Regulatory Agreement
caused by fire or other casualty; seizure, requisition, foreclosure, transfer of title by deed in lieu
of foreclosure, change in a federal law or an action of a federal agency after the Closing Date,
which prevents the Issuer from enforcing such provisions, or condemnation or a similar event,
but only if, within a reasonable period, either the Note is retired or amounts received as a
consequence of such event are used to provide a project that meets the requirements hereof;
provided, however, that the preceding provisions of this sentence shall cease to apply and the
restrictions contained herein shall be reinstated if, at any time subsequent to the termination of
such provisions as the result of the foreclosure or the delivery of a deed in lieu of foreclosure or a
similar event, the Owner or any related person (within the meaning of Section 1.103-10(e) of the
Regulations) obtains an ownership interest in the Project for federal income tax purposes. The
Owner hereby agrees that, following any foreclosure, transfer of title by deed in lieu of
foreclosure or similar event, neither the Owner nor any such related person as described above .
will obtain an ownership interest in the Project for federal tax purposes. Notwithstanding any
other provision of this Regulatory Agreement, this Regulatory Agreement may be terminated
upon agreement by the Issuer and the Owner upon receipt by the Issuer of an opinion of Bond
Counsel to the effect that such termination will not adversely affect the exclusion from gross
income of interest on the Note for federal income tax purposes. Upon the termination of the
terms of this Regulatory Agreement, the parties hereto agree, to execute, deliver and record
appropriate instruments of release and discharge of the terms hereof; provided, however, that the
execution and delivery of such instruments shall not be necessary or a prerequisite to the
termination of this Regulatory Agreement in accordance with its terms.
Section 14. Covenants to RunWiththe Land.' Notwithstanding Section 1461 of the
California Civil Code, the Owner hereby subjects the Project to the covenants, reservations and
restrictions set forth in this Regulatory Agreement. The Issuer and the Owner hereby declare
their express intent that the covenants, reservations and restrictions set forth herein shall be
deemed covenants running with the land and shall pass to and be binding upon the Owner's
17
OIiSUSA:7509090603
successors in title to the Project; provided, however, that on the termination of this Regulatory
Agreement said covenants, reservations and restrictions shall expire. Each and every contract,
deed or other instrument hereafter executed covering or conveying the Project or any portion
thereof -shall conclusively beheld to have been dxe6uted,�ddliVered'and'accepted=subjedtto-such
covenants,' reservations and restrictions, regardless of whether such covenants, reservations and
restrictions are set forth in such contract, deed or other instruments.
Section 15. Burden and Benefit. The Issuer and the Owner hereby declare their
understanding and intent that the burdens of the covenants set forth herein touch and concern the
land in that the Owner's legal interest in the Project is rendered less valuable thereby. The Issuer
and the Owner hereby further declare their understanding and intent that the benefits of such
covenants touch and concern the land by enhancing and increasing the enjoyment and use of the
Project by Low Income Tenants, the intended beneficiaries of such covenants, reservations and
restrictions, and by furthering the public purposes for which the Note was issued.
Section 16. Uniformity, Common Plan. The covenants, reservations and restrictions
.hereof shall apply uniformly to the entire Project in order to establish and cant' out a common
plan for the use of the site on which the Project is located.
Section 17. Default: Enforcement. If the Owner defaults in the performance or
observance of anycovenant, agreement or obligation of the Owner set forth -in this"Regulatory
Agreement, and if such default remains uncured for a period of sixty (60) days after notice
thereof shall have been given by the Issuer or the Funding Lender to the Owner (with a copy to
the Investor Limited Partner), or for a period of sixty (60) days from the date the Owner should,
with reasonable diligence, have discovered such default, then the Issuer shall declare an "Event
of Default" to have occurred hereunder, provided, however, that if the default is of such a nature
that it cannot be corrected within sixty (60) days, such default shall not constitute an Event of
Default hereunder so long as (i) the Owner institutes corrective action within said sixty (60) days
and diligently pursues such action until the default is corrected, and (ii) in the opinion of Bond
Counsel, the failure to cure said default within sixty (60) days will not adversely affect the Tax -
Exempt status of interest on the Note. The Issuer shall have the right to enforce the obligations
of the Owner under this Regulatory Agreement within shorter periods of time than are otherwise
provided herein if necessary to insure compliance with the Housing Law or the Code.
Following the declaration of an Event of Default hereunder, the Issuer, subject to the
terms of the Borrower Loan Agreement, may take any one or more of the following steps, in
addition to all other remedies provided by law or equity:
(i) by mandamus or other suit, action or proceeding at law or in equity,
including injunctive relief, require the Owner to perform its obligations and covenants
hereunder or enjoin any acts or things that may be unlawful or in violation of the rights of
the Issuer hereunder;
(ii) have access to and inspect, examine and make copies of all of the books
and records of the Owner pertaining to the Project;
18
OHSUSA:7509090603
(iii) take such other action at law or in equity as may appear necessary or
desirable to enforce the obligations, covenants and agreements of the Owner hereunder;
unreasonably withheld, order and direct the Owner in w
and to select a replacement Manager meeting the require
such written direction, and to notify the Issuer in
replacement Manager and that certify that such repl
requirements hereof; and with the consent of the Funding
be unreasonably withheld, declare a default under the
applicable, and proceed with any remedies provided there
ich consent -shall --not be
----
to terminate the Manager
hereof within 60 days of
I of the identity of the
at Manager satisfies the
:r, which consent shall not
wer Loan Agreement, as
The Owner hereby agrees that specific enforcement of the Owner's agreements contained
herein is the only means by which the Issuer may fully obtain the benefits of this Regulatory
Agreement made by the Owner herein, and the Owner therefore agrees to the imposition of the
remedy of specific performance against it in the case of any Event of Default by the Owner
hereunder.
The Issuer hereby agrees that a cure of any Event of Default made or tendered by any
partner of the Owner shall be deemed to be a cure by the Owner and shall be accepted or rejected
on the same basis as if made or tendered by the Owner.
_ _ .. .
All reasonable fees, costs and expenses (including rea
Issuer incurred in taking any action pursuant to this Section shall
Owner.
Section 18. [Reserved].
Section 19. Recording and Filing.
(a) The Owner shall cause this Regulatory Agrees
supplements hereto and thereto, to be recorded and filed in tl
County, and in such other places as the Issuer may reasonably r(
fees and charges incurred in connection with any such recording.
cable attorney's fees) of the
the sole responsibility of the
nt and all amendments and
real property records of the
lest. The Owner shall pay all
(b) The Owner and the Issuer will file of record such other documents and take such
other steps as are reasonably necessary, in the opinion of Bond Counsel, in order to insure that
the requirements and restrictions of this Regulatory Agreement will be binding upon all owners
of the Project.
(c) The Owner hereby covenants to include or 1.
restrictions contained in this Regulatory Agreement in any docu
the Project to another person to the end that such transferee has
restrictions, and, except in the case of a foreclosure or comparal
Deed of Trust, whereby the Funding Lender or any affiliate of
owner of the Project, to obtain the agreement from any transfe
and restrictions of this Regulatory Agreement.
19
OHSUSA_750909060.3
erence the requirements and
rots transferring any interest in
>tice of, and is bound by, such
involuntary conversion of the
Funding Lender becomes the
it to abide by all requirements
Section 20. Payment of Fees. The Owner shall pay to the Issuer on the Closing Date
the Issuer Issuance Fee and the first year's Issuer Annual Fee. Thereafter, the Owner shall pay
the Issuer Annual Fee, in advance on the first day of August of each year. Notwithstanding any
-prepayment=of,the-Loan,-throughout-the term -of --this Regulatory--Agreement;-the-�OWher shall - -
continue to pay to the Issuer the Issuer Annual Fee and upon the occurrence of an Event of
Default hereunder, reasonable compensation for any services rendered by it hereunder and
reimbursement for all expenses reasonably incurred by any of them in connection therewith. The
fee of the Issuer referenced in this Section shall in no way limit amounts payable by the Owner
set forth below in this Section 20, or otherwise arising in connection with the Issuer's
enforcement of the provisions of this Regulatory Agreement, but the Issuer does agree to
compensate any third party administrator appointed by it from the Issuer Annual Fee for the
ordinary duties of the administrator hereunder.
Notwithstanding any prepayment of the Loan, through the term of this :Regulatory
Agreement, the Owner shall continue to pay to the Issuer "Additional Payments," as follows:
(a) All taxes and assessments of any type or character charged to the Issuer in any
way arising 'due to the transactions contemplated hereby (including taxes and assessments
assessed or levied by any public agency or governmental authority of whatsoever.character
having power to levy taxes or assessments); provided, however, that the Owner shall have the
rightWprotest any such taxes or assessments and to require the Issuer at the Owner's expense,
to protest and contest any such taxes or assessments levied upon it and that the Owner shall have
the right to withhold payment of any such taxes or assessments pending disposition of any such
protest or contest unless such withholding, protest or contest would adversely affect the rights or
interests of the Issuer;
(b) The reasonable fees and expenses of such accountants, consultants, attorneys and
other experts as may be engaged by the Issuer to prepare audits, financial statements, reports,
opinions or provide such other services required under this Regulatory Agreement, the Funding
Loan Agreement or the Borrower Loan Agreement; and
(c) The reasonable fees and expenses of the Issuer or any agent or attorney selected
by the Issuer to act on its behalf in connection with the Funding Loan Agreement, the Borrower
Loan Agreement, the Note, or this Regulatory Agreement, including, without limitation, any and
all reasonable expenses incurred in connection with the authorization, execution and delivery of
the Note or in connection with any litigation, investigation or other proceeding which may at any
time be instituted involving the Funding Loan Agreement, the Borrower Loan Agreement, this
Regulatory Agreement, or the Note or any of the other documents contemplated thereby, or in
connection with the reasonable supervision or inspection of the Owner, its properties, assets or
operations .or otherwise in connection with the administration of the Funding Loan Agreement,
the Borrower Loan Agreement, this Regulatory Agreement or the Note.
(d) Any amounts due and payable by the Owner as arbitrage rebate under Section 148
of the Code, pursuant to Owner's covenants and agreements with respect thereto in the Borrower
Loan Agreement and the Tax Certificate.
20
OHSUSA:750909060.3
Such Additional Payments shall be billed to the Owner by the Issuer from time to time,
together with a statement certifying that the amount billed has been incurred or paid by the Issuer
for one or -more of the above items.. After such a demand, amounts so billed shall be paid by the
Owner. -within. thirty .(30)-days--after•the-date-of, invotce.;;:Notwithstanding the -foregoing; the
Issuer shall not be required to submit a bill to the Owner for payment of the Issuer Annual Fee or
any amounts due with respect to arbitrage rebate under Section 148 of the Code, the calculation
and payment for which is the responsibility of the Owner.
Section 21. Governing Law, Venue. This Regulatory Agreement shall be enforceable
under and shall be interpreted in accordance with and governed by the laws of the State of
California without regard to principles of conflicts of laws. Any action arising hereunder or
under the Governmental Lender Note shall (unless waived by the Issuer) be filed and maintained
in San Diego County, unless the Issuer specifically waives this requirement.
Section 22. Amendments; Waivers.
(a) Except as provided in Section 8(a) hereof, this Regulatory Agreement may be
amended only by a written instrument executed by the parties hereto or their successors in title,
and duly recorded in the real property records of the County and only upon (i) receipt by the
Issuer of an opinion from Bond Counsel that such amendment will not adversely affect the Tax -
Exempt status of interest on the Note and -is not contrary to the provisions of the Housing Law
and (ii) the written consent of the Funding Lender, who shall receive a copy of any such
amendment.
(b) Anything to the contrary contained herein notwithstanding, the Issuer and the
Owner hereby agree to amend this Regulatory Agreement to the extent required, in the opinion
of Bond Counsel, in order that interest on the Note remains Tax -Exempt. The parties requesting
such amendment shall notify the other parties to this Regulatory Agreement of the proposed
amendment, with a copy of such proposed amendment to Bond Counsel and a request that Bond
Counsel render to the Issuer an opinion as to the effect of such proposed amendment upon the
Tax -Exempt status of interest on the Note. This provision shall not be subject to any provision
of any other agreement requiring any party hereto to obtain the consent of any other person in
order to amend this Regulatory Agreement.
(c) Any waiver of, or consent to, any condition under this Regulatory Agreement
must be expressly made in writing.
Section 23. Notices. Any notice required to be given hereunder shall be made in
writing and shall be given by personal delivery, overnight delivery, certified or registered mail,
postage prepaid, return receipt requested, or by telecopy, in each case at the respective addresses
specified in the Borrower Loan Agreement, or at such other addresses as may be specified in
writing by the parties hereto. Unless otherwise specified by the Administrator or the Owner, the
address of the Administrator and the Owner is:
Issuer: California Municipal Finance Authority
2111 Palomar Airport Road, Suite 320
Carlsbad, California 92011
21
OHSUSA:7509090603
With a copy to:
Attention: John Stoecker
Telephone: (760) 930-1221
Telecopier: (760) 683-3390
Squire, Sanders (US) LLP
555 South Flower Street, Suite 3100
Los Angeles, California 90071-2300
Attention: Harriet M. Welch, Esq.
Telephone: (213) 689-5158
Telecopier: (213) 623-4581
Owner: Coral Mountain Partners, L.P.
c/o Highway 1 I I Apts Member LLC
46-753 Adams Street
La Quinta, CA 92253
Attention: John Durso
Telecopier: (949) 854-7105
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street, 70th Floor
____._... 1os Angeles, CA 90671
Attention: Lance Bocarsly
Facsimile: (213) 559-0733
With a copy to: WCH Affordable VIII, LLC
c/oWestem Community Housing, Inc.
151 Kalmus Drive, Suite 3-5
Costa Mesa, CA 92626
Attention: Graham Espley-Jones
Facsimile: (714) 5494600
With a copy to: Cox, Castle & Nicholson LLP
555 California Street, 10th Floor
San Francisco, CA94104
Attention: Ofer Elitzer
Facsimile: (415) 392-4250
The Issuer, the Administrator and the Owner may, by notice given hereunder, designate
any further or different addresses to which subsequent notices, certificates or other
communications shall be sent. Notice shall be deemed given on the date evidenced by the postal
or courier receipt or other written evidence of delivery or electronic transmission; provided that
any telecopy or other electronic transmission received by any party after 4:00 p.m., local time of
the receiving party, as evidenced by the time shown on such transmission, shall be deemed to
have been received the following Business bay. A copy of each notice of default provided to the
Owner hereunder shall also be provided to the Investor Limited Partner and the Funding Lender
at the addresses set forth in the Borrower Loan Agreement.
22
011SUSA:750M060.3
A copy of each notice sent by or to the Owner shall also be sent to the Manager at the
address of the Manager provided by the Owner to the Administrator; but such copies shall not
constitute notice to the Owner, nor shall any failure to send such copies constitute a breach of
this Regulatory-Agreement'or.a.failure=of-or defect in-notice-to`.the-Owner:
The Owner shall notify the Issuer and the Administrator in writing of any change to the
name of the Project or any change of name or address for the Owner or the Manager.
Section 24. Severability. If any provision of this Regulatory Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
portions hereof shall not in any way be affected or impaired thereby.
Section 25. Multiple Counterparts. This Regulatory Agreement may be
simultaneously executed in multiple counterparts, all of which shall constitute one and the same
instrument, and each of which shall be deemed to be an original.
Section 26. Limitation on Liability. Notwithstanding the foregoing or any other
provision or obligation to the contrary contained in this Regulatory Agreement, and except for
the Owner's obligations under Section 9 of this Regulatory Agreement (which, except for the
obligation of the Owner to pay principal or interest due to the Funding Lender or the
GovernmentalLenderas provided in Section 9 of-the-Borrower--Note,-are not -subject to the
provisions of this Section 26) (i) the liability of the Owner under this Regulatory Agreement to
any person or entity, including, but not limited to, the Funding Lender or the Issuer and their
successors and assigns, is limited to the Owner's interest in the Project, the Collateral and the
amounts held in the funds and accounts created under the Funding Loan Agreement, or any
rights of the Owner under any guarantees relating to the Project, and such persons and entities
shall look exclusively thereto, or to such other security as may from time to time be given for the
payment of obligations arising out of this Regulatory Agreement or any other agreement
securing the obligations of the Owner under this Regulatory Agreement; and (ii) from and after
the date of this Regulatory Agreement, no deficiency or other personal judgment, nor, any order
or decree of specific performance (other than pertaining to this Regulatory Agreement, any
agreement pertaining to any Project or any other agreement securing the Owner's obligations
under this Regulatory Agreement), shall be rendered against the Owner, the assets of the Owner
(other than the Owner's interest in the Project, this Regulatory Agreement, amounts held in the
funds and accounts created under the Funding Loan Agreement, any rights of the Owner under
the Funding Loan Agreement or any other documents relating to the Note or any rights of the
Owner under any guarantees relating to the Project), its partners, members, successors,
transferees or assigns and each of their respective officers, directors, employees, partners, agents,
heirs and personal representatives, as the case may be, in any action or proceeding arising out of
this Regulatory Agreement and the Funding Loan Agreement or any agreement securing the
obligations of the Owner under this Regulatory Agreement, or any judgment, order or decree
rendered pursuant to any such action or proceeding, except to the extent provided in the
Borrower Loan Agreement.
Section 27. Third -Party Beneficiary. The City and CDLAC are intended to be and
shall each be a third -party beneficiary of this Regulatory Agreement. The City shall have the
right (but not the obligation) to enforce, separately or jointly with the Issuer or to cause the Issuer
23
OHSUSA:750909060.3
to enforce, the terms of this Regulatory Agreement and to pursue an action for specific
performance or other available remedy at law or in equity in accordance with Section 17 hereof
CDLAC shall have the right (but not the obligation) to enforce the CDLAC Conditions and to
pursue an .:action.for_specific perfonnance.or..other. available , -remedy at -law, -or -in -equity in--
accordance with Section 17 hereof, provided that any such action or remedy shall not materially
adversely affect the interests and rights of the Holders of the Governmental Lender Note.
Pursuant to Section 52080(k) of the Housing Law, the provisions of Section 6 hereof may be
enforced either in law or in equity by any resident, local agency, entity, or by any other person
adversely affected by the Owner's failure to comply with that Section.
[Remainder of Page Intentionally Lejl Blank]
24
OUSUSA:7509090603
IN WITNESS WHEREOF, the Issuer and the Owner have executed this Regulatory
Agreement by duly authorized representatives, all as of the date first above written.
_ __.. .._ .mCALIFORNIA Mi3NICIPAL FINANCE --
AUTHORITY
Member, Bo of Directors
[Execution Page to Coral Mountain Apartments Regulatory Agreement and Declaration of Restrictive Covenants]
OHSUSA:750909060.
STATE OF CALIFORNIA )
COUNTY OFLOS ANGELES )
On August 1 n, 7617 before me, Consuelo M. Lopez ,
Notary Public, personally appeared Jonathan Gordon Lee who proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/herauthorized capacity, and that by his/Jrer
signature on the instrument the person, or the entity upon behalf of which the person acted, executed
the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
COkSUELO M. LOPEZ�" 1"
Co ON'U on • 1965185 $i ature, a Notary (P,u c V
$ .�+ • Notary Public
• CalllorNe = �'svt l0 (h • t u
Los Anmlisgeles County My commission expires October 31, 2015
M Comm. Ex I1e5 00 31, 2015
(Official Seal)
[Notary Page of CMFA to Regulatory Agreement and Declaration of Restrictive Covenants —
Califomia Municipal Finance Authority
Multifamily Housing Revenue Note (Coral Mountain Apartments) 2012 Series A]
LOSANGELES1334549.1
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership .,,,...
By: Coral Mountain AGP, LLC,
a California limited liability company,
its administrative general partner
By: KD Housing Partners, Inc.,
a California corporation, its manager
By:
Name:
Title:
By: WCH Affordable VIII, LLC, a California
limited liability company, its managing
general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
By:
t • D
Name:
Sandra C. Gibbons
Title:
Chief Financial Officer
[Signature page — Regulatory Agreement - Coral Mountain]
OHSUSA:750909060.
California All -Purpose Acknowledgement
State of California:.,... - _ .._:. -. _
s.s.
County of
On _ L% Z- before run S.yvvt.vf���. A)f c - 4 PUA e
1_ h+rnu [d n;ulyj WiAi: t%
personally appeared !�► Ui O'V- b ,
who proved tome on the basis of satisfactory evidence to be the person(s) whose name(s) .
1are subscribed to the within Instrument and acknowledged to me that hefts' e/they executed
the same in hisief/their authorized capacity(ies), and that by his'/,Odr/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws
of the State of California that the foregoing paragraph is S. WRIGHT
true and correct. _ commission # t88tZ54....._
__..._._
i :p d Notary Public -California
WITNESS my hand and t ' I seal = eta Los Angeles County a
My Comm. Expires Apr 2, 2014'
Srgnula/t rJ n -
S.
OPTIONAL INFORMATION
Afthough tiro olormation in this section is not required by Las., it couidprr:ve+;t Lancfufeet ran%oval ante reoltachment of
fins acknowedgment tc an rrnan(harized rlocun,ant anct mmay prove usetuf to persons relying on :ere ahached doctonent
Description of Attached Document
The preceding Certificate of Acknowledgment Is ttac ed to a
document
fitted/f
o
r the purpose of PClt
containing u_ pages, and dated
The signer(s) capacity or authority islare as:
❑ Individual(s)
❑ Attomey-h-fact
❑ Corporate Officer(s)
4fi'v*
❑ GuardianlConservator
❑ Partner• Limited/General
❑ Tmsiee(s)
❑ other.
representing:
..... , O''rt•!'r:n(51 irfniiir1 6�ne.a u. i:;,,..x�nlaU;
Method of Signer Identification
Proved to me on the bash of satisfactory evldenca:
❑ form(!) or idengacagen ❑ credible vAmeas(es)
Notarial event Is detailed in notary journal on:
Pages— EnbyC_
Notary contact
Ogler____
❑ Additional Signer ❑ Signer(s) Thumbprints(a)
ORDER NO.: 1117011827.1
----EXHIBIT:A.... _; :...
The land referred to is situated in the County of Riverside, City of to Quinta, State of California,
and is described.as follows:
Leaseholdestate as created by that certain Ground Lease dated August 2012, made by
and between La Quinta Housing Authority, a public body, corporate and politic, as lessor; and
Coral Mountain Partners, L.P., a California limited partnership; at lessee; for the term of 55
.years and upon the terms and conditions contained in said lease and subject to provisions
contpined i the lease which limit the right of possession, a Memorandum thereof recorded
2012, Instrument No. 2012-0qL11,l(J in and to the following: .
In the City of La.Quinta, County of Riverside, State of California; that portion of the West half; of .
the East half 'and 'the East half of the West half of the Northwest quarter of the Southeast
quarter of. Section 29, Township 5 South, Range 7 East, San Bernardino Base and Meridian;
more particularly described as follows:
-------. Commencing at the East quarter -corner of said Section 29;thence-South 891_39'.16" West_
along the North line of said Southeast quarter, a distance of 1,656.57 feet to the Northeast
corner of said West half of the East half of the Northwest quarter of the Southeast quarter of
Section 29; thence South 000 08' 10" East along the East line of said West half of the East.half
of the Northwest quarter of the Southeast quarter Section 29, a distance of 60.93 feet to the
South right=of-way line of Highway 111 as granted to the City of La.Quinta per Instrument No.
2007-0076267 recorded February 1, 2007 and re -recorded February 14, 2007 as Instrument
No. 2007-0103255, O.R.;
Thence continuing South 000 08' 10" East along said East line a distance of 626.13 feet to the
beginning of a non -tangent curve, concave Northerly, having a radius of 300.00 feet, a radial
dine to said point bears South 010 53' 43" West, and the true point of beginning;
Thence leaving said East line and Westerly along the arc of said curve„through a central angle
of 16° 09' 07", an arc distance of 84.57 feet to the beginning of a reverse curve concave. .
Southerly,having a radius of 300.00 feet, a radial line to said point bears North 18° 02' 50"
East; thence Westerly along the arc of said curve through a central angle of 180 02' 50", an arc
distance of:94.50 feet; thence North 90° 00' 00" West a distance of264.78 feet to the
beginning:of a tangent curve, concave Southeasterly, having a.radius of 200,00 feet;
Thence Southwesterly along the arc of said. curve, through.a central angle of 90° 09' 34", an
arc distance of 314.72 feet, thence non -tangent to said curve'South 890 50'26" West; a
distance of 21.18 feet to the West line of said East half of theWest half of the Northwest
quarter of the Southeast quarter of Section 29; thence South .000 09' 34" East along said West
line, a distance of 50013 fleet to the South line of said Northwest quarter of the Southeast
quarter of Section 29; thence South 890 48' 22" East along said South ;line a distance of 662.14
feet to said East line of the West half of the East half of the'Noithwest quarter of the Southeast
quarter of Section 29; thence North 00° 18' 10" West along said East line, a distance of 673.63
feet to thetrue point of beginning.
EXHIBIT B
FORM OF VERIFICATION OF INCOME
1. TENANT INCOME CERTIFICATION Effective Dole:
El Initial Certification 0 Recertification D Other Move -in Date:
Hit
Mby 9
Last Name
First Name &
Middle Initial
Relationship to Head of
Household
Date of Birth
(MM/DD/YYYY)
F/T Student
(Y or N)
Social Security
or Alien Reg.
No.
I
HEAD
2
3
4
7
-1 ';PART ,11-
11
.
AL NCOI%J tM0j,,,T_ JN
(A)
Employment or Wages
(B)
See! Security/Pensions
(c)
Public Assistance
(D)
Other Income
Add totals from (A) through (D), above
TOTAL INCOME W:
S
Alf"
Hshld
Mbr1Y
(F)
Type of Asset
(G)
C/I
(H)
cash vrauc of Asset
(1)
Annual Income
from Asset
TOTALS:
Enter Column (H) Total Passbook Rate
Ifover S50110 S x 2.00% (J) Imputed Income $
Enter the greeter of the total of column 1. or J: imputed income TOTAL INCOME FROM ASSETS (K)
(L) Total Annual Household Income from all Sources [Add (E) + (K)]
B-1
OMSUSA:750909060.3
e m ormatron an this fomt will be used to determine maximum income eligibility. Vwc have provided for each person(s) 5e1 fan
in Pan 11 acceptable verification of current anlicipoted annual income. Vwx agree to notify the landlord immediately upon any member of the
household moving out of the unit or any new:member moving in..Vwe ogree.lo notify lho_Ipndlord immediately upon onymember becoming a
-- Tulllime student.
Under penalties of petjury, Vwe certify that the information presented in this C rWicalion is true and ocnuale to the best of my/our
knowledge and belief The undersigned further understands that providing false representations herein constitutes an act of fraud. False.
_ misleading or incomplete information may result in the termination of the lease agreement.
Signature (Dare) Signature (Dale)
Signature (Dore) Signature (Dare)
UHSUSA:750MO60.3
TOTAL ANNUAL HOUSE]IOLD INCOME FROM
ALLSOURCES:
- - - -- From item fLl an name L
Current Income Limit per Family Size: $
Household Income at Move -in:
Current Income
-
Limitx 140%:
S
Household Income
exceeds 140%al
recertification:
❑ Yes ONo
Household Size at Move -in:
I pi jwQV'�x]{111'(";W_MdV flit. .i?fO I1 RT VJ:1111rMACON IMM1W.+Tk'!�]'j'/
$
Tenant Paid Rent -
Rent Assistance: S
Utility Allowance S
Other non -optional charges: $
- GROSS RENT FOR UNIT:
Unit Meets Rent Restriction at:
(Terloal paid rent plus Utility Allowance S other
non -optional charges) $
0 60% 0 50% 040% O 30% O_%
Maximum Rent Limit for this unit: S
STUD1Np'SDA'J'.US''t".t._e'W.;..'�nm-��.I.ISt.�t.S�{-�d�S"i}...<�.?'�-
'Student
Explanation:
ARE ALL OCCUPANTS FULL TIME STUDENTS? If yes. Enter student explanation'
1. Current TANF
(also attach documentation)
assistance
2. Former TANF
assistance
(foster children only)
3. Job Training
Program
0 yes ❑ no
4. Single
parcnt/dcpcndcnl
child
5. Marricdfjoint
return
Enter
1-5
OHSUSA:7509090603
Mad: The prrWam(s) listed below (a. through e.) ror which this households unit will be counted toward the property's occupancy
requirements. Under each program marked, indicate the household's income status as alnblished by this certirtcation recanirlention.
'. ,a: -T=Credit 0.:.. ._........ 6-HOMH'`l7 -_._.. :a` e. 'rox Exempt ❑- d:-AHDP...❑ __-____-. e........__ ... ;........
- - - (Name of
See Pan V above. Income Straus Income Status - Prog-M)
❑ 5 50%AMGI 0 50% AMGI
0560%AM01 - - 1180%AMG1 Income Strams
❑5809AAMGI - ❑01i° ❑
❑ OI°i 0
❑ OI°-
❑ 50%AMGI
❑ 60'A AMGI
❑ 80%AMGI
❑ OI"
.,?t �;'..v.Y,u:::r4eXn..,,..;; �i`r,"x"�tSIGR1Af,'I.)I:T!OIYNEIFBECRESFIG�"Ri1'7iIV.Fx!+r...,_:''?Y.
Based on the representations herein and upon the proofs and documentation required to be
submitted, the individual(s) named in Part II of this Tenant Income Certification is/are eligible
under the provisions of Section 42 of the Internal Revenue Code, as amended, and the Land Use
Restriction Agreement (if applicable), to live in a unit in this Project.
SIGNATUREOFOWNER/RL•PRESEHTATIVE DATE
BA
OHSUSA:750909060.3
B. INSTRUCTIONS FOR COMPLETING
TENANT INCOME CERTIFICATION
This form is to be completed by the owner or an authorized representative.
Check the appropriate box for Initial Certification (move -in), Recertification (annual recertification), or Other. If
Other, designate the purpose of the recertification (i.e., o unit transfer, a change in household composition, or other stale -required
recertification).
Move -in Date Enter the dale the tenant has or will take occupancy of the unit.
Effective Date Enter the effective date of the certification. For move -in, this should be the move -in
date. For annual recertification, this effective date should be no later than one year
from the effective date of the previous (re)certification.
Property Name Enter the name of the development.
County Enter the county (or equivalent) in which the building is located.
BIN H Enter the Building Identification Number (BIN) assigned to the building (from IRS
Form 8609).
Address Enter the address of the building.
Unit Number Enter the unit number.
it Bedrooms Enter the number of bedrooms in the unit.
Part 11 - Household Composition
List all occupants of the unit. State each household member's relationship to the hend of household by using one of the
following coded definitions:
Head of Household Spouse
Adult co -tenant .Other family member
Child Foster child(ren)/adult(s)
Live-in caretaker None of the above
Enter the date of birth, student status, and social security number or alien registration number for each occupant.
If there are more that 7 accupants, use an additional sheet ofpaper to list (lie remaining household members and attach it to the
certification.
Part III Annual Income
See HUD Handbook 4350.3 for complete instructions on verifying and calculating income, including acceptable
forms of verification.
From the third party verification forms obtained fmm each income source, enter the gross amount anticipated to be
received for the twelve months from the effective date of the (re)certification. Complete a separate line for each income -earring
member. List the respective household member number from Part 11.
Column (A) Enter the annual amount of wages, salaries, lips, commissions, bonuses, and other income from
employment; distributed profits and/or net income from a business.
Column (B) Enter the annual amount of Social Security, Supplemental Security Income, pensions, military
retirement, etc.
Column (C) Enter the annual amount of income received from public assistance (i.e., TANF, general assistance, -
disability, etc.).
Column (D) Enter the annual amount of alimony, child support, unemployment benefits, or any other income
regularly received by the household.
Row (E) Add the totals from columns (A)through (D), above. Enter this amount.
B-5
OHSUSA:7509090603
Part IV - Income from Assets
See HUD Handbook 43503 for complete instructions on verifying and calculating income from assets, including
acceptable forms of verification.
From thethird verificaltion firms obtained from each -.asset source, list the gross amount -anticipated to be received - -- ---
-- during the twelve months from the effective date of the certification. List the respective household member number from Part Il
and complete a separate line for each member.
Column (F) List the type of asset (i.e., checking account, savings account, etc.)
Column (G) Enter C (for current, if the family currently owns or holds the asset), or I (for imputed, if the family
has disposed of the asset for less than fair market value within two years of the effective date of
(te)certiftcation).
Column (H) Enter the cash value of the respective asset.
Column (1) Enter the anticipated annual income from the asset (i.e., savings account balance multiplied by the
annual interest rate).
TOTALS Add the total of Column (11) and Column (1), respectively.
If the total in Column (11) is greater than S5,000, you must do an imputed calculation of asset income. Enter the Total
Cash Value, multiply by 2%and enter the amount in (I), Imputed Income.
Row (K) Enter the greater of the total in Column (1) or (I)
Row (L) Total Annual Household Income From all Sources Add (E) and (K) and enter the total
(it) HOUSEHOLD CERTIFICATION AND SIGNATURES
Alter all verifications of income and/or assets have been received and calculated, each household member age 18 or
older most sign and date. the Tenant Income Certification. for move -in, it is recommended that the Tenant Income Certification
be signed no earlier than 5 days prior to the effective date of the certification.
b) Pon V — Determination of Income Eligibility
Total Annual Household Income from all Enter the number from Item (Q.
Sources
Current Income Limit per Family Size Enter the Current Move -in Income Limit for the household size.
Household income at move -in For recertification, only. Enter the household income from the move -in
Household size at move -in certification. On the adjacent line, enter the number of household members
from the move -in certification.
Household Meets Income Restriction Check the appropriate box for the Income restriction that the household meets
according to what is required by the set -asides) for the project.
Current Income Limit x 140% For recertification only. Multiply the Current Maximum Move -in Income
Limit by 140% and enter the total. Below, indicate whether the household
income exceeds that total. If the Gross Annual Income at recertification is
greater than 140%ofthe current income limit, then the available unit rule must
be followed.
C. Pan VI- Rent
Tenant Paid Rent Enter the amount the tenant pays toward rent (not including rent assistance
payments such as Section 8).
Rent Assistance Enter the amount of rent assistance, if any.
Utility Allowance Enter the utility allowance. If the owner pays all utilities, enter zero.
Other non -optional charges Enter the amount of non -optional charges, such as mandatory garage rent,
storage lockers, charges for services provided by the development, etc.
Gross Rent for Unit Enter the total of Tenant Paid Rent plus Utility Allowance and other
non -optional charges.
B-6
OHSUSA:7509090603
Maximum Rent Limit for this unit Enter the maximum allowable gross rent for the unit.
Unit Meets Rent Restriction at Check the appropriate rent restriction that the unit meets according to what is
required by the set-aside(s) for the project.
.......-.. --_- ...- -_ .Part-VII - Student Status -
If all household members are full lime' students, check "yes". if at least one household member is not a full time
student, check "no".
If "yes" is checked, the appropriate exemption must be lisled in the box to the right. If none of the exemptions apply,
the household is ineligible to rent the unit.
'Full time is determined by the school.dhe student attends.
a) Part VIII —Program Type
Mark the program(s) for which this household's unit will be counted toward the,property's occupancy requirements.
Under each program marked, indicate the household's income status as established by this certification/recerlification. If the
property does not participate in the HOME, Tax -Exempt Bond, Affordnble Housing Disposition, or other housing program, leave
those sections blank.
Tax Credit See Pan V above.
HOME - If the property participates in the HOME program and the unit this household will occupy will count towards the
]TOME program set -asides, mark the appropriate box indicting the household's designation.
Tar Exempt If the property participates in The Tax Exempt Bond program, mark the appropriate box indicating the
household's designation,
AFIDP If the property participates in the Affordable Housing Disposition Program (AHDP), and this household's unit
will count towards the set -aside requirements, mark the appropriate box indicting the household's designation.
Other If the property participates in any other affordable housing program, complete the information as appropriate.
SIGNATURE OF OWNER/REPRESENTATIVE
It is the responsibility of the owner or the owner's representative to sign and date this document immediately following
execution by the resident(s).
The responsibility of documenting and determining eligibility (including completing and signing the Tenant Income
Certification form) and ensuring such documentation is kept in the tenant file is extremely important and should be conducted by
someone well trained in tax credit compliance,
These instructions should not be considered a complete guide on tax credit compliance. The responsibilityfor compliance with
federal program regulations lies with the owner ofthe buildiug(s) for which the credit is allowable.
B-7
OHSUSA:7509090603
Initial Certification
It-
Re-certificotion
Other
N
D- lncnme Infnm,nfnn
Unit
Yes No
Income Information
Monthly Gross
Income
]Ave am self employed. (List nature of self employment)
(use 1 e income
-
from business)
$
IAve have a job and receive -wages, salary, overtime pay, commissions, fees, tips,
bonuses, and/or other compensation: List thebusinesses and/or companies that, pay
you:
Name of Employer
I)
$
Z)
$
3)
S
l/we receive cash contributions of gifts including rent or utility payments, on on
ongoing basis from persons not living with mo.
g
IAvc receive unemployment benefits. -
$
I/we receive Veteran's Administration, GI Bill, or National Guard/Militury,
benefits/income.
S
-
I/we receive periodic social security payments.
S
The household receives unearned income from family members age 17 or under
(example: Social Security, Trust Fund disbursements, etc.).
S
IAve receive Supplemental Security income (SSI).
$
I/we receive disability or death benefits other than Social Security.
$
IAve receive Public Assistance income (examples: TANF, AFDC)
I/we am entitled to receive child support payments.
S
Uwe am currently receiving child support payments.
S
If yes, from how many persons do you receive support?
IAve an✓ure currently making efforts to collect child support owed to me. List efforts
being made to collect child support:
6HSUSA:750909060.3
U
1/%ve receive alimony/spousal support payments
1/hve receive periodic payments from trusts, annuities, inheritance, retirement funds or
__.
pensions, insurancepolicies, or lottery winnings:..,_
If yes, list sources: -
1)
$
2)
$
Uwe receive income from real or personal property.
use net earned
income)
E.
B-9
OHSUSA:750909060.3
F. Asset information
YES NO
INTERESTRATE
CASH VALUE
Vive have a checking account(s).
1)
%
$
2)
%
$
Vwe have a savings account(s)
_
If yes, list bank(s) .
I)
%
$
2)
%
S
1/we have a revocable trust(s)
If yes, list bank(s)
I)
%
S
IAve own real estate.
If ycs, provide description:
$
Uwe own stocks,bonds, or Treasury Hills
,
If yes, list sources/bank names
1)
%
$
2)
%
$
3)
%
$
Uwe have Certificates of Deposit (CD) or Money Markel
Account(s).
If yes, list sources/bank names
1)
%
S
2)
%
S
3)
%
S
Uwe have an IRA/Lump Sum Pension/Keogh Account/401K.
If yes, list bank(s)
-
1)
%
$
2)
%
S
IAve have a whole life insurance policy.
If yes, how many policies
S
Vive have cash on hand.
$
I/we have disposed of assets (i.e. gave away money/assets) for
less than the fair market value in the post 2 years.
If yes, list items and date disposed:
1)
g
2)
S
1/wc have income from assets or sources other than those listed
above.
If yes, list type below:
1)
%
$
2)
%
$
OHSUSA:7509090603
G.
H. Student Status
YES
Does the household consist of persons who are all full-time students
(Examples: Colle e/Universit , trade school, etc.)?
Does your household anticipate becoming a full-time student
household in the next 12 months?
If you answered yes to either of the previous two questions are you:
• Receiving assistance under Title IV of the Social Security Act
(AFDC/TANF) .
• Enrolled in a jab training program receiving assistance through the
Job Training Participation Act (1TPA) or other similar program
Married and filing a joint tax return
• Single parent with a dependent child or children and neither you nor
our children are dependent of another individual
Under penalties of perjury, l certify that the information presented on this form is true and accurate to the best of mylour
knowledge. The undersigned fimther understands that providing false representations herein constitutes an act offraud. False,
misleading or incomplete information will result in the denial of application or termination of the tease agreement.
PRINTED NAME OF APPLiCANP/TENANT SIGNATURE OF A PPLICANT/TENANT DATE
WITNESSED 13Y(SIGNATURE OF OWNER/REPRESENTATIVE)
B-11
OHSUSA:750909060.3 -
EXHIBIT C
COMPLETION CERTIFICATE
The undersigned hereby certifies that all construction work on the Project was
substantially completed and all units'in the Project were available either for occupancy or use by
tenants in the Project as of
The undersigned hereby further certifies that:
(a) the aggregate amount disbursed on the Loan to date is $ ;
(b) all amounts disbursed from proceeds of the Governmental Lender Note have been
applied to pay or reimburse the undersigned for the payment of Project Costs and none of the
amounts disbursed from the proceeds of the Governmental Lender Note have been applied to pay
or reimburse any party for the payment of costs or expenses other than Project Costs; and
(c) at least 97 percent of the amounts disbursed from the proceeds of the
Governmental Lender Note have been applied to pay or reimburse the Borrower for the payment
of Qualified Project Costs (as that term is used in the Regulatory Agreement) and less than
25 percent of the amounts disbursed from the proceeds of the Governmental Lender Note,
exclusive of amounts applied to pay the costs of delivering the Governmental Lender Note, have
been applied to pay or reimburse the Borrower for the cost of acquiring land.
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company,
its administrative general partner
By: KD Housing Partners, Inc.,
a California corporation, its manager
By:
Name: John Durso
Title: President
C-I
011SUSA:750909060.3
By: WCH Affordable VIII, LLC, a California
limited liability company, its managing
general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
By:
Name: Graham Espley-Jones
Title: President
C-2
OUSUSM50909060.3 -
EXHIBIT D
CORAL MOUNTAIN APARTMENTS
Project Name:
CDLAC Application Numbers :
CDLAC Resolution Numbers :
Property Address:
Project Completion Date (if completed,
otherwise mark NA):
Witnesseth that on this _ day of 20 the undersigned, having borrowed certain
funds from the CALIFORNIA MUNICIPAL FINANCE AUTHORITY (the "Issuer's for the
purpose of financing a multifamily rental housing development (the "Project'); does hereby certify
that:
A. There have been no changes to the ownership entity, principals or property
management of the Project since the Note was executed or since the last certification was provided
(as applicable), except as described below:
(If so please attach a request to revise the resolution noting all pertinent information regarding the
change, otherwise state "NONE")
If Project has not yet been placed in service, mark N/A for the balance of the items below:
B. During the preceding twelve -months (i) such Project was continually in compliance
with the Regulatory Agreement executed in connection with such loan from the Issuer and
(ii) _% of the units in the Project were occupied by [Very] Low Income Tenants (minimum of
[26/o] 40°/u).
C. Set forth below is certain information regarding occupancy of the Project as of the
date hereof.
1. Total Units:
2. Total Units Occupied:
3. Total Units Held Vacant
and Available for Rent to (Very) Low
Income Tenants
4. Total [Very] Low Income Units Occupied:
5. % of [Very] Low Income Units to Total Units
(equals the Total of Lines 3 and 4, divided by the lesser ofLine 1 or Line 2)
D-I
OHSUSA:7509090603
D. The units occupied by [Very] Low Income Tenants are of similar size and quality to
other units and are dispersed throughout the Project.
E Select appropriate certification: [No unremedied default has occurred under this
Regulatory Agreement, the Note, Loan Agreement or the Deed of Trust.] [A default has occurred
under the . The nature of the default and the measures being taken to remedy such
default are as follows: 1
F. There has been no change of use for the project, except as follows: (please describe
if any, or otherwise indicate "NONE")
G. Select appropriate certification: The undersigned hereby certifies that the project
[has satisfied all] [except as described below, has satisfied all] of the requirements memorialized in
the Exhibit A of the CDLAC Resolution, a copy of which is attached hereto (i.e. qualifying project
completion, qualifying depreciable asset purchase, qualifying loan originations, the use of public
funds, QRRP manager units, QRRP income rent restrictions, QRRP sustainable building methods,
etc.; as applicable), and thus has achieved all public benefit requirements (excluding QRRP service
amenities) as presented to CDLAC.
[Describe any requirements not satisfied:
H. As captured in Exhibit A of the Resolution, the Project has committed to and is
currently providing the following service amenities for a minimum of ten years, on a regular and
ongoing basis, which are provided free of charge (with the exception of day care services):
Please check the services that apply or write N/A where appropriate:
After -school Programs
Educational, health and wellness, or skill building classes
Health and Wellness services and programs (not group classes)
Licensed Childcare provided for a minimum of 20 hours per wee]: (Monday -Friday)
Bona -Fide Service Coordinator/ Social Worker
l) For this reporting period, attached is evidence (i.e. MOUs, contracts,
schedules, calendars, flyers, sign-up sheets, etc.) confirming that the above listed services are being
provided and have met the requirements of Exhibit A of the Resolution.
2) If any of the above services requirements were not met, what corrective
action is being taken to comply?
D-2
OHSUSA:7509090603
(Please also attach the completed project sponsor certification form as provided in
the CDLAC Resolution)
_.._ -
I. The representations set forth herein are true and correct to the best of the
undersigned's knowledge and belief, and the undersigned acknowledges and agrees that the
Authority will be relying solely on the foregoing certifications and accompanying documentation,
if any, in making its certification to CDLAC pursuant to Section 5144 of the CDLAC Regulations,
and agrees to provide to the Authority such documentation or evidence, in support of the foregoing
certifications, as the Authority or CDLAC may request.
Date:
Owner
[ATTACH CDLAC RESOLUTION HEREJ
D-3
OHSUSA:7509090603
EXHIBIT E
CERTIFICATE AS TO COMMENCEMENT -OF -QUALIFIED PROJECT PERIOD
The undersigned, on behalf of Coral Mountain Partners, L.P., hereby certifies that:
(complete blank information):
(a) 10% of the dwelling units in the project financed in part from the proceeds of the
captioned Governmental Lender Note were first occupied on 20
(b) 50% of the dwelling units in the project financed in part from the proceeds of the
captioned Governmental Lender Note were first occupied on 20 .
DATED: .20
CORAL MOUNTAIN PARTNERS, L.P-,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company,
its administrative general partner
By: KD Housing Partners, Inc.,
a California corporation, its manager
By:
Name: John Durso
Title: President
By: WCH Affordable VIII, LLC, a California
limited liability company, its managing
general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
By:
Name: Graham Espley-Jones
Title: President
E-I
014susA:750909060.3 - -
Recorded at the Request of
Old Republic Title Company
Oakland I �v-4 %"�
WHEN RECORDED MAIL TO: CERTIFIED A TRUE COPY OF THE ORIGINAL
RECORDED IN THE OFFICIAL RECORDS OF
Citibank. N.A: RIVERSIDE COUNTY ON August 28, 2012
Transactiod Managcmen"i Group'/Posi Closing Under Recorder's Serial No. 2012-04126 IZ
3ep90 Greenwich Street, 2nd Floor Old Rlic Title Company
New York: New York 10013 By:
Attention: Joanne Mareino
Ciii 11 10-7044852
MULTIFAMILY LEASEHOLD DEED OF TRUST,
ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(CALIFORNIA)
ATTENTION COUNTY RECORDER: THIS INSTRUMENT IS INTENDED TO BE
EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING
PURSUANT TO SECTION 9502 OF THE CALIFORNIA COMMERCIAL CODE.
PORTIONS OF THE GOODS COMPRISING A PART OF THE MORTGAGED
PROPERTY ARE OR ARE TO BECOME FIXTURES RELATED TO THE LAND
DESCRIBED IN EXHIBIT A HERETO. THIS INSTRUMENT IS TO BE FILED FOR
RECORD IN THE RECORDS OF THE COUNTY WHERE DEEDS OF TRUST ON
REAL PROPERTY ARE RECORDED AND SHOULD BE INDEXED AS BOTH A DEED
OF TRUST AND AS A FINANCING STATEMENT COVERING FIXTURES. THE
ADDRESSES OF BORROWER (DEBTOR) AND LENDER (SECURED PARTY) ARE
SPECIFIED IN THE FIRST PARAGRAPH ON PAGE 1 OF THIS INSTRUMENT.
p
1- DEFINITIONS .............................................:.. 2
....................................
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT..................................I 1
3. ASSIGNMENT OF RENTS;'APPOINTMENT`OFRECEIVER; LENDER IN
POSSESSION........................................................ .
E MO
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THRTGAGED
PROPERTY..................................................................................
S. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN
DOCUMENTS; PREPAYMENT PREMIUM.................................................................16
6. EXCULPATION .................................... .......16
....................................:.............................. .
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES ............................16
8. COLLATERAL AGREEMENTS.........................................:..........................................18
9. APPLICATION OF PAYMENTS.....; ....................... .....18
10. COMPLIANCE WITH LAWS ................................ ................18
.........................................
H. USE OF PROPERTY........................................................19
...............................................
12. PROTECTION OF LENDER'S SECURITY; INSTRUMENT SECURES
FUTURE ADVANCES ......................................... ....19
.................:.....................................
13. INSPECTION ............................................. 20
.................................................
14. BOOKS AND RECORDS; FINANCIAL REPORTING ....................... „ „20
15. TAXES; OPERATING EXPENSES .................. ...........................22
16. LIENS; ENCUMBRANCES ...........................__........ .............23
.........................................
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF
MORTGAGED PROPERTY ........................................... ..........................24
......................
18. ENVIRONMENTAL HAZARDS .............................. ...........25
19. PROPERTY AND LIABILITY INSURANCE ....................... .......33
..................................
20. CONDEMNATION ............................ .....................37
.........................................................
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN
BORROWER............................................... ......... ..................38
.......................................
22. EVENTS OF DEFAULT ........................ 43
...............................................................
23. REMEDIES CUMULATIVE..............................:............................................................45
24. FORBEARANCE .............:..... .......46
...................................................:..:............................
25. WAIVER OF STATUTE OF LIMITATIONS ...................... ...........46
.................................
26. WAIVER OF MARSHALLING .................... ................46
27. FURTHER ASSURANCES .................
28. ESTOPPEL CERTIFICATE ...........................................
ii
29.
GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE .........................47
30.
NOTICE............................................................................................................................48
31:::.
CHANGE IN SERVICER ..... :. ....:.::. ....::. ......... ......... ..........49
32.
SINGLE ASSET BORROWER......................................................................................A9
33.
SUCCESSORS AND ASSIGNS BOUND.......................................................................49
34.
JOINT AND SEVERAL LIABILITY..............................................................................49
35.
RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY ............
:........... 49
36.
SEVERABILITY; AMENDMENTS...............................................................................50
37.
CONSTRUCTION...........................................................................................................50
38.
SERVICER......................................................................................................................50
39.
DISCLOSURE OF INFORMATION...............................................................................51
40.
NO CHANGE IN FACTS OR CIRCUMSTANCES.......................................................51
41.
SUBROGATION..............................................................................................................51
42.
FINANCING STATEMENT............................................................................................51
43.
STATE SPECIFIC PROVISIONS (CALIFORNIA).......................................................52
44.
ATTACHED EXHIBITS ..................................... .................................................
............ 57
45.
WAIVER OF TRIAL BY JURY ............... .........................................................................
I
EXHIBITS
EXHIBIT A Description of the Land
EXHIBIT B Modifications to Instrument (Tax Credit Investor)
EXHIBIT C Financing Statement Information
iii
MULTIFAMILY LEASEHOLD DEED. OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
_(CALIFORNIA)
This MULTIFAMILY LEASEHOLD DEED OF TRUST, ASSIGNMENT OF
RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "Instrument') is dated
for reference purposes only as of the 1st day of August, 2012, and will not be effective and
binding on the parties hereto unless and until the Closing Date occurs, by CORAL
MOUNTAIN PARTNERS, L.P., a California limited partnership, whose address is c/o KD
Housing Partners, 4199 Campus Drive, Suite 550, Irvine, California 92612, as grantor
("Borrower"), to OLD REPUBLIC TITLE COMPANY, having an address at 555 120" Street,
Oakland, California 94607, as trustee ("Trustee") for the benefit of CALIFORNIA
MUNICIPAL FINANCE AUTHORITY, a joint exercise of powers authority duly organized
and existing under the laws of the State of California, whose address is 2111 Palomar Airport
Road, Suite 320, Carlsbad, California 92011, as beneficiary, and its successors and assigns
("Lender").
The Loan is made and the Indebtedness is evidenced by the Note in the maximum
principal amount of TWENTY FOUR MILLION FOUR HUNDRED THOUSAND AND
NO/100 DOLLARS ($24,400,000) maturing on the earlier to occur of [October 1, 20451, or any
earlier date on which the unpaid principal balance of the Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date").
Immediately upon the execution and delivery of the Note, this Instrument and the other
Loan Documents, it is contemplated and intended that Lender will assign its rights under the
Loan to Citibank, N.A., a national banking association ("Funding Lender"), pursuant to that
certain Funding Loan Agreement dated as of the date hereof by and between Lender and Funding
Lender and that certain Assignment of Deed of Trust, dated as of the date hereof, from Lender to
Funding Lender.
NOW THEREFORE:
Granting Clause. Borrower, in consideration of the Indebtedness and the trust created
by this Instrument, irrevocably grants, conveys and assigns to Trustee, in trust, with power of
sale, the Mortgaged Property, including the Land located in the City of La Quinta, Riverside
County, California, and described in Exhibit A attached to this Instrument, to have and to hold
the Mortgaged Property unto Trustee, Trustee's successor in trust and Trustee's assigns forever.
TO SECURE TO LENDER and its successors and assigns the repayment of the
Indebtedness evidenced by the Note executed by Borrower and maturing on the Maturity Date,
and all renewals, extensions and modifications of the Indebtedness, including, without limitation,
the payment of all sums advanced by or on behalf of Lender to protect the security of this
Instrument under Section 12 and the performance of the covenants and agreements of Borrower
contained in the Loan Documents.
Deed of Trust I Camt MOanmin Apartments
Borrower represents and warrants that Borrower is lawfully seized of the Mortgaged
Property and has the right, power and authority to grant, convey and assign the Mortgaged
Property, and that the Mortgaged Property i.s.-unencumbered except for the Permitted
Encumbrances. Borrower covenants that Borrower will warrant and defend generally the title to
The Mortgaged Property against all claims and demands, subject to any Permitted Encumbrances,
This Instrument is also a financing statement and a fixture filing under the Uniform
Commercial Code of the Property Jurisdiction and the information set forth on Exhibit C is
included for that purpose.
Covenants. Borrower and Lender covenant and agree as follows:
1. DEFINITIONS. The following terms, when used in this Instrument (including
when used in the above recitals), shall have the following meanings:
(a) "Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with such
Person. The term "control' for these purposes means, with respect to any Person, either
(i) ownership directly or through other entities of more than 50% of all beneficial equity
interest in such Person, or (ii) the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, through the
ownership of voting securities, by contract or otherwise.
(b) "Bankruptcy Event' means any one or more of the following:
(i) (A) the commencement of a voluntary case under one or more of
the Insolvency Laws by the Borrower; (B) the acknowledgment in
writing by the Borrower that it is unable to pay its debts generally
as they mature; (C) the making of a general assignment for the
benefit of creditors by the Borrower; (D) the commencement of an
involuntary case under one or more Insolvency Laws against the
Borrower; or (E) the appointment of a receiver, liquidator,
custodian, sequestrator, trustee or other similar officer who
exercises control over the Borrower or any substantial part of the
assets of the Borrower provided that any proceeding or case under
(D) or (E) above is not dismissed within 90 days after filing;
(ii) Any Guarantor or any Affiliate of a Guarantor files an involuntary
petition against Borrower under one or more of the Insolvency
Laws; or
(iii) Both (A) an involuntary petition under any one or more of the
Insolvency Laws is filed against Borrower or Borrower directly or
indirectly becomes the subject of any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws of
any jurisdiction, or in equity, and (B) Borrower or any Affiliate of
Borrower has acted in concert or conspired with such creditors of
Decd or Trust 2 Coral Mountain Apartments
Borrower (other than Lender) to cause the filing thereof with the
intent to interfere with enforcement rights of Lender after the
occurrence of an Event of Default. _
(c) "Beneficiary Parties" means Lender, any Servicer and their respective
successors and assigns, together with any lawful owner, holder or pledgee of the Note.
(d) "Borrower" means all persons or entities identified as "Borrower" in the
first paragraph of this Instrument, together with their successors and assigns.
(e) "Borrower's Organizational Documents" means, collectively: (i) the
certificate of limited partnership, certificate or articles of formation or certificate or
articles of organization of Borrower filed with the Office of the Secretary of State of
California on December 24, 2010, as the same may be amended and/or restated from time
to time; and (ii) the Second Amended and Restated Agreement of Limited Partnership
Agreement of Borrower dated as of August 29, 2012, as the same may be amended
and/or restated from time to time.
(f) "Business Day" means any day other than (i) a Saturday or a Sunday, or
(ii) a day on which federally insured depository institutions in New York, New York are
authorized or obligated by law, regulation, governmental decree or executive order to be
closed.
(g) "Closing Date" has the meaning ascribed thereto in the Loan Agreement.
(h) "Collateral Agreement" means any separate agreement between
Borrower, Lender, Funding Lender and/or Servicer for the purpose of establishing tax,
repair or replacement reserve or escrow accounts for the Mortgaged Property or granting
Lender a security interest in any such accounts. (including, without limitation, the
Replacement Reserve Agreement), or any other agreement or agreements between'
Borrower, Lender, Funding Lender and/or Servicer which provide for the establishment
of any other fund, reserve or account.
(i) "Collateral Assignments" means, collectively, (i) the Assignment of
Construction Contract dated as of the date hereof by Borrower to Funding Lender and
any consents relating thereto, (ii) the Assignment of Architect's Agreement and Plans and
Specifications dated as of the date hereof by Borrower to Funding Lender and any
consents relating thereto, (iii) the Assignment of Project Documents dated as of the date
hereof by Borrower to Funding Lender, (iv) the Assignment of Management Agreement
dated as of the date hereof by Borrower and the Manager (as defined therein) to Funding
Lender, (v) the Assignment of Equity Investor Capital Contributions, Pledge and Security
Agreement dated as of the date hereof by Borrower to Funding Lender, (vi) the
Assignment of Equity Interests, Pledge and Security Agreement dated as of the date
hereof by the general partners of the Borrower to Funding Lender, and (vii) the
Assignment of Subordination of Developer Fees, Pledge and Security Agreement dated
as of the date hereof by the Assignor (as defined therein) and Borrower to Lender.
Dud or"trust 3 Coral Mountain Apartments
(j) "Conditions to Conversion" has the meaning ascribed thereto in the
Construction Funding Agreement.
- (k) "Construction —Funding Agreement"means that certain` Construction
Funding Agreement, dated as of the date hereof, between the Funding Lender and
Borrower setting forth certain provisions relating to disbursement of the Loan during
construction, insurance and other matters, as such agreement may be amended, modified,
supplemented and replaced from time to time.
(1) "Controlling Interest' means (i) greater than 50% of the ownership
interests in an entity, or (ii) a percentage ownership interest in an entity of 50% or less if
the owners) of that interest actually direct(s) the business and affairs of the entity
without requirement of consent of any other party.
(m) "Conversion Date" has the meaning ascribed thereto in the Loan
Agreement.
(n) "Credit Enhancer" means a government sponsored enterprise that at any
time, directly or indirectly, purchases the Loan or provides credit enhancement with
respect to the Loan.
(o) "Credit Enhancer Insurance Standards" means the insurance standards
and requirements set forth in the multifamily underwriting guidelines generated by the
Credit Enhancer, as in effect from time to time.
(p) "Environmental Agreement' means that certain Agreement of
Environmental Indemnification dated as of the date hereof by Borrower for the benefit of
Beneficiary Parties.
(q) "Environmental Permit' means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any activities or
businesses conducted on or in relation to the Mortgaged Property.
(r) "Event of Default' means the occurrence of any event listed in
Section 22.
(s) "Fixtures" means all property owned by Borrower which is so attached to
the Land or the Improvements as to constitute a fixture under applicable law, including:
machinery, equipment, engines, boilers, incinerators, installed building materials;
systems and equipment for the .purpose of supplying or distributing heating, cooling,
electricity, gas, water, air, or light; antennas, cable, wiring and conduits used in
connection with radio, television; security, fire prevention, or fire detection or otherwise
used to carry electronic signals; telephone systems and equipment; elevators and related
machinery and equipment; fire detection, prevention and extinguishing systems and
apparatus; security and access control systems and apparatus; plumbing systems; water
heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers,
washers, dryers and other appliances; light fixtures, awnings, storm windows and storm
doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets,
Deed ofTrusl 4 Coral Mounmin Apmtmenls
paneling, rugs and floor and wall coverings; fences, trees and plants; swimming pools;
and exercise equipment.
------ - (t) • ---"Governmental Authority" means any board, commission, department or= -----
body of any municipal, county, state or federal governmental unit, or any subdivision of
any of them, that has or acquires jurisdiction over the Mortgaged Property or the use,
operation or improvement of the Mortgaged Property..
(u) "Guarantor" means, collectively, John Durso, an individual, and Michael
J. Shovlin,.an individual, and/or any other person or entity which may hereafter become a
guarantor of any of Borrower's obligations under the Loan.
(v) "Hazardous Materials" means petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil; explosives;
flammable materials; radioactive materials; polychlorinated biphenyls ("PCBs") and
compounds containing them; lead and lead -based paint; asbestos or asbestos -containing
materials in any form that is or could become &fable; underground or above -ground
storage tanks, whether empty or containing any substance; radon; Mold; toxic or
mycotoxin spores; any substance the presence of which on the Mortgaged Property is
prohibited by any federal, state or local authority; any substance that requires special
handling; and any other material or substance (whether or not naturally occurring) now or
in the future that (i) is defined- as a "hazardous substance," "hazardous material,"
.hazardous waste," toxic substance,„ `toxic pollutant," "" solid waste", "pesticide",
"contaminant," or "pollutant", or otherwise classified as hazardous or toxic by or within
the meaning of any Hazardous Materials Law, or (ii) is regulated in any way by or within
the meaning of any Hazardous Materials Law.
(w) "Hazardous Materials Laws" means all federal, state, and local laws,
ordinances and regulations and standards, rules, policies and other governmental
requirements, rule of common law (including, without limitation, nuisance. and trespass),
consent order, administrative rulings and court judgments and decrees or other
government directive in effect.now or in the future and including all amendments, that
relate to Hazardous Materials or to the protection or conservation of the environment or
human health and apply to Borrower or to the Mortgaged Property, including, without
limitation, those relating to industrial hygiene, or the use, analysis, generation,
manufacture, storage, discharge, release, disposal, transportation, treatment,
investigation, or remediation of Hazardous Materials. Hazardous Materials Laws
include, but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. .Section 9601, et seq., the Resource
Conservation and Recovery Act, 42U.S.C. Section 6901, et seq., the Toxic Substance
Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C.
Section 1251, et seq., and the Hazardous Materials Transportation Act, 49 U.S.C.
Section 5101, et seq., the Superfund Amendments and Reauthorization Act, the Solid
Waste Disposal Act, the Clean Water Act, the Clean Air Act, the Toxic Substances
Control Act, the Occupational Safety and Health Act, and their state analogs.
Deed of Trust - 5 Coral Mountain Apanments
(x) "Impositions" and "Imposition Deposits" shall have the meanings
ascribed thereto in Section 7(a).
--- (y) -"Improvements" means the --buildings, structures - improvements;' aand
alterations now constructed or at any time in the future constructed or placed upon the
Land, including any future replacements and additions.
(z) "Indebtedness" means collectively, the principal of, interest on, and all
other amounts due at any time under, the Note, this Instrument or any other Loan
Document, including prepayment premiums, late charges, default interest, and advances
as provided in Section 12 to protect the security of this Instrument, and any fees or
expenses paid by Lender on behalf of Borrower to Lender, or any other party for the
Loan or other amounts relating to the Loan Documents which are paid by Lender;
(aa) "Initial Owners" means, with respect to Borrower or any other entity, the
persons or entities who on the date of the Note, directly or indirectly, own in the
aggregate 100% of the ownership interests in Borrower or that entity.
(bb) "Insolvency Laws" means the United States Bankruptcy Code, l I U.S.C.
§ 101, et seq., together with any other federal or state law affecting debtor and creditor
rights or relating to the bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding, as amended from
time to time, to the extent applicable to the Borrower.
(cc) "Land" means the land described in Exhibit A.
(dd) "Leases" means all present and future leases, subleases, licenses,
concessions or grants or other possessory interests now or hereafter in force, whether oral
or written, covering or affecting the Mortgaged Property, or any portion of the Mortgaged
Property (including proprietary leases or occupancy agreements if Borrower is a
cooperative housing corporation), and all modifications, extensions or renewals.
(ee) "Lender" means the entity identified as "Lender" in the first paragraph of
this Instrument, or any subsequent holder of the Note.
(ff) "Loan" means the loan made by Lender to Borrower in an amount not to
exceed the original principal amount of the Note, which loan is evidenced by the Note
and secured by, among other things, this Instrument.
(gg) "Loan Agreement" means that certain Borrower Loan Agreement dated
as of the date hereof by and between Borrower and Lender relating to the Loan, as the
same may be amended, modified or supplemented from time to time.
(hh) "Loan Documents" means collectively, the Loan Agreement, the Note,
this Instrument, the Enviromnental Agreement, all guaranties, all indemnity agreements,
all Collateral Agreements, all Collateral Assignments, all O&M Programs, the MMP, and
any other documents now or in the future executed by Borrower, any guarantor or any
Deed of Tml 6 Coml Mountain Apartments
other person in connection with the Loan, as such documents may be amended from time
to time.
"Material Property Agreements" means" any agreeimfit which, in
Lender's sole discretion, acting in good faith, materially affects the Mortgaged Property,
the use thereof or otherwise. materially affects the rights of Borrower or Beneficiary
Parties in, to, and with respect to the Mortgaged Property or the proceeds therefrom,
including, without limitation, each of the following: (i) any agreement regarding the
payment in lieu of taxes ("PILOT', (ii) all. covenants, conditions and restrictions,
including, without limitation, any declaration subjecting the Mortgaged Property to an
association of owners or other community governance, (iii) any agreement regarding the
abatement or exemption of real estate taxes, (iv) any easement pursuant to which the
Mortgaged Property is granted access to a public right of way, (v) any material lease of
all or any portion of the Mortgaged Property, (vi) any operating agreements relating to
the Land or the Improvements and (vii) any regulatory agreements, declaration, land use
restriction agreements or similar instruments affecting the Mortgaged Property including
the operation or use thereof.
(ii) "Maturity Date" has the meaning ascribed thereto in the recitals to this
Instrument.
(kk) "MMP" means an operations and maintenance plan, moisture
management program and/or microbial operations and maintenance program approved by
Lender to control water intrusion and prevent the development of Mold or moisture at the
Mortgaged Property throughout the term of this Instrument. If required by Lender, the
MMP shall contain a provision for (i) staff training, (ii) information to be provided to
tenants, (iii) documentation of the plan, (iv) the appropriate protocol for incident response
and' remediation and (v) routine, scheduled inspections of common space and unit
interiors.
(11) ' "Mold" means mold, fungus, microbial contamination or pathogenic
organisms.
(nun) "Mortgaged Property" means all of Borrower's present and future right,
title and interest in and to all of the following:
(i) the Land;
(ii) the Improvements;
(iii) the Fixtures;
(iv) the Personalty;
(v) all current and future rights, including air rights, development
rights, zoning rights and other similar rights or interests,
easements, tenements, rights -of -way, strips and gores of land,
streets, alleys; roads, sewer rights, waters, watercourses, and
Deed of Trust .. 7 Coral Mountain Apartments
appurtenances related to or benefiting the Land or the
Improvements, or both, and all rights -of -way, streets, alleys and
roads which may have been or may in the future be vacated; .
(vi) all proceeds paid or to be paid by any insurer of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged. Property, whether or not Borrower obtained the
insurance pursuant to Lender's requirements;
(vii) all awards, payments and other compensation made or to be made
by any municipal, state or federal authority with respect to the
Land, the Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property, including any awards or
settlements resulting from condemnation proceedings or the total
or partial taking of the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property under the
power of eminent domain or otherwise and including any
conveyance in lieu thereof
(viii) all contracts, options and other agreements for the sale of the Land,
the Improvements, the Fixtures, the Personalty or any other part of
the Mortgaged Property entered into by Borrower now or in the
future, including cash or securities deposited to secure
performance by parties of their obligations:
(ix) all Rents and Leases;
(x) all earnings, royalties, accounts receivable, issues and profits from
the Land, the Improvements or any other part of the Mortgaged
Property, whether the foregoing are now due, past due, or to
become due, all undisbursed proceeds of the loan secured by this
Instrument, deposits forfeited by tenants, and, if Borrower is a
cooperative housing corporation, maintenance charges or
assessments payable by shareholders or residents;
(xi) all refunds or rebates of Impositions by any municipal, state or
federal authority or insurance company (other than refunds
applicable to periods before the real property tax year in which.this
Instrument is dated);
(xii) all tenant security deposits which have not been forfeited by any
tenant under any Lease and any bond or other security in lieu of
such deposits;
(xiii) all names under or by which any of the above Mortgaged Property
may be operated or known, and all trademarks, trade names, and
goodwill relating to any of the Mortgaged Property;
Deed of Trust 8 Coml Mountain Apartments
(xiv) all documents, writings, books, files, records and other documents
arising from or relating to any of the foregoing, whether now
existing or hereafter created; and
(xv) all proceeds from the conversion, voluntary or involuntary, of any
of the above into cash or liquidated claims, and the right to collect
such proceeds, and all other cash and non -cash proceeds and
products of any of the foregoing.
(nn) "Note" means that certain Multifamily Note dated as of the Closing Date,
executed and delivered by the Borrower, payable to Lender in an amount not to exceed
the original maximum principal amount of the Loan set forth in the recitals to this
Instrument, including all schedules, riders, allonges and addenda, as.the same may be
amended, modified, or supplemented from time to time.
(oo) "O&M Program" has the meaning ascribed thereto in Section 18(d).
(pp) "Permitted Encumbrances" means any easements, encumbrances or
restrictions listed on the schedule of exceptions in the titleinsurance policy issued to
Lender as of the date of recordation of this Instrument insuring Lender's interest in the
Mortgaged Property, together with the Subordinate Debt, if applicable.
(qq) "Permitted Transfer" has the meaning ascribed thereto in Section 21(b).
(n•) "Person" shall mean any individual, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated association, any federal,
state, county or municipal government or any bureau, department or agency thereof and
any fiduciary, acting in such capacity on behalf of any of the foregoing.
(ss) "Personalty" means all:
{i) accounts (including deposit accounts) of Borrower related to the
Mortgaged Property;
(ii) Imposition Deposits;
(iii) equipment, goods, supplies and inventory owned by Borrower that
are used now or in the future in connection with the ownership,
management or operation of the Land or the Improvements or are
located on the Land or in the Improvements (other than Fixtures),
including fiuniture, furnishings; machinery, building materials,
tools, books, records (whether in written or electronic form),
computer equipment (hardware and software);
(iv) other tangible personal property owned by Borrower which are
used now or in the future in connection with the ownership,
management or operation of the Land or Improvements or are
located on the Land or in the Improvements (other than Fixtures),
Dead ofTmst 9 - Corn] Mountain Apartments
including ranges, stoves, microwave ovens, refrigerators,
dishwashers, garbage disposers, washers, dryers and other
appliances;__
(v) any operating agreements relating to the Land or the
Improvements;
(vi) any surveys, plans and specifications and contracts for
architectural, engineering and construction services relating to the
Land or the Improvements;
(vii) documents, instruments, chattel paper, claims, deposits, deposit
accounts, payment intangibles, other intangible property, general
intangibles, and rights relating to the operation of, or used in
connection with, the Land or the Improvements, including all
governmental permits relating to any activities on the Land and
including subsidy or similar payments received from any sources,
including a governmental authority; and
(viii) any rights of Borrower in or under letters of credit.
(it) "Project" means that 176-unit multifamily project known as Coral
Mountain Apartments and located in the City of La Quinta, Riverside County, California.
(uu) "Property Jurisdiction' means the State of California.
(vv) "Regulatory Agreement' means the Regulatory Agreement and
Declaration of Restrictive Covenants, entered into or to be entered into by and among the
Lender and the Borrower, regulating or restricting the use or manner of operation of the
quirements that specified percentages of the
Mortgaged Property and containing re
dwelling units in the Mortgaged Property be occupied by tenants whose incomes are
below specified levels.
(ww) "Rents" means all rents (whether from residential or non-residential
space), revenues and other income of the Land or the Improvements, including subsidy
payments received from any sources (including, but not limited to payments under any
Housing Assistance Payments Contract or similar agreements), parking fees, laundry and
vending machine income and fees and charges for food, health care and other services
provided at the Mortgaged Property, whether now due, past due, or to become due, and
deposits forfeited by tenants.
(xx) "Replacement Reserve Agreement' means that certain Replacement
Reserve Agreement dated as of the date hereof by and between Borrower and Funding
Lender.
(yy) "Replacement Reserve Fund" has the meaning ascribed thereto by the
Replacement Reserve Agreement.
Deed of Trust 10 Coral Mountain Apartments
(zz) "Servicer" means the servicing party that is designated by Lender to
service the Loan, together with its successors in such capacity.
==- (aaa) "Suhordiiiate Debt" has the meaningascribed o that term -
in -the -Loan --Agreement.
(bbb) "Taxes" means all taxes, assessments, vault rentals and other charges, if
any, general, special or otherwise, including all assessments for schools, public
betterments and general or local improvements, which are levied, assessed or imposed by
any public authority or quasi -public authority, and which, if not paid, will become a lien,
on the Land or the Improvements.
(ccc) "Transfer" means, (i) a sale, assignment, transfer, or other disposition
(whether voluntary, involuntary or by operation of law); (ii) the grant, creation,. or
attachment of a lien, encumbrance, or security interest (whether voluntary, involuntary or
by operation of law); (iii) the issuance or other creation of a direct or indirect ownership
interest; or (iv) the withdrawal, retirement, removal or involuntary resignation of any
owner or manager of a legal entity.
(ddd) "United States Bankruptcy Code" means the United States Bankruptcy
Code, 1 I U.S.C. Section 101 et seq., as amended from time to time.
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.
(a) This Instrument is also a security agreement under, the Uniform
Commercial Code for any of the Mortgaged Property which, under applicable law, may
be subjected to a security interest under the Uniform Commercial Code, whether such
Mortgaged Property is owned now or acquired in the future, and all products and cash
and non -cash proceeds thereof (collectively,. "UCC Collateral"), and Borrower hereby
grants to Lender a security interest in the UCC Collateral. Borrower hereby authorizes
Lender to prepare and file any and all financing statements, continuation statements and
financing statement amendments, in such form as Lender may require to perfect or
continue the perfection of this security interest without execution by Borrower. Borrower
shall pay all filing costs and all costs and expenses of any record searches for financing
statements and/or amendments that Lender may require. Without the prior written
consent of Lender, Borrower shall not create or permit to exist any -other lien or security
interest in any of the UCC Collateral except for the Permitted Encumbrances. If an Event
of Default has occurred and is continuing, Lender shall have the remedies of a secured
party under the Uniform Commercial Code, in addition to all remedies provided by this
Instrument or existing under applicable law. In exercising any remedies, Lender may
exercise its remedies against the UCC Collateral separately or together, and in any order,
without in any affecting the availability of Lender's other remedies. This Instnrrnent
constitutes a financing statement with respect to any part of the Mortgaged Property
which is or may become a Fixture.
(b) Unless Borrower gives at least thirty (30) days', prior written notice to
Lender and subject to Section 21 hereof, Borrower shall not: (i) change its name,
Deed of Tmst ] ] Coml Mountain Apnmwnts
identity, or structure of organization; (ii) change its state of organization through
dissolution, merger, transfer of assets of otherwise; (iii) change its principal place of
business (or chief executive office if more than one place of business); or (iv) add to or
change any location at whtch any of the Ivlor[gaged Property is stored, held or located.
Such notice shall be accompanied by new financing statements and/or financing
statement amendments in the same form as the financing statements delivered to Lender
on the date hereof. Without limiting the foregoing, Borrower hereby authorizes and
irrevocably appoints Lender and each of its officers attomeys-in-fact for Borrower to
execute, deliver, and file, as applicable, such financing statements, continuation
statements or amendments deemed necessary by Lender in its sole discretion for and on
behalf of Borrower, without execution by Borrower. Borrower shall also execute and
deliver to Lender modifications or supplements of this Instrument as Lender may require
in connection with any change described in this Section.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER
IN POSSESSION.
(a) As part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all Rents. It is the intention of Borrower
to establish a present, absolute and irrevocable transfer and assignment to Lender of all
Rents and to authorize and empower Lender to collect and receive all Rents without the
necessity of further action on the part of Borrower. Promptly upon request by Lender,
Borrower agrees to execute and deliver such further assignments of Rents as Lender may
from time to time require. Borrower and Lender intend this assignment of Rents to be
immediately effective and to constitute an absolute present assignment and not an
assignment for additional security only. For purposes of giving effect to this absolute
assignment of Rents, and for no other purpose, Rents shall not be deemed to be a part of
the Mortgaged Property. However, if this present, absolute and unconditional assignment
of Rents is not enforceable by its terms under the laws of the Property Jurisdiction, then
the Rents shall be included as a part of the Mortgaged Property and it is the intention of
Borrower that in this circumstance this Instrument create and perfect a lien on Rents in
favor of Lender, which lien shall be effective as of the date of this Instrument.
(b) Borrower authorizes Lender to collect, sue for and compromise Rents and
directs each tenant of the Mortgaged Property to pay all Rents to, or as directed by,
Lender. However, until the occurrence of an Event of Default, Lender hereby grants to
Borrower a revocable license to collect and receive all Rents, to hold all Rents in trust for
the benefit of Lender and to apply all Rents to pay the installments of interest and
principal then due and payable under the Note and the other amounts then due and
payable under the other Loan Documents, including Imposition Deposits, and to pay the
current costs and expenses of managing, operating and maintaining the Mortgaged
Property, including utilities, Taxes and insurance premiums (to the extent not included in
Imposition Deposits), tenant improvements and other capital expenditures. So long as no
Event of Default has occurred and is continuing, the Rents remaining after application
pursuant to the preceding sentence may be retained by Borrower free and clear of, and
released from, Lender's rights with respect to Rents under this Instrument. Upon the
occurrence of an Event of Default, and without the necessity of Lender entering upon and
Deed of Trust 12 Coral Mountain Aponments
taking and maintaining control of the Mortgaged Property directly, or by a receiver,
Borrower's license to collect Rents shall automatically terminate and Lender shall
me due and -payable;, including Rents
dird-_.:
of Default to the satisfaction of Lender). Borrower upon. Borrower's cure of the Event
without nonce be entitled to all Rents as the become.
unpaid(
shall pay to Lender upon demand all
Rents to which Lender is entitled. At any time on or after the occurrence of an Event of
Default, Lender may give, and Borrower hereby irrevocably authorizes Lender to give,
notice to all tenants of the Mortgaged Property instructing them to pay all Rents to
Lender, no tenant shall be obligated to inquire further as to. the right of Lender to collect,
and no tenant shall be obligated to pay to Borrower any amounts which are actually paid
to Lender in response to such a notice. Any such notice by Lender shall be delivered to
each tenant personally, by mail or by delivering such demand to each. rental unit.
Borrower shall not interfere with and shall cooperate with Lender's collection of such
Rents.
(c) Borrower represents and warrants to Lender that Borrower has not
executed any prior assignment of Rents (other than the Subordinate Debt and other than
an assignment of Rents securing indebtedness that will be paid off and discharged with
the proceeds of the Loan), that Borrower has not performed, and Borrower covenants and
agrees that it will not perform, any acts and has not executed, and shall not execute, any
instrument which would prevent Lender from exercising its rights under this Section 3,
and that at the time of execution of this Instrument there has been no.anticipation or
prepayment of any Rents for more than two months prior to the due dates of such Rents
(other than a security deposit not in excess of one month's rent). Borrower shall not
collect or accept payment of any Rents more than two months prior to.the due dates of
such Rents (other than a security deposit not in excess of one month's rent).
(d) If an Event of Default has occurred and is continuing, Lender may, but
shall in no event be required, regardless of the adequacy of Lender's security or the
solvency of Borrower and even in the absence of waste, enter upon and take and maintain
full control of the Mortgaged Property in order to perform all acts that Lender in its
discretion determines to be necessary or desirable for the operation and maintenance of
the Mortgaged Property, including the execution, cancellation or modification of Leases,
the collection of all Rents, the making of repairs to the Mortgaged Property and the
execution or termination of contracts providing for the management, operation or
maintenance of the Mortgaged Property, for the purposes of enforcing the assignment of
Rents pursuant to Section 3(a), protecting. the Mortgaged Property or the security, of this
Instrument, or for such other purposes as Lender in its discretion may deem necessary or
desirable. AIternatively, if an Event of Default has occurred and is continuing, regardless
of the adequacy of Lender's security, without regard to Borrower's solvency and without
the necessity of giving prior notice (oral or written) to Borrower, Lender may apply to
any court having jurisdiction for the appointment of a receiver for the Mortgaged
Property to take any or all of the actions set forth in the preceding sentence. If Lender
elects to seek the appointment of a receiver for the Mortgaged Property at any time after
an Event of Default has occurred and is continuing, Borrower, by its execution of this
Instrument, expressly consents to the appointment of such receiver, including the
appointment of a receiver ex pane. if permitted by applicable law. Lender or the receiver,
Deed or Trust 13 Coral Mountain Apartments
as the case may be, shall be entitled to receive a reasonable fee for managing the
Mortgaged Property. Immediately upon appointment of a receiver or immediately upon
Lender's entering upon and taking possession and control of the Mortgaged Property,
— Borrower shall surrender possession ofthe-Wrtgaged Property to Lender or the receiver,
as the case may be; and shall deliver to Lender or the receiver, as the case may be, all
documents, records (including records on electronic or magnetic media), accounts,
surveys, plans, and specifications relating to the Mortgaged Property and all security
deposits and prepaid Rents. In the event Lender takes possession and control of the
Mortgaged Property, Lender may exclude Borrower and its representatives from the
Mortgaged Property. Borrower acknowledges and agrees that the exercise by Lender of
any of the rights conferred under this Section 3 shall not be construed to make Lender a
mortgagee -in -possession of the Mortgaged Property so long as Lender has not itself
entered into actual possession of the Land and Improvements.
(e) if Lender enters the Mortgaged Property, Lender shall be liable to account
only to Borrower and only for those Rents actually received. Lender shall not be liable to
Borrower, anyone claiming under or through Borrower or anyone having an interest in
the Mortgaged Property, by reason of any act or omission of Lender under this Section 3,
and Borrower hereby releases and discharges Lender from any such liability to the fullest
extent permitted by law, except for the gross negligence or willful misconduct of Lender
or its agents.
(f) If the Rents are not sufficient to meet the costs of taking control of and
managing the Mortgaged Property and collecting the Rents, any funds expended by
Lender for such purposes shall become an additional part of the Indebtedness as provided
in Section 12.
(g) Any entering upon and taking of control of the Mortgaged Property by
Lender or the receiver, as the case may be, and any application of Rents as provided in
this Instrument shall not cure or waive any Event of Default or invalidate any other right
or remedy of Lender under applicable law or provided for in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED
PROPERTY.
(a) As part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all of Borrower's right, title and interest
in, to and under the Leases, including Borrower's right, power and authority to modify
the terms of any such Lease, or extend or terminate any such Lease. It is the intention of
Borrower to establish a present, absolute and irrevocable transfer and assignment to
Lender of all of Borrower's right, title and interest in, to and under the Leases. Borrower
and Lender intend this assignment of the Leases to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional security
only. For purposes of giving effect to this absolute assignment of the Leases, and for no
other purpose, the Leases shall not be deemed to be a part of the "Mortgaged Property" as
that term is defined in Section 1. However, if this present, absolute and unconditional
assignment of the Leases is not enforceable by its terms under the laws of the Property
Dmd of Trust 14 Coral Mountain Apartments
Jurisdiction, then the Leases shall be included as a part of the Mortgaged Property and it
is the intention. ofBorrower.that in this circumstance this Instrument create and perfect a
lien on the Leases in favor of Lender, which lien shall be effective as of the date of this
lnstriunent.
(b) Unless an Event of Default has occurred and is continuing, Borrower shall
have all rights, power and authority granted to Borrower under any Lease (except as
otherwise limited by this Section or any other provision of this Instrument), including the
right, power and authority to modify the terns of any Lease or extend or terminate any
Lease. During the continuance of an Event of Default, the permission given to Borrower
pursuant to the preceding sentence to exercise all rights, power and- authority under
Leases shall automatically terminate. Borrower shall comply with and observe
Borrower's obligations under,all Leases, including Borrower's obligations pertaining to
the maintenance and disposition of tenant security deposits.
(c) Borrower acknowledges and agrees that the exercise by Lender, either
directly or by a receiver, of any of the rights conferred under this Section 4 shall not be
construed to make Lender a,mortgagee-in-possession of the Mortgaged Property so long
as Lender has not itself entered into actual possession of the Land and the Improvements.
The acceptance by Lender of the assignment of the Leases pursuant to Section 4(a) shall
not at any time or in any event obligate Lender to take any action under this Instrument or
to expend any money or to incur any expenses. Lender shall not be liable in any way for
any injury or damage to person or property sustained by any person or persons, firm or
corporation in or about the Mortgaged Property, except to the extent arising from the
gross negligence or willful misconduct of Lender. Prior to Lender's actual entry into and
taking possession of the Mortgaged Property, Lender shall not (i) be obligated to perform
any of the terms, covenants and conditions contained in any Lease (or otherwise have any
obligation with respect to any Lease); (ii) be obligated to appear in or defend any action
or proceeding relating to the Lease or the Mortgaged Property; or (iii) be responsible for
the operation, control, care, management or repair of the Mortgaged Property or any
portion of the Mortgaged Property. The execution of this Instrument by Borrower shall
constitute conclusive evidence that all responsibility for the operation, control, care,
management and repair of the Mortgaged Property is and shall be that of Borrower, prior
to such actual entry and taking of possession.
(d) Upon delivery of notice by Lender to Borrower of Lender's exercise of
Lender's rights under this Section 4 at any time during the continuance of an Event of
Default, and without the necessity of Lender entering upon and taking and maintaining
control of the Mortgaged Property directly, by a receiver, or by any other manner or
proceeding permitted by the laws of the Property Jurisdiction, Lender immediately shall
have all rights, powers and authority granted to Borrower under any Lease, including the
right, power and authority to modify the terms of any such Lease, or extend or terminate
any such Lease.
(e) Borrower shall, promptly upon Lender's request, deliver to Lender an
executed copy of each residential Lease then in effect. All Leases for residential
dwelling units shall (i) be on forms approved by Lender, (ii) be for initial terms of at least
Daa1 of Trust 15 Coral Mountain Apar nicnts
six (6) months and not more than two (2) years, (iii) not include options to purchase,
(iv) be legally valid, binding, and enforceable obligations of the tenants, (v) contain
language expressly stating that such Lease is subordinate to the lien of this Instrument
and (vi) comply with alFapplicable laws. -'
(f) Except for laundry facilities and cable television services for tenants on
market terms and conditions, Borrower shall not lease any portion of the Mortgaged
Property for non-residential use except with the prior written consent of Lender and
Lender's prior written approval of the Lease agreement. Borrower shall not modify the
terms of, or extend or terminate, any Lease for non-residential use (including any Lease
in existence on the date of this Instrument) without the prior written consent of Lender.
Borrower shall, without request by Lender, deliver an executed copy of each non-
residential Lease to Lender promptly after such Lease is signed. All non-residential
Leases, including renewals or extensions of existing Leases, shall specifically provide
that (i) such Leases are subordinate to the lien of this Instrument; (ii) the tenant shall
attorn to Lender and any purchaser at a foreclosure sale, such attornment to be self-
executing and effective upon acquisition of title to the Mortgaged Property by any
purchaser at a foreclosure sale or by Lender in any manner; (iii) the tenant agrees to
execute such further evidences of attornment as Lender or any purchaser at a foreclosure
sale may from time to time request; (iv) the Lease shall not be terminated by foreclosure
or any other transfer of the Mortgaged Property; (v) after a foreclosure sale of the
Mortgaged Property, Lender or any other purchaser at such foreclosure sale may, at
Lender's or such purchaser's option, accept or terminate such Lease; and (vi) the tenant
shall, upon receipt after the occurrence of an Event of Default of a written request from
Lender, pay all Rents payable under the Lease to Lender.
(g) Borrower shall not receive or accept Rent under any Lease (whether
residential or non-residential) for more than two months in advance (other than a security
deposit not in excess of one month's rent).
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN
DOCUMENTS; PREPAYMENT PREMIUM. Borrower shall pay the Indebtedness when due
in accordance with the terms of the Note and the other Loan Documents and shall perform,
observe and comply with all other provisions of the Note and the other Loan Documents.
Borrower shall pay a prepayment premium in connection with certain prepayments of the
Indebtedness, including a payment made after Lender's exercise of any right of acceleration of
the Indebtedness, as provided in the Note.
6. EXCULPATION. The personal liability of Borrower for payment of the Note
and for performance of the other obligations to be performed by Borrower under this Instrument
is limited in the manner, and to the extent, provided in the Note.
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.,
(a) Borrower shall deposit with Lender on the day monthly installments of
principal or interest, or both, are due under the Note (or on another day designated in
writing by Lender), until the Indebtedness is paid in full, an additional amount sufficient
Deed of Trust 16 Coral Mountain Apartments
to accumulate with Lender the entire sum required to pay, when due (i) any water and
sewer charges which, if not paid, may result in a lien on all or any part of the Mortgaged
Property, (ii) the premiums for fire and other hazard insurance, rental loss insurance and
- such' other -insurarice- as- Lender may -require require under Section 19,--(iii) Taxes, and
(iv) amounts for other charges and expenses which Lender at any time reasonably deems
necessary to protect the Mortgaged Property, to prevent the imposition of liens on the
Mortgaged Property, or otherwise to protect Lender's interests, all as reasonably
estimated from time to time by Lender, plus one -twelfth of such estimate, if required by
Lender. The amounts deposited under the preceding sentence are collectively referred to
in this Instrument as the "Imposition Deposits". The obligations of Borrower for which
the .Imposition Deposits are required are collectively referred to in this Instrument as
"Impositions". The amount of the Imposition Deposits shall be sufficient to enable
Lender to pay each Imposition before the last date upon which such payment may be
made without any penalty or interest charge being added. Lender shall maintain records
indicating how much of the monthly Imposition Deposits and how much of the aggregate
Imposition Deposits held by Lender are held for the purpose of paying Taxes, insurance .
premiums and each other Imposition.
(b) Imposition Deposits shall be held in an institution (which may be Lender,
if Lender is such an institution) whose deposits or accounts are insured or guaranteed by
a federal agency. Lender shall not be obligated to open additional accounts or deposit
Imposition Deposits in additional institutions when the amount of the Imposition
Deposits exceeds the maximum amount of the federal deposit insurance or guaranty.
Lender shall apply the Imposition Deposits to pay Impositions so long as no Event of
Default has occurred and is continuing. Unless applicable law requires, Lender shall not
be required to pay Borrower any interest, earnings or profits on the Imposition Deposits.
As additional security for all of Borrower's obligations under this Instrument and the
other Loan Documents, Borrower hereby pledges and grants to Lender a security interest
in the Imposition Deposits and all proceeds of and all interest and dividends on the
Imposition Deposits. Any amounts deposited with Lender under this Section 7 shall not
be trust funds, nor shall they operate to reduce the Indebtedness, unless applied by Lender
for that purpose under Section 7(e).
(c) If Lender receives a bill or invoice for an Imposition; Lender shall pay the
Imposition from the Imposition Deposits held by Lender. Lender shall have no
obligation to pay any Imposition to the extent it exceeds Imposition Deposits then held by
Lender. Lender may pay an Imposition according to any bill, statement or estimate from
the appropriate public office or insurance company without inquiring into the accuracy of
the bill, statement or estimate or into the validity of the Imposition.
(d) If at any time the amount of the Imposition Deposits held by Lender for
payment of a specific Imposition exceeds the amount deemed necessary by Lender, plus
one twelfth of such estimate if required by Lender, the excess shall be credited. against
future installments of Imposition Deposits. If at any time the amount of the Imposition
Deposits held by Lender for payment of a specific Imposition is less than the amount
estimated by Lender to be necessary, plus one twelfth of such estimate if required by
Deed of Trust 17 - Cont Mountoin Apartments
Lender, Borrower shall pay to Lender the amount of the deficiency within 15 days after
notice from Lender.
{e) If an Event of Default has and is continuing Lender may apply'
any Imposition Deposits, in any amounts and in any order as Lender determines, in
Lender's discretion, to pay any Impositions or as a credit against the Indebtedness. Upon
payment in full of the Indebtedness, Lender shall refund to Borrower any Imposition
Deposits held by Lender.
(f) If Lender does not collect an Imposition Deposit pursuant to a separate
written waiver by Lender, then on or before the date each such Imposition is due, or on
the date this Instrument requires each such Imposition to be paid, Borrower shall, if
required by Lender, provide Lender with proof of payment of each such Imposition for
which Lender does not require collection of Imposition Deposits. Lender may, at any
time and in Lender's discretion, revoke its deferral or waiver and require Borrower to
deposit with Lender any or all of the Imposition Deposits listed in this Section 7..
8. COLLATERAL AGREEMENTS. Borrower shall deposit with Lender such
amounts as may be required by the Loan Agreement and any Collateral Agreement and shall
perform all other obligations of Borrower under the Loan Agreement and each Collateral
Agreement.
9. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts
due and payable at such time, then Lender may apply that payment to amounts then due and
payable in any manner and in any order determined by Lender, in Lender's discretion. Neither
Lender's acceptance of an amount that is less than all amounts then due and payable nor
Lender's application of such payment in the manner authorized shall constitute or be deemed to
constitute either a waiver of the unpaid amounts or an accord and satisfaction. Notwithstanding
the application of any such amount to the Indebtedness, Borrower's obligations under this
Instrument and the Note shall remain unchanged_
10, COMPLIANCE WITH LAWS. Borrower shall comply with all laws,
ordinances, regulations and requirements of any Govemtrtental Authority and all recorded lawful
covenants and agreements relating to or affecting the Mortgaged Property, including all laws,
ordinances, regulations, requirements and covenants pertaining to health and safety, construction
of improvements on the Mortgaged Property, fair housing, disability accommodation, zoning and
land use, and Leases. Borrower also shall comply with all applicable laws that pertain to the
maintenance and disposition of tenant security deposits. Borrower shall at all times maintain
records sufficient to demonstrate compliance with the provisions of this Section 10. Borrower
shall take appropriate measures to prevent, and shall not engage in or knowingly permit, any
illegal activities at the Mortgaged Property that could endanger tenants or visitors, result in
damage to the Mortgaged Property, result in forfeiture of the Mortgaged Property, or otherwise
materially impair the lien created by this Instrument or Lender's interest in the Mortgaged
Property. Borrower represents and warrants to Lender that no portion of the Mortgaged Property
has been or will be purchased with the proceeds of any illegal activity.
Deed or Trust 18 Coral Mountain Apartments
11. USE OF PROPERTY. Unless required by applicable law, Borrower shall not
(a) allow changes in the use for which all or any part of the Mortgaged Property is being used at
the time this Instrument was executed, except for any change in use approved by Lender,
(b) convert any mdividual dwelling 'Gmts orrdominon areas to commercial use,
change in the zoning classification of the Mortgaged Property or acquiesce in a change in the
zoning classification of the Mortgaged Property, (d) establish any condominium or cooperative
regime with respect to the Mortgaged Property; (e) combine all or any part of the Mortgaged
Property with all or any part of a tax parcel which' is not part of the Mortgaged Property, or
(f) subdivide or otherwise split any tax parcel constituting all or any part of the Mortgaged
Property without the prior consent of Lender.
12. PROTECTION OF LENDER'S SECURITY; INSTRUMENT SECURES
FUTURE ADVANCES.
(a) If Borrower fails to perform any of its obligations under this Instrument or
any other Loan Document after the' expiration of any applicable notice and cure period, or
if any action or proceeding (including a Bankruptcy Event) is commenced which purports
to affect the Mortgaged Property, Lender's security or Lender's rights under this
Instrument, including eminent domain, insolvency, code enforcement, civil or criminal
forfeiture, enforcement of Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or decedent, then Lender at Lender's
option may make such appearances, file such documents, disburse such sums and take
such actions as Lender deems necessary to perform such obligations of Borrower and to
protect Lender's interest; including (i) payment of fees, expenses and reasonable fees of
attorneys, accountants, inspectors and consultants, (ii) entry upon the Mortgaged Property
to make repairs or secure the Mortgaged Property, (iii) procurement of the insurance
required by Section 19 (specifically including, without limitation, flood insurance if
required by Section 19), and (iv) payment of amounts which Borrower has failed to pay
under Sections 15 and 17. 11
(b) Any amounts disbursed -by Lender under this Section 12, or under any
other provision of this Instrument that treats such disbursement as being made under this
Section 12, shall be secured by this Instrument, shall be added to, and become part of, the
principal component of the Indebtedness, shall be immediately due and payable and shall
bear interest from the date of disbursement until paid at the "Default Rate", as defined in
the Note.
