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HomeMy WebLinkAboutRDA O1 REDEV SR HSG 02-19-02AGENDA REPORT RDA NO. 1 02-1§-02 MEETING DATE: FEBRUARY 19, 2002 TO: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR FROM: REDEVELOPMENT AGENCY STAFF SUBJECT: APPROVAL OF DISPOSITION AND DEVELOPMENT AGREEMENT FOR THE REDEVELOPMENT OF PROPERTY LOCATED IN THE VICINITY OF SYCAMORE AVENUE AND NEWPORT AVENUE SUMMARY Agency approval is requested for a Senior Citizen Residential Project Disposition and Development Agreement (DDA) and related Loan Agreements, Promissory Notes and Regulatory Agreement for the site at 1101 Sycamore Avenue. RECOMMENDATION It is recommended that the Redevelopment Agency take the following actions: 1. Adopt Resolution No. RDA 02-1 certifying the Negative Declaration as adequate for the proposed DDA. Subject to non-substantive modifications as may be required by Agency Counsel, authorize the Chairman to execute the DDA among the Tustin Community Redevelopment Agency, City of Tustin and Tustin Heritage Place, L.P., and Regulatory Agreement and authorize the Executive Director to execute related Loan Agreements, Promissory Notes, and Deeds of Trust for the senior citizen apartment development project proposed at 1101 Sycamore Avenue; 3. Approve funding in an amount not to exceed $250,000 from California Housing Finance Agency (CHFA) HELP Program bridge loan funds; and Appropriate $350,000 for the proposed project as follows: (a) $175,000 out of the Iow and moderate income housing set-aside fund for the South Central Redevelopment Project; and (b) $175,000 out of the Iow and moderate income housing set-aside fund for the Town Center Redevelopment Project. William A. Huston DDA Sycamore and Newport Avenue February 19, 2002 Page 2 FISCAL IMPACT Agency assistance in an aggregate amount of $600,000 is estimated. Assistance will be provided in the form of a short-term California Housing Finance Agency (CHFA) HELP Program bridge loan not to exceed $250,000, to be paid off upon completion of construction and a long-term Agency Loan not to exceed $350,000. BACKGROUND/DISCUSSION In order to develop and construct the subject project, the developer has secured two Apartment Development Revenue Bonds issued by the County of Orange, four percent (4%) Low Income Housing Tax Credits from the California Tax Credit Advisory Committee, and a long-term Iow interest loan from the County of Orange Housing and Community Development department (HCD). The HCD financing commitment requires a financial assistance match by the City and its Redevelopment Agency which was conditionally approved by the Agency at its meeting on May 21, 2001. The Agency assistance was anticipated to be funded from: (1) Agency Iow and moderate income housing set-aside funds in an amount not to exceed $350,000; and (2) California Housing Finance Agency (CHFA) HELP Program loan funds awarded to the Agency in an amount not to exceed $250,000. This anticipated financial assistance was subject to review and approval by the Agency of the terms and conditions embodied in the final form of a Disposition and Development Agreement (DDA) and any necessary and ancillary loan(s), agreement(s), and/or regulatory agreements. Accordingly, a Disposition and Development Agreement is attached with the related, loan agreements, promissory notes and regulatory agreement for the Agency's consideration. INDEPENDENT LIVING SENIOR CITIZEN APARTMENT PROJECT The developer of the 54 unit independent senior living project is Tustin Heritage Place, L.P., which is comprised of Tustin Heritage Place, LLC, a California limited liability company, as the Developer General Partner and Valley West Affordable Housing Corporation, a California non-profit public benefit corporation, as the Managing General Partner. The concept plan previously approved by the City calls for a high quality senior citizen apartment development in a three-story building having architecturally distinctive elevations. The project consists of 42 one-bedroom units and 12 two-bedroom units. The plan also encourages pedestrian activities providing landscaped grounds, swimming pool and recreational facilities to enhance the quality of living for the senior citizen tenants. William A. Huston DDA Sycamore and Newport Avenue February 19, 2002 Page 3 The project requires Heritage Place, LP to secure all required land use entitlements from the Tustin Planning Commission and City Council. The site improvements will be constructed in compliance with all provisions of the DDA and with all "Conditions of Approval" stipulated by the Tustin Planning Commission, the City Council and other applicable governmental agencies having jurisdiction. Except for the Agency assistance amount described below, the DDA requires the Developer to obtain funds necessary for all project costs, including but not limited to, the acquisition of the site, construction of on-site and off-site improvements, and all public utility improvements related to developing the site. Agency financial assistance will be provided to assist the Developer to acquire the site and enable the Developer: (1) to provide for the development of a 54-unit independent living senior citizen project; and (2) to record covenants requiring the maintenance of affordability for a period not less than fifty-five (55) years of fifty-three (53) such senior citizen units in the project (one unit will be a manager's unit) at a price not to exceed the affordable housing cost for Iow and very Iow-income senior citizen households. The total Agency assistance to the Developer will be an aggregate amount not to exceed $600,000 to be disbursed over time, to enhance the value of the Agency's security. An initial amount of $250,000 will be deposited into escrow as assistance for the Developer's predevelopment costs of the site. A subsequent amount not to exceed $350,000 will be disbursed upon completion of construction of the improvements evidenced by the issuance of a Certificate of Occupancy for the units by the City of Tustin. The Agency assistance will be in the form of a short-term Bridge Loan in the amount of $250,000 funded by CHFA HELP Program bridge loan funds previously competitively awarded to the Agency and evidenced by a Bridge Loan Promissory Note and secured by a Bridge Loan Deed of Trust to be recorded as a lien against the site. The Bridge Loan funding is in accordance with the agreement by and between CHFA an the Agency, dated February 27, 2001 per Agency Resolution RDA 01-2 approving the CHFA HELP Program allocation of $1,150,000 to provide assistance for affordable housing opportunities in the South Central Redevelopment Project Area. The Bridge Loan deed will be subordinate to permitted mortgage financing approved by the Agency for construction of the site improvements pursuant to the Apartment Development Revenue Bonds issuance by the County of Orange prior to the issuance by the Agency of a Certificate of Compliance. The Bridge Loan will accrue interest at three percent (3%) per annum to be paid off the earlier of: (1) three years from the date the Bridge Loan funds are disbursed to the Developer; or (2) funding of the Agency Loan in accordance with the conditions in the DDA. William A. Huston DDA Sycamore and Newport Avenue February 19, 2002 Page 4 Subject to the Developer's satisfactory completion of the site improvements as required by the DDA, the City and Agency's issuance of a Certificate of Compliance, and the repayment to the Agency of the total amount of the Bridge Loan and accrued interest, the Agency will fund and disburse a long-term Agency Loan in the amount not to exceed $350,000 from Iow and moderate income housing set-aside funds evidenced by an Agency Loan Promissory Note and secured by an Agency Loan Deed of Trust to be recorded as a lien against the site. The Agency Loan deed will be subordinate to permitted mortgage financing pursuant to the Apartment Development Revenue Bonds and the HCD Loan approved for construction of site improvements. The Agency Loan will accrue interest at three percent (3%) per annum simple interest and be repaid over the term of the loan from the Project's residual receipts as defined in the DDA to be split between the County HCD and Agency and the basis of their respective loan balances. CEQA CERTIFICATION OF NEGATIVE DECLARATIONS Staff has completed an environmental assessment of the DDA in compliance with the California Environmental Quality Act (CEQA). Approval of the DDA will not have the potential to degrade the quality of the environment and no significant environmental effect of the project is expected. The DDA stipulates that the Developer obtain certain land use and regulatory approvals from the City as conditions precedent to receiving Agency assistance for development or rehabilitation of the site. A previous CEQA Negative Declaration for the Project was approved by City Council Resolution No.01-57 pursuant to the approval of a General Plan Amendment (Resolution 01-58) and adoption of a Zone Change (Ordinance No. 1239) for the Project. An Initial Study/Negative Declaration for the DDA has been noticed for public review pursuant to the requirements of CEQA and no public comments were received during the public review and comment period, which closed on February 19, 2002. FINDING OF BENEFIT The site is located in close proximity to the South Central Project Area. On May 3, 1993 Tustin City Council adopted Resolution No. 93-45 and the Tustin Community Redevelopment Agency adopted Resolution No. 93-7 finding that the use of Iow and moderate income housing set-aside funds outside of the Project Area constituted a primary benefit to the South Central Project Area. On March 6, 2000 the Tustin Community Redevelopment Agency adopted a Second Five-Year Implementation Plan for the Town Center and South Central Redevelopment Project areas for fiscal years William A. Huston DDA Sycamore and Newport Avenue February 19, 2002 Page 5 2000-2001 through 2004-2005. The Implementation Plan was composed of two parts, a five-year plan for redevelopment activities and a five-year plan for housing activities. The proposed senior citizen rental residential development project is consistent with the Implementation Plan's five-year plan for housing activities for the Project Areas. Anticipated accomplishments and expenditures for the five-year period included the development of 60 new senior citizen rental units to benefit the Town Center and South Central Project Areas. The proposed project will remove a blighting influence adjacent to the South Central Project Area by developing a vacant lot and developing a 54-unit independent living senior citizen housing project that would allow for the recording affordability covenants for a period of not less than 55 years and the expenditure of housing set-aside funds. The project will contain certain senior citizen and affordability restrictions for fifty-three (53) units. RDA~RDA Report~Feb 19 DDA American Sr Living.doc Attachments RESOLUTION NO. RDA 02-1 A RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF TUSTIN, CALIFORNIA, ADOPTING THE FINAL NEGATIVE DECLARATION AS ADEQUATE FOR THE EXECUTION OF A RESIDENTIAL DISPOSITION AND DEVELOPMENT AGREEMENT (DDA) BETWEEN THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY, THE CITY OF TUSTIN AND HERITAGE PLACE, L.P. FOR THE PROPERTY LOCATED AT 1101 SYCAMORE AVENUE. The Tustin Community Redevelopment Agency ("Agency") does hereby resolve as follows: I. The Agency finds and determines as follows: Ao That the Disposition and Development Agreement (DDA) between the Tustin Community Redevelopment Agency, the City of Tustin and Heritage Place, L.P. is considered a "project" pursuant to the terms of the California Environmental Quality Act; B. An Initial Study and a Negative Declaration have been prepared for this project and have been distributed for public review; The Agency of the City of Tustin has considered evidence presented by the Redevelopment Agency staff and other interested parties with respect to the subject Negative Declaration; and The Agency has evaluated the proposed Negative Declaration and determined that the execution of a DDA will not have a significant effect on the environment. II. A Final Negative Declaration, attached hereto as Exhibit A, has been completed in compliance with CEQA and State guidelines. The Agency has received and considered the information contained in the Negative Declaration prior to approving the execution of a DDA, and found that it adequately discusses the environmental effects of the execution of a DDA for the project located at 1101 Sycamore Avenue, Tustin. Further, the Agency finds the execution of a DDA for the senior citizen housing project involves no potential for any adverse effect, either individually or cumulatively, on wildlife resources as defined in Section Resolution No. RDA 02-1 Page 2 of 2 711.2 of the Fish and Game Code Section. The Agency hereby adopts the Final Negative Declaration for the execution of a DDA for the senior citizen housing project located at 1101 Sycamore Avenue, Tustin, California. PASSED AND ADOPTED at a regular meeting of the Tustin Community Redevelopment Agency held on the 19th day of February, 2002. JEFFERY M. THOMAS Chairperson ATTEST: PAMELA STOKER Recording Secretary COMMUNITY DEVELOPMENT DEPARTMENT 300 Centennial Wa.}', Tustin, C,q 92780 (714J 573-3100 NEGATIVE DECLARATION Project Title: Heritage Place at Tustin Disposition and Developer Agreement (DDA) Project Location: 1101 Sycamore Avenue, Tustin, California Project Description: The execution of a Disposition and Development Agreement (DDA) by and between the Cit3' of Tustin, Tustin Community Redevelopment Agency, and Tustin Heritage Place, LP, the site developer, which will authorize issuance of two Agency loans in an aggregate amount not to exceed $600,000 to assist in the development of a 54-unit affordable senior citizen housing project. The Agency loans will be secured by loan agreements, promissor3' notes, and deeds of trust along with a Regulatory Agreement and Declaration of Restrictive Covenants to be recorded against the properly for a period of not less than 55 years. Project Proponent: American Senior Living, 1740 E.-Garry, Suite 105, Santa Ana, CA 92705 Lead Agency Contact Person: Justina Willkom Telephone: (714) 573-3174 The Community Development Department has conducted an Initial Study for the above project in accordance with the City of Tustin's procedures regarding implementation of the California Environmental Quality Act, and on the basis of that study hereby finds: That there is no substantial evidence that the project may have a significant effect on the environment. That potential significant effects were identified, but revisions have been included in the project plans and agreed to by the applicant that would avoid or mitigate the effects to a point where clearly no significant effects would occur. Said, Mitigation Measures are included in Attachment A of the Initial Stud)' which is attached hereto and incorporated herein. Therefore, the preparation of an Environmental Impact Report is not required. The Initial Study which provides the basis for this determination is attached and is on file at the Community Development Department, City of Tustin. The public is invited to comment on the appropriateness of this Negative Declaration during the review period, which begins with the public notice of Negative Declaration and extends for twenty (20) calendar days. Upon review by the Community Development Director, this review period may be extended if deemed necessary. REVIEW PERIOD ENDS 4:00 P.M. ON FEBRUARY 19, 2002. Date 01-31-02 Christine A. Shingleton ///-' "'--'-'~' Assistant City Manager COMMUNITY DEVELOPMENT DEPARTMENT 300 Centennial Way, Tustin, CA 92780 (7149 573-3100 INITIAL STUDY BACKGROUND Project Title: Heritage Place at Tustm Disposition and Developer Agreement (DDA) Lead Agency: City of Tustin Redevelopment Agency 300 Centennial Way Tustin, California 92780 Lead Agency Contact Person: Justina Willkom Phone: (714) 573-3174 Project Location: 1101 Sycamore Avenue Project Sponsor's Name and Address: American Senior Living 1740 E. Gan-)', Suite 105 Santa Aha, CA 92705 General Plan Desi~,mation: ltigh Density Residential Zoning Desi~mation: Multiple Family Residential District (R-3) Project Description: Redevelopment Agency approval for execution of a Disposition and Dcvelopmenl Agreement by and between the CiD' of Tustin, Tustin Communit5' Redevelopment Agency, and Tustin Heritage Place, LP. the site developer, which will authorize issuance of two Agency loans in an aggregate amount not to exceed $600,000 to assist in the development of a 54-unit affordable senior citizen housing project. The Agency loans will be secured by loan agreements, promissoD' notes, and deeds of u-ust along with a Regmlatory Agreement and Declaration of Restrictive Covenants to be recorded against the property, for a period of not less than 55 years. Surrounding Uses: North: Hospital South: Offices and Multi-Family Residential East: Multi-family Residential West: Hospital Parking Lot Other public agencies whose approval is required: Orange County Fire Authority Orange Count5' Health Care Agency South Coast Air Quality Management District Other City of Irvine [] City of Santa Ana Orange Count' EMA B. ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact" as indicated by the checklist in Section D below. [~Land Use and Planning [--[Population and Housing [--[Geological Problems I--Iwater t--lAir Quality [~]Transportation & Circulation [--~Biological Resources ['-]Energ3' and Mineral Resources [-[Hazards ["']Noise [-]Public Services [~]Utilities and Service Systems ~]Aesthetics [-]Cultural Resources [--IRecreation [-]Mandatory Findings of Significance C. DETERMINATION: On the basis of this initial evaluation: I find that the proposed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared. 1 find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because the mitigation measures described on an attached sheet have been added to the project. A NEGATIVE DECLARATION will be prepared. [~] I find that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required. I find that the proposed project MAY have a significant effect(s) on the environment, but at least one effect I) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets, if the effect is a "Potentially Significant Impact" or "Potentially Significant Unless Mitigated." An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed. I find that although the proposed project could have a significant effect on the environment, there WiLL NOT be a significant effect in this case because all potentially significant effects 1) have been analyzed adequately in an earlier EIR pursuant to applicable standards, and 2) have been avoided or mitigated pursuant to that earlier EIR, including revisions or mitigation measures that are imposed upon the proposed project. I find that although the proposed project could have a significant effect on the environment, there WiLL NOT be a significant effect in this case because all potentially significant effects 1) have been analyzed adequately in an earlier NEGATIVE DECLARATION pursuant to applicable standards, and 2) have been avoided or mitigated pursuant to that earlier NEGATIVE DECLARATION. including revisions or mitigation measures that are imposed upon the proposed project. Preparer: Ju,~ina Willkom Justifla:,.Willkom, Associate Planner Title Associate Platlr~er Date. 01-31-02 l) 2) 3) 4) 5) 6) 7) 8) 9) D. EVALUATION OF ENWIRON.,~M. ENTAL IMPACTS Directions A brief explanation is required for all answers except "No Impact" answers that are adequately supported by the information sources a lead agency cites in the parentheses following each question. A "No Impact" answer is adequately supported if the referenced information sources show that the impact simply does not apply to projects like the one involved (e.g. the project falls outside a fault rupture zone). A "No Impact" answer should be explained where it is based on project-specific factors and general standards (e.g. the project will not expose sensitive receptors to pollutants, based on a project-specific screening analysis). All answers must take into account the whole action involved, including off-site, on-site, cumulative project level, indirect, direct, construction, and operational impacts. Once the lead agency has determined that a particular physical impact may occur, the checklist answers must indicate whether the impact is potentially sigmfieant, less than significant with mitigation, or less than significant. "Potentially Significant Impact" is appropriate if there is substantial evidence that an effect may be significant. If there are one or more "Potentially Significant Impact" entries when the determination is made. an EIR is required. "Negative Declaration: Less Than Significant With Mitigation Incorporated" applies where the incorporation of mitigation measures has reduced an effect from "Potentially Significant Impact" to a "Less than Significant Impact." The lead agency must describe the mitigation measures, and briefly explain how they reduce the effect to a less than sigmificant level (mitigation measures from Section XVII, "Earlier Analyses," may be cross- referenced). Earlier analyses may be used where, pursuant to the tiering, program EIR. or other CEQA process, an effect has been adequately analyzed in an earlier EIR or negative declaration. Section 15063 (c) (3)(D). In this case, a brief discussion should identi~' the following: a) Earlier Analysis Used. Identify and state where they are available for review. b) Impacts Adequately Addressed. Identify which effects from the above checklist were within the scope of and adequately anal.vzed in an earlier document pursuant to applicable legal standards, and state whether such effects were addressed by mitigation measures based on the earlier analysis. c) Mitigation Measures. For effects that are "Less than Significant adth Mitigation Measures Incorporated," describe the mitigation measures which were incorporated or refined from the earlier document and the extent to which they address site-specific conditions for the project. Lead agencies are encouraged to incorporate into the checklist references to intbrmation sources for potential impacts (e.g. general plans, zoning ordinances). Reference to a prex,iously prepared or outside document should, where appropriate, include a reference to the page or pages where the statement is submantiated. Supporting Information Sources: A source list should be attached, and other sources used or individuals contacted should be cited in the discussion. This is only a suggested form, and lead agencies are free to use different formats; however, lead agencies normally address the questions from this checklm that are relevant to a project's emhronmental effects in whatever format is selected. The explanaticm of each issue should identify: a) lhe significance criteria or threshold, if any, used to evaluate each question; and, b) the mitigation measure identified, if an3'. to reduce the impact to less than significance. EVALUATION OF ENVIRONMENTAL IMPACTS I. AESTHETICS - Would the project: a) Have a substantial adverse effect on a scenic vista? b) Substantially damage scenic resources, including, but not limited to. trees, rock outcroppings, and historic buildings within a state scenic highway'? c) Substantially degrade the existing visual character or quality of the site and its surroundings.'? d) Create a new source of substantial light or glare which would adversely affect day or nighttime views in the area? ii. AGRICULTURE RESOURCES: In determining whether impacts to agricultural resources are significam environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Dept. of Conservation as an optional model to use in assessing impacts on agriculture and farmland. Would the project: a) Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as sho~xm on the maps prepared pursuant to the Farmland Mapping and Monitoring Program &the California Resources Agency, to non- agricultural use? b) Conflict with existing zoning for agricultural use, or a Williamson Act contract'/ c) involve other changes in the existing environment which, due to their location or nature, could result m conversion of Farmland, to non-agricultural use? II1. AIR QUALITY: Where available, the significance criteria established by the applicable air quality management or air pollution control district may be relied upon to make the following determinations. Would the project: a) Conflict with or obsmact implementation of the applicable air quality plan? b) Violate any air quality' standard or contribute substantially to an existing or projected air quality violation? c) Result in a cumulatively' considerable net increase of any criteria pollutant for which the project region is non- attainment under an applicable federal or state ambient air quahty standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)'" d) Expose sensitive receptors to substantial pollutant concentration.s? e) Create objectiomble odors affecting a substantial number of people? Potentialb, Sign~[icant Impact L ,e~s Than Sigmificant ~th Mitigation Incorporation Less Than Sign(/icant Impact No Impact [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] IX.'. BIOLOGICAL RESOURCES: - Would the project: a) Have a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special status species in local or regional plans, policies, or regulations, or by the California Department offish and Game or U.S. Fish and Wildlife Service? b) Have a substantial adverse effecl on any riparian habitat or other sensitive natural community identified in local or regional plans, policies, regulations or by the California Depasu,ent ofFish and Game or U.S. Fish and Wildlife Service? c) Have a substantial adverse effect on federally protected wetlands as defined by Section 404 of the Clean Water Act (including. but not limited to. marsh, vernal pool. coastal, etc.) through dkect removal, filling, hydrological interruption, or other means? d) Interfere substantially with the movement of any native resident or migrator), fish or wildlife species or x~fth established native resident or migratory wildlife corridors, or impede the use of native wildlife nurser3, sites.'? e) Conflict with an), local policies or ordinances protecting biological resources, such as a tree preservation policy or ordinance? f) Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Commumty Conservation Plan, or other approved local, regional, or state habitat conservation plan? V. CULTURAL RESOURCES: - Would the project: a) Cause a substantial adverse change in the significance of a historical resource as defined in § 15064.57 b) Cause a substantial adverse change in the significance of an archaeological resource pursuant lo § 15064.57 c) Directly or indirectly destro)' a unique paleomological resource or site or unique geologic feature? d) Disturb any human remains, including those interred outside of formal cemeteries? Vi. GEOLOGY AND SOILS: - Would the project: a) Expose people or smactures to potential substantial adverse effects, including the risk of loss, injury, or death involving: Potentially Significant Impact Less Than Significant With Mitigation Incorporation Less Than Significant Impact [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] 0 0 [] b'o Impact i) Rupture of a known earthquake fault, as delineated on the most recent Alquist-Priolo Earthquake Fault Zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42. ii) Strong seismic ~ound shaking? iii) Seismic-related ground failure, including liquefaction? iv) Landslides? b) Result in substantial soil erosion or the loss of topsoil? c) Be located on a geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on- or off-site landslide, lateral spreading, subsidence, liquefaction or collapse? d) Be located on expansive soil, as defined in Table 18-I-B of the Uniform Building Code (1994), creating substantial risks to life or property? e) Have soils incapable of adequately supporting the use of septic tanks or alternative waste water disposal systems where sewers are not available for the disposal of waste water? VII.HAZaRDS AND HAZARDOUS MATERIALS: Would the project: a) Create a significant hazard to the public or the environment through the routine transport, use. or disposal of hazardous materials? b) Create a significant hazard to the public or the environment through reasonably foreseeable upse! and accident conditions involving the release of hazardous materials into the environment? c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one-quarter mile of an existing or proposed school? d) Be located on a site which is included on a list of hazardous materials sites compiled pursuant m Government Code Section 65962.5 and, as a result, would it create a significant hazard to the public or the em'ironment? e') For a prqiect located within an airport land use plan or. where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project result in a safety hazard tbr people residing or working in the project area? f) For a project ~4thin the vicinit3' of a private airstrip, would the project result in a safety hazard for people residing or working in the project area? Less Than Significant Potentially With Significant Mitigation Impact Incorporation Lexs Than Significant Impact No Impact [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] g) Impair implementation of or physically interfere with an adopted emergency response plan or emergency evacuation plan? h) Expose people or slxucturcs to a significant risk of loss, injury or death involving wildland fn'cs, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? Xqll. HYDROLOGY AND WATER QUALITY: - Would the project: a) Violate any water qualiD' standards or waste discharge requirements? b) Substantially deplete groundwater supplies or interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre- existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been grained)? c) Substantially alter the existing drainage pauem ofthe site or area, including through the alteration of the course of a stream or river, in a manner which would result in substantial erosion or siltation on- or off-site'.' d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a slxeam or river, or substantially increase the rate or amount of surface runoff in a manner which would result in flooding or off-site? e) Create or contribute runoff water which would exceed the capacity of existing or planned stormwater drainage systems or provide substantial additional sources of polluted runoff: Otherwise substantially degrade xx~ter qualiw? g) Place housing within a 100-year flood hazard area as mapped on a federal Flood Hazard Boundary or Flood Insurance Rate Map or other flood hazard delineation map? h) Place within a lO0-ycar flood hazard area structures which would impede or redirect flood flows': i) Expose people or structures to a significant risk of loss. inju~.' or death invoMng flooding as a result of the failure ora levee or dam': j) Inundation by' seiche, tsunami, or mudflow? IX. LAND USE AND PLANNING - Would the prqject: Less Than Significant Potentially With Significant Mitigation Impact Incorporation Less Than Signoqcant Impact [] [] [] No Impact [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] Fq [] a) Physically divide an established communiB,? ~] 0 [~ ~ b) Conflict adth any applicable land use plan, policy, or regulation of an agency ~xSth j urisdicfion over the project (including. but not limited to the general plan, ~ecific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? c) Conflict with any applicable habitat conservation plan or natural community conservation plan? X. MINERAL RESOURCES - Would the project: a) Result in the loss of availability of a known mineral resource that would be of value to the region and the residents of the state? b) Result in the loss of availability of a locally-important mineral resource recover3.' site delineated on a local general plan. specific plan or other land use plan? XI. NOISE- Would the project result in: a) Exposure &persons to or generation ofnoise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies? b) Exposure of persons to or generation of excessive groundbome vibration or grotmdborne noise levels? c) A substantial permanent increase in ambient noise levels in the project vicinity above levels existing xvithout the project? d) A substantial tempom~ or periodic increase in ambient noise levels in the project vicinity above levels existing without the project? e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project expose people residing or working in the project area to excessive noise levels? f) For a project within the vicinity ora private airstrip. would the projec~ expose people residing or working in thc project area to excess noise levels'? XI1.POPUL.-~TION A. NI) HOUSING - Would the project: a) Induce substantial population growth in an area. either directly (for example, by proposing new homes and businesses) or indirectly, (for example, through extension of roads or other infrastructure)? b) Displace substantial numbers &existing housing, necessitating the construction of replacement housing elsewhere? Levs Than Significant Potentially' With Significant Mitigation Impact lnco~oration Less Than Sign~/icant Impact No Impact [] [] [] [] 0 [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] c) Displace substantial numbers ofpeople, necessitating the construction of replacement housing elsewhere? X_IH. PUBLIC SERVICES a) Would the project result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times or other performance objectives for any of the public sexwices: Fire protection? Police protection? Schools? Parks? Other public facilities? XIV. RECREATION - a) Would the project increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? b) Does the project include recreational facilities or require the constntction or expansion of recreational facilities which might have an adverse physical effect on the environment? XV. TRANSPORTATION/TRAFFIC - Would the project: a) Cause an increase in traffic which is substantial in relation to the existing traffic load and capacity of the street system (i.e. result in a substantial increase in either the number of vehicle trips, the volume to capacity ratio on roads, or congestion at intersections)? b) Exceed, either individually or cumulatively, a level of sen'ice standard established by the county congestion management agency for designated roads or highways? c) Result in a change in air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks? d) Substantially increase hazards due to a desigm feature (e.g. sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? e) Resuh in inadequate emergency access'? f) Result in inadequate parking capacity? Potentially Sign~[icant Impact LeSS Than Sign{/icant With Mitigation Incorporation Less Than Signoqcant Impact [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] 0 [] [] [] [] [] [] [] [] [] [] [] [] [] A:o Impact g) Conflict with adopted policies, plans, or programs supporting alternative transportation (e.g., bus turnouts, bicycle racks)? XVI. UTILITIES AND SERVICE SYSTEMS- Would the project: a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? b) Require or result in the construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? c) Require or result in the construction of new storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? d) Have sufficient water supplies available to serx, e the project from existing entitlements and resources, or are new or expanded entitlements needed? e) Result in a determination by the wastewater treatment provider which sen'es or may serve the project that it has adequate capacity to serve the projecfs projected demand in addition to the provider's existing commitments? f) Be served by a landfill with sufficient permitted capacity to accommodate the project's solid waste disposal needs? g) Comply with federal, state, and local statutes and regulations related to solid waste? XVIi. MANDATORY FLNDINGS OF SIGNIFICANCE a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or x~ildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plato or animal or eliminate important examples of the major periods of California history or prehistory? b'} Does the project have impacts that are individually limited, but cumulativeiy considerable? ("Cumulatively considerable" means that the incremental effects of a pro. ject are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects)? c) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? Potentially Sign~/icant Impact Less Than Sign~/icant With Mitigation Incorporation Less Than Sign~cant Impact No ]mDact [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] ATTACHMENT A EVALUATION OF ENVIRONMENTAL IMPACTS HERITAGE PLACE AT TUSTIN DISPOSITION AND DEVELOPMENT AGREEMENT (DDA) BACKGROUND The project involves the construction of a 54-unit affordable senior citizen housing project located at 1101 Sycamore Avenue. The City Council approved the entitlements and environmental document for the project on May 14, 2001. The project also includes the execution of a Disposition and Development Agreement (DDA) by and between the City of Tustin, Tustin Community Redevelopment Agency (Agency), and Tustin Heritage Place, LP. (Developer). The DDA will authorize the Agency to enter into two loans in an aggregate amount not to exceed $600,000 to assist in the development of the project. The Agency loans will be secured by loan agreements, promissory notes, and deeds of trust along with a Regulatory Agreement and Declaration of Restrictive Covenants to be recorded against the property for a period of not less than 55 years (loan documents). This environmental evaluation is focused on the execution of the DDA and necessary loan documents for the project. 1. AESTHETICS Items a throuqh d - "No Impact": The execution of a DDA and necessary loan documents for the project to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA will not have any effects on aesthetics in the area including scenic vistas or scenic resources, including, but not limited to, trees, rocks outcropping, and historic buildings within a state scenic highway. The execution of a DDA and loans will not degrade the existing visual character or quality of the plan area or its surroundings. Sources: Tustin Zoning Code Tustin General Plan Mitigation/Monitorinq Required: None Required 2. AGRICULTURAL RESOURCES Items a throuqh c - "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will have no impacts on any farmland, nor will it conflict with existing zoning for agricultural use or a Williamson Act contract. The execution of a DDA will not result in conversion of farmland to a non-agricultural use. Heritage Place DD,4 Initial Stud)'- Attachment Page 2 o.f 7 Sources: Tustin General Plan Mitigation/Monitorinq Required: None Required AIR QUALITY Items a throuqh e -"No Impact. The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not conflict with or obstruct implementation of any applicable air plan, violate any air quality standard, result in a cumulatively considerable increase of any cfiteda pollutant as applicable by federal or ambient air quality standard, nor will it expose sensitive receptors to substantial pollutant concentrations or create objectionable odor affecting a substantial number of people. Sources: South Coast Air Quality Management District Rules and Regulations Tustin General Plan Miti,qation/Monitofinq Required: None Required BIOLOGICAL RESOURCES Items a through f- "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not have any effects to any unique, rare, or endangered species of plant or animal life identified in local or regional plans, policies, or regulations by the California Department of Fish and Game or U.S. Fish and Wildlife Service would occur as a result of the execution of the DDA. Sources: Tustin General Plan Field Inspection Mitigation/Monitodn.q Required: None Required Heritage Place DD,~ Initial Stud9' - Attachment Page 3 of 7 CULTURAL RESOURCES Items a throuqh d -"No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not adversely affect any historical resources or archaeological resources or destroy or disturb a unique paleontological resource, human remains, or unique geologic feature. Sources: Cultural Resources District Tustin Zoning Code General Plan Mitigation/Monitoring Required: None Required GEOLOGY AND SOILS Items a (I), a (ii), a (iii), a (iv), b, c, d and e - "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not expose people to potential adverse geologic impacts, including the risk of loss, injury, or death involving the rupture of a known earthquake fault, strong seismic ground shaking, landslides, soil erosion, or loss of top soil, nor is the project located on unstable or expansive soil. Sources: Tustin General Plan Miti.qation/Monitofinq Required: None Required HAZARD AND HAZARDOUS MATERIALS Items a through h -"No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not result in significant hazards (i.e. explosion, hazardous materials spill, interference with emergency response plans, wildland fires, etc.), nor is the project area located within an airport land use plan or vicinity of a private airstrip. Sources: Project Plans Tustin General Plan Mitigation/Monitodnq Required: None Required Heritage Place DD/I Initial Study - Attachment Page 4 of 7 o 10. HYDROLOGY AND WATER QUALITY Items a throuqh i- "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not violate any water quality standards or waste water discharge requirements, deplete groundwater supplies or interfere substantially with groundwater recharge, alter the existing drainage pattern, create of contribute runoff water, degrade water quality, place housing within a 100-year flood hazard area, expose people or structures to a significant risk of loss, injury or death involving levee or dam, and be inundated by seiche, tsunami, or mudflow. Sources: Tustin General Plan Miti.qation/Monitofin,q Required: None Required LAND USE AND PLANNING Items a throuqh c - "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans is consistent with the intent of the City's General Plan to provide an adequate supply of housing to meet the City's need for a variety of housing types to meet the diverse socio-economic needs (Housing Element Goal 1). The execution of a DDA will not physically divide an established community or conflict with any applicable habitat conservation plan. Sources: Tustin General Plan Tustin Zoning Code Project Plan Mitigation/Monitoring Required: None Required MINERALRESOURCES Items a and b -"No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not result in loss of a known mineral resource or availability of a locally important mineral resource recovery site delineated on the general plan or other applicable land use maps. Heritage Place DDt1 Initial Stud)' - Attachment Page 5 of 7 11. 