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2003 Senior Affordable Housing Corp - Regulatory Agrmt & Declaration of Covenants & RestrictionsCOMMONWEALTH LAND 11TLE CO. RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: LA QUINTA REDEVELOPMENT AGENCY 78-495 Calle Tampico La Quinta, California 92253 Attn: Executive Director DOD a 2003--627066 08/15/2093 08:00A Fee:NC Page i of M Recorded in Official Records County of Riverside Gary L. Orso Assessor, County Clerk 8 Recorder 1111111111111111111111111111111111111111111111111111111 M S U PAGE SIZE DA PCOR NOCOR SMF MISC. A R L COPY LONG REFUND NCHG EXAM This Agreement is recorded at the request and for the benefit of the La Quinta Redevelopment Agency acid is exempt from the payment of a recording fee pursuant to Government Code Section 6103. REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS IF THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Agreement") is entered into this day of v� PSI , 2003("Effective Date"), by and between the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and SENIOR AFFORDABLE HOUSING CORP. NO. 3, a California nonprofit public benefit corporation ("Owner"). RECITALS A. Owner is the owner in fee of that certain real property located in the City of La Quinta, County of Riverside, State of California, legally described in Exhibit "A" attached hereto and incorporated herein by reference (the "Property"). B. Agency and Owner have entered into a Disposition and Development Agreement (the "DDA"), dated as of October 15, 2002, concerning the disposition and development of the Property, which DDA is incorporated herein by reference and is a public record available for public inspection at Agency's offices. The definitions of all terms in the DDA shall apply to this Agreement unless otherwise indicated C. Pursuant to the DDA, Agency conveyed the Property to Owner and Owner agreed to construct seventy-nine (79) one bedroom affordable senior citizen rental units, one (1) two bedroom on -site manager's unit, and related improvements, as more particularly described in the DDA as the "Project." D. Agency and Owner desire to enter- into this Agreement to place certain covenants and restrictions on Owner's development, use, operation, and maintenance of the Property, all as set forth herein. 538/0 l 5010-0047 41 1399.0? a07/ 1 b/03 L AGREEMENT Based upon the foregoing Recitals and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by both parties, Agency and Owner agree as follows: I. Definitions. The following terms as used in this Agreement shall have the meanings given below unless expressly provided to the contrary: The tern "Affordable Rent" shall mean the following rate (which shall include a Utility Allowance): annual rentals whose amount does not exceed the maximum percentage of income that can be devoted to rent by Very Low Income Tenants (which is 30% of 50% of the Area Median Income, adjusted for family size appropriate for the unit). The tern "Area Median Income" means the median household income for the County of Riverside, as annually estimated by the United States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937. In the event these federal determinations of Area Median Income are discontinued, the Area Median Income shall be the income limits established by the Department of Housing and Community Development in accordance with Health and Safety Code Section 50093. The term "Eligible Tenant" shall mean a tenant of one of the Residential Units within the Project who, as of the commencement date of his or her occupancy, satisfies both of the following requirements: (i) the person is a Very Low Income Tenant; and (ii) the person is a "qualifying resident" or "senior citizen" within the meaning of California Civil Code Section is "qualified permanent resident," "cohabitant," or "permitted health care 51.3. A person who ' resident" within the meaning of California Civil Code Section 51.3 and who resides with the Eligible Tenant described above shall also be considered an "Eligible Tenant provided, however that such person shall be entitled to reside in a Residential Unit only to the extent occupancy is permitted under Civil Code Section 51.3. The term "Initial Term" shall mean the period commencing on the Effective Date and continuing until the later of the following: (i) the date that is forty (40) years after the date of the first occupancy of a Residential Unit, or (ii) the expiration of the period of time defined in the DDA as the Term of the HUD Capital Advance Documents. The term "Low or Moderate income Tenant" shall mean persons and families whose income does not exceed one hundred twenty percent (120%) of the Area. Median Income, adjusted for family size in accordance with the adjustment factors adopted and amended from time to time by the United