(c) If the Lender shall elect to pay any sum due with reference to the Project
or the Mortgaged Property, the Lender may do so in reliance on any bill, statement or
assessment procured from the appropriate Governmental Authority or other issuer thereof
without inquiring into the accuracy or validity thereof. Similarly, in making any
payments to protect the security intended to be created by this Instrument and/or the other
Loan Documents, the Lender shall not be bound to inquire into the validity of any
apparent or threatened adverse title, lien; encumbrance, claim or charge before making an
advance for the purpose of preventing or removing the same.
Deed of Trust 19 Coml Mountoin Aponments
(d) Nothing in this Section 12 shall require Lender to incur any expense or
take any action.
13..: INSPECTION. - - _ .... _
(a) Lender and its agents, representatives, and designees may make or cause
to be made entries upon and inspections of the Mortgaged Property (including
environmental inspections and tests to the extent permitted under Section 18) during
normal business hours, or at any other reasonable time, upon reasonable notice to
Borrower if the inspection is to include occupied residential units (which notice need not
be in writing). Notice to Borrower shall not be required in the case of an emergency, as
determined in Lender's discretion, or when an Event of Default has occurred and is
continuing.
(b) If Lender determines that Mold has developed as a result of a water
intrusion event or leak, Lender, at Lender's discretion, may require that a professional
inspector inspect the Mortgaged Property as frequently as Lender determines is necessary
until any issue with Mold and its cause(s) are resolved to Lender's satisfaction. Such
inspection shall be limited to a visual and olfactory inspection of the area that has
experienced the Mold, water intrusion event or leak. Borrower shall be responsible for
the cost of such professional inspection and any remediation deemed to be necessary as a
result of the professional inspection. After any issue with Mold, water intrusion or leaks
is remedied to Lender's satisfaction, Lender shall not require a professional inspection
any more frequently than once every three years unless Lender is otherwise aware of
Mold as a result of a subsequent water intrusion event or leak.
(c) If Lender determines not to conduct an annual inspection of the
Mortgaged Property, and in lieu thereof Lender requests a certification, Borrower shall be
prepared to provide and must actually provide to Lender a factually correct certification
each year that the annual inspection is waived to the following effect: that Borrower
represents and warrants that Borrower has not received any written complaint, notice,
letter or other written communication from tenants, management agent or governmental
authorities regarding odors, indoor air quality, Mold or any activity, condition, event or
omission that causes or facilitates the growth of Mold on or in any part of the Mortgaged
Property, or if Borrower has received any such written complaint, notice, letter or other
written communication, that Borrower has investigated and determined that no Mold
activity, condition or event exists or alternatively has fully and properly remediated such
activity, condition, event or omission in compliance with the MMP for the Mortgaged
Property. if Borrower is unwilling or unable to provide such certification, Lender may
require a professional inspection of the Mortgaged Property at Borrower's expense.
14. BOOKS AND RECORDS; FINANCIAL REPORTING.
(a) Borrower shall keep and maintain at all times at the Mortgaged Property
or the management agent's offices, and upon Lender's request shall make available at the
Mortgaged Property, complete and accurate books of account and records (including
copies of supporting bills and invoices) adequate to reflect correctly the operation of the
Deed orTrust 20 Coral Mountain Apartments
Mortgaged Property, and copies of all written contracts, Leases, and other instruments
which affect the Mortgaged Property. The books, records, contracts, Leases and other
instruments shall be subject to examination and inspection at any reasonable., time by ,..
Lender uponi — nable advance -oral notice: - -
(b) Borrower shall furnish to Lender all of the following:
(i) (1) except as provided in clause (2) below, within 45 days after the
end of each fiscal quarter of Borrower, a statement of income and
expenses for Borrower's operation of the Mortgaged Property on a
year-to-date basis as of'the end of each fiscal quarter, (2)within
120 days after the end of each fiscal year of Borrower, (A) a
statement of income and expenses for Borrower's operation of the
Mortgaged Property for such fiscal year, (B) a statement of
changes in financial position of Borrower relating to the
Mortgaged Property for such fiscal year, and (C) when requested
by Lender, a balance sheet showing all assets and liabilities of
Borrower relating to the Mortgaged Property as of the end of such
fiscal year; and (3) any of the foregoing at any other time upon
Lender's request;
(ii) Within 45 days after the end of each fiscal year of Borrower, and at
any other time upon Lender's request, a rent schedule for the
Mortgaged Property showing the name of each tenant, and for each
tenant, the space occupied, the lease expiration date, the rent
payable for the current month, the date through which rent has
been paid, and any related information requested by Lender;
(iii) within 120 days after the end of each fiscal year of Borrower, and
at any other time upon Lender's request, an accounting of all
security deposits held pursuant to all Leases, including the name of
the institution (if any) and the names and identification numbers of
the accounts (if any) in which such security deposits are held and
the name of the person to contact at such financial institution,
along with any authority or release necessary for Lender to access
information regarding such accounts;
(iv) within 120 days after the end of each fiscal year of Borrower, and
at any other time upon Lender's request, a statement that identifies
all owners of any interest in Borrower and the interest held by
each, if Borrower is a corporation, all officers and directors of
Borrower, and if Borrower is a limited liability company, all
managers who are not members;
(v) upon Lender's request, a monthly property management report for
the Mortgaged Property, showing the number of inquiries made
and rental applications received from tenants or prospective tenants.
Dad nrTrust 21 Coral Mountain Apartments
and deposits received from tenants and any other information
requested by Lender;
(vi) upon Lender's request; a balance sheet; -a-statement of income and
expenses for Borrower and a statement of changes in financial
position of Borrower for Borrower's most recent fiscal year;
(vii) annually, if applicable, within 60 days of the date required for
submission by the agency in the Property Jurisdiction responsible
for monitoring the low income housing tax credit program, a low
income housing tax credit compliance report in form and substance
acceptable to Lender; and
(viii) if required by Lender, within 30 days of the end of each calendar
month, a monthly statement of income and expenses for such
calendar month on a year-to-date basis for Borrower's operation of
the Mortgaged Property.
(c) Each of the statements, schedules and reports required by Section 14(b)
shall be certified to be complete and accurate by an individual having authority to bind
Borrower and shall be in such form and contain such detail as Lender may require.
Lender also may require that any statements, schedules or reports be audited at
Borrower's expense by independent certified public accountants acceptable to Lender.
(d) If Borrower fails to provide in a timely manner the statements, schedules
and reports required by Section 14(b) and such failure continues for a period of ten (10)
days after Borrower receives written notice thereof, Lender shall have the right to have
Borrower's books and records audited, at Borrower's expense, by independent certified
public accountants selected by Lender in order to obtain such statements, schedules and
reports, and all related costs and expenses of Lender shall become immediately due and
payable and shall become an additional part of the Indebtedness as provided in
Section 12.
(e) If an Event of Default has occurred and is continuing, Borrower shall
deliver to Lender upon written demand all books and records relating to the Mortgaged
Property or its operation.
(f) Borrower authorizes Lender to obtain a credit report on Borrower at any
time.
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of Section 15(c) and Section 15(d), Borrower
shall pay, or cause to be paid, all Taxes when due and before the imposition of any
interest, fine, penalty or cost for nonpayment.
(b) Subject to the provisions of Section 15(c), Borrower shall pay (i) the
expenses of operating, managing, maintaining and repairing the Mortgaged Property
Deed of Trust 22 Coral Mountain Apartments
(including insurance premiums, utilities, repairs and replacements) before the last date
upon which each such payment may be made without any penalty or interest charge being
added, and (ii) insurance premiums :at least 30 days prior to the _expiration date of each
policy of insurance; unless applicable'law specifies some lessefperiod. I---
(c) If Lender is collecting Imposition Deposits, and to the extent that Lender
holds sufficient Imposition Deposits for the purpose of paying a specific Imposition, then
Borrower shall not be obligated to pay such Imposition, so long as no Event of Default
exists and Borrower has timely delivered to Lender any bills or premium notices that it
has received. If an Event of Default exists, Lender may exercise any rights Lender may
have with respect to Imposition Deposits without regard to whether Impositions are then
due and payable. Lender shall have no liability to Borrower for failing to pay any
Impositions to the extent that any Event of Default has occurred and is continuing,
insufficient Imposition Deposits are held by Lender at the time an Imposition becomes
due and payable or Borrower has failed to provide Lender with bills and premium notices
as provided above.
(d) Borrower, at its own expense, may contest by appropriate legal
proceedings, conducted diligently and in good faith, the amount or validity of any
Imposition other than insurance premiums, if (i) Borrower notifies Lender of the
commencement or expected commencement of such proceedings, (ii) the Mortgaged
Property is not in danger of being sold or forfeited, (iii) Borrower deposits with Lender
reserves sufficient to pay the contested Imposition, if requested by Lender, and
(iv) Borrower furnishes whatever additional security is required in the proceedings or is
requested by Lender, which may include the delivery to Lender of the reserves
established by Borrower to pay the contested Imposition.
(e) Borrower shall promptly deliver to Lender copies of all notices of, and
invoices for, Impositions, and if Borrower pays any Imposition directly, Borrower shall
promptly furnish to Lender on or before the date this Instrument requires such
Impositions to be paid, copies of receipts evidencing that such payments were made.
(f) All payments made by Borrower to Lender pursuant to this Instrument or
any of the Loan Documents shall be free and clear of any and all tax liabilities
whatsoever (other than United States federal income taxation payable by Lender) and, to
the extent Lender is required to pay any such tax liabilities, Borrower shall reimburse
Lender in respect of any such payment of taxes and, immediately upon request from
Lender, shall deliver to Lender copies of receipts evidencing the payment of such taxes.
16. LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage, deed of trust, deed to
secure debt, security interest or other lien or encumbrance (a "Lien") on the Mortgaged Property
(other than the lien of this Instrument and the Permitted Encumbrances) or on certain ownership
interests in Borrower, whether voluntary, involuntary or by operation of law, and whether or not
such Lien has priority over the lien of this Instrument, is a "Transfer" which constitutes an Event
of Default and subjects Borrower to personal liability under the Note. Borrower shall maintain
Deed of Trust 23 Coml Mountain Apan rants
the lien created by this Instrument as a first mortgage lien upon the Mortgaged Property, subject
to no other Liens or encumbrances other than Permitted Encumbrances.
PRESERVATIONS - MANAGEMENT AND MAINTENANCE- - OF -
MORTGAGED PROPERTY.
(a) Borrower shall not commit waste or permit impairment or deterioration of
the Mortgaged Property.
(b) Borrower shall not abandon the Mortgaged Property.
(e) Borrower shall restore or repair promptly, in a good and workmanlike
manner, any damaged part of the Mortgaged Property to the equivalent of its original
condition, or such other condition as Lender may approve in writing, whether or not
insurance proceeds or condemnation awards are available to cover any costs of such
restoration or repair.
(d) Borrower shall keep the Mortgaged Property in good repair (normal wear
and tear excepted), including the replacement of Personalty and Fixtures with items of
equal or better function and quality.
(e) Borrower shall provide for professional management of the Mortgaged
Property by a residential rental property manager satisfactory to Lender at all times,
under a contract approved by Lender, in writing, which contract must be terminable upon
not more than thirty (30) days notice without the necessity of establishing cause and
without payment of a penalty or termination fee by Borrower or its successors. There
shall be no change in the property manager or any contract for the management of the
Mortgaged Property without Lender's prior written approval. Lender shall have the right
to require that Borrower and any new property manager enter into an Assignment of
Management Agreement on a form approved by Lender. If required by Lender (whether
before or after an Event of Default), Borrower will cause any Affiliate of Borrower to
whom fees are payable for the management of the Mortgaged Property to enter into an
agreement with Lender, in a form approved by Lender, providing for subordination of
those fees and such other provisions as Lender may require. "Affiliate of Borrower"
means any Person controlled by, under common control with, or which controls Borrower
(the term "control" for these purposes means the ability, whether by the ownership of
shares or other equity interests, by contract or otherwise, to elect a majority of the
directors, of a corporation, to make management decisions on behalf of, or independently
to select the managing partner of, a partnership, or otherwise to have the power
independently to remove and then select a majority of those individuals exercising
managerial authority over an entity, and control shall be conclusively presumed in the
case of the ownership of 50% or more of the equity interests).
(f) Borrower shall give notice to Lender of and, unless otherwise directed in
writing by Lender, shall appear in and defend any action or proceeding purporting to
affect the Mortgaged Property, Lender's security or Lender's rights under this
Instrument. Borrower shall not (and shall not permit any tenant or other person to)
Deed of7rust 24 Coral Mountain Apartments
remove, demolish or alter the Mortgaged Property or any part of the Mortgaged Property,
including any removal, demolition or alteration occurring in connection with a
rehabilitation of all or part of the Mortgaged Property, except (i) in connection with the
replacement of tangible Personnity� (n)-repairs and replacements in connection with
making an individual unit ready for a new occupant.
(g) Unless otherwise waived by Lender in writing, Borrower must have or
must establish and must adhere to the MMP. If Borrower is required to have an MMP,
Borrower must keep all MMP documentation at the Mortgaged Property or at the
management agent's office and 'available for Lender or its agents to review during any
annual assessment or inspection of the Mortgaged Property that is required by Lender.
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters described in Section 18(b), Borrower shall not cause or
permit any of the following;,
(i) the presence, use, generation, release, treatment, processing,
storage (including storage in above ground and underground
storage tanks), handling, or disposal of any Hazardous Materials
on or under the Mortgaged Property (whether as a result of
activities on the Mortgaged Property or on surrounding properties)
or any other property of Borrower that is adjacent to the
Mortgaged Property;
(ii) the transportation of any Hazardous Materials to, from, or across
the Mortgaged Property (whether as a result of activities on the
Mortgaged Property or on surrounding properties);
any occurrence or condition on the Mortgaged Property (whether
as a result of activities on the Mortgaged Property or on
surrounding properties) or any other property of Borrower that is
adjacent to the. Mortgaged Property, which occurrence or condition
is or may be in violation of Hazardous Materials Laws; .
(iv) any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property or
any property of Borrower that is adjacent to the Mortgaged
Property;
(v) the imposition of any environmental lien against the Mortgaged
Property; or
(vi) any violation or noncompliance with the terms of any O&M
Program.
Dxd orTrusl - 25 Coral Mountain Aparonems
The matters described in clauses (i) through (vi) above, except as otherwise provided in
Section 18(b), are referred to collectively in this Section 18 as "Prohibited. Activities or
Conditions".:.::
(b) Prohibited Activities or Conditions shall not include lawful conditions
permitted by an O&M Program or the safe and lawful use and storage of quantities of
(i)pre-packaged supplies, cleaning materials, petroleum products, household products,
paints, solvents, lubricants and other materials customarily used in the construction,
renovation, operation, maintenance or use of comparable multifamily properties,
(ii) cleaning materials, household products, personal grooming items and other items sold
in pre -packaged containers for consumer use and used by tenants and occupants of
residential dwelling units in the Mortgaged Property; and (iii) petroleum products used in
the operation and maintenance of motor vehicles from time to time located on the
Mortgaged Property's parking areas, so long as all of the foregoing are used, stored,
handled, transported and disposed of in compliance with Hazardous Materials Laws.
(c) Borrower shall take all commercially reasonable actions (including the
inclusion of appropriate provisions in any Leases executed after the date of this
Instrument) to prevent its employees, agents, and contractors, and all tenants and other
occupants from causing or permitting any Prohibited Activities or Conditions. Borrower
shall not lease or allow the sublease or use of all or any portion of the Mortgaged
Property to any tenant or subtenant for nonresidential use by any user that, in the ordinary
course of its business, would cause or permit any Prohibited Activity or Condition.
(d) If and as required by Lender. Borrower shall also establish a written
operations and maintenance program with respect to certain Hazardous Materials. Each
such operations and maintenance program and any additional or revised operations and
maintenance programs established for the Mortgaged Property pursuant to this Instrument
must be approved by Lender and shall be referred to herein as an "O&M Program."
Borrower shall comply in a timely manner with, and cause all employees, agents, and
contractors of Borrower and any other persons present on the Mortgaged Property to
comply with each O&M Program. Borrower shall pay all costs of performance of
Borrower's obligations under any O&M Program, and any Beneficiary Party's out-of-
pocket costs incurred by such Beneficiary Party in connection with the monitoring and
review of each O&M Program and Borrower's performance shall be paid by Borrower
upon demand by such Beneficiary Party. Any such out-of-pocket costs of such
Beneficiary Party which Borrower fails to pay promptly shall become an additional part
of the Indebtedness as provided in Section 12.
(e) Without limitation of the foregoing, (i) Borrower hereby agrees to
implement and maintain during the entire term of the Loan the O&M Program(s)
described in that certain Borrower's Certificate and Agreement dated as of the date
hereof, and (ii) if asbestos -containing materials are found to exist at the Mortgaged
Property, the O&M Program with respect thereto shall be undertaken consistent with the
Guidelines for Controlling Asbestos -Containing Materials in Buildings (USEPA, 1985)
and other relevant guidelines and applicable Hazardous Materials Laws.
Deed or Trust 26 Coral Mountain Apartments .
(f) With respect to any O&M Program, Lender may require (i) periodic
notices or reports to Lender in form, substance and at such intervals as Lender may
specify; (ii) amendments to such O&M Program to address changing circumstances, laws
or other matters; including, withoot'limitation; variations in response to reports -provided
by environmental consultants; and (iii) execution of an Operations and Maintenance
Agreement relating to such O&M Program satisfactory to Lender.
(g) Borrower represents and warrants to Beneficiary Parties that, except as
otherwise disclosed in the Environmental Reports (as defined in the Environmental
Agreement):
(i) Borrower has not at any time engaged in, caused or permitted any
Prohibited Activities or Conditions;
(ii) to the best of Borrower's knowledge after reasonable and diligent
inquiry, no Prohibited Activities or Conditions exist or have
existed, and Borrower has provided Lender with copies of all
reports and information acquired in such inquiries;
(iii) the Mortgaged Property does not now contain any underground
storage tanks and, to the best of Borrower's knowledge after
reasonable and diligent inquiry, the Mortgaged Property has not
contained any underground storage tanks in the past. If there is an
underground storage tank located on the Mortgaged Property that
has been disclosed in Exhibit A to the Environmental Agreement,
that tank complies with all requirements of Hazardous Materials
Laws;
(iv) Borrower has complied with and will continue to comply with all
Hazardous Materials Laws, including all requirements for
notification regarding releases of Hazardous Materials. Without
limiting the generality of the foregoing, Borrower has obtained all
Environmental Permits required for the operation of the Mortgaged
Property in accordance with Hazardous Materials Laws now in
effect and all such Environmental Permits are in full force and
effect;
(v) no event has occurred with respect to the Mortgaged Property that
constitutes, or with the passing of time or the giving of notice
would constitute, noncompliance with the terms of any
Environmental Permit or Hazardous Materials Law;
(vi) there are no actions, suits, claims or proceedings pending or, to the
best of Borrower's knowledge after. reasonable and diligent
inquiry, threatened that involve the Mortgaged Property and allege,
arise out of, or relate to any Prohibited Activity or Condition;
Deed of Trust 27 Cmal Mountain Apartments
(vii) Borrower has not received any complaint, order, notice of violation
or other communication from any Governmental Authority with
regard to air emissions, water discharges, noise emissions or
--- Hazardous Materials, or any"other environmental; health' or safety
matters affecting the Mortgaged Property or any other property of
Borrower that is adjacent to the Mortgaged Property;
(viii) no prior Remedial Work (as defined below) has been undertaken,
and no Remedial Work is ongoing, with respect to the Mortgaged
Property during Borrower's ownership thereof or, to the best of
Borrower's knowledge, at any time prior to Borrower's ownership
thereof; and
(ix) Borrower has disclosed in the Environmental Agreement all
material facts known to Borrower or contained in Borrower's
records the nondisclosure of which could cause any representation
or warranty made herein or any statement made in the
Environmental Agreement to be false or materially misleading.
The representations and warranties in this Section 18 shall be continuing representations
and warranties that shall be deemed to be made by Borrower throughout the term of the
Loan, until the Indebtedness has been paid in full or otherwise discharged.
(h) Borrower shall promptly notify Lender in writing upon the occurrence of
any of the following events:
(i) Borrower's discovery of any Prohibited Activity or Condition;
(ii) Borrower's receipt of or knowledge of any complaint, order, notice
of violation or other communication from any tenant, management
agent, Governmental Authority or other person with regard to
present or future alleged Prohibited Activities or Conditions or any
other environmental, health or safety matters affecting the
Mortgaged Property or any other property of Borrower that is
adjacent to the Mortgaged Property;
(iii) Borrower's receipt of or knowledge of any personal injury claim,
proceeding or cause of action directly or indirectly arising as a
result of the presence of asbestos or other hazardous materials on
or from the Mortgaged Property;
(iv) Borrower's discovery that any representation or warranty in this
Section 18 has become untrue after the date of this Instrument; and
(v) Borrower's breach of any of its obligations under this Section 18.
Any such notice given by Borrower shall not relieve Borrower of, or result in a waiver of,
any obligation under this Instrument, the Note, or any other Loan Document.
Deed of Trust 28 Coral Mountain Aparnnents
(i) $orrower shall pay promptly the costs of any environmental inspections,
tests or audits ("Environmental Inspections") required by Lender or any Beneficiary
Pa m co Party ' nnection with any foreclosure or deed in lieu of foreclosure, or as a condition
of Under's consent to any Transfer under Section 21,'or'itsejttifed by Lender followings
determination by.Lender that Prohibited Activities or Conditions may exist. Any such
costs incurred by Lender (including, without limitation, fees and expenses of attorneys,
expert witnesses, engineers, technical consultants and investigatory fees, whether
incurred in connection with any judicial or administrative process or otherwise) that
Borrower fails to pay promptly shall become an additional part of the Indebtedness as.
provided in Section 12. The results of all Environmental Inspections made by Lender
shall at all times remain the property of Lender and Lender shall have no obligation to
disclose or otherwise make available to Borrower or any other party such results or any
other information obtained by Lender in connection with such Environmental
Inspections. Lender hereby reserves the right, and Borrower hereby expressly authorizes
Lender, to make available to any party, including any prospective bidder at a foreclosure
sale of the Mortgaged Property, the results of any Environmental Inspections made by
Lender with respect to the Mortgaged Property. Borrower consents to Lender notifying
any party (either as part of a notice of sale or otherwise) of the results of any of Lender's
Environmental Inspections. Borrower acknowledges that Lender cannot control or
otherwise assure the truthfulness or accuracy of the results of any of its Environmental
Inspections and that the release of such results to prospective bidders at a foreclosure sale
of the Mortgaged Property may have a material and adverse effect upon the amount
which a party may bid at such sale. Borrower agrees that Lender shall have no liability
whatsoever as a result of delivering the results of any of its Environmental Inspections to
any third party, and Borrower hereby releases and forever discharges Lender from any
and all claims, damages, or causes of action, arising out of, connected with or incidental
to the results of, the delivery of any of Lender's Environmental Inspections.
6) If any investigation, site monitoring, containment, clean-up, restoration or
other remedial work ("Remedial Work") is necessary to comply with or cure a violation
of any Hazardous Materials Law or order of any Governmental Authority that has or
acquires jurisdiction over the Mortgaged Property or the use, operation or improvement
of the Mortgaged Property under any Hazardous Materials Law, or is otherwise required
by Lender as a consequence of any Prohibited Activity or Condition or to prevent the
occurrence of a Prohibited Activity or Condition, Borrower shall, by the earlier of (i) the
applicable deadline required by such Hazardous Materials Law or (ii) thirty (30) days
after notice from Lender demanding such action, begin performing the Remedial Work,
and thereafter diligently prosecute it to completion, and shall in any event complete the
work by the time required by such Hazardous Materials Law. Borrower shall promptly
provide Lender with a cost estimate from an environmental consultant acceptable to
Lender to complete any required Remedial Work. If required by Lender, Borrower shall
promptly establish with Lender a reserve fund in the amount of such estimate. if in
Lender's opinion the amount reserved at any time during the Remedial Work is
insufficient to cover the work remaining to complete the Remediation or achieve
compliance, Borrower shall increase the amount reserved in compliance with Lender's
written request. All amounts so held in reserve, until disbursed, are hereby pledged to
Lender as security for payment of Borrower's obligations under this Instrument. If
Deed or Trust 29 Cora) Mountain Aparuncnts
Borrower fails to begin on a timely basis or diligently prosecute any required Remedial
Work, Lender may, at its option, cause the Remedial Work to be completed, in which
cost of doing so. Any
case Borrower.ahall reimburse Lender on demand for the c_ r ^.^^
provided in Section 12.
(k) Borrower shall comply with all Hazardous Materials Laws applicable to
the Mortgaged Property. Without limiting the generality of the previous sentence,
Borrower shall (i) obtain and maintain all Environmental Permits required by Hazardous
Materials Laws and comply with all conditions of such Environmental Permits;
(ii) cooperate with any inquiry by any Governmental Authority; and (iii) comply with any
governmental or judicial order that arises from any alleged Prohibited Activity or
Condition.
(1) BORROWER SHALL INDEMNIFY, HOLD HARMLESS AND
DEFEND BENEFICIARY PARTIES AND - THEIR RESPECTIVE OFFICERS,
DIRECTORS, SHAREHOLDERS, PARTNERS, EMPLOYEES, AGENTS,
ATTORNEYS, TRUSTEES, HEIRS AND LEGAL REPRESENTATIVES
(COLLECTIVELY, THE "INDEMNITEES") FROM AND AGAINST ALL LOSSES,
PROCEEDINGS, CLAIMS, DAMAGES, PENALTIES AND COSTS (WHETHER
INITIATED OR SOUGHT BY GOVERNMENTAL AUTHORITIES OR PRIVATE
PARTIES), INCLUDING, WITHOUT LIMITATION, FEES AND OUT-OF-POCKET
EXPENSES OF ATTORNEYS AND EXPERT WITNESSES, ENGINEERING FEES,
ENVIRONMENTAL CONSULTANT FEES, INVESTIGATORY FEES, AND
REMEDIATION COSTS (INCLUDING, WITHOUT LIMITATION, ANY
FINANCIAL ASSURANCES REQUIRED TO BE POSTED FOR COMPLETION OF
REMEDIAL WORK AND COSTS ASSOCIATED WITH ADMINISTRATIVE
OVERSIGHT), AND ANY OTHER LIABILITIES OF WHATEVER KIND AND
WHATEVER NATURE, WHETHER INCURRED IN CONNECTION WITH ANY
JUDICIAL OR ADMINISTRATIVE PROCESS OR OTHERWISE, ARISING
DIRECTLY OR INDIRECTLY FROM ANY OF THE FOLLOWING:
(i) ANY BREACH OF ANY REPRESENTATION OR.
WARRANTY OF BORROWER IN THIS SECTION 18;
(ii) ANY FAILURE BY BORROWER TO PERFORM ANY OF ITS
OBLIGATIONS UNDER THIS SECTION 18;
(iii) THE EXISTENCE OR ALLEGED EXISTENCE OF ANY
PROHIBITED ACTIVITY OR CONDITION;
(w) THE PRESENCE OR ALLEGED PRESENCE OF HAZARDOUS
MATERIALS ON OR UNDER THE ORT AGED PROPERTY
(WHETHER AS A RESULT OF ACTIVITIES ON THE
MORTGAGED PROPERTY OR ON SURROUNDING
PROPERTIES) OR IN ANY OF THE IMPROVEMENTS OR ON
Deed of Trust 30 Coral Mountain Apartments
OR UNDER ANY PROPERTY OF BORROWER THAT IS
ADJACENT TO THE MORTGAGED PROPERTY;
_ (v) _._.-THE ACTUAL OR' -ALLEGED VIOLATION OF ANY
HAZARDOUS MATERIALS LAW;
(vi) ANY LOSS OR DAMAGE. RESULTING FROM A LOSS OF
PRIORITY OF THIS INSTRUMENT OR ANY OTHER LOAN
DOCUMENT DUE TO AN IMPOSITION OF AN
1NVIRONMENTAL LIEN AGAINST THE MORTGAGED
PROPERTY; AND
(vii) ANY PERSONAL INJURY CLAIM, PROCEEDING OR CAUSE
OF ACTION DIRECTLY OR INDIRECTLY ARISING AS A
RESULT OF THE PRESENCE OF ASBESTOS OR OTHER
HAZARDOUS MATERIALS ON OR FROM THE
MORTGAGED PROPERTY.
(m) COUNSEL SELECTED BY BORROWER TO DEFEND
INDEMNITEES SHALL BE SUBJECT TO THE. APPROVAL OF THOSE
INDEMNITEES. IN ANY CIRCUMSTANCES IN WHICH THE INDEMNITY
UNDER THIS SECTION 18 APPLIES, ANY BENEFICIARY PARTY MAY EMPLOY
ITS OWN LEGAL COUNSEL AND CONSULTANTS TO PROSECUTE, DEFEND
OR NEGOTIATE ANY CLAIM OR LEGAL OR ADMINISTRATIVE PROCEEDING
AT BORROWER'S .EXPENSE, AND SUCH BENEFICIARY PARTY, WITH THE
PRIOR WRITTEN CONSENT OF BORROWER (WHICH SHALL NOT BE
UNREASONABLY WITHHELD, DELAYED OR CONDITIONED) MAY SETTLE
OR COMPROMISE ANY ACTION OR LEGAL OR ADMINISTRATIVE
PROCEEDING. BORROWER SHALL REIMBURSE SUCH BENEFICIARY PARTY
UPON DEMAND FOR ALL COSTS AND EXPENSES INCURRED BY SUCH
BENEFICIARY PARTY, INCLUDING, WITHOUT LIMITATION, ALL COSTS OF
SETTLEMENTS ENTERED INTO IN GOOD FAITH, AND THE FEES AND OUT OF
POCKET EXPENSES OF SUCH ATTORNEYS AND CONSULTANTS.
(n) BORROWER SHALL NOT, WITHOUT THE PRIOR WRITTEN
CONSENT OF THOSE INDEMNITEES WHO ARE NAMED AS PARTIES TO A
CLAIM OR LEGAL OR ADMINISTRATIVE PROCEEDING (A "CLAIM"), SETTLE
OR COMPROMISE THE CLAIM IF THE SETTLEMENT (1) RESULTS IN THE
ENTRY OF ANY JUDGMENT THAT DOES NOT INCLUDE AS AN
UNCONDITIONAL TERM THE DELIVERY BY THE CLAIMANT OR PLAINTIFF
TO BENEFICIARY PARTIES OF A WRITTEN RELEASE OF THOSE
INDEMNITEES, SATISFACTORY IN FORM AND SUBSTANCE TO LENDER; OR
(2) MAY MATERIALLY AND ADVERSELY AFFECT BENEFICIARY PARTIES,
AS DETERMINED BY LENDER IN ITS DISCRETION.
(o) BORROWER'S OBLIGATION TO INDEMNIFY THE INDEMNITEES
SHALL NOT BE LIMITED OR IMPAIRED BY ANY OF THE FOLLOWING, OR BY
Deed of Trust 31 Coral Mountain Apartmms
ANY FAILURE OF BORROWER OR ANY GUARANTOR TO RECEIVE NOTICE
OF OR CONSIDERATION FOR ANY OF THE FOLLOWING:
ANY AMENDMENT -OR -MODIFICATION OF ANY LOAN
DOCUMENT;
(ii) ANY EXTENSIONS OF TIME FOR PERFORMANCE
REQUIRED BY ANY LOAN DOCUMENT;
(iii) ANY PROVISION IN ANY LOAN DOCUMENT LIMITING
BENEFICIARY PARTIES' RECOURSE TO PROPERTY
SECURING THE INDEBTEDNESS, OR LIMITING THE
PERSONAL LIABILITY OF BORROWER OR ANY OTHER
PARTY FOR PAYMENT OF ALL OR ANY PART OF THE
INDEBTEDNESS;
(iv) THE ACCURACY OR INACCURACY OF ANY
REPRESENTATIONS AND WARRANTIES MADE BY
BORROWER UNDER THIS INSTRUMENT OR ANY OTHER
LOAN DOCUMENT;
(v) THE RELEASE OF BORROWER OR ANY OTHER PERSON,
BY BENEFICIARY PARTIES OR BY OPERATION OF LAW,
FROM PERFORMANCE OF ANY OBLIGATION UNDER_ANY
LOAN DOCUMENT;
(vi) THE RELEASE OR SUBSTITUTION IN WHOLE OR IN PART
OF ANY SECURITY FOR THE INDEBTEDNESS; AND
(vii) FAILURE BY BENEFICIARY PARTIES TO PROPERLY
PERFECT ANY LIEN OR SECURITY INTEREST GIVEN AS
SECURITY FOR THE INDEBTEDNESS.
(p) BORROWER SHALL, AT ITS OWN COST AND EXPENSE, DO ALL
OF THE FOLLOWING:
(i) PAY OR SATISFY ANY JUDGMENT OR DECREE THAT
MAY BE ENTERED AGAINST ANY INDEMNITEE OR
INDEMNITEES IN ANY LEGAL OR ADMINISTRATIVE
PROCEEDING INCIDENT TO ANY MATTERS AGAINST
WHICH INDEMNITEES ARE ENTITLED TO BE
INDEMNIFIED UNDER THIS SECTION 18;
(ii) REIMBURSE INDEMNITEES FOR ANY AND ALL
EXPENSES PAID OR INCURRED IN CONNECTION WITH
ANY MATTERS AGAINST WHICH INDEMNITEES ARE
ENTITLED TO BE INDEMNIFIED UNDER THIS SECTION 18;
AND
Deed of Trust 32 Coral Mountain ApanmenLs
(iii) REIMBURSE INDEMNITEES FOR ANY AND ALL
EXPENSES, INCLUDING, WITHOUT LIMITATION, FEES
AND OUT OF POCKET EXPENSES OF ATTORNEYS AND
....... EXPERT WITNESSES, `PAID "'012 INCURRED" IN ----
CONNECTION WITH THE ENFORCEMENT BY
INDEMNITEES OF .THEIR RIGHTS UNDER THIS
SECTION 18, OR IN MONITORING AND PARTICIPATING IN
ANY LEGAL OR ADMINISTRATIVE PROCEEDING.
(q) THE PROVISIONS OF THIS SECTION 18 SHALL BE IN ADDITION
TO ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES THAT
BORROWER MAY HAVE UNDER APPLICABLE LAW OR UNDER ANY OTHER
LOAN. DOCUMENT, AND EACH INDEMNITEE SHALL BE ENTITLED TO
INDEMNIFICATION UNDER THIS SECTION 18 WITHOUT REGARD TO
WHETHER ANY OTHER BENEFICIARY PARTY OR THAT INDEMNITEE HAS
EXERCISED ANY RIGHTS AGAINST THE MORTGAGED PROPERTY OR ANY
OTHER SECURITY, PURSUED ANY RIGHTS AGAINST ANY GUARANTOR, OR
PURSUED ANY OTHER RIGHTS AVAILABLE UNDER THE LOAN DOCUMENTS
OR APPLICABLE LAW. IF BORROWER CONSISTS OF MORE THAN ONE
PERSON OR ENTITY, THE OBLIGATION OF THOSE PERSONS OR ENTITIES TO
INDEMNIFY THE INDEMNITEES UNDER THIS SECTION 18 SHALL BE JOINT
AND SEVERAL. THE OBLIGATION OF BORROWER TO INDEMNIFY THE
INDEMNITEES UNDER THIS SECTION 18 SHALL SURVIVE ANY REPAYMENT
OR DISCHARGE OF THE INDEBTEDNESS, ANY FORECLOSURE PROCEEDING,
ANY FORECLOSURE SALE, ANY DELIVERY OF ANY DEED IN LIEU OF
FORECLOSURE, AND ANY RELEASE OF, RECORD OF THE. LIEN OF THIS
INSTRUMENT.
(r) Notwithstanding anything herein to the contrary, (i) Borrower shall have
no obligation hereunder to indemnify any Indemnitee for any liability under this
Section 18 to the extent that the Prohibited Activity or Condition giving rise to such
liability resulted solely from the gross negligence or willful misconduct of such
Indemnitee, and (ii) Borrower's liability under this Section 18 shall not extend to cover
the violation of any Hazardous Materials Laws or Prohibited Conditions that first arise,
commence or occur as a result of actions of Lender, its successors, assigns or designees,
after the satisfaction, discharge, release, assignment, termination or cancellation of this
Instrument following the payment in full. of the Note and all other sums payable under the
Loan Documents or after the actual dispossession from the entire Mortgaged Property of
Borrower and all entities which control, are controlled by, or are under common control
with Borrower following foreclosure of this Instrument or acquisition of the Mortgaged
Property by a deed in lieu of foreclosure.
19. . PROPERTY AND LIABILITY INSURANCE.
(a) Borrower shall keep the Improvements insured at all times against such
hazards as Lender may from time to time require, which insurance shall include but not
be limited to coverage against loss by fire and allied perils, general boiler and machinery
Deed of Trust 33 Coral Mountain Apartrnew
coverage, business income coverage and.extra expense insurance, coverage against acts
of terrorism, mold and earthquake coverage. Borrower acknowledges and agrees that
Lender's insurance; requirements_ may change from time to time throughout the term of
the Indebtedness- ]f Lender -so requires; such insurance shall also include sirikho16 -
insurance, in subsidence insurance, earthquake insurance, and, if the Mortgaged
Property does not conform to applicable zoning or land use laws, building ordinance or
law coverage. If any portion of the Improvements is at any time located in an area
identified by the Federal Emergency Management Agency (or any successor to that
agency) as an area now or hereafter having special flood hazards, and if flood insurance
is available in that area, Borrower shall insure such Improvements against loss by flood
in an amount equal to the maximum amount available under the National Flood Insurance
Program or any successor thereto.
(b) All premiums on insurance policies required under Section 19(a) shall be
paid in the manner provided in Section 7, unless Lender has designated in writing another
method of payment. All such policies shall also be in a form approved by Lender. All
policies of property damage insurance shall include a non-contributing, non -reporting
mortgage clause in favor of, and in a form approved by, Lender. Lender shall have the
right to hold the original policies or duplicate original policies of all insurance required
by Section 19(a). Borrower shall promptly deliver to Lender a copy of all renewal and
other notices received by Borrower with respect to the policies and all receipts for paid
premiums. At least 30 days prior to the expiration date of a policy, Borrower shall
deliver to Lender the original (or a duplicate original) of a renewal policy in form
satisfactory to Lender.
(c) All insurance policies and renewals of insurance policies required by this
Section 19 shall be in such amounts and for such periods as Lender may from time to
time require consistent with Lender's then current practices and standards, and shall be
issued by insurance companies satisfactory to Lender.
(d) During any period of construction and/or rehabilitation, and at all times
prior to occupancy of the Project by any tenants following the completion of the
construction and/or rehabilitation of the Project in accordance with the Loan Agreement,
the following provisions shall apply, in addition to the other provisions of this Section 19
and without limiting the generality of the other provisions of this Section 19:
(i) Borrower shall provide (or cause to be provided), maintain and
keep in force, the following insurance coverage:
(A) Builder's "all risk" insurance or the equivalent coverage,
including theft, to insure all buildings, machinery,
equipment, materials, supplies, temporary structures and all
other property of any nature on -site, off -site and while in
transit which is to be used in fabrication, erection,
installation and construction and/or rehabilitation of the
Project, and to remain in effect until the entire Project has
been completed and accepted by Borrower and is first
Deed of Trust 34 Cool Mountain Apartments
occupied by any tenants (provided that in any event, such
coverage shall remain in effect until such time as Borrower
has provided -Lender -with evidence of property,. insurance
-.-. ,--
of this Section 19). Such insurance shall be provided on a
replacement cost value basis and shall include foundations,
other underground property, tenant improvements and
personal property. If tenant improvements and personal
property are not included in the above coverage, they may
be insured separately by Borrower provided coverage is
acceptable to Lender. Builders "all risk" insurance shall
(i) be on a nonreporting, completed value form, (ii) cover
soft costs, debris removal expense (ineluding'removal of
pollutants), resulting loss and damage, to property due to
faulty or defective workmanship or materials and error in
design or specification, loss while the property is in the
care, custody and control of others to whom the property
may be entrusted, (iii) provide that Borrower can complete
and occupy the Mortgaged Property without further written
consent from the insurer, and (iv) cover loss of income
resulting from delay in occupancy and use of the
Mortgaged Property due to loss. During the initial
construction and/or, rehabilitation of the Project and until
such time as the Project is first occupied by any tenants, the
Borrower shall not be required to maintain property
insurance as required by this Section 19 for so long as
Builder's "all risk" insurance or equivalent coverage is
maintained in accordance with this paragraph.
(B) If any portion of the Mortgaged Property is or becomes
located in an area identified by the United States Secretary
of Housing and Urban Development as an area having
special flood hazards and in which flood insurance has
been made available under the National Flood Insurance
Act of 1968 and Flood Disaster Protection Act of 1973, as
amended, Borrower shall also keep the improvements and
the equipment located thereon insured against loss by flood
in an amount at least equal to the principal amount of the
Loan or the maximum limits of coverage available with
respect to the Mortgaged Property, whichever is less. All
such insurance shall also cover continuing expenses not
directly involved in the direct cost of construction,
rehabilitation or renovation, including interest on money
borrowed to finance construction, rehabilitation or
renovation, continuing interest on the Loan, advertising,
,promotion, real estate taxes and other assessments, the cost
of renegotiating leases, and other expenses incurred as the
Deed orTmst 35 Coral Mountain Apartments -
result of property loss or destruction by the insured peril.
Such coverage shall not contain any monthly limitation.
If Lender fails -to=receive proof"and evidence of the insurance
required hereunder, Lender shall have the right, but not the
obligation, to obtain or cause to be obtained current coverage and
to make a Disbursement, as defined by the Loan Agreement (or, in
its sole discretion, advance funds) to pay the premiums for it. If
Lender makes an advance for such purpose, Borrower shall repay
such advance irrunediately on demand and such advance shall be
considered to be a demand loan to Borrower bearing interest at the
Default Rate (as defined by the Note) and secured by the
Mortgaged Property.
(e) Borrower shall maintain at all times commercial general liability
insurance, workers' compensation insurance and such other liability, errors and omissions
and fidelity insurance coverages as Lender may from time to time require, consistent with
Lender's then current practices and standards (and from and after the Conversion Date,
any applicable Credit Enhancer Insurance Standards).
(0 Borrower shall comply with all insurance requirements and shall not
permit any condition to exist on the Mortgaged Property that would invalidate any part of
any insurance coverage that this Instrument requires Borrower to maintain.
(g) In the event of loss, Borrower shall give immediate written notice to the
insurance carrier and to Lender. Borrower hereby authorizes and appoints Lender as
attomey-in-fact for Borrower to make proof of loss, to adjust and compromise any claims
under policies of property damage insurance, to appear in and prosecute any action
arising from such property damage insurance policies, to collect and receive the proceeds
of property damage insurance, and to deduct from such proceeds Lender's expenses
incurred in the collection of such proceeds. This power of attorney is coupled with an
interest and therefore is irrevocable. However, nothing contained in this Section 19 shall
require Lender to incur any expense or take any action. Lender may, at Lender's option,
(i) hold the balance of such proceeds to be used to reimburse Borrower for the cost of
restoring and repairing the Mortgaged Property to the equivalent of its original condition
or to a condition approved by Lender (the "Restoration"), or (ii) apply the balance of
such proceeds to the payment of the Indebtedness, whether or not then due. To the extent
Lender determines to apply insurance proceeds to Restoration, Lender shall apply the
proceeds in accordance with Lender's then -current policies relating to the restoration of
casualty damage on similar multifamily properties.
(h) Lender shall not exercise its option to apply insurance proceeds to the
payment of the Indebtedness if all of the following conditions are met: (i).no Event of
Default (or any event which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default) has occurred and is continuing; (ii) Lender
determines, in its discretion, that there will be sufficient funds to complete the
Restoration (and complete construction of the Project in accordance with the Loan
Deed of Trust 36 coral Mountain Apartments
Agreement and the Plans and Specifications, as defined therein, if such construction has
not been completed'at such time); (iii) Lender determines, in its discretion, that the net
operating income generated by the Mortgaged Property after completion of the
_il.,. a a_ ._tLL .. .lC.�:-__� --- _11 a�a= • _-_ � _a.. I .._.._. ,,..::...S�y., :..
Deposits, deposits to reserves and loan repayment obligations relating to the Mortgaged
Property); (iv) Lender determines, in its discretion, that the Restoration will be completed
before the earliest of (A) one year before the Mandatory Prepayment Date set forth in the
Note, (B) one year before the Outside Conversion Date, as defined by the Loan
Agreement, if Conversion, as defined by the Loan Agreement, has not yet occurred, or
(C) one year after the date of the loss or casualty; and (v) upon Lender's request,
Borrower provides Lender evidence of the availability during and after the Restoration of
the insurance required to be maintained pursuant to this Instrument.
(i) If the Mortgaged Property is sold at a foreclosure sale or Lender acquires
title to the Mortgaged Property, Lender -shall automatically succeed to all rights of
Borrower in and to any insurance policies and unearned insurance premiums and in and
to the proceeds resulting from anydamage to the Mortgaged Property prior to such sale
or acquisition.
0) Unless Lender otherwise agrees in writing, any application of any
insurance proceeds to the Indebtedness shall not extend or postpone the due date of any
monthly installments referred to in the Note, Section 7 of this Instrument or any
Collateral Agreement, or change the amount of such installments, except as provided in
the Note.
(k) Borrower agrees to execute such further evidence of assignment of any
insurance proceeds as Lender may require.
(1) Borrower finther agrees that to the extent that Borrower obtains any form
of property damage insurance for the Mortgaged Property or any, portion thereof that
insures perils not required to be insured against by Lender, such policy of property
damage insurance shall include a standard mortgagee clause and shall name Lender as
loss payee and, within ten (10) days following Borrower's purchase of such additional
insurance, Borrower shall cause to be delivered to Lender a duplicate original policy of
insurance with respect to such policy. Any insurance proceeds payable to Borrower
under such policy shall be additional security for the Indebtedness and Lender shall have
the same rights to such policy and proceeds as it has with respect to insurance policies
required by Lender pursuant to this Section 19 (except that Lender shall not require that
the premium for such additional insurance be included among the Imposition Deposits).
20. CONDEMNATION.
(a) Borrower . shall promptly notify Lender in writing of any action or
proceeding or notice relating to any proposed or actual condemnation or other taking, or
conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or
indirect (a "Condemnation") and shall deliver to the Lender copies of any and all papers
served in connection with such Condemnation. Borrower shall appear in and prosecute
Deed ofTm i _ 37 Coral Mountain Apartments
or defend any action or proceeding relating to any Condemnation unless otherwise
directed by Lender in writing. Borrower authorizes and appoints Lender as attorney -in -
fact for Borrower to commence,_appear in and prosecute in Lender's or Borrower's
i i
name, any a_cti-on or proceeding relating to any Condemnation and to settle or
compromise any claim in connection with any Condemnation. This power of attorney is
coupled with an interest and therefore is irrevocable. However, nothing contained in this
Section 20 shall require Lender to incur any expense or take any action. Borrower hereby
transfers and assigns to Lender all right, title and interest of Borrower in and to any
award or payment with respect to (i) any Condemnation, or any conveyance in lieu of
Condemnation, and (ii) any damage to the Mortgaged Property caused by governmental
action that does not result in a Condemnation.
(b) Lender may apply such awards or proceeds, after the deduction of
Lender's expenses incurred in the collection of such amounts (including, without
limitation, fees and out-of-pocket expenses of attorneys and expert witnesses,
investigatory fees, whether incurred in connection with any judicial or administrative
process or otherwise), at Lender's option, to the restoration or repair of the Mortgaged
Property or to the payment of the Indebtedness in accordance with the provisions of the
Note as to application of payments to the Indebtedness, with the balance, if any, to
Borrower. Unless Lender otherwise agrees in writing, any application of any awards or
proceeds to the Indebtedness shall not extend or postpone the due date of payments due
under the Note, Section 7 of this Instrument or any Collateral Agreement or any other
Loan Document, or change the amount of such payments, except as otherwise provided
in the Note. Borrower agrees to execute such further evidence of assignment of any
awards or proceeds as Lender may require.
21. TRANSFERS OF THE MORTGAGED PROPERTY .OR INTERESTS IN
BORROWER.
(a) The occurrence of any of the following events shall constitute an Event of
Default under this Instrument:
(i) other than the lien of this Instrument and the Permitted
Encumbrances, a Transfer of all or any part of the Mortgaged
Property or any interest in the Mortgaged Property;
a Transfer of a Controlling Interest in Borrower;
(iii) a Transfer of a Controlling Interest in any entity which owns,
directly or indirectly through one or more intermediate entities, a
Controlling Interest in Borrower;
(iv) a Transfer of all or any part of a Guarantor's ownership interests in
Borrower, or in any other entity which owns, directly or indirectly
through one or more intermediate entities, an ownership interest in
Borrower (other than a Transfer of an aggregate beneficial
ownership interest in Borrower of 49% or less of such Guarantor's
Deed orTrust 38 Coral Mountain Apartments
original ownership interest in Borrower and which does not
otherwise result in a Transfer of the Guarantor's Controlling
Interest in such intermediate entitles or inBorrower),
(v) . if Guarantor is an entity, (A) a Transfer of a Controlling Interest in
Guarantor, or (B) a Transfer of a Controlling Interest in any entity
which owns, . directly or indirectly through one or more
intermediate entities, a Controlling Interest in Guarantor;
(vi) if Borrower or Guarantor is a trust, the termination or revocation of
such trust; unless the trust is terminated as a result of the death of
an individual trustor, in which event Lender must be notified and
such Borrower or Guarantor must be replaced with an individual or
entity acceptable to Lender, in accordance with the provisions of
Section 21(c) hereof, within 90 days of such death (provided
however that no property inspection shall be required and a 1%
transfer fee will not be charged);
(vii) if Guarantor is a natural person, the death of such individual;
unless the Lender is notified and such individual is replaced with
an individual or entity acceptable to Lender, in accordance with the
provisions of Section 21(c) hereof, within 90 days of such death
(provided however that no property inspection shall be required
and a I % transfer fee will not be charged);
(yiii). the merger, dissolution, liquidation, or consolidation of
(i) Borrower, (ii) any Guarantor that is a legal entity, or (iii) any
legal entity holding, directly or indirectly, a Controlling Interest in
Borrower or in any Guarantor that is an entity;
(ix) a conversion of Borrower from one type of legal entity into another
type of legal entity (including the conversion of a general
partnership into a limited partnership and the conversion of a
limited partnership into a limited liability company), whether or
not there is a Transfer; if such conversion results in a change in
any assets, liabilities, legal rights or obligations of Borrower (or of
any Guarantor, or any general partner of Borrower, as applicable),
by operation of law or otherwise;
W a Transfer of the economic benefits or right to cash flows
attributable to the ownership interests in Borrower and/or, if
Guarantor is an entity, Guarantor, separate from the Transfer of the
underlying ownership interests, unless the Transfer of the
underlying ownership interests would otherwise not be prohibited
by this Instrument; and
Deed of Tmsl 39 Coral Mountain Aporlmenfs
(xi) the filing, recording, or consent to filing or recording of any plat or
map subdividing, replatting or otherwise affecting the Mortgaged
: y pof-the g„
Propertyor an other, re lat or subdivision, Mortaged
lien of this Instrument.
Lender shall not be required to demonstrate any actual impairment of its security or any
increased risk of default in order to exercise any of its remedies with respect to an Event
of Default under this Section 21.
(b) The occurrence of any of the following events shall not constitute an
Event of Default under this Instrument, notwithstanding any provision of Section 21(a) to
the contrary (each a "Permitted Transfer'):
(i) a Transfer to which Lender has consented;
(ii) except as provided in Section 21(a)(vi) and (vii), a Transfer that
occurs by devise, descent, pursuant to the provisions of a trust, or
by operation of law upon the death of a natural person;
(iii) the grant of a leasehold interest in an individual dwelling unit for a
term of two years or less not containing an option to purchase;
(iv) a Transfer of obsolete or wom out Personalty or Fixtures that are
contemporaneously replaced by items of equal or better function
and quality, which are free of liens, encumbrances and security
interests other than those created by or permitted pursuant to the
Loan Documents or consented to by Lender;
(v) the grant of an easement, servitude, or restrictive covenant if,
before the grant, Lender determines that the easement, servitude, or
restrictive covenant will not materially affect the operation or
value of the Mortgaged Property or Lender's interest in the
Mortgaged Property, and Borrower pays to Lender, upon demand,
all costs and expenses incurred by Lender in connection with
reviewing Borrower's request;
(vi) the creation of a mechanic's, materialman's, or judgment lien
against the Mortgaged Property which is released of record or
otherwise remedied to Lender's satisfaction within 45 days after
Borrower has actual or constructive notice of the existence of such
lien; and
(vii) the conveyance of the Mortgaged Property at a judicial or non -
judicial foreclosure sale under this Instrument.
Deed or Trust - 40 Coro] Mountain Apartments
(c) Lender shall consent to a Transfer that would otherwise violate this
Section 21 if, prior to the Transfer, Borrower has satisfied each of the following
requirements:
(i) the submission to Lender of all information required by Lender to
make the determination required by this Section 21(c);
(ii) the absence of any Event of Default;
(iii) the transferee meets all of the eligibility, credit, management and
other standards (including standards with respect to previous
relationships between Lender and the transferee and the
organization of the transferee) customarily applied by Lender at
the time of the proposed Transfer to the approval of borrowers in
connectionwith the origination or purchase of similar mortgage
finance structures on similar multifamily properties, unless
partially waived by Lender in ' exchange for such additional
conditions as Lender may require;
(iv) the Mortgaged Property, at the time of the proposed Transfer,
meets all standards as to its physical condition, that are customarily
applied by Lender at,the time of the proposed Transfer to the
approval of properties in connection with the origination or
purchase of similar mortgage finance structures on similar
multifamily properties, unless partially waived by Lender in
exchange for such additional conditions as Lender may require;
(v) if the transferor or any other person has obligations under any
Loan Document, the execution by the transferee or one or more
individuals or entities acceptable to Lender of an assumption
agreement that is acceptable to Lender and that, among other
things, requires the transferee to perform all obligations of
.transferor or such person set forth in the Loan Documents, and
may require that the transferee comply with any provisions of this
Instrument or any other Loan Document which previously may
have been waived by Lender;
(vi) if a guaranty has been executed and delivered in connection with
the Note, this Instrument or any of the other Loan Documents by
the transferor, Borrower causes one or more individuals or entities
acceptable to Lender to execute and deliver to Lender a substitute
guaranty in a form acceptable to Lender;
(vii) Lender's receipt of all of the following:
(A) a non-refundable review fee in the amount of $3,000, and a
transfer fee equal to one percent (1%) of the outstanding
Indebtedness immediately prior to the transfer; and
D=d of Trust _ 41 - Coral Mountain Apartments
(B) Borrower's reimbursement of all of Lender's out-of-pocket
costs (including, reasonable attorneys' fees) incurred in
reviewing the Transfer request, to the extent such expenses
and
(viii) Borrower has agreed to Lender's conditions to approve such
Transfer, which may include, but are not limited to (A) providing
additional collateral, guaranties, or other credit support to mitigate
any risks concerning the proposed transferee or the performance or
condition of the Mortgaged Property, and (B) amending the Loan
Documents to (1) delete any specially negotiated terms or
provisions previously granted for the exclusive benefit of
transferor and (2) restore to original provisions of the standard
Lender forms of multifamily loan documents, to the extent such
provisions were previously modified.
(d) For purposes of this Section, the following terms shall have the meanings
set forth below:
(i) A Transfer of a "Controlling Interest" shall mean:
(A) with respect to any entity, the following:
(1) if such entity is a general partnership or a joint
venture, a Transfer of any general partnership interest or joint
venture interest which would cause the Initial Owners to own less
than 51% of all general partnership or joint venture interests in
such entity;
(2) if such entity is a limited partnership, (A) a Transfer
of any general partnership interest, or (B) a Transfer of any
partnership interests which would cause the Initial Owners to own
less than 51 % of all limited partnership interests in such entity;
(3) if such entity is a limited liability company or a
limited liability partnership, (A) a Transfer of any membership or
other ownership interest which would cause the Initial Owners to
own less than 5 1 % of all membership or other ownership interests
in such entity, (B) a Transfer of any membership, or other interest
of a manager, in such entity that results in a change of manager, or
(C) a change of the non-member manager;
(4) if such entity is a corporation (other than a Publicly -
Held Corporation) with only one class of voting stock, a Transfer
of any voting stock which would cause the Initial Owners to own
less than 51 % of voting stock in such corporation;
Deed of Trust 42 Coral Mountain Apartments
(5) if such entity is a corporation (other than a Publicly -
Held Corporation) with more than one class of voting stock, a
Transfer of any voting stock which would'cause the.1nitial Owners
having the power to elect the majority of directors of such
corporation; and
(6) if such entity is a trust (other than a Publicly -Held
Trust), the removal, appointment or substitution of a trustee. of
such trust other than (A) in tlhe`case of a land trust, or (B) if the
trustee of such trust after such removal, appointment, or
substitution is a trustee identified in the trust agreement approved
by Lender; and/or
(B) any agreement (including provisions contained in the
organizational and/or governing documents of Borrower or
Guarantor) or Transfer not specified in clause (A), the effect of
which, either immediately or after the passage of time or
occurrence of a specified event or condition, including the failure
of a specified event or condition to occur or be satisfied, would
(i) cause a change in or replacement of the Person that controls the
management and operations of the Borrower or Guarantor or
(ii) limit or otherwise modify the extent of such Person's control
over the management and operations of Borrower or Guarantor.
(ii)' "Publicly -Held Corporation" shall mean a corporation the
outstanding voting stock of which is registered under
Section 12(b) or 12(g) of the Securities and Exchange Act of 1934,
as amended.
(iii) "Publicly -Held Trust" shall mean a real estate investment trust
the outstanding voting shares or beneficial interests of which are
registered under Section 12(b) or 12(g) of the Securities Exchange
Act of 1934, as amended.
(e) Lender shall be provided with written notice of all Transfers under this
Section 21, whether or not such Transfers are permitted under Section 21(b) or approved
by Lender under Section 21(c), no later than 10 days prior to the date of the Transfer.
22. EVENTS OF DEFAULT. The occurrence of any one or more of the following
shall constitute an Event of Default under this Instrument:
(a) (i) any failure by Borrower to pay or deposit any payment of principal,
interest, principal reserve fund deposit, any payment with a specified due date, or any
other scheduled payment or deposit required by the Note, this Instrument or any other
Loan Document when such payment or deposit is due or (ii) any failure_by Borrower to
pay or deposit any unscheduled payment or deposit, or other payment or deposit without
Deed of Trust 43 1 Coral Mountain Apartments
a specified due date, required by the Note, this Instrument or any other Loan Document,
within five (5) days after written notice from Lender;
=—(b) any failure-by'Borrower to -maintain the insurance coverage required by
Section 19;
(c) any failure by Borrower to comply with the provisions of Section 32;
(d) fraud or material misrepresentation or material omission by Borrower or
Guarantor, any of their respective officers, directors, trustees, general partners, managing
members, managers, agents or representatives in connection with (i) the application for
the Loan, (ii) any financial statement, rent roll, or other report or information provided to
Lender during the term of the Indebtedness, or (iii) any request for Lender's consent to
any proposed action, including a request for disbursement of funds under any Collateral
Agreement;
(e) any of Borrower's representations and warranties in this Instrument is
false or misleading in any material respect;
(f) any Event of Default under Section 21;
(g) the commencement of a forfeiture action or proceeding, whether civil or
criminal, which, in Lender's judgment, could result in a forfeiture of the Mortgaged
Property or otherwise materially impair the lien created by this Instrument or Lender's
interest in the Mortgaged Property;
(h) any failure by Borrower to perform or comply with any of its obligations
under this Instrument (other than those specified in this Section 22), as and when
required, which continues for a period of thirty (30) days after written notice of such
failure by Lender to Borrower; provided, however, if such failure is susceptible of cure
but cannot reasonably be cured within such thirty (30) day period, and the Borrower shall
have commenced to cure such failure within such thirty (30) day period and thereafter
diligently and expeditiously proceeded to cure the same, such thirty (30) day period shall
be extended for an additional period of time as is reasonably necessary for the Borrower
in the exercise of due diligence to cure such failure, such additional period, not to exceed
sixty (60) days. However, no such notice or grace period shall apply to the extent such
failure could, in Lender's judgment, absent immediate exercise by Lender of a right or
remedy under this Instrument, result in harm to Lender, impairment of the Note or this
Instrument or any other security given under any other Loan Document;
(i) any failure by Borrower or any Guarantor to perform any of its obligations
as and when required under any Loan Document other than this Instrument which
continues beyond the applicable cure period, if any, specified in that Loan Document;
0) any exercise by the holder of any debt instrument secured by a mortgage,
deed of trust or deed to secure debt on the Mortgaged Property of a right to declare all
amounts due under that debt instrument immediately due and payable;
Deed orTmst 44 Coral Mountnin Aputments
(k) the occurrence of a Bankruptcy Event;
- (1) any Event -of -Default (as defined in any of the Loan Documents), which
--. continues -beyond the expiratibn of any applicable -
cure -period; -(in
) any breach of, or event of default under, any other document or agreement
relating to the Loan or the provision of low income housing tax credits to the Mortgaged
Property to which Borrower is a party, which continues beyond the expiration of any
applicable cure period thereunder;
(n) any failure by Borrower or the Project to qualify for low income housing
tax credits pursuant to the provisions of Section 42 of the Internal Revenue Code;
(o) any failure by the Borrower to satisfy the Conditions to Conversion on or
before the Conversion Date (as such date may be extended in accordance with the Loan
Agreement);
(p) any amendment, modification, waiver or termination of any of the
provisions of Borrower's Organizational Documents without the prior written consent of
Lender, other than (i) modifications necessary to reflect the occurrence of a Permitted
Transfer ,or (ii) modifications that do not: (A) impose any additional or greater
obligations on Borrower or any of the partners, managers or members of Borrower,
(B) reduce or relieve Borrower or any of.the partners, managers or members of Borrower
of any of their obligations, (C) modify the timing, amounts, number, conditions or other
terns of the installments or other payment obligations of the partners or members of
Borrower or (D) impair the collateral for the Loan; provided, however, that Borrower
shall promptly provide to Lender a copy of any modifications to Borrower's
Organizational Documents that do not require Lender's consent;
(q) (i) any breach of any Material Property Agreement by Borrower or its
officers, directors, employees, agents or tenants that continues beyond any. applicable
notice and cure period; (ii) any, failure by Borrower or its officers, directors, employees or
agents or any other party to deliver concurrently (in case of notices given) or promptly (in
case of notices received) copies of any and all notices received or given thereby to
Lender with respect to any Material Property Agreement; or (iii) any breach of the
representations, warranties, or covenants set forth in Section 22 of the Borrower's
Certificate and Agreement;
(r) if Borrower or any Guarantor is a trust, the termination or revocation of
any such trust; unless the trust is terminated as a result of the death of an individual
trustor, in which event Lender must, be notified and such Borrower or Guarantor must be
replaced with an individual or entity acceptable to Lender, in accordance with the
provisions of Section 21(c) hereof, within 90 days of such death (provided however that
no property inspection shall be required and a 1 % transfer fee will not be charged); or
(s) if any Guarantor is a natural person, the death of such individual; unless
the Lender is notified and such individual is replaced with an individual or entity
acceptable to Lender, in accordance with the provisions of Section 21(c) hereof, within
Deed orTmst 45 Comt Mountain Apmtmwts
90 days of such death (provided however that no property inspection shall be required
and a 1%transfer fee will not be charged).
--- - 23.--=REMEDIES CUMULATIVE. Each —right —and remedy provided- in -this —
Instrument is distinct from all other rights or remedies under this Instrument or any other Loan
Document or afforded by applicable law, and each shall be cumulative and may be exercised
concurrently, independently, or successively, in any order.
24. FORBEARANCE.
(a) Lender may (but shall not be obligated to) agree with Borrower, from time
to time, and without giving notice to, or obtaining the consent of, or having any effect
upon the obligations of, any guarantor or other third party obligor, to take any of the
following actions: extend the time for payment of all or any part of the Indebtedness;
reduce the payments due under this Instrument, the Note, or any other Loan Document;
release anyone liable for the payment of any amounts under this Instrument, the Note, or
any other Loan Document; accept a renewal of the Note; modify the terms and time of
payment of the Indebtedness; join in any extension or subordination agreement; release
any Mortgaged Property; take or release other or additional security; modify the rate of
interest or period of amortization of the Note or change the amount of the monthly
installments payable under the Note; and otherwise modify this Instrument, the Note, or
any other Loan Document.
(b) Any forbearance by Lender in exercising any right or remedy under the
Note, this Instrument, or any other Loan Document or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or remedy, or the
subsequent exercise of any right or remedy. The acceptance by Lender of payment of all
or any part of the Indebtedness after the due date of such payment, or in an amount which
is less than the required payment, shall not be a waiver of Lender's.right to require
prompt payment when due of all other payments on account of the Indebtedness or to
exercise any remedies for any failure to make prompt payment. Enforcement by Lender
of any security for the Indebtedness shall not constitute an election by Lender of remedies
so as to preclude the exercise of any other right available to Lender. Lender's receipt of
any awards or proceeds under Sections 19 and 20 shall not operate to cure or waive any
Event of Default.
25. WAIVER OF STATUTE OF LIMITATIONS. BORROWER HEREBY
WAIVES THE RIGHT TO ASSERT ANY STATUTE OF LIMITATIONS AS A BAR TO THE
ENFORCEMENT OF THE LIEN OF THIS INSTRUMENT OR TO ANY ACTION
BROUGHT TO ENFORCE ANY LOAN DOCUMENT.
26. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Lender or by any other party, Lender shall
have the right to determine the order in which any or all of the Mortgaged Property shall be
subjected to the remedies provided in this Instrument, the Note, any other Loan Document or
applicable law. Lender shall have the right to determine the order in which any or all portions of
the Indebtedness are satisfied from the proceeds realized upon the exercise of such remedies -
Deed of Trust 46 Coral Mountain Apartments
Borrower and any party who now or in the future acquires a security interest in the Mortgaged
Property and who has actual or constructive notice of this Instrument waives any and all right to
require the marshallin of assets or to require that any of the Mortgaged Property be sold in the
entirety in connection with the exercise of any of the remedies permitted by applicable law or
provided in this Instrument.
27. FURTHER ASSURANCES. Borrower shall execute, acknowledge, and deliver,
at its sole cost and expense, all further acts, deeds, conveyances, assignments, estoppel
certificates, financing statements or amendments, transfers and assurances as Lender may
require from time to time in order to better assure, grant, and convey. to Lender the rights
intended to be granted, now or in the future, to Lender under this Instrument and the Loan
Documents. In furtherance thereof, on the request of Lender, Borrower shall re -execute or ratify
any of the Loan Documents or execute any other documents or take such other actions as may be
necessary to effect the assignment, pledge or other transfer of the Loan to any party that may
purchase, insure, credit enhance or otherwise finance all .or any part of the Loan, including,
without limitation, any Credit Enhancer (including Freddie Mac or Fannie Mae), the U.S.
Department of Housing and Urban Development, or any insurance company, conduit lender or
any other lender or investor.
28. ESTOPPEL CERTIFICATE. Within 10 days after a request from Lender,
Borrower shall deliver to Lender a written statement, signed and acknowledged by Borrower,
certifying to Lender or any person designated by Lender, as of the date of such statement, (i) that
the Loan Documents are unmodified and in full force and effect (or, if there have been
modifications, that the Loan Documents are in full force and effect as modified and setting forth
such modifications); (ii) the unpaid principal balance of the Note; (iii) the date to which interest
under the Note has been paid; (iv) that Borrower is not in default in paying the Indebtedness or in
performing or observing any of the covenants or agreements contained in this Instrument or any
of the other Loan Documents. (or, if Borrower is in default, describing such default in reasonable
detail); (v) whether or not there are then existing any setoffs or defenses known to Borrower
against the enforcement of any right or remedy of Lender under the Loan Documents; and
(vi) any additional facts requested by Lender.
29. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
(a) This Instrument, and any Loan Document which does not itself expressly
identify the law that is to apply to it, shall be governed by the laws of the Property
Jurisdiction.
(b) Borrower agrees that any controversy arising under or in relation to the
Note, this lnstrument, or any other Loan Document may be litigated in the Property
Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have jurisdiction over all controversies that shall arise under or in
relation to the Note, any security for the Indebtedness, or any other Loan Document.
Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by virtue of
domicile, habitual residence or otherwise. However, nothing 'in this Section 29 is
Deed orTrust 47 Cord Mountain Apartments
intended to limit Lender's right to bring any suit, action or proceeding relating to matters
arising under this Instrument in any court of any other jurisdiction.
30. NOTICE.
(a) All notices, demands and other communications ("notice") under or
concerning this Instrument shall be in writing, addressed as set forth below, and shall
include a reference to "Citi Loan # 10-7044852. Each notice shall be deemed given on
the earliest to occur of (i) the date when the notice is received by the addressee; (ii) the
first Business Day after the notice is delivered to a recognized overnight courier service,
with arrangements made for payment of charges for next Business Day delivery; or
(iii) the third Business Day after the notice is deposited in the United States mail with
postage prepaid, certified mail, return receipt requested.
If to the Borrower: Coral Mountain Partners, L.P.
c/o Highway 111 Apts Member LLC
46-753 Adams Street
La Quinta, CA 92253
Attention: John Durso
Facsimile: (949) 854-7105
With a copy to:
Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street, 70th Floor
Los Angeles, CA 90071
Attention: Lance Bocarsly
Facsimile: (213) 559-0733
And a copy to:
Western Community Housing, Inc.
151 Kalmus Drive, Suite J-5
Costa Mesa, CA 92626
Attention: Graham Espley-Jones
Facsimile: (714) 549-4600
And a copy to:
Cox, Castle & Nicholson LLP
555 California Street, IOth Floor
San Francisco, CA 94104
Attention: Ofer Elitzer
Facsimile: (415) 392-4250
Dcel or Trust 48 Coral Mountain APnrtmcnL%
If to Lender: Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 1001.3
Attention: Desk head, Transaction Management Group
Loan # 10-7044852
Facsimile: (212) 723-8642
With a copy to: Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Loan # 10.7044852
Facsimile: (805) 557-0924
With a copy to: Citibank, N.A.
One Sansome Street, 26th Floor
San Francisco, California 94104
Attention: Sanjay Sharma
Loan # 10-7044852
Facsimile: (415).627-6387
With a copy to: Citibank, N.A.
388 Greenwich Street
New York, New York 10013
Attention: General Counsel's Office
Loan # 10-7044852
Facsimile: (212) 723-8939
(b) -Any party to this Instrument may change the address to which notices
intended for it are to be directed by means of notice given to the other party in
accordance with this Section 31. Each party agrees that it will not refuse or reject
delivery of any notice given in accordance with this Section 30, that it will acknowledge,
in writing, the receipt of any notice upon request by the other party and that any notice
rejected or refused by it shall be deemed for purposes of this Section 30 to have been
received by the rejecting party on the date so refused or rejected, as conclusively
established by the records of the U.S. Postal Service or the courier service.
(c) Any notice under the Note and any other Loan Document that does not
specify how notices are to be given shall be given in accordance with this Section 30.
31. CHANGE IN SERVICER. If there is a change of the Servicer, Borrower will be
given notice of the change.
32. SINGLE ASSET BORROWER. Until the Indebtedness is paid in full,
Borrower (a) shall not acquire any real or personal property other than the Mortgaged Property
and personal property related to the operation and maintenance of the Mortgaged Property;
Deed ofTmsl 49 Cuml Mounmin Apnnmenls,
(b) shall not operate any business other than the management and operation of the Mortgaged
Property; and (c) shall not maintain its assets in a way difficult to segregate and identify.
33. SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and the
rights granted by this Instrument shall inure to, the successors and assigns of Lender and the
permitted successors and assigns of Borrower.
..34. JOINT AND SEVERAL LIABILITY. If more than one person or entity signs
this Instrument as Borrower, the obligations of such persons and entities shall be joint and
several.
35. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The relationship between Lender and Borrower shall be solely that of
creditor and debtor, respectively, and nothing contained in this Instrument shall create
any other relationship between Lender and Borrower.
(b) No creditor of any party to this Instrument and no other person (other than
a holder of the Note and Servicer) shall be a third party beneficiary of this Instrument or
any other Loan Document. Without limiting the generality of the preceding sentence,
(i) any arrangement (a "Servicing Arrangement") between Lender and any Servicer for
loss sharing or interim advancement of funds shall constitute a contractual obligation of
such Servicer that is independent of the obligation of Borrower for the payment of the
Indebtedness, (ii) Borrower shall not be a third party beneficiary of any Servicing
Arrangement, and (iii) no payment by Servicer under any Servicing Arrangement will
reduce the amount of the Indebtedness.
36. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of any
provision of this Instrument shall not affect the validity or enforceability of any other provision,
and all other provisions shall remain in full force and effect. This Instrument contains the entire
agreement among the parties as to the rights granted and the obligations assumed in this
Instrument. This Instrument may not be amended or modified except by a writing signed by the
party against whom enforcement is sought; provided, however, that in the event of a Transfer,
any or some or all of the Modifications to Instrument set forth in Exhibit B (if any) may be
modified or rendered void by Lender at Lender's option by notice to Borrower or such
transferee.
37. CONSTRUCTION. The captions and headings of the sections of this Instrument
are for convenience only and shall be disregarded in construing this Instrument. Any reference
in this Instrument to an "Exhibit' or a "Section" shall, unless otherwise explicitly provided, be
construed as referring, respectively, to an Exhibit attached to this Instrument or to a Section of
this Instrument. All Exhibits attached to or referred to in this Instrument are incorporated by
reference into this Instrument. Any reference in this Instrument to a statute or regulation shall be
construed as referring to that statute or regulation as amended from time to time. Use of the
singular in this Instrument includes the plural and use of the plural includes the singular. As
used in this Instrument, the term "including" means "including, but not limited to.
Deed of Trust 50 Coral Mountain ApartmenLs
38. SERVICER.
(a) Borrower further acknowledges that Lender may from time to time and in
accordance with the terms of the Loan Agreement, appoint a Servicer or a replacement
servicer to collect payments, escrows and deposits, to give and receive notices under the
Note, this Instrument, or the other Loan Documents, and to otherwise service the Loan.
Borrower hereby acknowledges and agrees that, unless Borrower receives written notice
from Lender to the contrary, any action or right which shall or may be taken or exercised
by Lender may be taken or exercised by Servicer with the same force and effect,
including, without limitation, the collection of payments, the giving of notice, the holding
of escrows, inspection of the Mortgaged Property, inspections of books and records, the
request for documents or information, and the granting of consents and approvals.
Borrower further agrees that, unless Lender instructs Borrower to the contrary in writing,
(i) any notices, books or records, or other documents or information to be delivered under
this Instrument, the Note, or any other Loan Document shall also be simultaneously
delivered to the Servicer at the address provided for notices to Servicer pursuant to
Section 30 hereof, (ii) any, payments to be made under the Note or for escrows under
Section 7 of this Instrument or under any of the other Loan Documents shall be made to
Servicer. In the event Borrower receives conflicting notices regarding the identity of the
Servicer or any other subject, any such notice from Lender shall govern.
(b) Borrower further 'acknowledges and agrees that, for the purpose of
determining whether a security interest is created or perfected under the Uniform
Commercial Code of the Property Jurisdiction, any escrows or other funds held by
Servicer pursuant to the Loan Documents shall be deemed to be held by Lender.
39. DISCLOSURE OF INFORMATION. Lender may furnish information
regarding Borrower or the Mortgaged Property to third parties with an existing or prospective
interest in the servicing, enforcement, evaluation, performance, purchase or securitization of the
Indebtedness, including but not limited to trustees, master servicers, special servicers, rating
agencies, and organizations maintaining databases on the underwriting and performance of
multifamily mortgage loans. Without limiting the generality of the foregoing,without notice to
or the consent of Borrower, Lender may: disclose to any title insurance company which insures
any interest of Lender under this Instrument (whether as primary insurer, coinsurer or reinsurer)
any information, data or material in its possession relating to Borrower, the Loan, the
Improvements or the Mortgaged Property. Borrower irrevocably waives any and all rights it
may have under applicable law to prohibit such disclosure, including but not limited to any right
of privacy.
Deed of Trust 51 Coml Mountain Apartments
40. NO CHANGE IN FACTS OR CIRCUMSTANCES. Borrower warrants that
all information in Borrower's application for the Loan and in all financial statements, rent rolls,
reports, certificates and other documents submitted in connection with Borrower's application
for the Loan are complete and accurate in all material respects. There has been no material
adverse change in any fact or circumstance that would make any such information incomplete or
inaccurate.
41. SUBROGATION. If, and to the extent that, the proceeds of the Loan are used to
pay, satisfy or discharge any obligation of Borrower for the payment of money that is secured by
a pre-existing mortgage, deed of trust or other lien encumbering the Mortgaged Property (a
"Prior Lien"), such loan proceeds shall be deemed to have been advanced by Lender at
Borrower's request, and Lender shall automatically, and without further action on its part, be
subrogated to the rights, including lien priority, of the owner or holder of the obligation secured
by the Prior Lien, whether or not the Prior Lien is released.
42. FINANCING STATEMENT. As provided in Section 2, this Instrument
constitutes a financing statement with respect to any part of the Mortgaged Property which is or
may become a Fixture and for the purposes of such financing statement: (a) the Debtor shall be
Borrower and the Secured Party shall be Lender; (b) the addresses of Borrower as Debtor and of
Lender as Secured Party are as specified above in the first paragraph of this Instrument; (c) the
name of the record owner is Borrower; (d) the types or items of collateral consist of any part of
the Mortgaged Property which is or may become a Fixture; and (e) the organizational
identification number of Borrower (if any) as Debtor is set forth on Exhibit C.
43. STATE SPECIFIC PROVISIONS (CALIFORNIA).
(a) ACCELERATION; REMEDIES. If an Event of Default has occurred and
is continuing, Lender, at Lender's option, may declare the Indebtedness to be
immediately due and payable without further demand, and may invoke the power of sale
and any other remedies permitted by California law or provided in this Instrument or in
any other Loan Document. The provisions of this Section 43 shall not limit the remedies
available to Lender pursuant to the remaining provisions of this Instrument and pursuant
to the other Loan Documents. Borrower acknowledges that the power of sale granted in
this Instrument may be exercised by Lender without prior judicial hearing. Lender shall
be entitled to collect all costs and expenses incurred in pursuing such remedies, including
attorneys' fees, costs of documentary evidence, abstracts and title reports.
If the power of sale is invoked, Lender shall execute a written notice of the occurrence of
an Event of Default and of Lender's election to cause the Mortgaged Property to be sold and
shall cause the notice to be recorded in each county in which the Mortgaged Property or some
part of the Mortgaged Property is located. Trustee shall give notice of default and notice of sale
and shall sell the Mortgaged Property according to California law. Trustee may sell the
Mortgaged Property at the time and place and under the terms designated in the notice of sale in
one or more parcels and in such order as Trustee may determine. Trustee may postpone the sale
of all or any part of the Mortgaged Property by public announcement at the time and place of any
previously scheduled sale. Lender or Lender's designee may purchase the Mortgaged Property
at any sale.
Deed of Trust 52 Coml Mnumain Apartments
At any sale, Lender shall be entitled to credit bid, or to instruct Trustee on behalf of
Lender to credit bid, up to and including the entire amount of the Indebtedness plus Trustee's
fees and expenses. Trustee shall deliver to the purchaser at the sale, within a reasonable time
after the sale, a deed conveying the Mortgaged Property so sold without any express or implied
covenant or warranty. The recitals in Trustee's deed shall be prima facie evidence of the truth of
the statements made in those recitals. Trustee shall apply the proceeds of the sale in the
following order: (a) to all costs and expenses of the sale, including Trustee's,fees not to exceed
5% of the gross sales price, attorneys' fees and costs of title evidence; (b) to the Indebtedness in
such order as Lender, in Lender's discretion, directs; and (c) the excess, if any, to the person or
persons, legally entitled to the excess.
(b) RECONVEYANCE. Upon payment of the Indebtedness, Lender shall
request Trustee to reconvey the Mortgaged Property and shall surrender this Instrument
and the Note to Trustee. Trustee shall reconvey the. Mortgaged Property without
warranty to the person or persons legally entitled to the Mortgaged Property. Such
person or persons shall pay Trustee's reasonable costs incurred in so reconveying the
Mortgaged Property.
(c) SUBSTITUTE TRUSTEE. Lender, at Lender's option, may from time to
time, by a written instrument, appoint a successor trustee, which instrument, when
executed and acknowledged by Lender and recorded in the office of the Recorder of the
county or counties where the Mortgaged Property is situated, shall be conclusive proof of
proper substitution of the successor trustee. The successor trustee shall, without
conveyance of the Mortgaged Property, succeed to all the title, power and duties
conferred upon the Trustee in this Instrument and by California law. The instrument of
substitution shall contain the name of the original Lender, Trustee and Borrower under
this Instrument, the.book and page where this Instrument is recorded, and the name and
address of the successor trustee. If notice of default has been recorded, this power of
substitution cannot be exercised until after the costs, fees and expenses of the then acting
Trustee have been paid to such Trustee, who shall endorse receipt of those costs, fees and
expenses upon the instrument of substitution. The procedure provided for substitution of
trustee in this Instrument shall govern to the exclusion of all other provisions for
substitution, statutory or otherwise.
(d) STATEMENT OF OBLIGATION. Lender may collect a fee not to
exceed the maximum allowed by applicable law for furnishing the statement of obligation
as provided in Section 2943 of the Civil Code of California.
(e) SPOUSE'S SEPARATE PROPERTY. Each Borrower who is a married
person expressly agrees that recourse may be had against his or her community property
and separate property.
(f) FIXTURE FILING. This Instrument is also a fixture filing under the
Uniform Commercial Code of California.
Deed ofTmsi 53 Coral Mountain Apartments
(g) ADDITIONAL PROVISION REGARDING APPLICATION OF
PAYMENTS. In addition to the provisions of Section 9, Borrower further agrees that, if
Lender accepts a guaranty of only a portion of the Indebtedness, Borrower waives its
right under California Civil Code Section 2822(a), to designate the portion of the
Indebtedness which shall be satisfied by a guarantor's partial payment.
(h) WAIVER OF MARSHALLING; OTHER WAIVERS. To the extent
permitted by law, Borrower waives (i) the benefit of all present or future laws providing
for any appraisement before sale of any portion of the Mortgaged Property, (ii) all rights
of redemption, valuation, appraisement, stay of execution, notice of election to mature or
declare due the whole of the Indebtedness and marshalling in the event of foreclosure of
the lien created by this Instrument, (iii) all rights and remedies which Borrower may have
or be able to assert by reason of the laws of the State of California pertaining to the rights
and remedies of sureties, (iv) the right to assert any statute of limitations as a bar to the
enforcement of the lien of this Instrument or to any action brought to enforce the Note or
any other obligation secured by this Instrument, and (v) any rights, legal or equitable, to
require marshalling of assets or to require upon foreclosure sales in a particular order,
including any rights under California Civil Code Sections 2899 and 3433. Lender shall
have the right to determine the order in which any or all of the Mortgaged Property shall
be subjected to the remedies provided by this Instrument. Lender shall have the right to
determine the order in which any or all portions of the Indebtedness are satisfied from the
proceeds realized upon the exercise of the remedies provided by this Instrument. By
signing this Instrument, Borrower does not waive its rights under Section 2924c of the
California Civil Code.
(i) ADDITIONAL PROVISIONS CONCERNING ENVIRONMENTAL
HAZARDS. In addition to the provisions of Section 18:
(i) Except for matters covered by an O&M Program or matters
described in Section 18(b), Borrower shall not cause or permit any
lien (whether or not such lien has priority over the lien created by
this Instrument) upon the Mortgaged Property imposed pursuant to
any Hazardous Materials Laws. Any such lien shall be considered
a Prohibited Activity or Condition.
(ii) Borrower represents and warrants to Beneficiary Parties that,
except as set forth in the Environmental Agreement:
(A) at the time of acquiring the Mortgaged Property, Borrower
undertook all appropriate inquiry into the previous
ownership and uses of the Mortgaged Property consistent
with good commercial or customary practice and no
evidence or'indication came to light which would suggest
that the Mortgaged Property has been or is now being used
for any Prohibited Activities or Conditions; and
Deed or Trust 54 Coral Mountain Apartments
(B) the, Mortgaged Property has not been designated as
"hazardous waste property" or "border zone property"
pursuant to Section 25220, et seq., of the California Health
and Safety Code.
The representations and warranties in this subsection (ii) shall be
continuing representations and warranties that shall be deemed to
be made by Borrower throughout the term of the loan evidenced by
the Note, until the Indebtedness has been paid in full.
(iii) Without limiting any of the remedies provided in this Instrument,
Borrower acknowledges and agrees that each of the provisions in
Section 18 and in this Section 43(i) is an environmental provision
(as defined in Section 736(f)(2) of the California Code of Civil
Procedure) made by Borrower relating to the real property security
(the "Environmental Provisions"), and that Borrower's failure to
comply with any of the Environmental Provisions will be a breach
of contract that will entitle, Lender to pursue the remedies provided
by Section 736 of the California Code of Civil Procedure
("Section 736") for the recovery of damages and for the
enforcement of the Environmental Provisions. Pursuant to
Section 736, Lender's action for recovery of damages or
enforcement of the Environmental Provisions shall not constitute
an action within the meaning of Section 726(a) of the California
Code of Civil Procedure or constitute a money judgment for a
deficiency or a deficiency judgment within the meaning of
Sections 580a, 580b, 580d, or 726(b) of the California Code of
Civil Procedure.
(iv) Any reference in this Instrument or in any other Loan Document to
Section 18 of this Instrument shall be construed as referring
together to Section 18 and this Section 43(i).
0) JUDICIAL REFERENCE; REFEREE; COSTS.
(i) Controversies Subject to Judicial Reference: Conduct of
Reference, In the event that any action, proceeding and/or hearing
on any matter whatsoever, including all issues of fact or law
arising out of, or in .any way connected with, the Note, this
Instrument or any of the Loan Documents, or the enforcement of
any remedy under any law, statute, or regulation (hereinafter, a
"Controversy"), is to be tried in a court of the State of California
and the jury trial waiver provisions set forth below are not
permitted or otherwise applicable under then -prevailing law:
D=d orTmst 55 Comi Mwntnia Apartments
(A) Each Controversy shall be determined by a consensual
general judicial reference (the "Reference") pursuant to the
provisions of California Code of Civil Procedure §§ 638
et seq., as such statutes may be amended or modified from
time to time.
(B) Upon a written request, or upon an appropriate motion by
either Lender or Borrower, any pending action relating to
any Controversy and every Controversy shall be heard by a
single Referee (the "Referee') who shall then try all issues
(including any and all questions of law and questions of
fact relating thereto), and issue findings of fact and
conclusions of law and report a statement of decision. The
Referee's statement of decision will constitute the
conclusive determination of the Controversy. Lender and
Borrower agree that the Referee shall have the power to
issue all legal and equitable relief appropriate under the
circumstances before him/her.
(C) Lender and Borrower shall promptly and diligently
cooperate with one another and the Referee, and shall
perform such acts as may be necessary to obtain prompt
and expeditious resolution of each Controversy in
accordance with the terms of this Section 43(j).
(D) Either Lender or Borrower may file the Referee's findings,
conclusions and statement with the clerk or judge of any
appropriate court, file a motion to confirm the Referee's
report and have judgment entered thereon. if the report is
deemed incomplete by such court, the Referee may be
required to complete the report and resubmit it.
(E) Lender and Borrower will each have such rights to assert
such objections as are set forth in California Code of Civil
Procedure §§ 638 et seq.
(F) All proceedings shall be closed to the public and
confidential and all records relating to the Reference shall
be permanently sealed when the order thereon becomes
final.
(ii) Selection of Referee; Powers.
(A) Lender and Borrower shall select a single neutral referee
("Referee"), who shall be a retired judge or justice of the
courts of the State of California, or a federal court judge, in
each case, with at least ten years of judicial experience in
Deed orTrast 56 Coral Mountain Ap;mments
civil matters. The Referee shall be appointed in accordance
with California Code of Civil Procedure Section 638 (or
pursuant to comparable provisions of federal law if the
dispute falls within the exclusive jurisdiction of the federal
courts).
(B) If within ten (10) days after the request or motion for the
Reference, Lender and Borrower cannot agree upon a
Referee, either Lender or Borrower may request or move
that the Referee be appointed by the Presiding Judge of the
Riverside County Superior Court or of the U.S. District
Court for the Southern District of California. The Referee
shall determine all issues relating to' the applicability,
interpretation, legality and enforceability of this
Section 430).
(iii) Provisional Remedies.
(A) No provision of this Section 430) shall limit the right of
either Lender or Borrower, as the case may be, to
(I)exercise self-help remedies as might otherwise be
available under applicable law (2) initiate judicial or
non judicial foreclosure against any real or personal
property collateral, (3) exercise any judicial or power of
sale rights, or (4) obtain or oppose provisional or ancillary
remedies, including without limitation, injunctive relief,
writs of possession, the appointment of a receiver, and/or
additional or supplementary remedies from a court of
competent jurisdiction before, after or during the pendency
of the Reference.
(B) The exercise of, or opposition to, any such remedy does not
waive the right of Lender or Borrower to the Reference
pursuant to this Section 430).
(iv) Costs and Fees.
(A) Promptly following the selection of the Referee, Lender
and Borrower shall each advance equal portions of the
estimated fees and costs of the Referee.
(B) In the statement of decision issued by the Referee, the
Referee shall award costs, including reasonable attorneys'
fees, to the prevailing party, if any, and may order the
Referee's fees to be paid or shared by Borrower and/or
Lender in such manner as the Referee deems just.
Deed of Trust 57 coral Mountain Apartments
44.
ATTACHED
EXHIBITS.. The following Exhibits are attached to this
Instrument and are incorporated by reference herein as if more fully set forth in the text hereof:
®
Exhibit A
Description of the Land.
®
Exhibit B
Modifications to Instrument.
®
Exhibit C
Financing Statement Information,
®
Exhibit D
Modifications to Instrument (Ground Lease).
®
Exhibit E
Description of Ground Lease.
The terms of this Instrument are modified and supplemented as set forth in said Exhibits. To the
extent of any conflict or inconsistency between the terms -of said Exhibits and the text of this
Instrument, the terms of said Exhibits shall be controlling in all respects.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
aced of Trust 58 Coral Mountain Aparmcnts
45. WAIVER. OF TRIAL BY JURY. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER AND LENDER EACH (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
-- 'ARISING -OUT OF=THIS INSTRUMENT IOR'THE=RELATIUNSHIP=BE-T-WEEN'THE -- ---
PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH
ISSUE. TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE
FUTURE. THIS WAIVER OF RIGHT, TO TRIAL BY JURY IS SEPARATELY GIVEN
13Y EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Instrument or caused this Instrument to be duly executed and delivered by its authorized
representative as of the date first set forth above.
BORROWER,
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC, a California
limited liability company, its administrative
general partner
By: KD Hourtners, Inc., a California
By:
Nam r Durso
Title: President
By: WCH Affordable VIII, LLC, a California
limited liability company, its managing
general partner
By: Western Community Housing, Inc., a
California nonprofit public benefit
corporation, its sole member and
manager
By: >yD
Name: Sandra C. Gibbon
Title: Chief Financial Officer
Dccd nrTtnsl S-1 Coral Mountain Apantnents
California All -Purpose Acknowledgment
State of Califo nia
ss-
County of
ti
Ong Z7 1 � before me, S' ��� � �7"kif�
personally appeared �\� '1 i1 :�)m—S D
y It V1 a al 19 DY1
w}yo proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
,K/are subscribed to the within instrument and acknowledged to me that t>t�e/they executed
the same in hisfiller0their authorized capacity(ies), and that by hWpAr/their signature(s) on the
instrument the person(s), OF the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws
of the State of California that the foregoing paragraph is S. WRIGHT
true and correct. l' b: commission # 1081754
WITNESS my hand and ea . 'aJ` Notary Public - California
z •�. ' Los Angeles County
.aA
My Comm. Expires Apr2, 2014-
OPTIONAL INFORMATION „ t
111thou7h th•; lhy _r:C orn i„ rnL^xp,in-d i;y tar:•: it r �ndrl,na: ver,f t-at�ri;ien; ranruvat anal reaYarhotent nr
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Description of Attached Document
The preceding Certificate of Ackno time is attached t a
documenntAill��rla�1 nIurpos���
containing _ pages, and dated
The signer(s) capacity or authority is/are as:
O IndMdual(s)
❑ Allo neyin-fact
❑ Corporate officer(s)
G Guardianlconservator
❑ Partner - Limited/General
❑ Trustee(s)
C other.
representing
Method of Signer Identification '
Proved to me on the basis of satisfactory evidence:
❑ form(a) of identification ❑ credible Wtnesa(es)
Notarial event is detailed In notery journal on:
Page#_ Entry0_
Notary contact:
Other
❑ Additional Signer ❑ Signer(s) Thumbpdnts(s)
❑
i
)
i
t
EXHIBIT A
DESCRIPTION OF THE LAND
Leasehold estate as created by that certain Ground Lease dated August _�_, 2012, made by and
between La Quinta Housing Authority, a public body, corporate and politic; as lessor, and Coral
Mountain Partners, L.P., a California limited partnership, as lessee, for the term of 55 years and
upon the terms and conditions contained in said lease and subject to provision contai ed in the
lease which limit the right of osse sion, a Memorandum thereof. recorded
2012, Instrument No. 2012- in and to the following:
In the City of La Quinta, County of Riverside, State of California, that portion of the West half
of the East half and the East half of the West half of the Northwest quarter of the Southeast
quarter of Section 29, Township 5 South, Range 7 East, San Bernardino Base and Meridian,
more particularly described as follows:
Commencing at the East quarter corner of said Section 29; thence South 89' 39' 16" West along
the North line of said Southeast quarter, a distance of 1,656.57 feet to the Northeast corner of
said West half of the East half of the Northwest quarter of the Southeast quarter of Section 29;
thence South 000 08' 10" East along the East line of said West half of the East half of the
Northwest quarter of the Southeast quarter Section 29, a distance of 60.93 feet to the South right-
of-way line of Highway I I I as granted to the City of La Quinta per Instrument No. 2007-
0076267 recorded February 1, 2007 and re -recorded February 14, 2007 as Instrument No. 2007-
0103255, O.R.;
Thence continuing South 00' 08' 10" East along said East line a distance of 626.13 feet to the
beginning of a non -tangent curve, concave Northerly, having a radius of 300.00 feet, a radial line
to said point bears South 01 ` 53' 43" West, and the true point of beginning;
Thence leaving said East line and Westerly along the arc of said curve, through a central angle of
16' 09' 07", an arc distance of 84.57 feet to the beginning of a reverse curve concave Southerly,
having a radius of 300.00 feet, a radial line to said point bears North 18" 02' 50" East; thence
Westerly along the arc of said curve through a central angle of 18° 02' 50", an are distance of
94.50 feet; thence North 90e 00' 00" West a distance of 264.78 feet to the beginning of a tangent
curve, concave Southeasterly, having a radius of 200.00 feet;
Thence Southwesterly along the arc of said curve, through a central angle of 90° 09' 34", an are
distance of 314.72 feet; thence non -tangent to said curve South 89° 50' 26" West, a distance of
21.18 feet to the West line of said East half of the West half of the Northwest quarter of the
Southeast quarter of Section 29; thence South 00' 09' 34" East along said West line, a distance
of 500.13 feet to the South line of said Northwest quarter of the Southeast quarter of Section 29;
thence South 89' 48' 22" East along said South line a distance of 662.14 feet to said East line of
the West half of the East half of the Northwest quarter of the Southeast quarter of Section 29;
thence North 00° 18' 10" West along said East line, a distance of 673.63 feet to the true point of
beginning.
Deed of Trutt A-1 Coral Moumnin Aponmenu
Said land is also shown as Parcel 2 of Lot line Adjustment No. 2010-508 as Disclosed by Grant
Deed recorded December 2, 2010, as Instrument No. 2010-575516, of Official Records.
APN: 600-020-054
Deed of Trust A-2 Cotal Mountain Apartments
EXHIBIT B
_:MODIFICATIONS TO INSTRUMENT ..
The following modifications are made to the text of the Instrument that precedes this Exhibit:
1. Section 21(a) of the Instrument is amended by adding the following at the end of
such Section:
"(xii) notwithstanding anything to the contrary herein or in Borrower's Organizational
Documents, a Transfer or pledge of an interest in Borrower or any partner or member of
Borrower to a 501(c)(3) nonprofit corporation, or a limited liability company whose sole member
is a 501(c)(3) nonprofit corporation, without the prior written consent of Lender following full
review and underwriting by Lender of the proposed transferee."
