HomeMy WebLinkAboutItem 3c: ARA Resolution ARA-241 Approving 1st Amendment to Owner Participation Agreement between ARA and Arcadia Campus Commons for Senior Housing Project at 10 Campus Drive If 1
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14 STAFF REPORT
Arcadia Redevelopment Agency
DATE: December 7, 2010
TO: Chair and Members of the Agency Board
FROM: Jason Kruckeberg, Assistant City Manager /Development Service ,
Director
By: Jerry Schwartz, Economic Development Manager f
SUBJECT: ARA RESOLUTION NO. ARA -241 APPROVING THE FIRST
AMENDMENT TO THE OWNER PARTICIPATION AGREEMENT
BETWEEN THE ARCADIA REDEVELOPMENT AGENCY AND ARCADIA
CAMPUS COMMONS ASSOCIATES FOR THE DEVELOPMENT OF
THE 43 -UNIT CAMPUS COMMONS SENIOR HOUSING PROJECT AT
16 CAMPUS DRIVE
Recommendation: Adopt
SUMMARY
The Arcadia Redevelopment Agency approved an Owner Participation Agreement
(OPA) with Arcadia Campus Commons Associates at its September 21 meeting to
develop the 43 -unit Campus Commons Senior Housing project. With the expected
introduction of additional parties to the transaction and revisions requested by the
developer, a First Amendment to the OPA has been prepared to reflect these changes.
BACKGROUND
The Campus Commons OPA detailed the responsibilities of the developer and Agency
in the development of the project. The Agency agreed to provide a long term loan of up
to $6.9 million from its low /mod housing funds to facilitate the 43 units of affordable
senior housing. The payment of those funds would occur at two different times based
on rules of proportionality that the Agency must follow. The first $3.5 million in funds
would be provided at the issuance of a building permit, provided that the developer
owned the land and had worked out the financing for the project, including bank loans
and tax credits. The remainder would be provided in 2015 after the project is
completed, the developer converts its construction loan to permanent financing, and the
actual construction costs are known.
The developer will build a first class project with amenities for low income seniors and
will manage the development once it opens. The developer agreed to generate the
most money possible through the sale of its tax credits, and to bring in a bank that
would lend on the project and would supply a bridge loan that would provide the
developer with funds once the project is up and operating but before the Agency's 2015
payment.
The developer has successfully brought a tax credit investor and lender to the project.
As these parties have reviewed the OPA in comparison to their requirements, they have
requested some revisions to the agreement. As a result, the First Amendment to the
OPA has been prepared.
DISCUSSION
As all of the parties have been put in place, several requirements need to be
documented in the OPA. One important requirement involves the timing of some key
deadlines. The developer is required by the California Debt Limit Allocation Committee
(CDLAC) to close on the tax exempt bonds by December 21, 2010. This has made this
the target date to close other aspects of the project, such as the construction loan and
acquisition of the land.
Ashwood Construction, one of the partners in Arcadia Campus Commons Associates
and the development entity responsible for the project, has agreed to put up $1.6 million
of its funds in an account at California Bank & Trust to collateralize the bridge loan.
Those funds will be required as part of the loan closing. When the OPA was drafted,
Ashwood did not anticipate collateralizing the bridge loan, but expected to use its funds
to close on the land purchase. Because of this, Ashwood has requested that the
Agency provide approximately $1.745 million of its first $3.5 million on December 20 to
close on the land.
The First Amendment to the OPA provides for the Agency to front these funds to close
the land purchase. This will allow the project to stay on schedule. The Agency funds
would be guaranteed through a Deed of Trust. The Deed of Trust would be behind a
$55,000 first Trust Deed from California Bank & Trust. However, since the land is
appraised at $1.8 million, the Agency's loan will be fully secured in the case of a default
between the time of the land purchase and the issuance of a Building Permit. The
Agency had already agreed to subordinate to the lender and tax credit investor once the
Building Permit is issued, allowing the developer to start construction of the project.
The timing of the subordination would not change. Only the first payout of Agency
funds would change. The remainder of the $3.5 million first payment will still be made
once the developer is ready to construct the project.
As discussed above, when the Agency Board approved the OPA with Arcadia Campus
Commons Associates, it was understood by all parties that the Agency loan would be
for up to $6.9 million, which represented $6.4 million for the project and up to $500,000
for carrying costs for the bridge loan. At that time, the project lender, amount, and
terms of the bridge loan were not known. Now that the bridge loan amount, $1.6 million,
has been determined, and is lower than anticipated, the carrying costs should be as low
as $250,000. Additionally, the developer was able to bring in a tax credit investor that
First Amendment to OPA
December 7, 2010
Page 2 of 3
will pay a significantly greater amount than was originally anticipated in the project
budget. As a result, staff believes that the maximum loan for the overall project should
be no more than $6.4 million. The actual savings will be verified once the project is
completed and reaches stabilized occupancy. At that time, an audit of actual costs will
be performed, and the actual cost savings will reduce the Agency's loan payment in
2015.
Other changes are more technical in nature and accommodate the requests of the
lender or tax credit investor. For example, the tax credit investor will be included in any
notices that are otherwise sent regarding the project. Overall, these changes impact a
small part of the OPA, leaving the large majority of the agreement intact as approved by
the Agency on September 21.
Agency staff views these modifications as positive in that all of the parties are now
involved in the project, the overall loan amount is likely to decrease and the Agency will
not be responsible for guaranteeing the bridge loan. Additionally, because the amount
of the bridge loan has been reduced, the carrying costs will be lower than anticipated.
CALIFORNIA ENVIORNMENTAL QUALITY ACT (CEQA)
The First Amendment to the Owner Participation Agreement is not considered a project
per CEQA (CEQA Guidelines, Section 15061 (b) (3)). The Campus Commons project
was approved with a Negative Declaration on July 6, 2010 as part of the approval of the
entitlements for the project.
FISCAL IMPACT
The Agency's loan to the Campus Commons project will come from the low and
moderate income housing fund. This is a reduction in the amount of the originally
approved. There is no impact on the General Fund.
RECOMMENDATION
Adopt Resolution No. ARA -241, approving the First Amendment to the Owner
Participation Agreement between the Arcadia Redevelopment Agency and Arcadia
Campus Commons Associates for the development of the 43 unit Campus Commons
senior housing project at 16 Campus Drive.
Approved by -i-
Donald Penman, City Manager /Executive Director
Attachments: Resolution No. 241
First Amendment to the OPA (revised sections only)
First Amendment to OPA
December 7, 2010
Page 3 of 3
RESOLUTION NO. ARA -241
A RESOLUTION OF THE ARCADIA REDEVELOPMENT
AGENCY APPROVING THE FIRST AMENDMENT TO THE
OWNER PARTICIPATION AGREEMENT BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF ARCADIA AND
ARCADIA CAMPUS COMMONS ASSOCIATES, LLC FOR THE
CAMPUS COMMONS AFFORDABLE HOUSING PROJECT
WHEREAS, pursuant to the provisions of California Community Redevelopment
Law (Health and Safety Code Section 33000 et seq.) ( "CRL "), the City of Arcadia ( "City"
approved and adopted on December 26, 1973 the Central Redevelopment Plan
( "Redevelopment Plan ") for the Redevelopment Project Area ( "Project Area ") and
Redevelopment Agency of the City of Arcadia ( "Agency ") has the responsibility to
implement the Redevelopment Plan; and
WHEREAS, the Agency is engaged in activities necessary to execute and
implement the Redevelopment Plan for the Project Area pursuant to the provisions of
the California Community Redevelopment Law (Health & Safety Code Section 33000 et
seq.) ( "CRL "); and
WHEREAS, the Agency is required to set aside not Tess than twenty percent
(20 %) of all tax increment funds received annually ('Low and Moderate Housing Funds')
for the purpose of increasing, preserving, and improving housing affordable to persons
of very low, low- and moderate - income; and
WHEREAS, the Agency is authorized pursuant to CRL Sections 33334.2 and
33334.3 to expend Low and Moderate Housing Funds for the purposes of increasing,
improving, and preserving the community's supply of low- and moderate - income
housing available at affordable housing costs; and
-1-
WHEREAS, on September 21, 2010 the Agency now approved the Owner
Participation Agreement ( "Agreement ") with Arcadia Campus Commons Associates,
LLC ( "Developer") for the development of a forty -two (42) unit senior housing complex
that will be affordable to low and very low income senior households for a period of fifty -
five (55) years and one (1) manager's unit (the "Project "); and
WHEREAS, to effectuate additional Developer requests, including the early
release of One Million Seven Hundred Forty Five Thousand Dollars ($1,745,000) for
property acquisition, the Developer and Agency now desire to enter into the First
Amendment to the Agreement; and
WHEREAS, the California Environmental Quality Act (Public Resources Code
Sections 21000 et seq.) ( "CEQA "), the Project will not result in any significant effects
relating to traffic, noise, air quality or water quality and can be served adequately by all
required utilities and public services and was the subject of a previously approved
Negative Declaration, considered and approved by the City Council as part of the
entitlements for the Project; and
WHEREAS, the Agency will rely upon that previously approved Negative
Declaration as the First Amendment to the Agreement does not modify or create any
additional reasonably foreseeable impacts upon the environment; and
WHEREAS, Agency and Developer have negotiated the terms of the
Agreement, a copy of which is attached to this Resolution.
NOW, THEREFORE, THE ARCADIA REDEVELOPMENT AGENCY DOES
HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
-2-
SECTION 1. The foregoing Recitals are true and correct and are incorporated
herein.
SECTION 2. The Agency Board hereby approves the First Amendment to the
Owner Participation Agreement in substantially the form attached hereto subject to any
minor or non - substantive modifications as may be approved by the Executive Director
with the concurrence of the Agency Counsel.
SECTION 3. The Agency Board hereby grants the Executive Director the
authority to enter into any and all agreements and take such actions as are necessary
to implement the Owner Participation Agreement as amended by this First Amendment
to the Owner Participation Agreement.
SECTION 4. This Resolution shall take effect immediately upon its adoption by
the Agency Board.
SECTION 5. The Secretary of the Agency shall certify to the adoption of this
Resolution.
Passed, approved and adopted this day of , 2010.
Chairperson
Arcadia Redevelopment Agency
ATTEST:
Secretary
PPROVEDAS T FORM:
Stephen P. Deitsch
Agency Counsel
-3-
FIRST AMENDMENT TO
OWNER PARTICIPATION AND LOAN AGREEMENT
(ARCADIA COMMONS)
between
THE ARCADIA REDEVELOPMENT AGENCY
a California public agency
and
ARCADIA CAMPUS COMMONS ASSOCIATES, LP
a California limited partnership
[Dated as of December 7, 2010, for identification purposes only]
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FIRST AMENDMENT TO
OWNER PARTICIPATION AND LOAN AGREEMENT
(Arcadia Commons)
This First Amendment to Owner Participation and Loan Agreement (Arcadia Commons)
( "First Amendment ") is entered into between (i) The Arcadia Redevelopment Agency
( "Agency "), a California public agency, and (ii) Arcadia Campus Commons Associates, a
California limited partnership as assignee for Arcadia Commons, LP ( "Developer or Borrower ").
This First Amendment is dated as of December 7, 2010 for identification purposes only.
This First Amendment shall not become effective or operative until the date ( "Effective
Date ") that: (i) this First Amendment has been approved by the Developer and executed by the
Developers' authorized representatives, and (ii) this First Amendment has been approved by
formal action of the Agency's governing board, following a noticed public meeting, and
executed by the Agency's authorized representative.
ARTICLE 1
RECITALS
1.1 Pursuant to the provisions of California Community Redevelopment Law (Health
and Safety Code Section 33000 et seq.) ( "CRL "), , the Agency has the responsibility to
implement the Central Redevelopment Project Area Plan adopted by Ordinance No. 1490 of the
City Council of the City of Arcadia on December 26, 1973, pursuant to California Community
Redevelopment Law (the "Redevelopment Plan ") for the Community Development Project Area
(the "Project Area ");
1.2 The Borrower owns or will own that certain real property located outside the
Project Area and more particularly described in Attachment 1 (the "Property "). The Borrower
intends to construct forty -two (42) units of senior housing that will be affordable to low and very
low income senior households for a period of fifty -five (55) years and one (1) manager's unit
(the "Project ").
1.3 The Borrower and Agency entered into that certain Owner Participation and Loan
Agreement ( "Original Agreement "), dated , which provides the development of the Project
and for the Agency to provide up to Six Million Nine Hundred Thousand Dollars ($6,900,000) in
financial assistance to the Project.
1.4 The Borrower has now indentified additional funding sources which requires
revision to certain provisions the Original Agreement including an earlier disbursement of up to
One Million Seven Hundred Forty -Five Thousand Dollars ($1,745,000) of the Agency funds.
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ARTICLE 2
TERMS
2.1 Effect Upon Original Agreement. The Original Agreement remains in full force
and effect according to its terms, unless otherwise expressly amended by this First Amendment.
All initially capitalized terms used, but not otherwise defined, in this First Amendment shall have
the meanings ascribed to them in the Original Agreement. From and after the Effective Date of
this First Amendment, wherever the term "Agreement" appears in the Original Agreement, it
shall mean and be understood to include the amendments to the Original Agreement set forth in
this First Amendment. From and after the Effective Date of this First Amendment, whenever the
term "Agreement" is used in this First Amendment, it shall mean the Original Agreement, as
modified by this First Amendment.
2.2 Representation and Warranties Regarding Defaults; Ratification. The Developer
represents and warrants to the Agency that the Agency is not, as of the Effective Date of this
First Amendment, in material default under the Agreement and that there have been no events
which, with the passage of time, giving of notice or both, would constitute material events of
default under the Agreement.
