HomeMy WebLinkAboutItem No. 15 Habitat for Humanity Devel Loan AgrmentText File
City of Lake Elsinore 130 South Main Street
Lake Elsinore, CA 92530
www.lake-elsinore.org
File Number: ID# 17-765
Agenda Date: 8/14/2018 Status: Consent AgendaVersion: 3
File Type: ReportIn Control: City Council / Successor Agency
Agenda Number: 15)
Page 1 City of Lake Elsinore Printed on 8/9/2018
Page 1of 2
REPORT TO CITY COUNCIL
To:Honorable Mayorand Members of the City Council
From:Grant Yates, City Manager
Prepared By:Barbara Leibold, City Attorney
Date:August 14, 2018
Subject:Disposition, Development and Loan Agreement with Habitat for
Humanity Inland Valley, Inc. re 310 East Pottery Street
Recommendation
Approve and authorize the City Manager to execute a Disposition, Development and Loan
Agreement and relateddocuments substantially in the form attached, subject to minor
modifications approved by the City Attorney.
Background
Following the dissolution of the former Redevelopment Agency in 2012, the City of Lake
Elsinore elected to serve as the “successor” to the housing obligations of the former
Redevelopment Agency. As housingsuccessor, the City is charged with increasing,
improving and preserving the community’s supply of housing affordable for low and moderate
income families.
Also as housing successor, City holds funds in its Low and Moderate Income Housing Asset
Fund (“LMIHAF”) which are available for, among other things, meeting the obligation to
increase, improve and preserve affordable housing for low and moderate income families in
the City.
Discussion
The City’s owns a vacant parcel located at 310 East Pottery Streetsuitable for affordable
housing (the “Property”). The developer, Habitat for Humanity, desires to purchase the
Property, relocate a historical home (the “Hayman House”) now located at 307 N. Main
Street (commonly known as the Kumar site) to the Property, and improve the Property by
rehabilitating the Hayman House into a three bedroom, two bath single family home
(generally referred to herein as the “Project”).
Disposition, Development and Loan Agreement
August 14, 2018
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The proposed conveyance and implementation of the Project is set out in the attached
Disposition, Development and Loan Agreement(“Agreement”).
Upon completion of the Project, the renovated home will be an “affordable unit” restricted for
sale to a low income household with an income not exceeding 80% of area median income.
This restriction willremain in place for 45 years.
The City’s Property has a current appraised value of $35,000. Habitat also requests $30,000
in additional funding for various construction costs.Accordingly, the attached Agreement
provides for funding from the City by wayof a $65,000 loan to finance the acquisition and
various construction costs (the “City Loan”).
Habitat anticipates that it will also obtain “sweat equity,”corporate sponsorship, NSP 1
Funds, and a loan from the County of Riverside to complete the Project. Upon the sale of
the affordable unit to a qualified household, the portion of the City Loan attributed to the
purchase price ($35,000) will be converted to a “Third Mortgage Assistance” loan to the
buyer. The balance of the City Loan ($30,000) will bedeemed fully satisfied and converted to
a grant of funds to Habitat.
In summary, the attached Agreement provides for the sale of the Property to Habitat for its
appraised value, $35,000, to be financed by the City Loan and converted to a third mortgage
loan upon sale to a qualified low income family. Additional City assistance will be converted
to a grant upon completion of construction and sale to a qualified buyer. The dwelling unit
will remain affordable to low income homebuyers for a minimum of 45 years.
As a secondary matter, Senate Bill 341 requires that expenditures from the LMIHAF comply
with certain proportionality requirements. Attached hereto is the Review of SB 341
Compliance prepared by Urban Futures. The review concludes that based on acumulative
net LMIHAF balance of $12,251,750 projected as of June 30, 2019, theproposed $65,000
expenditure is in compliance with the expenditure requirements and limits of SB 341.
Fiscal Impact
The City Loan of $65,000 will be made from LMIHAF.
Attachments:
A.Disposition, Development and Loan Agreement
B.Review of SB 341 Compliance
C.Vicinity Map
DRAFT
08/01/18
DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT
(310 East Pottery Street)
by and between the
CITY OF LAKE ELSINORE
and
HABITAT FOR HUMANITY INLAND VALLEY, INC.
TABLE OF CONTENTS
Page
Habitat DDLA 080118 i
1. DEFINITIONS ..................................................................................................................... 2
1.1. Defined Terms ........................................................................................................ 2
1.2. Singular and Plural Terms .................................................................................... 11
1.3. Accounting Principles ........................................................................................... 11
1.4. References and Other Terms ................................................................................. 11
1.5. Recitals and Attachments Incorporated; Attachments Additional Consideration 12
1.6. Effective Date ....................................................................................................... 12
2. REPRESENTATIONS AND COVENANTS .................................................................. 12
2.1. Representations by the Developer ........................................................................ 12
2.1.1. Organization .......................................................................................... 12
2.1.2. Authority ............................................................................................... 12
2.1.3. Valid and Binding Agreements ............................................................. 12
2.1.4. Contingent Obligations ......................................................................... 13
2.1.5. Litigation ............................................................................................... 13
2.1.6. No Conflict ............................................................................................ 13
2.1.7. No Developer Bankruptcy .................................................................... 13
2.1.8. Pro Forma .............................................................................................. 13
2.1.9. Evidence of Financing .......................................................................... 13
2.1.10. Changed Circumstances ........................................................................ 14
2.2. Representations by City ........................................................................................ 14
2.2.1. Organization .......................................................................................... 14
2.2.2. Authority ............................................................................................... 14
2.2.3. Valid and Binding Agreements ............................................................. 14
2.2.4. Contingent Obligations ......................................................................... 14
2.2.5. Litigation ............................................................................................... 15
2.2.6. No Conflict ............................................................................................ 15
2.2.7. No City Bankruptcy .............................................................................. 15
2.2.8. Miscellaneous ....................................................................................... 15
2.2.9. Title to Property .................................................................................... 16
2.3. Limitation Upon Change in Ownership, Management and Control of Developer 16
2.3.1. Prohibition ............................................................................................. 16
2.3.2. Permitted Transfers by Developer ........................................................ 16
2.3.3. City Consideration of Requested Transfer ............................................ 16
2.3.4. Successors and Assigns ......................................................................... 17
2.4. Additional Covenants of Developer ...................................................................... 17
3. FINANCING; CONSTRUCTION; DEVELOPER PRO FORMA ............................... 17
3.1. Evidence of Financing .......................................................................................... 17
3.2. Sweat Equity ......................................................................................................... 18
3.3. Construction Budget ............................................................................................. 18
3.4. City Loan .............................................................................................................. 19
3.4.1. City Loan .............................................................................................. 19
3.4.2. Subordination of City Deed of Trust and Declaration .......................... 19
3.5. Pro Forma and Financing Updates ........................................................................ 19
3.6. Plans, Reports and Data ........................................................................................ 19
4. DISPOSITION OF SITE; ENVIRONMENTAL MATTERS ....................................... 20
TABLE OF CONTENTS
Page
Habitat DDLA 080118 ii
4.1. Transfer of Site ..................................................................................................... 20
4.2. Condition of the Site; Environmental ................................................................... 20
4.2.1. Disclosure ............................................................................................. 20
4.2.2. Developer’s Investigation of the Site .................................................... 20
4.2.3. Developer Approval or Disapproval of Condition of Site .................... 21
4.2.4. Required Disclosures After Closing ..................................................... 22
4.2.5. Duty to Prevent Hazardous Substance Contamination ......................... 22
4.2.6. Environmental Inquiries ........................................................................ 23
4.3. Escrow................................................................................................................... 23
4.4. Review of Title ..................................................................................................... 24
4.5. Title Insurance ...................................................................................................... 24
4.6. Submittals into Escrow ......................................................................................... 25
4.6.1. Submittals by Developer ....................................................................... 25
4.6.2. Submittals by City ................................................................................. 25
4.7. Conditions Precedent to Closing ........................................................................... 26
4.7.1. City’s Conditions .................................................................................. 26
4.7.2. Developer’s Conditions ........................................................................ 28
4.7.3. Termination of Escrow ......................................................................... 28
4.7.4. Close of Escrow .................................................................................... 29
4.8. Funding of City Loan ............................................................................................ 29
4.9. Indemnification ..................................................................................................... 30
4.10. Contests ................................................................................................................. 30
4.11. Occupants of the Site ............................................................................................ 31
4.12. Zoning of the Site.................................................................................................. 31
4.13. Suitability of the Site ............................................................................................ 31
5. DEVELOPMENT OF THE SITE .................................................................................... 32
5.1. Scope of Development .......................................................................................... 32
5.2. Construction of Improvements ............................................................................. 32
5.3. Land Use Restrictions ........................................................................................... 33
5.4. Permits and Entitlements ...................................................................................... 33
5.5. Design; Architectural Quality; Materials and Appliances .................................... 33
5.6. Preparation of Site................................................................................................. 34
5.7. Construction Costs ................................................................................................ 34
5.8. Construction Contracts.......................................................................................... 34
5.9. Insurance ............................................................................................................... 34
5.9.1. General Requirements ........................................................................... 34
5.9.2. Endorsements ........................................................................................ 35
5.9.3. Deductible and Self-Insured Retention ................................................. 36
5.9.4. Evidence of Insurance ........................................................................... 36
5.9.5. Failure to Maintain Coverage ............................................................... 36
5.9.6. Insurance for Subcontractors ................................................................ 36
5.10. Developer’s Indemnity.......................................................................................... 37
5.11. Bodily Injury and Property Damage Indemnification .......................................... 38
5.12. Rights of Access ................................................................................................... 38
5.13. Compliance with Laws ......................................................................................... 38
TABLE OF CONTENTS
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Habitat DDLA 080118 iii
5.13.1. General .................................................................................................. 38
5.13.2. Nondiscrimination in Employment ....................................................... 38
5.14. Liens and Stop Notices ......................................................................................... 39
5.15. Rights of City to Cure Deed of Trust Default or Cure Other Liens ...................... 39
5.16. Removal of Personal Property .............................................................................. 39
5.17. Local, State and Federal Laws .............................................................................. 40
5.18. Notice of Non-Responsibility ............................................................................... 41
5.19. Additional Developer Covenants .......................................................................... 41
5.20. Release of Construction Covenants ...................................................................... 41
6. RIGHTS OF REENTRY ................................................................................................... 42
7. RELOCATION .................................................................................................................. 43
8. SALE OF THE AFFORDABLE UNIT ........................................................................... 45
8.1. Completion Pro Forma .......................................................................................... 45
8.2. Sales; Proceeds...................................................................................................... 45
8.3. Repayment of City Loan ....................................................................................... 46
8.4. Mortgage Assistance ............................................................................................. 46
8.5. Third Mortgage Assistance Documents and Terms .............................................. 46
8.6. Additional Qualified Buyer Requirements ........................................................... 47
8.7. Conditions Precedent to City Third Mortgage Assistance .................................... 47
8.7.1. Qualified Buyer ..................................................................................... 48
8.7.2. No Default ............................................................................................. 48
8.7.3. First Mortgage and Second Mortgage Assistance ................................ 48
8.7.4. Down Payment ...................................................................................... 48
8.7.5. Third Mortgage Assistance Documents ................................................ 48
8.7.6. Insurance ............................................................................................... 48
8.7.7. Sales Contract ....................................................................................... 48
8.7.8. Gross Affordable Sales Price; Qualified Buyer .................................... 48
8.7.9. Homebuyer Education Class ................................................................. 49
8.7.10. Escrow Instructions ............................................................................... 49
8.7.11. Completion Pro Forma .......................................................................... 49
8.7.12. Release of Construction Covenants ...................................................... 49
8.8. Developer Obligations for Sale of Affordable Units ............................................ 49
9. COVENANTS AND RESTRICTIONS ........................................................................... 49
9.1. Use Covenants ...................................................................................................... 49
9.2. Nondiscrimination Covenants ............................................................................... 49
9.3. Affordable Housing Covenants ............................................................................. 51
9.3.1. Affordable Housing .............................................................................. 51
9.3.2. Qualified Buyer Selection ..................................................................... 51
9.3.3. Income of Qualified Buyer of the Affordable Unit; Affordable Housing
Cost ....................................................................................................... 52
9.3.4. Additional Qualified Buyer Requirements ........................................... 53
9.3.5. Declaration ............................................................................................ 53
9.3.6. Conflict with Declaration ...................................................................... 53
10. DEFAULTS, REMEDIES AND TERMINATION ......................................................... 53
10.1. Defaults - General ................................................................................................. 53
TABLE OF CONTENTS
Page
Habitat DDLA 080118 iv
10.2. Remedies and Rights of Termination Prior to Conveyance.................................. 54
10.2.1. Termination by Developer .................................................................... 54
10.2.2. Termination by City .............................................................................. 56
10.3. Remedies of the Parties for Default After Conveyance ........................................ 57
10.3.1. Remedies and Damages ........................................................................ 57
10.4. Limitation on Liability .......................................................................................... 58
10.5. Legal Actions ........................................................................................................ 58
10.5.1. Institution of Legal Actions .................................................................. 58
10.5.2. Applicable Law ..................................................................................... 58
10.5.3. Acceptance of Service of Process ......................................................... 58
10.6. Rights and Remedies are Cumulative ................................................................... 58
10.7. Inaction Not a Waiver of Default.......................................................................... 59
10.8. Attorneys’ Fees ..................................................................................... 59
11. GENERAL PROVISIONS ................................................................................................ 59
11.1. Notices, Demands and Communications Between the Parties ............................. 59
11.2. Conflicts of Interest............................................................................................... 60
11.3. Warranty Against Payment of Consideration for Agreement ............................... 60
11.4. Independent Consideration ................................................................................... 60
11.5. Nonliability of Developer and City Officials and Employees .............................. 60
11.6. Approvals by City and Developer......................................................................... 60
11.7. Force Majeure; Extension of Times of Performance ............................................ 60
11.8. Applicable Law; Interpretation ............................................................................. 62
11.9. Inspection of Books and Records, Reports ........................................................... 62
11.10. Administration ...................................................................................................... 62
11.11. Mutual Cooperation .............................................................................................. 62
11.12. Ground Breaking and Grand Openings................................................................. 62
11.13. Independent Contractor ......................................................................................... 62
11.14. Time ...................................................................................................................... 62
11.15. Third Party Beneficiaries ...................................................................................... 63
12. ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS ...................................... 63
Habitat DDLA 080118 v
SCHEDULE OF ATTACHMENTS
ATTACHMENT A LEGAL DESCRIPTIONS
ATTACHMENT B SCOPE OF DEVELOPMENT
ATTACHMENT C SCHEDULE OF PERFORMANCE
ATTACHMENT D DEVELOPER PRO FORMA
ATTACHMENT E GRANT DEED
ATTACHMENT F DECLARATION
ATTACHMENT G NOTICE OF AFFORDABILITY RESTRICTIONS
ATTACHMENT H LIST OF DUE DILIGENCE REPORTS
ATTACHMENT I RIGHT OF ENTRY AGREEMENT (DUE DILIGENCE)
ATTACHMENT J ESCROW INSTRUCTIONS
ATTACHMENT K PROMISSORY NOTE
ATTACHMENT L DEED OF TRUST
ATTACHMENT M ASSIGNMENTS OF CONTRACTS, PLANS AND
SPECIFICATIONS
ATTACHMENT N RELEASE OF CONSTRUCTION COVENANTS
ATTACHMENT O ENVIRONMENTAL INDEMNITY
Habitat DDLA 080118
DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT
THIS DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT (310 East
Pottery Street) (“Agreement”), dated for identification purposes only as of August , 2018, is
made and entered into by and between the CITY OF LAKE ELSINORE, a municipal
corporation (“City”), and HABITAT FOR HUMANITY INLAND VALLEY, INC., a
California nonprofit public benefit corporation (“Developer”), with reference to the following:
RECITALS
The following Recitals are a substantive part of this Agreement. Capitalized terms used
in these Recitals and not otherwise defined shall have the meaning set forth in Section 1.1.
A. City is a municipal corporation organized and existing under the laws of the State
of California. The City has adopted a Housing Element to its General Plan pursuant to
Government Code § 65580 et seq., which sets forth the City’s policies, goals and objectives to
provide housing to all economic segments of the community, including the preservation and
development of housing affordable to low and moderate income households.
B. The City has succeeded to the housing obligations of the former Redevelopment
Agency of the City of Lake Elsinore (“Agency”), which was established by action of the City
Council pursuant to Chapter 2 of the California Community Redevelopment Law (Health &
Safety Code § 33000 et seq.). The City’s purposes as housing successor include increasing,
improving and preserving the community’s supply of housing affordable to and occupied by low
and moderate income households pursuant to §§ 33334.2, 33334.3, 33334.6 and 33413 of the
Community Redevelopment Law.
C. In its capacity as housing successor, City holds funds in the Low and Moderate
Income Housing Asset Fund (“LMIHAF”) and other funds for, among other things, the purposes
of increasing, improving and preserving the community’s supply of affordable housing for
occupancy at affordable rent or affordable cost by low and moderate income households in the
City.
D. City owns, and subject to the terms and conditions of this Agreement, desires to
sell to Developer, and Developer desires to purchase from City, certain real property located at
310 East Pottery Street, in the City of Lake Elsinore (the “Property”), as described in
Attachment A (the “Legal Description”). The Property consists of vacant land.
E. Developer desires to purchase a fee interest in the Propert y (the fee ownership of
the Property and any existing or later constructed Improvements shall be collectively referred to
herein as the “Site”), relocate the current occupants of a home located on the Kumar Property,
and improve the Site by, among other things, moving a single family home from the Kumar
Property onto the Property, rehabilitating the home into a three bedroom, two bath single family
home, and constructing any ancillary improvements, structures, and/or facilities used in
connection therewith (collectively, the “Project”).
F. Upon completion of the Project, Developer shall sell the Site in accordance with
the terms, conditions, and provisions set forth in this Agreement. The single family home to be
relocated to the Property from the Kumar Property and renovated in connection with the Project
shall be referred to herein as the “Affordable Unit”. The Affordable Unit will be restricted to
Habitat DDLA 080118 2
sale to a Low Income Household at a Gross Affordable Sales Price for at least a forty five (45)
year restriction period pursuant to the terms hereof.
G. Developer anticipates that it will obtain sweat equity, corporate sponsorship, NSP
1 Funds, and an acquisition and construction loan from City to finance the Project. Developer
has requested a loan for the purchase of the Property and payment of certain fees, improvements
and permits in an amount not to exceed Sixty Five Thousand Dollars ($65,000) (the “City
Loan”). The terms and conditions of the City Loan shall be set forth herein and made pursuant
to a promissory note and related documents in such forms as are attached hereto. Prior to City’s
conveyance of the Site to Developer in accordance herewith, Developer shall demonstrate to City
that it has obtained sufficient financing to complete the construction of the Affordable Unit and
perform the other Project activities contemplated herein.
H. Upon the sale of the Affordable Unit in conformance with the terms set forth in
this Agreement, the portion of the City Loan attributed to the Purchase Price will be deemed
repaid by the issuance of City Third Mortgage Assistance to the Qualified Buyer, and the balance
of the City Loan will be deemed a grant of funds to Habitat.
I. In consideration of the conveyance of the Site, the City loan, the City Third
Mortgage Assistance and the other obligations of City set forth herein, Developer is willing to
accept the statutorily authorized occupancy restrictions encumbering the Affordable Unit and
other conditions all as more specifically set forth herein.
J. The conveyance of the Site pursuant to the terms and conditions of this
Agreement is in the vital and best interests of the City and the health, safety and welfare of the
City’s residents, and in accordance with the public purposes and provisions of applicable state
and local laws, including (without limitation) applicable replacement housing and housing
production obligations pursuant to Section 33413 of the Community Redevelopment Law, if any.
NOW, THEREFORE, City and Developer hereby agree as follows:
1. DEFINITIONS
1.1. Defined Terms
As used in this Agreement, the following capitalized terms shall have the
following meanings:
“Additional Endorsements” is defined in Section 4.5.
“Affiliate” means any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with a party which, if the
party is a partnership or limited liability company, shall include each of the constituent members
or general partners, respectively, thereof. The term “control” as used in the immediately
preceding sentence, means, with respect to a person that is a corporation, the right to the
exercise, directly or indirectly, of not less than 50% of the voting rights attributable to the shares
of the controlled corporation, and, with respect to a person that is not a corporation, the
possession, directly or indirectly, of the power to direct or cause the direction of the management
or policies of the controlled person.
Habitat DDLA 080118 3
“Affordability Period” means the period commencing upon the recordation of the
Release of Construction Covenants and terminating no earlier than the forty fifth (45th)
anniversary thereof.
“Affordable Housing Cost” means (i) with regard to Qualified Buyers whose
gross income is less than 70% of Area Median Income adjusted for family size appropriate to the
unit, Affordable Housing Cost shall mean Affordable Monthly Housing Expenses that do not
exceed the product of 30% times 70% of Area Median Income adjusted for family size
appropriate to the unit, or (ii) with regard to Qualified Buyers whose gross income equals or
exceeds 70% of Area Median Income adjusted for family size appropriate to the unit, Affordable
Housing Cost shall mean Affordable Monthly Housing Expenses that do not exceed the product
of 30% times the actual monthly gross income of the Qualified Buyers. As used in this
definition, “family size appropriate to the unit” shall equal the number of bedrooms in the
Affordable Unit plus one. Notwithstanding the foregoing, “Affordable Housing Cost” shall have
the meaning set forth in and be interpreted in accordance with Section 50052.5 of the California
Health and Safety Code or its successor statute(s).
“Affordable Monthly Housing Expenses” means monthly housing expenses that
include all of the following associated with the Affordable Unit, estimated or known as of the
date of the proposed purchase of the Affordable Unit: (i) principal and interest payments on a
mortgage loan(s) including any loan insurance or fees associated therewith (a first lien mortgage
loan is required hereunder to bear a fixed rate of interest and require level payments throughout
its term); (ii) property taxes and assessments; (iii) fire and casualty insurance covering
replacement value of property improvements; (iv) any homeowner association fees; (v) a
reasonable utility allowance; and (vi) property maintenance and repairs.
“Affordable Resale Price” means the sales price to be used when a Qualified
Buyer sells an Affordable Unit to an Eligible Purchaser, which shall be equal to the total of (i)
any subordinate mortgage assistance assumed or procured by the Eligible Purchaser, plus (ii) the
amount of a first mortgage which results in an Affordable Housing Cost to the Eligible
Purchaser, plus (iii) the amount of the down payment to be made by the Eligible Purchaser. The
Affordable Resale Price shall not exceed the fair market value of the Affordable Unit at the time
of sale.
“Affordable Unit Closing” means the closing of an escrow conveying title to the
Affordable Unit from Developer to a Qualified Buyer.
“Affordable Unit” means the single family residential unit to be developed on the
Property as part of the Project which shall be held for sale exclusively to Qualified Buyers at a
Gross Affordable Sales Price in accordance herewith.
“Agency” means the former Redevelopment Agency of the City of Lake Elsinore,
a public body, corporate and politic, exercising governmental functions and powers and
organized and existing under Chapter 2 of the Community Redevelopment Law and any assignee
of or successor to its rights, powers and responsibilities.
“Agreement” means this Disposition, Development and Loan Agreement,
including all Recitals, Attachments, agreements entered into in the form of an Attachment, and
all other agreements entered into by and between the Parties in connection therewith, which are
Habitat DDLA 080118 4
hereby incorporated herein, and includes all amendments, supplements, restatements, and
modifications thereto.
“AMI” or “Area-wide Median Income” means the median family income
(adjusted for family size) for the Riverside County area promulgated and published annually by
the California Department of Housing and Community Development (“HCD”) pursuant to Title
25, § 6932 of the California Code of Regulations. If HCD ceases annually to publish median
incomes, the Parties will agree upon an adequate substitute manner for determining Area-wide
Median Income.
“Annual Financial Statements” means annual financial statements of Developer
prepared in accordance with generally accepted accounting principles consistently applied, as
audited by a certified public accountant and certified by Developer’s President, Chief Financial
Officer or Vice President, and including the opinion of the auditor, a balance sheet, income
statement, statement of retained earnings, statement of cash flows, and footnotes.
“Assignment of Contracts, Plans and Specifications” mean an assignment
substantially in the form of Attachment M hereto.
“Attachments” means Attachment A through Attachment O to this Agreement,
and any amendments or modifications thereto.
“Business Day(s)” means Monday through Friday when the City of Lake Elsinore
is open for business, except for federal and state holidays.
“CEQA” means the California Environmental Quality Act, Public Resources
Code Section 21000, et seq.
“Challenge” is defined in Section 8.2.1.
“Challenge Notice” is defined in Section 8.2.1.
“City” means the City of Lake Elsinore, a California municipal corporation.
“City Conditions Precedent to Closing” is defined in Section 4.7.1.
“City Grant Deed” means the grant deed conveying title to the Property from
City to Developer substantially in the form of Attachment E.
“City Indemnitees” means the City and its elected and appointed officials,
employees, representatives, consultants, contractors and agents.
“City Loan” is defined in Recital G.
“City Loan Amount” means an aggregate amount not to exceed Sixty Five
Thousand Dollars ($65,000).
“City Loan Documents” means this Agreement and all of the documents
evidencing the City Loan and required as consideration for City to make the City Loan,
including, without limitation: (i) the Promissory Note; (ii) the Deed of Trust; (iii) the
Declaration; (iv) the Environmental Indemnity and (v) all other agreements reasonably required
by City in connection with the City Loan and/or entered into in connection therewith between the
Habitat DDLA 080118 5
Parties. The term “City Loan Documents” shall include all modifications, extensions, renewals,
and replacements of the aforementioned documents or any other agreement now or hereafter
executed by Developer which recites that the obligations thereunder are secured by the Deed of
Trust recorded against the Site.
“City Manager” means the City Manager of City or his/her designated
representative.
“City Third Mortgage Assistance” means a third lien position mortgage loan
provided by City to a Qualified Buyer requiring no payment of principal or interest until the
resale of the Affordable Unit or a default prior to the expiration of the Affordability Period.
Upon expiration of the Affordability Period, the outstanding principal balance of the City Third
Mortgage Assistance shall be reduced to zero. The Third Mortgage Assistance shall be equal to
the Property Purchase Price. The Third Mortgage Assistance shall be deemed to repay a portion
of the City Loan upon the Affordable Unit Closing.
“Closing” means the date upon which the City Grant Deed conveying title of the
Property to Developer and the Deed of Trust are recorded in the Official Records, and all
additional documents received by Escrow to be recorded in connection therewith are recorded in
the Official Records.
“Community Redevelopment Law” means Health & Safety Code Sections 33000,
et seq.
“Completion Pro Forma” means that financial information updating the
Developer Pro Forma and dated as of the completion of construction of the Affordable Unit
which reflects, (i) to the extent currently actually known to Developer, Developer’s actual costs
of construction and operation, (ii) sources and uses of funds, and (iii) estimated sales price of the
Affordable Unit, as reasonably approved by City. In the event no revised Pro Forma is submitted
by Developer, the Developer Pro Forma shall be deemed to constitute the Completion Pro
Forma.
“Condition of Title” is defined in Section 4.4.
“Construction Financing” means any loan, corporate grant or other contribution,
or other financing obtained by Developer for construction of the Project, including, without
limitation, the City Loan and the County Loan.
“Construction Financing Documents” means any documents evidencing the
Construction Financing.
“Conveyance” means the transfer of title to the Property to Developer. The
Conveyance shall occur upon Closing.
“County” means the County of Riverside, California.
“County Loan” means a loan of Two Hundred Ninety One Thousand Dollars
($291,000) from the County to Developer, funded by NSP1 monies and made pursuant to and in
accordance with that certain Loan Agreement for the Use of Neighborhood Stabilization
Program Funds (Hayman House Project) between the County and Developer dated as of August
, 2018.
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“Declaration” means the Declaration of Covenants, Conditions and Restrictions
substantially in the form of Attachment F to be recorded against the Site at Closing.
“Deed of Trust” means the deed of trust substantially in the form of Attachment
L to be recorded against the Site at Closing which secures the Promissory Note evidencing the
City Loan.
“Developer” means Habitat for Humanity Inland Valley, Inc., a California
nonprofit public benefit corporation, and any permitted successors and assigns.
“Developer Pro Forma” means Developer’s representation of costs, sources and
uses of funds, and related financial information attached as Exhibit D.
“Developer’s Environmental Reports” is defined in Section 4.14.
“Displaced Person” means any individual, business, or other entity who is
temporarily or permanently displaced from the Property due to Developer’s acquisition of the
Property due to the implementation of the Project and this Agreement and who qualifies as a
“displaced person” pursuant to the definition provided in the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970, 42 U.S.C. Section 4601(6) and in Government
Code Section 7260(c) of the California Relocation Assistance Act of 1970, as amended from
time to time.
“Due Diligence Period” means the time period that begins on the Effective Date
and ends ninety (90) days from the Effective Date, or such earlier date as approved by
Developer.
“Effective Date” means the date this Agreement is executed by City and
Developer.
“Eligible Purchaser” means a household purchasing the Affordable Unit upon
resale of the Affordable Unit by the Qualified Buyer or a subsequent Eligible Purchaser, which
such household must (a) qualify as a Low Income Household, (b) agree to occupy the Affordable
Unit as the household’s primary residence, and (c) agree to restrict the sale of the Affordable
Unit to Eligible Purchasers at an Affordable Resale Price for the remainder of the Affordability
Period.
“Environmental Indemnity” means an Indemnity agreement substantially in the
form attached hereto as Exhibit O.
“Environmental Laws” means any and all present and future federal, state and
local laws (whether under common law, statute, ordinance, rule, regulation or otherwise), court
or administrative orders or decrees, requirements of permits issued with respect thereto, and
other requirements of governmental authorities relating to the environment or to any Hazardous
Substance or Hazardous Substance Activity (including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. § 9601, et seq.),
as heretofore or hereafter amended from time to time (“CERCLA”), and the applicable
provisions of the Health & Safety Code and the Water Code, and any and all successor statutes
and regulations, orders, decrees, guidelines, or pronouncements promulgated thereunder).
Habitat DDLA 080118 7
“Environmental Reports” mean the environment reports and assessments in the
possession of City set forth in the List of Due Diligence Reports attached hereto as Attachment
H.
“Escrow” is defined in Section 4.3.
“Escrow Agent” means a qualified escrow company approved in writing by the
Parties.
“Escrow Costs” are defined in Section 4.3.
“Event of Default” is defined in Section 9.1.
“Evidence of Financing” is defined in Section 3.1.
“Evidence of Insurance” is defined in Section 5.9.4.
“Exceptions” is defined in Section 4.4.
“Fair Market Value” means the estimated fair market value of the Affordable
Unit (if valued without the affordability restrictions) based on similarly situated units not subject
to affordability restrictions as reasonably determined by a licensed appraiser selected by
Developer and approved by City.
“First Mortgage” means a thirty (30) year, fixed interest and fixed payment
mortgage obtained by a Qualified Buyer from Developer, a bank or third party lender for the
purchase of the Affordable Unit, the lien of which is recorded against the Affordable Unit in a
first lien position. Developer shall obtain City’s approval of the First Mortgage prior to the
Affordable Unit Closing.
“First-Time Homebuyer” is defined in Section 7.6.
“General Contractor” is defined in Section 3.3.1.
“Governmental Regulations” means all local, state, and federal laws, ordinances,
rules, requirements, resolutions, policy statements and regulations (including, without limitation,
those relating to land use, subdivision, zoning, environmental, labor relations, prevailing wage,
notification of sale to employees, Hazardous Substance, occupational health and safety, water,
earthquake hazard reduction and building and fire codes; and including all Environmental Laws)
bearing on the demolition, alteration, replacement, repair, refurbishing, improvement,
construction, maintenance, management, use, or operation of the Project.
“Gross Affordable Sales Price” means the sales price of the Affordable Unit to
be paid by the total of (i) the amount of a First Mortgage which results in an Affordable Housing
Cost to the Qualified Buyer, plus (ii) the amount of the Habitat Second Mortgage Assistance,
plus (iii) the City Third Mortgage Assistance, plus (iv) the proceeds of any other funds or
subsidy received by the Qualified Buyer, provided that City has approved such funds and the
terms thereof. The Gross Affordable Sales Price shall be equal to the Fair Market Value of the
Site at the time of sale.
“Habitat Second Mortgage Assistance” means mortgage assistance provided by
Developer to a Qualified Buyer secured by a second priority deed of trust recorded against the
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Affordable Unit, which shall bear no interest and require no payments until the earlier of a
default or sale of the Affordable Unit prior to the expiration of the Affordability Period.
“Hazardous Substance” means any substance, material, or waste which is or
becomes regulated by any local governmental authority, the State of California, or the United
States Government, including, but not limited to, any material or substance which is (i) defined
as a “hazardous waste”, “acutely hazardous waste”, “extremely hazardous waste”, or “restricted
hazardous waste” under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of
the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control
Law), (ii) defined as a “hazardous substance” under Section 25316 of the California Health and
Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account
Act), (iii) defined as a “hazardous material”, “hazardous substance”, or “hazardous waste” under
Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory), (iv) defined as a “hazardous substance” under
Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground
Storage of Hazardous Substances), (v) petroleum, petroleum based products and petroleum
additives and derived substances, (vi) asbestos and lead based paint, (vii) polychlorinated
byphenyls, (viii) listed under Article 9 or defined as “hazardous” or “extremely hazardous”
pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20, (ix)
designated as “hazardous substances” pursuant to Section 311 of the Clean Water Act (33
U.S.C. Section 1317), (x) defined as a “hazardous waste” pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section
6903), (xi) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., (xii)
methyl-tert butyl ether, (xiii) mold, fungi, viruses and bacterial matter, or (xiv) any other toxic
substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any
Governmental Regulations either requires special handling in its use, transportation, generation,
collection, storage, handling, treatment or disposal, or is defined as “hazardous” or harmful to
human health or the environment. Notwithstanding anything to the contrary herein, nothing shall
preclude Developer, any subcontractors, tenants and agents from using materials that may be
classified Hazardous Substances, so long as such use is permitted by applicable law and is of
such types and in such quantities as is customary and reasonable in the construction,
development, and operation of the Propert y.
“Hazardous Substance Activity” means any actual, proposed or threatened
storage, holding, existence or suspected existence, release or suspected release, emission,
discharge, generation, processing, abatement, removal, disposition, treatment, handling or
transportation of any Hazardous Substance from, under, into, on, above, or across the Site or any
other use of or operation on the Site that creates a risk of Hazardous Substance contamination of
the Site.
“Household” means one or more persons occupying an Affordable Unit.
“Improvements” shall mean and include any rehabilitation, construction,
demolition, remediation and grading done on the Site by Developer subsequent to Closing, as
well as all buildings, structures, fixtures, foundations, excavation, parking, landscaping,
underground installations, and other work, construction and improvement of whatsoever
character undertaken or constructed on, around, under or over the Site by Developer.
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“Kumar Property” means that certain property located at 307 North Main Street,
Lake Elsinore, CA and identified as APN 374-073-009.
“Legal Description” is defined in Recital D.
“Losses and Liabilities” means and includes all claims, causes of action,
liabilities, losses, damages (including, without limitation, penalties, fines and monetary
sanctions), injuries, expenses, charges, penalties or costs of whatsoever character, nature and
kind, including reasonable attorney’s fees and costs incurred by the indemnified party with
respect to counsel of its choice, whether to property or to person, whether by direct or derivative
action, and whether known or unknown, suspected or unsuspected, latent or patent.
“Low Income Household” means a Household whose aggregate gross income is
less than eighty percent (80%) of AMI, adjusted for family size appropriate to the unit. The term
“adjusted for family size appropriate to the unit” shall have the meaning set forth in Health and
Safety Code Section 50052.5(h) or its successor statute(s). “Gross income” shall be determined
in accordance with Section 6914 of Title 25 of the California Code of Regulations.
“Marketing and Selection Plan” means a written plan prepared by Developer
and approved by the City detailing the marketing process for the sale of the Affordable Unit and
the selection of the Qualified Buyer.
“Notice” means a notice in the form prescribed by Section 11.1.
“Notice of Affordability Restrictions” means a Notice of Affordability
Restrictions in substantially the form attached as Attachment G.
“Official Records” means the official records of the Riverside County Recorder’s
Office.
“Outside Closing Date” means September 28, 2018. The Outside Closing Date
may be extended upon the written approval of the City Manager.
