Loading...
HomeMy WebLinkAboutRDA 03 LAGUNA GARDENS 09-03-96RDA NO. 9-3-96 DATE: SEPTEMBER 3, 1996 Inter-Corn TO: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR FROM: REDEVELOPMENT AGENCY STAFF SUBJEC~ LAGUNA GARDENS DISPOSITION AND DEVELOPMENT AGREEMENT SUMMAR: the proposed disposition and development agreement would prvide Agency assistance for the acquisition, rehabilitation and conversion of the Laguna Gardens Apartment complex to 64-owner occupied condominium units. RECOMMENDATION It is recommended that the Redevelopment Agency take the following actions: I · Adopt Resolution No. RDA 96-4 making a finding that the Laguna Gardens project is of benefit to the Town Center Project Area. 2. Adopt Resolution No. RDA 96-3 certifying the Final Negative Declaration for adoption of the Disposition and Development Agreement; and 3. Approve the Disposition and Development Agreement by. and between the Tustin Community Redevelopment Agency and Laguna Gardens Associates, LLC. 4. Appropriate $1,174,000 from the Town Center Redevelopment Project Area Housing Set-Aside fund for Developer assistance for the subject project and $500,000 for the Agency's relocation obligation under California Redevelopment Law. FISCAL IMPACTS Pursuant to the provisions of the Disposition and Development Agreement, a total maximum Agency assistance of $1,174,000 is proposed from the Town Center Redevelopment Project Area Housing Set-Aside fund. The Agency will also be responsible for approximately $500,000 in relocation costs. City Council Report Laguna Gardens Disposition and Development Agreement September 3, 1996 Page 2 BACKGROUND The Redevelopment Agency at their meeting on April 1, 1996, authorized staff to enter into an Exclusive Right to Negotiate with Charles H. Fry with the intent of entering into a Disposition and Development Agreement for his acquisition, rehabilitation and conversion of the Laguna Gardens Apartment complex to condominiums. The subject property is located at 1361 E1 Camino Real and consists of 64, two bedroom apartments.· The proposed project is outside of the Town Center Project Area, separated from it' only by Tusti~ High School. California Redevelopmen[ Law (CRL) requires the use of any Project Area tax increment to be used only within the'project boundaries. However, Section 33445 of CRL provides an exception when the Agency makes a finding that the use of these funds outside of the Project Area constitutes a. benefit to the Project Area and there are no other funds available for said project. Said funding must be declared through adoption of a resolution adopted by both the Agency and the City Council. One of the primary goals .of the Redevelopment Agency is to eliminate blight in residential areas. The Agency identified methods to accomplish this when it adopted the Comprehensive Affordable Housing Strategy in November, 1993. A major element of this strategy was to encourage homeownership in order to stabilize neighborhoods and give the residents a vested interest in their maintenance. Since blight within residential neighborhoods does not stop at the project area boundaries, it is necessary to utilize tax increment housing set-aside funds outside of the project area. The physical rehabilitation and conversion of Laguna Gardens to owner-occupied affordable units will benefit the Town Center Project Area which is immediately to the west of the project site. E1 Camino Real'~is also a key entry to the Town Center Project Area and the physical streetscape condition of residential properties along E1 Camino Real will have a positive impact on the image of the Town.Center Project Area. A resolution is presented for the City Council and Agency's consideration making the required legal findings of benefit. DISCUSSION The attached Development and Disposition Agreement ~DDA) memorializes the proposed financial obligations of the Agency and developer. The purpose of the Agency's assistance to the developer is to further the goals of the Town Center Project Area by City Council Report Laguna Gardens Disposition and Development Agreement September 3, 1996 Page 3 financially assisting the developer in the acquisition of the site; the rehabilitation of the 64 apartment units and their conversion to owner-occupied condominium units, and the maintenance of affordability for the life of the Redevelopment Plan of 14 dwelling units. The' total amount of Agency assistance proposed to the developer in the DDA is $1,174,000. All assistance would be provided from Housing Set-Aside funds accumulated in the Town Project Area. In addition, the Agency's action on the DDA would result in additional relocation costs to the Agency pursuant to California Redevelopment Law estimated at approximately $500,000. A descrip%ion of the business points in the DDA can be summarized as follows: Agency will lend $1,174,000 to the developer based on a permanent'subsidy amount of $489,000 and a loan of $685,000. The