12. 13. Sources: Tustin General Plan Mitigation/Monitoring Required: None Required NOISE Items a throuqh f- "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not expose persons to noise levels in excess of standards established in the general plan, noise ordinance, or excessive ground vibrations, nor will it create a permanent increase in the existing ambient noise levels. Sources: Tustin City Code Tustin General Plan Mitigation/Monitorinq R.equired: None Required POPULATION AND HOUSING Items a, b, and c- "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not increase population. Sources: Tustin General Plan Miti,qation/Monitorinq Required: None Required PUBLIC SERVICES Item a -" No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not create demand for alteration or addition of government facilities or services (fire and police protection, schools, parks, etc.). Sources: Tustin General Plan Mitigation/Monitorinq Required: None Required Heritage Place DDA Ini~al Study - Attachment A Page 6 of 7 14. RECREATION Items a and b - "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a f'r[-ty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not increase demand for neighborhood parks or recreational facilities. Soumes: Tustin General Plan Miti.qation/Monitodn,q Required: None Required 15. TRANSPORTATION/TRAFFIC Items a throuqh g - "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not have any effects on the traffic generation and circulation patterns within the project area. The execution of the DDA and loans will not result in changes to air traffic pattems, emergency access, level of service standards, or conflict with adopted policies, plans or programs supporting altemative transportation. Sources: Tustin General Plan Mitigation/Monitoring Required: None Required 16. UTILTIES AND SERVICE SYSTEMS Items a throuqh ,q - "No Impact": The execution of a DDA and necessary loan documents to assist in the development of a fifty-four (54) unit senior affordable housing project would not involve physical improvements. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and loans will not have any impacts to water treatment, water supply, wastewater treatment, or solid waste disposal. Sources: Tustin General Plan Miti(]ation/Monitodnq Required: None Required Heritage Place DD~I Initial Study - ~4 ttachrnent ~q Page ? of 7 17. MANDATORY FINDINGS OF SIGNIFICANCE Items a throuqh c - "No Impact": The purpose of the DDA is to authorize the issuance of two Agency loans in an aggregate amount not to exceed $600,000 to assist in the development of the project. The Agency loans will be secured by loan agreements, promissory notes, and deeds of trust along with a Regulatory Agreement and Declaration of Restrictive Covenants to be recorded against the property for a period of not less than 55 years. This environmental evaluation is focused on the execution of the DDA and loan documents for the project. There would be no physical improvement or changes in the environment as a result of the execution of a DDA and loan documents for the construction financing of a 54 unit senior affordable housing. A Final Negative Declaration for construction of the project was adopted by the City Council on May 14, 2001. The execution of a DDA and necessary loan documents for the construction financing of a 54 unit senior affordable housing project does not have the potential to degrade the quality of the environment, achieve short-term environmental goals to the disadvantage of long-term goals, nor produce significant negative indirect or direct effects on humans. S:\CdCJUSTINA~urrent planningt~nvi~nmental\Hedtage Place DDA - ND Evaluation.doc SENIOR CITIZEN RESIDENTIAL PROJECT DISPOSITION AND DEVELOPMENT AGREEMENT by and between THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY, as Agency, And THE CITY OF TUSTIN, As City, And TUSTIN HERITAGE PLACE, L.P., a California Limited Partnership as Developer aim',S~JthCen'.ra~P,o..ec[~Hen:ageP~aceSenlo~Proje=~e: :a ;e P.a ce_oa n Doc~ 'ne".ts .Her,~a;e P.ace D'aI'.DDA RESIDENTIAL PROJECT DISPOSITION AND DEVELOPMENT AGREEMENT TABLE OF CONTENTS RECITALS .................................................................................................................. 2. 3. 4. SECTION 1. SECTION 2. 2.1 2.2 SECTION 3. SECTION 4. Page 1 Purpose of Agreement ................................................................... 1 The Redevelopment Plan ............................................................... 2 Description of the Site .................................................................... 2 Parties to the Agreement ................................................................ 2 A. Agency and City ........................................................................ 2 B. Developer .................................................................................. 2 C. Relationship of Agency and City to Developer .......................... 3 Single Transaction ............................................................... 3 DEFINITIONS ........................................................................................ 3 PROHIBITION AGAINST CHANGE IN OWNERSHIP, MANAGEMENT AND CONTROL OF DEVELOPER ....................................................... 4 Importance of Developer Qualifications ......................................... 4 Prohibition Against Transfer ........................................................... 5 2.2.1 General Prohibition ................................................................ 5 2.2.2 No Encumbrances Except Mortgages, Deeds of Trust, Conveyances and Leases-Back or Other Conveyances for Financing for Development ......................................................................... 8 2.2.3 Right of Agency to Cure Mortgage Deed of Trust, or Other Security Interest Default ................................ 8 REPRESENTATIONS AND WARRANTIES OF DEVELOPER ............. 8 DEVELOPMENT OF THE SITE ............................................................ 11 Tustin Heritage Place DDA Page 2 DRAFT 02/1212002 4.1 Agency ........................................................................................... 4.2 Cooperation .................................................................................... 4.3 Developer ....................................................................................... 4.3.1 Plans and Drawings ............................................................... 4.3.2 Cost of Site Development and Construction .......................... 4.3.3 Permits and Governmental Approvals ................................... 4.3.4 Local, State and Federal Laws .............................................. 4.3.5 Schedule of Performance ...................................................... 4.3.6 Required Notifications ............................................................ SECTION 5 FINANCIAL ASSISTANCE TO DEVELOPER ........................................ 5.1 Purpose of Agency Financial Assistance to Developer ....................................................................................... 5.2 Submission and Approval of Evidence of Financing Commitments .................................................................... 5.3 Bridge Loan for Pre-Development Cost Assistance ....................... 5.3.1 Conditions .............................................................................. 5.3.2 Amount and Schedule ........................................................... 5.4 Terms of Bridge Loan .................................................................. 5.5 Agency Loan for Land Acquisition Assistance ................................ 5.5.1 Conditions .............................................................................. 5.5.2 Amount and Schedule ................................................. 5.5.3 Maintenance of Records ....................................................... 5.6 Terms of Agency Loan ................................................................... SECTION 6 AFFORDABLE UNIT REQUIREMENTS ................................................ 6.1 Identification and Rental of Affordable Units .................................. 6.2 Covenants ...................................................................................... SECTION 7 CONDITIONS FOR CONSTRUCTION .................................................. 7.1 7.2 7.3 7.4 Compliance with Laws .................................................................... Time Limit for Construction ............................................................ Required Licenses and Permits ..................................................... One (1) Year Warranty ................................................................... 11 11 12 12 13 13 13 13 14 15 15 16 17 17 18 18 19 19 19 20 2O 22 22 22 29 29 29 29 3O Tustin Heritage Place DDA Page i DRAFT 02/1212002 Table of Contents (continued) Page 7.5 Quality of Work and Materials ........................................................ 30 7.6 Clean-up of Site and Adjacent Areas ............................................. 30 SECTION 8 USES OF THE SITE .............................................................................. 30 8.1 Uses ............................................................................................... 30 8.2 Maintenance of Site ........................................................................ 31 SECTION 9 CERTIFICATE OF COMPLIANCE .......................................................... 31 SECTION 10 NON-DISCRIMINATION ....................................................................... 33 10.1 Obligation to Refrain from Discrimination ....................................... 33 10.2 Non-discrimination and Non-Segregation Covenants ...................................................................................... 33 10.3 Duration of Covenants .................................................................... 34 SECTION 11 INSURANCE AND INDEMNIFICATION ................................................ 34 11.1 Worker's Compensation, Bodily Injury and Property Damage Insurance .......................................................... 34 11.2 Insurance Endorsements ............................................................... 35 11.3 Indemnification ............................................................................... 36 SECTION 12 DEFAULTS, REMEDIES AND TERMINATION .................................... 36 12.1 Default ............................................................................................ 36 12.2 Notice ............................................................................................. 37 12.3 Cure Period .................................................................................... 37 12.4 Rights and Remedies ..................................................................... 38 12.5 Legal Actions .................................................................................. 38 12.5.1 Venue ................................................................................. 38 12.5.2 Service of Process .............................................................. 38 12.5.3 Applicable Law ................................................................... 39 Tustin Heritage Place DDA Page ii DRAFT 02/12/2002 Table of Contents (continued) Pa,qe 12.6 Rights of Termination ..................................................................... 39 12.6.1 Termination by Developer .................................................. 39 12.6.2 Termination by Agency and City .......................................... 39 12.7 Rights and Remedies Are Cumulative ............................................ 40 12.8 Effect of Violation of the Terms and Provisions of this Agreement .......................................................... 40 SECTION 13 GENERAL PROVISIONS 13.1 Disputes to be Determined by Agency and City ............................. 41 13.2 Local, State and Federal Laws ....................................................... 41 13.3 Taxes, Assessments, Encumbrances and Liens ............................ 41 13.4 Rights of Access ............................................................................. 41 13.5 Notices, Demands and Communications Between the Parties ...................................................................................... 42 13.6 Conflicts of Interest ......................................................................... 42 13.7 Enforced Delay; Extension of Times of Performance ................................................................................... 43 13.8 Non-liability of Officials and Employees of Agency and City ............................................................................. 44 13.9 Inspection of Books and Records ................................................... 44 SECTION 14 SPECIAL PROVISIONS ........................................................................ 44 14.1 Successors In Interest .................................................................... 44 SECTION 15 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS .................... '44 SECTION 16 EFFECTIVE DATE OF THE AGREEMENT .......................................... 45 Tustin Heritage Place DDA Page iii DRAFT 02]12;2002 LIST OF ATTACHMENTS Attachment 1 Attachment 2 Attachment 3 - Attachment 4 Attachment 5 - Attachment 6 - Attachment 7 - Attachment 8 - Attachment 9 - Attachment 10 - Attachment 11 - Attachment 12 - Attachment 13 - Attachment 14 - Attachment 15 - Project Site Map Legal Description Scope of Development Schedule of Performance Method of Financing Bridge Loan Agreement Bridge Loan Promissory Note Bridge Loan Trust Deed Agency Loan Agreement Agency Loan Promissory Note Agency Loan Trust Deed Site Plan Regulatory Agreement and Declaration of Restrictive Covenants Intentionally Omitted Certificate of Insurance Tustln Horitage Place DDA Page iv DRAFT 02/1212002 RESIDENTIAL PROJECT DISPOSITION AND DEVELOPMENT AGREEMENT THIS AGREEMENT is entered into by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency ("Agency"), and the CITY OF TUSTIN, a public body, corporate and politic, to wit (hereinafter referred to jointly as "City"), and TUSTIN HERITAGE PLACE, L.P., a California limited partnership ("Developer"), consisting of TUSTIN HERITAGE PLACE, LLC, a California limited liability company (the "Developer General Partner"), VALLEY WEST AFFORDABLE HOUSING CORPORATION, a California non-profit public benefit corporation (the "Managing General Partner"). RECITALS: 1. Purpose of Aqreement The general purpose of this Agreement is to promote the implementation and realization of the objectives of the Redevelopment Plan (the "Redevelopment Plan") for the South Central Redevelopment Project Area (the "Project Area"), by providing for the improvement of the hereinafter described Site with a 54 unit, senior citizen rental project (the "Project"). The development and operation of the Site for such uses as allowed pursuant to this Agreement and the fulfillment of this Agreement are in the vital and best interest of the City of Tustin and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws. Completing the development on the Site will increase the supply of very Iow- and Iow-income, rental housing to the South Central Redevelopment Project Area, provide additional jobs for the community and substantially improve the economic and physical conditions of the community in accordance with the purposes and goals of the Redevelopment Plan. 2. The Redevelopment Plan Tustin Heritage Place DDA Page 1 DRAFT 02/12]2002 This Agreement is subject to the provisions of the South Central Redevelopment Plan, which was approved and adopted by the City Council of the City of Tustin by Ordinance No. 890 as amended by Ordinance Nos. 939, 1142, and 1223. Said ordinances and the Redevelopment Plan, as amended, are incorporated herein by reference and made a part hereof. 3. Description of The Site The "Site" is that portion of the City outside the Project Area illustrated on the Project Site Map, attached hereto and incorporated herein by reference as Attachment 1, and having the legal description set forth in the Legal Description of the Site, attached hereto and incorporated herein by reference as Attachment 2. The Site is currently owned by Tustin Heritage Place, LP. 4. Parties to the Aqreement A. Agency and City Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California. The principal office and mailing address of Agency is: 300 Centennial Way, Tustin, CA 92780. "Agency", as used in this Agreement, includes the City of Tustin Community Redevelopment Agency, and any assignee of or successor to its rights, powers and responsibilities. "City", as used in this Agreement, includes the City of Tustin, the Agency and any assignee of or successor to its rights, powers and responsibilities. B. Developer Developer is a California Limited Partnership. The mailing address of Developer is: 1740 E. Garry, Suite 105, Santa Ana, CA 92705. Whenever the term "Developer" is used herein, such term shall include any permitted assignee as herein Tustin Heritage Place DDA Page 2 DRAFT 02113~20O2 provided. Developer is C. Relationship of Agency and City to Developer It is hereby acknowledged that the relationship of Agency and City to neither that of a partnership nor that of a joint venture and that Agency or City shall not be deemed nor construed for any purpose to be the agent of Developer. Nor shall Developer be deemed or construed to be the agent of Agency or City. 5. Single Transaction The DDA, the Regulatory Agreement, the Loan Agreements, the Promissory Notes, and the Deeds of Trust constitute a single transaction and should be construed as a whole so as to fulfill the intent of the parties. In the event of any conflict between the DDA and any of the other documents referenced above, the other document shall control, unless to do so would frustrate a purpose of this transaction. If there is a conflict between the Regulatory Agreement and the Loan Agreements, the Promissory Notes, or the Deeds of Trust, the latter agreements shall prevail over the Regulatory Agreement, unless to do so would frustrate a purpose of this transaction. The Notes shall conform to the Loan Agreements and in the event of any conflict the Loan Agreements shall prevail. AGREEMENT NOW, THEREFORE, Based on the recitals and the mutual promises and covenants herein, the parties agree as follows: SECTION 1 DEFINITIONS "Affordable Housing Cost" means a rental rate that does not exceed the "Affordable Housing Cost for Very Low and Low Income Households." ',Affordable Housing Cost For Very Low Income Households" means, as more Tustin Heritage Place DDA Page 3 DRAFT 02112,'2002 particularly defined in Health and Safety Code Section 50052.5, a rent per unit which does not exceed thirty percent (30%) times fifty percent (50%) of the Orange County Median Income, adjusted for family size, and which takes into account an allowance for payment of utilities. ,,Affordable Housing Cost For Low Income Households" means, as more particularly defined in Health and Safety Code Section 50052.5, a rent per unit which does not exceed thirty percent (30%) times sixty percent (60%) of the Orange County Median Income, adjusted for family size, and which takes into account an allowance for payment of utilities. "Hazardous Substances" means substances defined as "hazardous substances", "hazardous materials", or "toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. 6901 et seq.; and those substances defined as "hazardous waste" in Section 25117 of the California Health and Safety Code or as "hazardous substances" in Section 25316 of the California Health and Safety Code; and substances defined in the regulations adopted in publications promulgated pursuant to such laws. "Permitted Mortgage (Permitted Mortgagee)" means Developer's acquisition, development and construction financing through the Apartment Development Revenue Bonds issued by the County of Orange approved by Agency and City pursuant to Section 6 of this Agreement. Permitted Mortgagee(s) is the Developer's lender approved by Agency and City. "Persons and Families of Very Low and Low Income" means, as more particularly defined in Health and Safety Code Section 50093, very Iow income households as defined in Tusfin Heritage Place DDA Page 4 DRAFT 02112/2002 Health and Safety Code Section 50105, and Iow income households as defined in Health and Safety Code Section 50079.5. "Senior Citizen" means persons age 62 or higher. "Qualified Project Period" means the period beginning on the first day on which at least 10% of the residential units in the Project are first occupied and ending on the date which is fifty-five (55) years after the date on which at least 50% of the residential units in the Project are first occupied. "To the Best of Developer's Knowledge," as used in Section 3, Paragraphs 3.9 and 3.10, means the actual, present knowledge of each of Tustin Heritage Place, LLC, the Developer General Partner and Valley West Affordable Housing Corporation, the Managing General Partner. Among the present officers, employees and agents of Developer and/or its partners, Mr. Roger Davila and Mr. Douglas R. Bigley are the persons with the most knowledge of the Site and the Project. In their respective capacities, they are authorized to make, on behalf of Developer, and bind Developer to, those representations and warranties contained in Section 3, Paragraphs I and J, that are made "To the Best of Developer's Knowledge." SECTION 2 PROHIBITION AGAINST CHANGE IN OWNERSHIP, MANAGEMENT AND CONTROL OF DEVELOPER 2.1 Importance of Developer Qualifications Developer recognizes that, in view of the following, the professional qualifications and reputation of Developer, and its principals, are of particular concern to the community and Agency: 2.1.1 The importance of the redevelopment of the Site to the general welfare of the community; 2.1.2 The public assistance that has been made available by law and by Tusfln Heritage Place DDA Page 5 DRAFT 02112/2002 the Agency and City for the purpose of making such redevelopment possible; 2.1.3 The fact that a change in ownership or control of Developer or of its partners, or any other act or transaction involving or resulting in a significant change in ownership or control of Developer or the degree of control thereof, is for practical purposes, a transfer or disposition of the Site then owned by Developer; and 2.1.4 That it is because of the professional qualifications and reputation of Developer that Agency and City is entering into this Agreement with Developer. 2.2. Prohibition Against Transfer 2.2.1 General Prohibition Developer shall not, except as expressly permitted by this Agreement, assign or attempt to assign this Agreement or any right herein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Site or the Site Improvements, without prior written approval of Agency, which approval shall not be unreasonably withheld. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by Agency and City and shall have comparable professional reputation for quality design and construction to Developer, as may be reasonably determined by Agency and City. Any such proposed transferee, by a recordable written instrument, satisfactory to Agency and City, for such proposed transferee and its successors and assigns, and for the benefit of Agency and City, shall expressly assu me all of the obligations of Developer under this Agreement and agree to be subject to all conditions and restrictions to which Developer is subject. There shall be submitted to Agency and City for review and approval all instruments and other legal documents proposed to effect any such transfer and if approved by Agency and City, its approval shall be indicated to Developer in writing. Tustin Heritage Place DDA Page 6 DRAFT 02112,~2002 Notwithstanding the foregoing, however, and subject to Agency and City's good faith review and approval of the transferee's ability to perform this Agreement, Developer may transfer its interest in the Site, the Site Improvements and this Agreement to any other California general or limited partnership, corporation, or individual, in good standing and authorized to do business in the State of California, so long as all of the requirements of this Section 2 are met, including Agency and City's written approval. Developer shall, at least thirty (30) business days in advance of the transfer, provide to Agency and City, for its review and approval: (1) a copy of the proposed recordable written transfer and assumption instrument pursuant to which the transferee expressly assumes all of the obligations of Developer under this Agreement and agrees to be subject to all conditions and restrictions to which Developer is subject hereunder, satisfactory to Agency and City, and (2) financial information and other information sufficient to satisfy Agency and City, in its good faith discretion, that the transferee is able to perform this Agreement. In the absence of specific written approval by Agency and City, as provided above, no sale, transfer, conveyance or assignment of the Site or any portion thereof, shall be deemed to relieve Developer or any other party from any obligations under this Agreement. 2.2.2 No Encumbrances Except Mortgages, Deeds of Trust, Conveyances and Leases-Back or Other Conveyances for Financing for Development Notwithstanding subsection 2.2.1, mortgages, deeds of trusts, conveyances and leaseback, or any other form of conveyance required for the financing are permitted for the purposes of securing loans of funds to be used for financing the expenditures necessary and appropriate to construct the Site Improvements as required by this Agreement. Developer shall notify Agency and City in advance of any mortgage, deed of trust, conveyances and leaseback, or other form of conveyance for proposes financing if Developer to enter into the same before recordation of a Certificate of Compliance, as defined in Section 9. Tustln Heritage Place DDA Page 7 DRAFT 02J1212002 Developer shall not enter into any such conveyance for financing without the prior written approval of Agency and City, and such approval shall not be unreasonably withheld or delayed. The words "mortgage" and "deed of trust" as used herein includes all other appropriate modes of financing real estate acquisition, construction and land development. 2.2.3 Right of Agency and City to Cure Mortgage Deed of Trust, or Other Security Interest Default In the event of a default or breach by Developer of any mortgage, deed of trust or other security interest with respect to the Site (or any portion thereof) prior to the recordation of a Certificate of Compliance, as defined in Section 9, below, Agency and/or City, in accordance with the terms and conditions of the applicable mortgage, deed of trust or other security interest or as otherwise provided by law, may cure the default prior to completion of any foreclosure. In such event, Agency and City shall be entitled to reimbursement from Developer of all costs and expenses incurred by Agency and City in curing the default. Agency and City, as applicable, shall also be entitled to a lien upon the Site (or any portion thereof) to the extent of such costs and disbursements. Any such lien shall be subordinate and subject to mortgages, deeds of trust, or other security instruments executed for the sole purpose of obtaining funds to acquire and develop the Site as authorized herein. SECTION 3 REPRESENTATIONS AND WARRANTIES OF DEVELOPER Developer represents and warrants to Agency and City that Developer has the experience, qualifications and legal status necessary to perform as Developer pursuant to this Agreement. As an inducement to Agency and City to enter into this Agreement, Developer represents and warrants to Agency and City as follows: 3.1 Developer represents and agrees that its acquisition of the Site and its other undertakings pursuant to this Agreement are for the purpose of redevelopment of the Site and not for speculation or land holding. Tustin Heritage Place DDA Page 8 DRAFT 02/12/2002 3.2 Developer and General Partners of Developer has duly authorized, executed and delivered this Agreement and any and all other agreements and documents required to be executed and delivered by them in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement. 3.3 Developer has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transactions contemplated hereby. 3.4 All requisite corporate or partnership action has been taken by Developer and its partners in connection with the entering into this Agreement, the instruments referenced herein, and the consummation of the transactions contemplated hereby. No consent of any additional partner, individual, corporation, shareholder, creditor, investor, judicial or administrative body, authority or other party is required. 3.5 The individuals executing this Agreement and the instruments referenced herein on behalf of Developer and its General Partners thereof, have the legal power, right and actual authority to bind Developer to the terms and conditions hereof and thereof. 3.6 This Agreement and all documents required hereby to be executed by Developer and its General Partners are and shall be valid, legally binding obligations of and enforceable against Developer and its partners, as applicable, in accordance with their terms, subject only to applicable bankruptcy, insolvency, reorganization, interim zoning ordinances, and similar laws or equitable principals affecting or limiting the rights of contracting parties generally. 3.7 Neither the execution and delivery of this Agreement and the documents referenced herein, nor the incurring of the obligations set forth herein, nor the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement and the documents referenced herein conflict with or result in the material breach of any Tustln Heritage Place DDA Page 9 DRAFT 0~12~002 terms, conditions, or provisions of, or constitute a default under any bond, note, or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan partnership agreement, lease or other agreements or instruments to which Developer or any of its partners are a party, or affecting the Site. 3.8 No attachments, execution proceedings, assignments of benefit of creditors, bankruptcy, reorganization or other proceedings are pending or threatened against Developer or its partner's. 3.9 To the Best of Developer's Knowledge, except as otherwise previously disclosed by Developer, to Agency and City, in writing, pursuant to that certain Phase I Environmental Site Assessment, which writings are incorporated herein by reference and copies of which are on file with Agency and City: 3.9.1 Developer does not use, treat, store or dispose of, and, to the best of Developer's knowledge, has not permitted anyone else to use, treat, store or dispose of Hazardous Substances at, on or beneath the Site in violation of any federal, state or local law, regulation or ordinance; 3.9.2 No Hazardous Substances are present, and no Hazardous Substances have been used, treated, stored, released or disposed of, at, on or beneath the Site, which have created or might create any liability of owners or occupants of the Site under any federal, state or local law or regulation or which would require reporting to a governmental agency; 3.9.3 No polychlorinated byphenyls ("PCB's") are contained in or stored on the Site; and the Site. 3.10 3.9.4 There are no underground storage tanks located in, on or under To the Best of Developer's Knowledge, all reports, documents, instruments, Tustin Heritage Place DDA Page 1 0 DRAFT 02112/2002 information and forms of evidence delivered by Developer, to Agency and City, concerning or required by this Agreement are accurate, correct, and sufficiently complete to give Agency and City true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission. 3.11 Developer has, and shall maintain throughout the term of this Agreement, sufficient equity, capital and firm and binding commitments to (i) pay through completion, all costs of development, construction, marketing and sale of all of the improvements as defined in Attachment $ hereto (the "Scope of Development"); and (ii) enable Developer to perform and satisfy all of the covenants of Developer contained in this Agreement. Developer shall not undertake such additional projects as could reasonably be expected to jeopardize the sufficiency of such equity, capital and firm and binding commitments for the purposes expressed in the preceding sentence. 3.12 Developer does not have any contingent obligations or any other contracts which could materially and adversely affect the ability of Developer to carry out its obligations hereunder. 3.13 There are no material legal proceedings either pending or, so far as is known to Developer, threatened, to which Developer or either of its partners is or may be made a party, or to which any of Developer's property, including the Site, is or may become subject, which has not been fully disclosed in the documents submitted to Agency and City and which could materially adversely affect the ability of Developer to carry out its obligations hereunder. Each of the foregoing items, Section 3.1 through 3.13, inclusive, is deemed to be an ongoing representation and warranty for the term of this Agreement. Developer shall promptly advise Agency and City in writing if there is any change pertaining to any matters set forth or referenced in the foregoing items, Section 3.1 through 3.13, inclusive. Tustin Heritage Place DDA Page 1 1 DRAFT 02112/2002 All of the terms, covenants and conditions of this Agreement shall be binding upon and shall inure to the benefit of the Parties and the permitted successors and assigns of the Parties. SECTION 4 4.1 DEVELOPMENT OF THE SITE Agency 4.1.1 Subject to the terms and conditions herein, Agency shall fund its cost obligations as set forth in Section 6. 4.1.2 Agency shall have the right of review (including, but not limited to, architectural review) and approval of all plans, drawings and related documents (including the right to review and approve samples of all construction materials, finishes, fixtures, hardware, roofing materials and similar items called out in the specifications) for the development of the Site, including any proposed changes therein subject to other provisions hereof. 4.2. Cooperation 4.2.1 During Developer's preparation of all drawings and plans, Agency staff and Developer shall hold regular progress meetings, not less than monthly, to coordinate the preparation of, submission of, and review of construction plans and related documents by the Agency. Such meetings shall serve as a forum for the exchange of information concerning the design of the Project. The Agency and Developer shall communicate and consult informally as frequently as is necessary to ensure that the formal submittal of any documents to the Agency can receive prompt and speedy consideration. The Developer shall prepare and distribute minutes of the meetings to the Agency, the architect and all others in attendance, if requested by the Agency. Upon receipt of a disapproval as described in subsection 5.1.2 above, Developer, shall revise such portions of the plans, drawings or related documents in a manner that satisfies the reasons for disapproval, and shall resubmit such revised portions to the Agency as soon as possible after Tustin Heritage Place DDA Page 1 2 DRAFT 02/12/2002 receipt of the notice of disapproval. 4.2.2 If any revisions or correction shall be required by any government official, agency, department or bureau having jurisdiction, or any lending institution involved in financing the Site Improvements, of plans approved by the Agency, the Developer and the Agency shall cooperate in effort to develop a mutually acceptable revision or correction. 4.3 Developer The Site shall be developed by Developer pursuant to this Agreement and in accordance with and within the limitations established in the "Scope of Development", which is attached hereto as Attachment 3 and incorporated herein by this reference and all plans approved by Agency and City of Tustin. 4.3.1 Plans and Drawings Developer shall prepare, complete and submit to Agency and City, for its approval, the Basic Concept Drawings, the Design Development Drawings and Final Construction Drawings and Related Documents, consistent with the requirements set forth in the Scope of Development, Attachment 3 and in accordance with the times for performance set forth in the Schedule of Performance, Attachment 4. The Site shall be developed substantially as shown on the approved Site plan (attached hereto and incorporated herein by reference as Attachment 9, the Basic Concept Drawings, Design Development Drawings, Final Construction Drawings and Related Documents. Changes to approved plans and drawings may be approved only in writing signed by both Developer and Agency and City. Any such written changes shall be within the limitations of the Scope of Development. 4.3.2 Cost of Site Development and Construction Except for the Agency Assistance described in Section 6, Developer shall bear the cost of planning, designing, preparing the Site and constructing all Site Improvements thereon. Tustln Heritage Place DDA Page 1 3 DRAFT 02712/2002 4.3.3 Permits and Governmental Approvals The Developer shall process, secure or cause to be secured any and all permits, certificates and approvals which may be required by the Agency, the City of Tustin or any other governmental agency with jurisdiction over the Site and/or over the construction of the Project, including, but not limited to, a parcel or tract map to create the Site as a legal parcel, necessary building permits and all approvals required under the California Environmental Quality Act, Public Resources Code 21000 et seq., as amended or re-codified from time to time. Not by way of limiting the foregoing, in developing and constructing the Project, Developer shall ensure that the Project complies with all applicable development standards in the City of Tustin Municipal Code and with all building code, landscaping, signage and parking requirements, except as may be permitted through approved variances and modifications. 4.3.4 Local, State and Federal Laws The Developer shall carry out the construction of the improvements on the Site in conformity with all applicable federal and state laws, and all applicable federal and state labor standards, including but not limited to, any applicable prevailing wage requirements under California Senate Bill 975 (Chapter 938 of the Government Code) effective January 1, 2002. 4.3.5 Schedule of Performance Developer shall begin and complete the construction and development of the Site Improvements within the times specified in the Schedule of Performance, attached hereto as Attachment 4, and incorporated herein by this reference. Agency and City may, at its sole discretion and upon written request from Developer, extend the times specified in the Schedule of Performance dealing with construction of Improvements. Any such extensions shall not be deemed as amendments to Tustln Heritage Place DDA Page 14 DRAFT 02712.,'2002 this Agreement, as defined in Section 15, hereof. Any such extensions shall be evidenced by written notice from Agency's Executive Director or his/her designee. If Developer presents evidence satisfactory to Agency and City that Developer has diligently and reasonably attempted to meet the times specified in the Schedule of Performance, Agency shall not unreasonably withhold its approval of extensions of time as requested by Developer. Agency and City may, however, approve an extension for a shorter period of time than requested by Developer. 