“Parties” mean City and Developer; “Party” means City or Developer.
“Permitted Exceptions” shall mean those (i) encumbrances, liens, taxes,
assessments, easements, rights of way, leases, covenants, agreements or other exceptions
affecting title to the Site as of the date of recordation of the City Grant Deed which are not
disapproved in writing by the Developer; and (ii) the liens and security interests created by the
County and City Loan Documents; and expressly including any: (a) liens, if any, for property
taxes and/or imposed by any governmental authority not yet due and payable or being contested;
and (b) workers’, mechanics’ or similar liens with respect to property taxes and/or other charges
on the Project provided any such lien is being reasonably contested in good faith.
“Permitted Mortgage” shall mean, subject to the prior approval of City, the
conveyance of a security interest in the Site to a Mortgagee to secure any loan to finance the
construction of the Project, or any conveyance of a security interest in a Property to secure any
refinancing to the extent it repays a Permitted Mortgage Loan, or the conveyance of title to the
Mortgagee or its assignee in connection with a foreclosure or a deed in lieu of foreclosure of
such loan.
Habitat DDLA 080118 10
“Permitted Mortgage Loan” shall mean the obligations secured by a Permitted
Mortgage.
“Permitted Transfer” shall mean reassignment of all or any part of this
Agreement or any right therein, or the sale, agreement to sell, transfer, conveyance or assignment
of the Site or any portion thereof or interest therein to any of the following:
a. The granting of easements, licenses or permits to facilitate the
development of the Site; or
b. The sale to a Qualified Buyer of any Affordable Unit in
accordance with the terms of this Agreement.
“Plans and Specifications” means any and all plans, drawings, studies, reports
and related documents concerning the construction of the Project submitted by Developer to
City, and approved by City on or prior to the Closing, including, without limitation, all
architectural and engineering plans, and all approved amendments, modifications, supplements,
general conditions and addenda thereto.
“Preliminary Title Report” is defined in Section 4.4.
“Project” is defined in Recital E.
“Promissory Note” means a Promissory Note evidencing the City Loan
substantially in the form of Attachment K.
“Property Purchase Price” means Thirty Five Thousand Dollars ($35,000).
“Qualified Buyer” means a Household (a) whose income does not exceed the
income set forth herein for a Low Income Household; (b) whose members qualify as a First Time
Homebuyer; and (c) whose members meet the other requirements set forth herein for buyers of
an Affordable Unit, including, without limitation, the requirement that the buyer(s) agree to
occupy the Affordable Unit as their principal residence and restrict the sale of the Affordable
Unit to Eligible Purchasers at an Affordable Resale Price for the Affordability Period.
“Release of Construction Covenants” means the document which evidences the
Developer’s satisfactory completion of construction of the Project in accordance herewith, as
reasonably determined by City, substantially in the form of Attachment N.
“Relocation Consultant” means Autotemp, or such other relocation consultant
reasonably acceptable to City.
“Relocation Laws” means the relocation laws set forth in California Relocation
Assistance Act, California Government Code § 7260 et seq. and the implementing regulations
thereto in 25 California Code of Regulations § 6000 et seq., and any other local, state, or federal
laws or regulations governing the Project and the provision and administration of relocation
payments and advisory assistance.
“Relocation Plan” means the relocation plan for the Project prepared by
Relocation Consultant dated February 2018.
Habitat DDLA 080118 11
“Representatives” means the agents, employees, members, independent
contractors, affiliates, principals, shareholders, officers, Executive Directors, council members,
board members, committee members, and planning and other commissioners, partners, attorneys,
accountants, representatives, and staff of the referenced entity and the predecessors, heirs,
successors and assigns of all such persons.
“Right of Entry and License Agreement (Due Diligence)” means the Right of
Entry and License Agreement in the form of Attachment K
“Schedule of Performance” means that certain Schedule of Performance attached
hereto as Attachment C, as may be amended from time to time, which establishes the dates
and/or time periods by which certain obligations set forth in this Agreement must be
accomplished.
“Scope of Development” means any conditions of approval and other
requirements imposed by the City on the Project and that certain Scope of Development attached
hereto as Attachment B, as may be amended from time to time, which together establish the
“Scope of Development” for the Project.
“Site” is defined in Recital E.
“Third Mortgage Assistance Documents” is defined in Section 8.5.
“Title Company” means any qualified title company approved in writing by the
Parties.
1.2. Singular and Plural Terms
Any defined term used in the plural herein shall refer to all members of the
relevant class and any defined term used in the singular shall refer to any number of the members
of the relevant class.
1.3. Accounting Principles
Any accounting term used and not specifically defined herein shall be construed
in conformity with, and all financial data required to be submitted herein shall be prepared in
conformity with, generally accepted accounting principles applied on a consistent basis or in
accordance with such other principles or methods as are reasonably acceptable to the City
Manager.
1.4. References and Other Terms
Any reference to any document shall include such document both as originally
executed and as it may from time to time be modified. References herein to Sections and
Attachments shall be construed as references to this Agreement unless a different document is
named. References to subparagraphs shall be construed as references to the same Section in
which the reference appears. The term “document” is used in its broadest sense and
encompasses agreements, certificates, opinions, consents, instruments and other written material
of every kind. The terms “including” and “include” mean “including (include), without
limitation.”
Habitat DDLA 080118 12
1.5. Recitals and Attachments Incorporated; Attachments Additional Consideration
The Recitals are a substantive part of this Agreement, and are hereby incorporated
by this reference. All Attachments, as now existing and as the same may from time to time be
amended or modified, are incorporated herein by this reference. Each Attachment or agreement
delivered by Developer or another party substantially in the form of an Attachment hereto in
connection with this Agreement is required as and constitutes consideration for City’s
obligations hereunder.
1.6. Effective Date
This Agreement shall become binding and the rights and obligations herein shall
vest with the respective Parties upon the Effective Date.
2. REPRESENTATIONS AND COVENANTS
2.1. Representations by the Developer
Developer hereby represents and warrants the following herein below to City:
2.1.1. Organization
Developer is duly organized in the State of California, and validly existing
and in good standing under the laws of the State of California and has the power and authority to
own and lease property and carry on its business as now being conducted and as contemplated
hereby. The copies of the documents evidencing the organization of Developer delivered to the
City are true and correct copies of the originals as of the Effective Date.
2.1.2. Authority
The Developer has the legal power, right and authority to execute, deliver
and enter into this Agreement and any and all other agreements and documents required to be
executed and delivered by the Developer in order to carry out, give effect to, and consummate
the transactions contemplated by this Agreement, and to perform and observe the terms and
provisions of all of the above. The parties who have executed this Agreement and all other
documents or instruments executed and delivered, or to be executed and delivered, pursuant to
this Agreement are authorized to execute and deliver the same on behalf of the Developer and all
actions required under Developer’s organizational documents and applicable governing law for
the authorization, execution, delivery and performance of this Agreement and all other
documents or instruments executed and delivered, or to be executed and delivered pursuant
hereto, have been duly taken.
2.1.3. Valid and Binding Agreements
This Agreement and all other documents or instruments which have been
executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet
executed or delivered, will constitute when so executed and delivered, legal, valid and binding
obligations of Developer enforceable against it in accordance with their respective terms, except
as enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws and court decisions or general principles of equity.
Habitat DDLA 080118 13
2.1.4. Contingent Obligations
Developer does not have any contingent obligations or any contractual
agreements, nor is it subject to any set of circumstances, which could adversely affect the ability
of the Developer to carry out its obligations hereunder.
2.1.5. Litigation
To the knowledge of Developer’s chief executive officer, no action, suit or
proceedings are pending or threatened before any governmental department, commission, board,
bureau, agency or instrumentality to which the Developer is or may be made a party or to which
any of its property is or may become subject, which has not been fully disclosed to the City or
which materially adversely affects the ability of the Developer to carry out its obligations
hereunder.
2.1.6. No Conflict
Developer’s execution and delivery of this Agreement and any other
documents or instruments executed and delivered, or to be executed or delivered, pursuant to this
Agreement, and the performance of any provision, condition, covenant or other term hereof or
thereof, do not or will not conflict with or result in a breach of any statute, rule or regulation, or
any judgment, decree or order of any court, board, commission or agency whatsoever binding on
Developer, or any provision of the organizational documents of Developer, or will conflict with
or constitute a breach of or a default under any agreement to which Developer is a party, or will
result in the creation or imposition of any lien upon any assets or property of Developer, other
than liens established pursuant hereto.
2.1.7. No Developer Bankruptcy
No attachments, execution proceedings, assignments for the benefit of
creditors, insolvency, bankruptcy, reorganization, receivership or other proceedings are pending
or threatened against the Developer, nor are any of such proceedings contemplated by
Developer. Developer is able to pay its debts when they come due.
2.1.8. Pro Forma
The Developer Pro Forma constitutes Developer’s best estimates as of the
date hereof with respect to the information set forth therein, and Developer is not aware of any
omissions from or misstatements in the Developer Pro Forma. Developer agrees and
acknowledges that City is relying on the accuracy of the information set forth in the Developer
Pro Forma in making the City Loan.
2.1.9. Evidence of Financing
Upon the recordation of the Grant Deed, and until such time as such
Affordable Unit is sold to a Qualified Buyer, Developer represents and warrants (i) that it has
sufficient funds on hand and binding legal commitments for financing and/or donations of
materials and labor for construction of the Affordable Unit in an amount sufficient to complete
the Project, (ii) that such commitments are in full force and effect, and (iii) Developer is in
compliance with all the requirements of such commitments and there exists no default, or event
which, upon the passage of time, would constitute a default under such commitments.
Habitat DDLA 080118 14
2.1.10. Changed Circumstances
Except as expressly stated above, the representations and warranties set
forth herein are made by Developer as of the Effective Date and the Closing. The parties
acknowledge the possibility that prior to the Closing, acts, actions and occurrences, outside the
control of Developer, may arise which result in the occurrence of facts and circumstances
inconsistent with and(or) otherwise different from the representations and warranties set forth in
herein (“Changed Circumstances”). Upon either party hereto becoming aware of Changed
Circumstances, such party shall promptly notify the other party hereto in writing, detailing the
same.
2.2. Representations by City
City hereby represents and warrants to Developer as follows:
2.2.1. Organization
City is duly organized in the State of California, and validly existing and
in good standing under the laws of the State of California and has the power and authority to own
and lease property and carry on its business as now being conducted and to consummate or cause
to be consummated the transactions contemplated hereby.
2.2.2. Authority
The City has the legal power, right and authority to execute, deliver and
enter into this Agreement and any and all other agreements and documents required to be
executed and delivered by the City in order to carry out, give effect to, and consummate the
transactions contemplated by this Agreement, and to perform and observe the terms and
provisions of all of the above. The parties who have executed this Agreement and all other
documents or instruments executed and delivered, or to be executed and delivered, pursuant to
this Agreement are authorized to execute and deliver the same on behalf of the City and all
actions required under City’s organizational documents and applicable governing law for the
authorization, execution, delivery and performance of this Agreement and all other documents or
instruments executed and delivered, or to be executed and delivered pursuant hereto, have been
duly taken.
2.2.3. Valid and Binding Agreements
This Agreement and all other documents or instruments which have been
executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet
executed or delivered, will constitute when so executed and delivered, legal, valid and binding
obligations of City enforceable against it in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws and court decisions or general principles of equity.
2.2.4. Contingent Obligations
City does not have any contingent obligations or any contractual
agreements which could materially adversely affect the ability of the City to carry out its
obligations hereunder.
Habitat DDLA 080118 15
2.2.5. Litigation
To the actual knowledge of the City Manager, no action, suit or
proceedings are pending or threatened before any governmental department, commission, board,
bureau, agency or instrumentality to which City is or may be made a party or to which any of its
property is or may become subject, which could materially adversely affect the ability of the City
to carry out its obligations hereunder.
2.2.6. No Conflict
City’s execution and delivery of this Agreement and any other documents
or instruments executed and delivered, or to be executed or delivered, pursuant to this
Agreement, and the performance of any provision, condition, covenant or other term hereof or
thereof, do not or will not conflict with or result in a breach of any statute, rule or regulation, or
any judgment, decree or order of any court, board, commission or agency whatsoever binding on
City, or any provision of the organizational documents of City, or will conflict with or constitute
a breach of or a default under any agreement to which City is a party, or will result in the
creation or imposition of any lien upon any assets or property of City, other than liens
established pursuant hereto.
2.2.7. No City Bankruptcy
To the actual knowledge of the City Manager, no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization,
receivership or other proceedings are pending or threatened against the City, nor are any of such
proceedings contemplated by City.
2.2.8. Miscellaneous
2.2.8.1.The Property shall be in the same working order, ordinary wear
and tear excepted, at the Closing as the same was as of the Effective Date. As of the Effective
Date, except as disclosed to Developer in writing and to the best of City’s knowledge, there is no
action or proceeding (including litigation) pending or threatened against City or relating to the
Property, which challenges or impairs City’s ability to execute or perform its obligations under
this Agreement. There are no legal actions, suits or similar proceedings pending and served, or
threatened in writing, against City or the Property or any reassessment, tax proceeding, zoning
code violation or other proceeding related to the Property.
2.2.8.2.City has not received from any governmental authority notice of
any material violation of any laws applicable (or alleged to be applicable) (including
environmental laws) to the Property, or any part thereof, that has not been corrected.
2.2.8.3.There are no existing or pending contracts of sale, leases, options
to purchase or rights of first refusal (or the like) with respect to the Property. City has not granted
any rights to acquire the Property or any part thereof to any other person or entity, and as long as
this Agreement remains in force, City shall not lease, transfer, option, mortgage, pledge, or
convey its interest in the Property or any portion thereof nor any right therein, nor shall City
enter into any agreement granting to any person or entity any option to purchase or rights with
respect to the Property or any part thereof.
Habitat DDLA 080118 16
2.2.8.4.Notwithstanding anything herein to the contrary, upon the
Effective Date, and until the Closing, City shall (i) immediately cease, or cause to be ceased, the
marketing of the Property for sale; (ii) immediately cease, or cause to be ceased, any negotiation,
agreements, or discussions regarding any sale or other disposition of all or any portion of the
Property to third parties; and (iii) shall not enter into any negotiations, agreements, or discussions
with third parties regarding the sale or other disposition of all or any portion of the Property.
2.2.9. Title to Property
Except as set forth in the Preliminary Title Report, City has good and
marketable fee simple title to the Property, free and clear of all conditions, exceptions, or
reservations. City has not granted any option or right of first refusal or first opportunity to any
person or entity to acquire the Property or any interest therein. City has not entered into any
agreement or understanding, either written or oral, pursuant to which any person or entity has the
right to own, acquire, use or occupy any portion of the Property or any interest therein.
2.3. Limitation Upon Change in Ownership, Management and Control of Developer
2.3.1. Prohibition
The identity and qualification of Developer as an experienced and
successful residential housing developer are of particular concern to the City. It is because of
this identity and these qualifications that City has entered into this Agreement with the
Developer. No voluntary or involuntary successor in interest of Developer shall acquire any
rights or powers under this Agreement by assignment, operation of law or otherwise, nor shall
Developer make any total or partial sale, transfer, conveyance, encumbrance to secure financing
(including, without limitation, the grant of a deed of trust to secure funds necessary for
construction or permanent financing of the Project), distribution, assignment or lease of the
whole or any part of the Site or any material change in the management or control of Developer
(including, without limitation, a change in the identity of the Developer, or a change in the
management or control of Developer) except as expressly set forth herein without the prior
written consent of City, which consent shall not be unreasonably conditioned, delayed, or
withheld. Any purported transfer, voluntary or by operation of law, in violation of this Section
2.3 shall constitute a default hereunder and shall be voidable, as determined by City, and, after
written notice and commercially reasonable opportunity for Developer to cure thereof, City shall
have the cumulative options to terminate this Agreement, declare the City Loan immediately due
and payable and to seek all remedies available at law or equity. Except as may otherwise be
agreed in writing, no transfer or assignment shall relieve the Developer from its obligations
hereunder.
2.3.2. Permitted Transfers by Developer
Except as set forth herein, City prior approval of conveyance of the Site or
any interest therein or part thereof shall not be required in connection with a Permitted Transfer.
2.3.3. City Consideration of Requested Transfer
Developer shall provide City with at least sixty (60) days prior written
notice of its intent to assign, finance, refinance or transfer all or any portion of the Site (except
any proposed sale to a Qualified Buyer, which shall be made in accordance with Section 8
Habitat DDLA 080118 17
hereof) or this Agreement or effect a material change in the management or control of Developer
and shall request any approval sought for such assignment or transfer. The notice shall be
accompanied by evidence regarding the proposed transferee’s development, operation and
management qualifications and experience and its financial commitments and resources.
After receipt of Developer’s written request for City approval of an
assignment or transfer pursuant to this Section 2.3.3, City shall use commercially reasonable
efforts to promptly respond in writing (but in no event later than sixty (60) days) either
approving the proposed assignee, transferee or Qualified Buyer or requesting further information
required by City in order to determine whether or not to grant the requested approval. If
additional information is requested, approval shall be determined no later than thirty (30) days
from Developer’s written response. Upon receipt of such a request for further information,
Developer shall use commercially reasonable efforts to furnish to City such requested
information.
An assignment or transfer approved by City pursuant to this Section 2.3.3
shall not be effective unless and until the proposed assignee or transferee executes and delivers
to the City an agreement in form reasonably satisfactory to City’s legal counsel assuming the
obligations of Developer hereunder, or, in the case of a Qualified Buyer, all conditions set forth
in Article 8 have been satisfied. Developer shall remain responsible to City for performance of
the obligations assumed by the assignee. Developer shall promptly, after written demand
therefore, pay City’s reasonable and necessary costs of evaluating and consummating any
request for assignment or transfer, including all staff costs reasonable and all necessary outside
attorneys’ fees and costs.
2.3.4. Successors and Assigns
All of the terms, covenants and conditions of this Agreement shall be
binding upon Developer and any permitted successors and assigns of Developer.
2.4. Additional Covenants of Developer
Until the later to occur of (i) the repayment in full of any principal or
interest amounts outstanding under the City Loan, or (ii) the sale of the Affordable Unit to a
Qualified Buyer, Developer covenants and agrees that it shall not, without the prior written
consent of City, directly or indirectly permit any senior debt or other obligation to be secured by
all or any portion of the Property nor permit any other senior deed of trust to be filed against the
Property or the Site.
3. FINANCING; CONSTRUCTION CONTRACT; DEVELOPER PRO FORMA
3.1. Evidence of Financing
As a condition precedent to City’s obligation to convey the Property, at least
fifteen (15) days prior to Closing, Developer shall submit to the City Manager an update of the
Developer Pro Forma (the “Developer Pro Forma”) and evidence that Developer has obtained,
or will obtain on or prior to the Closing, sufficient construction financing (including any
donations) to finance the development of the Project and equity capital or other financing, all on
commercially reasonable terms, such that the City Manager is satisfied that the Project can be
constructed and completed in accordance with this Agreement. Developer shall provide such
Habitat DDLA 080118 18
documents and other commercially reasonable deliverables as requested by City (collectively,
the “Evidence of Financing”), which shall include, to the extent applicable and reasonably
available to Developer:
i. Construction loan or other construction financing documents or drafts
thereof evidencing an amount sufficient to construct the Project in accordance herewith along
with evidence reasonably satisfactory to the City Manager that the lender intends to execute the
same and provide an initial funding on the Closing Construction Budget. Any such agreement
shall provide for notice of default to City, and a right to cure.
ii. Evidence of such other loans, donations, equity or grants as may be
required to pay the good faith estimated (i) amount of the construction and rehabilitation costs
for the Improvements, plus (ii) an amount equal to all consultant and loan fees, “points,”
commissions, costs, charges, furnishings, fixtures, taxes, interest, Developer’s overhead and
administration and other costs and expenses of developing, completing and selling the
Affordable Units.
iii. A copy of the most recently prepared Annual Financial Statement for
Developer and the most recently prepared quarterly financial statement dated at least sixty (60)
days prior to Closing.
iv. Evidence of such other financing or grants as may be required to satisfy
the City Manager that Developer has obtained sufficient acquisition and construction financing
such that the construction of the Project is financially feasible, and Developer is able to meet its
financial obligations as required hereby and by any other agreements binding upon the Project,
all in accordance with the Developer Pro Forma.
City’s consultants shall review, at City’s cost and expense, the Evidence of
Financing and determine that the Developer Pro Forma is reasonable and that the Project is
financially feasible for Developer. All documents received by City pursuant to this Section shall
demonstrate that the Developer Pro Forma is supported by adequate documentation and that the
financial feasibility of the Project reflected thereon is achievable based on the assumptions used
to prepare the Developer Pro Forma. The City Manager shall be satisfied that the Project is
financially feasible based on the Developer Pro Forma and Evidence of Financing, and such
requirement shall be deemed met upon the Closing.
3.2. Sweat Equity
At least five (5) days prior to the Affordable Unit Closing, Developer shall
provide evidence to City that the Qualified Buyer selected to purchase the Affordable Unit will
contribute at least five hundred (500) labor hours per two parent family (or three hundred fifty
(350) labor hours for a single parent family) to the construction of the Affordable Unit or
another, comparable Affordable Unit.
3.3. Construction Budget
At least fifteen (15) days prior to Closing, Developer shall submit to and obtain
City’s approval of a detailed construction budget, showing the projected predevelopment and
development costs of the Improvements (“Construction Budget”) and costs of marketing the
Affordable Unit to Qualified Buyers and a sources and uses statement showing that the projected
Habitat DDLA 080118 19
funding sources will be available as needed to fund all such projected costs at the time incurred.
Once City approves the Construction Budget, Developer shall not amend the Construction
Budget without the prior written approval of City.
City approval of the Construction Budget shall not constitute a waiver by City of
any breach or violation of this Agreement that is a result of acts that are or purport to be in
compliance with or in furtherance of said Construction Budget.
In the event of any disapproval, City shall, concurrently with delivery of the
notice of such disapproval to Developer, inform Developer in writing of the reasons for
disapproval and the required changes to the Construction Budget.
3.4. City Loan
3.4.1. City Loan
Upon the Closing, City hereby agrees to loan to Developer, and Developer
hereby agrees to borrow from City, the City Loan, in an amount not to exceed the Loan Amount.
City shall make the City Loan to Developer from available funds from the Low and Moderate
Income Housing Asset Fund. The City Loan shall be made in accordance with and subject to the
terms and conditions set forth in the City Loan Documents. The City Loan shall be evidenced by
one or more Promissory Notes secured by one or more Deeds of Trust recorded against the Site.
3.4.2. Subordination of City Deed of Trust and Declaration
Developer covenants and agrees that the liens of the City Declaration and
Deeds of Trust shall not be subordinate to the lien of any other deed of trust, except upon the
prior written instruction of the City.
3.5. Pro Forma and Financing Updates
Developer hereby agrees to update the Evidence of Financing and Developer Pro
Forma in the event of any material change to either of the foregoing and obtain the approval of
City with respect to any such changes.
3.6. Plans, Reports and Data
By way of execution and delivery of the Assignment of Contracts, Plans and
Specifications at Closing, Developer shall assign, pledge, transfer and set over to the City all of
Developer’s, to the extent assignable and without cost or liability to Developer, rights, title and
interest in and to the following (collectively, the “Plans, Reports and Data”): any and all
commitments for financing of the Project, materials, plans, drawings, studies, reports and related
documents concerning the Site, and all amendments, modifications, supplements, general
conditions and addenda thereto, including, without limitation, Environmental Reports, all
architectural and engineering plans, any architect’s agreement entered into hereafter
(“Architect’s Agreement”) by and between Developer and any architect engaged to perform
services with respect to the Site (“Architect”) and those certain plans and specifications referred
to therein, and all amendments, modifications, supplements, general conditions and addenda
thereto (collectively, “Architectural Plans”) prepared by the Architect for the account of
Developer in connection with the development of the Project.
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4. DISPOSITION OF SITE; ENVIRONMENTAL MATTERS
4.1. Transfer of Site
City is the owner in fee of the Property. In consideration of payment of the
Property Purchase Price and such other covenants and consideration as set forth in this
Agreement, and upon satisfaction of City’s Conditions Precedent to Closing, City shall sell all of
the fee interest in the Property to Developer. Developer agrees to purchase the same at the
Closing. The Closing shall occur no later than the Outside Closing Date.
City shall convey all of City’s interest in the Property to Developer by Grant
Deed.
4.2. Condition of the Site; Environmental
4.2.1. Disclosure
Prior to the commencement of the Due Diligence Period, City shall, at
City’s sole cost and expense, deliver, cause to be delivered, or make available to Developer,
copies of the Due Diligence Reports. Other than as may be set forth in the list of Environmental
Reports included in the List of Due Diligence Reports set forth herein, City hereby represents
and warrants to Developer that City has not received any prior written notice or communication
from any government agencies having jurisdiction over the Site, or any other third party,
notifying City or any third party of, and to the best of City’s knowledge, the presence of surface
or subsurface zone Hazardous Substances in, on, adjacent to, or under the Site, or any portion
thereof.
4.2.2. Developer’s Investigation of the Site
Developer shall have the right, to the extent Developer deems necessary,
to seek out and obtain until the Closing such additional information and documentation as
Developer deems necessary in order to evaluate the Properties, to investigate and study the
condition of the Properties until the Closing, and to contact, meet with and make submissions
and applications to all applicable governmental authorities with respect to the Entitlements, as it
relates only to the current status of the same but not to any modifications thereto. Developer
may elect, in its sole and absolute discretion, to proceed with the Closing prior to the expiration
of the Due Diligence Period. Developer represents that except for the representations, warranties
and covenants of City contained in this Agreement, it has relied and shall rely solely upon (i) its
own expertise and that of Developer’s consultants in purchasing the Property, and (ii)
Developer’s own knowledge of the Property based on its investigations and inspections of the
Property. Developer has conducted, or by the Closing will conduct, such inspections and
investigations of the Property as Developer deemed or shall deem necessary, including, but not
limited to, the physical and environmental conditions of the Property and shall rely upon same.
Except for the City’s representations, warranties and covenants and as may be expressly
provided herein, upon Closing, Developer shall assume the risk that adverse matters, including,
but not limited to, adverse physical and environmental conditions not known to City, may not
have been revealed by Developer’s inspections and investigations. Developer acknowledges and
agrees that except for the representations and warranties of City herein, upon Closing, City shall
sell and convey to Developer and Developer shall accept the Property “as is, where is,” with all
faults and defects (latent and apparent). Except for the representations and warranties of City
Habitat DDLA 080118 21
contained herein and in any documents executed and delivered by City at Closing pursuant to
this Agreement, Developer further acknowledges and agrees that there are no oral agreements,
warranties or representations, collateral to or affecting the Properties by City or any agent,
employee or contractor of City or any third party. City is not liable or bound in any manner by
any oral or written statements, representations, or information pertaining to the Properties
furnished by City, or any real estate broker, contractor, agent, employee, servant or other person,
unless the same are specifically set forth in this agreement. Developer acknowledges that the
Property Purchase Price reflects the “as is” nature of this sale and any faults, liabilities, defects or
other adverse matters that may be associated with the Properties. Developer has fully reviewed
the disclaimers and waivers set forth in this Agreement with its counsel and understands the
significance and effect thereof.
During Developer’s Due Diligence Period, representatives of Developer
shall have the right to access the Site during regular business hours and upon reasonable Notice
to City for the purpose of examining, inspecting, obtaining data and conducting surveys and tests
necessary to reasonably assess the suitability of the Site for the Project, or for any other purpose
as determined by Developer. Any surveys and tests conducted on the Site by Developer’s
representatives shall be done at the sole expense of Developer and only after (i) Developer has
secured any necessary permits from the appropriate governmental agencies and (ii) Developer
has delivered to City a copy of the Right of Entry and License Agreement (Due Diligence) fully
executed and acknowledged by Developer and satisfied the conditions precedent to Developer’s
entry onto the Site set forth therein.
4.2.3. Developer Approval or Disapproval of Condition of Site
(A) Physical Condition of Site. Developer shall approve or disapprove
of the physical or any other condition or matter affecting the Site within Developer’s Due
Diligence Period. Developer’s approval of the physical or any other condition or matter
affecting the Site shall be both a City’s and a Developer’s Condition Precedent to the Closing. If
Developer, disapproves of the physical condition of the Site (or deemed disapproval thereof),
then Developer may, in Developer’s sole discretion, terminate the Escrow and this Agreement by
written Notice to City, in which event, any deposits or sums paid to City and/or deposited with
Escrow, shall be immediately returned to Developer without any further instructions.
(B) Environmental Condition of Site. In addition, Developer shall
approve or disapprove of the environmental or any other condition or matter affecting the Site
within Developer’s Due Diligence Period in accordance with Section 4.14 hereof. Developer’s
approval of the environmental condition of the Site shall be both a City and a Developer
Condition Precedent to the Closing. If Developer disapproves of the environmental condition of
the Site (or deemed disapproval thereof), then Developer may terminate the Escrow and this
Agreement by written Notice to City.
(C) Notice to Proceed or Terminate. Prior to the termination of
Developer’s Due Diligence Period, Developer shall deliver to City and Escrow Agent either (i)
Notice of Developer’s intention to proceed with the acquisition of the Site (“Developer’s Notice
to Proceed”), or a (ii) Notice of Developer’s intention to terminate Escrow and this Agreement
(“Developer’s Notice to Terminate”) whereupon any sums deposited by Developer into Escrow
and all interest earned thereon shall be immediately returned to Developer without any further
Habitat DDLA 080118 22
instructions by the parties, and without any right or need on City’s part to approve or reject
Escrow’s required documents for the release of such amounts.
Developer shall be deemed to have accepted the environmental, physical
and other conditions of the Property upon the Closing for each Property. In the event that
Developer delivers Developer’s Notice to Terminate, Escrow for that Property shall terminate
and the parties shall have no that expressly survive the earlier termination of this Agreement.
4.2.4. Required Disclosures After Closing
After the Closing, Developer shall notify City, and provide to City, except
to the extent such documents are protected by the attorney-client or attorney work product
privileges, a copy or copies, of all environmental permits, applications, or entitlements relating to
each Property, including notices of violation, notices to comply, citations, inquiries, clean-up or
abatement orders, cease and desist orders, reports filed pursuant to self-reporting requirements
and reports filed or applications made pursuant to any Governmental Requirement relating to
Hazardous Substances and underground tanks.
Except for customary materials used and applied in accordance with all
Governmental Regulations and in the ordinary course of completing, maintaining and operating
the Improvements or customarily utilized by households for domestic purposes in accordance
with all Governmental Regulation, in the event of a release of any Hazardous Substances into the
environment, Developer shall, reasonably promptly after the release, furnish to City a copy of
any and all reports relating thereto and copies of all correspondence with governmental agencies
relating to the release. Upon request, Developer shall furnish to City a copy or copies of any and
all other environmental entitlements or inquiries relating to or affecting the Site including, but
not limited to, all permit applications, permits and reports.
4.2.5. Duty to Prevent Hazardous Substance Contamination
After the Closing, Developer shall take all reasonably customary and
necessary precautions to prevent the release of any Hazardous Substance onto the Site or into the
environment in connection with the use or development thereof in violation of applicable
Governmental Regulations. Such precautions shall include complying with and causing all
activities on the Site to comply with all Governmental Regulations with respect to Hazardous
Substance. In addition, the Developer shall install and utilize such equipment and implement
and adhere to all procedures, requirements and restrictions imposed by Governmental
Regulations pertaining to the disclosure, storage, use, removal and disposal of Hazardous
Substance. Developer further covenants that it shall not, except for customary materials used
and applied in accordance with all Governmental Regulations and in the ordinary course of
completing, maintaining and operating the Improvements or customarily utilized by households
for domestic purposes in accordance with all Governmental Regulations, (i) deposit Hazardous
Substance in, on or upon the Site, in violation of any applicable Governmental Regulations, nor
(ii) permit the deposit of Hazardous Substance in, on or upon the Site in violation of any
applicable Governmental Regulations.
Prior to and during construction of the Project on the Property, Developer
shall not knowingly engage in any Hazardous Substance Activity, except in strict compliance
with all Environmental Laws, and shall comply with all Environmental Laws in connection with
any activity on or about the Site, including the construction and operation of the Project.
Habitat DDLA 080118 23
Developer shall use commercially reasonable efforts to maintain the Site and any Improvements
thereon in good condition free from graffiti and from any accumulation of debris or waste
materials. Developer shall keep and maintain the Site in conformity with the Lake Elsinore
Municipal Code.
4.2.6. Environmental Inquiries
In the event that, after Closing, Developer discovers the presence of
Hazardous Substance under or upon the Site in violation of applicable Governmental
Regulations, or there is a release of Hazardous Substance on or from the Site, the Developer shall
provide to City a copy of any environmental permits, disclosures, applications, entitlements or
inquiries relating to such Hazardous Substance, including any notices of violation, notices to
comply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed
pursuant to self-reporting requirements and reports filed or applications made pursuant to any
Governmental Regulations relating to Hazardous Substance and underground tanks including,
specifically, without limitation, the following:
i. All required reports of releases of Hazardous Substance, including
notices of any release of Hazardous Substance as required by any Governmental Regulations;
ii. All notices of suspension of any environmental permits;
iii. All notices of violation from federal, state or local environmental
authorities;
iv. All orders under the State Hazardous Waste Control Act and the
State Hazardous Substance Account Act and corresponding federal statutes, concerning
investigation, compliance schedules, clean up, or other remedial actions;
v. All orders under the Porter Cologne Act, including corrective
action orders, cease and desist orders, and clean up and abatement orders;
vi. Any notices of violation from OSHA or Cal OSHA concerning
employees’ exposure to Hazardous Substances; and
vii. All complaints and other pleadings filed against the Developer
relating to the Developer’s storage, use, transportation, handling or disposal of Hazardous
Substance on the Site.
In the event that a release of Hazardous Substance into the environment
occurs on the Site following the Closing in violation of applicable Governmental Regulations,
the Developer shall promptly and fully remediate such Hazardous Substance in accordance with
all Governmental Regulations. Upon request of City, the Developer shall furnish to City a copy
of any and all other environmental documents or inquiries relating to or affecting the Site from
time to time during Developer’s ownership or possession thereof.
4.3. Escrow
Not later than ten (10) days after the Effective Date, the Parties shall open escrow
(the “Escrow”) for the Conveyance with Escrow Company.
Habitat DDLA 080118 24
Developer shall pay the customary and usual Escrow fees, charges and costs
which arise from the Escrow (the “Escrow Costs”), and prepare and enter into such escrow
instructions as are reasonably acceptable to Developer, City and Escrow Agent.
4.4. Review of Title
Not later than five (5) days after the Effective Date, Title Company or another
title company mutually acceptable to the Parties shall deliver to Developer and City a standard
preliminary title report with respect to the Site, together with legible copies of the documents
underlying the exceptions (the “Exceptions”) set forth in the preliminary title report
(collectively, the “Preliminary Title Report”).
Developer shall further have the right, but not the obligation, to obtain a survey at
Developer’s sole cost. Developer shall have thirty (30) days from receipt of the Preliminary Title
Report, or any supplements and/or modifications thereto, to give Notice to City and the Escrow
Agent of Developer’s approval or disapproval of the Preliminary Title Report, including without
limitation any Exceptions. Such objections shall be within Developer’s sole and absolute
discretion. If Developer fails to timely object to any such exceptions or other matters set forth in
the Preliminary Title Report or any survey pursuant to the Notice as so provided, then Developer
shall be deemed to have approved such exceptions and other matters set forth in the survey and
Preliminary Title Report.
If Developer notifies City of Developer’s disapproval of any items with respect to
the Preliminary Title Report, City shall have the right, but not the obligation, to remove any
disapproved items after receiving Notice of Developer’s disapproval or provide assurances
reasonably satisfactory to Developer that such items will be removed or remedied on or before
the Closing. City shall exercise such right by Notice to Developer within ten (10) days of receipt
of Notice from Developer of Developer’s disapproval. If City cannot or does not elect to remove
any disapproved items, Developer shall have ten (10) days after the expiration of City’s ten (10)
day election period to either (i) give City Notice that Developer intends to proceed with the
Conveyance subject to the disapproved items or (ii) give City Notice that Developer does not
elect to accept the Conveyance and elects to terminate the Escrow and this Agreement,
whereupon any sums deposited by Developer into Escrow and all interest earned thereon shall be
returned to Developer.