2. Section 21(b) of the Instrument is amended by adding the following at the end of
such Section:
"(viii) Provided that (i) Coral Mountain Partners, L.P. owns the Mortgaged Property and
remains the borrower under the Note, (ii) WCH Affordable VIII, LLC, a.
California limited liability company ("Managing General Partner'), as the
managing general partner, and Coral Mountain AGP, LLC, a California limited
liability company ("Administrative General Partner"), as the administrative
general partner, are the only general partners in Borrower and (iii) Hamilton
USBCDC Investments, L.P., a California limited partnership, or its permitted
transferee (the "Equity Investor"), has not less than a 99.9% limited partnership
interest iii Borrower:
(A) the removal by Equity Investor of Administrative General Partner as
administrative general partner of Borrower and its replacement as
administrative general partner by Hamilton Investments LLC or U.S.
Bancorp Community Development Corporation (collectively, "Equity
Investor Sponsor"), or by a wholly -owned affiliate of Equity. Investor
Sponsor, which removal shall be in accordance with the terms of the
limited partnership agreement of Borrower, provided that (i) the entity
replacing the removed Administrative General Partner must be a single
purpose entity, (ii) after such replacement, Managing General Partner
remains as the managing general partner of Borrower, (iii) after such
replacement, Equity Investor Sponsor or the Initial Owners of Equity
Investor Sponsor must own not less than 51 % of the general partnership or
managing membership interests, as applicable, in the entity which
replaced the removed Administrative General Partner and (iv) each
Guarantor shall be replaced as Guarantor by an individual or entity that is
approved by Lender and satisfies Lender's mortgage credit standards for
guarantors; or
iced of Trust B-1 Coral Mountain Apartments
(B)
the removal by Equity Investor of Managing General Partner, as managing
general partner of Borrower and its replacement as managing general
partner by a 501,(c)(3) nonprofit -corporation, Pr_.a limited liability
cowhose sole member ii-a 501(c)(3) nonprofit corporation that is
m an
P Y >
approved by Lender based upon full review and underwriting (i) Lender's
mortgage credit standards for nonprofit principals and (ii) the
requirements for state and local real estate tax abatement; or
(C) As long as no Event of Default has occurred and is continuing: (i) a
Transfer of limited partnership interests of Equity Investor in Borrower to
(A) a wholly -owned affiliate of Equity Investor or a wholly -owned
affiliate of Equity Investor Sponsor, or (B) an entity whose management is
controlled by Equity Investor, by a wholly -owned affiliate of Equity
Investor or by Equity Investor Sponsor, or (ii) so long as Equity Investor
Sponsor remains the sole managing member, sole manager or sole general
partner, as applicable, of Equity Investor, the transfer of non -managing
membership interests or limited partnership interests, as applicable, in
Equity Investor.
Borrower must provide Lender with: (i) advance written notice of the identity of
any entity replacing the Managing General Partner or Administrative General
Partner, as the case may be, or a Guarantor pursuant to this Section 21(b), and (ii)
upon request by Lender from time to time, the names of all owners of interests in
Borrower, whether such interests are owned directly or indirectly."
3. Section 30(a) of the Instrument is amended to add the following at the end of such
Paragraph:
"Lender agrees that, so long as Equity Investor has a continuing ownership interest in Borrower,
effective notice to Borrower under the Loan Documents shall require delivery of a copy of such
notice to Equity Investor. Such notice shall be given in the manner provided in this Section
30(a), at Equity Inventor's address set forth below:
Hamilton USBCDC Investments, L.P.
U.S. Bancorp Community Development Corporation
1307 Washington Avenue, Suite 300
St. Louis, MO 63103
Lender agrees that, notwithstanding its rights to invoke the remedies permitted by Section 43 of
the Instrument, upon the breach of any covenant or agreement by Borrower in the Instrument
(including, but not limited to, the covenants to pay when due sums secured by the Instrument) or
any other Loan Document, Lender :shall not, so long as Equity Investor has a continuing
ownership interest in Borrower, conduct a foreclosure sale of the Mortgaged Property or receive
a deed -in -lieu of foreclosure, until such time as Equity Investor has first been given 30 days
written notice of such default and has failed, within such 30-day period to cure such default;
provided, however, that Lender shall be entitled, during such 30-day period, to continue to
accelerate the Note and to pursue its remedies."
Deed or Trust B-2 Coral Mountain Apartments
4. The following new Sections are added to the Instrument after the last numbered
Section:
-- ' 46-.—'RECOURSE LIABILITY. After' the -Conversion Date, so -long as equity -
Investor has a continuing ownership interest in Borrower, the provisions of Section 9 of the
Note, as they relate to Events of Default described in Section 9(e) of the Note, shall be operative
only after Equity Investor has been given thirty (30) days notice of the applicable Event(s) of
Default described in Section 9(e) of the Note, together with an opportunity within such thirty
(30) day period to remedy the applicable Event(s) of Default. In all events, Lender shall be
entitled during such thirty (30) day period to exercise all of its rights and remedies under this
Instrument upon the occurrence of such Event of Default other than foreclosure of the Mortgaged
Property.
47. EXTENDED LOW-INCOME HOUSING COMMITMENT. Lender agrees
that the lien of this Instrument shall be subordinate to any extended low-income housing
commitment (as such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code) (the
"Extended Use Agreement") recorded against the Mortgaged Property; provided that such
Extended Use Agreement, by its terms, must terminate upon foreclosure under this Instrument or
upon a transfer of the Mortgaged Property by instrument in lieu of foreclosure, in accordance
with Section 42(h)(6)(E) of the Internal Revenue Code.
48. ANNUAL LIHTC REPORTING REQUIREMENTS. Borrower must. submit
to Lender each year at the time of annual submission of Borrower's financial analysis of
operations, a copy of the following sections of Borrower's federal tax return: Internal Revenue
Forms 1065, 8586, 8609 and Form 8609, Schedule A, which must reflect the total low-income
housing tax credits ("LIHTCs") allocated to the Mortgaged Property and the LIHTCs claimed
for the Mortgaged Property in the preceding year.
49. CROSS -DEFAULT. Borrower acknowledges and agrees that (a) any failure by
Borrower or the Project to qualify for low income housing tax credits pursuant to the provisions
of Section 42 of the Internal Revenue Code and (b) any default, event of default, or breach
(however such terms may be defined) after the expiration of any applicable notice and/or cure
periods under the Extended Use Agreement shall be an Event of Default under this Instrument
and that any costs, damages or other amounts, including reasonable attorney's fees incurred by
Lender as a result of such an Event of Default by Borrower, including amounts paid to cure any
default or event of default, under the Extended Use Agreement shall be an obligation of
Borrower and become a part of the Indebtedness secured by this Instrument.
50. ANNUAL COMPLIANCE. Borrower shall submit to Lender on an annual
basis, evidence that the Mortgaged Property is in ongoing compliance with all income,
occupancy and rent restrictions under the Extended Use Agreement relating to the Mortgaged
Property. Such submissions shall be made contemporaneously with Borrower's reports required
to be made to the regulator under the Extended Use Agreement.
Dud of Trust B-3 - Coml Mountain Apartments
51. TAX EXEMPTION OR ABATEMENT.
(a) Borrower r
its and covenants to Lender that the Mortgaged
Abatement") for the "welfare exemption" under Section 214(g) of the California
Revenue and Taxation Code as provided for in subdivision (b) of Section 4 and Section 5
of Article XIII of the California Constitution (the "Program").
(b) Borrower must file or cause to be filed on a timely basis all documentation
necessary to maintain the Tax Abatement.
(c) Borrower must comply or cause compliance fully with all of the Program
requirements in order to obtain and maintain the Tax Abatement.
(d) Borrower shall promptly provide Lender with a copy of any notice
Borrower may receive alleging that Borrower is in breach of the requirements of the
Program or that the Mortgaged Property is not being maintained as required by the
Program.
(e) In any application for a Transfer of the Mortgaged Property, any interest
in the Mortgaged Property or any interest in Borrower, Borrower shall notify Lender if
the completion of such Transfer without the consent of the agency administering the Tax
Abatement would result in the termination of the Tax Abatement.
(f) Borrower shall avail itself of all rights and opportunities to renew or
extend the Tax Abatement.
(g) Borrower shall not voluntarily take or cause to be taken any action that
would threaten the Tax Abatement or cause the Tax Abatement to terminate without the
prior written consent of Lender.
(h) Borrower represents and warrants that:
(1) Borrower has not received any notice indicating that the Tax
Abatement will be terminated or will not be obtained.
(2) Borrower has adhered to any income, rent or other restrictions
imposed by the Tax Abatement.
(i) Each of the following shall constitute an Event of Default:
(1) Any breach of any of the representations and warranties in
Subsection (h).
(2) Any transfer of the Mortgaged Property, any interest in the
Mortgaged Property, or any interest in Borrower that would cause the Tax
Abatement to terminate.
Deed of Trust B4 Coral Mountain Apartments
52. VARIABLE RATE NOTE. The Note is subject to interest rate adjustment from
time to time in accordance with its terms, which terms are incorporated herein by this reference.
__ 53. `==REGi3EATORY'AGREEMENT:"Notwithstandmg anything"in thisinsfrument
to the contrary, the Lender hereby acknowledges and consents to the lien of the Regulatory
Agreement and agrees that, irrespective of the order of recordation or date of effectiveness, the
lien of this Instrument shall be subordinate to the Regulatory Agreement. Borrower
acknowledges and agrees that any default, event of default, or breach (however such terms may
be defined) after the expiration of any applicable notice and/or cure periods under the Regulatory
Agreement shall be an Event of Default under this Instrument and that any costs, damages or
other amounts, including reasonable attorney's fees incurred by the Lender as a result of such an
Event of Default by Borrower, including amounts paid to cure any default or event of default,
under the Regulatory Agreement shall be an obligation of Borrower and become a part of the
Indebtedness secured by this Instrument.
All capitalized terms used in this Exhibit not specifically defined herein shall have the
meanings set forth in the text of the Instrument that precedes this Exhibit.
Deed of Trust - 13-5 1 Coral Mountain Apartments
EXHIBIT C
FINANCING STATEMENT INFORMATION
1. Name and Address of Debtor:
Coral Mountain Partners, L.P.
c/o KD Housing Partners
4199 Campus Drive, Suite 550
Irvine, CA 92612
2. Debtor's State of Organization and Organizational LD.#:
State of Formation:
California
Type of Entity:
limited partnership
Organizational LD.#:
201036400021
3. Name and Address of Secured Party:
California Municipal Finance Authority
2111 Palomar Airport Road, Suite 320
Carlsbad, California 92011
Name and Address of Assignee Secured Party:
Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
4. The Collateral is:
Fixtures (as that term is described in the
Uniform Commercial Code of California
attached to the Land described in
Exhibit A attached to this Instrument.
Deed of Trust C-1 Coral Mountain Apartments
EXHIBIT D
_MODIFICATIONS TO INSTRUMENT -
The following modifications are made to the text of the Instrument that precedes this
Exhibit:
I. The grunting clause on page 1 is deleted in its entirety and the following new
granting clause is inserted in its place:
"Grantine Clause. Borrower, in consideration of the Indebtedness and the trust created
by this Instrument, irrevocably grants, conveys and assigns to Trustee, in trust, with power of
sate, the Mortgaged Property, including the Leasehold Estate in the Land located in Riverside
County, California and described in Exhibit A attached to this Instrument, to have and to hold the
Mortgaged Property unto Trustee, Trustee's successor in trust and Trustee's assigns forever."
2. The definition of Mortgaged Property in Section 1(mm) is amended by deleting
paragraph (I) and inserting the following new paragraph in its place: "(i) the Ground Lease and
the Leasehold Estate;"
3. The definition of Mortgaged Property in Section l (mm)(viii) is amended by
deleting the word "Land" and inserting the words "Leasehold Estate" in its place.
4. Section I is amended by adding the following new paragraphs at the end:
6jj) "Event of Ground Lessor Bankruptcy" means either of the following
actions taken by or with respect to Ground Lessor: (i) Ground Lessor pursuant to or
within the meaning of the United States Bankruptcy Code (x) commences a voluntary
case, or (y) consents to the entry of an order for relief against it in an involuntary case; or
(ii) a court of competent jurisdiction enters an order or decree under the United States
Bankruptcy Code that is for relief against Ground Lessor in an involuntary case.
(kkk) "Ground Lease" means the lease described in Exhibit E pursuant to
which Borrower leases the Land, as such lease may from time to time be amended,
modified, supplemented, renewed and extended.
(111) "Ground Lessee Default" means (i) a default by Borrower in making any
payment of rent, additional rent or other sum of money payable by Borrower to Ground
Lessor under the Ground Lease on the date such payment is due and payable, or (ii) a
default by Borrower in performing or observing any of the terms, covenants or conditions
of the Ground Lease (other than the payments referred to in clause (i)) required to be
performed or observed by Ground Lessee.
(mmm)"Ground Lessor" means the lessor from time to time under the Ground
Lease.
Deed ofTm t D-I Core) Mountain Apenments
(rum) "Ground Lessor Default" means a default by Ground Lessor in
performing or observing any of the terms, covenants or conditions of the Ground Lease
required to be performed or observed by Ground Lessor.
(000) "Ground Rent" means the base or minimum rent payable in fixed
monthly or other periodic installments under the Ground Lease_
(ppp) "Leased Premises" means the Land and any other real property leased by
Borrower pursuant to the Ground Lease.
(qqq) "Leasehold Estate" means Borrower's interest in the Land and any other
real property leased by Borrower pursuant to the Ground Lease, including (i) all rights of
Borrower to renew or extend the term of the Ground Lease, (ii) all amounts deposited by
Borrower with Ground Lessor under the Ground Lease, (iii) Borrower's right or privilege
to terminate, cancel, surrender, modify or amend the Ground Lease, and (iv) all other
options, privileges and rights granted and demised to Borrower under the Ground Lease
and all appurtenances with respect to the Ground Lease."
Section 22(d) is amended in its entirety to read as follows:
"(d) fraud or material misrepresentation or material omission by Borrower or
Guarantor, any of their respective officers, directors, trustees, general partners, managing
members, managers, agents or representatives in connection with (i) the application for
the Loan, (ii) any financial statement, rent roll, or other report or information provided to
Lender during the term of the Indebtedness, (iii) any request for Lender's consent to any
proposed action, including a request for disbursement of funds under any Collateral
Agreement, or (iv) any of the representations and warranties contained in Section 54;"
Section 22 is amended by inserting the following new provision as additional
subsection (t):
"any failure by Borrower to comply with the provisions of Sections 54, 55, 56, 58, 59(b),
60(a) or 61;"
9. The following new Sections are added at the end of the Instrument after the last
numbered Section:
"54. REPRESENTATIONS AND WARRANTIES REGARDING
GROUND LEASE. Borrower Warrants and represents to Lender that, as of the date of
this Instrument: (i) the Ground Lease is in full force and effect in accordance with its
terms; (ii) Borrower has not waived, canceled or surrendered any of its, rights under the
Ground Lease; (iii) Borrower is the sole owner of, and has good and marketable title to,
the Leasehold Estate; (iv) the Leasehold Estate, the Leased Premises and the Mortgaged
Property are free and clear of all liens, encumbrances and other matters affecting title,
other than the lien of this Instrument and the Permitted Encumbrances; (v) there is no
existing Ground Lessee Default and no event has occurred which, with the passage of
time or the giving of notice, or both, would constitute a Ground Lessee Default; and (vi)
to the best of Borrower's knowledge, there is no existing Ground Lessor Default and no
Deed orTmst D-2 Coml Mowttain Apartments
event has occurred which, with the passage of time or the giving of notice, or both, would
constitute a Ground Lessor Default.
- 5&= OT4G--ES-i1NDER�GROUND=LEASE: "Borrower -§hall -deliver =to—==
Lender, within ten (10) days after Borrower's receipt, a true and correct copy of each
notice, demand, complaint or request from Ground Lessor under, or with respect to, the
Ground Lease.
56. BORROWER'S OBLIGATIONS TO COMPLY WITH GROUND
LEASE. Borrower shall (i) pay the Ground Rent and all other sums of money due and
payable at any time and from time to time under the Ground Lease as and when such
sums become due and payable, but in any event before the expiration of any grace period
provided in the Ground Lease for the payment of any such sum, and (ii) at all times fully
perform, observe and comply with all other terms, covenants and conditions of the
Ground Lease to be performed, observed or complied with by Borrower as lessee under
the Ground Lease. If the Ground Lease does not provide for a grace period for the
payment of a.surn of money, Borrower shall make the payment on or before the date on
which the payment becomes due and payable. Borrower shall deliver evidence of the
payment to Lender within ten (10) days after receipt of a written request from Lender for
evidence of the payment.
57. LENDER'S RIGHT TO CURE GROUND LESSEE DEFAULTS. At
any time after Lender receives notice of a Ground Lessee Default, (i) Lender may (but
shall not be obligated to do so), make any payment, perform any obligation and take any
other action Borrower would have the right to pay, perform or take under the Ground
Lease which Lender deems necessary or desirable to cure the Ground Lessee Default, and
(ii) Lender and its authorized agents shall have the right at any time or from time to time
to enter the Land and Improvements, or any part thereof, to such extent and as often as
Lender, in its discretion, deems necessary or desirable in order to cure the Ground Lessee
Default, subject to the rights of the tenants and occupants of the Mortgaged Property.
Lender may exercise its rights under this Section immediately after receipt of notice of a
Ground Lessee Default and without regard to any grace period provided to Borrower in
the Ground Lease to cure the Ground Lessee Default. For purposes of exercising its
rights under this Section, Lender shall be fully protected for any action taken or omitted
to be taken by Lender, in good faith, in reliance on any written notice from Ground
Lessor stating that a Ground Lessee Default has occurred and is continuing even though
Borrower may question or deny the existence or nature of the Ground Lessee Default.
All expenditures made by Lender pursuant to this Section to cure a Ground Lessee
Default shall become an additional part of the Indebtedness as provided in Section 12.
58. COVENANTS TO PROTECT LEASEHOLD ESTATE. Borrower
shall not, without the written consent of Lender (which may be given or withheld by
Lender in its discretion), (i) surrender the Leasehold Estate to Ground Lessor or terminate
or cancel the Ground Lease, (ii) amend, modify or change the Ground Lease, either orally
or in writing, or waive any of Borrower's rights under the Ground Lease, (iii) subordinate
the Ground Lease or the Leasehold Estate to any mortgage, deed of trust or other lien on
Ground Lessor's fee title to the Leased Premises, or (iv) except as otherwise provided in
Deed of Trust D-3 Coral Mountain Apartments
a
Section 59(b), reject or assume the Ground Lease or assign the Leasehold Estate pursuant
to Section 365(h) of the United States Bankruptcy Code. Borrower absolutely and
unconditionally transfers and assigns to -Lender -all of Borrower's rights to surrender,
terminate,- cancel,- modify and=change-t1i�Grontrd-liease, and any such surrender
termination, cancellation, modification or change made without the prior written consent
of Lender shall be void and have no legal effect.
59. GROUND LESSEE'S BANKRUPTCY.
(a) Borrower assigns to Lender, as additional security for the Indebtedness,
Borrower's right to reject the Ground Lease under Section 365 of the United States
Bankruptcy Code after the occurrence of a Bankrupety Event, subject to Section 59(b).
(b) If, after the occurrence of a Bankrupcty Event, Borrower decides to reject
the Ground Lease, Borrower shall give Lender written notice, at least ten (10) days in
advance, of the date on which Borrower intends to apply to the Bankruptcy Court for
authority and permission to reject the Ground Lease. Lender shall have the right, but not
the obligation, within ten (10) days after receipt of Borrower's notice, to deliver to
Borrower a notice ("Lender's Assumption Notice") in which (i) Lender demands that
Borrower assume the Ground Lease and assign the Ground Lease to Lender, or its
designee, in accordance with the United States Bankruptcy Code, and (ii) Lender agrees
to cure or provide adequate assurance of prompt cure of all Ground Lessee Defaults
reasonably susceptible of being cured by Lender and of future performance under the
Ground Lease. If Lender timely delivers Lender's Assumption Notice to Borrower,
Borrower shall not reject the Ground Lease and shall, within fifteen (15) days after
receipt of Lender's notice, comply with the demand contained in clause (i) of Lender's
notice. If Lender does not timely deliver Lender's Assumption Notice to Borrower,
Borrower shall have the right to reject the Ground Lease,
60. GROUND LESSOR'S BANKRUPTCY.
(a) If, after the occurrence of an Event of Ground Lessor Bankruptcy, Ground
Lessor rejects the Ground Lease pursuant to Section 365(h) of the United States
Bankruptcy Code (i) Borrower, immediately after obtaining notice of the rejection, shall
deliver a copy of the notice to Lender, (ii) Borrower shall not, without Lender's prior
written consent (which may be given or withheld in Lender's discretion), elect to treat the
Ground Lease as terminated pursuant to Section 365(h) or any other applicable provision
of the United States Bankruptcy Code, and (iii) this Instrument and the lien created by
this Instrument shall extend to and encumber Borrower's retained rights under the
Ground Lease that are appurtenant to the Leased Premises for the balance of the term of
the Ground Lease and for any renewal or extension of those rights under the Ground
Lease. Borrower transfers and assigns to Lender, as additional security for the
Indebtedness, Borrower's rights, after Ground Lessor's rejection of the Ground Lease, to
treat the Ground Lease as terminated, and any termination of the Ground Lease made by
Borrower without Lender's prior written consent shall be void and have no legal effect.
Deed of Trust D-'I Coral Mountain Apartments
O
(b) Borrower transfers and assigns to Lender, as additional security for the
Indebtedness, all of Borrower's rights to damages caused by Ground Lessor's rejection of
the Ground Lease after the occurrence of an Event of Ground Lessor Bankruptcy and all
As long as no Event of Default has occurred and is continuing, Lender agrees that it will
not enforce its rights under the preceding sentence, but will permit Borrower to exercise
such rights with Lender's prior written consent. Any amounts received by Lender as
damages arising out of Ground Lessor's rejection of the Ground Lease shall be applied in
the manner set forth in Section 9.
61. OPTION TO RENEW OR EXTEND GROUND LEASE. Borrower
shall give Lender written notice of Borrower's intention to exercise each option to renew
or extend the term of the Ground Lease at least ninety (90) days, but not more than one
hundred fifty (150) days, before the last day on which the option may be timely
exercised. If Borrower intends to renew or extend the term of the Ground Lease, it shall
deliver to Lender, together with the notice of such decision, a copy of the notice of
renewal or extension it delivers to Ground, Lessor. If Borrower does not intend to renew
or extend the term of the Ground Lease or, if Borrower fails to deliver its written notice
of exercise of its option to renew or extend the term of the Ground Lease at least ninety
(90) days before the last day on which the option may be timely exercised, Lender shall
have the right, but shall not be obligated, to renew or extend the tern of the Ground
Lease for and on behalf of Borrower.
62. NO MERGER OF ESTATES. To the extent applicable, if Borrower
acquires the fee estate of Ground Lessor under the Ground Lease (the "Fee Estate") (i)
there shall be no merger between the Fee Estate and the Leasehold Estate unless all
persons, including Lender, having an interest in the Ground Lease consent in writing to
the merger, and (ii) simultaneously with Borrower's acquisition of the Fee Estate, the lien
of this Instrument shall automatically, without the necessity of any further conveyance,
be spread to cover the Fee Estate and as so spread shall be prior to the lien of any
mortgage, deed of trust or other lien placed on the Fee Estate after the date of this
Instrument. Promptly after Borrower's acquisition of the Fee Estate, Borrower, at its sole
cost and expense, including payment of Lender's attorneys' fees and out-of-pocket
disbursements, shall execute and deliver all documents and instruments necessary to
subject the Fee Estate to the lien of this Instrument, and shall provide to Lender a title
insurance policy insuring the lien of this Instrument as a first lien on the Fee Estate and
the Leasehold Estate. If Lender acquires the Fee Estate and the Leasehold Estate
(whether pursuant to the provisions of the Ground Lease, by foreclosure of this
Instrument, or otherwise), the Fee Estate and the Leasehold Estate shall not merge as a
result of such acquisition and shall remain separate and distinct for all purposes after such
acquisition unless and until Lender shall elect to merge the Fee Estate and the Leasehold
Estate.
63. NEW LEASE_ If (i) the Ground Lease is canceled or terminated for any
reason before the natural expiration of its term, and (ii) Lender (or its designee) obtains
from Ground Lessor a new lease in accordance with the term of the Ground Lease,
Dad of Trust D-5 Coral Mountain Apartments
Borrower shall have no right, title or interest in and to the new lease or the leasehold
estate created by the new lease.
_ ___-----_ - - -64;�A .PO.1N--I!M-ENT-0= T=liENDER-AS-BORRO-W-ER'S=A-T_TOR-NE-Y-IN-
FACT. Borrower makes, constitutes and appoints Lender as Borrower's attorney -in -fact,
in Borrowers name, place and stead, with full power of substitution, to take all actions
and to sign all documents and instruments which Lender, in its discretion, considers to be
necessary or desirable to (i) prevent or cure a Ground Lessee Default pursuant to Section
57, (ii) perform or carry out any of Borrowers covenants under Section 56, (iii) renew or
extend the term of the Ground Lease pursuant to Section 61, (iv) appoint arbitrators and
conduct arbitration proceedings pursuant to the Ground Lease, and (v) request and obtain
estoppel certificates from Ground Lessor pursuant to the Ground Lease. Borrower gives
and grants to Lender, as Borrower's attorney -in -fact, full power and authority to do and
perform every act and sign every document and instrument necessary and proper to be
done in the exercise of the foregoing power as fully as Borrower might or could do, and
Borrower hereby ratifies and confirms all acts that Lender, as Borrower's attorney -in -
fact, shall lawfully do or cause to be done by virtue of this power of attorney. This power
of attorney_ being coupled with an interest, shall be irrevocable as long as any of the
Indebtedness remains unpaid."
8. All capitalized terms used in this Exhibit not specifically defined herein shall have
the meanings set forth in the text of the Instrument that precedes this Exhibit.
BORROWER'S INITIALS:
"—
[Jecdol I rust D-6 Coml Mountain Apartments
EXHIBIT E
DESCRIPTION OF GROUND LEASE
Ground Lease dated as of August 29, 2012, by and between the La Quinta Housing
Authority, a public body, corporate and politic, as landlord, and Coral Mountain Partners, L.P., a
California limited partnership, as tenant, a memorandum of which will be recorded in the
Official Records of Riverside County, California contemporaneously herewith.
Deed orTorsi - E-I Coral Mountain Apartments
Recorded at the Request of
Old Republic Title Company
Oakland'll�t
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
-- -- Citibank. N;A.-
Transaction Management Group/Post Closing
390 Greenwich Street, 2nd Floor
New York, New York 10013
Attention: Joanne Marcino
Citi # 10-7044852
CERTIFIED A TRUE COPY OF THE ORIGINAL
RECORDED IN THE OFFICIAL RECORDS OF
RIVERSIDE COUNTY ON August 28, 2012
Under Record is Serial No. 2012-0412613
Old Re ubli itle Company
By:
ASSIGNMENT OF DEED OF TRUST
AND LOAN DOCUMENTS
KNOW ALL PERSONS BY THESE PRESENTS:
CALIFORNIA MUNICIPAL FINANCE AUTHORITY, a joint exercise of powers
authority duly organized and existing under the laws of the State of California ("Assignor"),
pursuant to that certain Funding Loan Agreement between Assignor and CITIBANK, N.A., a
national banking association ("Assignee"), for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, does by these presents assign, without recourse, to
Assignee all of Assignor's right, title and interest in and to, subject to the Unassigned Rights (as
defined in that certain Funding Loan Agreement dated as of the date hereof by and between
Assignor and Assignee), the instruments ("Assigned Instruments") described on Schedule 1
attached hereto.
TOGETHER with the Note described in the Assigned Instruments, and the money due
and to become due thereon, with the interest thereon, TO HAVE AND TO HOLD the same unto
the said Assignee forever, subject only to all the provisions contained therein, AND the said
Assignor hereby constitutes and appoints the Assignee as the Assignor's true and lawful
attorney, irrevocable in law or in equity, in the Assignor's name, place and stead, but at
Assignee's cost and expense, to have, use and take all lawful ways and means for the recovery of
all of the said money and interest; and in case of payment, to discharge the same as fully as the
Assignor might or could if these presents were not made.
Overriding Limitations. In no event shall Assignor:
(i) prosecute its action to a lien on the Project, as defined in that certain Borrower
Loan Agreement by and between Coral Mountain Partners, L.P_, a California limited partnership
("Borrower") and Assignor (the "Borrower Loan Agreement"); or
(ii) take any action which may have the effect, directly or indirectly, of impairing the
ability of Borrower to timely pay the principal of, interest on, or other amounts due under, the
Borrower Loan or of causing Borrower to file a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of Borrower under any applicable liquidation,
11728556-0
insolvency, bankruptcy, rehabilitation, composition, reorganization, conservation or other similar
law in effect now or in the future; or
--
(ni) interfere -with -the exercise.byAssignee or Servrcer of any of their rights under, the
Borrower Loan Documents upon the occurrence of an event of default by Borrower under the
Borrower Loan Documents; or
(iv) take any action to accelerate or otherwise enforce payment or seek other remedies
with respect to the Borrower Loan.
Definitions. All capitalized terms that are used and are not defined herein shall have the
respective meanings ascribed to them in the Borrower Loan Agreement. In all references herein
to any parties, persons, entities or corporations the use of any particular gender on the plural or
singular number is intended to include the appropriate gender or number as the text of the within
instrument may require.
Dated as of the I st day of August, 2012 (the foregoing date is for reference purposes only
and this Assignment shall not be effective until the Closing Date, as defined by the Borrower
Loan Agreement).
[signature page follows]
Assignment of Deed of Trust - 2 Coral Mountain Apartments
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Assignment of Deed of Trust and Loan Documents or caused this Assignment of Deed of Trust
:.. , ...
' and Loan Documehts`to'be duly executed`ai8 delivered by its authorized representative"as of the
date first set forth above.
ASSIGNOR:
CALIFORNIA MUNICIPAL FINANCE
AUTHORITY
Member, RAo d of Directors
\w a..t C, bt'AOn (..tom
Assignment of Deed of Trust _ - $-1 Coral Mountain Apartments _
On August 10, 2012 before me, Consuelo'M. Lapa.z
Notary Public, personally appeared Jonathan Gordon Lee who proved to me on
the basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/ber signature on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official sea].
CONSUELO M.LOPEI
Commission A' 1955155
8 e
Notary Public - California_ Los Angeles County
My Comm Expites Oct 31, 2615+
(Official Seal)
V 1/
SignjtuSallotary is
0 OA " October 31
My commission expires on 2015
Notary Page of CMFA to Assignment of Deed of Trust and t.oanDocuments —Multifamily Housing Revenue Note (Coral
Mountain Apartments) 2012 series A
SCHEDULEI
TO
ASSIGNMENT OF DEED OF TRUST
AND'LOANDOCUMENTS
ASSIGNEE:
Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
ASSIGNED INSTRUMENTS:
1. Multifamily Note by Coral Mountain Partners, L.P., a California limited partnership
("Borrower"), to Assignor, dated as of the Closing Date, in the original principal amount
of up to $24,400,000.
2........ _._Multifamily..Leasehold_Deed .of -Trust. Assignment of Rents, Security _Agreement and --
Fixture Filingdated as of the date hereof executed by Borrower for the benefit of
Assignor securing the principal amount of up to $24,400,000, which is being recorded
immediately prior hereto in the Recorder's Office of Riverside County, California, and
encumbers the real property (and improvements thereon) that is more particularly
described on Exhibit A.
Assignment orDeed orTrust - - Sch. 1-1 Coral Mountain Apartments
EXHIBIT A
LEGAL DESCRIPTION
Leasehold estate as created by that certain Ground Lease dated August , 2012, made by and
between La Quinta Housing Authority, a public body, corporate and politic, as lessor, and Coral
Mountain Partners, L.P., a California limited partnership, as lessee, for the term of 55 years and
upon the terms and conditions contained in said lease and subject to provision conta n d in the
lease which limit the right of possession, a Memorandum thereof recorded -tut 7
2012, Instrument No. 2012- Lyl in and to the following:
In the City of La Quinta, County of Riverside, State of California, that portion of the West half
of the East half and the East half of the West half of the Northwest quarter of the Southeast
quarter of Section 29, Township 5 South, Range 7 East, San Bernardino Base and Meridian,
more particularly described as follows:
Commencing at the East quarter comer of said Section 29; thence South 89" 39' 16".West along
the North line of said Southeast quarter, a distance of 1,656.57 feet to the Northeast corner of
said West half of the East half of the Northwest quarter of the Southeast quarter of Section 29;
thence South 00' 08' 10" East along the East line of'said West half of the East half of the
Northwest quarter of the Southeast quarter Section 29, a distance of 60.93 feet to the South right-
of-way line of Highway II I as granted to the City of La Quinta per Instrument No. 2007-
0076267 recorded February 1, 2007 and re -recorded February 14, 2007 as Instrument No. 2007-
0103255, O.R.;
Thence continuing South 00' 08' 10" East along said East line a distance of 626.13 feet to the
beginning of a non -tangent curve, concave Northerly, having a radius of 300.00 feet, a radial line
to said point bears South 0V 53' 43" West, and the true point of beginning;
Thence leaving said East line and Westerly along the are of said curve, through a central angle of
16' 09' 07", an arc distance of 84.57 feet to the.beginning of a reverse curve concave Southerly,
having a radius of 300.00 feet, a, radial line to said point bears North 18° 02' 50" East; thence
Westerly along the arc of said curve through a central angle of 18' 02' 50", an arc distance of
94.50 feet; thence North 90° 00' 00" West a distance of 264.78 feet to the beginning of a tangent
curve, concave Southeasterly, having a radius of 200.00 feet;
Thence Southwesterly along the arc of said curve, through a central angle of 90a 09' 34", an arc
distance of 314.72 feet; thence non -tangent to said curve South 89' 50' 26" West, a distance of
21.18 feet to the West line of said East half of the West half of the Northwest quarter of the
Southeast quarter of Section 29; thence South 00' 09' 34" East along said West line, a distance
of 500.13 feet to the South line of said Northwest quarter of the Southeast quarter of Section 29;
thence South 890 48' 22" East along said South line a distance of 662.14 feet to said East line of
the West half of the East half of the Northwest quarter of the Southeast quarter of Section 29;
thence North 000 18' 10" West along said East line, a distance of 673.63 feet to the true point of
beginning.
Assignment of Decd of Trust A -I Coral Mountain Apartments
Said land is also shown as Parcel 2 of Lot line Adjustment No. 2010-508 as Disclosed by Grant
Deed recorded December 2, 2010, as Instrument No. 2010-575516, of Official Records.
APN: 600-020-054
Assignment of Deed of Trust A-2 Coral Mountain Apartments
ESTOPPEL CERTIFICATE
(Disposition and Development Agreement)
THIS ESTOPPEL CERTIFICATE (the "Certificate") is made as of August 1, 2012, by
La Quinta Housing Authority, a public body, corporate and politic organized under the laws of
the State of California (the "Authority"), in favor of Coral Mountain Partners, L.P., a California
limited partnership (the "Partnership").
Background Information
A. The former La Quinta Redevelopment Agency (the "Agency") and the Partnership
entered into that certain Disposition and Development Agreement dated as of January 4, 2011
(the "DDA") providing for the lease of certain real property and the development of an
affordable housing project southeast of the intersection of Dune Palms Road and Highway 111,
in the City of La Quinta, County of Riverside, State of California (the "Project").
B. On June 28, 2011, the Governor signed Assembly Bill 26 ("ABxl 26") from the
2011-2012 First Extraordinary Session of the California legislature suspending all redevelopment
agency activities, except continued performance of "enforceable obligations" and set forth a
process to dissolve redevelopment agencies. The constitutionality of ABx 126 was subsequently
upheld in California Redevelopment Assn. v. Matosantos (2011) 53 Ca1.4t' 231 ("CRA Case").
Under the CRA Case, all redevelopment agencies in California dissolved on February 1, 2012,
including the Agency. Pursuant to Health and Safety Code section 341710), added by Part 1.85
of Division 24 ("Part 1.85"), and La Quinta City Council Resolution No. 2012-002, the City of
La Quinta ("City") is the "successor agency" to the Agency. Pursuant to Health and Safety Code
section 34175(b), added by Part 1.85, all assets, contracts, and properties of the Agency,
including the real property that is the subject of the DDA (the "Property"), were transferred to
the control of the City, as the successor agency to the Agency, on February 1, 2012. Pursuant to
Health and Safety Code Section 34176(b)(2), added by Part 1.85, and Authority Resolution No.
2012-002, the Authority became the "housing successor" to the Agency.
C. The DDA is a housing asset and function of the former Agency and pursuant to
Health and Safety Code Section 34176(b)(2), added by Part 1.85, all rights, powers, assets,
duties and obligations associated therewith were to be transferred to the Authority.
D. Pursuant to Health and Safety Code Section 34177(g), on March 7, 2012, the City, in
its capacity as the successor agency to the former Agency, (i) assigned all of the City's right, title
and interest in and to the DDA to the Authority, pursuant to that certain Assignment and
Assumption Agreement entered into by and between the City, as assignor, and the Authority, as
assignee, and (ii) transferred all of its interests in and to the Property to the Authority.
E. The Authority will be making a loan in the original principal amount of $29,000,000
to the Partnership pursuant to the terms of the DDA (the "Authority Loan").
F. The Authority and the Partnership now wish to clarify, modify and affirm certain
terms and provisions of the DDA as they relate to the Project. All capitalized terms not
expressly defined herein shall have the meaning ascribed to them in the DDA.
14141312 v4
Provisions
NOW, THEREFORE, the Authority hereby certifies, warrants, represents and agrees to
the foregoing and as follows, as of the date and year heretofore written:
Section 1. The Authority has succeeded to all right, title and interest of the Agency in the
DDA and agreed to discharge, perform or cause to be performed and to be bound by all of the
duties, obligations, terms and conditions imposed on the Agency in connection with the DDA, as
if the Authority had been the original party thereto.
Section 2. Citibank, N.A. is approved as the Construction Lender. Citibank, N.A. is also
approved as the first mortgage permanent lender. The Authority is approved as the subordinate
lender and the Project Financing is approved. The Project Financing Disbursement Agreement is
also approved.
Section 3. Hamilton USBCDC Investments, L.P. is approved as the Investor. U.S.
Bancorp Community Development Corporation is approved as the limited partner of the Investor
("USBCDC").
Section 4. The Escrow Holder has changed from Nations Title Company to Old Republic
and the new Escrow Holder is approved.
Section 5. The Final Construction Documents have been approved including, without
limitation, the plans and specifications for the Project.
Section 6. The Housing Development Architect is approved.
Section 7. The Permitted Encumbrances are approved including those exceptions to title
appearing on Schedule B of the Developer Title Policy.
Section 8. The Public Improvements Contract has been approved. The Public
Improvements Contractor is Optimus Construction, Inc and it is approved.
Section 9. The Due Diligence Period has expired.
Section 10. The Project Budget and the Final Project Budget have been approved.
Section 11. Notwithstanding the terms and provisions of Section 6.2(c), (d) and (e) of
the DDA, the Authority Loan shall be disbursed in accordance with the terms of that certain
Disbursement Agreement by and among Citibank, N.A., the Authority and the Partnership dated
as of August 1, 2012.
Section 12. The Authority waives its right under Sections 6.9 and 7.5 of the
Agreement to terminate the Agreement.
Section 13. The Developer Fee in the amount of $2,500,000 is approved.
Section 14. Upon execution of the Ground Lease by the Authority, the conditions set
forth in Section 7.2 of the DDA will be deemed satisfied or waived.
14141312 v4
Ma
15016905W-2
Section 15. Notwithstanding the terms and provisions of Section 12.3 of the DDA, no
final decision has been made to develop the Adjacent Property for use as an automobile
dealership.
Section 16. Any notice sent to the Partnership by the Authority pursuant to the DDA
or other Authority documents shall be simultaneously sent to Investor at Hamilton USBCDC
Investments, L.P. at 1640 South Sepulveda Blvd., Suite 425, Los Angeles, CA 90025, with
copies to U.S. Bancorp Community Development Corporation, 1307 W. Washington Avenue,
Suite 300, St. Louis, Missouri 63103 Attention: Asset Management and to Jana Cohen Barbe,
SNR Denton US LLP, 233 W. Wacker Drive, Suite 7800, Chicago, IL 60606. Investor and
USBCDC shall be entitled to all cure rights afforded the Partnership under the DDA and either
may tender a cure on behalf of the Partnership, as though it were a party to the DDA.
Section 17. Under Section 15.1 of the DDA, Authority shall approve or disapprove a
replacement general partner within 15 business days of written request for such approval.
Section 18. Authority has not given any notice of default to the Partnership pursuant to
the DDA, and to Authority's actual knowledge, without duty of inquiry or investigation, (i) the
Partnership is not in default under any of the terms or provisions of the DDA, and (ii) no
circumstance, event or fact has occurred that, with the giving of notice or passage of time or
both, would constitute a default by the Partnership under the DDA. The DDA is in full force and
effect.
Section 19. Authority hereby confirms that the portion of the Authority Loan funds
that will be used to fund a contingency line item (the "Contingency Line Item") in the Project's
construction budget may be used to fund the following: development cost overruns; any
payments of principal or interest required to reduce the principal amount of the Construction
Loan to an amount necessary to effectuate conversion of the Construction Loan to permanent
status; and to fund any Project development deficits resulting from a reduction in Investor equity
pursuant to a tax credit basis adjuster calculation in accordance with the terms of the Partnership
Agreement. Notwithstanding the foregoing, the Contingency Line Item funds shall be disbursed
in accordance with the terms of the Authority Loan documents and the Construction Loan
documents, and any funds remaining in the Contingency Line Item after the Partnership's receipt
of its third capital contribution from the Investor after delivery to the Investor of the Form 8609
shall be returned to the Authority as Cost Savings in accordance with Section 6.11 of the DDA,
which return of Costs Savings constitutes a partial repayment of the Authority Loan.
Section 20. This Certificate is for the benefit of the Partnership, the Investor and
USBCDC, and their respective successors and assigns, and the Authority and its respective
successors and assigns are bound by all matters contained herein.
Section 21. This Certificate may be executed in counterparts, each of which when
taken together shall constitute one and the same instrument.
14141312 v4
-3-
15016975\V.2
IN WITNESS WHEREOF, the Authority has caused this Certificate to be executed as of
the day and year first above written.
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
(H053%7A
41413MVJ
1501697AV-2
IN WITNESS WHEREOF, the Authority has caused this Certificate to be executed as of
the day and year first above written.
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
Date: 2012 By:
Its: Executive Director
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
u ority Counsel
IN0053969.1 )
14141312\V-3
15016975\V-2
COMPLETION GUARANTY
This COMPLETION GUARANTY (this "Guaranty") is entered into as of the I' day
of August, 2012, by JOHN DURSO, an individual, and MICHAEL J. SHOYLIN, an
individual ("Guarantor", whether one or more), for the benefit of the LA QUINTA HOUSING
AUTHORITY, a public body, corporate and politic ("Authority"). The date of this Guaranty as
set forth above is for reference purposes only, and this Guaranty will not be effective and binding
until the Closing Date (as defined by the DDA).
RECITALS:
A. Coral Mountain Partners, L.P., a California limited partnership ("Borrower") and
the former La Quinta Redevelopment Agency ("Agency") entered into that certain Disposition
and Development Agreement concerning Developer's construction of the Project at the Property
(the "DDA").
B. Pursuant to Assembly Bill 26 from the 2011-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2011("ABx1 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was filed, challenging the constitutionality of ABxI 26
and companion bill ABxl 27 (which would have allowed redevelopment agencies to remain in
existence and continue redevelopment, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality of ABxl 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxl 27.
(California Redevelopment Assn. v. Matosantos (2012) 53 CalAth 231. ABxI 26 is chapter 5,
Statutes 2012, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of the Health and Safety Code.
Pursuant to Health and Safety Code Section 341710), added by Part 1.85, the City of La Quinta
("City") is the "successor agency" to the Agency. On January 3, 2012, the La Quinta City
Council adopted Resolution No. 2012-002, pursuant to which the City elected (a) to be the
"successor agency" to the Agency, and (b) to have the Authority be the "housing successor" to
the Agency. On January 17, 2012, the Authority adopted HA Resolution No. 2012-002,
affirmatively electing to be the "housing successor" to the Agency.
C. Pursuant to Health and Safety Code section 34175(b), added by Part 1.85, all
assets, contracts, and properties of the Agency, including the Property, were transferred to the
control of the City, as the successor agency to the Agency, on February 1, 2012. The Property is
a housing asset of the former Agency, the DDA is an obligation of the former Agency associated
with the housing activities of the former Agency, and administration of the DDA is a housing
activity of the former Agency. Pursuant to Health and Safety Code Section 34177(g), added by
Part 1.85, on March 7, 2012, the City, in its capacity as the successor agency to the former
Agency, (i) assigned all of the City's right, title and interest in and to the DDA to the Authority,
pursuant to that certain Assignment and Assumption Agreement entered into by and between the
City, as assignor, and the Authority, as assignee, and (ii) transferred all of its interests in and to
the Property to the Authority.
E. The DDA provides, among other things, that Authority will provide Borrower
with a loan in the original principle amount of Twenty Nine Million Dollars ($29,000,000) (the
"Authority Loan") for the acquisition, construction, development, equipping and operation of the
Project.
F. The Authority Loan is evidenced by certain documents including, but not limited
to, that certain Amended and Restated Authority Loan Promissory Note dated as of August 29,
2012 in the maximum principal amount of $29,000,000 made by Borrower payable to the order
of Authority (the "Note") and the DDA.
G. The Authority Loan is secured by, among other things, that certain Leasehold
Deed of Trust with Assignment of Rents dated as of August 29 2012 executed by Borrower for
the benefit of Authority (the "Security Instrument"; together with the Note, the DDA and all
other documents executed in connection with the Authority Loan, including this Guaranty, the
"Authority Loan Documents"), which Security Instrument encumbers the Property.
H. As a condition to the making of the Authority Loan, Authority requires that
Guarantor execute this Guaranty.
I. Guarantor will directly or indirectly derive a material financial benefit from the
making of the Authority Loan.
NOW, THEREFORE, in order to induce Authority to make the Authority Loan to
Borrower, and in consideration thereof, Guarantor agrees as follows:
1. Defined Terms. Capitalized terms used but not defined in this Guaranty shall
have the meanings assigned to them in the Security Instrument or the DDA.
2. Scope of Guaranty. Guarantor represents to Authority that Guarantor has a
direct or indirect ownership in Borrower and/or will otherwise derive a material financial benefit
from the making of the Authority Loan. Guarantor hereby does jointly, severally and
unconditionally guaranty to Authority the following (collectively, the "Guaranteed
Obligations"):
(a) that Borrower will complete all construction, rehabilitation and/or repairs
to the Project (collectively, the "Work") in all respects within the time period set forth in
the Schedule of Performance, in substantial accordance with any construction plans
approved by the Authority in accordance with the DDA, and the Project Budget (subject
to any changes thereto permitted by the DDA);
(b) that in the event that the sum of the proceeds of the Construction Loan and
the Authority Loan available for disbursement, the equity contributions, and the net cash
flow available from the Project are, or at any time become, in the reasonable judgment of
Authority, insufficient to pay all costs of acquisition of the Property and for the
completion of the Work in accordance with the DDA, then Borrower will pay the costs of
such Work;
2
(c) that Borrower will pay and discharge, or otherwise release, all mechanic's
and materialmen's liens or claims therefor imposed or alleged against the Property to the
end that there shall be no mechanic's, materialmen's or other like liens or claims
outstanding against the Property; and
(d) that Borrower shall cause the Work at all times to comply with all
applicable existing building, zoning, use and environmental protection laws and
ordinances as may be necessary to enable the use and occupancy of the Property for its
intended purposes.
If Borrower shall fail to duly and punctually perform and observe any of the Guaranteed
Obligations, then Guarantor forthwith upon demand by Authority or its designee will themselves,
at their own expense, do, promptly perform and observe such Guaranteed Obligations. In the
case of any payment to be made by Guarantor, such payment shall be made within fifteen (15)
business days following demand therefor.
Notwithstanding anything to the contrary contained herein, as a condition precedent to
the obligations of Guarantor to perform and complete the Work, Authority shall approve
advances to Guarantor of undisbursed portions of the Authority Loan and the release of reserves
held by Authority, if any, subject to the terms and conditions of the Authority Loan Documents,
provided that Guarantor shall have cured any default by Borrower and satisfied the conditions for
the advance of such funds under the Authority Loan Documents (other than the conditions
relating to the financial condition or corporate status of Borrower), including any failure of the
Authority Loan to be "in balance", and with respect to any default related to the construction
and/or completion of the Work, Guarantor shall have diligently commenced to cure such default
and, after such cure or commencement of cure, as the case may be, Guarantor shall diligently
continue to perform all obligations assumed by Guarantor under this Guaranty up to the time of
the lien -free completion of the Work.
3. Guarantor's Obheations Survive Foreclosure. The obligations of Guarantor
under this Guaranty shall survive any foreclosure proceeding, any foreclosure sale, any delivery
of any deed in lieu of foreclosure, and any release of record of the Security Instrument or the
other Authority Loan Documents.
4. Guaranty of Payment and Performance. Guarantor's obligations under this
Guaranty constitute an unconditional and continuing guaranty of payment and performance and
not merely a guaranty of collection. Guarantor hereby irrevocably and unconditionally
covenants and agrees that Guarantor is liable for the Guaranteed Obligations as a primary
obligor. The Guaranteed Obligations and this Guaranty are separate, distinct and in addition to
any liability and/or obligations that Borrower or Guarantor may have under any other guaranty or
indemnity executed by Borrower or Guarantor, if any, in connection with the Authority Loan,
and no other agreement, guaranty or indemnity executed in connection with the Authority Loan
shall act to reduce or set off any of Guarantor's liability hereunder.
5. Unconditional Guaranty. The obligations of Guarantor under this Guaranty
shall be performed without demand by Authority and shall be unconditional irrespective of the
genuineness, validity, regularity or enforceability, in whole or in part, of the Guaranteed
Obligations, the Note, the Security Instrument or any other Authority Loan Document, and
without regard to any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety, a guarantor, a borrower or a mortgagor. Guarantor hereby waives the
benefit of all principles or provisions of law, statutory or otherwise, which are or might be in
conflict with the terms of this Guaranty and agrees that Guarantor's obligations shall not be
affected by any circumstances, whether or not referred to in this Guaranty, which might
otherwise constitute a legal or equitable discharge of a surety, a guarantor, a borrower or a
mortgagor. Guarantor hereby waives the benefits of any right of discharge under any and all
statutes or other laws relating to a guarantor, a surety, a borrower or a mortgagor, and any other
rights of a guarantor, a surety, a borrower or a mortgagor, thereunder. Without limiting the
generality of the foregoing, Guarantor hereby waives, to the fullest extent permitted by law,
diligence in collecting the Authority Loan, presentment, demand for payment, protest, all notices
with respect to the Note and this Guaranty which may be required by statute, rule of law or
otherwise to preserve Authority' rights against Guarantor under this Guaranty, including, but not
limited to, notice of acceptance, notice of any amendment of the Authority Loan Documents,
notice of the occurrence of any default or Event of Default under the terms of the Authority Loan
Documents, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of
foreclosure, notice of protest, and notice of the incurring by Borrower of any obligation or
indebtedness. Guarantor also waives, to the fullest extent permitted by law, all rights to require
Authority to (a) proceed against Borrower, (b) if Borrower is a partnership, proceed against any
general partner of Borrower, (c) proceed against or exhaust any collateral held by Authority to
secure the repayment of the Authority Loan, (d) pursue any other remedy it may now or hereafter
have against Borrower, or, if Borrower is a partnership, any general partner of Borrower or (e)
record the Security Instrument or to file any financing statement or to otherwise enforce, perfect,
protect, secure or insure any lien or security interest given as security in connection with the
Security Instrument. Guarantor further waives, to the fullest extent permitted by applicable law,
(a) any right to revoke this Guaranty as to any future advances under the Security Instrument or
the other Authority Loan Documents, (b) any defenses that could arise with respect to an
amendment or modification of the Guaranteed Obligations by operation of law, action of any
court or the amendment of any of the Authority Loan Documents, (c) any defense that Authority
have waived any Guaranteed Obligation by failing to enforce any right or remedy hereunder, or
to promptly enforce any such right or remedy and (d) any other event or circumstance that may
constitute a defense of Borrower or Guarantor to payment of the Guaranteed Obligations.
6. Modification of Authority Loan Documents. At any time or from time to time
and any number of times, without notice to Guarantor and without affecting the liability of
Guarantor, (a) the time for payment of the principal of or interest on the Authority Loan may be
extended or the Authority Loan may be renewed in whole or in part; (b) the time for Borrower's
performance of or compliance with any covenant or agreement contained in the Note, the
Security Instrument or any other Authority Loan Document, whether presently existing or
hereinafter entered into, may be extended or such performance or compliance may be waived; (c)
the maturity of the Authority Loan may be accelerated as provided in the Note, the Security
Instrument, or any other Authority Loan Document; (d) the Note, the Security Instrument, or any
other Authority Loan Document may be modified or amended by Authority and Borrower in any
respect, including, but not limited to, an increase in the principal amount; and (e) any security for
the Authority Loan may be modified, exchanged, surrendered or otherwise dealt with or
additional security may be pledged or mortgaged for the Authority Loan.
13
7. Joint and Several Liability. If more than one person executes this Guaranty, the
obligations of those persons under this Guaranty shall be joint and several. Authority, in their
sole and absolute discretion, may (a) bring suit against Guarantor, or any one or more of the
persons constituting Guarantor jointly and severally, or against any one or more of them; (b)
compromise or settle with any one or more of the persons constituting Guarantor for such
consideration as Authority may deem proper; (c) release one or more of the persons constituting
Guarantor from liability; and/or (d) otherwise deal with Guarantor in any manner, and no such
action shall impair the rights of Authority to collect from Guarantor any amount guaranteed by
Guarantor under this Guaranty.
8. Subordination of Borrower's Indebtedness to Guarantor. Any indebtedness
of Borrower held by Guarantor now or in the future is and shall be subordinated to the Authority
Loan. After the occurrence and during the continuance of an Event of Default under the terms of
the Authority Loan Documents or the occurrence and during the continuance of an event which
would, with the giving of notice or the passage of time, or both, constitute an Event of Default
under the terms of the Authority Loan Documents, Guarantor shall not receive or collect, directly
or indirectly, from Borrower or any other party any amount of such indebtedness until the
Guaranteed Obligations are paid in full. To the extent that Guarantor receives payment of any of
the indebtedness of Borrower in violation of the preceding sentence, the same shall be collected,
enforced and received by Guarantor, as trustee for Authority, but without reducing or affecting in
any manner the liability of Guarantor under the other provisions of this Guaranty.
9. Waiver of Subrogation. Guarantor agrees to withhold the exercise of any and all
subrogation and reimbursement rights against Borrower, against any other person, and against
any collateral or security for the Authority Loan and Guarantor shall have no right of, and hereby
waives any claim for, subrogation or reimbursement against Borrower or any managing member
or general partner of Borrower by reason of any payment by Guarantor under this Guaranty,
whether such right or claim arises at law or in equity or under any contract or statute, until (i) the
Authority Loan has been indefeasibly paid and satisfied in full, (ii) all obligations owed to
Authority have been fully performed, (iii) there has expired the maximum possible period
thereafter during which any payment made by Borrower to Authority with respect to the
Authority Loan, could be deemed a preference under the United States Bankruptcy Code and (iv)
each of Authority has released, transferred or disposed of all its right, title and interest in such
collateral or security.
10. Preference. If any payment by Borrower is held to constitute a preference under
any applicable bankruptcy, insolvency, or similar laws, or if for any other reason any of
Authority is required to refund any sums to Borrower, such refund shall not constitute a release
of any liability of Guarantor under this Guaranty. It is the intention of Authority and Guarantor
that Guarantor's obligations under this Guaranty shall not be discharged except by Guarantor's
performance of such obligations and then only to the extent of such performance.
11. Reinstatement. If at any time any payment of any amounts due under the
Authority Loan Documents by Borrower, Guarantor or any other person is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization of Borrower or
Guarantor or otherwise, Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment has been due but not made at such time.
5
12. Guarantor's Financial Condition. Guarantor hereby covenants and agrees that
during the term of the Authority Loan, except for the payment of employee salaries and benefits
and dividends in the ordinary course of business, it shall not sell, pledge, mortgage or otherwise
transfer any of its assets, or any interest therein, on terms materially less favorable than would be
obtained in an arms -length transaction for fair consideration.
13. State Snecific Provisions (California).
(a) If a guarantor is liable for only a portion of the Authority Loan, Guarantor
hereby waives its rights under California Civil Code Section 2822(a) to designate the
portion of the Authority Loan that shall be satisfied by Borrower's partial payment.
(b) Guarantor hereby waives any and all benefits and defenses under
California Civil Code Section 2810 and agrees that by doing so Guarantor shall be liable
even if Borrower had no liability at the time of execution of the Note, the. Security
Instrument or any other Authority Loan Document, or thereafter ceases to be liable.
Guarantor hereby waives any and all benefits and defenses under Califomia Civil Code
Section 2809 and agrees that by doing so Guarantor's liability may be larger in amount
and more burdensome than that of Borrower. Guarantor also waives, to the fullest extent
permitted by law, any and all benefits under California Civil Code Sections 2845, 2849
and 2850.
(c) Guarantor understands that the exercise by Authority of certain rights and
remedies contained in the Security Instrument (such as a nonjudicial foreclosure sale)
may affect or eliminate Guarantor's right of subrogation against Borrower and that
Guarantor may therefore incur a partially or totally nonreimburseable liability under this
Guaranty. Nevertheless, Guarantor hereby authorizes and empowers Authority to
exercise, in their sole and absolute discretion, any right or remedy, or any combination
thereof, which may then be available, since it is the intent and purpose of Guarantor that
the obligations under this Guaranty shall be absolute, independent and unconditional
under any and all circumstances. Guarantor expressly waives any defense (which
defense, if Guarantor had not given this waiver, Guarantor might otherwise have) to a
judgment against Guarantor by reason of a nonjudicial foreclosure. Without limiting the
generality of the foregoing, Guarantor hereby expressly waives any and all benefits under
(i) California Code of Civil Procedure Section 580a (which Section, if Guarantor had not
given this waiver, would otherwise limit Guarantor's liability after a nonjudicial
foreclosure sale to the difference between the obligations of Guarantor under this
Guaranty and the fair market value of the Property or interests sold at such nonjudicial
foreclosure sale), (ii) California Code of Civil Procedure Sections 580b and 580d (which
Sections, if Guarantor had not given this waiver, would otherwise limit Authority' right
to recover a deficiency judgment with respect to purchase money obligations and after a
nonjudicial foreclosure sale, respectively), and (iii) California Code of Civil Procedure
Section 726 (which Section, if Guarantor had not given this waiver, among other things,
would otherwise require Authority to exhaust all of their security before a personal
judgment could be obtained for a deficiency). Notwithstanding any foreclosure of the
lien of the Security Instrument, whether by the exercise of the power of sale contained in
the Security Instrument, by an action for judicial foreclosure or by Authority' acceptance
of a deed in lieu of foreclosure, Guarantor shall remain bound under this Guaranty.
(d) In accordance with Section 2856 of the California Civil Code, Guarantor
also waives any right or defense based upon an election of remedies by Authority, even
though such election (e.g., nonjudicial foreclosure with respect to any collateral held by
Authority to secure repayment of the Authority Loan) destroys or otherwise impairs the
subrogation rights of Guarantor or the right of Guarantor (after payment of the
obligations guaranteed by Guarantor under this Guaranty) to proceed against Borrower
for reimbursement, or both, by operation of Section 580d of the Code of Civil Procedure
or otherwise.
(e) In accordance with Section 2856 of the California Civil Code, Guarantor
waives any and all other rights and defenses available to Guarantor by reason of Sections
2787 through 2855, inclusive, of the California Civil Code, including any and all rights or
defenses Guarantor may have by reason of protection afforded to Borrower with respect
to any of the obligations of Guarantor under this Guaranty pursuant to the antideficiency
or other laws of the State of California limiting or discharging Borrower's Indebtedness,
including Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure.
(f) In accordance with Section 2856 of the California Civil Code, Guarantor
agrees to withhold the exercise of any and all subrogation and reimbursement rights
against Borrower, against any other person, and against any collateral or security for the
Authority Loan, including any such rights pursuant to Sections 2847 and 2848 of the
California Civil Code, until the Authority Loan has been indefeasibly paid and satisfied
in full, all obligations owed to Authority under the Authority Loan Documents have been
fully performed, and each of Authority has released, transferred or disposed of all of its
right, title and interest in such collateral or security.
14. Term of Guaranty. Upon the earlier to occur of (i) the Conversion Date or (ii)
the satisfaction of the Authority Loan and all of Borrower's other obligations under the Authority
Loan Documents and the due recordation of the release or reconveyance of the Security
Instrument, this Guaranty shall automatically terminate, except with respect to: (A) any
mechanic's and materialmen's liens or claims therefor imposed or alleged against the Property
with respect to the Work, any other liens, charges, encumbrances or other restrictions (other than
Permitted Encumbrances) which remain against the Property as of the Conversion Date and (B)
any obligations hereunder with respect to the Work; provided, however, if Borrower causes to be
delivered to Authority after the Conversion Date an assignment in form and substance acceptable
to Authority of all warranties and guarantees received by Borrower from any contractor,
subcontractor or other party providing construction and/or rehabilitation services relating to the
Work, then, effective as of the date of such assignment, the liability of Guarantor hereunder with
respect to the completion of the Work shall terminate and be of no further force and effect.
15. Governing Law. This Guaranty shall be governed by and enforced in accordance
with the laws of the State of California, without giving effect to the choice of law principles of
the State of California that would require the application of the laws of a jurisdiction other than
the State of California.
16. Consent to Jurisdiction and Venue. Guarantor irrevocably and unconditionally
submits to the jurisdiction of the Superior Court of the State of California for the County of
Riverside or the United States District Court of the Central District of California, as Authority
`l
may deem appropriate, in connection with any legal action or proceeding arising out of or
relating to this Guaranty. Guarantor also waives any objection regarding personal or in rem
jurisdiction or venue.
17, Successors and Assigns. This Guaranty shall be binding upon Guarantor and its
heirs, legal representatives, successors, successors -in -interest and assigns, as appropriate, and
shall inure to the benefit of the Authority and their respective successors, successors -in -interest
and assigns. The terms used to designate any of the parties herein shall be deemed to include the
heirs, legal representatives, successors, successors -in -interest and assigns, as appropriate, of such
parties. References to a "person" or "persons" shall be deemed to include individuals and
entities. Guarantor may not assign or delegate its rights, interests or obligations under this
Guaranty without first obtaining Authority's prior written consent.
18. Severability. The invalidity, illegality or unenforceability of any provision of
this Guaranty shall not affect the validity, legality or enforceability of any other provision, and
all other provisions shall remain in full force and effect.
19. Expenses. In the event of a dispute between the parties arising out of or in
connection with this Guaranty, whether or not such dispute results in arbitration or litigation, the
prevailing party (whether resulting from settlement before or after arbitration or litigation is
commenced) shall be entitled to have and recover from the losing party reasonable attorneys'
fees and costs of suit, including expert witness fees, incurred by the prevailing party.
20. Remedies Cumulative. In the event of Guarantor's default under this Guaranty,
the Authority may exercise all or any one or more of their rights and remedies available under
this Guaranty, at law or in equity. Such rights and remedies shall be cumulative and concurrent,
and may be enforced separately, successively or together, and the exercise of any particular right
or remedy shall not in any way prevent the Authority from exercising any other right or remedy
available to the Authority. The Authority may exercise any such remedies from time to time as
often as may be deemed necessary by the Authority.
21. No Agency or Partnership. Notwithstanding any other provision of this
Guaranty: (i) Authority is not a partner, joint venturer, alter -ego, manager, controlling person or
other business associate or participant of any kind of the Borrower and Authority does not intend
to ever assume any such status; (ii) Authority shall not be deemed responsible for or a participant
in any acts, omissions or decisions of Borrower;
22. Entire Agreement; Amendment and Waiver. This Guaranty contains the
complete and entire understanding of the parties with respect to the matters covered herein.
Guarantor acknowledges that Guarantor has received copies of the Authority Loan Documents.
This Guaranty may not be amended, modified or changed, nor shall any waiver of any provision
hereof be effective, except by a written instrument signed by the party against whom
enforcement of the waiver, amendment, change, or modification is sought, and then only to the
extent set forth in that instrument. No specific waiver of any of the terms of this Guaranty shall
be considered as a general waiver.
23. Notices; Change of Guarantor's Address. All notices given under this
Guaranty shall be in writing and shall be sent to the respective addresses of the parties, in the
manner set forth in the Security Instrument. Notices to Guarantor shall be sent to the address of
Guarantor, at the address set forth below Guarantor's signature block to this Guaranty.
Guarantor agrees to notify Authority (in the manner for giving notices provided in the Security
Instrument) of any change in Guarantor's address within ten (10) Business Days after such
change of address occurs.
24. Counterparts. To the extent Guarantor consists of more than one party, this
Guaranty may be executed in multiple counterparts, each of which shall constitute an original
document and all of which together shall constitute one agreement.
25. Captions. The captions of the sections of this Guaranty are for convenience only
and shall be disregarded in construing this Guaranty.
26. Time of the Essence. Time is of the essence with respect to this Guaranty.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
E
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Completion Guaranty or caused this Completion Guaranty to be duly executed and delivered by
its authorized representative as of the date first set forth above.
MICHAEL J. SHOVLIN, an individual
Guarantor's Address for Notices:
John Durso
KD Housing Partners
4199 Campus Drive
Irvine, CA 92612
Facsimile: (949) 854-7105
Michael J. Shovlin
Shovlin Companies Development Contractors
46753 Adams Street
LaQuinta, CA 92253
S-1
GENERAL ACKNOWLEDGMENT
STATE OF CALIFORNIA )
COUNTY OF��11� L )
On /4(/a1 �S1 c9 rl �-O I before me,
i-- —�
Notary Public, personally appeazed �,j 2 h n F , nUYia who
proved to me on the basis of satisfactory evidence to be the person(s}-whose name(s) is/ar*-
subscribed to the within instrument and acknowledged to me that he/sheftimy executed the same
in hisfhe"4heir authorized capacity(ies), and that by his/hm*heir signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s)-acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal. BARBARA HEM LE MATAMOR08
CannYpbn s 113a16Y
A7Wm MY CWM- IMM J0 K 2013
ignature of Notary Public
(Seal)
GENERAL ACKNOWLEDGMENT
STATE OF CALIFORNIA )
COUNTY OF L&:5 )
On AV V Sf C9 rl 2b la- before me, 6Ar4� MA-TAt4 o za�s
Notary Public, ersonally appeared H i C:bl a e.1 ? . h o ✓ 1 n who
proved to me on the basis of satisfactory evidence to be the person(&) whose name(* is/are-
subscribed to the within instrument and acknowledged to me that he/ahafthey executed the same
in his/i*s41*eir authorized capacity(4es), and that by his#&r4heir signature(&) on the instrument
the person*, or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
- ]I@WiMMOWMATAWM
ignature of Notary Public Cep te>r m
limy We - Ca bMs
Los Anwa Coway
my Coffin. J 28.2013
(Seal)
AMENDED AND RESTATED AUTHORITY LOAN PROMISSORY NOTE
$29,000,000.00
August 1, 2012
La Quinta, California
FOR VALUE RECEIVED, CORAL MOUNTAIN PARTNERS, L.P., a California
limited partnership (`Borrower"), as maker and obligor, promises to pay to the LA QUINTA
HOUSING AUTHORITY, a public body, corporate and politic ("Authority"), as holder and
beneficiary, or order, at Authority's office at P.O. Box 1504, La Quinta, California 92247, or
such other place as Authority may designate in writing, the sum of (a) Twenty -Nine Million
Dollars ($29,000,000.00), or so much thereof as may be disbursed hereunder ("Note Amount"),
and (b) all costs and expenses payable hereunder, in currency of the United States of America,
which at the time of payment is lawful for the payment of public and private debts.
This Amended and Restated Authority Loan Promissory Note ("Note") is given in
accordance with that certain Disposition and Development Agreement executed between the
Borrower, as "Developer," and the former La Quinta Redevelopment Agency, a public body,
corporate and politic ("Agency"), and dated as of January 4, 2011 ("DDA").
Pursuant to Assembly Bill 26 from the 2012-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2012 ("ABxl 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was filed, challenging the constitutionality of ABxI 26
and companion bill ABxl 27 (which would have allowed redevelopment agencies to remain in
existence and continue redevelopment,, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality of ABxI 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxl 27.
(California Redevelopment Assn. v. Matosantos (2012) 53 Cal.4th 231. ABxl 26 is chapter 5,
Statutes 2012, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of the Health and Safety Code.
Pursuant to Health and Safety Code Section 341710), added by Part 1.85, the City of La Quinta
("City") is the "successor agency" to the Agency. On January 3, 2012, the La Quinta City
Council adopted Resolution No. 2012-002, pursuant to which the City elected (a) to be the
"successor agency" to the Agency, and (b) to have the Authority be the "housing successor" to
the Agency. On January 17, 2012, the Authority adopted HA Resolution No. 2012-002,
affirmatively electing to be the "housing successor" to the Agency.
Pursuant to Health and Safety Code section 34175(b), added by Part 1.85, all assets,
contracts, and properties of the Agency, including the Property, were transferred to the control of
the City, as the successor agency to the Agency, on February 1, 2012. The Property is a housing
asset of the former Agency, the DDA is an obligation of the former Agency associated with the
housing activities of the former Agency, and administration of the DDA is a housing activity of
the former Agency. Pursuant to Health and Safety Code Section 34177(g), added by Part 1.85,
882/0156IM047
3779516.4 a0827/12
on March 7, 2012, the City, in its capacity as the successor agency to the former Agency, (i)
assigned all of the City's right, title and interest in and to the DDA to the Authority, pursuant to
that certain Assignment and Assumption Agreement entered into by and between the City, as
assignor, and the Authority, as assignee, and (ii) transferred all of its interests in and to the
Property to the Authority.
The rights and obligations of Borrower and Authority under this Note shall be governed
by the DDA and by the additional terms set forth in this Note. In the event of any
inconsistencies between the terms of this Note and the terms of the DDA or any other document
related to the Note Amount, the terms of this Note shall prevail. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings ascribed to them in the DDA. An
Event of Default by Developer under any of the provisions of the DDA, and/or a default under
any and all attachments and all breakout documents executed, attested and/or recorded in
implementation of the DDA, including, without limitation, the Agency Deed of Trust
(hereinafter referred to as the "Authority Deed of Trust"), the Agency Regulatory Agreement
(hereinafter referred to as the "Authority Regulatory Agreement"), and Ground Lease, or the
income and/or rent restrictions as set forth in the Tax Credit Regulatory Agreement (collectively,
the "Transaction Documents") shall, after the expiration of any cure period under the respective
agreement or document, be a default under this Note (a "Default"), and a default under this Note,
after notice and expiration of a fifteen (15) day cure period, shall be an Event of Default under
the DDA and a default under the Transaction Documents. Notwithstanding anything herein to
the contrary, the Investor shall have a period of not less than thirty (30) days to cure a default
under this Note prior to the Authority declaring a Default hereunder.
1. Replacement of Original Note. This Note replaces, in its entirety, that certain
Agency Loan Promissory Note executed by Borrower on or about February 10, 2011.
2. Interest. The Note Amount shall bear simple interest at one percent (1%) per
annum. Upon Authority's deposit of portions of the Note Amount into the escrow account
established with Old Republic Title Company (the "Title Company") as Order No.
1117011827.1, for subsequent deposit by the Title Company into an escrow fund pursuant to that
certain Escrow Agreement by and among the Authority, Citibank, N.A., and the Title Company,
such portions shall be deemed to have been disbursed to Borrower and shall begin accruing
interest on said date.
3. Repayment of Note Amount. The Note Amount shall be paid by the Borrower's
annual payment to Authority of an amount equal to fifty percent (50%) of the Residual Receipts
from operation of the Housing Development, as determined by a Residual Receipts calculation
from the operation of the Housing Development the preceding calendar year.
Annual Residual Receipts payments shall be made by the Borrower by cashier's check
and shall be delivered on or before May 1 for each year during the term of this Note commencing
in the first fiscal year following the Conversion Date until the Note Amount and all unpaid
interest thereon has been repaid in full. Additionally, the Note Amount shall be paid by any or
all of the following: (i) fifty percent (50%) of the Refinancing Net Proceeds immediately upon
any refinancing of the loans secured by the Property (or any part thereof), and (ii) one hundred
882/015610-0047
3779516.4 a0827/12 -2-
percent (100%) of the Transfer Net Proceeds immediately upon any transfer in whole or in part
of the Housing Development.
As used herein, "Affiliate" means any person or entity directly or indirectly, through one
or more intermediaries, controlling, controlled by or under common control with Borrower
which, if Borrower is a partnership or limited liability company, shall include each of the
constituent members or partners, respectively thereof. The term "control" as used in the
immediately preceding sentence, means, with respect to a person that is a corporation, the right
to the exercise, directly or indirectly, of more than fifty percent (50%) of the voting rights
attributable to the shares of the controlled corporation, and, with respect to a person that is not a
corporation, the possession, directly or indirectly, of the power to direct or cause the direction of
the management or policies of the controlled person.
As used herein, "Annual Financial Statement" shall mean each certified financial
statement of Borrower for the Housing Development using generally accepted accounting
principles ("GAAP"), as separately accounted for this Housing Development, including
Operating Expenses and Annual Project Revenue, prepared annually at Borrower's expense, by
an independent certified public accountant reasonably acceptable to Authority, as well as the
Residual Receipts Report.
As used herein, "Annual Project Revenue" means all gross income and all revenues of
any kind from the Housing Development in a calendar year, of whatever form or nature, whether
direct or indirect, with the exception of the items excluded below, actually received by or paid to
or for the account or benefit of Borrower or any Affiliate of Borrower or any of their agents or
employees, from any and all sources, resulting from or attributable to the ownership, operation,
leasing and occupancy of the Housing Development, determined on the basis of generally
accepted accounting principles applied on a consistent basis, and shall include, but not be limited
to: (i) gross rentals paid by tenants of the Housing Development under leases, and payments and
subsidies of whatever nature, including without limitation any payments, vouchers or subsidies
from the U.S. Department of Housing and Urban Development or any other person or
organization, received on behalf of tenants under their leases, (ii) amounts paid by residents of
the Housing Development to Borrower or any Affiliate of Borrower on account of Operating
Expenses for further disbursement by Borrower or such Affiliate to a third party or parties,
(iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses, concessions,
vending machines, coin laundry and similar sources, (v) other fees, charges or payments not
denominated as rental but payable to Borrower in connection with the rental of office, retail,
storage, or other space in the Housing Development, (vi) consideration received in whole or in
part for the cancellation, modification, extension or renewal of leases, and (vii) interest and other
investment earnings on security deposits, reserve accounts and other Housing Development
accounts to the extent disbursed for other than the purpose of the reserve. Notwithstanding the
foregoing, gross income shall not include the following items: (a) security deposits from tenants
(except when applied by Borrower to rent or other amounts owing by tenants); (b) capital
contributions to Borrower by its members, partners or shareholders (including capital
contributions required to pay any Deferred Developer Fee); (c) condemnation or insurance
proceeds; (d) funds received from any source actually and directly used for initial development
of the Housing Development; (e) receipt by an Affiliate of management fees or other bona fide
arms -length payments for reasonable and necessary Operating Expenses associated with the
892/015610-0047
3779516.4 a08/27/12 -3-
Housing Development, including but not limited to, any Partnership Related Fees; (f) Transfer
Net Proceeds; or (g) Refinancing Net Proceeds.
As used herein "Capital Replacement Reserve" shall have the meaning ascribed thereto in
the Authority Regulatory Agreement.
As used herein, "CPI Adjustment" means the increase in the cost of living index, as
measured by the Consumer Price Index for all urban consumers, Los Angeles -Anaheim -
Riverside statistical area, all items (1982-84 = 100) published by the United States Department
of Labor, Bureau of Labor Statistics ("CPI") in effect as of the date on which the Certificate of
Occupancy is issued for the Housing Development to the CPI in effect as of the date on which an
adjustment is made. If such index is discontinued or revised, such other index with which such
index is replaced (or if not replaced, another index which reasonably reflects and monitors
consumer prices) shall be used in order to obtain substantially the same results as would have
been obtained if the discontinued index had not been discontinued or revised. If the CPI is
changed so that the base year is other than 1982-84, the CPI shall be converted in accordance
with the conversion factor published by the United States Department of Labor, Bureau of Labor
Statistics.
As used herein, "Debt Service" shall mean payments made in a calendar year pursuant to
the approved Construction Loan or the Take -Out Loan, as applicable, obtained for the
construction/development, and ownership of the Project and approved by the Authority pursuant
to Section 7.2(b) of the DDA or any permitted refinancing or modification thereof, but excluding
payments made pursuant to this Note.
As used herein, "Deferred Developer Fee" shall mean the portion of the Borrower's
development fee, if any, that is payable out of the Annual Project Revenue and not from capital
sources, as set forth in the Housing Development Budget. Disbursement of the Deferred
Developer Fee (all or any part thereof) shall be subject to the provisions of the next paragraph.
In connection with Borrower's eligibility to disburse all or any part of the Deferred
Developer Fee, in the event the cost of completing the Project exceeds the amount set forth in the
final Budget; then, to the extent necessary, the funds otherwise available to pay the developer fee
from capital sources shall be expended and used to pay the remaining costs of completing the
Project to the extent necessary to ensure the completion of the Project and the balance of the
developer tee shall be paid as Deferred Developer Fee in accordance with the priority set forth in
the Partnership Agreement, and/or payable from the proceeds of any approved refinancing or
transfer of the Property and/or the Housing Development. In no event shall Borrower be eligible
for disbursement of the Deferred Developer Fee or any part thereof prior to completion of the
Project, as approved by the Executive Director as evidenced by the issuance by the Authority of
the Release of Construction Covenants.
As used herein, "Operating Expenses" shall mean actual, reasonable and customary (for
comparable high quality affordable rental housing developments in Riverside County) costs, fees
and expenses directly incurred, paid, and attributable to the operation, maintenance and
management of the Housing Development in a calendar year, which are in accordance with the
882/015610-0047
3779516.4 a08/27/12 -4-
annual Operating Budget approved by Authority pursuant to Section 9 of the Authority
Regulatory Agreement, including, without limitation, painting, cleaning, repairs, alterations,
landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and
personal property taxes, assessments, insurance, security, advertising and promotion, janitorial
services, cleaning and building supplies, purchase, repair, servicing and installation of
appliances, equipment, fixtures and furnishings, fees and expenses of property management, fees
and expenses of accountants, attorneys and other professionals, repayment of any completion or
operating loans made to Borrower, its approved successors or assigns, and other actual,
reasonable and customary operating costs which are directly incurred and paid by Borrower, but
which are not paid from or eligible to be paid from the Operating Reserve or any other reserve
accounts. In addition, Operating Expenses shall include a social services fee in the amount of
Twenty -Two Thousand Dollars ($22,000) for calendar year 2011, which shall be increased
annually by three percent (3%) per year, provided Borrower provides the social services
described in the Tenant Services Agreement that was included in Borrower's tax credit
application. Operating Expenses shall not include any of the following: (i) salaries of
employees of Borrower or Borrower's general overhead expenses, or expenses, costs and fees
paid to an Affiliate of Borrower, to the extent any of the foregoing exceed the expenses, costs or
fees that would be payable in a bona fide arms' length transaction between unrelated parties in
the Riverside County area for the same work or services; (ii) any amounts paid directly by a
tenant of the Housing Development to a third party in connection with expenses which, if
incurred by Borrower, would be Operating Expenses; (iii) optional or elective payments with
respect to the Construction Loan; (iv) any payments with respect to any Project -related loan or
financing that has not been approved by the Authority; (v) expenses, expenditures, and charges
of any nature whatsoever arising or incurred by Borrower prior to completion of the Housing
Development with respect to the development of the Housing Development, or any portion
thereof, including, without limitation, all predevelopment and preconstruction activities
conducted by Borrower in connection with the Housing Development, including without
limitation, the preparation of all plans and the performance of any tests, studies, investigations or
other work, and the construction of the Housing Development and any on site or off site work in
connection therewith; or (vi) depreciation, amortization, and accrued principal and interest
expense on deferred payment debt.
As used herein, "Operating Reserve" means an operating reserve for the Housing
Development (i) initially consisting of not less than Four Hundred Ninety -Five Thousand Dollars
($495,000) (or such greater amount required under either of the Additional Regulatory
Agreements, or under the Partnership Agreement) set aside in a separate interest -bearing trust
account, commencing upon the rental of the units in the Housing Development, and (ii)
replenished to Four Hundred Ninety -Five Thousand Dollars ($495,000) from annual deposits of
the Annual Project Revenue, to the extent available, such that the balance of the Operating
Reserve consists of not less than four (4) months of projected Operating Expenses, adjusted
annually by the CPI Adjustment (unless otherwise agreed to by Developer and Authority) or as
required under the Partnership Agreement (or such greater amount required under either of the
Additional Regulatory Agreements, or under the Partnership Agreement), provided in no event
shall the balance in such account exceed a sum equal to one (1) year of Debt Service for the
Housing Development (or such greater amount required under the Tax Credit Regulatory
Agreement, pursuant to any of the Approved Financing or under the Partnership Agreement).
882/015610-0047
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As used herein, "Partnership Agreement" means the agreement which sets forth the terms
of the Borrower's limited partnership, as such agreement may be amended from time to time.
As used herein, "Partnership Related Fees" means partnership fees actually incurred
pursuant to the terms of the Partnership Agreement, which are reasonable and customary to
developer/owner entities for similar projects in Southern California, and may include, but shall
not exceed: (i) a general partner(s) (administrative and/or managing partner(s)) partnership
management fee payable to the general partner(s) (ii) a limited partner asset management fee
payable to the Investor; and (iii) an annual audit fee in and for any calendar year. In no event
shall the annual fees for (i) and (ii) above cumulatively exceed Forty Thousand Dollars
($40,000.00), but such fees in (i) and (ii) may be increased annually by the CPI Adjustment. In
the event insufficient Annual Project Revenues exist to provide for payment of all or part of the
specific Partnership Related Fees listed above, no interest shall accrue on the unpaid portions of
such Partnership Related Fees, but the unpaid balance of such fees alone will be added to the
Partnership Related Fees due in the following year.
As used herein, "Refinancing Net Proceeds" means the proceeds of any approved
refinancing of the Construction Loan or other approved financing secured by the Property, net of
the following actual costs and fees incurred: (i) the amount of the financing which is satisfied
out of such proceeds, (ii) reasonable and customary costs and expenses incurred in connection
with the refinancing, (iii) the balance, if any, of the Deferred Developer Fee, (iv) the balance, if
any, of authorized loans to the Housing Development made by the limited partners of Borrower,
including interest at the rate set forth in the Partnership Agreement for such loans, (v) the
balance, if any, of authorized operating loans or development loans made by the general partners
of a limited partnership that succeeds to Borrower's interest in the DDA and the Housing
Development, including interest at the rate set forth in the Partnership Agreement for such loans,
(vi) the balance, if any, of any unpaid Partnership Related Fees, (vii) any amounts owed to the
Investor pursuant to the Partnership Agreement, (viii) the return of capital contributions, if any,
to the Project made by the general partners of a limited partnership that succeeds to Borrower's
interest in the DDA and the Housing Development that were used to pay the Deferred Developer
Fee, (ix) the amount of proceeds required to be reserved for the repair, rehabilitation,
reconstruction or refurbishment of the Housing Development; and (x) the payment to general
partner of Borrower of a refinancing fee, which is agreed to be set at three percent (3%) of the
amount of the approved refinancing.
As used herein, "Reserve Deposits" shall mean any payments to the Capital Replacement
Reserve account and payments to the Operating Reserve account pursuant to Sections 10 and 11,
respectively, of the Authority Regulatory Agreement.
As used herein, "Residual Receipts" shall mean Annual Project Revenue less the sum of:
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve;
(iv) Reserve Deposits to the Operating Reserve;
882/015610-0047
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(v) Partnership Related Fees;
(vi) Deferred Developer Fees;
(vii) Property management fee for the Housing Development which remains unpaid
after payment of Operating Expenses, if any;
(viii) Amy amounts owed to the Investor, including, without limitation, Unpaid Tax
Credit adjustment amounts, if any, pursuant to the Partnership Agreement;
(ix) Repayment of loans to the Project, if any, made by the limited partner(s) of
Borrower pursuant to the Partnership Agreement, including interest at the rate set forth in the
Partnership Agreement, for eligible development and/or operating expense deficits or other
eligible loans (provided that if made during the compliance period Borrower shall provide to
Executive Director documentation showing the propriety of such loan(s) and if made subsequent
to the expiration of the compliance period each such loan must be reasonably approved by the
Executive Director before being provided to the Project after review of documentation provided
by Borrower showing propriety of such loans);
(x) Repayment to the administrative and/or managing general partners of Borrower
for loans to the Project for development advance(s) pursuant to the Partnership Agreement,
operating deficit advance(s) pursuant to the Partnership Agreement), credit adjuster payment(s)
pursuant to the Partnership Agreement), and/or Development Fee advance(s) pursuant to the
Partnership Agreement, and with all such loans to be repaid without interest (provided that if
made during the compliance period Borrower shall provide to Executive Director documentation
showing the propriety of such loan(s) and if made subsequent to the expiration of the compliance
period each such loan must be reasonably approved by the Executive Director before being
provided to the Project after review of documentation provided by Borrower showing propriety
of such loans);
(xi) Repayment to the administrative and/or managing general partners of Borrower of
certain loans made to the Project after the expiration or earlier termination of the Partnership
Agreement to cover shortfalls in funding for Operating Expenses in excess of the Operating
Expenses included in the approved annual Operating Budget for the year in which such loan is
made (if at all), all such loans to be repaid without interest (provided that if made during the
compliance period Borrower shall provide to Executive Director documentation showing the
propriety of such loan(s) and if made subsequent to the expiration of the compliance period each
such loan must be reasonably approved by the Executive Director before being provided to the
Project after review of documentation provided by Borrower showing propriety of such loans);
and
(xii) Capital contributions to the Project, if any, made by the general partners of
Borrower that were used to pay the Developer Fee.
In the event any calculation of Annual Project Revenue less subsections (i) through (xii)
inclusive above results in a negative number, then Residual Receipts shall be zero ($0) for that
year and shall not carry over to the next or any other subsequent year.
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In addition, none of the fees, costs, expenses, or items described above in calculation of
Residual Receipts shall include any duplicate entry/item, or double accounting for a cost item.
For example, an audit fee incurred by Borrower and deducted or included above in subsection (i)
for Operating Expenses shall not also be deducted or included in subsection (v) for Partnership
Related Fees in the calculation of Residual Receipts. The calculation of Residual Receipts shall
be conducted at Borrower's sole cost and expense, by a third party auditor and submitted to
Borrower annually, along with Borrower's payment of Residual Receipts.
As used herein, "Transfer Net Proceeds" shall mean the proceeds of any sale or other
transfer, in whole or part, of the Property or Borrower's interests therein, net only of (i) the
reasonable and customary costs and expenses incurred in connection with such transfer; (ii) the
amount of the financing which is satisfied out of such proceeds, (iii) the balance, if any, of the
Deferred Developer Fee, (iv) the balance, if any, of loans to the Project made by the limited
partners of Borrower, including interest thereon as provided in the Partnership Agreement, (v)
the balance, if any, of operating loans or development loans made by the general partners of
Borrower, including interest thereon as provided in the Partnership Agreement, and (vi) the
return of capital contributions, if any, to the Project made by the general partners of Borrower
that were used to pay the Deferred Developer Fee. Notwithstanding anything herein to the
contrary, Transfer Net Proceeds shall not be required to be paid in connection with a transfer or
sale that consists only of (a) the removal of the general partner of the Borrower, or (b) the
transfer or sale of the interests of the Investor provided such transfer or sale is consistent with the
Partnership Agreement and with the terns of the Authority Regulatory Agreement.
4. Security. Prior to Borrower's purchase of the Property, Borrower's obligations
under this Note and the DDA shall be secured by that certain Assignment of Architectural
Agreements and Plans and Specifications executed by Borrower in favor of Authority pursuant
to the DDA.
Borrower's obligations under this Note and the DDA shall, at all times subsequent to the
purchase of the Property by Borrower during which any amount remains outstanding hereunder,
be secured by the Authority Deed of Trust, which Authority Deed of Trust shall only be
subordinated to approved deed(s) of trust for the Construction Loan and such encumbrances
approved by the Authority in writing, pursuant to a written subordination agreement in a form
approved by Authority counsel. Upon execution of the same, the terms of the Authority Deed of
Trust are incorporated herein and made a part hereof to the same extent and with the same force
and effect as if fully set forth herein.
5. Maturity. This Note shall be due and payable on the date of expiration of the
term of the Ground Lease, as such term may be extended pursuant to the terms thereof, or earlier
termination thereof.
6. Application of Payments. All payments shall be applied (i) first, to costs and
fees owing under this Note, (ii) second, to the payment of unpaid accrued interest owing under
this Note for each calendar year in which no payment was made by Borrower pursuant to Section
3 above, (iii) third, to the payment of accrued interest for the preceding calendar year, and (iv)
fourth, to payment of principal.
882/015610-0047
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7. Waivers.
(a) Borrower expressly agrees that this Note or any payment hereunder may
be extended from time to time at Authority's sole discretion and that Authority may accept
security in consideration for any such extension or release any security for this Note at its sole
discretion all without in any way affecting the liability of Borrower.
(b) No extension of time for payment of this Note made by agreement by
Authority with any person now or hereafter liable for the payment of this Note shall operate to
release, discharge, modify, change or affect the original liability of Borrower under this Note,
either in whole or in part.
(c) The obligations of Borrower under this Note shall be absolute and
Borrower waives any and all rights to offset, deduct or withhold any payments or charges due
under this Note for any reasons whatsoever.
(d) Borrower waives presentment, demand, notice of protest and nonpayment,
notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or
interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the
rights or interests in or to properties securing this Note, and the benefit of any exemption under
any homestead exemption laws, if applicable.
(e) No previous waiver and no failure or delay by Authority in acting with
respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach,
default, or failure or condition under this Note, the Authority Deed of Trust or the obligations
secured thereby. A waiver of any term of this Note, the Authority Deed of Trust or of any of the
obligations secured thereby must be made in writing and shall be limited to the express written
terms of such waiver.
8. Attorneys' Fees and Costs. Borrower agrees that if any amounts due under this
Note are not paid when due, Borrower will pay all costs and expenses of collection and
reasonable attorneys' fees paid or incurred in connection with the collection or enforcement of
this Note, whether or not suit is filed.
9. Joint and Several Obligation. This Note is the joint and several obligation of all
makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs,
successors and assigns.
10. Amendments and Modifications. This Note may not be changed orally, but
only by an amendment approved by Authority and evidenced in a writing signed by Borrower
and by Authority.
11. Authority May Assign. Authority may, at its option, assign its right to receive
payment under this Note without necessity of obtaining the consent of the Borrower.
12. Borrower Assignment Prohibited. In no event shall Borrower assign or transfer
any portion of this Note without the prior express written consent of Authority, which consent
882/015610-0047
3779516 4 a08/27/12 -9-
shall not unreasonably be withheld, except pursuant to a transfer that is authorized under Section
15 of the DDA.
13. Acceleration and Other Remedies. Upon the occurrence of a Default, Authority
may, at Authority's option, declare the outstanding principal amount of this Note, together with
the then accrued and unpaid interest thereon and other charges hereunder, and all other sums
secured by the Authority Deed of Trust, to be due and payable immediately, and upon such
declaration, such principal and interest and other sums shall immediately become and be due and
payable without demand or notice, all as further set forth in the Authority Deed of Trust. All
costs of collection, including, but not limited to, reasonable attorneys' fees and all expenses
incurred in connection with protection of, or realization on, the security for this Note, may be
added to the principal hereunder, and shall accrue interest as provided herein. Authority shall at
all times have the right to proceed against any portion of the security for this Note in such order
and in such manner as Authority may consider appropriate, without waiving any rights with
respect to any of the security. Any delay or omission on the part of Authority in exercising any
right hereunder, under the DDA or under the Authority Deed of Trust shall not operate as a
waiver of such right, or of any other right. No single or partial exercise of any right or remedy
hereunder or under the DDA or any other document or agreement shall preclude other or further
exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of
any sum payable hereunder, or part thereof, after the due date of such payment shall not be a
waiver of Authority's right to either require prompt payment when due of all other sums payable
hereunder or to declare a Default for failure to make prompt or complete payment.
14. Alternate Rate. Upon the occurrence of any Default, or upon the maturity hereof
(by acceleration or otherwise), the entire unpaid principal sum, at the option of Authority, shall
bear interest, from the date of occurrence of such Default or maturity and after judgment and
until collection, at the "Alternate Rate", such rate being the highest interest rate then permitted
by law. Interest calculated at the Alternate Rate, when and if applicable, shall be due and
payable immediately without notice or demand. Borrower agrees that in the event of any
Default, Authority will incur additional expense in servicing the loan evidenced by this Note and
will suffer damage and loss resulting from such Default. Borrower agrees that in such event
Authority shall be entitled to damages for the detriment caused thereby, which damages are
extremely difficult and impractical to ascertain. Therefore, Borrower agrees that the Alternate
Rate (as applied to the unpaid principal balance, accrued interest, fees, costs and expenses
incurred) is a reasonable estimate of such damages to Authority, and Borrower agrees to pay
such sum on demand.
15. Consents. Borrower hereby consents to: (a) any extension (whether one or
more) of the time of payment under this Note, (b) the release or surrender or exchange or
substitution of all or any part of the security, whether real or personal, or direct or indirect, for
the payment hereof, (c) the granting of any other indulgences to Borrower, and (d) the taking or
releasing of other or additional parties primarily or contingently liable hereunder. Any such
extension, release, surrender, exchange or substitution may be made without notice to Borrower
or to any endorser, guarantor or surety hereof, and without affecting the liability of said parties
hereunder.
882/015610-0047
3779516.4 e0827/12 -10-
16. Interest Rate Limitation. Authority and Borrower stipulate and agree that none
of the terms and provisions contained herein or in any of the loan instruments shall ever be
construed to create a contract for the use, forbearance or detention of money requiring payment
of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of
the State of California. In such event, if any holder of this Note shall collect monies which are
deemed to constitute interest which would otherwise increase the effective interest rate on this
Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of
California, all such sums deemed to constitute interest in excess of such maximum rate shall, at
the option of such holder, be credited to the payment of the sums due hereunder or returned to
Borrower.
17. Successors and Assigns. Whenever "Authority" is referred to in this Note, such
reference shall be deemed to include the La Quinta Redevelopment Authority and its successors
and assigns, including, without limitation, any successor to its rights, powers, and
responsibilities, and any subsequent assignee or holder of this Note. All covenants, provisions
and agreements by or on behalf of Borrower, and on behalf of any makers, endorsers, guarantors
and sureties hereof which are contained herein shall inure to the benefit of Authority and
Authority's successors and assigns.
18. Miscellaneous. Time is of the essence hereof. This Note shall be governed by
and construed under the laws of the State of California except to the extent Federal laws preempt
the laws of the State of California. Borrower irrevocably and unconditionally submits to the
jurisdiction of the Superior Court of the State of California for the County of Riverside or the
United States District Court of the Central District of California, as Authority may deem
appropriate, in connection with any legal action or proceeding arising out of or relating to this
Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue.
19. Non -Recourse Obligation. Borrower and its partners shall not be personally
liable for the payment of this Note or for the payment of any deficiency established after judicial
foreclosure or trustee's sale; provided, however, that the foregoing shall not in any way affect
any rights Authority may have (as a secured party or otherwise) hereunder or under the DDA or
Authority Deed of Trust to recover directly from Borrower any amounts, or any funds, damages
or costs (including without limitation reasonable attorneys' fees and costs) incurred by Authority
as a result of fraud, intentional misrepresentation or bad faith, waste, and any costs and expenses
incurred by Authority in connection therewith (including without limitation reasonable attorneys'
fees and costs).
20. Accounting.
(a) Accounting Terms and Determinations. Unless otherwise specified
herein, (i) all accounting terms used herein shall be interpreted, (ii) all accounting determinations
hereunder shall be made, and (c) all books, records and financial statements required to be
delivered hereunder shall be prepared, in accordance with GAAP, consistently applied, except
for changes approved by Authority.