The Agency represents and warrants to the Developer that the Developer is not, as of the
Effective Date of this First Amendment, in material default under the Agreement and that there
have been no events which, with the passage of time, giving of notice or both, would constitute
material events . of default under the Agreement.
The Agency and the Developer each ratify and reaffirm the Agreement and each and
every one of their obligations under the Agreement. The Agency and the Developer further
agree and stipulate that, other than this First Amendment, there have been no prior oral or written
amendments, modifications or alterations to the parties' rights and obligations under the
Agreement.
2.3 Amendment to Section 1.1 Definitions of the Original Agreement. The
definitions of the following terms set forth in Section 1.1 of the Original Agreement are deleted
in their entirety and replaced with the following:
(e) "Approved Financing" shall mean all of the following funds acquired by the
Borrower and approved by the Agency for the purpose of financing the Development, in addition
to the Loan:
(i) Multifamily housing revenue bonds issued by the California Statewide
Communities Development Authority (the "Authority ") in the approximate amount of Six
Million Four Hundred Thousand Dollars ($6,400,000.) in construction bond financing for the
purpose of providing construction and permanent financing for the Development (the "Bond
Financing "). Said Bond Financing will be bifurcated with Californian Bank and Trust
purchasing an A bond in the amount of approximately $4,800,000 (the "A Bonds ") and Ashwood
Construction, Inc. purchasing a B bond in the approximate amount of $1,600,000 (the "B
Bonds "); and
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(ii) Tax credit acquisition equity contribution in the approximate amount of
Three Million Three Hundred Fifty One Thousand Nine Hundred Eighty Dollars ($3, 351,980).
(k) "Construction Component of Loan" shall mean that portion of the Loan to be
disbursed, in multiple draws, for acquisition of the Property and construction purposes in
accordance with the Approved Development Budget and as set forth in Section 2.1(a) of this
Agreement.
(gg) "Permanent Component of Loan" shall mean up to Three Million Three Hundred
Fifty Five Thousand Five Hundred Sixty Five Dollars ($3,355,565) of the Loan to be disbursed
for permanent financing purposes in accordance with the Approved Development Budget. The
Permanent Component of the Loan shall be used to repay the B Bonds, reasonable third party
carrying costs of the B Bonds up to Five Hundred Thousand Dollars ($500,000). The Permanent
Component of the Loan shall be reduced by any costs reductions as provided for herein and any
additional proceeds from the tax credits not anticipated or reflected in the Approved
Development Budget.
(nn) "Tax Credits" means an allocation from TCAC of four percent (4 %) federal low
income housing tax credits in an amount of approximately Four Million One Hundred Eleven
Thousand Seven Hundred Fifty One Dollars ($4,111,751) to finance a portion of the total Project
costs, all in accordance with Section 42 of the Internal Revenue Code of 1986, as amended, all
associated Internal Revenue Service regulations and all associated TCAC regulations. Developer
shall get no less than three (3) bids from tax credit investors before selecting the investor who
provides the best value to the Project.
(oo) Tax Credit Equity The amount of approximately Three Million Three Hundred
Fifty One Thousand Nine Hundred Eighty Dollars ($3,351,980) to be paid by the Tax Credit
Investor to the Borrower to obtain the Tax Credits.
2.4 Amendment to Section 2.1(a) Construction Component of Loan of the Original
Agreement. Section 2.1(a) of the Original Agreement is hereby deleted in its entirely and
replaced with the following:
(a) Construction Component of Loan: Three Million Five Hundred Forty Four
Thousand Four Hundred Thirty Five Dollars ($3,544,435,) upon close of escrow and satisfaction
of all conditions precedents set forth in Section 2.6 of this Agreement. It is anticipated this shall
occur on or before on or before December 21, 2010. The Construction Component may
disbursed in multiple draws provided all conditions precedent to disbursement as set forth in
Section 2.6 of this Agreement have been satisfied. It is anticipated that the first draw shall occur
on or before December 21, 2010. The first draw will be approximately One Million Seven
Hundred Forty Five Thousand Dollars ($1,745,000). The first draw shall be available for and
applied to the purchase price of the Property ($1,800,000), site demolition ($40,650) and market
study cost ($8612);
(b) Permanent Component of Loan: Not to exceed Three Million Three
Hundred Fifty Five Thousand Five Hundred Sixty Five Dollars ($3,355,565) no earlier than
January 1, 2015 and no later than January 15, 2015 provided all conditions precedents to
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disbursement as set forth in Section 2.7 of this Agreement have been satisfied and are to be
applied solely to pay down the B Bonds and any deferred payments provided for in the Approved
Development Budget.
2.5 Amendment to Section 2.3(b) Use of Loan Funds of the Original Agreement.
Section 2.3(b) of the Original Agreement is hereby amended to expand the permitted use of the
Loan to include Property acquisition, demolition and market study costs.
2.6 Amendment to Section 2.5 Security of the Original Agreement. The first
paragraph of Section 2.5 of the Original Agreement is deleted in its entirety and replaced with
the following:
Section 2.5 Security. Borrower shall secure its obligation to repay the Loan, as
evidenced by the Note, by executing the Deed of Trust, and recording it as a lien against the
Property junior only to the construction financing from California Bank and Trust ( "Senior
Lender ") from the time of Property acquisition by Borrower (anticipated to be December 21,
2010) until the Agency has received a copy of the building permit required to construct the
Project. Developer agrees and acknowledges that Senior Lender shall not release more than
Fifty -Five Thousand Dollars ($55,000) prior to the occurrence of the conditions in Section 2.6 of
the Agreement. Developer shall not accept more than Fifty -Five Thousand Dollars ($55,000)
from the Senior Lender prior to the satisfaction of the conditions in Section 2.6 of the
Agreement. Upon receipt of the building permit required to construct the Project, Agency shall,
pursuant to the provisions herein, subordinate the Agency's Deed of Trust so as to be junior to
the deeds of trust securing the Bond Financing, provided the deeds of trust securing the Bond
Financing are approved by Agency in Agency's reasonable discretion.
2.7 Amendment to Section 2.6 Construction Component of Loan Disbursement of the
Original Agreement. The following subsections of Section 2.6 of the Original Agreement are
deleted in their entirety and replaced with the following:
(b) Borrower owns, or will own at the time of the closing on the Construction
Component of Loan, a fee simple interest title to the Property.
(e) Borrower has furnished the Agency with evidence of a commitment for the
issuance of insurance coverage meeting the requirements of Section 4.13 below.
(h) Borrower has closed, or will close simultaneously with the closing on the
Construction Component of Loan, all Approved Financing described in Section 1.1(e) above.
(j) Agency has received and approved the final plans and specifications for the
Development, as required pursuant to Section 3.2 below, or if no final approval has been issued,
Agency will authorize disbursement of loan funds subject to Borrower modifying the plans and
specifications reasonably required by Agency within 30 days;
(1) The Agency has received a copy of the building permit required to construct the
Development or evidence that said building permit is being processed and expected to be issued
within 45 days;
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2.8 Amendment to Section 2.10 Cost Reductions or Increases of the Original
Agreement. The Section 2.10 of the Original Agreement are deleted in its entirety and replaced
with the following:
Section 2.10 Cost Reductions or Increases
(a) The Parties acknowledge and agree that the Loan is intended to partially finance
the financing "gap" of the Project (the amount needed to pay the excess of the proposed Project
costs over the financing and other funding sources available to the Borrower for construction and
development of the Project), but in no event to provide funding (when combined with all other
sources of financing and other funding sources available to the Borrower for construction and
development of the Project) in excess of the proposed project costs as set forth in the Approved
Development Budget.
(b) Cost Reduction. If the actual Project costs are less than the proposed project costs
(the difference between the actual Project costs and the proposed Project costs being a "Cost
Reduction "), then the Cost Reduction shall be applied, after adjusting for any reduction in
eligible basis, tax credits, developer fee and syndication/investor proceeds as verified by the cost
certification/audit required by CTCAC and Agency, to reduce the amount of Loan required to be
paid by the Agency pursuant to this Agreement or to reduce principal on the Loan that has
already been disbursed.
(c) Cost Increases. If the actual Project costs exceed the sum of all financing and
other funding sources available to the Borrower for construction and development of the Project
(the difference being a "Project Deficit "), the Borrower shall be solely responsible for causing
payment (either through third party financing, as approved by the Agency, or Borrower funds) of
the Project Deficit.
(d) If the actual Project costs are less than the sum of the financing and other funding
sources available to Borrower for development and construction of the Project (the difference
being a "Project Surplus "), then the Project Surplus, as verified by the cost certification required
by CTCAC and Agency, shall be applied to reduce or repay the principal amount of the Loan. At
the close of escrow for the transaction, any unexpended amount in the Bridge Loan reserve
account shall be applied to reduce the Permanent Component of the Loan.
2.9 Amendment to Section 2.11 Tax Credits of the Original Agreement. Section 2.11
of the Original Agreement is hereby amended to revise the amount of Tax Credits from
$4,289,650 to $4,111,751.
2.10 Amendment to Section 5.6 Permitted Transfers of the Original Agreement. The
Section 5.6(a) is modified to replace "Arcadia Campus Commons Associates, LLC" with "Hunt
Capital Partners, LLC ".
2.11 Amendment to Section 7.1 Events of Default of the Original Agreement. The
following subsections of Section 7.1 of the Original Agreement are deleted in their entirety and
replaced with the following:
(j) Unauthorized Transfer. Any Transfer other than as permitted by Section 4.13;
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provided, however, that a Permitted Limited Partner shall have the right to cure an unauthorized
Transfer of the general partnership interest in Borrower by removing the unauthorized general
partner and replacing it with an affiliate of Hunt Capital, LLC or another general partner
approved by the City which approval shall not be withheld unreasonably.
2.12 Acknowledgment of Tax Credit Investor. Agency hereby acknowledges and
consents to Hunt Capital, LLC as the Tax Credit Investor.
2.13 Exhibit D Deed of Trust of the Original Agreement. Exhibit D of the Original
Agreement is deleted in its entirety and replaced with the new Exhibit D which is attached to this
First Amendment as Attachment 2.
2.14 Exhibit E Promissory Note of the Original Agreement. Exhibit E of the Original
Agreement is deleted in its entirety and replaced with the new Exhibit E which is attached to this
First Amendment as Attachment 3.
2.15 Exhibit F Deed of Trust of the Original Agreement. Exhibit F of the Original
Agreement is deleted in its entirety and replaced with the new Exhibit F which is attached to this
First Amendment as Attachment 4.
2.16 Notices, Demands and Communications. Formal notices, demands, and
communications between the Parties shall be sufficiently given if and shall not be deemed given
unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or
delivered by express delivery service, return receipt requested, or delivered personally, to the
principal office of the Parties as follows:
Agency: Arcadia Redevelopment Agency
240 West Huntington Drive or P.O. Box 60021
Arcadia, CA 91066
Attention: Executive Director
Borrower: Arcadia Campus Commons Associates, a California
Limited Partnership
5755 E. Kings Canyon Road, Suite 110
Fresno, CA 93727
With a Copy to: Law Offices of Patrick R. Sabelhaus
1006 Fourth Street, Sixth Floor
Sacramento, CA 95814
With a Copy to: Hunt Capital Partners, LLC
•
1600 Duke Street
Suite 420
Alexandria, VA 22314
Attention: Alain Fair
With a Copy to: Ballard Spahr LLP
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1735 Market Street
51st Floor
Philadelphia, PA 19103
Attention: Jere G. Thompson
Such written notices, demands and communications may be sent in the same manner to
such other addresses as the affected Party may from time to time designate by mail as provided
in this Section. Receipt shall be deemed to have occurred on the date shown on a written receipt
as the date of delivery or refusal of delivery (or attempted delivery if undeliverable). Copies of
notice, sent to Borrower shall also be sent to any limited partner of Borrower who requests such
notice in writing and provides its address.
2.17 Memorandum of First Amendment. The Parties agree to execute, acknowledge
and cause to be recorded in the Official Records of San Bernardino County, California, a
"Memorandum of First Amendment" substantially in the form attached hereto as Attachment 5.
[Signatures on following pages]
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SIGNATURE PAGE TO THE
FIRST AMENDMENT TO
OWNER PARTICIPATION AND LOAN AGREEMENT
(ARCADIA COMMONS)
"AGENCY"
THE ARCADIA REDEVELOPMENT AGENCY,
a California public agency
By:
Chair
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
BEST BEST & KRIEGER LLP
Agency Counsel
"DEVELOPER OR BORROWER"
ARCADIA CAMPUS COMMONS ASSOCIATES,
a California limited partnership
By: Community Revitalization and Development Corporation,
a California nonprofit public benefit corporation
Its: Managing General Partner
By:
David Rutledge,
Secretary /Chief Executive Officer
By: ARCADIA CAMPUS COMMONS ASSOCIATES, LLC,
a California limited liability company
Its: General Partner
By:
Steven Froberg,
Member
17705. 00000 \5762997.6
ATTACHMENT 1 TO
FIRST AMENDMENT TO
OWNER PARTICIPATION AND LOAN AGREEMENT
(ARCADIA COMMONS)
PROPERTY DESCRIPTION
17705.00000 \5762997.6
ATTACHMENT 2 TO
FIRST AMENDMENT TO
OWNER PARTICIPATION AND LOAN AGREEMENT
(ARCADIA COMMONS)
REVISED EXHIBIT D TO ORIGINAL AGREEMENT
DEED OF TRUST
17705.00000\5762997.6
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Arcadia Redevelopment Agency
240 West Huntington Drive
(P.O. Box 60021)
Arcadia, CA 91066
Attention:
No fee for recording pursuant to
Government Code Section 27383
DEED OF TRUST WITH ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(Arcadia Commons)
THIS DEED OF TRUST WITH ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT ( "Deed of Trust ") is made as of this September , 2010, by and among
Arcadia Campus Commons Associates, a California limited partnership ( "Trustor "), Old
Republic Title Company ( "Trustee "), and the Arcadia Redevelopment Agency, a public body
corporate and politic ( "Beneficiary ").