The Exceptions to title approved by Developer as provided herein shall
hereinafter be referred to as the “Permitted Exceptions” and/or the “Condition of Title.”
Notwithstanding the foregoing, title to the Properties shall be conveyed to Developer at Closing
in fee simple, free and clear of any monetary liens, mortgages, deeds of trust and security
interests (“Encumbrances”). Developer shall have the right to approve or disapprove in the
manner provided in this Section any Exception reported by the Title Company or otherwise
discovered after Developer has approved the Condition of Title (which are not created by
Developer).
4.5. Title Insurance
Concurrently with the Closing, the Title Company shall issue and deliver to:
(i) Developer, at Developer’s cost, an ALTA extended owner’s policy of title
insurance, together with the Approved Endorsements, and subject to the Permitted Exceptions,
Habitat DDLA 080118 25
all in an amount no less than the Property Purchase Price (the “Title Policy”), insuring that
ownership of the Site is vested in Developer. The Title Policy shall be in such amount as is
reasonably requested by Developer; provided, however, that the Title Company shall, if
requested by Developer, provide any endorsements reasonably requested by Developer (the
“Additional Endorsements”). The cost of the Additional Endorsements shall be borne by
Developer. City shall, at no cost or expense to City, cooperate with and assist Developer in
obtaining any Additional Endorsements, including required indemnities that are customary and
reasonable, or special coverage reasonably requested by Developer.
(ii) City, at Developer’s cost, a 2006 ALTA lender’s policy of title insurance
in the amount of the City Loan, together with such endorsements as are reasonably requested by
City (the “City Lender Policy”), insuring City’s loan secured by the Site subject only to the
liens of current real property taxes and assessments and any exception to title which may be
approved by City.
4.6. Submittals into Escrow
The Parties shall submit documents and funds into Escrow as set forth in this
Section.
4.6.1. Submittals by Developer
Prior to Closing, Developer shall submit into Escrow the following:
(A) The City Grant Deed, duly executed by Developer and
acknowledged.
(B) The Deed of Trust, duly executed by Developer and
acknowledged.
(C) The Declaration, duly executed by Developer and acknowledged.
(D) The Notice of Affordability Restrictions, duly executed by
Developer and acknowledged.
(E) Any other documents or other deliverables reasonably requested by
City or the Escrow Agent.
(F) Sufficient funds to pay all costs of escrow and title to effect the
Conveyance.
4.6.2. Submittals by City
Prior to Closing, City shall submit into Escrow the following:
(A) The City Grant Deed, duly executed by City and acknowledged.
(B) A non-foreign transferor affidavit in a form acceptable to Escrow
Agent.
(C) The Declaration, duly executed by City and acknowledged.
Habitat DDLA 080118 26
(D) The Notice of Affordability Covenants, duly executed by City and
acknowledged.
(E) Any other documents or other deliverables reasonably requested by
Developer or the Escrow Agent.
4.7. Conditions Precedent to Closing
The Closing is conditioned upon satisfaction of the terms and conditions set forth
in this Section.
4.7.1. City’s Conditions
City’s obligation to close Escrow and convey the Property to Developer is
conditioned upon the satisfaction or written waiver of each and every one of the conditions
precedent (A) through (U), inclusive, described below (“City’s Conditions Precedent to
Closing”), which are solely for the benefit of City, and which shall be satisfied or waived by the
time periods provided for herein. City at its option may terminate this Agreement without notice
and/or opportunity to cure if any of the conditions precedent set forth below are not satisfied by
the Developer or waived in writing by City by the Outside Closing Date.
(A) Physical Condition of Site. Prior to the expiration of the
Developer’s Due Diligence Period, Developer shall not have elected to cancel Escrow and
terminate this Agreement due to the physical condition of the Property to be conveyed and shall
not have delivered to City a Developer’s Notice to Terminate.
(B) Environmental Condition of Site. Prior to the expiration of the
Developer’s Due Diligence Period, Developer shall not have elected to cancel Escrow and
terminate this Agreement due to the environmental condition of the Property to be conveyed and
shall not have delivered to City a Developer’s Notice to Terminate.
(C) Execution of City Documents. Developer shall have executed and
delivered into Escrow the City Grant Deed, the Deed of Trust, the Promissory Note, the
Declaration, the Notice of Affordability Restrictions, the Assignment of Contracts, Plans and
Specifications, the Environmental Indemnity, and such other documents as may be reasonably
required by City in connection therewith and all of which shall be in a form acceptable to City.
(D) Deposit of Funds. Developer shall have deposited or caused to be
deposited into Escrow all funds necessary for the Closing or otherwise required pursuant to this
Agreement.
(E) Certificates of Good Standing. Developer shall have delivered to
City certificates of good standing for California, dated within thirty (30) days of Closing.
(F) Financing. Developer shall have submitted and the City Manager
shall have approved Developer’s Evidence of Financing in accordance with Section 3.1 of this
Agreement, and, based on the Evidence of Financing submitted by Developer, the City Manager
shall be satisfied that the Project is financially feasible for Developer.
(G) Project Pro Forma. Developer shall have submitted and City shall
have approved the Developer Pro Forma in accordance with Section 3.1 of this Agreement. The
Habitat DDLA 080118 27
City Manager shall be satisfied that the Developer Pro Forma demonstrates that the Project is
financially feasible for Developer.
(H) Schedule of Performance. Developer shall have submitted and
City shall have approved a Schedule of Performance dated as of Closing.
(I) Construction Budget and Construction Contract. The Construction
Budget and Construction Contract shall have been submitted to and approved by City in
accordance with Section 3.2.
(J) Intentionally Omitted.
(K) Construction Package. Developer shall have submitted and City
shall have approved all material aspects of the construction process, including, without
limitation, engineering contracts, lists of subcontractors, and other construction related
documentation which may be reasonably requested by City.
(L) Relocation Plan. Developer shall have submitted, and City shall
have approved, the Relocation Plan.
(M) General Liability Insurance. Developer, at its cost, shall have
procured and be maintaining in full force and effect insurance consistent with the requirements
of Section 5.9 and in the amounts specified therein. Developer shall have submitted to City an
insurance certificate or other acceptable written evidence demonstrating compliance with the
foregoing requirement.
(N) Additional Deliverables. Developer shall have delivered such
additional items as reasonably requested by City.
(O) Lender Policy. The Title Company shall, upon payment of the
Title Company’s regularly scheduled premium, be irrevocably committed to issue to City the
City Lender’s Policy and all reasonably requested endorsements upon the Closing.
(P) City Loan. Developer, City and any other necessary third party
shall have executed all documents required by City in connection with the City Loan, all of
which shall be in a form acceptable to City, and any documents required to be recorded in
connection therewith shall have been signed by all parties and deposited into Escrow.
(Q) No Litigation. No litigation shall be pending or threatened by any
third parties which seeks to enjoin the transactions contemplated herein.
(R) No Default. There shall exist no condition, event or act which
would constitute an event of default under this Agreement, or which, upon the giving of notice or
the passage of time, or both, would constitute an event of default.
(S) Representations and Warranties. All representations and
warranties of Developer herein contained and contained in this Agreement shall be true and
correct as if made on and as of the date of Closing, except in the case of Changed Circumstances.
(T) Governmental Regulations. There shall be no presently existing
condition, event or act, existing in connection with the Project which constitutes, or would, with
the passage of time, constitute a violation of any applicable Governmental Regulation.
Habitat DDLA 080118 28
(U) Permit Ready. Developer shall demonstrate to City that upon
acquisition of title the Property and the payment of fees, Developer has satisfied all conditions
necessary for the issuance of permits for the Project in accordance with all applicable
Governmental Regulations.
4.7.2. Developer’s Conditions
Developer’s obligation to close Escrow on each Property is conditioned
upon the satisfaction or written waiver by Developer of each and every one of the conditions
precedent (A) through (K), inclusive, described below (the “Developer’s Conditions Precedent
to Closing”), which are solely for the benefit of Developer, and which shall be satisfied or
waived by the time periods provided for herein:
(A) Physical Condition of Site. Prior to the expiration of the
Developer’s Due Diligence Period, Developer shall not have elected to cancel Escrow and
terminate this Agreement due to the physical condition of the Site and shall not have delivered a
written notice not to proceed to City.
(B) Environmental Condition of Site. Prior to the expiration of the
Developer’s Due Diligence Period, Developer shall not have elected to cancel Escrow and
terminate this Agreement due to the environmental condition of the Site and shall not have
delivered a written notice not to proceed to City.
(C) Execution of Documents. City shall have executed and delivered
into Escrow all documents to which City is a Party.
(D) Review and Approval of Title. Developer shall have reviewed and
approved the condition of title, as provided in this Agreement.
(E) Title Policy. The Title Company shall, upon payment of the Title
Company’s regularly scheduled premium, be irrevocably committed to issue an Owner’s Title
Policy to Developer including all Additional Endorsements upon the Closing.
(F) Project Pro Forma. Developer shall have submitted and City shall
have approved the Developer Pro Forma, which shall be updated by Developer prior to Closing.
(G) No Litigation. No litigation shall be pending or threatened by any
third parties which seeks to enjoin the transactions contemplated herein.
(H) No Default. There shall exist no presently existing condition,
event or act which would constitute an event of default under this Agreement, or which, upon the
giving of notice or the passage of time, or both, would constitute an event of default.
(I) Representations and Warranties. All representations and
warranties of City herein contained and contained in this Agreement shall be true and correct as
if made on and as of the date of Closing.
4.7.3. Termination of Escrow
Escrow may be terminated as set forth in this Section.
Habitat DDLA 080118 29
(A) Developer’s Notice to Terminate during Developer’s Due
Diligence Period. In the Event that Developer delivers a written notice not to proceed to City
prior to the expiration of Developer’s Due Diligence Period, Escrow shall be terminated,
Developer shall pay all escrow termination charges and this Agreement shall be terminated,
whereupon any sums deposited by Developer into Escrow and all interest earned thereon shall be
immediately returned to Developer without any further instructions by the parties, and without
any right or need on City’s part to approve or reject Escrow’s required documents for the release
of such amounts.
(B) Escrow Not in Condition to Close. If the Escrow is not in a
condition to close by the Outside Closing Date, for a reason other than a default hereunder by
either party, then either Party which has fully performed under this Agreement may, in writing,
demand the return of money, documents or property and terminate the Escrow and this
Agreement (but solely with respect to any Property not yet conveyed to Developer). If either
Party makes a written demand for the return of its money, documents or property, this
Agreement (but solely with respect to any Property not yet conveyed to Developer) shall not
terminate until ten (10) business days after the Escrow Agent shall have delivered copies of such
demand to the other Party at the respective addresses set forth in this Agreement. If any
objections are raised by written Notice within such ten (10) day period, the Escrow Agent is
authorized to hold all money, documents or property until instructed by a court of competent
jurisdiction or by mutual written instructions of the Parties. If no such objections are timely
made, the Escrow Agent shall immediately return the demanded money and/or documents, and
the escrow cancellation charges shall be paid by the undemanding Party. Termination of the
Escrow shall be without prejudice as to whatever legal rights, if any, either Party may have
against the other arising from this Agreement. If no demands are made, the Escrow Agent shall
proceed with the Closing as soon as possible consistent with the terms of this Agreement.
4.7.4. Close of Escrow
Provided that both Developer’s Conditions Precedent to Closing and the
City’s Conditions Precedent to Closing have been satisfied or waived in writing, the Conveyance
of the Property shall close. The Closing shall occur on or before the Outside Closing Date.
4.8. Funding of City Loan
City Loan funds shall be disbursed at Closing in the amount of and in payment of
the Purchase Price. The remainder of the City Loan funds shall be disbursed from the LMIHAF
to the City in payment of the estimated Project costs to be incurred by Developer listed below.
City shall provide Developer with adequate supporting documentation upon payment of the
following construction costs payable to the City from the LMIHAF from disbursements of City
Loan funds:
$ 510 Asbestos and Lead Paint Testing and Report
$ 7,514 Building Plan Check and Permit Fees
$ 1,750 Engineering Grading Plan Check and Permit Fee
$ 550 Dedication Pottery Street
$ 16 Engineering Transport Fee
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$15,660 Street, sidewalk, curb and gutter improvements
$ 4,000 Contingency
$30,000 Total
City shall perform all construction activities necessary to complete the street,
sidewalk, curb and gutter improvements for the Affordable Unit in consideration of receipt of
City Loan funds from the LMIHAF as set forth above, including an allocation of any available
contingency if costs exceed $15,660. In the event total costs exceed the estimated cost of
$15,660 and any available contingency, City shall be responsible for completing the street,
sidewalk, curb and gutter improvements for the Affordable Unit at its cost.
4.9. Indemnification
Following the Conveyance, Developer agrees to save, protect, defend, indemnify
and hold harmless the City Indemnitees from and against any and all Losses and Liabilities
(including, without limitation, reasonable attorneys’ and consultants’ fees, investigation and
laboratory fees, and remedial and response costs), which may now or in the future be incurred or
suffered by the City Indemnitees, by reason of, in connection with, resulting from or arising in
any manner whatsoever as a direct or indirect result of (i) the ownership (or possession) of all or
any part of the Site for purposes of any Governmental Regulations regulating Hazardous
Substance not existing before the Conveyance and released onto the Site following the
Conveyance, (ii) any act or omission on the part of Developer, or its representatives, contractors,
volunteers, or invitees with respect to the Site; (iii) the death of any person or any accident,
injury, loss, or damage whatsoever caused to any person or to the property of any person
resulting from the alleged negligence, intentional acts or omissions of Developer, its officers,
agents, volunteers, contractors or employees, in connection with the Site or the performance of
its obligations under this Agreement, (iv) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission or release from the Site of any Hazardous Substance first
released and/or occurring on the Site following the Conveyance, (v) any environmental or other
condition of the Site relating to any Hazardous Substance not existing before the Conveyance
and first released and/or occurring following the Conveyance, and (vi) any Losses and Liabilities
incurred with respect to the Site under any Governmental Regulations relating to Hazardous
Substance not existing before the Conveyance and first released and/or occurring on the Site
following the Conveyance. Developer’s obligations under this Section shall survive the issuance
of the Release of Construction Covenants or any termination of this Agreement.
4.10. Contests
Developer shall refrain from, in bad faith, appealing, challenging or contesting in
any manner the validity or amount of any tax assessment, encumbrance or lien on the Site;
provided, however, that such prohibition shall not apply to an appeal, challenge or contesting of
the erroneous initial assessment for property tax purposes of the Site in the fiscal year of the
completion of the Improvements to be constructed pursuant to the Agreement, and further
provided that in the absence of transfer of ownership or new construction Developer shall not be
prohibited from appealing, challenging or contesting any increases in assessment of the Site for
property tax purposes over and above the current 2% per annum permitted amount.
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Developer agrees that any such permitted proceedings shall be begun without
undue delay after any contested item is imposed and shall be prosecuted to final adjudication
with reasonable dispatch. Developer shall give City prompt notice in writing of any such contest
at least ten (10) days before filing any contests. In the event of any such contest and the final
determination thereof adversely to Developer, Developer shall, before any fine, interest, penalty
or cost may be added thereto for nonpayment thereof, pay fully and discharge the amounts
involved in or affected by such contest, together with any penalties, fines, interest, costs and
expenses that may have accrued thereon or that may result from any such contest by Developer
and, after such payment and discharge by Developer, City will promptly return to Developer
such security as City shall have received in connection with such contest.
City shall cooperate reasonably in any such contest permitted by this Section, and
shall execute any documents or pleadings reasonably required for such purpose. Any such
proceedings to contest the validity or amount of Imposition or to recover back any imposition
paid by Developer shall be prosecuted by Developer at Developer’s sole cost and expense; and
Developer shall indemnify and save harmless City against any and all loss, cost or expense of
any kind, including, but not limited to, reasonable attorneys’ fees and expenses, which may be
imposed upon or incurred by City in connection therewith.
4.11. Occupants of the Site
The interest to be conveyed in the Site shall be conveyed free of any possession or
right of possession except that of Developer, unless waived in writing by Developer.
4.12. Zoning of the Site
It is the responsibility of Developer, without cost to City, to ensure that zoning of
the Site and all applicable City land use requirements will be such as to permit development of
the Project and the use, operation and maintenance of such Improvements in accordance with the
provisions of this Agreement. Nothing contained herein shall be deemed to entitle Developer to
any City permit or other City approval necessary for the development of the Site, or waive any
applicable City requirements relating thereto. This Agreement does not (a) grant any land use
entitlement to Developer, (b) supersede, nullify or amend any condition which may be imposed
by the City in connection with approval of the development described herein, (c) guarantee to
Developer or any other party any profits from the development of the Site, or (d) amend any City
laws, codes or rules. This Agreement is not a development agreement as provided in
Government Code Section 65864 et seq.
4.13. Suitability of the Site
During the Due Diligence Period, Developer shall have the right, at its sole cost
and expense, to engage its own environmental consultant (“Developer’s Environmental
Consultant”), to make such investigations as Developer deems necessary, including without
limitation any “Phase 1” and/or “Phase 2” investigations of the Site or any portion thereof, and
City shall promptly be provided a copy of all reports and test results provided by Developer’s
Environmental Consultant (the “Developer’s Environmental Reports”).
Except as may otherwise be provided in this Agreement, the Site shall be
delivered by City to Developer in an “as is” physical condition, with no warranty, express or
implied by City as to the presence of Hazardous Substances, or the condition of the soil, its
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geology or the presence of known or unknown faults, except as expressly provided in Section
4.2.1. If the condition of the Site is not in all respects entirely suitable for the use or uses to
which the Site will be put, then it is the sole responsibility and obligation of Developer to place
the Site in all respects in a condition entirely suitable for the development thereof, solely at
Developer’s expense.
On and after the Closing, Developer hereby waives, releases and discharges the
City Indemnitees, from any and all present and future claims, demands, suits, legal and
administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and
expenses (including, without limitation, attorneys’ fees) arising out of or in any way connected
with City’s or Developer’s use, maintenance, ownership or operation of the Site, any Hazardous
Substances on the Site, or the existence of Hazardous Substances contamination in any state on
the Site, however the Hazardous Substances came to be placed there, except for those first
released and/or occurring on the Site before the Conveyance or arising out of the active
negligence, acts, omissions, or intentional misconduct of City or its employees, officers or
agents. Developer acknowledges that it is aware of and familiar with the provisions of Section
1542 of the California Civil Code which provides as follows: “A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his settlement with
the debtor.” To the extent of the release set forth in this Section, Developer hereby waives and
relinquishes all rights and benefits which it may have under Section 1542 of the California Civil
Code.
5. DEVELOPMENT OF THE SITE
5.1. Scope of Development
Developer covenants and agrees, at its sole cost and expense, to relocate to the
Site from the Kumar Property, a single family house known as the “Hayman House” and
rehabilitate such house into a three bedroom two bath single family home, and all ancillary
improvements and structures used in connection therewith, as described herein.
Developer covenants and agrees that it will cause the Project to be developed in
accordance with all Governmental Regulations, to the Scope of Development, site plan, Final
Construction Drawings, and Schedule of Performance. The size and specifications of the
Affordable Unit shall be as set forth in the Scope of Development and Final Construction
Drawings. Without limitation of the foregoing, Developer specifically acknowledges and agrees
that the Developer shall satisfy all conditions necessary to ensure that the Project conforms to all
applicable CEQA requirements.
5.2. Construction of Improvements
Following the Closing, Developer shall use commercially reasonable efforts to
begin and thereafter diligently prosecute to completion the construction of the Project as
provided in the Scope of Development, site plan, Final Construction Drawings and the Schedule
of Performance. The Schedule of Performance may be subject to revision from time to time as
mutually agreed upon in writing between Developer and City.
During periods of construction, Developer shall submit to City written monthly
reports of the progress of the construction. The reports shall be in such form and detail as may be
Habitat DDLA 080118 33
reasonably acceptable to City and shall include a reasonable number of construction photographs
taken since the last report submitted by Developer. The construction of the Project shall be
completed in accordance with the Plans and Specifications, the Final Construction Drawings and
the Schedule of Performance. Developer shall not make any material changes to the Project
from the Plans and Specifications or the Final Construction Drawings without obtaining City’s
prior written approval. If the building department of the City of Lake Elsinore requires any
material changes to the Project after approval of the Plans and Specifications or the Final
Construction Drawings, Developer shall promptly provide City with written notice of such
changes. Developer shall be financially responsible for all costs of the Project, including,
without limitation, all costs of construction.
5.3. Land Use Restrictions
The Developer shall construct the Project consistent with applicable
Governmental Regulations, including (without limitation) all applicable zoning, planning and
design review requirements of the City and all permits and entitlements relating thereto.
5.4. Permits and Entitlements
Prior to commencement of any work of improvement upon the Site, the
Developer shall, at its own expense, secure or cause to be secured any and all permits,
entitlements or approvals which may be required by the City in accordance with its Municipal
Code and land use entitlement process and by any other governmental entity with jurisdiction
over the Site and/or the Project in accordance with applicable Governmental Regulations. The
execution of this Agreement does not constitute the granting of or a commitment to obtain any
required land use entitlements or approvals required by the City.
5.5. Design; Architectural Quality; Materials and Appliances
Developer acknowledges and understands that the materials, workmanship, finish,
design, components and general architectural quality of the Project to be constructed by
Developer under this Agreement will have a significant and continuing impact on the Site and
the surrounding community and that City’s agreement to participate in assisting this Project is
based upon Developer’s representation that the Project will be high quality in, design,
construction and finish consistent with as similar projects in Southern California developed by
Developer. Accordingly, Developer understands and agrees that it will be required to develop
the Site by means of materials, workmanship and an overall design that will result in a residential
development that is of high quality and of benefit to the Site and the community. Developer
assumes all responsibility for the design and construction of the Project. City shall not be
responsible to Developer or to third parties in any way for any defects in the design of the
Project, nor for any structural or other defects in any work done according to the approved
design of the Project.
This Section shall not preclude City from requiring Developer to comply with any
applicable Governmental Regulations, including, without limitation, building codes, fire and
safety codes, and parking requirements, as a condition to approval of development plans
subsequently submitted by Developer with respect to the Improvements approved. This Section
is not intended to nor shall it be construed to relieve the Developer of its obligation to submit to
City and to obtain City approval of all Plans and Specifications and to obtain any other permits
required by applicable Governmental Regulations. City shall reasonably cooperate with
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Developer with respect to the processing of all Plans and Specifications with the City and
obtaining all necessary City approvals with respect to all Plans and Specifications approved by
City pursuant to the provisions of this Agreement.
Developer shall use commercially reasonable efforts to construct the Affordable
Unit using available sustainable materials and environmentally friendly building practices and
will use commercially reasonable efforts to obtain and install energy saving appliances, all as
reasonably approved by City.
5.6. Preparation of Site
Developer shall be responsible for all preparation of the Site following the
Closing. The Developer shall carry out or cause to be carried out such activities in compliance
with all applicable Governmental Regulations. It shall be the sole responsibility of the
Developer to investigate and determine the soil conditions of the Property for the construction of
all Improvements thereon. If the soil or other conditions of the Property or Improvements are
not in all respects entirely suitable for the use or uses to which the Property will be put, then it is
the sole responsibility and obligation of the Developer to take such action as may be necessary to
place the Property in a condition entirely suitable for the development of the Project on the
Property.
5.7. Construction Costs
The cost of relocating the house from the Kumar Property, planning, designing,
developing and constructing the Project shall be borne solely by the Developer. If applicable,
concurrently with submission to any construction lender of any draw requests for funding of any
construction costs relating to the Project, Developer shall concurrently submit a copy of such
draw request and all supporting documentation customarily required with respect to such request
to City.
5.8. Construction Contracts
Developer shall have submitted to City, and City shall, in its reasonable
discretion, have approved any proposed contractor/subcontractor bidding procedures and the
proposed form of any contract to be entered into with the General Contractor and/or
subcontractors, which such approval shall not be unreasonably withheld or delayed. All such
contracts shall be entered into with a duly licensed and insured contractor or subcontractors.
5.9. Insurance
5.9.1. General Requirements
Prior to commencement of any work of improvement upon the Site and at
all times during the term of this Agreement, without limiting the indemnity provisions set forth
herein, Developer, at its sole cost, shall procure and maintain in full force and effect the following
policies of insurance from a company or companies authorized to do business in the State of
California or from a company or companies listed on the California list of Eligible Surplus Lines
Insurers (http://www.sla-cal.org/carrier_info/lesli/ ) with a current rating from A.M. Best
Company of A:VIII or better:
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(a) General Liability. Commercial general liability insurance which
affords coverage at least as broad as Insurance Services Office (ISO) Commercial General
Liability coverage form ISO CG 00 01 11 85 with minimum limits of not less than $2,000,000
per occurrence, of which $1,000,000 may be in the form of excess liability following form
coverage.
(b) Automobile Liability. Commercial automobile liability insurance
with coverage at least as broad as ISO CA 00 01 06 92 covering Symbol 1 (“Any Auto”), with
minimum limits of $1,000,000 combined single limits.
(c) Worker’s Compensation. Workers’ Compensation insurance, as
required by the State of California, and Employer’s Liability insurance, with a minimum limit of
$1,000,000 per accident or occupational illness for bodily injury or disease.
(d) Property Insurance. Prior to commencement, during the course of
construction, and following completion of construction of the Improvements, fire and hazard “all
risk” insurance covering 100% of the replacement cost of the Improvements (including offsite
materials) in the event of fire, lightening, windstorm, vandalism, malicious mischief and all other
risks normally covered by “all risk” coverage policies in the area where the Property is located
(including loss by flood if the Property is in an area designated as subject to the danger of flood
and earthquake (if commonly carried by similar projects in the region and available at reasonable
rates)).
5.9.2. Endorsements
(a) The policy or policies of insurance required by Section 5.9.1(a)
and (b), above, shall be endorsed as follows:
(1) The indemnified parties, while acting within the scope of
their authority, shall be additional insureds, such insurance is to be primary and not contributing
with any other insurance or self-insurance maintained by said additional insureds. For section
5.9.1(a), the additional insured endorsement shall be equivalent in coverage scope to ISO CG 20
10 11 85.
(2) In the event of one insured, whether named or additional,
incurring liability to any other of the insureds, whether named or additional, the policy shall
cover the insured against whom a claim is or may be made in the same manner as if separate
policies had been issued to each insured, except that the limits of insurance shall not be increased
thereby.
(3) The same shall not be canceled or the coverage reduced
until a thirty (30)-day written notice of cancellation (or ten (10) days, for nonpayment of
premium only) has been served upon the City Risk Manager by registered or certified mail.
(4) Such insurance is primary and any other insurance,
deductible, retention or self-insurance maintained by the indemnified parties shall not contribute
with such primary insurance.
(5) Any failure by the named insured to comply with reporting
provisions of the policy or breaches or violations of warranties shall not affect coverage provided
to the insureds added by this endorsement.
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(b) The policy or policies of insurance required by Section 5.9.1(d),
above, shall be endorsed as follows:
(1) The policies shall include a “lender’s loss payable
endorsement” (Form 438BFU) in form and substance satisfactory to the City Manager, showing
City as an encumbrancer.
(2) A waiver of subrogation stating that the insurer waives
indemnification from City. A waiver of subrogation shall also apply to Subsections (a) and (c).
(3) The policy or policies shall not be canceled or the coverage
reduced until a thirty (30)-day written notice of cancellation has been served upon the City Risk
Manager and the City Manager by registered or certified mail.
5.9.3. Deductible and Self-Insured Retention
In the event any of the insurance coverages required to be furnished by
Developer have deductible or self-insured provisions, Developer shall fully protect the
indemnified parties in the same manner as those interests would have been protected had the
policy not contained the deductible or self-insured provision. The deductible or self-insured
amount shall be shown on any “evidence of insurance” provided to City, and City reserves the
right to limit said amount and to review Developer’s financial statements if the amount exceeds a
level reasonably acceptable to the City. A deductible amount of not more than Five Thousand
Dollars ($5,000.00) shall be acceptable to the City.
5.9.4. Evidence of Insurance
Prior to the Closing, and periodically thereafter until the Affordable Unit
sale Closes, Developer shall deliver said policy or policies of insurance or certified true copies
thereof, or endorsement forms furnished by the City (“Evidence of Insurance”) for approval as
to sufficiency by the City Risk Manager and approval as to form by the City Manager, which
approval shall not be unreasonably withheld or delayed. The endorsements are to be signed by a
person authorized by that insurer to bind coverage on its behalf. If Workers’ Compensation
Coverage is placed with the State Compensation Insurance Fund, a State Compensation
Insurance Fund Certificate of coverage will be acceptable if endorsed in accordance with Section
5.9.2(b), above.
5.9.5. Failure to Maintain Coverage
Should Developer fail to maintain policies with the coverages and limits
specified in Section 5.9.1, above, in full force and effect at all times, City shall have the right to
withhold any payment due Developer or to suspend Developer’s operations until Developer has
fully complied with these provisions and furnished the required evidence of insurance. In the
event that Developer’s operations are suspended for failure to maintain acceptable insurance
coverage, Developer shall not be entitled to an extension of time for completion of the
Improvements.
5.9.6. Insurance for Subcontractors
All subcontractors shall be included as additional insureds under
Developer’s policies, or Developer shall be responsible for causing subcontractors to purchase
Habitat DDLA 080118 37
general liability, automobile and worker’s compensation insurance in compliance with the terms
of this section. Except as otherwise specified in the immediately preceding sentence, all
coverages and endorsements of coverages for subcontractors shall be subject to all of the
requirements stated herein. In addition, subcontractors whose profession requires licensure,
including, but not limited to architects and engineers, shall be required to maintain professional
liability insurance, applicable to their respective professions, in an amount not less than Two
Million Dollars ($2,000,000) per claim, without environmental restrictions, for a period whose
prior acts coverage shall be no later than the first date of this Agreement and whose extended
reporting coverage period shall be at least three years from the time that all work under this
Agreement is completed.
5.10. Developer’s Indemnity
Developer shall indemnify, defend and hold harmless the City Indemnitees from
and against any liability (including liability for claims, suits, actions, arbitration proceedings,
administrative proceedings, regulatory proceedings, actual out-of-pocket losses, expenses or cost
of any kind, whether actual, alleged or threatened, including without limitation reasonable
attorneys’ fees and costs, court costs, interest or defense costs, and expert witness fees), where
the same arise out of, are in connection with, are a consequence of, or are in any way attributable
to, in whole or in part, to: (i) Developer’s compliance with or failure to comply with all
Governmental Regulations, including all applicable federal and state labor standards, including,
without limitation, the requirements of Labor Code § 1720; (ii) defects in the design of the
Project, including (without limitation) the violation of any laws, and for defects in any work
done according to the City approved plans, or (iii) any other performance or act or failure to
perform or act in connection with the activities contemplated by this Agreement by Developer,
or by any individual or entity that Developer shall bear the legal liability thereof, including but
not limited to officers, agents, employees, volunteers or contractors of Developer.
Without affecting the rights of the City Indemnitees under any provisions of this
Agreement, Developer shall not be required to indemnify and hold harmless the City
Indemnitees for liability attributable to the active negligence, acts, omissions, or intentional
misconduct of City Indemnitees, and/or their agents, representatives, invitees, licensees,
consultants, and contractors. In instances where City Indemnitees are shown to have failed to
act, have been negligent or to have acted with intentional misconduct and where City
Indemnitees’ active negligence, acts, omissions, or intentional misconduct accounts for only a
percentage of the liability involved, the obligation of Developer will be for that entire portion or
percentage of liability not attributable to the active negligence, acts, omissions, or intentional
misconduct of City Indemnitees.
Developer agrees to be fully responsible to City for all acts of each and every
sponsor, volunteer, contractor or any other person or entity involved by, for, with or on behalf of
Developer in the performance of this Agreement according to the terms of this Section 5.10.
Failure of City Indemnitees to monitor compliance with these requirements
imposes no additional obligations on City Indemnitees and will in no way act as a waiver of any
rights hereunder. This obligation to indemnify and defend City Indemnitees as set forth here is
binding on the successors, assigns or heirs of Developer and shall survive the expiration or
termination of this Agreement.
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5.11. Bodily Injury and Property Damage Indemnification
Developer agrees to and shall defend, indemnify and hold the City Indemnitees
harmless from and against all liability, loss, damage, costs, or expenses (including without
limitation attorneys’ fees and costs) arising from or as a result of or in connection with the death
of any person or any accident, injury, loss, or damage whatsoever caused to any person or to the
property of any person resulting from the acts or omissions of Developer, its officers, agents,
sponsors, volunteers, or employees.
This indemnification provision supplements and in no way limits the scope of the
indemnification set out elsewhere in this Agreement. The indemnity obligation of Developer
under this Section shall survive the expiration or termination, for any reason, of this Agreement.
5.12. Rights of Access
Prior to the issuance of a Release of Construction Covenants for purposes of
assuring compliance with this Agreement, representatives of City shall have the right of access to
the Site, without charges or fees, at normal construction hours during the period of construction
for the purposes of this Agreement, including but not limited to, the inspection of the work being
performed in constructing the Project so long as (i) City representatives comply with all safety
rules, and (ii) City permits, upon the request of Developer, representatives of the Developer to
accompany the representatives of City gaining such access. City representatives shall, except in
emergency situations, notify the Developer prior to exercising its rights pursuant to this Section
5.12. In the event of an emergency, City may immediately enter upon the Site.
5.13. Compliance with Laws
5.13.1. General
Developer shall comply with all Governmental Regulations in the
construction, use and operation of the Project, including all applicable federal, state and local
statutes, ordinances, regulations and laws, including without limitation, all applicable federal,
state, and local labor standards, City zoning and development standards, building, plumbing,
mechanical and electrical codes, and all other provisions of the City Municipal Code, and all
applicable disabled and handicapped access requirements, including without limitation the
Americans With Disabilities Act, 42 U.S.C. § 12101, et seq., Government Code § 4450, et seq.,
and Government Code § 11135, et seq.
5.13.2. Nondiscrimination in Employment
Developer certifies and agrees that all persons employed or applying for
employment by it, its affiliates, subsidiaries, or holding companies, and all subcontractors,
bidders and vendors, are and will be treated equally by it without regard to, or because of race,
color, religion, ancestry, national origin, sex, age, pregnancy, childbirth or related medical
condition, medical condition (cancer related) or physical or mental disability, and in compliance
with Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000, et seq., the Federal Equal Pay
Act of 1963, 29 U.S.C. § 206(d), the Age Discrimination in Employment Act of 1967, 29 U.S.C.
§ 621, et seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. § 1324b, et seq., 42
U.S.C. § 1981, the California Fair Employment and Housing Act, Government Code § 12900, et
seq., the California Equal Pay Law, Labor Code § 1197.5, Government Code § 11135, the
Habitat DDLA 080118 39
Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., and all other applicable anti-
discrimination laws and regulations of the United States and the State of California as they now
exist or may hereafter be amended.
5.14. Liens and Stop Notices
Except for financing liens granted in accordance with the terms of this
Agreement, Developer shall not allow to be placed on the Site or any part thereof any lien or stop
notice. If a claim of a lien or stop notice is given or recorded affecting the Project, the Developer
shall within thirty (30) calendar days of such recording or service or within five (5) Business
Days of the City’s demand, whichever last occurs:
i. pay and discharge the same; or
ii. effect the release thereof by recording and delivering to the City a surety
bond in sufficient form and amount, or otherwise; or
iii. provide such other assurances which the City deems, in its sole discretion,
to be satisfactory for the payment of such lien or bonded stop notice and for the full and
continuous protection of City from the effect of such lien or bonded stop notice.
5.15. Rights of City to Cure Deed of Trust Default or Cure Other Liens
Prior to the issuance by the City of the Release of Construction Covenants in
accordance herewith and after the Developer has had written notice and has failed after a
reasonable time (but in any event not more than ninety (90) calendar days) to challenge, cure,
adequately bond against, or satisfy any deed of trust default or breach or any lien or
encumbrance on the Site which are not otherwise permitted under this Agreement, the City shall
have the right (but not the obligation) to cure such default or breach and to satisfy any such liens
or encumbrances prior to completion of any foreclosure. In such event, the City, as the case may
be, shall be entitled to reimbursement from the Developer of all proper costs and expenses
incurred by the City in curing such default. Such costs and expenses incurred by the City shall
accrue interest until paid by the Developer at the rate of ten percent (10%) per annum or the
maximum allowable interest rate permitted by applicable law, whichever is lower. Such costs
and expenses and any interest accrued thereon shall be secured as additional advances by and
pursuant to the Deed of Trust and the Assignment of Rents.