(b) Financial Reporting and Accounting Covenants. Borrower shall permit
the representatives of Authority at any time or from time to time, upon three (3) business days'
882/015610-0047
3779516.4 a08/27112 - 11-
notice and during normal business hours, to inspect, audit, and copy all of Borrower's books,
records, and accounts relating to the Property. Borrower shall furnish or cause to be furnished to
Authority the following:
(i) Annual Financial Statement. Borrower shall submit to
Authority, on or before May 1 of each year commencing in the first year after the issuance of the
first certificate of occupancy for the Housing Development, an Annual Financial Statement, with
respect to the Housing Development that has been reviewed by an independent certified public
accountant, together with an expressed written opinion of the certified public accountant that
such Annual Financial Statement presents the financial position, results of operations, and cash
flows of the Housing Development fairly and in accordance with GAAP.
(ii) Tax Returns. As soon as available, but in no event later than
thirty (30) days after the time of filing with the Internal Revenue Service, the federal tax returns
(and supporting schedules, if any) of Borrower.
(iii) Audit Reports. Not later than ten (10) days after receipt thereof
by Borrower, copies of all reports submitted to Borrower by independent public accountants in
connection with each annual, interim or special audit of the financial statements of Borrower,
made by such accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit. If any such audit report results in Borrower
restating Residual Receipts upward for any fiscal year, then Borrower shall accompany delivery
of such audit report to Authority with the additional payment to Authority resulting from said
restatement pursuant to Section 3 of this Note. If any such audit report results in Borrower
restating Residual Receipts downward for any fiscal year, Borrower may carry forward the
overpayment made to Authority pursuant to such Section 3 as a credit against payments
thereunder in subsequent fiscal years.
(c) Late Payment. If any annual payment required pursuant to Section 3
above is not received by Authority within ten (10) calendar days after payment is due, Borrower
shall pay to Authority a late charge of five percent (5%) of such payment, such late charge to be
immediately due and payable without demand by Authority.
(d) Dispute Regarding Annual Financial Statement. If Authority disputes
any Annual Financial Statement, Authority shall notify Borrower of such dispute within sixty
(60) days after receipt of an Annual Financial Statement and the parties shall cause their
representatives to meet and confer concerning the dispute and to use all reasonable efforts to
reach a mutually acceptable resolution of the matter in question within thirty (30) days after
Authority's notice of such dispute. If the parties are unable to reach a mutually acceptable
resolution within such thirty (30) day period, then, within twenty (20) days after the expiration of
such period, Borrower and Authority shall appoint a national firm of certified public accountants
to review the dispute and to make a determination as to the matter in question within thirty (30)
days after such appointment. If the parties cannot, within ten (10) days, agree upon the firm to
be appointed, then, upon the application of either party, such firm shall be appointed by the
Presiding Judge of the Superior Court for the County of Riverside, California. Such firm's
determination shall be final and binding upon the parties. Such firm shall have full access to the
books, records and accounts of Borrower and the Property.
882/015610-0047
3779516.4 a08/27/12 -12-
(e) Underpayment. If any audit by Authority reports an underpayment by
Borrower on this Note, Borrower shall pay the amount of such underpayment, together with the
late charge set forth in Section 20(c) of this Note, to Authority within ten (10) days after written
notice thereof to Borrower or, in the event of a dispute, after timely notice to Borrower of the
resolution of such dispute by the independent firm of certified public accountants, as the case
may be, and if such underpayment amounts to more than five percent (5%) of the disputed
payment for the period audited, then, notwithstanding anything to the contrary in this section,
Borrower shall pay to Authority, within ten (10) days after written demand, Authority's
reasonable costs and expenses in conducting such audit and exercising its rights under this
Section 20 of this Note.
1 " 1
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company,
administrative general uartner
By: KD H g P ers, Inc.
a Calif' 'a co ration, its manager
2012
President
By: WCH Affordable VIII, LLC,
a California limited liability company,
managing general partner
Date: 12012
982f01561M047
3779516.4 a0W7/12 -13-
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
By: D6M1zl6j Sandra C. Gibbons,
Chief Financial Officer
NOTICE
The indebtedness evidenced by this Note is and shall be subordinate in right of payment
to the prior payment in full of all amounts then due and payable (including, but not limited to, all
amounts due and payable by virtue of any default or acceleration or upon maturity) with respect
to the indebtedness evidenced by the Note (as defined by that certain Multifamily Leasehold
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing by the Borrower in
favor of the California Municipal Finance Authority and assigned to Citibank, N.A.), in the
original maximum principal amount of $24,400,000, executed by Borrower and payable to the
California Municipal Finance Authority and endorsed to Citibank, N.A. ("Senior Lender") to
the extent, subject to the limitations, and in the manner provided in that certain Subordination
Agreement, dated as of August 1, 2012, by and between the Senior Lender and the holder of this
Note (the "Subordination Agreement"). The rights and remedies of the payee and each
subsequent holder of this Note shall be deemed, by virtue of such holder's acquisition of this
Note, to have agreed to perform and observe all of the terms, covenants and conditions to be
performed or observed by the "Junior Lender" under the Subordination Agreement.
'82/015610-0047
3779516.4 a0827/12 -14-
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement'), dated as of August 1, 2012, by and
among the LA QUINTA HOUSING AUTHORITY, a public body, corporate and politic
(together with its permitted successors and assigns, the "Junior Lender"), OLD REPUBLIC
TITLE COMPANY (together with its permitted successors and assigns, the "Escrow Agent'),
not in its individual capacity but solely in its capacity as escrow agent, and CITIBANK, N.A., a
national banking association (together with its successors and assigns, the "Senior Lender").
RECITALS
A. Coral Mountain Partners, L.P., a California limited partnership ("Borrower"), has
applied to the California Municipal Finance Authority, a joint exercise of powers authority duly
organized and existing under the laws of the State of California ("Governmental Lender"), for
a loan in the maximum principal amount of $24,400,000 (the "Senior Load'), for the
acquisition, construction, rehabilitation, development, equipping and/or operation of a 176-unit
multifamily residential project located in the City of La Quinta, County of Riverside, California,
known or to be known as the Coral Mountain Apartments (the "Project').
B. The Senior Loan is evidenced by that certain Multifamily Note, dated as of
August 29, 2012, in the maximum principal amount of $24,400,000, made by Borrower payable
to the order of Governmental Lender (as the same may from time to time be extended,
consolidated, substituted for, modified, increased, amended, restated and/or supplemented, the
"Senior Note"), and that certain Borrower Loan Agreement, dated as of the date hereof, between
Borrower and Governmental Lender (the "Borrower Loan Agreement').
C. The Senior Loan is secured by, among other things, that certain Multifamily
Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as
of the date hereof, executed by Borrower for the benefit of Governmental Lender (as the same
may from time to time be extended, consolidated, substituted for, modified, increased, amended
and supplemented, the "Senior Security Instrument") which Senior Security Instrument
encumbers the Property (as defined below).
D. Borrower has requested that Senior Lender enter into that certain Funding Loan
Agreement, dated as of the date hereof, between Governmental Lender and Senior Lender,
pursuant to which Senior Lender will make a loan to Governmental Lender (the "Funding
Load'), the proceeds of which will be used to make the Senior Loan to Borrower.
E. The Senior Note, the Senior Security Instrument and the Borrower Loan
Agreement will each be assigned by Governmental Lender to Senior Lender to secure the
Funding Loan. The Borrower and Senior Lender have entered into that certain Construction
Funding Agreement dated as of the date hereof (the "Construction Funding Agreement')
regarding the manner in which the Project will be completed and paid for.
F. Citibank, N.A. (together with its successors and assigns, "Servicer"), will act as
the initial servicer of the Senior Loan.
11830782-A
G. Junior Lender is making a loan (the "Junior Loan") to Borrower in the original
principal amount of $29,000,000, which Junior Loan is evidenced by a certain Amended and
Restated Authority Loan Promissory Note, dated on or about the date hereof, made by Borrower
to Junior Lender (the "Junior Note") and secured by, or to be secured by, that certain Leasehold
Deed of Trust with Assignment of Rents (the "Junior Security Instrument"), dated on or about
the date hereof, and recorded concurrently herewith in the Official Records of Riverside County,
encumbering the Property, and will be advanced to Borrower pursuant to that certain Disposition
and Development Agreement dated January 4, 2011 (the "Junior Loan Agreement"), between
Borrower and the former La Quinta Redevelopment Agency ("Agency").
H. Pursuant to Assembly Bill 26 from the 2012-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2012 ("ABxl 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was filed, challenging the constitutionality of ABx1 26
and companion bill ABxI 27 (which would have allowed redevelopment agencies to remain in
existence and continue redevelopment, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality of ABxl 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxl 27.
(California Redevelopment Assn. v. Matosantos (2012) 53 CalAth 231. ABxl 26 is chapter 5,
Statutes 2012, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of the Health and Safety Code.
Pursuant to Health and Safety Code Section 341710), added by Part 1.85, the City of La Quinta
("City") is the "successor agency" to the Agency. On January 3, 2012, the La Quinta City
Council adopted Resolution No. 2012-002, pursuant to which the City elected (a) to be the
"successor agency" to the Agency, and (b) to have the Junior Lender be the "housing successor"
to the Agency. On January 17, 2012, the Junior Lender adopted HA Resolution No. 2012-002,
affirmatively electing to be the "housing successor" to the Agency.
L Pursuant to Health and Safety Code section 34175(b), added by Part 1.85, all
assets, contracts, and properties of the Agency were transferred to the control of the City, as the
successor agency to the Agency, on February 1, 2012. The Junior Loan Agreement is an
obligation of the former Agency associated with the housing activities of the former Agency, and
administration of the DDA is a housing activity of the former Agency. Pursuant to Health and
Safety Code Section 34177(g), added by Part 1.85, on March 7, 2012, the City, in its capacity as
the successor agency to the former Agency, assigned all of the City's right, title and interest in
and to the DDA to the Authority, pursuant to that certain Assignment and Assumption
Agreement entered into by and between the City, as assignor, and the Authority, as assignee.
J. As a condition to the making of the Senior Loan, Senior Lender requires that
Junior Lender execute and deliver this Agreement at the time of funding the Senior Loan and
deposit $25,281,357.96 of Junior Loan proceeds (the "Junior Loan Proceeds") in accordance
with the terms of this Agreement.
K. The Escrow Agent has agreed to act as Escrow Agent upon the terms and subject
to the conditions set forth in this Agreement.
Escrow Agreement 2 Coral Mountain Apartments
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by the Junior Lender, the Escrow Agent, and the Senior Lender, the
Junior Lender, the Escrow Agent and the Senior Lender agree as follows:
1. Incorporation of Recitals; Definitions; Interpretation; Reference Materials.
1.1. Incorporation of Recitals. The recitals set forth above are, by this
reference, incorporated into and deemed a part of this Agreement.
1.2. Interpretation. Words importing any gender include all genders. The
singular form of any word used in this Agreement shall include the plural, and vice versa, unless
the context otherwise requires. Words importing persons include natural persons, firms,
associations, partnerships, corporations and public entities.
1.3. Reference Materials. Sections cited by number only refer to the
respective sections of this Agreement so numbered. Reference to "this section" or "this
subsection" shall refer to the particular section or subsection in which such reference appears.
Any captions, titles or headings preceding the text of any section and any table of contents or
index attached to this Agreement are solely for convenience of reference and shall not constitute
part of this Agreement or affect its meaning, construction or effect.
1.4. Effective Date. The parties agree that this Agreement is dated as of the
date first above written for convenience of the parties, and agree that it shall be effective on,
from and after, and all representations and warranties shall be made as of, the date upon which
the proceeds of the Junior Loan are funded into the "Escrow Fund" (as that term is defined in
Section 3.1 below) (the "Funding Date").
1.5. Definitions. In addition to terms elsewhere defined in this Agreement
including the Recitals, the following words and terms as used in this Agreement and the Recitals
hereto shall have the following meanings unless the context or use clearly indicates another or
different meaning or intent.
"Eligible Account" means an identifiable account which is separate from all other funds
held by the holding institution that is either (i) an account or accounts maintained with the
corporate trust department of a federal or state -chartered depository institution or trust company
which complies with the definition of Eligible Institution or (ii) a segregated trust account or
accounts maintained with the corporate trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity which, in the case of a state chartered
depository institution or trust company is subject to regulations substantially similar to 12 C.F.R.
§9.10(b), having in either case a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by federal and state authority. An Eligible Account will not be
evidenced by a certificate of deposit, passbook or other instrument.
"Eligible Institution" means a federal or state chartered depository institution or trust
company insured by the Federal Deposit Insurance Corporation, the short term unsecured debt
obligations or commercial paper of which are rated at least A-1 by Standard & Poor's Ratings
Services, a Standard & Poor's Financial Services LLC business division, P-1 by Moody's
Escrow Agreement 3 Coral Mountain Apartments
Investors Service, Inc. and F-3 by Fitch, Inc. in the case of accounts in which funds are held for
30 days or less or, in the case of letters of credit or accounts in which funds are held for more
than 30 days, the long term unsecured debt obligations of which are rated at least "A" by Fitch,
Inc. and Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC
business division, and "AT' by Moody's Investors Service, Inc. If at any time an Eligible
Institution does not meet the required rating, the Escrow Agent must move the Escrow Fund
within 30 days of such event to an appropriately rated Eligible Institution.
"Permitted Investments" means any of the following if and to the extent permitted by
law: (a) direct and general obligations of the United States of America; (b) obligations of any
agency or instrumentality of the United States of America the payment of the principal of and
interest on which are unconditionally guaranteed by the full faith and credit of the United States
of America; (c) demand deposits or time deposits with, or certificates of deposit issued by any
bank organized under the laws of the United States of America or any state or the District of
Columbia which has combined capital, surplus and undivided profits of not less than
$50,000,000; provided that such institution has been rated at least "VMIG 17'A 1+" by
Moody's/S&P which deposits or certificates are fully insured by the Federal Deposit Insurance
Corporation or collateralized pursuant to the requirements of the Office of the Comptroller of the
Currency; (d) investment agreements with a bank or any insurance company or other financial
institution which has a rating assigned by Moody's or S&P to its outstanding long term
unsecured debt which is the highest rating (as defined below) for long term unsecured debt
obligations assigned by Moody's or S&P, and which are approved by the Senior Lender; (e)
shares or units in any money market mutual fund rated "Aaa"/"AAA" by Moody's or S&P (or if
a new rating scale is implemented, the equivalent rating category given by the Rating Agency for
that general category of security) registered under the Investment Company Act of 1940, as
amended, whose investment portfolio consists solely of (A) direct obligations of the government
of the United States of America, or (B) tax-exempt obligations; (f)(i) tax exempt obligations
rated in the highest short term rating category by Moody's or S&P, or (ii) shares of a tax-exempt
municipal money market mutual fund or other collective investment fund registered under the
federal Investment Company Act of 1940, whose shares are registered under the federal
Securities Act of 1933, having assets of at least $100,000,000, and having a rating of
"Aaa"/"AAA" by Moody's or S&P (or if a new rating scale is implemented, the equivalent rating
category given by the Rating Agency for that general category of security), for which at least
95% of the income paid to the holders on interest in such money market fund will be excludable
from gross income under Section 103 of the Code; or (g) any other investments approved in
writing by Senior Lender. For purposes of this definition, the "highest rating" shall mean a
rating of at least "VMIG I"/"A 1+" for obligations with less than one year maturity; at least
"Aaa"/"VMIG 1"/"AAA"/"A 1+" for obligations with a maturity of one year or greater but less
than three years; and at least "Aaa"/"AAA" for obligations with a maturity of three years or
greater. Permitted Investments must be limited to instruments that have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or change and interest, if tied to an
index, shall be tied to a single interest rate index plus a single fixed spread, if any, and move
proportionately with such index.
Escrow Agreement 4 Coral Mountain Apartments
Capitalized terms used in this Agreement and not otherwise defined in this Agreement shall have
the meanings given to those terms in the Subordination Agreement, dated as of August 1, 2012
among the Junior Lender and the Senior Lender (as amended from time to time, the
"Subordination Agreement").
2. Escrow Payments. Concurrently with the execution of this Agreement, the Junior
Lender is depositing the Junior Loan Proceeds with the Escrow Agent. The Escrow Agent
acknowledges receipt of the Junior Loan Proceeds and agrees to hold the proceeds in accordance
with the terms and conditions of this Agreement.
3. Establishment of Escrow Fund.
3.1. The Escrow Agent has established, at the request of the parties hereto, a
special and irrevocable escrow fund designated "La Quinta Loan Proceeds Coral Mountain
Apartments" (the "Escrow Fund"). Such Escrow Fund is a special, segregated escrow fund
maintained by the Escrow Agent in an Eligible Account at an Eligible Institution separate and
apart from the general banking assets and liabilities or other escrow funds of the Escrow Agent
and held and administered by the Escrow Agent in accordance with the terms and provisions of
this Agreement.
3.2. The Escrow Agent acknowledges that (i) it will hold the Escrow Fund
pursuant to the terms of this Agreement; (ii) it will credit the Junior Loan Proceeds and any
investments in the Escrow Fund on its own books and records to the Escrow Fund; and (iii) it
will hold such Junior Loan Proceeds for the credit of the Escrow Fund as Escrow Agent
hereunder subject to the terms of this Agreement.
3.3. The parties hereto agree that the Junior Lender shall not have any right to
withdraw any moneys from the Escrow Fund or any proceeds thereof without the express written
consent of Senior Lender.
4. Investment of Moneys In Escrow Fund; Interest Earnings.
4.1. Funds deposited in the Escrow Fund may be invested and reinvested by
and in the name of the Escrow Agent only in Permitted Investments. All Permitted Investments
shall be made by the Escrow Agent at the written direction of the Junior Lender. The Escrow
Agent or its affiliates may act as principal, agent, sponsor or depository with respect to any
Permitted Investments. To insure that cash on hand is invested, if the Junior Lender does not
give the Escrow Agent written or timely instructions with respect to investments of funds, the
Escrow Agent shall invest, to the extent that timing permits, cash balances in a money market
mutual fund that qualifies as a Permitted Investment. The Escrow Agent is specifically
authorized to implement an automated cash investment system to assure that cash on hand is
invested at all times.
4.2. The Escrow Agent agrees to keep accurate records regarding amounts on
deposit in the Escrow Fund and any interest earned on or profits realized from amounts on
deposit in the Escrow Fund and to, upon request of the Junior Lender or Senior Lender, share
such records with the Junior Lender and/or Senior Lender.
Escrow Agreement 5 Coral Mountain Apartments
4.3. Any interest earnings on funds in the Escrow Fund shall be added to the
principal balance of the Escrow Fund and disbursed in accordance with the provisions of this
Agreement.
5. Application of Escrow Fund. Escrow Agent shall release amounts on deposit in the
Escrow Fund to the collateral account held by Senior Lender in accordance with the direction of
the Junior Lender given by persons at the time designated and authorized to act on behalf of the
Junior Lender as indicated on Exhibit A hereto, or in another written certificate furnished to the
Escrow Agent by Junior Lender and containing the specimen signature of such person and signed
on behalf of the Junior Lender in accordance with a disbursement authorization in the form
annexed hereto as Exhibit B. In order to release amounts on deposit in the Escrow Fund to any
account other than the Senior Lender collateral account set forth in Exhibit B, the written
direction of Junior Lender and Senior Lender given by persons at the time designated and
authorized to act on behalf of the Junior Lender and Senior Lender, respectively, shall be
required.
6. Banker's Lien; Set -Off. The Escrow Agent hereby acknowledges and agrees that it
shall have no lien on or security interest, or right of setoff in respect of, monies or investments in
the Escrow Fund for the payment of fees and expenses or for any other purpose whatsoever.
7. Representations and Warranties
7.1. Representations and Warranties of the Junior Lender. The Junior Lender
represents and warrants to the Escrow Agent and the Senior Lender that:
(a) It is a public body, corporate and politic duly organized and
existing under the laws of the State of California;
(b) It has the power and authority to execute, deliver, and perform its
obligations under, this Agreement; and
(c) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary actions on the part of the Junior Lender; this
Agreement has been duly executed and delivered by it and is the valid and
binding obligation of the Junior Lender, and assuming the enforceability hereof
against the other parties hereto, is enforceable against it in accordance with its
terms.
7.2. Representations and Warranties of the Escrow Agent. The Escrow
Agent represents to the Junior Lender and the Senior Lender that:
(a) It is a California corporation;
(b) It has the power and authority to execute, deliver, and perform its
obligations under, this Agreement; and
Escrow Agreement 6 Coral Mountain Apartments
(c) All corporate or other action required to authorize the acceptance
of its appointment as Escrow Agent hereunder and the execution, delivery and
performance of this Agreement and the effectuation of the transactions provided
for in this Agreement has been duly taken.
7.3. Representations and Warranties of the Senior Lender. The Senior
Lender represents to the Escrow Agent and the Junior Lender that:
(a) It is a national banking association duly organized and existing
under the laws of the United States of America;
(b) It has the power and authority to execute, deliver, and perform its
obligations under, this Agreement; and
(c) All corporate or other action required to authorize the acceptance
of its appointment as Senior Lender hereunder and the execution, delivery and
performance of this Agreement and the effectuation of the transactions provided
for in this Agreement has been duly taken.
8. Regarding the Escrow Agent.
8.1. Powers of the Escrow Agent.
(a) The Junior Lender and Senior Lender hereby authorize the Escrow
Agent to (i) take such action and to exercise such rights, powers and privileges
under this Agreement as are specifically authorized to be exercised by the Escrow
Agent by the terms of this Agreement, together with such rights, remedies,
powers and privileges as are reasonably incidental thereto; (ii) execute any of its
duties as escrow agent under this Agreement by or through agents or employees;
and (iii) retain experts (including counsel) and to act in reliance upon the advice
of such experts concerning all matters pertaining to the agencies created by this
Agreement and its duties under this Agreement, free from any liability for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such experts;
(b) The Escrow Agent agrees to perform only those duties specifically
set forth in this Agreement and no implied duties or obligations shall be read into
this Agreement. The Escrow Agent shall have no duty to exercise any
discretionary right, remedy, power or privilege granted to it by this Agreement, or
to take any affirmative action under this Agreement, unless directed to do so by
the Senior Lender in writing, and shall not, without the prior written approval of
the Senior Lender, consent to any departure by the Junior Lender from the terms
of this Agreement, or amend, modify, supplement or terminate, or agree to any
surrender of, this Agreement or the Escrow Fund; provided, however, that the
Escrow Agent shall not be required to take any action which requires it to expend
or advance its own funds, exposes the Escrow Agent to personal liability or which
is contrary to this Agreement, or any other agreement or instrument relating to the
Escrow Fund or applicable law;
Escrow Agreement 7 Coral Mountain Apartments
(c) Neither the Escrow Agent nor any of its directors, officers,
employees or agents shall be liable for any action taken or omitted to be taken by
it or them under this Agreement, or in connection with this Agreement, except for
its or their own negligence or willful misconduct; and
(d) The Escrow Agent shall be entitled to rely on any communication,
instrument, paper or other document believed by it to be genuine and correct and
to have been signed or sent by the proper person or persons. The Escrow Agent
may accept deposits from, lend money to, and generally engage in any kind of
business with, the Junior Lender or the Senior Lender.
8.2. Successor Escrow Agent.
(a) The Escrow Agent may at any time resign and be discharged of the
duties and obligations created by this Agreement by giving notice to the Senior
Lender and the Junior Lender by an instrument in writing addressed and delivered
to the Senior Lender and the Junior Lender. Such resignation shall take effect
upon the date specified in such notice, unless a successor has not been appointed,
in which event such resignation shall take place upon the appointment of a
successor. The Escrow Agent may be removed at any time with or without cause
by an instrument in writing duly executed by or on behalf of the Senior Lender
and the Junior Lender. If the parties shall not have appointed a successor Escrow
Agent prior to the expiration of thirty (30) days following the effective date of the
notice of resignation or removal, the Escrow Agent may petition any court of
competent jurisdiction for the appointment of a successor Escrow Agent or for
other appropriate relief, and any such resulting appointment shall be binding upon
the parties.
(b) The Senior Lender and the Junior Lender shall, concurrently with
any such resignation or removal, appoint a successor Escrow Agent by a written
instrument of substitution which complies with any requirements of applicable
law. Upon the making and acceptance of such appointment, the execution and
delivery by such successor Escrow Agent of a ratifying instrument pursuant to
which such successor Escrow Agent agrees to assume the duties and obligations
imposed on the Escrow Agent by the terms of this Agreement, and the delivery to
such successor Escrow Agent of the Escrow Fund and documents and instruments
then held by the retiring Escrow Agent, such successor Escrow Agent shall
thereupon succeed to and become vested with all the estate, rights, powers,
remedies, privileges, immunities, indemnities, duties and obligations by this
Agreement granted to or conferred or imposed upon the predecessor Escrow
Agent. No Escrow Agent shall be discharged from its duties or obligations under
this Agreement until the Escrow Fund and documents and instruments then held
by such Escrow Agent shall have been transferred or delivered to the successor
Escrow Agent and until such retiring Escrow Agent shall have executed and
delivered to the successor Escrow Agent appropriate instruments assigning the
retiring Escrow Agent's security or other interest in the Escrow Fund to the
successor Escrow Agent. The retiring Escrow Agent shall not be required to make
Escrow Agreement 8 Coral Mountain Apartments
any representation or warranty in connection with any such transfer or
assignment.
8.3. No Additional Waiver Implied by One Waiver. If the Junior Lender
shall fail to perform any obligation it is required to perform under this Agreement, and such
failure is thereafter waived by the Senior Lender, such waiver shall be limited to the particular
failure so waived and shall not be deemed to waive any other failure to perform as required
under this Agreement. Any forbearance by tl
amounts payable under this Agreement shall be
Senior Lender forbears demand for payment an
any other amount payable under this Agreement.
e Senior Lender to demand payment of any
limited to the particular payment for which the
I shall not be deemed a forbearance to demand
8.4. Nature of the Senior Lender's and Escrow Agent's Rights. Subject to
Junior Lender's right to withdraw funds from the Escrow Fund with the express written consent
of Senior Lender pursuant to section 3.3 above, the rights of the Senior Lender and the Escrow
Agent to the Escrow Fund held under this Agreement shall not be subject to any right of
redemption the Junior Lender might otherwise have and shall not be suspended, discontinued or
reduced or terminated for any cause, including, without limiting the generality of the foregoing,
any event constituting force majeure or any acts or circumstances that may constitute
commercial frustration of purpose.
8.5. Disputes. If there is any dispute between Senior Lender and the
Junior Lender as to the disposition of the Escrow Funds, Escrow Agent shall continue to hold the
Escrow Funds subject to the order of a court of competent jurisdiction as to the disposition
thereof or, at the option of Escrow Agent at any time after Escrow Agent becomes aware of such
dispute, Escrow Agent may deposit the Escrow Funds with the clerk of a court of competent
jurisdiction and commence an action in the nature of an interpleader for a determination of the
respective rights of the parties and, in such case, recover Escrow Agent's reasonable out of
pocket costs and expenses, including a reasonable third party attorney's fee.
8.6. Fees. Borrower shall be responsible for the payment of Escrow Agent's
normal cash management fees in connection with the establishment and administration of the
Escrow Fund, which shall be billable to Borrower by Escrow Agent from time to time. Without
limiting the foregoing (or any other provision of this Agreement and the exhibits hereto), Escrow
Agent acknowledges and agrees that neither of the Junior Lender nor the Senior Lender shall
have any responsibility for the payment of any fees to Escrow Agent hereunder.
9. Miscellaneous Provisions.
9.1. Cooperation. At any time and from time to time after the date of this
Agreement, a party shall, at the request of another party, execute and deliver any instruments or
documents, and shall take all such further actions as such party may reasonably request in order
to consummate and effectuate the transactions contemplated by this Agreement.
9.2. Fee; Costs and Expenses; Indemnification. The Borrower shall: (a) pay
to the Escrow Agent a reasonable fee for its services hereunder; (b) reimburse the Escrow Agent,
on demand, for all reasonable costs and expenses actually incurred by the Escrow Agent in
Escrow Agreement 9 Coral Mountain Apartments
connection with the administration and enforcement of this Agreement; and (c) indemnify and
hold harmless the Escrow Agent from and against any and all losses, costs, claims, damages,
penalties, causes of action, suits, judgments, liabilities and expenses (including, without
limitation, reasonable attorneys' fees and expenses actually incurred) actually incurred by the
Escrow Agent in connection with this Agreement, unless such liability shall be finally
adjudicated to be directly caused by the willful misconduct or gross negligence on the part of the
Escrow Agent or its agents or employees. The obligations of the Borrower under this Section 9.2
shall survive the termination of this Agreement, the resignation or removal of the Escrow Agent,
and the discharge of the other obligations of the Junior Lender under this Agreement.
9.3. Termination. This Agreement shall terminate upon the earlier of (i)
release, or withdrawal in accordance with the express written consent of Senior Lender pursuant
to Section 3.3 above, of all funds in the Escrow Fund, or (ii) November 1, 2015. Any funds
remaining in the Escrow Fund upon termination of this Agreement shall be disbursed in
accordance with Section 5 of this Agreement.
9.4. Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among the parties to
this Agreement with respect to the subject matter of this Agreement. This Agreement may not
be amended, changed, waived or modified except by a writing executed by all parties hereto.
9.5. Successors and Assigns. Subject to the terms and conditions of the
Subordination Agreement, this Agreement shall inure to the benefit of, and be enforceable by,
the Junior Lender, the Escrow Agent and the Senior Lender and their respective successors and
permitted assigns, and nothing herein expressed or implied shall be construed to give any other
person or entity any legal or equitable rights under this Agreement. No party to this Agreement
shall assign any of the rights, interests or obligations under this Agreement without the prior
written consent of the other parties to this Agreement.
9.6. Notices. All written notices, certificates or other communications shall be
sufficiently given and shall be deemed to be given on the date on which the same shall have been
mailed by certified first class mail, postage prepaid, return receipt requested, commercial
delivery service, overnight courier, telecopier or facsimile transmission, air or other courier, or
hand delivery addressed as follows:
To the Junior Lender: Notices Delivered by U.S. Mail
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Phone No.: (760) 777-7031
Facsimile: (760) 777-7101
Attention: Executive Director
Escrow Agreement 10 Coral Mountain Apartments
Delivered Personally or by Courier:
La Quinta Housing Authority
78-495 Calle Tampico
La Quinta, CA 92253
Phone No.: (760) 777-7031
Facsimile: (760) 777-7101
Attention: Executive Director
And a copy to:
Rutan & Tucker, LLP
611 Anton Boulevard, 14th Floor
Costa Mesa, CA 92626
Phone No.: (714) 641-5100
Facsimile: (714) 546-9035
Attention: M. Katherine Jenson, Esq.
To the Escrow Agent: Old Republic Title Company
555 12th Street, Suite 2000
Oakland, CA 94607
Attention: Escrow, Julie Massey
Facsimile: (510) 208-5045
Telephone: (510) 272-1121
If to the Senior Lender: Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
Attention: Desk Head, Transaction Management
Group
Loan # 10-7044852
Facsimile: (212) 723-8642
AND:
Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Loan # 10-7044852
Facsimile: (805) 557-0924
Telephone: (805) 557-0930
AND:
Escrow Agreement I 1 Coral Mountain Apartments
Citibank, N.A.
One Sansome Street, 26th Floor
San Francisco, California 94104
Attention: Sanjay Sharma
Loan # 10-7044852
Facsimile: (415) 627-6387
AND:
Citibank, N.A.
388 Greenwich Street
New York, New York 10013
Attention: General Counsel's Office
Loan # 10-7044852
Facsimile: (212) 723-8939
Any of such addresses may be changed at any time upon written notice of such change
sent, as provided above in this Section 9.6, to the other party.
9.7. WAIVER OF TRIAL BY JURY. TO THE MAXIMUM EXTENT
PERMITTED UNDER APPLICABLE LAW, EACH OF PARTIES (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING
OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES THAT
IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS
NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH
THE BENEFIT OF COMPETENT LEGAL COUNSEL
9.8. Books and Records. The Escrow Agent agrees to maintain its books and
records relevant to the amounts on deposit held by it in the Escrow Fund from time to time
pursuant hereto in accordance with corporate trust industry practice and the terms and provisions
hereof. The Escrow Agent agrees that each of the Junior Lender and Senior Lender may at any
time upon reasonable advance request and during normal business hours examine or copy the
books and records of the Escrow Fund and the Permitted Investments.
9.9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts of law principles
except to the extent that Federal laws may prevail.
9.10. Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the transactions contemplated hereby.
Escrow Agreement 12 Coral Mountain Apartments
9.11. Multiple Counterparts. This Agreement may be executed in multiple
counterparts, all of which shall constitute one and the same instrument and each of which shall
be deemed to be an original.
[Remainder of page intentionally left blank.]
Escrow Agreement 13 Coral Mountain Apartments
The Junior Lender, the Escrow Agent and the Senior Lender have caused this Agreement
to be signed, on the date first written above, by their respective officers duly authorized.
JUNIOR LENDER:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
Title:
ATTEST:
S�'
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
Escrow Agreement S-1 Coral Mountain Apartments
The Junior Lender, the Escrow Agent and the Senior Lender have caused this Agreement
to be signed, on the date first written above, by their respective officers duly authorized.
JUNIOR LENDER:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
By: _
Name:
Title:
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
7htAN &TUKER, LLPority Couns
Executive Director
Escrow Agreement S-1 Coral Mountain Apartments
ESCROW AGENT:
OLD REPUBLIC TITLE COMPANY, as Escrow
Agent
Escrow Agreement S-Z Coral Mountain Apartments
SENIOR LENDER:
CITIBANK, N.A.,
a national banking association
By:
/ to
Name:
Brian Dale
Title:
Vice President
Escrow Flgrecmcnt .-1� Coral Mountain Apartments
ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE:
BORROWER:
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC, a California
limited liability company, its administrative
general partner
By: KD Housin ar iers, Inc., a California
cornorat . its m nager
Title:
By: WCH Affordable VIII, LLC, a California
limited liability company, its managing
general partner
By: Western Community Housing, Inc., a
California nonprofit public benefit
corporation, its sole member and
manager
By:
Name: Sandra C. Gibbons
Title: Chief Financial Officer
Escrow Agreement S-4 Coral Mountain Apartments
EXHIBIT A
Certificate as to Authorized Signatures
The specimen signatures shown below are the specimen signatures of the individuals who have
been designated as authorized representatives of LA QUINTA HOUSING AUTHORITY and are
authorized to initiate and approve transactions of all types for the escrow account or accounts
established under the Escrow Agreement to which this Exhibit A is attached, on behalf of LA
QUINTA HOUSING AUTHORITY.
Name / TitIe
Frank Spevacek
Name
Executive Director
La Quints Housing Authority
Title
Les Johnson
Name
Planning Director
City of La Quinta
Title
Deborah Powell
Name
Economic Development/Housing Manager
City of La Quinta
Title
Name
Title
w4-u--Q,
Signature
Signature
Escrow Agreement A -I Comm Mountain Apartments
EXHIBIT B
(Form of Disbursement Request — Section 5)
To: Old Republic National Title Insurance Company, as Escrow Agent
Re: Escrow Agreement dated as of August 1, 2012 by and among the La Quinta Housing
Authority, Old Republic National Title Insurance Company, as Escrow Agent, and
Citibank, N.A. (the "Escrow Agreement')
Pursuant to the provisions of Section 5 of the Escrow Agreement, the Junior Lender and Senior
Lender confirm their approval of the release of Escrow Funds in the amount of $ and the
Junior Lender and Senior Lender hereby direct the Escrow Agent to transfer and release such funds from
the Escrow Fund to the following account:
Bank:
Citibank, N.A.
ABA:
322271724
Account#:
204757678
Account Name:
CORAL MOUNTAIN PARTNERS, L.P. —
Junior Loan Proceeds Account
Attention:
Dawn Bagley
Capitalized terms used and not defined herein shall have the respective meanings ascribed to
them in the Escrow Agreement.
Dated: , 20
cc: Coral Mountain Partners, L.P.
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
By:
Name:
Title:
Executive Director
Escrow Agreement B-1 Coral Mountain Apartments
DISBURSEMENT AGREEMENT
THIS DISBURSEMENT AGREEMENT is made as of August 1, 2012 and entered into
by and among CITIBANK, N.A., a national banking association ("Senior Lender"), the LA
QUINTA HOUSING AUTHORITY, a public body, corporate and politic ("Authority"), and
CORAL MOUNTAIN PARTNERS, L.P., a California limited partnership ("Borrower").
RECITALS:
A. Borrower has applied to the California Municipal Finance Authority, a joint
exercise of powers agency duly organized and existing under the laws of the State of California
("Governmental Lender"), for a loan in the maximum principal amount of Twenty -Four
Million Four Hundred Thousand Dollars ($24,400,000) (the "Senior Load'), for the acquisition,
construction, rehabilitation, development, equipping and/or operation of a 176-unit multifamily
residential project located in the City of La Quinta, County of Riverside, California, known or to
be known as the Coral Mountain Apartments (the "Project").
B. The Senior Loan is evidenced by that certain Multifamily Note, dated as of
August 29, 2012, in the maximum principal amount of Twenty -Four Million Four Hundred
Thousand Dollars ($24,400,000), made by Borrower payable to the order of Governmental
Lender (the "Senior Note"), and that certain Borrower Loan Agreement, dated as of the date
hereof, between Borrower and Governmental Lender (the "Borrower Loan Agreement').
C. The Senior Loan is secured by, among other things, that certain Multifamily
Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as
of the date hereof, executed by Borrower for the benefit of Governmental Lender (the "Senior
Security Instrument') which Senior Security Instrument encumbers the Project.
D. Borrower has requested that Senior Lender enter into that certain Funding Loan
Agreement, dated as of the date hereof, between Governmental Lender and Senior Lender,
pursuant to which Senior Lender will make a loan to Governmental Lender (the "Funding
Load'), the proceeds of which will be used to make the Senior Loan to Borrower.
E. The Senior Note, the Senior Security Instrument and the Borrower Loan
Agreement will each be assigned by Governmental Lender to Senior Lender to secure the
Funding Loan. The Borrower and Senior Lender have entered into that certain Construction
Funding Agreement dated as of the date hereof (the "Construction Funding Agreement')
regarding the manner in which the Project will be completed and paid for. The Senior Note, the
Senior Security Instrument, the Borrower Loan Agreement, the Construction Funding Agreement
and the other documents, instruments and agreements executed in connection with the Senior
Loan and otherwise evidencing or securing the Senior Loan shall be referred to collectively
herein as the "Senior Loan Documents".
F. Citibank, N.A. (together with its successors and assigns, "Servicer") will act as
the initial servicer of the Senior Loan.
G. Authority is making a loan (the "Authority Load') to Borrower in the original
principal amount of up to Twenty -Nine Million Dollars ($29,000,000), which Authority Loan is
evidenced by a certain Amended and Restated Authority Loan Promissory Note, dated as of the
II780566-v9
date hereof, made by Borrower payable to the order of Authority (the "Authority Note") and
secured by that certain Leasehold Deed of Trust with Assignment of Rents (the "Authority
Security Instrument"), dated as of the date hereof, encumbering the Project, and will be
advanced to Borrower pursuant to that certain Disposition and Development Agreement dated
January 4, 2011 (the "Authority Loan Agreement"), between Borrower and the former La
Quinta Redevelopment Agency ("Agency").
H. Pursuant to Assembly Bill 26 from the 2012-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2012 ("ABxl 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was filed, challenging the constitutionality of ABxI 26
and companion bill ABxI 27 (which would have allowed redevelopment agencies to remain in
existence and continue redevelopment, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality of ABxI 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxI 27.
(California Redevelopment Assn. v. Matosantos (2012) 53 Cal.4th 231 (the "CRA Case").
ABxI 26 is chapter 5, Statutes 2012, First Extraordinary Session, which added Part 1.8
(suspension provisions) and Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of
the Health and Safety Code. Pursuant to Health and Safety Code Section 341710), added by Part
1.85, the City of La Quinta ("City") is the "successor agency" to the Agency. On January 3,
2012, the La Quinta City Council adopted Resolution No. 2012-002, pursuant to which the City
elected (a) to be the "successor agency" to the Agency, and (b) to have the Authority be the
"housing successor" to the Agency. On January 17, 2012, the Authority adopted HA Resolution
No. 2012-002, affirmatively electing to be the "housing successor" to the Agency.
I. Pursuant to Health and Safety Code section 34175(b), added by Part 1.85, all
assets, contracts, and properties of the Agency, including the real property to be developed with
the Project (the "Property"), were transferred to the control of the City, as the successor agency
to the Agency, on February 1, 2012. The Property is a housing asset of the former Agency, the
Authority Loan Agreement is an obligation of the former Agency associated with the housing
activities of the former Agency, and administration of the Authority Loan Agreement is a
housing activity of the former Agency. Pursuant to Health and Safety Code Section 34177(g),
added by Part 1.85, on March 7, 2012, the City, in its capacity as the successor agency to the
former Agency, (i) assigned all of the City's right, title and interest in and to the Authority Loan
Agreement to the Authority, pursuant to that certain Assignment and Assumption Agreement
entered into by and between the City, as assignor, and the Authority, as assignee, and (ii)
transferred all of its interests in and to the Property to the Authority.
J. The Authority Note, the Authority Security Instrument, the Authority Loan
Agreement and the other documents, instruments and agreements executed in connection with
the Authority Loan and otherwise evidencing or securing the Authority Loan shall be referred to
collectively herein as the "Authority Loan Documents".
K. In addition, Borrower has agreed to provide Borrower's funds during the
construction period ("Borrower's Funds"), to pay that portion of the "Project Costs" (as that
term is defined in Recital L) in excess of the sum of the Authority Loan and the Senior Loan.
The Borrower's Funds consist of the following:
Disbursement Agreement 2 Coral Mountain Apartments
(i) capital contributions made by Borrower's tax credit equity investor, Hamilton
USBCDC Investments, L.P. (the "Investor"), in the aggregate amount of
$16,816,069, subject to the terms and conditions set forth in the Second Amended
and Restated Agreement of Limited Partnership of the Borrower dated August 29,
2012 (the "Borrower Partnership Agreement"); and
(ii) funds provided by Borrower during the construction period, if and as needed, to
pay for all cost overruns and contingencies not otherwise funded by any other
sources of construction financing, in accordance with the requirements and
procedures of the Senior Loan Documents.
L. The costs of developing the Project (the "Project Costs") are set forth in the
Project budget approved by Borrower, Investor, Senior Lender and Authority (Senior Lender and
Authority are, collectively, the "Lenders"), which is attached to this Disbursement Agreement as
Exhibit A and incorporated herein by this reference (the "Project Budget"). The Project Budget
shall be subject to amendment from time -to -time as provided herein.
M. The Authority Loan, Senior Loan and Borrower's Funds are sometimes referred
to herein collectively as the "Project Funds."
N. The Lenders and Borrower desire to enter into this Disbursement Agreement
solely to provide for the disbursement of the Project Funds for approved Project Costs and to
provide for cooperation among the Lenders and Borrower.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated
herein by this reference, and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties agree as follows:
Deposit and Use of Project Funds.
(a) Except to the extent Borrower's Funds have been spent on Project Costs
prior to or on the date the Senior Loan is made, or as otherwise agreed to, in writing, by
the Lenders, Borrower shall deposit Borrower's Funds, into a collateral account held by
the Senior Lender (the "Borrower's Funds Account") pursuant to that certain Deposit
Account Control Agreement, dated on or about the date hereof, by and among the
Borrower, the Senior Lender, and Citibank, N.A., as Bank (the "Deposit Account
Control Agreement"), for subsequent disbursement pursuant to this Disbursement
Agreement and the Senior Loan Documents.
(b) A portion of the Authority Loan in the amount of $3,718,642.04 has been
disbursed to Borrower to reimburse the Borrower for predevelopment costs in accordance
with the terms and conditions of the Authority Loan Agreement. The balance of the
Authority Loan proceeds, in the amount of Twenty -Five Million Two Hundred Eighty -
One Thousand Three Hundred Fifty -Seven and 96/100 Dollars ($25,281,357.96), will be
disbursed into an escrow account ("Escrow Account") with Old Republic Title
Company, as escrow agent ("Escrow Agent"), pursuant to that certain Escrow
Agreement dated as of the date hereof, by and among the Authority, Escrow Agent and
Senior Lender (the "Escrow Agreement") and released pursuant to the terms of the
Escrow Agreement and this Disbursement Agreement.
Disbursement Agreement 3 Coral Mountain Apartments
(c) Funds within the Borrower's Funds Account and the Escrow Account
shall be released only in accordance with the Project Budget. Further, Senior Lender will
approve disbursement of the proceeds of the Senior Loan and the Borrower Fund's
Account only in accordance with, and subject to the terms and conditions of, the
Construction Funding Agreement and the Senior Loan Documents.
(d) Borrower must deliver simultaneously to Authority and Senior Lender all
requests for a release of funds from the Escrow Account (each of the foregoing, a
"Release Request") together with copies of any other forms submitted by Borrower in
connection with the Authority Loan. Subject to any additional requirements of the Senior
Lender, each Release Request shall set forth: (1) a description of the work performed,
material supplied and/or other Project Costs incurred or due for which release is
requested with respect to a line item ("Item") in the Project Budget; (2) the total amount
incurred, expended and/or due for each requested Item, less prior releases; (3) written
evidence of previously paid or pending invoices, such as receipts or invoices from the
vendor, as well as written evidence that the invoices are for actual development costs that
have been incurred as a result of the development of the Project; (4) any lien waivers
required under the Authority Loan Documents, and (5) the percentage of completion of
the portion of the work to be paid from each Item.
(e) Within twenty-one (21) days after Authority's receipt of the Release
Request in completed form with all required supporting documentation, and (i)
determination by Authority that all of the conditions to release have been met, and (ii)
disbursement of proceeds of the Senior Loan related to the Release Request (a "Senior
Loan Disbursement"), the Authority shall approve the release of funds from the Escrow
Account to the "Deposit Account" (as that term is defined below) such that the total
amount that has been released to the Deposit Account is not less than seventy-five
percent (75%) of the collective amount of the pending Senior Loan Disbursement and all
prior Senior Loan Disbursements. The Senior Lender shall not be obligated to disburse
additional Senior Loan proceeds to the Borrower if the Deposit Account does not contain
Authority Loan proceeds in an amount equal to at least seventy-five percent (75%) of the
collective amount of all prior Senior Loan Disbursements (e.g., not including the pending
disbursement request for a Senior Loan Disbursement). For purposes hereof, the
"Deposit Account" shall mean the account entitled "CORAL MOUNTAIN PARTNERS,
L.P. — Junior Loan Proceeds Account" held pursuant to the terms of the Deposit Account
Control Agreement, dated as of the date hereof, by and among the Borrower, the Senior
Lender, and Citibank, N.A., as bank.
(f) At such time as $21,000,000 of the Senior Loan has been disbursed to
Borrower, the Borrower shall notify the Authority and the Senior Lender of the estimated
remaining Project Costs, if any, necessary to fund "Public Improvements" (as that term
is defined in the Authority Loan Agreement) (the "PI Holdback"). The Senior Lender
will continue to fund the Senior Loan in accordance with the terms of the Construction
Funding Agreement and the Senior Loan Documents until such time as the remaining
undisbursed proceeds of the Senior Loan equals the PI Holdback ("PI Holdback Date").
Following the PI Holdback Date, the Senior Lender will begin funding Project Costs
from the Deposit Account in accordance with the terms of the Construction Funding
Agreement and the Senior Loan Documents for all items other than Public Improvements
Disbursement Agreement 4 Coral Mountain Apartments
as directed by Borrower. Senior Lender's approval of funding Project Costs from the
Deposit Account will be contingent upon the Authority having transferred additional
funds from the Escrow Account to the Deposit Account equal to seventy-five percent
(75%) of the amount of disbursements previously funded from the Deposit Account.
Following the PI Holdback Date, each disbursement request from Borrower shall
delineate any portion of the request that relates to Public Improvements and specify that
those sums should be paid from the PI Holdback and not from the Deposit Account.
(g) At conversion of the Senior Loan to the permanent phase, funds remaining
in the Deposit Account may be used to pay down the Senior Loan to the extent required
under the Senior Loan Documents.
(h) Under no circumstances shall Authority's consent or approval be required
as a condition to release of funds from the Deposit Account or disbursement of proceeds
of the Senior Loan.
(i) In the event Senior Lender has received notice from the Authority that a
release request is not in accordance with the Authority Loan Documents, or Senior
Lender has received notice from the Authority that the conditions precedent to the
making of such release have not been satisfied or waived, and Senior Lender disagrees
with the determination, Senior Lender and Authority agree to meet and confer in good
faith, upon the request of either of them in an effort to resolve the matter, which meeting
may be by telephonic or electronic means, or may be an in person meeting.
2. Loan Balancine.
(a) In the event either the Authority or the Senior Lender reasonably
determines, from time -to -time, that the mathematically combined amounts of the Project
Funds, as set forth in the attached Project Budget, are insufficient to pay all Project Costs,
including payment of increased costs due to change orders, cost overruns or otherwise
which have not been funded by Borrower's Administrative General Partner or paid with
deferred costs, then, upon ten (10) days' advance notice from such Lender (`Balancing
Call"), Borrower shall deposit into the Borrower's Funds Account held by the Senior
Lender such additional Borrower's Funds as may be necessary to pay all such
obligations. In addition, Borrower shall, in strict accordance with the Senior Loan
Documents, pay to Senior Lender for deposit into the Borrower's Funds Account, any
amount demanded by Senior Lender pursuant to the Construction Funding Agreement.
(b) To the extent Borrower fails to deposit such additional Borrower's Funds
into the Borrower's Funds Account, the Lenders shall each have the right (but not the
obligation) to exercise all rights and remedies available under the Senior Loan
Documents or the Authority Loan Documents, as applicable.
3. Amendments to Project Budget. Subject to the terms and provisions of this
Disbursement Agreement, the Authority Loan Agreement and the Senior Loan Documents, any
change order or Project Budget amendment (collectively referred to as a "Revision") shall
require the prior approval of each of the Lenders provided such Lender has the right to approve
such change order or Project Budget amendment pursuant to the terms of their respective loan
documents.
Disbursement Agreement 5 Coral Mountain Apartments
4. No Modification of Loan Documents. Except as specifically provided herein, this
Disbursement Agreement does not amend, modify, waive or limit any provision, term or
condition of the Authority Loan Documents, the Senior Loan Documents or Borrower's
Partnership Agreement.
5. Reliance. This Disbursement Agreement is made for the sole benefit and
protection of the parties hereto and no other person or persons shall have any right of action or
right to rely hereon.
6. Intercreditor Provisions.
(a) Borrower hereby exculpates and releases Senior Lender, its successors and
assigns, from any and all losses, claims, and damages, including interest and reasonable
attorneys' fees, which Borrower may suffer by virtue of any action or inaction taken by
Senior Lender in accordance with the provisions of this Disbursement Agreement, except
to the extent arising from the gross negligence or willful misconduct of Senior Lender.
Borrower further agrees to protect, defend, indemnify and hold harmless Senior Lender
from and against any and all claims that may be asserted against Senior Lender relating to
or arising from any action or inaction taken by Senior Lender in accordance with the
provisions of this Disbursement Agreement, except to the extent arising from the gross
negligence or willful misconduct of Senior Lender.
(b) No covenant or provision of this Disbursement Agreement is intended, nor
shall it be deemed or construed, to create a partnership, joint venture, agency or common
interest in profits or income among the Authority or Senior Lender. Senior Lender does
not undertake or assume any responsibility or duty to the Authority or to any other person
with respect to the Project or the Senior Loan, except as expressly provided in this
Disbursement Agreement or the Construction Funding Agreement.
7. Notices. All written notices, certificates or other communications shall be
sufficiently given and shall be deemed to be given on the date on which the same shall have been
mailed by certified first class mail, postage prepaid, return receipt requested, commercial
delivery service, overnight courier, telecopier or facsimile transmission, air or other courier, or
hand delivery addressed as follows:
If to Authority: Notices Delivered by U.S. Mail
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Phone No.: (760) 777-7031
Facsimile: (760) 777-7101
Attention: Executive Director
Delivered Personally or by Courier:
La Quinta Housing Authority
78-495 Calle Tampico
La Quinta, CA 92253
Disbursement Agreement 6 Coral Mountain Apartments
With a copy to:
Phone No.: (760) 777-7031
Facsimile: (760) 777-7101
Attention: Executive Director
Rutan & Tucker, LLP
611 Anton Boulevard, 14th Floor
Costa Mesa, CA 92626
Phone No.: (714) 641-5100
Facsimile: (714) 546-9035
Attention: M. Katherine Jenson, Esq.
If to Borrower: Coral Mountain Partners, L.P.
46-753 Adams Street
La Quinta, CA 92253
Phone No.: (760) 771-3345
Facsimile: (760) 771-0686
Attention: Robert High
And a copy to:
Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, 701h Floor
Los Angeles, CA 90071
Phone No.: (213) 239-8088
Facsimile: (213) 559-0733
Attention: Lance Borcarsly
If to the Senior Lender: Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
Attention: Desk Head, Transaction Management
Group
Loan # 10-7044852
Facsimile: (212) 723-8642
umbi
Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Loan # 10-7044852
Facsimile: (805) 557-0924
Telephone: (805) 557-0930
AND:
Disbursement Agreement 7 Coral Mountain Apartments
Citibank, N.A.
One Sansome Street, 26th Floor
San Francisco, California 94104
Attention: Sanjay Sharma
Loan #10-7044852
Facsimile: (415) 627-6387
AND:
Citibank, N.A.
388 Greenwich Street
New York, New York 10013
Attention: General Counsel's Office
Loan # 10-7044852
Facsimile: (212) 723-8939
Any of such addresses may be changed at any time upon written notice of such change
sent, as provided above in this Section 7, to the other party.
8. Termination of this Disbursement Agreement. This Disbursement Agreement
shall terminate when all of the Project Funds have been fully released to the Borrower.
9. Counterparts. This Disbursement Agreement may be signed by each party on a
separate signature page, and when the executed signature pages are combined, shall constitute
one single instrument with the same effect as if all signatories had executed the same instrument.
10. Binding Effect. This Disbursement Agreement shall be binding on and inure to
the benefit of the parties to this Disbursement Agreement and their heirs, personal
representatives, successors, and assigns, except as otherwise provided in this Disbursement
Agreement.
11. Governing Law. This Disbursement Agreement has been negotiated and entered
in the State of California, and shall be governed by, construed and enforced in accordance with
the internal laws of the State of California, applied to contracts made in California by California
domiciliaries to be wholly performed in California, without regard to conflict of law principles.
12. Interpretation. No provision in this Disbursement Agreement is to be interpreted
for or against any party hereto on the basis that a certain party or its legal representatives drafted
such provision.
13. No Waiver: Amendments. No breach of any provision hereof may be waived
unless in writing. Waiver of any one breach of any provision hereof shall not be deemed to be a
waiver of any other breach of the same or any other provision hereof. This Disbursement
Agreement may be amended only by a written agreement executed by the parties in interest at
the time of the modification.
14. Further Assurances. The parties hereto hereby agree to execute and deliver such
other documents and to take other actions as may be reasonably necessary in order to further the
purposes of this Disbursement Agreement.
Disbursement Agreement 8 Coral Mountain Apartments
15. Severance. If any provision of this Disbursement Agreement is determined by a
court of competent jurisdiction to be illegal, invalid or unenforceable, then such provision will be
deemed to be severed and deleted from this Disbursement Agreement as a whole, and provided
that the purpose and intent of this Disbursement Agreement can still be served after such
severance and deletion, then neither such provision, nor its severance and deletion shall in any
way affect the validity of the remaining provisions of this Disbursement Agreement.
[Remainder of Page Intentionally Left Blank.]
Disbursement Agreement 9 Coral Mountain Apartments
IN WITNESS WHEREOF, the Senior Lender, the Authority and the Borrower have
executed this Disbursement Agreement as of the date first set forth above.
SENIOR LENDER:
CITIBANK, N.A.,
a national banking association
By:
Name:
Brian Dale
Title:
Vice President
Disbursement Agreement S-1 Coral Mountain Apartments
AUTHORITY:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
Disbursement Agreement 3-2 Coral Mountain Apartments
ATTEST:
Authority Secretary
Disbursement Agreement
AUTHORITY:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
By: _
Name:
Title:
S-2
Executive Director
Coral Mountain Apartments
BORROWER:
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC, a California
limited liability company, its administrative
general partner
By: KID Housing
By: _
Name:
Title:
Inc., a California
By: WCH Affordable VIII, LLC, a California
limited liability company, its managing
general partner
By: Western Community Housing, Inc., a
California nonprofit public benefit
corporation, its sole member and
manager
� 1
By:
Name: Sandra C. Gibbons
Title: Chief Financial Officer
Disbursement Agreement S-3 Coral Mountain Apartments
ACKNOWLEDGED AND CONSENTED TO:
INVESTOR:
HAMILTON USBCDC INVESTMENTS, L.P.
By: Hamilton Investments, LLC, its general partner
By: �Lz
J M. Huskey, Manager and Member
Disbursement Agreement S-4 Coral Mountain Apartments
EXHIBIT A
PROJECT BUDGET
Disbursement Agreement A-1 Coral Mountain Apartments
Coral Mountain Apartments
79-625 Vista Coralina Lane
La Quinta, CA 92253
FINAL LEGAL
CLOSING
BUDGET
Acquisition Costs thi title and escrow:
55,000.00
TOTAL ACQUISITION COSTS
55.000.00
Ceretrectian Contract
HC: Construction Contract
31,602,594.00
SUB -TOTAL CONTRACT AMOUNT
31,602,594.00
HC: Hard Costs Contingency 76)
2,212,181.58
TOTAL HARD COSTS
33,814,775.58
SOFT COSTS
Citibank: Interest Reserve (during construction)
2,047,851.82
Construction Loan Repayment (prior to Conversion)
4,237,291.00
Citibank: Origination Fee -Construction
244,000.00
Citibank: Legal
87,600.00
Citibank: Appraisal
8,500.00
Citibank: Construction Cost Review and Seismic
7,300.00
Citbank: Undenxnting & Inspection Costs
5,000.00
Citibank, Monthly Construction Inspections
27,000.00
Citibank t Insurance Review
1,250.00
Obbank: Other Closing Costs 1 (Zoning, Floor Credit)
206.00
Legal & Accounting Fees: Tax Cretlit Syndication
50.000.00
Legal & Accounting Fees: Other 1 (Sher r)
243,084A0
ME
1,719,146.00
Professional Fees: Consultant
106,700.00
Professional Fees: U.S. Bank Inspection Fees
9,000.00
Professional Fees. Title, Escrow and Recording bru lulling Monthly The)
77,000.00
Professional Fees. Other 1 (Banower 3N Party Reports)
25,700.00
Financial'. Other (Cost of Bond Issuance Fees)
3491
Application Fees: Tax Credit Fees
2Q368.00
Application Fees: Permit and Fees
3,775,066.00
Construction Period: Real Estate Taxes
8,800.00
Construction Period: Security
65,000.00
Constmc6on Penrod: Insurance (BR. Hazard & Use)
598,500.00
Construction Period: FF&E
233,000.00
Construction Period: Other (Miscellaneous)
49,500.00
ConstructioulLeasei Man etingli-e ens Up Cost
105,000.00
Construction/Lease-Up: Other 1 (Lease -Up Reserve)
300.000.00
Developer Fee: Developer Fee (Paid at Closing)
625,000.00
Developer Fee: Developer Fee (During Consel-spee-up)
510,000.00
SOX Cost Contln a motli formula as necessary per RAC
204,972.00
TOTAL SOFT COSTS
15,741,311.82
TOTAL CONSTRUCTION/LEASE-UP COSTS 49,611,087.40
CONVERSION COSTS
Citibank: Construction Loan Repayment
20,142,694.00
Citibank: Interest Reserve (at conversion) & Conversion/Legal Fees
75,03099
Tax Credit Syndi pti Tax CretlN8609's Fees
71,932.00
Reserve: Operating Deficit Reserve
940,612.00
Conversion'. Other l(La Quints HA Project Contingency)
4,759,342.81
Conversion: Other 3(Mlscellaneous)
5,500.00
Developer Fee (At and/or After Conversion)
1,365,000.00
TOTAL CONVERSION COSTS 27,359,981.60
TOTAL PROJECT COSTS 76,971,069.00
CONSTRUCTION/LEASE-UP SOURCES OF FUNDS
Cid Construction Loan
2414001000.00
Construction Source #1 (City of La Cointa Housing Authoxii
161842,518.85
TC Equity- let Installment -Closing
3,377,950.00
TC Equity- 2nd Installment- Later Df 10O % Compoton or 4lll2014
5,066,926.00
TOTAL CONSTRUCTION / LEASE -UP SOURCES
49,687,394.85
CONVERSION SOURCES
TC Equity- 3rd Installment- Later of Conversion or 4I1I2015
8,060,92000
TC Equity- 4th Installment- Receipt of 8609s
310,269.00
Consersion Source #1 (City of La Ol Housing Authority)
12,157,401.15
Permanent Loan
6,755,000.00
TOTAL CONVERSION SOURCES 27,283,676.15
TOTAL PROJECT SOURCES 76,971,069.00
Loan Policy of Title Insurance
American Land Title Association Loan Policy 6-17-06
Rr
* ^ * Policy Number A04232-LX-134696
* * Issued by Old Republic National Title Insurance Company
(i��,
* * Any notice of claim and any other notice or statement in writing required to be given to the Company
* * under this Policy must be given to the Company at the address shown in Section 1.7 of the conditions.
COVERED RISKS
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B, AND THE CONDITIONS,
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, a Minnesota corporation (the "Company l insures as of Date of Policy and, to the extent
stated in Covered Risks 11, 13, and 14, after Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by
the Insured by reason of:
1. Title being vested other than as stated in Schedule A.
2. Any defect in or lien or encumbrance on the Tide. This Covered Risk includes but is not limited to insurance against loss from
(a) A defect in the Title caused by
(i) forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation;
(ii) failure of any person or Entity to have authorized a transfer or conveyance;
(iii) a document affecting Title not properly created, executed, witnessed, sealed, acknowledged, notarized, or delivered;
(iv) failure to perform those acts necessary to create a document by electronic means authorized by law;
(v) a document executed under a falsified, expired, or otherwise invalid power of attorney;
(vi) a document not properly fled, recorded, or indexed in the Public Records including failure to perform those acts by electronic means
authorized by law; or
(vii) a defective judicial or administrative proceeding.
(b) The lien of real estate taxes or assessments imposed on the Title by a governmental authority due or payable, but unpaid.
(c) Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate
and complete land survey of the Land. The term "encroachment" includes encroachments of existing improvements located on the Land
onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land.
3. Unmarketable Title.
4. No right of access to and from the Land.
5. The violation or enforcement of any law, ordinance, permit, or governmental regulation (including those relating to building and zoning)
restricting, regulating, prohibiting, or relating to:
(a) the occupancy, use, or enjoyment of the Land;
(b) the character, dimensions, or location of any improvement erected on the Land;
(c) the subdivision of land; or
(d) environmental protection
if a notice, describing any part of the Land, is recorded in the Public Records setting forth the violation or intention to enforce, but only to the
extent of the violation or enforcement referred to in that notice.
6. An enforcement action based on the exercise of a governmental police power not covered by Covered Risk 5 if a notice of the enforcement
action, describing any part of the Land, is recorded in the Public Records, but only to the extent of the enforcement referred to in that notice.
7. The exercise of the rights of eminent domain if a notice of the exercise, describing any part of the Land, is recorded in the Public Records.
8. Any taking by a governmental body that has occurred and is binding on the rights of a purchaser for value without Knowledge. -
9. The invalidity or unenforceability of the lien of the Insured Mortgage upon the Title. This Covered Risk includes but is not limited to insurance
against loss from any of the following impairing the lien of the Insured Mortgage
(a) forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation;
(b) failure of any person or Entity to have authorized a transfer or conveyance;
(c) the Insured Mortgage not being propedy created, executed, witnessed, sealed, acknowledged, notarized, or delivered;
(d) failure to perform those acts necessary to create a document by electronic means authorized by law;
(e) a document executed under a falsified, expired, or otherwise invalid power of attorney;
(f) a document not properly fled, recorded, or indexed in the Public Records including failure to perform those acts by electronic means
authorized by law; or
(g) a defective judicial or administrative proceeding.
(Continued on Next Page)
Loan Policy
American Land Title Association Loan Policy 6-17-06
* Policy Number A04232-LX-134696
10. The lack of priority of the lien of the Insured Mortgage upon the Title over any other lien or encumbrance.
11. The lack of priority of the lien of the Insured Mortgage upon the Title
(a) as security for each and every advance of proceeds of the loan secured by the Insured Mortgage over any statutory lien for services, labor,
or material arising from construction of an Improvement or work related to the Land when the improvement or work is either
(I) contracted for or commenced on or before Date of Policy; or
(ii) contracted for, commenced, or continued after Date of Polley if the construction is financed, in whole or In part, by proceeds of the
loan secured by the Insured Mortgage that the Insured has advanced or is obligated on Date of Policy to advance; and
(b) over the lien of any assessments for street improvements under construction or completed at Date of Policy.
12. The Invalidity or unenforceability of any assignment of the Insured Mortgage, provided the assignment is shown in Schedule A, or the failure of
the assignment shown in Schedule A to vest title to the Insured Mortgage in the named Insured assignee free and clear of all liens.
13. The invalidity, unenforceability, ladle of priority, or avoidance of the lien of the Insured.Mortgage upon the Title
(a) resulting from the avoidance in whole or in part, or from a court order providing an alternative remedy, of any transfer of all or any part of
the title to or any interest in the Land occurring prior to the transaction creating the lien of the Insured Mortgage because that prior transfer
constituted a fraudulent or preferential transfer under federal bankruptcy, state insolvency, or similar creditors' rights laws; or
(b) because the Insured Mortgage constitutes a preferential transfer under federal bankruptcy, state insolvency, or similar creditors' rights laws
by reason of the failure of its recording in the -Public Records
(i) to be timely, or
(tt) to impart notice of its existence to a purchaser for value or to a judgment or lien creditor.
14. Any defect in or lien or encumbrance on the Title or other matter included in Covered Risks 1 through 13 that has been created or attached or
has been filed or, recorded in the Public Records subsequent to Date of Policy and prior to the recording of the Insured Mortgage In the Public
Records.
The Company will also pay the costs, attomeys' fees, and expenses incurred in defense of any matter insured against by this Policy, but only to the
extent provided in the Conditions.
Issued through the Office of
Old Republic Title Company
3400 Central Avenue, Suite 100
Riverside, CA 92506
�,r1�i�L'CY
Authorized Signatory
Old Republic National Tide Insurance Company
400 Second Avenue South
Minneapolis, Minnesota 55401
11
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or
expenses that arise by reason of:
1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or
relating to
(i) the occupancy, use, or enjoyment of the Land;
(ii) the character, dimensions, or location of any improvement erected on the Land;
(iii) the subdivision of land; or
(iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does
not modify or limit the coverage provided under Covered Risk 5.
(b) Any governmental police power. This Exdusion 1(b) does not modify or limit the coverage provided under Covered Risk 6.
2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 6.
3. Defects, liens, encumbrances, adverse claims, or other matters
(a) created, suffered, assumed, or agreed to by the Insured Claimant;
(b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing
to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;
(c) resulting in no loss or damage to the Insured Claimant;
(d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13, or
14); or
(e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage.
4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing -business laws of
the state where the Land is situated.
5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured
Mortgage and is based upon usury or any consumer credit protection or truth -in -lending law.
6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of
the Insured Mortgage, is
(a) a fraudulent conveyance or fraudulent transfer, or
(b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy.
7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and
the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered
Risk 11(b).
Old Republic National Title Insurance Company
400 Second Avenue South Minneapolis, Minnesota 55401
Policy No: A04232-LX-134696
Order No: 1117011827.1
Date of Policy: August 29th, 2012 at 3:25:00 PM
SCHEDULE A
Amount of Insurance: $29,000,000.00
Premium: $100.00
Address Reference:
79-625 Vista Coralina Lane
La Quinta, CA 92253
1. Name of Insured:
Loan No:
La Quinta Housing Authority, a public body, corporate and politic
2. The estate or interest in the Land that is encumbered by the Insured Mortgage is:
Leasehold
3. Title is vested in:
Coral Mountain Partners, L.P., a California limited partnership
4. The Insured Mortgage and its assignments, if any, are described as follows:
Leasehold Deed of Trust with Assignment of Rents to secure the indebtedness shown below:
Amount : $ 29,000,000.00
Trustor : Coral Mountain Partners, L.P., a California limited partnership
Trustee : Old Republic Title Company
Beneficiary : La Quinta Housing Authority, a public body, corporate and politic -
Dated : August 1, 2012
Recorded : August 29, 2012, Instrument Number 2012-412615
S. The Land referred to in this Policy is situated in the County of Riverside, City of La Quinta, State of California, and is described as
follows:
Leasehold estate as created by that certain Ground Lease Dated August 1, 2012, made by and between La
Quinta Housing Authority, a public body, corporate and politic, as lessor, and Coral Mountain Partners, L.P., a
California limited partnership, as lessee, for the term of 55 years and upon the terms and conditions contained
in said lease and subject to provisions contained in the lease which limit the right of possession, a
Memorandum thereof recorded August 29, 2012, Instrument No. 2012-412609, in and to the following:
In the City of La Quinta, County of Riverside, State of California, that portion of the West half of the East half
and the East half of the West half of the Northwest quarter of the Southeast quarter of Section 29, Township 5
South, Range 7 East, San Bernardino Base and Meridian, more particularly described as follows:
Page—Lof�Pages
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
Commencing at the East quarter corner of said Section 29; thence South 890 39' 16" West along the North line
of said Southeast quarter, a distance of 1,656.57 feet to the Northeast corner of said West half of the East half
of the Northwest quarter of the Southeast quarter of Section 29; thence South 000 08' 10" East along the East
line of said West half of the East half of the Northwest quarter of the Southeast quarter Section 29, a distance
of 60.93 feet to the South right-of-way line of Highway 111 as granted to the City of La Quinta per Instrument
No. 2007-0076267 recorded February 1, 2007 and re -recorded February 14, 2007 as Instrument No. 2007-
0103255, O.R.;
Thence continuing South 00108' 10" East along said East line a distance of 626.13 feet to the beginning of a
non -tangent curve, concave Northerly, having a radius of 300.00 feet, a radial line to said point bears South.
010 53' 43" West, and the true point of beginning;
Thence leaving said East line and Westerly along the arc of said curve, through a central angle of 16' 09' 07",
an arc distance of 84.57 feet to the beginning of a reverse curve concave Southerly, having a radius of 300.00
feet, a radial line to said point bears North 180 02' 50" East; thence Westerly along the arc of said curve
through a central angle of 180 02' 50", an arc distance of 94.50 feet; thence North 900 00' 00" West a distance
of 264.78 feet to the beginning of a tangent curve, concave Southeasterly, having a radius of 200.00 feet;
Thence Southwesterly along the arc of said curve, through a central angle of 900 09' 34", an arc distance of
314.72 feet; thence non -tangent to said curve South 891 50' 26" West, a distance of 21.18 feet to the West
line of said East half of the West half of the Northwest quarter of the Southeast quarter of Section 29; thence
South 001 09' 34" East along said West line, a distance of 500.13 feet to the South line of said Northwest
quarter of the Southeast quarter of Section 29; thence South 890 48' 22" East along said South line a distance
of 662.14 feet to said East line of the West half of the East half of the Northwest quarter of the Southeast
quarter of Section 29; thence North 000 18' 10" West along said East line, a distance of 673.63 feet to the true
point of beginning.
Said land is also shown as Parcel 2 of Lot line Adjustment No. 2010-508 as Disclosed by Grant Deed recorded
December 2, 2010, as Instrument No. 2010-575516, of Official Records.
APN:600-020-054
6. This policy incorporates by reference those ALTA endorsements selected below:
❑ 4-06 Condominium _
❑ 4.1-06
❑ 5-06 Planned Unit Development
❑ 5.1-06
❑ 6-06 Variable Rate
❑ 6.2-06 Variable Rate — Negative Amortization
❑ 8.1-06 Environmental Protection Lien Paragraph b refers to the following state statute(s): NONE
❑ 9-06 Restrictions, Encroachments, Minerals
❑ 13.1-06 Leasehold Loan
❑ 14-06 Future Advance -Priority
❑ 14.1-06 Future Advance -Knowledge
❑ 14.3-06 Future Advance -Reverse Mortgage
❑ 22-06 Location The type of improvement is a Vacant land, and the street address is as shown above.
Page 2 of 6 Pages
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
Policy No A04232-LX-134696
SCHEDULE B
Part I
Exceptions From Coverage
Except as provided in Schedule B Part II, this policy does not insure against loss or damage, and the Company will not pay costs,
attomeye fees, or expenses that arise by reason of:
i. Taxes and assessments, general and special, for the fiscal year 2012-2013, a lien, but not
yet due or payable as of the date of this policy.
2. The lien of supplemental taxes, if any, assessed pursuant to the provisions of Section 75, et
seq., of the Revenue and Taxation Code of the State of California arising as a result of
change of ownership or new construction occurring on or after the date of this policy.
None currently due and payable as of the date of this policy.
3. Taxes and assessments levied by the Coachella Valley Water District.
None currently due and payable as of the date of this policy
4. Said land lies within the La Quinta Redevelopment Project Area and subject to the terms and
conditions as contained therein, as disclosed by the document which recorded October 4,
2007, Series No. 2007-619749, Official Records.
5. Terms and provisions as contained in an instrument,
Entitled
Standard Domestic Water System and Sanitation System Installation
Agreement
Executed By
Coachella Valley Water District and the City of La Quinta
Dated
July 28, 2011
Recorded
October 20, 2011 in Official Records as Instrument Number 2011-
454553
6. Terms and provisions as contained in an instrument,
Entitled
Quitclaim Deed
Executed By
City of La Quinta, as successor Agency to the former La Quinta
Redevelopment Agency
Recorded
March 7, 2012 in Official Records as Instrument Number 2012-
105932
Page—Lof_§.Pages
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
Policy No A04232-LX-134696
An easement affecting that portion of said land and for the purposes stated herein and
incidental purposes as provided in the following
Instrument Grant of Easement and Agreement
Granted To City of La Quinta, a California municipal corporation
For right of way, public street, utility purposes and ancillary uses
Recorded May 4, 2012 in Official Records as Instrument Number 2012-0206092
Affects Westerly and Northerly portion of said land
Subject to the terms and conditions as contained therein
8. Any rights, interests or claims which may exist or arise by reason of the facts shown on a
survey plat prepared by MSA Consulting, Inc. , on August 23, 2012, designated Job No. J.N.
1920, as follows:
A) The fad that the fences do not track the property line. (chain link fence south of the
southerly property line 0.7' )
B) The fad the the block wall lies easterly and westerly of the easterly property line. (Varying
distances of .04' to 0.7')
9. The terms, covenants and conditions of the lease or leases described or referred to herein
and the effect of any failure to comply therewith.
10. An easement affecting that portion of said land and for the purposes stated herein and
incidental purposes as provided in the following
Instrument Grant of Easement/ Pipeline(s)
Granted To Coachella Valley Water District, a public agency of the State of
California
For Pipeline
Dated June 11, 2012
Recorded July 6, 2012 in Official Records as Instrument Number 2012-315108
Affects a portion of the premises
11. Agreement for Regulatory Agreement and Declaration of Restrictive Covenants
Executed By California Municipal Finance Authority
and Between Coral Mountain Partners, L.P., a California limited partnership
On the terms, covenants and conditions contained therein,
Dated August 1, 2012
Recorded August 29, 2012 in Official Records as Instrument Number 2012-
412610
Page 4 of 6-Pages
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
Policy No A04232-LX-134696
12. Agreement for
Executed By
and Between
Affordable Housing Regulatory Agreement
La Quinta Housing Authority, a public body, corporate and politic
Coral Mountain Partners, L.P., a California limited partnership
On the terms, covenants and conditions contained therein,
Dated August 1, 2012
Recorded August 1, 2012 in Official Records as Instrument Number 2012-
412611
13. Multifamily Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing (California) to secure the indebtedness shown below:
Amount
: $ 24,400,000.00
Trustor
: Coral Mountain Partners, L.P., a California limited partnership
Trustee
: Old Republic Title Company
Beneficiary
: California Municipal Finance Authority, a joint exercise of powers
authority
Dated
: August 1, 2012
Recorded
: August 29, 2012, Instrument Number 2012-412612
Loan Number
: 10-7044852
Assignment of Deed of Trust and Loan Documents:
From : California Municipal Finance Authority
To : Citibank, N.A., a national banking association
Dated : August 1, 2012
Recorded : August 29, 2012, Instrument Number 2012-412613
Page-5—of_rLPages
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
Policy No A04232-LX-134696
SCHEDULE B
Part II
In addition to the matters set forth in Part I of this Schedule, the Title is subject to the following matters, and the Company insures
against loss or damage sustained in the event that they are not subordinate to the lien of the Insured Mortgage:
None reported
Page 6 of 6 Pages
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
ENDORSEMENT Attached to:
Policy No: A04232-LX-134696
Order No:1117011827.1
OLD REPUBLIC NATIONAL
* TITLE INSURANCE COMPANY
a Corporation, of Minneapolis, Minnesota
The Company hereby assures the Insured that the Company will not deny liability under the policy or any endorsements issued
therewith solely on the grounds that the policy and/or endorsement(s) were issued electronically and/or lack of signatures in
accordance with Paragraph 14(c) of the Conditions.
This endorsement is issued as part of the policy. -Except as it expressly states, it does not (i) modify any of the terms and
provisions of the policy, (ii) modify any prior endorsements, (III) extend the Date of Policy, or (Iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement Is inconsistent with an express provision of
this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of
the policy and of any prior endorsements.
Countersigned:
BY Jeaa l'.v f qp
Validating Officer
Page 1 of 1 Pages
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
El
Aached to:
ENDORSEMENT Policy No: A042332-LX-134696
Order No:1117011827.1
*t OLD REPUBLIC NATIONAL
* Yi TITLE INSURANCE COMPANY
* * * a Corporation, of Minneapolis, Minnesota
1. As used in this endorsement, the following terms shall mean:
a. "Evicted" or "Eviction": (a) the lawful deprivation, in whole or in part, of the right of possession insured by this
policy, contrary to the terms of the Lease or (b) the lawful prevention of the use of the Land or the Tenant
Leasehold Improvements for the purposes permitted by the Lease, in either case, as a result of a matter
covered by this policy.
b. "Lease": the lease agreement described in Schedule A.
C. "Leasehold Estate": the right of possession for the Lease Term.
d. "Lease Term": the duration of the Leasehold Estate, including any renewal or extended term if a valid option to
renew or extend is contained in the Lease.
e. "Personal Property": chattels located on the Land and property that, because of their character and manner of
affixation to the Land, can be severed from the Land without causing appreciable damage to themselves or to
the Land to which they are affixed.
f. "Remaining Lease Term": the portion of the Lease Tenn remaining after the Insured has been Evicted as a
result of a matter covered by this policy.
g. 'Tenant": the tenant under the Lease and, after acquisition of all or any part of the Title in accordance with the
provisions of Section 2 of the Conditions of this policy, the Insured Claimant.
h. 'Tenant Leasehold Improvements": Those improvements, including landscaping, required or permitted to be
built on the Land by the Lease that have been built at the Insured's expense or in which the Insured has an
interest greater than the right to possession during the Lease Term.
2. Valuation of Estate or Interest Insured:
If in computing loss or damage it becomes necessary to value the Title as the result of a covered matter that results
in an Eviction of the Tenant, then that value shall consist of the value for the Remaining Lease Term of the Leasehold
Estate and any Tenant Leasehold Improvements existing on the date of the Eviction. The Insured Claimant shall
have the right to have the Leasehold Estate and the Tenant Leasehold Improvements valued either as a whole or
separately. In either event, this determination of value shall take into account rent no longer required to be paid for
the Remaining Lease Term.
3. Additional items of loss covered by this endorsement:
If the Insured acquires all or any part of the Title in accordance with the provisions of Section 2 of the Conditions of
this policy and thereafter is Evicted, the following items of loss, if applicable, shall be included in computing loss or
damage incurred by the Insured, but not to the extent that the same are included in the valuation of the Title.
a. The reasonable cost of removing and relocating any Personal Property that the Insured has the right to remove
and relocate, situated on the Land at the time of Eviction the cost of transportation of that Personal Property
for the initial one hundred miles incurred in connection with the relocation, and the reasonable cost of
repairing the Personal Property damaged by reason of the removal and relocation.
(Continued on Next Page)
ALTA Form 13.1-D6 (Adopted 6117/06)
Leasehdd -Lmn Page 1 of 2 Pages
ENDORSEMENT
Attached to:
Policy No: A04232-LX-134696
Order No:1117011827.1
* * OLD REPUBLIC NATIONAL
* TITLE INSURANCE COMPANY
* * * * a Corporation, of Minneapolis, Minnesota
(Continued From Previous Page)
b. Rent or damages for use and occupancy of the Land prior to the Eviction that the Insured as owner of the
Leasehold Estate may be obligated to pay to any person having paramount title to that of the lessor in the
Lease.
c. The amount of rent that, by the terms of the Lease, the Insured must continue to pay to the lessor after
Eviction with respect to the portion of the Leasehold Estate and Tenant Leasehold Improvements from which
the Insured has been Evicted.
d. The fair market value, at the time of the Eviction, of the estate or interest of the Insured in any lease or
sublease made by Tenant as lessor of all or part of the Leasehold Estate or the Tenant Leasehold
Improvements.
e. Damages that the Insured is obligated to pay to lessees or sublessees on account of the breach of any lease or
sublease made by the Tenant as lessor of all or part of the Leasehold Estate or the Tenant Leasehold
Improvements caused by the Eviction.
f. Reasonable costs incurred by the Insured to secure a replacement leasehold equivalent to the Leasehold
Estate. ..
g. If Tenant Leasehold Improvements are not substantially completed at the time of Eviction, the actual cost
incurred by the Insured, less the salvage value, for the Tenant Leasehold Improvements up to the time of
Eviction. Those costs include costs incurred to obtain, land use, zoning, building and occupancy permits,
architectural and engineering fees, construction management fees, costs of environmental testing and reviews,
and landscaping costs.
This endorsement Is issued as part of the policy. Except as it expressly states, it does not (1) modify any of the terms and
provisions of the polity, (0) modify any prior endorsements, (III) extend the Date of Policy, or (iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of
this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of
the policy and of any prior endorsements to it.
Dated : August 29th, 2012
Countersign/edd):
By �i�il/IyYiJY.G A�
Validating Officer
ALTA Form 13.1-06 (AdWad 6117/06)
wn: d - woo
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612)371-1111
Paae 2 of 2 Paaes
ENDORSEMENT
Attached to:
Policy No: A04232-LX-134696
Order No:1117011827.1
OLD REPUBLIC NATIONAL
* TITLE INSURANCE COMPANY
* * * a Corporation, of Minneapolis, Minnesota
*
The Company insures against loss or damage sustained by the Insured by reason of the failure of the Land as described in
Schedule A to be the same as identified on the survey made by MSA Consulting, Inc dated 8/23/2012, and designated Job No.
J.N.1920.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and
provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy
and of any prior endorsements.
Dated : August 29th, 2012
Countersign/eddy:
By ftiYt�O' cDCY
Validating Officer
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
of
CLTA Form 116.1-06 / ALTA Form 26-06
Sam as SuM (10 1608) Paae 1 of 1 Paces
URTIC TIM 58-06 ENDORSEMENT Attached to:
Policy No: A04232-LX-134696
Order No: 1117011827.1
* * OLD REPUBLIC NATIONAL
* * TITLE INSURANCE COMPANY
* * a Corporation, of Minneapolis, Minnesota
Dated as of Date of Policy to which this endorsement is attached.
Against loss or damage which the Insured shall sustain by reason of the failure to the map attached to this policy to
correctly show the location and dimensions of the Land according to the Public Records.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (I) modify any of the
terms and provisions of the policy, (0) modify any prior endorsements, (ill) extend the Date of Policy, or (iv) increase
the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an
express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of
the terms and provisions of the policy and of any prior endorsements.
Dated : August 29th, 2012
Countersigned:
By
Validating Officer
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
T.I.M. %-06 (Rev. 06-01-07)
ALTA LeMcr - W imp,ovetl Lard - Pace 1 of 1 Paces
ENDORSEMENT
Attached to:
Policy No: A04232-LX-134696
Order No: 1117011827.1
OLD REPUBLIC NATIONAL
* TITLE INSURANCE COMPANY
** * a Corporation, of Minneapolis, Minnesota
*
The Company insures against loss or damage sustained by the Insured by reason of the Land being taxed as part of a larger
parcel of land or failing to constitute a separate tax parcel for real estate taxes.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and
provisions of the policy, (ii) modify any prior. endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy
and of any prior endorsements.
Dated : August 29th, 2012
Countersigned:
By /�Y.iWoy1?'.t> airy
Validating Officer
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
ALTA Form 16-06 (Adopted 6/17/06)
Single Tu Parcel
Pace 1 of 1 Paces
FTGLi 11G7-06 ENDORSEMENT Attached to:
Policy No: A04232-LX-134696
Order No: 1117011827.1
OLD REPUBLIC NATIONAL
TITLE INSURANCE COMPANY
It * * * a Corporation, of Minneapolis, Minnesota
The Company insures against loss or damage sustained by reason of the failure of the Land described as Parcel In
Schedule to constitute a lawfully created parcel according to the Subdivision Map Act (Section 66410, et seq., of the
California Government Code) and local ordinances adopted pursuant thereto.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and
provisions of the policy, (ii) modify any prior endorsements, (III) extend the Date of Policy, or (iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy
and of any prior endorsements.
Dated : August 29th, 2012
Countersigned:
By Aa0w4'.t�
Validating Officer
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stork Company
40D Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
of
CLTA Form 116.7-06 (Rev. 03-OM7)
ALTA-owWs"l n Pace 1 of 1 Paoes
ENDORSEMENT
Attached to:
Policy No: AD4232-LX-134696
Order No: 1117011827.1
**** ** OLD REPUBLIC NATIONAL
* 9z * TITLE INSURANCE COMPANY
** * * a Corporation, of Minneapolis, Minnesota
*
1. Covered Risk 11(a) of this policy is deleted
2. The insurance [for Construction Loan Advances] added by Section 3 of this endorsement is subject to the
exclusions in Section 4 of this endorsement and the Exclusions from Coverage in the Policy, the provisions of the Conditions, and
the exceptions contained in Schedule B. For the purposes of this endorsement and each subsequent Disbursement Endorsement:
a. "Date of Coverage", is r 1 [Date of Policy] unless the Company sets a different
Date of Coverage by an ALTA 33-06 Disbursement Endorsement issued at the discretion of the Company.
b. "Construction Loan Advance," shall mean an advance that constitutes Indebtedness made on or before Date
of Coverage for the purpose of financing in whole or in part the construction of improvements on the Land.
C. "Mechanic's Lien," shall mean any statutory lien or claim of lien, affecting the Title, that arises from services
provided, labor performed, or materials or equipment furnished.
3. The Company insures against loss or damage sustained by the Insured by reason of:
a. The invalidity or unenforceability of the lien of the Insured Mortgage as security for each Construction Loan
Advance made on or before the Date of Coverage;
b. The lack of priority of the lien of the Insured Mortgage as security for each Construction Loan Advance made
on or before the Date of Coverage, over any lien or encumbrance on the Title recorded in the Public Records and not shown in
Schedule B; and
C. The lack of priority of the lien of the Insured Mortgage, as security for each Construction Loan Advance made
on or before the Date of Coverage over any Mechanic's Lien, if notice of the Mechanic's Lien is not fled or recorded in the Public
Records, but only to the extent that the charges for the services, labor, materials or equipment for which the Mechanic's Lien is
claimed were designated for payment in the documents supporting a Construction Loan Advance disbursed by or on behalf of the
Insured on or before Date of Coverage..
4 This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or
expenses) by reason of any Mechanic's Lien arising from services, labor, material or equipment: _
a. furnished after Date of Coverage; or
b. not designated for payment in the documents supporting a Construction Loan Advance disbursed by or
on behalf of the Insured on or before Date of Coverage.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and
provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy
and of any prior endorsements.
ALTA 32
Paoe 1 of 2 Paaes
Dated : August 29th, 2012
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
4D0 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
Countersigned: 5�
ByRL7O'A" aG Afi�ls
Validating Officer
NSA 32
Paue 2 of 2 Paaes
FG5t033 ENDORSEMENT Attached
Policy No: A0423232-LX-134696
Order No:1117011827.1
OLD REPUBLIC NATIONAL
TITLE INSURANCE COMPANY
* * * a Corporation, of Minneapolis, Minnesota
The Company insures against loss or damage sustained by the Insured in the event that the owner of the easement
referred to in paragraph 7 of Schedule B shall, for the purpose of ** compel the removal of any portion of the improvements on
the Land which encroach upon said easement.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and
provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy
and of any prior endorsements.
** right of way, public street, utility purposes and ancillary uses
Dated : August 29th, 2012
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
111"nt
Countersigned:
By 6tYY!/i �d
Validating Officer
CLTA Form 103.3-06 (Rev. 03-09-07)
ALTA - Loan Pace 1 of 1 Paces
FTGIS TIM 37 ENDORSEMENT Attached to:
Policy No: A04232-LX-134696
Order No:1117011827.1
** * * * OLD REPUBLIC NATIONAL
# * TITLE INSURANCE COMPANY
* * * * a Corporation, of Minneapolis, Minnesota
Said polity is hereby amended by deleting Paragraph 13 from the Conditions and Stipulations.
The total liability of the Company under said policy and any endorsements therein shall not exceed, in the aggregate, the
face amount of said policy and costs which the Company is obligated under the conditions and stipulations thereof to pay.
This endorsement is made a part of the policy and is subject to the terms and provisions thereof except as modified by the
provisions hereof.
This endorsement is not to be construed as insuring title to said estate or Interest as of any later date than the date of said
policy, except as herein expressly provided as to the subject matter hereof.
Dated : August 29th, 2012
Countersig
n
e
d
:
By KY.�fis .l. aPG
Validating Officer
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
T.I.M. 37
I>�01 Pace 1 of 1 Paces
ENDORSEMENT
Attached to:
Policy No: A04232-LX-134696
Order No: 1117011827.1
OLD REPUBLIC NATIONAL
TITLE INSURANCE COMPANY
** * * a Corporation, of Minneapolis, Minnesota
This company herby insures the insured against loss of damage which said insured shall sustain by reason of:
Any inaccuracies in the following assurances: Water, gas, electric, telephone and sanitary sewer services are available to the
property described in Schedule A either over under or upon public rights of way directly adjacent to said property or over, under
or upon as easement (not terminable by the grantor thereof or by his heirs, personal representatives, successors or assigns) or
the benefit of said property that connects to the public rights of way.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and
provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy
and of any prior endorsements.
Dated : August 29th, 2012
Countersigned:
By
Validating Officer
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
El
F"
pffllsib l
E"7
Utility Facilities
Pace 1 of 1 Paces
ENDORSEMENT
Attached to:
Policy No: A04232-LX-134696
Order No:1117011827.1
** * * * OLD REPUBLIC NATIONAL
TITLE INSURANCE COMPANY
* * * a Corporation, of Minneapolis, Minnesota
1. The Company insures against loss or damage sustained by the Insured in the event that, at Date of Policy,
a. According to applicable zoning ordinances and amendments, the Land is not classified Zone CP;
b. The following use or uses are not allowed under that classification:
Mulit Family Residential
2. There shall be no liability under this endorsement based on
a. Lack of compliance with any conditions, restrictions, or requirements contained in the zoning ordinances and
amendments, Including but not limited to the failure to secure necessary consents or authorizations as a prerequisite to
the use or uses. This paragraph 2.a. does not modify or limit the coverage provided in Covered Risk S.
b. The invalidity of the zoning ordinances and amendments until after a final decree of a court of competent jurisdiction
adjudicating the invalidity, the effect of which is to prohibit the use or uses.
c. The refusal of any person to purchase, lease or lend money on the Title covered by this policy.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (I) modify any of the terms and
provisions of the policy, (ii) modify any prior endorsements, (ili) extend the Date of Policy, or (iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement is Inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy
and of any prior endorsements.
Dated : August 29th, 2012
Countersig
ne
d:
By hf7dfffJ +i?Y.du sp
Validating Officer
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
s
A TA Form 3-06
Zoning Paae 1 of 1 Panes
ENDORSEMENT
Attached to:
Policy No: A04232-LX-134696
Order No:1117011827.1
** * * * OLD REPUBLIC NATIONAL
9 ' * TITLE INSURANCE COMPANY
* * 1F a Corporation, of Minneapolis, Minnesota
* �t
The Company insures against loss or damage sustained by the Insured if, at Date of Policy (i) the Land does not abut and have
both actual vehicular and pedestrian access to and from Vista Coralina Lane (the "Street'l, (ii) the Street is not physically open
and publicly maintained, or (iii) the Insured has no right to use existing curb cuts or entries along that portion of the Street
abutting the Land.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and
provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of
Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy
and of any prior endorsements.
Dated : August 29th, 2012
Countersigned:
By
Validating Officer
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
A Stock Company
400 Second Avenue South, Minneapolis, Minnesota 55401
(612) 371-1111
or
AM:
r x " $6Cf@1d1y
ALTA Form 17-06 (Adopted 6/17106)
Aoxss and Entry
Pace 1 of 1 Paces
CONDITIONS
1. DEFINITION OF TERMS
The following terms when used in this policy mean:
(a) "Amount of Insurance": The amount stated In Schedule A, as
may be increased or decreased by endorsement to this policy,
increased by Section B(b), or decreased by Section 10 of these
Conditions.
(b) "Date of Policy": The date designated as "Date of Policy" in
Schedule A.
(c) "Entity": A corporation, partnership, trust, limited liability
company, or other similar legal entity.
(d) "Indebtedness": The obligation secured by the Insured Mortgage
inducing one evidenced by electronic means authorized by law,
and if that obligation is the payment of a debt, the Indebtedness
is the sum of:
(1) the amount of the prindpal disbursed as of Date of Policy;
(it) the amount of the principal disbursed subsequent to Date
of Policy;
(III) the construction loan advances made subsequent to Date
of Policy for the purpose of finandng in whole or in part
the constriction of an Improvement to the Land or related
to the Land that the Insured was and continued to be
obligated to advance at Date of Policy and at the date of
the advance;
(iv) interest on the loan;
(v) the prepayment premiums, exit fees, and other similar fees
or penalties allowed by law;
(A) the expenses of foreclosure and any other costs of
enforcement;
(vii) the amountsadvancedto assure compliance with laws or
to protect the lien or the priority of the lien of the Insured
Mortgage before the acquisition of the estate or interest in
the Title;
(viii) the amounts to pay taxes and Insurance; and
(ix) the reasonable amounts expended to prevent deterioration
of improvements;
but the Indebtedness is reduced by the total of all payments
and by any amount forgiven by an Insured.
(e) "Insured": The Insured named in Schedule A.
(i) The term "Insured" also induces
(A) the owner of the Indebtedness and each successor in
ownership of the Indebtedness, whether the owner or
successor owns the Indebtedness for its own account
or as a trustee or other fiduciary, except successor
who is an obligor under the provisions of Section
12(c) of these Conditions,
I. the person or Entity who has "control" of the
"transferable record," if the Indebtedness is evidenced
by a "transferable record," as these terms are defined
by applicable electronic transactions law;
ii. successors to an Insured by dissolution, merger,
consolidation, distribution, or reorganization;
successors to an Insured by its conversion to another
kind of Entity,
iv. a grantee of an Insured under a deed delivered
without payment of actual valuable considerabon
conveying the Title
(1) if the stock, shares, memberships, or other
equity interests of the grantee are wholly -owned
by the named Insured,
(2) if the grantee wholly owns the named Insured,
or
(3) if the grantee is wholly -owned by an affiliated
Entity of the named Insured, provided the
affiliated Entity and the named Insured are both
wholly -owned by the same person or Entity;
F) any government agency or instrumentality that is an
insurer or guarantor under an insurance contract or
guaranty Insuring or guaranteeing the Indebtedness
secured by the Insured Mortgage, or any part of it,
whether named as an Insured or not;
(h) With regard to (A), (B), (C), (D), and (E) reserving, however,
all rights and defenses as to any successor that the company
would have had against any predecessor Insured, unless the
successor acquired the Indebtedness as a purchaser for value
without knowledge of the asserted defect, lien, encumbrance,
or other matter insured against by this policy.
(f) "Insured Claimant": An Insured dalming loss or damage.
(g) "Insured Mortgage": The Mortgage described in paragraph 4 of
Schedule A.
(h) "Knowledge" or "Known": Actual knowledge, not constructive
knowledge or notice that may be Imputed to an Insured by reason
of the Public Records or any other records that impart constructive
notice of matters affecting the Title.