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, Trustor's fee interest in the property located in the City of Arcadia, County
of Los Angeles, State of California, that is described in the attached Exhibit A, incorporated
herein by this reference (the "Property ").
TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents, issues, income, revenues,
royalties and profits now or in the future payable with respect to or otherwise derived from the
Property, including those past due and unpaid;
TOGETHER WITH all easements, rights -of -way and rights used in connection therewith
or as a means of access thereto, including (without limiting the generality of the foregoing) all
tenements, hereditaments and appurtenances thereof and thereto;
TOGETHER WITH any and all buildings and improvements of every kind and
description now or hereafter erected thereon, and all property of the Trustor now or hereafter
affixed to or placed upon the Property;
TOGETHER WITH all building materials and equipment now or hereafter delivered to
said property and intended to be installed therein;
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TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter
acquired, in and to any land lying within the right -of -way of any street, open or proposed,
adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to
or used in connection with the Property;
TOGETHER WITH all estate, interest, right, title, other claim or demand, of every
nature, in and to such property, including the Property, both in law and in equity, including, but
not limited to, all deposits made with or other security given by Trustor to utility companies, the
proceeds from any or all of such property, including the Property, claims or demands with
respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may
hereafter acquire, any and all awards made for the taking by eminent domain or by any
proceeding or purchase in lieu thereof of the whole or any part of such property, including
without limitation, any awards resulting from a change of grade of streets and awards for
severance damages to the extent Beneficiary has an interest in such awards for taking as
provided in Paragraph 4.1 herein; and
TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures
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 complete 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
therefor, whether or not the same are, or shall be attached to said building or buildings in any
manner.
TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment,
work in process and other personal property to be incorporated into the Property; all goods,
materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other
personal property now or hereafter appropriated for use on the Property, whether stored on the
Property or elsewhere, and used or to be used in connection with the Property; all rents, issues
and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles,
chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance
and condemnation awards and proceeds, trade names, trademarks and service marks arising from
or related to the Property and any business conducted thereon by Trustor; all replacements,
additions, accessions and proceeds; and all books, records and files relating to any of the
foregoing.
All of the foregoing, together with the Property, is herein referred to as the "Security."
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever.
FOR THE PURPOSE OF SECURING:
(a) Payment of just indebtedness of Trustor to Beneficiary as set forth in the Note
(defined in Article 1 below) until paid or cancelled. Said principal and other payments shall be
due and payable as provided in the Note. Said Note and all its terms are incorporated herein by
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reference, and this conveyance shall secure any and all extensions thereof, however evidenced;
and
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to
the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to
advance said sums and the expiration of any applicable cure period, with interest thereon as
provided herein; and
(c) Performance of every obligation, covenant or agreement of Trustor contained
herein and in the Loan Documents (defined in Section 1.3 below). Subsections (a) through (c)
may be collectively referred to herein as the "Secured Obligations."
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
ARTICLE 1. DEFINITIONS
In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall
have the following meanings in this Deed of Trust:
Section 1.1 The term "Loan Agreement" means that certain Owner Participation and
Loan Agreement between Trustor and Beneficiary, of even date herewith, providing for the
Beneficiary to loan to the Trustor Six Million Nine Hundred Thousand Dollars ($6,900,000) for
the construction and permanent financing costs related to the Property, and all attachments,
which is incorporated herein by reference. All initially capitalized terms used and not otherwise
defined herein shall have the meaning ascribed to such term by the Loan Agreement.
Section 1.2 The term "Loan Documents" means this Deed of Trust, the Note, the Loan
Agreement, the Regulatory Agreement, and any other debt, loan or security instruments between
Trustor and the Beneficiary relating to the Property.
Section 1.3 The term "Note" means the promissory note in the principal amount of Six
Million Nine Hundred Thousand Dollars ($6,900,000) of even date herewith executed by the
Trustor in favor of the Beneficiary, the payment of which is secured by this Deed of Trust. (A
copy of the Note is on file with the Beneficiary and terms and provisions of the Note are
incorporated herein by reference.).
Section 1.4 The term "Principal" means the amount required to be paid under the
Note.
Section 1.5 The term "Regulatory Agreement" means that certain Regulatory
Agreement and Declaration of Restrictive Covenants of even date herewith by and between the
Beneficiary and the Trustor.
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ARTICLE 2. MAINTENANCE AND MODIFICATION OF THE
PROPERTY AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor. Trustor shall
perform the obligations of the Owner and Borrower as set forth in the Loan Agreement at the
time and in the manner respectively provided herein. The Trustor agrees that at all times prior to
full payment of the sum owed under the Note, the Trustor will, at the Trustor's own expense,
maintain, preserve and keep the Security or cause the Security to be maintained and preserved in
good condition. The Trustor will from time to time make or cause to be made all repairs,
replacements and renewals deemed proper and necessary by it. The Trustor shall 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. The Beneficiary shall have no
responsibility in any of these matters or for the making of improvements or additions to the
Security.
Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all
claims for labor done and for material and services furnished in connection with the Security,
diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation
of labor on the work or construction on the Security for a continuous period of thirty (30) days or
more, and to take all other reasonable steps to forestall the assertion of claims of lien against the
Security of any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary
as its agent (said agency being coupled with an interest) with the authority, but without any
obligation, to file for record any notices of completion or cessation of labor or any other notice
that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the
Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor
only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those
actions as hereinbefore provided.
Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or
claims as Beneficiary shall specify upon laborers, materialmen, subcontractors or other persons
who have furnished or claim to have furnished labor, services or materials in connection with the
Security. Nothing herein contained shall require Trustor to pay any claims for labor, materials or
services which Trustor in good faith disputes and is diligently contesting provided that Trustor
shall, within thirty (30) days after the filing of any claim of lien, record in the Office of the
Recorder of Los Angeles County, a surety bond in an amount 1 and 1/2 times the amount of such
claim item to protect against a claim of lien.
Section 2.2 Granting of Easements. Trustor may not grant easements, licenses, rights -
of -way or other rights or privileges in the nature of easements with respect to any property or
rights included in the Security except those required or desirable for installation and maintenance
of public utilities including, without limitation, water, gas, electricity, sewer, telephone and
telegraph, or those required by law, and as approved, in writing, by Beneficiary.
Section 2.3 Assignment of Rents. As part of the consideration for the indebtedness
evidenced by the Note, Trustor hereby absolutely and unconditionally assigns and transfers to
Beneficiary all the rents and revenues of the Property including those now due, past due, or to
become due by virtue of any lease or other agreement for the occupancy or use of all or any part
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of the Property, regardless of to whom the rents and revenues of the Property are payable.
Trustor hereby authorizes Beneficiary or Beneficiary's agents to collect the aforesaid rents and
revenues and hereby directs each tenant of the Property to pay such rents to Beneficiary or
Beneficiary's agents; provided, however, that prior to written notice given by Beneficiary to
Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan
Documents, Trustor shall collect and receive all rents and revenues of the Property as trustee for
the benefit of Beneficiary and Trustor to apply the rents and revenues so collected to the sums
secured by this Deed of Trust with the balance, so long as no such breach has occurred, to the
account of Trustor, it being intended by Trustor and Beneficiary that this assignment of rents
constitutes an absolute assignment and not an assignment for additional security only. Upon
delivery of written notice by Beneficiary to Trustor of the breach by Trustor of any covenant or
agreement of Trustor in the Loan Documents, and without the necessity of Beneficiary entering
upon and taking and maintaining full control of the Property in person, by agent or by a court-
appointed receiver, Beneficiary shall immediately be entitled to possession of all rents and
revenues of the Property as specified in this Section 2.3 as the same becomes due and payable,
including but not limited to rents then due and unpaid, and all such rents shall immediately upon
delivery of such notice be held by Trustor as trustee for the benefit of Beneficiary only;
provided, however, that the written notice by Beneficiary to Trustor of the breach by Trustor
shall contain a statement that Beneficiary exercises its rights to such rents. Trustor agrees that
commencing upon delivery of such written notice of Trustor's breach by Beneficiary to Trustor,
each tenant of the Property shall make such rents payable to and pay such rents to Beneficiary or
Beneficiary's agents on Beneficiary's written demand to each tenant therefor, delivered to each
tenant personally, by mail or by delivering such demand to each rental unit, without any liability
on the part of said tenant to inquire further as to the existence of a default by Trustor.
Trustor hereby covenants that Trustor has not executed any prior assignment of said
rents, that Trustor has not performed, and will not perform, any acts or has not executed and will
not execute, any instrument which would prevent Beneficiary from exercising its rights under
this Section 2.3, and that at the time of execution of this Deed of Trust, there has been no
anticipation or prepayment of any of the rents of the Property for more than two (2) months prior
to the due dates of such rents. Trustor covenants that Trustor will not hereafter collect or accept
payment of any rents of the Property more than two (2) months prior to the due dates of such
rents. Trustor further covenant that Trustor will execute and deliver to Beneficiary such further
assignments of rents and revenues of the Property as Beneficiary may from time to time request.
Upon Trustor's breach of any covenant or agreement of Trustor in the Loan Documents,
Beneficiary may in person, by agent or by a court- appointed receiver, regardless of the adequacy
of Beneficiary's security, enter upon and take and maintain full control of the Property in order
to perform all acts necessary and appropriate for the operation and maintenance thereof
including, but not limited to, the execution, cancellation or modification of leases, the collection
of all rents and revenues of the Property, the making of repairs to the Property and the execution
or termination of contracts providing for the management or maintenance of the Property, all on
such terms as are deemed best to protect the security of this Deed of Trust. In the event
Beneficiary elects to seek the appointment of a receiver for the Property upon Trustor's breach of
any covenant or agreement of Trustor in this Deed of Trust, Trustor hereby expressly consents to
the appointment of such receiver. Beneficiary or the receiver shall be entitled to receive a
reasonable fee for so managing the Property.
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All rents and revenues collected subsequent to delivery of written notice by Beneficiary
to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan
Documents shall be applied first to the costs, if any, of taking control of and managing the
Property and collecting the rents, including, but not limited to, attorney's fees, receiver's fees,
premiums on receiver's bonds, costs of repairs to the Property, premiums on insurance policies,
taxes, assessments and other charges on the Property, and the costs of discharging any obligation
or liability of Trustor as lessor or landlord of the Property and then to the sums secured by this
deed of Trust. Beneficiary or the receiver shall have access to the books and records used in the
operation and maintenance of the Property and shall be liable to account only for those rents
actually received. Beneficiary shall not be liable to Trustor, anyone claiming under or through
Trustor or anyone having an interest in the Property by reason of anything done or left undone by
Beneficiary under this Section 2.3.
If the rents of the Property are not sufficient to meet the costs, if any, of taking control of
and managing the Property and collecting the rents, any funds expended by Beneficiary for such
purposes shall become indebtedness of Trustor to Beneficiary secured by this Deed of Trust
pursuant to Section 3.3 hereof. Unless Beneficiary and Trustor agree in writing to other terms of
payment, such amounts shall be payable upon notice from Beneficiary to Trustor requesting
payment thereof and shall bear interest from the date of disbursement at the rate stated in
Section 3.3.
Any entering upon and taking and maintaining of control of the Property by Beneficiary
or the receiver and any application of rents as provided herein shall not cure or waive any default
hereunder or invalidate any other right or remedy of Beneficiary under applicable law or
provided herein. This assignment of rents of the Property shall terminate at such time as this
Deed of Trust ceases to secure indebtedness held by Beneficiary.
ARTICLE 3. TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges. Trustor shall
pay, or cause to be paid, at least fifteen (15) days prior to the date of delinquency, all taxes,
assessments, charges and levies imposed by any public authority or utility company which are or
may become a lien affecting the Security or any part thereof; provided, however, that Trustor
shall not be required to pay and discharge any such tax, assessment, charge or levy so long as (a)
the legality thereof shall be promptly and actively contested in good faith and by appropriate
proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities contested pursuant
to this Section 3.1. With respect to taxes, special assessments or other similar governmental
charges, Trustor shall pay such amount in full prior to the attachment of any lien therefor on any
part of the Security; provided, however, if such taxes, assessments or charges may be paid in
installments, Trustor may pay in such installments. Except as provided in clause (b) of the first
sentence of this paragraph, the provisions of this Section 3.1 shall not be construed to require that
Trustor maintain a reserve account, escrow account, impound account or other similar account
for the payment of future taxes, assessments, charges and levies.
In the event that Trustor shall fail to pay any of the foregoing items required by this
Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the
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same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to
fully pay such items within seven (7) business days after receipt of such notice. Any amount so
advanced therefor by Beneficiary, together with interest thereon from the date of such advance at
the maximum rate permitted by law, shall become an additional obligation of Trustor to the
Beneficiary and shall be secured hereby, and Trustor agrees to pay all such amounts.
Section 3.2 Provisions Respecting Insurance. Trustor agrees to provide insurance
conforming in all respects to that required under the Loan Documents during the course of
construction and following completion, and at all times until all amounts secured by this Deed of
Trust have been paid and all other obligations secured hereunder fulfilled, and this Deed of Trust
reconveyed.
All such insurance policies and coverages shall be maintained at Trustor's sole cost and
expense. Certificates of insurance for all of the above insurance policies, showing the same to be
in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time
prior to the Beneficiary's receipt of the entire Principal and all amounts secured by this Deed of
Trust.