5.16. Removal of Personal Property
Developer shall not cause or permit the removal from the Site of any items of
personal property owned by Developer (other than tools and equipment used in the development
of the Project) unless (i) no Event of Default remains uncured and (ii) Developer promptly
substitutes and installs on the Site other items of equal or greater value in the operation of the
Site, all of which items shall be free of liens (other than liens permitted in accordance with the
terms of this Agreement) and shall be subject to the lien of the Deed of Trust, and executes and
delivers to City all documents reasonably required by City in connection with the attachment of
such liens to such items. Developer shall keep detailed records of each such removal and shall
make such records available to City upon written request from time to time.
Habitat DDLA 080118 40
5.17. Local, State and Federal Laws
a. Developer hereby agrees to carry out development, construction and
operation of the Improvements on the Site, including, without limitation, any and all public
works (as defined by applicable law), in conformity with all applicable federal and state labor
laws.
b. Developer hereby expressly acknowledges and agrees that neither City nor
City has ever previously affirmatively represented to Developer or its contractor(s) for the
Improvements in writing or otherwise, in a call for bids or otherwise, that the work to be covered
by the bid or contract is not a “public work,” as defined in Section 1720 of the Labor Code.
Developer hereby agrees that Developer shall have the obligation to provide any and all
disclosures, representations, statements, rebidding, and/or identifications which may be required
by Labor Code Sections 1726 and 1781, if applicable, as the same may be enacted, adopted or
amended from time to time, or any other provision of law. Developer hereby agrees that
Developer shall have the obligation to provide and maintain any and all bonds to secure the
payment to contractors (including the payment of wages to workers performing any public work)
which may be required by the Civil Code, Labor Code Section 1781, as the same may be
enacted, adopted or amended from time to time, or any other applicable provision of law.
Developer hereby agrees that Developer shall have the obligation, at Developer’s sole cost, risk
and expense, to obligate any party as may be required by Labor Code Sections 1726 and 1781, as
the same may be enacted, adopted or amended from time to time, or any other provision of law.
Developer shall indemnify, protect, defend and hold harmless City, City and their respective
officers, employees, contractors and agents, with counsel reasonably acceptable to City and City,
from and against any and all loss, liability, damage, claim, cost, expense, and/or “increased
costs” (including labor costs, penalties, reasonable attorneys fees, court and litigation costs, and
fees of expert witnesses) which, in connection with the development, construction (as defined by
applicable law) and/or operation of the Improvements, including, without limitation, any and all
public works (as defined by applicable law), results or arises in any way from any of the
following: (1) the noncompliance by Developer of any applicable local, state and/or federal law,
including, without limitation, any applicable federal and/or state labor laws (including, without
limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation
of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended
from time to time, or any other similar law; (3) failure by Developer to provide any required
disclosure, representation, statement, rebidding and/or identification which may be required by
Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time
to time, or any other provision of law; (4) failure by Developer to provide and maintain any and
all bonds to secure the payment to contractors (including the payment of wages to workers
performing any public work) which may be required by the Civil Code, Labor Code Section
1781, as the same may be enacted, adopted or amended from time to time, or any other provision
of law; and/or (5) failure by Developer to obligate any party as may be required by Labor Code
Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or
any other provision of law.
c. It is agreed by the parties that, in connection with the development,
construction (as defined by applicable law) and operation of the Project, including, without
limitation, any public work (as defined by applicable law), Developer shall bear all risks of
payment or non-payment of state prevailing wages and/or the implementation of Labor Code
Habitat DDLA 080118 41
Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time,
and/or any other provision of law. “Increased costs” as used in this Section shall have the
meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or
amended from time to time.
d. The foregoing indemnity shall survive termination of this Agreement and
shall continue after recordation of the Release of Construction Covenants.
5.18. Notice of Non-Responsibility
City shall, at its sole cost and expense, and all times during the term of this
Agreement, have the right to post and maintain on the Site, and record against the Site, as
required by law, any notice or notices of non responsibility provided for by the mechanics’ lien
laws of the State of California; provided, however, that Developer shall, on behalf of City, post
and maintain on the Site, and record against the Site, all notices of non responsibility provided
for by the mechanics’ lien laws of the State of California.
5.19. Additional Developer Covenants
Developer covenants and agrees to perform and observe all obligations imposed
by any grant or other source of construction financing for all or any portion of the Project, and to
preserve at all times the allocation and availability of such funds. Developer agrees not to
release, forego, alter, amend or modify its rights to any construction financing for the Project
without City’s prior written consent, which City may give or withhold in its sole and absolute
discretion.
5.20. Release of Construction Covenants
Upon completion of the Project, the Developer shall furnish City with a written
request for a Release of Construction Covenants. City shall not unreasonably withhold such
Release of Construction Covenants. The Release of Construction Covenants shall be a
conclusive determination of satisfactory completion of the construction of the Project as to the
Property indicated and the Release of Construction Covenants shall so state. Except for those
continuing covenants as set forth herein, and as provided in the Declaration, any party then
owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property shall
not (because of such ownership, purchase, lease or acquisition) incur any construction obligation
or liability under this Agreement.
If the City refuses or fails to furnish the Release of Construction Covenants, after
written request from the Developer, the City shall, within two (2) business days of written
request therefor, provide the Developer with a written statement of the reasons the City refused
or failed to furnish the Release of Construction Covenants. The statement shall also contain the
City’s opinion of the actions the Developer must take to obtain the Release of Construction
Covenants.
The Release of Construction Covenants shall not constitute evidence of
compliance with or satisfaction of any obligation of the Developer to any holder of any
mortgage, or any insurer of a mortgage securing money loaned to finance the Project, or any part
thereof. The Release of Construction Covenants is not a notice of completion as referred to in
Section 3093 of the Civil Code.
Habitat DDLA 080118 42
6. RIGHTS OF REENTRY
City shall, upon thirty (30) days’ written notice to Developer with opportunity for
Developer to cure, have the right, at its option, to reenter and take possession of the Property,
and to terminate and revest in City the fee interest heretofore conveyed to the Developer, if after
conveyance of title and prior to the Release of Construction Covenants pertaining to any
Property (or portion thereof), the Developer (or its successors in interest) shall:
i. Subject to force majeure, fail to commence construction of the
Improvements constituting the Project on the Property (or portion thereof) as required by this
Agreement for a period of three (3) months after the date set forth in the Schedule of
Performance, provided that the Developer shall not have obtained an extension or postponement
to which the Developer may be entitled pursuant to Section 11.7 hereof, or except to the extent
Developer has diligently pursued commencement of construction of the Improvements; or
ii. Abandon or substantially suspend construction of any of the
Improvements constituting the Project on the Property (or portion thereof) for a period of three
(3) months after written notice of such abandonment or suspension from City, provided that the
Developer shall not have obtained an extension or postponement to which the Developer may be
entitled to pursuant to Section 11.7 hereof; or
iii. assign or attempt to assign this Agreement, or any rights herein, or
transfer, or suffer any involuntary transfer of the Property in violation of this Agreement, and
such violation shall not be cured within thirty (30) days after the date of receipt of written notice
thereof by City to the Developer.
Such right to reenter, repossess, terminate, and revest, shall be subject to and be limited
by and shall not defeat, render invalid, or limit:
(a) any Permitted Mortgage instrument;
(b) any rights or interests provided in this Agreement for the protection of the
holders of such Permitted Mortgage instruments.
The right to terminate the Conveyance established above shall not apply to the Property if
the Improvements constituting the Project to be constructed thereon have been completed in
accordance with this Agreement and a Release of Construction Covenants has been issued as
provided herein.
Upon the revesting in City of title to the Property, City shall, pursuant to its
responsibilities under state law, use its diligent and good faith efforts to resell the fee interests
constituting the Property, as soon and in such manner as City shall find feasible and consistent
with the objectives of such law and of the Redevelopment Plan to a qualified and responsible
party or parties (as determined by City), who will assume the obligation of making or completing
the Improvements constituting the Project, or such other Improvements in their stead, as shall be
satisfactory to City and in accordance with the uses specified for the Property in the
Redevelopment Plan. Upon such resale of the leasehold and fee interests constituting the
Property, the proceeds thereof shall be applied:
Habitat DDLA 080118 43
A. first, to reimburse City on its own behalf or on behalf of the City of all
costs and expenses incurred by City, including but not limited to salaries to personnel engaged in
such action, in connection with the recapture, management, and resale of the leasehold interests
in the Property (but less any income derived by City from the Property, in connection with such
management); all taxes, assessments and water and sewer charges with respect to the Property
(or, in the event the Property is exempt from taxation or assessment or such charges during the
period of ownership, then such taxes, assessments, or charges, as would have been payable if the
Property were not so exempt); any payments made or necessary to be made to discharge or
prevent from attaching or being made any subsequent encumbrances or liens due to obligations,
defaults, or acts of the Developer, its successors or transferees; any expenditures made or
obligations incurred with respect to the making or completion of the agreed Improvements
constituting the Project or any part thereof on the Property; and any amounts otherwise owing to
City by Developer and its successor or transferee; and
B. second, to reimburse Developer, its successor or transferee, up to the
amount equal to (l) the sum of the Purchase Price paid to City by the Developer for the Property
being revested in City; and (2) the costs incurred for the development of the Site or for the
construction of the agreed Improvements constituting the Project thereon, if such costs were
incurred in accordance with the Developer Pro Forma, less (3) any gain or income withdrawn or
made by the Developer therefrom or from the Improvements constituting the Project thereon. For
purposes of this paragraph the term “cost incurred” shall include direct, out-of pocket expenses
of development, but shall exclude Developer’s all overhead expenses, Developer fees, and profit.
Any balance remaining after such reimbursements shall be retained by City as its
property. City shall also be entitled to exercise all of its rights under any Assignment of
Agreements.
To the extent that the right established in this Section involves forfeiture, it must be
strictly interpreted in favor of City, the party for whose benefit it is created. The rights
established in this Section are to be interpreted in light of the fact that City will convey each
Property to the Developer for development and not for speculation.
7. RELOCATION
7.1. Relocation Consultant
Developer represents and warrants that it has engaged the Relocation Consultant
to provide relocation services and assistance to Displaced Persons from the house located on the
Kumar Property, in accordance with the Relocation Plan and all applicable Relocation Laws.
Developer agrees to cooperate with and to coordinate all vacation, demolition, rehabilitation and
construction related activities with the Relocation Consultant, to provide the Relocation
Consultant with copies of all documents related to the operation and management of the Kumar
Property and the tenants occupying the Kumar Property, and to refrain from providing any notice
of termination of tenancy without the prior written approval of the Relocation Consultant and
City.
7.2. Displacement of Existing Tenants
Existing tenants occupying the Kumar Property may be displaced by the Project.
Habitat DDLA 080118 44
Developer agrees to provide such relocation assistance and make such relocation payments as
necessary and required under applicable Relocation Laws. All actions taken in furtherance of
this section shall be approved by the Relocation Consultant and made in accordance with the
Relocation Plan and all applicable Relocation Laws. Developer shall provide to City a relocation
release, in a form reasonably acceptable to City, executed by each occupant of the Kumar
Property displaced by the Project.
7.3. Verification of Tenant Income
In furtherance of the foregoing and as an express obligation of Developer under
this Agreement, Developer shall, or shall cause the Relocation Consultant to, document the
income of all existing Displaced Persons in order to determine eligibility for relocation benefits
and/or assistance and evaluate any other relocation obligations, if any, required by applicable
Relocation Laws with respect to the Project and any Displaced Persons. Developer shall submit
to City and the Relocation Consultant a Tenant Survey Form and all applicable backup
documents and other information. Developer shall provide to City a written acknowledgement
of its concurrence with the Relocation Consultant’s independent survey and evaluation of the
tenants’ eligibility for benefits and/or assistance. City agrees to cooperate in good faith with the
Developer and provide the Developer with pertinent copies of non-privileged documents relating
to such relocation survey and evaluation of the existing tenants.
7.4. City Administers Relocation
City acknowledges that as a public entity under applicable Relocation Laws it is
responsible for administering determinations of eligibility and payments pursuant to the
Relocation Laws, including implementing regulations, and providing relocation payments and
other assistance in connection with the Project pursuant to this Agreement. Notwithstanding the
foregoing, Developer shall (i) comply with all Relocation Laws in connection with its
implementation of the Relocation Plan and the Project; and (ii) in consideration of any lease
buyouts or other consideration given to the tenants of the Kumar Property or any other portion of
the Project, including, without limitation, any relocation payments, obtain from all tenants of the
Kumar Property or any other portion of the Project, a relocation release in such form and
substance as are acceptable to City. However, City reserves the right, in its sole and absolute
discretion, to evaluate, determine, and be satisfied, in the event relocation costs may exceed such
estimate, that sufficient funds are available to comply with all relocation obligations and that the
expenditure of such funds is justified given the overall characteristics and benefits of the Project.
7.5. Relocation Costs
Subject to the terms of this Section, the costs of and financial responsibility for
relocation, including, without limitation, temporary and/or permanent relocation benefits paid to
Displaced Persons, including without limitation any and all attorneys’ fees and court costs
arising or in any way connected with claims for relocation assistance or benefits under applicable
Relocation Laws as may be asserted by any existing or previous owner or tenant of the Kumar
Property or the Project, shall be the responsibility of Developer.
Habitat DDLA 080118 45
7.6. Relocation Indemnity
Developer agrees to indemnify, defend and hold the City Indemnitees harmless
from and against any Claims made by any Displaced Person or other party resulting from, in
connection with, arising out of, or based upon: (i) any action taken in furtherance of the Project
or the transactions contemplated by this Agreement, (ii) any failure by Developer or its agents to
act in accordance with the Relocation Plan, or (iii) any failure to comply with any and all
applicable Relocation Laws. Developer’s agreement to indemnify, defend and hold harmless the
City Indemnitees is in addition to, and in no way shall be construed to limit or replace, any other
obligations or liabilities which Developer may have to City in this Agreement, at common law or
otherwise. The indemnification obligations of Developer hereunder shall survive the termination
or expiration of this Agreement.
8. SALE OF THE AFFORDABLE UNIT
8.1. Completion Pro Forma
Not less than thirty (30) days prior to the sale of the Affordable Unit to a
Qualified Buyer, Developer shall provide an updated Pro Forma referred to herein as the
“Completion Pro Forma”. The Completion Pro Forma shall be in the same format as the
Developer Pro Forma and include updated information concerning the then best estimate of the
fair market value of the Affordable Unit, projected revenue and expenses to sell the Property
(and the components thereto), actual Property construction costs, and the sources and uses of
funding necessary to construct and sell the Property, including a detail of the financing to be
used by Qualified Buyer to purchase the Affordable Unit. The Completion Pro Forma shall be
subject to the reasonable review and approval of City and its consultants. The Evidence of
Financing, final accounting of construction costs, and other information submitted by Developer
shall demonstrate that the Project can be sold in conformance with the Completion Pro Forma.
8.2. Sales; Proceeds
Developer acknowledges that the purpose of the Conveyance and City Loan is to
encourage affordable homeownership among Low Income Households. Pursuant to such
purpose, prior to the sale of the Affordable Unit, Developer agrees to make available, hold for
sale and sell the Affordable Unit at a Gross Affordable Sales Price to a Qualified Buyer
consistent with applicable requirements of this Agreement, the Community Redevelopment Law
and all applicable Governmental Regulations at the time of sale of the Affordable Unit.
Developer covenants and agrees not to convey title to the Affordable Unit to a
Qualified Buyer until all of the conditions set forth in this Article 8 are met. In connection with
the sale of the Affordable Unit, the Qualified Buyer shall obtain a First Mortgage purchase
money deed of trust from Developer (to be approved by City), the principal and interest
payments on which result in an Affordable Housing Cost. Additionally, Developer shall provide
the Habitat Second Mortgage Assistance in an amount equal to the difference between the sales
price of Affordable Unit and the total of the Habitat First Mortgage and the City Third Mortgage
Assistance. City shall provide the City Third Mortgage Assistance in the amount of the Purchase
Price.
Developer represents and warrants that it has included all estimated costs of sale
upon the closing of the sale of the Affordable Unit as part of its Developer Pro Forma and shall
Habitat DDLA 080118 46
be responsible for all closing costs. Developer acknowledges and agrees that the City Third
Mortgage Assistance and Habitat Second Mortgage Assistance shall not result in any cash
proceeds to Developer. Except for the City Loan to Developer, the City Third Mortgage
Assistance to the Qualified Buyer, City shall have no additional obligation to provide any
financial or other assistance to Developer, Qualified Buyer and/or the Project.
8.3. Repayment of City Loan
Upon conveyance of the Affordable Unit to a Qualified Buyer and entry by the
Qualified Buyer into the Third Mortgage Assistance Documents, Developer shall be deemed to
repay $35,000 of the outstanding balance of the City Loan with the proceeds of the City Third
Mortgage Assistance and the balance of the City Loan shall be deemed granted to Developer.
Developer shall require that the Qualified Buyer utilize the City Third Mortgage Assistance in an
aggregate amount equal to the Purchase Price.
8.4. Mortgage Assistance
Upon satisfaction of the conditions set forth in this Section 8, City shall provide to
the Qualified Buyer of the Affordable Unit the City Third Mortgage Assistance in the amount of
the Purchase Price, which such third mortgage loan shall be deemed to repay a portion of the
City Loan with such deemed payment constituting a credit against the outstanding City Loan
amount.
The City Third Mortgage Assistance shall be provided to a Qualified Buyer of the
Affordable Unit in the form contemplated by the appropriate Third Mortgage Assistance
Documents (as defined herein) and secured by the Affordable Unit.
Developer covenants and agrees to sell the Affordable Unit at a Gross Affordable
Sales Price. The terms of the First Mortgage provided by Developer shall be in compliance with
all applicable Governmental Regulations, and shall include, at a minimum (unless prohibited by
Governmental Regulations) that payments shall be based on a thirty (30) year, fixed interest,
fixed payment formula during the Affordability Period. The First Mortgage shall be entered into
concurrently with the sale of the Affordable Unit to a Qualified Buyer.
8.5. Third Mortgage Assistance Documents and Terms
The Qualified Buyer of the Affordable Unit shall be required to execute loan
documents as required by City to document the City Third Mortgage Assistance, such as a loan
agreement, promissory note, agreement of conditions, covenants and restrictions and similar
documents as determined by City in accordance with all applicable Governmental Regulations.
The documents required hereby shall be collectively referred to herein as the “Third Mortgage
Assistance Documents”.
The Third Mortgage Assistance Documents shall document the terms of the Third
Mortgage Assistance in accordance with all applicable Governmental Regulations, and shall
include, at a minimum, the following terms (unless prohibited by Governmental Regulations): (i)
payments shall be deferred during the Affordability Period; (ii) payment may be required due to
breach or sale of the Unit, prior to the expiration of the Affordability Period; (iii) the sale of the
Affordable Unit shall be restricted to sales to Qualified Buyers at a sales price resulting in an
Affordable Housing Cost consistent with the requirements of the Community Redevelopment
Habitat DDLA 080118 47
Law during the Affordability Period; (iv) the City Third Mortgage Assistance may be assumed
by a subsequent Qualified Buyer; (v) upon the expiration of the Affordability Period, all
requirements of the Third Mortgage Assistance Documents shall be deemed satisfied and the
City deed of trust and covenants shall be reconveyed without any payment of funds to City; and
(vi) in the event Developer obtains title to the Affordable Unit prior to the expiration of the
Affordability Period, City shall not be entitled to declare the Third Mortgage Assistance due and
payable.
8.6. Additional Qualified Buyer Requirements
Developer shall sell the Affordable Unit only to a proposed purchaser who
qualifies as a First Time Homebuyer. For purposes of this Agreement and subject to any
changes hereto required by any applicable Governmental Requirement at the time of sale of the
Affordable Unit, “First Time Homebuyer” means (i) a person or group of persons none of
whom has held a present ownership interest in real property during all or any part of the three
years preceding the proposed date of purchase of the Affordable Unit, or (ii) a displaced
homemaker or single parent head of household who does not possess any present ownership
interest in real property. For purposes of this Agreement and subject to any changes hereto
required by any applicable Governmental Requirement at the time of sale of the Affordable Unit,
the term “displaced homemaker” shall mean an adult who has not worked full-time full-year in
the labor force for a number of years but has, during such years, worked primarily without
remuneration to care for the home and family, and who is unemployed or under employed and is
experiencing difficulty in obtaining or upgrading employment. For purposes of this Agreement
and subject to any changes hereto required by any applicable Governmental Requirement at the
time of sale of the Affordable Unit, the term “single parent” shall mean an individual who is
unmarried or legally separated from a spouse and who has one or more minor children for whom
the individual has custody or joint custody, or who is pregnant.
Subject to the requirements of all applicable Governmental Regulations, upon the
sale of the Affordable Unit, any proposed Qualified Buyer must (i) qualify with the appropriate
down payment specific to the underwriting guidelines of the conventional or governmental loan
program applied for; and (ii) have sufficient credit worthiness to qualify for and obtain a first
trust deed financing at a fixed rate of interest. The proposed buyer must be legally residing in
the United States and have appropriate documentation demonstrating such legal residence.
Upon determining that a prospective purchaser is a Qualified Buyer, Developer
may require such proposed Qualified Buyer to make a good faith deposit in an amount not to
exceed $1,000 to be applied towards closing costs provided, however, that such good faith
deposit shall be fully refunded to such prospective purchaser in the event that: (i) Developer
cancels the proposed sale; or (ii) the prospective purchaser cancels the sale later than 60 days
prior to the agreed upon close of escrow for such Affordable Unit.
8.7. Conditions Precedent to City Third Mortgage Assistance
Subject to the terms of this Agreement and all applicable Governmental
Regulations at the time of sale of the Affordable Unit, City agrees to provide to each Qualified
Buyer of an Affordable Unit the City Third Mortgage Assistance, provided that the following
conditions precedent are met:
Habitat DDLA 080118 48
8.7.1. Qualified Buyer
The buyer(s) of the Affordable Unit shall have satisfactorily demonstrated
to Developer and City his/her/their status as a Qualified Buyer in accordance with the terms and
conditions of this Agreement and all applicable Governmental Regulations. City shall have
approved the Qualified Buyer’s loan application and the form in which title is to be held by the
Qualified Buyer(s).
8.7.2. No Default
There shall exist no condition, event or act which would constitute an
Event of Default by Developer hereunder or which, upon the giving of notice or the passage of
time, or both, would constitute an Event of Default by Developer under this Agreement.
8.7.3. First Mortgage and Second Mortgage Assistance
The Qualified Buyer shall have qualified (and provided evidence to City
therefore) for a First Mortgage from Developer in an amount not greater than one hundred
percent (100%) of the Affordable Housing Cost. The terms of the First Mortgage shall comply
with all applicable Governmental Regulations and any additional requirements as may be
reasonably imposed by City. For example, City currently requires that the First Mortgage be a
thirty (30) year fixed interest rate level payment loan. The First Mortgage holder and Habitat
Second Mortgage holder must be ready, willing and able to fund the First Mortgage and enter
into the Second Mortgage loan at the proposed time of the closing of the Qualified Buyer’s
purchase of the Affordable Unit. The First Mortgage loan shall fund concurrently with
Developer’s funding of the Habitat Second Mortgage Assistance, City’s funding of the City
Third Mortgage Assistance and the purchase of the Affordable Unit from the Developer.
8.7.4. Down Payment
The Qualified Buyer shall have deposited into escrow any down payment
as may be required by Developer.
8.7.5. Third Mortgage Assistance Documents
The Qualified Buyer of an Affordable Unit shall have signed and
delivered to City or escrow, as applicable, all applicable Third Mortgage Assistance Documents.
8.7.6. Insurance
The Qualified Buyer shall have provided City with evidence of insurance
on the Affordable Unit in accordance with the applicable Second Mortgage Assistance
Documents.
8.7.7. Sales Contract
City shall have approved the sales contract between Developer and the
Qualified Buyer in the amount of the Gross Affordable Sales Price and such sales contract shall
have been executed by the parties thereto.
8.7.8. Gross Affordable Sales Price; Qualified Buyer
Habitat DDLA 080118 49
Developer shall have demonstrated to City that the Affordable Unit is
being sold to the Qualified Buyer at a Gross Affordable Sales Price.
8.7.9. Homebuyer Education Class
The Qualified Buyer shall have completed a Homebuyer Education Class.
8.7.10. Escrow Instructions
City shall have approved the escrow instructions and settlement statement
with respect to the proposed sale of the Affordable Unit.
8.7.11. Completion Pro Forma
Developer shall have timely submitted and City shall have approved the
Completion Pro Forma.
8.7.12. Release of Construction Covenants
A Release of Construction Covenants shall have been recorded against the
Affordable Unit.
8.8. Developer Obligations for Sale of Affordable Units
Developer covenants and agrees that it shall convey the Property to a Qualified
Buyer within the time set forth in the Schedule of Performance.
9. COVENANTS AND RESTRICTIONS
9.1. Use Covenants
Developer covenants and agrees for itself, its successors, its assigns, and every
successor in interest to the Site or any part thereof, that upon the acquisition of the Site and
during the development and operation of the Project thereafter, Developer shall devote the Site
solely to the uses specified in, and otherwise comply with the terms and conditions of, this
Agreement and the Declaration. All uses conducted on the Site, including, without limitation, all
activities undertaken by the Developer pursuant to this Agreement, shall conform to all
applicable provisions of the Lake Elsinore Municipal Code. Notwithstanding the foregoing,
Developer shall have no liability as a result of any actions by third parties in violation of this
Section.
9.2. Nondiscrimination Covenants
Developer covenants by and for itself that there shall be no discrimination against
or segregation of, any person or group of persons on account of any basis listed in subdivision (a)
or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926,
12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section
12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or
enjoyment of the Site, or any part of it, nor shall the Developer or any person claiming under or
through it, establish or permit any practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants,
Habitat DDLA 080118 50
sublessees, or vendees in the Site, including the Affordable Units, or any portion thereof. The
foregoing covenants shall run with the land.
Notwithstanding the foregoing paragraph, with respect to familial status, the
foregoing paragraph shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in the
foregoing paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and
799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and
Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to the foregoing paragraph.
Developer shall refrain from restricting the sale of the Site, including the
Affordable Units, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code.
All such deeds, leases, contracts or subcontracts shall contain or be subject to substantially the
following nondiscrimination and nonsegregation clauses:
a. In deeds: “In deeds: “The grantee herein covenants by and for
himself or herself, his or her heirs, executors, administrators, and assigns, and all persons
claiming under or through them, that there shall be no discrimination against or segregation of,
any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section
12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of
the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment
of the premises herein conveyed, nor shall the grantee or any person claiming under or through
him or her, establish or permit any practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with
the land.”
Notwithstanding the foregoing paragraph, with respect to familial status,
the foregoing paragraph shall not be construed to apply to housing for older persons, as defined
in Section 12955.9 of the Government Code. With respect to familial status, nothing in the
foregoing paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and
799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and
Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to the foregoing paragraph.
b. In leases: “The lessee herein covenants by and for himself or
herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or
through him or her, and this lease is made and accepted upon and subject to the following
conditions: That there shall be no discrimination against or segregation of any person or group of
persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises
herein leased nor shall the lessee himself or herself, or any person claiming under or through him
or her, establish or permit any such practice or practices of discrimination or segregation with
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reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees,
subtenants, or vendees in the premises herein leased.”
Notwithstanding the foregoing paragraph, with respect to familial status,
the foregoing paragraph shall not be construed to apply to housing for older persons, as defined
in Section 12955.9 of the Government Code. With respect to familial status, nothing in the
foregoing paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and
799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and
Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to the foregoing paragraph.
c. In contracts: “There shall be no discrimination against or
segregation of any person or group of persons, on account of any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926,
12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section
12955.2 of the Government Code, in connection with the performance of this contract nor shall
the contracting party himself or herself, or any person claiming under or through him or her,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants,
contractors, subcontractors or vendees with respect to the premises.”
Notwithstanding the foregoing paragraph, with respect to familial status,
the foregoing paragraph shall not be construed to apply to housing for older persons, as defined
in Section 12955.9 of the Government Code. With respect to familial status, nothing in the
foregoing paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and
799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and
Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to the foregoing paragraph.
9.3. Affordable Housing Covenants
9.3.1. Affordable Housing
Commencing upon and throughout the Affordability Period, Developer
covenants and agrees that the Affordable Unit shall be restricted to sale to Qualified Buyers in
accordance with the provisions of the Declaration.
9.3.2. Qualified Buyer Selection
Developer covenants and agrees to select a Qualified Buyer in accordance
with the Marketing Plan and Selection Plan approved by City in accordance with the Schedule of
Performance. City shall have the right to approve any Qualified Buyers of the Affordable Unit
prior to execution of a purchase and sale agreement between Developer and the Qualified Buyer.
Developer shall submit to City a written Marketing and Selection Plan describing the proposed
purchaser selection policies and criteria for the Affordable Unit, by the time set forth in the
Schedule of Performance. The Marketing and Selection Plan shall be subject to City’s approval
or disapproval thereof in writing. The purchaser selection policies and criteria for the Affordable
Unit shall require that, subject to applicable federal and state fair housing laws, preference be
given first to persons who live or work in the City. In addition, the tenant selection policies and
criteria shall:
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(1) Be consistent with the purpose of providing housing for Low
Income Households;
(2) Be reasonably related to program eligibility and the applicants’
ability to perform the obligations of the mortgage(s);
(3) Provide for the selection of buyers in accordance with a written
plan approved by City.
(4) Give prompt written notification to any rejected applicant of the
grounds for any rejection.
9.3.3. Income of Qualified Buyer of the Affordable Unit; Affordable Housing
Cost
At least thirty (30) days prior to the date required for sale of the
Affordable Unit as is specified in the Schedule of Performance, Developer shall submit to City a
completed income computation and certification form from the prospective buyer(s) of the
Affordable Unit, together with a copy of all back-up supporting information, in such form as
may be requested by City. Developer shall not transfer title to the Affordable Unit to the
prospective buyer(s) until the conditions set forth herein have been satisfied, including the
requirement that Developer has determined and City has confirmed that the buyer is a Qualified
Buyer and Developer has obtained City’s written approval of the completed income computation
and certification and supporting documentation. Developer shall obtain a certification from such
Household purchasing the Affordable Unit demonstrating that such Household is a Low Income
Household and meets the eligibility requirements established for the Affordable Unit such that
the Household qualifies as a Qualified Buyer. Developer shall submit to City a computation
demonstrating that the Affordable Unit will be sold to the prospective buyer(s) at an Gross
Affordable Sales Price resulting in an Affordable Housing Cost to the buyer(s). Developer shall
verify the income certifications and computations.
Developer shall obtain at least one of the following, as appropriate to the
Household of the proposed buyer(s):
a. three (3) paycheck stubs from the proposed purchaser’s three (3) most
recent pay periods (and the same from any other member of the Household eighteen (18) years
old or older);
b. a true copy of an income tax return from the proposed purchaser(s) for the
most recent tax year in which a return was filed (and the same from any other member of the
Household eighteen (18) years old or older);
c. an income verification certification from the employer of the proposed
purchaser(s) and any other member of the Household eighteen (18) years old or older;
d. an income verification certification from the Social Security
Administration and/or the California Department of Social Services if the proposed purchaser(s)
or any other member of the Household eighteen (18) years old or older receives assistance from
such agencies; or
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e. an alternate form of income verification reasonably requested by City if
none of the above forms of verification is available.
9.3.4. Additional Qualified Buyer Requirements
Developer shall sell each Affordable Unit only to a proposed purchaser
who qualifies as a First Time Homebuyer. For purposes of this Agreement and subject to any
changes hereto required by any applicable Governmental Requirement at the time of sale of the
Affordable Units, “First Time Homebuyer” means (i) a person or group of persons none of
whom has held a present ownership interest in real property during all or any part of the three
years preceding the proposed date of purchase of the Affordable Unit, or (ii) a displaced
homemaker or single parent head of household who does not possess any present ownership
interest in real property. For purposes of this Agreement and subject to any changes hereto
required by any applicable Governmental Requirement at the time of sale of the Affordable
Units, the term “displaced homemaker” shall mean an adult who has not worked full-time full-
year in the labor force for a number of years but has, during such years, worked primarily
without remuneration to care for the home and family, and who is unemployed or under
employed and is experiencing difficulty in obtaining or upgrading employment. For purposes of
this Agreement and subject to any changes hereto required by any applicable Governmental
Requirement at the time of sale of the Affordable Unit, the term “single parent” shall mean an
individual who is unmarried or legally separated from a spouse and who has one or more minor
children for whom the individual has custody or joint custody, or who is pregnant.
Subject to the requirements of all applicable Governmental Regulations, in
connection with the purchase of the Affordable Unit, any proposed Qualified Buyer must have
sufficient credit worthiness to qualify for and obtain the First Mortgage financing. The proposed
buyer must be legally residing in the United States and have appropriate documentation
demonstrating such legal residence.
9.3.5. Declaration
Developer shall execute, acknowledge, and deliver to escrow the
Declaration to be recorded with respect to the Site concurrently with the Closing. The
Declaration contains those portions of this Agreement relating to affordable housing
requirements and related matters, and is incorporated herein by this reference. In consideration
of the City Loan and City’s conveyance of the Site to Developer, Developer covenants and
agrees to develop and operate the Project at all times in accordance with the Declaration. A
material breach of the Declaration shall be an Event of Default hereunder.
9.3.6. Conflict with Declaration
In the event of a conflict between this Section and the Declaration, the
provisions of the Declaration shall control.
10. DEFAULTS, REMEDIES AND TERMINATION
10.1. Defaults - General
Subject to the extensions of time approved in writing by the Parties, failure or
delay by either party to timely perform, comply with or observe any of the conditions,
provisions, terms, covenants or representations of this Agreement, after notice and a reasonable
Habitat DDLA 080118 54
opportunity to cure thereof. constitutes a default under this Agreement. As provided herein
below, except for a failure to timely perform under the Schedule of Performance, the party who
so fails or delays must immediately commence to cure, correct or remedy such failure or delay,
and shall complete such cure, correction or remedy with diligence. The injured party shall give
written notice of default to the party in default, specifying the default complained of by the
injured party. Failure or delay in giving such notice shall not constitute a waiver of any default,
nor shall it change the date of default.
Subject to any extensions of time approved in writing by any lender or a force
majeure, failure or delay by Developer to timely perform, comply with or observe any of the
conditions, provisions, terms, covenants or representations of any agreement secured or to be
secured by an interest in the Site, and the expiration of any applicable notice and cure period,
shall constitute a default under this Agreement.
Except as required to protect against further damages, the injured party may not
institute legal proceedings against the party in default until an Event of Default (as such term is
hereinafter defined) has occurred. For purposes of this Agreement, an “Event of Default” for
purposes of instituting legal proceedings by a non-defaulting party against the defaulting party
shall mean a failure to satisfy, timely perform, comply with or observe any of the conditions,
provisions, terms, covenants or representations contained in this Agreement, including any
Attachment, or any agreement secured by an interest in the Site, and except for a failure to timely
perform under the Schedule of Performance, such failure having continued uncured or without
the defaulting party commencing to diligently cure for thirty (30) calendar days after notice
thereof in writing is mailed by the injured party to the defaulting party; provided, however, that if
a different period or notice requirement is specified for any particular default under any other
provision of this Agreement, including any of the Attachments, or any agreement secured by an
interest in the Site, the specific provision shall control; and provided further, that if such failure
is not reasonably capable of being cured within such thirty (30) day or different period, despite
the defaulting party’s good faith and timely efforts, such time as is reasonably necessary to
complete such cure but in no event shall such time exceed one hundred twenty (120) calendar
days after notice thereof is mailed to the defaulting party.
For purposes hereof, failure to timely perform by a date set forth in the
Schedule of Performance shall constitute an Event of Default hereunder, and the non-
defaulting party shall not be required to give written notice of such Event of Default nor
shall the defaulting party be given an opportunity to cure. Notwithstanding the foregoing,
a date for performance as set forth in the Schedule of Performance may be extended in a
writing signed by the parties hereto at any time prior to the occurrence of such date.
10.2. Remedies and Rights of Termination Prior to Conveyance
Prior to Conveyance, the sole remedy of the Parties for an Event of Default shall
be termination. Termination by either Party shall be subject to the conditions set forth below.