4.3.6 Required Notifications The Developer shall promptly after obtaining knowledge thereof, notify Agency and City in writing of the following: A. Any litigation affecting Developer or the Project. B. Any communication, whether written or oral, that Developer receives from any governmental authority claiming or asserting that any aspect of work of the Site Improvement fails in any respect to comply with any governmental requirements, or threatening to suspend or revoke any governmental approval. C. Any material adverse change in the physical condition of the Site or the Project, or the financial condition or operations of the Developer. D. Any material default by the Developer's contractor, architect, engineer or by any subcontractor, vendor or supplier, having a contract in excess of $100,000, any material adverse change in the financial condition or operations of any of them, or the filing of a 2etition by or against any of the under any debtor relief law. E. Any cessation in the work in excess of five (5) business days. F. Any damage to or destruction of any portion of the Project where the cost to repair and restore will exceed $25,000. G. Any defect in design or construction where the cost to correct Tustln Heritage Place DDA Page 1 5 DRAFT 0211212002 will require a change, or the delay that will be caused will exceed five (5) business days. Any lien, charge or encumbrance affecting the Project not Ho expressly permitted hereby. I. Any change in (i) the location of Developer's business; (ii) the legal or trade business names used by Developer; or (iii)the nature of Developer's business. J. The existence of any material default or failure to perform an obligation by any party under any contract relating to the Project. K. The existence of any Default by Developer, or any condition or event which with the giving of notice or passage of time, or both, would constitute Default, the nature thereof, and the corrective steps Developer is taking with respect thereto. SECTION 5 FINANCIAL ASSISTANCE TO DEVELOPER 5.1 Purpose and Type of Agency Financial Assistance to Developer The purpose of Agency financial assistance to Developer is to provide Developer with an amount not to exceed Six Hundred Thousand Dollars ($600,000.00) in assistance for pre-development and site acquisition cost of the Project. Such assistance shall be in the form of a Bridge Loan in the amount of Two Hundred Fifty Thousand Dollars ($250,000) for predevelopment costs and an Agency Loan in the amount of Three Hundred Fifty Thousand Dollars ($350,000) for site acquisition. Following completion of such acquisition, and within the time frames required under this Agreement and the Attachments hereto, Developer shall: (1) develop a 54 unit Senior Citizen independent living rental project on the Site; and (2) record covenants requiring the maintenance of affordability and age restrictions for a period not less than fifty-five (55) years for seventeen (17) of such units to be rented to, or held available for occupancy by Very Low Income Tenants and for thirty-six (36) of such units to be rented to, or held available for occupancy by Low Income Tenants. It shall be the responsibility of Developer to obtain funds necessary to develop the Site in accordance with Tustln Heritage Place DDA Page 16 DRAFT 02J1212002 this Agreement, including funding any Project Costs (as defined in the Method of Financing, attached hereto and incorporated herein by reference as Attachment 5) in excess of the estimated total Project Cost of $6,780,000, less Agency Financial Assistance. 5.2 Submission and Approval of Evidence of Financing Commitments As conditions precedent to Agency's obligation to make available any Agency assistance to Developer, and within the times established therefore in the Schedule of Performance, Developer shall submit to Agency the following Evidence of Financing Commitments: 5.2.1 The final loan documents for the Developer's financing of the acquisition and development of the Site and the construction of the Site Improvements through Apartment Development Revenue Bonds issued by the County of Orange (as defined in the Method of Financing, attached hereto and incorporated herein by reference as Attachment 5), including but not limited to: (a) those loan documents that pertain to indebtedness in connection with the acquisition and construction of the Site; and (b) such other documents, as Agency, in its good faith discretion, determines will assist in the evaluation of whether Developer is able to construct the Site Improvements and perform this Agreement in accordance with the Method of Financing, Attachment 5, which is incorporated herein by this reference. 5.2.2 Agency shall approve or reasonably disapprove such Evidence of Financing Commitments within the times established in the Schedule of Performance. 5.3 Bridge Loan for Pre-Development Cost Assistance 5.3.1 Conditions As conditions precedent to Developer's receiving the Bridge Loan disbursement for pre-development cost assistance ($250,000.00): A. Agency shall have approved Developer's Evidence of Tustin Heritage Place DDA Page 1 7 DRAFT 02112/2002 Financing Commitments; B. Agency shall have received from the California Housing Finance Authority (CHFA) a disbursement of HELP Loan funds in the amount of $250,000.00 pursuant to the Loan Agreement between CHFA and the Agency dated February 27, 2001 (CHFA Loan No. HELP-081800-2); C. Agency shall have received escrow holder's commitment to abide by Agency's escrow instructions pertaining to the disbursement of the Bridge Loan; which escrow instructions shall specify, inter alia, that the Regulatory Agreement and Declaration of Restrictive Covenants (attached hereto and incorporated herein by reference as Attachment (10) and the Bridge Loan Deed of Trust described in subsection D below shall be recorded through escrow, immediately following any Permitted Mortgage and without cost to Agency; and D. Such escrow holder is prepared to have issued to Agency, on close of escrow, an ALTA lender's title policy showing: (1) fee simple title to the Site as vested in Developer, (2) Agency as an insured lender, and (3) no monetary liens or encumbrances, other than a Permitted Mortgage, a lien for taxes not yet due and payable, and the Bridge Loan Deed of Trust described in subsection D below. 5.3.2 Amount and Schedule: Upon Satisfaction of the conditions precedent listed above in subsection 5.3.1, Agency shall deposit into escrow the amount of two hundred, fifty thousand dollars ($250,000.00). 5.4 Terms of the Bridge Loan 5.4.1 The Bridge Loan which consists of the total amount described in subsection 5.1 above, shall be evidenced by Developer executing and delivering to Agency a promissory note in the form attached hereto as Attachment 6 and incorporated herein by Tusfin Heritage Place DDA Page 18 DRAFT 0271272002 this reference, for an amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000.00)(the "Bridge Loan Promissory Note"). The Bridge Loan Promissory Note shall be executed concurrently herewith, but no interest shall begin to accrue thereunder until such time as the first disbursement has been made. 5.4.2 The Bridge Loan Promissory Note shall be secured by a Bridge Loan Deed of Trust which Developer shall execute and which shall be recorded as a lien against the Site. Such Deed of Trust shall be subordinate to the Permitted Mortgage required for Developer's acquisition or financing of the Site Improvements. The Bridge Loan Deed of Trust is attached as Attachment 7 and is incorporated herein by this reference. 5.4.3 The total amount of the Bridge Loan shall accrue interest at the rate of three percent (3%) per year, from the date of the disbursement under the Bridge Loan Promissory Note. The principal amount of the Bridge Loan Promissory Note and all accrued interest shall be due and payable the earlier of: a) three (3) years from the date of disbursement under the Bridge Loan Promissory Note, or b) upon disbursement of the Agency Loan described in subsection 5.5 below. 5.4.4 If prior to the issuance of a certificate of use and occupancy on the Site, Developer defaults underthe terms of this Agreement, the Bridge Loan Promissory Note, the Bridge Loan Deed of Trust, or the Regulatory Agreement and Declaration of Restrictive Covenants (Attachment 11 ), and fails to cure any such default pursuant to the provisions of Section 12 herein, the Bridge Loan Promissory Note, including all accrued interest, shall become immediately due and payable. If after issuance of a certificate of use and occupancy for the first unit but prior to the issuance of a Certificate of Compliance, Developer defaults under the terms of this Agreement, the Bridge Loan Promissory Note, or the Regulatory Agreement and Declaration of Restrictive Covenants (Attachment 11 ), and fails to cure any such default pursuant to Section 12 herein, the Agency may demand Tustin Heritage Place DDA Page 19 DRAFT 02/12/2002 immediate payment of the Bridge Loan Promissory Note, plus all accrued interest. The parties agree, that the remedy of specific performance is available to Agency to compel payment of the amount due. In the event Developer does not repay the full Bridge Loan Promissory Note and all accrued interest when demand for such is made by Agency, Agency shall, at that time, have full rights under the Bridge Loan Promissory Note and Bridge Loan Deed of Trust, and such other rights as may be afforded by law or in equity, to ensure repayment. 5.5 Agency Loan for Land Acquisition Assistance 5.5.1 Conditions As conditions precedent to receiving the Agency Loan ($350,000.00) for Land Acquisition Assistance: A Developer shall have obtained a City of Tustin Certificate of Occupancy for the Site Improvements; B Developer shall have fumished Agency with an ALTA lender's policy showing: (1) fee simple title to the Site as vested in Developer, (2) Agency as an insured lender, and (3) no monetary liens or encumbrances, other than a Permitted Mortgage, Bridge Loan to be paid off in escrow, a lien for taxes not yet due and payable, and the Deed of Trust described in subsection 5.6.2 below; C Developer shall have furnished to Agency proof of insurance coverage as provided in Section 13; D Developer shall not then be in default under this Agreement, the Agency Loan Promissory Note described in Section 5.6.1 below, or the Agency Loan Deed of Trust described in Section 5.6.2 below; Tustln Heritage Place DDA Page 20 DRAFT 02712/2002 5.5.2 Amount and Schedule: Upon satisfaction of the conditions precedent listed above in subsection 5.5.1, Agency shall deposit into escrow the amount of three hundred, fifty thousand dollars ($350,000.00). 6.5.3 Maintenance of Records Developer agrees to maintain complete and accurate accounts, invoices, and records of all monies expended or paid pursuant to contracts for the construction of the Site Improvements. 5.6. Terms of Agency Loan 5.6.1 The Agency Loan which consists of the total amount described in subsection 5.1 above, shall be evidenced by Developer executing and delivering to Agency a promissory note in the form attached hereto as Attachment 8 and incorporated herein by this reference, for an amount not to exceed Three Hundred Fifty Thousand Dollars ($350,000.00)(the "Agency Loan Promissory Note"). The Agency Loan Promissory Note shall be executed concurrently herewith, but no interest shall begin to accrue thereunder until such time as the disbursement has been made. 5.6.2 The Agency Loan Promissory Note shall be secured by an Agency Loan Deed of Trust which Developer shall execute and which shall be recorded as a lien against the Site. Such Deed of Trust shall be subordinate to any other Permitted Mortgage required for Developer's acquisition orfinancing of the Site Improvements. The Agency Loan Deed of Trust is attached as Attachment 9 and is incorporated herein by this reference. 5.6.3 The disbursed and unpaid principal balance of the Agency Loan shall accrue interest at the rate of three percent (3%) per annum, simple interest, from the date on which Agency Loan proceeds are first disbursed. Developer shall repay the Agency Loan with accrued interest in arrears in annual installments on April 15th of each year for the Tustin Heritage Place DDA Page 21 DRAFT 07J1212002 previous year, commencing on April 15, 2003. Absent prepayment or acceleration, each of the annual payments due April 15, 2003 through April 15, 2033 ("Maturity Date") shall be made out of Residual Receipts (as defined in the Agency Promissory Note) from the immediately preceding calendar year. The amount of such annual payment to Agency, when combined with the annual loan payment under the County of Orange Housing and Community Development (HCD) Loan out of Residual Receipts for the immediately preceding calendar year, shall equal fifty percent (50%) of all Residual Receipts for such year. The fifty percent (50%) amount shall be split between the Agency and HCD on the basis of their respective loan balances immediately prior to the annual payments (including their respective remaining principal balances, and accrued but unpaid interest and all charges respectively due as of such time). Residual Receipts shall be calculated and reported (as defined in the Agency Promissory Note) to the Agency annually for each calendar year no later than April 15th of the following calendar year on forms specified and provided by Agency from time to time. All calculations and records are subject to audit by Agency. Notwithstanding any other provision of under the Agency Loan Promissory Note or of this Agreement, unless due sooner, the entire outstanding principal balance of the Agency Loan together with any outstanding interest and any other sums payable under the Agency Loan Promissory Note shall be due and payable in full on the Maturity Date. 5.6.4 If Developer defaults under the terms of this Agreement, the Agency Loan Promissory Note, the Agency Loan Deed of Trust, or the Regulatory Agreement and Declaration of Restrictive Covenants (Attachment 11 ), and fails to cure any such default pursuant to the provisions of Section 12, herein, the Agency Loan Promissory Note, including all accrued interest, shall become immediately due and payable. If after issuance of a certificate of use and occupancy for the first unit but prior to the issuance of a Certificate of Compliance, Developer defaults under the terms of this Agreement, the Agency Loan Tustin Heritage Place DDA Page 22 DRAFT 02,~12/2002 Promissory Note, or the Regulatory Agreement and Declaration of Restrictive Covenants (Attachment 11 ), and fails to cure any such default pursuant to Section 12 herein, the Agency may demand immediate payment of the Agency Loan Promissory Note, plus all accrued interest. The parties agree, that the remedy of specific performance is available to Agency to compel payment of the amount due. In the event Developer does not repay the full Agency Loan Promissory Note and all accrued interest when demand for such is made by Agency, Agency shall, at that time, have full rights under the Agency Loan Promissory Note and Agency Loan Deed of Trust, and such other rights as may be afforded by law or in equity, to ensure repayment. SECTION 6 AFFORDABLE UNIT REQUIREMENTS 6.1 Identification of Affordable Housing Units The Project shall contain 53 Affordable Housing Units rented to Senior Citizen individuals/households with incomes at or below 60% of the Area Median Income ("AMI") as stated in the Regulatory Agreement and Declaration of Restrictive Covenants (Attachment 13), and 1 manager's unit. The 53 Affordable Housing Units will consist of seven (7) one- bedroom units restricted at 35% AMI; six (6) one-bedroom units restricted at 50% AMI; twenty-nine (29) one-bedroom units restricted at 60% AMI; two (2) two-bedroom units restricted at 35% AMI; two (2) two-bedroom units restricted at 50% AMI; and seven (7) two- bedroom units restricted at 60% AMI. 6.2 Covenants The Developer hereby represents, warrants and covenants as follows: 6.2.1 Use of Low and Very Income Units Developer shall devote the Project for use as a Senior Citizen independent living housing project with the Low and Very Low Income Units to be rented to and occupied only by Senior Citizen Low and Very Low Income Tenants subject to the occupancy restrictions contained in this Section 6, the Tustln Heritage Place DDA Page 23 DRAFT 02712/2002 Regulatory Agreement and Declaration of Restrictive Covenants, and in the Agency Loan Agreement. During the Qualified Project Period occupancy and rental rates for the Low and Very Low Income Units shall be restricted in accordance with this Agreement and the Regulatory Agreement and Declaration of Restrictive Covenants. 6.2.2 Notifying Low and Very Low Income Tenants. The Low and Very Low Income Units shall be rented to eligible and qualified Senior Citizen Low and Very Low Income Tenants in accordance with the following terms: A. Developer shall create and maintain an "interest list" which includes all those potential Senior Citizen tenants who have expressed an interest in leasing a unit within the Project. The interest list shall clearly designate whether such potential Senior Citizen tenant is eligible for rental assistance under the U.S. Department of Housing and Urban Development ("HUD") Section 8 program. Should multiple tenants be equally eligible and qualified for a Low or Very Low Income Unit, Developer shall rent available units to such eligible Senior Citizen tenants on a first-come, first-served, basis. B. Low and Very Low Income Units that fail to be leased after the thirty (30) day initial leasing period that occurs prior to issuance of the certificate of occupancy, or that become available as a result of tenant vacation where Developer has at least seven (7) days' prior notice of such anticipated vacation, shall be rented to new eligible and qualified Senior Citizen tenants in accordance with the following procedure: i. Developer shall make a reasonable effort to contact eligible and qualified prospective Senior Citizen tenants in the order of priority of the interest list as set forth in section 6.2.1 above; ii. Each such eligible and qualified prospective tenant(s) shall have three (3) business days to notify Developer of the tenant's intent to accept the unit, and must thereafter execute a lease for the unit within seven (7) days of such acceptance; Tusfin Heritage Place DbA Page 24 DRAFT 02112/2002 iii. Failure of the prospective tenant to timely accept the unit or thereafter execute a lease for the unit shall be deemed rejection of the unit. iv. Low and Very Low Income Units that become available as a result of a tenant vacation, or which remain vacant after Developer has fully complied with the procedure set forth in subparagraphs A through C, inclusive of the preceding paragraph, may be rented to any eligible Senior Citizen Low or Very Low Income Tenant. iv. Developer shall use its best efforts to fill vacancies of Low and Very Low Income Units as soon as possible following the date the Low or Very Low Income Unit becomes available. Developer shall notify the appropriate housing authorities any Low or Very Low Income Unit remaining vacant after the initial leasing period orfor more than thirty (30) days. v. Low and Very Low Income Tenants who occupy Low and Very Low Income Units at the expiration of the Qualified Project Period and who qualify as Low or Very Low Income Tenants on such date shall be permitted to continue to occupy those Low or Very Low Income Units for a period of three (3) years, beginning on the first day after the expiration of the Qualified Project Period; provided, however, that annual rent increases during such three (3) year period shall not exceed an amount equal to the existing rent for such unit plus an amount equal to the greater of (i) 5 percent or (ii) the percentage increase in Median Income for the Area. As any of these Restricted Units become unoccupied, such units shall not be subject to the restrictions of this Section B. vi. In lieu of compliance with the conditions set forth in subparagraph (v), the Developer may elect to provide the Low and Very Low Income Tenants residing in the Units at the expiration of the Qualified Project Period with relocation benefits, subject to the determination by the Agency that such benefits may be provided in accordance with California law. The Agency may rely upon advice of legal counsel in making such Tustin Heritage Place DDA Page 25 DRAFT 07J12/2002 determination, the cost of which legal advice and any necessary legal opinion shall be borne by the Developer. The Developer agrees to provide to Low and Very Low Income Tenants notice of all rent increases pursuant to applicable California law. 6.2.3 Rental Rates. Rental rates for all Low and Very Low Income Units to which this Agreement is applicable shall not exceed the higher of following: A. The fair market rent for existing housing for comparable units in the area as established by HUD under Section 888.111 of Title 24 of the Code of Federal Regulations ("CFR")less the monthly allowance for the utilities and services (excluding telephone) to be paid by the tenant; or B. Either of the following, at the Developer's option: i. 30 percent of the Senior Citizen Low or Very Low Income household's adjusted monthly income, as determined by HUD. If the Unit receives Federal or State project-based rental subsidy and the Low or Very Low Income Tenant pays as a contribution toward rent no more than 30% of the Senior Citizen household's Adjusted Income, then the maximum rent (i.e., tenant contribution plus project-based rental subsidy)is the rent allowable under the Federal or State project-based rental subsidy program. To obtain the maximum monthly rent that may be charged for a Unit that is subject to this limitation, the Developer shall multiply the annual Adjusted Income of the Senior Citizen Tenant by 30 percent and divide by 12 and, if applicable, subtract a monthly allowance for any utilities and services (excluding telephone) to be paid by the tenant; or ii. 30 percent of the income of a Senior Citizen household whose income equals 50 percent or less of the median income for the area, as determined by HUD, with adjustment for smaller and larger households, except that HUD may establish income ceilings higher or lower than 50 percent of the median for the area on the basis of Tustin Heritage Place DDA Page 26 DRAFT 02112~2002 HUD's findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or Iow family incomes. In determining the maximum monthly rent that may be charged for an Affordable Unit that is subject to this limitation, Developer shall subtract a monthly allowance for any utilities and services (excluding telephone) to be paid by the tenant. HUD provides average occupancy per unit and adjusted income assumptions to be used in calculating the maximum rent allowed under this subparagraph 6.2.3.B (ii). 6.2.4 Voucher Holders. No Low or Very Low Income Unit shall be refused for leasing to a Senior Citizen holder of a certificate or voucher under 24 CFR Part 982 Section 8 Rental Certificate Program or Section 8 Rental Voucher Program or to the holder of a comparable document evidencing participation in a HOME tenant-based assistance program because of the status of the prospective tenant as a holder of such certificate of family participation, rental voucher, or comparable HOME tenant-based assistance document. 6.2.5 Rent Schedule and Utility Allowances. The Agency and City shall annually review and approve rents proposed by the Developer for the Units to determine that the Developer has properly applied the rental restrictions contained in this Section 6 and shall review and approve a schedule to be provided by TCAC establishing the monthly allowances for utilities and services to be paid by the tenants of the Units. The Developer shall reexamine the income of each tenant household living in the Low and Very Low Income Units at least annually. The maximum monthly rent shall be recalculated by the Developer and reviewed and approved by the City and Agency annually, and may change as changes in the applicable gross rent amounts, the income adjustments, or the monthly allowance for utilities and services warrant. The Developer shall not impose an increase in rent approved by the City and Agency if that increase is not permitted to be imposed under the lease or rental Tusfln Heritage Place DDA Page 27 DRAFT 02117.]2002 agreement between Developer and the tenant. Developer shall provide not less than 30 days prior written notice to affected tenants before implementing any increase in rents. Rents shall not be increased more then one time a year. 6.2.6 Increases in Income. If, as a result of the annual reexamination of incomes required pursuant to paragraph 6.2.5 of this Section, the Developer determines that a Senior Citizen household that qualified as a Very Low Income Tenant for purposes of paragraph 6.2.3 of this Section, no longer is a Very Low Income Tenant but qualifies as a Low Income Tenant, then the Developer may charge the household rent which is the lesser of: (i) 30% of the Adjusted Income of a family earning 60% of the median income of the area, as determined by HUD, with adjustments for unit size; or (ii) the rent described in subparagraph (1) of paragraph (c) of this Section 6, and the Developer shall rent the next available Unit to a Very Low Income Tenant at the rent permitted under paragraph (d) of this Section 6. If, as a result of the annual reexamination of income required pursuant to paragraph (e) of this Section 6, the Developer determines that a Senior Citizen household no longer qualifies as a Low Income Tenant, Developer shall require that family to pay rent that is the lesser of the amount payable by the tenant under state or local law or thirty percent (30%) of the household's Adjusted Income, and shall rent the next available Unit to a Very Low Income Tenant at the rent permitted under subsection (c) above; provided, however, if a Unit has been allocated Low and Very Low Income housing tax credits pursuant to 26 United States Code ("USC") Section 42, the Developer shall not be required by this paragraph to increase the rent of the Unit above the approved tax credit rent for that Unit. 6.2.7 Minimum Rents. Notwithstanding the other provisions of this Section 6, Developer shall not be required to charge a rent for a Low and Very Low Income Unit that would be lower than the maximum rent Developer would have been permitted to charge for the Unit had the determination of maximum rent been made on the date the Agency and City Tustin Heritage Place DDA Page 28 DRAFT 02/12J2002 and the Developer entered into this Agreement. 6.2.8 Tenant Protections. The Lease between Developer and a tenant must be for not less than one year, unless by mutual agreement between the tenant and the Developer. A. Prohibited Lease Terms. The lease between the Developer and tenant may not contain any of the following provisions: i. Confession of Judgement. Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the Developer in a lawsuit brought in connection with the lease. ii. Treatment of property. Agreement by the tenant that the Developer may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the Unit after the tenant has moved out of the Unit. The Developer may dispose of this personal property in accordance with applicable state law. iii. Excusing owner from responsibility. Agreement by the tenant not to hold the Developer or its agents legally responsible for any action or failure to act, whether intentional or negligent. iv. Waiver of notice. Agreement of the tenant that the Developer may evict the tenant or household members without notice to the tenant. v. Waiver of legal proceedings. Agreement by the tenant that the Developer may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties. vi. Waiver of a jury trial. Agreement by the tenant to waive Tustin Heritage Place DDA Page 29 DRAFT 02/1212002 any right to a trial by jury. vii. Waiver of right to appeal court decision. Agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease. viii. Tenant chargeable with cost of legal actions regardless of outcome. Agreement by the tenant to pay attorney's fees or other legal costs even if the tenant wins in a court proceeding by the Developer against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. B. Termination of Tenancy. Developer may not terminate the tenancy or refuse to renew the lease of a tenant except for serious or repeated violation of the terms and conditions of the lease; for violation of applicable federal, state, or local law; for completion of the transitional housing tenancy period (if the housing is transitional); or for other good cause. Any termination or refusal to renew must be preceded by not less than thirty (30) days by the Developer's service upon the tenant of a written notice specifying the grounds for the action. SECTION 7 CONDITIONS FOR CONSTRUCTION 7.1 Compliance with Laws Developer shall perform the land development and construction of the Site Improvements in accordance with all applicable federal, state and local laws, rules and regulations, including but not limited to, any applicable prevailing wage requirements under California Senate Bill 975 (Chapter 938 of the Government Code) effective January 1,2002. 7.2 Time Limit for Construction All Site Improvements identified in the Scope of Development must be completed to the satisfaction of the Agency and City and in compliance with the City code, and applicable City ordinances, and public works specifications, as applicable, within the time Tustln Heritage Place DDA Page 30 DRAFT 02/12J2002 frames outlined in the Schedule of Performance. Any extensions of time must be approved in writing by Agency and City. 7.3 Required Licenses and Permits Before commencement of construction, Developer shall, at its own expense, secure or cause to be secured, any and all licenses and permits which may be required by the City or any other governmental agency affected by such construction. Developer shall cause plans for permits to be submitted within the times specified in the Schedule of Performance. 7.4 One (1) Year Warranty Developer's contractor shall provide a one-year contractual warranty, which shall run to the benefit of Developer and City Agency and City. 7.5 Quality of Work and Materials All work shall be of good quality and all workers shall be skilled in their trades. Unless otherwise specified herein, all materials shall be new, and shall be of good quality. 7.6 Clean-up of Site and Adjacent Areas Developer, its agents, servants, employees or contractors shall keep the Site and adjacent streets and sidewalks substantially free from accumulation of waste material and rubbish; and at the completion of the work, Developer shall remove from the Site all waste material and rubbish, implements, surplus materials, and surplus equipment. SECTION 8 USES OF THE SITE 8.1 Uses Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Site, or any part thereof, that during construction and thereafter for a period not less than fifty-five (55) years, Developer, its successors and such assigns, shall develop and devote the Site to the uses specified in the Scope of Development all plans Tustin Heritage Place DDA Page 31 DRAFT 0271272002 approved by Agency and City pursuant to this Agreement, the Regulatory Agreement and Declaration of Restrictive Covenants (Attachment 13) and this Section. The Regulatory Agreement and Declaration of Restrictive Covenants (Attachment 13) shall be executed by the parties and recorded through the escrow for the disbursement by Agency of the Bridge Loan, as provided in Section 5.3 above. 8.2 Covenants to Run with the Land 8.2.1 All conditions, covenants, and restrictions contained in this Agreement shall be covenants running with the land, and shall, in any event, and without regard to technical classification or designation, legal or otherwise, be, to the fullest extent permitted by law and equity, binding for the benefit and in favor or, and enforceable by the Agency, its successors and assigns, and the City of Tustin, its successors and assigns, against Developer, its successors and assigns, to or of the Project or any portion thereof or any interest therein, and any party in possession or occupancy of said Project or portion thereof. 8.2.2 In amplification and not in restriction of the provisions set forth hereinabove, it is intended and agreed that the Agency and City shall be deemed a beneficiary(les) of the agreements and covenants provided hereinabove both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of the Agency and City and such covenants shall run in favor of Agency and City for the entire period during which such covenants shall be in force and effect, without regard to whether the Agency or City is or remains an owner of any land or interest therein to which such covenants relate. The Agency and City shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such Tustin Heritage Place DDA Page 32 DRAFT 02212/2002 breach of agreement or covenant. 8.2.3 The Agency and its successors and assigns, the City and its successors and assigns, and Developer and the permitted successors and assigns of Developer in and to all or any part of the fee title to the Project, shall jointly have the right upon written agreement signed by both parties to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, easements, or restrictions contained in this Agreement without the consent of any tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust, or any other person or entity having any interest less than a fee in the Project. The covenants contained in this Agreement, without regard to technical classification shall not benefit or be enforceable by any owner of any other real property within or outside the Project, or any person or entity having any interest in any other such realty. 8.2.4 No breach of any of the provisions of this Agreement shall impair, defeat or render invalid the lien of any mortgage, deed of trust or like encumbrance made in good faith and for value encumbering the Project or any portion thereof. 8.3. Maintenance of the Site Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Site or any part thereof, that solely at Developer's expense, the Developer shall maintain the Site Improvements and keep the Site reasonably free from any debris and waste materials. If at any time Developer fails to maintain the Site as required by this subsection 8.3, and said condition is not corrected after written notice from Agency or City and a reasonable period of time not to exceed thirty (30) days from the date of written notice from Agency expires, either Agency or the City may perform the necessary landscape or other maintenance and Developer shall pay all costs incurred for such maintenance. Tustin Heritage Place DBA Page 33 DRAFT 02/12.~002 SECTION 9 CERTIFICATE OF COMPLIANCE 9.1 After completion of all Site development and construction to be completed by the Developer upon the Site in compliance with the terms of this Agreement and upon satisfaction of the conditions set forth hereinafter, the Agency and City shall furnish the Developer with a Certificate of Compliance upon written request therefore by the Developer. Such Certificate of Compliance shall be, and shall so state, conclusive determination of satisfactory completion of the Site Improvements required by this Agreement, and of full compliance with the terms hereof with respect to such Site Improvements. After the recordation of the Certificate of Compliance, any party then owning or thereafter purchasing, leasing, or otherwise acquiring any interest therein shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement with respect to such Site Improvements, except that such party shall continue be bound by any covenants contained in Sections 8 and 10. Issuance of the Certificate of Compliance shall not waive any rights or claim that the Agency and City may have against any party for latent or patent defects in design, construction or similar matters under any applicable law, nor shall it be evidence of satisfaction of any of Developer's obligations to others, not a party to this Agreement. The Certificate of Compliance shall be in such form as to permit it to be recorded in the Office of the County Recorder of Orange County. 9.2 The Agency and City shall not be obligated to issue the Certificate of Compliance until each of the following has occurred: 9.2.1 Final inspection of the Site by or on behalf of the Agency and City and determination by the Agency and City that the Site Improvements have been completed in conformance with this Agreement; 9.2.2 Issuance of a certificate of substantial completion by the Architect; 9.2.3 Issuance of the final certificate of occupancy by the City of Tustin; Tusfin Heritage Place DDA Page 34 DRAFT 02J12/2002 9.2.4 Releases or waivers of all liens or rights to record liens having been obtained from the general contractor and all subcontractors having served valid Preliminary 20-day Notices or otherwise could perfect a mechanic's lien, or the endorsements to their respective lender's title insurance policies, and the statutory period for filing liens having expired. 9.3 The Agency and City shall not unreasonably withhold or delay any Certificate of Compliance. If the Agency and City refuses or fails to issue a Certificate of Compliance after written request from Developer, provided each of the conditions established in paragraph 9.2 above has been satisfied, the Agency and City shall within ten (10) business days of the written request, provide a written statement which details the reasons the Agency and City refused or failed to issue the Certificate of Compliance. The statement shall also contain a statement of the actions that Developer must take to obtain a Certificate of Compliance. 9.4 Such Certificate of Compliance shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage or any insurer of a mortgage securing money loaned to finance the improvements or any part thereof. Such Certificate of Compliance iS not a notice of completion as referred to in California Civil Code Section 3093. SECTION 10 10.1 NON-DISCRIMINATION Obligation to Refrain from Discrimination Developer, covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, except as provided for senior housing projects under the law, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any residential uses Tustin Heritage Place DDA Page 35 DRAFT 02112,/2002 developed on the Site, nor shall Developer for itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of homeowners, tenants, lessees, subtenants, sublessees or vendees of the Site. The foregoing covenants shall run with the land, as provided in this Agreement and the Regulatory Agreement and Declaration of Restrictive Covenants. 10.2 Non-discrimination and Non-Segregation Covenants Developer agrees, for itself, its successors and assigns, to refrain from restricting the rental, or lease of the Project on the basis of race, color, creed, religion, national origin or ancestry, sex, marital status, or age, except as provided for senior citizen housing projects under the law, of any person. All leases or contracts shall contain or be subject to substantially the following nondiscrimination or non-segregation clauses: "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 them, and this lease or sublease is made and accepted upon and subject to the following conditions: That there be no discrimination against or segregation of, any person or group of persons, on account of race, color creed, religion handicap, natural origin or ancestry, sex, sexual orientation, marital status, or age, except as provided for senior citizen housing projects under the law, in the leasing, subleasing, transferring, use or enjoyment of the land herein lease or subleased, nor shall the lessee himself or herself, or any persons 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, subleases, subtenants or vends in the land herein leased." 10.3 Duration of Covenants The covenants in this Section 10 shall remain in effect in perpetuity. Tustin Heritage Placo DDA Page 36 DRAFT 02/12/2002 SECTION 11 INSURANCE AND INDEMNIFICATION 11.1 Worker's Compensation, Bodily Injury and Property Damage Insurance During the period commencing with the execution of this Agreement and ending with a recordation of a Certificate of Compliance, Developer shall furnish to Agency and City duplicate originals of appropriate certificates of insurance for the site development and construction work to be performed by Developer under this Agreement, as follows: 11.1.1 Worker's Compensation Insurance, providing coverage as required by the California State Worker's Compensation Law. 11.1.2 Liability for bodily injury and death. 11.1.3 Liability for Property Damage, including Builder's All Risk Insurance for the completed value of the Site Improvements. Each policy shall have coverage of not less than One Million Dollars ($1,000,000) combined single limit, and shall be occurrence-based. 