Section 3.3 Advances. In the event the Trustor shall fail to maintain the full insurance
coverage required by this Deed of Trust or shall fail to keep the Security in accordance with the
Loan Documents, the Beneficiary, after at least seven (7) days prior notice to Beneficiary, may
(but shall be under no obligation to) take out the required policies of insurance and pay the
premiums on the same or may make such repairs or replacements as are necessary and provide
for payment thereof; and all amounts so advanced therefor by the Beneficiary shall become an
additional obligation of the Trustor to the Beneficiary (together with interest as set forth below)
and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the
Beneficiary, and if not so paid, shall bear interest from the date of the advance at the lesser of ten
percent (10 %) per annum or the maximum rate permitted by law.
ARTICLE 4. DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages. All judgments, awards of damages, settlements
and compensation made in connection with or in lieu of (1) taking of all or any part of or any
interest in the Property by or under assertion of the power of eminent domain, (2) any damage to
or destruction of the Property or in any part thereof by insured casualty, and (3) any other injury
or damage to all or any part of the Property ( "Funds ") are hereby assigned to and shall be paid to
the Beneficiary by a check made payable to the Beneficiary. The Beneficiary is authorized and
empowered (but not required) to collect and receive any funds and is authorized to apply them in
whole or in part upon any indebtedness or obligation secured hereby, in such order and manner
as the Beneficiary shall determine at its sole option. The Beneficiary shall be entitled to settle
and adjust all claims under insurance policies provided under this Deed of Trust and may deduct
and retain from the proceeds of such insurance the amount of all expenses incurred by it in
connection with any such settlement or adjustment. All or any part of the amounts so collected
and recovered by the Beneficiary may be released to Trustor upon such conditions as the
Beneficiary may impose for its disposition. Application of all or any part of the Funds collected
and received by the Beneficiary or the release thereof shall not cure or waive any default under
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this Deed of Trust. The rights of the Beneficiary under this Section 4.1 are subject to the rights
of any senior mortgage lender. Notwithstanding the provisions of this Section, the Beneficiary
shall release the Funds to Trustor to be used to reconstruct the improvements on the Property
provided that the Beneficiary reasonably determines that Trustor (when taking into account the
Funds) has sufficient funds to rebuild.
ARTICLE 5. AGREEMENTS AFFECTING THE PROPERTY; FURTHER
ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property. The Trustor shall duly and
punctually perform all terms, covenants, conditions and agreements binding upon it under the
Loan Documents and any other agreement of any nature whatsoever now or hereafter involving
or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys' Fees and Expenses. In the event of any
Event of Default (as defined below) hereunder, and if the Beneficiary should employ attorneys or
incur other expenses for the collection of amounts due or the enforcement of performance or
observance of an obligation or agreement on the part of the Trustor in this Deed of Trust, the
Trustor agrees that it will, on demand therefor, pay to the Beneficiary the reasonable fees of such
attorneys and such other reasonable expenses so incurred by the Beneficiary; and any such
amounts paid by the Beneficiary shall be added to the indebtedness secured by the lien of this
Deed of Trust, and shall bear interest from the date such expenses are incurred at the lesser of ten
percent (10 %) per annum or the maximum rate permitted by law.
Section 5.3 Payment of the Principal. The Trustor shall pay to the Beneficiary the
Principal and any other payments as set forth in the Note in the amounts and by the times set out
therein.
Section 5.4 Secured Obligations. The Secured Obligations are incorporated in and
made a part of this Deed of Trust. Upon default of a Secured Obligation, and after the giving of
notice and the expiration of any applicable cure period, the Beneficiary, at its option, may
declare the whole of the indebtedness secured hereby to be due and payable. This Deed of Trust
shall cover, and the property subject hereto shall include, all property now or hereafter affixed or
attached to or incorporated upon the Property in, to or under which Trustor now has or hereafter
acquires any right, title or interest, which, to the fullest extent permitted by law, shall be deemed
fixtures and a part of the Property. To the extent any of the property subject to this Deed of
Trust consists of rights in action or personal property covered by the Uniform Commercial Code,
this Deed of Trust shall also constitute a security agreement, and Trustor hereby grants to
Beneficiary, as secured party, a security interest in such property, including all proceeds thereof,
for the purpose of securing the Secured Obligations. In addition, for the purpose of securing the
Secured Obligations, Trustor hereby grants to Beneficiary, as secured party, a security interest in
all of the property described herein in, to, or under which Trustor now has or hereafter acquires
any right, title or interest, whether present, future or contingent, including, but not limited to, all
equipment, inventory, accounts, general intangibles, instruments, documents and chattel paper,
as those terms are defined in the Uniform Commercial Code, and all other personal property of
any kind (including, without limitation, money and rights to the payment of money), whether
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now existing or hereafter created, that are now or at any time hereafter (i) in the possession or
control of Beneficiary in any capacity; (ii) erected upon, attached to or appurtenant to the
Property; (iii) located or used on the Property or identified for use on the Property (whether
stored on the Property or elsewhere); or (iv) used in connection with, arising from, related to, or
associated with the Property or any of the personal property described herein, the construction of
any improvements on the Property, the ownership, development, maintenance, management or
operation of the Property, the use or enjoyment of the Property or the operation of any business
conducted thereon, including, without limitation, all such property described as the trust estate
hereinabove. The security interests granted in this Section are hereinafter severally and
collectively called the "Security Interest ". The Security Interest shall be self - operative with
respect to the real property described herein but Trustor shall execute and deliver on demand
such additional security agreements, financing statements and other instruments as may be
requested in order to impose the Security Interest more specifically upon the real and personal
property encumbered hereby. The Security Interest, at all times, shall be prior to any other
interest in the personal property encumbered hereby. Trustor shall act and perform as necessary
and shall execute and file all security agreements, financing statements, continuation statements
and other documents requested by Beneficiary to establish, maintain and continue the perfected
Security Interest. Trustor, on demand, shall promptly pay all costs and expenses of filing and
recordation, to ensure the continued priority of the Security Interest. Trustor shall not sell,
transfer, assign or otherwise dispose of any personal property encumbered hereby without
obtaining the prior written consent of Beneficiary, except that the Trustor may, in the ordinary
course of business, replace personal property or dispose of personal property that will not be
replaced because of its obsolescence. Unless Beneficiary then agrees otherwise in writing, all
proceeds from any permitted sale or disposition in excess of that required for full replacement
shall be paid to Beneficiary to be applied on the Note. Although proceeds of personal property
are covered hereby, this shall not be construed to mean that Beneficiary consents to any sale of
such personal property. Upon its recordation in the real property records of Riverside County,
this Deed of Trust shall be effective as a financing statement filed as a fixture filing. In that
regard, the following information is provided:
Name of Debtor:
Address of Debtor:
Name of Secured Party:
Address of Secured Party:
Section 5.5 Personal Property. To the maximum extent permitted by law, the
personal property subject to this Deed of Trust shall be deemed to be fixtures and part of the real
property and this Deed of Trust shall constitute a fixtures filing under the California Commercial
Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust
shall constitute a security agreement under the California Commercial Code.
Section 5.6 Financing Statement. The Trustor shall deliver to the Beneficiary such
financing statements pursuant to the appropriate statutes, and any other documents or
instruments as are required to convey to the Beneficiary a valid perfected security interest in the
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Security. The Trustor agrees to perform all acts which the Beneficiary may reasonably request
so as to enable the Beneficiary to maintain such valid perfected security interest in the Security
in order to secure the payment of the Note in accordance with their terms. The Beneficiary is
authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem
appropriate from time to time in order to protect the security interest established pursuant to this
instrument.
Section 5.7 Operation of the Security. The Trustor shall operate the Security (and, in
case of a transfer of a portion of the Security subject to this Deed of Trust, the transferee shall
operate such portion of the Security) in full compliance with the Loan Documents.
Section 5.8 Inspection of the Security. At any and all reasonable times upon seventy -
two (72) hours' notice, the Beneficiary and its duly authorized agents, attorneys, experts,
engineers, accountants and representatives, shall have the right, without payment of charges or
fees, to inspect the Security.
Section 5.9 Nondiscrimination. The Trustor herein covenants by and for itself, its
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 race, color, creed, religion, age, sex, sexual orientation, marital status, national origin
or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
Security, nor shall the Trustor itself or any person claiming under or through it establish or
permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the Security. The foregoing covenants shall run with the land.
ARTICLE 6. HAZARDOUS WASTE
Trustor shall keep and maintain the Property in compliance with, and shall not cause or
permit the Property to be in violation of any federal, state or local laws, ordinances or regulations
relating to industrial hygiene or to the environmental conditions on, under or about the Property
including, but not limited to, soil and ground water conditions. Trustor shall not use, generate,
manufacture, store or dispose of on, under, or about the Property or transport to or from the
Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or
related materials, including without limitation, any substances defined as or included in the
definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations (collectively referred to
hereinafter as "Hazardous Materials ") except such of the foregoing as may be customarily kept
and used in and about multifamily residential property.
Trustor shall immediately advise Beneficiary in writing if at any time it receives written
notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against Trustor or the Property pursuant to any
applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous
Materials, ( "Hazardous Materials Law "); (ii) all claims made or threatened by any third party
against Trustor or the Property relating to damage, contribution, cost recovery compensation,
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loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii)
above hereinafter referred to a "Hazardous Materials Claims "); and (iii) Trustor's discovery of
any occurrence or condition on any real property adjoining or in the vicinity of the Property that
could cause the Property or any part thereof to be classified as "border -zone property" under the
provision of California Health and Safety Code, Sections 25220 et seq. or any regulation adopted
in accordance therewith, or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of the Property under any Hazardous Materials Law.
Beneficiary shall have the right to join and participate in, as a party if it so elects, any
legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to
have its reasonable attorneys' fees in connection therewith paid by Trustor. Trustor shall
indemnify and hold harmless Beneficiary and its board members, supervisors, directors, officers,
employees, agents, successors and assigns from and against any loss, damage, cost, expense or
liability directly or indirectly arising out of or attributable to the use, generation, storage, release,
threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about
the Property including without limitation: (a) all foreseeable consequential damages; (b) the
costs of any required or necessary repair, cleanup or detoxification of the Property and the
preparation and implementation of any closure, remedial or other required plans; and (c) all
reasonable costs and expenses incurred by Beneficiary in connection with clauses (a) and (b),
including but not limited to reasonable attorneys' fees.
Without Beneficiary's prior written consent, which shall not be unreasonably withheld,
Trustor shall not take any remedial action in response to the presence of any Hazardous
Materials on, under or about the Property, nor enter into any settlement agreement, consent
decree, or other compromise in respect to any Hazardous Material Claims, which remedial
action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgment,
impair the value of the Beneficiary's security hereunder; provided, however, that Beneficiary's
prior consent shall not be necessary in the event that the presence of Hazardous Materials on,
under, or about the Property either poses an immediate threat to the health, safety or welfare of
any individual or is of such a nature that an immediate remedial response is necessary and it is
not reasonably possible to obtain Beneficiary's consent before taking such action, provided that
in such event Trustor shall notify Beneficiary as soon as practicable of any action so taken
Beneficiary agrees not to withhold its consent, where such consent is required hereunder,
if either (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii)
Trustor will or may be subjected to civil or criminal sanctions or penalties if it fails to take a
required action; (iii) Trustor establishes to the reasonable satisfaction of Beneficiary that there is
no reasonable alternative to such remedial action which would result in less impairment of
Beneficiary's security hereunder; or (iv) the action has been agreed to by Beneficiary.
The Trustor hereby acknowledges and agrees that (i) this Article is intended as the
Beneficiary's written request for information (and the Trustor's response) concerning the
environmental condition of the Property as required by California Code of Civil Procedure
Section 726.5, and (ii) each representation and warranty in this Deed of Trust or any of the other
Loan Documents (together with any indemnity applicable to a breach of any such representation
and warranty) with respect to the environmental condition of the property is intended by the
Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code
17705.00000\5762997 6
of Civil Procedure Section 736.
In the event that any portion of the Property is determined to be "environmentally
impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or
to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section
726.5(e)(1)), then, without otherwise limiting or in any way affecting the Beneficiary's or the
Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its
rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such
environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and
remedies of an unsecured creditor, including reduction of its claim against the Trustor to
judgment, and (b) any other rights and remedies permitted by law. For purposes of determining
the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil
Procedure Section 726.5(a), the Trustor shall be deemed to have willfully permitted or
acquiesced in a release or threatened release of hazardous materials, within the meaning of
California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of
hazardous materials was knowingly or negligently caused or contributed to by any lessee,
occupant, or user of any portion of the Property and the Trustor knew or should have known of
the activity by such lessee, occupant, or user which caused or contributed to the release or
threatened release. All costs and expenses, including (but not limited to) attorneys' fees,
incurred by the Beneficiary in connection with any action commenced under this paragraph,
including any action required by California Code of Civil Procedure Section 726.5(b) to
determine the degree to which the Property is environmentally impaired, plus interest thereon at
the rate specified in the Note until paid, shall be added to the indebtedness secured by this Deed
of Trust and shall be due and payable to the Beneficiary upon its demand made at any time
following the conclusion of such action.
ARTICLE 7. EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The following shall constitute Events of Default
following the expiration of any applicable notice and cure periods: (1) failure to make any
payment to be paid by Trustor under the Loan Documents; (2) failure to observe or perform any
of Trustor's other covenants, agreements or obligations under the Loan Documents, including,
without limitation, the provisions concerning discrimination; or (3) failure to make any payment
or perform any of Trustor's other covenants, agreements, or obligations under any other debt
instruments or regulatory agreement secured by the Property, which default shall not be cured
within the times and in the manner provided therein.