States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937. If the Second Term Condition is satisfied, during the Second Term, the Residential Units must be rented to Low or Moderate income Tenants. The term "Project" shall have the meaning ascribed in Recital C. The term "Residential Unit" shall refer to all of the residential units on the Property excluding only the on -site manager's unit. 538/015610-0 47 _ - 41 i39y.o2 a07i16iO3 2003-627856 e8r15r2ee3108:e0A 2 of 16 The term "Second Term" shall mean the period commencing on the first day following the expiration of the Initial Term and continuing thereafter for a period of fifteen (15) years, but not to exceed the date that is fifty-five (55) years after the date of the first occupancy of a Residential Unit. The term "Second Term Affordable Rent" shall mean the following rate (which shall include a Utility Allowance): annual rentals whose amount does not exceed the maximum percentage of income that can be devoted to rent by Low or Moderate Income Tenants (which is 35% of 110% of the Area Median Income, adjusted for family size appropriate for the unit). The term "Second Term Condition" shall have the meaning ascribed in Section 6 of this Agreement. The term "Second Term Eligible Tenant" shall mean a tenant of one of the Residential Units within the Project who, as of the commencement date of his or her occupancy, satisfies both of the following requirements: (i) the person is a Low or Moderate Income Tenant, and (ii) the person is a "qualifying resident" or "senior citizen" within the meaning of California Civil Code Section 51.3. A person who is "qualified permanent resident," "cohabitant," or "permitted health care resident" within the meaning of California Civil Code Section S 133 and who resides with the Eligible Tenant described above shall also be considered an "Eligible Tenant"; provided, however that such person shall be entitled to reside in a Residential Unit only to the extent occupancy is permitted under Civil Code Section 51.3. The term "Utility Allowance" shall mean that amount required for utilities which are not paid for by Owner. The term "Very Low Income Tenant" shall mean persons and families whose. income does not exceed fifty percent (50%) of the Area Median Income, adjusted for family size in accordance with the adjustment factors adopted and amended from time to time by the United States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937. 2. Duration of Covenants. The covenants set forth in this Agreement shall remain in etTect from the EtTective Date and continue until the expiration of the Second Term. As further described in Section 6 of this Agreement, if the Second Term Condition is satisfied, the atfordability covenants and income levels required during the Initial Term will be different from those required during the Second Term. 3. Development of Project. Owner hereby covenants and agrees that Owner shall develop the Project on the Property within the times and subject to the terms and conditions set forth in the DDA. 4. Use. Owner shall operate the Property as an affordable senior rental project pursuant to the terms set forth in this Agreement. 5. Occupancy Levels. The number of persons permitted to occupy each Residential Unit shall not exceed the occupancy permitted pursuant to the general requirements of the United States Department of Housing and Urban Development, which as of the date of this Agreement , /015(1 l o-00.17 411399.02 a07/ 1(/03 2903-627956 08t15/2003 08: NA 3 of 16 is two persons per bedroom, plus one person (e.g., for a two bedroom unit the maximum number of persons residing in the unit can be five persons). The lease for each unit shall include a provision limiting the number of persons permitted to occupy each Residential Unit in accordance with the preceding sentence and Owner shall enforce such occupancy restrictions. 6. Income Eligibility Affordable Rent. a. Affordability Covenants. During the term of this Agreement, the Residential Units are to be rented to and occupied only by Eligible Tenants, with each unit to be rented at no greater than Affordable Rent. A Residential Unit occupied by a tenant who qualifies as an Eligible Tenant at the commencement of the occupancy shall be treated as occupied by an Eligible Tenant at such incorne level until a recertification of such Eligible Tenant's income in accordance with Section 8 below demonstrates that such tenant no longer qualifies as an Eligible Tenant at that income level. b. Second Term Condition. Owner desires to expand the income category required by this Agreement to low or moderate income including very low income upon the commencement of the Second Term. Agency has agreed to permit this change in the income category provided that Agency receives confirmation that a determination has been made that (i) the