11.2 Insurance Endorsements 11.2.1 Each such policy of liability insurance shall contain endorsements providing the following: A. The Tustin Community Redevelopment Agency and City of Tustin are hereby declared to be additional insureds under the terms of this policy with respect to this subject property and Agreement with Agency and City. B. This insurance policy is primary insurance and no insurance held or owned by the Agency or City shall be called upon to cover a loss under said policy. C. Owners Loss Payable giving priority, with respect to the proceeds and the insurance benefits to be used to restore the damaged property, to Agency, second only to Developer's Agency-approved Conventional Construction Loan lender, and stating that the amount of the Builder's All Risk Insurance policy shall at all times be sufficient Tustin Heritage Place DDA Page 37 DRAFT 0221222002 to cover the disbursements under both the Agency-approved Conventional Construction Loan, the Bridge Loan and the Agency Loan. D. An endorsement that provides that: "This insurance policy will not be canceled, limited or non-renewed by the insurer until thirty (30) days after receipt by City and Agency of a written notice of such cancellation or reduction in coverage." E. An endorsement that provides that: "A waiver of subrogation is hereby given to the City of Tustin and the City of Tustin Community Redevelopment Agency as pertains to the terms of all workers compensation insurance." F. Insurers must be in good standing in the State of California, have an agent for service of process in the State of California, and have a Best's Key Rating of at least A, VII, except that worker's compensation insurance with a b rating may be accepted. 11.2.2 As evidence of such insurance, Developer shall deliver to Agency and City, within ten (10) business days following the effective date of this Agreement, an insurance certificate in the form of Attachment 15, attached hereto and incorporated herein by reference. 11.3 Indemnification Upon execution of this Agreement, notwithstanding Developer's insurance obligations, and excepting any claims, liability, injury demands, suits, judgments, or awards based on Agency's or City's active negligence or willful misconduct, Developer shall defend, indemnify, and hold harmless the Agency and City, their officers and representatives, employees and agents from and against any claims, liability, injury, demands, suits, judgments or awards arising from or related in any manner to (i) the activities of Developer under this Agreement, (ii) the incurring of costs and expenses by Developer, (iii) the acquisition of the Site by Developer, (iv) the disposition of the Site pursuant to any future Tustin Heritage Place DDA Page 38 DRAFT 02J1212002 sales, leases and/or rental agreements, or (v) the construction and demolition activity undertaken by Developer for the redevelopment of the Site. This indemnity shall apply to economic losses, personal injuries or property damage suffered by Agency or City, their respective officers, employees or agents. This indemnity shall not apply to Agency and City's breach or default of any of the terms, conditions or covenants of this Agreement. SECTION 12 DEFAULTS, REMEDIES AND TERMINATION 12.1 Default Each of the following shall constitute a Default under this Agreement: 12.1.1 Failure or delay by a party to perform any term or provision of this Agreement within the time provided herein or in the Schedule of Performance, as such times may be extended pursuant to this Agreement. 12.1.2 Failure of Developer to develop the Site substantially in accordance with the Scope of Development plans, and construction drawings and any revisions thereto approved by Agency and City. 12.1.3 Breach of any covenant, warranty, or agreement contained or incorporated in this Agreement. The party who fails to perform or delays performance of any term or provision of this Agreement must immediately commence to cure, correct or remedy such failure and shall complete such cure, correction or remedy with all due diligence. 12.2 Notice If an event of Default under this Agreement occurs, the injured party shall give written notice (a "Default Notice") of the Default to the party in default, specifying the nature of the default. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it operate as a waiver of any rights or remedies of the injured party; but the injured party shall have no right to exercise any remedy Tustin Heritage Place DDA Page 39 DRAFT 02112/2002 hereunder without delivering the Default Notice as provided herein. Delays by either party in asserting any of its rights and remedies shall not deprive either 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. 12.3 Cure Period With respect to defaults or events for which a specific cure period is provided elsewhere in this Agreement, the specific cure period in that Section shall be applicable in lieu of cure periods provided in this section. In no event shall the cure period set forth in this section be added to any other cure period set forth in this Agreement. The injured party shall have no right to exercise a right or remedy hereunder unless the subject Default continues uncured for a period of thirty (30) days after the delivery of the Default Notice, or, where the default is of a nature which cannot be cured within such thirty (30) day period, the defaulting party fails to commence such cure within thirty (30) day period or fails to proceed diligently to complete the same, within a reasonable period of time, as determined by the non-defaulting party, in its reasonable discretion. A Default for failure to pay a sum of money is a default which can be cured within thirty (30) days. If the default is not cured within the time periods specified above, the non-defaulting party, at its option, may institute an action for specific performance of the terms of this Agreement or pursue such other rights and remedies as it may have. 12.4 Rights and Remedies Upon the occurrence of an event of Default and the expiration of the applicable cure period provided herein or by law, the injured party shall have all rights and remedies against the defaulting party as may be available at law or in equity, to cure, correct or remedy any Default, to obtain specific performance, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement, and when Agency or City is Tustin Heritage Place DDA Page 40 DRAFT 0211212002 the injured party, Such rights and remedies are cumulative, and except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the exercise of one or more of such rights and remedies shall not preclude the exercise, at the same or different times, of any other rights or remedies for the same Default or any other Default by the defaulting party. 12.5 Legal Actions 12.5.1 Venue. All legal actions must be instituted in the Superior Court of the County of Orange, State of California, or in any other appropriate court of that county, or in the Federal District Court in the Central District of California, Santa Ana branch. 12.5.2 Service of Process. Service of process on Agency and City shall be made by personal service upon the Executive Director of Agency and City Manager, or in such manner as may be provided by law. Service of process on Developer shall be made by personal service upon an officer of Developer or in such manner as may be provided by law, whether made within or without the State of California. 12.5.3 Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 12.6 Rights of Termination 12.6.1 Termination by Developer. In addition to other remedies set forth in this Agreement, and subject to the terms and conditions herein, Developer shall have the right to terminate this Agreement prior to close of escrow for Developer's Purchase of the Site if: A Developer reasonably determines the conditions of the Site are not suitable for the development required by this Agreement; B Developer, despite reasonable efforts to do so, is unable to Tustln Heritage Place DDA Page 4 1 DRAFT 0211212002 obtain financing for the Project. Upon termination by Developer, Developer shall have no further obligation to Agency and City except that Developer's indemnity obligations in this Agreement shall survive termination. 12.6.2 Termination by Agency and City In addition to other remedies set forth in this Agreement, Agency and City shall have the right to terminate this Agreement if: A. Agency or City at its option reasonably determines the conditions of the Site are not suitable for the development required by this Agreement; B. Agency or City delivers a Default Notice pursuant to subsection B, above, and any pertinent cure period applicable pursuant to subsection C, above, with respect thereto has expired; C. Developer (or any successor and assigns) assigns or attempts to assign this Agreement or any right therein or the Site (or any portion thereof), contrary to the provisions of this Agreement; D. Developer fails to submit plans, drawings and related documents for the Site, as required by this Agreement by the date respectively provided for in the Schedule of Performance; or E. Developer fails, in violation of this Agreement, to perform any of its obligations hereunder. 12.7 Rights and Remedies Are Cumulative Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of such rights or remedies shall not preclude the exercise by it, at Tustln Heritage Place DDA Page 42 DRAFT 02J12/2002 the same or different times, of any other rights or remedies for the same Default or any other Default by any other party. 12.8 Effect of Violation of the Terms and Provisions of this Agreement Agency and City are deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of Agency and City, without regard to whether Agency and City has been, remains, or is owner of any land or interest there in the Site. Agency and City shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. SECTION 13GENERAL PROVISIONS 13.1 Disputes to be Determined by Agency and City Any disagreement arising out of this Agreement or from breach thereof shall be submitted to Agency and City for determination. Agency and City shall make its determination within thirty (30) days after the matter is submitted to Agency and City for determination. It is mutually agreed that the determination shall be a condition precedent to any right of legal action that either party may have against the other. 13.2 Local, State and Federal Laws Developer shall carry out all Land Development obligations, all construction of the Site Improvements, and all responsibilities under this Agreement in conformity with all applicable local, state and federal laws, including all applicable federal immigration laws and applicable federal and state labor standards. 'rustin Heritage Place DDA Page 43 DRAFT 0211212002 13.3 Taxes, Assessments, Encumbrances and Liens Developer shall pay when due all real estate taxes and assessments, and other encumbrances or liens, assessed or levied on or against the Site and each portion thereof. Nothing herein contained shall be deemed to prohibit Developer from contesting the validity or amounts of any tax assessment, encumbrance or lien, or to limit the remedies available to the Developer in respect thereto. 13.4 Rights of Access Representatives of the Agency and City shall have the reasonable right of access to the Site or any portion thereof without charges or fees during the period of this Agreement for the purpose of determining compliance with plans approved under this Agreement or the provisions of the Redevelopment Plan, including but not limited to the inspection of work being performed in constructing the Site Improvements. 13.5 Notices, Demands and Communications Between the Parties Written notices, demands and communications between Agency and City and Developer shall be sufficiently given if (i) delivered by hand (and a receipt therefore is obtained or is refused to be given), (ii) dispatched by registered or certified mail, postage prepaid, return receipt requested, or (iii) delivered by private delivery service (and a receipt therefore is obtained or is refused to be given), to the principal offices of Agency and City and/or Developer, as applicable. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section 13.5. Any written notice, demand or communication shall be deemed received immediately if delivered by hand, shall be deemed received on the tenth day from the date it is postmarked if delivered by registered mail, shall be deemed received on date of delivery as shown on the return receipt if delivered by certified mail, and shall be deemed received as of Tustin Heritage Placo DDA Page 44 DRAFT 02~12J2002 the date of delivery shown in the records of the private delivery service if delivered by such private delivery service. Such notices shall be addressed and delivered to: City: William A. Huston, City Manager City of Tustin 300 Centennial Way Tustin, CA 92780 Agency: Christine A. Shingleton, Assistant City Manager Tustin Community Redevelopment Agency 300 Centennial Way Tustin, CA 9278 Developer: Roger Davila Tustin Heritage Place, L.P. 1740 E. Garry, Suite 105 Santa Ana, CA 92705 13.6 Conflicts of Interest No member, official or employee of Agency and City shall have any personal interest, direct or indirect, in this Agreement, nor shall any member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. 13.7 Enforced Delay; Extension of Times of Performance In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement and the Attachments hereto shall be extended, where delays or defaults are due to: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; Tustin Heritage Place DDA Page 45 DRAFT 02/12;2002 casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation by third parties challenging the validity of this Agreement, or Developer's rights and obligations under this Agreement; unusually severe weather; inability to secure, or delay in securing, permits (if the inability to secure, or delay in securing, permits is not the fault of Developer), necessary labor, materials or tools; delays of any contractor, subcontractor or supplier; acts or omissions of the other party; acts or failures to act of the City of Tustin or any other public or governmental agency or entity (other than the acts or failures to act of Agency which shall not excuse performance by Agency); or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time due to any such cause shall be for the period of the enforced delay, if notice by the party claiming such extension is sent to the other party within (1) thirty (30) calendar days of the commencement of the cause, when it is then reasonably foreseeable that a delay may result (e.g., on learning of a labor strike), or (2) thirty (30) business days of the commencement of the delay, when it was not reasonably foreseeable that a delay would result (e.g., sudden flooding). Times of performance under this Agreement may also be extended in writing by the mutual agreement of City and Agency and Developer. 13.8 Nonliability of Officials and Employees of Agency and City No member, official or employee of Agency and City shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by Agency or for any amount which may become due to Developer or its successors, or on any obligations under the terms of this Agreement. 13.9 Inspection of Books and Records Agency and City have and shall have the right at all reasonable times, upon no Tustin Heritage Place DDA Page 46 DRAFT 02112/2002 less than ten (10) days written notice, to inspect the books and records of Developer pertaining to the Site as pertinent to the purposes of this Agreement. Developer also has the right at all reasonable times, upon no less than two (2) days written notice to inspect the books and records of Agency and City pertaining to the Site as pertinent to the purposes of this Agreement. SECTION 14 SPECIAL PROVISIONS 14.1 Successors In Interest For the term of this Agreement, the terms, covenants, conditions and restrictions of this Agreement shall extend to and shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties, except as provided for in this Agreement. SECTION 15 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS This Agreement shall be executed in two (2) duplicate originals, each of which is deemed to be an original. This Agreement includes 48 pages and 15 Attachments, which constitutes the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing by the appropriate authorities of Agency, City, and Developer, and all Amendments hereto must be in writing by the appropriate authorities of, Agency, City and Developer. In any circumstance where, under this Agreement, either party is required to approve or disa.pprove any matter, approval shall not be unreasonably withheld. Tustin Heritage Place DDA Page 47 DRAFT 0Z~12/2002 SECTION 17 EFFECTIVE DATE OF THE AGREEMENT The effective date of this Agreement shall be the date when it shall have been signed by Agency. IN WITNESS WHEREOF, Agency, City Agreement on the respective dates set forth below. Dated: and Developer have signed this "Agency" TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency By: Jeffery M. Thomas, Chairman "City" CITY OF TUSTIN APPROVED AS TO FORM: By: Lois E. Jeffrey, Agency Counsel By: Jeffery M. Thomas, Mayor ATTEST: Recording Secretary Dated: "Developer" Tustin Heritage Place, LP., a California limited partnership By: Tustin Heritage Place, LLC, a California limited liability company, its Developer general partner Tustln Herttage Place DDA Page 48 DRAFT 02112J2002 By: Valley West Afffordable Housing Corporation, a California non-profit benefit corporation, its Managing general partner Tustin Heritage Place DDA Page 49 DRAFT 02J1212002 Attachment 1 Project Site Map ATTACHMENT 1 PROJECT SITE MAP Tustin Heritage Place DDA Page 50 DRAFT 02112"2002 Attachment 2 Legal Description ATTACHMENT 2 LEGAL DESCRIPTION ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORA,WOE, CITY OF TUSTIN? A.KrI:) IS DESCRIBED AS FOLLOWS: THE SOUTHEASTERLY 264.00 FEET OF THE SO~'ESTERLY O.NVE-HALF OF THE NORTHWESTERLY ONE-HALF OF THE SOL~HWESTERLY ONE-HALF OF LOT 49, AS SHOWN ON PLAT NO. 1 OF THE tL&NCHOS SANTIAGO DE SANTA ANA Aa\rD SAN JOAQUIN, RECORDED LN BOOK 5, PAGE 7, MISCELLANrEOUS RECORDS OF LOS ANGELES COUNTY, CALIFO~N'L~., MORE PARTICULAILLY DESCRIBED AS FOLLOWS: BEGINrNLNG AT THE MOST EASTERLY COtLNVER OF LOT 2 OF RECORD OF SU'RVEY, IN THE CITY OF TUSTIN, COL.~N'I~' OF ORANGE, STATE OF CALIFORNIA, FILED IN BOOK 71, PAGE 24 OF RECORD OF SL"RVEY, RECORDS OF O1L&NGE COUNVl~'; THENCE SOUTH 29°59'46' grEST 330.10 FEET TO A POINT ON THE CENTERLINVE OF SYCAMORE AVENUE AS SHOV¥.~ ON SAID MAP; THENCE ALONG S.MD CENTERLLNE NORTH 50°01'15' WEST 264.00 FEET: THENCE NORTH 39°59'46" EAST 330.12 FEET; THENCE SOL'TH 50°01'03' EAST 264.00 FEET TO SAID AFOREMENTIONED MOST EASTERLY CORNER OF LOT 2 OF RECORD OF SURVEY ANT) POINT OF BEGINNING. SAID LAN'D IS INCLUq2)ED WITHIN THE M_&PS FILED IN BOOK 69, PAGE I AND IN BOOK 71. PAGE 24, BOTH OF RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF S.MD COL'.~TY. Tustin Heritage Place DDA Page 51 DRAFT 02'12/2002 Attachment 3 Scope of Development ATTACHMENT 3 SCOPE OF DEVELOPMENT HERITAGE PLACE AT TUSTIN SENIOR CITIZEN HOUSING PROJECT Note: References herein to "the Agreement" and 'the DDA" mean the Disposition and Development Agreement of which this Attachment No. 3 is a part; references to "Attachments" mean the Attachments to the DDA unless otherwise specified. Except as otherwise noted, all capitalized terms defined within the DDA and the Attachments shall retain the meanings as defined in the Disposition and Development Agreement. I. GENERAL DESCRIPTION The Site is delineated on the Project Site Map (Attachment 1 ) and described in the Legal Description (Attachment 2) to the Agreement. II. DEVELOPER IMPROVEMENTS A. Definition of Site Improvements The Developer shall construct or cause to be constructed on the Site all of the Site Improvements including Private Improvements and Public Improvements set forth in this Scope of Development, as approved by the Agency, Planning Commission, and City Council. The Site Improvements shall generally consist of the following: 1. Improvement of the Site with a 54-unit senior citizen independent living rental apartment project pursuant to Agency approval and City of Tustin approvals through the Tustin Planning Commission and Tustin City Council. Resolutions of approval shall be obtained within the times established in the Schedule of Performance Attachment 4. 2. Compliance with all "Conditions of Approval" stipulated by an applicable governmental agency having jurisdiction, including, but not limited to, the design review and conditional use permit approval by the Tustin Planning Commission Resolution No. 3786 and the City approvals identified above. 3. Compliance with all provisions of the Disposition and Development Agreement. B. Schedule of Performance The Developer shall commence and complete the Site Improvements bythe respective times established therefore in the Schedule of Performance (Attachment 4). Tustin Heritage Place DDA Page 52 DRAFT 02/1212002 III. DEVELOPMENT STANDARDS The Site Improvements shall be designed and developed as a high quality Senior Citizen independent living project in which the residential units and buildings will have a first-class architectural qualify and character, both individually and in the context of the surrounding residential community. All public spaces and project open spaces shall be designed, landscaped and developed with the same degree of quality that reflects a high quality of life environment for the Senior Citizen tenants. Particular attention shall be paid to enhancing pedestrian activities, minimizing mass, scale and bulk, and to the selection of color and materials. The City and Agency and Developer will cooperate and direct their consultants, architects and/or engineers, and contractors to cooperate so as to ensure the continuity and coordination necessary for the proper and timely completion of the Project. All of the Site Improvements shall conform to all applicable federal, state, and city codes and regulations, including but not limited to federal and state labor codes and regulations, and the requirements of the City of Tustin Codes and conditions of the Tustin Planning Commission and Tustin City Council approvals and resolutions. The Developer acknowledges the responsibility to obtain any approvals required by any governmental agency, utility, or other agency, including the City, which has jurisdiction over all or any portion of the Site Improvements. All "Conditions of Approval" stipulated by an applicable jurisdiction shall be incorporated into the final design and noted in the construction documents by the architects, engineer and other consultants. The Developer shall make necessary applications by such time(s) as will be consistent with the timely commencement and completion of various portions of the off-site and on-site improvements by respective times established therefore by the Schedule of Performance (Attachment 4). IV. RENTAL REQUIREMENTS The Developer is aware that the City and Agency's participation in this Agreement is to provide financial assistance to Developer to provide for the development of 54 units of affordable Senior Citizen independent living rental apartments and to record covenants requiring the maintenance of affordability to Senior Citizen households not exceeding very Iow and lower-income limits as defined by the California Health and Safety Code and the DDA for the longest feasible period of time but for a period not less than fifty-five (55) years from the date the first units are occupied. To accomplish such purposes, the Developer covenants and promises to conduct marketing and provide rental restrictions in a manner consistent with and in full conformance with the provisions of the Agreement and the Regulatory Agreement and Declaration of Restrictive Covenants executed by and between the City of Tustin, Agency and Developer dated as of the date of the Agreement. Specifically, Developer shall lease nine (9) units to extremely Iow income Senior Tustin Herltago Place DDA Page 53 DRAFT 02~12/2002 Citizen households with incomes not exceeding 35% of the Area Median Income, as defined in the Agreement, eight (8) units to very Iow income Senior Citizen households with incomes not exceeding 50% of the Area Median Income, as defined in the Agreement, and thirty-six (36) units to lower income Senior Citizen households with incomes not exceeding 60% of the Area Median Income, as defined in the Agreement. CHANGES TO FINAL CONSTRUCTION DRAWINGS AND RELATED DOCUMENTS If the developer desires to make any changes in the Final Construction Drawings and Related Documents approved by the Agency, Tustin Planning Commission and Tustin City Council, the Developer shall submit the proposed change(s) to the Agency and City for approval. Such proposed changes shall be reviewed in the context of the purpose of the DDA and applicable provision of the City of Tustin Municipal Code and shall be approved or disapproved in writing by the Agency and City. Tustin Heritage Place DDA Page 54 DRAFT 02117J2002 Attachment 4 Schedule of Performance ATTACHMENT NO. 4 SCHEDULE OF PERFORMANCE (TUSTIN HERITAGE PLACE SENIOR CITIZEN HOUSING DDA) NOTE: References herein to "the Agreement" and "the DDA" mean the Disposition and Development Agreement of which this Attachment No. 4 is a part; references to "Attachments" mean the Attachments to the DDA unless otherwise specified. Except as otherwise noted, all capitalized terms defined within the DDA and the Attachments shall retain the meanings as defined in the Disposition and Development Agreement. Action Timinq 1. Execution of Aqreement A. Owner delivers executed DDA Attachments to Agency. B. Agency executes DDA and Attachments. C. Agency causes recordation of appropriate DDA Attachments. Within 15 calendar days following action by Agency on the DDA. Within 5 working days following Owner's submission of executed DDA Attachments. Within 10 working days following execution of the DDA by Agency. 2. Entitlement Approvals E. Owner submits complete applications with related drawings and documents to the City for all necessary entitlement approvals, including zoning approvals. F. City approves or disapproves all necessary entitlement approvals. Completed Completed Tustin Heritage Place DDA Page 55 DRAFT 02/12/2002 4. Agency Assistance. A. Developer submits evidence of satisfaction of conditions precedent for funding and disbursement of Bridge Loan as described in the DDA. B. Agency approves or disapproves disbursement of the Bridge Loan pursuant to the DDA. C. Developer submits evidence of satisfaction of conditions precedent for funding and disbursement of Agency Loan as described in the DDA. D. City and Agency approves or disapproves disbursement of Agency Loan pursuant to the DDA. 5. Construction of the Site Improvements. A. Owner commences construction of the Site Improvements. B. Owner completes construction of the Rehabilitation Improvements. 6. Submission of Request for Certificate of Compliance. Owner submits request for issuance of a Certificate of Compliance by City and Agency. 7. Approval and Issuance of Certificate of Compliance. The City and Agency approves or disapproves the request for issuance of a Certificate of Compliance. Within 10 working days following the execution of the DDA. Within 10 working days following Agency's inspection of the Developer's evidence of satisfaction of condition precedence funding the Bridge Loan. Within 30 working days following the issuance by City of Tustin of a certificate of occupancy for the Project. Within 10 working days following City and Agency's inspection of the Developer's evidence of satisfaction of condition precedence funding the Agency Loan. Within 60 calendar days following the execution of the DDA. Within twelve (12) months following the execution of the DDA. Upon completion of all Site Improvements and satisfaction of all conditions precedent set forth in the DDA. Within 10 working days following submission of request for Certificate of Compliance and satisfaction of all conditions precedent set forth in the DDA. Tustln Heritage Place DDA Page 56 DRAFT 07_/12/2002 8. Recordation of Certificate of Compliance. The City and Agency shall cause the recordation of the Certificate of Compliance in the Office of the County Recorder of Orange County. Within 5 working days following issuance of Certificate of Compliance by City and Agency. Tustin Heritage Place DDA Page 57 DRAFT 02/12/2002 Attachment 5 Method of Financing ATTACHMENT 5 METHOD OF FINANCING HERITAGE PLACE AT TUSTIN SENIOR CITIZEN HOUSING PROJECT Note: References herein to "the Agreement" and "the DDA" mean the Disposition and Development Agreement of which this Attachment No. 4 is a part; references to "Attachments" mean the Attachments to the DDA unless otherwise specified. Except as otherwise noted, all capitalized terms defined within the DDA and the Attachments shall retain the meanings as defined in the Disposition and Development Agreement. I. PROJECT BUDGET AND FINANCING SOURCES AND DEFINITIONS A. In General The acquisition of the Site and construction of the Site Improvements is intended to be financed as provided in this Method of Financing. (The acquisition of the Site and the construction of the Site Improvements are collectively referred to herein as "the Project.") The "Project Budget", which is attached hereto as Exhibit A, estimates the total Project Costs (as defined in Section I.B hereto), to be Six Million Seven Hundred Seventy Nine Thousand Eight Hundred Fifty Nine Dollars (S6,779,859.00). Funding sources for the total Project Costs will be generally as follows: "Apartment Development Revenue Bonds" (as defined in Section I.B(1 ) herein) in the aggregate amount of Four Million Six Hundred Thousand Dollars ($4,600,000); 2. "Low Income Housing Tax Credit Equity" (as defined in Section I.B(2) herein) in the amount of One Million Six Hundred Fourteen Thousand Eight Hundred Forty Dollars ($1,614,840); 3. "Agency Assistance" (as defined in Section I.B(3) herein) in the amount not to exceed (S600,000); 4. "HCD Loan" (as defined in Section I.B(4) herein) in an amount not to exceed Five Hundred Forty One Thousand Nine Hundred Three Dollars ($541,903); 5. "Deferred Developer Fee" (as defined in Section I.B(5) herein) in an amount of approximately Seven Hundred Eighteen Thousand Seven Hundred Eighty Dollars ($718,780). B. Definitions 1. "Apartment Development Revenue Bonds" shall mean the amounts funded in connection with the issuance by the County of Apartment Development Revenue Bonds as follows: Tustin Heritage Place DDA Page 58 DRAFT 02/1212002 (a) the issuance by the County related to $3,600,000 in Tax-Exempt Apartment Development Revenue Bonds (Heritage Place at Tustin) issue D of 2001 as a construction period/permanent loan. (b) the issuance by the County related to $1,000,000 in Taxable Apartment Development Revenue Bonds (Heritage Place at Tustin)issue D-T of 2001 to be used during the construction period for the un-funded Agency Loan, HCD Loan and tax credit contribution and is to be paid off upon conversion of the Tax-Exempt Bonds to permanent status. 2. "Low Income Housing Tax Credit Equity" shall mean the approximately $1,628,330 in 4% Iow income housing tax credits awarded to the Project by the California Tax Credit Advisory Board for which the 99.9% ownership of the limited partnership by the tax credit investor as the Limited Partner will fund $54,244 of capital and an unsecured bridge loan to the Limited Partnership of $1,305,280. Upon conversion of the funding of the loans to permanent status, the Limited Partner will fund the balance of the Tax Credit Equity to pay off the limited partner's bridge loan. 3. "Agency Assistance" shall mean the amount of the Agency assistance required to be funded by the Agency to assist the Developer for the cost of pre- development activities and fees in connection with the Project, which shall be disbursed in increments as follows: (a) Bridge Loan in an amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) to be paid into escrow from the disbursement of California Housing and Finance Agency "HELP" loan proceeds to be disbursed to Developer in accordance with the DDA and Agency Bridge Loan Agreement; and (b) Agency Loan in an amount not to exceed Three Hundred Fifty Thousand Dollars ($350,000) to be disbursed to Developer in accordance with the DDA and Agency Loan Agreement. 4. "HCD Loan" shall mean the Iow-interest permanent loan in an amount not to exceed $541,903 to be disbursed to Developer by the Orange County Housing and Community Development Department in connection with development of the Project under substantially the same term of the Agency Loan. 5. "Developer Equity" shall mean all equity made available by the Developer to fund Project Costs, including the Developer's cash contribution and any Developer's deferred equity, which may funded in part by the distribution to Developer of a Federal Home Loan Bank Affordable Housing Program (AHP) Grant, and any costs overruns, excluding any proceeds from a Permitted Mortgage. 6. "Project Costs' shall mean all reasonable and necessary cost and expenses incurred by Developer prior to the issuance of a Certificated of Compliance and solely in connection with the acquisition, planning, design, construction, improvement, development and equipping of the Project, which costs are enumerated in Exhibit "A" Project Budget. Tustin Heritage Place DDA Page 59 DRAFT 02/12/2002 II. DEVELOPER FUNDING A. Acquisition and Development Loan(s) Developer shall obtain Apartment Development Revenue Bonds issued by the County of Orange in an approximate amount of Four Million Six Hundred Thousand Dollars ($4,600,000) as describe in Section I.B.1 above. The Bonds shall be funded as provided in the bond financing agreement between the Developer, County and Permitted Mortgagee. B. Low Income Housing Tax Credit Equity Developer shall obtain a 4% Low Income Housing Tax Credit allocation from the California Tax Credit Advisory Committee in an approximate amount of One Million Six Hundred Fourteen Thousand Eight Hundred Forty Dollars ($1,614,840). C. County of Orange HCD Loan Developer shall obtain a Iow-interest permanent loan from the County of Orange Housing and Community Development Department to be amortized for a period of thirty years and secured by a Second Deed of Trust subordinate to the Apartment Development Revenue Bonds. The HCD Loan shall be funded and disbursed as provided in the HCD Loan agreement between the Developer and the County. D. Developer Deferred Equity Developer shall be permitted to fund an amount of Seven Hundred Eighteen Thousand Seven Hundred Eighty Dollars (S718,780) as Developer Deferred Equity provided that such Deferred Equity be reduced by an amount equal to any amount funded and disbursed to Developer from other funding sources including, but not limited to a Federal Home Bank Affordable Housing Program (AHP) Grant. The Developer's Deferred Equity or any remaining portion thereof shall be reduced by the Developer's 50% portion of Residual Receipts from the Project as defined in the Agreement and the Agency Loan Agreement. E. Developer Cash Equity Developer shall contribute Cash Equity to fund Project Costs in excess the amounts identified in Subsection A to D above including, but not limited to, all costs overruns in connection with the Project. III.AGENCY ASSISTANCE Agency Assistance shall be in the form of two loans, each of which evidenced by a Promissory Note and secured by a Deed of Trust. The terms of the Notes and Deeds of Trust are contained in the DDA, the Bridge Loan Agreement (Attachment 6) and the Agency Loan Agreement (Attachment 9). A. Initial Predevelopment Cost Disbursement Subject to the satisfaction of conditions precedent as described in Section 5.3.1 and in accordance with the schedule as described in Section 5.3.2 and the Tustin Heritage Place DDA Page 60 DRAFT 02112,~002 Schedule of Performance of the DDA, the Agency shall disburse the Agency Bridge Loan in the amount of $250,000 as a short-term financing to assist Developer to fund predevelopment costs and fees in connection with the Project. B. Subsequent Predevelopment Cost Disbursement Subject to the satisfaction of conditions precedent as described in Section 5.5.1 and in accordance with the schedule as described in Section 5.5.2 and the Schedule of Performance of the DDA, the Agency shall disburse the Agency Loan in the amount of $350,000 as a long-term financing to assist Developer to fund predevelopment costs and fees in connection with the Project. IV. GENERAL TERMS OF FINANCING DEVELOPMENT The Developer acknowledges that the Project Costs may exceed the amounts set forth in Exhibit "A" - Project Budget. Accordingly, Developer shall bear all costs in excess of the subtotal amounts set forth in Exhibit "A". Tustin Heritage Place DDA Page 6'~ DRAFT 02./1212002 EXHIBIT A PROJECT BUDGET CD Attachment 6 Bridge Loan Agreement BRIDGE LOAN AGREEMENT BY AND BETWEEN THE TUSTIN REDEVELOPMENT AGENCY AND TUSTIN HERITAGE PLACE, L.P. BRIDGE LOAN AGREEMENT ($250,000) This Bridge Loan Agreement ("the Agreement")is entered into as of this day of ., 2002, by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY ("Agency"), California redevelopment agency, and TUSTIN HERITAGE PLACE, LP, a California limited partnership ("Developer"), with reference to the following: RECITALS A. Developer intends to construct a senior citizen independent living rental housing project on that certain real property located within the City of Tustin, County of Orange, State of California, and more particularly described in Exhibit "A" attached hereto and incorporated herein (the "Property"). B. The Agency desires to provide financial assistance to facilitate said construction of said project in the form of a loan to Developer subject to the Developer's agreement, among other things, to encumber the Project with certain rental restrictions, all as more particularly set forth in this Agreement, that certain Regulatory Agreement and Declaration of Restrictive Covenants executed by and between the Agency, City of Tustin (City), and Developer of even date herewith (the "Regulatory Agreement"), and that certain Disposition and Development Agreement executed by and between the Agency, City and Developer of even date herewith (the "DDA"). NOW, THEREFORE, the parties agree as follows: ARTICLE I DEFINITIONS The following terms used in this Agreement shall have the respective meanings assigned to them in this Article I unless the context in which they are used clearly requires otherwise: 1.1 "Adjusted Income" shall mean the adjusted income of all persons who intend to reside in one residential unit, calculated in the manner which complies with determinations of income for Iow income families under Section 8 of the United States Housing Act of 1937, as amended. 1.2 "Agreement" shall mean this Bridge Loan Agreement. 1.3 "Area" shall mean the Anaheim-Santa Ana Primary Metropolitan Statistical Area. DRAFT Agency Bridge I.oan :\greement 2 02 13 02 1.4 "Assignment of Leases" shall mean that certain Assignment of Lessor's Interest in Leases, Rents and Profits executed by Developer of even date herewith. 1.5 "Agency" shall mean the Tustin Community Redevelopment Agency, a California redevelopment agency. 1.6 "City" shall mean the City of Tustin, California. 1.7 "Close of Escrow" shall mean the date on which the Loan is funded by the Agency through the Escrow holder and the Deed of Trust together with the other Loan Documents set up for recording are in fact recorded. 1.8 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time hereafter, or any successor statute thereto. 1.9 "Contractor" shall mean the general contractor(s) for the construction work for the Project. 1.10 "Deed of Trust" shall mean that certain Deed of Trust, Assignment of Rents and Security Agreement executed by the Developer in favor of the Agency of even date herewith. 1.11 "Developer" shall mean Tustin Heritage Place, LP. 1.12 "Executive Director" shall mean the Agency's Executive Director. 1.13 "Due Date" shall mean the date which is three (3) years following the Close of Escrow or such earlier date on which all principal and interest due on the Loan shall have been fully paid. 1.14 "Escrowholder" shall mean the escrow holder approved by the Agency for the escrow established to facilitate the Close of Escrow. 1.15 "Financing Plan" shall mean the financing plan described in Section 4.1 (g) below. 1.16 "Financing Statement" shall mean the Uniform Commercial Code (UCC) -1 form to be prepared and executed by Developer, in a form satisfaction to the Agency, and delivered to the Agency, the filing of which shall give the Agency a perfected security interest in Developer's tangible personal property and fixtures located on or about the Project. DR.\FI' Agency FJrid,__,e l.oan A~recmcnt ~ 02 I ~ ,')Z 1.17 "Home" shall mean the HOME INVESTMENT PARTNERSHIPS PROGRAM of the United States Department of Housing and Urban Development ("HUD"). 1.18 "Agency Bridge Loan" or "Bridge Loan" shall mean the Bridge Loan in the amount not to exceed TWO HUNDRED FIFTY THOUSAND Dollars ($250,000) by the Agency to the Developer, which Bridge Loan is the subject of this Agreement. 1.19 "Bridge Loan Documents" shall mean the following documents evidencing the Bridge Loan: (a) the Bridge Loan Promissory Note; (b) the Deed of Trust; (c) the Financing Statement; (d) the Regulatory Agreement and Declaration of Restrictive Covenants; (e) Request for Notice of Default; (f) the Assignment of Leases; and (g) this Bridge Loan Agreement. 1.20 "Low Income Tenant" means Senior Citizen households whose Annual Incomes do not exceed sixty percent (60%) of the median income for the area as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than sixty percent (60%) of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or Iow family incomes. If the occupant of a unit is a student (as defined under Section 151(c) of the Code, not entitled to file a return under Section 6013 of the Code, said occupant shall not qualify as a Low Income Tenant. The determination of a tenant's status as a Low Income Senior Citizen Tenant shall be made by the Developer upon initial occupancy of a unit in the Project by such Senior Citizen tenant and annually thereafter, on the basis of an Income Certification executed by the tenant. 