Section 7.2 Acceleration of Maturity. If an Event of Default shall have occurred and
be continuing, then at the option of the Beneficiary, the amount of any payment related to the
Event of Default and the unpaid Principal of the Note shall immediately become due and
payable, upon written notice by the Beneficiary to the Trustor (or automatically where so
specified in the Loan Documents), and no omission on the part of the Beneficiary to exercise
such option when entitled to do so shall be construed as a waiver of such right.
Section 7.3 Trustor agrees 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
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pay all costs and expenses, including cost of evidence of title and reasonable attorney's fees in
any such action or proceeding in which Beneficiary or Trustee may appear.
Section 7.4 The Beneficiary's Right to Enter and Take Possession. If an Event of
Default shall have occurred and be continuing, the Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or
proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its
security, enter upon the Security and take possession thereof (or any part thereof) and of any of
the Security, in its own name or in the name of Trustee, and do any acts which it deems
necessary or desirable to preserve the value or marketability of the Property, or part thereof or
interest therein, increase the income therefrom or protect the security thereof. The entering upon
and taking possession of the Security shall not cure or waive any Event of Default or Notice of
Default (as defined below) hereunder or invalidate any act done in response to such Default or
pursuant to such Notice of Default and, notwithstanding the continuance in possession of the
Security, Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust,
or by law upon occurrence of any Event of Default, including the right to exercise the power of
sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage,
appoint a receiver, or specifically enforce any of the covenants hereof;
(c) Deliver to Trustee a written declaration of default and demand for sale,
and a written notice of default and election to cause Trustor's interest in the Security to be sold
( "Notice of Default and Election to Sell "), which notice Trustee or Beneficiary shall cause to be
duly filed for record in the Official Records of Los Angeles County; or
(d) Exercise all other rights and remedies provided herein, in the instruments
by which the Trustor acquires title to any Security, or in any other document or agreement now
or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby,
or provided by law.
Section 7.5 Foreclosure By Power of Sale. Should the Beneficiary elect to foreclose
by exercise of the power of sale herein contained, the Beneficiary shall give notice to the Trustee
(the "Notice of Sale ") and shall deposit with Trustee this Deed of Trust which is secured hereby
(and the deposit of which shall be deemed to constitute evidence that the unpaid principal
amount of the Note is immediately due and payable), and such receipts and evidence of any
expenditures made that are additionally secured hereby as Trustee may require.
(a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be
recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then
required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse
of such time as may then be required by law and after recordation of such Notice of Default and
Election to Sell and after Notice of Sale having been given as required by law, sell the Security,
at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate
lots or parcels or items as Trustee shall deem expedient and in such order as it may determine
unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b), at
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public auction to the highest bidder, for cash in lawful money of the United States payable at the
time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient
deed or deeds conveying the property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed or any matters of facts shall be conclusive proof of the
truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary,
may purchase at such sale, and Trustor hereby covenants to warrant and defend the title of such
purchaser or purchasers.
(b) After deducting all reasonable costs, fees and expenses of Trustee,
including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds
of sale to payment of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to
Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the
remainder, if any, to Trustor.
(c) Trustee may postpone sale of all or any portion of the Property by public
announcement at such time and place of sale, and from time to time thereafter, and without
further notice make such sale at the time fixed by the last postponement, or may, in its discretion,
give a new Notice of Sale.
Section 7.6 Receiver. If an Event of Default shall have occurred and be continuing,
Beneficiary, as a matter of right and without further notice to Trustor or anyone claiming under
the Security, and without regard to the then value of the Security or the interest of Trustor
therein, shall have the right to apply to any court having jurisdiction to appoint a receiver or
receivers of the Security (or a part thereof), and Trustor hereby irrevocably consents to such
appointment and waives further notice of any application therefor. Any such receiver or
receivers shall have all the usual powers and duties of receivers in like or similar cases, and all
the powers and duties of Beneficiary in case of entry as provided herein, and shall continue as
such and exercise all such powers until the date of confirmation of sale of the Security, unless
such receivership is sooner terminated.
Section 7.7 Remedies Cumulative. No right, power or remedy conferred upon or
reserved to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right,
power or remedy, but each and every such right, power and remedy shall be cumulative and
concurrent and shall be in addition to any other right, power and remedy given hereunder or now
or hereafter existing at law or in equity.
Section 7.8 No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or
remedy accruing upon any Event of Default shall exhaust or impair any such right, power or
remedy, or shall be construed to be a waiver of any such Event of Default or acquiescence
therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may
be exercised from time to time and as often as may be deemed expeditious by the Beneficiary.
Beneficiary's express or implied consent to a breach by Trustor, or a waiver of any obligation of
the Trustor hereunder shall not be deemed or construed to be a consent to any subsequent breach,
or further waiver, of such obligation or of any other obligations of the Trustor hereunder. Failure
on the part of the Beneficiary to complain of any act or failure to act or to declare an Event of
17705.00000 \5762997.6
Default, irrespective of how long such failure continues, shall not constitute a waiver by the
Beneficiary of its right hereunder or impair any rights, power or remedies consequent on any
Event of Default by the Trustor.
(b) If the Beneficiary (i) grants forbearance or an extension of time for the
payment of any sums secured hereby, (ii) takes other or additional security or the payment of any
sums secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents,
(iv) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes
any of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the
granting of any easement or other right affecting the Security, or (iv) makes or consents to any
agreement subordinating the lien hereof, any such act or omission shall not release, discharge,
modify, change or affect the original liability under this Deed of Trust, or any other obligation of
the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-
signer, endorser, surety or guarantor (unless expressly released) such action shall not constitute a
waiver or acquiescence therein; nor shall any such act or omission preclude the Beneficiary from
exercising any right, power or privilege herein granted or intended to be granted in any Event of
Default then made or of any subsequent Event of Default, nor, except as otherwise expressly
provided in an instrument or instruments executed by the Beneficiary shall the lien of this Deed
of Trust be altered thereby.
Section 7.9 Suits to Protect the Security. The Beneficiary shall have power to (a)
institute and maintain such suits and proceedings as it may deem expedient to prevent any
impairment of the Security and the rights of the Beneficiary as may be unlawful or any violation
of this Deed of Trust, (b) preserve or protect its interest (as described in this Deed of Trust) in the
Security, and (c) restrain the enforcement of or compliance with any legislation or other
governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the
enforcement for compliance with such enactment, rule or order would impair the Security
thereunder or be prejudicial to the interest of the Beneficiary.
Section 7.10 Trustee May File Proofs of Claim. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other
proceedings affecting the Trustor, its creditors or its property, the Beneficiary, to the extent
permitted by law, shall be entitled to file such proofs of claim and other documents as may be
necessary or advisable in order to have the claims of the Beneficiary allowed in such proceedings
and for any additional amount which may become due and payable by the Trustor hereunder
after such date.
Section 7.11 Waiver. The Trustor waives presentment, demand for payment, notice of
dishonor, notice of protest and nonpayment, protest, notice of interest on interest and late
charges, and diligence in taking any action to collect any sums owing under the Note or in
proceedings against the Security, in connection with the delivery, acceptance, performance,
default, endorsement or guaranty of this Deed of Trust.
17705.00000 \5762997.6
ARTICLE 8. MISCELLANEOUS
Section 8.1 Amendments. This instrument cannot be waived, changed, discharged or
terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor.
Section 8.2 Reconveyance by Trustee. Upon written request of Beneficiary stating
that all sums secured hereby have been paid or forgiven, and upon surrender of this Deed of
Trust to Trustee for cancellation and retention, and upon payment by Trustor of Trustee's
reasonable fees, Trustee shall reconvey the Security to Trustor, or to the person or persons
legally entitled thereto.
Section 8.3 Notices. If at any time after the execution of this Deed of Trust it shall
become necessary or convenient for one of the parties hereto to serve any notice, demand or
communication upon the other party, such notice, demand or communication shall be in writing
and shall be served personally or by depositing the same in the registered United States mail,
return receipt requested, postage prepaid and (1) if intended for Beneficiary shall be addressed
to:
Beneficiary: Arcadia Redevelopment Agency
240 West Huntington Drive
(P.O. Box 60021)
Arcadia, CA 91066
Attn: Executive Director
Trustor: Arcadia Campus Commons Associates
5755 E. Kings Canyon Road, Suite 110
Fresno, CA 93727
With a Copy to: Law Offices of Patrick R. Sabelhaus
1006 Fourth Street, Sixth Floor
Sacramento, CA 95814
With a Copy to: Hunt Capital Partners, LLC
1600 Duke Street
Suite 420
Alexandria, VA 22314
Attention: Alain Fair
With a Copy to: Ballard Spahr LLP
1735 Market Street
51st Floor
Philadelphia, PA 19103
Attention: Jere G. Thompson
Any notice, demand or communication shall be deemed given, received, made or
communicated on the date personal delivery is affected or, if mailed in the manner herein
specified, on the delivery date or date delivery is refused by the addressee, as shown on the
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return receipt. Either party may change its address at any time by giving written notice of such
change to Beneficiary or Trustor as the case may be, in the manner provided herein, at least ten
(10) days prior to the date such change is desired to be effective.
Section 8.4 Successors and Joint Trustors. Where an obligation is created herein
binding upon Trustor, the obligation shall also apply to and bind any transferee or successors in
interest. Where the terms of the Deed of Trust have the effect of creating an obligation of the
Trustor and a transferee, such obligation shall be deemed to be a joint and several obligation of
the Trustor and such transferee. Where Trustor is more than one entity or person, all obligations
of Trustor shall be deemed to be a joint and several obligation of each and every entity and
person comprising Trustor.
Section 8.5 Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties and are not a part of this Deed of Trust.
Section 8.6 Invalidity of Certain Provisions. Every provision of this Deed of Trust is
intended to be severable. In the event any term or provision hereof is declared to be illegal or
invalid for any reason whatsoever by a court or other body of competent jurisdiction, such
illegality or invalidity shall not affect the balance of the terms and provisions hereof, which
terms and provisions shall remain binding and enforceable. If the lien of this Deed of Trust is
invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to
any part of the Security, the unsecured or partially secured portion of the debt, and all payments
made on the debt, whether voluntary or under foreclosure or other enforcement action or
procedure, shall be considered to have been first paid or applied to the full payment of that
portion of the debt which is not secured or partially secured by the lien of this Deed of Trust.
Section 8.7 Governing Law; Venue. This Deed of Trust shall be governed by and
construed in accordance with the laws of the State of California. Venue shall be in Los Angeles
County.
Section 8.8 Gender and Number. In this Deed of Trust the singular shall include the
plural and the masculine shall include the feminine and neuter and vice versa, if the context so
requires.
Section 8.9 Deed of Trust, Mortgage. Any reference in this Deed of Trust to a
mortgage shall also refer to a deed of trust and any reference to a deed of trust shall also refer to
a mortgage.
Section 8.10 Actions. Trustor agrees to appear in and defend any action or proceeding
purporting to affect the Security.
Section 8.11 Substitution of Trustee. Beneficiary may from time to time substitute a
successor or successors to any Trustee named herein or acting hereunder to execute this 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
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situated, shall be conclusive proof of proper appointment of the successor trustee.
Section 8.12 Statute of Limitations. 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.
Section 8.13 Acceptance by Trustee. 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 the Trustee is not obligated to notify any party hereto of pending sale
under this Deed of Trust or of any action of proceeding in which Trustor, Beneficiary, or Trustee
shall be a party unless brought by Trustee.
Section 8.14 Tax Credit Provisions. Notwithstanding anything to the contrary
contained herein or in any documents secured by this deed of trust or contained in any
subordination agreement, the Beneficiary acknowledges and agrees that in the event of a
foreclosure or deed -in -lieu of foreclosure (collectively, "Foreclosure ") with respect to the
property encumbered by this deed of trust, the following rule contained in Section 42(h)(6)(E)(ii)
of the Internal Revenue Code of 1986, as amended, shall apply:
For a period of three (3) years from the date of Foreclosure, with respect to any unit that
had been regulated by the regulatory agreement with the California Tax Credit Allocation
Committee, (i) none of the tenants occupying those units at the time of Foreclosure may be
evicted or their tenancy terminated (other than for good cause), (ii) nor may any rent be
increased except as otherwise permitted under Section 42 of the Code.
[Signatures on next page]
17705.00000 \5762997.6
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and
year first above written.
ARCADIA CAMPUS COMMONS ASSOCIATES,
a California limited partnership
By: Community Revitalization and Development Corporation,
a California nonprofit public benefit corporation
Its: Managing General Partner
By:
David Rutledge,
Secretary /Chief Executive Officer
By: ARCADIA CAMPUS COMMONS ASSOCIATES, LLC,
a California limited liability company
Its: General Partner
By:
Steven Froberg,
Member
17705.00000 \5762997.6
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On , before me, , personally
appeared , personally known to me (or 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 hand and official seal.
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On , before me, , personally
appeared , personally known to me (or 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 hand and official seal.
17705. 00000 \5762997.6
EXHIBIT A
(Legal Description)
17705.00000 \5762997.6
ATTACHMENT 3 TO
FIRST AMENDMENT TO
OWNER PARTICIPATION AND LOAN AGREEMENT
(ARCADIA COMMONS)
REVISED EXHIBIT E TO ORIGINAL AGREEMENT
PROMISSORY NOTE
17705.00000 \5762997.6
PROMISSORY NOTE
(Arcadia Commons)
•
$6,900,000 Arcadia, California
, 2010
FOR VALUE RECEIVED, Arcadia Campus Commons Associates, a California limited
partnership ( "Borrower "), promises to pay to the Arcadia Redevelopment Agency, a public body
corporate and politic, (the "Agency "), or order, the principal sum of up to Six Million Nine
Hundred Thousand Dollars ($6,900,000), or so much as is loaned to Borrower, plus interest
thereon pursuant to Section 2 below.