change will not jeopardize Agency's ability to count the Residential Units towards the Agency's very low income housing requirements under the Community Redevelopment Law (Health & Safety Code §§ 33000 el veal.), including without limitation Agency's production housing requirements, and (ii) the financial assistance provided to Owner by Agency from Agency's Low and Moderate Income Housing Fund for the construction and maintenance of the Project will continue to qualify as funds used for the production of very low income housing for' the purpose of the Community Redevelopment Law (collectively, the "Second Term Condition"'). The occurrence of either of the following shall satisfy the requirement that "a determination has been made" within the meaning of the preceding sentence: (i) a court having jurisdiction has rendered a final, non -appealable judgment in a judicial validation action as to the satisfaction of the Second Term Condition, or (ii) the California Department of Housing and Community Development and any other regulatory or public agency with jurisdiction has provided Agency written confirmation as to the satisfaction of the Second Term Condition. If the Second Term Condition is satisfied, during the Second Term, the references in this Agreement to the term "Eligible Tenant" shall be deemed to mean "Second Term Eligible Tenant" as defined in Section 1, and the references to the term "Affordable Rent" shall be deemed to mean "Second Term Atordable Rent" as defined in Section l . If the Second Term Condition is not satisfied, however, the terms "Eligible Tenant" and "Affordable Rent" shall continue to have the meaning given to those terms in Section I for the entire term of this Agreement. 7. Determination of Eligible Tenants. Owner shall make a good faith reasonable effort to determine the age and income eligibility of each prospective tenant prior to allowing the tenant to occupy a Residential Unit. Notwithstanding any other provision set forth in this Agreement to the contrary, in determining the age and income eligibility of a prospective tenant, Owner shall be entitled to rely upon documentation provided by the prospective tenant and Owner shall not be required to do any further or independent investigation or verification of the information provided by the prospective tenant. in the event Owner rents a. Residential Unit to a 538/01 561 ()-0047 .411399.02 a07/16/03 2093-627956 —Ll- 08/1513003 08:00A 4 of 16 tenant who is not an Eligible Tenant due to false information provided by the prospective tenant, Owner shall not be deemed to be in default of its obligations set forth in this Agreement, provided, however, that within a reasonable time after receiving such information, Owner shall take steps to terminate the tenancy of such tenant and re -let the Residential Unit to an Eligible Tenant. 8. Tenant Recertification. immediately prior to the first anniversary date of the occupancy of a Residential Unit by an Eligible Tenant and on each anniversary date thereafter, Owner shall recertify the incorne of such Eligible Tenant. Notwithstanding any other provision set forth in this Agreement to the contrary, if, after performing such recertification, Owner determines that the tenant's household incorne exceeds the incorne at which such tenant would qualify as an Eligible Tenant, Owner at its option may permit the tenant to continue to reside in such Residential Unit, provided that Owner may increase the rent for such Residential Unit to an amount not greater than the "fair market rent" for comparable units in the area, as said amount is determined from time to time by the Housing Authority of the County of Riverside or other similar governmental housing agency. 9. Rental A�gyreements. The form of rental agreement between Owner and each of the tenants of the Residential Units shall obligate the tenants to comply with the provisions set forth in this Agreement. Not by way of limitation of the foregoing, each lease for a Residential Unit shall contain a provision to the etTect that Owner has relied on the age and income certification and supporting information supplied by the tenant in determining qualification for occupancy of the Residential Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. In addition, _ each lease for a Residential Unit shall contain a provision permitting Agency to review any of Owner's books and records relating to whether the tenant is an Eligible Tenant hereunder and waiving any privacy or other rights the tenant may have that otherwise might prevent such disclosure. The initial form rental agreement to be utilized by Owner for the Residential Units, and any changes to such form rental agreement, shall be approved by Agency's Executive Director, which approval shall not be unreasonably withheld, prior to the initial use of the lease form and, each time the form is changed, prior to the first use of the changed form. Agency's Executive Director shall approve or disapprove the rental agreement (or- changes thereto, as applicable) within fifteen (15) days of Owner's submittal. During the Term of the HUD Capital Advance Documents, the form of lease approved by HUD shall be deemed approved by Agency. 