1.21 "Low and Very Low Income Units" shall mean the fifty-three (53) dwelling units in the Project designated for occupancy by Low and Very Low Income Senior Citizen Tenants pursuant to the DDA, the Regulatory Agreement and Exhibit "B" attached hereto and incorporated herein. 1.22 "Management Plan" shall mean that management plan submitted to and approved by the Agency pursuant to Section 4.1 below. 1.23 "Area Median Income" shall mean the median income for the Area as most recently determined by the Secretary of the Treasury pursuant to Section 142(d)(2)(B) of the Code. 1.24 "Mortgage Loan" shall mean any of the following loans secured by a mortgage or deed of trust on the Project: 1.24.1 The Loan evidenced by the Note and the balance of the Loan Documents. DIL,\I--T Ageacy Bridge [.cmn ,\~eement ~ 02 'l 3, 02 1.24.2 Any other loan secured by a mortgage or deed of trust on the Project, either senior or junior to the Loan. 1.25 "Mortgage Loan Documents" shall mean all documents executed by the Developer endorsing or securing a Mortgage Loan. 1.26 "Mortgagee" shall mean the mortgagee or beneficiary under a mortgage or a deed of trust executed in connection with a Mortgage Loan. 1.27 "Promissory Note" shall mean the Bridge Loan Promissory Note in the principal amount of TWO HUNDRED FIFTY THOUSAND Dollars ($250,000), evidencing the Bridge Loan. 1.28 "Parties" shall mean the Agency and the Developer. 1.29 "Partnership" shall mean Tustin Heritage Place, L.P. 1.30 "Project" shall mean the Property, together with all improvements, fixtures and equipment now or hereafter constructed, placed or located on the Property. 1.31 "Property" shall mean that certain real property legally described on Exhibit "A" attached hereto and incorporated herein. 1.32 "Qualified Project Period" shall mean the period beginning on the first day on which at least ten percent (10%) of the residential units in the Project are first occupied and ending on the date which is fifty-five (55) years after the date on which at least fifty percent (50%) of the residential units in the Project are first occupied. 1.33 "Regulations" shall mean the Income Tax Regulations promulgated by the United States Department of the Treasury pursuant to the Code from time to time. 1.34 "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Restrictive Covenants between the Agency, City and the Developer of even date herewith. 1.35 "Request for Notice of Default" shall mean a request for notice of default to be recorded against the Property in a form approved by the Agency. 1.36 "Senior Citizen" shall mean persons age 62 or higher. DRAFT Agency Bridge Loan Agreement ;5 02 13'02 1.37 "Term" shall mean the period beginning with the date of this Agreement and ending on the date which is three (3) years following the Close of Escrow. 1.38 "Very Low Income Tenants" shall mean very Iow-income senior citizen households whose annual incomes do not exceed fifty percent (50%) of the median family income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than fifty percent (50%) of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or Iow family incomes. ARTICLE II BRIDGE LOAN 2.1 Amount. The Agency hereby agrees to loan and the Developer hereby agrees to borrow, an amount not to exceed the total Bridge Loan (as such term is defined above, subject to the terms, covenants, conditions, representa- tions, and warranties set forth in this Agreement, and the other Loan Documents. 2.2 Repayment of Bridge Loan. The total amount of the Bridge Loan shall accrue interest at the rate of three percent (3%) per year, simple interest, from the date of the disbursement by Agency. The principal amount of the Note outstanding plus accrued but unpaid interest thereon shall be due and payable in one balloon payment to the Agency the earlier of: i) the Due Date; or ii) upon disbursement by Agency of the Agency Loan in the amount not to exceed Three Hundred Fifty Thousand Dollars ($350,000). 2.3 Prepayment. Developer may pay the principal and any interest due the Agency under the Note for the Bridge Loan prior to or in advance of the time for payment thereof as provided in the Bridge Loan Note, without penalty; provided, however, that Developer acknowledges that the provisions of this Agreement, the DDA and the Regulatory Agreement will be applicable to the Project even though Developer may have prepaid the Bridge Loan Note. 2.4 Assumption. Subject to the provisions of Section 7.7, the Bridge Loan Note shall not be assumable by successors and assigns of Developer, either voluntarily or by operation of law, without the prior written consent of the Agency, and any such assignment or assumption shall be void. 2.5 Bridge Loan Disbursement. Upon satisfaction of the conditions to disbursement set forth in Section 4.1 and pursuant to the disbursement procedures set forth in Section 4.2, the Agency, through the approved escrow holder, will cause the disbursement of the Bridge Loan as provided for in Section 4.2. I)RAFF Agency Bmlg¢ Loan Agreemcm 6 02 '13 '02 2.6 Security for Bridge Loan. The Bridge Loan shall be secured by a Deed of Trust which Developer shall execute and which shall be recorded as a lien against the Site along with the recording of Assignment of Leases and the Request for Notice of Default. 2.7 Approval of Additional Financin.q. The Developer shall not place or permit (either voluntarily or involuntarily) to be placed any encumbrances not otherwise provided for and approved by the Agency in the Financing Plan, including, but not limited to any additional liens or financing of any kind on the Project without the prior written consent of the Agency. 2.8 Subordination of Deed of Trust. The Agency agrees that the Deed of Trust may be subordinate to the lien of a construction loan or permanent loan first deed of trust securing financing in an amount not to exceed $4,600,000 so long as: (i) the documentation for said loan is approved by the Agency; and (ii) said loan is otherwise provided for and approved by the Agency in the Financing Plan and DDA Method of Financing (Attachment 5). Any other financing, refinancing or encumbrance of the Project is prohibited without the Agency's prior written consent which consent the Agency may arbitrarily withhold in the exercise of its discretion. ARTICLE III RENTAL RESTRICTIONS 3.1 Use and Rent Restrictions. 3.1.1 In accordance with the provisions of the DDA, Regulatory Agreement, this Bridge Loan Agreement and Exhibit "B" attached hereto and incorporated herein, the Developer has agreed to rent the Low Income Units of the Project to Low and Very Low Income Senior Citizen Tenants for the Qualified Project Period. 3.1.2 Low and Very Low Income Senior Citizen Tenants who occupy Low Income Units at the expiration of the Qualified Project Period and who qualify as Low or Very Low Income Senior Citizen Tenants on such date shall be permitted to occupy Low and Very Low Income Units for a period of three (3) years beginning on the first day after the expiration of the Qualified Project Period; provided, however, that annual rent increases during such three (3) year period shall not exceed an amount equal to the existing rent for such units plus the greater of (i) five percent (5%) or (ii) the percentage increase in the Median Income for the Area. As any of these Low Income Units become unoccupied, such unit shall not be subject to the restrictions of this subparagraph 3.1.2. DRAFT Agency Bridge l.oan Agreemem 7 ~)2.13 '02 3.1.3 In lieu of compliance with the conditions set forth in subparagraph 3.1.2, the Developer may elect to provide Low and Very Low Income Senior Citizen Tenants residing in the Low or Very Low Income Units at the expiration of the Qualified Project Period relocation benefits subject to the determination by the Agency that such benefits may be provided in accordance with California law. The Agency may rely upon the advice of legal counsel in making such determination, the cost of which legal advice and any necessary legal opinion shall be borne by the Developer. 3.1.4 Developer agrees to provide to Low and Very Low Income Senior Citizen Tenants notice of all rent increases pursuant to applicable law. 3.2 Income Determination. For the purposes of this section, the income of individuals and families and the area median gross income shall be determined in a manner consistent with determinations of lower income families and the Median Income for the Area under Section 8 of the United States Housing Act of 1937, as amended (or, if such program is terminated, in a manner consistent with such determinations under such program as is in effect immediately before such termination). Determinations under the preceding sentence shall include adjustments for household size. 3.3 Certifications. With respect to those Low and Very Low Income Senior Citizen Units subject to the rental restrictions described above, the Developer will comply with the Low and Very Low Income Senior Citizen Tenant certifications and recertifications in the same manner as prescribed under the DDA and Regulatory Agreement. 3.4 Records. The Developer will maintain complete and accurate records pertaining to the Low and Very Low Income Senior Citizen Units, and will permit any duly authorized representative of the Agency to inspect and copy the books and records of the Developer pertaining to the Project, including those books and records pertaining to the occupancy of the Low and Very Low Income Senior Citizen Units. 3.5 Leases. Each lease pertaining to a Low or Very Low Income Senior Citizen Unit shall contain provisions to the effect that the Developer has relied on the income and age certification and supporting information supplied by the Low and Very Low Income Senior Citizen Tenant in determining qualification for occupancy of the Low or Very Low Income Senior Citizen Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. ARTICLE IV DISBURSEMENT OF LOAN I')RAFT Agcr, cy B:tdge. I..oan Agreement 8 02,'1 .~ '02 4.1 Conditions Precedent to Disbursement of Bridge Loan Proceeds. The Agency shall cause Bridge Loan proceeds to be disbursed through escrow to the Developer as set forth in this Article IV. No disbursement shall be made until all of the following conditions precedent are satisfied. 4.1.1 Execution and Delivery of Documents. Developer shall have executed and delivered to the Agency (i) this Agreement, the Bridge Loan Promissory Note, the Deed of Trust and Assignment of Leases, and the Regulatory Agreement, (ii) all resolutions and certificates necessary or appropriate in the opinion of the Agency to evidence the'Developer's authority to enter into the Bridge Loan and be bound by the Bridge Loan Documents, and (iii) all other documents and instruments required by the Agency to be executed and delivered, all in form and substance satisfactory to the Agency. 4.1.2 Insurance. Developer shall have furnished the Agency with evidence of the insurance coverage described under Section 7.11. 4.1.3 Title to Property. The Agency has determined to its satisfaction that upon the Close of Escrow Developer will have good and marketable fee title to the Property and there will exist thereon or with respect thereto no mortgage, lien, pledge, easement, covenant, condition, restriction, or other encumbrance of any character whatsoever other than liens for current real property taxes and assessments not yet due and payable, the lien of the first deed of trust described in Section 2.8 hereof and any other matters approved in writing by the Agency. 4.1.4 Level One Environmental Assessment Report. Developer shall have provided the Agency with a Level One Environmental Assessment Report on the Property, along with any other information the Agency may require, as satisfactory evidence that there are no hazardous or toxic materials present on the Property. 4.1.5 Plans and Specifications. The Developer shall have submitted to the Agency and the Agency shall have approved the Construction Plans for the Project in accordance with the DDA Schedule of Performance (Attachment 4). Such approval of Agency shall not have relieved Developer's obligation to obtain any and all permits and approvals required under Section 4.1.6, including but not limited to building permits and approval of plans and specifications. As used in this Agreement, "Constructions Plans" shall mean all construction documentation upon which the Developer and Developer's Contractor shall rely in undertaking the Project (including buildings, landscaping, parking, and common areas) and shall include, but not necessarily be limited to, final architectural drawings, landscaping plans and specifications, final elevations, building plans and specifications (also known as "working drawings") and a time schedule for construction. DRAFT Agency Bridge l.oan Agreemem 9 02'12 02 1.4.6 Permits and Approvals. The Developer shall have obtained any and all permits and approvals required by the City of Tustin or other governmental agency for the Project. 4.1.7 Financinq Plan. The Developer shall have submitted and the Agency shall have approved the Developer's plan for financing the construction of the Project ("Financing Plan"). The Financing Plan shall include a budget showing the costs of acquisition of the Property and the costs of constructing the Project, including a breakdown of costs by major categories (including, but not limited to, engineering and architectural), a construction schedule indicating when such costs will be paid, firm commitments of the funds necessary to pay when due the costs shown in the Project budget, and firm commitments for long term financing of the costs of the Project including take-out of any construction or short-term acquisition loans. 4.1.8 Manaqement Plan. The Developer shall have submitted and the Agency shall have approved a Management Plan ("Management Plan"). The Management Plan shall include a management contract with a manager approved in writing by the Agency for management of the Project and a plan for long-term marketing, operation, maintenance, repair and security of the Project, method of selection of tenants, and for rental policies in compliance with HUD and HOME requirements, policies and procedures and with the Regulatory Agreement, along with any other policies or procedures required by the Agency. The Management Plan shall also include an initial budget for the Project. 4.1.9 Recordation. The approved escrow holder is prepared to concurrently: (i) record the Bridge Loan Deed of Trust against the Property at the Close of Escrow and issue or cause the issuance to the Agency by a title insurance company approved by the Agency, of an American Land Title Association policy of lender's title insurance, together with such endorsements as the Agency may require, which shall insure the Bridge Loan Deed of Trust as a second lien upon the Property subject only to the exceptions approved by the Agency in Section 4.1.3 above. 4.1.10 No Default. There shall exist no condition, event or act which would constitute an Event of Default (as hereinafter defined) hereunder or which, upon the giving of notice or the passage of time, or both, would constitute an Event of Default. 4.1.11 Representations and Warranties. All representations and warranties of Developer herein contained shall be true and correct. 4.1.12 Availability of Funds. The Developer has submitted to the Agency and the Agency has approved in the exercise of its discretion evidence that the funds identified as committed to the Project in the approved Financing DR..\FT Agency Bridge Ix*an Agreement 02.'13 Plan are in fact unconditionally and readily available to Developer for the Project as of the Close of Escrow. 4.1.13 Priority of Re.qulatory Apreement. The Regulatory Agreement has been executed and the escrow holder is prepared to record the Regulatory Agreement at the Close of Escrow as a lien senior to the Bridge Loan Deed of Trust. 4.1.14 Construction Contracts. Developer has submitted to the Agency and the Agency has approved a construction contract or contracts with a responsible contractor or contractors providing for the construction of the Project in conformance with the terms of this Agreement. 4.2 Procedure for Disbursement of Loan Proceeds. When all the conditions to disbursement have been satisfied and the Agency is satisfied that any conditions to the Close of Escrow have been satisfied, the Agency shall deposit the Bridge Loan with the escrow holder for disbursement upon the Close of Escrow in accordance with the terms of the DDA by and between the Agency, City and Developer. 4.3 Termination. If any of the conditions to disbursement of the Bridge Loan are not satisfied within sixty (60) days following the date of this Agreement, Agency may terminate this Agreement by giving written notice to Developer. Upon such termination, the parties shall have no further rights or obligations under this Agreement. ARTICLE V DEVELOPMENT OF THE IMPROVEMENTS 5.1 Commencement of Construction. The Developer hereby covenants and agrees to commence the construction of the Project within thirty (30) days after the Close of Escrow. 5.2 Construction Pursuant to Plans. Unless modified by operation of Section 5.3, the Project shall be constructed substantially in accordance with the Construction Plans approved by the City and Agency and the terms and conditions of the permits and approvals and building permits for the Project. 5.3 Change in Construction. If the Developer desires to make any material change in the Project which is not substantially consistent with the Construction Plans approved by the City and Agency, the Developer shall submit the proposed change to the City and Agency for approval. The City's and Agency's approval of any such changes shall not be considered an approval of any additional funding or financing. DRAFT Agency Bridge [ zmn Agreement ,)2, I.! 02 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF DEVELOPER 6.1 Representations and Warranties. Developer hereby makes the following representations and warranties to the Agency, each of which shall also be deemed a covenant and all of the following, Developer agrees, shall continue to be true and accurate in all material respects so long as the Bridge Loan or any portion thereof remains outstanding: 6.1.1 Organization. Developer is duly organized, validly existing and in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. The copies of the documents evidencing the organization of Developer delivered to the Agency are true and correct copies of the originals, as amended to the date of this Agreement. 6.1.2 Authority of Developer. Developer has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Bridge Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above. 6.1.3 Authority of Persons Executing Documents. This Agreement and the Bridge Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of 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 the Bridge Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken. 6.1.4 Valid Binding Agreements. This Agreement and the Bridge Loan Documents 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 when so executed and delivered constitute, legal, valid and binding obligations of Developer enforceable against the Developer in accordance with their respective terms. DRAFT Agency Bridge Loan Al,n'eement ] 2 02 13,'02 6.1.5 No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement and the Bridge Loan Documents or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will 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, if applicable, of its constituent partners, or will conflict with or constitute a breach of or a default under any agreement to which Developer, or, if applicable, its constituent partners, 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. 6.1.6 Pending Proceedings. Developer is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Developer, threatened against or affecting Developer or the Property or Project, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Developer, materially affect Developer's ability to repay the Loan or impair the security to be given to the Agency pursuant hereto. 6.1.7 Compliance with Laws; Consents and Approvals. The Project shall comply at all times with all applicable laws, ordinances, rules and regulations of federal, state, and local governments and agencies, including but not limited to all applicable federal and state labor requirements, and with all applicable directions, rules and regulations of the fire marshal, health officer, building inspector, and other officers of any such government or agency. All consents, permissions and licenses required by any federal, state, or local gov- ernment or agency to which the Developer or the Project is subject, which may be necessary in relation to this Agreement or the ownership or operation of the Project, have been or will be obtained, and none of such consents, permissions, and licenses is subject to appeal or to conditions which have not been met. 6.1.8 Financial Statements. The financial statements of the Developer and its general partners and other financial data and information furnished by the Developer for review by the Agency fairly present the information contained therein. As of the date of Loan disbursement, there will not have been any adverse material change in the financial condition of the Developer from that shown by such financial statements and other data and information. 6.1.9 Adequacy of Bridge Loan. The amount of the Bridge Loan, together with any funds to be provided by the Developer or to the Developer from any other sources, including the Agency Loan is adequate to pay all costs DR,\I"T Agency Bridge I.oan Agreement [ 3 02. 13 02 incurred in connection with the Project and to enable the Developer to satisfy the covenants contained in this Agreement. 6.1.10 Payment of Taxes. All federal, state, county, and municipal taxes required to be paid by the Developer or on account of the Project have been paid in full as of the date of this Agreement or will be paid in full by the Close of Escrow. ARTICLE VII CONTINUING OBLIGATIONS 7.1 Applicability. For the longer of the entire Term, or so long as the Bridge Loan Note remains outstanding, the Developer shall comply with the provisions of this Article VII. 7.2 Compliance with Bridge Loan Documents. Developer shall promptly comply with all the terms and provisions of the Bridge Loan Documents. 7.3 Taxes and Assessments. So long as Developer owns the Project, Developer shall pay all real and personal property taxes, assessments and charges, and all franchise, income, unemployment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Project; provided, however, that Developer shall have the right to contest in good faith any such taxes, assessments, or charges. In the event Developer exercises its right to contest any tax, assessment, or charge against it, Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges, and interest. 7.4 Indemnity. Developer shall, at Developer's expense, defend, indemnify, save and hold the City, Agency and its respective elected and appointed officials, officers, agents, employees, and members harmless from any and all losses, damages, liabilities, claims, causes of action, judgments, settlements, court costs, attorneys' fees, and other legal expenses, cost of evidence of title, cost of evidence of value, and other expenses which they may suffer or incur due to, arising from, or relating to Developer's performance or non- performance of its obligations under this Agreement, the DDA or the Bridge Loan Documents, or Developer's ownership or operation of the Property or the Project. 7.5 Entry by the Agency. Developer shall permit the City and Agency, through its officers, agents, or employees, at all reasonable times to enter into the Property or the Project and inspect the work of construction to determine that the same is in conformity with the Construction Plans and all the requirements hereof. Developer acknowledges that the City and Agency is under no obligation D RA FT Agency Bridge Loan As~'cemem 1 4 02:13:02 to supervise, inspect, or inform Developer of the progress of construction, and Developer shall not rely upon the City and Agency therefore. Any inspection by the City and Agency is entirely for its purposes in determining whether Developer is in default under this Agreement or the Bridge Loan Documents and is not for the purpose of determining or informing Developer of the quality or suitability of construction. Developer shall rely entirely upon its own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of architects, subcontractors, and material suppliers. 7.6 Hazardous Materials. Developer shall indemnify, defend and hold harmless the City and Agency, and its respective elected and appointed officials, members, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of hazardous materials on, under, or about the Project, including without limitation: (a) all foreseeable consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Project and the preparation and implementation of any closure, remedial or other required plans; and (c) all reasonable costs and expenses incurred by the Agency or Agency in connection with clauses (a) and (b), including but not limited to reasonable attorneys' fees. 7.7 Transfers. During the Term, Developer shall not sell or otherwise transfer the Project or any portion thereof, and none of the general partners in Developer shall sell or otherwise transfer their interests in Developer, and none of the general partners in a partnership that is a partner in Developer shall sell or otherwise transfer their interest in such partnership without first obtaining the approval of the Agency. The Agency shall not approve any such transfer request if the Developer is in default under any of the Bridge Loan Documents or the Management Plan. 7.8 Annual Marketing and Management Plans. Developer and the Agency (if it so elects) will cooperate in the marketing of the units on the Property pursuant to a marketing plan (the "Marketing Plan") prepared by the Developer and approved by the Agency. Said Marketing Plan and the Management Plan described in Section 4.1 hereof shall be prepared by the Developer and approved by the Agency on an annual basis; however, the Developer shall provide quarterly written supplements to said approved plans (or more frequently if requested by the Agency). 7.9 Maintenance of Project. Developer agrees to maintain all interior and exterior improvements, including landscaping, on the Project in first-class condition, repair and sanitary condition (and, as to landscaping, in a healthy condition) and in accordance with any Management Plan approved by the Agency under the Bridge Loan Agreement (including without limitation any landscape and signage plans), as the same may be amended from time to time, DRAFT ^gcncy l-}nd~zc Loan A~,n-ccmcn[ 1 5 021 '. 3.02 and all other applicable laws, rules, ordinances, orders, and regulations of all federal, state, Agency, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials. Developer acknowledges the great emphasis the City and Agency places on quality maintenance to protect its investment and to provide quality Iow income housing for its constituents and to ensure that all City and Agency- subsidized affordable housing projects within the City are not allowed to deteriorate due to deficient maintenance. In addition, Developer shall keep the Project free from all graffiti and any accumulation of debris or waste material. Developer shall promptly make all repairs and replacements necessary to keep the Project in first class condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. In the event that Developer breaches any of the covenants contained in this Section 7.9 and such default continues for a period of five (5) days after written notice from Agency (with respect to graffiti, debris, waste material, and general maintenance) or thirty (30) days after written notice from Agency (with respect to landscaping and building improvements), then Agency, in addition to whatever other remedy it may have under this Bridge Loan Agreement, at law or in equity, shall have the right to enter upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such dght of entry, the Agency shall be permitted (but not required) to enter upon the Project and perform all acts and work necessary to protect, maintain and preserve the improvements and landscaped areas on the Project, in the amount of the expenditure arising from such acts and work of protection, maintenance, and preservation by Agency and/or costs of such cure, including a fifteen percent (15%) administrative charge, which amount shall be promptly paid by Developer to Agency upon demand. 7.10 Status of Developer. Developer shall at all times maintain its legal status in good standing and comply with all laws, rules and regulations of California and the United States and of any political subdivision thereof applicable to it or its business. 7.11 Insurance. While any obligation of Developer under any Bridge Loan Document remains outstanding, Developer shall maintain at Developer's sole expense, with insurers of recognized responsibility, the following policies of insurance in form and substance satisfactory to the Agency. 7.11.1 Workers' compensation insurance and any other insurance required by law in connection with the Project; 7.11.2 Builder's all-risk insurance covering one hundred percent (100%) of the replacement cost of the Project during the course of any construction or reconstruction in the event of fire, lightning, windstorm, DRAI'-I' Agency Bridge I.oan Agreement ~ 6 02:3~02 vandalism, malicious mischief, and all other risks normally covered by extended coverage policies in the locality where the Project is situated (including insurance against loss by flood if the Project is located in an area now or hereafter designated as subject to the danger of flood); 7.11.3 Fire and hazard "all risk" insurance covering one hundred percent (100%) of the replacement cost of the Project in the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks normally covered by "all risk" coverage policies in the locality where the Project is situated (including insurance against loss by flood if the Project is located in an area now or hereafter designated as subject to the danger of flood, but excluding insurance against loss by earthquake); 7.11.4 Public liability insurance in an amount not less than $1,000,000 for "single occurrence" and $2,000,000 in the aggregate; 7.11.5 Personal property damage insurance in the amount required by the Agency from time to time; 7.11.6 Rent loss insurance for a period of repair or restoration for a period of at least one year; 7.11.7 Umbrella coverage in an amount not less than $5,000,000; and 7.11.8 All such insurance shall be endorsed to provide that said insurance may not be canceled or materially modified without 30 days' prior written notice to the Agency. The policies required pursuant to subparagraphs 7.11.2 and 7.11.3, shall include a "lender's loss payable endorsement" (Form 438BFU) in form and substance satisfactory to the Agency assuring Agency that all proceeds shall be paid to Agency as provided in the Deed of Trust subject to the interests of the senior lenders on the Project. The City and Agency shall be an additional named insured as to the policies required pursuant to subparagraph 7.11.4, 7.11.5 and 7.11.6. No such insurance shall include deductible amounts to which the Agency has not previously consented in writing. Certificates of insurance for all of the above policies (and/or original policies, if required by the Agency from time to time), showing the same to be in full force and effect, shall be delivered to the Agency. All policies insuring against damage to the Project shall contain an agreed value clause sufficient to eliminate any risk of co- insurance. 7.12 Payment of Expenses. Developer shall pay the Agency's costs and expenses incurred in connection with the making, disbursement and administration of the Bridge Loan, as well as any revisions, extension, renewals, modifications or "workouts" of the Bridge Loan, and in the exercise of any of Agency's rights or remedies under this Agreement. Such costs and expenses [)Ib~,FT Aacnc¥ Bfidac t.oan A~ccrnen: ] '7 02, [ 3.'02 include title insurance, recording and escrow charges, survey charges, hazard insurance, premiums, fees for any appraisals and any appraisal reviews, architectural and engineering review, construction services and environmental and toxic services and reviews, zoning and entitlement services and reviews, mortgage taxes, legal fees and any other reasonable fees and costs for services, regardless of whether such services are furnished by the Agency's employees or agents or independent contractors. ARTICLE VIII DEFAULT AND REMEDIES 8.1 Events of Default. Each of the following shall constitute an "Event of Default" by Developer under this Agreement: 8.1.1 Failure to Make Bridge Loan Note Payments. Failure to make prompt payments under the Note as and when provided for in the Bridge Loan Note and this Agreement. 8.1.2 Mismanagement. Failure by Developer to manage the Project in a prudent, first class manner in accordance with the terms, covenants, conditions, representations and warranties of this Agreement, the DDA or other Bridge Loan Documents. For purposes of this Agreement, an act or omission constituting "mismanagement" by the Developer shall include, but not be limited to each of the following: 8.1.2.1 Failure to maintain and repair the Project and make replacements thereto as provided for in Section 7.9 hereof or the committing or permitting of any waste or deterioration of the Project; 8.1.2.2 Breach or failure by Developer to duly perform, comply with or observe any of the terms, covenants, or conditions of this Agreement, the DDA or any other Bridge Loan Document, and such failure continues uncured or without Developer commencing to diligently cure for thirty (30) days after notice thereof in writing is mailed by the Agency to Developer; 8.1.2.3 Any default of Developer which continues uncured after the expiration of any applicable cure period under any other loan document including, but not limited to, the Mortgage Loan Documents; 8.1.2.4 The voluntary suspension of Developer's business or the dissolution or termination of the partnership constituting Developer; 8.1.2.5 A sale or other transfer of the Project in violation of Section 7.7 above. DRAFT Agency Bridge I..oan Agreement 18 02 '13 '02 8.1.3 Fraud or Material Misstatement or Omissions. Any fraudulent act or omission of Developer's, or misrepresentation of Developer's, pertaining to or made in connection with the Bridge Loan, Bridge Loan Documents or the Project. 8.1.4 Insolvency. A court having jurisdiction shall have made or entered any decree or order (i) adjudging Developer to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of Developer or seeking any arrangement for Developer under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Developer in bankruptcy or insolvency or for any of their properties, or (iv) directing the winding up or liquidation of Developer, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of sixty (60) days unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period will apply under this subsection 8.1.4 as well; or Developer shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the events of default in this paragraph shall act to accelerate automati- cally, without the need for any action by the Agency, the indebtedness evidenced by the Note. monies. 8.1.5 Project Monies. Misapplication or embezzlement of Project 8.2 Remedies. The occurrence of any Event of Default shall, either at the option of the Agency or automatically where so specified, relieve the Agency of any obligation to make or continue the Bridge Loan and shall give the Agency the dght to proceed with any and all remedies set forth in this Agreement and the Bridge Loan Documents or otherwise available at law or in equity or by statute (and all of the Agency's rights and remedies shall be cumulative), including but not limited to the following: 8.2.1 Acceleration of Bridge Loan Note. The Agency shall have the right to cause all indebtedness of the Developer to the Agency under this Agreement and the Bridge Loan Note, together with any accrued interest thereon, to become immediately due and payable. The Developer waives all right to presentment, demand, protest or notice of protest, or dishonor. The Agency may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the Agency as a creditor and secured party under the law including the Uniform Commercial Code, including foreclosure under the Deed of Trust. The Developer shall be liable to pay the Agency on demand all expenses, costs and fees (including, without limitation, attorneys' fees and expenses) paid or incurred by the Agency in connection with the collection of the DIL~,FT Agency Bridge l.~an Agreement 19 02/I 3 02 Bridge Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Bridge Loan. 8.2.2 Specific Performance. The Agency shall have the right to mandamus or other suit, action or proceeding at law or in equity to require Developer to perform its obligations and covenants under the Bridge Loan Documents or to enjoin acts on things which may be unlawful or in violation of the provisions of the Bridge Loan Documents. 8.2.3 Right to Cure at Developer's Expense. The Agency shall have the right to cure any monetary default by Developer under a loan other than the Bridge Loan. The Developer agrees to reimburse the Agency for any funds advanced by the Agency to cure a monetary default by Developer upon demand therefore, together with interest thereon at the rate of twelve percent (12%) per annum or the maximum rate permitted by law, whichever rate is greater, from the date of expenditure until the date of reimbursement. 8.3 Right of Contest. Developer shall have the right to contest in good faith any third party claim, demand, levy, or assessment the assertion of which would constitute an Event of Default hereunder. Any such contest shall be prosecuted diligently and in a manner unprejudicial to the Agency or the rights of the Agency hereunder. Upon demand by the Agency the Developer shall make provision by deposit of funds with the Agency or, if permitted by the Agency in the exercise of the Agency's sole discretion, by bond in an amount, on forms, and with a bonding company all satisfactory to the Agency in the exercise of its discretion. Such assurance shall be given thirty (30) days after demand therefore, and, if made by deposit of funds with the Agency, the amount so deposited shall be disbursed in accordance with the resolution of the contest either to the Developer or the adverse claimant. 8.4 Remedies Cumulative. No right, power, or remedy given to the Agency by the terms of this Agreement or the BridgeLoan Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the Agency by the terms of any such instrument, or by any statute or otherwise against Developer and any other person. Neither the failure nor any delay on the part of the Agency to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the Agency of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy. 8.5 Waiver of Terms and Conditions. No waiver of any default or breach by Developer hereunder shall be implied from any omission by the Agency to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver, and such waiver shall be operative only for the time and DRAFT Agency Brid_ee Loan Agreement 20 02, i3 02 to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. The consent or approval by the Agency to or of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute a cure or a waiver of any default under this Agreement or the Bridge Loan Documents, nor shall it invalidate any act done pursuant to notice of default, or prejudice the Agency in the exercise of any right, power, or remedy hereunder or under the Bridge Loan Documents, unless in the exercise of any such right, power, or remedy all obligations of Developer to Agency are paid and discharged in full. ARTICLE IX MISCELLANEOUS 9.1 Approvals Under Agreement. Where this Agreement requires an approval or consent of the Agency, such approval or consent may be given on behalf of the Agency by the Director or his or her designee. 9.2 Time. Time is of the essence in this Agreement. 9.3 Notices. 9.3.1 Any notice requirement set forth herein shall be deemed to be satisfied three (3) days after mailing of the notice first-class United States certified mail, postage prepaid, addressed to the appropriate party as follows: Developer: Tustin Heritage Place, L.P. 1740 E. Garry, Suite 105 Santa Aha, CA 92705 Attn: Roger Davila Agency: Tustin Community Redevelopment Agency 300 Centennial Way Tustin, CA 92780 Attention: Executive Director, and Attention: Assistant City Manager 9.3.2 Agency shall endeavor to provide a courtesy copy of any notice sent to Developer to the following addressee, however, failure to do so shall not affect the validity of any otherwise proper, timely delivered notice to Developer: Arter & Hadden LLP DRAFT Agency Bridge l.o~n Agreement 21 02 '13 02 5 Park Plaza, Suite 1000 Irvine, CA 92614 Attn' Bruce Holden Such addresses may be changed by notice to the other party given in the same manner as provided above. 