10.2.1. Termination by Developer
In the event that:
(A) City does not sign this Agreement within sixty (60) calendar days
after the date of signature by Developer; or
Habitat DDLA 080118 55
(B) Developer does not approve the condition of title to the Site in
accordance herewith or fails to obtain title insurance in compliance herewith despite diligently
pursuing the issuance of such insurance; or
(C) City does not tender Conveyance of the Site, in the manner and
condition, and by the Outside Closing Date, and Developer has fully performed its obligations
hereunder; or
(D) Developer fails after reasonable diligence, to secure the right, upon
acquisition of title and payment of fees, to obtain entitlements, approvals or permits necessary
for the development of the Site pursuant to this Agreement; or
(E) Developer fails after reasonable and timely diligence to secure
sufficient financing for the Project; or
(F) during the Due Diligence Period, the soils and geologic, or any
other condition(s) (all as determined in Developer’s sole and absolute discretion) of the Site are
determined to be not in all respects entirely suitable for the use or uses to which the Site will be
put, and Developer determines that development of the Project is economically infeasible or
otherwise undesirable; or
(G) there is a land use lawsuit (“Challenge”) brought against the
development of the Site in accordance with this Agreement, including a Challenge under state or
federal environmental laws, and said Challenge either legally prevents Developer or City from
performing its obligations under this Agreement, or, if successful, would prevent Developer from
constructing the Improvements in substantially the form contemplated by this Agreement, then
Developer may deliver a notice of such challenge (the “Challenge Notice”) to City requesting
that such impediment to City’s or Developer’s performance of its obligations be eliminated on or
before expiration of the “Minimum Period” provided below. Developer and City shall cooperate
with each other in seeking to diligently resolve the Challenge. During the pendency of the
Challenge, the Developer shall not be obligated to proceed with construction of the
Improvements or any other matters subject to a force majeure delay as a result of such
Challenge, and all deadlines set forth in the Schedule of Performance with respect to such
matters shall be extended during the period of such Challenge. If, prior to expiration of the
Minimum Period, such Challenge is not eliminated or otherwise resolved in a manner which
would permit Developer to construct the Improvements in substantially the form contemplated
by this Agreement, then Developer may, at its option and upon written notice delivered to City
not later than ten (10) calendar days after the expiration of the Minimum Period, terminate this
Agreement. The “Minimum Period” shall mean a period of time commencing upon delivery of
the Challenge Notice and ending one hundred and eighty (180) calendar days from the date of
City’s receipt of the Challenge Notice; or
(H) either City or Developer is prevented from performing their
obligations under this Agreement for an uninterrupted period in excess of one hundred and
eighty (180) calendar days because of an event of force majeure described in this Agreement; or
(I) not all federal, state and local environmental requirements
applicable to the Site, including without limitation, the National Environmental Policy Act of
1969, Public Law 91-190 as amended, 42 U.S.C. §§ 4321-4347 and the California
Habitat DDLA 080118 56
Environmental Quality Act, Public Resources Code § 21000, et seq. have been satisfied as of the
Closing; or
(J) there exists a condition, event or act which constitutes an Event of
Default by City or the City under this Agreement or which, upon the giving of notice or the
passage of time, or both, would constitute an Event of Default by City as of the Closing; or
(K) not all representations and warranties of City herein contained are
true and correct as if made on and as of the Closing;
then this Agreement may, at the option of the Developer, be terminated by
written notice thereof to City as to any Property not conveyed to Developer. Except as otherwise
expressly provided herein, following such termination, neither City nor the Developer shall have
any further rights against or liability to the other under this Agreement as to any Property not
conveyed to Developer or otherwise with respect to the subject matter of this Agreement.
Developer’s indemnification obligations under this Agreement shall remain in force following
such termination with respect to any events occurring or claims accruing prior to the date of such
termination. In the event of the Developer’s exercise of such termination prior to Closing, the
right of termination provided in this Section shall be Developer’s sole and exclusive remedy.
10.2.2. Termination by City
In the event that:
(A) Developer (or any successor in interest) assigns or attempts to
assign this Agreement or any rights in it, or in the Site or any part thereof, except as expressly
permitted herein; or
(B) there is a change in the ownership of Developer, or with respect to
the identity of the parties in control of Developer, or the degree thereof, contrary to the
provisions herein, except as expressly permitted therein; or
(C) Developer does not submit site and elevation plans, insurance
certificates, Evidence of Financing, the Construction Budget, Construction Contract and related
documents, as required by this Agreement, in satisfactory form and in the manner and by the
dates respectively provided in this Agreement; or
(D) There is a Challenge brought against the development of the Site in
the manner contemplated by this Agreement and said Challenge either legally prevents City or
Developer from performing their obligations under this Agreement, or, if successful, would
prevent Developer from constructing the Improvements in substantially the form contemplated
by this Agreement, and this Challenge is not eliminated within one hundred and eighty (180)
calendar days; or
(E) Either City or Developer is prevented from performing its
obligations under this Agreement for an uninterrupted period in excess of one hundred and
eighty (180) calendar days because of a force majeure event described in this Agreement; or
(F) Developer does not take title to the Site on tender of Conveyance
pursuant to this Agreement by the date specified in the Schedule of Performance; or
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(G) Developer secures the right, conditioned only upon acquisition of
title and payment of fees, to obtain permits from governmental agencies as required (including,
but not limited to, the City of Lake Elsinore) necessary for the development of the Site and
nonetheless fails to proceed with development in accordance with the Schedule of Performance;
or
(H) Developer fails despite diligent effort to submit the Evidence of
Financing or to secure the financing necessary for the acquisition, development and operation of
the Project by the date specified in the Schedule of Performance; or
(I) not all federal, state and local environmental requirements
applicable to the Site, including without limitation, the National Environmental Policy Act of
1969, Public Law 91-190 as amended, 42 U.S.C. §§ 4321-4347 and the California
Environmental Quality Act, Public Resources Code § 21000, et seq. have been satisfied as of the
Closing; or
(J) there exists a condition, event or act which resulted in the
termination of, or constitutes an Event of Default by Developer, or which, upon the giving of
notice or the passage of time, or both, would constitute an Event of Default by Developer as of
the Closing; or
(K) not all representations and warranties of Developer herein
contained and contained in this Agreement are true and correct as if made on and as of the
Closing; or
(L) the Closing does not occur by the Outside Closing Date;
then this Agreement may, at the option of the City, be terminated by
written notice thereof to the Developer. Except as otherwise expressly provided herein,
following such termination, neither City nor the Developer shall have any further rights against
or liability to the other under this Agreement or otherwise with respect to the subject matter of
this Agreement. City’s indemnification obligations under this Agreement shall remain in force
following such termination with respect to any events occurring or claims accruing prior to the
date of such termination. In the event of the City’s exercise of such termination prior to Closing,
the right of termination provided in this Section shall be City’s sole and exclusive remedy.
10.3. Remedies of the Parties for Default After Conveyance
10.3.1. Remedies and Damages
If after Conveyance an Event of Default occurs, the nondefaulting party
shall have such rights as are afforded under applicable law, including, without limitation, an
action for specific performance, and the defaulting party will be liable to the other party for any
actual out of pocket damages caused by the default and other relief as is afforded by applicable
law, except as set forth herein. Upon an Event of Default by Developer, City may take such
actions as are permitted by law, including, without limitation, declaration of the entire amount of
the City Loan immediately due and payable.
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10.4. Limitation on Liability
Notwithstanding the foregoing, neither Developer nor City shall in any event be
entitled to, and each hereby waives, any right to seek loss of profits or any special, incidental or
consequential damages of any kind or nature from the other Party arising out of or in connection
with this Agreement or the termination hereof, and in connection with such waiver each Party is
familiar with and hereby waives the provision of Section 1542 of the California Civil Code
which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE WHICH IF KNOWN BY HIM OR
HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.
10.5. Legal Actions
10.5.1. Institution of Legal Actions
In addition to any other rights or remedies and subject to the restrictions
otherwise set forth in this Agreement, either party may institute an action at law or equity to
cure, correct or remedy any Event of Default, to recover damages as provided herein for any
Event of Default, or to obtain any other remedy consistent with the purpose of this Agreement.
Such legal actions may be instituted in the Superior Court of the County of Riverside, State of
California, or in the Federal District Court in the Central District of California.
10.5.2. Applicable Law
The laws of the State of California shall govern the enforcement of this
Agreement.
10.5.3. Acceptance of Service of Process
In the event that any legal action is commenced by Developer against
City, service of process on the City shall be made by personal service upon the City Manager of
City, or in such other manner as may be provided by law.
In the event that any legal action is commenced by City against
Developer, service of process on Developer shall be made by personal service upon any officer,
owner or legal agent of Developer or in such other manner as may be provided by law, whether
made within or without the State of California.
10.6. Rights and Remedies are Cumulative
To the extent permitted by law and except with respect to rights and remedies
expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are
cumulative, and the exercise by either party of one or more of such rights or remedies shall not
preclude the exercise by it, at the same time or different times, of any other rights or remedies for
the same Event of Default or any other Event of Default by the other party.
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10.7. Inaction Not a Waiver of Default
Any failure or delay by either party in asserting any of its rights and remedies as
to any default shall not operate as a waiver of any default or of any such rights or remedies, or
deprive either such party of its right to institute and maintain any actions or proceedings which it
may deem necessary to protect, assert or enforce any such rights or remedies.
10.8. Attorneys’ Fees
In any action between the Parties to interpret, enforce, reform, modify, rescind or
otherwise in connection with any of the terms or provisions of this Agreement, the prevailing
Party in the action or other proceeding shall be entitled, in addition to damages, injunctive relief
or any other relief to which it might be entitled, reasonable costs and expenses including, without
limitation, litigation costs, expert witness fees and reasonable attorneys’ fees.
As used herein, the terms “attorneys’ fees” or “attorneys’ fees and costs” means
the reasonable fees and expenses of counsel to the parties hereto (including, without limitation,
in-house or other counsel employed by City or Developer) which may include printing,
duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals and
others not admitted to the bar but performing services under the supervision of an attorney. The
terms “attorneys’ fees” or “attorneys’ fees and costs” shall also include, without limitation, all
such reasonable fees and expenses incurred with respect to appeals, arbitrations and bankruptcy
proceedings, and whether or not any action or proceeding is brought with respect to the matter
for which said fees and expenses were incurred.
11. GENERAL PROVISIONS
11.1. Notices, Demands and Communications Between the Parties
All notices, demands, requests, elections, approvals, disapprovals, consents or
other communications given under this Agreement shall be in writing (“Notice”) and shall be
given by personal delivery, certified mail, return receipt requested, or overnight guaranteed
delivery service and addressed as follows:
To City: City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: City Manager
To Developer: Habitat for Humanity Inland Valley, Inc.
41615 Winchester Road, Suite 214
Temecula, CA 92591
Attention: Executive Director
Any Notice shall be deemed received immediately if delivered by hand and shall be
deemed received on the third day from the date it is postmarked if delivered by registered or
certified mail.
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11.2. Conflicts of Interest
No member, official or employee of the City shall have any direct or indirect
interest in this Agreement, nor participate in any decision relating to the Agreement which is
prohibited by law.
11.3. Warranty Against Payment of Consideration for Agreement
Developer warrants that it has not paid or given and will not pay or give, any third
person any money or other consideration for obtaining this Agreement, other than normal costs
of conducting business and costs of professional services such as project managers, architects,
engineers, attorneys, and public relations consultants.
11.4. Independent Consideration
City acknowledges that certain conditions and/or contingencies in this Agreement
grant Developer broad discretion to terminate this Agreement. It is the intent of the parties that
this Agreement be binding on all parties and not illusory. Upon the execution of this Agreement,
Developer shall pay to City the sum of $100.00 as independent consideration (the “Independent
Consideration”) for the execution of this Agreement and the granting of such discretion by City.
The Independent Consideration is being paid to, and shall be retained by, City as additional
consideration for this Agreement and not as part of the purchase price. The Independent
Consideration is deemed earned by City as of the Effective Date of this Agreement and is
non-refundable in all events.
11.5. Nonliability of Developer and City Officials and Employees
No member, partner, director, official, employee, representative or agent of the
Developer shall be personally liable to City, or any successor in interest thereof, in the event of
any default or breach by Developer under the terms of this Agreement.
No member, official, employee, representative or agent of City shall be personally
liable to Developer, or any successor in interest thereof, in the event of any default or breach by
City under the terms of this Agreement.
11.6. Approvals by City and Developer
Approvals required of the parties shall be given within the time set forth in this
Agreement, the Schedule of Performance or, if no time is given, within a reasonable time.
Wherever this Agreement requires the City or Developer to approve any contract, document,
plan, proposal, specification, drawing or other matter, such approval shall not be unreasonably
withheld or delayed, unless expressly provided to the contrary.
11.7. Force Majeure; Extension of Times of Performance
Failure by either Party to perform shall not be deemed a default hereunder and
times for performance shall be extended as provided herein where delays are due to war;
insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the
public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation;
governmental restrictions or priority; litigation; unusually severe weather; inability to secure
necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party;
Habitat DDLA 080118 61
acts of failure to act of any public or governmental agency or entity (other than that acts or
failure to act of City, shall not excuse performance by City) or similar causes beyond the control
and without the fault of the Party claiming an extension of time to perform (collectively, a
“Force Majeure” delay); provided, however, that the Party claiming the existence of a Force
Majeure delay and an extension of its obligation to perform shall notify the other Party in writing
of the nature of the matter causing the delay within fifteen (15) Business Days of the occurrence
thereof (including a description of the Force Majeure event causing such conditions and
Developer’s efforts to complete the development of the Project in spite of such conditions).
The lack of funding to complete the development of the Site shall not
constitute grounds of Force Majeure delay pursuant to this Section. Developer expressly
assumes the risk of real estate market conditions, construction costs, interest rates, funding
availability and other similar general economic circumstances that may make funding and/or
construction of the Project difficult, more expensive, or infeasible, whether or not such events or
causes are foreseeable as of the date of this Agreement. Developer acknowledges and agrees that
the provisions of this Section shall not operate to excuse Developer from prompt payment of the
City Loan or other monies when due.
Provided that written Notice is given by the Party seeking an extension of
time pursuant to this provision not later than fifteen (15) Business Days after the occurrence of
the Force Majeure event, the extension of time to perform shall commence to run from the time
of the commencement of the cause and shall continue only for the period of the Force Majeure
delay; provided, however, in no event shall performance be excused pursuant to this Section for
any Force Majeure delay for a cumulative period of more than six (6) months. If said Force
Majeure delay extends for more than six (6) months, either Party may terminate this Agreement
upon fifteen (15) days written notice to the other Party.
Notwithstanding the foregoing, provided that written Notice of the Force
Majeure event was given in a timely manner, Developer may request an extension of its
obligation to complete development of the Project on the Site for up to three (3) additional
months (for a total of up to nine (9) consecutive months, but provided that any extension shall
only be for the period of the Force Majeure delay if the period of such delay is less than three (3)
months) if Developer demonstrates to the reasonable satisfaction of City that solely as a result of
a Force Majeure event, conditions are such that no commercially reasonable person or entity
exercising timely and consistent commercially reasonable best efforts could obtain financing or
complete construction of the Project. Developer shall notify City in writing of its intention to
seek such additional three (3) month period (including a description of the Force Majeure event
causing such conditions and Developer’s efforts to complete the development of the Project in
spite of such conditions) not later than thirty (30) days prior to the expiration of the six (6) month
period specified above. Agency shall notify Developer of its approval or disapproval of such
additional three (3) month period within ten (10) days of the receipt of Developer’s notice.
Times of performance under this Agreement may also be extended in
writing by mutual agreement of City and Developer.
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11.8. Applicable Law; Interpretation
The laws of the State of California shall govern the interpretation of this
Agreement. This Agreement shall be construed as a whole and in accordance with its fair
meaning and as though both of the parties participated equally in its drafting.
11.9. Inspection of Books and Records, Reports
Upon two (2) Business Days prior written notice, City or its designee has the right
at all reasonable times during normal business hours to inspect the books and records and other
related documents of the Developer pertaining to the satisfaction of its obligations hereunder as
reasonably necessary for purposes of enforcing the provisions of this Agreement. Such books,
records and related documents shall be maintained by the Developer at locations as agreed by the
parties. Throughout the term of this Agreement, the Developer shall submit to City reasonable
written progress reports as and when reasonably requested by City on all matters pertaining to
the Project or the Site.
11.10. Administration
This Agreement shall be administered by the City Manager. Whenever a
reference is made in this Agreement to an action, finding or approval to be undertaken by the
City, the City Manager is authorized to act on behalf of the City unless specifically provided
otherwise or the context should require otherwise. The City Manager shall have the authority to
issue interpretations, waive provisions and enter into amendments of this Agreement on behalf of
City, so long as such actions do not substantially change the uses or development permitted on
the Site, or add to the costs of the City as specified herein or as agreed to by the City Council.
Notwithstanding the foregoing, the City Manager may in his or her sole and absolute discretion
refer any matter to the City Council, for action, direction or approval.
11.11. Mutual Cooperation
Each party agrees to cooperate with the other in this transaction and, in that
regard, to sign any and all documents which may be reasonably necessary, helpful or appropriate
to carry out the purposes and intent of this Agreement.
11.12. Ground Breaking and Grand Openings
To insure proper protocol and recognition of the City, the Developer shall
cooperate with City staff in the organization of any Project-related ground breaking, grand
openings or any other such inaugural events/ceremonies sponsored by the Developer and
celebrating the development which is the subject of this Agreement providing City staff with at
least sixty (60 ) calendar days prior written notice of any such event.
11.13. Independent Contractor
The parties agree that the Developer, in the performance of this Agreement shall
act as and be an independent contractor and shall not act in the capacity of an agent, employee or
partner of the City.
11.14. Time
Time is of the essence in this Agreement.
Habitat DDLA 080118 63
11.15. Third Party Beneficiaries
This Agreement is made and entered into for the sole protection and benefit of the
City, and its successors and assigns, and Developer, and its permitted successors and assigns, and
no other person or persons shall have any right of action hereon.
12. ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS
This Agreement includes sixty three (63) pages, two (2) signature pages, and
Attachments A through R which together constitute the entire understanding and agreement of
the Parties. Duplicate originals of this Agreement may be executed, each of which shall be
deemed to be an original. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, and such counterparts shall constitute one and the same instrument.
Except as otherwise provided herein, this Agreement integrates all of the terms and
conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous
agreements between the parties with respect to all or any part of the subject matter hereof. All
waivers of the provisions of this Agreement must be in writing and signed by the appropriate
authorities of City or Developer, and all amendments hereto must be in writing and signed by the
appropriate authorities of the City and Developer.
[END OF TEXT – SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, City and Developer have signed this Disposition,
Development and Loan Agreement as of the date set forth above.
“City”
CITY OF LAKE ELSINORE, a municipal corporation
By: ____________________________________
Grant Yates, City Manager
ATTEST:
By:
Susan M. Domen, MMC, City Clerk
APPROVED AS TO FORM:
By:
Barbara Leibold, City Attorney
[SIGNATURE PAGE TO DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT]
[PAGE 1 OF 2]
“DEVELOPER”
HABITAT FOR HUMANITY INLAND
VALLEY, INC., a California nonprofit public
benefit corporation
By:
Name:____________________________________
Title: _____________________________________
[SIGNATURE PAGE TO DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT]
[PAGE 2 OF 2]
Habitat DDLA 080118 ATTACHMENT A
ATTACHMENT A
LEGAL DESCRIPTION
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
LOT 6, BLOCK 503, AS SHOWN ON THAT CERTAIN MAP ENTITLED SMITH’S
ADDITION TO ELSINORE, WHICH MAP WAS FILED IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA IN BOOK 2 OF
MAPS PAGE(S) 135.
APN: 377-292-027-1
Habitat DDLA 080118 ATTACHMENT B
ATTACHMENT B
SCOPE OF DEVELOPMENT
(Attached)
Habitat DDLA 080118 ATTACHMENT C
ATTACHMENT C
SCHEDULE OF PERFORMANCE
(Attached)
DRAFT
08/01/18
Att C Schedule of Performance 08011812183-0039\2161791v2.doc
ATTACHMENT C
SCHEDULE OF PERFORMANCE
ITEM OF PERFORMANCE TIME FOR PERFORMANCE
1. Closing. On or before September 28, 2018.
2. Disbursement of Loan funds in the amount
of the Purchase Price.
At Closing.
3. Developer pulls building permits. Not more than 200 days after Closing.
4. Developer commences construction of the
Project.
Not later than 45 days after the
Developer obtains building permits.
5. Developer submits to City (i) written
procedures for selection of buyers of the
Affordable Unit, and (ii) a written marketing
and outreach program for solicitation of
Qualified Buyers.
Not later than 60 days after the
Developer obtains building permits.
6. City makes additional Loan disbursements. Within 30 days of request by
Developer.
7. Developer submits to City income and
affordable housing cost computations and
eligibility determination materials for
proposed Qualified Buyer.
At least 45 days prior to sale of
Affordable Unit to Qualified Buyer.
8. Developer completes construction of the
Project.
Within 365 days after the
commencement of construction of the
Project.
9. City issues Release of Construction
Covenants.
Upon satisfactory completion of
construction of the Project, within 10
days of written request of Developer.
10. Developer completes the sale of the
Affordable Unit to a Low Income
Household.
Not later than 90 days after issuance
of a Certificate of Occupancy for the
Affordable Unit.
Habitat DDLA 080118 ATTACHMENT D
ATTACHMENT D
DEVELOPER PRO FORMA
(Attached)
Habitat DDLA 080118 ATTACHMENT E
ATTACHMENT E
GRANT DEED
(Attached)
DRAFT
08/01/18
TO BE RECORDED AND WHEN
RECORDED RETURNED TO:
Habitat for Humanity
Inland Valley, Inc.
41615 Winchester Road, Suite 214
Temecula, CA 92591
Attention: Executive Director
Mail tax statements to return address above.
APN: 377-292-027-1
Documentary Transfer Tax is $_______________
GRANT DEED
For valuable consideration, the receipt of which is hereby acknowledged,
The CITY OF LAKE ELSINORE, a municipal corporation, of the State of California,
(“Grantor”) hereby grants to HABITAT FOR HUMANITY INLAND VALLEY, INC., a
California nonprofit public benefit corporation (“Grantee”), all of its right, title and interest in
and to that certain real property (the “Property”) and described on the attached Exhibit “A”
incorporated herein by this reference. Such Property is and shall remain real property. By this
Grant Deed Grantor is acting under the Community Redevelopment Law of California to carry
out the public purposes of that certain Disposition, Development and Loan Agreement (310 East
Pottery Street) (the “Agreement”), dated August , 2018, and entered into by and between
Grantor and Grantee.
1. The Property is conveyed in accordance with and subject to the Redevelopment
Plan for the Rancho Laguna Redevelopment Project area which was approved and adopted by
the City Council of the City by Ordinance, which Ordinance and Redevelopment Plan are
incorporated by reference and made a part of this Grant Deed. Grantee, its successors, assigns,
and any successor in interest to the Property shall develop, use and maintain the Property subject
to the following:
(a) During construction and thereafter, the Grantee, its successors and assigns
shall devote the Property to the uses specified in the Redevelopment Plan, the Agreement and
this Grant Deed.
2. Title to the Property is conveyed subject to all those exceptions to title of record
or apparent.
Att E Grant Deed 080118
2
3. Grantee agrees to develop and construct, or cause the development and
construction, on the Property, within the time required in the Agreement, improvements
(“Improvements”) consisting of a single family home, all as more specifically provided in the
Agreement (the “Project”).
4. Grantee hereby covenants for itself, its successors, its assigns and every successor
in interest to the Property or any part thereof that prior to recordation of the Release of
Construction Covenants:
(a) Grantee shall have no power to make any total or partial sale, transfer,
conveyance, encumbrance, lease or assignment of the Property or any part thereof without the
prior written consent of Grantor, except to a mortgagee or trustee under a mortgage or deed of
trust or other conveyance permitted by paragraph 4(b) of this Grant Deed or by a purchaser on
foreclosure or to municipal corporations or public utilities or others as owner of easements or
permits to facilitate development of the Property, or except for the sale of the Affordable Unit as
otherwise permitted in the Agreement. In the absence of specific written agreement by Grantor,
no such unauthorized sale, transfer, conveyance or assignment of the Property shall be deemed to
relieve Grantee or any other party from any obligations under this Grant Deed.
(b) Grantee shall not place or suffer to be placed on the Property any lien or
encumbrance other than mortgages, deeds of trust, sale and lease-back or other methods of
financing to finance the Improvements to be constructed on the Property in accordance with the
Agreement. Grantee shall not enter into any such conveyance or financing without the prior
written approval of Grantor.
(c) Grantee shall pay prior to delinquency all real property taxes and
assessments assessed and levied on or against the Property.
(d) Grantee shall remove, or shall have removed, any levy or attachment made
on the Property or shall assure the satisfaction thereof within a reasonable time but in any event
prior to a sale of an Affordable Unit.
Grantee shall cure any violation of the provisions of this paragraph 4 within thirty
(30) days after the date of receipt of written notice of such violation by Grantor to Grantee.
Nothing herein contained shall be deemed to prohibit Grantee from contesting the
validity or amounts of any levy, attachment, tax assessment, encumbrance or lien, nor to limit the
remedies available to Grantee in respect thereto.
5. Prior to recordation of the Release of Construction Covenants for the
Improvements:
(a) Grantor shall have the additional right at its option to re-enter and take
possession of the Property hereby conveyed with all Improvements thereon, and to terminate and
revest in Grantor the Property hereby conveyed to Grantee if Grantee (or its successors in
interest) shall:
(1) Fail to proceed with the construction of the Improvements as
required by the Agreement for a period of three (3) months after written notice thereof from
Att E Grant Deed 080118
3
Grantor, which notice may be given only after expiration of all extensions and postponements to
which Grantee may be entitled or permitted under Section 11.7 (re: Force Majeure) of the
Agreement, the Schedule of Performance and elsewhere in the Agreement;
(2) Abandon or substantially suspend construction of the
Improvements without cause or valid reason for a period of three (3) months after written notice
of such abandonment or suspension from Grantor which may be given only after expiration of all
extensions and postponements to which Grantee may be entitled pursuant to Section 11.7 (re:
Force Majeure) of the Agreement, the Schedule of Performance, and elsewhere in the
Agreement; or
(3) Assign or attempt to assign the Agreement (or any rights therein),
or transfer, or suffer any involuntary transfer of the Property or any part thereof, in violation of
this Grant Deed and the Agreement and such violation shall not be cured within thirty (30) days
after the date of receipt of written notice thereof by Grantor to Grantee.
(b) The right to reenter, repossess, terminate and revest shall be subject to and
be limited by and shall not defeat, render invalid, or limit:
(1) Any mortgage or deed of trust or other security instrument
permitted by the Agreement or approved by Grantor;
(2) Any rights or interests provided in the Agreement for the
protection of the holders of such mortgage, deed of trust, or other security interest.
(c) The right to reenter, repossess, terminate and revest with respect to the
Property as set forth in this paragraph 5 shall terminate when the Release of Construction
Covenants regarding the Improvements to be constructed on the Property under Section 5.20 of
the Agreement has been recorded by Grantee.
(d) In the event title to the Property or any part thereof is revested in Grantor
as provided in this paragraph 5, Grantor shall, pursuant to its responsibilities under California
law, use its best efforts to resell the Property or part thereof as soon and in such manner as
Grantor shall find feasible and consistent with the objectives of such law and of the
Redevelopment Plan to a qualified and responsible party or parties (as determined by Grantor)
who will assume the obligation of making or completing the Improvements or such other
improvements in their stead as shall be satisfactory to Grantor and in accordance with the uses
specified for such property or part thereof in the Agreement or Redevelopment Plan. Upon such
resale of the Property, the proceeds thereof shall be applied:
(1) First, to reimburse Grantor for all direct, actual costs and expenses
incurred by Grantor, including but not limited to: (A) salaries to personnel directly engaged in
(but excluding Grantor's general overhead expense), the recapture, management, and resale of
the Property or any part thereof, (but less any income derived by Grantor from the Property, or
any part thereof in connection with such management); (B) all taxes, assessments and water and
sewer charges with respect to the Property, or part thereof, (or in the event the Property, or any
part thereof, is exempt from taxation or assessment or such charges during the period of
ownership thereof by Grantor, an amount if paid, equal to such taxes, assessments or charges as
Att E Grant Deed 080118
4
determined by the City assessing officials, as would have been payable if the Property, or part
thereof, were not so exempt); (C) any payment made or necessary to be made to discharge or
prevent from attaching any subsequent encumbrances or liens due to obligations incurred with
respect to the making or completion of the Improvements on the Property, or any part thereof;
(D) any expenditures made or obligations incurred with respect to the making or completion of
the improvements or any part of them; and (E) any amounts otherwise owing Grantor by Grantee
or its successor transferee.
(2) Second, to reimburse Grantee, its successor or transferee, up to the
amount equal to (A) the sum of the Purchase Price paid to Grantor by Grantee for the Property;
and (B) the costs incurred by Grantee in connection with the development of the Property, or part
thereof, and for construction of the Improvements thereon, less (C) any gains or income
withdrawn or made by the Grantee from the Property or the improvements;
(3) Third, any balance remaining after such reimbursement will be
retained by Grantor as its property
(e) This right of reverter is to be interpreted in light of the fact that Grantor
hereby conveys the Property to Grantee for development and not for speculation in undeveloped
land.
(f) Grantee herein covenants by and for himself or herself, his or her heirs,
executors, administrators, and assigns, and all persons claiming under or through them, that there
shall be no discrimination against or segregation of, any person or group of persons on account
of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those
bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease,
transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the
grantee or any person claiming under or through him or her, establish or permit any practice or
practices of discrimination or segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein
conveyed. The foregoing covenants shall run with the land.
Notwithstanding the foregoing paragraph, with respect to familial status, the
foregoing paragraph shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in the
foregoing paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and
799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and
Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to the foregoing paragraph.
6. No violation or breach of the covenants, conditions, restrictions, provisions or
limitations contained in this Grant Deed shall defeat or render invalid or in any way impair the
lien or charge of any mortgage, deed of trust or other security instrument permitted by this Grant
Deed and made in good faith and for value; provided, however, that any subsequent owner of the
Property shall be bound by such remaining covenants, conditions, restrictions, limitations and
provisions, whether such owner's title was acquired by foreclosure, trustee's sale or otherwise.
Att E Grant Deed 080118
5
7. Following completion of the Improvements on the Property, and Grantor's
determination that the completed Improvements comply with the Agreement, the Redevelopment
Plan, and the covenants contained herein, Grantor shall record the Release of Constructions
Covenants. Following the recording of said Release of Construction Covenants, the only on-
going obligation hereunder of Grantee, and its successors and assigns, shall be the obligations as
set forth in paragraph 1 hereof, which covenants shall cease and terminate on the termination of
the last to terminate of the Agreement or the Redevelopment Plan, and those covenants in
paragraph 6 hereof, which covenants against discrimination shall remain in perpetuity.
8. All covenants without regard to technical classification or designation shall be
binding on Grantee, its successors and assigns, and for the benefit of Grantor and such covenants
shall run in favor of Grantor for the entire period during which such covenants shall be in force
and effect, without regard to whether Grantor is or remains an owner of any land or interest
therein to which such covenants relate. Grantor, in the event of any breach of any such covenant,
shall have the right to exercise all the rights and remedies, and to maintain any action at law or
suits in equity or other proper proceedings to enforce the curing of such breach.
9. All covenants contained in this Grant Deed shall be construed as covenants
running with the land and not as conditions which might result in forfeiture of title, except for the
covenant and condition contained in paragraph 5 of this Grant Deed.
10. None of the terms, covenants, agreements, or conditions heretofore agreed upon
in writing in other instruments between the parties to this Grant Deed with respect to obligations
to be performed, kept or observed in respect to the Property after this conveyance of the Property
shall be deemed to be merged with this Grant Deed.
11. Both before and after recording of the Release of Construction Covenants, only
Grantor, its successor, and assigns, and Grantee and the successor and assigns of Grantee in and
to all or any part of the fee title to the Property, shall have the right to consent and agree to
changes in, or to eliminate in whole or in part, any of the covenants or other restrictions
contained in this Grant Deed or to subject the Property to additional covenants, easements, or
other restrictions without the consent of any tenant, lessee, easement holder or licensee. The
covenants contained in this Grant Deed without regard to technical classification or designation
shall not benefit or be enforceable by any person, firm, or corporation, public or private, except
Grantor, the City and Grantee and their respective successors and assigns.
Att E Grant Deed 080118
IN WITNESS WHEREOF, Grantor and Grantee have caused this instrument to be
executed on their behalf by their respective officers thereunder duly authorized, as of the date set
forth above.
GRANTOR:
CITY OF LAKE ELSINORE, a municipal
corporation
By:
Grant Yates, City Manager
ATTEST:
By:
Susan M. Domen, MMC, City Clerk
APPROVED AS TO FORM:
By:
Barbara Leibold, City Attorney
[SIGNATURE PAGE TO GRANT DEED]
[PAGE 1 OF 2]
Att E Grant Deed 080118
Grantee hereby accepts and approves each of the covenants, conditions and restrictions
set forth in this Grant Deed.
GRANTEE:
HABITAT FOR HUMANITY INLAND
VALLEY, INC., a California nonprofit
public benefit corporation
By:
Name:
Its:
[SIGNATURE PAGE TO GRANT DEED]
[PAGE 2 OF 2]
Att E Grant Deed 080118
STATE OF CALIFORNIA )
) §
County of )
On , before me, a
Notary Public, personally appeared who proved to me on
the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct
WITNESS my hand and official seal.
________________________________
Signature of Notary (Affix seal here)
A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
Att E Grant Deed 080118
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
LOT 6, BLOCK 503, AS SHOWN ON THAT CERTAIN MAP ENTITLED SMITH’S
ADDITION TO ELSINORE, WHICH MAP WAS FILED IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA IN BOOK 2 OF
MAPS PAGE(S) 135.
APN: 377-292-027-1
Habitat DDLA 080118 ATTACHMENT F
ATTACHMENT F
DECLARATION
(Attached)
DRAFT
08/01/18
RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
)
City of Lake Elsinore )
130 South Main Street )
Lake Elsinore, CA 92530 )
Attention: City Manager )
Project: 310 East Pottery Street )
(Space above for Recorder's Use Only)
This document is exempt from the payment of a recording fee
pursuant to Government Code Section 27383.
DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS
(WITH AFFORDABLE HOUSING COVENANTS)
This DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS
(this “Declaration”) is made as of August , 2018 by and between HABITAT FOR
HUMANITY INLAND VALLEY, INC. a California nonprofit public benefit corporation
(“Borrower”) (together with its permitted successors and assigns, the “Owner”) and the CITY
OF LAKE ELSINORE, a California municipal corporation (“City”).
RECITALS
A. City is a municipal corporation organized and existing under the laws of the State
of California. The City has adopted a Housing Element to its General Plan pursuant to Government
Code § 65580 et seq., which sets forth the City’s policies, goals and objectives to provide housing
to all economic segments of the community, including the preservation and development of
housing affordable to low and moderate income households.
B. The City has succeeded to the housing obligations of the former Redevelopment
Agency of the City of Lake Elsinore (“Agency”), which was established by action of the City
Council pursuant to Chapter 2 of the California Community Redevelopment Law (Health & Safety
Code § 33000 et seq.). The City’s purposes as housing successor include increasing, improving
and preserving the community’s supply of housing affordable to and occupied by low and
moderate income households pursuant to §§ 33334.2, 33334.3, 33334.6 and 33413 of the
Community Redevelopment Law.
C. In its capacity as housing successor, City holds funds in the Low and Moderate
Income Housing Asset Fund (“LMIHAF”) and other funds for, among other things, the purposes
of increasing, improving and preserving the community’s supply of affordable housing for
occupancy at affordable rent or affordable cost by low and moderate income households in the
City.