10. Annual Reports. On or before August 1 of each fiscal year (July 1 - June 30) or partial fiscal year, Owner shall submit or cause to be submitted to Agency's Executive Director the annual report required pursuant to Health and Safety Code Section 33418, as the same may be amended from time to time, in the form prescribed by Agency. 11. Books and Records. Owner shall maintain complete and accurate records pertaining to the Residential Units for a minimum period of four (4) years and shall permit any duly authorized Agency representative to inspect such books and records. 12. Repair and Maintenance of Property. Owner shall maintain or cause to be maintained all improvements that may exist on the Property from time to time in first class condition and repair (and, as to landscapin(-11, in a healthy condition) (including without limitation 538/01561 0-0 47 411399.02 a07/16/03 -5- 2883-627956 esr i 5r2 193 es WA of 16 any approved landscape plans), as the same may be amended from time to time, and all other applicable laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or clairning jurisdiction and all their respective departments, bureaus, and officials. In addition, Owner shall (i) keep the Property or cause the Property to be kept free from all graffiti and any accumulation of debris or waste material and (ii) keep all trash containers out of public view during non -trash days and otherwise maintained in accordance with applicable requirements of Agency or any other governmental agency with jurisdiction. Owner shall make all repairs and replacements necessary to keep the improvements in first class condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. In the event that Owner breaches any of the covenants contained in this Section 12, and such default continues for a period of one (1) day after written or verbal notice from Agency (with regard to maintenance and removal of trash containers), five (5) business days after written or verbal notice from Agency (with respect to landscaping, graffiti, debris, waste material, or general maintenance) or thirty (30) days after written notice from Agency (with respect to building improvements), then Agency, in addition to whatever other remedy it may have at law or in equity, shall have the right to enter upon the Property and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, Agency shall be permitted (but not required) with due notice and without disturbing the tenants to enter upon the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Property, and to attach a lien on the Property, or to assess the Property, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by Agency and/or costs of such cure, including a fifteen percent (15%) administrative charge, which amount shall be promptly paid by Owner to Agency upon demand. Notwithstanding the foregoing, during the Term of the HUD Capital Advance Documents, there shall be no entry by Agency to perform such acts and work without the prior written approval of HUD, except in the event of an emergency, and any entry shall be upon at least forty-eight (48) hours notice to the Owner except in the event the nature of the emergency requires a shorter notice period. In addition, during the Term of the HUD Capital Advance Documents, (1) Agency shall not be permitted to attach a lien on the Property pursuant to this Section 12; and (ii) the 15% administrative charge described above shall be payable only from residual receipts if approved by HUD. 13. Insurance Obligations. a. Duty to Procure Insurance. Owner, for the term of this Agreement, shall procure and keep in full force and effect or cause to be procured and kept in full force and effect for the mutual benefit of Owner and Agency, and shall provide Agency evidence reasonably acceptable to Agency Executive Director, insurance policies meeting the minimum requirements set forth below: (1) Commercial General Liability insurance with respect to the Property and the operations of or on behalf of Owner, in an amount not less than One Million Dollars ($1,000,000) per occurrence combined single limit including products, completed operations, contractual, bodily injury, personal injury, death and property damage liability per occurrence, subject to such increases in amount as Agency may reasonably require from time to time; provided, that the 5 38/01 5610-0 047 41 1399.0'_ a07/16/03 —�2803-627956 — esri r2 193 es eer+ 6 of 16 percentage increase in coverage shall not be required to exceed the percentage increase in the Consumer Price Index published by the United States Department of Labor, Bureau of Labor Statistics, for Urban Wage Earners and Clerical Workers, Los Angeles -Long Beach -Anaheim Average, All Items (1984.