1. Borrower's Obligation. This promissory note (the "Note ") evidences the
Borrower's obligation to pay the Agency the principal amount of up to Six Million Nine Hundred
Thousand Dollars ($6,900,000) for the funds loaned to the Borrower by Agency to finance the
construction and permanent financing costs of the Property pursuant to the Owner Participation
and Loan Agreement between the Borrower and the Agency of even date herewith (the "Loan
Agreement "). All capitalized terms not otherwise defined in this Note shall have the meanings
set forth in the Loan Agreement.
2. Interest. The outstanding principal balance of this Note shall bear interest at the
annual rate of one percent (1 %), compounded annually, commencing on the date of the Note
until paid; provided, however, if a Default occurs, interest on the principal balance shall begin to
accrue, as of the date of Default (following expiration of applicable notice and cure periods), and
continuing until such time as the Loan funds are repaid in full or the Default is cured, at the
default rate of the lesser of ten percent (10 %), compounded annually, or the highest rate
permitted by law.
3. Term and Repayment Requirements. The term of the Loan shall commence with
the date of this Note and shall expire fifty -five (55) years after the date of the certificate of
occupancy for the Development. This Note shall be due and payable as set forth in Section 2.7
of the Loan Agreement.
4. No Assumption. This Note shall not be assumable by the successors and assigns
of Borrower without the prior written consent of the Agency as provided in Article 5 of the Loan
Agreement.
5. Security. This Note is secured by a Deed of Trust and Security Agreement (the
"Deed of Trust ") of even date herewith, wherein the Borrower is the Trustor and Agency is the
Beneficiary, covering the Property.
6. Terms of Payment.
6.1 All payments due under this Note shall be paid in currency of the United
17705.00000 \5762997 6
States of America, which at the time of payment is lawful for the payment of public and private
debts.
6.2 All payments on this Note shall be paid to Arcadia Redevelopment
Agency, 240 West Huntington Drive (or P.O. Box 60021), Arcadia, California 91066, Attention:
Executive Director or to such other place as the Agency may from time to time designate in
writing.
6.3 All payments on this Note shall be without expense to the Agency, and the
Borrower agrees to pay all costs and expenses, including re- conveyance fees and reasonable
attorney's fees of the Agency, incurred in connection with the payment of this Note and the
release of any security hereof.
6.4 Notwithstanding any other provision of this Note, or any instrument
securing the obligations of the Borrower under this Note, if, for any reason whatsoever, the
payment of any sums by the Borrower pursuant to the terms of this Note would result in the
payment of interest which would exceed the amount that the Agency may legally charge under
the laws of the State of California, then the amount by which payments exceeds the lawful
interest rate shall automatically be deducted from the principal balance owing on this Note, so
that in no event shall the Borrower be obligated under the terms of this Note to pay any interest
which would exceed the lawful rate
6.5 This note shall be non recourse to the Borrower, pursuant to, and except as
provided in, Section 2.9, of the Loan Agreement.
7. Default.
7.1 Any of the following shall constitute an Event of Default under this Note:
7.1.1 Any failure to pay, in full, any payment required under this Note
when due following written notice by Agency of such failure and ten (10) days opportunity to
cure;
7.1.2 Any failure in the performance by the Borrower of any term,
condition, provision or covenant set forth in this Note subject to the notice and cure period set
forth in Section 7.1 of the Loan Agreement; and
The occurrence of any Event of Default under the Loan Agreement, or other instrument
securing the obligations of the Borrower under this Note or under any other promissory notes
hereafter issued by the Borrower to the Agency pursuant to the Loan Agreement, subject to
notice and cure periods, if any, set forth therein.
7.1.3 Upon the occurrence of such an Event of Default, the entire unpaid
principal balance, together with all interest thereon, and together with all other sums then
payable under this Note and the Deed of Trust shall at the option of the Agency become
immediately due and payable upon written notice by the Agency to the Borrower without further
demand.
17705 00000 \5762997.6
7.1.4 The failure to exercise the remedy set forth in Subsection 7(b)
above or any other remedy provided by law upon the occurrence of one or more of the foregoing
events of default shall not constitute a waiver of the right to exercise any remedy at any
subsequent time in respect to the same or any other default. The acceptance by Agency hereof of
any payment which is less than the total of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the foregoing remedies or
options at that time or at any subsequent time, or nullify any prior exercise of any such remedy
or option, without the express consent of the Agency, except as and to the extent otherwise
provided by law.
8. Waivers.
8.1 The Borrower hereby waives diligence, presentment, protest and demand,
and notice of protest, notice of demand, and notice of dishonor of this Note. The Borrower
expressly agrees that this Note or any payment hereunder may be extended from time to time,
and that the Agency may accept further security or release any security for this Note, all without
in any way affecting the liability of the Borrower.
8.2 No extension of time for payment of this Note or any installment hereof
made by agreement by the Agency with any person now or hereafter liable for payment of this
Note shall operate to release, discharge, modify, change or affect the original liability of the
Borrower under this Note, either in whole or in part.
8.3 The obligations of the Borrower under this Note shall be absolute and the
Borrower waives any and all rights to offset, deduct or withhold any payments or charges due
under this Note for any reason whatsoever.
9. Miscellaneous Provisions.
9.1 All notices to the Agency or the Borrower shall be given in the manner
and at the addresses set forth in the Loan Agreement, or to such addresses as the Agency and the
Borrower may hereinafter designate.
9.2 The Borrower promises to pay all costs and expenses, including
reasonable attorney's fees, incurred by the Agency in the enforcement of the provision of this
Note, regardless of whether suit is filed to seek enforcement.
9.3 This Note may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change, modification or discharge
is sought.
9.4 This Note shall be governed by and construed in accordance with the laws
of the State of California.
9.5 The times for the performance of any obligations hereunder shall be
strictly construed, time being of the essence.
9.6 This document, together with the Loan Documents (as defined in the Loan
17705.00000 \5762997.6
Agreement), contains the entire agreement between the parties as to the Loan. It may not be
modified except upon written consent of the parties.
ARCADIA CAMPUS COMMONS ASSOCIATES,
a California limited partnership
By: Community Revitalization and Development Corporation,
a California nonprofit public benefit corporation
Its: Managing General Partner
By:
David Rutledge,
Secretary /Chief Executive Officer
By: ARCADIA CAMPUS COMMONS ASSOCIATES, LLC,
a California limited liability company
Its: General Partner
By:
Steven Froberg,
Member
•
17705.00000 \5762997.6
ATTACHMENT 4 TO
FIRST AMENDMENT TO
OWNER PARTICIPATION AND LOAN AGREEMENT
(ARCADIA COMMONS)
REVISED EXHIBIT F TO ORIGINAL AGREEMENT
REGULATORY AGREEMENT
17705.00000 \5762997 6
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Arcadia Redevelopment Agency
240 West Huntington Drive
(P.O. Box 60021)
Arcadia, CA 91066
Attention:
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement ")
is made and entered into as of , 2010, by and between the Arcadia
Redevelopment Agency, a public body, corporate and politic (the "Agency ") and Arcadia
Campus Commons Associates, a California limited partnership ( "Owner ").
RECITALS
1. The Owner and the Agency entered in an Owner Participation and Loan
Agreement dated of even date herewith (the "Loan Agreement "), whereby the Agency provided
a loan to the Owner in the amount of Six Million Nine Hundred Thousand Dollars ($6,900,000)
(the "Loan ") to construct and finance the development of that certain real property located in
Arcadia, California more particularly described in Exhibit A attached to this Agreement and
incorporated by this reference (the "Property "). The improvements on the Property (the
"Improvements ") include forty -two (42) senior housing units affordable to low- and very low -
income households and one (1) manager's unit. The forty -two (42) senior housing units shall be
affordable to low and very low- income households for a period of fifty -five (55) years following
the certificate of occupancy for the Development. The Property and the Improvements will be
referred to collectively as the Development. All initially capitalized terms used and not
otherwise defined herein shall have the meaning ascribed to such term by the Loan Agreement.
2. The Loan is evidenced by a Promissory Note dated of even date herewith (the
"Promissory Note "), and a deed of trust dated of even date herewith, and recorded against the
Property (the "Deed of Trust ").
3. The Agency has agreed to loan funds to Owner on the condition that the
Development be maintained and operated in accordance with Health and Safety Sections
33334.2 et _se q. The Agency intends to utilize the Improvements to obtain replacement housing
credits pursuant to Health and Safety Code Section 33413(a) and in accordance with additional
restrictions concerning affordability, operation and maintenance of the Development as specified
in this Agreement.
4. In consideration of receipt of the Agency Loan and repayment terms substantially
below market rate loans, the Owner further agrees to observe all the terms and conditions set
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forth below.
5. In order to ensure that the Development will be used and operated in accordance
with these conditions and restrictions, the Agency and Owner wish to enter into this Agreement.
THEREFORE, the Agency and Owner hereby agree as follows.
ARTICLE I. DEFINITIONS
Section 1.1 Definitions. When used in this Agreement, the following terms shall have
the respective meanings assigned to them in this Article 1.
(a) "Actual Household Size" shall mean the actual number of persons in the
applicable household.
(b) "Adjusted Income" shall mean the total anticipated annual income of all
persons in a household, as calculated in accordance with 25 California Code of Regulations
Section 6914 or pursuant to a successor State housing program that utilizes a reasonably similar
method of calculation of adjusted income. In the event that no such program exists, the Agency
shall provide the Owner with a reasonably similar method of calculation of adjusted income as
provided in said Section 6914.
(c) "Agency" shall mean the Arcadia Redevelopment Agency, a public body,
corporate and politic.
(d) "Agreement" shall mean this Regulatory Agreement and Declaration of
Restrictive Covenants.
(e) "Assumed Household Size" shall have the meaning set forth in Section
2.2(d) below.
(f) "City" shall mean the City of Arcadia, a municipal corporation.
(g) "Development" shall mean the Property and the forty -three (43) units on
the Property, as well as a community building, office and all landscaping, roads and parking
spaces existing thereon, as the same may from time to time exist.
(h) "Median Income" shall mean the median gross yearly income adjusted for
Actual Household Size or Assumed Household Size as specified herein, in the County of Los
Angeles, California, as determined by the U.S. Department of Housing and Urban Development
pursuant to Section 8 of the United States Housing Act of 1937, and as published from time to
time by the U.S. Department of Housing and Urban Development. In the event that such income
determinations are no longer published or are not updated for a period of at least eighteen (18)
months, the Agency shall provide the Owner with other income determinations which are
reasonably similar with respect to methods of calculation to those previously published by HUD.
(i) "Owner" shall mean Arcadia Campus Commons Associates, a California
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limited partnership, and its successors and assigns to the Development.
(j) "Property" shall mean the real property described in Exhibit A attached
hereto and incorporated herein, and all current and future improvements thereon.
(k) "Rent" shall mean the total of monthly payments by the tenants of a Unit
for the following: use and occupancy of the Unit and land and associated facilities, including
parking; any separately charged fees or service charges assessed by Owner which are required of
all tenants, other than security deposits; the cost of an adequate level of service for utilities paid
by the tenant, including garbage collection, sewer, water, electricity, gas and other heating,
cooking and refrigeration fuel, but not telephone service; any other interest, taxes, fees or
charges for use of the land or associated facilities and assessed by a public or private entity other
than Owner, and paid by the tenant.
(1) "Senior" shall mean mean a person sixty -two (62) years of age or older,
pursuant to California Civil Code Section 51.3.
(m) "Sixty Percent Household" shall mean a household with an Adjusted
Income that does not exceed sixty percent (60 %) Median Income.
(n) "Sixty Percent Rent" shall mean the maximum allowable rent for a Sixty
Percent Unit pursuant to Section 2.2(b) below.
(o) "Sixty Percent Unit" shall mean the Units which, pursuant to Section
2.1(b) are required to be rented to Sixty Percent Households.
(p) "Term" shall mean the term of this Agreement, commencing on the date
of this Agreement and expiring on the fifty -fifth (55 anniversary of the date of issuance by the
City of a certificate of occupancy for the Development.
(q) "Units" shall mean the forty -three (43) rental units located on the
Property.
(r) "Very Low Income Household" shall mean a household with an Adjusted
Income that does not exceed the qualifying limits for very low income households, adjusted for
Actual Household Size, as established and amended from time to time pursuant to Section 8 of
the United States Housing Act of 1937, and as published by the State of California Department
of Housing and Community Development.
(s) "Very Low Income Rent" shall mean the maximum allowable rent for a
Very Low Income Unit pursuant to Section 2.2 (a) below.
(t) "Very Low Income Unit" shall mean the Units which, pursuant to Section
2.1(a) below, are required to be occupied by Very Low Income Households.
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ARTICLE 2. AFFORDABILITY COVENANTS
Section 2.1 Occupancy Requirements.
(a) Very Low Income Units. Thirteen (13) of the Units shall be rented and
occupied by or, if vacant, available for rental and occupancy by Very Low Income Households.
(b) Sixty Percent Units. Twenty -Nine (29) of the Units shall be rented and
occupied by or, if vacant, available for rental and occupancy by Sixty Percent Households.
(c) Bedroom Size. The Units (excluding the manager's unit) shall be
available in the following bedroom sizes:
1 bdrm 2 bdrm Total
Very Low Income Units 10 3 13
Sixty Percent Units 23 6 29
Manager's Unit 1 0 1
TOTAL 34 9 43
(d) Senior Occupancy.