9.4 No Third Parties Benefitted. This Agreement is made and entered into for the sole protection and benefit of the Agency, its successors and assigns, and Developer, its permitted successors and assigns, and no other person or persons shall have any right of action hereon. 9.5 Agency to File Notices. Developer irrevocably appoints, designates, and authorizes the Agency as its agent (said agency being coupled with an interest) to file for record any notices of completion, cessation of labor, or any other notice that the Agency deems necessary or desirable to protect its interest hereunder and under the Bridge Loan Documents. 9.6 Actions. The Agency shall have the right to commence, appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities of the parties hereunder, or the disbursement of any proceeds of the Loan. 9.7 Successors and Assigns. The terms hereof shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto; provided, however, that no assignment of Developer's rights hereunder shall be made, voluntarily or by operation of law, without the prior written consent of the Agency as specified in Section 7.7 above, and that any such assignment without said consent shall be void. 9.8 Construction of Words. Except where the context otherwise requires, words imparting the singular number shall include the plural number and vice versa, words imparting persons shall include firms, associations, partnerships and corporations, and words of either gender shall include the other gender. 9.9 Partial Invalidity. If any provision of this Agreement shall be declared invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. 9.10 Governing Law and Venue. This Agreement and the Bridge Loan Documents and other instruments given pursuant hereto shall be construed in accordance with and be governed by the laws of the State of California. In the event of any legal action to enforce or interpret this Agreement or any of the Bridge Loan Documents, the sole and exclusive venue shall be a court of competent jurisdiction located in Orange Agency, California, and the parties DRAFT Ag~.~cy Bt!dsc Lo',,n A~r¢cmcnt 22 02~ 13 02 hereto agree to and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure Section 394. 9.11 Amendment. This Agreement may not be changed orally, but only by an agreement in writing signed by Developer and the Agency. 9.12 Approvals. Where an approval or submission is required under this Agreement, such approval or submission shall be valid for purposes of this Agreement only if made in writing. 9.13 Captions and Headings. Captions and headings in this Agreement are for convenience of reference only, and are not to be considered in construing the Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. DEVELOPER: TUSTIN HERITAGE PLACE, L.P. By: Its: APPROVED AS TO FORM AGENCY COUNSEL Lois Jeffrey By Dated By: Its: TUSTIN COMMUNITY REDEVELOPMENT AGENCY By: Its: DRAFI' Agency Bridge Loan ..\grcement 23 02,'13/02 EXHIBIT A LEGAL DESCRIPTION ALL THAT ~TAIN LAND SITUATED IN THE STATE 'OF CALIFOICNIA, COUNT%' OF ORANGE, 'CITY OF TUSTIN, AaNT) IS DESCRIBED AS FOLLOWS: THE SOUTHEASTERLY 264.00 FF_SET OF THE SOI.,q/-I~STERLY ONE-HALF OF TIKE NORTH%VESTERLY ONE-HALF OF THE SOUTHWESTERLY ONE-HALF OF LOT 49, AS SHOWN ON PLAT NO. 1 OF THE RANCHOS SANTIAGO DE SANTA ANA AND) SAN JOAQLmq, RECORDED IN BOOK 5, PAGE 7, MISCELLANEOUS RECORDS OF LOS ANGELES COUNT%:, CALIFOILNrL&, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGIA.~ENG AT THE MOST EASTERLY CORNER OF LOT 2 OF RECORD .OF SUR\rEy, IN THE C/TY OF TUST~, COUN"IA' OF ORANGE, STATE OF C.~LIFOR.NVL%., FILED IN BOOK 71, PAGE 24 OF RECORD OF SURVL~', RECORDS OF ORANGE COUNq~'; THENCE_ SOUTH 39°59'46'' WEST 330.10 FEET TO A POINT ON THE CENTERLINVE OF S¥C.MvfORE AV'END~ AS SHOV~.~ ON SAID MAP; THENCE ALONG S.M'D CENTER.LINE NORTH 50°01 '15" WEST 264.00 FEET; THENCE NORTH 39°59'46'' ~.ST 330.12 FEET; THENCE SOLrl~ 50°01'03'' EAST 264.00 FEET TO SAID AFOREM~N~rlONED MOST EASTEP, LY COP,.N~R OF LOT 2 OF RECORD OF SURVEY AND POINq- OF BEGL-N~TNG. SAID LAND tS INCLUDED WIEI-ID< THE MiPS FILED IN BOOK 69, PAGE 1 AND L\' BOOK 7!. PAGE 24. BOTI-J OF RECORD OF SURXrEYS, IN' THE OFFICE OF THE COL,'A'~' RECORDER OF S.kID COUAJA'. Tusfln Herttage Place DDA Page 51 DRAFT 02/12./2002 Attachment 7 Bridge Loan Promissory Note PROMISSORY NOTE SECURED BY DEED OF TRUST Bridge Loan Not to exceed $250,000.00 Tustin, California ,2002 FOR VALUE RECEIVED, the undersigned TUSTIN HERITAGE PLACE, LP ("Developer") promises to pay to the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California redevelopment agency (the "Agency") or order at Tustin, California or such other place as the Agency may designate in writing, the principal sum of TWO HUNDRED FIFTY THOUSAND Dollars ($250,000) plus interest on the terms specified below. 1. Agreement. This Note is given in accordance with that certain Agency Bridge Loan Agreement executed by and between the Agency and the Developer of even date herewith (the "Bridge Loan Agreement"), and in connection with that certain Disposition and Development Agreement (the "DDA") and Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") executed by and between the Agency and the Developer dated as of the same date as this Note. The obligations of the Developer under this Bridge Loan Note shall be subject to the terms of the Bridge Loan Agreement, the Deed of Trust of even date herewith which secures performance under this Note, the Assignment of Leases, the DDA, and the Regulatory Agreement, all of which are hereby incorporated by reference. 2. Interest and Repayment. (a) Except as provided in Section 11 below, the unpaid principal balance of the Bridge Loan shall accrue interest commencing on the date on which the Loan proceeds are first disbursed to Developer, at the rate of three percent (3%) per annum, simple interest to be computed on the basis of actual days elapsed and a 360-day year ("Deferred Interest Rate"). (b) The total unpaid principal amount and all unpaid accrued interest shall be due and payable as a balloon payment the earlier of: (a) three (3) years from the date of disbursement of the Bridge Loan proceeds to Developer; or (b) upon disbursement of the Agency Loan in the amount of $350,000, as described in the DDA and Agency Loan Agreement executed by and between the Agency and Developer dated as of the same date of this Bridge Loan Note. 3. Terms of Payment. All amounts due and payable under the Bridge Loan Promissory Note are payable at the Office of the Agency at the address provided to the Developer by the Agency, or at such other place or places as the Agency may designate to the Developer in writing from time to time. Any payment under this Bridge Loan Note shall be paid in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts and which on the Ilcritage Place Draft B:id~c Ix)an Prom,s,mr.', Note 1 2.13.02 respective dates on which such payments are due shall be in immediately available funds. 4. Prepayments. Developer may prepay all or part of the principal balance and accrued interest due under this Bridge Loan Note without penalty subject to the conditions under the Bridge Loan Agreement. 5. Security. This Bridge Loan Promissory Note is secured by the Bridge Loan Deed of Trust described in paragraph 1 hereof. 6. Waivers. (a) Developer expressly agrees that payment of this Bridge Loan Promissory Note or any payment due hereunder may be extended from time to time at the Agency's sole discretion and that the Agency may accept security in consideration for any such extension or release any security for this Bridge Loan Note at its sole discretion all without in any way affecting the liability of Developer. (b) No extension of time for payment of this Bridge Loan Note or any installment hereof made by agreement by the Agency with any person now or hereafter liable for payment of this Bridge Loan Note shall operate to release, discharge, modify, change, or affect the original liability of Developer under this Bridge Loan Note, either in whole or in part. (c) The obligations or Developer under this Bridge Loan Note shall be absolute and Developer waives any and all rights: (i) to offset, deduct, or withhold any payments or charges due under this Bridge Loan Note for any reasons whatsoever; (ii) of presentment for payment, demand, protest and notices of dishonor and protest; and (iii) of diligence in taking any action to collect any sums owing under this Bridge Loan Note or in proceeding against any of the rights and interests in and to properties securing payment of this Bridge Loan Note. 7. Attorney Fees and Costs. Developer agrees that if any amounts due under this Bridge Loan Note are not paid when due, to pay in addition, all costs and expenses of collection and reasonable attorney fees paid or incurred in connection with the collection or enforcement of this Bridge Loan Note, whether or not suit is filed. 8. Joint and Several Obligations. This Bridge Loan Note is the joint and several obligation of all makers, sureties, guarantors, and endorsers, and shall be binding upon them and their successors and assigns. I.Icri:ag¢ Pl~cc. Drai't Bridge l.omi I~rom~s~,or.x .Note 2 2. I~ 02 9. Deed of Trust Acceleration. This Bridge Loan Note is secured by a Deed of Trust on the Property (as defined in the Bridge Loan Agreement). The Deed of Trust, Bridge Loan Agreement, the DDA, and the Regulatory Agreement provide for acceleration of the payments due under this Bridge Loan Note in the event of default (after expiration of any cure period) under the Deed of Trust, Bridge Loan Agreement, or Regulatory Agreement. 10. Prohibition Against Transfer of Interest. The Developer shall not make any sale, assignment or conveyance, or transfer in any other form, nor any further pledge, encumbrance, or mortgaging of the Project or any part thereof or of any of its interest therein, other than in accordance with the terms of this Bridge Loan Note, the Bridge Loan Agreement, the DDA, the Regulatory Agreement, and the Deed of Trust. 11. Default Under Other Loan Documents and Acceleration. All covenants, conditions, and agreements contained in this Bridge Loan Note, the Bridge Loan Agreement, the DDA, the Regulatory Agreement, and the Deed of Trust are hereby made a part of this Bridge Loan Note, and the Developer agrees that the unpaid balance of the then principal amount of this Bridge Loan Note, together with all accrued interest thereon and charges owing, shall, at the option of the Agency hereof, become immediately due and payable, and thereafter until paid bear interest at the rate of ten percent (10%) per annum (the "Default Rate"), compounded annually upon the failure of the Developer to make any payment hereunder as and when due (after expiration of any cure period); upon the failure of the Developer to perform or observe any other term or provision of this Bridge Loan Note; or upon the occurrence of any event (whether termed default, event of default, or similar term) which (after the expiration of any cure period) under the terms of this Bridge Loan Note, the Bridge Loan Agreement, the DDA, the Regulatory Agreement or the Deed of Trust shall entitle the Agency to exercise rights or remedies thereunder, or (b) under the terms of this Bridge Loan Note, the Bridge Loan Agreement, the DDA, the Regulatory Agreement, or the Deed of Trust shall entitle the Agency to exercise rights or remedies thereunder or, if this Bridge Loan Note, the Bridge Loan Agreement, the DDA, the Regulatory Agreement, and the Deed of Trust shall have been fully performed by the Developer, which under the terms thereof would have entitled the Agency hereof to exercise rights or remedies thereunder had such event occurred prior to such full performance. 12. Definitions. Capitalized terms not defined in this Bridge Loan Note shall have the same meanings as defined in the Bridge Loan Agreement, the terms of which are incorporated into this Bridge Loan Note by this reference. 13. Governing Law. This Bridge Loan Note shall be construed in accordance with and be governed by the laws of the State of California. 14. Severability. If any provision of this Bridge Loan Note shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. lief/rage Placc Dm:'t Bridge I.oan Promissory .No'.c 3 2.13.02 15. Time. Time is of the essence in this Bridge Loan Promissory Note. 16. No Waiver by the Agency. No waiver of any breach, default, or failure of condition under the terms of this Bridge Loan Note, the Bridge Loan Agreement, the DDA, the Regulatory Agreement, or the Deed of Trust or the obligations secured thereby shall be implied from any failure of the Agency to take, or any delay by the Agency in taking, action with respect to such breach, default or failure, or any form of previous waiver of any similar or unrelated breach, default or failure; and waiver of any term of this Bridge Loan Note, the Bridge Loan Agreement, the DDA, the Regulatory Agreement, or the Deed of Trust or any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. 17. Amendments and Modifications. This Bridge Loan Note may not be changed orally, but only by an amendment in writing signed by Developer and the Agency. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. DEVELOPER: TUSTIN HERITAGE PLACE, L.P. By: Its: APPROVED AS TO FORM AGENCY COUNSEL Lois Jeffrey By. Dated By: Its: TUSTIN COMMUNITY REDEVELOPMENT AGENCY By: Its: I leritzge Place [)mi", Brld~ee I.oa:: Prorn:ssor,x .No:c 4 2.13.02 Attachment 8 Bridge Loan Trust Deed To be provided by Escrow Holder. Attachment 9 Agency Loan Agreement AGENCY LOAN AGREEMENT ($350,000) BY AND BETWEEN THE TUSTIN REDEVELOPMENT AGENCY and TUSTIN HERITAGE PLACE, L.P. I)RAFT :\genc.~ Loa:'. Agreement 22 {)2 I;! 02 AGENCY LOAN AGREEMENT (s35o,ooo) This Loan Agreement ("the Agreement") is entered into as of this __ day of,2002, by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY ("Agency"), California redevelopment agency, and TUSTIN HERITAGE PLACE, LP, a California limited partnership ("Developer"), with reference to the following: RECITALS A. Developer intends to construct a senior citizen independent living rental housing project on that certain real property located within the City of Tustin, County of Orange, State of California, and more particularly described in Exhibit "A" attached hereto and incorporated herein (the "Property"). B. The Agency desires to provide financial assistance to facilitate said construction of said project in the form of a loan to Developer subject to the Developer's agreement, amongst other things, to encumber the Project with certain rental restrictions, all as more particularly set forth in this Agreement, that certain Regulatory Agreement and Declaration of Restrictive Covenants executed by and between the Agency, the City of Tustin ("City"), and Developer of even date herewith (the "Regulatory Agreement"), and that certain Disposition and Development Agreement executed by and between the Agency, City and Developer of even date herewith (the "DDA"). NOW, THEREFORE, the parties agree as follows: ARTICLE I DEFINITIONS The following terms used in this Agreement shall have the respective meanings assigned to them in this Article I unless the context in which they are used clearly requires otherwise: 1.1 "Adjusted Income" shall mean the adjusted income of all persons who intend to reside in one residential unit, calculated in the manner which complies with determinations of income for Iow income families under Section 8 of the United States Housing Act of 1937, as amended. 1.2 "Agreement" shall mean this Agency Loan Agreement. 1.3 "Area" shall mean the Anaheim-Santa Ana Primary Metropolitan Statistical Area. I)RAF I' Agency l.oan Agreement (,2.'13 02 1.4 "Assignment of Leases" shall mean that certain Assignment of Lessor's Interest in Leases, Rents and Profits executed by Developer of even date herewith. 1.5 "Agency" shall mean the Tustin Community Redevelopment Agency, a California redevelopment agency. 1.6 "City" shall mean the City of Tustin, California. 1.7 "Close of Escrow" shall mean the date on which the Loan amount is disbursed by the Agency through the Escrow holder and the Deed of Trust together with the other Loan Documents set up for recording are in fact recorded. 1.8 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time hereafter, or any successor statute thereto. 1.9 "Contractor" shall mean the general contractor(s) for the construction work for the Project. 1.10 "Deed of Trust" shall mean that certain Deed of Trust, Assignment of Rents and Security Agreement executed by the Developer in favor of the Agency of even date herewith. 1.11 "Developer" shall mean Tustin Heritage Place, LP. 1.12 "Executive Director" shall mean the Agency's Executive Director. 1.13 "Due Date" shall mean the date which is thirty (30) years following the Close of Escrow or such earlier date on which all principal and interest due on the Loan shall have been fully paid. 1.14 "Escrowholder" shall mean the escrow holder approved by the Agency for the escrow established to facilitate the Close of Escrow. 1.15 "Financing Plan" shall mean the financing plan described in Section 4.1 (g) below. 1.16 "Financing Statement" shall mean the UCC-1 form to be prepared and executed by Developer, in a form satisfaction to the Agency, and delivered to the Agency, the filing of which shall give the Agency a perfected security interest in Developer's tangible personal property and fixtures located on or about the Project. 1.17 "Home" shall mean the HOME INVESTMENT PARTNERSHIPS PROGRAM of the United States Department of Housing and Urban Development ("HUD"). 1.18 "Agency Loan" shall mean the Loan in the amount not to exceed THREE HUNDRED FIFTY THOUSAND Dollars (S350,000) by the Agency to the Developer, which Loan is the subject of this Agreement. I)RAFT Agency Loa~: Agreement 2 02 13 02 1.19 "Loan Documents" shall mean the following documents evidencing the Loan: (a) the Agency Loan Promissory Note; (b) the Agency Loan Deed of Trust and Assignment of Leases; (c) the Financing Statement; (d) the Regulatory Agreement and Declaration of Restrictive Covenants; (e) Request for Notice of Default; and (f) this Agency Loan Agreement. 1.20 "Low Income Tenant" means families whose Annual Incomes do not exceed sixty percent (60%) of the median income for the area as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than sixty percent (60%) of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or Iow family incomes. If the occupant of a unit is a student (as defined under Section 131(c) of the Code), not entitled to file a return under Section 6013 of the Code, said occupant shall not qualify as a Low Income Ten- ant. The determination of a tenant's status as a Low Income Tenant shall be made by the Developer upon initial occupancy of a unit in the Project by such tenant and annually thereafter, on the basis of an Income Certification executed by the tenant. 1.21 "Low and Very Low Income Units" shall mean the fifty-three (53) dwelling units in the Project designated for occupancy by Low and Very Low Income Senior Citizen Tenants pursuant to the DDA, the Regulatory Agreement and Exhibit "B" attached hereto and incorporated herein. 1.22 "Low Income Tenants" shall mean Iow-income Senior Citizen households whose annual incomes do not exceed fifty percent (60%) of the median family income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than fifty percent (60%) of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or Iow family incomes. 1.23 "Management Plan" shall mean that management plan submitted to and approved by the Agency pursuant to Section 4.1 below. 1.24 "Area Median Income" shall mean the median income for the Area as most recently determined by the Secretary of the Treasury pursuant to Section 142(d)(2)(B) of the Code. 1.25 "Mortgage Loan" shall mean any of the following loans secured by a mortgage or deed of trust on the Project: (a) The Agency Loan evidenced by the Agency Loan Promissory Note and the balance of the Loan Documents. (b) Any other loan secured by a mortgage or deed of trust on the Project, either senior or junior to the Loan. 1.26 "Mortgage Loan Documents" shall mean all documents executed by the Developer endorsing or securing a Mortgage Loan. i)RAFT Agency l.oan Agreen:ent 3 02,13 02 1.27 "Mortgagee" shall mean the mortgagee or beneficiary under a mortgage or a deed of trust executed in connection with a Mortgage Loan. 1.28 "Promissory Note" shall mean the promissory note in the principal amount of THREE HUNDRED FIFTY THOUSAND Dollars ($350,000), evidencing the Agency Loan. 1.29 "Parties" shall mean the Agency and the Developer. 1.30 "Partnership" shall mean Tustin Heritage Place, L.P. 1.31 "Project" shall mean the Property, together with all improvements, fixtures and equipment now or hereafter constructed, placed or located on the Property. 1.32 "Property" shall mean that certain real property legally described on Exhibit "A" attached hereto and incorporated herein. 1.33 "Qualified Project Period" shall mean the period beginning on the first day on which at least ten percent (10%) of the residential units in the Project are first occupied and ending on the date which is fifty-five (55) years after the date on which at least fifty percent (50%) of the residential units in the Project are first occupied. 1.34 "Regulations" shall mean the Income Tax Regulations promulgated by the United States Department of the Treasury pursuant to the Code from time to time. 1.35 "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Restrictive Covenants between the Agency and the Developer of even date herewith. 1.36 "Request for Notice of Default" shall mean a request for notice of default to be recorded against the Property in a form approved by the Agency 1.37 "Senior Citizens" shall mean persons age 62 and higher. 1.38 "Term" shall mean the period beginning with the date of this Agreement and ending on the date which is thirty (30) years following the Close of Escrow. 1.39 "Very Low Income Tenants" shall mean Iow-income Senior Citizen households whose annual incomes do not exceed fifty percent (50%) of the median family income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than fifty percent (50%) of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or Iow family incomes. I)RAFT Agency I.oan :\gr¢cme,".t 4 02'13 02 ARTICLE II LOAN 2.1 Amount. The Agency hereby agrees to loan and the Developer hereby agrees to borrow, an amount not to exceed the total Agency Loan (as such term is defined above, subject to the terms, covenants, conditions, representations, and warranties set forth in this Agreement, and the other Loan Documents. 2.2 Repayment of Agency Loan. The unpaid principal balance of the Agency Loan shall accrue interest at the rate of three percent (3%) per year simple interest, from the date of the disbursement by Agency. The Developer shall repay the Agency Loan with accrued interest in arrears in annual installments on April 15th of each year for the previous year, commencing on April 15, 2003. Absent prepayment or acceleration, each of the annual payments due April 15, 2003 through April 15, 2033 ("Maturity Date") shall be made out of Residual Receipts (as defined in the Agency Loan Promissory Note) from the immediately preceding calendar year. The amount of such annual payment to Agency, when combined with the annual loan payment under the County of Orange Housing and Community Development (HCD) Loan out of Residual Receipts for the immediately preceding calendar year, shall equal fifty percent (50%) of all Residual Receipts for such year. The fifty percent (50%) amount shall be split between the Agency and HCD on the basis of their respective loan balances immediately prior to the annual payments (including their respective remaining principal balances, and accrued but unpaid interest and all charges respectively due as of such time). Residual Receipts shall be calculated and reported to the Agency annually for each calendar year no later than April 15th of the following calendar year on forms specified and provided by Agency from time to time. All calculations and records are subject to audit by Agency. Notwithstanding any other provision of under the Agency Loan Promissory Note or of this Agreement, unless due sooner, the entire outstanding principal balance of the Agency Loan together with any outstanding interest and any other sums payable under the Agency Loan Promissory Note shall be due and payable in full on April 15, 2033. 2.3 Prepayment. Developer may pay the principal and any interest due the Agency under the Agency Loan Promissory Note prior to or in advance of the time for payment thereof as provided in the Note, without penalty; provided, however, that Developer acknowledges that the provisions of this Agreement and the Regulatory Agreement will be applicable to the Project even though Developer may have prepaid the Note. 2.4 Assumption. Subject to the provisions of Section 7.7 hereof, the Note shall not be assumable by successors and assigns of Developer, either voluntarily or by operation of law, without the prior written consent of the Agency, and any such assignment or assumption shall be void. 2.5 Loan Disbursement. Upon satisfaction of the conditions to disbursement set forth in the DDA and Section 4.1 below and pursuant to the I)RAF'r ,\~enc.~ I.o.',~~, A,_,reumc':~: ~ 02 13 02 disbursement procedures set forth in Section 4.2 below, the Agency, through the approved Escrowholder, will cause the disbursement of the Loan as provided for in Section 4.2. 2.6 Security for Loan. The Loan shall be secured by the Deed of Trust which Developer shall execute and which shall be recorded as a lien against the Site along with the recording of Assignment of Leases and the Request for Notice of Default. 2.7 Approval of Additional Financing. The Developer shall not place or permit (either voluntarily or involuntarily) to be placed any encumbrances not otherwise provided for and approved by the Agency in the Financing Plan, including, but not limited to any additional liens or financing of any kind on the Project without the prior written consent of the Agency. 2.8 Subordination of Deed of Trust. The Agency agrees that the Deed of Trust may be subordinate to the lien of a construction loan or permanent loan first deed of trust securing financing in an amount not to exceed $4,600,000 and other financing approved by Agency so long as (i) the documentation for said loans are approved by the Agency and (ii) said loans are otherwise provided for and approved by the Agency in the Financing Plan. Any other financing, refinancing or encumbrance of the Project is prohibited without the Agency's prior written consent which consent the Agency may arbitrarily withhold in the exercise of its discretion. ARTICLE III RENTAL RESTRICTIONS 3.1 Use and Rent Restrictions. (a) In accordance with the provisions of the DDA, the Regulatory Agree- ment, this Loan Agreement and Exhibit "B" attached hereto and incorporated herein, the Developer has agreed to rent the Low Income Units of the Project to Low and Very Low Income Senior Citizen Tenants for the Qualified Project Period. (b) Low and Very Low Income Senior Citizen Tenants who occupy Low Income Units at the expiration of the Qualified Project Period and who qualify as Low or Very Low Income Tenants on such date shall be permitted to occupy Low Income Units for a period of three (3) years beginning on the first day after the expiration of the Qualified Project Period; provided, however, that annual rent increases during such three (3) year period shall not exceed an amount equal to the existing rent for such units plus the greater of (i) five percent (5%) or (ii) the percentage increase in the Median Income for the Area. As any of these Low Income Units become unoccupied, such unit shall not be subject to the restrictions of this subparagraph (b). (c) In lieu of compliance with the conditions set forth in subparagraph (b), the Developer may elect to provide the Low and Very Low Income Senior Citizen Tenants residing in the Low and Very Low Income Units at the expiration of the I)RAFT Agency l,oan .\grcemcnl 6 02 13 02 Qualified Project Period relocation benefits subject to the determination by the Agency that such benefits may be provided in accordance with California law. The Agency may rely upon the advice of legal counsel in making such determination, the cost of which legal advice and any necessary legal opinion shall be borne by the Developer. (d) Developer agrees to provide to Low and Very Low Income Senior Citizen Tenants notice of all rent increases pursuant to applicable law. 3.3 Income Determination. For the purposes of this section, the income of individuals and families and the area median gross income shall be determined in a manner consistent with determinations of lower income families and the Median Income for the Area under Section 8 of the United States Housing Act of 1937, as amended (or, if such program is terminated, in a manner consistent with such determinations under such program as is in effect immediately before such termination). Determinations under the preceding sentence shall include adjustments for household size. 3.4 Certifications. With respect to those Low Income Units subject to the rental restrictions described above, the Developer will comply with the Low and Very Low Income Tenant certifications and recertifications in the same manner as prescribed under the DDA and Regulatory Agreement. 3.5 Records. The Developer will maintain complete and accurate records pertaining to the Low and Very Low Income Units, and will permit any duly authorized representative of the Agency to inspect and copy the books and records of the Developer pertaining to the Project, including those books and records pertaining to the occupancy of the Low and Very Low Income Units. 3.6 Leases. Each lease pertaining to a Low or Very Low Income Unit shall contain provisions to the effect that the Developer has relied on the income certification and supporting information supplied by the Low or Very Low Income Senior Citizen Tenant in determining qualification for occupancy of the Low or Very Low Income Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. ARTICLE IV DISBURSEMENT OF AGENCY LOAN 4.1 Conditions Precedent to Disbursement of Agency Loan Proceeds. The Agency shall cause Agency Loan proceeds to be disbursed through escrow to the Developer as set forth in this Article IV. No disbursement shall be made until all of the following conditions precedent are satisfied. (a) Execution and Delivery of Documents. Developer shall have executed and delivered to the Agency (i) this Agreement, the Agency Loan Promissory Note, and the Agency Loan Deed of Trust and Assignment of Leases, (ii) all resolutions and certificates necessary or appropriate in the opinion of the Agency to evidence the Developer's authority to enter into the Loan and be bound by the Loan Documents, and (iii) all other documents and instruments I)R:~,I:T A~ency I.oar: ABrc~.'mcn: 7 02 13 02 required by the Agency to be executed and delivered, all in form and substance satisfactory to the Agency. (b) Insurance. Developer shall have furnished the Agency with evidence of the insurance coverage described under Section 7.11 hereof. (c) Title to Property. The Agency has determined to its satisfaction that upon the Close of Escrow Developer will have good and marketable fee title to the Property and there will exist thereon or with respect thereto no mortgage, lien, pledge, easement, covenant, condition, restriction, or other encumbrance of any character whatsoever other than liens for current real property taxes and assessments not yet due and payable, the lien of the first deed of trust described in Section 2.8 hereof, the lien of the second deed of trust securing a loan made by the Orange County Housing and Community Development Department in the amount of $541,903 ("HCD Loan"), and the lien of the recorded Regulatory Agreement and any other matters approved in writing by the Agency. (d) Level One Environmental Assessment Report. Developer shall have provided the Agency with a Level One Environmental Assessment Report on the Property, along with any other information the Agency may require, as satisfactory evidence that there are no hazardous or toxic materials present on the Property. (e) Certificate of Occupancy. The Developer shall have obtained a Certificate of Occupancy issued by the City of Tustin evidencing the substantial completion of the improvements for the Project. (f) Management Plan. The Developer shall have submitted and the Agency shall have approved a Management Plan ("Management Plan"). The Management Plan shall include a management contract with a manager approved in writing by the Agency for management of the Project and a plan for long-term marketing, operation, maintenance, repair and security of the Project, method of selection of tenants, and for rental policies in compliance with HUD and HOME requirements, policies and procedures and with the Regulatory Agreement, along with any other policies or procedures required by the Agency. The Management Plan shall also include an initial budget for the Project. (g) Recordation. The Escrowholder is prepared to concurrently (1) record the Aency Loan Deed of Trust against the Property at the Close of Escrow and issue or cause the issuance to the Agency by a title insurance company approved by the Agency, of an American Land Title Association policy of lender's title insurance, together with such endorsements as the Agency may require, which shall insure the Agency Loan Deed of Trust as a third lien upon the Property subject only to the exceptions approved by the Agency in Section 4.1(c) above. (h) No Default. There shall exist no condition, event or act which would constitute an Event of Default (as hereinafter defined) hereunder or which, upon the giving of notice or the passage of time, or both, would constitute an Event of Default. I)RAI:'r Agency l..o.".n Agreement 8 02 13 02 (i) Representations and Warranties. All representations and warranties of Developer herein contained shall be true and correct. (j) Disbursement of Funds. The Developer has submitted to the Agency and the Agency has approved in the exercise of its discretion evidence that the funds identified as committed to the Project in the approved Financing Plan have been in fact unconditionally disbursed to Developer for the Project as of the Close of Escrow. (k) Priority of Regulatory Agreement. The Regulatory Agreement has been executed and recorded prior to the Close of Escrow as a lien senior to the Agency Loan Deed of Trust. (I) Construction Releases. Developer has submitted to the Agency and the Agency has approved copies of all labor and materials released pertaining to the construction contract or contracts with a responsible contractor or contractors providing for the construction of the Project in conformance with the terms of this Agreement. 4.2 Procedure for Disbursement of Agency Loan Proceeds. When all the conditions to disbursement have been satisfied and the Agency is satisfied that any conditions to the Close of Escrow have been satisfied, the Agency shall deposit the Agency Loan with the Escrowholder for disbursement upon the Close of Escrow in accordance with the terms of the DDA by and between the Agency and Developer. 4.3 Termination. If any of the conditions precedent to disbursement of the Agency Loan are not satisfied within fifteen (15) months following the date of this Agreement, Agency may terminate this Agreement by giving written notice to Developer. Upon such termination, the parties shall have no further rights or obligations under this Agreement. ARTICLE V DEVELOPMENT OF THE IMPROVEMENTS 5.1 Construction Pursuant to Plans. Unless modified by operation of Section 5.3, the Project shall be constructed substantially in accordance with the Construction Plans approved by the City and Agency and the terms and conditions of the permits and approvals and building permits for the Project. 5.2 Change in Construction. If the Developer desires to make any material change in the Project which is not substantially consistent with the Construction Plans approved by the City and Agency, the Developer shall submit the proposed change to the City and Agency for approval. The City's and Agency's approval of any such changes shall not be considered an approval of any additional funding or financing. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF DEVELOPER I)RAFT agency l.oan Agrcemcm 9 02 13,02 6.1 Representations and Warranties. Developer hereby makes the following representations and warranties to the Agency, each of which shall also be deemed a covenant and all of the following, Developer agrees, shall continue to be true and accurate in all material respects so long as the Agency Loan or any portion thereof remains outstanding: (a) Organization. Developer is duly organized, validly existing and in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. The copies of the documents evidencing the organization of Developer delivered to the Agency are true and correct copies of the originals, as amended to the date of this Agreement. (b) Authority of Developer. Developer has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Agency Loan Documents and all other documents or instruments executed and delivered, or to be exe- cuted and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above. (c) Authority of Persons Executing Documents. This Agreement and the Agency Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of 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 the Agency Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken. (d) Valid Binding Agreements. This Agreement and the Agency Loan Documents 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 when so executed and delivered constitute, legal, valid and binding obligations of Developer enforceable against the Developer in accordance with their respective terms. (e) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement and the Agency Loan Documents or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will 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, if applicable, of its constituent partners, or will conflict with or constitute a breach of or a default under any agreement to which Developer, or, if applicable, its constituent partners, 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. DRAFT :~gency l.oan Agrccrnent 10 02 13 02 (f) Pending Proceedings. Developer is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Developer, threatened against or affecting Developer or the Property or Project, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Developer, materially affect Developer's ability to repay the Agency Loan or impair the security to be given to the Agency pursuant hereto. (g) Compliance with Laws; Consents and Approvals. The Project shall comply at all times with all applicable laws, ordinances, rules and regulations of federal, state, and local governments and agencies, including but not limited to all applicable federal and state labor requirements, and with all applicable directions, rules and regulations of the fire marshal, health officer, building inspector, and other officers of any such government or agency. All consents, permissions and licenses required by any federal, state, or local government or agency to which the Developer or the Project is subject, which may be necessary in relation to this Agreement or the ownership or operation of the Project, have been or will be obtained, and none of such consents, permissions, and licenses is subject to appeal or to conditions which have not been met. (h) Financial Statements. The financial statements of the Developer and its general partners and other financial data and information furnished by the Developer for review by the Agency fairly present the information contained therein. As of the date of Agency Loan disbursement, there will not have been any adverse material change in the financial condition of the Developer from that shown by such financial statements and other data and information. (i) Adequacy of Agency Loan. The amount of the Loan, together with any funds to be provided by the Developer or to the Developer from any other sources, is adequate to pay all costs incurred in connection with the Project and to enable the Developer to satisfy the covenants contained in this Agreement. (j) Payment of Taxes. All federal, state, county, and municipal taxes required to be paid by the Developer or on account of the Project have been paid in full as of the date of this Agreement or will be paid in full by the Close of Escrow. ARTICLE VII CONTINUING OBLIGATIONS 7.1 Applicability. For the longer of the entire Term, or so long as the Agency Loan Promissory Note remains outstanding, the Developer shall comply with the provisions of this Article VII. 7.2 Compliance with Agency Loan Documents. Developer shall promptly comply with all the terms and provisions of the Agency Loan Documents. DRAFT Agency Loan Agreemem I l 02 13 02 7.3 Taxes and Assessments. So long as Developer owns the Project, Developer shall pay all real and personal property taxes, assessments and charges, and all franchise, income, unemployment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Project; provided, however, that Developer shall have the right to contest in good faith any such taxes, assessments, or charges. In the event Developer exercises its right to contest any tax, assessment, or charge against it, Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges, and interest. 