` 100) (the "Index"), from and after the date of this Agreement, or, if said Index is discontinued, such official index as may then be in existence and which is most nearly equivalent to said Index (the "CPI Adjustment"). Unless otherwise approved in advance by the Agency Executive Director, the insurance to be provided by Owner may provide for a deductible or self -insured retention of not more than Ten Thousand Dollars ($10,000), with such maximum amount to increase at the sarne rate as the periodic increases in the minimum amount of total insurance coverage set forth above. (ii) With respect to the improvements and any fixtures and furnishings to be owned by Owner on the Property, 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 earthquake to the extent generally and commercially available at commercially reasonable rates. Agency shall be a loss payee under such policy or policies and such insurance shall contain a replacement cost endorsement. b. Policy Requirements. All policies of insurance required to be carried by Owner shall meet the following requirements and contain the following endorsements, provisions, or clauses (as applicable): (i) The policies shall be written by responsible and solvent insurance companies licensed in the State of California and having a policyholder's rating of A or better, in the most recent addition of `Best's Key Rating Guide -- Property and Casualty." A copy of each paid -up policy evidencing such insurance (appropriately authenticated by the insurer) or a certificate of the insurer, certifying that such policy has been issued, providing the coverage required herein, and containing the provisions specified herein, small be delivered to Agency on or prior to the date of this Agreement, and thereafter, upon renewals, not less than thirty (30) days prior to the expiration of coverage. Agency may, at any time, and ti-om time to time, inspect and/or copy any and all insurance policies required to be procured by Owner hereunder. in no event shall the limits of any policy be considered as limiting the liability of Owner hereunder. (ii) The insurer shall not cancel or materially alter the coverage provided by such policy in a manner adverse to the interest of the insured without first giving Agency a minimum of thirty (30) days prior written notice by certified mail, return receipt requested, and 535/015610-0047 Al 1399.0? a07/16/03 2803-627956 -7- 08/15/2093 88 : 09A 7 of 16 A waiver by the insurer of any right to subrogation against Agency, its officers, officials, members, employees, agents, or representatives, which arises or might arise by reason of any payment under such policy or policies or by reason of any act or omission of Agency, its officers, officials, members, employees, agents, or representatives. (iv) The Agency and the City and its respective officers, officials, members, employees, agents, and representatives shall be named as additional insureds on the Commercial General Liability policies. (v) Coverage provided by these policies shall be primary and non- contributory to any insurance carried by the Agency or its officers, officials, members, employees, agents, or representatives. (vi) Failure to comply with reporting provisions shall not affect coverage provided to Agency and its officers, officials, members, employees, agents, or representatives. 1.4. Repair of Damage. a. Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance. If the Project shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by Owner, Owner shall promptly proceed to obtain insurance proceeds and 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 the Project is required to be maintained in pursuant to this Agreement, whether or not the insurance_ proceeds are sufficient to cover the actual cost of repair, replacement, or restoration, and Owner shall complete the same as soon as possible thereafter so that the Project can continue to be operated and occupied as a senior housing project in accordance with this Agreement. In no event shall the repair, replacement, or restoration period exceed one (1) year from the date Owner obtains insurance proceeds unless Agency's Executive Director, in his or her sole and absolute discretion, approves a longer period of time. If, however, the then -existing laws of any governmental agencies with jurisdiction over the Property do not permit the repair, replacement, or restoration, Owner may elect not to repair, replace, or restore the Project by giving notice to Agency (in which event Owner shall be required to remove all debris fi-om the Property) or - Owner may reconstruct such other improvements on the Property as are consistent with applicable land use regulations and approved by the Agency, and any other governmental agency or agencies with jurisdiction. b. Application of Insurance Proceeds. All insurance monies received on account of damage or destruction, less the cost, if any, of such recovery, shall be applied as necessary to the payment of the cost of repairing, replacing, and restoring the improvements comprising the Project. Except as otherwise provided herein, if net available insurance monies shall be insufficient to pay the entire cost of such work, or if the damage Or destruction shall be the result of a cause not required to be insured against, then Owner shall bear the cost thereof in excess of the net available insurance monies. 53 a/01 >610-0047 411399.()2 a07/16/03 2003-627956 08r 15/2803 08 : 00A 1111111111111111111111111111111111111111111111111111111 8 of 16 C. Continued Operations. During any period of repair, Owner shall continue, or cause the continuation of, the operation of the housing complex on the Property to the extent reasonably practicable from the standpoint of prudent business management. d. Damage or Destruction Due to Cause Not Required to be Covered by Insurance. If the improvements comprising the Project are completely destroyed or substantially damaged by a casualty for which Owner is not required to insure against (and has not insured against), then Owner shall not be required to repair, replace, or restore such improvements and may elect not to do so by providing Agency with written notice of election not to repair, replace, or restore within ninety (90) days after such substantial damage or destruction. In such event, Owner shall remove all debris frorn the Property. As used in this subparagraph (d), "substantial damage" caused by a casualty not required to be (and not) covered by insurance shall mean damage or destruction which is fifty percent (50%) or more of the replacement cost of the improvements comprising the Project. In the event Owner does not timely elect not to repair, replace, or restore the improvements as set forth in the first sentence of this subparagraph (d), Owner shall be conclusively deemed to have waived its right not to repair, replace, or restore the improvements and thereafter Owner shall promptly commence and complete the repair, replacement, or restoration of the damaged or destroyed improvements in accordance with subparagraphs (a) and (b) above and continue operation of the housing complex during the period of repair (if practicable) in accordance with subparagraph (c) above. e. HUD Insurance Provisions. During the Term of the HUD Capital Advance Documents, the rights and obligations set forth in this Section 14 shall be subject to the rights of HUD as holder of the first lien on the Project. In connection therewith, in the event of loss covered by fire and extended coverage insurance, the insurance proceeds, to the extent of the HUD Capital Advance then remaining unpaid, shall be paid to the beneficiary of the HUD deed of trust and, at the option of the beneficiary, may be applied to the HUD Capital Advance or released for the repair or rebuilding of the Project. Any balance remaining of insurance proceeds shall be paid to the additional insured and, at the option of such additional insured, may be applied to the indebtedness owed to such insured or be released for repair- or rebuilding of the Project. Surplus insurance proceeds thereafter may be dispersed to the Owner of the Project. 15. indemnity. Owner shall indemnify, defend, and hold harmless Agency, and Agency's officers, officials, members, employees, agents, and representatives (collectively, "Agency Indemnitees") from and against any loss, liability, claim, or judgment relating in any manner to the development or use of the Property, excluding any liability caused by the gross negligence or willful misconduct of the Agency Indemnitees. 16. Taxes and Assessments. Owner shall pay, prior to delinquency, all property taxes and assessments in connection with the Property; provided, however, that nothing herein shall prohibit or prevent Owner fi-om challenging the applicability or amount of any tax or assessment pursuant to the applicable procedures required by law. 17. Com_pliance with Laws. Owner shall comply with all applicable laws, regulations, and rules of any governmental agencies having jurisdiction with regard to the construction of the Project and any activities conducted on the Property, including the operation of the Project and the Lease of the Residential Units. 