(i) Except for the resident manager's unit, if used as such, all Units in
the Development shall be occupied or held available for occupancy by households containing
Senior residents. The Development shall be operated at all times in compliance with the
provisions of: (a) the Unruh Act, including but not limited to California Civil Code Sections
51.2, 51.3 and 51.4 which relate to the requirements for lawful senior housing; (b) the United
States Fair Housing Act, as amended, 42 U.S.C. Section 3607(b) and 24 CFR 100.304, which
relate to lawful senior housing; (c) the California Fair Employment and Housing Act,
Government Code Section 12900 et seq., which relates to lawful senior housing; and (d) any
other applicable law or regulation (including the Americans With Disabilities Act, to the extent
applicable to the Development). Owner shall develop and implement appropriate age
verification procedures to ensure compliance with the requirements of this Section. The Owner
shall provide County with a copy of its written verification procedures.
(ii) Owner agrees to indemnify, protect, hold harmless and defend (by
counsel reasonably satisfactory to Agency) Agency, and its boardmembers, officers and
employees, from all suits, actions, claims, causes of action, costs, demands, judgments and liens
arising out of Owner's failure to comply with applicable legal requirements related to housing
for seniors and persons with disabilities. The provisions of this subsection shall survive
expiration of the Term or other termination of this Agreement, and shall remain in full force and
effect.
Section 2.2 Allowable Rent. Owner covenants that no Very Low Income Household
or Sixty Percent Household shall pay an amount in excess of the applicable Rent set forth below.
(a) Very Low Income Rent. Subject to the provisions of Section 2.3 below,
the Rent (including utility allowance) charged to Tenants of the Very Low Income Units shall
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not exceed one - twelfth (1/12 of thirty percent (30 %) of fifty percent (50 %) of Median Income,
adjusted for Assumed Household Size.
(b) Sixty Percent Rent. Subject to Section 2.3 below, the Rent charged to
Tenants of the Sixty Percent Units shall not exceed one - twelfth (1/12 of thirty percent (30 %)
of sixty percent (60 %) of Median Income, adjusted for Assumed Household Size.
(c) Agency Approval of Rents. Initial rents for all Units (excluding the
Manager's Unit) shall be approved by the Agency prior to occupancy. All rent increases shall
also be subject to Agency approval.
(d) Assumed Household Size. In calculating the allowable Rent for the Lower
Income Units, the following assumed household sizes shall be utilized:
Number of Bedrooms Assumed Household Size
One 1.5
Two 3
Section 2.3 Increased Income of Occupying Households.
(a) Very Low Income Household to Sixty Percent Household. If, upon
recertification of the income of a Tenant of a Very Low Income Unit, the Owner determines that
a former Very Low Income Household's Adjusted Income has increased and exceeds the
qualifying income for a Very Low Income Household set forth in Section 1.1(q), but does not
exceed the maximum qualifying income for a Sixty Percent Household, then, upon expiration of
the Tenant's lease:
(i) Such Tenant's Unit shall be considered a Sixty Percent Unit;
(ii) Such Tenant's Rent may be increased to a Sixty Percent Rent,
upon sixty (60) days' written notice to the Tenant; and
(iii) The Owner shall rent the next available Unit to a Very Low
Income Household at Rent not exceeding the maximum Rent specified in Section 2.2(a) to
comply with the requirements of Section 2.1(a) and Section 2.2(a) above.
(b) Non - Qualifying Household. In the event, upon recertification of an
occupant household's income, the Owner determines that a former Very Low Income Household
or Sixty Percent Household, has an Adjusted Income exceeding sixty percent (60 %) of Median
Income, such household shall be permitted to continue to occupy the Unit, and upon expiration
of the household's lease and upon sixty (60) days written notice, the Rent may be increased to
one - twelfth (1/12` of thirty percent (30 %) of the household's actual income. The Owner shall
rent the next available Unit to a Very Low Income Household or a Sixty Percent Household as
necessary to meet the requirements of Section 2.1(a) above.
(c) Under no circumstances shall Owner increase rent more than five percent
(5 %) in any twelve (12) month period provided, however, if any annual change in Median
Income would result in an increase of more than 5% in any year, Owner shall be permitted to
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increase rent in any subsequent year up to 5% to address such Median Income increase.
Section 2.4 Acknowledgment of Owner. Owner hereby acknowledges that this
Agreement imposes certain restrictions on the use and occupancy of the Project and the Property
during the Term of this Agreement. Owner acknowledges and understands that the restrictions
shall be applicable to the Project and the Property for the Term hereof.
Initials of Owner
Section 2.5 Reservation of Property for Affordable Housing. The Owner covenants
and agrees to reserve and restrict the Property for residential occupancy by individuals and
families who, at the time of initial occupancy of a Unit and continuously thereafter (subject to
the other provisions of this Agreement), until the end of the Term, are members of a Very Low
Income or Sixty Percent Household. Only one (1) Unit within the Project may be used as a
manager unit at any given time.
(a) Continuous Operation Covenant. The Owner covenants to and for the
benefit of the Agency to cause the Project to be continuously operated, in accordance with the
other provisions of this Section, throughout the Term
Section 2.6 Affordable Senior Residential Rental Property Restrictive Covenant. The
Owner covenants to and for the benefit of the Agency that the Owner shall construct, own,
manage and operate, or cause the management and operation of, the Project to provide senior
residential rental housing available only to Sixty Percent Households at a Sixty Percent Rent and
Very Low Income Households at a Very Low Income Rent (except for the Manager's Unit) and
for no other purposes in accordance with this Agreement during the Term. The Owner hereby
covenants to develop the Property with the Project. The Owner will not knowingly permit any
Unit to be used on a transient basis and will not lease or rent any Unit for a period of less than six
(6) months. No Unit will, at any time, be leased or rented for use as a hotel, motel, time share,
dormitory, fraternity house, sorority house, rooming house, hospital, nursing home, sanitary or
rest home.
(a) Continuous Operation Covenant. The Owner covenants to and for the
benefit of the Agency to cause the Project to be continuously operated, in accordance with the
other provisions of this Section, throughout the Term
Section 2.7 Lease Provisions. Owner for itself, its successors and assigns hereby
covenants and agrees that, in connection with the lease of Units (except for the Manager's Unit)
in the Project to Very Low Income and Sixty Percent Households during the Term, it shall
comply with the following requirements:
(a) The lease between Owner and the Very Low Income and Sixty Percent
Households shall be for not less than one (1) year, unless by mutual agreement between Owner
and the Very Low Income and /or Sixty Percent Households, but in such a case for not less than
six (6) months, as required by applicable provisions of the United States Internal Revenue Code.
(b) The Lease shall contain provisions which authorize Owner to immediately
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terminate the tenancy of any household one or more of whose members misrepresented any fact
material to the household's qualification as a Sixty Percent or Very Low Income Household.
Each lease or rental agreement shall also provide that the household is subject to annual
certification in accordance with Section 3.1 below, and that, if the household's income increases
above the applicable limits for a Very Low Income Household or Sixty Percent Household, such
household's Rent may be subject to increase.
(c) The lease shall not contain any of the following provisions:
(i) an agreement by the Very Low Income or Sixty Percent Household
to be sued, to admit guilt or to entry of a judgment in favor of Owner in a lawsuit brought in
connection with the lease;
(ii) an agreement by the Very Low Income or Sixty Percent Household
that Owner may take, hold or sell personal property of household members, without notice to the
Very Low Income or Sixty Percent Household and a court decision on the rights of the parties,
other than an agreement by the tenant concerning disposition of personal property remaining in
the housing unit, after the Very Low Income or Sixty Percent Household has moved out of the
unit;
(iii) an agreement by the Very Low Income or Sixty Percent Household
not to hold Owner or its agents legally responsible for any action or failure to act, whether
intentional or negligent;
(iv) an agreement by the Very Low Income or Sixty Percent Household
that Owner may institute a lawsuit without notice to the Very Low Income or Sixty Percent
Household;
(v) an agreement by the Very Low Income or Sixty Percent Household
that Owner may evict the Very Low Income or Sixty Percent Household without instituting a
civil court proceeding in which the Very Low Income or Sixty Percent Household has the
opportunity to present a defense, or before a court decision on the rights of the parties;
(vi) an agreement by the Very Low Income or Sixty Percent Household
to waive any right to a trial by jury;
(vii) an agreement by the Very Low Income or Sixty Percent Household
to waive the Very Low Income or Sixty Percent Household's right to appeal, or to otherwise
challenge a court decision in connection with the lease;
(viii) an agreement by the Very Low Income or Sixty Percent Household
to pay attorney's fees or other legal costs, even if the Very Low Income or Sixty Percent
Household wins in a court proceeding by Owner against the Very Low Income or Sixty Percent
Household; provided, however, the Very Low Income or Sixty Percent Household may be
obligated to pay costs in the event it loses such a legal action.
(d) Owner shall not terminate the tenancy or refuse to renew the lease of a
Very Low Income or Sixty Percent Household, except for serious or repeated violations of the
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terms and conditions of the lease; for violation of applicable federal, state, or local law; or for
other good cause. Owner shall, in connection with a termination of a tenancy or a refusal to
renew a lease, serve written notice upon the Very Low Income or Sixty Percent Household
specifying the grounds for the action, at least thirty (30) calendar days before the termination of
the tenancy.
(e) Owner shall adopt written tenant selection policies and criteria that:
(i) are consistent with the purpose of providing housing for
individuals who have an income that is no more than the Very Low Income or Sixty Percent
Rent;
(ii) are reasonably related to program eligibility and the applicants'
ability to perform the obligations of the lease;
(iii) give reasonable consideration to the housing needs of individuals
who occupy substandard housing (including individuals that are homeless or living in a shelter
for homeless individuals); individuals that are paying more than fifty percent (50 %) of their
annual income for rent; or individuals that are involuntarily displaced;
(iv) provide for the selection of tenants from a written waiting list in
the chronological order of their application, insofar as is practicable; and
(v) give prompt written notification to any rejected applicant of the
grounds for rejection.
(f) Except as may otherwise be required by the rental requirements of the
financing approved pursuant to the Agreement, as applicable, all Units (except for the Manager's
Unit) shall be available at a Sixty Percent Rent or Very Low Income Rent for occupancy on a
continuous basis to the appropriate Very Low Income or Sixty Percent Household with a Sixty
Percent Rent or Very Low Income Rent for the income category attributable to that restricted
Unit. Owner shall not give preference to any particular class or group of persons in renting the
Units. Owner shall include a statement in all advertisements, notices and signs for the
availability of units for rent to the effect that Owner is an Equal Housing Opportunity Provider.
Section 2.8 Condominium Conversion. The Owner shall not convert Development
units to condominium or cooperative ownership or sell condominium or cooperative conversion
rights to the Property during the Term of this Agreement.
ARTICLE 3. INCOME CERTIFICATION AND REPORTING
Section 3.1 Income Certification. The Owner will obtain, complete and maintain on
file, immediately prior to initial occupancy and annually thereafter, income certifications from
each household renting any of the Units, substantially in the form attached hereto as Exhibit B.
The Owner shall make a good faith effort to verify that the income provided by an applicant or
occupying household in an income certification is accurate by taking one or more of the
following steps as a part of the verification process: (1) obtain a pay stub for the most recent pay
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period; (2) obtain an income tax return for the most recent tax year; (3) conduct a credit agency
or similar search; (4) obtain an income verification form from the applicant's current employer;
(5) obtain an income verification form 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 has no such tax return, obtain another form of
independent verification. Copies of tenant income certifications shall be available to the Agency
upon request. All such verification information shall only be obtained by Owner after obtaining
the household's written consent for the release of such information to Owner. Copies of income
certifications shall be available to Agency upon request. Owner shall ensure appropriate
language is included in the lease requiring tenant to provide incpome information annually and
acknowledge that should its income increase the household may be subject to higher rent.
Section 3.2 Annual Report to Agency. On April 15 of each year the Owner shall
submit an annual report to the Agency, in a form approved by the Agency. The annual report
shall include for each Unit covered by this Agreement, the Rent and the income and household
size of the household occupying the Unit. The report shall also state the date the tenancy
commenced for each rental Unit and such other information as the Agency may be required by
law to obtain.
Section 3.3 Additional Information. Owner shall provide any additional information
reasonably requested by the Agency.
Section 3.4 Records. Owner shall maintain complete, accurate and current records
pertaining to the Units for five (5) years after creating such records, and shall permit any duly
authorized representative of the Agency to inspect and copy records, including records pertaining
to income and household size of tenant households.
ARTICLE 4. OPERATION OF THE DEVELOPMENT
Section 4.1 Residential Use. The Development shall be operated only for residential
use. No part of the Development shall be operated as transient housing.
Section 4.2 Taxes and Assessments. Owner shall pay all real and personal property
taxes, assessments, if any, and charges and all franchise, income, employment, old age benefit,
withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such
manner as to prevent any penalty from accruing, or any line or charge from attaching to the
Property; provided, however, that Owner shall have the right to contest in good faith, any such
taxes, assessments, or charges. In the event Owner exercises its right to contest any tax,
assessment, or charge against it, Owner, on final determination of the proceeding or contest, shall
immediately pay or discharge any decision or judgment rendered against it, together with all
costs, charges and interest.
Section 4.3 Nondiscrimination. All of the Units shall be available for occupancy on a
continuous basis to members of the general public who are income eligible. Owner shall not
give preference to any particular class or group of persons in renting or selling the Units, except
to the extent that the Units are required to be leased to Sixty Percent or Very Low Income
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Households. There shall be no discrimination against or segregation of any person or group of
persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national
origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment
of any Unit nor shall Owner or any person claiming under or through the Owner, 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 of any Unit or in connection with the employment of persons for the operation and
management of the Development. All deeds, leases or contracts made or entered into by Owner
as to the Units or the Development or portion thereof, shall contain covenants concerning
discrimination as prescribed by the Loan Agreement.