D. Concurrently herewith, City and Owner have entered into that certain Disposition,
Development and Loan Agreement (310 East Pottery Street) (the “DDLA”), which is incorporated
herein by this reference and copies of which are on file as public record of the City at its offices
located at 130 South Main Street, Lake Elsinore, CA 92530. Pursuant to the DDLA, City has
Att F Declaration 080118 2
agreed to provide financial assistance (the “City Loan”) to Owner in connection with its
acquisition and development of certain real property located at 310 East Pottery Street, City of
Lake Elsinore (“Property”) as described in the legal description attached as Attachment A (the
“Legal Description”). All capitalized terms not defined herein shall have the meaning set forth
in the DDLA.
E. As a result of the satisfaction of certain conditions set forth in the DDLA, Owner
now holds title to the Property. As a condition to the conveyance of the Property and the
disbursement of the City Loan, Owner has agreed to develop the Property in accordance with
certain covenants, conditions and restrictions as set forth herein. This Declaration is intended to
ensure that Owner, its successors and assigns, and every successor in interest to the Property or
any part thereof, shall develop the Property in accordance with the terms and conditions of this
Declaration and improve the Property by, among other things, moving a single family home onto
the Property and rehabilitating the home into a two bedroom, one bath single family home,
relocating the current occupants of the home in accordance with applicable law, and constructing
any ancillary improvements, structures, and/or facilities used in connection therewith (collectively,
the “Project”). The Property and the single family home relocated to the Property and renovated
in connection with the Project shall be referred to herein as the “Affordable Unit”.
F. The newly constructed single family home to be constructed on the Property shall
be held for sale and sold to a Low Income Household at a Gross Affordable Sales Price. The
Affordable Unit shall be restricted to sale to a Low Income Household at a Gross Affordable Sales
Price for at least a forty five (45) year restriction period pursuant to the terms hereof.
G. The transfer of the Property, provision of the City Loan to Owner and the
development of the Property pursuant to the terms and conditions of the DDLA and this
Declaration are in the vital and best interests of City and the health, safety and welfare of its
residents, and are in accord with the public purposes and provisions of applicable state and local
laws, including (without limitation) the City’s replacement and inclusionary housing obligations
pursuant to § 33413 of the Community Redevelopment Law.
AGREEMENT
NOW, THEREFORE, the parties hereto agree and covenant as follows:
ARTICLE I
NONDISCRIMINATION
Section 1. Nondiscrimination. Owner covenants by and for itself and any successors
in interest that there shall be no discrimination against or segregation of, any person or group of
persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government
Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the Property or the Affordable Unit, or
any part of it, nor shall the Owner or any person claiming under or through it, establish or permit
any practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property,
Att F Declaration 080118 3
including the Affordable Unit, or any portion thereof. The foregoing covenants shall run with the
land.
Notwithstanding the foregoing paragraph, with respect to familial status, the foregoing
paragraph shall not be construed to apply to housing for older persons, as defined in Section
12955.9 of the Government Code. With respect to familial status, nothing in the foregoing
paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the
Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360
of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall
apply to the foregoing paragraph.
Section 2. Nondiscrimination Clauses. Owner shall refrain from restricting the sale of
the Property, including the Affordable Unit, on account of any basis listed in subdivision (a) or (d)
of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code. All such deeds, leases, contracts or subcontracts shall contain or be subject to
substantially the following nondiscrimination and nonsegregation clauses:
a. In deeds: “In deeds: “The grantee herein covenants by and for himself or herself,
his or her heirs, executors, administrators, and assigns, and all persons claiming under or through
them, that there shall be no discrimination against or segregation of, any person or group of persons
on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code,
as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall
the grantee or any person claiming under or through him or her, establish or permit any practice or
practices of discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed.
The foregoing covenants shall run with the land.”
Notwithstanding the foregoing paragraph, with respect to familial status, the foregoing
paragraph shall not be construed to apply to housing for older persons, as defined in Section
12955.9 of the Government Code. With respect to familial status, nothing in the foregoing
paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the
Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360
of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall
apply to the foregoing paragraph.
b. In leases: “The lessee herein covenants by and for himself or herself, his or her
heirs, executors, administrators and assigns, and all persons claiming under or through him or her,
and this lease is made and accepted upon and subject to the following conditions: That there shall
be no discrimination against or segregation of any person or group of persons, on account of any
basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of
Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing,
transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee
himself or herself, or any person claiming under or through him or her, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection, location,
Att F Declaration 080118 4
number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises
herein leased.”
Notwithstanding the foregoing paragraph, with respect to familial status, the foregoing
paragraph shall not be construed to apply to housing for older persons, as defined in Section
12955.9 of the Government Code. With respect to familial status, nothing in the foregoing
paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the
Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360
of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall
apply to the foregoing paragraph.
a. In contracts: “There shall be no discrimination against or segregation of any person
or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in connection with the performance of this contract nor shall the contracting party himself or
herself, or any person claiming under or through him or her, establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location, number, use,
or occupancy of tenants, lessees, sublessees, subtenants, contractors, subcontractors or vendees
with respect to the premises.”
Notwithstanding the foregoing paragraph, with respect to familial status, the foregoing
paragraph shall not be construed to apply to housing for older persons, as defined in Section
12955.9 of the Government Code. With respect to familial status, nothing in the foregoing
paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the
Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360
of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall
apply to the foregoing paragraph.
The covenants in this Article I shall run with the Property in perpetuity.
ARTICLE II
GENERAL DUTIES OF OWNER
Section 1. Maintenance. Owner, or its successor in interest, shall maintain the
Property and all of the improvements thereon, including the Affordable Unit, in good condition in
accordance with the terms and conditions of the DDLA and in conformity with all applicable
Governmental Regulations, including, without limitation, the City of Lake Elsinore Municipal
Code. The Owner, or its successor in interest, shall keep the Property and the Affordable Unit free
from graffiti and from any accumulation of debris or waste materials and shall maintain the
landscaping in good condition.
Section 2. No Nuisance. Owner shall not maintain, cause to be maintained, or allow
to be maintained on or about the Property any public or private nuisance, including without
limitation, the conduct of criminal activities set forth in the nuisance abatement provisions of the
Uniform Controlled Substances Act (Health & Safety Code Sections 11570, et seq.) or the Street
Terrorism Enforcement and Prevention Act (Penal Code Sections 186.22 et seq.) or any successor
statute or law.
Att F Declaration 080118 5
Section 3. Construction of the Project. Owner shall complete the relocation of a single
family home onto the Property and the rehabilitation of the home into a two bedroom, one bath
single family home, and construction of any ancillary improvements, structures, and/or facilities
used in connection therewith in a timely manner and in accordance with the DDLA and all
applicable laws, regulations and entitlements. No demolition or construction activities shall be
undertaken on the Property without a validly issued building permit in accordance with the
requirements of the City of Lake Elsinore Municipal Code.
Section 4. No Hazardous Materials Activity. Owner shall not engage in any
Hazardous Materials Activity in violation of Environmental Laws and shall comply with all
Governmental Regulations in connection with the development and operation of the Project.
In addition, Owner shall take all necessary precautions to prevent the release into the
environment of any Hazardous Materials which are located in, on or under the Property in violation
of Environmental Laws. Such precautions shall include compliance with all Governmental
Regulations with respect to any Hazardous Materials. In addition, Owner shall install and utilize
such equipment and implement and adhere to such procedures as are consistent with commercially
reasonable standards with respect to the disclosure, storage, use, removal and disposal of
Hazardous Materials. Notwithstanding the foregoing, this Declaration shall not prohibit the use
of such products in quantities as are customarily used in the construction, maintenance,
rehabilitation or management of residential developments or associated buildings and grounds, or
used in residential activities in a manner typical of other comparable residential developments, or
substances commonly ingested by a significant population living within the Project including
without limitation alcohol, aspirin, tobacco and saccharine.
ARTICLE III
AFFORDABLE HOUSING OBLIGATIONS OF OWNER
Section 1. Affordable Unit. Owner acknowledges that the purpose of the City Loan is
to encourage affordable homeownership among Low Income Households. Pursuant to such
purpose, Owner covenants and agrees to make available and sell the Affordable Unit constructed
on the Property to a Low Income Household consistent with applicable requirements of the DDLA,
the Community Redevelopment Law and this Declaration. It is the intent of City that the
Affordable Unit qualify as replacement housing and inclusionary housing pursuant to § 33413 of
the Community Redevelopment Law in furtherance of the City’s affordable housing goals and
objectives and the requirements resulting from anticipated projects including demolition and new
construction within the territorial jurisdiction of the City.
For purposes hereof, “Low Income Household” means a Household whose
aggregate gross income is less than eighty percent (80%) of AMI, adjusted for family size
appropriate to the unit. The term “adjusted for family size appropriate to the unit” shall have the
meaning set forth in Health and Safety Code Section 50052.5(h) or its successor statute(s). “Gross
income” shall be determined in accordance with Section 6914 of Title 25 of the California Code
of Regulations.
Section 2. Sale of Affordable Unit. Owner covenants and agrees to make available
and sell the Affordable Unit at a Gross Affordable Sales Price solely to a Qualified Buyer who is
Att F Declaration 080118 6
also a Low Income Household consistent with applicable requirements of the DDLA and the
Community Redevelopment Law.
For purposes hereof, “Affordable Housing Cost” means (i) with regard to
Qualified Buyers whose gross income is less than 70% of Area Median Income adjusted for family
size appropriate to the unit, Affordable Housing Cost shall mean Affordable Monthly Housing
Expenses that do not exceed the product of 30% times 70% of Area Median Income adjusted for
family size appropriate to the unit, or (ii) with regard to Qualified Buyers whose gross income
equals or exceeds 70% of Area Median Income adjusted for family size appropriate to the unit,
Affordable Housing Cost shall mean Affordable Monthly Housing Expenses that do not exceed
the product of 30% times the actual monthly gross income of the Qualified Buyers. As used in
this definition, “family size appropriate to the unit” shall equal the number of bedrooms in the
Affordable Unit plus one. Notwithstanding the foregoing, “Affordable Housing Cost” shall have
the meaning set forth in and be interpreted in accordance with Section 50052.5 of the California
Health and Safety Code or its successor statute(s).
For purposes hereof, “Affordable Monthly Housing Expenses” means monthly
housing expenses that include all of the following associated with the Affordable Unit, estimated
or known as of the date of the proposed purchase of the Affordable Unit: (i) principal and interest
payments on a mortgage loan(s) including any loan insurance or fees associated therewith (a first
lien mortgage loan is required hereunder to bear a fixed rate of interest and require level payments
throughout its term); (ii) property taxes and assessments; (iii) fire and casualty insurance covering
replacement value of property improvements; (iv) any homeowner association fees; (v) a
reasonable utility allowance; and (vi) property maintenance and repairs.
For purposes hereof, “Gross Affordable Sales Price” means the sales price of the
Affordable Unit to be paid by the total of (i) the amount of a First Mortgage which results in an
Affordable Housing Cost to the Qualified Buyer, plus (ii) the amount of the down payment to be
made by the Qualified Buyer, plus (iii) the City Second Mortgage Assistance, plus (iv) the
proceeds of any other funds or subsidy received by the Qualified Buyer, provided that City has
approved such funds and the terms thereof. The Gross Affordable Sales Price shall be equal to the
Fair Market Value of the Property at the time of sale.
For purposes hereof, “Qualified Buyer” means a Household (a) whose income does
not exceed the income set forth herein for a Low Income Household; (b) whose members qualify
as a First Time Homebuyer; and (c) whose members meet the other requirements set forth herein
for buyers of an Affordable Unit, including, without limitation, the requirement that the buyer(s)
agree to occupy the Affordable Unit as their principal residence and restrict the sale of the
Affordable Unit to Eligible Purchasers at an Affordable Resale Price for the Affordability Period.
Section 3. Selection of Buyers. Owner shall be responsible for the selection of buyers
for the Affordable Unit constructed on the Property in accordance with the terms of the DDLA.
Owner shall develop and submit to the City a written procedure for selection of buyers which,
upon approval by City, shall be implemented by Owner. To the extent permitted by law,
preference shall be given first to buyers who have been displaced by redevelopment activities by
the Agency or City in the implementation of the Redevelopment Plan, and second to households
who currently reside or are employed in the City of Lake Elsinore. Owner shall submit a written
marketing and outreach program to City for City approval. Owner shall use commercially
Att F Declaration 080118 7
reasonable best efforts to sell the Affordable Unit in accordance with the approved marketing and
outreach program and the approved home buyer selection program.
Section 5. Income of Buyers. At least forty five (45) days prior to the proposed close
of escrow for the sale of the Affordable Unit, Owner shall submit to City a completed income
computation and certification form from the prospective buyer of the Affordable Unit, together
with a copy of all back-up supporting information, in such form as may be requested by City. Such
forms shall include evidence that the buyer has obtained a first mortgage commitment in such
amount and meeting such terms as set forth in the DDLA. Owner shall not transfer title to the
Affordable Unit to the prospective buyer until City has confirmed that the buyer is a Qualified
Buyer and Owner has obtained City’s written approval of the completed income computation and
certification and supporting documentation. Owner shall obtain a certification from the Qualified
Buyer purchasing the Affordable Unit demonstrating that such household is a Low Income
Household and meets the eligibility requirements established for the Affordable Unit such that the
buyer qualifies as a Qualified Buyer. Owner shall submit to City a computation demonstrating
that the Affordable Unit will be sold to the prospective buyer at a Gross Affordable Sales Price
resulting in an Affordable Housing Cost to the buyer. Owner shall verify the income certifications
and computations as set forth below.
a. Owner shall obtain at least one of the following, as appropriate to
the Household of the proposed buyer:
b. three (3) paycheck stubs from the proposed purchaser’s three (3)
most recent pay periods (and the same from any member of the Household over 18 years of age);
c. a true copy of an income tax return from the proposed purchaser for
the most recent tax year in which a return was filed (and the same from any member of the
Household over 18 years of age);
d. an income verification certification from the employer of the
proposed purchaser (and any member of the Household over 18 years of age);
e. an income verification certification from the Social Security
Administration and/or the California Department of Social Services if the proposed purchaser or
any member of the Household over 18 years of age receives assistance from such agencies; or
f. an alternate form of income verification reasonably requested by
City if none of the above forms of verification is available.
Section 6. First Time Homebuyers. Owner shall sell the Affordable Unit only to a
third party purchaser who qualifies as a First Time Homebuyer. For purposes of this Declaration,
“First Time Homebuyer” means (i) a person or group of persons none of whom has held a present
ownership interest in real property during all or any part of the three years preceding the proposed
date of purchase of the Affordable Unit, or (ii) a displaced homemaker or single parent head of
household who does not possess any present ownership interest in real property. For purposes of
this Declaration, the term “displaced homemaker” shall mean an adult who has not worked full-
time full-year in the labor force for a number of years but has, during such years, worked primarily
without remuneration to care for the home and family, and who is unemployed or under employed
Att F Declaration 080118 8
and is experiencing difficulty in obtaining or upgrading employment. For purposes of this
Declaration, the term “single parent” shall mean an individual who is unmarried or legally
separated from a spouse and who has one or more minor children for whom the individual has
custody or joint custody, or who is pregnant.
Section 7. Term of Covenants. Owner covenants and agrees to restrict the resale of
the Affordable Unit to resale exclusively to Qualified Buyers who are Low Income Households
until such date as is forty five (45) years from the date of the initial sale of each Affordable Unit
by Owner.
Section 8. Owner Occupancy. Owner covenants and agrees that the Affordable Unit
shall be restricted to occupancy by the owners of the Affordable Unit in accordance with the
DDLA. Owner covenants and agrees to disclose such restriction to buyers of the Affordable Unit
and obtain written acknowledgement and agreement that Owner shall occupy the Affordable Unit
as its principal residence during the first forty five (45) years from the date of the initial sale of the
Affordable Unit by Owner.
ARTICLE IV
ENFORCEMENT
Section 1. Remedies. Subject to the notice and cure rights of the Owner set forth in
the DDLA, in the event of default or breach of any of the terms or conditions of this Declaration
by Owner, its heirs, executors, administrators or assigns, City may pursue the remedy thereof by
any and all means of enforcement, both in equity and at law, as provided by the laws of the State
of California, including, but not limited to, injunctive relief and/or specific performance.
Performance of the obligations set forth herein is secured by a deed of trust recorded against the
Property concurrently herewith.
By way of example and not limitation, if any default, breach or violation is
not cured to the satisfaction of City within the applicable cure period, City may declare a default
hereunder and may take any one or more of the following actions:
(a) Collect all rents and income in connection with the operation
or sale of the Project, if any, and use the same and the reserve funds for the construction, sale,
operation and maintenance of the Project.
(b) Take possession of the Project and bring any action
necessary to enforce any rights of the Owner growing out of the construction or sale of the Project,
and construct and sell the Project in accordance with the terms of this Declaration until such time
as City, in its sole discretion, shall determine that the Owner is again in a position to resume
construction and sale of the Project in accordance with the terms of this Declaration.
(c) Apply to any court, state or federal, for specific performance
of this Declaration or for the appointment of a receiver to take over and construct, operate and sell
the Project in accordance with the terms of this Declaration, or for such other relief as may be
appropriate. It is agreed by the Owner that the injury to City arising from a default under any of
the terms of this Declaration would be irreparable and that the amount of compensation which
would provide adequate relief to City, in light of the purposes and requirements of the programs
Att F Declaration 080118 9
applicable to the Project (such as the laws applicable to the use of LMIHAF monies), would be
impossible to ascertain.
(d) Accelerate all amounts, including outstanding principal and
interest, due under the terms of the City Loan Documents and demand immediate repayment
thereof. Upon a failure to repay such accelerated amount in full, the City Loan Documents provide
that City may proceed with a foreclosure or sale under the power of sale in accordance with the
provisions of the Deed of Trust and state law regarding foreclosures.
(e) Seek such other appropriate remedies as may be available
under the law.
In the event that the breach or violation involves selling the Property for a
price in excess of a Gross Affordable Sales Price or other charges in excess of those permitted
under this Declaration, City may demand the return of such excess proceeds or other charges to
the affected households.
The remedies of City hereunder and under the other City Loan Documents
are cumulative, and the exercise of one or more of such remedies shall not be deemed an election
of remedies and shall not preclude the exercise by City of any one or more of its other remedies.
Section 2. Rights of City. As a party to this Declaration, City is entitled to the
following rights:
a. City has the right, but not the obligation, to enforce all of the
provisions of this Declaration.
b. Any amendment to the Declaration shall require the written consent
of City.
c. This Declaration does not in any way infringe on the right or duties
of the City of Lake Elsinore to enforce any of the provisions of the City of Lake Elsinore Municipal
Code including, but not limited to, the abatement of dangerous buildings.
Section 3. Cumulative Remedies. The remedies herein provided for breach of the
covenants contained in this Declaration shall be deemed cumulative, and none of such remedies
shall be deemed exclusive.
Section 4. Failure to Enforce. The failure to enforce any of the covenants contained
in this Declaration shall not constitute a waiver of the right to enforce the same thereafter.
Section 5. Third Party Beneficiary. This Declaration is made and entered into for the
sole protection and benefit of the City of Lake Elsinore and its respective successors and assigns,
and Owner, and its permitted successors and assigns, and no other person or persons shall have
any right of action hereon.
Att F Declaration 080118 10
ARTICLE V
GENERAL PROVISIONS
Section 1. Severability. Invalidation of any one of these covenants or restrictions by
judgment or court order shall in no way affect any other provisions which shall remain in all force
and effect.
Section 2. Construction. The provisions of this Declaration shall be liberally
construed for the purpose of developing and maintaining the Property and restricting the sale of
the Affordable Unit thereon in accordance with this Declaration and the Agreement. The article
and section headings have been inserted for convenience only, and shall not be considered or
referred to in resolving questions of interpretation or construction.
Section 3. Amendments. This Declaration may be amended only by the written
agreement of Owner and City.
Section 4. Notices. Any notice permitted or required to be delivered as provided
herein from one party to another shall be in writing and may be delivered either personally or by
first-class or registered mail. If delivery is made by mail, it shall be deemed to have been delivered
seventy-two (72) hours after a copy of same has been deposited in the United States Mail, postage
prepaid. Notices to Owner shall be sent to Habitat for Humanity Inland Valley, Inc., 41615
Winchester Road, Suite 214, Temecula, CA 92591, Attn: Executive Director. Notices to City
shall be sent to City at 130 South Main Street, Lake Elsinore, California 92530, Attention: City
Manager. Such addresses may be changed from time to time by notice in writing, which shall be
made by certified mail to the other party in accordance with this Section 4.
Section 5. Term of Declaration. It is the intent of the Parties that this Declaration be
released upon the conveyance of title by Owner of the Affordable Unit to a third party purchaser
that constitutes a Qualified Buyer, provided that concurrently with the transfer of title of the
Affordable Unit to a Qualified Buyer, another declaration of covenants, conditions and restrictions
containing resale and other restrictions applicable to such Qualified Buyer of the Affordable Unit
is recorded in the place of this Declaration.
[Signatures on Next Page]
Att F Declaration 080118
IN WITNESS WHEREOF, City and Owner have executed this Declaration as of the
date set forth above.
CITY:
CITY OF LAKE ELSINORE, a municipal
corporation
By:
Grant Yates, City Manager
ATTEST:
By:
Susan M. Domen, MMC, City Clerk
APPROVED AS TO FORM:
By:
Barbara Leibold, City Attorney
[DECLARATION SIGNATURE PAGE 1 OF 2]
Att F Declaration 080118
OWNER:
HABITAT FOR HUMANITY INLAND
VALLEY, INC., a California nonprofit public
benefit corporation
By:
Name:
Its:
[DECLARATION SIGNATURE PAGE 2 OF 2]
Att F Declaration 080118 Exhibit “A”
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
LOT 6, BLOCK 503, AS SHOWN ON THAT CERTAIN MAP ENTITLED SMITH’S
ADDITION TO ELSINORE, WHICH MAP WAS FILED IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA IN BOOK 2 OF
MAPS PAGE(S) 135.
APN: 377-292-027-1
Att F Declaration 080118
STATE OF CALIFORNIA )
) §
County of )
On , before me, a
Notary Public, personally appeared who proved to me on
the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct
WITNESS my hand and official seal.
Signature of Notary (Affix seal here)
A notary public or other officer completing
this certificate verifies only the identity of
the individual who signed the document to
which this certificate is attached, and not
the truthfulness, accuracy, or validity of
that document.
Att F Declaration 080118
STATE OF CALIFORNIA )
) §
County of )
On , before me, a
Notary Public, personally appeared who proved to me on
the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct
WITNESS my hand and official seal.
Signature of Notary (Affix seal here)
A notary public or other officer completing
this certificate verifies only the identity of
the individual who signed the document to
which this certificate is attached, and not
the truthfulness, accuracy, or validity of
that document.
Habitat DDLA 080118 ATTACHMENT G
ATTACHMENT G
NOTICE OF AFFORDABILITY RESTRICTIONS
(Attached)
DRAFT
08/01/18
RECORDING REQUESTED BY, AND )
WHEN RECORDED MAIL TO: )
)
City of Lake Elsinore )
130 South Main Street )
Lake Elsinore, CA 92530 )
Attention: City Manager )
Project: 310 East Pottery Street ) SPACE ABOVE THIS LINE FOR RECORDER’S USE
This document is exempt from recording fees
pursuant to Government Code Section 27383
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
Notice is hereby given that certain real property located at 310 East
Pottery Street, in the City of Lake Elsinore, County of Riverside, State of
California, and known as Assessor’s Parcel Number 377-292-027-1, as more
particularly described in Exhibit “A” attached hereto and incorporated herein
by reference, is subject to certain affordability covenants and restrictions
identified in that certain Declaration of Covenants, Conditions and
Restrictions (“Declaration”) dated as of August , 2018, made by and
between CITY OF LAKE ELSINORE, a California municipal corporation
(“City”), and HABITAT FOR HUMANITY INLAND VALLEY, INC., a
California nonprofit public benefit corporation (“Developer”), recorded
concurrently herewith and incorporated herein by this reference. The
affordability covenants and restrictions will expire on the forty-fifth (45th)
anniversary of the recording of the grant deed conveying the property to a
third party purchaser.
This notice is prepared for notice and recordation purposes only, and
in no way modifies the terms, conditions, provisions and covenants set forth
in the Declaration. In the event of any inconsistency between the terms,
conditions, provisions and covenants set forth in the Declaration and this
notice, the terms, conditions, provisions and covenants set forth in the
Declaration shall prevail.
[SIGNATURE PAGE FOLLOWS]
2
Att G Notice of Afford Rest 080118
IN WITNESS WHEREOF, the parties have duly executed this
Notice of Affordability Restrictions on Transfer of Property.
CITY OF LAKE ELSINORE, a
municipal corporation
By:
Grant Yates, City Manager
ATTEST:
By:
Susan M. Domen, MMC, City Clerk
APPROVED AS TO FORM:
By:
Barbara Leibold, City Attorney
[SIGNATURE PAGE TO NOTICE OF AFFORDABILITY RESTRICTIONS]
[PAGE 1 OF 2]
3
Att G Notice of Afford Rest 080118
“DEVELOPER”
HABITAT FOR HUMANITY
INLAND VALLEY, INC., a
California nonprofit public benefit
corporation
By:
Name:
Its:
[SIGNATURE PAGE TO NOTICE OF AFFORDABILITY RESTRICTIONS]
[PAGE 2 OF 2]
Att G Notice of Afford Rest 080118
EXHIBIT “A”
LEGAL DESCRIPTION OF THE PROPERTY
Real property in the City of Lake Elsinore, County of Riverside, State of
California, described as follows:
LOT 6, BLOCK 503, AS SHOWN ON THAT CERTAIN MAP ENTITLED
SMITH’S ADDITION TO ELSINORE, WHICH MAP WAS FILED IN
THE OFFICE OF THE RECORDER OF THE COUNTY OF RIVERSIDE,
STATE OF CALIFORNIA IN BOOK 2 OF MAPS PAGE(S) 135.
APN: 377-292-027-1
Att G Notice of Afford Rest 080118
STATE OF CALIFORNIA )
) §
County of )
On , before me,
a Notary Public, personally appeared who
proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct
WITNESS my hand and official seal.
Signature of Notary (Affix seal here)
A notary public or other officer completing
this certificate verifies only the identity of the
individual who signed the document to which
this certificate is attached, and not the
truthfulness, accuracy, or validity of that
document.
Habitat DDLA 080118 ATTACHMENT H
ATTACHMENT H
LIST OF DUE DILIGENCE REPORTS
(Attached)
Habitat DDLA 080118 ATTACHMENT I
ATTACHMENT I
RIGHT OF ENTRY AGREEMENT (DUE DILIGENCE)
(Attached)
Habitat DDLA 080118 ATTACHMENT J
ATTACHMENT J
ESCROW INSTRUCTIONS
(Attached)
DRAFT
08/01/18
Escrow Instructions 080118 1
SELLER’S
CLOSING INSTRUCTIONS
August , 2018
Ms. Tracy Hales, President
Chardonnay Escrow
44025 Margarita Road, Suite 101
Temecula, CA 92592
Mr. Dan Dulin
Chicago Title Company
560 E. Hospitality Lane
San Bernardino, CA 92408
Re: Escrow Number: 030238-TH
Title Number: 7101802996-DD
Property Address: 310 East Pottery Street, Lake Elsinore, CA
Buyer(s): Habitat for Humanity Inland Valley
Seller: City of Lake Elsinore
Contract: Disposition, Development and Loan Agreement dated
August , 2018
Dear Ms. Hales and Mr. Dulin:
We hereby provide you (“Escrow and Title Agent”) with supplemental escrow
instructions from the City of Lake Elsinore (“Seller”) with respect to the purchase of the above-
captioned Property by Habitat for Humanity Inland Valley (“Habitat” or “Buyer”), which
transaction is more particularly described in that certain Disposition, Development and Loan
Agreement dated August , 2018 (“DDLA”). Pursuant to the DDLA, Buyer is purchasing the
Property for a purchase price of Thirty Five Thousand Dollars ($35,000) (“Purchase Price”). In
payment of the Purchase Price, Buyer shall execute and deliver to escrow various funds and
documents as described herein.
Buyer will also receive a construction loan from the County of Riverside (“Lender”) in
the amount of Two Hundred Ninety One Thousand Dollars ($291,000) (the “First Priority
Loan”). In consideration of the First Priority Loan, Buyer shall execute and deliver to escrow
various documents described herein.
Buyer has executed, or is about to execute, a promissory note(s) (the “First Priority
Note”) in the amount of the First Priority Loan, in favor of Lender evidencing the First Priority
Escrow Instructions 080118 2
Loan to Buyer. The First Priority Note is to be secured by a first priority deed of trust (the “First
Priority Deed of Trust”), to be executed by Buyer, which will encumber the Property.
In addition to the First Priority Loan, Buyer has executed, or is about to execute, a
promissory note (the “Second Priority Note”) in the sum of Sixty Five Thousand Dollars
($65,000) in favor of Seller evidencing a loan (the “Second Priority Loan”) to Buyer. A
portion of the proceeds of the Second Priority Loan shall be used to pay the purchase price at
closing. The balance of the Second Priority Loan will be disbursed outside of escrow post-
closing. The Second Priority Note is to be secured by a second priority Deed of Trust and
Assignment of Rents (the “Second Priority Deed of Trust”), to be executed by Buyer, which
will encumber the Property.
This letter shall constitute “Supplemental Escrow Instructions” to you, on behalf of
Seller, concerning the transmittal, recording, filing and disbursement of the funds and documents
referred to herein and other material matters in connection with the close of the Escrow.
A. DEPOSIT OF FUNDS; DISBURSEMENT OF EXCESS SALE PROCEEDS
The Lender will deposit into escrow, on behalf of Buyer, a portion of the proceeds of its
First Priority Loan not to exceed the amount of $ . Seller will deposit into escrow, on
behalf of Buyer, a portion of the proceeds of its Second Priority Loan in the amount of $35,000
for payment of the Purchase Price. Such funds shall be collectively referred to as the “Closing
Deposit.”
Upon satisfaction of the conditions set forth in Section C, Seller approves the sale and
purchase of the Property. Any excess Closing Deposit after payment of fees and costs shall be
disbursed to Habitat.
B. CLOSING DOCUMENTS
The following documents (collectively, the “Documents”) have been or will
hereafter be delivered to you for purposes of closing the above-referenced Escrow:
1. One (1) original Grant Deed, duly executed by Seller and Habitat and
notarized;
2. One (1) original First Priority Deed of Trust, duly executed by Habitat and
notarized;
3. One (1) original Loan Agreement for the use of Neighborhood
Stabilization Program Funds (Hayman House Project), duly executed by
Habitat and the County (the “Loan Agreement”) and notarized;
4. One (1) original Second Priority Deed of Trust, duly executed by Habitat
and notarized;
5. One (1) original Declaration of Condition, Covenant, and Restrictions
(with Affordable Housing Covenants) between Buyer and Seller
Escrow Instructions 080118 3
(“Restrictive Agreement”), duly executed by Habitat and Seller and
notarized; and
6. One (1) copy of the Notice of Affordability Covenants (“Notice”), duly
executed by Habitat and Seller and notarized.
C. CONDITIONS PRECEDENT TO THE CLOSING
The following shall constitute conditions precedent to the Closing of the above-
referenced Escrow:
1. You have received fully executed (and acknowledged, where appropriate)
originals of all of the Documents.
2. Seller has approved the Estimated Settlement Statement (the
“Statement”).
3. You have received the Closing Deposit and, in accordance with the
Statement, sufficient funds to pay all other fees and costs payable in connection with the close of
escrow.
4. You have made an unconditional and irrevocable commitment to issue to
Seller a 2006 ALTA Lender’s Title Policy insuring Seller’s interest in the Property in the total
amount of the Second Priority Loan (the “Seller’s Title Policy”) in the following form:
a. Insured Lien: The Seller’s Title Policy shall insure the Second
Priority Loan.
b. Form of Title Policy: The Seller’s Title Policy shall be issued
by Escrow and Title Agent in the amount of $65,000 and insure
the liens of the Second Priority Deed of Trust, Restrictive
Agreement, Notice, and the Schedule B, Part I exceptions
approved by Seller in the Pro Forma Seller’s Title Policy, with
the following endorsements (2006 forms, where applicable and
available):
• Environmental;
• Water Rights and Surface Damage;
• Special: Electronic signatures on
policy/endorsements.
c. The Seller’s Title Policy should substantially conform in all
material respects to the marked-up copy of the Pro Forma
Seller’s Title Policy attached hereto as Exhibit B. Within thirty
(30) days of the date of this letter you are to deliver a final
Seller’s Title Policy in a form reflective of the instructions
contained above in this Section C.4.c.
Escrow Instructions 080118 4
d. Insured: The insured under the Seller’s Title Policy shall be
“City of Lake Elsinore, a California municipal corporation, and
its successors and assigns as their interests may appear.”
e. Vesting: The estate or interest referred to herein shall be
shown as vested, as of the date of the Seller’s Title Policy,
solely in Habitat.
f. Legal Description: The legal description in the Seller’s Title
Policy shall conform exactly to the legal description shown in
the Title Pro Forma.
g. Taxes: All taxes shall be shown as paid, or, if not paid, as a lien
not yet delinquent.
5. You are in a position to comply with all of the instructions you may
receive which are not inconsistent with the instructions and conditions described in this letter. In
the event of any inconsistencies between the terms of other separate instructions and the terms of
these letter instructions, please immediately notify the undersigned of such fact.
For purpose hereof, “Closing” refers to the date upon which all documents
affecting the sale of the Property to Buyer are recorded in the Official Records (as defined
below). Funds received into Escrow from disbursements of the First Priority Loan shall be
disbursed to Habitat immediately after Closing. Funds received into Escrow from disbursements
of the Second Priority Loan shall be disbursed to City in payment of the Purchase Price
immediately after Closing.
D. CLOSING PROCEDURES
In proceeding with respect to the Closing, Escrow and Title Agent will strictly
adhere to the procedures in the order set forth below. All requirements with respect to the
Closing shall be considered as having taken place simultaneously, and no delivery or transaction
shall be considered as having been made until all deliveries and closing transactions have been
accomplished.
1. For each document executed in counterparts, combine the signature pages
so as to physically form one (1) document. Escrow and Title Agent should date each undated
document as of the Closing.
2. After each of the foregoing conditions precedent has been satisfied, you
are authorized and instructed on behalf of Seller to record the following documents in the
following order in the Official Records of the County Recorder of the County of Los Angeles
(the “Official Records”):
first, the Grant Deed,
second, the First Priority Deed of Trust,
Escrow Instructions 080118 5
third, the Restrictive Agreement,
fourth, the Second Priority Deed of Trust,
fifth, the Loan Agreement, and
sixth, the Notice.
3. Perform the prorations and payments as set forth in the DDLA, these
Instructions and the Statement and distribute the funds due to Seller as set forth herein.
E. DISBURSEMENT OF FUNDS
On the Closing, upon confirmation of recording, Escrow and Title Agent shall
disburse funds to the Seller in payment of the purchase price and as to any remaining funds, in
accordance with the approved Statement attached hereto.
F. PAYMENT OF FEES
Habitat shall be responsible for the payment of any of the following fees and
charges:
1. The premium for the lender’s ATLA title insurance policies for Lender and Seller,
if any.
2. Notary fees;
3. Any State, County or City documentary stamps or transfer tax not paid by
Authority;
4. Recording fees;
5. Lender’s or Seller’s portion of the escrow fee, loan fees, inspection fees (if any)
and all fees and impounds required by Lender; and
6. Such other costs, expenses and fees, not expressly provided for herein, as are
customarily paid for by a purchaser of property in Los Angeles County.
G. DISTRIBUTION OF DOCUMENTS
Immediately following the Closing, please provide conformed copies of the
following, as recorded in the Official Records, to Seller and Habitat:
i. the Grant Deed,
ii. the Loan Agreement,
iii. the Restrictive Agreement,
Escrow Instructions 080118 6
iv. the First Priority Deed of Trust,
v. the Second Priority Deed of Trust, and
vi. the Notice.
In addition, please provide to Seller copies of all disclosure documents and
acknowledgments signed by Habitat. You are authorized to provide such copies in pdf format via
email to Joy Otsuki (joy@CEQA.com).
H. MISCELLANEOUS PROVISIONS
1. Fees, including without limitation, escrow fees, recording fees, and title
policy fees are to be paid as provided in the Statement.
2. If Escrow and Title Agent is unable to comply with these Instructions and
close the Escrow on or before 12:00 p.m. on September 28, 2018, or if there are to be any
changes therein, Escrow and Title Agent is not to proceed without further written authorization
from the undersigned.