538/015(11 0-0047 411.399.02 )7i 16/0 3 2003-627956 e8r15r2 193 es eeR 9 of 16 18. Covenants Run with the Land. All conditions, covenants, and restrictions contained in this Agreement shall be covenant's running with the land, and shall, in any event, and without regard to technical classification or designation, legal or otherwise, be, to the fullest extent permitted by law and equity, binding for the benefit and in favor of, and enforceable by Agency, its successors and assigns, and the City of La Quinta and its successors and assigns, against Owner, its successors and assigns, to or of the Property conveyed herein or any portion thereof or any interest therein, and any party in possession or occupancy of said Property or portion thereof. In arnplification and not in restriction of the provisions set forth hereinabove, it is intended and agreed that Agency and the City are each deemed a beneficiary of the agreements, covenants, and restrictions provided hereinabove both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of Agency and the City and such covenants shall nun in favor of Agency and City for the entire period during which such covenants shall be in force and effect, without regard to whether Agency is or remains an owner of any land or interest therein to which such covenants relate. However, all such covenants and restrictions shall be deerned to run in favor of all real property owned by the City and Agency which real property shall be deemed the benefited property of such covenants. Furthermore, all of the covenants, conditions, and restrictions contained herein shall also constitute easernents in gross running in favor of the Agency and City. Agency shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 19. Gross Mismanagement. Owner shall manage or cause the Property to be managed in a prudent and business -like manner. In the event of "Gross Mismanagement" (as that term is defined below) of the Project, Agency shall have the authority to require that such Gross Mismanagement cease immediately, and further to require the immediate replacement of the Manager; provided, however, Agency acknowledges that during the Term of the Capital Advance Documents the manager cannot be replaced without the prior written approval of HUD. Agency shall provide written notice to Owner of the event(s) of Gross Mismanagement occurring and Owner shall have five (5) days after receipt of such notice to cure, correct, or remedy the event(s) of Goss Mismanagement identified in the Agency's notice and to notify the Agency Executive Director of the cure, correction, or remedy. For purposes of this Agreement the term "Gross Mismanagement" shall mean management of the Project in a manner which violates the terms and/or intention of this Agreement to operate a senior housing complex of the highest standard, and shall include, but is not limited to, the following: (i) Knowingly leasing to ineligible tenants or tenants whose incorne exceeds the prescribed levels, Knowingly allowing the tenants to exceed the prescribed occupancy levels without taking immediate steps to stop such overcrowding, 538/01561i1-0047 - 1 0- 41 1399,021 a07/16/03 2003-627956 08t15/2003 08:00A 10 4f 16 (iii) Failing to timely maintain the Project and the Property in the manner required by this Agreement or failing to submit materially complete reports; (iv) Failing to timely submit the reports as required by this Agreement, (v) Fraud in connection with any document or representation relating to this Agreement or embezzlement of Project monies, and (vi) Failing to fully cooperate with the Police Department in maintaining a crime -free environment on the Property. 20. Modification of Agreement. Agency and its successors and assigns, and Owner and the successors and assigns of Owner in and to all or any part of the fee title to the Property, shall have the right to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, conditions, or restrictions contained in this Agreement without the consent of any tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust, or any other person or entity having any interest less than a fee in the Property. Any amendment or modification to this Agreement must be in writing and signed by Agency and Owner, or their successors and assigns, and during the Term of the HUD Capital Advance Documents shall also require the approval of HUD. 21. Recognition of HUD Agreement. Notwithstanding anything herein to the contrary, in the event the Secretary of HUD ("HUD Secretary"), during the Term of the HUD Capital Advance Documents, should take title to the Property through foreclosure, deed in lieu of foreclosure, or otherwise, all covenants, conditions and restrictions set forth in this Agreement shall cease and terminate and be of no further force and et%ect. Notwithstanding anything herein to the contrary, if, during the Term of the HUD Capital Advance Documents, any provision of this Agreement tends to contradict, modify or in any way change the terms of the HUD Capital Advance Documents, including the HUD Regulatory Agreement encumbering the Property to be entered into between the HUD Secretary and the Owner, the terms of the HUD Capital Advance Documents shall prevail and govern; or if any provision of this Agreement in any way tends to limit the HUD Secretary in his administration of the Housing Act of 1959, as amended, or the Cranston -Gonzalez National Affordable Housing Act, or the regulations issued pursuant thereto, this Agreement shall be deemed amended so as to comply with the Acts, the regulations and the aforementioned HUD Capital Advance Documents. Owner shall not be in default of this Agreement for failure to comply with any term or provision that is inconsistent with the HUD Capital Advance Documents. 