7.4 Indemnity. Developer shall, at Developer's expense, defend, indemnify, save and hold the Agency and its respective elected and appointed officials, officers, agents, employees, and members harmless from any and all losses, damages, liabilities, claims, causes of action, judgments, settlements, court costs, attorneys' fees, and other legal expenses, cost of evidence of title, cost of evidence of value, and other expenses which they may suffer or incur due to, arising from, or relating to Developer's performance or non-performance of its obligations under this Agreement, the DDA or the Agency Loan Documents, or Developer's ownership or operation of the Property or the Project. 7.5 Entry by the Agency. Developer shall permit the Agency, through its officers, agents, or employees, at all reasonable times to enter into the Property or the Project and inspect the work of construction to determine that the same is in conformity with the Construction Plans and all the requirements hereof. Developer acknowledges that the Agency is under no obligation to supervise, inspect, or inform Developer of the progress of construction, and Developer shall not rely upon the Agency therefor. Any inspection by the Agency is entirely for its purposes in determining whether Developer is in default under this Agreement or the Loan Documents and is not for the purpose of determining or informing Developer of the quality or suitability of construction. Developer shall rely entirely upon its own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of archi- tects, subcontractors, and material suppliers. 7.6 Hazardous Materials. Developer shall indemnify, defend and hold harmless the Agency, and its respective elected and appointed officials, mem- bers, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of hazardous materials on, under, or about the Project, including without limitation: (a) all foreseeable consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Project and the preparation and implementation of any closure, remedial or other required plans; and (c) all reasonable costs and expenses incurred by the Agency or Agency in connection with clauses (a) and (b), including but not limited to reasonable attorneys' fees. L)R,\I:'I' Agency I.o,"n Agrcemen: I 2 02. 13 02 7.7 Transfers. During the Term, Developer shall not sell or otherwise transfer the Project or any portion thereof, and none of the general partners in Developer shall sell or otherwise transfer their interests in Developer, and none of the general partners in a partnership that is a partner in Developer shall sell or otherwise transfer their interest in such partnership without first obtaining the approval of the Agency. The Agency shall not approve any such transfer request if the Developer is in default under any of the DDA, Agency Loan Documents, Regulatory Agreement or the Management Plan. 7.8 Annual Marketing and Management Plans. Developer and the Agency (if it so elects) will cooperate in the marketing of the units on the Property pursuant to a marketing plan (the "Marketing Plan") prepared by the Developer and approved by the Agency. Said Marketing Plan and the Management Plan described in Section 4.1 hereof shall be prepared by the Developer and approved by the Agency on an annual basis; however, the Developer shall provide quarterly written supplements to said approved plans (or more frequently if requested by the Agency). 7.9 Maintenance of Project. Developer agrees to maintain all interior and exterior improvements, including landscaping, on the Project in first-class condition, repair and sanitary condition (and, as to landscaping, in a healthy condition) and in accordance with any Management Plan approved by the Agency under the Loan Agreement (including without limitation any landscape and signage plans), as the same may be amended from time to time, and all other applicable laws, rules, ordinances, orders, and regulations of all federal, state, Agency, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials. Developer acknowledges the great emphasis the Agency places on quality maintenance to protect its investment and to provide quality Iow income housing for its constituents and to ensure that all Agency-subsidized affordable housing projects within the Agency are not allowed to deteriorate due to deficient maintenance. In addition, Developer shall keep the Project free from all graffiti and any accumulation of debris or waste material. Developer shall promptly make all repairs and replacements necessary to keep the Project in first class condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. In the event that Developer breaches any of the covenants contained in this Section 7.9 and such default continues for a period of five (5) days after written notice from Agency (with respect to graffiti, debris, waste material, and general maintenance) or thirty (30) days after written notice from Agency (with respect to landscaping and building improvements), then Agency, in addition to whatever other remedy it may have under this Loan Agreement, at law or in equity, shall have the right to enter upon the Project and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the Agency shall be permitted (but not required) to enter upon the Project and perform all acts and work necessary to protect, maintain and preserve the improvements and landscaped areas on the Project, in the amount of the expenditure arising from such acts and work of protection, maintenance, and preservation by Agency and/or costs of such cure, including a fifteen percent DRAFT AgellC.x l.oan :\gr~¢mem 1:3 02,13 02 (15%) administrative charge, which amount shall be promptly paid by Developer to Agency upon demand. 7.10 Status of Developer. Developer shall at all times maintain its legal status in good standing and comply with all laws, rules and regulations of California and the United States and of any political subdivision thereof applicable to it or its business. 7.11 Insurance. While any obligation of Developer under any Loan Document remains outstanding, Developer shall maintain at Developer's sole expense, with insurers of recognized responsibility, the following policies of insurance in form and substance satisfactory to the Agency. (a) Workers' compensation insurance and any other insurance required by law in connection with the Project; (b) Builder's all-risk insurance covering one hundred percent (100%) of the replacement cost of the Project during the course of any construction or reconstruction in the event of fire, lightning, windstorm, vandalism, malicious mischief, and all other risks normally covered by extended coverage policies in the locality where the Project is situated (including insurance against loss by flood if the Project is located in an area now or hereafter designated as subject to the danger of flood); (c) Fire and hazard "all risk" insurance covering one hundred percent (100%) of the replacement cost of the Project in the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks normally covered by "all risk" coverage policies in the locality where the Project is situated (including insurance against loss by flood if the Project is located in an area now or hereafter designated as subject to the danger of flood, but excluding insurance against loss by earthquake); (d) Public liability insurance in an amount not less than $1,000,000 for "single occurrence" and $2,000,000 in the aggregate; (e) Personal property damage insurance in the amount required by the Agency from time to time; (f) Rent loss insurance for a period of repair or restoration for a period of at least one year; (g) Umbrella coverage is an amount not less than $5,000,000; and (h) All such insurance shall be endorsed to provide that said insurance may not be canceled or materially modified without 30 days' prior written notice to the Agency. The policies required pursuant to subparagraphs (b) and (c), above, shall include a "lender's loss payable endorsement" (Form 438BFU) in form and substance satisfactory to the Agency assuring Agency that all proceeds shall be paid to Agency as provided in the Agency Loan Deed of Trust subject to the interests of the senior lenders on the Project. The City and Agency shall be an additional named insured as to the policies required pursuant to subparagraph DR.\FT Agency Lx)an Agrecmcnl 14 02 13 02 (d), (e), and (f), above. No such insurance shall include deductible amounts to which the Agency has not previously consented in writing. Certificates of insurance for all of the above policies (and/or original policies, if required by the Agency from time to time), showing the same to be in full force and effect, shall be delivered to the Agency. All policies insuring against damage to the Project shall contain an agreed value clause sufficient to eliminate any risk of co- insurance. 7.12 Payment of Expenses. Developer shall pay the Agency's costs and expenses incurred in connection with the making, disbursement and administration of the Loan, as well as any revisions, extension, renewals, modifications or "workouts" of the Agency Loan, and in the exercise of any of Agency's rights or remedies under this Agreement. Such costs and expenses include title insurance, recording and escrow charges, survey charges, hazard insurance, premiums, fees for any appraisals and any appraisal reviews, architectural and engineering review, construction services and environmental and toxic services and reviews, zoning and entitlement services and reviews, mortgage taxes, legal fees and any other reasonable fees and costs for services, regardless of whether such services are furnished by the Agency's employees or agents or independent contractors. ARTICLE VIII DEFAULT AND REMEDIES 8.1 Events of Default. Each of the following shall constitute an "Event of Default" by Developer under this Agreement: (a) Failure to Make Note Payments. Failure to make prompt payments under the Agency Loan Promissory Note as and when provided for in the Note and this Agreement. (b) Mismanagement. Failure by Developer to manage the Project in a prudent, first class manner in accordance with the terms, covenants, conditions, representations and warranties of this Agreement, the DDA or other Agency Loan Documents. For purposes of this Agreement, an act or omission constitut- lng "mismanagement" by the Developer shall include, but not be limited to each of the following: (1) Failure to maintain and repair the Project and make replacements thereto as provided for in Section 7.9 hereof or the committing or permitting of any waste or deterioration of the Project; (2) Breach or failure by Developer to duly perform, comply with or observe any of the terms, covenants, or conditions of this Agreement, the DDA or any other Agency Loan Document, and such failure continues uncured or without Developer commencing to diligently cure for thirty (30) days after notice thereof in writing is mailed by the Agency to Developer; I)RAI:T :\.genc:. l.oan Agreement I 5 02 13 02 (3) Any default of Developer which continues uncured after the expiration of any applicable cure period under any other loan document including, but not limited to, the Mortgage Loan Documents; (4) The voluntary suspension of Developer's business or the dissolution or termination of the partnership constituting Developer; (5) A sale or other transfer of the Project in violation of Section 7.7 above. (c) Fraud or Material Misstatement or Omissions. Any fraudulent act or omission of Developer's, or misrepresentation of Developer's, pertaining to or made in connection with the Agency Loan, Agency Loan Documents or the Project. (d) Insolvency. A court having jurisdiction shall have made or entered any decree or order (i) adjudging Developer to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of Developer or seeking any arrangement for Developer under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Developer in bankruptcy or insolvency or for any of their properties, or (iv) directing the winding up or liquidation of Developer, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of sixty (60) days unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period will apply under this subsection 8.1(d) as well; or Developer shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the events of default in this paragraph shall act to accelerate automati~ cally, without the need for any action by the Agency, the indebtedness evidenced by the Agency Loan Promissory Note. (e) Project Monies. Misapplication or embe771ement of Project monies. 8.2 Remedies. The occurrence of any Event of Default shall, either at the option of the Agency or automatically where so specified, relieve the Agency of any obligation to make or continue the Agency Loan and shall give the Agency the right to proceed with any and all remedies set forth in this Agreement and the Loan Documents or otherwise available at law or in equity or by statute (and all of the Agency's rights and remedies shall be cumulative), including but not limited to the following: (a) Acceleration of Note. The Agency shall have the right to cause all indebtedness of the Developer to the Agency under this Agreement and the Agency Loan Promissory Note, together with any accrued interest thereon, to become immediately due and payable. The Developer waives all right to presentment, demand, protest or notice of protest, or dishonor. The Agency may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the Agency as a creditor and secured party under the law including DR.'W I' ..\~t'nc? l.(;an Asrccm~.'rl: 1 ~) the Uniform Commercial Code, including foreclosure under the Deed of Trust. The Developer shall be liable to pay the Agency on demand all expenses, costs and fees (including, without limitation, attorneys' fees and expenses) paid or incurred by the Agency in connection with the collection of the Agency Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Agency Loan. (b) Specific Performance. The Agency shall have the right to mandamus or other suit, action or proceeding at law or in equity to require Developer to perform its obligations and covenants under the Loan Documents or to enjoin acts on things which may be unlawful or in violation of the provisions of the Agency Loan Documents. (c) Right to Cure at Developer's Expense. The Agency shall have the right to cure any monetary default by Developer under a loan other than the Agency Loan. The Developer agrees to reimburse the Agency for any funds advanced by the Agency to cure a monetary default by Developer upon demand therefore, together with interest thereon at the rate of twelve percent (12%) per annum or the maximum rate permitted by law, whichever rate is greater, from the date of expenditure until the date of reimbursement. 8.3 Right of Contest. Developer shall have the right to contest in good faith any third party claim, demand, levy, or assessment the assertion of which would constitute an Event of Default hereunder. Any such contest shall be prosecuted diligently and in a manner unprejudicial to the Agency or the rights of the Agency hereunder. Upon demand by the Agency the Developer shall make provision by deposit of funds with the Agency or, if permitted by the Agency in the exercise of the Agency's sole discretion, by bond in an amount, on forms, and with a bonding company all satisfactory to the Agency in the exercise of its discretion. Such assurance shall be given thirty (30) days after demand therefor, and, if made by deposit of funds with the Agency, the amount so deposited shall be disbursed in accordance with the resolution of the contest either to the Developer or the adverse claimant. 8.4 Remedies Cumulative. No right, power, or remedy given to the Agency by the terms of this Agreement or the Agency Loan Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the Agency by the terms of any such instrument, or by any statute or otherwise against Developer and any other person. Neither the failure nor any delay on the part of the Agency to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the Agency of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy. 8.5 Waiver of Terms and Conditions. No waiver of any default or breach by Developer hereunder shall be implied from any omission by the Agency to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver, and such waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term, or condition DI~I.'\FT AgCll¢.XI I.oan Agrecm~nl 1 '7 02 13 02 contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. The consent or approval by the Agency to or of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute a cure or a waiver of any default under this Agreement or the Agency Loan Documents, nor shall it invalidate any act done pursuant to notice of default, or prejudice the Agency in the exercise of any right, power, or remedy hereunder or under the Agency Loan Documents, unless in the exercise of any such right, power, or remedy all obligations of Developer to Agency are paid and discharged in full. ARTICLE IX MISCELLANEOUS 9.1 Approvals Under Agreement. Where this Agreement requires an approval or consent of the Agency, such approval, or .consent may be given on behalf of the Agency by the Executive Director or .his or her designee. 9.2 Time. Time is of the essence in this Agreement. 9.3 Notices. (a) Any notice requirement set forth herein shall be deemed to be satisfied three (3) days after mailing of the notice first-class United States certified mail, postage prepaid, addressed to the appropriate party as follows: Developer: Tustin Heritage Place, L.P. 1740 E. Garry, Suite 105 Santa Aha, CA 92705 Attn: Roger Davila Agency: Tustin Community Redevelopment Agency 300 Centennial Way Tustin, CA 92780 Attention: Executive Director (b) Agency shall endeavor to provide a courtesy copy of any notice sent to Developer to the following addressee, however, failure to do so shall not affect the validity of any otherwise proper, timely delivered notice to Developer: Arter & Hadden, LLP 5 Park Plaza, Suite 1000 Irvine, CA 92614 Attn: Bruce Holden Such addresses may be changed by notice to the other party given in the same manner as provided above. I)RAFT Agcuc.~ I,oan Agr¢cmcn: [ 8 02 I? 02 9.4 No Third Parties Benefitted. This Agreement is made and entered into for the sole protection and benefit of the Agency, its successors and assigns, and Developer, its permitted successors and assigns, and no other person or persons shall have any right of action hereon. 9.5 Agency to File Notices. Developer irrevocably appoints, designates, and authorizes the Agency as its agent (said agency being coupled with an interest) to file for record any notices of completion, cessation of labor, or any other notice that the Agency deems necessary or desirable to protect its interest hereunder and under the Loan Documents. 9.6 Actions. The Agency shall have tile right to commence, appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities of the parties hereunder, or the disbursement of any proceeds of the Loan. 9.7 Successors and Assigns. The terms hereof shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto; provided, however, that no assignment of Developer's rights hereunder shall be made, voluntarily or by operation of law, without the prior written consent of the Agency as specified in Section 7.7 above, and that any such assignment without said consent shall be void. 9.8 Construction of Words. Except where the context otherwise requires, words imparting the singular number shall include the plural number and vice versa, words imparting persons shall include firms, associations, partnerships and corporations, and words of either gender shall include the other gender. 9.9 Partial Invalidity. If any provision of this Agreement shall be declared invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. 9.10 Governing Law and Venue. This Agreement and the Loan Documents and other instruments given pursuant hereto shall be construed in accordance with and be governed by the laws of the State of California. In the event of any legal action to enforce or interpret this Agreement or any of the Loan Documents, the sole and exclusive venue shall be a court of competent jurisdiction located in Orange Agency, California, and the parties hereto agree to and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure Section 394. 9.11 Amendment. This Agreement may not be changed orally, but only by an agreement in writing signed by Developer and the Agency. 9.12 Approvals. Where an approval or submission is required under this Agreement, such approval or submission shall be valid for purposes of this Agreement only if made in writing. L)I{.\F I' Agenc.v l.<~un :',.grcrmcnt 19 02 13'02 9.13 Captions and Headings. Captions and headings in this Agreement are for convenience of reference only, and are not to be considered in construing the Agreement. I)RAI-T ..\gcnc~, I.om~ Agrccmcnt 20 02 ~ 3 02 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. DEVELOPER: TUSTIN HERITAGE PLACE, L.P. By: Its: APPROVED AS TO FORM AGENCY COUNSEL Lois Jeffrey By. Dated By: Its: TUSTIN COMMUNITY REDEVELOPMENT AGENCY By: Its: I)RAF 1' Ag~:nc~ I.oan Agreement 21. 02 i2 02 EXHIBIT A LEGAL DESCRIPTION ALL THAT CF~LTAIN LAND SITUAT"~) IN THE STATE 'OF CALIFORNIA, COUNTY OF ORANGE, .CITY OF TUSTI]q, AND IS DESCKI~ED AS FOLLOWS: THE SOL'TI-iEASTERLY 264.00 FEET OF THE SOU'II-~rESTERLY oNrE-HA. LF OF TI'iE NORTH'WESTERLY ONE-HALF OF THE SOUTHWESTERLY ONE-HALF OF LOT 49, AS SHOWN ON PLAT NO. ] OF THE RANCHOS SANTIAGO DE SANTA ANA AND SAN JOAQUBq, RECORDED IN BOOK 5, PAGE 7, MISCELL4_NvEOUS RECORDS OF LOS ANGELES COUNTY, C.A ~J~ORNL&, MORE PARTI~%' DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST EASTERLY COP, NER OF LOT 2 OF RECORD.OF SURVEY, IN THE CITY OF TUSTIX, COUNTY OF ORANGE, STATE OF CALIFORNIA, FILED IN BOOK 71, PAGE 24 O~: RECORD OF SURVEY, RECORDS OF O1L~NGE COUNTY; THENCE SOLrI~ 39=59'46'' grEST 330.10 FEET TO A POISX'T ON' THE CEN'I?,R.L~"E OF SYCAMORE AVENUE AS SHO~rN ON SA.D MAP; THENCE ALONG SAID CEN'TEP,.LLN'E NOKTH 50°01 '15" WEST 2Oi.00 FEET; THENCE NORTH 39°59'46" EAST 330.12 FEET; THENCE SOL,'TH 50°01'03'' EAST 264.00 FEET TO SAID .~FOREMiZNWIoNrED MOST EASTERLY CORN-rEp, OF LOT 2 OF RECORD OF SURVEY AND POINT OF BEGINNTNG. SAiD LAND IS INCLUDED '~qTH~' THE MAPS FILED IN' BOOK 69, PAGE I AND L~ BOOK 7!. PAGE 24, BOTH OF P,.ECORD OF SURVEYS, ILK THE OFFICE OF THE COL~'TY RECORDER OF S.~ID COUN ,'TY. Tustin Heritage Place DDA Page 51 DRAFT 02,'lZ/2DO2 Attachment 10 Agency Loan Promissory Note PROMISSORY NOTE SECURED BY DEED OF TRUST Agency Loan Not to exceed S350,000.00 Tustin California ., 2002 FOR VALUE RECEIVED, the undersigned TUSTIN HERITAGE PLACE, LP ("Developer") promises to pay to the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California redevelopment agency (the "Agency") or order at Tustin, California or such other place as the Agency may designate in writing, the principal sum of THREE HUNDRED FIFTY THOUSAND Dollars ($350,000) plus interest on the terms specified below. 1. Agreement. This Note is given in accordance with that certain Agency Loan Agreement executed by and between the Agency and the Developer of even date herewith (the "Agency Loan Agreement"), and in connection with that certain Disposition and Development Agreement (the "DDA") and Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") executed by and between the Agency and the Developer dated as of the same date as this Note. The obligations of the Developer under this Agency Loan Note shall be subject to the terms of the Loan Agreement and the Deed of Trust of even date herewith which secures performance under this Note, the Assignment of Leases, the DDA, and the Regulatory Agreement, all of which are hereby incorporated by reference. 2. Interest and Repayment. (a) Except as provided in Section 12 below, the unpaid principal balance of the Agency Loan shall bear interest commencing on the date on which the Loan proceeds are first disbursed to Developer at the rate of three percent (3%) per annum, simple interest shall be computed on the basis of actual number of days elapsed and a 360-day year ("Deferred Interest Rate"). (b) Developer shall repay the Agency Loan with accrued interest in arrears in equal annual installments on April 15th of each year commencing on April 15, 2003. Absent prepayment or acceleration, annual payments due April 15, 2003 through April 15, 2033 ("Maturity Date") shall be paid out of Residual Receipts (as defined in Section 3 below) from the immediately preceding calendar year. The amount of such annual payment to Agency, when combined with the annual loan payment under the County of Orange Housing and Community Development (OCHCD) Loan out of Residual Receipts for the immediately preceding calendar year, shall equal fifty percent (50%) of all Residual Receipts for such year. The fifty percent (50%) amount shall be split between the Agency and OCHCD on the basis of their respective loan balances immediately prior to the annual payments (including their respective remaining principal balances, and accrued but unpaid interest and all charges respectively due as of such time). Residual Receipts shall be calculated and reported to the' Agency annually for each I lcritage I'lacc Draft .\gcncy l.oan I'rom~ssory .Not,: 2.13.02 calendar year no later than April 15th of the following calendar year on forms specified and provided by Agency from time to time. All calculations and records are subject to audit by Agency. Notwithstanding any other provision under the DDA, the Agency Loan Agreement or of this Promissory Note, unless due sooner, the entire outstanding principal balance of the Agency Loan together with any unpaid interest and any other sums payable under the Agency Loan Agreement and this Promissory Note shall be due and payable in full on April 15, 3033. (c) Developer shall provide Agency for inspection and copying any records, receipts, account books, ledgers, checks, or other documents or other evidence requested by Agency for the purpose of verifying Developer's calculation of Residual Receipts, and shall promptly pay to Agency any further amount due but not paid as a result of any miscalculation by Developer. In not event shall any Agency Loan payment payable attributable to an event of default or acceleration be deferred. 3. Definition of Residual Receipts (a) "Residual Receipts" shall mean, with respect to each calendar year, the amount by which "Gross Receipts," as defined herein, for such calendar year exceed the "Operating Expenses," as defined herein, for that calendar year. (b) With the exception of the "Excluded Items," (as defined below), "Gross Rents" shall mean, with respect to each calendar year or portion thereof, all gross rentals, revenues, payments and consideration, of whatever form or nature, whether direct or indirect, received by or paid to or for the account of or benefit of Developer or any "Affiliate" (as defined below) of Developer or any of their agents or employees, from any and all sources, resulting from or attributable to the ownership, operation, leasing, and occupancy of the Project, determined on the basis of generally accepted accounting principles applied on a consistent basis, and shall include, but not be limited to: (i) Gross rentals paid by occupancy of tenants of the Project under occupancy leases and payments and subsidies of whatever nature, including without limitation any payments, vouchers or subsidies for the United States Department of Housing and Urban Development (HUD) or any other person or organization, received on behalf of tenants under occupancy leases; (ii) Amounts paid to Developer or any Affiliate of Developer on account of "Operating Expenses" (as defined herein), for further disbursement by Developer or such Affiliate to a third party or parties; (iii) Late charges and interest paid on rentals; (iv) Rents and receipts from licenses, concessions, vending machines, coin laundry and similar sources; (v) Other fees, charges or payments not denominated as rental but payable to Developer in connection with the rental of office, retail, storage, or other space in the Project; and I leritage Place Draft A~uuncy Loan Promissory .No~u 2 2.13.02 (vi) Consideration received in whole or in part for the cancellation, modification, extension or renewal of occupancy leases. The term "Affiliate" shall mean any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Developer which, if Developer is a partnership or limited liability company, shall include each of the constituent members or partners, respectively thereof. The term "control" as used in this immediately preceding sentence, means, with respect to a person that is a corporation, the right to the exercise, directly or indirectly, of more 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 management or policies of the controlled person. (c) Notwithstanding Section 3(b), above, Gross Rents shall not include the following items ("Excluded Items"): (i) (ii) (iii) (iv) (v) Security deposits from tenants (except when applied by Developer to rent or other amounts owing by tenants); Capital contributions to Developer by its members, partners or shareholders; Condemnation or insurance proceeds constituting "Net Proceeds"; Funds received from any source actually and directly used for acquisition and/or initial development of the Project; or Receipt by and affiliate of management fees or other bona fide arms- length payments for reasonable and necessary operating expenses associated with the Project. (d) "Operating Expenses" shall mean, with respect to each calendar year or portion thereof, the sum of the following expenses to the extent reasonably paid by Developer during such period: (i) (ii) (iv) Non-elective payments made with respect to financing senior to the Agency Loan; All taxes and assessments imposed upon the Project and required to be paid by Developer but only to the extent such taxes and assessments are paid by Developer during such calendar year; All amount paid or set aside as a reserve by Developer on account of isurance premiums for insurance carried in connection with the Project, provided that is insurance on the Project is maintained as part of a blanket policy covering the Project and other properties, the insurance premium included in this definition shall be the portion of the premium fairly allocable to the Project for the period; Ownership and operating costs incurred by Developer for the management, operation, cleaning, leasing, marketing, maintenance and I lemagc Place Draft .\gcnc.~ Ix~an l'~:'(mussor.,. .Note 3 2.!3.02 (v) repair of the Project (including without limitation, property management fees, and administrative fees), properly chargeable against income according to generally accepted accounting principles, including without limitation wages, payroll and accounting costs, utility and heating charges, material costs, maintenance costs, costs of services, water, and sewer charges, travel expenses allocable to the Project, and license fees and business taxes; provided that the amount included as property management fees and administrative fees in Operating Expenses shall each not exceed Thirty Five Dollars ($35.00) per unit per month, to be increased annually for inflation as noted in the CPI printed in the Wall Street Journal of September 15th for such period all or a portion of which may be paid to Developer and/or and Affiliate of Developer; Eligible Operating Reserves. (e) Notwithstanding any provision of Section 3(d) above, the term "Operating Expenses" shall not include any of the following: (i) (ii) (iii) (iv) (v) Salaries of employees of Developer or Developer's general overhead expenses, or expenses, costs or fees that would be payable in a bona fide arms' length transaction between unrelated parties in the Los Angeles- Orange County area for the same work or services; Any amounts paid directly by tenant of the Project to a third party in connection with expenses with, if incurred by Developer, would be Operating Expenses; Optional or elective payments with respect to any financing senior to the Agency Loan; Any payments with respect to any Project-related loan or financing other than financing senior to the Agency Loan; Expenses, expenditures, and charges of any nature whatsoever arising or incurred by Developer prior to completion of the Project with respect to the development, maintenance and upkeep of the Project, or any portion thereof, including, without limitation, all costs and expenses incurred by Developer in connection with the acquisition of the Property, all predevelopment activities conducted by Developer in connection with the Project, including without limitation, the preparation of all plans and the performance of any tests, studies, investigations or other work, and the construction of the Project and any on-site or off-site work in connection therewith. 4. Terms of Payment. All amounts due and payable under this Agency Loan Promissory Note are payable at the Office of the Agency at the address provided to the Developer by the Agency, or at such other place or places as the Agency may designate to the Developer in writing from time to time. Any payment under this Agency Loan Promissory Note shall be paid in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts and which on the respective dates on which such payments are due shall be in immediately available funds. I lcri',a~. [':,',cc Dral': Agency l.oan Promissory .Nmc 4 2.1'~.02 5. Prepayments. Developer may prepay all or part of the principal balance and accrued interest due under this Agency Loan Pomissory Note without penalty subject to the conditions under the Loan Agreement. 6. Security. This Agency Loan Promissory Note is secured by the Deed of Trust described in paragraph 1 hereof. 7. Waivers. (a) Developer expressly agrees that this Agency Loan Promissory Note or any payment hereunder may be extended from time to time at the Agency's sole discretion and that the Agency may accept security in consideration for any such extension or release any security for this Agency Loan Promissory Note at its sole discretion all without in any way affecting the liability of Developer. (b) No extension of time for payment of this Agency Loan Promissory Note or any installment hereof made by agreement by the Agency with any person now or hereafter liable for payment of this Agency Loan Promissory Note shall operate to release, discharge, modify, change, or affect the original liability of Developer under this Note, either in whole or in part. (c) The obligations or Developer under this Agency Loan Promissory Note shall be absolute and Developer waives any and all rights: (i) to offset, deduct, or withhold any payments or charges due under this Note for any reasons whatsoever; (ii) of presentment for payment, demand, protest and notices of dishonor and protest; and (iii) of diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights and interests in and to properties securing payment of this Note. 8. Attorney Fees and Costs. Developer agrees that if any amounts due under this Agency Loan Promissory Note are not paid when due, to pay in addition, all costs and expenses of collection and reasonable attorney fees paid or incurred in connection with the collection or enforcement of this Agency Loan Promissory Note, whether or not suit is filed. 9. Joint and Several Obligations. This Agency Loan Promissory Note is the joint and several obligation of all makers, sureties, guarantors, and endorsers, and shall be binding upon them and their successors and assigns. I lcnt:.'ge Place Dral't .~.genc.x l.oan Pl'om~ssor.~ .No~c 2 10. Deed of Trust Acceleration. This Agency Loan Promissory Note is secured by an Agency Loan Deed of Trust on the Property (as defined in the Agency Loan Agreement). The Agency Loan Deed of Trust, the Agency Loan Agreement, the DDA, and the Regulatory Agreement provide for acceleration of the payments due under this Agency Loan Promissory Note in the event of default (after expiration of any cure period) under the DDA, Agency Loan Deed of Trust, Agency Loan Agreement, or Regulatory Agreement. 11. Prohibition Against Transfer of Interest. The Developer shall not make any sale, assignment or conveyance, or transfer in any other form, nor any further pledge, encumbrance, or mortgaging of the Project or any part thereof or of any of its interest therein, other than in accordance with the terms of this Agency Loan Promissory Note, the Agency Loan Agreement, the DDA, the Regulatory Agreement, and the Agency Loan Deed of Trust. 12. Default Under Other Loan Documents and Acceleration. All covenants, conditions, and agreements contained in this Agency Loan Promissory Note, the Agency Loan Agreement, the DDA, the Regulatory Agreement, and the Agency Loan Deed of Trust are hereby made a part of this Agency Loan Promissory Note, and the Developer agrees that the unpaid balance of the then principal amount of this Agency Loan Promissory Note, together with all accrued interest thereon and charges owing, shall, at the option of the Agency hereof, become immediately due and payable, and thereafter until paid bear interest at the rate of ten percent (10%) per annum (the "Default Rate"), compounded annually upon the failure of the Developer to make any payment hereunder as and when due (after expiration of any cure period); upon the failure of the Developer to perform or observe any other term or provision of this Agency Loan Note; or upon the occurrence of any event (whether termed default, event of default, or similar term) which (after the expiration of any cure period) under the terms of this Agency Loan promissory Note, the Agency Loan Agreement, the DDA, the Regula- tory Agreement or the Agency Loan Deed of Trust shall entitle the Agency to exercise rights or remedies thereunder, or (b) under the terms of this Agency Loan Promissory Note, the Agency Loan Agreement, the DDA, the Regulatory Agreement, or the Agency Loan Deed of Trust shall entitle the Agency to exercise rights or remedies thereunder or, if this Agency Loan Promissorhy Note, the Agency Loan Agreement, the DDA, the Regulatory Agreement, and the Agency Deed of Trust shall have been fully performed by the Developer, which under the terms thereof would have entitled the Agency hereof to exercise rights or remedies thereunder had such event occurred prior to such full performance. 13. Definitions. Capitalized terms not defined in this Note shall have the same meanings as defined in the Agency Loan Agreement, the terms of which are incorporated into this Note by this reference. 14. Governing Law. This Agency Loan Promissory Note shall be construed in accordance with and be governed by the laws of the State of California. Heritage P!~c~ Dr'afl A~zency Loan Promissor.~ .Note 2.13.02 15. Severability. If any provision of this Agency Loan Promissory Note shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. 16. Time. Time is of the essence in this Agency Loan Promissory Note. 17. No Waiver by the Agency. No waiver of any breach, default, or failure of condition under the terms of this Agency Loan Promissory Note, Agency Loan Agreement, the DDA, the Regulatory Agreement, or the Agency Loan Deed of Trust or the obligations secured thereby shall be implied from any failure of the Agency to take, or any delay by the Agency in taking, action with respect to such breach, default or failure, or any form of previous waiver of any similar or unrelated breach, default or failure; and waiver of any term of this Agency Loan Promissory Note, the Agency Loan Agreement, the DDA, the Regulatory Agreement, or the Agency Loan Deed of Trust or any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. 18. Amendments and Modifications. This Agency Loan Promissory Note may not be changed orally, but only by an amendment in writing signed by Developer and the Agency. Her;',~e P!ace Di'aL't A~¢ncy I.oan I~rom:ssory .Nou: 7 2.~3 02 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. DEVELOPER: TUSTIN HERITAGE PLACE, L.P. By: Its: APPROVED AS TO FORM AGENCY COUNSEL Lois Jeffrey By Dated By: Its: TUSTIN COMMUNITY REDEVELOPMENT AGENCY By: Its: I lcrilagc Place l)~af't Agency I.oan I"romi:;sory .Note 8 2. [ 3.02 Attachment 11 Agency Loan Trust Deed To be provided by Escrow Holder. Attachment 12 Site Plan II Ii · ' ,i :,i. i[l~ ,' ill[ sill i r~ ATTACHMENT 12 SITE PLAN Attachment 13 Regulatory Agreement and Declaration of Restrictive Covenants J. m',.~'~ Jt r Cer. r'a:Pr o~e c:'Jle ma ge P;a ce Sen::)r Pro..~cf.'J-lenla ~.eP;a :e L::)a n Dec j,"r, er ;s ..LAg er cy~ egula;:Dr,,,AG.e .