(I) "W nc": The land described in Schedule A, and affixed
Improvements that by law constitute real property. The term
"Land" does not include any property beyond the lines of the area
described in Schedule A, nor any right, title, interest, estate, or
easement in abutting streets, roads, avenues, alleys, lanes, ways,
or waterways, but this does not modify or limit the extent that a
right of access to and from the Land is insured by this policy.
(j) "Mortgage": Mortgage, deed. of trust, trust deed, or other security
instrument, inducting one evidenced by electronic means
authorized by law.
(k) "Public Records': Records established under state statutes at Date
of Policy for the purpose of imparting constructive notice of
matters relating to real property to purchasers for value and
without Knowledge. With respect to Covered Risk 5(d), "Public
Records" shall also include environmental protection liens filed in
the records of the clerk of the United States District Court for the
district where the Land is located.
(1) "Title": The estate or interest described in Schedule A.
(m) "Unmarketable Title": Title affected by an alleged or apparent
matter that would permit a prospective purchaser or lessee of the
Title or lender on the Title or a prospective purchaser of the
Insured Mortgage to be released from the obligation to purchase,
lease, or lend if there is a contractual condition requiring the
delivery of marketable title.
2. CONTINUATION OF INSURANCE
The coverage of this policy shall continue in force as of Date of Policy in
favor of an Insured after acquisition of the Tide by an Insured or after
conveyance by an Insured, but only so long as the Insured retains an
estate or interest in the Land, or holds an obligation secured by a
purchase money Mortgage given by a purchaser from the Insured, or
only so long as the Insured shall have liability by reason of warranties in
any transfer or conveyance of the Title. This policy shall not continue in
force in favor of any purchaser from the Insured of either (1) an estate
or Interest in the Land, or (ii) an obligation secured by a purchase
money Mortgage given to the Insured.
3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT
The Insured shall notify the Company promptly in writing (i) in case of
any litigation as set forth in Section 5(a) of these Conditions, (li) in case
Knowledge shall come to an Insured of any claim of title or interest that
is adverse to the Title or the lien of the Insured Mortgage, as insured,
and that might cause loss or damage for which the Company may be
liable by virtue of this policy, or (III) if the Tide or the lien of the Insured
Mortgage, as insured, is rejected as Unmarketable Tide. If the Company
is prejudiced by the failure of the Insured Claimant to provide prompt
notice, the Company's liability to the Insured Claimant under the policy
shall be reduced to the extent of the prejudice.
4. PROOF OF LOSS
In the event the Company is unable to determine the amount of loss
or damage, the Company may, at its option, require as a condition of
.payment that the Insured Claimant furnish a signed proof of loss. The
Proof of loss must describe the defect, lien, encumbrance, or other
matter insured against by this policy that constitutes the basis of loss
or damage and shall state, to the extent possible, the basis of
calculating the, amount of the loss or damage.
S. DEFENSE AND PROSECUTION OF ACTIONS
(a) Upon written request by the Insured, and subject to the options
contained in Section 7 of these Conditions, the Company, at its
own cost and without unreasonable delay, shall provide for the
defense of an Insured in litigation in which any third party
asserts a claim covered by this policy adverse to the Insured.
This obligation is limited to only those stated causes of action
alleging matters insured against by this policy. The Company
shall have the right to select counsel of its choice (subject to the
right of the Insured to object for reasonable cause) to represent
the Insured as to those stated causes of action. It shall not be
liable for and will not pay the fees of any other counsel. The
Company will not pay any fees, costs, or expenses incurred by
the Insured in the defense of those causes of action that allege
matters not insured against by this policy.
(b) The Company shall have the right, in addition to the options
contained in Section 7 of these conditions, at its own cost, to
institute and prosecute any action or proceeding or to do any
other act that in its opinion may be necessary or desirable to
establish the Title or the lien of the Insured Mortgage, as
insured, or to prevent or reduce loss or damage to the Insured.
The Company may take any appropriate action under the terms
of this policy, whether or not it shall be liable to the Insured.
The exercise of these rights shall not be an admission of liability
or waiver of any provision of this policy. If the Company
exercises its rights under this subsection, it must do so
diligently.
(c)Whenever the Company brings an action or asserts a defense as
required or permitted by this policy, the Company may pursue
the litigation to a final determination by a court of competent
jurisdiction, and it expressly reserves the right, in its sole
discretion, to appeal any adverse judgment or order.
6. DUTY OF INSURED CLAIMANT TO COOPERATE
(a) In all cases where this policy permits or requires the Company
to prosecute or provide for the defense of any action or
proceeding and any appeals, the Insured shall secure to the
Company the right to so prosecute or provide defense in the
action or proceeding, including the right to use, at its option,
the name of the Insured for this purpose. Whenever requested
by the Company, the Insured, at the Company's expense, shall
give the Company all reasonable aid (i) in securing evidence,
obtaining witnesses, prosecuting or defending the action or
proceeding, or effecting settlement, and (ii) in any other lawful
act that in the opinion of the Company may be necessary or
desirable to establish the Title, the lien of the Insured Mortgage,
or any other matter as insured. If the Company is prejudiced by
the failure of the Insured to furnish the required cooperation,
the Company's obligations to the Insured under the policy shall
terminate, including any liability or obligation to defend,
prosecute, or continue any litigation, with regard to the matter
or matters requiring such cooperation.
(b) The Company may reasonably require the Insured Claimant to
submit to examination under oath by any authorized
representative of the Company and to produce for examination,
inspection, and copying, at such reasonable times and places as
may be designated by the authorized representative of the
Company, all records, in whatever medium maintained,
including books, ledgers, checks, memoranda, correspondence,
reports, e-mails, disks, tapes, and videos whether bearing a
date before or after Date of Policy, that reasonably pertain to
the loss or damage. Further, if requested by any authorized
representative of the Company, the Insured Claimant shall grant
its permission, in writing, for any authorized representative of
the Company to examine, inspect, and copy all of these records
in the custody or control of a third party that reasonably pertain
to the loss or damage. All information designated as
confidential by the Insured Claimant provided to the Company
pursuant to this Section shall not be disclosed to others unless,
in the reasonable judgment of the Company, it is necessary in
the administration of the claim. Failure of the Insured Claimant
to submit for examination under oath, produce any reasonably
requested information, or grant permission to secure reasonably
necessary information from third parties as required in this
subsection, unless prohibited by law or governmental regulation,
shall terminate any liability of the Company under this policy as to
that claim.
7. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS;
TERMINATION OF LIABILITY
In case of a claim under this policy, the Company shall have the
following additional options:
(a) To Pay or Tender Payment of the Amount of Insurance or to
Purchase the Indebtedness.
(1) To pay or tender payment of the Amount of Insurance under
this policy together with any costs, attomeys' fees, and
expenses incurred by the Insured Claimant that were
authorized by the Company up to the time of payment or
tender of payment and that the Company is obligated to pay;
or
(ii) To purchase the Indebtedness for the amount of the
Indebtedness on the date of purchase, together with any
costs, attomeys' fees, and expenses incurred by the Insured
Claimant that were authorized by the Company up to the time
of purchase and that the Company is obligated to pay.
When the Company purchases the Indebtedness, the Insured
shall transfer, assign, and convey to the Company the
Indebtedness and the Insured Mortgage, together with any
collateral security.
Upon the exercise by the Company of either of the options
provided for in subsections (a)(i) or (ii), all liability and obligations
of the Company to the Insured under this policy, other than to
make the payment required in those subsections, shall terminate,
including any liability or obligation to defend, prosecute, or
continue any litigation.
(b) To Pay or Otherwise Settle With Parties Other Than the Insured or
With the Insured Claimant.
(i) to pay or otherwise settle with other parties for or in the
name of an Insured Claimant any claim insured against under
this policy. In addition, the Company will pay any costs,
attorneys' fees, and expenses incurred by the Insured
Claimant that were authorized by the Company up to the time
of payment and that the Company is obligated to pay; or
(ii) to pay or otherwise settle with the Insured Claimant the loss
or damage provided for under this policy, together with any
costs, attomeys' fees, and expenses incurred by the Insured
Claimant that were authorized by the Company up to the time
of payment and that the Company is obligated to pay.
Upon the exercise by the Company of either of the options provided for
in subsections (b)(i) or (ii), the Company's obligations to the Insured
under this policy for the claimed loss or damage, other than the
payments required to be made, shall terminate, including any liability or
obligation to defend, prosecute, or continue any litigation.
8. DETERMINATION AND EXTENT OF LIABILITY
This policy is a contract of indemnity against actual monetary loss or
damage sustained or incurred by the Insured Claimant who has
suffered loss or damage by reason of matters insured against by this
policy.
(a) The extent of liability of the Company for loss or damage under
this policy shall not exceed the least of
(i) the Amount of Insurance,
(ii) the Indebtedness,
(iii) the difference between the value of the Title as insured and
the value of the Title subject to the risk insured against by
this policy, or
(iv) if a government agency or instrumentality is the Insured
Claimant, the amount it paid in the acquisition of the Title or
the Insured Mortgage in satisfaction of its insurance contract
or guaranty.
(b) If the Company pursues its rights under Section 5 of these
Conditions and is unsuccessful in establishing the Title or the lien
of the Insured Mortgage, as insured,
(i) the Amount of Insurance shall be increased by 10%, and
(ii) the Insured Claimant shall have the right to have the loss or
damage determined either as of the date of the claim was
made by the Insured Claimant or as of the date it is settled
and paid.
(c) In the event the Insured has acquired the Title in the manner
described in Section 2 of these Conditions or has conveyed the
Trde,'then the extent of liability of the Company shall continue as
set forth in Section B(a) of these Conditions.
(d) In addition to the extent of liability under (a), (b),. and (c), the
Company will also pay those costs, attorneys' fees, and expenses
incurred in accordance with Sections 5 and 7 of these Conditions.
9. LIMITATION OF LIABILITY
(a) If the Company establishes the Title, or removes the alleged
defect, lien, or encumbrance, or cures the lack of a right of
access to or from the Land, or cures the claim of Unmarketable
Title, or establishes the lien of the Insured Mortgage, all as
insured, in a reasonably diligent manner by any method,
including litigation and the completion of any appeals, it shall
have fully performed its obligations with respect to that matter
and shall not be liable for any loss or damage caused to the
Insured.
(b) In the event of any litigation, including litigation by the Company
or with the Company's consent, the Company shall have no
liability for loss or damage until there has been a final
determination by a court of competent jurisdiction, and
disposition of all appeals, adverse to the Tile or to the lien of the
Insured Mortgage, as insured.
(c) The Company shall not be liable for loss or damage to the
Insured for liability voluntarily assumed by the Insured in settling
any claim or suit without the prior written consent of the
Company.
10. REDUCTION OF INSURANCE; REDUCTION OR TERMINATION
OF LIABILITY
(a) All payments under this policy, except payments made for costs,
attomeys' fees, and expenses, shall reduce the Amount of
Insurance by the amount of the payment. However, any
payments made prior to the acquisition of Title as provided in
Section 2 of these Conditions shall not reduce the Amount of
Insurance afforded under this policy except to the extent that the
payments reduce the Indebtedness.
(b) The voluntary satisfaction or release of the Insured Mortgage
shall terminate all liability of the Company except as provided in
Section 2 of these Conditions.
11. PAYMENT OF LOSS _
When liability and the extent of loss or damage have been definitely
fixed in accordance with these Conditions, the payment shall be
made within 30 days.
12. RIGHTS OF RECOVERY UPON PAYMENT OR SETTLEMENT
(a) The Company's Right to Recover
Whenever the Company shall have settled and paid a claim
under this policy, it shall be subrogated and entitled to the rights
of the Insured Claimant in the Title or Insured Mortgage and all
other rights and remedies in respect to the claim that the
Insured Claimant has against any person or property, to the
extent of the amount of any loss, costs, attomeys' fees, and
expenses paid by the Company. If requested by the Company,
the Insured Claimant shall execute documents to evidence the
transfer to the Company of these rights and remedies. The
Insured Claimant shall permit the Company to sue, compromise,
or settle in the name of the Insured Claimant and to use the
name of the Insured Claimant in any transaction or litigation
involving these rights and remedies.
If a payment on account of a claim does not fully cover the loss
Of the Insured Claimant, the Company shall defer the exercise of
its right to recover until after the Insured Claimant shall have
recovered its loss.
(b) The Insured's Rights and Limitations
(i) The owner of the Indebtedness may release or substitute
the personal liability of any debtor or guarantor, extend or
Otherwise modify the terms of payment, release a portion
of the Title from the lien of the Insured Mortgage, or
release any collateral security for the Indebtedness, if it
does not affect the enforceability or priority of the lien of
the Insured Mortgage.
00 If the Insured exercises a right provided in (b)(i), but has
Knowledge of any claim adverse to the Title or the lien of the
Insured Mortgage insured against by this policy, the Company
shall be required to pay only that part of any losses insured
against by this policy that shall exceed the amount, if any,
lost to the Company by reason of the Impairment by the
Insured Claimant of the Company's right of subrogation.
(c) The Company's nights Against Noninsured Obligors
The Company's right of subrogation Includes the Insured's rights
against non-insured obligors including the rights of the Insured to
indemnities, guaranties, other policies of insurance, or bonds,
notwithstanding any terns or conditions contained in those
instruments that address subrogation rights.
The Companys right of subrogation shall not be avoided by
acquisition of the Insured Mortgage by an obligor (except an
obligor described in Section 1(eXiXF) of these Conditions) who
acquires the Insured Mortgage as a result of an indemnity,
guarantee, other policy of insurance, or bond, and the obligor will
not be an Insured under this policy.
13. ARBITRATION
Either the Company or the Insured may demand that the claim or
controversy shall be submitted to arbitration pursuant to the Title
Insurance Arbitration Rules of the American Land Title Association
("Rules"). Except as provided in the Rules, there shall be no joinder or
consolidation with dalms or controversies of other persons. Arbitrable
matters may induce, but are not limited to, any controversy or claim
between the Company and the Insured arising out of or relating to this
policy, any service in connection with its issuance or the breach of a
policy provision, or to any other controversy or claim arising out of the
transaction giving rise to this policy. All arbitrable matters when the
Amount of Insurance is $2,000,000 or less shall be arbitrated at the
option of either the Company or the Insured. All arbitrable matters
when the Amount of Insurance is in excess of $2,000,000 shall be
arbitrated only when agreed to by both the Company and the Insured.
Arbitration pursuant to this policy and under the Rules shall be binding
upon the parties. Judgment upon the award rendered by the
Arbitrator(s) may be entered in any court of competent jurisdiction.
14. LIABILITY LIMITED TO THIS POLICY; POLICY ENTIRE
CONTRACT
(a) This policy together with all endorsements, if any, attached to it by
the Company is the entire policy and contract between the Insured
and the Company. In interpreting any provision of this policy, this
policy shall be construed as a whole.
-(b) Any claim of loss or damage that arises out of the status of the
Title or lien of the Insured Mortgage or by any action asserting
such claim shall be restricted to this policy.
(c) Any amendment of or endorsement to this policy must be in
writing and authenticated by an authorized person, or expressly
incorporated by Schedule A of this policy.
(d) Each endorsement to this policy Issued at any time is made a part
of this policy and is subject to all of Its terns and provisions.
Except as the endorsement expressly states, it does not (i) modify
any of the terms and provisions of the policy, (11) modify any prior
endorsement, (III) extend the Date of Policy, or (N) increase the
Amount of Insurance.
15. SEVERABILITY
In the event any provision of this policy, in whole or in part, is held
Invalid or unenforceable under applicable law, the policy shall be
deemed not to include that provision or such part held to be Invalid,
but all other provisions shall remain in full force and effect.
16. CHOICE OF LAW; FORUM
(a) Choice of Law: The Insured acknowledges the Company has
underwritten the risks covered by this policy and determined the
premium charged therefor in reliance upon the law affecting
interests in real property and applicable to the interpretation,
rights, remedies, or enforcement of policies of title insurance of
the jurisdiction where the Land is located.
Therefore, the court or an arbitrator shall apply the law of the
jurisdiction where the Land is located to determine the validity
of claims against the Title or the lien of the Insured Mortgage
that are adverse to the Insured and to interpret and enforce the
terms of this policy. In neither case shall the court or arbitrator
apply its conflicts of law principles to determine the applicable
law.
(b) Choice of Forum: Any litigation or other proceeding brought by
the Insured against the Company must be filed only in a state or
federal court within the United States of America or its
territories having appropriate jurisdiction.
17. NOTICES, WHERE SENT
Any notice of claim and any other notice or statement in writing
required to be given to the Company under this policy must be given
to the Company at 400 Second Avenue South, Minneapolis,
Minnesota 55401-2499.
LANDLORD ESTOPPEL CERTIFICATE
August 29, 2012
California Municipal Finance Authority
2111 Palomar Airport Road, Suite 320
Carlsbad, California 92011
Citibank, N.A.
c/o Citi Community Capital
390 Greenwich Street, 2nd Floor
New York, New York 10013
Re: Ground Lease dated as of August 1, 2012 between the La Quinta Housing
Authority, as Landlord, and Coral Mountain Partners, L.P., as lessee
Lessee: Coral Mountain Partners, L.P., a California
limited partnership ("Borrower")
Premises: Coral Mountain Apartments
79-625 Vista Coralina Lane
La Quinta, California 92253
Commencement Date: August 29, 2012
Termination Date: The earlier of December 31, 2070 and the 55'h
anniversary of the date 75% of the units are
occupied subject to two 10-year renewals
Ladies and Gentlemen:
The undersigned, as Landlord, does hereby state, declare, represent and warrant to
California Municipal Finance Authority, a joint exercise of powers agency duly organized and
existing under the laws of the State of California ("Governmental Lender"), and Citibank,
N.A., a national banking association ("Funding Lender'; and together with Governmental
Lender and each of their respective successors and assigns, collectively, the "Lender"), as
follows:
1. Attached hereto as (i) Exhibit A-1 is a true, correct and complete copy of the
above -captioned ground lease; and (ii) Exhibit A-2 is a true, correct and complete copy of a
Memorandum of Unrecorded Ground Lease (the "Lease") which was recorded or will be
recorded in the Official Records of Riverside County, California (the "Official Records").
Except as set forth on Exhibit A-L there are no amendments, supplements, modifications or
changes to the Lease or additional documents or instruments affecting the rights, duties or
obligations of either party to the Lease with respect to the Lease. Terms not otherwise defined
herein shall have the same meanings as ascribed to such terms in the Lease.
11728662-0
2. The undersigned is the Landlord under the Lease with respect to the premises
described above (the "Property") and the undersigned has not assigned or agreed to assign the
Landlord's interest under the Lease, in whole or in part.
3. All conditions precedent to the effectiveness of the Lease have been satisfied or
waived. The term of the Lease shall expire on the Termination Date indicated above, unless
sooner terminated pursuant to the terms of the Lease or extended in accordance therewith.
4. There are no leases between Landlord or any other person or entity affecting the
Property except the Lease.
5. The Lease has been duly authorized, executed and delivered by Landlord and is in
full force and effect.
6. The current fixed rent under the Lease is $1 per year until the later of (i) full
payment of the Agency Loan Promissory Note by Borrower for the benefit of the La Quinta
Housing Authority, or (ii) the twentieth (20th) anniversary of the Commencement Date (the
"Adjustment Date"). No additional rent or charge (including taxes, maintenance, operating
expenses or otherwise) that has been billed to Lessee by Landlord is overdue. There are no
provisions for, and Landlord has no rights with respect to increasing the rent prior to the
Adjustment Date. There is no deferred rent, either payable or accrued, under the Lease as of the
date hereof. All rent due or payable as of the date hereof under the terms of the Lease has been
paid in full.
7. To Landlord's knowledge, no default, or any event or condition which with the
passing of time or the giving of notice, or both, would constitute a default on the part of Landlord
or Lessee exists under the Lease in the performance of the terms, covenants and conditions of the
Lease required to be performed on the part of Landlord or Lessee.
8. Lessee has the fight without Landlord's prior written consent, or if such consent is
required, Landlord hereby gives such consent, to encumber all the Lessee's right, title and
interest in and to the Lease with a mortgage, deed of trust, assignment of leases and/or other
security documents for the benefit of Lender with respect to the "Loan" (as defined in the
following sentence). Landlord has been advised by Lessee that Lessee has applied to
Governmental Lender for a loan (the "Loan") to be secured by, among other things, a
Multifamily Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing (the "Deed of Trust") in favor of Governmental Lender and assigned to Funding Lender
encumbering all of Lessee's leasehold interest under the Lease and ownership interest in all
improvements now or hereafter situated on the Property.
9. Landlord has received no notice of any assignment, hypothecation, mortgage or
pledge of Lessee's interest under the Lease or the rents or other amounts payable thereunder,
except for (i) the Deed of Trust and other documents and agreements executed by Lessee in
connection with the Loan, and (ii) the subordinate loan made by Landlord to Borrower in the
amount of $29,000,000, which loan is secured by a Leasehold Deed of Trust With Assignment of
Rents, dated as of August 1, 2012 encumbering the Property and to be recorded in the Official
Records.
Landlord Estoppel Certificate 2 Coral Mountain Apartments
10. During the term of the Loan, Landlord will not enter into any agreement with the
Lessee to modify, restate, cancel, terminate or surrender the Lease or any interest of the Lessee
thereunder without the prior written consent of the Lender, and no exercise by Lessee of a right
under the Lease to terminate the Lease shall be effective without the prior written consent of
Lender, provided, however, that the foregoing provisions shall not apply with respect to any
event of default by Lessee under the Lease of which Lender has notice and has not cured within
the time period within which Lender may effect a cure under the Lease.
11. Landlord agrees that by acceptance of this Estoppel Certificate or by acceptance
of the Deed of Trust or other encumbrance of the Lease, Lender has not become liable under the
terms of the Lease.
12. Landlord acknowledges receipt of a copy of the Deed of Trust and the
Multifamily Note secured thereby, the Borrower Loan Agreement, dated as of August 1, 2012,
between Borrower and Governmental Lender, the Construction Funding Agreement entered into
by and among Lessee and Citibank, and such other Loan documents as it considers necessary or
appropriate for purposes hereof. Landlord further acknowledges that all conditions precedent to
the encumbrance of the Lease with the Deed of Trust, and the leasehold estate created thereby
pursuant to that certain Disposition and Development Agreement to which Lessee and Landlord
are parties (the "DDA"), have been satisfied or waived. Landlord further acknowledges receipt
of all notices required pursuant to the Lease to encumber Lessee's leasehold interest in the
Property and that Lender is entitled to all of the rights of a permitted leasehold "Mortgagee"
under the Lease. Landlord further acknowledges that it has reviewed and approved the plans and
specifications for the construction of the improvements on the Property pursuant to the DDA.
13. The address for notice to Lender, as provided under the terms of the Lease, is:
If to Lender: Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
Attention: Desk Head, Transaction Management Group
Loan # 10-7044852
Facsimile: (212) 723-8642
AND
Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Loan # 10-7044852
Facsimile: (805) 557-0924
Landlord Estoppel Certificate 3 Coral Mountain Apartments
With a copy to: Citibank, N.A.
One Sansome Street, 26th Floor
San Francisco, CA 94104
Attention: Sanjay Sharma
Loan # 10-7044852
Facsimile: (415) 627-6387
And a copy of any notices Citibank, N.A.
of default sent to: 388 Greenwich Street
New York, New York 10013
Attention: General Counsel's Office
Loan # 10-7044852
Facsimile: (212) 723-8939
Landlord agrees that in the event Landlord sends any notice to tenant, it will concurrently send a
copy of such notice to Lender.
14. The Landlord executes this Estoppel Certificate for the benefit and protection of
Lender with full knowledge that Lender is relying on this Estoppel Certificate in extending the
Loan in Lessee's favor.
15. The Landlord hereby acknowledges and agrees that, pursuant to the terms of the
Deed of Trust: (i) from time to time, Lender may appoint a servicer as agent of Lender to collect
deposits, escrows and payments, to receive notices under the Loan Documents, and to otherwise
service the Loan and (ii) unless Landlord receives written notice from Lender to the contrary,
any action or right which shall or may be taken or exercised by Lender may be taken or exercised
by such servicer as agent of Lender with the same force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Landlord Estoppel Certificate 4 Coral Mountain Apartments
IN WITNESS WHEREOF, the undersigned, as Landlord, has executed this Landlord
Estoppel Certificate as of the date first written above.
LANDLORD:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
F4746MyIS
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
Landlord Estoppel Certificate S-1 Coral Mountain Apartments
IN WITNESS WHEREOF, the undersigned, as Landlord, has executed this Landlord
Estoppel Certificate as of the date first written above.
LANDLORD:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
By: _
Name:
Title:
ATTEST:
Authority Secretary
RUT4N & TUCI' , LLP
/Authority Counsel
Executive Director
Landlord Estoppel Certificate S-1 Coral Mountain Apartments
I .FCCF.F•
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC, a California
limited liability company, its administrative
general partner
By: KD Housin a ners, Inc., a California
comoratie , its n1ana2er
Title:
By: WCH Affordable VIII, LLC, a California
limited liability company, its managing
general partner
By: Western Community Housing, Inc., a
California nonprofit public benefit
corporation, its sole member and
manager
By: � Cr Vlri�
Name: Sandra C. Gibbons
Title: Chief Financial Officer
Landlord Estoppel Certificate S-2 Coral Mountain Apartments
EXHIBIT A-1
GROUND LEASE
VA vs
J, q I I
A it
Landlord Estoppel Certificate A-1 Coral Mountain Apartments
TABLE OF CONTENTS
Page
ARTICLE 1.
LEASE OF THE PROPERTY..............................................................................2
1.1.
Ground Lease of the Property; Acquisition of Improvements ..............................
2
1.2
Purpose of Ground Lease......................................................................................2
1.3
Recorded Encumbrances......................................................................................2
IA
Memorandum of Ground Lease............................................................................2
ARTICLE 2.
DEFINITIONS.....................................................................................................
3
ARTICLE3.
TERM..............................:..................................................................................12
ARTICLE4.
RENT..................................................................................................................13
4.1
Rent.....................................................................................................................13
4.2
Payment of Rent ............................ :................................................................
.... 14
4.3
Right to Audit.....................................................................................................14
4AUtilities
...............................................................................................................14
4.5
Taxes and Assessments.......................................................................................14
4.6
Overdue Interest..................................................................................................16
ARTICLE 5. POSSESSION OF PROPERTY ................................................
5.1 Acceptance of Premises.............................................................
5.2 Ownership of Improvements..................................I..:...............
5.3 Surrender of Property................................................................
5.4 Abandonment.............................................................................
ARTICLE 6_ REPRESENTATIONS AND WARRANTIES .........................
6.1 Landlord's Representations.........................................:.............
6.2 Tenant's Representations...........................................................
........................16
........................16
........................16
........................16
........................18
................:...... is
.......................18
.......................18
ARTICLE 7.
CONSTRUCTION OF THE IMPROVEMENTS :.....................................
:....... 19
7.1
Construction........................................................................................................19
7.2
Construction Cost...............................................................................................19
7.3
Landlord's Right to Discharge Lien.:............:...:................................................19
7.4
Notice of Non -Responsibility ......................................................
.. .....................19
7.5
Notice of Completion.........................................................................................20
7.6
Subsequent Alterations.......................................................................................
20
ARTICLE 8. USE OF THE PROPERTY................................................................................20
8.I Covenant to Use in Accordance with Redevelopment Plan, City
Municipal Code, Regulatory Agreement, and this Ground Lease......................20
8.2 Covenant to Pay Taxes and Assessments .......... .........
....................................... 20
8.3 Covenants Regarding Nondiscrimination.............................................I.............20
ARTICLE 9. INSURANCE.....................................................................................................22
9.1 Tenant's Insurance ..............................................................................................22
8821015610-0047
39672353 a0827/12 -T
Page
9.2
Commercial General and Automobile Liability; Worker's
Compensation.....................................................................................................22
9.3.
: Builders Risk ........................................... :..........................................................
23
9.4
Property; Business Interruption; Boiler and Machinery Insurance
....................23
9.5
Contractor Insurance Requirements...................................................................24
9.6
Additional Requirements....................................................................................24
9.7
Remedies for Defaults Re: Insurance.................................................................25
9.8
Indemnification......................................::...........................................................
25
ARTICLE 10. MAINTENANCE; REPAIRS............................................................................26
ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS ........... 27
11.1 Ownership During Term.....................................................................................27
11.2 Ownership at Expiration or Termination ............... .......................... :.................. 27
11.3 Waste............................................................................................................:.....28
11.4 Alteration of Improvements................................................................................28
ARTICLE 12. SIGNS AND MARKETING..............................................................................29
ARTICLE 13. DAMAGE OR DESTRUCTION OF PROPERTY OR
IMPROVEMENTS.............................................................................................
29
13.1
Tenant's Repair Obligation.................................................................................29
13.2
Tenant's Restoration of Premises .......................................................................30
13.3
Procedure for Restoring Improvements.............................................................. 31
13.4
Mortgagee Protection..........................................................................................32
ARTICLE 14.
EMINENT DOMAIN.........................................................................................33
14.1
Notice..................................................................................................................33
14.2
Representation in Proceedings or Negotiations..................................................
33
14.3
Total Taking........................................................................................................33
14.4
Substantial Taking..............................................................................................
34
14.5
Partial Taking......................................................................................................35
14.6
Obligation to Repair on Partial Taking...............................................................35
14.7
Temporary Taking..............................................................................................
35
14.8
Mortgagee Protection..........................................................................................36
14.9
Appraisal........................................................................................................:....36
ARTICLE 15. COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS ..................37
15.1 Compliance With Laws...................................................................................... 37' .
15.2 Indemnity..:...............................................................................:......................... 37
15.3 Duty to Prevent Hazardous Material Contamination ................ :......................... 38
15.4 Obligation of Tenant to Remediate Premises ...................... I ........ ...................... 39
15.5 Environmental Inquiries..................................................................................... 39
ARTICLE 16. ASSIGNMENT...................................................................................................39
ARTICLE17. MORTGAGES...................................................................................................40
9MI561"047
3967235.5 a0827112 -11-
17.1 Ground Leasehold Mortgages..........:.... ......... .....:.........................:.....
17.2 Landlord's Forbearance and Right to Cure Defaults on Ground
Leasehold Mortgages....................................................................:.....................41
17.3
Limited Liability of Mortgagee for Prior Indemnified Acts...............................41
17.4
Landlord Cooperation.........................................................................................42
17.5
No Subordination of Landlord's Interest............................................................42
17.6
Priority................................................................................................................42
17.7
Claims.................................................................................................................42
17.8
Further Amendments..........................................................................................43
17.9
Loan Obligations................................................:..............:...............:...:............43
17.10
Liens and Encumbrances Against Tenant's Interest in the Leasehold
Estate...................... ............................... :.............................................................
43
17.11
Cost of Loans to be Paid by Tenant................................::..................................47
17.12
.No Merger.............................................::............................................................47
17.13
Transfer Rights.....:.............................................................................................
47
17.14
Tenant's Personal Property .............. ...................................................................
47
17.15
Two or More Mortgagees ............................................... :...................................
48
ARTICLE18. SUBLEASING..........................................................................................:........48
18.1 Subleasing of Property ..........................:.............................................................48
18.2 Rights of Mortgagees.......................................................................................... 48
ARTICLE 19. PERFORMANCE OF TENANT'S COVENANTS..............................:............48
19.1 Right of Performance ............. ......48
19.2 Reimbursement and Damages.............:.....................::........................................49
ARTICLE 20. EVENTS OF DEFAULT; REMEDIES..............................................................49
20.1 Events of Default................................................................................................49
20.2 Remedies .............................
................................. ......:........................................ 51
20.3 Receipt of Rent, No Waiver of Default.............................................................. 51
20.4 Effect on Indemnification...................................................................................52
ARTICLE 21. PERMITTED CONTESTS :...............................................
ARTICLE 22. FORCE MAJEURE ...........................
22.1 Delay of Performance ........................
22.2' Notice and Cure Requirements..........
52
............................................................... 52
............................................................... 52
............................................................... 52
ARTICLE 23. GENERAL PROVISIONS .......................................
23.1 Notices.....................................................................
23.2 Certificates ........................... :...................................
23.3 No Merger of Title ...................................................:
23.4 Utility Services.........................................................
23.5 Quiet Enjoyment.......................................................
23.6 . No Claims Against Landlord ....................................
23.7 Inspection..................................................................
882/015610,0047
3967235.5 s08/17/12 -111-
... 53
............................. :........ 53
...................................... 55
....................I.................. 55
...................................... 56
...................................... 56
...................................... 56
...................................... 56
Page
23.8
No Waiver by Landlord......................................................................................56
23.9
Holding Over ...................................... ............. ..........::........:.:............................56
23.10
Exculpation of Tenants Personal Liability............:...........................................56,
23.11
No Partnership....................................................................................................57
23.12
Remedies Cumulative.......................................:.................................................57
23.13
Attorney's Fees..::.............................................................
..
...............................: 57
23.14
Time Is of The Essence.......................................................................................57
23.15
Survival of Representations, Warranties and Covenants ....................................
57
23.16
Construction of Agreement:..................................:..................a..........................
57
23.17
Severability.............:..................................:..
57
23.18
Entire Agreement: Modification.........................................................................
57
23.19
Binding Effect and Benefits................................................................................
58
23.20
Further Assurances...........................................:..................:..............................58
23.21
Counterparts.....................................................................................................:..58
23.22
Number and Gender.......`..............:.......................................................................58
23.23
Conflicts...................................................................................:....:.....................58-
23.24
Incorporation by Reference.................................................................................
58
23.25
Consent Rights....................................................................................................58
23.26
Third Party Beneficiary .....................................:...................................
` .......... 58
8821015610-0047
3967235.5 a08/27/12 -iv-
GROUND LEASE
This GROUND LEASE ("Ground Lease") dated as of August 1, 2012 ("Effective
Date"), is entered into by and between LA QUINTA HOUSING AUTHORITY, a public body,
corporate and politic ("Landlord"), and CORAL MOUNTAIN PARTNERS, L.P., a California
limited partnership ("Tenant').
RECITALS
A. Landlord is a public body, corporate and politic, organized and existing under the
California Housing Authorities Law (California Health and Safety Code Section 34200 et seq.).
B. Tenant is controlled by an experienced owner, developer and manager of
affordable housing for low and moderate -income families.
C. Landlord is the owner of certain real property situated in the City of La Quinta,
County of Riverside, State of California, and legally described in Exhibit "A", which is attached
hereto and incorporated herein by this reference ("Property").
D. On or about January 4, 2011, the former La Quinta Redevelopment Agency
("Agency") entered into a Disposition and Development Agreement with Tenant dated as of
January 4, 2011 (the "Agreement"), which provided for the Agency, as then -owner of the
Property, to ground lease the Property to Tenant, and for Tenant to construct and operate thereon
a one hundred seventy-six (176) unit multifamily apartment project with all of such units
restricted for occupancy by very low income, lower income, and moderate income families (the
"Project").
E. Pursuant to Assembly Bill 26 from the 2012-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2012 ("ABxl 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was filed, challenging the constitutionality of ABx1 26
and companion bill ABx1 27 (which would have allowed redevelopment agencies to remain in
existence and continue redevelopment, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality. of ABxl 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxl 27.
(California Redevelopment Assn. v. Matosantos (2012) 53 CalAth 231. ABxl 26 is chapter 5,
Statutes 2012, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of the Health and Safety Code.
Pursuant to Health and Safety Code Section 341710), added by Part 1.85, the City of La Quinta;
a California municipal corporation and charter city ("City"), is the "successor agency" to the
Agency. On January 3, 2012, the La Quinta City Council adopted Resolution No. 2012-002,
pursuant to which the City elected (a) to be the "successor agency" to the Agency, and (b) to
have the Landlord be the "housing successor" to the Agency. On January 17, 2012, the Landlord
adopted HA Resolution No. 2012-002, affirmatively electing to be the "housing successor" to the
Agency.
882/015610-0047
39672353 a0827/12
Pursuant to Health and Safety Code section 34175(b), added by Part 1.85, all assets,
contracts, and properties of the Agency, including the Property, were transferred to the control of
the City, as the successor agency to the Agency, on February 1, 2012. The Property is a housing
asset of the former Agency, the DDA is an obligation of the former Agency associated with the
housing activities of the former Agency, and administration of the DDA, including all of the
attachments thereto, is a housing activity of the former Agency. Pursuant to Health and Safety
Code Section 34177(g), added by Part 1.85, on March 7, 2012, the City, in its capacity as the
successor agency to the former Agency, (i) assigned all of the City's right, title and.interest in
and to the DDA to the Landlord, pursuant to that certain Assignment and Assumption Agreement
entered into by and between the City, as assignor, and the Landlord, as assignee, and (ii)
transferred all of its interests in and to the Property to the Landlord, who is now the fee owner of
good and marketable title to the Property. Concurrently herewith, Landlord has executed an
Estoppel Certificate clarifying, modifying, and affirming the DDA.
F. All conditions precedent to the parties entering into this Ground Lease have been
satisfied or waived:
G. This Ground Lease is in the vital and best interests of the City of La Quinta,
California, and the health, safety and welfare of its residents.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and
conditions herein contained, Landlord and Tenant agree as follows:
ARTICLE 1. LEASE OF THE PROPERTY
1.1 Ground Lease of the Property; Acquisition of Improvements. Landlord leases
the Property to Tenant, and Tenant leases the Property from Landlord, on the terms and
conditions as set forth in this Ground Lease. Pursuant to the Agreement and subject to the
provisions of Section 5.3 hereof, Tenant will concurrent with the Effective Date of this Ground
Lease acquire fee title to all Improvements on the Property and shall hold fee title to such
Improvements during the Term hereof.
1.2 Purpose of Ground Lease. The purpose of this Ground Lease is to provide for
the construction, maintenance, management and operation of the Project as a 176-unit
multifamily apartment project. Tenant will not occupy or use the Property, nor permit the
Property to be occupied or used, nor do or permit anything to be done in or on the Property, in
whole or in part, for any other purpose.
1.3 Recorded Encumbrances. This
Tenant hereunder, and the Property, are in all
covenants, conditions; restrictions, reservations,
prior to the recordation of this Ground Lease.
Ground Lease, the interests of Landlord and
respects subject to and bound by all of the
rights, rights -of -way and easements of record
1.4 Memorandum.of Ground Lease. A short form Memorandum of Unrecorded
Ground Lease referring to this Ground Lease, substantially in the form attached hereto and
incorporated herein as "Exhibit B", shall be executed by Landlord and Tenant concurrently
herewith; and recorded in the Official Records of the County of Riverside, California ("Official
Records"). -
8821015610-0041
3967235.5 aOM7/12 - -2-
ARTICLE 2. DEFINITIONS.
Capitalized terms used herein are defined where first used in this Ground Lease and/or as
set forth in this Article 2.A11 capitalized terms not defined herein shall have the same meanings
ascribed to them in. the Agreement. For the purpose of supplying such definitions, the
Agreement, notwithstanding anything contained therein or herein to the contrary, shall not merge
with this Ground Lease.
"Affiliate" means any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Tenant which, if Tenant
is a partnership or limited liability company, shall include each of the constituent members or
partners, respectively thereof. The term "control" as used in the immediately preceding
sentence, means, with respect to a person that is a corporation, the right to the exercise, directly
or indirectly, of more than fifty percent (50%) of the voting rights attributable to the shares of the
controlled corporation, and, with respect to a person that is not a corporation, the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of the controlled person.
"Agreement" means the Disposition and Development Agreement between Landlord, as
the housing successor to the Agency, and Tenant, dated as of January 4, 2011.
"Annual Project Revenue" means all gross income and all revenues of any kind from
the Housing Development in a calendar year, of whatever form or nature, whether direct or
indirect, with the exception of the items excluded below, actually received by or paid to or for
the account or benefit of Tenant or any Affiliate of Tenant or any of their agents or employees,
from any and all sources, resulting from or attributableto the ownership, operation, leasing and .
occupancy of the Housing Development, determined on the basis of generally accepted
accounting principles applied on a consistent basis, and shall include, but not be limited to: (i)
gross rentals paid by tenants of the Housing Development under leases, and payments and
subsidies of whatever nature, including without limitation any payments, vouchers or subsidies
from HUD or any other person or organization, received on behalf of tenants under their leases,
(ii) amounts paid by residents of the Property to Tenant or any Affiliate of Tenant on account of
Operating Expenses for further disbursement by Tenant or such Affiliate to a third party or
parties, (iii) late charges and interest paid on rentals, (iv) rents and receipts .from licenses, .
concessions, vending machines, coin laundry and similar sources, (v) other fees, charges or
payments not denominated as rental but payable to Tenant in connection with the rental of office,
retail, storage, or other space in the Housing Development, (vi) consideration received in whole
or in part for the cancellation, modification, extension or renewal of leases, and (vii) interest and
other investment earnings on security deposits, reserve accounts and other Housing Development .
accounts to the extent disbursed for other than the purpose of the reserve. Notwithstanding the
foregoing, gross income shall not include the following items: (a) security deposits from tenants
(except when applied by Tenant to rent or other amounts owing by tenants); (b) capital
contributions to Tenant by its members, partners or shareholders (including capital contributions
required to pay any deferred developer fee); (c) condemnation or insurance proceeds; (d) funds
received from anysource actually and directly used for initial development of the Housing
Development; (e) receipt by an. Affiliate of management fees or other bona fide arms -length
payments for reasonable and necessary Operating Expenses associated with the Housing
99=15610-0047
3967235.5 480/12 -3-
Development, including but not limited to, any Partnership Related Fees; or (f) Transfer Net
Proceeds and/or Refinancing Net Proceeds.
"Approved Financing" means the financing approved by the Landlord pursuant to
Section 6.7 of the Agreement, obtained by Tenant for the construction/development and
ownership of the Project, and includes, but is not limited to, the Construction Loan and the Take -
Out Loan.
"Authority Loan" means that certain loan made by Landlord to Tenant in the original
principal amount of Twenty -Nine Million Dollars ($29,000,000).
"Authority Loan Note" means that certain Amended and Restated Authority Loan
Promissory Note made by Tenant in favor of Landlord, on or about the date of execution hereof, .
evidencing the Authority Loan.
"Award" means any compensation or payment made or paid for the Total, Partial or
Temporary Taking of all of any part of or interest in the Property and/or the Improvements,
whether pursuant to judgment, agreement or otherwise.
"Capital Improvements" means all work and improvements with respect to the Property
for which costs and expenses may be capitalized in accordance with GAAP.
"Capital Replacement Reserve" shall have the meaning ascribed thereto in the
Regulatory Agreement.
"Certificate of Occupancy" means the final certificate of occupancy issued by the City
for the Project.
"City" means the City of La Quinta, a California municipal corporation and charter city.
"Commencement Date" means the first date upon which all of the following have
occurred: (i) this Ground Lease has been fully executed and Landlord has delivered possession.
of the Property to Tenant; (ii) Tenant has executed, with signatures acknowledged; and delivered
to Landlord, for recordation in the Official Records, the "Memorandum of Ground Lease, the
Regulatory Agreement, a Leasehold Deed of Trust with Assignment. of Rents substantially in the
form attached to the Agreement as Attachment No. 7, and a Notice of Affordability Restrictions
on Transfer of Property, substantially in the form attached to the Agreement as Attachment No.
11; and (iii) . all of Tenant's financing for the Project, including, without limitation, the
Construction Loan, has closed.
"Construction Loan" refers to the loan from a Mortgagee (or consortium of Mortgagees)
authorized pursuant to Section 17.1 hereof, the proceeds of which are used to perform the
construction of the Project, and includes, but is not limited to, the First Mortgage Construction
Financing.
"CPI Adjustment" means the increase in the cost of living index, as measured by the
Consumer Price Index for all urban consumers, Los Angeles -Anaheim -Riverside statistical area,
all items (1982-84 = 100) published by the United States Department of Labor, Bureau of Labor
882MI5610-0047
396723s.5 z0827712 -4-
Statistics("CPI") in effect as of the date on which the Certificate of Occupancy is issued to the
CPI in effect as of the date on which an adjustment is made. If such index is discontinued or
revised, such other index with which such index is replaced (or if not replaced, another index
which reasonably reflects and monitors consumer prices) shall be used in order to obtain
substantially the same results as would have been obtained if the discontinued index had not
been discontinued or revised. If the CPI is changed so that the base year is other than 1982-84,
the CPI shall be converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics.
"Debt Service" means payments made in a calendar year pursuant to the Approved
Financing obtained for the construction/development and ownership of the Project or any
permitted refinancing or modification thereof, but excluding Rent -
"Deferred Developer Fees" means any deferred developer fee allowable under the
Approved Financing.
"Event of Default" has the meaning set forth in Article 20.
"Executive Director" means the Executive Director of Landlord or his or her designee.
"First Mortgage -Construction Financing" means a loan from the California Municipal
Finance Authority ("Governmental Lender") in the maximum principal amount of $24,400,000
evidenced by that certain Multifamily Note, dated as of August 1, 2012, made by Tenant payable
to the order of Governmental Lender and that certain Borrower Loan Agreement, dated as of
August 1, M12, between Tenant and Governmental Lender, and secured by, among other things,
that certain Multifamily Leasehold Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing in first (lst)lien position against the Tenant's leasehold interest in the Property,
executed by Tenant for the benefit of Governmental Lender, each of which documents are being
assigned by Governmental Lender to Citibank, N.A.
"Foreclosure.Transferee" shall mean any Mortgagee or other transferee of the leasehold
interest under this Ground Lease as a result of a judicial foreclosure, non judicial foreclosure or
assignment of the leasehold in lieu of foreclosure.
"Housing Development" means an affordable rental housing development consisting of
one hundred seventy-six (176) residential dwelling units and all required on -site improvements
that will remain privately owned and that are necessary to serve the Housing Development.
"Impositions" means. all taxes (including, without limitation, sales. and use taxes);
assessments (including, without limitation, all assessments for public improvements or benefits
whether or not commenced or completed prior to the Commencement Date and whether or not to.
be completed within the Term); water, sewer or other rents, rates and charges; excises; levies;
license fees; permit fees; inspection fees and other authorization fees and other charges; in each
case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every
character (including all interests and penalties thereon), which are attributable or applicable to
any portion of the Tenn and may be assessed, levied, confirmed or imposed on or in respect of,
or be a lien upon (a) the Property, or the Improvements, or any part thereof, or any, estate, right or
interest therein, (b) any occupancy, use or possession of or activity conducted on the Property or
882/015610-0047
3967235.5 a0&27112 -5-
the Improvements, or any part thereof, or (c) this Ground Lease. The term"Impositions" shall
also include any and all increases in the foregoing, whether foreseen or unforeseen, ordinary or
extraordinary, including, without limitation, any increase in real property taxes resulting from a
sale of the Property by Landlord.
"Improvements" means all buildings, structures and other improvements, including the
building fixtures thereon, now located on the Property or hereafter constructed on the Property;
all landscaping, fencing, walls, paving, curbing, drainage facilities, lighting, parking areas,
roadways and similar site improvements now located or hereafter placed upon the Property.
"Institutional Lender" means any of the following institutions having assets or deposits
in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a California
chartered bank; a bank created and operated under and pursuant to the laws of the United States
of America; an "incorporated admitted insurer" (as that term is used in Section 1100.1 of the
California Insurance Code); a "foreign (other state) bank" (as that term is defined in Section
1700(i) of the California Financial Code); a federal savings and loan association (Cal. Fin, Code
Section 8600); a commercial finance lender (within the meaning of Sections 2600 et seq. of the
California Financial Code); a "foreign (other nation) bank" provided it is licensed to maintain an
office in Califomia, is licensed or otherwise authorized by another state to maintain an agency or
branch office in that state, or maintains a federal agency or federal branch in any state (Section
1716 of the California Financial Code); a bankholding company or a subsidiary of a bank
holding company which is not a bank (Section 3707; of the California Financial Code); a trust
company, savings and loan association, insurance company, investment banker; college or.
university; pension or retirement fund or system, either governmental or private, or any pension
or retirement fund or system of which any of the foregoing shall be trustee, provided the same be
organized under the laws of the United States or of any state thereof; and a Real Estate
Investment Trust, as defined in Section 856 of the Internal Revenue Code of 1986, asamended,
provided such trust is listed on either the American Stock Exchange or the New York Stock
Exchange. Each of the California Municipal Finance Authority and Citibank, N.A. is hereby
deemed to be an Institutional Lender.
"Insurance Requirements" means all terms of any insurance policy covering or
applicable to the Property or the Improvements, or any part thereof, all requirements imposed by
the issuer of any such policy, and all orders, rules, regulations and other requirements of the
National Board of Fire Underwriters (or any other body exercising similar. functions) applicable
to or affecting the Property or the Improvements, or any part thereof, or any use or condition of
the Property or the Improvements, or any part thereof.
"Investor" means Hamilton USBCDC Investments, L.P., which is the limited partner of
Tenant, and its successors and assigns.
"Maintenance Standards" means those standards set forth in Article 10 hereof.
"Memorandum of. Ground Lease" refers to the memorandum of unrecorded ground
lease which has been recorded as described in Section 1.4.
"Mortgage" has the meaning set forth in Section 17.1 of this Ground Lease.
SUM15610-0047
3967235.5 a0W7112 - -6-
"Mortgagee" has the meaning set forth in Section 17.1 of this Ground Lease.
"Notice of Intended Taking" means any notice or notification on which a reasonably
prudent person would rely and which said person would interpret as expressing an existing
intention of Taking as distinguished from a mere preliminary inquiry or proposal. It includes,
without limitation, the service of a condemnation summons and complaint on a party to this
Ground Lease. The notice is considered to have been received when a party to this Ground
Lease receives from the condemning agency or entity a notice of intent to take, in writing,
containing a description or map of the taking which reasonably defines the extent of the taking.
"Official Records" means the Official Records of Riverside County, California.
"Operating Budget" means an operating budget for the Project, which budget shall be
subject to the annual written approval of Landlord in accordance with Section 4 of the
Regulatory Agreement.
"Operating Expenses" means actual, reasonable and customary (for comparable high
quality affordable multifamily residential developments in Riverside County) costs, fees and
expenses directly incurred, paid, and attributable to the operation, maintenance and management
of the Housing Development in a calendar year, including, without limitation: painting, cleaning,
repairs, alterations, landscaping, utilities, refuse removal, certificates; permits and licenses, sewer
charges, real and personal property taxes, assessments, insurance, security, advertising and
promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing and
installation of appliances, equipment, fixtures and fiunishings, fees and expenses of property
management, fees and expenses of accountants, attorneys and other professionals, repayment of
any completion or operating loans made to Tenant, its approved successors or assigns, and other
actual, reasonable and customary operating costs which are directly incurred and paid by Tenant,
but which are not paid from or eligible to be paid from the operating reserve or other reserve
accounts. In addition, Operating Expenses shall include a social services fee in the amount of
Twenty -Two Thousand Dollars ($22,000) for calendar year 2011, which shall be increased
annually by three percent (3%) per year, provided Tenant provides the social services described
in the Tenant Services Agreement that was included in Tenant's tax credit application. Operating
Expenses shall not include any of the following: (i) salaries of employees of Tenant or Tenant's
general overhead expenses, or expenses, costs and fees paid to an Affiliate of Tenant, to the
extent any of the foregoing exceed the expenses, costs or fees that would be payable in a bona
fide arms' length transaction between unrelated parties in the Riverside County area for the same
work or services; (ii) any amounts paid directly by a tenant of the Housing Development to a
third party in connection with expenses which, if incurred by Tenant, would be Operating
Expenses; (iii) optional or elective payments with respect to the First Mortgages or the Second
Mortgage; (iv) any payments with respect to any Project -related loan or financing that has not
been approved by the Landlord; (v) expenses, expenditures, and charges of any .nature
whatsoever, arising or incurred by Tenant prior to completion of the Project with respect to the
development of the Project, or any portion thereof, including, without limitation, all
predevelopment and preconstruction activities conducted by Tenant in connection with the
Project, including without limitation,the preparation of all plans and the performance of any
tests, studies, investigations or other work, and the construction and any on -site or off --site work
SM015610-0047 -
39672235.5 a09/27112 _ -7-
in connection therewith; or (vi) depreciation, amortization, and accrued principal and interest
expense on deferred payment debt.
"Operating Reserve" shall have the meaning ascribed thereto. in the Regulatory
Agreement.
"Partial Taking" means any taking of the fee title of the Property and/or the
Improvements that is not either a Total, Substantial or Temporary Taking.
"Partnership Agreement" means the agreement which sets forth the terms of the
Tenant's limited partnership, as such agreement may be amended from time to time.
"Partnership Related Fees" means partnership fees actually incurred pursuant to the
terms of the Partnership Agreement, which are reasonable and customary to developer/owner
entities for similar projects in Southern California, and may include, but shall not exceed: (i) a
general partner(s) (administrative and/or managing partner(s)) partnership management fee
payable to the general partner(s) (ii) a limited partner asset management fee payable to the
investor limited partner; and (iii) an annual audit fee in and for any calendar year. In no event
shall the annual fees for (i) and (ii) above cumulatively exceed Forty Thousand Dollars
($40,000.00), but such fees in (i) and (ii) may be increased annually by the CPI Adjustment. in
the event insufficient Annual Project Revenues exist to provide for payment of all or part of the
specific Partnership Related Fees listed above, no interest shall accrue. on the unpaid portions of
such Partnership Related Fees, but the unpaid balance of such fees alone will be added to the
Partnership Related Fees due in the following year.
"Plans" means the plans and specifications for the construction of the Project, a.set of
Which, initialed by Tenant, are on file in the offices of Landlord.
"Potential Default" means any condition or event which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
"Project" means Tenant's construction of the Housing Development and certain public
improvements, all as more particularly described in the Agreement.
"Property" has the meaning set forth in Recital C above.
"Redevelopment Plan" means the Redevelopment Plan for Project Area No. 2, adopted
.by Ordinance No. 139 of the City Council of the City on May 16, 1989, as the same has been
amended from time to time.
"Refinancing Net Proceeds" means the proceeds of any approved refinancing of the
Approved Financing secured by the Property, net of the following actual costs and fees
incurred:(i) the amount of the financing which is satisfied out of such proceeds, (ii) reasonable
and customary costs and expenses incurred in connection with the refinancing, (iii) the balance,
if any, of the Deferred Developer Fee, (iv) the balance, if any, of authorized loans to the Project
made by the limited partners of Tenant, including interest at the rate set forth in the Partnership .
Agreement for such loans, (v) the balance, if any, of authorized operating loans or development
loans made by the general partners of a limited partnership that succeeds to Tenant's interest in
892/015610-0047
. 3967235.5 1080112 - -8- -
the Agreement. and the Project, including interest at the rate set forth in the Partnership
Agreement for such loans, (vi) the balance, if any, of any unpaid Partnership Related Fees, (vii)
any, amounts owed to the Investor pursuant to the Partnership Agreement, (viii) the return of
capital contributions, if any, to the Project made by the general partners of a limited partnership
that succeeds to Tenant's interest in the Agreement and the Project that were used to pay the
Deferred Developer Fee, (ix) the amount of proceeds required to be reserved for the repair,
rehabilitation, reconstruction or refurbishment of the Project; and (x) the payment to general
partner of Tenant of a refinancing fee, which is agreed to be set at three percent (3%) of the
amount of the approved refinancing..
"Regulatory Agreement" means that certain Regulatory Agreement executed by and
between Tenant, as "Developer," and Landlord, as "Authority," on even date herewith, which
Regulatory Agreement was recorded in the Official Records.
"Rent" means the rent payable pursuant to Article 4 of this Ground Lease.
"Rental Period" means each of the calendar years throughout the Lease Tenn. The first
Rental Period shall commence upon the issuance of the Certificate of Occupancy and terminate
upon the December 31 of that year; each Rental Period thereafter shall commence on`January -1
and terminate on December 31.
"Rent Payment Date" means the May 1 of each year following the end of each Rental
Period; the fast Rent Payment Date shall occur. on the May 1 after the expiration of the first
Rental Period.
"Reserve Deposits" means any payments to the Capital Replacement Reserve account
and the Operating Reserve account pursuant to Sections 10 and 11, respectively; of the
Regulatory Agreement.
"Residual Receipts" shall mean Annual Project Revenue less the sum of-
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve;
(iv) Reserve Deposits to the Operating Reserve;
(v) Partnership Related Fees;
(vi) Deferred Developer Fees;
(vi) Property management fee for the Housing Development which remains
unpaid after payment of Operating Expenses, if any;
(viii) Amy amounts owed to.the Investor, including, without limitation, Unpaid
Tax Credit adjustment amounts, if any, pursuant to the Partnership Agreement;
882MIS610-0047
3967235.5 s0=7/12 -9-
(ix) Repayment of loans to the Project, if any, made by the limited partner(s)
of Tenant pursuant to the Partnership Agreement, including interest at the rate set forth in the
Partnership Agreement for such loans, for eligible development and/or operating expense deficits
or other eligible loans (provided that if made during the compliance period Tenant shall provide
to Executive Director documentation showing the propriety of such loan(s) and if made
subsequent to the expiration of the compliance period each such loan must be reasonably
approved by the Executive Director before being provided to the Project after review of
documentation provided by Tenant showing propriety of such loans);
(x) Repayment to the administrative and/or managing general partners of
Tenant for loans to the Project for development advance(s) pursuant to the Partnership
Agreement, operating deficit advance(s) pursuant to the Partnership Agreement), credit adjuster
payment(s) pursuant to the Partnership Agreement), and/or Development Fee advance(s)
pursuant to the Partnership Agreement, and with all such loans to be repaid without interest
(provided that if made during the compliance period Tenant shall provide to Executive Director
documentation showing the propriety of such loan(s) and if made subsequent to the expiration of
the compliance period each such loan must be reasonably approved by the Executive Director
before being provided to the Project after review of documentation provided by Tenant showing
propriety of such loans);
(xi) Repayment to the administrative and/or managing general partners of
Tenant of certain loans made to the Project after the expiration or earlier termination of the
Partnership Agreement to cover shortfalls in funding for Operating Expenses in excess of the
Operating Expenses. included in the approved annual Operating Budget for the year in which
such loan is made (if at all), all such loans to be repaid without interest (provided that if made
during the compliance period Tenant shall provide to Executive Director documentation showing
the propriety of such loan(s) and if made subsequent to the expiration of the compliance period
each such loan must be reasonably approved by the Executive Director before being provided to
the Project after review of documentation provided by Tenant showing propriety of such loans);
and
(xii) Capital contributions to the Project, if any, made by the general partners of.
Tenant that were used to pay the Developer Fee.
In the event any calculation of Annual Project Revenue less subsections (i) through (xii)
inclusive above results in a negative number, then Residual Receipts shall be zero ($0) for that
year and shall not carry over to the next or any other subsequent year.
In addition, none of the fees, costs, expenses, or items described above in calculation of
Residual Receipts shall include any duplicate entry/item, or double accounting for a cost item.
For example, an audit fee incurred by Tenant and deducted or included above in subsection (i)
for Operating Expenses shall not also be deducted or included in subsection (v) for Partnership
Related Fees in the calculation of Residual Receipts. The calculation of Residual Receipts shall
be conducted at Tenant's sole cost and expense, by a third party auditor and submitted to Tenant
annually, along with Tenant's payment of Residual Receipts.
83=1561G-M7
3967235.5O 27/12 -10-
"Substantial Taking" means the taking of so much of the Property and/or the
Improvements that the portion of the Property and/or the Improvements not taken cannot be
repaired or reconstructed, taking into consideration the amount of the award available for repair
or reconstruction, so as to constitute a complete; rentable stricture, capable of producing a
proportionately fair and reasonable net annual income after payment of all Operating Expenses,'
and all other charges payable under this Ground Lease, and after performance of all covenants
and conditions required by Tenant by law and under this Ground Lease.
"Take -Out Loan" refers to the loan, if any, from Citibank, N.A., or from another lender
acceptable to the Executive Director of Landlord, pursuant to which said lender agrees to make a
take-out loan for the purpose of paying all amounts due under the Construction Loan or the
conversion of the Construction Loan to permanent phase financing.
"Taking" means a taking or damaging, including severance damage, by eminent domain
or by inverse condemnation or for any public or quasi -public use under any statute. The taking
may occur as a result of a transfer pursuant to the recording of a final order in condemnation, a
voluntary transfer or conveyance to the taking authority under threat of condemnation, or a
transfer while condemnation proceedings are pending. Unless otherwise provided, the taking
shall be deemed to occur as of the earlier of (a) the date actual physical possession is taken by
the condemnor, or (b) the date on which the right to compensation and damages accrues under
the law applicable to the Property and/or the Improvements. A taking as used in this Ground .
Lease does not include the voluntary dedication of any portion of the Property necessary to
obtain building permits onto comply with any other applicable governmental rule, regulation or
statute; nor does it include the enactment of any law, ordinance or regulation which may affect
the use or value of the Property but which does not involve an actual taking of any portion
thereof Eminent domain actions filed by Landlord against former owners of portions of the
Property and pending as of the Commencement Date shall not be deemed, construed or
interpreted as a Taking under this Ground Lease.
"Tax Credits" means Low Income Housing Tax Credits granted pursuant to Section 42
of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5,
17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq.
"Tax Credit Regulatory Agreement" means the regulatory agreement which may be
required to be recorded against the Property with respect to the issuance of Tax Credits for the
Project.
"Temporary Taking" means a taking of all or any part of the Property and/or the
Improvements for a term certain which term is specified at the time of taking. Temporary
Taking does not include a taking which is to last for an indefinite period or a taking which will
terminate only upon the happening of a specified event unless it can be determined at the time of
the taking substantially when such event will occur. If a taking for an indefinite term should take
place, it shall be treated as a Total, Substantial or Partial Taking in accordance with the
definitions set forth herein.
"Term" has the meaning set forth in Article 3 of this Ground Lease.
8871015610.DD47
3967235.5 a0827/12 -ll-
"Total Taking" means the taking of the fee title to all of the Property.
"Transaction Documents" means, collectively, the Agreement and the Regulatory .
Agreement.
"Transfer Net Proceeds" shall mean the proceeds of any sale or other transfer, in whole
or part, of the Property or Tenant's interests therein, net only of (i) the reasonable and customary
costs and expenses incurred in connection with such transfer; (H) the amount of the financing
which is satisfied out of such proceeds, (iii) the balance, if any, of the Deferred Developer Fee,
(iv) the balance, if any, of loans to the Project made by the limited partners of Tenant, including
interest thereon as provided in the Partnership Agreement, (v) the balance, if any, of operating
loans or development loans made by the general partners of Tenant, including interest thereon as
provided in the Partnership Agreement, and (vi) the return of capital contributions, if any, to the
Project made by the general partners of Tenant that were used to pay the Deferred Developer
Fee. Notwithstanding anything herein to the contrary, Transfer Net Proceeds shall not be
required to be paid in connection with a transfer or sale that consists only of (a) the removal of
the general partner of the Tenant, or (b) the transfer or sale of the interests of the investor limited'
partner provided such transfer or sale is consistent with the Partnership Agreement and with the
terms of the Regulatory Agreement.
ARTICLE 3. TERM.
The term of this Ground Lease ("Term") shall commence on the Commencement Date,
and shall continue thereafter until the earlier to occur of:(a) December 31, 2070, and the (b) fifty-
fifth (55th) anniversary of the date seventy-five percent (75%) of the units have been leased to .
and occupied by income -qualified tenants in accordance with the terms of the Regulatory
Agreement.
Notwithstanding the foregoing, the Tenn may be extended for two (2) additional ten (10)
year periods, provided Tenant notifies Landlord in writing of Tenant's desire to so extend at least
six (6) months prior to expiration of the Term, as it may have been extended pursuant to the
terms hereof. In such event, the Landlord and Tenant shall meet and confer to determine
whether to so extend and whether any modifications to the terms and provisions hereof are
necessary. If each of Landlord and Tenant agree, in their sole and absolute discretion, to any
such extension, including to any such additional terms and modifications, then the Term of this
Ground Lease shall be so extended, and except for any modifications agreed to, all other terms
and conditions of this Ground Lease shall apply and be in effect during any such extension
period.
The Landlord shall provide the Mortgagee notice in the event the Tenant fails to extend
the Term of this Ground Lease by the time set forth in the immediately preceding paragraph and,
notwithstanding said failure, the Mortgagee shall have the right to extend the Term.on behalf of
the Tenant during the 30 day period following Mortgagee's receipt of such notice.
UZD15610-0047
39 M5.5a=7/12 --12-
ARTICLE 4. RENT.
4.1 Rent.
4.1.1 Initial Rent. On each Rent Payment Date, Tenant shall pay to Landlord
Rent in the nominal sum of One Dollar ($1.00).
4.1.2 Rent Adjustment. Upon the later to occur of (i) full payment of the
Authority Loan Note or (ii) the twentieth (20th) anniversary of the Commencement Date, the
Rent due under this Ground Lease shall be reset based on the fair market value of the remaining
leasehold interest under this Ground Lease (taking into account the restrictions set forth in the
Regulatory Agreement, hereinafter referred to as the `.`Recorded Restrictions" as independently
appraised and at an annual rental based on a percentage of such appraised value as determined by
a qualified, independent appraiser (conducted by a certified appraiser reasonably acceptable to
Executive Director and Tenant), who shall take into account the cumulative amounts which have
been actually paid to the Landlord as Rent under this Ground Lease, including without limitation
taking into consideration the remaining balance, if any, on the Authority Loan as of the time of
the appraisal, and including a reasonable return on investment of between six percent (6%) and
eight percent (80/6). Such independent appraisal shall determine the fair market value of the
Property, at its highest and best use (but taking the Recorded Restrictions into account); at the
time of such appraisal but shall also take into consideration an overall fair market ground lease
rent over the 55-year Term of this Ground Lease with an objective that Landlord receive over
such 55-year term cumulatively a fair market value ground lease rent (taking the Recorded
Restrictions into account), under this Ground Lease. In such regard, if the Rent paid to date has
underpaid, cumulatively, toward achieving a fair market ground lease rent (taking the Recorded
Restrictions into account), over the 55=year Term of this Ground Lease, then the appraiser shall
take that fact into consideration when determining an adjusted fair market Rent for the remainder
of the Term. Likewise, if the Rent paid to date has been overpaid, cumulatively, toward
achieving a fair market ground lease rent (taking the Recorded Restrictions into account) over
the 55-year Term, then the appraiser shall take that fact into consideration when determining the
adjusted Rent for the remainder of the Term.
This adjusted annual rent for the remaining Term of this Ground Lease, as determined by
the independent appraiser as described above, with the Rent due and required to be paid annually
under this Ground Lease shall be re -adjusted to the lesser of (1) such appraised rent for the
Property (to be increased by 20% every five (5) years to account for inflation), or (2) fifty
percent (50%) of the Residual Receipts for the Housing Development. In any year, if the
appraised value -.rent (to be increased by 20% every five (5) years to account for inflation)
exceeds fifty percent (50%) of the Residual Receipts for the Housing Development, the amount:
by which such appraised value rent (increased by 20% every five (5) years to account for
inflation) exceeds 50 percent (50%) of the Residual Receipts for the Housing Development to be
paid pursuant to this Section 4.1 in a given year shall accrue and be carried over and added to the
amount of the Rent to be paid in later years by Tenant.
Additionally, the adjusted annual rent shall include all of the following: (i) fifty percent
(50%) of the Refinancing Net Proceeds immediately upon any refinancing of the loans secured
3967235.5 08M/12 -13-
by the Property (or any part thereof), and (ii) one hundred percent (100%) of the Transfer Net
Proceeds immediately upon any transfer in whole or in part of the Housing Development.
4.2 Payment of Rent. All rent that becomes due and payable pursuant to this Ground
Lease shall be paid to Landlord at the address listed in Section 23.1 or such other place as the
Landlord may from time to time designate by written notice to the Tenant without notice or
demand, and without setoff, counterclaim, abatement, deferment, suspension or deduction.
Except as expressly provided herein or in the Agreement, under no circumstances or conditions,
whether now existing or hereafter arising, or whether beyond the present contemplation of the
parties, shall Landlord be expected or required to make any payment of any kind whatsoever or.
to perform any act or obligation whatsoever or be under any obligation or liability hereunder, or
with respect to the Property.
4.3 Right to Audit. Tenant shall keep full and accurate books of account, records
and other pertinent data with respect to operations of the Housing. Development. Such books of
account, records, and other pertinent data shall be kept for a period of three (3) years after the
end of each Rental Period.
Landlord shall be entitled within two (2) years after the end of each Rental Period to
inspect and examine all of Tenant's books of account, records, and other pertinent data. Tenant
shall cooperate fully with Landlord in making the inspection. Landlord shall also be entitled,
also within two (2) years after the end of each Rental Period, to an independent audit of Tenant's
books of account, records, and other pertinent data.
4.4 Utilities. Tenant shall be responsible for the payment of all water, gas, electricity,
refuse collection and disposal, and all other utilities used by Tenant on the Property. Landlord
expressly has no obligation regarding provision of or payment for utilities serving the Property.
4.5 Taxes and Assessments.
4.5.1 Notice of Possessory Interest; Payment of Taxes and Assessments on
Value of Entire Property. In accordance with California Revenue and Taxation Code Section
107.6(a), Landlord notices Tenant that by entering into this Ground Lease, a possessory interest
subject to assessment and collection of property taxes may be created. Tenant or other party in
whom the possessory interest is vested may be subjeetto the payment of property taxes levied on
such interest. If possessory interest taxes are assessed, Tenant agrees it is responsible for
payment thereof and Landlord has no obligation or liability of any kind or nature relating to
payment of property taxes. Tenant shall, at its sole cost and expense, seek exemption from, or
contest the payment of, assessments and the collection of property taxes pursuant to Revenue and
Taxation Code Section 214, or a successor statute. During the pendency of such contest or
request, Tenant's non-payment of assessments or taxes when due shall not constitute a default
hereunder if (i) the validity of such assessments and taxes are actively contested in good faith
and by appropriate proceedings,. (ii) Tenant has demonstrated to Landlord's reasonable
satisfaction that leaving such assessments or taxes unpaid pending the outcome of such
proceedings could not result in conveyance of the Property in satisfaction of such assessments or
taxes or otherwise impair Landlord's estates in the Property, (iii) Tenant has furnished Landlord
with a bond. or other security satisfactory to Landlord in an amount not less than 100% of the
NMI5610-M7
3%7235.5 a0H27/12 - -14-
applicable claim (including interest and penalties) and (iv) upon the final disposition of such
proceedings, Tenant shall promptly pay all taxes and assessments then due, inclusive of any
unpaid accrued penalties and interest. Landlord is a tax exempt public entity and no property
taxes, will be or are legally assessable against its fee interest.
4.5.2 Payment of Taxes. Subject to any applicable exemptions, Tenant is
responsible for and shall pay the real property and/or possessory interest taxes applicable to the
Property during the term of this Ground Lease. All such payments shall be made prior to the
delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory
evidence that such taxes have been paid or that an exemption from such taxes has been obtained..
If any such taxes paid by Tenant shall cover any period of time prior to or after the expiration of.
the Term, Tenant's share of such taxes shall be equitably prorated to cover only the period of
time within the tax fiscal year during which this Ground Lease shall be in effect, and Landlord
shall reimburse .Tenant to the extent required. If Tenantshall fail to pay any such taxes,
Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to
Landlord within ten (10) days after demand from Landlord together with interest at the rate set
forth in Section 4.6.
4.5.3 Definition. As used herein, the term "real property tax" shall include
any form of real estate tax or assessment (including, without limitation, on possessory interests),
general, special, ordinary or extraordinary, and any license fee, commercial rental tax,,
improvement bond or bonds, levy or tax (other than inheritance, personal income, or estate taxes)
imposed on the Property or any interest (including, without limitation, possessory interests)
therein by any authority having the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, fire, street, drainage or other,
improvement district thereof, as against any legal or equitable interest of Landlord or Tenant in.
the Property or in the real property of which the Property are a part, as against Landlord's right
to rent or other income therefrom, and as against Landlord's business of leasing the Property.
The term "real property tax" shall also include any tax, fee, levy, assessment or charge (i) in
substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included
within the definition of "real property tax," or (ii) the nature of which was hereinbefore included
within the definition of "real property tax," or (iii) which is imposed as a result of a transfer„
either partial or total, of Landlord's interest in the Property or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of such transfer, or (v)
which is imposed by reason of this lease transaction, any modifications or changes hereto, or any
transfers hereof.
4.5.4 Personal. Property. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant contained in the Property or elsewhere. When possible, Tenant shall cause
said trade fixtures, furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Landlord.
4.5.5 Apportionment. If any of Tenant's said personal property shall be
assessed with Landlord's real property, first Tenant shall advise the County of Riverside Tax
Assessor and Tax Collector of the same in writing, and Tenant shall pay Landlord the taxes
attributable to Tenant not later than the later of (a) ten (10) days after receipt of a written
8871015610-0047 - -15-
3967735.5 z0827112
statement setting forth the taxes applicable to Tenant's property or (b) fifteen (15) days prior to
the date said taxes are due and payable.
4.6 Overdue Interest. Any amount due to Landlord, if not paid when due and on or
before expiration of the period for cure as set forth herein, after Landlord's delivery of notice
thereof to the Tenant, shall bear interest from the date due until paid at the lower.of:(a) the
reference or prime rate of Bank of America,.N.T. & S.A., in effect from time to time plus three
percent (3%); or (b) the highest rate of interest allowed under applicable usury law.
ARTICLE 5. POSSESSION OF PROPERTY.
5.1 Acceptance of Premises. Tenant hereby accepts the Property and acknowledges
that the Property is in the condition called for by the Agreement and this Ground Lease.
5.2 Ownership of Improvements. Unless otherwise provided herein, during the
Term of this Ground Lease, as it maybe extended pursuant to the terms hereof, fee title to all
Improvements, now existing or later made, on the Property are and shall be vested in Tenant as
set forth in Article 11 hereof.
5.3 Surrender of Property.
5.3.1 Expiration or Termination. Tenant agrees that on the expiration or
earlier termination of the Term, as it may be extended pursuant to the terms hereof, the leasehold
estate hereby granted to Tenant may be terminated by Landlord. Upon such termination, the
leasehold estate shall be forfeited and shall revert to Landlord, its successors and assigns, and all
Improvements on the Property shall become the property of Landlord, its successors and assigns,
free and clear from any liens or claims whatsoever (other than non -monetary liens previously
approved or otherwise accepted in writing by Landlord), in good condition, reasonable wear and
tear excepted without further compensation therefor from Landlord to Tenant or any other
person. Following any such expiration or termination, Tenant shall execute, acknowledge and
deliver to Landlord a quitclaim deed, or other document required by a reputable title company, .
conveying all Tenant's right, title, and interest in and to the Property and Improvements to
Landlord. In the event Tenant receives a written default notice relating to or arising from any
Construction Loan, Take -Out Loan or any mortgage, deed of trust or security instrument secured
by the leasehold interest granted hereunder, the Property or the Improvements, or from the Tax
Credit Allocation Committee or the Internal Revenue Service, then Tenant shall provide written
notice of such alleged default to the Executive Director within five (5) days of receipt thereof.
Tenant hereby irrevocably appoints Landlord as Tenant's agent and attorney -in -fact (such
agency being coupled with an interest), and as such agent and attorney -in -fact Landlord may,
without the obligation to do so, in Tenant's name, or in the name of Landlord, prepare, execute
and file or record such statements, applications and other documents necessary to create, perfect
or preserve any of. Landlord's interests and rights in or to the Property and any of the
Improvements, and, upon the earlier expiration or termination of the Tern, take any other action.
required of Tenant. Notwithstanding any other provisions herein, unless the Low Income
Housing Tax Credit Extended Use Agreement is terminated pursuant to Internal Revenue Code
Section 42(h)(6)(E)(i)(I) or otherwise as permitted by the Internal Revenue Code, Landlord, and
its successors and assigns specifically agree that upon any termination of this Ground Lease prior
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to the end of the Low Income Housing Tax Credit Extended Use Period, Landlord, and its
successors and assigns shall, for the balance of the term of the Low Income Housing Tax Credit
Extended Use Period, continue to operate the Property such that forty percent (40%) of the units
in the Housing Development shall be leased to households who, at the time of initial occupancy,.
have incomes of no more than sixty percent (60%) of the area median income, adjusted for
family size; and that the rents charged such tenants shall not exceed the maximum low income
housing tax credit rents for such households.
5.3.2 Condition. On expiration or earlier termination of the Term and in
furtherance of the provisions relating to surrender of the Property set forth in Section 5.3.1
above, Tenant shall peaceably and quietly leave and surrender the Property and the
Improvements to Landlord in good order, condition and repair, reasonable wear and tear and
obsolescence excepted. Tenant shall leave in place and in good order, condition and repair, all
fixtures and machinery; except (if Tenant is not then in default under this Ground Lease) Tenant
shall have the right to remove only Tenant -owned appliances, other unattached equipment,
finniture and merchandise that Tenant shall have installed, which removal must be done without
damage to the Property or Improvements. Landlord shall have the right to have the Property and
the Improvements inspected at Tenant's cost to determine whether the Property and the
Improvements have been properly maintained, repaired and restored in accordance with the
terms of this Ground Lease. That notwithstanding and subject to the exception of the
environmental indemnities which shall survive any termination in perpetuity; Tenant shall not be
responsible for the interior physical condition of individual occupied apartments on the
termination or expiration of this Ground Lease. ,
5.3.3 Delivery of Documents. Contemporaneous with the expiration or,
earlier termination of the Term, as it may be extended pursuant to the terms hereof, and subject
to the provisions of Sections 5.3.1 and 5.3.2 hereof, Tenant shall immediately deliver to
Landlord the following:
(a) Such documents, instruments and conveyances as Landlord may
reasonably request to enable Landlord's ownership of the Property and the Improvements to be
reflected of record, including, without limitation, a quitclaim deed in recordable form to the
Property and the Improvements.
(b) If requested by Landlord, a lender's policy of title insurance (as
provided in Section 7.2(r) of the Agreement), surety bond, or other security reasonably
acceptable to Landlord insuring against all claims and liens against the Property and the
Improvements other than those incurred by Landlord or accepted by Landlord in writing.
(c) All construction plans, surveys, permits, existing contracts for
services, maintenance, operation, and any other documents relating' to use, operation,
management, and maintenance of the Improvements as may be in effect and/or in the possession
of Tenant at the time and from time to time thereafter.
(d) All documents and instruments required to be delivered by Tenant
to Landlord pursuant to this Section shall be in form reasonably satisfactory to Landlord,
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3967235.5 a0827/12
including without limitation such documents and instruments shall be complete, originals or true
copies, and legible.
5.4. Abandonment. Tenant shall not abandon or vacate the Property or the
Improvements at any time during the Term. If Tenant shall abandon, vacate or otherwise
surrender the Property or the Improvements, or be dispossessed (other than dispossession as the
result of a Substantial Taking or a Taking and subject to Section 22.1 below) thereof by process
of law or otherwise, the same shall constitute a default under this Ground Lease on the part of
Tenant and, in addition to any other remedy available on the part of Landlord, any of Tenant's
property left in, upon or about the Property or the Improvements (except for underground storage
tanks, if any, placed within the Property by Tenant) shall, at Landlord's option, be deemed to be
abandoned and shall become the property of Landlord. The appointment of a receiver pursuant
to a Mortgagee's exercise of its rights under a Mortgage,_ or the.foreclosure of a Mortgage, shall
not be a default under this Section.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
6.1 Landlord's Representations. Landlord represents and warrants :to Tenant it
owns the Property in fee simple and has the power and authority to enter into this Ground Lease
and perform all obligations and agreements incidental or pertinent to the Ground Lease.
Landlord makes no representation or warranty with respect to the condition of the Property or its
fitness or availability for any particular use, and Landlord shall not be liable for any latent or
patent defect therein. Landlord represents and warrants to tenant as follows:
(A) . Landlord. Landlord is a public body, corporate and politic, organized and
existing pursuant to the Housing Authorities Law (Health and Safety Code .
Section 34200 et seq.), which has been authorized to transact business
pursuant to action of the City. The execution, performance and delivery of.
this Ground Lease by Landlord has been fully authorized by all requisite
actions on the part of Landlord. .
(B) No Conflict. To the best of Landlord's knowledge, Landlord's execution,
delivery and performance of its obligations under this Ground Lease_ will
not constitute a default or a breach under any contract, agreement or order
to which Landlord is a party or by which it is bound.
(C) No Landlord Bankruptcy. Landlord is not the subject of a bankruptcy
proceeding.
As used herein, "Landlord's knowledge" shall be limited to the actual knowledge of
Frank Spevacek, Executive Director, with no, duty of inquiry or investigation.
6.2 Tenant's Representations. Tenant represents and warrants to Landlord it has
examined the Property and acknowledges that it hereby accepts possession of the Property in its
"AS IS" condition, with all faults and defects, including, without limitation, any physical
condition or environmental condition of the Property. Tenant represents and warrants to
Landlord as follows:
88210156MM7
3967235.5 a0827A2 - -18-
(A) Tenant. Tenant is a duly organized limited partnership formed within and
in good standing under the laws of the State of California. Upon request
by Landlord, Tenant shall deliver to Landlord true and complete copies of
the original documents evidencing the organization of Tenant, as amended
to the date of this Ground Lease. Tenant has full right, power and lawful
authority to undertake all obligations as provided herein and the execution,
performance and delivery of this Ground Lease by Tenant have been fully
authorized by all requisite actions on the part of Tenant.
(B) No Conflict. To the best of Tenant's knowledge, Tenant's execution,
delivery and performance of its obligations under this Ground Lease will
not constitute a default or a breach under any contract, agreement or order'
to which Tenant is a party or by which it is bound.
(C) No Tenant Bankruptcy. Tenant is not the subject of a bankruptcy
proceeding.
Tenant shall, upon learning of any fact or condition which would cause any of the
warranties and representations in this Section not to be true, immediately. give written notice of
such fact or condition to Landlord.
ARTICLE 7. CONSTRUCTION OF THE IMPROVEMENTS:
7.1 Construction. Tenant shall construct the Improvements in accordance with plans
and specifications (the "Plans") approved by Landlord pursuant to the Agreement. All
Improvements, including the Public Improvements, shall be construeted in a good and
workmanlike manner using materials of good quality and in substantial compliance with this
Ground Lease, and shall comply with all applicable governmental permits, laws, ordinances and
regulations.
7.2 Construction Cost. With the exception of the "Authority Loan" provided to
Tenant pursuant to the Agreement, Tenant shall bear the entire and sole cost of constructing the
Improvements, including all fees and mitigation measures.
7.3 . Landlord's Right to Discharge Lien. If Tenant does not cause to be recorded
the bond described in California Civil Code Section 3143 or otherwise protect the Property under
any alternative or successor statute, and a final judgment has been entered against Tenant by a
court of competent jurisdiction for the foreclosure of a mechanic's, materialmen's, contractor's,
or subcontractor's lien claim, and if Tenant fails to stay the execution of the judgment by lawful
means or to pay the judgment, Landlord shall have the right, but not the duty, subject to the
notice and cure rights of Mortgagees and the Investor set forth elsewhere in this Ground Lease,
to pay or otherwise discharge, stay, or prevent the execution of any such judgment or lien or
both. Tenant shall reimburse Landlord for all sums paid by Landlord under this Section, together
with all Landlord's reasonable attorneys' fees and costs, plus interest on those sums, fees, and
costs from.the date of payment until the date of reimbursement at the rate set forth in Section 4.7.
7.4 Notice of Non -Responsibility. After the recordation of the Certificate of
Completion for the Improvements in the Official Records, Tenant shall provide Landlord with
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prior written notice of not less than fifteen (15) days before commencing construction of any
structural alteration of the Improvements, or any non-structural alteration which will cost more
than Twenty Thousand Dollars ($20,000), and shall permit Landlord to record .and post
appropriate notices of non -responsibility on the Property. The foregoing Ten Thousand Dollar
($10,000) limitation shall be increased each calendar year by the CPI Adjustment.
7.5 Notice of Completion. On completion of construction of the Improvements,
Tenant shall file or cause to be filed a notice of completion. Tenant hereby appoints Landlord as
Tenant's attorney -in -fact to file the notice of completion on Tenant's failure to do so after the
work of improvement has been substantially completed.
7.6 Subsequent Alterations. Following completion of the construction of the
Improvements in accordance with the Plans, Tenant may from time to time, at its sole expense,
make improvements and other alterations to the Property which Tenant reasonably determines to
be beneficial. Tenant shall not make any alteration or improvement to the Property, the cost of
which exceeds Fifty Thousand Dollars ($50,000), without Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed. The foregoing dollar amount
limitations shall be increased each calendar year by the CPI Adjustment. Tenant shall timely pay
any obligation incurred by Tenant with respect to any such alterations or improvements that
could become, a lien against the Property and shall defend, indemnify and hold Landlord
harmless in connection therewith.
ARTICLE 8. USE OF THE PROPERTY
8.1 Covenant to Use in Accordance with Redevelopment Plan, City Municipal
Code, Regulatory Agreement, and this Ground Lease. Tenant covenants and agrees for itself,
its successors, assigns, and every successor in interest to Tenant's interest in the Property or any
part thereof, that Tenant shall devote the Property to the uses specified in the Redevelopment
Plan, the Regulatory Agreement and this Ground Lease until the expiration of the Term hereof,
as it may be extended pursuant to the terms hereof, as applicable to the Property. All uses
conducted on the Property, including, without limitation, all activities undertaken by Tenant
pursuant to this Ground Lease, shall conform to the Redevelopment Plan and all- applicable
provisions of the La Quinta Municipal Code. The foregoing covenants shall run with the land.
8.2 Covenant to Pay Taxes and Assessments. Tenant shall pay prior to delinquency
all ad valorem real estate taxes, special taxes, assessments and special assessments levied against
the Property, subject to Tenant's right to contest any such tax in good faith and any property tax
exemptions.
8.3 Covenants Regarding Nondiscrimination. Tenant covenants by and for itself
and any successors in interest that there shall be no discrimination against or segregation of any
person, or group of persons on any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any.
part thereof, nor shall Tenant, or any person claiming under or through him or her, establish or
permit any such practice or practices of discrimination or segregation with reference to the
Mffl]5610A047 -
3967295.5 a=7112 -20-
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the Property, or any part thereof The foregoing covenants shall run with the land.
Tenant .agrees for itself and any successor in interest that Tenant shall refrain from
restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the
Property, on the basis of race, color, creed, religion, sex, marital status, ancestry, or national
origin of any person. All such deeds, leases or contracts shall contain or be subject to
substantially the following nondiscrimination or nonsegregation clauses:
(A) In deeds: "The grantee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons
claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of
any basis listed in subdivision. (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease,"
transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through
him or her, establish or permit any practice or practices of discrimination
or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
premises herein conveyed. The foregoing covenants shall run with the
land."
(B) In leases: "The lessee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons
claiming under or through him or her, and this lease is made and accepted
upon and subject to the following conditions:"That there shall be no
discrimination against or segregation of any person or group of persons,
on account of any basis listed in subdivision (a) or (d) of Section 12955 of
the Government Code, as those bases are defined in Sections 12926,
12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section
12955, and Section 12955.2 of the Government Code, in the leasing,
subleasing, transferring, use, occupancy, tenure, or enjoyment of the
premises herein leased nor shall the lessee himself or herself, or any
person claiming under or through him or her, establish or permit any such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants, lessees,
sublessees, subtenants, or vendees in the premises herein leased."
(C) In contracts pertaining to the realty: "There shall be no discrimination
against or segregation of, any person or group of persons on account of
any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
.and Section 12955.2 of the Government Code, in the sale, lease, sublease,
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3967235.5 08M/12 -21-
transfer, use, occupancy, tenure, or enjoyment of the premises which are
the subject of this agreement, nor shall the grantee or any person claiming
under or through him or her, establish or permit any practice or practices
of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or
vendees in the premises herein conveyed. The foregoing covenants shall
run with the land."
The covenants established in this Lease shall,.without regard to technical classification
and designation, be binding for the benefit and in favor of the Landlord, its successors and
assigns, the City and any successor in interest to the Property, together with any property
acquired by the Tenant pursuant to this Agreement, or any part thereof. The covenants against
discrimination shall remain in effect in perpetuity.
ARTICLE 9. INSURANCE.
9.1 Tenant's Insurance. Without limiting Landlord's right to indemnification,
Tenant shall secure and maintain insurance coverage as set forth in this Article 9.
9.2 Commercial General and Automobile Liability; Worker's Compensation..
Commencing on the Effective Date and continuing throughout the term of this Ground Lease, the
Tenant shall procure and maintain, at its sole cost and expense, in a form and content satisfactory
to the Landlord's Executive Director, the following policies of insurance:
(A)' Commercial General Liability Insurance covering bodily injury, property
damage, personal injury and advertising injury written on a per -occurrence
and not a claims -made basis containing the following minimum limits:(i)
general aggregate limit of Three Million Dollars ($3,000,000.00); (ii)
products -completed operations aggregate limit of Three. Million Dollars
($3,000,000.00); (iii) personal and advertising injury limit of One Million
Dollars ($1,000,000.00); and (iv) each occurrence limit of One Million
Dollars ($1,000,000.00).Said policy shall include the following
coverages:(i) blanket contractual liability (specifically covering the
indemnification clause contained in Section 8 below); (ii) products and
completed operations; (iii) independent contractors; (iv) Owner's broad
form property damage; (v) severability of interest; (vi) cross liability; and
(vii) property damage liability arising out of the so-called "XCU" hazards
(explosion, collapse and underground hazards).The policy shall be
endorsed to have the general aggregate apply to this Project only.
(B) A policy of worker's compensation insurance in such amount as will fully
comply with the laws of the State of California and which shall indemnify,
insure, and provide. legal defense for the Landlord and the Tenant against
any ,loss, claim or .damage arising from any injuries or occupational
diseases occurring to any worker employed by or any persons retained by
the Tenant in the course of carrying out the work or services contemplated
in this Ground Lease, and Employers Liability Insurance in an amount not
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less than One Million Dollars ($1,000,000) combined single limit for all
damages arising from each accident or occupational disease.
(C) A policy of comprehensive automobile liability insurance written on a per -
occurrence .basis in an amount not less than Three Million Dollars
($3,000,000.00) combined single limit covering all owned, non -owned,
leased and hired vehicles used in connection with the Work.
9.3 Builders Risk. Commencing on the Effective Date and continuing until the
Landlord issues a Release of Construction Covenants for the Project, the Tenant shall procure
and maintain, at its sole cost and expense, in'a form and content satisfactory to the Landlord's
Executive. Director, Builder's Risk (course of construction) insurance coverage in an amount
equal to the full cost of the hard construction costs of the Project. Such insurance shall cover, at
a minimum: all work; materials, and equipment to be incorporated into the Project; the Project
during construction; the completed Project until such time as the City issues a final certificate of
occupancy for the Project, and storage and transportation risks. Such insurance shall
protect/insure the interests of Tenant/owner and all of Tenant's contractor(s), and subcontractors,
as each of their interests may appear. If such insurance includes an exclusion for "design
error," such exclusion shall only be for the object or portion which failed. Landlord shall be a
loss payee under such policy or policies and such insurance shall contain a replacement cost
endorsement
9.4 Property; Business Interruption; Boiler and Machinery Insurance.
Commencing on .the date Landlord issues a Release of Construction Covenants for the Project
and continuing throughout the term of this Ground Lease, the Tenant shall procure and maintain,
at its sole cost and expense, in a form and content satisfactory to the Landlord's Executive
Director, the following insurance:
(A) Insurance against fire, extended coverage, vandalism, and malicious
mischief, and such other additional perils, hazards, and risks as now are or
may be included in the standard "all risk" form in general use in Riverside
County, California, with the standard form fie insurance coverage in an
amount equal to full actual replacement cost thereof, as the same may
change from time to time. The above insurance policy or policies shall
include coverage for earthquakes to the extent generally and commercially
available at commercially reasonable rates, if such insurance is generally
obtained for affordable housing developments in the counties of Riverside
and San Bernardino. Landlord shall be a loss payee under such policy or
policies and such insurance shall contain a replacement cost endorsement.
(B) Business interruption and extra expense insurance to protect Tenant and
Landlord covering loss of revenues and/or extra expense incurred by
reason of the total or partial suspension or delay of, or interruption in, the
operation of the Project caused by loss or damage to, or destruction of, any
part of the insurable real property structures or equipment as a result of the
perils insured against under the all risk physical damage insurance;
covering a period of suspension, delay or interruption of at least twelve
TMI5610.0047.
3967235.5 a0827112 -23-
(12) months, in an amount not less than the amount required to cover such
business interruption and/or extra expense loss during such period.
(C) Boiler and machinery insurance in the aggregate amount of the full
replacement value of the equipment typically covered by such insurance.
9.5 Contractor Insurance Requirements. Tenant shall cause any general contractor
with whom it has contracted for the performance of work on the Property to secure, prior to
commencing any activities hereunder and maintain insurance that satisfies all of the requirements
of this Section 9.
9.6 Additional Requirements. The following additional requirements shall apply to
all of the above policies of insurance:
(A) All of the above policies of insurance shall be primary insurance and,
except the Worker's Compensation, Employer Liability insurance, and
automobile liability insurance, shall name the Landlord, City and their
respective officers, officials,members, employees, agents, and
representatives (collectively, "Landlord and City and Landlord and City
Personnel") as additional insureds on an ISO Form CG 20:10 (current
version) or substantially similar form and not an ISO Form CG 20:09.7he
insurer shall waive all rights of subrogation and contribution it may have
against Landlord and City and Landlord and City Personnel and their
respective insurers. All of said policies of insurance shall provide that
said insurance may not be amended or cancelled without providing thirty
(30) days' prior written notice to the Landlord. In the event any of said
policies of insurance are cancelled, the Tenant shall, prior to the
cancellation date, submit new evidence of insurance in conformance with
this: Section to the Executive Director.. Not later than the Effective, the
Tenant shall provide the Executive Director with Certificates of Insurance
or appropriate insurance binders evidencing the above insurance coverages
and said Certificates of Insurance or binders shall be "subject to the
reasonable approval of the Executive Director.
(B), The policies of insurance required by this Ground Lease shall be
satisfactory only if issued by companies of recognized good standing
authorized to do business in California, rated "A-" or better in the most
recent edition of Best Rating Guide, The Key Rating Guide or in the
Federal Register, and only if they are of a financial category Class VII or
better, unless such requirements are waived by the Executive Director, in
consultation with the City's Risk Consultant through the California Joint
Powers Insurance Authority, due to unique circumstances.
(C) The Executive Director, in consultation with the City's Risk Consultant
through the California Joint Powers Insurance Authority, is hereby
authorized to reduce or otherwise modify Tenant's insurance requirements
set forth herein in the event they collectively determine, in their sole and
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3M7235.5a08rz7112- - -24-
absolute discretion, that such reduction or modification is consistent with
reasonable commercial practices.
(D) The Tenant -agrees that the provisions of this Section shall not be
construed as limiting in any way the Landlord's right to indemnification or
the extent to which the Tenant may be held responsible for the payment of
damages to any persons or property resulting from the Tenant's activities
or the activities of any person or persons for which the Tenant is otherwise
responsible.
93 Remedies for Defaults Re: Insurance. In addition to any other remedies
Landlord may have if Tenant fails to provide or maintainany insurance policies or policy
endorsements to the extent and within the time herein required, Landlord may, at its sole option,
after fifteen (15) days Notice to Tenant and Investor:
(A) Obtain such insurance and charge Tenant the amount of the premium for
such insurance, in which event Tenant shall promptly remit such sum to
Landlord; provided, however, if Landlord's Executive Director reasonably
determines that the Tenant, Property and/or Project will be uninsured or
underinsured in the absence of such insurance then Landlord need not
provide for any cure period in its notice to Tenant but may instead obtain
such insurance immediately upon its provision of such notice;
(B) Withhold any payment(s) which become due to Tenant hereunder until
Tenant demonstrates compliance with the requirements hereof; and
(C) Declare Tenant in Default and exercise its rights and remedies under this
Ground Lease.
Exercise of any of the above remedies, however, is an alternative to other remedies
Landlord may have and is not the exclusive remedy for Tenant's failure to maintain insurance or
secure appropriate endorsements.
Nothing herein contained shall be construed as limiting in any way the extent to which
Tenant may be held responsible for payment of damages to persons or property resulting from
Tenant's contractors or any subcontractor's performance under this Ground Lease.
9.8 Indemnification. Tenant shall defend, indemnify, assume all responsibility for;
and hold Landlord, its officers, employees and agents, harmless from, all claims, demands,
damages, defense costs (including attorneys' fees and costs) or liability of any kind or nature
relating to the subject matter.of this Ground Lease or the implementation hereof, including but
not limited to any damages to property or injuries to persons, including accidental death, arising
out of or in connection with Tenant's activities, acts, errors, omissions, performance or work
under this Ground Lease, whether such activities or performance thereof be by Tenant or by
anyone directly.or indirectly employed, controlled or contracted by Tenant and whether such
damage shall accrue or be discovered before or after termination of this Ground Lease. Tenant
shall not be liable for any such claims; demands,. damages, defense costs, or liability, including
68MI56104)U47
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any damages to property or injuries to persons, to the extent occasioned by the active negligence
or willful misconduct of Landlord or its designated agents or employees.