22. interpretation, Governing Law, Forum. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto. This Agreement shall be construed in accordance with the laws of the State of California. Titles and captions are for convenience only and shall not constitute a portion of this Agreement. In the event of any litigation between the parties hereto, the Municipal and Superior Courts of the State of California in and for the County of Orange shall have exclusive jurisdiction. 538/015610.0047 -1 I - 41 1399.0a a07/ 16/03 2893_627956 sr29 3 es :1 11 of 16 23. Assignment. Except as permitted in Section 106 of the DDA, Owner shall not assign this Agreement or any interest in the Property. 24. Execution in Counterpart. This Agreement may be executed in several counterparts, and all so executed shall constitute one agreement binding on both parties hereto, notwithstanding that both parties are not signatories to the original or the sarne counterpart. [SIONATURES ON NIJXT PA(i1 ] II XII IIII III IIIIIII IIIIII II ae�i0z12 w eeof 6m 538/0 15610-0047 _ 1 2 _ 41 1399.03 a07/ 16/0 3 IN WITNESS WHEREOF, Agency and Owner have caused this instrument to be executed on their behalf by their respective officers or agents herein duly authorized as of the date first written above. ATTEST: Agenc ec etary APPROVED AS TO FORM RUT N & TUCKER, LLP Attorneys for the La Quinta Redevelopment Agency "AGENCY" LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic By:'��� Its: 7'Z)'11' "OWNER" SENIOR AFFORDABLE HOUSING CORP. NO. 3, a California non- rofit ublic benefit corp at n By: I t s - Av"'� tN Lvq✓� By: Its: y`51A��I 538/015610-0047 — 13 — 411399.02 a07/ 16/03 STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) On August 51 2003 , before me, Linda Wreede , personally appeared Ck 1 e r , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose nameP4 is/a* subscribed to the within instrument and acknowledged to me that he/spCtVy executed the same in his/f*/ttv&r authorized capacity(*), and that by his/l*/tVeir signature( on the instrument the person($) or the entity upon behalf of which the person acted, executed the instrument. Witness my hand and official seal. LMA WREEDE tivs c►t Ls AnVM caxft My C3�nrn. 8�piesseP � � [SEAL STATE OF CALIFORNIA ) ) SS. COUNTY OF LOS ANGELES ) � no, , A ^ I , Notary PtTbfic On August 5, 2003 , before me, Linda Wreede personally appeared 4znl lit I ittla , personally known to me (or proved to me on t e asis of satisfactory evidence) to be the person whose name(s) is/a)k subscribed to the within instrument and acknowledged to me that Wshe/ttAy executed the same in lip/her/ti*ir authorized capacity(*), and that by hMier/t* signature( on the instrument the person( or the entity upon behalf of which the person0 4 acted, executed the instrument. Witness my hand and official seal. [SEAL] UNDA WREEDE COfnrni1" #k 1275133 z Way PUMC - Cofltomia t ZI Us Angeles County [ Notary PUbhc III III IN I I I� III III II III IIII I III Ili e R0 z14 ee�16 eea 5 38/015610-0047 — 14— 111399.02 a07/16/03 STATE OF CALIFORNIA ) ) ss. COUNTY OF s t ) On 444before me, personally a eared S S personally known to me (ar Pp ' to be the person(&) whose name(g) is/a* subscribed to the within instrument and acknowledged to me that he/ijwe/tj�ey executed the same in his/fjet/t�Ar authorized capacity(yos), and that by hisjor/toAr signature(4) on the instrument the person( or the entity upon behalf of which the person() acted, executed the instrument. Witness my hand and official seal. REGENIA HENSLEY CoR imbsion 01274458 Not at u bl i c Notcryy Public - Ca i efrtta Favefside COur11y My COM. E#es AM 19.=4 2083-627956 538/015610-0047 — 1 5— 411399.02 a07/16/03 c- - EXHIBIT "A" LEGAL DESCRIPTION OF PROPERTY That certain property located in the City of La Quinta, County of Riverside, State of California, described as follows: LOT 285 OF TRACT NO. 24230, IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 214, PAGE(S) 69 THROUGH 82, INCLUSIVE, OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. 2003-667356 53R/(:i 1561 i -00 t7 08! 15l219 3 68 : 80R 16 of 18 41 1399.02 a0�7/16/03