ARTICLE 5. PROPERTY MANAGEMENT AND MAINTENANCE
Section 5.1 Management Responsibilities. The Owner is responsible for all
management functions with respect to the Development, including without limitation the
selection of tenants, certification and recertification of household size and income, evictions,
collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs,
replacement of capital items, and security. The Agency shall have no responsibility over
management of the Development. The Owner shall retain a professional property management
company approved by the Agency in its reasonable discretion to perform its management duties
hereunder. A resident manager shall also be required.
Section 5.2 Management Agent. The Development shall at all times be managed by
an experienced management agent reasonably acceptable to the Agency, with demonstrated
ability to operate residential facilities like the Development in a manner that will provide decent,
safe, and sanitary housing (as approved, the "Management Agent "). The Owner shall submit for
the Agency's approval the identity of any proposed Management Agent. The Owner shall also
submit such additional information about the background, experience and financial condition of
any proposed Management Agent as is reasonably necessary for the Agency to determine
whether the proposed Management Agent meets the standard for a qualified Management Agent
set forth above. If the proposed Management Agent meets the standard for a qualified
Management Agent set forth above, the Agency shall approve the proposed Management Agent
by notifying the Owner in writing. Unless the proposed Management Agent is disapproved by
the Agency within thirty (30) days, which disapproval shall state with reasonable specificity the
basis for disapproval, it shall be deemed approved.
Section 5.3 Performance Review. The Agency reserves the right to conduct an annual
(or more frequently, if deemed reasonably necessary by the Agency) review of the management
practices and financial status of the Development. The purpose of each periodic review will be
to enable the Agency to determine if the Development is being operated and managed in
accordance with the requirements and standards of this Agreement. The Owner shall cooperate
with the Agency in such reviews.
Section 5.4 Replacement of Management Agent. If, as a result of a periodic review,
the Agency determines in its reasonable judgment that the Development is not being operated
and managed in accordance with any of the material requirements and standards of this
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Agreement, the Agency shall deliver notice to Owner of its intention to cause replacement of the
Management Agent, including the reasons therefor. Within fifteen (15) days of receipt by Owner
of such written notice, Agency staff and the Owner shall meet in good faith to consider methods
for improving the financial and operating status of the Development. If after a reasonable period
as determined by the Agency (not to exceed sixty (60) days), the Agency determines that the
Owner is not operating and managing the Development in accordance with the material
requirements and standards of this Agreement, the Agency may require replacement of the
Management Agent.
If, after the above procedure, the Agency requires in writing the replacement of the
Management Agent, Owner shall promptly dismiss the then Management Agent, and shall
appoint as the Management Agent a person or entity meeting the standards for a Management
Agent set forth in Section 5.2 above and approved by the Agency pursuant to Section 5.2 above.
Any contract for the operation or management of the Development entered into by Owner
shall provide that the contract can be terminated as set forth above. Failure to remove the
Management Agent in accordance with the provisions of this Section shall constitute default
under this Agreement, and the Agency may enforce this provision through legal proceedings as
specified in Section 6.3.
Section 5.5 Approval of Management Policies. The Owner shall submit its written
management policies with respect to the Development to the Agency for its review, and shall
amend such policies in any way necessary to ensure that such policies comply with the
provisions of this Agreement.
Section 5.6 Capital Replacement Reserve Account. Developer shall establish an
account for the payment of repair and replacement of capital items ( "Capital Replacement
Reserve Account ") in an initial amount equal to Zero Dollars ($0.00). Each Fiscal Year
thereafter, Developer shall deposit into the Capital Reserve Replacement Account an additional
amount of at least Two Hundred Fifty Dollars ($250) per Unit per year.
Section 5.7 Property Maintenance. The Owner agrees, for the entire Term of this
Agreement, and in addition to any requirements set forth in the Loan Agreement, to maintain all
interior and exterior improvements, including landscaping, on the Property in good condition and
repair (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws,
rules, ordinances, orders and regulations of all federal, state, county, municipal, and other
governmental agencies and bodies having or claiming jurisdiction and all their respective
departments, bureaus, and officials, and in accordance with the following maintenance
conditions:
The Agency places prime importance on quality maintenance to protect its investment
and to ensure that all Agency and Agency- assisted affordable housing projects within the
Agency are not allowed to deteriorate due to below - average maintenance. Normal wear and tear
of the Development will be acceptable to the Agency assuming the Owner agrees to provide all
necessary improvements to assure the Development is maintained in good condition. The Owner
shall make all repairs and replacements necessary to keep the improvements in good condition
and repair.
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In the event that the Owner breaches any of the covenants contained in this section and
such default continues for a period of seven (7) days after written notice from the Agency with
respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after
written notice from the Agency with respect to landscaping and building improvements, then the
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, the Agency shall be permitted (but
is not required) 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 the Agency and /or costs of
such cure, including a ten percent (10 %) administrative charge, which amount shall be promptly
paid by the Owner to the Agency upon demand.
ARTICLE 6. MISCELLANEOUS
Section 6.1 Term. The provisions of this Agreement shall apply to the Property for
the entire Term even if the entire Loan is paid in full prior to the end of the Term; provided,
however, that the provisions of Article 2 and Section 4.3 of the Agreement shall run with the
Property and shall remain in effect in perpetuity. This Agreement shall bind any successor, heir
or assign of Owner, whether a change in interest occurs voluntarily or involuntarily, by operation
of law or otherwise, except as expressly released by the Agency. The Agency makes the Loan
on the condition, and in consideration of, this provision, and would not do so otherwise.
Section 6.2 Covenants to Run With the Land. The Agency and Owner hereby declare
their express intent that the covenants and restrictions set forth in this Agreement shall run with
the land, and shall bind all successors in title to the Property, provided, however, that on the
expiration of the Term of this Agreement said covenants and restrictions shall expire. Each and
every contract, deed or other instrument hereafter executed covering or conveying the Property
or any portion thereof shall be held conclusively to have been executed, delivered and accepted
subject to such covenants and restrictions, regardless of whether such covenants or restrictions
are set forth in such contract, deed or other instrument, unless the Agency expressly releases
such conveyed portion of the Property from the requirements of this Agreement.
Section 6.3 Enforcement by the Agency. If Owner fails to perform any obligation
under this Agreement, and fails to cure the default within thirty (30) days after the Agency has
notified the Owner in writing of the default or, if the default cannot be cured within thirty (30)
days, fails to commence to cure within thirty (30) days and thereafter diligently pursue such cure
(and subject also to the notice and cure rights of the limited partner of Owner set forth in Section
7.1 of the Loan Agreement), the Agency shall have the right to enforce this Agreement by any or
all of the following actions, or any other remedy provided by law:
(a) Calling the Agency Loan. The Agency may declare a default under the
Agency Note, accelerate the indebtedness evidenced by the Note, and with respect to the Agency
Loan, proceed with foreclosure under the Deed of Trust.
17705.00000 \5762997.6
(b) Action to Compel Performance or for Damages. The Agency may bring
an action at law or in equity to compel the Owner's performance of its obligations under this
Agreement, and /or for damages.
(c) Remedies Provided Under Loan Agreement. The Agency may exercise
any other remedy provided under the Loan Agreement.
Section 6.4 Attorneys Fees and Costs. In any action brought to enforce this
Agreement, the prevailing party shall be entitled to all costs and expenses of suit, including
reasonable attorneys' fees. This section shall be interpreted in accordance with California Civil
Code Section 1717 and judicial decisions interpreting that statute.
Section 6.5 Recording and Filing. The Agency and Owner shall cause this
Agreement, and all amendments and supplements to it, to be recorded against the Property in the
Official Records of Los Angeles County.
Section 6.6 Governing Law Venue. This Agreement shall be governed by the laws of
the State of California. Venue shall be in Los Angeles County.
Section 6.7 Amendments. This Agreement may be amended only by a written
instrument executed by all the parties hereto or their successors in title, and duly recorded in the
real property records of Los Angeles County, California.
Section 6.8 Notice. All notices given or certificates delivered under this Agreement
shall be in writing and be deemed received on the delivery or refusal date shown on the delivery
receipt, if: (i) personally delivered by a commercial service which furnishes signed receipts of
delivery or (ii) mailed by certified mail, return receipt requested, postage prepaid, addressed as
follows:
Agency: Arcadia Redevelopment Agency
240 West Huntington
(P.O. Box 60021)
Arcadia, CA 91066
Owner: Arcadia Campus Commons Associates, LLC
5755 E. Kings Canyon Road, Suite 110
Fresno, CA 93727
With a Copy to: Law Offices of Patrick R. Sabelhaus
1006 Fourth Street, Sixth Floor
Sacramento, CA 95814
With a Copy to: Hunt Capital Partners, LLC
1600 Duke Street
Suite 420
Alexandria, VA 22314
Attention: Alain Fair
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With a Copy to: Ballard Spahr LLP
1735 Market Street
51st Floor
Philadelphia, PA 19103
Attention: Jere G. Thompson
Any of the parties may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or communications shall be sent.
Section 6.9 Severability. If any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining portions of this
Agreement shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the Agency and Owner have executed this Agreement by
duly authorized representatives, all on the date first written above.
ARCADIA CAMPUS COMMONS ASSOCIATES,
a California limited partnership
By: Community Revitalization and Development Corporation,
a California nonprofit public benefit corporation
Its: Managing General Partner
By:
David Rutledge,
Secretary /Chief Executive Officer
By: ARCADIA CAMPUS COMMONS ASSOCIATES, LLC,
a California limited liability company
Its: General Partner
By:
Steven Froberg,
Member
[Signatures continued on next page]
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AGENCY:
Arcadia Redevelopment Agency,
a public body corporate and politic
By:
Name:
Title:
ATTEST:
By:
Agency Secretary
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Exhibit A
Property Description
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Exhibit B
Income Certification
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17705.00000\5762997 6
ATTACHMENT 5
FIRST AMENDMENT TO
OWNER PARTICIPATION AND LOAN AGREEMENT
(ARCADIA COMMONS)
MEMORANDUM OF FIRST AMENDMENT
[Attached behind this page]
17705.00000\5762997.6
Recording Requested By:
The Arcadia Redevelopment Agency
AND WHEN RECORDED MAIL TO:
Arcadia Redevelopment Agency
Attention: Executive Director
Fee Exempt pursuant to Gov't Code § 6103
Space Above for Recorder's Use Only
MEMORANDUM OF FIRST AMENDMENT TO AGREEMENT
THIS MEMORANDUM OF FIRST AMENDMENT TO AGREEMENT
( "Memorandum "), dated for identification purposes as of December 7, 2010, is entered into by
and between THE ARCADIA REDEVELOPMENT AGENCY, a California public agency (the
"Agency "), and ARCADIA CAMPUS COMMONS ASSOCIATES, a California limited
partnership (the "Developer or Borrower ").
1. Owner Participation Agreement. The Agency and the Developer previously entered
into an Owner Participation Agreement ( "Agreement "), dated for reference purposes only
, 2010, which among other things imposes certain obligations and restrictions on the
Developers's use of that certain real property located in the City of Arcadia, County of Los
Angeles, State of California, more fully described in Exhibit "A" attached hereto and
incorporated herein by this reference (the "Property "). The Agency and the Developer
previously executed a Notice of Agreement ( "Original Memorandum ") with respect to the
Agreement. The Original Memorandum was or will be recorded in Los Angeles County
Records.
2. First Amendment to Owner Participation and Loan Agreement. The Agency and the
Developer have executed a First Amendment to Owner Participation and Loan Agreement ( "First
Amendment "), dated for reference purposes only December 7, 2010, which among other things,
amends certain of the rights and obligations of the Agency and the Developer as set forth in the
Agreement. The First Amendment is available for public inspection and copying at the Office of
the City Clerk, Arcadia City Hall, 240 West Huntington, PO Box 60021, Arcadia, California
91066. All of the terms, conditions, provisions and covenants of the First Amendment are
incorporated in this Memorandum by reference as though fully set forth herein, and the First
Amendment and this Memorandum shall be deemed to constitute a single instrument or
document. This Memorandum does not affect, amend or alter the terms, provisions or conditions
17705.00000 \5762997.6
of the Original Memorandum.
3. Purpose of Memorandum. This Memorandum is prepared for recordation purposes
only, and in no way modifies the terms, conditions, provisions and covenants of the Agreement
or the First Amendment. In the event of any inconsistency between the terms, conditions,
provisions and covenants of this Memorandum, the Agreement or the First Amendment, the
terms, conditions, provisions and covenants of the Agreement and First Amendment shall
prevail.
The parties have executed this Memorandum of Agreement on the dates specified
immediately adjacent to their respective signatures.
[Signatures on following pages]
•
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SIGNATURE PAGE TO THE
MEMORANDUM OF AGREEMENT
FIRST AMENDMENT TO
OWNER PARTICIPATION AND LOAN AGREEMENT
(ARCADIA COMMONS)
"AGENCY"
THE ARCADIA REDEVELOPMENT AGENCY,
a California public agency
By:
Chair
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
BEST BEST & KRIEGER LLP
Agency Counsel
"DEVELOPER OR BORROWER"
ARCADIA CAMPUS COMMONS ASSOCIATES,
a California limited partnership
By: Community Revitalization and Development Corporation,
a California nonprofit public benefit corporation
Its: Managing General Partner
By:
David Rutledge,
Secretary /Chief Executive Officer
By: ARCADIA CAMPUS COMMONS ASSOCIATES, LLC,
a California limited liability company
Its: General Partner
By:
Steven Froberg,
Member
17705.00000 \5762997.6
EXHIBIT A TO
MEMORANDUM OF FIRST AMENDMENT TO AGREEMENT
LEGAL DESCRIPTION OF PROPERTY
[Attached behind this page]
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