ARTICLE 10. MAINTENANCE; REPAIRS
Tenant shall maintain the Property and all improvements thereon, including lighting and
signage, in good condition, free of debris, waste and graffiti, and in compliance with the terms of
the Redevelopment Plan and all applicable provisions of the City of La Quinta Municipal Code,
and in accordance with the HUD Housing Quality Standards. Tenant shall maintain in
accordance with the "Maintenance Standards," as hereinafter defined, the improvementsand
landscaping on the Property. Such Maintenance Standards shall apply to all buildings, signage,
lighting, landscaping, irrigation of landscaping, architectural elements identifying the Property.
and any and all other improvements on the Property. To accomplish the maintenance, Tenant
shall either staff or contract with and hire licensed and qualified personnel to perform the
maintenance work, including the provision of labor, equipment, materials, support facilities, and
any and all other items necessary to comply with the requirements of this Ground Lease.
Tenant and its maintenance staff,. contractors or subcontractors shall comply with the
following standards (the "Maintenance Standards"):
(A) The Property shall be maintained in conformance and in compliance with
the approved plans and permits, and reasonable maintenance standards for.
similar, comparable neighboring structures, including but not limited to
painting and cleaning of all exterior surfaces and other exterior facades
comprising all private improvements and public improvements to the curb
line. The Property shall be maintained in good condition and in
accordance with the custom and practice generally applicable to
comparable apartment complexes.
(B) Landscape maintenance shall include, but not be limited to:.
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree
and shrub pruning; trimming and shaping of trees and shrubs to maintain a
healthy, natural .appearance and safe road conditions and visibility, and
irrigation coverage; replacement, as needed, of all plant materials; control
of weeds in all planters, shrubs, lawns, ground covers, or other planted
areas; and staking for support of trees.
(C) Clean-up maintenance shall include, but not be limited to: maintenance of
all sidewalks, paths and other paved areas in clean and weed -free
condition; maintenance of all such areas clear of dirt, mud, trash, debris or
other matter which is unsafe or unsightly; removal of all trash, litter and
other debris from improvements and landscaping prior to mowing;
clearance and cleaning of all areas maintained prior to the end of the day
on which the maintenance operations are performed to ensure that all
cuttings, weeds, leaves and other debris are properly disposed of by
maintenance workers.
982D66160047
3967235.5 08M/12 - - - -26-
Upon Landlord's written notification to Tenant of any maintenance deficiency, Tenant
shall have thirty (30) days within which.to correct, remedy or cure the deficiency, or such longer
period as is reasonably necessary to complete the cure, provided such correction, remedy, or cure
is commenced within such thirty (30) day period and diligently proceed to completion. If the
written notification states the problem is urgent relating to the public health and safety of the
City or Landlord, then Tenant shall have forty-eight (48) hours to rectify the problem, or such
longer period as is reasonably necessary to complete the cure. In the event Tenant does not
maintain the Property in the manner set forth herein and in accordance with the Maintenance
Standards, Landlord shall have, in addition to any other rights and remedies hereunder, the right
to maintain the Property, or to contract for the correction of such deficiencies, after Notice to
Tenant, and Tenant shall be responsible for the payment of all such costs incurred by Landlord.
ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS.
11.1 Ownership During Term.
11.1.1 Improvements. Subject to the provisions of Sections 5.3.1 and 5.3.2
hereof, all Improvements on the Property as permitted or required by this Ground Lease shall,
during the Tenn, be and remain the property of Tenant, and Landlord shall not have title thereto.
Tenant shall not, however, demolish, remove, sell, encumber, lease, assign or otherwise convey
any Improvements from the Property except as permitted herein.
11.1.2 Personal Property. All personal property, furnishings, fixtures and
equipment, including, without limitation, Tenant -owned appliances, which are not so affixed to
the Property or the buildings thereon as to require substantial damage to the buildings upon
removal thereof shall constitute personal property including, but not limited to:(a) functional
items related to the everyday operations of the Property; (b) personal property furnishings,
fixtures and equipment of the nature or type deemed by law as permanently resting upon or.
attached to the buildings or land by any means, including, without Iimitation, cement, plaster,
nails, bolts or screws, or essential to the ordinary and convenient use of the. Property and the
Improvements. If Tenant is not then in default under this Ground Lease, at any time during the
Term and at termination thereof, Tenant shall Have the right to remove any and all such personal
property, furnishings, fixtures and equipment; provided, that Tenant repairs any damage to the
Property or the Improvements caused by such removal.
11.1.3 Basic Building Systems. For purposes of this Ground Lease, the
personal property, furnishings, fixtures and equipment described in this Section 1I.1 shall not
include those major building components or fixtures necessary for operation of the basic building
systems such as, but not limited to, the elevators, plumbing, sanitary fixtures, heating and central
air-cooling system.
11.2 Ownership at Expiration or Termination.
11.2.1 Property of Landlord. In accordance with provisions of Sections 5.3.1
and 5.3.2 hereof, and except as provided in Section 11.2.2, all Improvements which constitute or
are a part of the Property shall become (without the payment of compensation to Tenant or
others) the property. of Landlord free and clear of all claims and encumbrances on such
3967235.5 aOM7/12 -27-
Improvements by Tenant, and anyone claiming under or through Tenant, except for such title
exceptions permitted or required during the Term with Landlord's prior written consent. Tenant
shall then quitclaim to Landlord any and all rights, interests and claims to the Improvements.
Tenant agrees to and shall defend, indemnify and hold Landlord harmless from and against all
liability and loss which may arise from the assertion of any such claims and any encumbrances
on such hnprovements (except to the extent such claims arise due to Landlord's actions) and
except for such title exceptions permitted or required during the Tenn.
11.2.2 Removal by Tenant. Tenant shall not be required or permitted to
remove the Improvements, or any of them, at the expiration or sooner termination of the Term;
provided, however, that, subject to the provisions of Section 5.3.2 hereof, within thirty (30) days
following the expiration or sooner termination of the Term, Tenant may remove all personal
property, furniture, and equipment.
11.2.3 Unremoved Property. Any .personal property, fumishings or
equipment not removed by Tenant pursuant to Section 11.2.2 hereof, shall, without
compensation to Tenant, become Landlords' property, free and clear of all claims to or against
them by Tenant or any third person, firm or entity arising by, through or under Tenant.
11.2.4 Maintenance and Repair of Improvements. Subject to the provisions
of this Ground Lease concerning condemnation, alterations and damage and destruction, Tenant
agrees to assume full responsibility for the operation and maintenance of the Property and the
Improvements and all fixtures and furnishings thereon or therein throughout the Term hereof
without expense to Landlord, and to perform all repairs and replacements necessary to maintain
and preserve the Property, the Improvements, fixtures and furnishings in a decent, safe and
sanitary condition consistent with good practices and in compliance with all applicable laws.
Tenant agrees that Landlord shall not be required to perform any maintenance, repairs or
services, or to assume any expense not specifically assumed herein in connection with the
Property and the Improvements thereon unless specifically required. under the terms of this
Ground Lease.
Except as otherwise provided in this Section 11.2 and in Section 11.4, the condition of
the Improvements required to be maintained hereunder upon completion of the work of
maintenance or repair shall be equal in value, quality and use to, the condition of such
Improvements before the event giving rise to the work.
11.3 . Waste. Subject to the alteration rights of Tenant and damage and destruction or
condemnation of the. Property or any part thereof, Tenant shall not commit or suffer to be
committed any waste of the Property or the Improvements, orany part thereof.
Tenant agrees to keep the Property and the Improvements clean and clear of refuse and
obstructions, and to dispose properly of all garbage, trash and rubbish.
11.4 Alteration of Improvements. Except as provided in Section 7.1, Tenant shall
not make or permit to be made any material exterior alteration of, addition. to. or change in, the '
Improvements which would affect the exterior elevations (including materials selection and
color) or the size, bulk and scale of the Property, other than routine maintenance and repairs, nor
. - SSMIS610-0047 -
396723M a0&4//12 -28-
demolish all or any part of the Improvements, without the prior written consent of Landlord.
Nothing herein shall prohibit interior alterations or decorations, or the removal and replacement
of interior improvements consistent with the specified use of the Property. In requesting consent
for such exterior improvements as required by the foregoing,. Tenant shall submit to Landlord
detailed plans and specifications of the proposed work and an explanation of the need and
reasons thereof. Tenant may make such other improvements, alterations, additions or changes to
the Improvements which do not materially affect the exterior elevations (including materials
selection and color) or the size, bulk and scale thereof without Landlord's prior written consent.
Notwithstanding the prohibition in this Section 11.4, Tenant may make such changes,
repairs, alterations, improvements, renewals or replacements to the exterior elevations, materials,
size, bulk or scale of the Improvements as are required (a) by reason of any law, ordinance,
regulation or order of a competent government authority, (b) for the continued safe.and orderly
operation of the Property, or (c) to continue to receive the Tax Credits or any other government
funding that may be available to the Project.
ARTICLE 12. SIGNS AND MARKETING..
Tenant shall not place or suffer to be placed on the Property or upon theroof or any
exterior door or wall or on the exterior or interior of any window of the Improvements, any sign,
awning, canopy, marquee, advertising matter, decoration, lettering or other thing of any kind
(exclusive of the signs, awnings and canopies,.if any, which may be provided for in the Plans)
without the written consent of the Executive Director first had and obtained.
ARTICLE 13. DAMAGE OR DESTRUCTION OF PROPERTY OR
IMPROVEMENTS.
13.1 Tenant's Repair Obligation:
13.1.1 In case of damage to or destruction of the Property or the Improvements;
or any part thereof, by fire, earthquake, flood, act of God or other casualty (any of the foregoing,
a "Casualty") at any time during the Term of this Ground Lease, Tenant, if and to the extent
insurance proceeds are available, shall restore the same as nearly as possible to their value,
condition and character immediately prior to such damage or destruction. Such restoration shall
be commenced with due diligence and in good faith, and prosecuted with due diligence and in
good faith, unavoidable delays excepted.
13.1.2 In case of damage to or destruction of the Improvements by Casualty
resulting in a loss exceeding in the aggregate Ten Thousand Dollars ($10,000), Tenant shall
-
promptly give written notice thereof to Landlord.
13.1.3 In the event insurance proceeds are insufficient to restore the Property or
the Improvements to its/their value, condition and character immediately prior to such damage or
destruction, then, with the consent and approval of Citibank, N.A. in its capacity. as Mortgagee
(but only during such time as the Construction Loan or Take -Out Loan remain unpaid), Landlord
shall have the right to terminate this. Ground Lease by providing written notice thereof to Tenant..
882/015610-0047 -
. 3967235.5 .0=7/12 -29- -
I3.1.4 In the event that the entire Improvements or so much of the
Improvements.as to render the balance unusable by Tenant, as reasonably determined by Tenant,
shall be damaged or destroyed by Casualty, then, with the consent and approval of Citibank,
N.A. in its capacity as Mortgagee (but only during such time as the Construction Loan or Take -
Out Loan remain unpaid), Tenant shall have the right to terminate this Ground Lease by written
notice thereof to Landlord.
13.2 Tenant's Restoration of Premises.
13.2.1 If, during the Term, the improvements are damaged or destroyed by a
Casualty, and the total amount of loss does not exceed thirty-three percent (33%) of the
replacement value of the Improvements, Tenant shall make the loss adjustment with the
insurance company insuring the loss, with the approval of Landlord, which approval shall not be
unreasonably withheld or delayed. The proceeds shall be paid directly to a Mortgagee, if any,
and if there is not a Mortgagee, to Landlord and Tenant for the sole purpose of making the
restoration of the Improvements in accordance with this Article 13.
13.2.2 If, during the Term, the Improvements are damaged or destroyed by a
Casualty, and the total amount of loss exceeds thirty-three percent (33%) of the replacement
value of the Improvements, Tenant shall make the loss adjustment with the insurance company
insuring the loss, with the approval of Landlord, which approval shall not be unreasonably
withheld or delayed, and the insurance company shall immediately pay the proceeds to a
Mortgagee, if any, and if there is not a Mortgagee, then to a bank or trust company designated by
Landlord and approved by Tenant (such Mortgagee or other institution, the "Insurance Trustee"),,
which approval shall not be unreasonably withheld or delayed. All sums deposited with the
Insurance Trustee shall be held for the following purposes and the Insurance Trustee shall have
the following powers and duties:
(a) The sums shall be paid in installments by the Insurance Trustee to
the contractor retained by Tenant and approved by Landlord as construction progresses, for
payment of the cost of restoration. A ten percent (10%) retention fund shall be established that
will be paid to the contractor on completion of restoration, payment of all costs, expiration of all
applicable lien periods, and proof that the Property and the Improvements are free of all
mechanics' liens and lienable claims;
(b) Payments shall be made on presentation of certificates or vouchers
from the architect or engineer retained by Tenant and approved by Landlord (which approval
shall not be unreasonably withheld, conditioned or delayed) showing the amount due. If the
Insurance Trustee, in its reasonable discretion, determines that the certificates or vouchers are
being improperly approved by the architect or engineer retained by Tenant, the Insurance Trustee
shall have the right to appoint an architect or an engineer to supervise construction and to make
payments on certificates or vouchers approved by the architect or engineer retained by the
Insurance Trustee. The reasonable expenses and charges of the architect or engineer retained by
the Insurance Trustee shall be paid by the Insurance Trustee out of the trust fund;
..(c) . If, after the work of restoration has commenced, the sums held by
the Insurance Trustee are not sufficient to pay the actual cost of restoration, Tenant shall deposit
882A15610-W7
39672355 e0827/12 -30-
the amount of the deficiency with the Insurance Trustee within ten (10) days after receipt of
request for payment of such amount from the Insurance Trustee, which request shall be made by
the Insurance Trustee promptly after it is determined there will be a deficiency;
(d) If the Insurance Trustee has received notice from Landlord that the
Tenant is in default under this Ground Lease, then, subject to the lien of a Mortgagee's Mortgage
and the Mortgagee's prior written consent, the Insurance Trustee shall pay to Landlord an
amount sufficient to cure such default as specified in Landlord's notice to the Insurance Trustee;
(e) Any amounts remaining after making the payments hereinabove
referred to in clauses (a), (b) and (c) shall be paid to any leasehold Mortgagee to the extent (a)
required by any Mortgage and (b) such leasehold Mortgagee makes written demand therefor to
the Insurance Trustee;
(f) Any undisbursed funds remaining after compliance with all of the
provisions of this Section 13.2 shall, if and to the extent required by any Mortgage, be delivered
to the Mortgagee, and if there is no leasehold Mortgagee, to Tenant; and
(g) All actual costs and charges of the Insurance Trustee shall be paid
by Tenant. If the Insurance Trustee resigns or for any reason is unwilling to act or continue to
act, Landlord shall substitute a new Insurance Trustee in the manner described in this Section.
13.2.3 Both parties shall promptly execute.A documents and perform all acts
reasonably required by the Insurance Trustee to perform its obligations under this Section 13.2.
13.3 Procedure for Restoring Improvements.
13.3.1 If and to the extent Tenant is obligated to restore the Improvements
pursuant to this Article 13, Tenant shall restore the Improvements substantially in accordance
with the Plans, to the extent insurance proceeds are available. Within forty-five (45) days after.
the date of such damage or destruction, Tenant, at its cost, shall prepare and deliver to Landlord
final plans and specifications and working drawings complying with applicable laws that will be
necessary for such restoration. Such plans and specifications shall specify differences from the
Plans. The plans and specifications and working drawings are subject to the approval of
Landlord only insofar as they vary from the Plans. Landlord shall have twenty (20) days after
receipt of the plans and specifications and working drawings to either approve or disapprove the
plans and specifications and working drawings and return them to Tenant. If Landlord
disapproves the plans and specifications and working drawings, Landlord shall notify Tenant of
its objections in writing, specifying the objections clearly and stating what modifications are
required for Landlord's approval. Tenant acknowledges that the plans and specifications and
working drawings shall be subject to approval of the appropriate government bodies and that
they will be prepared in such a manner as to obtain that approval.
13.3.2 The restoration shall be accomplished as follows:
(a) Tenant shall complete the restoration within eighteen (18) months
after final plans and specifications and working drawings have been approved by the appropriate
government bodies and all required permits have been.obtained.\
'9M156104047
3967235.5 aosrz7112 -31-
(b) Tenant shall retain a licensed contractor that is bondable. The
contractor shall be required to carry public liability and property damage insurance, builders risk
insurance, standard fire and extended coverage insurance, with vandalism and malicious
mischief endorsements, during the period of construction in accordance with Article 9.Such
insurance shall contain waiver of subrogation clauses in favor of Landlord and Tenant in
accordance with the provisions of and to the extent required by Section 9.6.
. (c) Tenant shall notify Landlord of the date of commencement of the
restoration not later than ten (10) days before commencement of the restoration to enable
Landlord to post and record notices of non -responsibility. The contractor retained by Tenant
shall not commence construction until a completion bond and a labor and materials bond have
been delivered to Landlord to insure completion of the construction.
(d) Tenant shall accomplish the restoration in a manner that will cause
the least inconvenience, annoyance, and disruption to the Property and the Improvements.
(e) On completion of the restoration Tenant shall immediately record a
notice of completion.
W The restoration shall not be commenced until sums sufficient to
cover the cost of restoration are placed with the Insurance Trustee as provided in Section 13.2.
13.4 Mortgagee Protection. The following provisions are for the protection of a
Mortgagee and shall, notwithstanding anything contained in this Ground Lease to the contrary,
control.
13.4.1 Insurance. Any insurance proceeds payable from any policy of
insurance (other than liability insurance) required by the Ground. Lease shall be paid to and
applied by the Mortgagees, if any, in accordance with their respective Mortgage. Each
Mortgagee, if any, shall have the right to participate in all adjustments, settlements, negotiations
or actions with the insurance company regarding the amount and allocation of any such
insurance proceeds. Any insurance policies permitted or required by this Ground Lease shall
name each Mortgagee, if any, as an additional insured or loss payee, as appropriate, if required
by such Mortgagees.
13.4.2 Restoration. Tenant shall have no obligation to restore or repair the
Improvements following the occurrence of any Casualty for which insurance is not required
under this Ground Lease. The Mortgagee, if any and if it exercises any of its remedies set forth
in this Ground Lease to acquire the leasehold estate hereunder, shall have no obligation to restore
or repair damage to the Improvements that cost in excess of available insurance proceeds. .
Tenant shall have no obligation to restore or repair damage to the Improvements if the Casualty .
occurs during the last five (5) years of the Ground Lease term. In the event such a loss occurs in
the last five (5) years, then, at the election of Tenant, with the prior written consent of the
Mortgagee, if any, insurance proceeds shall be used, first, to clear the Property of the damaged
Improvements and any debris, and second, to reduce or pay in full the Mortgage, with any excess
being payable as provided in this Ground Lease_
88N015610-0047 -
3967235.52O 27112 -32-
13.4.3 Termination. Neither Tenant nor Landlord shall have the right to
terminate this Ground Lease without first obtaining the written consent of Citibank, N.A. in its
capacity as Mortgagee (but only during such time as the Construction Loan or Take -Out Loan
remain unpaid).
ARTICLE 14. EMINENT ]DOMAIN.
14.1 Notice. The party receiving any notice of the kind specified in this Section 14.1
shall promptly give the other party notice of the receipt, contents and date of the notice received.
For purposes of this Article 14, the term."Notice" shall include:
(a) Notice of Intended Taking;
(b) Service of any legal process relating to condemnation of the
Property or the Improvements;
(c) Notice in connection with any proceedings or negotiations. with
respect to such condemnation; or
(d) Notice of intent or willingness to make or negotiate a private
purchase, sale or transfer in lieu of condemnation:
14.2 Representation in Proceedings or Negotiations. Landlord and. Tenant shall
each have the right to represent their respective interests in each proceeding or negotiation with
respect to a Taking or intended Taking and to make full proof of their claims. No agreements or
settlement with or sale or transfer to the condemning authority shall be made without the consent
of Landlord, but, as to its reversionary interest only, Landlord may enter into such agreement,
settlement, sale or transfer without the consent of Tenant. Landlord and Tenant each agree to
execute and deliver to the other any instruments which may be required to effectuate or facilitate
the provisions of this Ground Lease relating to condemnation. Neither Tenant nor Landlord shall
have the right ,to terminate this Ground Lease without first obtaining the written consent of
Citibank, N.A. in its capacity as Mortgagee (but only during such time as the Construction Loan
or Take -Out Loan remain unpaid).
14.3 .Total Taking.
14.3.1 In the event of a Total Taking, this Ground Lease shall terminate as of
the date of the Taking:
14.3:2 If this Ground Lease is terminated pursuant to this Section 14.3, the
Award for such Taking shall be apportioned and distributed as follows:
(a) First, to the Mortgagees, if any, to the. extent of their respective
Mortgages; .
(b) Second, to Landlord, a sum equal to the fair market value of the
Landlord's fee interest in the Property (subject to the remaining Term and the Rent reserved) on
the date immediately preceding the Taking or threat of condemnation, as determined by the
882/01561"047 -
3967235.5a0827/12 -33- - - -
appraisal method set forth in Section .14.9.The.parties shall commence said appraisal by the
earlier of ten (10) days after Tenant's receipt of a Notice of Intended Taking or ten (10) days
after the date of the Taking;
(c) Third, to Tenant, a sum equal to the fair market value of the
Improvements made by Tenant as of the date immediately preceding the Taking or threat of
condemnation plus the residual value of the Term, subject to Rent reserved, plus any part of the
Award attributable to the Tax Credits and any other governmental funding provided to the
Project, other than funding provided to the Project by Landlord;
(d) Fourth, to Landlord, the remainder, if any.
14.4 Substantial Taking. .
14.4.1 In the event of Taking that does not constitute a Total Taking, Partial
Taking, or Temporary Taking, Landlord and Tenant shall meet and confer to determine whether
the Taking is, material and, in the event Landlord and Tenant determine that such. Taking is
material, then, with the consent and approval of Citibank, N.A. in its capacity as Mortgagee (but
only during such time as the Construction Loan or Take -Out Loan remain unpaid), and subject to
any other rights of the Mortgagees, either of Landlord or Tenant may terminate this Ground
Lease. In the event Landlord and Tenant do not agree as to whether the Taking is material, then
such decision shall be made solely by the Landlord, in the Landlord's reasonable judgment. hi
such event, if Landlord, determines that the Taking is material, then, subject to theconsentand
approval and rights of Citibank, N.A. in its capacity as Mortgagee (but only during such time as
the Construction Loan or Take -Out Loan remain unpaid), and subject to any other rights of the
Mortgagees, Landlord may terminate this Ground Lease. In the event this Ground Lease is
terminated pursuant to this Section 14.4.1, the terminating party shall give written notice of its
election to terminate to the other party within thirty (30) days after the parties have met and
conferred:
14.4.2 In the event this Ground Lease is terminated pursuant to Section 14.4.1
above, such termination shall be as of the time when the Taking entity takes possession of the
portion of the Property and the Improvements taken. In such event, the Award for such
Substantial Taking (including any award for severance, consequential or other damages which
will accrue to the portion of the Property and/or the Improvements not taken) shall be
apportioned and distributed as follows:
(a) First, to the Mortgagees, if any, to the extent of their respective
Mortgages;
(b) Second, to Landlord, a sum equal to the fair market value of the
Property taken (subject to the remaining Term and Rent reserved) on the date immediately
preceding the Taking as determined by the appraisal process provided for in Section 14.9
commenced as provided in Section 14.3.2;
(c) Third, to Landlord, an amount equal to the portion of the award for
severance, consequential or other damages Which accrued to the portion of the Property or
Improvements not taken;
3967235.5 a0827n2 - -34
(d) Fourth, to Tenant, a sum equal to the fair market value of the
Improvements made by Tenant as of the date immediately preceding the Taking or threat of
condemnation, plus the residual value of the Tenn, subject to Rent reserved, plus any part of the
Award attributable to the Tax Credits and any other governmental funding provided to the
Project, other than funding provided to the Project by Landlord;
(e) Fifth, to Landlord, the remainder, if any.
14.5 Partial Taking.
14.5.1 In the event of a Partial Taking, this Ground Lease shall continue in full
force and effect, and there shall be no abatement in or reduction of any of Tenant's obligations
hereunder.
14.5.2 The Award for such Partial Taking shall be apportioned and distributed
first to the Mortgagees, if any, to the extent of their respective Mortgages, then to Landlord and
Tenant in proportion to the fair market value of their respective interests; provided, however, that
any part of the Award attributable to the Tax Credits or other governmental funding provided to
the Project, other than funding provided to the Project by Landlord, shall belong to Tenant.
14.5.3 Any Award for severance, consequential or other damages which
accrues by reason of the Partial Taking to the portion of the Property or the Improvements not
taken shall be distributed first to the Mortgagees, if any, to the extent of their respective
Mortgages, and the remainder, if any, shall be payable to Landlord and Tenant in proportion to
the fair market value of their respective interests.
14.6 Obligation to Repair on Partial Taking. Promptly after any Partial Taking,
Tenant shall, to the extent of the Award received by Tenant and in the manner specified in the
provisions of this Ground Lease, repair, alter, modify or reconstruct the Improvements and/or
other improvements on the Property so as to make them usable for the designated purpose and
capable of producing a fair and reasonable net income.
14.7 Temporary Taking.
14.7.1 in the event of a Temporary Taking of the whole or any part of the
Property and/or Improvements, the Term shall not be reduced or affected in any way and Tenant
shall continue to pay in full any sum or sums of money and charges herein reserved and provided
to be paid by Tenant, and, subject to the other provisions of this Section 14.7, Tenant shall be
entitled to any Award or payment for the temporary use of the Property and/or Improvements
prior to the termination of this Ground Lease and Landlord shall be entitled to any award or
payment for such use after the termination of this Ground Lease.
14.7.2 If, after the occurrence of a temporary taking, possession of the Property
and/or Improvements shall revert to Tenant prior to the expiration of the Term, Tenant shall, to
the extent of the amount of any award or payment, unless at such time there remains less than
five (5) years in the Term, restore the Property and/or Improvements and in all other respects
indemnify and hold Landlord harmless .from the effects of such Taking so that the Property
8821015610-M7
3967235.5 08W/12 -35-
and/or Improvements in every respect shall upon completion of such restoration be in the same
condition as they were prior to the taking thereof.
14.7.3 Any Award or payment for damages or cost of restoration made on or
after the termination of this Ground Lease shall be paid fust to the Mortgagees, if any, to the
extent of their respective Mortgages, then to Landlord absolutely, together with the remaining .
balance of any other funds paid to Tenant for such damages or cost of restoration and Tenant
shall thereupon be excused from any obligation to restore the Property and/or Improvements
upon the termination of such Temporary Taking except that any obligation that may have
accrued for Tenant to restore the Property and/or Improvements prior to the commencement of
said Temporary Taking shall continue to be the obligation of Tenant.
14.8 Mortgagee Protection. Notwithstanding anything contained in this Ground
Lease to the contrary, any and all condemnation proceeds shall be paid first to the Mortgagees, if
any, to be applied to reduce their respective Mortgages if required by the applicable mortgage
documents.
14.9 Appraisal. Whenever an appraisal of the Property is called for under the terms of
this Ground Lease, the parties shall use the following procedure:
14.9.1. Appointment of Appraiser. Within ten (10) days after notice from
Landlord to Tenant; Landlord and Tenant shall each appoint an MAI appraiser to participate in
the appraisal process provided for in this Section 14.9 and shall give written notice thereof to the
other party. Upon the failure of either party so to appoint, the nondefaulting party shall have the
right to apply to the Superior Court of Riverside County, California, to appoint an appraiser to
represent the defaulting party. Within ten (10) days of the parties' appointment, the two (2)
appraisers shall jointly appoint a third MAI appraiser and give written notice thereof to Landlord
and Tenant, or if within ten (10) days of the appointment of said appraisers the two (2) appraisers
shall fail to appoint a third, then either party hereto shall have the right to make application to
said Superior Court to appoint such third appraiser.
14.9.2 Determination of Pair Market Value.
(a) . Within thirty (30) days after the appointment of the third appraiser,
the appraisers shall determine the fair market value of the Property and the Improvements in
accordance with the provisions hereof, and shall execute and acknowledge their determination of
fair market value in writing and cause a copy thereof to be delivered to each of the parties hereto.
(b) The appraisers shall determine the fair market value of the
Property and the, Improvements as of the date of Landlord's notice referred to in Section 14.9.1
above, based on sales of comparable property in the area in which the Property is located, subject
to the restrictions encumbering the Property. If, however, in the judgment of a majority of the
appraisers, no such comparable sales are available; then the appraisal shall be based on the
assumption that the Property is available for immediate sale and development for the purposes
and at.the density and intensity of development permitted under the zoning, subdivision and land
use planning ordinances and regulations applicable to the Property in effect on the
Commencement Date of this Ground Lease, and any changes or amendments thereto or
UM15610-0047
3967235s z08U7112 -36-
modification or variance from the provisions thereof or conditional use permits which could
reasonably be anticipated to have been granted or approved as of the date of this Ground Lease.
Notwithstanding anything contained herein to the contrary, if the appraisal, for the particular
purposes for which it is being done, should reasonably reflect the rent restrictions imposed on the
Property pursuant to the Regulatory Agreement, then such rent restrictions shall be taken into
consideration by the appraisers.
(c) If a majority of the appraisers are unable to agree on fair market
value within thirty (30) days of the appointment of the third appraiser, the three (3) appraisals
shall be added together and their total divided by three (3).The resulting quotient shall be the fair
market value of the Property and the Improvements. If, however, the low appraisal and/or high
appraisal is or are more than ten percent (10%) lower and/or higher than the middle appraisal, the
low and/or high appraisal shall be disregarded. If only one appraisal is disregarded, the
remaining two appraisals shall be added together and their total divided by two (2).The resulting
quotient shall be the fair market value of the Property and the Improvements. If both the low and
high appraisals are disregarded, the middle appraisal shall be the fair market value of the
Property.
14.9.3 Payment of Fees. Each of the parties hereto shall (a) pay for the
services of its appointee, (b) pay one-half (1/2) of the fee charged by the appraiser selected by
their appointees, and (c) pay one-half (1/2) of all other proper costs of the appraisal.
ARTICLE 15. COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
15.1 Compliance With Laws. Tenant shall comply with (i) all ordinances, regulations'
and standards of the City, Landlord, County of Riverside, any regional governmental entity,
State of California, and federal government applicable to the Property; (ii) all rules and
regulations of any assessment district of the City with jurisdiction over the Property; and (iii) all
applicable labor standards of California law and federallaw; and (iv) the requirements of
California law and federal law with respect to the employment of undocumented workers or
illegal aliens.
15.2 Indemnity. Tenant shall save, protect, defend, indemnify and hold harmless
Landlord and the City and their respective officers, officials, members, employees,, agents, and
representatives from and against any and all liabilities, suits, actions, claims, demands, penalties,
damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs or
expenses (including, without limitation, consultants' fees, investigation and laboratory fees,
reasonable attorneys' fees and remedial and response costs) (the foregoing are hereinafter
collectively referred to as "Liabilities") which may now or in the future be incurred or suffered
by Landlord or City or their respective officers, officials, members, employees, agents, or
representatives by reason of, resulting from, in connection with, or existing in any manner
whatsoever as a direct or indirect result of (i) Tenant's placement on or under the Property of any
Hazardous (Materials or Hazardous Materials Contamination, (ii) the escape, seepage, leakage,
spillage, discharge, emission or release from the Property of any Hazardous Materials or
Hazardous Materials Contamination that occurs after the Commencement Date, or (iii) any
Liabilities incurred under any Governmental Requirements relating to the acts described in the
foregoing clauses (i) and (ii):
9 2MI5610-0047 -
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For the purposes of this Ground Lease, unless the context otherwise specifies or requires,
the following terms shall have the meanings herein specified:
The term "Hazardous Materials" shall mean any substance, material, or waste which is or
becomes regulated by any local govemmentat authority, the City, the County of Riverside, the
State of California, a regional governmental authority, or the United States Government,
including, but not limited to, any material or substance which is (i) defined as a "hazardous
waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115,
25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter
6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous
material," "hazardous substance," or "hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls,
(viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix)
designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C.
§ 1317), (x) defined as a "hazardous. waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903) or (xi) defined as
"hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. For purposes hereof, "Hazardous
Materials" excludes materials and substances in quantities as are commonly used in the
construction and operation of an apartment complex, provided that such materials and substances
are used in accordance with all applicable laws.
The term "Hazardous Materials Contamination" shall mean the contamination (whether
presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or.
other elements on, in or of the Property by. Hazardous Materials, or the contamination of the
buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a
result of Hazardous Materials at anytime emanating from the Property.
The term "Governmental, Requirements" shall mean all past, present and future laws,
ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state,
the county, the city, or any other political subdivision in which the Property is located, and any
other state, county city, political subdivision, agency, instrumentality or other entity exercising
jurisdiction over the Property.
15.3 Duty to Prevent Hazardous Material Contamination. Tenant shall take
commercially reasonable action to prevent the release of any Hazardous Materials into the
environment. Such precautions shall include compliance with all Governmental Requirements
with respect to Hazardous Materials. In addition, Tenant shall install and utilize such equipment
and implement and adhere to such procedures as are consistent with the standards generally
applied by apartment complexes in Riverside County, California as respects the disclosure,
storage, use, removal, and disposal of Hazardous Materials.
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15.4 Obligation of Tenant to Remediate Premises. Notwithstanding the obligation
of Tenant to indemnify Landlord, City, and their respective officers, officials, members,
employees, agents, and representatives pursuant to Section 15.2, and provided no Hazardous
Materials exist on the Property as a result of Landlord's action, Tenant shall, at its sole cost and
expense, promptly take (i) all actions required by any federal, state, regional, or local
governmental agency or political subdivision or any Governmental Requirements and (ii) all
actions necessary to make full economic use of the Property for the purposes contemplated by
the Regulatory Agreement, the Agreement, and this Ground Lease, which requirements or
necessity arise fiom .the presence upon, about or beneath the Property, of any Hazardous
Materials or Hazardous Materials Contamination. Such actions shall include, but not be limited
to, the investigation of the environmental condition of the Property, the preparation of any
feasibility studies or reports and the performance of any cleanup, remedial, removal or
restoration work.
15.5 Environmental Inquiries. Tenant, when it has received any notices of violation,
notices to comply, citations, inquiries, clean-up or abatement orders; or cease and desist orders
related to Hazardous Materials or Hazardous Materials Contamination, or when Tenant is
required to report to any governmental agency any violation or potential violation of any
Governmental Requirement pertaining to Hazardous Materials or Hazardous Materials
Contamination, shall concurrently notify the Executive Director, and provide to him/her a copy .
or copies; of the environmental permits, disclosures, applications, entitlements or inquiries
relating to the Property,.the notices of violation, notices to comply, citations, inquiries, clean-up
or abatement orders, cease and desist orders, reports filed pursuant to self -reporting
requirements, and reports filed or applications made pursuant to any Governmental Requirement
relating to Hazardous Materials and underground tanks, and Tenant shall report to the Executive
Director, as soon as possible after each incident, any unusual, potentially important incidents.
In the event of a responsible release of any Hazardous Materials into the environment,
Tenant shall, as soon as possible after it becomes aware of the release, furnish to the Executive
Director a copy of any and all reports relating thereto and copies of all correspondence with
governmental agencies relating to the release. Upon request of the Executive Director, Tenant
shall famish to the Executive Director a copy or copies of any and all other environmental
entitlements or inquiries relating to or affecting the Property including, but not limited to, all
permit applications, permits and reports including, without limitation, those reports and other
matters which may be characterized as confidential.
ARTICLE 16. ASSIGNMENT.
Because of the importance that Landlord places on Tenant's qualification, expertise and
identity, and the reliance Landlord makes upon Tenant's ability to construct and operate the
Project, during the Term, Tenant shall not assign or attempt to assign this Ground Lease or any
right herein, except to such transferees as approved or permitted pursuant to Section 15 of the
Regulatory Agreement. Notwithstanding the foregoing, Tenant may sublease the units to low,
moderate, and very low income households as provided in the Agreement and the Regulatory
Agreement.
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ARTICLE 17. MORTGAGES.
17.1 Ground Leasehold Mortgages. Notwithstanding anything to the contrary
contained elsewhere herein, at all times during the Tenn, Tenant shall have the right to mortgage,
pledge, deed in trust, assign rents, issues and profits and/or collaterally (or absolutely for
purposes of security if required by any lender) assign its interest in this Ground Lease, or
otherwise encumber this Ground Lease, and/or the interest of Tenant hereunder, in whole or in
part, and any interests or rights appurtenant to this Ground Lease, and to assign or pledge the
same as security for any debt (the holder of any such mortgage, pledge or other encumbrance,
and the beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the
mortgage, pledge, deed of trust or other instrument hereafter referred to as "Mortgage"), upon
and subject to each and all of the terms and conditions listed in Paragraphs (a) — (c) below. As
used in this Ground Lease, the term "Mortgage" includes the Authority Loan, the Construction
Loan and the Take -Out Loan, and the term "Mortgagee" includes Landlord, as the beneficiary
under the Authority Loan Note, and Citibank, N.A. and California Municipal Finance Authority
under the Construction Loan and Take -Out Loan (as applicable):
(a) Prior to the issuance of a Release of Construction Covenants by
Landlord, Mortgages entered into by Tenant shall be limited in purpose to and shall not exceed
the amount necessary and appropriate to develop the Improvements, and to acquire and install
equipment and fixtures thereon. Said amount shall include all hard and soft costs of acquisition,
development, including, but not limited to payment of a development fee to. the Project developer
and funding of all reserves in accordance with the terms of the Regulatory Agreement and the
Partnership Agreement, construction, lease -up and operation of the Improvements. After the
recordation of the Release of Construction Covenants, the limitation contained in this subsection
shall no longer apply.
(b) Any permitted Mortgages entered into by Tenant are to be
originated only by Institutional Lenders approved in writing by Landlord, which approval will
not be unreasonably conditioned, delayed.or withheld. Landlord shall state the reasons for any
such disapproval.
(c) All rights acquired by said Mortgagee shall be subject to each and
all of the covenants, conditions and restrictions set forth in this Ground Lease, and to all rights of
Landlord thereunder, none of which covenants, conditions and restrictions is or shall be waived
by Landlord by reason of the giving of such Mortgage.
If Tenant encumbers its leasehold estate by way of a Mortgage as permitted herein, and
should Landlord be advised in writing of the name and address of the Mortgagee, then this
Ground Lease shall not be terminated or canceled on account of any Event of Default by Tenant
in the performance of the terms, covenants or conditions hereof until Landlord shall have
complied with the provisions of this Ground Lease as to the Mortgagee's rights to cure. In
addition, no cancellation, surrender, termination, amendment or modification of this Ground
Lease shall be effective without the written consent of each Mortgagee and the Investor. .
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17.2 Landlord's Forbearance and Right to Cure Defaults on Ground Leasehold
Mortgages.
(a) Landlord will give to any Mortgagee and Investor, at such address
as is specified by the Mortgagee in accordance with Section 23.1 hereof, a copy of each notice or
other communication with respect to any claim that a default exists or is about to exist from
Landlord to Tenant hereunder at the time of giving such notice or communication to Tenant, and
Landlord will give to the Mortgagee and Investor a copy of each notice of any rejection of this
Ground Lease by any trustee in bankruptcy of Tenant. Landlord will not exercise any right,
power or remedy with respect to any Event of Default hereunder, and no notice to Tenant of any
such Event of Default and no termination of this Ground Lease in connection therewith shall be
effective, unless Landlord has given to the Mortgagee and Investor written notice or a copy of its
written notice to Tenant of such Event of Default or any such termination, as the case may be,
and an opportunity to cure as provided below. Each such notice to a Mortgagee and to the
Investor shall be given by U.S. certified mail, postage prepaid, return receipt requested, and shall
be effective upon receipt.
(b) In the event the leasehold estate hereunder shall be acquired by
foreclosure, trustee's sale or deed, or assignment in lieu of foreclosure of a Mortgage, the
purchaser at such sale or the transferee by such assignment and its successors as holders of the
leasehold estate hereunder shall not be liable for any past due Rent, if any, or other obligations
hereunder accruing after its or their subsequent sale or transfer of such. leasehold estate and such
purchaser or transferee and its successors shall be entitled to transfer such estate or interest one
time without consent or approval of Landlord. Additionally, in the event the leasehold estate
hereundershall be acquired by foreclosure, trustee's sale or deed, or assignment in lieu of
foreclosure of a Mortgage, the purchaser at such sale or the transferee by such assignment and its
successors as holders of the leasehold estate hereunder shall only be liable for payment of Rent
pursuant to Section 4.1 becoming due with respect to the period during which such purchaser,
transferee or other successor is the holder of the leasehold estate hereunder. This Section shall
also apply to the rights of a Mortgagee in connection with the entry into a New Ground Lease
under Section 17.10 and to the appointment of a receiver on behalf of a Mortgagee.
(c) Notwithstanding anything herein to the contrary, Landlord will
give to U.S. Bancorp Community Development Corporation ("USBCDC"), which is the limited
partner of the Investor, at such address as is specified by USBCDC in accordance with Section
23.1 hereof, a copy of each notice or other communication with respect to any claim that a
default exists or is about to exist from Landlord to Tenant hereunder at the time of giving such
notice or.communication to Tenant, and Landlord will give to USBCDC a copy of each notice of
any rejection of this Ground Lease by any trustee in bankruptcy of Tenant, and USBCDC will
have the same cure rights hereunder as any Mortgagee. Each such notice to USBCDC shall be
given by U.S. certified. mail, postage prepaid, return receipt requested, and shall be effective
upon receipt.
17.3 Limited Liability of Mortgagee for Prior Indemnified Acts. A Mortgagee
shall not be obligated to assume the liability of Tenant for any indemnities arising for a period
prior to the Mortgagee's acquisition of the leasehold estate created under this Ground Lease or
after such Mortgagee disposes of such leasehold estate.
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17.4 Landlord Cooperation. Landlord covenants and agrees that itwill act and fully
cooperate with Tenant in connection with Tenant's right to grant leasehold mortgages as
hereinabove provided. At the request of Tenant or any proposed or existing Mortgagee,
Landlord shall, within ten business days after request, execute and deliver (i) any documents or
instruments reasonably requested to evidence, and/or acknowledge the rights of the Mortgagees
as herein provided; and (ii) an estoppel certificate certifying the status of this Ground Lease and
Tenant's interest herein, including whether or not this Ground Lease is in force and effect. If this
Ground Lease is in force and effect, such estoppel certificate shall include and such matters as
are reasonably requested by Tenant or such Mortgagees, including, but not be limited to,
certification by Landlord that (a) this Ground Lease is unmodified and in full force and effect
(or, if modified, state the nature of such modification, provide Mortgagee with an executed•copy
of the modification agreement and certify that this Ground Lease, as so modified, is in full force
and effect), (b) all rents currently due under the Ground Lease have been paid (or, if unpaid, the
period and amount of any arrearages, penalties, interest and other charges), (c) there are not, to
Landlord's knowledge, any uncured Events of Default on the part of Tenant under the Ground
Lease or facts, acts or omissions which with the giving of notice or passing of time, or both,
would constitute an Event of Default (or, if there is a default, the nature and scope of the
default), (d) there are not, to Landlord's knowledge; any uncured default on the part of Landlord
under the Ground Lease or facts, acts or omissions which with the giving of notice or passing of
time, or both, would constitute a default by Landlord (or, if there is a default, the nature and
scope of the default); (e) whether there are any setoffs, defenses or counterclaims against
enforcement of the obligations of Landlord hereunder known to Landlord, and (f) if such request
is made by a Mortgagee, that the Mortgage provided by the Mortgagee constitutes Approved
Financing pursuant to the Agreement. Any such estoppel certificate may be conclusively relied
upon by any proposed or existing leasehold Mortgagee or assignee of Tenant's interest in this
Ground Lease.
17.5 No Subordination of Landlord's Interest. Landlord's fee interest in the
Property shall be senior to, and not be subordinated to, any ..financing obtained by Tenant in
connection with the Property.
17.6 Priority. This Ground Lease, and any extensions, renewals or replacements
thereof, and any sublease entered into by Tenant as sublessor, and any Mortgage or other
encumbrance now or hereafter recorded by any Mortgagee. shall be superior to any future
mortgages, deeds of trust or similar encumbrances placed by Landlord on the Property and to any
lien right, if any, of Landlord on the buildings, and any furniture, fixtures, equipment or other
personal property of Tenant upon the Property or any interest of Landlord in sublease rentals or
similar agreements.
17.7 Claims. Landlord and Tenant shall deliver to each Mortgagee written notice of
any litigation or arbitration proceedings between the parties or involving the Property or this
Ground Lease. Any Mortgagee shall have the right, at its option and its expense, to intervene
and become a party to any such proceedings. If a Mortgagee elects not to intervene or become a
party, Landlord shall deliver to said Mortgagee prompt written notice of and a written copy of
any award, decision or settlement agreement made in connection with any such proceeding.
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17.8 Further Amendments. Landlord and Tenant shall cooperate in including in this
Ground Lease by suitable amendment from time to time any provision which may be reasonably
requested by the Investor or by any proposed Mortgagee for the purpose of implementing the
Investor and mortgagee protection provisions contained in this Ground Lease and allowing the
Investor reasonable means to protect its interests in the Project and Property, and the Mortgagee
reasonable means to protect or preserve the lien of its Mortgage, upon the occurrence of a default
under the terms of this Ground Lease. Landlord and Tenant each agree to execute and deliver
(and to acknowledge for recording purposes, if necessary) any agreement reasonably required to
effect any such amendment.
17.9 Loan Obligations. Nothing contained in this Ground Lease shall relieve Tenant
of its obligations and responsibilities under any Mortgage loans and Mortgage loan documents to
operate the Project as set forth therein.
17.10 Liens and Encumbrances Against Tenant's Interest in the Leasehold Estate.
(a) Tenant (and Foreclosure Trustee, if applicable) shall have the right
to encumber the leasehold estate created by this Ground Lease and the Improvements with one or
more deeds of trust or mortgages, in conformance with the requirements of Section 17.1 hereof.
(b) Tenant shall not have the right to encumber Landlord's fee interest
in the Property or Landlord's reversionary interest in the Improvements.
(c) For as long as there is any lien securing any Mortgage loans:
(1) Landlord shall not agree to any mutual termination or
cancellation of, or accept any surrender of this Ground Lease, nor shall Landlord consent to any
amendment or modification of this Ground Lease, in each case without the prior written consent
of each Mortgagee which has an outstanding Mortgage loan. Tenant may not exercise any right
to terminate this Ground Lease without the prior written consent of each Mortgagee.
(2) Notwithstanding any default by Tenant under this Ground
Lease, Landlord shall have no right to terminate this Ground Lease unless Landlord shall have
given each Mortgagee which have an outstanding Mortgage loan written notice of such default
and such Mortgagees shall have failed to remedy such default or acquire Tenant's leasehold
estate created by this Ground Lease or commence foreclosure or other appropriate proceedings
as set forth in, and within the time specified by, this Section.
(3) Each Mortgagee which has an outstanding Mortgage loan
shall have the right, but not the obligation, at any time to pay any or all of the Rent due pursuant
to the terms of this Ground Lease, and do any other act or thing required of Tenant by the terms
of this Ground Lease, to prevent termination of this Ground Lease. Each Mortgagee and its
agents and contractors shall have a right to enter the Property for purposes of accomplishing the
foregoing, so long as such Mortgagee indemnifies and holds Landlord harmless from any and all
liability arising from such entry upon the Property. Each Mortgagee shall have sixty (60) days
after receipt of written notice from Landlord describing a default by Tenant to cure the default.
All payments so made and all things so done shall be as effective to prevent a termination of this
99MIS610-0047
3967235.5 a0827/12 -43- `
Ground Lease as the same would have been if made and performed by Tenant instead of by
Mortgagee(s):
(4) In addition to the cure period provided in paragraph (3)
above, if the default is such that. possession of the Property may be reasonably necessary to
remedy the default, each Mortgagee which has an outstanding Mortgage loan shall have such
additional time after the expiration of such sixty (60) day period as such Mortgagee may
reasonably require, to remedy such default, provided that (i) such Mortgagee shall have fully
cured any default in the payment of any monetary obligations of Tenant under this Ground Lease
within such sixty (60) day period and shall continue to pay currently such monetary obligations
when the same are due, and (ii) within one hundred twenty (120) days after receipt of Landlord's
notice of default, such Mortgagee shall have acquired Tenant's leasehold estate hereunder or
commenced foreclosure or other appropriate proceedings, and shall be diligently prosecuting the
same.
(5) Any default under this Ground Lease which by its nature
cannot be remedied by any Mortgagee shall be deemed to be remedied if (i) within one hundred
twenty (120) days after receiving written notice from Landlord describing the default, or prior:
thereto, any Mortgagee shall have acquired Tenant's leasehold estate or commenced.foreclosure
or other appropriate proceedings, (ii) the Mortgagee shall diligently prosecute any such
proceedings to completion, (iii) the Mortgagee shall have fully cured any default in the payment
of any monetary. obligations of Tenant hereunder which does not require possession of the
Property, and (iv) after gaining possession of the Property, the Mortgagee shall perform all other
obligations of Tenant hereunder capable of performance by the Mortgagee when the obligations
are due.
(6) If a Mortgagee is prohibited, stayed, or enjoined by, any
bankruptcy, insolvency or other judicial proceedings involving Tenant from commencing or
prosecuting foreclosure or other appropriate proceedings, the times specified for commencing or
prosecuting such foreclosure or other, proceedings shall be extended for the period of such stay .
prohibition or injunction; provided that any Mortgagee shall have fully cured any default in the ..
payment of any monetary obligations of Tenant under this Ground Lease and shall continue to
pay currently such monetary obligations when the same fall due (subject to the notice and cure
provision contained herein).
(7) Landlord shall deliver, by U.S. certified mail, postage
prepaid, return receipt requested, to each Mortgagee which has any outstanding Mortgage loan a
duplicate copy of all notices which Landlord may from time to time give to Tenant pursuant to
this Ground Lease.
(8) In the event any Foreclosure Transferee becomes Tenant .
under this Ground Lease by means of foreclosure or assignment of the leasehold interest,
hereunder in lieu of foreclosure or pursuant to any new lease obtained under paragraph (9)
below, that Foreclosure Transferee shall be personally liable under this Ground Lease or such
new lease only for the period of time that Foreclosure Transferee remains Tenant thereunder, and
that Foreclosure Transferee's right to assign this Ground Lease or such new lease shall not be
subject to the restrictions set forth in. this Ground Lease. Nothing in this Section shall be.
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construed to. obligate any Foreclosure Transferee to remedy any default of Tenant, and any
failure of any Mortgagee to complete any such cure after commencing the same shall not give
rise to any liability of any Mortgagee to. Landlord or Tenant.
(9) If this Ground Lease is terminated, whether by foreclosure,
order of a bankruptcy court or otherwise, upon written request by any Mortgagee given within
sixty (60) days after Landlord gives written notice of such termination to each Mortgagee,
Landlord shall enter into a new lease of the Property with the Mortgagee for the remainder of the
Term with the same agreements, covenants, reversionary interests and conditions (except for any
requirements which have been fulfilled by Tenant prior to termination) as are contained in this
Ground Lease and with priority equal to this Ground Lease, which new lease shall be effective as
of the date of termination of the original Ground Lease; provided, however, that a requesting
Mortgagee shall promptly cure any defaults by Tenant reasonably susceptible to cure by the
Mortgagee. The Tenant under the new lease shall have the same right, title and interest in and to.
all Improvements located on the Property as Tenant had under the terminated Ground Lease
immediately prior to its termination. Landlord shall by quitclaim deed or by the terms of the new
lease convey to the Mortgagee, title to the improvements, if any, which become vested in
Landlord as a result of the termination of the Ground Lease. The Mortgagee shall be responsible
for all costs reasonably incurred by Landlord in connection with the preparation and execution of
such new lease:
(10) The Investor of Tenant shall have the same rights to
receive notices of default and to cure as any Mortgagee authorized under this paragraph (c).
(11) Landlord shall include in this Ground Lease by,suitable
amendment from time to time any provision which may reasonably be requested by any
Mortgagee for the purpose of implementing the mortgagee -protection provisions contained in
this Ground Lease and allowing such Mortgagee reasonable means to protect or preserve the lien
of the leasehold mortgage and the value of its security. Any such amendment shall not in any
way affect the Term under this Ground Lease nor otherwise in any material respect adversely
affect any rights of Landlord under this Ground Lease.
(12) The parties shall not amend this Ground Lease without the
consent of the Mortgagees and Investor of Tenant. Landlord shall not terminate this Ground .
Lease without the Investor's consent prior to the expiration of the fifteen (15) year Tax Credit
compliance period described in Section 42(i)(1) of the Internal Revenue Code of 1986, as
amended (the "Code").
(13) No Mortgagee shall be required to perform any act which is
not susceptible to performance by a Mortgagee, such as to cure a filing or condition of
bankruptcy or insolvency or to cure or commence the cure of any default which is Tenants'
failure to pay any lien, charge or encumbrance which is junior in priority to the Mortgagee's
encumbrance.
(d) Any Mortgage created pursuant to subsection (a) of this Section
shall be subject to the provisions of this Ground Lease and all rights of Landlord under this
Ground Lease.
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3%7235.5 aosa7112 -45-
(e) No Mortgagee or its designee or transferee shall be or become
liable to Landlord as an assignee of this Ground Lease or otherwise unless it expressly assumes
by written instrument executed by Landlord and the Mortgagee or its designee or transferee such
liability (in which event the Mortgagee's, designee's or transferee's liability shall be limited to
the period of time during which it is the owner of the leasehold estate created hereby) and no
assumption shall be inferred from or result from acceptance of an estoppel certificate from
Landlord, acceptance of a Mortgage of Tenant's leasehold estate, or by foreclosure or other
appropriate proceedings in the nature thereof or as the result of any other action or remedy
provided for by such Leasehold Mortgage or other instrument or from a conveyance from Tenant
pursuant to which the purchaser at foreclosure or grantee shall acquire the rights and interest of
Tenant under the terms of this Ground Lease. If any Mortgagee (or its.affiliate or nominee)
acquires the Property by foreclosure or deed in lieu of foreclosure, or obtains a new lease under
this Section 17, the Rent shall be One Dollar ($1.00) for each Rental Period until the
"Conversion Date" (as defined in the first mortgage loan documents); thereafter, the Rent
payable shall be fifty percent (50%) of the Residual Receipts, if any, for the subject Rental
Period, except that Operating Expenses, Debt Service, Reserve Deposits and Partnership Related
Fees shall be calculated based upon the actual amounts of operating expenses, debt service,
reserve deposits and partnership related fees, respectively, incurred by the Tenant (without
giving effect the limitations contained in the definitions of those terms or other provisions of this
Lease).Additionally, the Rent shall include all of the following:(i) fifty percent (50%) of the
Refinancing Net Proceeds immediately upon any refinancing of the Project (or part thereof), and
(ii) one hundred percent (100%) of the Transfer Net Proceeds immediately upon any transfer in
whole or in part of the Project. Further, in such event, subject to the rule set forth in Section
42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended, or any successor rule, the
requirements concerning compliance with applicable regulations of the California Tax Credit
Allocation' Committee and applicable requirements of the Tax Credit Regulatory Agreement in
Article 18.1 shall automatically have no further force or effect (and this Ground Lease shall be
construed as if those. requirements had never been included in this Ground Lease).
(f) On transfer of this Ground Lease at any foreclosure sale, or upon
creation of a new Ground Lease, any or all of the following Events of Default relating to the
prior owner of the Ground Lease shall be deemed cured:
(1) Attachment, execution or other judicial levy upon the
Ground Lease;
(2) Assignment of the Ground Lease for the direct or indirect
benefit of creditors of the prior Tenant;
(3) . Judicial appointment of a receiver or similar officer to take
possession of the Ground Lease;
(4) Filing a petition by, for or against Tenant under any chapter
of the federal Bankruptcy Act or any federal or state debtor relief statute; as amended; and
(5) Any other defaults personal to Tenant and/or not otherwise
reasonably curable. by Mortgagee.
88VOI5610-0047
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(g) A Foreclosure Transferee shall succeed to all interest of Tenant in
any security or other deposits or other impound payments paid by Tenant to Landlord, except to
the extent such security or other deposit or impound payment is used by Landlord to cure an
Event of Default of Tenant hereunder.
(h) Foreclosure of any Mortgage or. any sale thereunder, whether by
judicial proceedings or by virtue of any power of sale contained in such Mortgage, or any
conveyance of the leasehold estate under this Ground Lease from Tenant to a Foreclosure
Transferee in lieu of foreclosure or other appropriate proceedings in the nature thereof, shall not
require the consent of Landlord or constitute a breach of any provision or a default under this
Ground Lease. Landlord shall recognize the Foreclosure Transferee as the Tenant under this
Ground Lease following any such transfer, subject to the obligations of the Foreclosure
Transferee to comply with this. Ground Lease.
17.11 Cost of Loans to be Paid by Tenant. The Tenant affirms that it shall bear all of
the costs and expenses in connection with (i) the preparation and securing of the Mortgage loans,
(ii) the delivery of any instruments and documents and their filing and recording, if required, (iii)
all taxes and charges payable in connection with the Mortgage loans, and (iv) all costs
reasonably incurred by Landlord in making any amendments of this Lease requested by Tenant
or Mortgagees.
17.12 No Merger. There shall be no merger, without the consent of the Mortgagee
under any Mortgage, of the .leasehold estate and the fee estate in the Property merely because
both estates are acquired or become vested in the same person or entity...
17.13 Transfer Rights. Foreclosure of any Mortgage, or any sale thereunder, whether
by judicial proceedings or by virtue of any power contained.in.the Mortgage, or any conveyance
of the leasehold estate hereunder from Tenant to any Mortgagee or an affiliate of Mortgagee or
entity , controlled by Mortgagee, through, or in lieu of, foreclosure or other appropriate
proceedings in the nature thereof, shall not require the consent of Landlord or constitute a breach
of any provision of or a default under this Ground Lease, and upon such foreclosure, sale or
conveyance, Landlord shall recognize the purchaser or other transferee in connection therewith
as the Tenant hereunder. The Foreclosure Transferee may transfer to another party one time
without the approval of Landlord. Any further assignments shall require the approval of the
Landlord, which shall not unreasonably be withheld, conditioned, or delayed.
17.14 Tenant's Personal Property. In the event of any default by Tenant under this
Ground Lease or any Approved Financing loan documents that has not been cured after written
notice to Tenant and expiration of the applicable cure period, Landlord will allow Citibank, N.A.
in its capacity as Mortgagee (but only during such time as the Construction Loan or Take -Out
Loan remain unpaid) to enforce its lien and security interest in Tenant's personal property
located at the Property and Landlord will allow Mortgagee to assemble and remove all of
Tenant's personal property located on the Property. Landlord hereby waives any landlord's lien
it might hold, statutory, constitutional, contractual or otherwise, in any personal property owned
or leased by Tenant and now or hereafter located on the Property. If so requested by Tenant,
Landlord shall execute a waiver of any right, title or interest or right to seize any of Tenant's
personal property on the Property that may be subject to a lien or security interest in favor of
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3967235.5 a0827112 -47-
Mortgagee or a seller of Tenant's personal property or creditor holding a security interest in such
personal property.
17.15, Two or More Mortgagees.. Any Mortgages permitted hereunder may consist of
two (2) or more separate loans or other financing arrangements from two (2) or more
Mortgagees. In the event two (2) or more Mortgagees each exercise their rights under this
Ground Lease and there is a conflict that renders it impossible to comply with all requests of
Mortgagees, the Mortgagee whose Mortgage would have senior priority in the event of a
foreclosure shall prevail.
ARTICLE 18. SUBLEASING.
18.1 Subleasing of Property. All subleases made by Tenant to residents of units in
the Project ("Resident Leases") shall be in compliance with the applicable (if any) regulations of
the California Tax Credit Allocation Committee and the applicable (if any) requirements of the
Tax Credit Regulatory Agreement, and shall be subject to the following provisions and
restrictions:
18.I.1 Each Resident Lease shall contain a provision, satisfactory to Landlord,
requiring the Subtenant to attom to Landlord upon (a) an Event of Default by Tenant under this
Ground Lease, and (b) receipt by such Subtenant of written notice of such Event of Default and
instructions to make such Subtenant's rental payments to Landlord.
18.1.2 On any termination of this Ground Lease prior to the expiration of the
Term, .all of .Tenant's interest as sublessorunder any and all existing valid and enforceable
Resident Leases for which Landlord has issued a non -disturbance agreement shall be deemed
automatically assigned, transferred and conveyed to Landlord and subtenants under such
Resident Leases shall be deemed to have attomed to Landlord. Landlord shall thereafter be
bound on such Resident Leases to the same extent Tenant, as sublessor, was bound thereunder
and Landlord shall have all the rights under such Resident Leases that Tenant, as sublessor, had
under such -Resident Leases; provided, however, that any amendments to any such Resident
Lease made after the issuance of a non -disturbance agreement to subtenant shall not be. binding
on Landlord.
18.1.3 Each Resident Lease shall expressly provide that it is subject to each and
all of the covenants, conditions, restrictions and provisions of this Ground Lease.
18.2 Rights of Mortgagees: Notwithstanding anything contained in this Ground
Lease to the contrary, all . attornment provisions applicable to the Landlord shall also be
applicable to a Mortgagee and, as between Landlord and the. Mortgagee, the Mortgagee shall
have priority in any attornment situation:
ARTICLE 19. PERFORMANCE OF TENANT'S COVENANTS.
19.1 Right of Performance. If Tenant shall at any time fail to pay any Imposition or
other charge in accordance with Article 4 hereof, within the time period therein permitted, or
shall fail to pay for or maintain any of the insurance policies provided for in -Article 9 hereof,
within the time therein permitted, or to make any otherr payment or perform any other act on its
892/0156104047 39672355 a082112 -48-
part to be made or performed hereunder, within the time permitted by this Ground Lease, then
Landlord, after thirty (30) days' written notice to Tenant (or, in case of an emergency; on such
notice, or without notice, as may be reasonable under the circumstances) and without waiving or
releasing Tenant from any obligation of Tenant hereunder, may (but shall not be required to):
(a) pay such Imposition or other charge payable by Tenant pursuant to
the provisions of Article 4 hereof,.or
(b) pay for and maintain such insurance policies provided for .in
Article 9 hereof, or
(c) make such other payment or perform such other act on Tenant's
part to be madeor performed as in this Ground Lease provided.
19.1.2 Rights of Mortgagees and Investor.. Notwithstanding anything in this
Ground Lease to the contrary, all of the performance rights available to Landlord under Section
19.1 shall also be available to any Mortgagee and to the Investor.
19.2 Reimbursement and Damages. All sums paid by Landlord pursuant to Section
19.1 and all costs and expenses incurred by Landlord in connection with the performance of any
such act, :together with interest thereon at the rate provided in Section 4.7 from the. respective
dates of Landlord's making of each such payment or incurring of each such cost or expense,
shall constitute additional Rent payable by Tenant under this Ground Lease and shall be paid by
Tenant to Landlord on demand. Landlord shall not be limited in the proof of any damages which
Landlord may claim against Tenant arising out of or by reason of Tenant's failure to provide and
keep in force insurance as aforesaid, to the amount of the insurance premium or premiums not
paid or incurred by Tenant and which would have been payable upon such insurance, but
Landlord shall also be entitled to recover as damages for, such breach, the uninsured amount of
any loss (to the extent required to be insured against pursuant to the terms of this Ground Lease
of any deficiency in the insurance required by the provisions of this Ground Lease), damages,
costs and expenses of suit, including reasonable attorneys' fees, suffered or incurred by reason of
damage to; or destruction of, the Improvements, occurring during any period in which Tenant
shall have failed or neglected to provide insurance as aforesaid.
ARTICLE 20. EVENTS OF DEFAULT; REMEDIES..
20.1 Events. of Default. Any one or all of the following events shall, subject to
Section 22.1, constitute an Event of Default hereunder:
20.1.1, If Tenant shall default in the payment of any Rent when and as the same
becomes due and payable and such default shall continue for more than fifteen (15) days after
Landlord shall have given written notice thereof to Tenant; or
20.1.2 If Tenant shall materially default under one or more of the Transaction
Documents, and such default is not timely cured within the greater of thirty (30) days after
Landlord has given Tenant written notice of such default or such longer period as may be granted
Tenant under such document to cure such default; or
SM15610-0047
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20.1.3 The abandonment or vacation of the Property by Tenant for a period of
thirty (30) days, after prior written notice thereof by Landlord; or
20.1.4 The entry of any decree or order for relief by any court with respect to
Tenant, or any assignee or transferee of Tenant (hereinafter "Assignee"), in any involuntary case
under the Federal Bankruptcy Code or any other applicable federal or state law; or the
appointment of or taking possession by any receiver, liquidator, assignee, trustee, sequestrator or
other similar official of Tenant or any Assignee (unless such appointment is in connection with a
Mortgagee's exercise of its remedies under its Mortgage), or of any substantial part of the
property of Tenant or such Assignee, or the ordering or winding up or liquidating of the affairs of
Tenant or any Assignee and the continuance of such decree or order unstayed and in effect for a
period of ninety (90) days or more (whether or not consecutive); or the commencement by
Tenant or any such Assignee of a voluntary proceeding under the Federal Bankruptcy Code or
any other applicable state or federal law or consent by Tenant or any such Assignee to the entry
of any order for relief in an involuntary case under any such law, or consent by Tenant or any
such Assignee to the appointment of or taking of possession by a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of Tenant or any such Assignee; or of any
substantial property of any of the foregoing, or the making by Tenant or any such Assignee of
any general assignment for the benefit of creditors; or Tenant or any such Assignee takes any
other voluntary action related to the business of Tenant or any such. Assignee or the winding up
of the affairs of any of the foregoing.
20.1.5 If Tenant shall materially default in the performance of or compliance
with any other term, covenant or condition of this Ground Lease (other than as set forth in
Sections 20.1.1 and 20.1.2) and such default shall continue for more than thirty (30) days after
Landlord shall have given written notice thereof to Tenant, provided, however, if cure of such
default reasonably requires more than thirty (30) days, then, provided that Tenant commences to
cure within such thirty (30) day period and thereafter diligently and continuously prosecutes the
cure to completion, Tenant shall not be in default.
20.1.6 Notwithstanding anything to the contrary containedin this Ground.
Lease, prior to declaring any default or taking any remedy permitted under this Ground Lease or
applicable law based upon an alleged default under this Ground Lease by Tenant, Landlord shall
deliver written notice to Tenant's limited partners of Tenant's failure to cure such default, and
Tenant's limited partners shall have an additional period of not less than (a) ten (10) days from
the date of such notice to cure such alleged default if of a monetary nature, and (b) thirty (30)
days from the date of such notice to cure such alleged default if of a nonmonetary nature;
provided, however, if in order to cure such a default the limited partners must remove the general
partner of Tenant, the limited partner shall so notify Landlord and so long as the limited partner
is diligently and continuously attempting to so remove such general partner, the limited partner
shall have until the date thirty (30) days after the effective date of the removal of the general
partner or general partners to cure such default.
Nothing herein shall be deemed to permit Landlord to terminate this Ground Lease
without the Investor's consent prior to expiration of the fifteen (15) year Tax Credit compliance
period described in Section 42(i)(1) of the Code.
'UM15610-0047
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20.2 Remedies.
20.2.1 If an Event of Default shall occur and continue as aforesaid, then in
addition to any other remedies available.to Landlord at law or in equity, but subject to Article 17,
Landlord shall have the immediate option to terminate this Ground Lease and bring suit against
Tenant and recover as an award in such suit or arbitration proceeding the following:
(a) the: worth at the time of award of the unpaid rent and all other sums
due hereunder which had been earned at the time of termination;
(b) the worth at the time of award of the amount by which the unpaid
rent and all other sums due hereunder which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(c) the worth at the time of award of the amount by which the unpaid
rent and all other sums due hereunder for the balance of the Term after the time of award exceeds
the amount of such rental loss that Tenant proves could be reasonably avoided;
(d) any other amount necessary to compensate Landlord for all the
detriment proximately caused by the Tenant's failure to perform its obligations under this
Ground Lease or which in the ordinary course of things could be likely to result therefrom; and
(e) . such amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable California law.
20.2.2 The "worth at the time of the award" of the amounts referred to in
Subparagraphs 20.2.1(a) and 20.2.1(b) above shall be computed by allowing interest at the rate.
provided in Section 4.7 as of the date of the award. The "worth at the time of award" of the
amount referred to in subparagraph 20.2.1(c) above shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1 %).
20.3 Receipt of Rent, No Waiver of Default. The receipt by Landlord of the rents or
any other charges due to Landlord, with knowledge of any breach of this Ground Lease by
Tenant or of any default on the part of Tenant in the observance or performance of any of the
conditions or covenants of this Ground Lease, shall not be deemed to be a waiver of any
provisions of this Ground Lease. No acceptance by Landlord of a lesser sum than the rents or
any other charges then due shall be deemed to be other than on account of the earliest installment
of the rents or other charges due, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment of rent or charges due be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to Landlord'. s
right to recover the balance of such installment or pursue any other remedy provided in this
Ground Lease. The receipt by Landlord of any rent or any other sum of money or any other
consideration paid by Tenant after the termination of this Ground Lease, or after giving by
Landlord of any notice hereunder to effect such termination, shall not, except as otherwise
expressly set forth in this.Ground Lease, reinstate, continue, or extend the term of this Ground
Lease, or destroy, or in any manner impair the efficacy of any such notice of termination as may
882/015610-0047
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have been given hereunder by Landlord to Tenant prior to the receipt of any such sum of money
or other consideration, unless so agreed to in writing and signed by Landlord. Neither
acceptance of the keys nor any other act or thing done by Landlord or by its agents or employees
during the Tenn shall be deemed to be an acceptance of a surrender of the Property or the
Improvements, excepting only an agreement in writing signed by Landlord accepting or agreeing
to accept such a surrender.
20.4 Effect on Indemnification. Notwithstanding the foregoing, nothing contained in
this Article 20 shall be construed to limit Landlord's and/or the City's right to indemnification as,.
otherwise provided in this Ground Lease.
ARTICLE 21. PERMITTED CONTESTS.
Tenant, at no cost or expense to Landlord, may contest (after prior written notice to
Landlord), by appropriate legal proceedings conducted with due diligence, the amount or validity
or application, in whole or in part, of any Imposition or lien, provided that (a) in the case of liens
of mechanics, materialmen, suppliers or vendors; or Impositions or liens therefor, such
proceedings shall suspend the collection thereof from Landlord, and shall suspend a foreclosure
against the Property and/or the Improvements, or any interest therein, or any Rent; if any, (b)
neither the Property or the Improvements, nor any part thereof or interest therein, or the Rent, if
any, or any portion thereof, would be in any danger of being sold, forfeited or lost by reason of
such proceedings, and (c) Tenant shall have famished to Landlord, if requested, a bond or other
security, satisfactory to Landlord. If Tenant shall fail to contest any such matters, or to give
Landlord security as hereinabove provided, Landlord may, but shall not be obligated to, contest
the matter or settle or compromise the same without inquiring into the validity or the
reasonableness thereof. Landlord, at the sole cost and expense of Tenant; will cooperate with
Tenant and execute any documents or pleadings legally required for any such contest.
ARTICLE 22. FORCE MAJEURE.
22.1 Delay of Performance. Subject to Paragraph 23.2. below, any prevention, delay,
nonperformance or stoppage by Tenant due to any of the following causes shall be excused: any
regulation, order, act, restriction or requirement or limitation imposed by any federal, state,
municipal or foreign government or any department or agency thereof, or civil or military
authority; acts of God; acts or omissions of Landlord or its agents or employees; fire, explosion
or floods; strikes, walkouts or inability to obtain materials; war, terrorism, riots, sabotage or civil,
insurrection; or any other causes beyond the reasonable control of Tenant.
22.2 Notice and Cure Requirements. No prevention, delay, or stoppage of
performance shall. be excused unless: ,
(a) Tenant notifies Landlord within thirty (30) days of such
prevention, delay or stoppage that it is claiming excuse of its obligations under this Article 22;
and
(b) Tenant diligently proceeds within thirty (30) days of the
conclusion of such prevention, delay or stoppage to cure the condition causing the prevention,
delay or stoppage; and
882/015610-M7
3%7235.5 a0827112 -52-
(c) Tenant effects such cure within a reasonable time.
ARTICLE 23. GENERAL PROVISIONS.
23.1 Notices. Written notices, demands and communications between Landlord and
Tenant shall be sufficiently given if (i) delivered by hand, (ii) delivered by reputable same -day or
overnight messenger service that provides a receipt showing date and time of delivery, or (iii)
dispatched by registered or certified mail, postage prepaid, return receipt requested, to the
principal offices of Landlord and Tenant at the addresses specified in this Section 23:1.Such
written notices, demands and communications may be sent in the same manner to such other
addresses as either party may from time to time designate by mail as provided in this Section
23.1.
Any written notice, demand, or communication shall be deemed received immediately if
delivered by hand. or delivered by messenger in accordance with the preceding paragraph, and
shall be deemed received on the third (3rd) day from the date it is postmarked if delivered by
registered or certified mail in accordance with the preceding paragraph.
If to Tenant: Coral Mountain Partners, L.P.
46753 Adams Street
La Quinta, CA 92253
Phone No.: (760) 771-3345
Facsimile No.: (760) 771-0686
Attention: Robert High
with copies to: Bocarsly Emden Cowan Esmail & Arndt. LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Phone No.: (213) 239-8088
Facsimile No.: (213) 559-0733
Attention: Lance Bocarsly
Hamilton USBCDC Investments, L.P
1640 S. Sepulveda Boulevard, Suite 425
Los Angeles, CA 90025
Phone No.: (310) 575-3543
Facsimile No.: (310) 575-3563
Attention: Project Manager
U.S. Bancorp Community Development Corporation
1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
Phone No.: (314) 335-2600
Facsimile No.: (314) 335-2601
Attention: Director of Asset Management
8821015610-W47
3967235.5 a0827n2 -53-
SNR Denton
233 South Wacker Drive, Suite 7800
Chicago, IL 60666
Phone No.: (312) 876-7967
Facsimile No.: (312) 876-7934
Attention: Jana Cohen Barbe, Esq.
Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
Loan # 10-7044852
Facsimile: (212) 723-8642
Attention: Desk Head, Transaction Management Group
Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Loan # 10-7044852
Phone No.: (805) 557-0930
Facsimile: (805) 557-0924
Attention: Operations Manager/Asset Manager
Citibank, N.A.
One Sansome Street, 26th Floor
San Francisco, CA 94104
Loan # 10-7044852
Facsimile: (415) 627-6387
Attention: Sanjay Sharma
Citibank, N.A.
388 Greenwich Street
New York, New York 10013
Loan # 10-7044852
Facsimile: (212) 723-8939
Attention: General Counsel's Office
If to Landlord: Notices Delivered by U.S. Mail:
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Phone No.: (760) 777-703 t
Facsimile No.: (760) 777-7101
Attention: Executive Director
UM15610-0047 I
3967235.5 aOU27/12 -54- _ _
Notices Delivered Personally or by Courier:
La Quinta Housing Authority
78-495 Calle Tampico
La Quinta, CA 92253
Phone No.: (760) 777-7031
Facsimile No.: (760) 777-7101
Attention: Executive Director
with a copy to Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Phone No.: (714) 641-5100
Facsimile No:: (714) 546-9035
Attention: M. Katherine Jenson, Esq.
Addresses for notice may be changed from time to time by notice to all other parties.
Notwithstanding that Notices shall be deemed given when delivered, the non -receipt of any
Notice as the result of a change of address of which the sending party was not notified shall be
deemed receipt of such Notice.
23.2 Certificates. 'Landlord or Tenant, as the case may be, shall execute, acknowledge
and deliver to the other, promptly upon request by Landlord, Tenant, a Mortgagee or Investor, a
Certificate of Landlord or Tenant, as the case may be, certifying (a) that this Ground Lease is
unmodified and in full force and effect (or, if there have been modifications, that the Ground
Lease is in full force and effect, as modified, and stating the date of each instrument so
modifying the Ground Lease), (b) the date, if any, through which the Rent, if any, has been paid,
(c) whether there are then existing any offsets or defenses against the enforcement of any term
hereof on the part of Tenant to be performed or complied with (and, if so, specifying the same),
and (d) whether any default exists hereunder and, if any such default exists, specifying the nature
and period of existence thereof and what action Landlord or Tenant, as the case may be, is taking
or proposes to take with respect thereto and whether notice thereof has been given to the party in
default. Any Certificate may be relied upon by any prospective purchaser, transferee, mortgagee
or trustee under a deed of trust or leasehold estate .in the Property or any part thereof or of
Landlord's or Tenant's interest under this Ground Lease. Tenant will also deliver to Landlord,
promptly upon request, such information with respect to the Property or any part thereof as from
time to time may reasonably be requested.
23.3 . No Merger of Title. There shall be no merger of this Ground Lease or the
leasehold estate created by this Ground Lease with any other estate in the Property or any part
thereof by reason of the fact that the same person, firm, corporation or other entity may acquire
or own or hold, directly or indirectly:(a) this Ground Lease or the leasehold estate created by this
Ground Lease or any interest in this Ground Lease or in any such leasehold estate, and (b) any
other estate in the Property and the Improvements or any part thereof or any interest in such
estate, and no such merger shall occur unless and until all persons,.corporations, firms and other
entities, including any leasehold Mortgagee or leasehold Mortgagees, having any interest
(including a security interest) in (i) this Ground Lease or the leasehold estate created by this
8=15610-0047 -55
3%7235.5 �oarzwz
Ground Lease, and (ii) any other estate in the Property or the. Improvements or any part thereof
shall join in a written instrument effecting such merger and shall duly record the same:
23.4 Utility Services. Tenant shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at any time rendered to
or in connection with the Property or the Improvements, or any part thereof, and shall comply
with all contracts existing on the date hereof or subsequently executed by Tenant relating to any
such services, and will do all other things required for the maintenance and continuance of all
such services.
23.5 Quiet Enjoyment. Tenant, upon paying the Rent, if any, and other charges
herein provided for and upon performing and complying with all covenants, agreements, terms
and conditions of this Ground Lease to be performed or complied with by it, shall lawfully and
quietly hold, occupy and enjoy the Property during the term of this Ground Lease without
hindrance or molestation by Landlord, or any person or persons claiming through Landlord.
23.6 No Claims Against Landlord. Nothing contained in this Ground Lease shall
constitute any consent or request by Landlord, express or implied, for the performance of any
labor or services or the furnishing of any materials or other property in respect of the Property or
any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or other property, in such
fashion as would permit the making of any claim against Landlord or its interest in the Property
in respect thereof.
23.7 Inspection. Landlord and its authorized representatives may enter the Property or
any part thereof at all reasonable times for the purpose of inspecting, servicing or posting
notices, protecting the Property or the Improvements, or for any other lawful purposes. That
notwithstanding, Landlord may only enter residential units after giving Tenant three (3) days
prior written notice and subject to all rights of such tenants.
23.8 No Waiver by Landlord. To the extent permitted by applicable law, no failure
by Landlord to insist upon the strict performance of any term hereof onto exercise any right,
power or remedy consequent upon a default under this Ground Lease, and no acceptance of rent
during the continuance of any such default, shall constitute a waiver of any such default or of any
such term. No waiver of any default shall affect or alter this Ground Lease, which shall continue
in full force and effect, or the rights of Landlord with respect to any other then existing or
subsequent default.
23.9 Holding Over. In the event Tenant shall hold over or remain in possession of the
Property or the Improvements with the consent of Landlord after the expiration of the Term, such
holding over or continued possession shall create a tenancy for month -to -month only, upon the
same terms and conditions as are herein set forth so far as the same are applicable.
23.10 Exculpation of Tenant's Personal Liability. Notwithstanding anything to the
contrary provided in this Ground Lease, including, without limitation, the remedies provisions
set forth in Section 20.2 above, it is specifically understood and agreed that there shall be no
personal liability or obligation on the part of any partner of Tenant or any assignee or successor
88=15610.0047.
3967235.5a0827n2 -56•.
in interest of the partners of Tenant hereunder (including; without limitation, any mortgagee,
trustee or beneficiary under any mortgage or deed of trust which may acquire Tenant's interest
under this Ground Lease through foreclosure or deed in lieu of foreclosure or any purchaser at a
foreclosure sale) with respect to the provisions of this Ground Lease relating, to the payment of
Rent or performance of any other obligations under this Ground Lease; but that Landlord and all
those claiming by, through or under Landlord, its successors and assigns, shall look solely to the
interest of Tenant, its successors and assigns in this Ground Lease and the Improvements, for the
satisfaction of each and every provision and each and every right, privilege or remedy of
Landlord or any other party, in the event of any breach or default of Tenant or any assignee or
successor in interest of any of the provisions made by or to be performed by the Tenant.
However, Tenant acknowledges and agrees that this exculpation of personal liability of the
partners of Tenant for the payment of Rent shall in no way limit the exercise of Landlord's other,
remedies, including, without limitation, termination of this Ground Lease.
23.11 No Partnership. Anything contained herein to the contrary notwithstanding,
Landlord does not in any way or for any purpose become a partner of Tenant in the conduct of its
business, or otherwise, or a joint venturer or member of a joint enterprise with Tenant hereunder.
23.12 Remedies Cumulative. The various rights, options, elections and remedies of
Landlord and Tenant, respectively, contained in this Ground Lease shall be cumulative and no
one of them shall be construed as exclusive of any other, or of any right, priority or remedy
allowed or provided for by law and not expressly waived in this Ground Lease.
23.13 Attorney's Fees. In the event of a dispute between the parties arising out.of or in
connection with this Ground Lease, whether or not such dispute results in arbitration or
litigation, the prevailing party (whether resulting from settlement before or after arbitration or
litigation is commenced) shall be entitled to have and recover from the losing party reasonable"
attorneys' fees and costs of suit, including expert witness fees, incurred by the prevailing party.
23.14 Time Is of The Essence. Time is of the essence of this Ground Lease and all of
the terms, provisions, covenants and conditions hereof.
23.15 Survival of Representations, Warranties and Covenants. The respective
representations, warranties and covenants contained herein shall survive the Commencement
Date and continue throughout the Term, as it may be extended pursuant to the terms hereof.
23.16 Construction of Agreement. This Ground Lease shall be construed in
accordance with the substantive laws of the State of California, without regard to the choice of
law Hiles thereof The rule of construction that a document be construed strictly against its
drafter shall have no application to this Ground Lease.
23.17 Severability. If one or more of the provisions of this Ground Lease shall be held
to be illegal or otherwise void or invalid, the remainder of this Ground Lease shall not be
affected thereby and shall remain in full force and effect to the maximum extent permitted under
applicable laws and regulations.
2318 'Entire Agreement: Modification. This Ground Lease contains the entire
agreement of the parties with respect to the matters discussed herein; This Ground Lease may be
98MI5610-0067
3967735.5 a0&27112 -57-
amended only by an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extensions or discharge is sought.
23.19 Binding Effect and Benefits. This Ground Lease shall inure to the benefit of and
be binding on the parties hereto and their respective successors and assigns. Except as otherwise
set, forth herein, nothing in this Ground Lease, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Ground Lease.
23.20 Further Assurances. Each party hereto will promptly execute and deliver such
additional agreement, assignments, endorsements and other documents as the other party hereto
may reasonably request to carry out the purposes of this Ground Lease:
23.21 Counterparts. This Ground Lease may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same Ground Lease.
23.22 Number and Gender. Whenever the singular number is used in this Ground
Lease and required by the context, the same shall include the plural, and the masculine gender
shall include the feminine and neuter genders.
23.23 Conflicts. The parties acknowledge that certain provisions of this Ground Lease
overlap and conflict with the provisions of the Agreement or complete missing information in the
Agreement. It is the intention of the parties that this Ground Lease and the Agreement be read
consistently. To the extent conflicting provisions exist in this Ground Lease and the Agreement,
the provisions of this Ground Lease shall control over the conflicting or incomplete provision in
the Agreemenk
23.24 Incorporation by Reference. Every Exhibit attached to this Ground Lease and
referred to herein is hereby incorporated by reference.
23.25 Consent Rights. Unless otherwise expressly provided in this Ground Lease, all
approvals or consents of Landlord (or Landlord's Executive Director), Tenant or any Mortgagee
shall not be unreasonably withheld, conditioned or delayed.
23.26 Third Party Beneficiary. Each Mortgagee shall be a third party beneficiary of
the rights and benefits granted to Mortgagees under this Ground Lease: Neither the Tenant nor
the Landlord shall be deemed to be a third party beneficiary of the rights granted hereunder to a
Mortgagee and no Mortgagee shall have any obligation to the Tenant or the Landlord to account
for any decision, action or election it may take or the exercise of its rights hereunder, nor shall
any Mortgagee have any duty to the Tenant or the Landlord to exercise any right hereunder in
any particular manner or order, other than that which such Mortgagee, in its sole discretion (but
in any event subject to the terms of this Ground Lease) shall deem appropriate and in its own
best interests.
[end — signatures on next page]
a821015610-M7 -
3967235s aOUD112 -58- - ..
IN WITNESS WHEREOF, the undersigned have executed this Ground Lease as of the
date first above written.
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
Date: 12012 By:
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
Its: Executive Director
[signatures continued on next page]
882/015610-0047
3967235.5 a08/27/12 -59-
"Tenant"
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company,
administrative eenei-dknartner
By: KD Hou figPartilers, Inc.,
a Calif( corporation, its manager
Date: 12012 By:
Jo rs6 esident
By: WCH Affordable VIII, LLC,
a California limited liability company,
managing general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
Date: 12012 By:'�i7t� if�� r'/.)
Sandra C. Gibbons,
Chief Financial Officer
112/015610.0047
1167235.5 a007/12 -60-
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF" OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION29, TOWNSHIP 5
SOUTH, RANGE 7'EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS[
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 8903916" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656,57 FEET TO THE .
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00"08'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 2% A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT -.OF -WAY LINE OF HIGHWAY 1'11 AS GRANTED TO
THE CITY OF LA QUINTA. PER INSTRUMENT NO: 2007-0076267
RECORDED: FEBRUARY 1, 2007 AND RERECORDED'FEBRUARY 14, 2007
AS INSTRUMENT No. 2D07-01032551 O.R,.;
THENCE'CONTINUING S.OLITH 00`MIa' EAST ALONG SAID: EAST LINEA,
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERUY, HAVING .A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01653-43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID.EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE; THROUGH A CENTRAL ANGLE OF 16909'0r' AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF.A REVERSE CURVE,
CONCAVE SOUTHER.VY, HAVING A RADIUS OF 30Q.Oti FEET, A RADIAL
LINE TO SAID; POINT BEARS NORTH 181O2'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE.OF 186O2'60'; AN ARC DISTANCE OF 04.50 FEET;
THENCE NORTH 90"00'OQ" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A: TANGENT .CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
asav15610-DO47
3967235.5 aft'27112
I
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE
THROUGH A CENTRAL .ANGLE OF 90009,'34', AN ARCDISTANCE OF
314-72-FEET;
THENCE NONJANGENT TO SAID CURVE SOUTH 89p60'26' WEST A
DISTANCE OF 21 A 8 FEET TO THE � WEST LINE OF SAID EAST HALF OF
THE WEST HALF I OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF, SECTION 29;
THENCE SOUTH 0.0-09.34- EAST ALONG SAID WEST LINE, A DISTANCE
OF ' 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER.
OF THE SOUTHEAST QUARTER OF SECTION 29;,
THENCE SOUTH 8W48'27k EAST ALONG SAID SOUTH LINEA DISTANCE
OF 462.14 FEET TO. SAID. EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST. QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29�
THENCE NORTH 00*08l U'WEST ALONG SAID EAST LINE, A DISTANCE
OF P3.61,FEET TO THE TRUE POINT OF BEGINNING..
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS-OF-WAY-0FRECOR-D.
CONTAINING 449,,483 SQUARE FEET OR 10,319ACRES, MORE OR LESS
882/0156104047
3967235.5 a08127/12
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Attn: Executive Director
Exempt From Recording Fee Pursuant to
Government Code Section 27383- _!
MEMORANDUM OF UNRECORDED GROUND LEASE
This MEMORANDUM OF UNRECORDED GROUND LEASE ("Memorandum") is
hereby entered into as of August 1, 2012 by and between LA QUINTA HOUSING
AUTHORITY, a public body, corporate and politic ("Landlord"), and CORAL MOUNTAIN
PARTNERS, L.P.; a California limited partnership ("Tenant").
RECITALS
A. Landlord and Tenant have entered into a "Ground Lease" dated concurrently
herewith for that certain real property owned by the Landlord (the "Property"), which provides
for the construction, maintenance, management and operation of a 176-unit affordable
multifamily apartment project, to be made available long term at an affordable housing cost (the
"Project").The Property is legally described in Exhibit "A." which is attached hereto and
incorporated herein by this reference. A copy of the Ground Lease is available for public
inspection.at the office of the City Clerk of the City of La Quinta, 78-495 Calle Tampico, La
Quinta, CA 92253.
B. The term of the Ground Lease commences on the date of recordation of this
Memorandum of Unrecorded Ground Lease in the Official Records of Riverside County and
continues until the earlier to occur of (a) December 31, 2070, or (b) the fifty-fifth (55th)
anniversary of the date seventy-five percent (751/o) of the units have been leased to and are
occupied by income -qualified tenants at affordable rents. The term may be extended by
agreement of Landlord and Tenant for two additional ten (10) year periods.
C. The Ground Lease provides that a short form memorandum of the Ground Lease
shall be executed and recorded in the Official Records of Riverside County, California.
NOW, THEREFORE, the parties hereto certify as follows:
Landlord, pursuant to the Ground Lease, hereby leases the Property to the Tenant upon
the terms and conditions provided for therein. This Memorandum of Lease is not a complete
summary of the Ground Lease, and shall not be used to interpret the provisions of the Ground
Lease.
[end - signatures on next page]
'BM15610-0067.
3967235.5 a0827/I2
"Landlord"
"Tenant"
CORAL MOUNTAIN PARTNERS, L.P.,
I
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company,
administrative general partner
By: KD Housing Partners, Inc.,
a California corporation, its manager
i
Date: 2012 By:
John Durso, President
By: WCH Affordable VIII, LLC,
a California limited liability company,
managing general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
Date: 2012 By:
Sandra C. Gibbons,
Chief Financial Officer
a
992/0156104047 _ ..
3967235s AWV12. - -3-
i
State of California
County of Riverside
On before me,
(insert name and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct:
WITNESS my hand and official seal.
Signature
State of California )
County of Riverside )
On before me,
(insert name and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
EXHIBIT A TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION
IN THE CITY OF LA QUINTA, _ COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN MORE
PARTICULARLLY DESCRIBED AS FOLLOWS':
COMMENCING AT THE EAST QUARTER CORNER OF SAID. SECTION 29;
THENCE SOUTH 89°39'15' WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCEOF 1656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF. OF THE
NORTHWEST' QUARTER OF THESOUTHEASTQUARTER OF SECTION 29;
THENCE SOUTH 0090,810" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST' QUARTER OF SECTION 29, A DISTANCE.OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 .AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
As jNSTRUMENT NO. M07-0103255, O.R.;
THENCE CONTINUING SOUTH W-08'10" EAST ALONG SAID. EAST LINE A
DISTANCE OF 626,13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET; A
RADIAL LINE' TO SAID POINT. BEARS SOUTH 01 063"43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16'0907", AN ARC
DISTANCE OF 64.67 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY; ,HAVING A .RADI.LIS OF 300.0'0 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 1 01:250" EAST;
THENCE WESTERLY ALONG THE ARC 'OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 1800250' ,.AN ARC DISTANCE' OF94.50 FEET;
THENCE NORTH 90`00'00" WEST A DISTANCE OF 264.7$ FEET TO THE
BEGINNING OF A TANGENT .CURVE; CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
98MIS610-0047 -
3967235.5 aM7/12
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF .900093' 4", AN ARC DISTANCE OF
314.722 FEET;
THENCE NON TANGENT TO SAID CURVE SOUTH 89659.26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
T14E WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION N;
THENCE SOUTH OD90934" EAST ALONG SAID WEST LINE; A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF.SAID NORTHWEST QUARTER
OFTHE SOUTHEAST QUARTEROF SECTION 29;,
THENC-E SOUTH W4822" EAST ALONG SAID SOUTH 'LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST *HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER.
QFSECTION M,
THENCE NORTH 0000131 XWEST ALONG SAID EAST LINE, A DISTANCE
OF'073.63 FEET TO THE TRUE POINT OF BEGINNING.
1
S,UHdECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS-DF-WAY OF RECORp ^q
i
CONTAINING 449,483'SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
i
86LU15610-0P77 -
3967235.5 s0327/12 - —2- -
EXHIBIT A-2
MEMORANDUM OF LEASE
Landlord Estoppel Certificate A-2 Coral Mountain Apartments
Recorded at the Request of
Old Republic Title Company
Oakland ccnn
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Attn: Executive Director
From Recording Fee Pursuant to
Govemment Code Section 27383
MEMORANDUM OF UNRECORDED GROUND LEASE
This MEMORANDUM OF UNRECORDED GROUND LEASE ("Memorandum") is
hereby entered into as of August 1, 2012 by and between LA QUINTA HOUSING
AUTHORITY, a public body, corporate and politic ("Landlord"), and CORAL MOUNTAIN
PARTNERS, L.P., a California limited partnership ("Tenant").
RECITALS
A. Landlord and Tenant have entered into a "Ground Lease" dated concurrently
herewith for that certain real property owned by the Landlord (the "Property"), which provides
for the construction, maintenance, management and operation of a 176-unit affordable
multifamily apartment project, to be made available long term at an affordable housing cost (the
"Project").The Property is legally described in Exhibit "A." which is attached hereto and
incorporated herein by this reference. A copy of the Ground Lease is available for public
inspection at the office of the City Clerk of the City of La Quinta, 7S-495 Calle Tampico, La
Quinta, CA 92253.
B. The term of the Ground Lease commences on the date of recordation of this
Memorandum of Unrecorded Ground Lease in the Official Records of Riverside County and
continues until the earlier to occur of (a) December 31, 2070, or (b) the fifty-fifth (55th)
anniversary of the date seventy-five percent (75%) of the units have been ]eased to and are
occupied by income -qualified tenants at affordable rents. care term .may be extended by
agreement of Landlord and Tenant for two additional ten (10) y P
C. The Ground Lease provides that a short form memorandum of the Ground Lease
shall be executed and recorded in the Official Records of Riverside County, California.
NOW, Ti3EREEORE, the parties hereto certify as follows:
Landlord, pursuant to the Ground Lease, hereby leases the Property to the Tenant upon
the temts and conditions provided for therein. This Memorandum of Lease is not a complete
summary of the Ground Lease, and shall not be used to interpret the provisions of the Ground
Lease.
[end - signatures on next page]
S$2101561040047
4100224.1 o007/12
executed in counterpart
ATTEST:
S1/� Y r wv
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Counsel
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
Frank J. Spevacek, Executive Director
[signatures continued on next page]
8821015610-0047 _2_
4100224.1 o08127M
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Au on y Counsel
"Landlord"
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
2012 By:
Its: Executive Director
[signatures continued on next page]
882/015610-0047
4 100224.1a0B27112 -2-
State of California
County of Riverside
On tMR! Z7 201L before me, s1ASA1A MAySFI.S
(insert name and title or the officer)
Notary Public, personally appeared FRAA& J. S'P�AGg
who proved to me on the basis of satisfactory evidence to be the person(e) whose name(s) ishmv
subscribed to the within instrument and acknowledged to me that he/a� executed the same
in his/herhheir authorized capacityfies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person($) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct. ^^" ySELS
SUSAN MA
COMM.#1844479 x
WITNESS my hand and official sea]. ROTARY PUBLIC • CALIFORO!R
x RNMSIDEC M tots
co�poa
Signature (Seal)
�)U4)ay\ i�GL el�
State of California )
County of Riverside )
�m
before me,
(insert mane and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
882/01561M047 _4_
4100124.1 .09127112
"Tenant
CORAL. MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company,
administrative general partner
By: KD
Inc.,
in, its manager
Date: f �� 2012 BY
o ur o, President
By: WCH Affordable VIII, LLC,
a California limited liability company,
managing general partner
By: Western Community Housing, Inc.,
a California nonprofit public benefit
corporation, its sole member and
manager
i
Q 7
D �J� 2012 By:
Date: Sandra C. Gibbons,
Chief Financial Officer
80615610 D41 -3-
4100224.1-08127112
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
ss.