3. Escrow and Title Agent is authorized to act upon a signed facsimile copy
of these Supplemental Escrow Instructions transmitted either by fax machine or a pdf via email.
Escrow and Title Agent is not to comply with these Supplemental Escrow Instructions if Escrow
and Title Agent receives from the undersigned a written request not to so comply and not to so
record.
4. We request that you sign and return the enclosed copy of these
Supplemental Escrow Instructions to the undersigned to confirm your acceptance and agreement
in your capacity as Escrow and Title Agent.
5. Notwithstanding either your failure to sign or return these Supplemental
Escrow Instructions, or the undersigned's failure to receive the returned executed copy of these
Supplemental Escrow Instructions, your act of recording the Documents described in these
instructions shall constitute evidence of your agreement to otherwise comply with the foregoing
instructions.
6. These Supplemental Escrow Instructions may be executed in counterparts,
each of which shall be deemed an original, and which taken together shall constitute one and the
same instrument.
7. These Supplemental Escrow Instructions and the rights and obligations of
the parties hereto shall be governed by and construed in accordance with the laws of the State of
California.
Escrow Instructions 080118 7
Thank you for your assistance.
CITY OF LAKE ELSINORE:
By:
Its:
[SIGNATURE PAGE TO HABITAT ESCROW INSTRUCTIONS]
Escrow Instructions 080118 8
ESCROW AND TITLE AGENT
AGREEMENT AND CONSENT
Receipt of the foregoing Supplemental Title Escrow Instructions and documents is
hereby acknowledged this ____ day of August, 2018. The undersigned agrees, for itself and on
behalf of Chardonnay Escrow and Chicago Title, as Escrow and Title Agent, respectively, to
proceed in strict accordance with these Instructions, and represents and warrants that the
undersigned is authorized to execute this Agreement and Consent on behalf of Chardonnay
Escrow and Chicago Title.
CHARDONNAY ESCROW
By:
Name:
Title:
CHICAGO TITLE
By:
Name:
Title:
Escrow Instructions 080118 9
EXHIBIT A
ESTIMATED CLOSING SETTLEMENT STATEMENT
[ATTACHED]
Escrow Instructions 080118 10
EXHIBIT B
PRO FORMA TITLE POLICY
[ATTACHED]
Habitat DDLA 080118 ATTACHMENT K
ATTACHMENT K
PROMISSORY NOTE
DRAFT
08/01/18
PROMISSORY NOTE SECURED BY DEED OF TRUST
310 East Pottery Street
Loan Amount: $65,000 August , 2018
Lake Elsinore, California
FOR VALUE RECEIVED, HABITAT FOR HUMANITY INLAND VALLEY,
INC., a California nonprofit public benefit corporation (“Borrower”) promises to pay to the
CITY OF LAKE ELSINORE, a California municipal corporation (“City”), or order, the
principal sum of Sixty Five Thousand Dollars ($65,000), together with interest on the
outstanding principal balance from time to time in accordance with the terms and conditions set
forth herein. This Note evidences the obligation of Borrower to City for the repayment of certain
funds (the “City Loan”) loaned to Borrower by City pursuant to that certain Disposition,
Development, and Loan Agreement (310 East Pottery Street) between the City and Borrower
dated of even date herewith (the “DDLA”), incorporated herein, in connection with the purchase
and development of real propert y located at 310 East Pottery Street in the City of Lake Elsinore
(as described in Attachment A, the “Property”). Borrower is purchasing the Property with a
loan from the City’s Low and Moderate Income Housing Asset Fund (“LMIHAF”). The
Property currently consist of a vacant lot. Unless otherwise defined herein, all capitalized terms
shall have the same meaning as set forth in the DDLA.
1. Definitions.
“Assignment” means any voluntary or involuntary conveyance, disposition, assignment,
encumbrance (including any Refinancing as defined below), sublease, sale or transfer of the
Property or any portion thereof, including, without limitation, any transfer by Borrower of all or
any portion of its rights under or interest in the Project or the Property, any change of ownership
or control of Borrower or its manager or members not in compliance with the DDLA, any
foreclosure of Borrower’s interest in the Project or the Property, whether by judicial proceedings,
or by virtue of any power contained in a deed of trust, indenture or other instrument creating a
lien against the Project or the Property, or any assignment of Borrower’s estate or any portion
thereof in the Project or the Property through, or in lieu of, foreclosure or other appropriate and
bona fide proceedings in the nature thereof; provided, however, that the term “Assignment” as
used herein shall not include any permitted transfer as set forth in the DDLA nor shall it include
the rental or leasing of individual apartments or retail space within the Project.
“City Loan Amount” shall not exceed Sixty Five Thousand Dollars ($65,000).
“City Loan” means the loan from the City to the Borrower pursuant to the terms of this
Note and the DDLA in the amount of the City Loan Amount.
“City Loan Document(s)” means all of the following documents evidencing the City
Loan and required as consideration for the City to make the City Loan: (i) this Note; (ii) the City
Deed of Trust; (iii) the DDLA; (iv) the Declaration, and (v) all other agreements entered into in
connection with any of the foregoing. The term “City Loan Documents” shall include all
modifications, amendments, extensions, renewals, and replacements of the aforementioned
documents or any other agreement now or hereafter executed by Borrower which recites that the
obligations thereunder are secured by the Deed of Trust.
Att K Promissory Note 080118 Page 2
“Conditions of Disbursement” is defined in Section 2.2.
“Deed of Trust” means the Deed of Trust, Fixture Filing and Assignment of Rents in
substantially the form attached to the DDLA be executed by the Borrower as Trustor, in favor of
City as Beneficiary, and to be recorded as a lien against the Property in accordance with the
terms and conditions of the DDLA.
“Event of Default” is defined in Section 10.
“Loan Proceeds” is defined in Section 2.1.
“Maturity Date” has the meaning set forth in Section 2.5 hereof.
“Project Loan” means a loan secured by an encumbrance on the Property, the Project, or
any portion of either.
“Refinancing” shall mean creation or substantial modification of a Project Loan. The
term “Refinancing” shall not include the creation of the any other Project Loan, the proceeds of
which are used solely for initial acquisition of the Property or initial development of the Project.
“Term” shall mean the time from the date of this Note until the earlier to occur of: (i) the
Maturity Date; (ii) repayment in full of all principal and interest due hereunder; or (iii) such other
date, as agreed to in writing by the City, upon which the City releases all of its rights under this
Note.
2. Disbursement, Interest and Repayment.
2.1 Disbursement
The City Loan proceeds (the “Loan Proceeds”) shall be used for payment of the
Purchase Price for the Property and development costs of the Project in accordance with the
DDLA or as otherwise approved by the City in its sole and absolute discretion.
Upon satisfaction of the Conditions Precedent to Closing set forth in Section 4.7
of the DDLA, Loan Proceeds shall be disbursed to Borrower for the purchase of the Property.
Disbursement of the remaining Loan Proceeds shall be made by City not later
than thirty (30) Business Days after receipt by the City manager of an approved written
disbursement request from the Borrower (each, a “Disbursement Request”), as approved by
City. Notwithstanding the foregoing, City will use commercially reasonable efforts to disburse
loan funds as soon as possible after receipt of a Disbursement Request. The Disbursement
Request shall set forth the amount of the requested disbursement of Loan Proceeds and shall
certify that all conditions precedent to disbursement of the Loan Proceeds set forth in the DDLA
have been met.
2.3 Payment Dates and Amounts.
(a) Principal and Interest Payments. Borrower shall make no periodic interest
and principal payments on this Note provided that no Event of Default (as defined herein) has
occurred. Upon the occurrence of an Event of Default, all outstanding principal shall accrue
Att K Promissory Note 080118 Page 3
interest at the Default Rate (as hereinafter defined) and City shall have the right to declare all
outstanding principal and interest immediately due and payable.
(b) Payments Due in the Event of Assignment. If Borrower effects any
Assignment not in accordance with the DDLA, such Assignment shall constitute an Event of
Default hereunder and all of the outstanding balance of principal and interest (if any) on the City
Loan shall be immediately payable to City.
(c) Sale of Affordable Unit. Borrower shall not sell the Affordable Unit
located on the Property described herein except upon the satisfaction of the conditions set forth
in Section 8 of the DDLA. Upon the close of escrow for the sale of the Affordable Unit by
Borrower to a Qualified buyer, the City Loan shall be deemed repaid with the proceeds of the
City Second Mortgage Assistance upon execution of a Deed of Trust by the Qualified Buyer in
favor of City in the amount of the City Loan, or such lesser amount as may be agreed to be City,
with such City Seco nd Mortgage Assistance constituting a credit against the outstanding City
Loan Amount.
2.4 Maturity Date. The outstanding principal balance together with any outstanding
interest due thereon and any other sums payable under this Note shall be due and payable in full
upon the earlier to occur of the following (the “Maturity Date”) (i) an Event of Default; (ii) an
Assignment not in accordance with the DDLA; or (iii) not later than ninety (90) days after the
issuance of a Certificate of Occupancy for the Affordable Unit.
2.6 Default Rate. Any amounts (including but not limited to amounts of principal
and interest on the City Loan) which Borrower does not pay when otherwise due under the terms
of this Note, shall bear interest at the rate of the lesser of ten percent (10%) or the maximum rate
allowed per law per annum (“Default Rate”), simple interest, from the date which is ten (10)
days after such amount would otherwise be due until the date paid.
3. Acceleration.
The entire outstanding principal balance of the Note, together with any outstanding
interest and other amounts payable thereunder, shall, at the election of City and upon notice to
Borrower thereof, become immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by Borrower, if:
(a) Notwithstanding the payment terms set forth in Section 2 above, and subject to
any applicable notice and cure period, upon the occurrence of any Event of Default as set forth in
Section 10 of the DDLA; or
(b) Except for a Permitted Transfer, Borrower sells or transfers all or any portion of
the Property, including, without limitation, lease, exchange or other disposition of the Property
or any interest therein, whether voluntary or involuntary, except a sale or transfer which under
federal law would not, by itself, permit the Borrower to exercise a due on sale or due on
encumbrance clause, and except as permitted by the DDLA; or
(c) Borrower refinances the City Loan or the County Loan.
Att K Promissory Note 080118 Page 4
4. Prepayment; Application of Payments.
At any time after the disbursement of the Loan Proceeds, Borrower may prepay all or a
portion of the unpaid principal amount of the City Loan and accrued interest and any other sums
outstanding without penalty. All payments, including any prepayments or funds received upon
acceleration pursuant to Section 3 above, shall be applied first toward any outstanding costs of
collection or other amounts (excluding City Loan principal or interest thereon) due under this
Note or the DDLA, then toward outstanding interest accrued at the Default Rate, if any, and
finally toward the remaining principal balance under the Note.
5. Security and Source of Payment.
Borrower’s obligations under this Note and the DDLA shall, at all times subsequent to
the purchase of the Property by Borrower during which any amount remains outstanding
hereunder, be secured by the Deed of Trust of which City is the beneficiary, recorded against
Borrower’s fee interest in the Property. The security interest in the Property granted to City
pursuant to the Deed of Trust shall be subordinate only to the Declaration, such exceptions to
title shown in the title report for the Property which are approved in writing by City, and, if
approved in a writing by City, any deed of trust securing the County Loan.
Upon the issuance of the Release of Construction Covenants, the City Loan shall
constitute a nonrecourse obligation of Borrower.
Nothing contained in the foregoing limitation of liability shall (a) limit or impair the
enforcement against all such security for this Note of all the rights and remedies of City, or (b)
be deemed in any way to impair the right of the City to assert the unpaid principal amount of this
Note as a demand for money within the meaning and intendment of Section 431.70 of the
California Code of Civil Procedure or any successor provision thereto. The foregoing limitation
of liability is intended to apply only to the obligation for the repayment of the principal of, and
payment of interest on this Note; nothing contained therein is intended to relieve the Borrower
and, if Borrower is a partnership, limited liability company, or corporation, any general partner,
member, or shareholder of Borrower of liability for damages caused to City as a result of (i)
fraud or willful misrepresentation; (ii) the failure to pay taxes, assessments or other charges
which may create liens on the real property described in the City Loan Documents that are
payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such
taxes, assessments or other charges); and (v) the misapplication of any proceeds under any
insurance policies or awards resulting from condemnation or the exercise of the power of
eminent domain or by reason of damage, loss or destruction to any portion of the Project; and
(vi) breach of any environmental covenant or representation made by the Borrower relating to
the Project.
6. Obligation of Borrower Unconditional.
The obligation of Borrower to repay the City Loan and all accrued interest thereon shall
be absolute and unconditional, and until such time as all of the outstanding principal of and
interest on this Note shall have been fully paid, Borrower covenants and agrees that it: (a) will
use the funds solely for the purposes set forth herein; and (b) will not terminate or suspend any
payment or obligations under this Note, the DDLA, or any other City Loan Document executed
hereunder or in connection herewith for any cause, including without limitation, any acts or
Att K Promissory Note 080118 Page 5
circumstances that may constitute failure of consideration, commercial frustration of purpose, or
any duty, liability or obligation arising out of or in connection with this Note, the DDLA or any
City Loan Document executed hereunder or in connection herewith.
7. Purpose of City Loan.
The Loan Proceeds shall be used by Borrower as provided in the DDLA. In no event
shall Borrower use or otherwise invest the Loan Proceeds.
8. Covenants of Borrower.
As additional consideration for the making of the City Loan by City, Borrower covenants
as follows:
8.1. Compliance with City Loan Documents. Borrower shall comply with all of its
obligations under the City Loan Documents. Any amounts payable by Borrower under the City
Loan Documents (other than amounts also payable hereunder) shall be deemed added to the
principal amount of the City Loan payable hereunder.
8.2. Other Loans. Borrower shall comply with all monetary and non-monetary
covenants associated with any other loan secured by an interest in the Property or the Project,
including the County Loan. Borrower shall provide to City a copy of any notice of default
within five (5) business days after receiving any notice of a default or alleged default of such
covenants by Borrower, and Borrower shall promptly cure any such default and cooperate in
permitting City, to the extent City in its sole discretion elects to do so, to cure or assist in curing
the default. Any cost or expenditure incurred by City in providing or assisting in such a cure
shall be deemed added to the outstanding principal amount of the City Loan.
8.3. Compliance With Declaration. Borrower covenants and agrees to comply with
the terms and conditions of the Declaration, including, without limitation, to obtain all consents
of the City required thereby in connection with the sale of the Affordable Unit.
9. Borrower Assignment Prohibited.
The provisions of Section 2.3 of the DDLA shall apply to any transfer or Assignment of
any interest of Borrower in the Property, the creation or refinancing of any debt secured by the
Property, and any transfer of Assignment of the obligation of Borrower under this Promissory
Note. Except as provided in Section 2.3 of the DDLA, neither this Note nor any interest or
portion thereof of Borrower in the Property, shall be sold, assigned, mortgaged, pledged or
hypothecated, or otherwise transferred by Borrower, whether by operation of law or otherwise.
10. Events of Default and Remedies.
10.1 Borrower Events of Default. The occurrence of any Event of Default as defined
in the DDLA shall constitute an “Event of Default” hereunder.
10.2 City Remedies. Upon the occurrence and during the continuance of an Event of
Default hereunder, City may, in its sole discretion, take any one or more of the following actions:
(a) By notice to Borrower, declare the entire then unpaid principal balance of
the City Loan immediately due and payable, and the same shall become due and payable without
Att K Promissory Note 080118 Page 6
further demand, protest or further notice of any kind, all of which are expressly waived. Upon
such declaration, outstanding principal and (to the extent permitted by law) interest and any other
sums outstanding in connection with the City Loan shall thereafter bear interest at the Default
Rate, payable from the date of such declaration until paid in full;
(b) Subject to the nonrecourse provisions of Section 5 above, take any and all
actions and do any and all things which are allowed, permitted or provided by law, in equity or
by statute, in the sole discretion of City, to collect the amounts then due and thereafter to become
due hereunder, to exercise its rights under the Deed of Trust, and to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this Note, the
DDLA, the Declaration or under any other City Loan Document; and/or
(c) Subject to the nonrecourse provision of Section 5 above, upon the
occurrence of an Event of Default which is occasioned by Borrower’s failure to pay money, City
may, but shall not be obligated to, make such payment. If such payment is made by City,
Borrower shall deposit with City, upon written demand therefor, such sum plus interest at the
Default Rate. In either case, the Event of Default with respect to which any such payment has
been made by City shall not be deemed cured until such repayment (as the case may be) has been
made by Borrower. Until repaid, such amounts shall have the security afforded disbursements
under this Note.
10.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to City
intended to be exclusive of any other available remedy or remedies, but each such remedy shall
be cumulative and shall be in addition to every other remedy given under this Note or now
existing at law or in equity or by statute; and may be exercised in such number, at such times and
in such order as City may determine in its sole discretion. No delay or omission to exercise any
right or power upon the occurrence of any Event of Default hereunder shall impair any such right
or power or shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient by City. In order to entitle
City to exercise any right or remedy reserved to it under this Note, no notice shall be required
except as expressly provided herein.
10.4 Borrower Remedies. Without limiting the generality of the foregoing, Borrower
shall in no event be entitled to, and hereby waives, any right to seek consequential damages of
any kind or nature from City arising out of or in connection with this Note or the City Loan, and
in connection with such waiver Borrower is familiar with and hereby waives the provision of
Section 1542 of the California Civil Code which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST
HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
11. Agreement to Pay Attorneys’ Fees and Expenses.
In the event that either party hereto brings any action or files any proceeding in
connection with the enforcement of its respective rights under this Note or the Deed of Trust, as
a consequence of any breach by the other party of its obligations thereunder, the prevailing party
in such action or proceeding shall be entitled to have its reasonable attorneys’ fees and costs and
Att K Promissory Note 080118 Page 7
out-of-pocket expenditures paid by the losing party. The attorneys’ fees and costs so recovered
shall include fees for prosecuting or defending any appeal and shall be awarded for any
supplemental proceedings until the final judgment is satisfied in full. In addition to the foregoing
award of attorneys’ fees and costs, the prevailing party in any lawsuit on this Note or the Deed of
Trust shall also be entitled to its attorneys’ fees and costs incurred in any post-judgment
proceedings to collect or enforce the judgment. In addition to the foregoing, Borrower agrees to
pay or reimburse City, upon demand by City, for all costs incurred by City in connection with
enforcement of this Note or the Deed of Trust, including without limitation, reasonable
attorneys’ fees and costs, if there shall be filed by or against Borrower any proceedings under
any federal or state bankruptcy or insolvency laws, whether City is a creditor in such proceedings
or otherwise.
12. Conflict of Interest; No Individual Liability.
No official or employee of City shall have any personal interest, direct or indirect, in this
Note, nor shall any official or employee of City participate in any decision relating to this Note
which affects such official’s or employee’s pecuniary interest in any corporation, partnership or
association in which such official or employee is directly or indirectly interested. No official or
employee of City shall be personally liable in the event of a breach of this Note by City.
13. Amendments, Changes and Modifications.
This Note may not be amended, changed, modified, altered or terminated without the
prior written consent of the parties hereto.
14. Notices.
All notices, demands, requests, elections, approvals, disapprovals, consents or other
communications given under this Note shall be in writing and shall be given by personal
delivery, certified mail, return receipt requested, or overnight guaranteed delivery service and
addressed as follows:
To City: City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: City Manager
To Borrower: Habitat for Humanity Inland Valley, Inc.
41615 Winchester Road, Suite 214
Temecula, CA 92591
Attention: Executive Director
Any Notice shall be deemed received immediately if delivered by hand and shall be
deemed received on the third day from the date it is postmarked if delivered by registered or
certified mail.
15. Severability.
The invalidity or unenforceability of any one or more provisions of this Note will in no
way affect any other provisions.
Att K Promissory Note 080118 Page 8
16. Interpretation.
Whenever the context requires, all words used in the singular will be construed to have
been used in the plural, and vice versa, and each gender will include any other gender. The
captions of the paragraphs of this Note are for convenience only and do not define or limit any
terms or provisions. Time is of the essence in the performance of this Note by Borrower. Each
party hereto has been represented by counsel in the negotiation of this Note, and it shall not be
interpreted in favor of or against any party on account of relative responsibilities in drafting.
Notwithstanding any other provision of this Note, nothing herein or in this Note shall be deemed
to require Borrower to pay interest in an amount in excess of any applicable usury law or other
legal limitation on interest, and the terms of this Note shall be interpreted to require in each
instance the lesser of (a) the amount stated in this Note, and (b) the maximum applicable legal
limit.
17. No Waiver; Consents.
Any waiver by City must be in writing and will not be construed as a continuing waiver.
No waiver will be implied from any delay or failure by City to take action on account of any
default of Borrower. Consent by City to any act or omission by Borrower will not be construed
to be consent to any other or subsequent act or omission or to waive the requirements for City’s
consent to be obtained in any future or other instance.
18. Governing Law.
This Note shall be governed by the laws of the State of California.
19. Representations and Warranties of Borrower.
Borrower hereby warrants and represents to City that:
19.1. Organization and Standing. Borrower is a California corporation, duly
organized in California, qualified to operate in California and validly existing and in good
standing under all applicable laws, and has all requisite power and authority to enter into and
perform its obligations under this Note, the DDLA, the Deed of Trust, the Declaration, and all
other City Loan Documents executed in connection herewith.
19.2. Enforceability. This Note and all other instruments to be executed by Borrower
in connection with the City Loan constitute the legal, valid and binding obligation of Borrower,
without joinder of any other party.
19.3. Authorization and Consents. The execution, delivery and performance of this
Note and all other instruments to be executed in connection herewith is consistent with the
operating agreement, partnership agreement or articles and bylaws governing Borrower and have
been duly authorized by all necessary action of Borrower’s members, partners, directors, officers
and shareholders.
19.4. Due and Valid Execution. This Note and all other instruments to be executed in
connection herewith, will, as of the date of their execution, have been duly and validly executed
by Borrower.
Att K Promissory Note 080118 Page 9
19.5. Licenses. Borrower will obtain and maintain all material licenses, permits,
consents and approvals required by all applicable governmental authorities to develop the
Project.
19.6. Litigation and Compliance. There are no suits, other proceedings or
investigations pending or threatened against, or affecting the business or the properties of
Borrower (other than those as have been previously disclosed in writing to City) which could
materially impair its ability to perform its obligations under this Note, nor is Borrower in
violation of any laws or ordinances which could materially impair Borrower’s ability to perform
its obligations under this Note.
19.7. Default. There are no facts now in existence which would, with the giving of
notice or the lapse of time, or both, constitute an Event of Default hereunder.
19.8. No Violations. The execution and delivery of this Note, the DDLA and all other
documents executed or given thereunder, and the performances hereunder and thereunder by
Borrower, as applicable, will not constitute a breach of or default under any instrument or
agreement to which Borrower may be a party nor, to the best of Borrower’s knowledge, will the
same constitute a breach of or violate any law or governmental regulation.
20. Approvals.
Except with respect to those matters set forth hereinabove providing for City’s approval,
consent or determination to be at City’s “sole discretion” or “sole and absolute discretion,” City
hereby agrees to act reasonably with regard to any approval, consent, or other determination
given by City hereunder. City agrees to give Borrower written notice of its approval or
disapproval following submission of items to City for approval, including, in the case of any
disapproved item, the reasons for such disapproval.
Any review or approval of any matter by the City or any City official or employee under
this Note shall be solely for the benefit of City, and neither Borrower nor any other person shall
rely upon such review or approval as an indication of the wisdom, soundness, safety,
appropriateness, or presence or absence of any matter. Without limiting the generality of the
foregoing, Borrower and not City shall be solely responsible for assuring compliance with laws,
the suitability of the Property for the Project, the adequacy of the plans, and the safety of the
Project construction site, the completed Project, and the operation thereof.
21. Good Faith and Fair Dealing.
City and Borrower agree to perform all of their obligations and the actions required of
each hereunder in good faith and in accordance with fair dealing.
22. Waiver.
Borrower agrees that it will still be liable for repayment of this Note, even if the holder
hereof does not follow the procedures of presentment, protest, demand, diligence, notice of
dishonor and of nonpayment, which requirements are hereby waived. Failure of City or other
holder hereof to exercise any right or remedy hereunder shall not constitute a waiver of any
future or other default. No acceptance of a past due installment or indulgence granted from time
to time shall be construed to be a waiver of, or to preclude the exercise of, the right to insist upon
Att K Promissory Note 080118 Page 10
prompt payment thereafter or to impose late charges retroactively or prospectively, or to waiver
or preclude the exercise of, the right to insist upon prompt payment thereafter or to impose late
charges retroactively or prospectively, or to waive or preclude the exercise of any other rights
which City may have.
[SIGNATURE PAGE FOLLOWS]
Att K Promissory Note 080118
IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year first
above written.
BORROWER:
HABITAT FOR HUMANITY INLAND
VALLEY, INC., a California nonprofit public
benefit corporation
By:
Name: Tammy Marine
Its: Executive Director
[PROMISSORY NOTE SIGNATURE PAGE]
[PAGE 1 OF 1]
Habitat DDLA 080118 ATTACHMENT L
ATTACHMENT L
DEED OF TRUST
(Attached)
DRAFT
08/01/18
Att L Deed of Trust 080118 -1-
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: City Manager
Re: 310 East Pottery Street
APN: 379-292-027-1
(Above Space for Recorder’s Use)
Exempt from Recordation Fee per Government Code Section 27383.
DEED OF TRUST
CA Low and Moderate Income Housing AssetFunds
(310 E. Pottery St.)
This DEED OF TRUST (“Deed of Trust”) is made as of August , 2018, by and among
INLAND VALLEY HABITAT FOR HUMANITY, INC., a California nonprofit corporation
(“Trustor”), the CITY OF LAKE ELSINORE, a municipal corporation (“Trustee”), and the
CITY OF LAKE ELSINORE, a municipal corporation (“Beneficiary”). Concurrently herewith,
Trustor and Beneficiary are entering into that certain Disposition, Development and Loan
Agreement (together with any modifications or amendments thereto, the “DDLA”). All
capitalized terms not defined herein shall have the meaning set forth in the DDLA.
Grant in Trust. Trustor grants to Trustee in trust, with power of sale and right of entry
and possession, that certain property/parcel of land located in the City of Lake Elsinore, County
of Riverside, State of California, more particularly described as follows: 310 E. Pottery Street
(“Property”), together with rents, issues and profits thereof.
Real property in the City of Lake Elsinore, County of Riverside, State of California,
described as follows:
LOT 6, BLOCK 503, AS SHOWN ON THAT CERTAIN MAP ENTITLED SMITH’S
ADDITION TO ELSINORE, WHICH MAP WAS FILED IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA IN BOOK 2 OF
MAPS PAGE(S) 135.
APN: 377-292-027-1
1. Obligations Secured. Trustor makes this grant and assignment for the purpose of
securing (i) payment of the sum of Sixty Five Thousand and No/100 Dollars ($65,000.00) (“Note
Amount”), with interest thereon, if applicable, according to the terms of that certain Promissory
Note Secured by Deed of Trust of substantially even date herewith executed by Trustor, and
payable to the order of Beneficiary, and any written modification(s) thereof (the “Note”), and (ii)
performance of all obligations of Trustor under the DDLA and that certain Declaration of
Covenants, Conditions and Restrictions dated and recorded substantially concurrently herewith
Att L Deed of Trust 080118 -2-
executed by Trustor, for the benefit of Beneficiary, and any written modification(s) thereof (the
“Declaration”).
2. Acceleration of Note Amount Upon Sale, Encumbrance, or Default. To the
extent permitted by applicable law, if Trustor shall: (a) directly or indirectly, voluntarily, or
involuntarily, sell, assign, transfer, dispose of, alienate, encumber, lease, or agree to sell, assign,
transfer, dispose of, alienate, encumber, or lease all or any portion of any interest in the Property
in violation of the Declaration or default under this Deed of Trust, then Beneficiary, at its option,
may declare the entire indebtedness evidenced hereby, including, without limitation, all accrued
interest, if applicable, to be immediately due and payable and collectible then or thereafter as
Beneficiary may elect.
3. No Cure. In the event Beneficiary collects and receives any rents under the Deed
of Trust upon any default hereof, such collection or receipt shall in no way constitute a curing of
the default, except if and to the extent the same are sufficient to cure all monetary defaults and
no other defaults then exist.
4. Possession Upon Default. Upon the occurrence of and during the continuation of
a default, Beneficiary, after having given notice and the applicable cure periods having expired
with the default having not been cured (hereinafter, a “default”), may, at its option, without any
action on its part being required and without in any way waiving such default, take possession of
the Property in accordance with applicable law and have, hold, manage, lease and operate the
same, on such terms and for such period of time as Beneficiary may deem proper, and may
collect and receive all rents and profits, with full power to make, from time to time, all
commercially reasonable alterations, renovations, repairs or replacements thereto as may seem
proper to Beneficiary, and to apply such rents and profits to the payment of (a) the cost of all
such alterations, renovations, repairs and replacements, and all costs and expenses incident to
taking and retaining possession of the Property, and the management and operation thereof, and
keeping the same properly insured; (h) all taxes, charges, claims, assessments, and any other
liens which may be prior to this Deed of Trust, and premiums for insurance, with interest on all
such items; and (c) the indebtedness secured hereby, together with all costs and attorney’s fees,
in such order or priority as to any of such items as Beneficiary in its sole discretion may
determine, any statute, law, custom or use to the contrary notwithstanding. Any amounts
received by Beneficiary or its agents in the performance of any acts prohibited by the terms of
this assignment, including, but not limited to, any amounts received in connection with any
cancellation, modification or amendment of any lease prohibited by the terms of this assignment
and any rents and profits received by Trustor after the occurrence of a default shall be held by
Trustor as trustee for Beneficiary and all such amounts shall he accounted for to Beneficiary and
shall not be commingled with other funds of the Trustor. Any person receiving any portion of
such trust funds shall receive the same in trust for Beneficiary as if such person had actual or
constructive notice that such funds were impressed with a trust in accordance therewith.
5. Receiver. In addition to any and all other remedies of Beneficiary set forth under
this Deed of Trust or permitted at law or in equity, if a default shall have occurred and not have
been cured within any applicable cure period, Beneficiary, to the extent permitted by law and
without regard to the value, adequacy or occupancy of the security and any obligations or sums
secured hereby, shall be entitled as a matter of right if it so elects to the appointment of a receiver
Att L Deed of Trust 080118 -3-
to enter upon and take possession of the Property and to collect all rents and profits and apply the
same as the court may direct, and such receiver may be appointed by any court of competent
jurisdiction by ex parte application and without notice, notice of hearing being hereby expressly
waived. The expenses, including receiver’s fees, attorneys’ fees, costs and agent’s compensation,
incurred pursuant to the power herein contained shall be secured by this Deed of Trust.
6. Reconveyance of Deed of Trust. This Deed of Trust shall be reconveyed upon
the earlier to occur of (i) repayment of the City Loan in full and expiration of the Affordability
Period, or (ii) sale of the Affordable Unit to a Qualified Buyer in accordance with the terms and
conditions of the DDLA and recordation against the Property of a Deed of Trust executed by the
Qualified Buyer in favor of Beneficiary in the amount of the City Loan, or such lesser amount as
may be agreed to by City.
7. Incorporation of Fictitious Deed of Trust. To protect the security of this Deed
of Trust, and with respect to the property above described, Trustor expressly makes each and all
of the agreements, and adopts and agrees to perform and be bound by each and all of the terms
and provisions set forth in subdivision A, and it is mutually agreed that, except as provided
below, each and all of the terms and provisions set forth in subdivision B of the fictitious deed of
trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in
the book and at the page of Official Records in the office of the county recorder of the county
where said property is located, noted below opposite the name of such county, namely:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187
Alpine 3 130-31 Lake 437 110 Minas 166 1307 Siskiyou 506 762
Arnador 133 438 Lassen 192 367 Riverside 3778 317 Soling) 1287 621
Butte 1330 513 Los Angeles 7-3878 874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56
Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585
Contra Costa 1684 1 Mariposa 90 453 San Francisco A-804 596 Tehania 451 183
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595
El Dorado 704 635 Merced 1660 753 San Lois Obispo 1311 137 Tulare 2530 108
Fresno 5052 623 Motioc 191 93 San Mateo 4778 175 Tuolumne 177 160
(liens 469 76 Mono 69 302 Santa Barbara 2065 881 'Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16
Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693
My° 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Dingo SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the property above described. Said
agreements, terms and provisions contained in said subdivision A and B (identical in all counties,
and printed on pages 6 and 7 hereof) are by the within reference thereto, incorporated herein and
made a pair of this Deed of Trust for all purposes as fully as if set forth at length herein, and
Beneficiary may charge for a statement regarding the obligation secured hereby, provided the
charge therefore does not exceed the maximum allowed by law.
Att L Deed of Trust 080118 -4-
Notwithstanding the incorporation herein of subdivision A and Subdivision B of the fictitious
deed of trust referenced above (the “Fictitious Deed of Trust”):
a) In the event of a fire or other casualty for which Trustor has procured
insurance, if, upon Trustor receipt of the insurance proceeds thereunder, Trustor will he
financially, and in all other respects, capable of rebuilding the improvements on the Property, as
reasonably determined by Beneficiary, Trustor shall be entitled to retain the insurance proceeds
for the sole purpose of rebuilding the improvements.
b) In the event of a condemnation of any portion of the Property, if, upon
Trustor receipt of the condemnation award in connection therewith, Trustor will be financially,
and in all other respects, capable of rebuilding the improvements on the Property, as reasonably
determined by Beneficiary, Trustor shall be entitled to retain the condemnation award for the
sole purpose of rebuilding the Project.
c) To the extent the provisions set forth in paragraph 5 of Subdivision B of
the Fictitious Deed of Trust are inconsistent with the provisions in Section 5 and/or Section 6
hereof, the provisions in Section 5 and Section 6 shall prevail.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date set
forth above.
HABITAT FOR HUMANITY INLAND
VALLEY, INC., a California nonprofit public
benefit corporation
By:
Print name: TAMMY MARINE
Title: EXECUTIVE DIRECTOR
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
Att L Deed of Trust 080118
A notary public or other officer completing
this certificate verifies only the identity of
the individual who signed the document to
which this certificate is attached, and not
the truthfulness, accuracy, or validity of
that document.
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On before me, , Notary Public
personally appeared
who proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity, and that by his/her/their
signature(s) on the instrument the person(s), or the entity(ies) upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the
State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above Signature of Notary Public
OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
Document Date: Number of Pages:
Signer(s) Other Than Named Above:
Capacity(ies) claimed by Signer(s)
Signer’s Name:
Individual
Corporate Officer – Title(s):
Partner – Limited General
Attorney in Fact
Trustee
Guardian or Conservator
Other:
Signer is Representing:
RIGHT THUMBPRINT
OF SIGNER
Top of thumb here
Habitat DDLA 080118 ATTACHMENT M
ATTACHMENT M
ASSIGNMENTS OF CONTRACTS, PLANS AND SPECIFICATIONS
(Attached)
DRAFT
08/01/18
-1-
ASSIGNMENT OF CONTRACTS, PLANS AND SPECIFICATIONS
This Assignment of Contracts, Plans and Specifications (the “Assignment”) is made as of
August , 2018, by HABITAT FOR HUMANITY INLAND VALLEY, INC., a California
nonprofit public benefit corporation (the “Borrower”) to and for the benefit of the CITY OF
LAKE ELSINORE, a California municipal corporation, its successors, transferees and assigns
(collectively, “City”)
A. City is making a loan (the “Loan”) to Borrower in the principal amount of Sixty
Five Thousand Dollars ($65,000). The Loan is being made under that certain Disposition,
Development and Loan Agreement (the “Loan Agreement”) between City and Borrower dated
as of the date hereof. Pursuant to the Loan Agreement, City has agreed to finance the purchase
of the Property and certain costs of construction of some or all of the Improvements on the
Property (as such terms are defined in the Loan Agreement) owned by Borrower and described
in Exhibit A attached hereto.
B. The Loan is evidenced by one or more promissory notes (the “Note(s)”) made
payable to City in the aggregate principal amount of the Loan. The Note(s) are secured by one
or more Deeds of Trust, Assignment of Rents, and Fixture Filing (the “Deed(s) of Trust”)
covering certain real and personal property, as therein described (all collectively, the
“Property”). The Notes may also be secured by other collateral, as more fully explained in the
Loan Agreement.