~men: FREE RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: TUSTIN COMMUNITY REDEVELOPMENT AGENCY 300 CENTENNIAL WAY TUSTIN, CALIFORNIA 92780 ATTENTION: ASSISTANT EXECUTIVE DIRECTOR REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS By and Between THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY And THE CITY OF TUSTIN And TUSTIN HERITAGE PLACE, LP REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (the "Regulatory Agreement" or "Agreement") is made and entered into as of , 2002, by and between the City of Tustin, a municipal corporation and public body corporate and politic of the State of California (together with any successor, the "City"), the Tustin Community Redevelopment Agency, a California redevelopment agency (together with any successor, the "Agency"), and Tustin Heritage Place, LP, a California limited partnership (the "Developer"), consisting of Tustin Heritage Place, LLC, a California limited liability company (the "Developer General Partner") and Valley West Affordable Housing Corporation, a California non- profit public benefit corporation (the "Managing General Partner"). RECITALS A. Developer intends to construct a housing project on the Project Site legally described on Exhibit "A" attached hereto and incorporated herein. B. City and the County of Orange (the "County") have entered into that certain Cooperative Agreement dated as of October 1, 1996, pursuant to which the City has agreed with the County in connection with the issuance by the County of $3,600,000 in Tax-Exempt Apartment Development Revenue Bonds (Heritage Place at Tustin) issue D of 2001 and $1,000,00 in Taxable Apartment Development Revenue Bonds (Heritage Place at Tustin) issue D-T of 2001 (collectively the "Bonds"), to finance the acquisition and construction by the Developer of a 54-unit senior citizen rental housing project located at 1101 Sycamore Avenue in the City of Tustin. C. The senior citizen housing project has received City design review approval and conditional use permit as approved by the Planning Commission Resolution No, 3786. A condition of the said design review and conditional use permit is the Developer's agreement to enforce certain senior citizen housing and affordable housing restrictions. D. The Agency has agreed to provide certain financing for the Project subject to the terms, covenants and conditions of that certain Disposition and Development Agreement ("DDA"), Bridge Loan Agreement and Agency Loan Agreement of Heritage Place Tusbn Draft Regu~a[ory Agreement 02,'12'2002 even date herewith between the Agency and the Developer. One of the conditions of the Loans by the Agency to the Developer in the DDA, Bridge Loan Agreement and Agency Loan Agreement is the Developer's agreement to enforce certain affordable housing restrictions. E. In consideration of the City's and Agency's agreement to support the Project pursuant to the Cooperation Agreement, the City's zoning approvals, and the Agency's loan commitments to provide certain financing for the Project, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and Agency and the Developer now desire to enter into this Agreement to set forth their agreement regarding the affordable housing restrictions for the Project and to cause said affordable housing restrictions to run with the land. AGREEMENT NOW, THEREFORE, the City of Tustin and Agency and the Developer hereby agree as follows: 1. Definitions. Unless otherwise defined herein, capitalized terms used in this Regulatory Agreement shall have the respective meanings assigned to them in this Section 1: 1.1 "Act" means Chapter 8 (commencing with Section 33750) of Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended. 1.2 "Adjusted Income" means the adjusted income of a family calculated pursuant to the definition of 'adjusted income' for the Section 8 Housing Assistance Payment Program in the Code of Federal Regulations ("CFR") Part 813, except that 'annual income' shall mean Annual Income as defined in subsection 1.3 below. 1.3 "Annual Income" means the option for calculation of annual income set forth in 24 CFR 92.203 (as designated by the Agency). 1.4 "Area" means the Orange County Primary Metropolitan Statistical Area. 1.5 "Certificate of Continuing Program Compliance" means the Certificate of Continuing Program Compliance and Statistical Report described in Section 4.2 hereof or such other form as may be prescribed by the City and Agency. 1.6 "Code" means the United States Internal Revenue Code of 1986, as amended. Heritage Place Tustin Draft Regulatory Agreement 02/1212002 2 1.7 "Completion Certificate" means the notice of completion of construction filed by Developer, a copy of which shall also be concurrently delivered to the City and Agency by the Developer. 1.8 "Developer" means Tustin Heritage Place, LP and its permitted successors and assigns. 1.9 "Housing Act" means the United States Housing Act of 1937, as amended, or its successor. 1.10 "Income Certification" means the Verification of Income described in Section 3(b) hereof or such other form as may from time to time be provided by the City and Agency to the Developer. 1.11 "Bridge Loan" means the short-term loan made by the Agency to the Developer pursuant to the Bridge Loan Agreement for the purpose of financing the acquisition and predevelopment costs of the Project. 1.12 "Agency Loan" means the long-term loan made by the Agency to the Developer pursuant to the Agency Loan Agreement for the purpose of financing the acquisition and predevelopment costs of the Project. 1.13 "Low Income Tenant" means Senior Citizen households whose Annual Incomes do not exceed sixty percent (60%) of the median income for the area as determined by the United States Department of Housing and Urban Development ("HUD") with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than sixty percent (60%) of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or Iow family incomes. If the occupant of a unit is a student (as defined under Section 131(c) of the Code), not entitled to file a return under Section 6013 of the Code, said occupant shall not qualify as a Low Income Ten- ant. The determination of a tenant's status as a Low Income Tenant shall be made by the Developer upon initial occupancy of a unit in the Project by such tenant and annually thereafter, on the basis of an Income Certification executed by the tenant. 1.14 "Low Income Units" means the thirty six (36) units in the Project required to be rented to, or held available for occupancy by Low Income Tenants pursuant to Section 3 and Exhibit "B" attached hereto and incorporated herein. 1.15 "Median Income for the Area" means the median income for the Area as most recently determined by the Secretary of the Treasury pursuant to Section 142(d)(2)(B) of the Code. 1.16 "Project" means the Project Facilities and the Project Site. Heritage Place Tustin Draft Regulatory Agreement 0Z'12/2002 1.17 "Project Facilities" means the structures and related buildings and other improvements constructed or to be constructed on the Project Site and all fixtures and other property owned by the Developer and located on, or used in connection with, such buildings, structures and other improvements constituting the Project. 1.18 "Project Site" means the real property legally described on Exhibit "A", which is attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto appertaining. 1.19 "Qualified Project Period" means the period beginning on the first day on which at least 10% of the residential units in the Project are first occupied and ending on the date which is fifty-five (55) years after the date on which at least 50% of the residential units in the Project are first occupied. 1.20 "Regulations" means the Income Tax Regulations promulgated or proposed by the Department of the Treasury pursuant to the Code from time to time. 1.21 "Senior Citizen" means persons age 62 and higher. 1.22 "Very Low Income Tenant" means very Iow-income Senior Citizen households whose annual incomes do not exceed fifty percent (50%) of the median family income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than fifty percent (50%) of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or Iow family incomes. 1.23 "Very Low Income Units" means the seventeen (17) units in the Project required to be rented to, or held available for occupancy by Very Low Income Tenants pursuant to Section 3 and Exhibit "B" attached hereto and incorporated herein. 2. Development of the Site 2.1 Permits and Governmental Approvals. As part of the proposed construction of the Project, the Developer agrees to obtain all required City approvals and building permits in accordance with the conditions of the Design Review application approvals prior to any construction requiring a building permit occurring for the Project in order to conform to the City of Tustin Municipal Code requirements. 2.2 Local, State and Federal Law. The Developer shall carry out the construction of the Project in conformity with all applicable federal, state and local laws, rules and regulations and all applicable federal and state labor rules, Heritage Place Tustin Draft Regulatory Agreement 02/12'2002 4 including but not limited to, an applicable prevailing wage requirements under California Senate Bill 975 (Chapter 938 of the Government Code) effective January 1,2002. 2.3 Inspections. 2.3.1 During the construction of the Project, the City and Agency shall have the right to inspect all improvements thereto, including but not limited to, dwelling unit interiors and the grounds of the Project for City and/or the State of California (the "State") building, housing and fire code and safety violations. Developer shall correct any such violations within a reasonable period of time after receiving written notice of a violation of any building, housing, fire or safety code applicable to the Project. 2.3.2 Upon completion of the construction work, the City and Agency shall have the right to conduct annual inspections of the Project, including the dwelling unit interiors and the grounds of the Project for City and/or State building, housing and fire code and safety and occupancy violations. All rental agreements and contracts wit'h the tenants in the Project shall include the right to inspect the interior of the dwelling units upon forty-eight (48) hours notice. The City agrees to use its best efforts to coordinate annual inspections in conjunction with annual inspections by other agencies. 2.4 Time Limit for Construction. All improvements on the Project must be completed to the satisfaction of the City and Agency and in compliance with the City code, and applicable ordinances, and public works specifications, as applicable, and in accordance with the DDA Schedule of Performance (Attachment 4). 3. Agency Requirements as to Low and Very Low Income Units. The Developer hereby represents, warrants and covenants as follows: 3.1 Use of Low and Very Income Units. Developer shall devote the Project for use as a Senior Citizen independent living rental housing project with the Low and Very Low Income Units to be rented to and occupied only by Senior Citizen Low and Very Low Income Tenants subject to the occupancy restrictions contained in this Section 2 and in the DDA, Bridge Loan Agreement and Agency Loan Agreement. During the Qualified Project Period, occupancy and rental rates for the Low and Very Low Income Units shall be restricted in accordance with Exhibit "B" attached hereto and incorporated herein. 3.2 Notifying Low and Very Low Income Tenants. The Low Income Units shall be rented to eligible and qualified Senior Citizen Low and Very Low Income Tenants in accordance with the following terms: Hedtage Place Tustin Draft Regulatory Agreement 02'i 2;2002 5 3.2.1 Developer shall create and maintain an "interest list" which includes all those potential Senior Citizen tenants who have expressed an interest in leasing a unit within the Project. The interest list shall clearly designate whether such potential Senior Citizen tenant will be receiving rental assistance under the U.S. Department of Housing and Urban Development (HUD) Section 8 program. Should multiple tenants be equally eligible and qualified for a Low or Very Low Income Unit, Developer shall rent available units to such eligible tenants on a first-come, first-served, basis. 3.2.2 Low and Very Low Income Units that fail to be leased after the thirty (30) day initial leasing period that occurs prior to issuance of the certificate of occupancy, or that become available as a result of tenant vacation where Developer has at least seven (7) days' prior notice of such anticipated vacation, shall be rented to new eligible and qualified Senior Citizen tenants in accordance with the following procedure: 3.2.2.1 Developer shall make a reasonable effort to contact eligible and qualified prospective Senior Citizen tenants in the order of priority of the interest list as set forth in 3.2.1 above; 3.2.2.2 Each such eligible and qualified prospective Senior Citizen tenant(s) shall have three (3) business days to notify Developer of the tenant's intent to accept the unit, and must thereafter execute a lease for the unit within seven (7) days of such acceptance; 3.2.2.3 Failure of the prospective Senior Citizen tenant to timely accept the unit or thereafter execute a lease for the unit shall be deemed rejection of the unit. 3.2.3 Low and Very Low Income Units that become available as a result of a Tenant vacation, or which remain vacant after Developer has fully complied with the procedure set forth in subparagraphs 3.2.2.1 through 3.2.2.3, inclusive of the preceding paragraph, may be rented to any eligible Senior Citizen Low or Very Low Income Tenant. 3.2.4 Developer shall use its best efforts to fill vacancies of Low and Very Low Income Units as soon as possible following the date the Low or Very Low Income Unit becomes available. Developer shall notify the appropriate housing authorities any Low or Very Low Income Unit remaining vacant after the initial leasing period or for more than thirty (30) days. 3.2.5 Low and Very Low Income Tenants who occupy Low and Very Low Income Units at the expiration of the Qualified Project Period and who qualify as Low or Very Low Income Tenants on such date shall be permitted to continue to occupy those Low and Very Low Income Units for a period of three (3) years, beginning on the first day after the expiration of the Qualified Project Period; provided, however, that annual rent increases during such three (3) year period Heritage Place Tustin Draft Regu;atory Agreement 02/12/2002 6 shall not excegd an amount equal to the existing rent for such unit plus an amount equal to the greater of (i) 5 percent or (ii) the percentage increase in Median Income for the Area. As any of these Low and Very Low Income Units become unoccupied, such units shall not be subject to the restrictions of this subparagraph 3.2.5. 3.2.6 In lieu of compliance with the conditions set forth in 3.2.5 above, the Developer may elect to provide the Low and Very Low Income Tenants residing in the Low and Very Low Income Units at the expiration of the Qualified Project Period relocation benefits subject to the determination by the Agency that such benefits may be provided in accordance with California law. The Agency may rely upon advice of legal counsel in making such determination, the cost of which legal advice and any necessary legal opinion shall be borne by the Developer. 3.2.7 The Developer agrees to provide to Low and Very Low Income Tenants notice of all rent increases pursuant to applicable California law. 3.3 Rental Rates. Rental rates for all Low and Very Low Income Units to which this Agreement is applicable shall not exceed the higher of following: 3.3.1 The fair market rent for existing housing for comparable units in the area as established by HUD under Section 888.111 of Title 24 of the Code of Federal Regulations ("CFR") less the monthly allowance for the utilities and services (excluding telephone) to be paid by the tenant; or 3.3.2 Either of the following, at the Developer's option: (i) 30 percent of the Senior Citizen household's adjusted monthly income as determined by HUD. If the unit receives Federal or State project-based rental subsidy and Low or Very Low Income Tenant pays as a contribution toward rent no more than 30% of the Senior Citizen household's Adjusted Income, then the maximum rent (i.e., tenant contribution plus project-based rental subsidy) is the rent allowable under the Federal or State project-based rental subsidy program. To obtain the maximum monthly rent that may be charged for a unit that is subject to this limitation, the Developer shall multiply the annual Adjusted Income of the Senior Citizen tenant household by 30 percent and divide by 12 and, if applicable, subtract a monthly allowance for any utilities and services (excluding telephone) to be paid by the tenant; or (ii) 30 percent of the income of a Senior Citizen household whose income equals 50 percent or less of the median income for the area, as determined by HUD, with adjustment for smaller and larger families, except that HUD may establish income ceilings higher or lower than 50 percent of the median for the area on the basis of HUD's findings that such variations are necessary because of prevailing levels of construction Hed~age Place Tustin Draft, Regulatory Agreement 02/12'2002 7 costs or fair market rents, or unusually high or Iow family incomes. In determining the maximum monthly rent that may be charged for a Unit that is subject to this limitation, Developer shall subtract a monthly allowance for any utilities and services (excluding telephone) to be paid by the tenant. HUD provides average occupancy per unit and adjusted income assumptions to be used in calculating the maximum rent allowed under this subparagraph 3.3.2(ii). 3.4 Voucher Holders. No Low or Very Low Income Unit shall be refused' for leasing to a holder of a certificate or voucher under 24 CFR Part 982 Section 8 Rental Certificate Program or Section 8 Rental Voucher Program or to the holder of a comparable document evidencing participation in a HOME tenant-based assistance program because of the status of the prospective tenant as a holder of such certificate of family participation, rental voucher, or comparable HOME tenant-based assistance document. 3.5 Rent Schedule and Utility Allowances. The City and Agency shall annually review and approve rents proposed by the Developer for the Low and Very Low Income Units to determine that the Developer has properly applied the rental restrictions contained in this Section 3 and shall provide the Developer with a schedule establishing the monthly allowances for utilities and services to be paid by the tenants of the units. The Developer shall reexamine the income of each Senior Citizen tenant household living in the Low and Very Low Income Units at least annually. The maximum monthly rent shall be recalculated by the Developer and reviewed and approved by the City and Agency annually, and may change as changes in the applicable gross rent amounts, the income adjustments, or the monthly allowance for utilities and services warrant. The Developer shall not impose on a tenant an increase in rent approved by the Agency if that increase is not permitted to be imposed under the lease between Developer and the tenant. Developer shall provide not less than 30 days prior written notice to affected tenants before implementing any increase in rents. Rents shall not be increased more than one time a year. 3.6 Increases in Income. 3.6.1 If, as a result of the annual reexamination of incomes required pursuant to 3.5 above, the Developer determines that a Senior Citizen household that qualified as a Very Low Income Tenant for purposes of paragraph 3.3 above, no longer is a Very Low Income Tenant but qualifies as a Low Income Tenant, then the Developer may charge the household rent which is the lesser of: (i) 30% of the Adjusted Income of a Senior Citizen household earning 60% of the median income of the area, as determined by HUD, with adjustments for unit size; or (ii) the rent described in paragraph 3.3 above, and the Developer shall rent the next available Unit to a Very Low Income Tenant at the rent permitted under paragraph 3.3. Heritage Piace Tustin Draft. Regulatory Agreement 02.'12,'2002 3.6.2 If, as a result of the annual reexamination of income required pursuant to paragraph 3.5 above, the Developer determines that a Senior Citizen household no longer qualifies as a Low Income Tenant, Developer shall require that household to pay rent that is the lesser of the amount payable by the tenant under state or local law or thirty percent (30%) of the Senior Citizen household's Adjusted Income, and shall rent the next available Unit to a Very Low Income Tenant at the rent permitted under 3.3 above; provided, however, if a Unit has been allocated Low and Very Low Income housing tax credits pursuant to 26 United States Code ("USC") Section 42, the Developer shall not be required by this paragraph to increase the rent of the Unit above the approved tax credit rent for that Unit. 3.7 Minimum Rents. Notwithstanding the other provisions of this Section 3, Developer shall not be required to charge a rent for a Low or Very Low Income Unit that would be lower than the maximum rent Developer would have been permitted to charge for the Unit had the determination of maximum rent been made on the date the City, Agency and Developer entered into the Agreement. 3.8 Tenant Protections 3.8.1 Lease The Lease between Developer and a Senior Citizen tenant must be for not less than one year, unless by mutual agreement between the tenant and the Developer. 3.8.2 Prohibited Lease Terms. The lease between the Developer and tenant may not contain any of the following provisions: 3.8.2.1 Agreement to be sued. Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the Developer in a lawsuit brought in connection with the lease. 3.8.2.2 Treatment of property. Agreement by the tenant that the Developer may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the Unit after the tenant has moved out of the Unit. The Developer may dispose of this personal property in accordance with applicable state law. 3.8.2.3 Excusing owner from responsibility. Agreement by the tenant not to hold the Developer or its agents legally responsible for any action or failure to act, whether intentional or negligent. 3.8.2.4 Waiver of notice. Agreement of the tenant that the Developer may evict the tenant or household members without notice to the tenant. Heritage Place Tustin Draft Regulatory Agreement 07./12/2002 3.8.2.5 Waiver of legal proceedings. Agreement by the tenant that the Developer may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties. 3.8.2.5 Waiver of a jury trial. Agreement by the tenant to waive any right to a trial by jury. 3.8.2.6 Waiver of right to appeal court decision. Agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease. 3.8.2.7 Tenant chargeable with cost of legal actions regardless of outcome. Agreement by the tenant to pay attorney's fees or other legal costs even if the tenant wins in a court proceeding by the Developer against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. 3.9 Termination of Tenancy. Developer may not terminate the tenancy or refuse to renew the lease of a Senior Citizen tenant except for serious or repeated violation of the terms and conditions of the lease; for violation of applicable federal, state, or local law; for completion of the transitional housing tenancy period (if the housing is transitional); or for other good cause. Any termination or refusal to renew must be preceded by not less than thirty (30) days by the Developer's service upon the tenant of a written notice specifying the grounds for the action. 3.10 Nondiscrimination Covenant. By acceptance hereof, the Developer agrees, for itself, its successors and assigns, to refrain from restricting the rental, or lease of the Project on the basis of reach, color, creed, religion, ancestry, sex, marital status, national origin or age (except as provided for senior citizen housing projects under the law) of any person. All leases or contracts shall contain or be subject to substantially the following nondiscrimination or non- segregation clauses: "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 them, and this lease or sublease is made and accepted upon and subject to the following conditions: That there be no discrimination against or segregation of, any person or group of persons, on account of race, color creed, religion handicap, natural origin, sex, sexual orientation, marital status, age (except as provided for senior citizen housing projects under the law) or ancestry in the leasing, subleasing, transferring, use or enjoyment of the land herein lease or subleased, nor shall the lessee himself or herself, or any persons 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, subleases, subtenants or vends in the land herein leased." Heritage Place Tustin Drab Regulatory Agreement 10 02~12/2002 4. Low and Very Low Income Senior Citizen Tenants; Records and Reports. The Developer hereby represents, warrants and covenants as follows: 4.1 Within 30 days after the date on which at least ten percent (10%) of the dwelling units in the Project are first occupied, the Developer shall deliver a written notice, in the form provided by City and Agency or otherwise approved by Agency, to the City and Agency, specifying such date. Within 30 days after the date on which 50 percent of the dwelling units in the Project are occupied, the Developer shall execute and deliver to the City and Agency a copy of a certificate identifying said date and the beginning date and earliest ending date of the Qualified Project Period, which certificate shall be in the form provided by Agency or otherwise approved by City and Agency. The Developer shall record a copy of such certificate in the Office of the County Recorder of the County of Orange, California. 4.2 The Developer will obtain, complete and maintain on file Verifications of Income and Senior Citizen age qualification, in the form provided by City and Agency or otherwise approved by Agency, from each Low or Very Low Income Tenant, including (i) a Verification of Income and Age dated immediately prior to the initial occupancy of such Low or Very Low Income Tenant and (ii) thereafter, annual Verifications of Income and Age which must be dated as of April 15 of each year, or such other date as may be mutually agreed upon by the City and Agency, and the Developer, and in no event less than once in every twelve- month period following each Low or Very Low Income Tenants' occupancy of a unit in the Project. The Developer will obtain such additional information as may be required in the future by the State of California, and by the City and Agency. A copy of the most recent Verification of Income and Senior Citizen age qualification for Low and Very Low Income Tenants commencing or continuing occupation of a Low or Very Low Income Unit (and not previously filed) shall be attached to the Certificate of Continuing Program Compliance, in the form provided by City and Agency or otherwise approved by Agency which is to be filed with the City and Agency no later than the fifteenth day of each month following the receipt by the City and Agency of the Completion Certificate to and including the month in which such report indicates that twenty percent (20%) of the units in the Project are occupied by Low and Very Low Income Tenants and, thereafter, no later than the fifteenth day of the first month of each calendar quarter until the end of the Qualified Project Period. The Developer shall make a diligent and good-faith effort to verify that the income and age qualification information provided by an applicant in the Verification of Income and Age is accurate by taking one or more of the following steps, as required by the Agency, as a part of the verification process: (1) obtain copy of Birth Certificate or other evidence of the tenant's qualifying age acceptable to Agency (2) obtain pay stubs for the most recent one-month period; (3) obtain income tax returns for the most recent two tax years; (4) conduct a consumer credit search; (5) obtain an income verification from the applicant's current employer; (6) obtain an income Heritage Place Tustin Draft Rogulatory Agreement 1 1 02/1~,'2002 verification from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies; or (7) if the applicant is unemployed, does not have income tax returns or is otherwise unable to provide other forms of verification as required above, obtain another form of independent verification satisfactory to the Agency. 4.3 The Developer will maintain complete and accurate records pertaining to the Low and Very Low Income Units and will permit any duly authorized representative of the City and Agency to inspect the books and records of the Developer pertaining to the Project, including those records pertaining to the occupancy of the Low and Very Low Income Units. 4.4 The Developer will prepare and submit to the City and Agency later than the fifteenth day of the first month of each calendar quarter until the end of the Qualified Project Period, a Certificate of Continuing Program Compliance executed by the Developer with the following information: 4.4.1 the percentage of the dwelling units of the Project which were occupied or deemed occupied, pursuant to paragraph 4.2 above, by Senior Citizen Low and Very Low Income Tenants during such period and such other tenant information as may be reasonably required as stated on the form of the Certificate of Continuing Program Compliance acceptable to the City and Agency; and 4.4.2 that either (i) no unremedied default has occurred under this Agreement or (ii) a default has occurred, in which event the certificate shall describe the nature of the default in detail and set forth the measures being taken by the Developer to remedy such defaults. 4.5 Each lease or rental agreement pertaining to a Low or Very Low Income Unit shall contain a provision to the effect that the Developer has relied on the Income Certification, age qualification and supporting information supplied by the Senior Citizen Low or Very Low Income Tenant in determining qualification for occupancy of the Low or Very Low Income Unit and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease or rental agreement. Each such lease or rental agreement shall also provide (and shall so disclose to the tenant) that the tenant's income is subject to annual certification in accordance with Section 3.2 hereof and that, if upon any such certification such tenant's Adjusted Income the then applicable income limit for a Low or Very Low Income Tenant, such tenant shall cease to qualify as a Low or Very Low Income Tenant, and, as a consequence, said Tenant's lease shall be subject to termination on such prior notice as the Agency deems reasonable. 5. Consideration. The Agency has made the Bridge Loan and Agency Loan for the purpose, among others, of inducing the Developer to provide affordable Heritage Place Tustin Draft Regulatory Agreement 02'12~'2002 12 Senior Citizen housing in the City of Tustin. In consideration of the loans to the Developer, the Developer has entered into this Agreement and has agreed to restrict the Low and Very Low Income Units of the Project for Senior Citizen tenants on the terms and conditions set forth herein. 6. Sale or Transfer of the Project. The Developer hereby covenants and agrees not to voluntarily sell, transfer or otherwise dispose of the Project, or any portion thereof (other than for individual tenant use as contemplated hereunder), without obtaining the prior written consent of the City and Agency. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the Project in violation of this Section 6 ~hall be null, void and without effect, shall cause a reversion of title to the Developer and shall be ineffective to relieve the Developer of its obligations under this Agreement. Any transfer of the Project to any entity, whether or not affiliated with the Developer, shall be subject to the provisions of this Section 6. 7. Term. This Agreement and all and each of the provisions hereof shall become effective upon its execution and delivery, shall remain in full force and effect for the period provided herein and, shall terminate in its entirety at the end of three years following the expiration of the Qualified Project Period, it being expressly agreed and understood that the provisions of the DDA and this Agreement are intended to survive the discharge of the Bridge Loan and Agency Loans, and the termination of the Bridge Loan and Agency Loan Agreements. 8. Covenants to Run with the Land. 8.1 All conditions, covenants, and restrictions contained in the DDA and this Agreement shall be covenants running with the land, and shall, in any event, and without regard to technical classification or designation, legal or otherwise, be, to the fullest extent permitted by law and equity, binding for the benefit and in favor or, and enforceable by City of Tustin, its successors and assigns, and the Agency, its successors and assigns, against Developer, its successors and assigns, to or of the Project or any portion thereof or any interest therein, and any party in possession or occupancy of said Project or portion thereof. 8.2 In amplification and not in restriction of the provisions set forth hereinabove, it is intended and agreed that the City and Agency shall be deemed a beneficiary(les) of the agreements and covenants provided hereinabove both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of the City and Agency and such covenants shall run in favor of City and Agency for the entire period during which such covenants shall be in force and effect, without regard to whether the City or Agency is or remains an owner of any land or interest therein to which such covenants relate. The City and Agency shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and Heritage Piace Tustin Draft Regulatory Agreement 02,'12/2OO2 13 remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 8.3 The City and its successors and assigns, the Agency and its successors and assigns, and Developer and the permitted successors and assigns of Developer in and to all or any part of the fee title to the Project, shall jointly have the right upon written agreement signed by both parties to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, easements, or restrictions contained in this Agreement without the consent of any tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust, or any other person or entity having any interest less than a fee in the Project. The covenants contained in this Agreement, without regard to technical classification shall not benefit or be enforceable by any owner of any other real property within or outside the Project, or any person or entity having any interest in any other such realty. 8.4 No breach of any of the provisions of this Agreement shall impair, defeat or render invalid the lien of any mortgage, deed of trust or like encumbrance made in good faith and for value encumbering the Project or any portion thereof. 9. Burden and Benefit. The City, Agency and the Developer hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the Project in that the Developer's legal interest in the Project is rendered less valuable thereby. The City, Agency and the Developer hereby further declare their understanding and intent that the benefit of such covenants touching and concerning the land is the enhancement and increased enjoyment and use of the Project by Senior Citizen Low and Very Low Income Tenants, the intended beneficiaries of such covenants, reservations and restrictions, and by the furthering of public purposes for which the Loan was made. 10. Uniformity; Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan for the use, development and improvement of the Project Site. 11. Default; Enforcement. Developer shall be in default under this Agreement if an Event of Default occurs under the Bridge Loan Agreement and Agency Loan Agreement (as such terms are defined in the Loan Agreements). Following the declaration of a default hereunder by the City or Agency, the City or Agency may pursue all of its rights and remedies set forth in the Bridge Loan Agreement and Agency Loan Agreement, or in the Deeds of Trust as such term is defined in the Loan Agreements) or otherwise available at law, in equity or by statute and all of the City and Agency's rights and remedies shall be cumulative including, but not limited to, the following: 11.1 If the default or failure occurs within the first ten years after the earlier of ~ledtage Place Tustin Draft Regulatory Agreement 02/12~2OO2 14 the date the Units are first occupied or a certificate of occupancy is issued for the Units by the appropriate agency, the Agency shall be entitled to receive payment from the Developer equal to the financial assistance the Agency provided to Developer under the Loan Agreements plus interest at the rate of ten percent (10%) per annum from the date such assistance was provided until repaid; and 11.2 If the default or failure occurs within the first ten years after the earlier of the date the Units are first occupied or a certificate of occupancy is issued for the Units, the Agency shall have the right to purchase the Property at the fair market value at the time the Agency exercises such right less the amount of assistance the Agency provided to Developer. If the Agency and Developer cannot agree on the fair market value, that value shall be determined by a qualified independent appraiser selected by the Agency and approved by the Developer which approval shall not be unreasonably withheld. 11.3 For the purpose of this Section 11, the Developer's default or failure under a deed of trust or mortgage to which this Agreement is subordinate shall be deemed a breach or default under this Agreement and the City and Agency shall not be required to give notice of such default nor an opportunity to cure such default beyond the opportunity to cure given under the deed of trust or mortgage, (if any), provided that the period to cure shall be the same (including extensions granted by the lender) allowed under the deed of trust or mortgage (if any). 12. Recording and Filing. The Developer shall cause this Agreement, and all amendments and supplements hereto and thereto, to be recorded and filed in the real property records of the County of Orange and in such other places as the City and Agency may reasonably request. The Developer shall pay all fees and charges incurred in connection with any such recording. 13. Governing Law. This Agreement shall be governed by the laws of the State of California. 14. Amendments. This Agreement shall be amended only by a written instrument executed by the parties hereto, or their successors in title and duly recorded in the real property records of the County of Orange. 15. Notices. 15.1 Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: Heritage Place Tustin Draft Regulatory Agreement 02/12/2OO2 15 Developer: Tustin Heritage Place, LP 1740 E. Garry, Suite 105 Santa Aha, CA 92705 Attn: Roger Davila City and Agency: City of Tustin and Tustin Community Redevelopment Agency 300 Centennial Way Tustin, CA 92780 Attn: William A. Huston, City Manager Notice shall be deemed given three (3) business days after the date of mailing. 15.2 Agency shall endeavor to provide a courtesy copy of any notice sent to Developer to the following address, however, failure to do so shall not affect the validity of any otherwise proper, timely delivered notice to Developer: Valley West Affordable Housing Corporation Attn:.. 16. Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. Heritage Place Tustin Draft, Regulatory Agreement 02~12,'2002 16 IN WITNESS WHEREOF, the City of Tustin, Tustin Community Redevelopment Agency and the Developer have executed this Regulatory Agreement and Declaration of Restrictive Covenants by duly authorized representatives, all as of the date first written above. CITY OF TUSTIN By: Jeffery M. Thomas, Mayor TUSTIN COMMUNITY REDEVELOPMENT AGENCY By: Jeffery M. Thomas, Chairman APPROVED AS TO FORM Lois Jeffrey CITY ATTORNEY TUSTIN, CALIFORNIA By: Dated: DEVELOPER: TUSTIN HERITAGE PLACE, LP, a California limited partnership By: DEVELOPER GENERAL PARTNER: TUSTIN HERITAGE PLACE, LLC, a California limited liability company By: ASL TUSTIN, INC., a California corporation By: Roger Davila, Vice President By: MANAGING GENERAL PARTNER VALLEY WEST AFFORDABLE HOUSING CORPORATION, a California non-profit public benefit corporation. By: Heritage Place Tustin Draft, Regulatory Agreement 02'12,'2OO2 17 EXHIBIT A LEGAL DESCRIPTION ALL THAT CERTABN LAND SITUATED ]ZN THE STATE OF CALIFORNIA, COLrN~' OF ORANGE, C_alTY OF TUSTIN, AND IS DESCRIBED AS FOLLOWS: THE SOUTHEASTERLY 264.00 FEET OF THE SOUTHWESTERLY ONE-HALF OF THE NORTHWESTERLY ONE-HALF OF THE SOUTHWESTERLY ONE-HALF OF LOT 49, AS SHO~ :~ ON PLAT NO. I OF THE IL&NCHOS SANTIAGO DE SANTA ANA AND SAN JOAQUIN, RECORDED IN BOOK 5, PAGE 7, MISCELLANrEOUS RECORDS OF LOS ANGELES COL.'N-[~', CALIFORNIA. MORE PARTIC%'LARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST EASTERLY CORNER OF LOT 2 OF RECORD OF SURVEY, IN THE CII'~' OF TUSTLN, COUNTY OF ORANGE, STATE OF CALIFOI~\"IJk, FILED IN BOOK 71, PAGE 24 OF RECORD OF SURVEY. RECORDS OF ORANGE COb.~T¥; THENCE SOLTrH 39=59'46'' WEST 330.10 FEET TO A POINT ON THE CENTERLIN'E OF SYCAMORE AVENUE AS SHO~.,~ ON SAID MAP; THENCE ALONG SAID CENTERLINE NORTH 50°01 '15" WEST 264.00 FEET; THENCE NORTH 39°59'46.. EA ST 330.12 FEET; THENCE SOUTH 50°01 '03" EAST 264.00 FEET TO SAID AFOREMENTIONED MOST EASTERLY CORNER OF LOT 2 OF RECORD OF SURVEY AND POINT OF BEGINNING. SAID LAND IS INCLUDED WITHIN THE MAPS FILED IN BOOK 69, PAGE 1 AND IN BOOK 71, PAGE 24, BOTH OF RECORD OF SURVEYS, IN THE OFFICE OF THE COL.rNTY RECORDER OF SAID COL.n'4TY. Heritage Place Tustin Draft Regulatory Agreement 0Z.'12,'2002 18 EXHIBIT B LOW AND VERY LOW INCOME TENANT/UNIT MIX TUSTIN, CALIFORNIA Attachment 14 Intentionally Omitted Attachment 15 Certificate of Insurance