COUNTY OF LOS ANGELES )
On August 27, 2012, before me, R. Shupe, Notary Public, personally appeared John Durso and
Sandra C. Gibbons,
-----------------
R. SHUPE
Commission * 1914352 =
b Notary Public • California
San Francisco County
Mx Comm. Expires Nov 25. 2914
Place Notary Seal Above
who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) i/are subscribed to the
within instrument and acknowledged to me that hrK/*e/they
executed the same in h*/Ildr/their authorized capacity(ies),
and that by hid/hefttheir signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the
State of California that the foregoing paragraph is true and
correct.
WITNESS my hand and official seal.
EXHIBIT A TO MEMORANDUM OF LEASE
LEGAL DESCRIPTION
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039*16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00°08'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01°53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16"09-07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST,
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18-02-50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
8821015610-0047
4100224.1 a08/27112
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90009'34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89050'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00'08'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
882/01 s010-0mn -6-
4100224.1 u08127112
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Attn: Executive Director
Exempt From
DOC # 2012-0423348
09/05/2012 04:47 PM Fees: $33.00
Page 1 of 7
Recorded in Official Records
County of Riverside
Larry W. Ward
Assessor, County Clerk & Recorder
"This document was electronically submitted
to the County of Riverside for recording"
Receipted by: TVERBA
vee rursuant to Govemment Code §
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and
title companies, and other persons, regarding affordable housing restrictions on
the real property described in this Notice: Affordable housing restrictions have
been recorded with respect to the property described below (referred to in this
Notice as the "Property") which require that the Property be developed as an
affordable rental development and that all of the units be rented to and occupied by
persons and households of limited income at affordable rents.
Title of Document Containing Affordable Housing Restrictions:
Affordable Housing Regulatory Agreement ("Agreement').
Parties to Agreement: Coral Mountain Partners, L.P., a California limited
partnership ("Developer"), who holds a leasehold interest in and to the Property,
and the La Quinta Housing Authority, a public body, corporate and politic
("Authority"), which is the fee owner of the Property.
The Agreement is recorded concurrently with this Notice, in the Official
Records of Riverside County.
Legal Description of Property: See Exhibit "A" attached hereto and
incorporated herein by this reference.
Property Location: Southeast intersection of Dune Palms Road and
Highway 111.
Assessor's Parcel Number of Property: 600-020-054.
882/015610-0047
1786123.2 a0&27.'12
DOC # 2012-0423348
Page 2 of 7 09/05/2012 04:47 PM
Summary of Agreement:
o The Agreement requires the Developer to develop a one hundred
seventy-six (176) unit rental housing development on the Property,
which property is being leased by Developer from Authority;
o The Agreement restricts the rental of (i) thirty-six (36) units to
households whose annual income does not exceed the qualifying
limits under California law for "very low income households"; one
hundred thirty-eight (138) units to households whose annual income
does not exceed the qualifying limits under California law for "lower
income households"; and two (2) units to households whose annual
income does not exceed the qualifying limits under California law for
"persons and families of moderate income", all as established by
HUD, and as published periodically by HCD.
o The Regulatory Agreement restricts the rents that may be charged to
such households to the maximum amount of rent, including a
reasonable utility allowance, that does not exceed the rent permitted to
be charged to the applicable household, as the case may be,
determined pursuant to Health and Safety Code Section 50053(b).
o The term of the Agreement is fifty-five (55) years, commencing on
the date seventy-five percent (75%) of the units have been leased to
income -eligible tenants at affordable rents; provided that the term may
be extended for up to twenty (20) additional years, as further provided
in the Agreement.
This Notice does not contain a full description of the details of all of the
terms and conditions of the Agreement. You will need to obtain and read the
Agreement to fully understand the restrictions and requirements which apply to the
Property.
This Notice is being recorded and filed in compliance with Health and
Safety Code Section 33334.3(f)(3) and (4), and shall be indexed against the
Developer, who will own fee title to the improvements during the term of the
Developer's leasehold interest in the Property, and the Authority.
[signatures on next page]
"2/015610-0047
3786123.2 407112 -2-
DOC # 2012-0423348
Page 3 of 7 09/05/2012 04:47 PM
Date: WLI , 2012
ATTEST:
Authority Secretary
S
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Legal Counsel
"Authority"
LA QUINTA HOUSING AUTHORITY, a
public b dy, corpora d politic
BC�—
xecutiv irec
Frank J. Spevacek, Executive Director
882/0]5610.0047
3786123.2 e0829/12
-3-
DOC # 2012-0423348
Page 4 of 7 09/05/2012 04:47 PM
"Authority"
LA QUINTA HOUSING AUTHORITY, a
public body, corporate and politic
Date: , 2012 By:
Executive Director
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
RV.TAN & jUiCKE , LLP
AtIfority Legal nsel
882/015610-0047
3786123.2 a0827/12 -3-
DOC # 2012-0423348
Page 5 of 7 09/05/2012 04:47 PM
State of California )
County of Riverside )
On y3 7-oty before me, SUS/hJ MAY561,5 Notary Public,
(here insert name and title of the officer)
personally appeared E(2.A/d ' J. S � (GE k ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument, and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf
of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
StAsn-✓t YYlau5e15
WITNESS my hand and official seal.
RNIW CamemnEt Fee APR 13201
Signature
_2L/-'� 15, y� �5j � (seal)
982/015610-0047
3786123.2 AM27112
-4-
DOC # 2012-0423348
Page 6 of 7 09/05/2012 04:47 PM
ORDER NO.: 1117011827.1
EXHIBIT A
The land referred to is situated in the County of Riverside, City of La Quinta, State of California,
and is described as follows:
Leasehold estate as created by that certain Ground Lease dated August <3H 2O12, made by
and between La Quinta Housing Authority, a public body, corporate and politic, as lessor, and
Coral Mountain Partners, L.P., a California limited partnership, as lessee, for the term of 55
years and upon the terms and conditions contained in said lease and subject to provisions
contained in the lease which limit the right of possession, a Memorandum thereof recorded
6 - a6i — . 2012, Instrument No. 2012- i LkQCYn4 , in and to the following:
In the City of La Quinta, County of Riverside, State of California, that portion of the West half of
the East half and the East half of the West half of the Northwest quarter of the Southeast
quarter of Section 29, Township 5 South, Range 7 East, San Bernardino Base and Meridian,
more particularly described as follows:
Commencing at the East quarter corner of said Section 29; thence South 890 39' 16" West
along the North line of said Southeast quarter, a distance of 1,656.57 feet to the Northeast
corner of said West half of the East half of the Northwest quarter of the Southeast quarter of
Section 29; thence South 000 08' 10" East along the East line of said West half of the East half
of the Northwest quarter of the Southeast quarter Section 29, a distance of 60.93 feet to the
South right-of-way line of Highway 111 as granted to the City of La Quinta per Instrument No.
2007-0076267 recorded February 1, 2007 and re -recorded February 14, 2007 as. Instrument
No. 2007-0103255, O.R.;
Thence continuing South 000 08' 10" East along said East line a distance of 626.13 feet to the
beginning of a non -tangent curve, concave Northerly, having a radius of 300.00 feet, a radial
line to said point bears South 010 53' 43" West, and the true point of beginning;
Thence leaving said East line and Westerly along the arc of said curve, through a central angle
of 16° 09' 07", an arc distance of 84.57 feet to the beginning of a reverse curve concave
Southerly, having a radius of 300.00 feet, a radial line to said point bears North 181 02' 50"
East; thence Westerly along the arc of said curve through a central angle of 180 02' 50", an arc
distance of 94.50 feet; thence North 900 00' 00" West a distance of 264.78 feet to the
beginning of a tangent curve, concave Southeasterly, having a radius of 200.00 feet;
Thence Southwesterly along the arc of said curve, through a central angle of 900 09' 34", an
arc distance of 314.72 feet; thence non -tangent to said curve South 890 50' 26" West, a
distance of 21.18 feet to the West line of said East half of the West half of the Northwest
quarter of the Southeast quarter of Section 29; thence South 000 09' 34" East along said West
line, a distance of 500.13 feet to the South line of said Northwest quarter of the Southeast
quarter of Section 29; thence South 890 48' 22" East along said South line a distance of 662.14
feet to said East line of the West half of the East half of the Northwest quarter of the Southeast
quarter of Section 29; thence North 000 18' 10" West along said East line, a distance of 673.63
feet to the true point of beginning.
DOC # 2012-0423348
Page 7 of 7 09/05/2012 04:47 PM
Said land is also shown as Parcel 2 of lot line Adjustment No. 2010-508 as Disclosed by Grant
Deed recorded December 2, 2010, as Instrument No. 2010-575516, of Official Records.
APN:600-020-054
No Recording Fee
Required Per
Government Code
Section 27383
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
COACHELLA VALLEY WATER DISTRICT
Post Office Box 1058
Coachella, California 92236
DOC # 2012-0481305
10/09/2012 02:1811P Fee -NC
Page t of 37
Recorded in Official Records
County of Riverside
Larry 11. Ilard
Assessor, County Clark & Recorder
I IN IN 11111111111 IN III 111111111
SIZE
DA
MISC
LONG
RFD
COPY7485
KPAGE
425
POOR
NCOR
SdF
G
$IS
r.
c7Y
.
(Space above this line for Recorder's Use) Xl
File: 0421.1 �(
APN: 600-020-054 815
0721.1
STANDARD DOMESTIC WATER SYSTEM AND 0655.
SANITATION SYSTEM INSTALLATION AGREEMENT 0001.3
THIS STANDARD DOMESTIC WATER SYSTEM AND SANITATION SYSTEM
INSTALLATION AGREEMENT ("Agreement') is made on this jI d day ofalbJW2012, by
and between the COACHELLA VALLEY WATER DISTRICT, a public agency of the State of
California ("District") and Coral Mountain Partners, L.P., a California limited partnership
("Developer').
RECITALS
A. Developer is or will be the ground lessee of certain real property located in the
County of Riverside, California legally described on Exhibit "A" and depicted on Exhibit "B"
attached hereto and by this reference incorporated herein ("Developer Property').
B. Developer is developing Coral Mountain Affordable Housing on the Developer
Property ("Project') of approximately one hundred and seventy six (176) units ("Units').
C. The Developer Property will require a domestic water system and sanitation
system and domestic water and sanitation service to each of the Units. For purposes of this
Agreement, the term "domestic water system" shall include, without limitation, pipelines and
appurtenances thereto, including valves, service connections and fire hydrants, but excepting a
water meter to each Unit. For purposes of this Agreement, the term "sanitation system" shall
include, without limitation, pipelines and appurtenances thereto, including manholes and sewer
laterals. The terms "domestic water system" and "sanitation system" shall sometimes be referred
to herein collectively as "Domestic Water and Sanitation Systems."
050729-4-054
CVWDI4c
(Rev.5/12)
D. Developer is desirous of having District provide domestic water and sanitation
service to the Developer Property and is willing to transfer to District the Domestic Water and
Sanitation Systems necessary therefor after the construction thereof and District is willing to
accept such transfer and to provide domestic water and sanitation service to the Developer
Property on the terms and conditions set forth herein.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Developq General Responsibilities
(a) Developer will comply with District's rules, regulations, ordinances and
procedures regarding the design, installation and construction ofthe Domestic Water and
Sanitation Systems and the provision of domestic water and sanitation service to the Developer
Property, including, without limitation, `Regulations Governing Domestic Water Service",
"Regulations Governing Sanitation Service" and "Development Design Manual" as the same
may be amended from time to time (collectively, "Rules"). The Rules are incorporated herein by
reference.
(b) (i) . Developer shall, at Developer's sole cost and expense, be
responsible for compliance with the California Environmental Quality Act ("CEQA') and all
other applicable state and federal environmental laws and all requirements of the Federal
Endangered Species Act and the California Endangered Species Act arising out of or in
connection with the design and construction of the Domestic Water and Sanitation Systems
and for compliance with all conditions and mitigation measures which must be satisfied in
connection with the same. Developer shall cause such public agency of the State of California
as shall be acceptable to District to act as lead agency for the purposes of complying with
CEQA, or District may elect, but shall have no obligation, to act as lead agency. As part of its
obligation to fund the CEQA process, Developer shall prepare or cause to be prepared all
instruments, documents, reports and other like or kind writings required to be prepared and/or
filed by CEQA
(ii) Developer shall, upon request by and at no cost to District, furnish
District with such information as Developer possesses or has available to it from any
consultants, engineers, contractors or other persons engaged by or under the control of
Developer relating to the environmental assessment relative to the creation of the Domestic
I�bIiiIIInIIIiIII�IIIIII�INaI��l�lllllnl re 5�
Water and Sanitation Systems covered by this Agreement. In this regard, nothing herein
contained shall be construed or interpreted to require District to take or participate in any legal
action for the purpose of securing approval for any improvement.
(c) (i) Developer shall employ, at its sole expense, a qualified
professional engineering firm ("Developer's Engineer') to plan, design and prepare detailed
construction plans and specifications ('Plans") for the Domestic Water and Sanitation Systems
in full and complete accordance with District's design criteria and standards, including, but not
limited to, the District's "Development Design Manual", "Standard Specifications for the
Construction of Domestic Water Systems" and "Standard Specifications for the Construction of
Sanitary Sewer Systems." Developer's Engineer shall complete the design and Plans and the
same shall be submitted to District as set forth below. All such planning and design work and
Plans performed and prepared by Developer's Engineer shall be subject to review and written
approval by District prior to presentation thereof to contractors for bidding purposes. District
shall approve or disapprove the Plans within a reasonable amount of time after submittal thereof
to District. In the event District disapproves the Plans, Developer shall modify the Plans in
accordance with the reasons given for disapproval and shall resubmit the revised Plans to District
for approval or disapproval. The foregoing procedure shall be continued until the Plans have
been approved by the District. Developer hereby acknowledges and understands that District
may approve or disapprove of Developer's planning and design work and/or Plans, in its sole and
absolute discretion. Developer represents that the Plans will conform to all applicable federal,
state and local governmental rules, ordinances and regulations and all applicable environmental
protection laws. To Developer's knowledge, after due inquiry, the Plans are complete, accurate,
workable and are in compliance with all governmental requirements with respect thereto.
(ii) Developer and Developer's. successors, assigns and successors -in -
interest to the Developer Property shall be liable for the replacement of decorative concrete and
other surface improvements, including, but not limited to, alternative paving methods which
District may be required to remove in the future to gain access to the Domestic Water and
Sanitation Systems. District shall not be responsible for seal coating, overlaying or otherwise
resurfacing street improvements outside the immediate area of construction. Developer and
Developer's successors shall be responsible for all costs having to do with the same. Developer
shall include these conditions in the Covenants, Conditions, and Restrictions for the Developer
Property.
IIIWIIIaI��I�II�INI��l�llllllllal�ial la?B�of 37 lap
(iii)P rior to any service hereunder, Developer hereby consents and
agrees to execute the District's standard form Water Production Metering Agreement (or such
successor agreement) ("Metering Agreement') for any and all producing wells on the Developer
Property. The Metering Agreement shall provide, in part, that (i) such wells must be equipped
with a water measuring device ("Measuring Device'l more particularly described therein; (ii) on
a monthly basis the Developer shall gram District employees, agents and representatives an
irrevocable right to come onto the Developer Property to read and maintain the Measuring
Device, and (iii) Developer shall be required to pay a monthly replenishment assessment charge.
Developer's that do not produce more than 25 acre-feet in any year from within areas benefiting
from the District's groundwater replenishment programs shall be exempt from paying
replenishment assessment charges during that year.
(iv) Prior to any service hereunder, the Developer shall provide the
District gate codes for access to the Developer Property through any electrically or
electronically operated security gate system installed by Developer. If the Developer cannot
provide the District with gate codes then the District shall have the right to install -radio controls
to operate said gate(s) at Developer's expense. Developer hereby grants to District an irrevocable
easement for District in and over the Developer Property for the purpose of installation,
reinstallation, repair, replacement, operation and maintenance of such radio controls. Developer.
shall pay District the sum of Four Thousand Five Hundred Dollars ($4,500.00) as the cost of said
radio controls prior to acceptance of the Domestic Water and Sanitation Systems by District.
District will operate, maintain, and replace said radio controls at District expense.
2. Developer Pre -Plan Check Renuirements
(a) Prior to submitting the Plans to the District for initial plan check,
Developer shall do the following:
(i) Concurrently with the execution of this Agreement by Developer,
Developer shall deliver to District a current preliminary report ("PTR') dated within thirty (30)
days of delivery thereof to District. The District shall notify Developer of any title exceptions
within the PTR which must be subordinated to the lien of this Agreement. Notwithstanding the
foregoing, any monetary liens or liens of any covenants, conditions and restrictions must be
subordinated to the lien of this Agreement. Developer shall have a period of thirty (30) days after
I1111IN111111111111Il III Illll�llhl i� �� 5sp
the receipt of the written notice to cause the subordination of the items listed in the District's
notice, as well as any monetary liens or liens of any covenants, conditions and restrictions.
(ii) Pay the District's Hydraulic Modeling Deposit and provide the
Developer Property acreage, number of proposed dwelling units by phase, description and square
footage of any commercial buildings, clubhouses, community centers, etc., domestic and
landscape irrigation water daily demands and fire flow requirements in the form of a letter from
the Fire Marshall and sanitation (wastewater) flows.
(iii) Pay the District's Plan Check Deposit and any amounts necessary
to reimburse District for costs incurred in connection with review of the Plans.
(iv) Furnish to District Exhibits "A" and "B" and notarized
Installation Agreement.
(v) Complete and deliver to District the Original Bill of Sale on a
form supplied by the District.
Worksheet.
(vi)C omplete and deliver the Supplemental Water Supply Charge
(vii) Complete and deliver to District the District's Standard Form
Development Category Declaration.
(viii) Furnish to District written petitions for the annexation of the
Developer Property to those Improvement Districts of District which are applicable to the public
services to be provided.
(ix) Complete and deliver to District the District's Standard Form
Domestic Water Plan Checklist.
(x) Complete and deliver to District the District's Standard Form
Sanitation Plan Checklist.
(b) Prior to submitting Plans to the District for the second plan check,
provide the following:
IIIIIIII�INIIIINIIII INllIN11hill III III 1a881� f 3�BP
(i) Pursuant to Section Ila), Developer, at its sole cost and expense,
shall furnish to District recorded grant deeds and/or recorded easement document(s) and/or
easements proposed to be dedicated in tract maps and/or public rights -of -way, if applicable,
satisfactory to District (in its sole and absolute discretion) as to content, form, location and
width, which assure District's unequivocal right to own, operate, maintain, replace, repair,
enlarge, reconstruct, remove and improve the Domestic Water and Sanitation Systems.
Developer shall ensure that all deeds of trust, mortgages and covenants, conditions and
restrictions are reconveyed as to fee ownership and/or subordinated as to the easements.
Developer shall also ensure that the grant deeds and easements comply with the requirements
of the Rules.
(ii) Engineer's estimate of construction costs.
(iii) Landscape irrigation plans and specifications for common areas
and typical residential lots ("Landscape Plans") for the [Developer Property] in full and
complete accordance with the Rules. The design and Landscape Plans shall be submitted to
District for review and written approval. District shall approve or disapprove the Landscape
Plans within a reasonable amount of time after submittal thereof to District. In the event
District disapproves the Landscape Plans, Developer shall modify the Landscape Plans in
accordance with the reasons given for disapproval and shall resubmit the revised Landscape
Plans to District for approval or disapproval. The foregoing procedure shall be continued
until the Landscape Plans have been approved by the District. Developer hereby
acknowledges and understands that District may approve or disapprove of Developer's
Landscape Plans, in its sole and absolute discretion. Developer represents that the
Landscape Plans will conform to all applicable federal, state and local governmental rules,
ordinances and regulations and all applicable environmental protection laws. To Developer's
knowledge, after due inquiry, the Landscape Plans are complete, accurate, workable and are
in compliance with all governmental requirements with respect thereto.
3. Developer Plan Aooroval/Release Requirements
Prior to the release/approval of the Plans by the District for the Domestic Water
and Sanitation Systems, Developer shall furnish to District the following:
(a) Deliver the approved Plans in electronic CAD format.
I�IINIIIIIIIINNN�IIIIIIIIINI�IINIINI ta�'�� �6P
(b) Execute and deliver the District's Special Water System and Sanitation
System Installation Agreement in such form and content as shall be acceptable to the District.
4. Developer Pre -Construction Requirements
Following receipt of District's approval of the design and Plans for the
Domestic Water and Sanitation Systems and prior to the construction thereof, Developer
shall do the following:
(a) Furnish to District, prior to the pre -construction meeting set forth in
subsection (d), an irrevocable letter of credit C LOC) or a certificate of deposit (CD') from a
bank or savings and loan located and doing business in the State of California and acceptable to
District, naming District as sole beneficiary with the exclusive right of withdrawal according to
the following, in the amount of Five Thousand Dollars ($5,000.00) or five percent (5%) of the
amount of the construction costs of the Domestic Water and Sanitation Systems, whichever sum
is greater, as security for the purpose of guaranteeing the completion of the construction of the
Domestic Water and Sanitation Systems. Said security shall provide that District has the
absolute right five (5) days after the mailing of a written notification to Developer by certified
mail, at Developer's address herein, to draw all or a portion of the funds represented by the
security as may be necessary to complete construction, including administrative and all other
project costs or to secure compliance with this Agreement, including the construction of the
Domestic Water and Sanitation Systems; each LOC or CD shall be issued or delivered on a case -
by -case basis, for each contract based on the construction required as outlined herein.
Said security, less draws, if any, will be returned to Developer on a case -
by -case basis, upon the District declaring that the Domestic Water and Sanitation Systems is
final and complete (including, but not limited to, the paving of road/streettright-of-way above
such facilities) in District's sole and absolute discretion. Developer hereby understands,
acknowledges and agrees that the determination that the Domestic Water and Sanitation Systems
is complete and final may come after District has accepted such facilities.
(b) Fumish to District, prior to the pre -construction meeting set forth in
subsection (d), the District's Standard Form Materials Submittal and an electronic copy of the
recorded tract map of the Project.
111III 1111 IIO III III III IN111 Ig or 37658P
(c) Employ, with written concurrence of District, a qualified contractor or
contractors (collectively, "Developer's Contractor") properly licensed by the State of
California, to construct and complete the Domestic Water and Sanitation Systems.
(d) Arrange or cause Developer's Contractor to arrange for a preconstrucxion
meeting with the District. At such meeting there shall be at least one (1) representative of
District, Developer and Developer's Contractor. At such meeting, Developer shall be required o
pay to District such deposit for inspection as shall be required by District. District shall deduct
from said deposit all reasonable cost and expense of District, including, but not limited to,
District's agents, employees or independent contractors. District shall handle such deposit
consistent with the District's rules, regulations and procedures with respect to such deposits.
(e) Obtain and maintain in full force and effect during the term of this
Agreement; the insurance coverages listed on Exhibit "C" attached hereto and by this reference
incorporated herein.
5. Developer Construction aeauirements
Following satisfaction of the requirements set forth in Section 4, Developer
shall construct the Domestic Water and Sanitation Systems in accordance with the following
requirements:
(a) Developer shall, at its own cost and expense, apply for and obtain all
necessary consents, approvals, permits, authority, licenses or entitlements as shall be
required for the construction and installation of the Domestic Water and Sanitation Systems,
from all appropriate governmental authorities. .
(b) Once the construction and/or installation of the Domestic Water and
Sanitation Systems has commenced, Developer shall diligently prosecute the same to
completion at no cost or expense to District in conformance with the laws, rules and
regulations of all governmental bodies and agencies, including those of the District.
(c) Developer shall perform, or cause to be performed, all construction and
installation of the Domestic Water and Sanitation Systems in good, workmanlike and
commercially reasonable manner, with the standard of diligence and care normally employed
by duly qualified persons in the performance of comparable work and in accordance with
generally accepted practices appropriate to the activities undertaken and in compliance with
1811MIIII�II�MMIINIIIII 1�'e�' �
the construction standards set forth herein. Developer shall employ at all times adequate
staff or consultants with the requisite experience necessary to administer and coordinate all
work related to the design, engineering, construction and installation of the Domestic Water
and Sanitation Systems.
(d) Developer shall cause the Developer's Contractor to comply with the
applicable OSHA standards and requirements, including following OSHA safety standards
and submitting construction and shoring plans as required.
(e) District shall be under no obligation to protect the Domestic Water and
Sanitation Systems to be constructed by or on behalf of Developer, or any material, tool,
equipment and facilities until written acceptance thereof by District. Prior to the acceptance,
Developer shall bear all risk of loss or damage thereto by whatever cause inflicted.
Developer shall rebuild, repair, restore and replace or cause to be rebuilt, repaired, restored
or replaced, and make good all injuries or damages to any portion of the Domestic Water and
Sanitation Systems before completion and acceptance by District and Developer shall bear
the expense thereof.
(t) Developer shall directly pay all costs associated with the construction
of the Domestic Water and Sanitation Systems, including, but not limited to, furnishing of
materials, and Developer shall keep District free and harmless from such costs.
(g) The Domestic Water and Sanitation Systems shall be installed in strict
compliance with the Plans. Any deviations from the approved Plans must be approved by
District, in writing, prior to being made.
(h) Developer is required by this Agreement to install and construct certain
improvements which will be dedicated to District upon completion thereof in accordance with
the terms of this Agreement. Notwithstanding the foregoing, if Developer does not believe that
it is required to perform such work in the same manner and subject to the same requirements as
would be applicable to District had it undertaken such construction, including, without
limitation, the payment of prevailing wages and other public works requirements pursuant to the
California Labor Code, the California Government Code and the California Public Contracts
Code, then Developer undertakes such construction at Developer's risk. Should it be determined
in the future by either the legislature or a court of competent jurisdiction that Developer was
required to comply with some or all of the requirements as would be applicable to District had it
IImII� uN�01111111111111 1 ta, of 37
undertaken such construction, Developer shall indemnify, defend and hold harmless the District
Indemnitees (as defined in Exhibit "D') from all Costs (as defined Exhibit 1191 to which they
may be subjected or put, by reason of or resulting from failure to comply with public works
project requirements, including, but not limited to, the failure to pay prevailing wages or such
other requirements as would be applicable to District had it undertaken such construction.
(i) Developer hereby irrevocably appoints District to inspect the furnishing
and installation of the Domestic Water and Sanitation Systems. Developer shall provide
District representatives with reasonable access for inspection purposes. It is understood and
agreed that District's inspection personnel shall have the authority to enforce the Plans,
which authority shall include requiring that all unacceptable material, workmanship and/oi
installation be replaced, repaired or corrected by Developer's Contractor. Nothing herein
shall be construed to grant District direct control over Developer's Contractor or anyone but
Developer or its designee. District's inspection does not include inspection for compliance
with safety requirements by Developer's Contractor. Any inspection completed by District
shall be for the sole use and benefit of District, and neither Developer nor any third party
shall be entitled to rely thereon for any purpose. District does not undertake or assume any
responsibility for or owe a duty to select, review or supervise the creation of the Domestic
Water and Sanitation Systems. In addition thereto, District's inspection is not for the purpose
of determining installed footage of water pipeline.
6. Developer Requirements for Progress for Fire Protection, Progress for
Domestic Water and Sanitation Service and Project Completion and Acceptance
(a) Upon completion and testing of the domestic water system, and prior to
base paving, the Developer may request to progress (place in service) the domestic water system
for fire protection only. No water meters will be issued at this stage. Notwithstanding anything
contained in this Section 6, District shall provide to the Developer Property, upon written request
by Developer and satisfaction of the District's rules, regulations and procedures, water for fire
protection on such terns and conditions as shall be acceptable to the District, in its sole and
absolute discretion. Developer acknowledges and agrees that provisions of water for fire
protection or the use of the improvements in connection therewith neither is an acceptance of
those improvements (which may only be accepted as provided in this Agreement) nor initiates
the warranty period pursuant to subsection (c) (v) below.
1111111111„I,1.,11 IIISO11111111 1B/BB/lo of837
(b) (i) Upon completion and testing of the domestic water system and
sanitation system, and after base paving, the Developer may request to progress (place in service)
the domestic water system for fire protection and domestic water service and the sanitation
service. The District will issue water meter (s) for the approved phase of the Project and/or in
accordance meter release schedules outlined in the Special Agreement(s) if any.
(ii) Prior to the first request for meter (s) , Developer shall pay to the
District all Water System Back -Up Facilities Charges, Supplemental Water Supply Charges and
other charges related to the provision of domestic water service ("Domestic Water Charges") to
the Developer Property.
(III) Prior to the first request for meter (s), Developer shall pay to the
District all Sanitation Capacity Charges and other charges related to the provision of sanitation
service ("Sanitation Charges") to the Developer Property.
(c) (i) Upon completion and testing of the Domestic, Water and
Sanitation Systems; and after final paving, the Developer shall give District notice of the
same. District shall make a final inspection and provide written notice to Developer either
confirming that the Domestic Water and Sanitation Systems has been completed in
accordance with the requirements of this Agreement or setting forth a punchlist of items that
need to be completed or corrected. If District provides such a punchlist, the above -
referenced notice and inspection procedure shall be repeated upon completion of the
punchlist items. Nothing herein shall be considered a waiver of any warranty, guarantee or
other right in favor of the District.
(ii) Prior to the acceptance of the Domestic Water and Sanitation
Systems by the District, Developer shall provide to District a certified copy of the Covenants,
Conditions and Restrictions for the Developer Property.
(III) Upon completion and acceptance of the Domestic Water and
Sanitation Systems, Developer shall prepare and execute a Certificate of Completion and
Final Acceptance as to the Domestic Water and Sanitation Systems and record said notice
with the Office of Recorder of the County of Riverside, State of California.
(iv) Upon receipt of the Certificate of Completion and Final
Acceptance, the Bill of Sale provided in Section 2(a)(v) shall convey title of the Domestic
I�Igllilllill� lil�l�lllill��l �l ,a 12BE�ap
Water and Sanitation Systems at no cost and expense to the District. The Domestic Water
and Sanitation Systems shall be transferred to District free of all liens and encumbrances.
The Developer shall provide CVWD the final construction cost of the Domestic Water and
Sanitation Systems.
(v) Developer warrants and represents to District that the Domestic
Water and Sanitation Systems shall be free from construction defects for eighteen (18) months.
The Developer shall maintain in force the CD or LOC required in Section 4 (a) above for the
duration of the eighteen (18) month guarantee.
(vi) Developer's Engineer shall provide to District all field -
engineering surveys associated with the construction of the Domestic Water and Sanitation
Systems at Developer's sole cost and expense. Developer shall promptly furnish to District
all field notes and grade sheets, together with all location, offset, and attendant data and
reports, resulting from Developer's Engineer's field engineering surveys and/or proposed
facility design changes, all of which have been prepared in accordance with generally
accepted engineering practices. Any inspection or review pursuant to this subsection shall be
for the sole use and benefit of District, and neither Developer nor any third party shall be
entitled to rely thereon for any purpose.
(d) District shall repair, at Developer's cost and expense all failures of the
domestic water system which was furnished, installed and/or constructed due to faulty materials
or installation, during the period commencing with the acceptance of the domestic water system
and within said eighteen (18) month warranty period reference in Section 6(cxv). District shall
invoice Developer for such costs. Developer shall, within thirty (30) days after written demand
therefor, pay or cause Developer's Contractor or surety to pay such costs Mown on the invoice.
Nothing in this subsection shall limit or abrogate any other claims, demands or actions District
may have against Developer or Developer's Contractor on account of damages sustained by
reason of such defects, nor shall the provisions of this Section limit, abrogate or affect any
warranties in favor of District which are expressed or implied by law or set forth in any
construction agreement.
(e) Developer shall repair, at Developer's cost and expense all failures of the
sanitation system which was furnished, installed and/or constructed due to faulty materials or
installation, during the period commencing with the acceptance of the sanitation system and
INM0�0II'��III������ull re2012-4re81Mea
within said eighteen (18) month warranty period reference in Section 6(cxv). Nothing in this
subsection shall limit or abrogate any other claims, demands or actions District may have against
Developer or Developer's Contractor on account of damages sustained by reason of such defects,
nor shall the provisions of this Section limit, abrogate or affect any warranties in favor of District
which are expressed or implied by law or set forth in any construction agreement.
7. Proiect Close Out Requirements
After receipt of the Certificate of Completion and Final Acceptance the
following requirements shall apply:
(a) Developer shall cause the Developer's Contractor and all
subcontractors and materialmen to provide unconditional lien and material releases.
(b) Developer shall provide District with a declaration by Developer's
Contractor that the Developer's Contractor and ail persons and entities who furnished
material in the construction of the Domestic Water and Sanitation Systems have been paid in
full.
(c) All permits, plans, construction surveys and operating manuals related
thereto, shall be delivered to and become the sole property of the District, subject to
Developer's warranty work and other obligations required hereunder.
(d) Upon a written request of Developer, District will furnish to the
appropriate departments of the appropriate city or county, the Department of Real Estate and/or
Department of Corporations of the State of California, a letter from District indicating that
financial arrangements have been made for the construction of the Domestic Water and
Sanitation Systems for the Developer property and District is willing to provide domestic water
and sanitation service to each and every Unit therein, provided Developer has done all of the
following:
1 II VIIII�Is111111111111111,aast 3Of37
time,
(i) Complied with all provisions of this Agreement applicable at the
(ii) Furnished District an LOC or CD from a bank or savings and loan
located and doing business in the State of California in a form approved by District in the
amount of Five Thousand Dollars ($5,000.00) or five percent (50/6) of the amount of the
construction contract(s), whichever sum is greater,
(iii) If required by the appropriate city or county, famished District
with a copy of the bond filed with the appropriate city or county, guaranteeing the construction
of required subdivision improvements, including the Domestic Water and Sanitation Systems
provided for herein, and
Charges-
(v) Paid to District any amount due under the Domestic Water
(v) Paid to District any amount due under the Sanitation Charges.
g. General Provisions
(a) Developer shall assume the defense of, indemnify and hold harmless
District -arid its officers, directors, administrators, representatives, consultants, engineers,
employees and agents and their respective successors and assigns, and each and every one of
them, in accordance with the provisions of Exhibit "D" attached hereto and by this reference
incorporated herein.
(b) Prior to the acceptance of the Domestic Water and Sanitation Systems by
District, Developer shall famish to District any and all documents reasonably requested by
District
(c) In the event that construction of the Domestic Water and Sanitation
Systems has not begun within twelve (12) months of the date of approval of the Plans, District
shall have the right to declare this Agreement void. In the event District exercises said right, it
shall have no further obligations under this Agreement. Any new or revised agreement and any
related domestic water and/or sanitation plans shall reflect any new conditions in effect at that
time and shall require the submittal of domestic water and/or sanitation plans by Developer to
II�NII�NIIIN�INI�II�IININIIIIIN111IIII W2V29o23951
7
the District for approval. Costs, fees and charges due under said new or revised agreement shall
be those which are in effect at the time payment thereof is tendered.
(d) All notices provided for hereunder shall be in writing and mailed
(registered or certified, postage prepaid, return receipt requested), or by express carrier
(return receipt requested) or hand delivered to the parties at the addresses set forth below or at
such other addresses as shall be designated by such party and a written notice to the other
party in accordance with the provisions of this Section. All such notices shall, if hand
delivered, or delivered by express carrier, be deemed received upon delivery and, if mailed, be
deemed received three (3) business days after such mailing.
DISTRICT:
Coachella Valley Water District
Attention: General Manager — Chief Engineer
Post Office Box 1058
Coachella, California 92236
DEVELOPER:
Coral Mountain Partners, L.P.
Attention: Michael J. Shovlin
46753 Adams Street
La Quinta, CA 92253
(e) Time is of the essence of this Agreement and each and every term and
provision thereof.
(f) This Agreement shall be construed as if prepared by all of the parties
hereto. Accordingly, any rule of law (including California Civil Code Section 1654) or legal
decision that would require interpretation of any ambiguities in this Agreement against the party
that has drafted it is not applicable and is waived.
(g) No delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof; nor shall any waiver on the part of any
party hereto of any right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise of any other right, power or privilege
hereunder.
IININ01111IIIIIIIINIII�IIII INIIIIII �II ra,mof 8a��
(h) This instrument, together with the exhibits attached hereto and other
writings referenced herein, contain the entire agreement between the parties relating to the
subject matter hereof and supersede any and all prior agreements between the parties, oral or
written, and any and all amendments thereto. Any oral representations or modifications
concerning this instrument shall be of no force and effect excepting a subsequent modification
in writing, signed by the parties to be charged.
(i) In the event of any litigation or other action between the parties arising out
of or relating to this Agreement or the breach thereof, the prevailing party shall be entitled, in
addition to such other relief as may be granted, to its reasonable costs and attorneys' fees.
6) If any provision of this Agreement shall be ruled invalid, illegal or
unenforceable, the parties shall: (i) promptly negotiate a substitute for the provision which shall,
to the greatest extent legally permissible, effect the intent ofthe parties in the invalid, illegal or
unenforceable provision, and (ii) negotiate such changes in, substitutions for or additions to the
remaining provisions of this Agreement as may be necessary in addition to and in conjunction
with subsection (i) above to give effect to the intent of the parties without the invalid, illegal or
unenforceable provision. To the extent the parties are unable to negotiate such changes,
substitutions or additions as set forth in the preceding sentence, and the intent of the parties with
respect to the essential terms of the Agreement may be carried out without the invalid, illegal or
unenforceable provision, the balance of this Agreement shall not be affected, and this Agreement
shall be construed and enforced as if the invalid, illegal or unenforceable provision did not exist.
(k) Each party hereto agrees to execute and deliver such documents and
perform such other acts as may be necessary to effectuate the purposes of this Agreement.
(1) Each individual executing this Agreement hereby represents and warrants
that he or she has the full power and authority to execute this Agreement on behalf of the named
parties.
(m) Developer shall maintain and make available for inspection by District
during regular office hours, accurate records pertaining to the design, construction and
installation of the improvements to be constructed by Developer.
(n) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute but one instrument.
I�I�III IIII ININIhIIIIINI 11 W- 7op
(o) If any payment due District hereunder is not paid when due, Developer
shall pay to District an additional ten percent (100%) for each payment due as an administrative
processing charge. The parties agree that this late charge represents a fair and reasonable
estimate of the costs that District will incur by reason of late payment by Developer. Acceptance
of any late charge shall not constitute a waiver of Developer's default with respect to the overdue
amount or prevent District from exercising any of the other rights and remedies available to
District. Any payment not paid when due shall bear simple interest at the rate of ten percent
(10%) per annum (provided such amount shall not exceed the maximum rate allowed under
California law) from the date due until paid in full.
(p) The parties agree that any action or proceeding to enforce or relating to
this Agreement shall be brought exclusively in the Federal or State courts located in Riverside
County, California, and the parties hereto consent to the exercise of personal jurisdiction over
them by any such courts for purposes of any such action or proceeding.
(q) This Agreement is entered into within the State of California, and all
questions concerning the validity, interpretation and performance of any of its terms or
provisions or any of the rights or obligations of the parties hereto shall be governed by and
resolved in accordance with the laws of the State of California.
(r) Subject to the obligations of Developer set forth herein, and the terms and
conditions hereof; upon accepting title to the Domestic Water and Sanitation Systems and
facilities described above in this Agreement, District shall assume all rights and obligations of
ownership including, without lim itation, the operation of the systems at no further cost to
Developer.
(s) The terms and provisions set forth in this Agreement shall be deemed
provisions, terns and/or covenants running with the Developer Property in accordance with
applicable law and shall be binding on the current and successor owners of the Developer
Property. As such, the current and all successor owners of the Developer Property will have any
of the rights, responsibilities and liabilities of Developer, as if such person or entity originally
executed this Agreement in place and stead of Developer. Each and every contract, deed or other
instrument hereafter executed covering or conveying the Developer Property, or any portion
thereof, shall conclusively be held to have been executed, delivered and accepted subject to such
terms and conditions regardless of whether such terms and conditions are set forth in such
IN�III���IINIQNINIII IRill 11111 10/ �sls ea�e2, 1er
contract, deed or other instrument. This Agreement shall (i) burden the Developer Property and
is binding on the parties as set forth herein and (ii) benefit the Developer Property and inure to
the benefit of the owners of the Developer Property and its successors and assigns.
Notwithstanding anything in this section g (s) to the contrary, however, as long as the
Developer Property is subject to the existing ground lease (the "Existing Lease"), or to a
subsequent ground lease or long -tern lease (e.g., 30 years or longer) with the La Quinta Housing
Authority (a "Subsequent Lease"), the obligations of this Agreement shall be enforceable only
against the Developer or the lessee under the Subsequent Lease (the "Subsequent Lessee") (as
applicable), and during the term of the Existing Lease or Subsequent Lease (as applicable) the
fee owner of the Developer Property shall have no obligations hereunder. Notwithstanding any
of the foregoing, but subject to the following sentence, neither Developer nor any Subsequent
Lessee (or Developer's or Subsequent Lessee's approved successors and assigns) shall have the
right to assign or otherwise transfer this Agreement, or otherwise transfer or alienate, mortgage
or pledge this Agreement, in whole or in part (any of the foregoing, a `Transfer'), without the
prior written consent of District, which consent shall not be unreasonably withheld.
Notwithstanding the immediately preceding sentence, any Transfer that has been approved by
the La Quint& Housing Authority shall be deemed approved by District without the need for
written consent by District
No Transfer, whether requiring District's prior written consent or deemed approved by
District pursuant to the preceding paragraph, shall be valid until such time as the assignor and
assignee have executed a written instrument in a form reasonably satisfactory to District, under
which the assignee agrees to assume, perform and abide by all of the terms, covenants and
conditions of this Agreement to be done, kept and performed by Developer.
(t) Following fulfillment of the terms and conditions herein and acceptance
by District of the Domestic Water and Sanitation Systems, District will provide domestic water
service and sanitation service to the Developer Property in accordance with the Rules.
IIIIIII IIIIIIIIIfIIINII IIIHI 1111 '2912-8481305
� 9 at 37
DISTRICT:
COACHELLA VALLEY WATER DISTRICT,
a public agency of die State of Caliifbmia
DEVELOPER:
CORAL MOUNTAIN PARTNERS, L.P., a Califomia
limited partnership
By: CORAL MOUNTAIN AGP, LLC, a
California limited liability company
ltr. General Partner
0
By: KQ'iiOtTSING PARTNERS, INC., a
By: HWY 111 AM MEMBER, LLC, a
California limited liability company
Its: Manager
SbDVIKMa
II 1111I1I1uIIIIaI11IINl1llnli to I19 e3�
STATE OF CALIFORNIA)
) ss.
County of Riverside )
On October 5, 2012, before me, Maricela Vanessa Cabral, Notary Public, personally
appeared J. M. Barrett, who proved to me on the basis of satisfactory evidence to be the person
whose name is subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
----------------
MARICEIA VANEBBA CABRAL
Cammlsslon • 1823330 Notuy Public - Col"M* Z
Rhrenlde Couaq
Comm Nov 1, . 2012 t
COMMISSION NO. 1823330
cela Vanessa Cabral, Notary lic in
and for said County and State
MY COMMISSION EXPIRES NOVEMBER 18, 2012
CAPACITY CLAIMED BY SIGNER: Acting General Manager
SIGNER IS REPRESENTING: Coachella Valley Water District
I n�ul IIWII I� 9I� �I I�� I� ���III II i 261o 37
roY_.ae-1 .+1:.•>.„<S35,rNvy: �. O -n 3. 06 .. V _MiL'yiY_»K`? _6. vs_» N 9.S'AYnN9 �a4°+ _+a 0 _4 � -a w M ry A - - .b �:
State of California
County of F,yeU'✓�A`P✓
Onaj& � %a before me, - eY1StJil\- �+wt Oarti.Yc
�eaie —� F10re INsI Name BM cue d Ox OIIIOrt _
personally appeared YY11 AA , Sha �. t'►at
who proved to me on the basis of satisfactory evidence to
be the personorwhose namejq is(ptt!'"subscnbed to the
within 'instrument and acknowledged to me that
he/spA/t4ey executed the same in hype M*rauthodzed
capacityQW, and that by h RjpHttt)3trsignature(`on the
instrument the personal, or the entity upon behalf of
which the person(K acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws
of the State of California that the foregoing paragraph is -
true and correct.
WITNESS m hand and official seal.
c_
Pyre NdazY 6ea PDow SlgnatU aquNre ofNY
OPTIONAL
Though the mbrnfadon below is not regtnred by law, it may prole va1mblit to persons retying on the document
and could prevent haudulem removal and reattachment of Mis form to another document.
Description of Attached Document
Title or Type of Document: - _---.
Document Date: Number of
Signers) Other Than Named Above: __
Capaclty(Geq) Claimed by Signers)
Signer's Name:
Signers Name:_--_
D Individual
I l Individual
❑ Corporate Officer —Tias(s):
q, Corporate Off icer—Title(s):
I� Partner —�-Limited C General
(3 Partner —t..I Limited U General
Attorney in Fact
top of Mumb here
Attorneyin Fact
Top of Mu b here
Trustee
. Trustee
Guardian or Conservator
I
Ci Guardian or Conservator
O Other.
Other! _—
Signer Is Represenfing:_ Signer Is Represent ng:
I111111I 1111111IIi�I111111111i11lllll� re ea'221 of 37
STATE OF eAMPORNbt
ss
COUNTY OF 10e4
•M.=- - A
instrument and admowledged to mo that he/WWABW
mAwixed cepmtyow)s and that by ' q
the entity upon bebatfof which the person W acted.
urso who proved to me on the
at mom*) islets subscribed to the within
executed die same in hi 4m4hsir
mtme(s) on the instrurnent the Pets *), or
xecuted do instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paregraph is true and correct.
WITNESS my hand and official seal.
Sigmriue: hE E SON
eq
J O�•cn� OAP
STATE OF CALIFORNIA )
as
COUNTY OF )
On before me,
Notary Public, personally appeared who proved to the an the
basis of satisfactory evidence so be the person(,) whose aame(s) islare subscribed to the within
instrument and aelmowledged to me that hdahe tbey executed the same in hisA='their
eudw ized capecirKles), and drat by bialber%r sipmetute(s) on the instrument the person(s), or
rim entity upon behalf of whieb she persum(a) acted, executed the instrument.
I certify under PENALTY OF PERJURY under tie laws of the State of California that
the foregoing"paragraph is true and con+ect.
WITNESS my hand and offieial seal.
Signature: (sea)
i11111111111�II11till 11111111111111111�11111111B�U4a 7
CONSENT
By execution below, the La Quinta Housing Authority hereby consents to the recordation of the
agreement to which this Consent is attached, and shall, subject to Section 8(s) thereof, be bound
by the terms of said agreement.
ATTEST: SNSAN/+ RAYS "S
Vi Authority Secretary V
APPROVED AS TO FORM!
RUTAN & TtJ� ICER, P
A , ity Counsel
LA QUINTA HOUSING AUTHORITY, a
A
ri corporale8rt litic
cu .jctor
Frank J. Spevacek, Executive Director
State of California )
County of Riverside i
On July 13, 2012, before me, SUSAN MAYSELS, Notary Public, personally
appeared FRANK J. SPEVACEK who proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal E
COMM. Nswsrs
Signature ? CAE rAPN a M3;
(seal)
DOCUMENT:
CONSENT TO RECORDATION OF THE STANDARD DOMESTIC WATER
SYSTEM AND SANITATION SYSTEM INSTALLATION AGREEMENT
BETWEEN CVWD AND CORAL MOUNTAIN PARTNERS, LP (DEVELOPER).
-10-
11111IIIII�II�III�II11IiIII1IINII �z�2 of 3?
.i:r
EXHIBIT "A"
LEGAL DESCRIPTION OF
DEVELOPER PROPERTY
EXHIBIT "B"
DEPICTION OF DEVELOPER
PROPERTY
EXHIBIT "C"
INSURANCE REQUIREMENTS
EXHIBIT "D"
INDEMNITY PROVISION
I��IIII��II�IIII�IIIIIIIII 11111111 la�es Of 37
EXHIBIT "A"
TO
STANDARD DOMESTIC WATER SYSTEM AND SANITATION SYSTEM
INSTALLATION AGREEMENT
LEGAL DESCRIPTION OF DEVELOPER PROPERTY
111181��III oil ININ 1111111111118 �' �a 7ep
EXHIBIT "A"
LEGAL DESCRIPTION
DEVELOPER PROPERTY
ALL THAT PROPERTY IN THE CITY OF LA QUINTA, COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, LOCATED IN A PORTION OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29,
TOWNSHIP 5 SOUTH, RANGE 7 EAST, SAN BERNARDINO MERIDIAN,
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 2 OF GRANT DEED RECORDED DECEMBER 2, 2010 AS
DOCUMENT NO. 2010-0575516, OFFICIAL RECORDS OF SAID COUNTY
AND STATE.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
EXHIBIT "B" ATTACHED HERETO AND BY THIS REFERENCE MADE A
PART HEREOF.
PREPARED BY OR UNDER THE DIRECTION OF:
CHARLES R. HARRIS' P.L.S. -4989
�^ EXP.12l31/2013
DATED: +J� Z,b tZ
PAGE 1 OF 1
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I IIIHI�HIHI IHH���nIIHill1111 t a9,2� o(3�
EXMIT "B"
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STANDARD DOMESTIC WATER SYSTEM AND SANITATION SYSTEM
INSTALLATION AGREEMENT
DEPICTION OF DEVELOPER PROPERTY
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DEVELOPER PROPERTY
NW 1/4 OF SE 1/4 OF SEC.
N. LINE OF SE 1f4 29, T. 5 S.. R 7 E.. S.B.M.
OF SEC. 29, T.555.,
ME., S.B.M. - � — Wjilz_=
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NE COR. OF W. 1/2 OF
E. 1/2 OF NW 1/4 OF
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REC 12/02/10, O.R.
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REC 12/02/10, O.R.
APN 600-020-054
S. LINE OF NW 1/4 OF
SE 1/4 OF SEC. 29,
T.5S., R.7E., S.B.M.
CURVE DATA
NO.
DELTA
RADIUS
LENGTH
C7
16-09 07
300.00
84.57
C2
1 V 02 50
300.02
94.50'
C3
90'09 34
200.00
314.72'
E. 1/4 COR.
OF SEC. 29,
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4DMSA CONSULTWO, INC
Pwamm ■ Cmm Baavmaaam ■ LAM Snvamm
34200 Boa Hva ors Dim ■ RA=w Almwoa a CA 92270
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1111 IIIIIIIINIn1111IIINIloll119 �a�129 o ��
EXHIBIT "C"
STANDARD DOMESTIC WATER SYSTEM AND SANITATION SYSTEM
INSTALLATION AGREEMENT
INSURANCE REQUIREMENTS
I Il�f IIIIII II IIV IN 11111111111111111 1 37
EXHIBIT C
INSURANCE REQUIREMENTS
1. Developer shall carry and maintain, at Developer's sole cost and expense, until
the Domestic Water and Sanitation Systems have been installed and completed, not less than the
following coverage and limits of insurance which shall be maintained with insurers and under
forms of policies satisfactory to District:
(a) Worker's Compensation and Employers Liability:
(i) State Workers Compensation — coverage as required by law.
(ii) Employer's Liability with limits of at least $1,000,000 per
occurrence.
(b) Automobile Liability for Bodily Injury, Death and Property Damage —
$1,000,000 per person, $2,000,000 per occurrence.
(c) Commercial General Liability for Bodily Injury, Death and Property
Damage - $1,000,000 per person, $2,000,000 per occurrence.
The foregoing policies shall include, without limitation, owned,
nonowned and hired automobile (vehicle) liability, contractual liability, personal injury,
blanket commercial, broad form property damage and produatcompleted operation liability
coverage. These policies may contain an aggregate limit not less than the occurrence limit.
The required limits may be satisfied by a combination of a primary policy and an excess or
umbrella policy.
shall:
2. All insurance required pursuant to the express provisions of this Agreement
(a) Provide that coverage shall not be revised, canceled or reduced until at
least thirty (30) days written notice of such revision, reduction or cancellation shall have been
given to District. In the event any policies of insurance are revised, canceled or reduced,
Developer shall, prior to the revision, cancellation or reduction date, submit evidence of new
insurance to the District complying with this Agreement.
(b) Be issued by insurance companies which are qualified to do business in
the State of California and which have a rating satisfactory to District and by such rating service
as shall be reasonably acceptable to District.
(c) Be reasonably satisfactory to District in all other reasonable respects.
II�IIInIINllll�illl�gl�IN111111118?sM 7ap
3. The policies required pursuant to this Agreement or a certificate of the policies,
together with evidence of payment of premiums, shall be provided to District prior to the
commencement of construction of any improvement hereunder.
4. The insurance to be maintained by Developer pursuant to this Agreement shall:
insureds;
volunteers;
(a) Name District, and its officers, employees and volunteers as additional
(b) Apply severally to Developer and District, and its officers, employees and
(c) Cover Developer and District as insureds in the same manner as if separate
policies had been issued to each of them;
(d) Contain no provisions affecting the rights which either of them would
have as claimants if not so named as insureds;
(e) Be primary insurance with any other valid and collectible insurance
available to the aforesaid additional insureds constituting excess insurance, and each policy shall
be endorsed substantially as follows:
"The insurance afforded by this policy to District shall be primary
insurance and other valid and collectible insurance available to
District shall be excess insurance and, under no circumstances,
shall be considered contributory."
(f) Have a deductible or deductibles, if any, which are no greater than those
normally maintained for similar projects in the State of California and shall contain a waiver of
subrogation and endorsement in favor of the District.
IINHill IIIIINI�NIIII II�IIIIIIMInIINII �a�32 ��eP
EXIIIBIT "D"
m
STANDARD DOMESTIC WATER SYSTEM AND SANITATION SYSTEM
INSTALLATION AGREEMENT
INDEMNITY PROVISION
EXHIBIT D
INDEMNITY
Developer shall assume the defense of, indemnify and hold harmless District and its
officers, directors, administrators, representatives, consultants, engineers, employees and agents
and their respective successors and assigns (collectively, "District Indemnitees'), and each and
every one of them, from and against any and all actions, causes of action, damages, demands,
liabilities, costs and expenses (including, but not limited to, reasonable attorneys' fees) claims,
losses and expenses of every type and description ("Costs") to which they may be subjected or
put, by reason of, or resulting from, (A) this Agreement, (B) the design, engineering and
construction of the Domestic Water and Sanitation Systems, (C) the performance of or failure
to perform, the work covered by this Agreement which is caused or occasioned by any act,
action, neglect on the part of Developer or its Representatives (as defined below), (D) any death,
injury, property damage, accident or casualty caused or claimed to be caused by Developer or its
Representatives or involving Developer or its Representatives or its or their property, (E) any
breach by Developer of its obligations under this Agreement, and (F) any enforcement by
District of any provision of this Agreement. The foregoing indemnity shall not apply to the
extent any such Costs are ultimately established by a court of competent jurisdiction to have
been caused by the gross negligence or willful misconduct of the District Indemnitees or any of
them. District shall make all decisions with respect to its representation in any legal proceeding
concerning this Section. If Developer fails to do so, District shall have the right, but not the
obligation, to defend the same and charge all of the direct or incidental Costs of such defense,
including fees and costs, to Developer and to recover the same from Developer. The term
"Representatives" shall mean employees, representatives, agents, contractors, subcontractors or
any other persons directly or indirectly employed by any one of the foregoing or reasonably
under the control of any of the foregoing or for whose acts any of the foregoing may be liable.
No provision of this Agreement shall in any way limit the extent of the responsibility of
Developer for payment of damages resulting from its operations or the operations of any of its
contractors, engineers, agents or employees. Developer further covenants and agrees to pay, or
to reimburse District, its agents, employees, engineers, consultants, officers, directors and .
administrators, for any and all costs, attorneys' fees, liabilities or expenses in connection with the
investigating, defending
II�III�IIIII�I�I�IIIN 1111111111 1 W' 3ep
against or otherwise in connection with any Costs arising out of or in connection with
Developer's obligations pursuant to this Agreement, except liability arising through the gross
negligence or willful misconduct of the District Indemnitees, or any of them. District shall have
the right, at Developer's expense, to commence, to appear in or to defend any action or
proceeding arising out of and in connection with the Agreement, and in connection therewith,
may pay all necessary expenses if Developer fails upon reasonable notice to so commence,
appear in or defend any action or proceeding with counsel reasonably acceptable to District.
Developer shall be furnished with copies of bills relating to the foregoing upon request.
III�I INIIIaIINIIIIIIIIIII l �a '�� �
BILL OF SALE
File: Oq al, � 7)1, d-
For a valuable consideration, receipt of which is hereby acknowledged
Coral Mountain Partners, L.P.
as SELLER, hereby bargains, conveys and sells unto the COACHELLA VALLEY WATER
DISTRICT, a public agency of the State of California, the following described personal property,
such conveyance to become effective upon receipt of the Certificate of Completion and Final
Acceptance of such personal property as described below:
All of the domestic water and sanitation collection facilities including, but
not limited to fire hydrants, services, manholes and house laterals for
Sewer Main - 2,170 LF
Manholes -12 as
Lateral - 6" 210 LF
Cleanout -17 as
Hydrant - 9 as
Meters -16 2" Service
CVWD Drawing No(s):
Water: 5go5Y 46ru 39051?
Sewer.. 34 U 50 4'Iyr;J 3-q 0 5" 3
Other: -'C:75�`
Seller:
By: Q
Date: °o - !a - !/
cvWD•181c
(Rey. I M10)
lk f
.VICINITY MAP
Hrs
ti act'
1 11�11��111N IN 111111 ml III 111 i 37iof 3'?
0,
P.O. Box 1504
LA QUINTA, CALIFORNIA 92247-1504
78-495 CALLE TAMPICO (760) 7 7 7 - 7 0 0 0
LA QUINTA, CALIFORNIA 92253 FAX (760) 777-7101
May 23, 2013
Mr. Jim Barrett
Coachella Valley Water District
75-515 Hovley Lane East
Palm Desert, CA 92211
RE: Coral Mountain Apartments Affordable Housing Project
Dear Mr. Barrett:
Coral Mountain Apartments is a housing project being developed by the
La Quinta Housing Authority. It is located off east of Dune Palms Road
near Highway 111 in the City of La Quinta.
The City of La Quinta has reviewed the improvement plans, specifically
the proposed storm drain outlets into the Whitewater River Watershed,
and is hereby certifying that the proposed storm drain system meets the
requirements of the National Pollutant Discharge Elimination System
Permit and Waste Discharge Requirements for the discharge of storm
water in the Whitewater River Watershed, also known as the MS4
Permit. This certification applies to the requirements included in the
Storm Water Management Plan, Storm Water Pollution Prevention Plan
and Water Quality Management Plan described in the MS4 Permit.
Please call me at (760) 777-7042 if you have questions about this
project.
Sincerely,
T mothy o son, PE
ublic Works Director/City Engineer
4
MEMORANDUM
TO: 0mothy
Frank J. Spevacek, City Manager
FROM: R. Jonasson, Public Works Director/City Engineer
DATE: May 23, 2013
RE: Coral Mountain Apartmen s Affordab_le Housing Protect,- Coachella Valley
Water District Encroachment Permit 050729-4-047 -
Attached for your signature is the original encroachment permit between Coachella
Valley Water District and the La Quinta Housing Authority for the project or services
referenced above.
W
No Recording Fee
Required Per
Goverment Code
Section 27383
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
COACHELLA VALLEY WATER DISTRICT
Post Office Box 1058
Coachella, California 92236
APN: 600-020-003
(Space above this line is for Recorder's Use)
File: 0652.3
0655.
ENCROACHMENT PERMIT NO.050729-4-047
ISSUED BY
COACHELLA VALLEY WATER DISTRICT, .
a public agency of the State of California ("CV WD")
IN FAVOR OF
La Quinta Housing Authority ("Permittee")
Doc. No. 050729-4-047
THIS ENCROACHMENT PERMIT ("Permit') is issued as of , 20_
("Effective Date") by CVWD in favor of Permittee.
RECITALS
A. CVWD is the owner of certain real property located in the County of Riverside, State of California and
legally described on Exhibit "A" attached hereto and incorporated herein by this reference ("CVWD Property").
B. Pursuant to Construction Encroachment Permit No. 050729-4-047C, issued to Opitimus Construction,
Inc. by CVWD, Permittee shall construct or cause to be constructed the facilities or improvements shown on
certain construction drawings on file with CVWD at its headquarters and referenced on Exhibit'B" attached
hereto and by this reference incorporated herein ("Permittee Facilities"). Permittee desires to obtain this Perrnit to
operate and maintain Permittee Facilities.
C. CVWD hereby authorizes Permittee to operate and maintain the Permittee Facilities on CVWD Property
on the terms and conditions set forth herein.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF
WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:
1. All of the Recitals are hereby incorporated herein by this reference as to the same extent as
though hereinagain set forth in full.
2. The term of this Permit shall commence on the Effective Date and shall expire or terminate as
provided in this Permit.
3. This Permit is subject to: (a) the special provisions attached hereto as Exhibit "C" and by this
reference incorporated herein; and (b) the general provisions attached hereto as Exhibit "D" and by this reference
incorporated herein.
4. Unless otherwise provided herein, any notice to be given by any party hereunder must be given in
writing and delivered in person, or by reputable nationwide overnight courier (e.g., Federal Express), or
forwarded by certified or registered mail, postage prepaid, return receipt requested, or transmitted by electronic
facsimile transmission (with electronic confirmation of receipt) at the address indicated below or transmitted by e-
mail, unless the party giving such notice has been notified, in writing, of a change of address:
CVWD: Coachella Valley Water District
P.O. Box 1058
85-995 Avenue 52
Coachella, California 92236
Telephone: 760-398-2651
Facsimile: .760-398-3711
cvwdmail(dcvwd.org
PERMITTEE: La Quinta Housing Authority
P.O. Box 1504
La Quinta, California 92247
(760)777-7000
Any such notice is effective on the date on which such notice is delivered, if notice is given by
2
personal delivery or overnight courier, or electronic transmission (with electronic confirmation of receipt) or if
notice is sent through the United States mail, on the date of actual delivery as shown by the addressee's receipt or
upon the expiration of three (3) days following the date of mailing, whichever first occurs.
5. This Permit may be signed and delivered in any number of counterparts, each of which, when
signed and delivered, shall be an original, but all of which shall together constitute one and the same agreement.
[SIGNATURESAPPEAR ONFOLLOHYNGPAGE]
3
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS PERMIT AS OF THE DATE
FIRST ABOVE WRITTEN.
COACHELLA VALLEY WATER DISTRICT,
a public agency of the State of California
Um
Print Name
Its
PERMITTEE: La Quinta Ho!! j g Authority
Print/Name (�RArI
J. SPEJAC'
Its Ex t'tA.T1g6
D(Pt6crok
A
Print Name
Its
4 CV WD-450
(Rev. 10/10)
State of California )
County of Riverside )
On May 23, 2013, before me, SUSAN MAYSELS, Notary Public, personally
appeared FRANK J. SPEVACEK who proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
rA Still MUSASELS
Commission /2017258
Notary Public - CalNornla
Signature Riverside County
(seal)
DOCUMENT:
ENCROACHMENT PERMIT NO. 050729-4-047 issued by CVWD in favor of
LO Housing Authority
-5
STATE OF CALIFORNIA)
ss.
County of )
On before me, Notary Public,
personally appeared who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity, and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF,PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary Public in and
for said County and State
STATE OF CALIFORNIA)
ss.
County of 1
On before me, , Notary Public,
personally appeared who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity, and that by
his/her/their signature(s) on the mi strument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary Public in and
for said County and State
EXHIBIT LIST
EXHIBIT "A" DESCRIPTION OF CVWD PROPERTY
EXHIBIT `B" DESCRIPTION OF PERMITTEE
FACILITIES AND REFERENCE TO
CONSTRUCTION DRAWINGS
EXHIBIT "C" SPECIAL PROVISIONS
EXHIBIT "D" GENERAL PROVISIONS
EXHIBIT "A"
TO
ENCROACHMENT PERMIT
DESCRIPTION OF CVWD PROPERTY
ALL THAT REAL PROPERTY IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, LOCATED WITHIN THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO MERIDIAN, DESCRIBED AS FOLLOWS:
ALL THAT REAL PROPERTY DESCRIBED IN FINALORDER OF CONDEMNATION (PARCEL 19)
RECORDED DECEMBER 12, 1978 AS INSTRUMENT NO.260944, OFFICIAL RECORDS OF RIVERSIDE
COUNTY, CALIFORNIA.
APN: 600-020-003
EXHIBIT "B"
Zi7
ENCROACHMENT PERMIT
DESCRIPTION OF PERMITTEE FACILITIES AND
REFERENCE TO CONSTRUCTION DRAWINGS
PERMITTEE SHALL CONSTRUCT OR CAUSE TO BE CONSTRUCTED THE FACILITIES OR
IMPROVEMENTS SHOWN ON CONSTRUCTION DRAWING NOS. 38948 THROUGH 39850, ON FILE
WITH THE COACHELLA VALLEY WATER DISTRICT, HEADQUARTERS LOCATED AT 85-995
AVENUE 52, COACHELLA, CA 92236.
PERMISSION IS HEREBY GRANTED TO LA QUINTA HOUSING AUTHORITY, TO OPERATE AND
MAINTAIN A 54-INCH RCP STORM DRAIN AND OUTLET STRUCTURE, U TYPE HEADWALL,
OUTLET SCREEN, AND 18-INCH THICK RIP RAP WITHIN THE LA QUINTA EVACUATION CHANNEL
RIGHT-OF-WAY.
THE PROJECT IS WITHIN ASSESSOR PARCEL NO. 600-020-003 LOCATED SOUTH OF HIGHWAY I I I
AND EAST OF DUNE PALMS ROAD IN THE CITY OF LA QUINTA.
THIS PROJECT IS LOCATED IN THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5 SOUTH,
RANGE 7 EAST, SAN BERNARDINO MERIDIAN.
EXHIBIT "C"
TO
ENCROACHMENT PERMIT
SPECIAL PROVISIONS
COACHELLA VALLEY WATER DISTRICT
SPECIAL PROVISIONS TO ENCROACHMENT PERMIT NO. 050729-4-047
1. IT SHOULD BE NOTED that the interest of CV WD in said land is limited to an
easement for flood control purposes and consequently this permit does not represent sole
authorization required for the construction of said facility. Permittee shall obtain written
approval of the owners of the fee title to CVWD's easement. Copies of the approvals
shall be provided to C V WD prior to the start of work.
2.. Permittee is responsible for compliance with all local, state and federal environmental
laws and regulations, including, but not limited to, California Environmental Quality
Act (CEQA) and National Environmental Policy Act (NEPA), as well as obtaining and
complying with all local, state and federal permit requirements, including, but not .
limited to, California Department of Fish and Game Streambed Alteration Agreement,
California Regional Water Control Board Section 401 Permit and U.S. Army Corps of
Engineers Section 404 Permit.
3. Permit not valid without Underground Service Alert identification number.
X 4. The permit is issued to the permittee for operation and maintenance of the facility only.
The permittee and/or permittee's contractor shall apply for and obtain a Construction
Encroachment Permit prior to commencing the initial installation of said facility. Any
alternation or modification to the authorized installed facility will require the permittee
and/or permittee's contractor to obtain new permits.
X 5. Underground Service Alert identification number not required. Construction will not be
done by permittee.
X 6. Prior to commencement of any work of this permit, the contractor shall participate in a
preconstruction conference with CVWD's inspection staff. To schedule a
preconstruction conference, contact the CVWD's Inspector Supervisor.
X 7. No work shall be done under the permit outside of the normal working hours of CV WD
employees except in the presence of the CV WD inspector. Permittee shall first obtain
the consent of CVWD's Inspector Supervisor.
X 8. The permittee shall maintain the surface over facilities placed under any permit for a
period of one year after completion of work under the permit. If CVWD's right-of-way
is not restored as herein provided for, or if CV WD elects to make repairs, permittee
agrees by acceptance of permit to bear the cost thereof.
X 9. The work shall be constructed in accordance with CV WD Drawing Nos. 38948 through
39850.
CVWD ENCROACHMENT PERMIT PAGE I OF 5
EXHIBIT "C" SPECIAL PROVISIONS
10. Soil shall be removed such that a pilot channel is constructed in the center of the
channel. Pilot channel shall be feet in width with side slopes of
horizontal to vertical.
The pilot channel shall have a minimum depth of feet.
11. Earth shall be removed on a uniform gradient.and in such a manner that no holes are
created which will cause ponding of runoff.
12. Permittee shall contact CVWD's Stormwater Engineer for location to deposit material
within channel right-of-way.
X 13. The work authorized by this permit shall not conflict with the normal operation and
maintenance of the La Quinta Evacuation Channel.
14. Permittee shall not remove dirt within feet of the edge of pavement and
shall remove dirt from the area shown on attached Exhibit
15. Deposit materials shall consist of clean fill dirt.
X 16. Permittee shall not deposit any asphalt, concrete, organic matter, chemicals, metal,
paper, trash, or other illicit wastes within CV WD's right-of-way.
X 17. The work authorized by the permit is limited to the following: To operate and maintain a
54-inch rcp storm drain and outlet structure, u type headwall, outlet screen, and 18-inch
thick rip rap within the La Quinta Evacuation Channel right-of-way.
X 18. In the event any action is. brought by any person for violation of any of the terms and
conditions of this permit, CV WD shall be held harmless and assumes no responsibility
for damages, claims or suits in connection with said permit.
19. Permittee shall pay $140 per acre-foot for canal water plus $11.50 per day gate charge.
20. Permittee to install pump in a manner that backwash does not run into the canal. .
21. Construction meter must totalize in acre-feet.. Flow shall be measured, preferably, in
cubic feet, GPM is acceptable.
X 22. Permittee shall not block access to the La Quinta Evacuation Channel. CVWD vehicles
must be able to pass for its normal operation and maintenance activities.
23. Pump capacity shall not exceed 6 cfs.
CV WD ENCROACHMENT PERMIT PAGE 2 OF 5
EXHIBIT "C" SPECIAL PROVISIONS
X 24. Permittee, at its expense, shall maintain all excavations, embankments, haul roads,
permanent access roads, plant sites, waste disposal areas, borrow areas and all other
work areas free from dust.
X - 25. Permittee shall provide a set of record drawings, including changes and all dimensions
and lengths as required by CV WD, within 15 calendar days after completion of work.
26. Permittee shall not remove any channel lining between June 1 and October 31.
Permittee shall replace any removed lining on or before June 1.
X 27. Permittee shall abide by stormwater discharge regulations adopted by the U.S.
Environmental Protection Agency and by the State Water Resources Control Board.
X 28. In the event permit activity including, but not limited to, clearing, grading and excavation
results in a land disturbance of one (1) or more acres, the permittee shall:
X Submit a Notice of Intent (State Form II) in compliance with the terms of the
general permit to discharge stormwater associated with construction activity to
the State Water Resources Control Board and to the CV WD.
State Water Resources Control Board
Division of Water Quality
Attention: Stormwater Permit Unit
Post Office Box 1977
Sacramento, California 95812
X 29. All work within CVWD's right-of-way shall conform to the following standards of
construction (A copy of the below -checked edition or specification must be on -site at all
times.):
Standard Specifications State of California Department of Transportation
(Caltrans), most current edition.
X Standard Specifications for Public Works Construction as written and
promulgated by the Southern California Chapter of the American Public
Works Association and the Southern California District of the Associated
General Contractors of California (Green Book), most current edition.
CV WD ENCROACHMENT PERMIT- PAGE 3 OF 5
EXHIBIT "C" SPECIAL PROVISIONS
29. (Continued)
CVWD Standard Specifications for Construction of:
Domestic water systems
Sanitary sewer systems
X 30. Prior to approval of a Permanent Encroachment Permit for outlets discharging into
CVWD facilities, the permittee shall provide a letter from the land use authority for the
project certifying that the project has been reviewed and determined to meet the
requirements of the National Pollutant Discharge Elimination System permit and Waste
Discharge Requirements for the discharge of stormwater in the Whitewater River
Watershed, which is known as the MS4 Permit. This certification applies to
requirements included in the Drainage Area Management Plan, Stormwater
Management Plan, Stormwater Pollution Prevention Plan and Water Quality
Management Plan described in the MS4 Permit and applicable to the project at the time
of the application.
CVWD requires the permittee to implement control measures to the maximum extent
practicable to prevent the discharge of nonstormwater generated runoff into the La
Quinta Evacuation Channel. The permittee shall repair and maintain the outlet structure
and the channel to mitigate any condition of nuisance and/or damage to the outlet
structure and the channel caused by the permittee's discharge of nonstormwater as
determined by CVWD. This maintenance and repair shall include, but not be limited to
outlet concrete repairs, channel bottom scour repair, slope protection repair, vegetation
clearing, ponded/nuisance water removal, etc. Failure to complywith these conditions
of approval may result in CVWD revoking the Permanent Encroachment Permit
associated with the outlet and removal or sealing of the outlet.
X 31. Permit not valid without CVWD receipt for drainage inlet fees.
X 32. Permit valid only so long as insurance is in effect.
CVWD ENCROACHMENT PERMIT PAGE 4 OF 5
EXHIBIT "C" SPECIAL PROVISIONS
X 33. Permittee shall provide at the preconstruction conference a plan for fugitive dust control
in compliance with AQMD Rule 403.
X 34. No work shall be done under this permit without first contacting CV WD's Inspector
Supervisor.
35. Permittee shall implement preventative measures, e.g., double walled tank, containment
facilities, etc., to prevent chemical and petroleum spills.
36. Permittee is responsiblefor crop loss or crop damage as a result of the Pennittee's
actions.
X 37. Permittee shall retain a copy of this encroachment permit and all construction drawings
or exhibits on -site at all times.
38. Permittee is prohibited from utilizing a hurricane pump in the canal. The pump and
truck fill must be placed off of the canal road. A suction hose or pipe may be laid across
the canal road with a dirt ramp or other means for vehicle traffic to cross. No
excavating is allowed on the canal road or bank. CVWD vehicles and equipment must
be able to travel the road unimpeded at all times. Equipment setup and operation shall
beexecuted to prevent washouts of the canal road and bank. Backwash will not be
permitted to be discharged back into the canal. CVWD facilities must be returned to
original or better condition when the pump and appurtenances are removed.
39. Permittee shall notify the Zanjero Supervisor in writing three (3) days prior to
commencing any construction on irrigation facilities/laterals. The lateral will not be
permitted to be out of service for more than two (2) days unless other means of delivery
of water to existing customers is established.
X 40. Permittee shall comply with all local, state, and federal environmental laws and
regulations.
CVWD ENCROACHMENT PERMIT PAGE 5 OF 5
EXHIBIT "C" SPECIAL PROVISIONS
EXHIBIT "D"
TO
ENCROACHMENT PERMIT
GENERAL PROVISIONS
COACHELLA VALLEY WATER DISTRICT
GENERAL PROVISIONS TO ENCROACHMENT PERMIT
1. The Permit is issued with the understanding that any particular action is not to be considered as
establishing precedent (a) on the question of permitting any certain kind of encroachment on CVWD Property, or
(b) as to the acceptability of any such permits as to any other or future situation.
2. Before starting any work on the Permittee Facilities ("Work") under the Permit, the Permittee shall
contact CV WD's Inspection Division Supervisor and arrange for a pre -construction meeting. No Work shall be
performed prior to the pre -construction meeting. _ When the Work has been interrupted for two (2) business days
or more Permittee shall obtain from the Inspection Supervisor a written consent to resume the Work.
3. The Permit or a copy thereof must be shown to any representative of CVWD or any law enforcement
officer on demand. In the event the Permit is not on the job site, CVWD may, at its option, require immediate
suspension of Work at the job site by oral notice to the Permittee's employees, contractors or representatives
located at the job site.
4. If an existing encroachment or improvement conflicts with the proposed Work, the Permittee must
arrange, at its sole cost and expense, for any removal or relocation of such encroachment with the owner thereof.
Any such removal or relocation will be at no expense to CVWD.
5. The Permittee shall, whenever the same is required by law, secure the written order, approval,
authorization or consent (collectively, "Approval") to complete the Work from any federal, state or local public
or quasi -public agencies having jurisdiction over the Work. In addition to the foregoing, Permittee shall obtain
an Approval from the owner of the real property on, under, and in which the Work is to be accomplished in the
event CVWD is not the owner thereof This Permit shall not be valid until such Approvals are obtained.
6. All Work shall be completed at no cost or expense to CVWD in conformance with all laws, rules and
regulations of all governmental or quasi -governmental agencies and the owners of the real property on, under,
and in which the Work is to be accomplished.
7. Upon completion of the Work, all brush, timber, scraps, material, etc., placed at the job site by or on
behalf of Permittee shall be entirely removed and Permittee shall be responsible for restoring CVWD Property
to its former condition as nearly as may be possible. In addition thereto, it is understood by the Permittee that
whenever construction, reconstruction, or maintenance work on CVWD Property may be required by CVWD, the
Work shall, upon request of CVWD, be immediately ceased and/or moved, by and at the sole expense of the
Permittee. In the event Permittee fails to do any of the foregoing, CVWD may, but shall have no obligation, to
complete any or all of the tasks at Permittee's cost and expense. Such cost shall be paid by Permittee within
ten (10) days of such parry's receipt of an invoice from CVWD.
8. All Work shall be subject to inspection and approval by CVWD. The Permittee shall notify the Inspection
Division when the Work has been completed. If any inspection by CVWD indicates that the Work and/or
Permittee Facilities interfere with the use of CVWD Property by CVWD, the owner of the underlying real
property or any prior right holder, in CV WD's sole and absolute discretion, Permittee shall remove or ieplace the
Permittee Facilities in such a fashion as shall be directed by CVWD. In the event Permittee fails to do so,
CVWD may, but shall have no obligation, to complete any or all of the tasks at Permittee's cost and expense.
Such cost shall be paid by Permittee within ten (10) days of such party's receipt of an invoice from CVWD.
9. CVWD shall not be liable for the replacement of decorative concrete and other surface improvements,
including, but not limited to, alternative paving methods which CVWD may be required to remove in the future
to gain access to CVWD facilities or if CVWD removes any or all Permittee Facilities pursuant to the terms
CVWD ENCROACHMENT PERMIT PAGE 1 OF 5
EXHIBIT "D" GENERAL PROVISIONS
hereof. CVWD shall not be responsible for seal coating, overlaying or otherwise resurfacing street
improvements. Permittee shall be responsible for all costs having to do with the same. Permittee hereby
waives the right of claim, loss, damage or action against CVWD or its Representatives (as defined below)
arising out of or in connection with any Costs (as defined below) or destruction of the Permittee Facilities from
CVWD exercising any right with respect to CVWD Property, except if caused by the gross negligence or
willful misconduct of CVWD or its Representatives. CVWD shall have no liability or responsibility to restore
any Permittee Facilities on CVWD Property to any condition after exercising any right with respect to CVWD
Property or to pay for loss or destruction of the same. Permittee shall be responsible for all costs having to do
with the same.
10. Permittee shall assume the defense of, indemnify and hold harmless CVWD and their respective
Representatives (as defined herein) (the "Indemnified Parties") and each and everyone of them, from and against
all actions, causes of action, demands, liabilities, costs, damages, claims, losses and expenses (including attorneys'
fees) (collectively, "Costs") of every type and description to which they may be subjected or put, by reason of, or
resulting from: (a) this Permit; (b) any act or omission of Permittee or his/her/its/their Representatives in
connection with any matters contemplated by this Permit; (c) any death, bodily injury, property damage or
casualty, including, but not limited to any CVWD facilities caused in whole or part by Permittee or
his/herrts/their respective Representatives; (d) any breach by Permittee of its obligations under this Permit; (e)
any enforcement of CVWD of any provision of this Permit; and (f) the maintenance, operation, repair,
replacement or improvement of the Permittee 's Facilities, except for Costs ultimately established by a court of
competent jurisdiction to have been caused by the gross negligence or willful misconduct of the Indemnified
Parties. Except as set forth in the exception of the immediately preceding sentence, Permittee, as a material part of
the consideration of this Permit, waive all claims or demands against CVWD and the other Indemnified Parties
for any such Costs. No provision of this Permit shall in any way limit the extent of the responsibility of Permittee
for payment of damages resulting from his/her/its/their operations or the operations of any of his/her/its/their
respective Representatives. Permittee further covenants and agrees to pay, or to reimburse the Indemnified
Parties for any and all Costs arising out of or in connection with Perrnittee's obligations pursuant to this Permit,
except Costs arising through the gross negligence or willful misconduct of the Indemnified Parties. The
Indemnified Parties shall have the right, at Permittee's expense, to commence, to appear in, or to defend any
action or proceeding, arising out of and in connection with the Permit, and in connection therewith, may pay all
necessary expenses if Permittee fails upon reasonable notice to so commence, appear in or defend any action or
proceeding with counsel reasonably acceptable to CVWD. Permittee shall be furnished with copies of bills
relating to the foregoing upon request. The term "Representatives" shall mean employees, representatives,
agents, contractors, subcontractors or any other persons directly or indirectly employed by any one of the
foregoing or reasonably under the control of any of the foregoing or for whose acts any of the foregoing may be
liable.
11. Prior to and at all times after executing the Permit the Permittee shall carry and maintain, at its sole cost
and expense, not less than the following coverage and limits of insurance which shall be maintained with insurers
and under policy forms satisfactory to CVWD.
(a) Commercial. General Liability Insurance written on an occurrence basis of at least $1,000,000 per
occurrence, for bodily injury and property damage including coverage for contractual liability,
personal injury, independent contractors, broad form property damage, ongoing and products and
completed operations.
(b) Commercial Automobile Liability Insurance written on a per occurrence basis with a single limit of
liability in the amount of $1,000,000 for bodily injury and property damage. Said policy shall include
coverage for owned, non -owned, leased and hired cars.
(c) Workers' Compensation Insurance as required by the Labor Code or be legally self -insured pursuant
to Labor Code section 3700 et. seq. along with Employer's Liability limits of $1,000,000.
(d) All of Permittce's policies shall contain the following provisions and endorsement forms that:
CVWD ENCROACHMENT PERMIT PAGE 2 OF 5
EXHIBIT "D" GENERAL PROVISIONS
(i) Names Coachella Valley Water District, its employees, directors, officers, and agents as
additional insureds (Except workers' compensation); and,
(ii) The insurer waives all right of subrogation against CV WD, its employees, directors,
officers and agents; and,
(iii) Written notice shall be given to CV WD at least ten (10) days prior to termination,
cancellation or reduction of coverage in the policy; except for non-payment of premium;
and,
(iv) Such insurance is primary insurance as respects to the interests of the additional insured
and that any other insurance maintained by the additional insured is excess and not
contributing insurance with the insurance required by Permittee and,
(v) Apply a "Cross Liability" or "Severability of Interest" clause to CV WD; and,
(vi) Have deductibles which are not greater than those normally maintained for similar
Encroachment Permits in the State of California.
(vii) Such insurance, subject to all of its other terms and conditions, applies to the liability
assumed by Permittee under the Permit.
(e) The Permittee shall deliver to C V WD, the certificates of insurance and endorsements covering all
policies providing the required insurance referred to above, and shall be signed on behalf of the
insurer by its authorized representative. Permittee shall, upon written request by C V WD, furnish
copies of such policies, certified by an authorized representative of the insurer.
(t) The foregoing requirements as to the types, limits and CV WD's approval of insurance coverage to be
maintained by Permittee are not intended to and shall not in any manner limit or qualify the liabilities
and obligations assumed by Permittee under the Permit.
12. All costs incurred for the Work shall be home by Permittee and Pennittee hereby waives all claims for
indemnification or contribution from CV WD for the Work
13. One or more bonds, including, without limitation payment and performance bonds and guarantee bonds,
or certificate(s) of deposit ("CD") or letters of credit ("LOC") may be required of the Permittee whenever, in the
sole and absolute judgment of C V WD; it becomes necessary or advisable to guarantee performance. The bonds,
CD or LOC shall be in such form and content as shall reasonably be acceptable to CV WD.
14. This Permit may be cancelled by C V WD upon thirty (30) days written notice to the Permittee. If there are
no valid insurance certificates, the Permit will terminate upon the failure to provide or termination or expiration
of the insurance certificates, or any of them.
15. If the Permit involves Work within the right-of-way of any C V WD stormwater channel, the
provisions of Paragraphs (a) and (b) following, shall apply.
(a) C V WD reserves the right to maintain and operate said channel, removing therefrom the
installation, obstructions or interference when such installation or obstruction substantially interferes with
the free flow of the channel waters or interferes with discharge by C V WD of its public duties and
responsibilities; further, CV WD reserves the right to realign the channel, changing the course and depth
thereof and/or to make other changes and improvements to the channel, as C V WD deems necessary.
(b) Permittee recognizes the responsibility of C V WD to make such changes to the channel as
stipulated above and to maintain the integrity of said channel during periods of stormwater runoff and
waives and releases CV WD and C V WD Indemnitees from any claim of any type for the damage or
destruction of the installation caused by CV WD, or its Representatives. Permittee and Permittee's
Representatives agree that any repairs, reconstruction, restoration, or relocation of the Work damaged or
destroyed as defined herein shall be performed. by and at the sole expense of the Permittee.
CVWD ENCROACHMENT PERMIT PAGE 3 OF 5
EXHIBIT "D" GENERAL PROVISIONS
16. The Work and the Permittee Facilities shall be subordinated to any operations which CV WD may
conduct during the permit period, and shall be coordinated with the work of CV WD forces or CV WD contractors
so that there shall be no delay to, nor interference with, C V WD operations.
17. Permittee shall be fully responsible to ascertain location of all facilities constructed by others, and to
place the encroachment or perform the Work in a manner which will'not damage, conflict or interfere with any
existing encroachment improvement or facility. Prior to making any excavation, Permittee shall call Underground
Service Alert at.1-800-422-4133.
18: The following additional general provisions shall apply:
(a) Time is of the essence of this Permit and each and every term and provision thereof.
(b) This Permit shall be construed as if prepared by all of the parties hereto. Accordingly, any rule of
law (including California Civil Code Section 1654) or legal decision that would require interpretation of
any ambiguities in this Permit against the party that has drafted it is not applicable and is waived.
(c) No delay on the part of any party hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party hereto of any right, power
or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise
of any other right, power or privilege hereunder.
(d) Each individual executing this Permit hereby represents and warrants that he or she has the full
power and authority to execute this Permit on behalf of the named parties.
(e) The parties agree that any action or proceeding to enforce or relating to this Permit shall be
brought exclusively in the Federal or State courts located in Riverside County, California, and the parties
hereto consent to the exercise of personal jurisdiction over them by any such court for purposes of any
such action or proceeding.
(f) . This instrument, together with the exhibits attached hereto and other writings referenced herein,
contain the entire agreement between the parties relating to the subject matter hereof and. supersede any
and all prior agreements between the parties, oral or written, and any and all amendments thereto. Any
oral representations or modifications concerning this instrument shall be of no force and effect excepting
a subsequent modification in writing, signed by the parties to be charged.
(g) In the event of any litigation or other action between the parties arising out of or relating to this
Permit or the breach thereof, the prevailing party shall be entitled, in addition to such other relief as may
be granted, to its reasonable costs and attorneys' fees.
(h) The invalidity or illegality of any provisions of this Permit shall not affect the remainder of the
Permit.
(i) Each party hereto agrees to execute and deliver such other documents and perform such other
acts as may be necessary to effectuate the purposes of this Permit.
0) This Permit is entered into within the State of California, and all questions concerning the
validity, interpretation and performance of any of its terms or provision or any of the rights or obligations
of the parties hereto shall be governed by and resolved in accordance with the laws of the State of
California
CV WD ENCROACHMENT PERMIT PAGE 4 OF 5
EXHIBIT "U' GENERAL PROVISIONS
(k) The terms and provisions set forth in this Permit shall be deemed provisions, terms and/or
covenants running with CVWD Property in accordance with applicable law, including, without limitation,
Section 1468 of the California Civil Code and shall pass to and be binding upon the successor owners of
the Permittee Facilities. As such, all successor owners of the Permittee Facilities will have any of the
rights, responsibilities and liabilities of Permittee, as if such person or entity originally executed this
Permit in place and stead of Permittee. No transfer of the Permittee Facilities shall relieve Permittee (or
any successor owner of the Permittee Facilities) of any responsibility or liability under this Permit.
CV WD ENCROACHMENT PERMIT PAGE 5 OF 5
EXHIBIT "D" GENERAL PROVISIONS
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
La Quinta Housing Authority
P.O. Box 1504
La Quinta, CA 92247
Attn: Executive Director
Exempt From Recording
DOC # 2012-0423348
09/05/2012 04:47 PM Fees: $33.00
Page 1 of 7
Recorded in Official Records
County of Riverside
Larry W. Ward
Assessor, County Clerk 8 Recorder
'This document was electronically submitted
to the County of Riverside for recording"
Receipted by: TVERBA
Pursuant to c;overnment Code §
I- OTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and
title companies, and other persons, regarding affordable housing restrictions on
the real property described in this Notice: Affordable housing restrictions have
been recorded with respect to the property described below (referred to in this
Notice as the "Property") which require that the Property be developed as an
affordable rental development and that all of the units be rented to and occupied by
persons and households of limited income at affordable rents.
Title of Document Containing Affordable Housing Restrictions:
Affordable Housing Regulatory Agreement ("Agreement").
Parties to Agreement: Coral Mountain Partners, L.P., a California limited
partnership ("Developer"), who holds a leasehold interest in and to the Property,
and the La Quinta Housing Authority, a public body, corporate and politic
("Authority"), which is the fee owner of the Property.
The Agreement is recorded concurrently with this Notice, in the Official,
Records of Riverside County.
"IP
Legal Description of Property: See Exhibit "A" . `ta;hed hereto apd
incorporated herein by this reference.
Property Location: Southeast intersection of Dune Palms Road and
Highway 111.
Assessor's Parcel Number of Property: 600-020-054.
882/015610-0047
37861232 a08/2712
Summary of Agreement:
o The Agreement requires the Developer to develop a one hundred
seventy-six (176) unit rental housing development on the Property,
which property is being leased by Developer from Authority;
o The Agreement restricts the rental of (i) thirty-six (36) units to
households whose annual income does not exceed the qualifying
limits under California law for "very low income households"; one
hundred thirty-eight (138) units to households whose annual income
does not exceed the qualifying limits under California law for "lower
income households"; and two (2) units to households whose annual
income does not exceed the qualifying limits under California law for
"persons and families of moderate income", all as established by
HUD, and as published periodically by HCD.
o The Regulatory Agreement restricts the rents that may be charged to
such households to the maximum amount of rent, including a
reasonable utility allowance, that does not exceed the rent permitted to
be charged to the applicable household, as the case may be,
determined pursuant to Health and Safety Code Section 50053(b).
o The term of the Agreement is fifty-five (55) years, commencing on
the date seventy-five percent (75%) of the units have been leased to
income -eligible tenants at affordable rents; provided that the term may
be extended for up to twenty (20) additional years, as further provided
in the Agreement.
This Notice does not contain a full description of the details of all of the
terms and conditions of the Agreement. You will need to obtain and read the
Agreement to fully understand the restrictions and requirements which apply to the
Property.
This Notice is being recorded and filed in compliance with Health and
Safety Code Section 33334.3(f)(3) and (4), and shall be indexed against the
Developer, who will own fee title to the improvements during the term of the
Developer's leasehold interest in the Property, and the Authority.
[signatures on next page]
882/015610-0047
3786123.2 a08/27/12 -2-
Date: WL-1 _, 2012
ATTEST:
Authority Secretary
g Vzow S
.APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Authority Legal Counsel
"Authority"
LA QUINTA HOUSING AUTHORITY, a
Frank J. Spevacek, Executive Director
882JO15610-0047
3786123.2 a0829A 2
-3-
"Authority"
LA QUINTA HOUSING AUTHORITY, a
public body, corporate and politic
Date: 2012 By:
Executive Director
ATTEST:
Authority Secretary
APPROVED AS TO FORM:
R AN & KE , LLP
ut ority Legal nsel
882/015610-0047
3786123.2.08/27/12 -3-
State of California )
County of Riverside )
On >3 7-oIY , before me, �US/k MAY5EL5 , Notary Public,
(here insert name and title of the officer)
personally appeared �fZAn(K J. 5 PEV ACC
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument, and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf
of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct. Suss Yl/luy5�[ 5
WITNESS my hand and official seal. 'USAN MAYSELS
COMM. #1844479
NOTARY PUBLIC • CALIFORNR
KVERSICon E O. ApR 2013
Signature
(seal)
882/015610-0047
37861232 .08/27/12 -4-
ORDER NO.: 1117011827.1
EXHIBIT A
The land referred to is situated in the County of Riverside, City of La Quinta, State of California,
and is described as follows:
Leasehold estate as created by that certain Ground Lease dated August 4q, 2012, made by
and between La Quinta Housing Authority, a public body, corporate and politic, as lessor, and
Coral Mountain Partners, L.P., a California limited partnership, as lessee, for the term of 55
years and upon the terms and conditions contained in said lease and subject to provisions
contained in the lease which limit the -right of possession, a Memorandum. thereof recorded
e) •- 2161 — , 2012, Instrument No. 2012- oLkk) C�,09 , in and to the following:
In the City of La Quinta, County of Riverside, State of California, that portion of the West half of
the East half and the East half of the West half of the Northwest quarter of the Southeast
quarter of Section 29, Township 5 South, Range 7 East, San Bernardino Base and Meridian,
more particularly described as follows:
Commencing at the East quarter corner of said Section 29; thence South 890 39' 16" West
along the North line of said Southeast quarter, a distance of 1,656.57 feet to the Northeast
corner of said West half of the East half of the Northwest quarter of the Southeast quarter of
Section 29; thence South 000 08' 10" East along the East line of said West half of the East half
of the Northwest quarter of the Southeast quarter Section 29, a distance of 60.93 feet to the
South right-of-way line of Highway 111 as granted to the City of La Quinta per Instrument No.
2007-0076267 recorded February 1, 2007 and re -recorded February 14, 2007 as Instrument
No. 2007-0103255, O.R.;
Thence continuing South 000 08' 10" East along said East line a distance of 626.13 feet to the
beginning of a non -tangent curve, concave Northerly, having a radius of 300.00 feet, a radial
line to said point bears South 010 53' 43" West, and the true point of beginning;
Thence leaving said East line and Westerly along the arc of said curve, through a central angle
of 160 09' 07", an arc distance of 84.57 feet to the beginning of a reverse curve concave
—Southerly,. having.a_radiusd f.-Inn-a fee%aea iaUrAeto,saidtp(inLtlhp,,Irs.,North.18°b02'SO
East; thence Westerly along the arc of said curve through a central angle of 180 02' 50", an arc
distance of 94.50 feet; thence North 900 00' 00" West a distance of 264.78 feet to the
beginning of a tangent curve, concave Southeasterly, having a radius of 200.00 feet;
Thence Southwesterly along the arc of said curve, through a central angle of 900 09' 34", an
arc distance of 314.72 feet; thence non -tangent to said curve South 890 50' 26" West, a
distance of 21.18 feet to the West line of said East half of the West half of the Northwest
quarter of the Southeast quarter of Section 29; thence South 000 09' 34" East along said West
line, a distance of 500.13 feet to the South line of said Northwest quarter of the Southeast
quarter of Section 29; thence South 890 48' 22" East along said South line a distance of 662.14
feet to said East line of the West half of the East half of the Northwest quarter of the Southeast
quarter of Section 29; thence North 000 18' 10" West along said East line, a distance of 673.63
feet to the true point of beginning.
Said land is also shown as Parcel 2 of Lot line Adjustment No. 2010-508 as Disclosed by Grant
Deed recorded December 2, 2010, as Instrument No. 2010-575516, of Official Records.
APN: 600-020-054
LA QUINTA DOUSING AUTHORITY
P.O. BOX 1504
® LA QUINTA, CALIFORNIA 92247-1504
78-495 CALLE TAMPICO
LA QUINTA, CALIFORNIA 92253
September 5, 2012
Mr. Michael J. Shovlin, Member
Mr. John E. Durso, Member
Coral Mountain Partners, LP
46-753 Adams Street
La Quinta, CA 92253
RE: Extension of time for DDA Schedule of Performance
Dear Mssrs. Shovlin and Durso:
(760) 777-7000
FAX (760) 777-7101
This is in response to your request for time extensions to Item No. 15 of
Attachment No. 2 (the Schedule of Performance) of the Disposition and
® Development Agreement between the former La Quinta Redevelopment Agency
("Agency") and Coral Mountain Partners, L.P. ("DDA").
By execution of this letter, I hereby approve the requested time extension pursuant
to Attachment No. 2, which states, "The Executive Director of Agency shall have
the authority on behalf of Agency to approve extensions of time, with the
exception of any extension that would result in the Outside Closing Date, the date
to commence construction of the Project, or the date to complete construction of
the Project, being extended by more than one hundred twenty (120) days."
While the above -quoted paragraph references the "Agency," the DDA was
transferred by operation of law to the City of La Quinta, as the "Successor
Agency" to the Agency, and subsequently assigned to the La Quinta Housing
Authority. Therefore, I am exercising my authority as the Interim Executive
Director of the La Quinta Housing Authority to grant this extension.