C. This Assignment is one of several “Loan Documents,” as that term is defined in
the Loan Agreement. The Loan Documents include the Loan Agreement, the Note, the Deed of
Trust, the Declaration and all other documents that evidence, guaranty, secure, or otherwise
pertain to the Loan. The term “Loan,” as used herein, is broadly defined as the loan to Borrower
evidenced by the Loan Documents. All capitalized terms used herein and not defined shall have
the meanings set forth in the Loan Agreement.
D. As a requirement of, and as a material consideration for making the Loan, City
has required that Borrower execute and deliver this Assignment to City as security for the
performance of Borrower’s obligations under the Loan Documents.
THEREFORE, Borrower hereby agrees as follows:
1. Assignment. Borrower hereby assigns, conveys, and transfers to City, as security
for Borrower’s obligations under the Loan Documents and all other obligations of Borrower
which are secured by the Deed of Trust, all of Borrower’s respective rights, title, interest,
privilege, benefits, and remedies in, to and under the following:
1.1 the construction contract(s), architect contract(s), engineer
contract(s), development contracts, management contracts, and any other agreements
listed in Exhibit B attached hereto;
Att M Ass of Contracts Plans Specs 080118 -2-
1.2 all other agreements now or hereafter entered into by Borrower
with any contractor in connection with construction of or on the Property; and
1.3 all other agreements now or hereafter entered into by Borrower
with any architect, engineer, or other consultant in connection with the design,
engineering, construction of or on, or management of the Property;
1.4 all plans, specifications, and drawings with respect to the Property
(collectively, the “Project Plans”), which shall include, without limitation, the plans,
specifications, and drawings for any and all improvements, streets, sewers, water, and
drainage, and all tentative and final tract maps pertaining to the Property; and
1.5 any and all present and future amendments, modifications,
supplements, change orders, and addenda to any of the items described above.
A complete, true, and correct copy of each document listed on Exhibit B has previously
been provided to City or shall be provided to City concurrently with delivery of this Assignment.
Each of the agreements described above is referred to herein as a “Contract”, and all of such
agreements are collectively referred to herein as the “Contracts.” The other party to each
Contract with Borrower is referred to herein as a “Contract Party.”
2. Consents to Assignment.
2.1 Borrower agrees to obtain and deliver to City, concurrently with its
delivery of this Assignment, consents to assignment substantially in the form of
Exhibit C attached hereto, or in such other form satisfactory to City in its sole and
absolute discretion (each, a “Consent”), from each Contract Party which is a party to the
Contracts listed in Exhibit B. Upon City’s request, Borrower shall promptly obtain and
deliver to City (a) a Consent from each Contract Party for Contracts not listed in
Exhibit B, and (b) a true, complete, and correct copy of each such Contract.
2.2 This Assignment and the Consents to it do not relieve Borrower of
its obligations under the Contracts. City does not hereby assume any of Borrower’s
obligations or duties concerning any Contract, including, without limitation, any
obligation to pay for the work done pursuant thereto.
3. Rights Upon Default. Upon the occurrence of an Event of Default by Borrower
under the Loan Documents, City may, at its option, exercisable in its sole and absolute
discretion, upon written notice to the appropriate Contract Party, exercise any or all of the rights
and remedies granted to Borrower under the Contract with the Contract Party as if City had been
an original party to such Contract. Unless otherwise agreed in writing by City, City may elect to
assume some or all of the obligations of Borrower under the Contract by giving notice to that
effect to the Contract Party; provided however, that City shall not be responsible for any default,
liability, or obligation of Borrower under the Contract occurring prior to the time City gives such
notice to the Contract Party, and City shall thereafter be responsible only to the extent expressly
set forth in said notice.
Att M Ass of Contracts Plans Specs 080118 -3-
4. Appointment. Borrower hereby irrevocably constitutes and appoints City as its
attorney-in-fact, which power is coupled with an interest, so that City shall have the right upon
the occurrence of an Event of Default by Borrower under the Loan Documents to demand,
receive, and enforce Borrower’s rights with respect to the Contracts, to give appropriate receipts,
releases, and satisfactions for and on behalf of Borrower, and to do any and all acts in the name
of Borrower or in the name of City with the same force and effect as Borrower could have done.
5. Representations and Warranties. Borrower hereby represents and warrants to
City that, except as set forth herein, no previous assignment of the Contracts have been made,
and Borrower agrees not to assign, sell, pledge, transfer, or otherwise encumber its interest in
any of the Contracts so long as this Assignment is in effect. Borrower represents and warrants
that the copy of each Contract provided by Borrower to City shall be the complete and entire
agreement between the parties thereto. Borrower agrees not to modify the Contracts without the
City’s prior written consent, except to the extent otherwise permitted in the Loan Agreement.
6. Enforceability; Modifications. If any provision of this Assignment shall be
invalid, illegal, or unenforceable, it shall not affect or impair the validity, legality, and
enforceability of the other provisions of this Assignment or of the other Loan Documents. This
Assignment may not be amended, modified, or changed, nor shall any waiver of any provision
hereof be effective, except by a written instrument signed by the party against whom
enforcement of the waiver, amendment, change, or modification is sought.
7. Indemnity. Borrower shall indemnify, defend, and hold City harmless, for, from,
and against any and all actual or threatened liabilities, claims, actions, causes of action,
judgments, orders, damages (including foreseeable and unforeseeable consequential damages),
costs or expenses, fines, penalties, and losses, including sums paid in settlement of claims and all
consultant, expert, and legal fees and expenses of City’s counsel (including the allocated cost of
in-house counsel), directly or indirectly arising out of or resulting from this Assignment or City’s
exercise of its rights hereunder, excepting those arising out of, or resulting, solely from City’s
gross negligence or willful misconduct.
8. Heirs, Successors, and Assigns. This Assignment shall be binding upon
Borrower and its successors and assigns, and shall inure to the benefit of City, its successors and
assigns. City may assign all or any portion of its interest in the Contracts or its rights created
hereunder and, in such event, Borrower, at its sole expense, shall promptly execute,
acknowledge, and deliver such additional documents, instruments, and agreements as may be
required by City in connection with any such assignment.
9. Survival; Termination. This Assignment shall be deemed to be continuing in
nature and shall remain in full force and effect and shall survive the exercise of any remedy by
City under the Deed of Trust or any of the other Loan Documents, including, without limitation,
any foreclosure or deed in lieu thereof. This Assignment shall terminate upon the first to occur
of the following: (a) by a writing signed by City; or (b) all obligations of Borrower to City under
the Loan Documents have been paid and performed in full and the due recordation of the release
or reconveyance of all deeds of trust now or hereafter securing the Loan.
Att M Ass of Contracts Plans Specs 080118 -4-
10. Governing Law. This Assignment shall be governed by the laws of the State of
California, without regard to the choice of law rules of that state.
11. Costs and Expenses. If any lawsuit, reference, or arbitration is commenced
which arises out of, or which relates to this Assignment, the prevailing party shall be entitled to
recover from each other party such sums as the court, referee, or arbitrator may adjudge to be
reasonable attorneys’ fees in the action or proceeding, in addition to costs and expenses
otherwise allowed by law. In all other actions or proceedings, including any matter arising out of
or relating to any Insolvency Proceeding, Borrower agrees to pay all of City’s costs and
expenses, including attorneys’ fees which may be incurred in any effort to enforce its rights or
interests under this Assignment. From the time(s) incurred until paid in full to City, all such
sums shall bear interest at the Default Rate (as such term is defined in the Note).
12. Authorization; No Violation. Borrower is authorized to execute, deliver and
perform under this Assignment, which is a valid and binding obligation of Borrower. No
provision or obligation of Borrower contained in this Assignment violates any applicable law,
regulation, or ordinance, or any order or ruling of any court or governmental agency. No such
provision or obligation conflicts with, or constitutes a breach or default under, any agreement to
which Borrower is a party. No consent, approval, authorization of, or notice to any person or
entity is required in connection with Borrower’s execution of and obligations under this
Assignment.
13. Amendments. This Assignment may not be modified or amended except by a
written agreement signed by the parties.
14. Time is of the Essence. Time is of the essence in the performance of this
Assignment by Borrower, and each and every term thereof.
15. Recitals; Exhibits. The Recitals to this Assignment set forth above are true,
complete, accurate, and correct, and such recitals are incorporated hereby by reference. The
exhibits to this Assignment are incorporated hereby by reference.
16. Counterparts. This Assignment and any attached consents or exhibits requiring
signatures may be executed in counterparts, and all counterparts constitute but one and the same
document.
[Remainder of page intentionally left blank.]
Att M Ass of Contracts Plans Specs 080118 S-1
IN WITNESS WHEREOF, Borrower has caused this Assignment to be executed as of
the date first above written.
“BORROWER”
HABITAT FOR HUMANITY INLAND VALLEY,
INC., a California nonprofit public benefit corporation
By:
Name: Tammy Marine
Its: Executive Director
Address for notices to Borrower:
Habitat for Humanity Inland Valley, Inc.
41615 Winchester Road, Suite 214
Temecula, CA 92591
Attention: Executive Director
Copies to:
[SIGNATURE PAGE 1 OF 2
ASSIGNMENT OF CONTRACTS, PLANS AND SPECS]
Att M Ass of Contracts Plans Specs 080118 S-2
“CITY”
CITY OF LAKE ELSINORE, a California
municipal corporation
By:
Grant Yates, City Manager
ATTEST:
By:
Susan M. Domen, MMC, City Clerk
APPROVED AS TO FORM:
By:
Barbara Leibold, City Attorney
Address for notices to Lender:
City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: City Manager
[SIGNATURE PAGE 2 OF 2
ASSIGNMENT OF CONTRACTS, PLANS AND SPECS]
Att M Ass of Contracts Plans Specs 080118 EXHIBIT A
EXHIBIT A
DESCRIPTION OF THE LAND
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
LOT 6, BLOCK 503, AS SHOWN ON THAT CERTAIN MAP ENTITLED SMITH’S
ADDITION TO ELSINORE, WHICH MAP WAS FILED IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA IN BOOK 2 OF
MAPS PAGE(S) 135.
APN: 377-292-027-1
END OF LEGAL DESCRIPTION
Att M Ass of Contracts Plans Specs 080118 EXHIBIT B
EXHIBIT B
LIST OF CONTRACTS
1. Sponsorship Agreement, dated , between and
Developer dated as of .
2. Sponsorship Agreement between Developer and , dated as of .
3. AIA Document B141 Standard Form of Agreement between Owner and Architect with
Standard Form of Architect’s Services, dated as of , between Architect
and Borrower
Att M Ass of Contracts Plans Specs 080118 EXHIBIT C
EXHIBIT C
FORM OF CONSENT TO ASSIGNMENT OF CONTRACTS
This Consent to Assignment of Contracts (this “Consent”) is made to be effective as of
, 20 , by ____________________________ (the “Contract Party”) to and for the benefit of
the CITY OF LAKE ELSINORE, a California municipal corporation, its successors, transferees and assigns
(collectively, “City”). Contract Party hereby consents to the foregoing Assignment of Contracts, Plans and
Specifications (the “Assignment”), and agrees to perform pursuant to the terms and conditions of the Contract
Party’s agreement with Borrower (the “Contract”) described in Exhibit B attached to said Assignment,
notwithstanding a foreclosure of the Deed of Trust (as such term is defined in the Assignment) by City. If
requested by City in the exercise of its rights under the Assignment, Contract Party shall continue to perform its
obligations under its Contract for which Contract Party shall be compensated in accordance with its Contract.
The Contract Party agrees that, upon request by City, Contract Party shall provide a complete list of all of its
subcontractors in connection with work for or on the Property and shall cooperate to provide and permit access
to City or its agent for inspection of the Property and the work in process. Contract Party also agrees that, in the
event of a breach or default by Borrower of any of the terms and conditions of said Contract, Contract Party will
give prompt written notice of such breach or default to City at City’s address below or such address otherwise
provided to Contract Party by City. City shall have sixty (60) days from the receipt of such notice of breach or
default to remedy or cure said breach or default; provided, however, that neither the Assignment nor this
Consent shall require City to cure said breach or default, but City shall, in its sole and absolute discretion, have
the option to do so. The Contract Party agrees that if City becomes the owner of the Property, or otherwise
becomes involved with the construction of the Project, City shall have the right to use same without any cost or
expense and without payment of any additional fees or charges to the Contract Party. The undersigned
acknowledges that City is relying on this Consent and the assurances herein in making its Loan to Borrower and
this Consent shall also be for the benefit of and bind any assignee or successors of City and the Contract Party.
All capitalized terms used in this Consent shall have the same meaning as in the Assignment. The Contract
between Borrower and the undersigned is in full force and effect as of the date hereof.
IN WITNESS WHEREOF, Contract Party has caused this Consent to be executed and to be effective
as of the date first above written.
“CONTRACT PARTY”
,
a
By:
Name:
Title:
Address for notices to Contract Party:
Attention:
Address for notices to City:
City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: City Manager
Habitat DDLA 080118 ATTACHMENT N
ATTACHMENT N
RELEASE OF CONSTRUCTION COVENANTS
(Attached)
DRAFT
08/01/18
RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
)
)
City of Lake Elsinore )
130 South Main Street )
Lake Elsinore, CA 92530 )
Attn: City Manager )
Re: 310 East Pottery Street ) (Space above for Recorder’s use only.)
Exempt from Recording Fees Per Government Code Section 27383.
RELEASE OF CONSTRUCTION COVENANTS
THIS RELEASE OF CONSTRUCTION COVENANTS (the “Release”) is hereby
made as of this day of , by the CITY OF LAKE ELSINORE, a
California municipal corporation (“City”) and HABITAT FOR HUMANITY INLAND
VALLEY, INC., a California nonprofit public benefit corporation (“Developer”).
R E C I T A L S
A. Developer and City entered into that certain Disposition, Development and Loan
Agreement (310 East Pottery Street) (the “City Loan Agreement”) whereby City made a loan
to Developer in the total principal amount of Sixty Five Thousand Dollars ($65,000) (the “City
Loan”) for the purpose of providing financing necessary for Developer to (i) rehabilitate the
Improvements located on 310 East Pottery Street, in the City of Long Beach (the “Property”),
and (ii) purchase the Property, in accordance with the City Loan Agreement. All capitalized
terms not defined in this Release shall have the meaning set forth in the City Loan Agreement.
B. As a condition to the City Loan, City and Developer entered into that certain
Declaration of Covenants, Conditions and Restriction recorded on , 201 as
Instrument No. in the Official Records Official Records of the Recorder's
Office of Los Angeles County, California (“Official Records”) (the “Declaration”).
C. In conjunction therewith, Developer agreed to develop, maintain and sell the
Project in accordance with certain covenants, conditions and restrictions set forth in the
Declaration.
D. City has conclusively determined that the construction of the Project as required
by the City Loan Agreement and Declaration has been satisfactorily completed.
NOW, THEREFORE, City hereto certifies as follows:
1. As provided in the City Loan Agreement and Declaration, City does hereby
certify that the construction of the Project as set forth in the Scope of Development attached to
the City Loan Agreement has been fully and satisfactorily completed in accordance with the City
Loan Agreement.
Att N Release of Constr Covs 080118 -2-
2. Further, upon recordation of this Release, City does hereby certify that the
construction of the Project has been fully and satisfactorily completed and the guarantor is
released from all obligations under the Guaranty.
3. Delivery of this Release evidences only the completion of the construction of the
Project for purposes of the City Loan Agreement and Declaration. After the recordation of this
Release, any person or entity then owning or thereafter purchasing, or otherwise acquiring any
interest in the Project will not (because of such ownership, purchase, or acquisition) incur any
obligation or liability under the City Loan Agreement or Declaration to construct the Project,
however, any such party shall be bound by any and all of the covenants, conditions, and
restrictions concerning the use, maintenance and operation of the Property set forth in the
Declaration. Developer acknowledges and agrees that subsequent to the recordation of this
Release, Developer shall remain bound by any and all of the covenants, conditions, and
restrictions concerning the use, maintenance and operation of the Property set forth in the
Declaration.
4. This Release of Construction Covenants is not a notice of completion as referred
to in Section 3093 of the California Civil Code.
[SIGNATURE PAGE FOLLOWS]
Att N Release of Constr Covs 080118
IN WITNESS WHEREOF, City has executed this Release as of the date set forth
above.
“CITY”
CITY OF LAKE ELSINORE, a California
municipal corporation
By:
Grant Yates, City Manager
ATTEST:
By:
Susan M. Domen, MMC, City Clerk
APPROVED AS TO FORM:
By:
Barbara Leibold, City Attorney
Att N Release of Constr Covs 080118
EXHIBIT “A”
LEGAL DESCRIPTION
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
LOT 6, BLOCK 503, AS SHOWN ON THAT CERTAIN MAP ENTITLED SMITH’S
ADDITION TO ELSINORE, WHICH MAP WAS FILED IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA IN BOOK 2 OF
MAPS PAGE(S) 135.
APN: 377-292-027-1
Att N Release of Constr Covs 080118
STATE OF CALIFORNIA )
) §
County of )
On , before me, a
Notary Public, personally appeared who proved to me on
the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct
WITNESS my hand and official seal.
Signature of Notary (Affix seal here)
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
Habitat DDLA 080118 ATTACHMENT O
ATTACHMENT O
ENVIRONMENTAL INDEMNITY
(Attached)
DRAFT
08/01/18
ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY (this “Indemnity”), dated as of August , 2018,
is made by HABITAT FOR HUMANITY INLAND VALLEY, INC., a California nonprofit
corporation (“Developer”), whose address for purposes of giving notice is 41615 Winchester Road,
Suite 214, Temecula, CA 92591, Attn: Executive Director, in favor of the CITY OF LAKE
ELSINORE, a municipal corporation (“City”) , whose address for purposes of giving notices is 130
South Main Street, Lake Elsinore, CA 92530, Attn: City Manager.
WITNESSETH
WHEREAS, Developer is the owner of the real property in the City of Lake Elsinore, as more
particularly described on Exhibit A attached hereto and made a part hereof, and the improvements
currently or to be constructed thereon (collectively referred to as the “Property”);
WHEREAS, Developer and City have entered into that certain Disposition, Development and
Loan Agreement of even date herewith (the “DDLA”) pursuant to which the City will make a loan to
Developer (the “City Loan”) for the purpose of acquiring the Property and constructing an
affordable housing unit thereon (the DDLA and the documents and instruments referred to therein
which are being executed by Developer concurrently herewith are referred to collectively as the
“City Documents”). All capitalized terms not defined herein shall have the meaning ascribed to
them in the DDLA;
WHEREAS, Developer has agreed to execute and deliver to the City this Indemnity to induce
the City to enter into the DDLA and make the City Loan to Developer.
NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual
agreements hereinafter set forth, Developer hereby agrees with the City as follows:
Section I. DEFINITIONS
For the purpose of this Indemnity, “Hazardous Materials” or “Hazardous Substances”
shall include, but not be limited to, substances defined as “extremely hazardous substances,”
“hazardous substances,” “hazardous materials,” “hazardous waste” or “toxic substances” in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sections 11001-11050; the Hazardous Materials Transportation Act, 49 U.S.C. Sections
1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.; and
those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety
Code, as “infectious waste” in Section 25117.5 of the California Health and Safety Code, or as
“hazardous substances” in Section 25316 of the California Health and Safety Code or “hazardous
materials” as defined in Section 353 of the California Vehicle Code; and in the regulations adopted
and publications promulgated pursuant to said laws.
ENVIRONMENTAL INDEMNITY
PAGE 2
Att O Environmental Indemnity 080118
Section II. COVENANTS AND INDEMNITY
The following covenants, and indemnities are hereby given and made by Developer:
2.1 Covenants.
(a) Developer covenants that it shall comply with any and all laws, regulations,
and/or orders which may be promulgated, from time to time, with respect to the discharge and/or
removal of Hazardous Materials, to pay immediately when due the costs of the removal of, or any
other action required by law with respect to, any such Hazardous Materials, and to keep the Property
free of any lien imposed pursuant to any such laws, regulations, or orders.
(b) Developer covenants that the Property will not, while Developer is the owner
thereof, be used for any activities involving, directly or indirectly, the use, generation, treatment,
storage, release, or disposal of any Hazardous Materials, except for de minimis quantities used at the
Property in compliance with all applicable environmental laws and required in connection with the
development of the Affordable Unit or routine operation and maintenance of the Property.
(c) Developer further agrees that Developer shall not release or dispose of any
Hazardous Materials at the Property without the express written approval of the City, except for de
minimis quantities used at the Property in compliance with all applicable environmental laws and
required in connection with the development of the Affordable Unit, and that any such release or
disposal shall be effected in strict compliance with all applicable laws.
(d) The City shall have the right, at any time, to conduct an environmental audit of
the Property at the City’s expense, unless Hazardous Materials are found, then at Developer’s sole
cost and expense, and Developer shall cooperate in the conduct of any such environmental audit but
in no event shall such audit be conducted unless the City believes that such audit is warranted. Other
than in an emergency, such audit shall be conducted only after prior notice has been given to
Developer and only in the presence of a representative of Developer. If Developer is reasonably
requested to remove or mitigate a Hazardous Material and fails to do so in a reasonable time,
Developer shall give the City, its agents and employees access to the Property to remove, or
otherwise mitigate against the effects of Hazardous Materials.
(e) Developer shall not install, or permit to be installed, on the Property friable
asbestos or any substance containing asbestos and deemed hazardous by federal or state regulations
respecting such material, and, with respect to any such material currently present in the Property,
Developer shall promptly either (i) remove or cause to be removed any material that such regulations
deem hazardous and require to be removed, or (ii) otherwise comply with such federal and state
regulations, at Developer’s sole cost and expense. If Developer shall fail to perform the
aforementioned within the cure period permitted under applicable law, regulation, or order, the City
may do whatever is necessary to eliminate said substances from the premises or to otherwise comply
with the applicable law, regulation, or order, and the costs thereof shall be added to the Obligations
(as hereinafter defined) of Developer under this Section 2.
ENVIRONMENTAL INDEMNITY
PAGE 3
Att O Environmental Indemnity 080118
(f) Developer shall immediately advise the City in writing of any of the following: (i)
any pending or threatened environmental claim against the Property, (ii) any condition or occurrence
on the Property that (A) results in noncompliance by Developer with any applicable environmental
law, (B) could reasonably be anticipated to cause the Property to be subject to any restrictions on the
ownership, occupancy, use or transferability of the Property under any environmental law, or (C)
could reasonably be anticipated to form the basis of an environmental claim against the Property or
Developer.
2.2 Indemnity. Developer shall indemnify, protect, and hold harmless the City, its elected
officials, employees, officers, appointees, agents and consultants from and against any and all
damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments,
suits, proceedings, costs, disbursements, or expenses (including, without limitation, attorneys’ and
experts’ fees, costs and disbursements) of any kind or of any nature whatsoever (collectively, the
“Obligations”) which may at any time be imposed upon, incurred by or asserted or awarded against
the City, its elected officials, employees, officers, appointees, agents and consultants, in connection
with, or arising from or out of:
(a) The presence of any Hazardous Materials on, in, under, or affecting all or any
portion of the Property while Developer owns the Property, except to the extent such
Hazardous Materials were present on, in, under or affecting all or any portion of the
Property prior to Developer’s acquisition of the Property or were caused by the City
or its employees, officers, agents or consultants;
(b) The breach of any covenant made by Developer in Section 2.1 hereof; or
(c) The enforcement by the City of any of the provisions of this Section 2.2 or the
assertion by Developer of any defense to its obligations hereunder.
Section III. DEVELOPER’S UNCONDITIONAL OBLIGATIONS
3.1 Unconditional Obligations. Developer hereby agrees that the Obligations will be paid
and performed strictly in accordance with the terms of this Indemnity, regardless of any law,
regulation, or order now or hereafter in effect in any jurisdiction affecting any of the City Documents
or affecting any of the rights of the City with respect thereto. The obligations of Developer hereunder
shall be absolute and unconditional irrespective of:
(a) The validity, regularity, or enforceability of the City Documents or any other
instrument or document executed or delivered in connection therewith;
(b) Any alteration, amendment, modification, release, termination, or cancellation
of any of the City Documents, or any change in the time, manner, or place of payment
or performance of, or in any other term in respect of, all or any of the obligations of
Developer contained in any of the City Documents;
ENVIRONMENTAL INDEMNITY
PAGE 4
Att O Environmental Indemnity 080118
(c) Any exculpatory provision in any of the City Documents limiting the City’s
recourse to property encumbered by the Deeds of Trust securing Developer’s
obligations under the City Documents, or to any other security, or limiting the City’s
rights to a deficiency judgment against Developer;
(d) The insolvency or bankruptcy of Developer, or of any indemnitor or guarantor
under any other indemnity or guarantee given in respect of the Obligations; or
(e) Any other circumstance that might otherwise constitute a defense available to,
or a discharge of Developer, or any other indemnitor or guarantor with respect to any
or all of the Obligations.
3.2 Continuation. This Indemnity (a) is a continuing indemnity and shall remain in full
force and effect until the satisfaction in full of all of the Obligations (notwithstanding the release or
other extinguishment of the Deeds of Trust securing Developer’s obligations under the City
Documents); and (b) shall continue to be effective or shall be reinstated, as the case may be, if at any
time any payment of any of the Obligations is rescinded or must otherwise be returned by the City
upon the insolvency, bankruptcy, or reorganization of Developer, all as though such payment had not
been made.
3.3 Termination. Notwithstanding the payment (and performance) in full of all of the
Obligations and the payment (or performance) in full of all of Developer’s obligations under the City
Documents, this Indemnity shall not terminate if any of the following shall have occurred:
(a) Except for the City’s ownership of the Property prior to conveying the
Property to the Developer, the City has at any time or in any manner participated in
the management or control of, taken possession of (whether personally, by agent or
by appointment of a receiver), or taken title to the Property or any portion thereof,
whether by foreclosure, deed in lieu of foreclosure, sale under power of sale or
otherwise; or
(b) There has been a change, between the date hereof and the date on which all of
the Obligations are paid and performed in full, in any Hazardous Materials laws, the
effect of which may be to make a lender or mortgagee liable in respect of any of the
Obligations, notwithstanding the fact that no event, circumstance, or condition of the
nature described in paragraph (a) above ever occurred.
Section IV. WAIVER
Developer hereby waives the following:
(a) Notice of acceptance and notice of the incurrence of any obligation by Developer;
ENVIRONMENTAL INDEMNITY
PAGE 5
Att O Environmental Indemnity 080118
(b) Notice of any action taken by the City, Developer, or any other interested party under
any City Document, except as required by the City Document, or under any other agreement or
instrument relating thereto;
(c) All other notices, demands, and protests, and all other formalities of every kind, in
connection with the enforcement of the Obligations, the omission of or delay in which, but for the
provisions of this Section 4, might constitute grounds for relieving Developer of its Obligations
hereunder;
(d) Any requirement that the City protect, secure, perfect, or insure any security interest
or lien in or on any property subject thereto;
(e) Any requirement that the City exhaust any right or take any action against Developer
or any other person or collateral; and
(f) Any defense that may arise by reason of:
(1) The incapacity, lack of authority, death or disability of, or revocation hereof
by, any person or persons;
(2) The failure of the City to file or enforce any claim against the estate (in
probate, bankruptcy, or any other proceedings) of any person or persons; or
(3) Any defense based upon an election of remedies by the City, including,
without limitation, an election to proceed by nonjudicial foreclosure or which
destroys or otherwise impairs the subrogation rights of City or any other right of City
to proceed against Developer.
Section V. NOTICES
Any notice, demand, statement, request, or consent made hereunder shall be in writing and
shall be personally served or mailed by first-class registered mail, return receipt requested, to the
address set forth in the first paragraph of this Indemnity above, with confirmations mailed by first
class registered mail, return receipt requested to the address set forth above, of the party to whom
such notice is to be given (or to such other address as the parties hereto, shall designate in writing):
Any notice that is transmitted by electronic transmission followed by delivery of a “hard” copy, shall
be deemed delivered upon its transmission; any notice that is personally delivered (including by
means of professional messenger service, courier service such as United Parcel Service or Federal
Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt; and
any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be
deemed received on the date of receipt thereof.
ENVIRONMENTAL INDEMNITY
PAGE 6
Att O Environmental Indemnity 080118
Section VI. MISCELLANEOUS
6.1 Developer shall make any payment required to be made hereunder in lawful money
of the United States of America, and in same day funds, to the City at its address specified in the first
paragraph hereof.
6.2 No amendment of any provision of this Indemnity shall be effective unless it is in
writing and signed by Developer and the City. No waiver of any provision of this Indemnity, nor
consent to any departure by Developer from any provision of this Indemnity, shall be effective unless
it is in writing and signed by the City, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
6.3 No failure on the part of the City to exercise, and no delay in exercising, any right
hereunder or under any other City Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the City provided herein and in the other City Documents are
cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The
rights of the City under any City Document against any party thereto are not conditional or
contingent on any attempt by the City to exercise any of its rights under any other City Document
against such party or against any other person or collateral.
6.4 Any provision of this Indemnity that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining portions hereof and without affecting the validity or
enforceability of such provision in any other jurisdiction.
6.5 This Indemnity shall (a) be binding upon Developer, and Developer’s successors and
assigns; and (b) inure, together with all rights and remedies of the City hereunder, to the benefit of
the City, its respective directors, officers, employees, consultants and agents, any successors to the
City’s interest in the Property, any other person who acquires any portion of the Property at a
foreclosure sale or otherwise through the exercise of the City’s rights and remedies under the City
Documents, any successors to any such person, and all directors, officers, employees, and agents of
all of the aforementioned parties. Without limiting the generality of clause (b) of the immediately
preceding sentence, the City may, subject to, and in accordance with, the provisions of the City
Documents, assign or otherwise transfer all or any portion of its rights and obligations under any
other City Document, to any other person, and such other person shall thereupon become vested with
all of the rights and obligations in respect thereof that were granted to the City herein or otherwise.
None of the rights or obligations of Developer hereunder may be assigned or otherwise transferred
without the prior written consent of the City.
6.6 Developer hereby (a) irrevocably submits to the jurisdiction of any California or
federal court sitting, in each instance, in Riverside County in any action or proceeding arising out of
or relating to this Indemnity, (b) waives any defense based on doctrines of venue or forum non
convenient or similar rules or doctrines, and (c) irrevocably agrees that all claims in respect of any
ENVIRONMENTAL INDEMNITY
PAGE 7
Att O Environmental Indemnity 080118
such action or proceeding may be heard and determined in such California or federal court.
Developer irrevocably consents to the service of any and all process which may be required or
permitted in any such action or proceeding to the address specified in the first paragraph of this
Indemnity, above. Developer agrees that a final judgment in any such action or proceeding shall be
inclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law.
6.7 The title of this document and the captions used herein are inserted only as a matter of
convenience and for reference and shall in no way define, limit, or describe the scope or the intent of
this Indemnity or any of the provisions hereof.
6.8 This Indemnity shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California applicable to contracts made and to be performed therein,
except to the extent that the laws of the United States preempt the laws of the State of California.
6.9 This Indemnity may be executed in any number of counterparts, each of which shall
constitute an original and all of which together shall constitute one agreement.
[signature page follows]
ENVIRONMENTAL INDEMNITY
PAGE 8
Att O Environmental Indemnity 080118
IN WITNESS WHEREOF, Developer has duly executed this Indemnity as of the date first set
forth above.
HABITAT FOR HUMANITY INLAND
VALLEY, INC., a California nonprofit public
benefit corporation
By:
Name: Tammy Marine
Title: Executive Director
Att O Environmental Indemnity 080118 EXHIBIT A
EXHIBIT “A”
LEGAL DESCRIPTION
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
LOT 6, BLOCK 503, AS SHOWN ON THAT CERTAIN MAP ENTITLED SMITH’S ADDITION
TO ELSINORE, WHICH MAP WAS FILED IN THE OFFICE OF THE RECORDER OF THE
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA IN BOOK 2 OF MAPS PAGE(S) 135.
APN: 377-292-027-1
1
REVIEW OF SB 341 COMPLIANCE FOR HABITAT FOR
HUMANITY PROJECT
The following summary outline provides background information about SB 341 (Chapter 796,
Statutes of 2013) and its impacts on Habitat for Humanity’s (“Habitat”) proposed project at 310
East Pottery Street, and other future expenditures of housing funds held in the City’s Low and
Moderate Income Housing Asset Fund (“LMIHAF”). This outline makes the following
assumptions:
Cash currently held in the “SARDA Housing Fund” (Fund 617) are assumed to be LMIHAF
monies that are subject to SB 341.
Since January 1, 2014, UFI assumes the City has expended a total of $7,520,000 in
LMIHAF monies from Fund 617 for affordable projects or other non‐administrative
activities or payments for approved Enforceable Obligations on the Successor Agency’s
Recognized Obligation Payment Schedule (“ROPS”). If any such expenditures were
made during the SB 341 2014‐2019 accounting and reporting period, they would further
reduce the maximum amount of LMIHAF monies that can be spent on the Habitat
Project for Extremely Low, Very Low, or Low Income housing units. Conversely, future
deposits into the LMIHAF projected through June 30, 2019 will increase the maximum
amount of expenditures.
Cash currently held in the “Affordable Housing Fund” (Fund 106) are assumed to be
non‐LMIHAF monies that are not subject to the expenditure requirements and
limitations of SB 341.
OVERVIEW OF SB 341
SB 341 made technical changes to the Health and Safety Code pertaining to housing assets and
liabilities of former redevelopment agencies. Amendments primarily relate to expenditures of
the Low and Moderate Income Housing Asset Fund. Funds may first be used for:
Administrative costs – monitoring and preserving long‐term affordability units (up to
$200,000); and
Homeless – preservation and assistance (up to $250,000) (if prior outstanding housing
replacement production requirements were fulfilled by former redevelopment agency).
Any remaining funds may be expended for the purposes of income targeting requirements as
follows:
Extremely Low‐Income Households (<30% AMI) – minimum 30% of remaining funds;
Very Low‐Income Households (30 ‐ 60% AMI) – no expenditure limitations;
Low‐Income Households (60 ‐ 80% AMI) – maximum 20% of remaining; and
Moderate‐Income Households (>80% AMI) – no expenditures permitted.
2
Compliance with the above income‐limited expenditure requirements must be reflected in a 5‐
year housing compliance report to be completed in 2019 for the period covering January 1,
2014 through June 30, 2019, and subsequent five‐year periods. If a housing successor fails to
comply with the Extremely Low‐Income expenditure requirement the minimum required
expenditure for this income group increases to 50% of remaining funds until expenditure
requirements have been met.
It is important to note that the expenditure requirements of SB 341 are applied to the
cumulative expenditures from the LMIHAF during the five‐year reporting period and are NOT
applied or calculated on a project‐by‐project basis.
LMIHAF (FUND 617) HOUSING FUNDS
As of June 30, 2018, LMIHAF Housing Fund (Fund 617) cumulative net balance (existing
balance as of 1/1/2014 plus subsequent revenues less permitted non‐project costs):
$12,351,750.
The maximum expenditure requirement for Very Low‐Income Households for the five‐
year period is 70% of the net LMIHAF Housing Fund, or $8,646,225. Of that amount,
20%, or $2,470,350 (or 20% of the net projected LMIHAF Housing Fund as of June 30,
2019) can be spent on Low‐Income Households. During FY 2017‐18, the City provided
$7,520,000 to C&C Development for a Very Low‐Income project. The remaining amount
that may be spent on either Very Low‐ or Low‐Income Households is $1,126,225 (or 9%
of the net projected LMIHAF Housing Fund as of June 30, 2019).
HABITAT PROJECT
$65,000 loan, of which is $30,000 is forgivable, from Fund 617 for renovation of a home
affordable to Low‐Income Households.
ANALYSIS
Based on a cumulative net Fund 617 balance of $12,251,750, projected as of June 30, 2019, the
following table concludes that the proposed $65,000 expenditure from Fund 617 to assist Low‐
Income Households is in compliance with the expenditure requirements and limits of SB 341.
3
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$
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$
4,
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Maximum39%
$
6,
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$
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Minimum0%
$
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20
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FU
N
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61
7
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RE
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FOR FY 2018‐19
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.
HS
C
34
1
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.
1
(
a
)
(
3
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(
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FI
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AS
S
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A
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(F
Y
20
1
7
‐
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8
)
EX
T
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M
E
L
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LO
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<3
0
%
AM
I
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Miles
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