The Schedule of Performance is hereby amended as follows:
15. Developer commences construction of
Project
Amended Date: September 28, W 12
Mr. Michael J. Shovlin, Member
Mr. John E. Durso, Member
September 5, 2012
Page 2
An extension of time was previously granted on March 15, 2012 for the following
items and to the following dates:
6. Developer obtains approval of precise
grading plan. Amended date: By March 31, 2012
7. Developer submits to City for plan check Net 'a*A- *h^^ "AaF6h 15, 'n"
for Final Construction Documents. Amended: Not later than May 15, 2012
8. Developer submits applications for building By MaFah 27, '^"
permits. Amended date: By May 27, 2012
Please contact Debbie Powell at (760) 777-7073 should you have any questions.
La Quinta Housing Authority
DP/Ijl
cc: Debbie Powell, Economic Development/Housing Manager
M. Katherine Jenson, Rutan & Tucker
At '
Z
Established in 1918 as a public agency 1U'`Coachella Valley Water District
Directors:
John P. Powell, Jr., President - Div. 3
Franz W. De Klotz, Vice President - Div. 1
Ed Pack - Div. 2
Peter Nelson - Div. 4 June 24, 2013
Debi Livesay - Div. 5
Frank Spevacek
La Quinta Housing Authority
Post Office Box 1504
La Quinta, CA 92247
Dear Mr. Spevacek:
ED
JUN 2 2013
CrrY OF LA QUINrA
CrrY M4,NAGE.B'$&XFWiiE
Jim Barrett, General Manager
Julia Fernandez, Board Secretary
Redwine and Sherrill, Attorneys
File: 0652.3
Enclosed for your records is a copy of a recorded Encroachment Permit, executed by
J. M. Barrett, General Manager, Coachella Valley Water District, and Frank J. Spevacek,
Executive Director, La Quinta Housing Authority, dated May 30, 2013, concerning a portion
of the southeast quarter of section 29, township 5 south, range 7 east, San Bernardino Base
and Meridian, for stormwater purposes.
Sincerely,
ha Ferna>'fcTez
oard Secretary
Enclosure/as
ec: Chris Bogart
Kelly Esmeralda
Julia Fernandez
James Monge
Matt Palavido
1F:ddkcrdU3UuncTncroachrnmt Pennit Notification- La Quinta Housing Authority
0507294-047
A IN 600-020-003
CM
MOO,
No Recording Fee
Required Per
Government Code
Section 27383
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
COACHELLA VALLEY WATER DISTRICT
Post Office Box 1058
Coachella, California 92236
OOC a 2013-0270623
06/06/2023
Customer Co�X Label
The paper to which is label is
withfthedfiled/recordedcdocument
Larry W Ward
Assessor, CountyRClerkiEeRecorder
(Space above this line is for Recorder's Use)
APN: 600-020-003 File: 0652.3
0655.
ENCROACHMENT PERMIT NO. 050729-4-047
ISSUED BY
COACHELLA VALLEY WATER DISTRICT,
a public agency of the State of California ("CV WD')
IN FAVOR OF
La Quinta Housing Authority ("Permittee")
Doc. No. 050729-4-047
THIS ENCROACHMENT PERMIT ("Permit") is issued as of MAkQ 20J3
("Effective Date") by CVWD in favor of Permittee.
RECITALS
A. CVWD is the owner of certain real property located in the County of Riverside, State of California and
legally described on Exhibit "A" attached hereto and incorporated herein by this reference ("CVWD Property").
B. Pursuant to Construction Encroachment Permit No. 050729-4-047C, issued to Opitimus Construction,
Inc. by CVWD, Permittee shall construct or cause to be constructed the facilities or improvements shown on
certain construction drawings on file with CVWD at its headquarters and referenced on Exhibit "B" attached
hereto and by this reference incorporated herein ("Permittee Facilities'). Permittee desires to obtain this Permit to
operate and maintain Permittee Facilities.
C. CVWD hereby authorizes Permittee to operate and maintain the Permittee Facilities on CVWD Property
on the terms and conditions set forth herein.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF
WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:
1. All of the Recitals are hereby incorporated herein by this reference as to the same extent as
though hereinagain set forth in full.
2. The term of this Permit shall commence on the Effective Date and shall expire or terminate as
provided in this Permit.
3. This Permit is subject to: (a) the special provisions attached hereto as Exhibit "C" and by this
reference incorporated herein; and (b) the general provisions attached hereto as Exhibit "D" and by this reference
incorporated herein.
4. Unless otherwise provided herein, any notice to be given by any party hereunder must be given in
writing and delivered in person, or by reputable nationwide overnight courier (e.g., Federal Express); or
forwarded by certified or registered mail, postage prepaid, return receipt requested, or transmitted by electronic
facsimile transmission (with electronic confirmation of receipt) at the address indicated below or transmitted by e-
mail, unless the party giving such notice has been notified, in writing, of a change of address:
CVWD: Coachella Valley Water District
P.O. Box 1058
85-995 Avenue 52
Coachella, California 92236
Telephone: 760-398-2651
Facsimile: 760-398-3711
cvwdmailaa cvwd org
PERMITTEE: La Quinta Housing Authority
P.O. Box 1504
La Quinta, California 92247
(760)777-7000
Any such notice is effective on the date on which such notice is delivered, if notice is given by
personal delivery or overnight courier, or electronic transmission (with electronic confirmation of receipt) or if
notice is sent through the United States mail, on the date of actual delivery as shown by the addressee's receipt or
upon the expiration of three (3) days following,the date of mailing, whichever first occurs.
5. This Permit may be signed and delivered in any number of counterparts, each of which, when
signed and delivered, shall be an original, but all of which shall together constitute one and the same agreement.
[SIGNA TURES APPEAR ONFOLLOWINGPAGE]
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS PERMIT AS OF THE DATE
FIRST ABOVE WRITTEN.
COAC ELLA.VALLEYWATERDISTRICT,
a public age of the State of California
By
Print Name J. . Barrett
Its General Manager
La Quinta Hogg Authority
Print Name RAJ4 J. S1
lts C (et AE a,ReCfoIZ
Print Name
Its
4 CVwaaso
(Rev. 10/10)
State of California )
)
County of Riverside ►
On May 23, 2013, before me, SUSAN MAYSELS, Notary Public, personally
appeared FRANK J. SPEVACEK who proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
8u3AN MAYS l6; Mal
Com atloe A lot 72M
Notary Public • Califort"
Signature Riverside Coumy
M Comm.Ex lMA r13,2017+
(seal)
DOCUMENT:
ENCROACHMENT PERMIT NO. 050729-4-047 issued by CVWD in favor of
LQ Housing Authority
-5-
STATE OF CALIFORNIA)
) ss.
County of Riverside )
On June 3, 2013, before me, Grace Gil, Notary Public, personally appeared
J. M. Barrett, who proved to me on the basis of satisfactory evidence to be the person whose name
is subscribed to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
4mzu 4u
NOTARI RIBIIC •CAIIPoRIQA Grace Gil, Notary Public in
c and for said County and State
RKARAN
COMMISSION NO. 1879053
MY COMMISSION EXPIRES FEBRUARY 2, 2014
CAPACITY CLAIMED BY SIGNER: General Manager
SIGNER IS REPRESENTING: Coachella Valley Water District
EXHIBIT LIST
EXHIBIT "A"
EXHIBIT "B"
EXHIBIT "C"
EXHIBIT "D"
DESCRIPTION OF CVWD PROPERTY
DESCRIPTION OF PERMITTEE
FACILITIES AND REFERENCE TO
CONSTRUCTION DRAWINGS
SPECIAL PROVISIONS
GENERAL PROVISIONS
EXHIBIT "A"
U
ENCROACHMENT PERMIT
DESCRIPTION OF.CVWD PROPERTY
ALL THAT REAL PROPERTY IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, LOCATED WITHIN THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO MERIDIAN, DESCRIBED AS FOLLOWS:
ALL THAT REAL PROPERTY DESCRIBED IN FINAL ORDER OF CONDEMNATION (PARCEL 19)
RECORDED DECEMBER 12, 1978 AS INSTRUMENT NO. 260944, OFFICIAL RECORDS OF RIVERSIDE
COUNTY, CALIFORNIA.
APN: 600-020-003
EXHIBIT `B"
TO
ENCROACHMENT PERMIT
DESCRIPTION OF PERMITTEE FACILITIES AND
REFERENCE TO CONSTRUCTION DRAWINGS
PERMITTEE SHALL CONSTRUCT OR CAUSE TO BE CONSTRUCTED THE FACILITIES OR
IMPROVEMENTS SHOWN ON CONSTRUCTION DRAWING NOS. 38948 THROUGH 39850, ON FILE
WITH THE COACHELLA VALLEY WATER DISTRICT, HEADQUARTERS LOCATED AT 85-995
AVENUE 52, COACHELLA, CA 92236.
PERMISSION IS HEREBY GRANTED TO LA QUINTA HOUSING AUTHORITY, TO OPERATE AND
MAINTAIN A 54-INCH RCP STORM DRAIN AND OUTLET STRUCTURE, U TYPE HEADWALL,
OUTLET SCREEN, AND 18-INCH THICK RIP RAP WITHIN THE LA QUINTA EVACUATION CHANNEL
RIGHT-OF-WAY.
THE PROJECT IS WITHIN ASSESSOR PARCEL NO. 600-020-003 LOCATED SOUTH OF HIGHWAY I I I
AND EAST OF DUNE PALMS ROAD IN THE CITY OF LA QUINTA.
THIS PROJECT IS LOCATED IN THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5 SOUTH,
RANGE 7 EAST, SAN BERNARDINO MERIDIAN.
EXHIBIT "C"
TO
ENCROACHMENT PERMIT
SPECIAL PROVISIONS
COACHELLA VALLEY WATER DISTRICT
SPECIAL PROVISIONS TO ENCROACHMENT PERMIT NO.050729-4-047
1. IT SHOULD BE NOTED that the interest of CVWD in said land is limited to an
easement for flood control purposes and consequently this permit does not represent sole
authorization required for the construction of said facility. Permittee shall obtain written
approval of the owners of the fee title to CVWD's easement. Copies of the approvals
shall be provided to CV WD prior to the start of work.
2. Permittee is responsible for compliance with all local, state and federal environmental
laws and regulations, including, but not limited to, California Environmental Quality
Act (CEQA) and National Environmental Policy Act (NEPA), as well as obtaining and
complying with all local, state and federal permit requirements, including, but not
limited to, California Department of Fish and Game Streambed Alteration Agreement,
California Regional Water Control Board Section 401 Permit and U.S. Army Corps of
Engineers Section 404 Permit.
Permit not valid without Underground Service Alert identification number.
X 4. The permit is issued to the permittee for operation and maintenance of the facility only.
The permittee and/or permittee's contractor shall apply for and obtain a Construction
Encroachment Permit prior to commencing the initial installation of said facility. Any
alternation or modification to the authorized installed facility will require the permittee
and/or permittee's contractor to obtain new permits.
X 5. Underground Service Alert identification number not required. Construction will not be
done by permittee.
X 6. Prior to commencement of any work of this permit, the contractor shall participate in a
preconstruction conference with CVWD's inspection staff. To schedule a
preconstruction conference, contact the CVWD's Inspector Supervisor.
X 7. No work shall be done under the permit outside of the normal working hours of CVWD
employees except in the presence of the CVWD inspector. Permittee shall first obtain
the consent of CVWD's Inspector Supervisor.
X 8. The permittee shall maintain the surface over facilities placed under any permit for a
period of one year after completion of work under the permit. If CVWD's right-of-way
is not restored as herein provided for, or if CVWD elects to make repairs, permittee
agrees by acceptance of permit to bear the cost thereof.
X 9. The work shall be constructed in accordance with CVWD Drawing Nos. 38948 through
38950.
CVWD ENCROACHMENT PERMIT PAGE I OF 5
EXHIBIT "C" SPECIAL PROVISIONS
10. Soil shall be removed such that a pilot channel is constructed in the center of the
channel. Pilot channel shall be feet in width with side slopes of
horizontal to vertical.
The pilot channel shall have a minimum depth of feet.
11. Earth shall be removed on a uniform gradient and in such a manner that no holes are
created which will cause ponding of runoff.
12. Permittee shall contact CV WD's Stormwater Engineer for location to deposit material
within channel right-of-way.
X 13. The work authorized by this permit shall not conflict with the normal operation and
maintenance of the La Quinta Evacuation Channel.
14. Permittee shall not remove dirt within feet of the edge of pavement and
shall remove dirt from the area shown on attached Exhibit
15. Deposit materials shall consist of clean fill dirt.
X 16. Permittee shall not deposit any asphalt, concrete, organic matter, chemicals, metal,
paper, trash, or other illicit wastes within CV WD's right-of-way.
X 17. The work authorized by the permit is limited to the following: To operate and maintain a
54-inch rcp storm drain and outlet structure, u type headwall, outlet screen, and 18-inch
thick rip rap within the La Quinta Evacuation Channel right-of-way.
X 18. In the event any action is brought by any person for violation of any of the terms and
conditions of this permit, CVWD shall be held harmless and assumes no responsibility
for damages, claims or suits in connection with said permit.
19. Permittee shall pay $140 per acre-foot for canal water plus $11.50 per day gate charge.
20. Permittee to install pump in a manner that backwash does not run into the canal.
21. Construction meter must totalize in acre-feet. Flow shall be measured, preferably, in
. cubic feet, GPM is acceptable.
X 22. Permittee shall not block access to the La Quinta Evacuation Channel. CV WD vehicles
must be able to pass for its normal operation and maintenance activities.
23. Pump capacity shall not exceed 6 cfs.
CV WD ENCROACHMENT PERMIT PAGE 2 OF 5
EXHIBIT "C" SPECIAL PROVISIONS
X 24. Permittee, at its expense, shall maintain all excavations, embankments, haul roads,
permanent access roads, plant sites, waste disposal areas, borrow areas and all other
work areas free from dust.
X 25. Permittee shall provide a set of record drawings, including changes and all dimensions
and lengths as required by CV WD, within 15 calendar days after completion of work.
26. Permittee shall not remove any channel lining between June 1 and October 31.
Permittee shall replace any removed lining on or before June 1.
X 27. Permittee shall abide by stormwater discharge regulations adopted by the U.S.
Environmental Protection Agency and by the State Water Resources Control Board.
X 28. In the event permit activity including, but not limited to, clearing, grading and excavation
results in a land disturbance of one (1) or more acres, the permittee shall:
X Submit a Notice of Intent (State Form II) in compliance with the terms of the
general permit to discharge stormwater associated with construction activity to
the State Water Resources Control Board and to the CVWD.
State Water Resources Control Board
Division of Water Quality
Attention: Stormwater Permit Unit
Post Office Box 1977
Sacramento, California 95812
X 29. All work within CV WD's right-of-way shall conform to the following standards of
construction (A copy of the below -checked edition or specification must be on -site at all
times.):
Standard Specifications State of California Department of Transportation
(Caltrans), most current edition.
X Standard Specifications for Public Works Construction as written and
promulgated by the Southern California Chapter of the American Public
Works Association and the Southern California District of the Associated
General Contractors of California (Green Book), most current edition. .
CV WD ENCROACHMENT PERMIT PAGE 3 OF 5
EXHIBIT "C" SPECIAL PROVISIONS
29. (Continued)
CVWD Standard Specifications for Construction of:
Domestic water systems
including
Sanitary sewer systems
including
X 30. Prior to approval of a Permanent Encroachment Permit for outlets discharging into
CVWD facilities, the permittee shall provide a letter from the land use authority for the
project certifying that the project has been reviewed and determined to meet the
requirements of the National Pollutant Discharge Elimination System permit and Waste
Discharge Requirements for the discharge of stormwater in the Wbitewater River
Watershed, which is known as the MS4 Permit. This certification applies to
requirements included in the Drainage Area Management Plan, Stormwater
Management Plan, Stormwater Pollution Prevention Plan and Water Quality
Management Plan described in the MS4 Permit and applicable to the project at the time
of the application.
CVWD requires the permittee to implement control measures to the maximum extent
practicable to prevent the discharge of nonstormwater generated runoff into the La
Quinta Evacuation Channel. The permittee shall repair and maintain the outlet structure
and the channel to mitigate any condition of nuisance and/or damage to the outlet
structure and the channel caused by the permittee's discharge of nonstormwater as
determined by CVWD. This maintenance and repair shall include, but not be limited to
outlet concrete repairs, channel bottom scour repair, slope protection repair, vegetation
clearing, ponded/nuisance water removal, etc. Failure to comply with these conditions
of approval may result in CVWD revoking the Permanent Encroachment Permit
associated with the outlet and removal or sealing of the outlet.
X 31. Permit not valid without CVWD receipt for drainage inlet fees.
X 32. Permit valid only so long as insurance is in effect.
CVWD ENCROACHMENT PERMIT PAGE 4 OF 5
EXHIBIT "C" SPECIAL PROVISIONS
X 33. Permittee shall provide at the preconstruction conference a plan for fugitive dust control
in compliance with AQMD Rule 403.
X 34. No work shall be done under this permit without first contacting CV WD's Inspector
Supervisor.
35. .Permittee shall implement preventative measures, e.g., double walled tank, containment,
facilities, etc., to prevent chemical and petroleum spills.
36. Permittee is responsible for crop loss or crop damage as a result of the Permittee's
actions.
X 37. Permittee shall retain a copy of this encroachment permit and all construction drawings
or exhibits on -site at all times.
38. Permittee is prohibited from utilizing a hurricane pump in the canal. The pump and
truck fill must be placed off of the canal road. A suction hose or pipe may be laid across
the canal road with a dirt ramp or other means for vehicle traffic to cross. No
excavating is allowed on the canal road or bank. CVWD vehicles and equipment must
be able to travel the road unimpeded at all times. Equipment setup and operation shall
be executed to prevent washouts of the canal road and bank. Backwash will not be
permitted to be discharged back into the canal. CV WD facilities must be returned to
original or better condition when the pump and appurtenances are removed.
39. Permittee shall notify the Zanjero Supervisor in writing three (3) days prior to
commencing any construction on irrigation facilities/laterals. The lateral will not be
permitted to be out of service for more than two (2) days unless other means of delivery
of water to existing customers is established.
X 40. Permittee shall comply with all local, state, and federal environmental laws and
regulations.
CV WD ENCROACHIV ENT PERMIT PAGE 5 OF 5
MaIIBIT "C" SPECIAL PROVISIONS
EXHIBIT "D"
TO
ENCROACHMENT PERMIT
GENERAL PROVISIONS
COACHELLA VALLEY WATER DISTRICT
GENERAL PROVISIONS TO ENCROACHMENT PERMIT
1. The Permit is issued with the understanding that any particular action is not to be considered as
establishing precedent (a) on the question of permitting any certain kind of encroachment on CVWD Property, or
(b) as to the acceptability of any such permits as to any other or future situation.
2. Before starting any work on the Permittee Facilities ("Work") under the Permit, the Permittee shall
contact CV WD's inspection Division Supervisor and arrange for a pre -construction meeting. No Work shall be
performed prior to the pre -construction meeting. When the Work has been interrupted for two (2) business days
or more Permittee shall obtain from the Inspection Supervisor a written consent to resume the Work.
3. The Permit or a copy thereof must be shown to any representative of CVWD or any law enforcement
officer on demand. In the event the Permit is not on the job site, CVWD may, at its option, require immediate
suspension of Work at the job site by oral notice to the Permittee's employees, contractors or representatives
located at the job site.
4. If an existing encroachment or improvement conflicts with the proposed Work, the Permittee must
arrange, at its sole cost and expense, for any removal or relocation of such encroachment with the owner thereof.
Any such removal or relocation will be at no expense to CVWD.
5. The Permittee shall, whenever the same is required by law, secure the written order, approval,
authorization or consent (collectively, "Approval") to complete the Work from any federal, state or local public
or quasi -public agencies having jurisdiction over the Work. In addition to the foregoing, Permittee shall obtain
an Approval from the owner of the real property on, under, and in which the Work is to be accomplished in the
event CVWD is not the owner thereof. This Permit shall not be valid until such Approvals are obtained.
6. All Work shall be completed at no cost or expense to CVWD in conformance with all laws, rules and
regulations of all governmental or quasi -governmental agencies and the owners of the real property on, under,
and in which the Work is to be accomplished.
7. Upon completion of the Work, all brush, timber, scraps, material, etc., placed at the job site by or on
behalf of Permittee shall be entirely removed and Permittee shall be responsible for restoring CVWD Property
to its former condition as nearly as may be possible. In addition thereto, it is understood by the Permittee that
whenever construction, reconstruction, or maintenance work on CVWD Property may be required by CVWD, the
Work shall, upon request of CVWD, be immediately ceased and/or moved, by and at the sole expense of the
Permittee. In the event Permittee fails to do any of the foregoing, CVWD may, but shall have no obligation, to
complete any or all of the tasks at Permittee's cost and expense. Such cost shall be paid by Permittee within
ten (10) days of such parry's receipt of an invoice from CVWD.
8. All Work shall be subject to inspection and approval by CVWD. The Permittee shall notify the Inspection
Division when the Work has been completed. If any inspection by CVWD indicates that the Work and/or
Permittee Facilities interfere with the use of CVWD Property by CVWD, the owner of the underlying real
property or any prior right holder, in CV WD's sole and absolute discretion, Permittee shall remove or ieplace the
Permittee Facilities in such a fashion as shall be directed by CVWD. In the event Permittee fails to do so,
CVWD may, but shall have no obligation, to complete any or all of the tasks at Permittee's cost and expense.
Such cost shall be paid by Permittee within ten (10) days of such party's receipt of an invoice from CVWD.
9. CVWD shall not be liable for the replacement of decorative concrete and other surface improvements,
including, but not limited to, alternative paving methods which CVWD may be required to remove in the future
to gain access to CVWD facilities or if CVWD removes any or all Permittee Facilities pursuant to the terms
CVWD ENCROACHMENT PERMIT PAGE 1 OF 5
EXHIBIT "D" GENERAL PROVISIONS
hereof. CVWD shall not be responsible for seal coating, overlaying or otherwise resurfacing street
improvements. Permittee shall be responsible for all costs having to do with the same. Permittee hereby
waives the right of claim, loss, damage or action against CVWD or its Representatives (as defined below)
arising out of or in connection with any Costs (as defined below) or destruction of the Permittee Facilities from
CVWD exercising any right with respect to CVWD Property, except if caused by the gross negligence or
willful misconduct of CVWD or its Representatives. CVWD shall have no liability or responsibility to restore
any Permittee Facilities on CVWD Property to any condition after exercising any right with respect to CVWD
Property or to pay for loss or destruction of the same. Permittee shall be responsible for all costs having to do
with the same.
10. Permittee shall assume the defense of, indemnify and hold harmless CVWD and their respective
Representatives (as defined herein) (the "Indemnified Parties") and each and every one of them, from and against
all actions, causes of action, demands, liabilities, costs, damages, claims, losses and expenses (including attorneys'
fees) (collectively, "Costs") of every type and description to which they may be subjected or put, by reason of, or
resulting from: (a) this Permit; (b) any act or omission of Permittee or his/her/its/their Representatives in
connection with any matters contemplated by this Permit; (c) any death, bodily injury, property damage or
casualty, including, but not limited to any CVWD facilities caused in whole or part by Permittee or
his/her/its/their respective Representatives; (d) any breach by Permittee of its obligations under this Permit; (e)
any enforcement of CVWD of any provision of this Permit; and (f) the maintenance, operation, repair,
replacement or improvement of the Permittee 's Facilities, except for Costs ultimately established by a court of
competent jurisdiction to have been caused by the gross negligence or willful misconduct of the Indemnified
Parties. Except as set forth in the exception of the immediately preceding sentence, Permittee, as a material part of
the consideration of this Permit, waive all claims or demands against CVWD and the other Indemnified Parties
for any such Costs. No provision of this Permit shall in any way limit the extent of the responsibility of Permittee
for payment of damages resulting from his/her/its/their operations or the operations of any of his/her/its/their
respective Representatives. Permittee further covenants and agrees to pay, or to reimburse the Indemnified
Parties for any and all Costs arising out of or in connection with Permittee's obligations pursuant to this Permit,
except Costs arising through the gross negligence or willful misconduct of the Indemnified Parties. The
Indemnified Parties shall have the right, at Permittee's expense, to commence, to appear in, or to defend any
action or proceeding, arising out of and in connection with the Permit, and in connection therewith, may pay all
necessary expenses if Permittee fails upon reasonable notice to so commence, appear in or defend any action or
proceeding with counsel reasonably acceptable to CVWD. Permittee shall be furnished with copies of bills
relating to the foregoing upon request. The term "Representatives" shall mean employees, representatives,
agents, contractors, subcontractors or any other persons directly or indirectly employed by any one of the
foregoing or reasonably under the control of any of the foregoing or for whose acts any of the foregoing may be
liable.
11. Prior to and at all times after executing the Permit the Permittee shall carry and maintain, at its sole cost
and expense, not less than the following coverage and limits of insurance which shall be maintained with insurers
and under policy forms satisfactory to CVWD.
(a) Commercial General Liability Insurance written on an occurrence basis of at least $1,000,000 per
occurrence, for bodily injury and property damage including coverage for contractual liability,
personal injury, independent contractors, broad form property damage, ongoing and products and
completed operations.
(b) Commercial Automobile Liability Insurance written on a per occurrence basis with a single limit of
liability in the amount of $1,000,000 for bodily injury and property damage. Said policy shall include
coverage for owned, non -owned, leased and hired cars.
(c) Workers' Compensation Insurance as required by the Labor Code or be legally self -insured pursuant
to Labor Code section 3700 et. seq. along with Employer's Liability limits of $1,000,000.
(d) All of Permittee's policies shall contain the following provisions and endorsement forms that:
CVWD ENCROACHMENT PERMIT PAGE 2 OF 5
EXHIBIT "D" GENERAL PROVISIONS
(i) Names Coachella Valley Water District, its employees, directors, officers, and agents as
additional insureds (Except workers' compensation); and,
(ii) The insurer waives all right of subrogation against CVWD, its employees, directors,
officers and agents; and,
(ui) Written notice shall be given to CVWD at least ten (10) days prior to termination,
cancellation or reduction of coverage in the policy; except for non-payment of premium;
and,
(iv) . Such insurance is primary insurance as respects to the interests of the additional insured
and that any other insurance maintained by the additional insured is excess and not
contributing insurance with the insurance required by Permittee and,
(v) Apply a "Cross Liability" or "Severability of Interest" clause to CVWD; and,
(vi) Have deductibles which are not greater than those normally maintained for similar
Encroachment Permits in the State of California.
(vii) Such insurance, subject to all of its other terms and conditions, applies to the liability
assumed by Permittee under the Permit.
(e) The Permittee shall deliver to CVWD, the certificates of insurance and endorsements covering all
policies providing the required insurance referred to above, and shall be signed on behalf of the
insurer by. its authorized representative. Permittee shall, upon written request by CVWD, furnish
copies of such policies, certified by an authorized representative of the insurer.
(f) The foregoing requirements as to the types, limits and CV WD's approval of insurance coverage to be
maintained by Permittee are not intended to and shall not in any manner limit or qualify the liabilities
and obligations assumed by Permittee under the Permit.
12. All costs incurred for the Work shall be home by Permittee and Permittee hereby waives all claims for
indemnification or contribution from CVWD for the Work.
13. One or more bonds, including, without limitation payment and performance bonds and guarantee bonds,
or certificate(s) of deposit ("Cl)') or letters of credit ("LOC') may be required of the Permittee whenever, in the
sole and absolute judgment of CVWD, it becomes necessary or advisable to guarantee performance. The bonds,
CD or LOC shall be in such form and content as shall reasonably be acceptable to CVWD.
14. This Permit may be cancelled by CVWD upon thirty (30) days written notice to the Permittee. If there are
no valid insurance certificates, the Permit will terminate upon the failure to provide or termination or expiration
of the insurance certificates, or any of them.
15. If the Permit involves Work within the right-of-way of any CVWD stormwater channel, the
provisions of Paragraphs (a) and (b) following, shall apply.
(a) CVWD reserves the right to maintain and operate said channel, removing therefrom the
installation, obstructions or interference when such installation or obstruction substantially interferes with
the free flow of the channel waters or interferes with discharge by CVWD of its public duties and
responsibilities; further, CVWD reserves the right to realign the channel, changing the course and depth
thereof and/or to make other changes and improvements to the channel, as CVWD deems necessary.
(b) Permittee recognizes the responsibility of CVWD to make such changes to the channel as
stipulated above and to maintain the integrity of said channel during periods of stormwater runoff and
waives and releases CVWD and CVWD Indemnitees from any claim of any type for the damage or
destruction of the installation caused by CVWD, or its Representatives. Permittee and Permittee's
Representatives agree that any repairs, reconstruction, restoration, or relocation of the Work damaged or
destroyed as defined herein shall be performed by and at the sole expense of the Permittee.
CVWD ENCROACHMENT PERMIT PAGE 3 OF 5
EXHIBIT "D" GENERAL PROVISIONS
16. The Work and the Permittee Facilities shall be subordinated to any operations which CVWD may
conduct during the permit period, and shall be coordinated with the work of CVWD forces or CVAD contractors
so that there shall be no delay to, nor interference with, CVWD operations.
17. Permittee shall be fully responsible to ascertain location of all facilities constructed by others, and to
place the encroachment or perform the Work in a manner which will not damage, conflict or interfere with any
existing encroachment improvement or facility. Prior to making any excavation, Permittee shall call Underground
Service Alert at 1-800-422-4133.
18. The following additional general provisions shall apply
(a) Time is of the essence of this Permit and each and every term and provision thereof.
(b) This Permit shall be construed as if prepared by all of the parties hereto. Accordingly, any rule of
law (including California Civil Code Section 1654) or legal decision that would require interpretation of
any ambiguities in this Permit against the party that has drafted it is not applicable and is waived.
(c) No delay on the part of any party hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party hereto of any right, power
or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise
of any other right, power or privilege hereunder.
(d) Each individual executing this Permit hereby represents and warrants that he or she has the full
power and authority to execute this Permit on behalf of the named parties.
(e) The parties agree that any action or proceeding to enforce or relating to this Permit shall be
brought exclusively in the Federal or State courts located in Riverside County, California, and the parties
hereto consent to the exercise of personal jurisdiction over them by any such court for purposes of any
such action or proceeding.
(f) This instrument, together with the exhibits attached hereto and other writings referenced herein,
contain the entire agreement between the parties relating to the subject matter hereof and supersede any
and all prior agreements between the parties, oral or written, and any and all amendments thereto. Any
oral representations or modifications concerning this instrument shall be of no force and effect excepting
a subsequent modification in writing, signed by the parties to be charged.
(g) In the event of any litigation or other action between the parties arising out of or relating to this
Permit or the breach thereof, the prevailing party shall be entitled, in addition to such other relief as may
be granted, to its reasonable costs and attorneys' fees.
(h) The invalidity or illegality of any provisions of this Permit shall not affect the remainder of the
Permit.
(i) Each party hereto agrees to execute and deliver such other documents and perform such other
acts as may be necessary to effectuate the purposes of this Permit.
(j) This Permit is entered into within the State of California, and all questions concerning the
validity, interpretation and performance of any of its terms or provision or any of the rights or obligations
of the parties hereto shall be governed by and resolved in accordance with the laws of the State of
California.
CVWD ENCROACHMENT PERMIT PAGE 4 OF 5
EXHIBIT "D" GENERAL PROVISIONS
(k) The terms and provisions set forth in this Permit shall be deemed provisions, terms and/or
covenants running with CV WD Property in accordance with applicable law, including, without limitation,
Section 1468 of the California Civil Code and shall pass to and be binding upon the successor owners of
the Permittee Facilities. As such, all successor owners of the Permittee Facilities will have any of the
rights, responsibilities and liabilities of Permittee, as if such person or entity originally executed this .
Permit in place and stead of Permittee. No transfer of the Permittee Facilities shall relieve Permittee (or
any successor owner of the Permittee Facilities) of any responsibility or liability under this Permit.
CV WD ENCROACHMENT PERMIT PAGE 5 OF 5
EXHIBIT "D" GENERAL PROVISIONS
LENDER'S ESTOPPEL CERTIFICATE
This LENDER'S ESTOPPEL CERTIFICATE ("Estoppel") is dated this 51h day of June,
2014, and is by La Quinta Housing Authority ("Lender").
WHEREAS, Lender and Coral Mountain Partners, L.P. ("Borrower") entered into that
certain Loan Agreement, dated February 10, 2011, as amended (the "Loan Agreement"), a copy
of which is attached hereto and incorporated herein by this reference, where in Lender loaned
certain money to Borrower in order for Borrower to acquire, developer, construct, rehabilitate
and operate certain improved real property commonly known as Coral Mountain Apartments (the
"Premises").
NOW, THEREFORE, Lender hereby agrees as follows:
1. The Loan Agreement is in full force and effect, and has not been further assigned,
modified, supplemented, or amended.
2. Lender has no knowledge that any default exists in the performance or observance by
Borrower of any covenant or condition in the Loan Agreement, nor of any event
which, with the delivery of notice or the expiration of a grace period, or both, would
constitute a default under the Loan Agreement. Lender has sent no notice of any
default which remains outstanding. There are no defenses against the enforcement of,
or offsets under, the Loan Agreement currently claimed by Lender.
Lender hereby acknowledges that Borrower and US Bancorp Community
Development Corporation will act in reliance upon the statements contained herein.
4. Please provide the following information using "N/A" when applicable:
• Principal Balance as of 06/17/14
• $15,351,523.97 Drawn Funds
• Monthly Payment Amount **
• 50% of Residual Receipts from
Operation of Coral Mountain
Apartments, as determined by a
Residual Receipts calculation from
the operation of the development the
preceding calendar year.
** Payment is Due Annually on the I't day of
May for the term of the Note.
• Replacement Reserve Balance as of
• N/A
• Interest Rate
• 1 % per annum
• Accrued and unpaid interest
• $
• Amortization Period
• N/A
• Maturity Date**
• 12/31/2070 or 55 years from the
Anniversary of the date 75% units
have been leased to and are occupied
by income qualified tenants at
affordable rents.
** The term may be extended for two (2)
additional ten (10) periods.
IN WITNESS WHEREOF, the undersigned has duly executed this Estoppel as of the day and
year first above written.
LENDER:
La Quin a Housing Aufiv ity
Si Ur
Name: Fr . pevacek
Print or Type Name
Title: Executive Director
Print or Type Title
AGENCY LOAN PROMISSORY NOTE
$29,000,000,00
—/Q 2011
La Quinta, California
FOR VALUE RECEIVED, CORAL MOUNTAIN PARTNERS, L.P., a California
limited partnership ("Borrower'), as maker and obligor, promises to pay to the LA QUINTA
REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), as holder
and beneficiary, or order, at Agency's office at P.O. Box 1504, La Quinta, California 92247, or
such other place as Agency may designate in writing, the sum of (a) Twenty -Nine Million
Dollars ($29,000,000,00), or so much thereof as may be disbursed hereunder ("Note Amount"),
and (b) all costs and expenses payable hereunder, in currency of the United States of America,
which at the time of payment is lawful for the payment of public and private debts.
1. Agreement. This Agency Loan Promissory Note ("Note") is given in accordance
with that certain Disposition and Development Agreement executed by Agency and Borrower, as
"Developer," dated as of January 4, 2011 ("Agreement'). The rights and obligations of
Borrower and Agency under this Note shall be governed by the Agreement and by the additional
terms set forth in this Note. In the event of any inconsistencies between the terms of this Note
and the terms of the Agreement or any other document related to the Note Amount, the terms of
this Note shall prevail. Unless otherwise defined herein, capitalized terms used herein shall have
the meanings ascribed to theist in the Agreement. An Event of Default by Developer under any
of the provisions of the Agreement, and/or a default under any and all attachments and all
breakout documents executed, attested and/or recorded in implementation of the Agreement,
including, without limitation, the Agency Deed of Trust, Agency Regulatory Agreement, and
Ground Lease, or the income and/or rent restrictions as set forth in the Tax 'Credit Regulatory
Agreement (collectively, the "Transaction Documents") shall, after the expiration of any cure
period under the respective agreement or document, be a default under this Note (a "Default"),
and a default under this Note, after notice and expiration of a fifteen (15) day cure period, shall
be an Event of Default under the Agreement and a default under the Transaction Documents.
2. Interest. The Note Amount shall bear simple interest at one percent (1%) per
annum.
3. Repayment of Note Amount. The Note Amount shall be paid by the Borrower's
annual payment to Agency of an amount equal to fifty percent (50%) of the Residual Receipts
from operation of the Housing Development, as determined by a Residual Receipts calculation
from the operation of the Housing Development the preceding calendar year.
Annual Residual Receipts payments shall be made by the Borrower by. cashier's check
and shall be delivered on or before May I for each year -during the term of this Note commencing
in the first fiscal year following the Conversion Date until the Note Amount and all unpaid
interest thereon has been repaid in full. Additionally, the Note Amount shall be paid by any or
all of the following: (i) fifty percent (50%) of the Refinancing Net Proceeds immediately upon
any refinancing of the loans secured by the Property (or any part thereof), and (ii) one hundred
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percent (100%) of the Transfer Net Proceeds immediately upon any transfer in whole or in part
of the Housing Development.
As used herein, "Affiliate " means any person or entity directly or indirectly, through one
or more intermediaries, controlling, controlled by or under common control with Borrower
which, if Borrower is a partnership or limited liability company, shall include each of the
constituent members or partners, respectively thereof, The term "control" as used in the
immediately preceding sentence, means, with respect to a person that is a corporation, the right
to the exercise, directly or indirectly, of more, than fifty percent (50%) of the voting rights
attributable to the shares of the controlled corporation, and, with respect to a person that is not a
corporation, the possession, directly or indirectly, of the power to direct or cause the direction of
the management or policies of the controlled person.
As used herein, "Annual Financial Statement" shall mean each certified financial
statement of Borrower for the Housing Development using generally accepted accounting
principles ("GAAP"), as separately accounted for this Housing Development, including
Operating Expenses and Annual Project Revenue, prepared annually at Borrower's expense, by
an independent certified public accountant reasonably acceptable to Agency, as well as the
Residual Receipts Report.
As used herein, "Annual Project Revenue" means all gross income and all revenues of
any kind from the Housing Development in a calendar year, of whatever form or nature, whether
direct or indirect, with the exception of the items excluded below, actually received by or paid to
or for the account or benefit of Borrower or any Affiliate of Borrower or any of their agents or
employees, from any and all sources, resulting from or attributable to the ownership, operation,
leasing and occupancy of the Housing Development, determined on the basis of generally
accepted accounting principles applied on a consistent basis, and shall include, but not be limited
to: (i) gross rentals paid by tenants of the Housing Development under leases, and payments and
subsidies of whatever nature, including without limitation any payments, vouchers or subsidies
from the U.S. Department of Housing and Urban Development or any other person or
organization, received on behalf of tenants under their leases, (ii) amounts paid by residents of
the Housing Development to Borrower or any Affiliate of Borrower on account of Operating
Expenses for further disbursement by Borrower or such Affiliate to a third party or parties,
(iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses, concessions,
vending machines, coin laundry and similar sources, (v) other fees, charges or payments not
denominated as rental but payable to Borrower in connection with the rental of office, retail,
storage, or other space in the Housing Development, (vi) consideration received in whole or in
part for the cancellation, modification, extension or renewal of leases, and (vii) interest and other
investment earnings on security deposits, reserve accounts and other Housing Development
accounts to the extent disbursed for other than the purpose of the reserve. Notwithstanding the
foregoing, gross income shall not include the following items: (a) security deposits from tenants
(except when applied by Borrower to rent or other amounts owing by tenants); (b) capital
contributions to Borrower by its members, partners or shareholders (including capital
contributions required to pay any Deferred Developer Fee); (c), condemnation or insurance
proceeds; (d) funds received from any source actually and directly used for initial development
of the Housing Development; (e) receipt by an Affiliate of management fees or other bona fide
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1111838.07 a01A04/11 -2-
arms -length payments for reasonable and necessary Operating Expenses associated with the
Housing Development, including but not limited to, any Partnership Related Fees; (f) Transfer
Net Proceeds; or (g) Refinancing Net Proceeds.
As used herein "Capital Replacement Reserve" shall have the meaning ascribed thereto in
the Agency Regulatory Agreement.
As used herein, "CPI Adjustment" means the increase in the cost of living index, as
measured by the Consumer Price Index for all urban consumers, Los Angeles -Anaheim -
Riverside statistical area, all items (1982-84 = 100) published by the United States Department
of Labor, Bureau of Labor Statistics ("CPI") in effect as of the date on which the Certificate of
Occupancy is issued for the Housing Development to the CPI in effect as of the date on which an
adjustment is made. If such index is discontinued or revised, such other index with which such
index is replaced (or if not replaced, another index which reasonably reflects and monitors
consumer prices) shall be used in order to obtain substantially the same results as would have
been obtained if the discontinued index had not been discontinued or revised. If the CPI is
changed so that the base year is other than 1982-84, the CPT shall be converted in accordance
with the conversion factor published by the United States Department of Labor, Bureau of Labor
Statistics.
As used herein, "Debt Service" shall mean payments made in a calendar year pursuant to
the approved Construction Loan or the Take -Out Loan, as applicable, obtained for the
construction/development, and ownership of the Project pursuant to Section 6.7 of the
Agreement or any permitted refinancing or modification thereof, but excluding payments made
pursuant to this Note.
As used herein, "Deferred Developer Fee" shall mean the portion of the Borrower's
development fee, if any, that is payable out of the Annual Project Revenue and not from capital
sources, as set forth in the Housing Development Budget. Disbursement of the Deferred
Developer Fee (all or any part thereof) shall be subject to the provisions of the next paragraph.
In connection with Borrower's eligibility to disburse all or any part of the Deferred
Developer Fee, in the event the cost of completing the Project exceeds the amount set forth in the
final Budget; then, to the extent necessary, the funds otherwise available to pay the developer fee
from capital sources shall be expended and used to pay the remaining costs of completing the
Project to the extent necessary to ensure the completion of the Project and the balance of the
developer fee shall be paid as Deferred Developer Fee in accordance with the priority set forth in
the Partnership Agreement, and/or payable from the proceeds of any approved refinancing or
transfer of the Property and/or the Housing Development. In no event shall Borrower be eligible
for disbursement of the Deferred Developer Fee or any part thereof prior to completion of the
Project, as approved by the Executive Director as evidenced by the issuance by the Agency of
the Release of Construction Covenants.
As used herein, "Operating Expenses" shall mean actual, reasonable and customary (for
comparable high quality rental housing developments in Riverside County) costs, fees and
expenses directly incurred, paid, and attributable to the operation, maintenance and management
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of the [-lousing Development in a calendar year, which are in accordance 'with the annual
Operating Budget approved by Agency pursuant to Section 9 of the Agency Regulatory
Agreement, including, without limitation, painting, cleaning, repairs, alterations, landscaping,
utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal
property taxes, assessments, insurance, security, advertising and promotion, janitorial services,
cleaning and building supplies, purchase, repair, servicing and installation of appliances,
equipment, fixtures and furnishings, fees and expenses of property management, fees and
expenses of accountants, attorneys and other professionals, repayment of any completion or
operating loans made to Borrower, its approved successors or assigns, and other actual,
reasonable and customary operating costs which are directly incurred and paid by Borrower, but
which are not paid from or eligible to be paid from the Operating Reserve or any other reserve
accounts. In addition, Operating Expenses shall include a social services fee in the amount of
Twenty -Two Thousand Dollars ($22,000) for calendar year 2011, which shall be increased
annually by three percent (3%) per year, provided Borrower provides the social services
described in the Tenant Services Agreement that was included in Borrower's tax credit
application. Operating Expenses shall not include any of the following: (i) salaries of
employees of Borrower or Borrower's general overhead expenses, or expenses, costs and fees
paid to an Affiliate of Borrower, to the extent any of the foregoing exceed the expenses, costs or
fees that would be payable in a bona fide arms' length transaction between unrelated parties in
the Riverside County area for the same work or services; (ii) any amounts paid directly by a
tenant of the Housing Development to a third party in connection with expenses which, if
incurred by Borrower, would be Operating Expenses; (iii) optional or elective payments with
respect to the Construction Loan; (iv) any payments with respect to any Project -related loan or
financing that has not been approved by the Agency; (v) expenses, expenditures, and charges of
any nature whatsoever arising or incurred by Borrower prior to completion of the Housing
Development with respect to the development of the Housing Development, or any portion
thereof, including, without limitation, all predevelopment and preconstruction activities
conducted by Borrower in connection with the Housing Development, including without
limitation, the preparation of all plans and the performance of any trysts, studies, investigations or
other work, and the construction of the Housing Development and any on site or off site work in
connection therewith; or (vi) depreciation, amortization, and accrued principal and interest
expense on deferred payment debt.
As used herein, "Operating Reserve" means an operating reserve for the Housing
Development (i) initially consisting of not less than Four Hundred Ninety -Five Thousand Dollars
($495,000) • (or such greater amount required under either of the Additional Regulatory
Agreements, or under the Partnership Agreement) set aside in a separate interest -bearing trust
account, commencing upon the rental of the units in the Housing Development, and (ii)
replenished to pour Hundred Ninety -Five Thousand Dollars ($495,000) from annual deposits of
the Annual Project Revenue, to the extent available, such that the balance of the Operating
Reserve consists of not less than four (4) months of projected Operating Expenses, adjusted
annually by the CPT Adjustment (unless otherwise agreed to by Developer and Agency) or as
required under the Partnership Agreement (or such greater amount required under either of the
Additional Regulatory Agreements, or under the Partnership Agreement), provided in no event
shall the balance in such account exceed a sum equal to one (1) year of Debt Service for the
Housing Development (or such greater amount required under the Tax Caredit Regulatory
Agreement, pursuant to any of the Approved Financing or under the Partnership Agreement).
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1111838 07 2004111 '4
As used herein, "Partnership Agreement" means the agreement which sets forth the terms
of the Borrower's limited partnership, as such agreement may be amended from time to time.
As used herein, "Partnership Related Fees" means partnership fees actually incurred
pursuant to the terms of the Partnership Agreement, which are reasonable and customary to
developer/owner entities for similar projects in Southem California, and.may include, but shall
not exceed: (i) a general partners) (administrative and/or managing partner(s)) partnership
management fee payable to the general partner(s) (ii) a limited partner asset management fee
payable to the investor limited partner; and (iii) an annual audit fee in and for any calendar year.
In no event shall the annual fees for (i) and (ii) above cumulatively exceed Forty Thousand
Dollars ($40,000.00), but such fees in (i) and (ii) may be increased annually by the CPI
Adjustment. In the event insufficient Annual Project Revenues exist to provide for payment of
all or part of the specific Partnership Related Fees listed above, no interest shall accrue on the
unpaid portions of such Partnership Related Fees, but the unpaid balance of such fees alone will
be added to the Partnership Related Fees due in the following year.
As used herein, "Refinancing Net Proceeds" means the proceeds of any approved
refinancing of the Construction Loan or other approved financing secured by the Property, net of
the following actual costs and fees incurred: (i) the amount of the ,financing which is satisfied
out of such proceeds, (ii) reasonable and customary costs and expenses incurred in connection
with the refinancing, (iii) the balance, if any, of the Deferred Developer Fee, (iv) the balance, if
any, of authorized loans to the Housing Development made by the limited partners of Borrower,
including interest at the rate set. forth in the Partnership Agreement for such loans, (v) the
balance, if any, of authorized operating loans or development loans made by the general partners
of a limited partnership that succeeds to Borrower's interest in the Agreement and the Housing
Development, including interest at the rate set forth in the Partnership Agreement for such loans,
(vi) the return of capital contributions, if any, to the Project made by the general partners of a
limited partnership that succeeds to Borrower's interest in the Agreement and the Housing
Development that were used to pay the Deferred Developer Fee, (vii) the amount of proceeds
required to be reserved for the repair, rehabilitation, reconstruction or refurbishment of the
Housing Development; and (viii) the payment to general partner of Borrower of a refinancing
fee, which is agreed to be set at three percent (3%) of the amount of the approved refinancing.
As used herein, "Reserve Deposits" shall mean any payments to the Capital Replacement
Reserve account and payments to the Operating Reserve account pursuant to Sections 10 and 11,
respectively, of the Agency Regulatory Agreement.
As used herein, "Residual Receipts" shall mean Annual Project Revenue less the sum of:
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve;
(iv) Reserve Deposits to the Operating Reserve;
(v) Partnership Related Fees;
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1111838.07 r01l04/I 1
(vi) Deferred Developer Fees;
(vii) Property management fee for the Housing Development which remains unpaid
after payment of Operating Expenses, if any;
(viii) Unpaid Tax Credit adjustment amounts, if any, pursuant to the Partnership
Agreement;
(ix) Repayment of loans to the Project, if any, made by the limited partner(s) of
Borrower pursuant to the Partnership Agreement, including interest at the rate set forth in
Borrower's limited partnership agreement, for eligible development and/or operating expense
deficits or other eligible loans (provided that if made during the compliance period Borrower
shall provide to Executive Director documentation showing the propriety of such loan(s) and if
made subsequent to the expiration of the compliance period each such loan must be reasonably
approved by the Executive Director before being provided to the Project after review of
documentation provided by Borrower showing propriety of such loans);
(x) Repayment to the administrative and/or managing general partners of Borrower
for loans to the Project for development advance(s) pursuant to the Partnership Agreement,
operating deficit advance(s) pursuant to the Partnership Agreement), credit adjuster payment(s)
pursuant to the Partnership Agreement), and/or Development Fee advance(s) pursuant to the
Partnership Agreement, and with all such loans to be repaid without interest (provided that if
made during the compliance period Borrower shall provide to Executive Director documentation
showing the propriety of such loan(s) and if made subsequent to the expiration of the compliance
period each such loan must be reasonably approved by the Executive Director before being
provided to the Project after review of documentation provided by Borrower showing propriety
of such loans);
(xi) Repayment to the administrative and/or managing general partners of Borrower of
certain loans made to the Project after the expiration or earlier termination of the Partnership
Agreement to cover shortfalls in funding for Operating Expenses in excess of the Operating
Expenses included in the approved annual Operating Budget for the year in which such loan is
made (if at all), all such loans to be repaid without interest (provided that if made during the
compliance period Borrower shall provide to Executive Director documentation showing the
propriety of such loan(s) and if made subsequent to the expiration of the compliance period each
such loan must be reasonably approved by the Executive Director before being provided to the
Project after review of documentation provided by Borrower showing propriety of such loans);
and
(xii) Capital contributions to the Project, if any, made by the general partners of
Borrower that were used to pay the Developer Fee.
In the event any calculation of Annual Project Revenue less subsections (i) through (xii)
inclusive above 'results in a negative number, then Residual Receipts shall be zero ($0) for that
year and shall not carry over to the next or any other subsequent year.
In addition, none of the fees, costs, expenses, or items described above in calculation of
Residual Receipts shall include any duplicate entry/item, or double accounting for a cost item.
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1111839 07 A01 /04 / 1 I
For example, an audit fee incurred by Borrower and deducted or included above in subsection (i)
for Operating Expenses shall not also be deducted or included in subsection (v) for Partnership
Related Fees in the calculation of Residual Receipts. The calculation of Residual Receipts shall
be conducted at Borrower's sole cost and expense, by a third party auditor and submitted to
Borrower annually, along with Borrower's payment of Residual Receipts.
As used herein, "Transfer Nei Proceeds" shall mean the proceeds of any sale or other
transfer, in whole or part, of the Property or Borrower's interests therein, net only of (i) the
reasonable and customary costs and expenses incurred in connection with such transfer; (ii) the
amount of the financing which is satisfied out of such proceeds, (iii) the balance, if any, of the
Deferred Developer Fee, (iv) the balance, if any, of loans to the Project made by the limited
partners of Borrower, including interest thereon as provided in the Partnership Agreement, (v)
the balance, if any, of operating loans or development loans made by the general partners of
Borrower, including interest thereon as provided in the Partnership Agreement, (vi) the return of
capital contributions, if any, to the Project made by the general partners of Borrower that were
used to pay the Deferred Developer Fee, and (vii) the payment to the general partner of Borrower
of a disposition fee set forth in the Partnership Agreement, which is agreed to be set at three
percent (3%) of the amount of the approved transfer.
4. Security. Prior to Borrower's purchase of the Property, Borrower's obligations
under this Note and the Agreement shall be secured by that certain Assignment of Architectural
Agreements and Plans and Specifications executed by Borrower in favor of Agency pursuant to
the Agreement.
Borrower's obligations under this Note and the Agreement shall, at all times subsequent
to the purchase of the Property by Borrower during which any amount remains outstanding
hereunder, be secured by the Agency Deed of Trust, which Agency Deed of Trust shall only be
subordinated to approved deed(s) of trust for the Construction Loan and such encumbrances
approved by the Agency in writing, pursuant to a written subordination agreement in a form
approved by Agency counsel. Upon execution of the same, the terms of the Agency Deed of
Trust are incorporated herein and made a part hereof to the same extent and with the same force
and effect as if fully set forth herein.
5. Maturity. This Note shall be due and payable on the date of expiration of the
term of the Ground Lease, as such term may be extended pursuant to the terms thereof, or earlier
termination thereof.
6. Application of Payments. All payments shall be applied (i) first, to costs and
fees owing under this Note, (ii) second, to the payment of unpaid accrued interest owing under
this Note for each calendar year in which no payment was made by Borrower pursuant to Section
3 above, (iii) third, to the payment of accrued interest for the preceding calendar year, and (iv)
fourth, to payment of principal.
7. Waivers.
(a) Borrower expressly agrees that this Note or any payment hereunder may
be extended from time to time at Agency's sole discretion and that Agency may accept security
8001 se io•oa7
i E 11839.07 eoiroan 1 -7-
in consideration for any such extension or release any security for this Note at its sole discretion
all without in any way affecting the liability of Borrower.
(b) No extension of time for payment of this Note made by agreement by
Agency with any person now or hereafter liable for the payment of this Note shall operate to
release, discharge, modify, change or affect the original liability of Borrower under this Note,
either in whole or in part.
(c) The obligations of Borrower under this Note shall be absolute and
Borrower waives any and all rights to offset, deduct or withhold any payments or charges due
under this Note for any reasons whatsoever.
(d) Borrower waives presentment, demand, notice of protest and nonpayment,
notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or
interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the
rights or interests in or to properties securing this Note, and the benefit of any exemption under
any homestead exemption laws, if applicable.
(e) No previous waiver and no failure or delay by Agency in acting with
respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach,
default, or failure or condition under this Note, the Agency Deed of Trust or the obligations
secured thereby. A waiver of any term of this Note, the Agency Deed of Trust or of any of the
obligations secured thereby must be made in writing and shall be limited to the express written
terms of such waiver.
S. Attorneys' Fees and Costs. Borrower agrees that if any amounts due under this
Note are not paid when due, Borrower will pay all costs and expenses of collection and
reasonable attorneys' fees paid or incurred in connection with the collection or enforcement of
this Note, whether or not suit is filed.
9. Joint and. Several Obligation. This Note is the joint and several obligation of all
makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs,
successors and assigns.
10. Amendments and Modifications. This Note may not be changed orally, but
only by an amendment approved by Agency and evidenced in a writing signed by Borrower and
by Agency.
11. Agency May Assign. Agency may, at its option, assign its right to receive
payniient under this Note without necessity of obtaining the consent of the Borrower.
12. Borrower Assignment Prohibited. In no event shall Borrower assign or,transfer
any portion of this Note without the prior express written consent of Agency, which consent shall
not unreasonably be withheld, except pursuant to a transfer that is authorized under Section 15 of
the Agreement.
13. Acceleration and Other Remedies. Upon the occurrence of a Default, Agency
may, at Agency's option, declare the outstanding principal amount of this Note, together with the
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1111838.07 a01/04111
then accrued and unpaid interest thereon and other charges hereunder, and all other sums secured
by the Agency Deed of Trust, to be due and payable immediately, and upon such declaration,
such principal and interest and other sums shall immediately become and be due and payable
without demand or notice, all as further set forth ' in the Agency Deed of Trust. All costs of
collection, including, but not limited to, reasonable attorneys' fees and all expenses incurred in
connection with protection of, or realization on, the security for this Note, may be added to the
principal hereunder, and shall accrue interest as provided herein. Agency shall at all times have
the right to proceed against any portion of the security for this Note in such order and in such
manner as Agency may consider appropriate, without waiving any rights with respect to any of
the security. Any delay or omission on the part of Agency in exercising any right hereunder,
under the Agreement or under the Agency Deed of Trust shall not operate as a waiver of such
right, or of any other right. No single or partial exercise of any right or remedy hereunder or
under the Agreement or any other document or agreement shall preclude other or further
exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of
any sum payable hereunder, or part thereof, after the due date of such payment shall not be a
waiver of Agency's right to either require prompt payment when due of all other sums payable
hereunder or to declare a Default for failure to make prompt or complete payment.
14. Alternate Rate. Upon the occurrence of any Default, or upon the maturity hereof
. (by acceleration or otherwise), the entire unpaid principal sum, at the option of Agency, shall
bear interest, from the date of occurrence of such Default or maturity and after judgment and
until collection, at the "Alternate Rate", such rate being the highest interest rate then permitted
by law. Interest calculated at- the Alternate Rate, when and if applicable, shall be due and
payable immediately without notice or. demand. Borrower agrees that in the event of any
Default, Agency will incur additional expense in servicing the loan evidenced by this Note and
will suffer damage and loss resulting from such Default. Borrower agrees that in such event
Agency shall be entitled to damages for the detriment caused thereby, which damages are
extremely difficult and impractical to ascertain. Therefore, Borrower agrees that the Alternate
Rate (as' applied to the unpaid principal balance, accrued interest, fees, costs and expenses
incurred) is a reasonable estimate of such damages to Agency, and Borrower agrees to pay such
sum on demand.
15. Consents. Borrower hereby consents to: (a) any extension (whether one or
more) of the time of payment under this Note, (b) the release or surrender or exchange or
substitution of all or any part of the security, whether real or personal, or direct or indirect, for
the payment hereof, (c) the granting of any other indulgences to Borrower, and (d) the taking or
releasing of other or additional parties primarily or contingently liable hereunder. Any such
extension, release, surrender, exchange or substitution may be made without notice to Borrower
or to any endorser, guarantor or surety hereof, and without affecting the liability of said parties
hereunder.
16. Interest Rate Limitation. Agency and Borrower stipulate and agree that none of
the terms and provisions contained herein or in any of the loan instruments shall ever be
construed to create a contract for the use, forbearance or detention of money requiring payment
of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of
the State of California. in such event, if any holder of this Note shall collect monies which are
deemed to constitute interest which would otherwise increase the effective interest rate on this
8921015610.0047
1111838.07 WID4111 -g
Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of
California, all such sums deemed to constitute interest in excess of such maximum rate shall, at
the option of such holder, be credited to the payment of the sums due hereunder or returned to
Borrower.
17. Successors and Assigns. Whenever "Agency" is referred to in this Note, such
reference shall be deemed to include the La Quinta Redevelopment Agency and its successors
and assigns, including, without limitation, any successor to its rights, powers, and
responsibilities, and any subsequent assignee or holder of this Note. All covenants, provisions
and agreements by or on behalf of Borrower, and on behalf of any makers, endorsers, guarantors
and sureties hereof which are contained herein shall inure to the benefit of Agency and Agency's
successors and assigns.
18. Miscellaneous. Time is of the essence hereof. This Note shall be governed by
and construed under the laws of the State of California except to the extent Federal laws preempt
the laws of the State of California. Borrower irrevocably and unconditionally submits to the
jurisdiction of the Superior Court of the State of California for the County of Riverside or the
United States District Court of the Central District of California, as Agency may deem
appropriate, in connection with any legal action or proceeding arising out of or relating to this
Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue.
19. Non -Recourse Obligation. Borrower and its partners shall not be personally
liable for the payment of this Note or for the payment of any deficiency established after judicial
foreclosure or trustee's sale; provided, however, that the foregoing shall not in any way affect
any rights Agency may have (as a secured party or otherwise) hereunder or under the Agreement
or Agency Deed of Trust to recover directly from Borrower any amounts, or any funds, damages
or costs (including without limitation reasonable attorneys' fees and costs) incurred by Agency
as a result of fraud, intentional misrepresentation or bad faith, waste, and any costs and expenses
incurred by Agency in connection therewith (including without limitation reasonable attorneys'
fees and costs).
20. Accounting.
(a) Accounting Terms and Determinations. Unless otherwise specified
herein, (i) all accounting terms used herein shall be interpreted, (ii) all accounting determinations
hereunder shall be made, and (c) all books, records and financial statements required to be
delivered hereunder shall be prepared, in accordance with GAAP, consistently applied, except
for changes approved by Agency.
(b) Financial Reporting and Accounting Covenants. Borrower shall permit
the representatives of Agency at any time or from time to time, upon three (3) business days'
notice and during normal business hours, to inspect, audit, and copy' all of Borrower's books,
records, and accounts relating to the Property. Borrower shall furnish or cause to be furnished to
Agency the following:
(i) Annual Financial Statement. Borrower shall submit to Agency,
on or before May 1 of each year commencing in the first year after the issuance of the first
8821015610-0047 .10.
1111938.07 0110411I
certificate of occupancy for the Housing Development, an Annual Financial Statement, with
respect to the Housing Development that has been reviewed by an independent certified public
accountant, together with an expressed written opinion of the certified public accountant that
such Annual Financial Statement presents the financial position, results of operations, and cash
flows of the Housing Development fairly and in accordance with GAAP.
(ii) Tax Returns. As soon as available, but in no event later than
thirty (30) days after the time of filing with the Internal Revenue Service, the federal tax returns
(and supporting schedules, if any) of Borrower.
(iii) Audit Reports. Not later than ten (10) days after receipt thereof
by Borrower, copies of all reports submitted to Borrower by independent public accountants in
connection with each annual, interim or special audit of the financial statements of Borrower,
made by such accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit. If any such audit report results in Borrower
restating Residual Receipts upward for any fiscal year, then Borrower shall accompany delivery
of such audit report to Agency with the additional payment to Agency resulting from said
restatement pursuant to Section 3 of this Note. if any such audit report results in Borrower
restating Residual Receipts downward for any fiscal year, Borrower may carry forward the
overpayment made to Agency pursuant to such Section 3 as a credit against payments thereunder
in subsequent fiscal years.
(c) Late Payment. If any annual payment required pursuant to Section 3
above is not received by Agency within ten (10) calendar days after payment is due, Borrower
shall pay to Agency a late charge of five percent (5%) of such payment, such late charge to be
immediately due and payable without demand by Agency.
(d) Dispute Regarding Annual Financial Statement. If Agency disputes
any Annual Financial Statement, Agency shall notify Borrower of such dispute within sixty (60)
days• after receipt of an Annual Financial Statement and the parties shall cause their
representatives to meet and confer concerning the dispute and to use all reasonable efforts to
reach a mutually acceptable resolution of the matter in question within thirty (30) days after
Agency's notice of such dispute. If the parties are unable to reach a mutually acceptable
resolution within such thirty (30) day period, then, within twenty (20) days after the expiration'of
such period, Borrower and Agency shall appoint a national firm of certified public accountants to
review the dispute and to make a determination as to the matter in question within thirty (30)
days after such appointment, if the parties cannot, within ten (10) days, agree upon the firm to
be appointed, then, upon the application of either party, such firm shall be appointed by the
Presiding Judge of the Superior Court for the County of Riverside, California. Such firm's
determination shall be final and binding upon the parties. Such firm shall have full access to the
books, records and accounts of Borrower and the Property.
(e) Underpayment. If any audit by Agency reports an underpayment by
Borrower on this Note, Borrower shall pay the amount of such underpayment, together with the
late charge set forth in Section 20(c) of this Note, to Agency within ten (10) days after written
notice thereof to Borrower or, in the event of a dispute, after timely notice to Borrower of the
resolution of such dispute by the independent firm of certified public accountants, as the case
8921015610-0047 11-
1 1 11338.07 301104/11
may be, and if such underpayment amounts to more than five percent (5%) of the disputed
payment for the period audited, then, notwithstanding anything to the contrary in this section,
Borrower shall pay to Agency, within ten (10) days after written demand, Agency's reasonable
costs and expenses in conducting such audit and exercising its rights under this Section 20 of this
Note.
Date:_'f"`'Lr� 2011
$92/015610-0047 -12-
1111838.07 *01/04111
BORROWER:
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC,
a California limited liability company
Its: General Partner
By: Highway 111 Apts Member, LLC,
a Califomia limited liability
company, its member
By: �i
MOMI J. S110in, Member
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
LA QUINTA HOUSING AUTHORITY
78-495 Calle Tampico
La Quinta, CA 92253
Attention: Executive Director
DOC # 2014-0334646
09/03/2014 04:10 PM Fees: $23.00
Page 1 of 9
Recorded in Official Records
County of Riverside
Larry W. Ward
Assessor, County Clerk & Recorder
'This document was electronically submitted
to the County of Riverside for recording—
Receipted by: MRUIZ
(Space Above for Recorder's Use)
Exempt from Recordation Fee per Gov. Code § 27383
RELEASE OF CONSTRUCTION COVENANTS
This RELEASE OF CONSTRUCTION COVENANTS ("Release") is made this 2"d, day
of July,, by the LA QUINTA HOUSING AUTHORITY, a public body, corporate and politic
("Authority"), in favor of CORAL MOUNTAIN PARTNERS, L.P., a California limited
partnership ("Developer").
RECITALS
A. Developer is the owner of that certain real property located in the City of
La Quinta, County of Riverside, State of California, more particularly described in the legal
description attached hereto as Exhibit "A" ("Property").
B. On or about January 4, 2011, the former La Quinta. Redevelopment Agency
(`'Agency') and Developer entered into that certain Disposition and Development Agreement
("DDA") which provides for Developer to develop on the Property a one hundred seventy-six
(176) unit rental affordable housing development and certain on- and off -site public
improvements, more particularly described therein as the "Project."
C. Pursuant to Assembly Biil 26 from the 201 1-12 First Extraordinary Session of the
California Legislature, which was signed by the Governor on June 28, 2011 ("ABxl 26"), all
redevelopment agency activities, except continued performance of "enforceable obligations,"
were immediately suspended. A lawsuit was flied, challenging the constitutionality of ABx1 26
and companion bill ABxl 27 (which would have allowed redevelopment agencies to remain in.
existence and continue redevelopment, if the legislative bodies that established the agencies
elected to participate in a "voluntary alternative redevelopment program" and make certain
remittance payments). The California Supreme Court upheld the constitutionality of ABx1 26,
revising the effective dates of certain provisions, and struck down as unconstitutional ABxI 27.
(California Redevelopment Assn. v. Matosantos (2011) 53 CalAth 231. ABxI 26 is chapter 5,
Statutes 2012, First Extraordinary Session, which added Part 1.8 (suspension provisions) and
Part 1.85 (dissolution provisions) ("Part 1.85") of Division 24 of the Health and Safety Code.
Pursuant to Health and Safety Code Section 34171(I), added by Part 1.85, the City of La Quinta
("City") is the "successor agency" to the Agency. On January 3, 2012, the La Quinta City
Council adopted Resolution No. 2012-002, pursuant to which the City elected (a) to be the
"successor agency" to the Agency, and (b) to have the Authority be the "housing successor" to
882/015610-0047
7232846.2 07/09114
DOC #2014-0334646 Page 2 of 9 09/03/2014 04:10 PM
the Agency. On January 17, 2012, the Authority adopted HA Resolution No. 2012-002,
affirmatively electing to be the "housing successor" to the Agency.
D. Pursuant to Health and Safety Code Section 34176(b), added by Part 1.85, all of
the housing assets and functions of the Agency, including administration of the DDA, were
transferred to the Authority.
E. Pursuant to the DDA, Authority is required to furnish Developer with this Release
upon request by Developer after completion of construction of the Project.
F. The issuance by Authority of this Release shall "be conclusive evidence that
Developer has complied with the terms of the DDA pertaining to the construction of the Project.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated
herein by this reference, the parties hereto agree as follows:
1. As provided in the DDA, Authority does hereby certify that the construction of
the Project has been satisfactorily performed and completed, and that such development and
construction work complies with the DDA.
2. This Release does not constitute evidence of compliance with or satisfaction of
any obligation of Developer to any holder of a mortgage or any insurer of a mortgage security
money loaned to finance the work of construction of improvements and development of the
Property, or any part of thereof.
3. This Release is not a notice of completion as referred to in Section 3093 of the
California Civil Code.
4. This Release does not terminate any other agreement or document executed by
Developer. in connection with the DDA, including, without limitation, that certain Affordable
Housing Regulatory Agreement recorded on August 29, 2012, as Instrument No. 2012-041261 l,"
in the Official Records of the County of Riverside (the "Official Records"), that certain Ground
Lease between Developer and Authority dated August 1, 2012, as referenced in that certain
Memorandum of Unrecorded Ground Lease recorded on August 29, 2012, as Instrument No.
2012-0412609, in the Official Records, and that certain Leasehold Deed of Trust with
Assignment of Rents recorded on August 29, 2012, as Instrument No. 2012-0412615, in the
Official Records, all of which shall survive recordation of this Release.
[End — Signature page follows]
882/a15G1a-0o47
7232846.2 ,oval; is -2-
IN WITNESS WHEREOF, Authority has executed this Release as of the date set forth
above.
LA QUINTA HOUSING AUTHOI
a public body,,gorp9r politic
M.
882/015610-0047
7232846.2 a07/09/14
J. S'neek. Executive Director
State of California
County of Riverside
On lJ I't4 301 -ap t L+ before me, 0W D 6;0 0 ,
ff __ (insert name and title of the officer)
Notary Public, personally appeared aA k � Sr��y cd r_�
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature- (Seal)
++W+w
TERESA THOMPSON
Commission # 2030796
�r Notary Public - California
Riverside County♦ My Comm. Expires Jun 24, 2017
882/015610-0047
7232846.2 a07/09/14 -4-
DOC #2014-0334646 Page 5 of 9 09/03/2014 04:10 PM
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
Real property in the City of La Quinta, County of Riverside, State of California,
described as follows:
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST., SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89°39'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00008'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO. 2007-0103255, O.R.;
THENCE CONTINUING SOUTH 0000810" EAST ALONG SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01 °53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°09'07", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 18-02-50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90000'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
882/015b10-0047
723 28461 OW09/ 14 -5 -
DOC #2014-0334646 Page 6 of 9 09/03/2014 04:10 PM
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90009'34', AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89"50'26" WEST A
DISTANCE. OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE SOUTH 00"09'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89"48'22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID EAST LINE OF THE WEST HALF OF THE EAST
HALF. OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 00008'10" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673,63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449,483 SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
8821015610-0047
7232846.2 107/09/14 -6-
CONSENT TO RECORDATION
By LA QUINTA HOUSING AUTHORITY
La Quinta Housing Authority ("Owner"), owner of the fee interest in the real
property legally described as "Exhibit A", hereby consents to the recordation
of the foregoing Release of Construction Covenants against said real
property.
LA QUINTA HOUSING -AUTHORITY
ranVJ\S&evacek, Executive Director
State of California
County of Riverside
On 'I -a -a ®t � , before me, PAM NIETO, Notary Public, personally
appeared FRANK J. SPEVACEK who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument, and
acknowledged to me that he executed the same in his authorized capacity, and that
by his signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal. PAMELA NIET0
Commission # 1934806
Notary Public - California z
z �'O Riverside County a
Signature My Comm. Expires May 2, 2015
(seal)
DOC #2014-0334646 Page 8 of 9 09/03/2014 04:10 PM
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
Real property in the City of La Quinta, County of Riverside, State of California,
described as follows:
IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, THAT PORTION OF THE WEST HALF OF THE EAST HALF
AND THE EAST HALF OF THE WEST HALF OF THE NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 5
SOUTH, RANGE 7 EAST, SAN BERNARDINO BASE AND MERIDIAN, MORE
PARTICULARLLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 29;
THENCE SOUTH 89039'16" WEST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER, A DISTANCE OF 1,656.57 FEET TO THE
NORTHEAST CORNER OF SAID WEST HALF OF THE EAST HALF OF THE
NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 00"08'10" EAST ALONG THE EAST LINE OF SAID WEST
HALF OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 29, A DISTANCE OF 60.93 FEET TO
THE SOUTH RIGHT-OF-WAY LINE OF HIGHWAY 111 AS GRANTED TO
THE CITY OF LA QUINTA PER INSTRUMENT NO. 2007-0076267
RECORDED FEBRUARY 1, 2007 AND RE -RECORDED FEBRUARY 14, 2007
AS INSTRUMENT NO.2007-0103255, O.R.;
THENCE CONTINUING SOUTH 00008'10" EAST ALONG. SAID EAST LINE A
DISTANCE OF 626.13 FEET TO THE BEGINNING OF A NON -TANGENT
CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 300.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 01 °53'43" WEST, AND THE
TRUE POINT OF BEGINNING;
THENCE LEAVING SAID EAST LINE AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 16-0907", AN ARC
DISTANCE OF 84.57 FEET TO THE BEGINNING OF A REVERSE CURVE,
CONCAVE SOUTHERLY, HAVING A RADIUS OF 300.00 FEET, A RADIAL
LINE TO SAID POINT BEARS NORTH 18002'50" EAST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE THROUGHA
CENTRAL ANGLE OF 18-02-50", AN ARC DISTANCE OF 94.50 FEET;
THENCE NORTH 90°00'00" WEST A DISTANCE OF 264.78 FEET TO THE
BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHEASTERLY,
HAVING A RADIUS OF 200.00 FEET;
DOC #2014-0334646 Page 9 of 9 09/03/2014 04:10 PM
THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE,
THROUGH A CENTRAL ANGLE OF 90009'34", AN ARC DISTANCE OF
314.72 FEET;
THENCE NON -TANGENT TO SAID CURVE SOUTH 89°50'26" WEST A
DISTANCE OF 21.18 FEET TO THE WEST LINE OF SAID EAST HALF OF
THE WEST HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 29;
THENCE .SOUTH 00009'34" EAST ALONG SAID WEST LINE, A DISTANCE
OF 500.13 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER
OF THE SOUTHEAST QUARTER OF SECTION 29;
THENCE SOUTH 89048'22" EAST ALONG SAID SOUTH LINE A DISTANCE
OF 662.14 FEET TO SAID 'EAST LINE OF THE WEST HALF OF THE EAST
HALF OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER
OF SECTION 29;
THENCE NORTH 0000810" WEST ALONG SAID EAST LINE, A DISTANCE
OF 673.63 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND
RIGHTS -OF -WAY OF RECORD.
CONTAINING 449.,483.SQUARE FEET OR 10.319 ACRES, MORE OR LESS.
T4tvl 4 4a Qu4la&
MEMORANDUM
TO: Frank J. Spevacek, City Manager
VIA: Les Johnson, Community Development Director
FROM: Jon McMillen, Tall Man Group
DATE: March 26, 15
SUBJECT: Coral Mountain Apartments
Lender Estoppel Certificate
The Coral Mountain Project Staff has completed the Lender and Landlord
Estoppel Certificates for the Coral Mountain Development. The completed
Certificates have been reviewed and approved by the developer for accuracy and
consistency with their records The Landlord Certificate has been executed in
counterpart by the Lessee. � A4- tub .K+
By way of background, the Certificates are used to verify the terms associated
with the Ground Lease and Lenders Promissory Note and it is a requirement of
the Partnership Agreement between the developer, Coral Mountain Partners,
L.P., and tax credit purchaser, Hamilton USBCDC Investments, L.P.
Please review and sign where indicated,4if you should hal any additional
questions please contact Jon McMillen @ 760-212-2322.
0
LENDER'S ESTOPPEL CERTIFICATE
This LENDER'S ESTOPPEL CERTIFICATE ("Estoppel") is dated this 19'h day of
March, 2015, and is by La Quinta Housing Authority ("Lender").
WHEREAS, the former La Quinta Redevelopment Agency ("Agency") and Coral
Mountain Partners, L.P. ("Borrower") entered into that certain Disposition and Development
Agreement dated January 4, 2011 (as it may be amended from time to time, the "Loan
Agreement"), a copy of which is attached hereto and incorporated herein by this reference.
WHEREAS, pursuant to Health and Safety Code section 34176(b), La Quinta City
Council Resolution No. 2012-002, adopted by the La Quinta City Council on January 3, 2012,
and La Quinta Housing Authority Resolution No. 2012-002, adopted by Lender on January 17,
2012, Lender is the housing successor entity to the Agency, and as such all of the Agency's
housing rights and obligations the Loan Agreement were assigned and transferred to Lender.
WHEREAS, pursuant to the Loan Agreement, Lender loaned certain money to Borrower
in order for Borrower to acquire, develop, construct, rehabilitate and operate certain improved
real property commonly known as Coral Mountain Apartments (the "Premises"). Lender's loan
to Borrower is evidenced by that certain Amended and Restated Authority Loan Promissory
Note, executed by Borrower on or about February 10, 2011.
NOW, THEREFORE, Lender hereby agrees as follows:
1. The Loan Agreement is in full force and effect, and other than the assignment and
transfer to Lender, has not been further assigned, modified, supplemented, or
amended.
2. Lender has no knowledge that any default exists in the performance or observance by
Borrower of any covenant or condition in the Loan Agreement, nor of any event
which, with the delivery of notice or the expiration of a grace period, or both, would
constitute a default under the Loan Agreement. Lender has sent no notice of any
default which remains outstanding. There are no defenses against the enforcement of,
or offsets under, the Loan Agreement currently claimed by Lender.
3. Lender hereby acknowledges that Borrower and US Bancorp Community
Development Corporation will act in reliance upon the statements contained herein.
4. Please provide the following information using "N/A" when not applicable:
Balance as of 3/19/2015
• Monthly Payment Amount *
• $15,726,979.54 Drawn Funds
• 50% of Residual Receipts from
Operation of Coral Mountain
Apartments, as determined by a
Residual Receipts calculation from
the operation of the development the
preceding calendar year.
* Payment is Due Annually on the I" day of
May for the term of the Note
R • Replacement Reserve Balance as of I • N/A f
• Interest Rate
• Accrued and unpaid interest
• Amortization Period
■ Maturity Date **
• 1%per annum
• $237,404.25 Accrued and Unpaid
Total Interest as of 3/19/2015
• N/A
• 12/31/2070 or 55 years from the
Anniversary of the date 75% units
have been leased to and are occupied
by income qualified tenants at
affordable rents.
** The term may be extended for two (2)
additional ten (10) year periods.
IN WITNESS WHEREOF, the undersigned has duly executed this Estoppel as of the day and
year first above written.
LENDER:
Name of Lender: LA QU HOUSING AUTHORITY
By:
5ignandr
Name: Frank acek
Title: Housing Authority Executive Director
ATTEST:
Susan Maysels, Flousin utliority Secretary
LANDLORD ESTOPPEL CERTIFICATE
March 20, 2015
Citibank, N.A.
c/o Citi Community Capital
390 Greenwich Street, 2nd Floor
New York, New York 10013
Re: Ground Lease dated as of August 1, 2012 between the La Quinta Housing
Authority, as "Landlord," and Coral Mountain Partners, L.P., as lessee
Lessee: Coral Mountain Partners, L.P., a California
limited partnership ("Borrower")
Premises: Coral Mountain Apartments
79-625 Vista Coralina Lane
La Quinta, California 92253
Commencement Date: August 29, 2012
Termination Date: The earlier of December 31, 2070 and the 551"
anniversary of the date 75% of the units are
occupied subject to two 10-year renewals
Ladies and Gentlemen:
The undersigned, as Landlord, does hereby state, declare, represent and warrant Citibank,
N.A., a national banking association ("Funding Lender"), as follows:
1. Attached hereto as Exhibit A-1 is a true, correct and complete copy of the above -
captioned ground lease (the "Lease"); a Memorandum of which was recorded in the Official
Records of Riverside County, California (the "Official Records"). Except as set forth on
Exhibit A-1, there are no amendments, supplements, modifications or changes to the Lease or
additional documents or instruments affecting the rights, duties or obligations of either party to
the Lease with respect to the Lease. Terms not otherwise defined herein shall have the same
meanings as ascribed to such terms in the Lease.
2. The undersigned is the Landlord under the Lease with respect to the premises
described above (the "Property") and the undersigned has not assigned or agreed to assign the
Landlord's interest under the Lease, in whole or in part.
3. Funding Lender made a loan in the amount of $24,400,000 ("Funding Loan") to
the California Municipal Finance Authority, a joint exercise of powers agency duly organized
and existing under the laws of the State of California (in such capacity, "Governmental
Lender'), which in turn made a loan to Borrower in the same amount (the "Borrower Loan")
for the rehabilitation, development and/or equipping of a housing project known as Coral
Mountain Apartments and located at the Property. The Borrower Loan is evidenced by that
Landlord Estoppel Certificate 1 Coral Mountain Apartments
certain Multifamily Note in the original principal amount of up to $24,400,000 made by
Borrower in favor of Governmental Lender (the "Borrower Loan Note") and is secured by,
among other things, that certain Multifamily Leasehold Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing (the "Security Instrument"), dated as of August 1, 2012
from Borrower in favor of Governmental Lender, encumbering the Property, and was disbursed
to Borrower pursuant to a certain Borrower Loan Agreement dated as of August 1, 2012 between
Borrower and Governmental Lender (the "Borrower Loan Agreement") and a Construction
Funding Agreement dated as of August 1, 2012 between Borrower and Funding Lender (the
"Construction Funding Agreement"; together with the Borrower Loan Agreement collectively
referred to'as the "Loan Agreement"). The Borrower Loan Note, the Security Instrument, the
Loan Agreement and all other documents executed in connection with the Borrower Loan are
collectively referred to as the "Loan Documents"). Governmental Lender assigned and
transferred the Borrower Loan Note, the Security Instrument and the Borrower Loan Agreement
to Funding Lender simultaneously with the execution and delivery of such documents to secure
the Funding Loan.
4. Borrower has requested Funding Lender agree to convert the Borrower Loan from
construction to permanent phase in accordance with the terms of the Loan Agreement and
Funding Lender has agreed, subject to the fulfillment of the Conditions to Conversion (as
defined in the Construction Funding Agreement), including, without limitation, the execution
and delivery of this Estoppel Certificate. Accordingly, Landlord represents as follows:
(a) There are no leases between Landlord and any other person or entity
affecting the Property except the Lease.
(b) The Lease is in full force and effect.
(c) Landlord has no knowledge of any default, or that any event or condition
which with the passing of time or the giving of notice, or both, would constitute a default on the
part of Landlord or Lessee, exists under the Lease in the performance of the terms, covenants and
conditions of the Lease required to be performed on the part of Landlord or Lessee.
(d) Landlord has received no notice of any assignment, hypothecation,
mortgage, conveyance or pledge of Lessee's interest under the Lease or the rents or other
amounts payable thereunder, except for the Security Instrument, the other Loan Documents, and
that certain Leasehold Deed of Trust with Assignment of Rents dated as of August 1, 2012 from
Borrower in favor of Landlord, encumbering the Property.
(e) There is no deferred rent, either payable or accrued, under the Lease as of
the date hereof.
(f) The Landlord executes this Estoppel Certificate for the benefit and
protection of Funding Lender with full knowledge that Funding Lender is relying on this
Estoppel Certificate in converting the Loan from the construction to the permanent phase.
5. This Estoppel Certificate shall inure to the benefit of Funding Lender and the
other parties hereto and Funding Lender's and such parties' respective successors and assigns.
Landlord Estoppel Certificate 2 Coral Mountain Apartments
IN WITNESS WHEREOF, the undersigned, as Landlord, has executed this Landlord
Estoppel Certificate as of the date first written above.
LANDLORD:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
By:
Na e: 1` •aMirector
vacek
Title: X
ATTEST:
Susan Maysels, Auth ty Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
SIGNED IN COUNTERPART
Allison LeMoine-Bui, Authority Counsel
Landlord Estoppel Certificate S-1 Coral Mountain Apartments
IN WITNESS WHEREOF, the undersigned, as Landlord, has -executed this Landlord
Estoppel Certificate as of the date first written above.
LANDLORD:
LA QUINTA HOUSING AUTHORITY,
a public body, corporate and politic
SIGNED IN COUNTERPART
By:
Name: Frank J. Spevacek
Title: Executive Director
ATTEST:
SIGNED IN COUNTERPART
Susan Maysels, Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
6 y`
Allison LeMoine-Bui, Authority Counsel
Landlord Estoppel Certificate S-1 Coral Mountain Apartments
LESSEE:
CORAL MOUNTAIN PARTNERS, L.P.,
a California limited partnership
By: Coral Mountain AGP, LLC
a California limited liability company
Its: Administrative General Partner
By: KD Ho . g Partners, Inc.,
a Cal' mia corporation
Its: Mari Rer
By: �
Name:
Title:
By: WCH Affordable VIII, LLC
a California limited liability company
Its: Managing General Partner
By: Western Community Housing, Inc.
a California nonprofit public benefit corporation
Its: Sole Member and Manager
By:
Name: Sandra C. Gibbons
Title: Chief Financial Officer
Landlord Estoppel Certificate S-2 Coral Mountain Apartments
EXHIBIT A-1
GROUND LEASE
Landlord Estoppel Certificate A-1 Coral Mountain Apartments
CORAL MOUNTAIN PARTNERS, L.P.
78982 Hwy 111, Suite 1B, La Quinta, CA 92253
(760) 771-3345 Fax (760) 771-0686
October 6, 2015 RECEIVED
Mr. Frank Spevacek
Executive Director
La Quinta Housing Authority
RE: Coral Mountain Apartments
Cost Savings
Dear Mr. Spevacek,
OCT 7 20115
CITY OF LA QUINTA
CITY MANAGER'S OFFICE
Pursuant to our conversation about a partial release of the Cost Savings at Coral Mountain
Apartments we have reviewed the DDA and investigated a partial payment of the "Cost
Savings".
Coral Mountain Partners is to account for any "Cost Savings" from the original development
budgets and refund same back to the Housing Authority for which the $29M Promissory Note
principal amount will be reduced by an equal amount of the refunded Cost Savings.
Our contractual requirement is to provide the Cost Savings to the Housing Authority within 60
days of the Final Equity Contribution from the equity provider (Limited Partner). We had
anticipated the Final Equity contribution to have been funded by September 30, 2015. This has
not occurred because we have not received our final 8609 Forms from CTCAC which establish
the final basis from which the final equity contributions are calculated. In conflict with this
timing, the DDA requires the Cost Savings Audit to occur within 60 days of final C of O. This
audit date requirement is one that was not thought through or was missed in the many revisions
of the DDA as it cannot occur within that time frame and be accurate. In reality the project
cannot know its final Sources and Uses and therefore audit same until such time as the Final
Equity Contribution is funded to the Project.
After a thorough review and assessment of current total Project Development Costs, Coral
Mountain Partners would like to release a significant amount of monies that will be deemed, and
included in, the final "Cost Savings" amount. We have chosen an amount that will not
jeopardize the economic viability of the project prior to the final reconciliation of Project
Sources and Uses and the final "Cost Savings" calculation.
The DDA does not contemplate a "partial" release of the "Cost Savings" or interim adjustments
of the Promissory Note Balance and as such we are requesting your concurrence of the
following;
• Coral Mountain Apartments will agree to release $5,000,000 (Five Million Dollars) of
project funds as a partial payment of the anticipated "Cost Savings" pending a final
reconciliation once the final Equity Contributions are funded.
• This $5,000,000 will be applied as a paydown of the principal balance of the $29M
Promissory Note, making the outstanding balance of the Promissory Note $24M prior to
any further adjustments. We would request the Housing Authority issue a receipt and
letter indicating this is the understanding and has occurred.
• Coral Mountain Partners will provide the final reconciliation and any further "Cost
Savings" once the final Equity has been received. At the time the Final Cost Savings are
paid to the Housing Authority the Promissory Note will be amended to reflect payment of
both the $5,000,000 paydown and any additional "Cost Savings" per the Final
reconciliation. The resultant Housing Authority Promissory Note reflecting the reduced
principal balance will be carried forward as Permanent Project Financing.
If you would like to discuss this further please contact me at your earliest convenience.
If this meets with your approval and the reflects the wishes of the Housing Authority please sign
and date below, return a copy to us, and we will work with Jon McMillen to start the process to
provide the Housing Authority with the $5,000,000.
Coral Mountain Partners, AGP, LLC
General Partner
Coral Mountain Partners, L.P.
Accepted and agreed to this day of Oct, 2015
€r Sp a
Executi e Direc r
La Quin -ng Authority
LENDER'S ESTOPPEL CERTIFICATE
This LENDER'S ESTOPPEL CERTIFICATE ("Estoppel") is dated this 241" day of May,
2016, and is by La Quinta Housing Authority ("Lender").
WHEREAS, the former La Quinta Redevelopment Agency ("Agency") and Coral
Mountain Partners, L.P. ("Borrower") entered into that certain Disposition and Development
Agreement dated January 4, 2011 (as it may be amended from time to time, the "Loan
Agreement"), a copy of which is attached hereto and incorporated herein by this reference.
WHEREAS, pursuant to Health and Safety Code section 34176(b), La Quinta City
Council Resolution No. 2012-002, adopted by the La Quinta City Council on January 3, 2012,
and La Quinta Housing Authority Resolution No. 2012-002, adopted by Lender on January 17,
2012, Lender is the housing successor entity to the Agency, and as such all of the Agency's
housing rights and obligations the Loan Agreement were assigned and transferred to Lender.
WHEREAS, pursuant to the Loan Agreement, Lender loaned certain money to Borrower
in order for Borrower to acquire, develop, construct, rehabilitate and operate certain improved
real property commonly known as Coral Mountain Apartments (the "Premises"). Lender's loan
to Borrower is evidenced by that certain Amended and Restated Authority Loan Promissory
Note, executed by Borrower on or about February 10, 2011.
NOW, THEREFORE, Lender hereby agrees as follows:
The Loan Agreement is in full force and effect, and other than the assignment and
transfer to Lender, has not been further assigned, modified, supplemented, or
amended.
2. Lender has no knowledge that any default exists in the performance or observance by
Borrower of any covenant or condition in the Loan Agreement, nor of any event
which, with the delivery of notice or the expiration of a grace period, or both, would
constitute a default under the Loan Agreement. Lender has sent no notice of any
default which remains outstanding. There are no defenses against the enforcement of,
or offsets under, the Loan Agreement currently claimed by Lender.
3. Lender hereby acknowledges that Borrower and US Bancorp Community
Development Corporation will act in reliance upon the statements contained herein.
4. Please provide the following information using "N/A" when not applicable:
• Principal Balance as of 5/24/2016 • $22,899,921.32 Drawn Funds
• Monthly Payment Amount * 50% of Residual Receipts from
Operation of Coral Mountain
Apartments, as determined by a
Residual Receipts calculation from
the operation of the development the
preceding calendar year.
* Payment is Due Annually on the 15` day of
May for the term of the Note
Reserve Balance as of 5/24/2016 $64,540.58
• Interest Rate
■ 1 % per annum
• Accrued and unpaid interest
• $507,675.21 Accrued and Unpaid
Total Interest as of 5/24/2016
• Amortization Period
• N/A
■ Maturity Date **
• 12/31/2070 or 55 years from the
Anniversary of the date 75% units
have been leased to and are occupied
by income qualified tenants at
affordable rents.
** The term may be extended for two (2)
additional ten (10) yyear periods.
IN WITNESS WHEREOF, the undersigned has duly executed this Estoppel as of the day and
year first above written.
LENDER:
Name of Lender: LA QUINTA HOUSING AUTHORITY
Name: Frank T-S-p-evacek
Title: Executive Director, Housing Authority
ATTEST:
Susan Maysels, Housing Aut city Secretary
La Quints Housing Authority
July 26, 2016
Mr. John Durso
Coral Mountain Partners
78-982 Highway 111, Suite 1B
La Quinta, CA 92253
RE: Coral Mountain Apartments
Cost Savings and Escrow Closeout
Dear Mr. Durso.
Pursuant to our recent conversation, regarding Coral Mountain Apartments Cost
Savings, the La Quinta Housing Authority requests the balance of the Escrow account
in the approximate amount of $1,137,283.46 be released. These funds represent a
portion of the Cost Savings for the project. The release of funds should be wired to the
following account:
Bank: Wells, Fargo Bank - Governmental Banking Division
ABA: 121000248
Account #: 4159282482
Account Name: City of La Quinta
Reference: Coral Mountain City of La Quinta
Cost Savings Reimbursement
If additional information is needed to expedite processing of this request, please
contact the City's Housing Coordinator at 760-777-7094.
Sincerely,
Frank J. Ppqqacek
Executiv irector
78-495 Calle Tampico I La Quinta I California 92253 1 760.777.7000
La Quinta Housing Authority
November 24, 2015
Mr. John Durso
Coral Mountain Partners
78-982 Highway 111, Suite 1B
Lo Quinta, CA 92253
RE: Coral Mountain Apartments
Cost Savings
Dear Mr. Durso.
Pursuant to your letter dated October 6, 2015, regarding Coral Mountain Apartments
Cost Savings, the La Quinta Housing Authority requests a portion of the "Cost Savings"
be released in the amount of $5,000,000 (Five Million Dollars). The release of funds
should be wired to the following account:
Bank: Wells Fargo Bank - Governmental Banking Division
ABA: 121000248
Account #: 4159282482
Account Name: City of La Quinta
Reference: Coral Mountain City of La Quinta
Cost Savings Reimbursement
If additional information is needed to expedite processing of this request, please
contact Housing Coordinator Carla Triplett at 760-777-7120.
Sincerely,
nk J pec%
!cuti a Dir,6ctor
78-495 Calle Tampico I La Quinta I California 92253 1 760.777.7000
CORAL MOUNTAIN PARTNERS, L.P.
78982 Hwy 111, Suite 1B, La Quinta, CA 92253
(760) 771-3345 Fax (760) 771-0686
October 6, 2015 [RECEIVED
Mr. Frank Spevacek
Executive Director
La Quinta Housing Authority
RE: Coral Mountain Apartments
Cost Savings
Dear Mr. Spevacek,
OCT i' 20 15
CITY OF LA QUINTA
CITY MANAGER'S OFFICE
Pursuant to our conversation about a partial release of the Cost Savings at Coral Mountain
Apartments we have reviewed the DDA and investigated a partial payment of the "Cost
Savings".
Coral Mountain Partners is to account for any "Cost Savings" from the original development
budgets and refund same back to the Housing Authority for which the $29M Promissory Note
principal amount will be reduced by an equal amount of the refunded Cost Savings.
Our contractual requirement is to provide the Cost Savings to the Housing Authority within 60
days of the Final Equity Contribution from the equity provider (Limited Partner). We had
anticipated the Final Equity contribution to have been funded by September 30, 2015. This has
not occurred because we have not received our final 8609 Forms from CTCAC which establish
the final basis from which the final equity contributions are calculated. In conflict with this
timing, the DDA requires the Cost Savings Audit to occur within 60 days of final C of O. This
audit date requirement is one that was not thought through or was missed in the many revisions
of the DDA as it cannot occur within that time frame and be accurate. In reality the project
cannot know its final Sources and Uses and therefore audit same until such time as the Final
Equity Contribution is funded to the Project.
After a thorough review and assessment of current total Project Development Costs, Coral
Mountain Partners would like to release a significant amount of monies that will be deemed, and
included in, the final "Cost Savings" amount. We have chosen an amount that will not
jeopardize the economic viability of the project prior to the final reconciliation of Project
Sources and Uses and the final "Cost Savings" calculation.
The DDA does not contemplate a "partial" release of the "Cost Savings" or interim adjustments
of the Promissory Note Balance and as such we are requesting your concurrence of the
following;
• Coral Mountain Apartments will agree to release $5,000,000 (Five Million Dollars) of
project funds as a partial payment of the anticipated "Cost Savings" pending a final
reconciliation once the final Equity Contributions are funded.
• This $5,000,000 will be applied as a paydown of the principal balance of the $29M
Promissory Note, making the outstanding balance of the Promissory Note $24M prior to
any further adjustments. We would request the Housing Authority issue a receipt and
letter indicating this is the understanding and has occurred.
• Coral Mountain Partners will provide the final reconciliation and any further "Cost
Savings" once the final Equity has been received. At the time the Final Cost Savings are
paid to the Housing Authority the Promissory Note will' be amended to reflect payment of
both the $5,000,000 paydown and any additional "Cost Savings" per the Final
reconciliation. The resultant Housing Authority Promissory Note reflecting the reduced
principal balance will be carried forward as Permanent Project Financing.
If you would like to discuss this further please contact me at your earliest convenience.
If this meets with your approval and the reflects the wishes of the Housing Authority please sign
and date below, return a copy to us, and we will work with Jon McMillen to start the process to
provide the Housing Authority with the $5,000,000.
Coral Mountain Partners, AGP, LLC
General Partner
Coral Mountain Partners, L.P.
Accepted and agreed to tlus _(day of Oct, 2015
€r Ste-Direor
a k
Executi
La QuiJ g Authority