permanent subsidy would be forgiven once the project has been completed and all DDA obligations met. Permanent subsidy funds and $374,000 in loan funds would be deposited in escrow to provide assistance to the developer in acquisition of the site. The remaining portion of loan funds ($311,000) would be disbursed by the Agency as rehabilitation work is completed on a dollar for dollar basis as construction loan funds are disbursed by the developer,s permanent construction lender. The $685,000 loan would have no interest for the first 24 months. Thereafter, the loan will bear interest at a rate of 7% per annum with the loan due and payable in three years. As structured, the Agency loan would be repaid as units are sold, commencing with the first escrow closing for a unit sold, with the developer paying 90% of net sales proceeds to retire the construction lender and 10% to the Agency. After the construction lender has been repaid, the developer will pay the Agency 100% of net sales proceeds.of all units sold. Developer is required to show a minimum equity level at all times throughout completion of the project of $200,000. This is in addition to $150,000 worth of equity from any cash flow the Developer realizes from operating the apartments until actual units are converted and sold as condominiums. Equity will be documented by segregated funds or documentation of unreimbursed expenses. City Council Report Laguna Gardens Disposition and Development Agreement September 3, 1996 Page 4 The developer's rehabilitation budget is now projected at $1,132,674. The DDA allows the developer to keep the first $100,000 of any savings in this established budget (this basically allows the developer to keep his .contingency if actual costs run low). Fifty percent of any additional savings (if actual costs are below this $100,000 savings "threshol'd'') will accrue to the Agency, ~directly reducing the permanent subsidy. Developer will be required to maintain units in the project for four (4) very low~, five (5) low- and five (5) moderate- income households in compliance with California Community Redevelopment Law. Each of these units will have deed restrictions recorded against them requiring the units to remain affordable through the life of the Redevelopment Plan, which will terminate on November 23, 2016. California Redevelopment Law requires that such deed restrictions guarantee the affordability of assisted unit for the longest period feasible. If the original purchase of one affordable unit decides to sell the unit, they must sell it to a household which meets the appropriate income level, moderate, lower or low, respectively. State law does allow an exemption to the required resale to a low-to-moderate income household. The DDA also includes this exemption. Under this exemption, . if the unit is sold to someone other than a. qualified household, the proposed second trust deed must be paid in full and the Agency must also receive its share of the equity in the unit. The equity is based on the ratio of the Agency second trust deed to the total cost of the unit when originally purchased. The Agency will assume the lead on relocation activities capping its obligations without any developer contribution up to a total of $400,000 to include actual benefit, payments/moving expenses and cost of Agency's consultant. After the $400,000 threshold is reached, developer would assume a relocation exposure not to exceed $100,000, with the Agency assuming all costs over $500,000. It is currently estimated by the Agency's Relocation Consultant that relocation costs could approach $600,000. City Council Report Laguna Gardens Disposition and Development Agreement September 3, 1996 Page 5 The DDA also includes other provisions which are typical to such agreements. These include a defined scope of work for the project, a schedule of performance, the right of the Agency to cure any default by the developer if the Agency decides to do so, non- discrimination provisions, requirements for insurance and indemnification of the Agency and a section on how the parties resolve any defaults. NEGATIVE DECLARATION The adoption' of the DDA is defined as a "project" under the California Environmental Quality Act (CEQA) which requires a .environmental clearance. Staff have completed an Initial Study and found that the adoption and implementation of the DDA will not result in any significant environmental impacts. This initial study has been noticed pursuant to the requirements of CEQA and no public comments were received during the comment period. The Initial Study is attached, staff recommends approval of Resolution No. RDA 96-03 certifying the Negative Declaration. CONCLUSION The proposed DDA reflects the requirements of California Community Redevelopment Law. The City Attorney has reviewed and provided comments on the. DDA. The developer has also reviewed and accepted the DDA as presented to the. Agency. Christine A~ Shing~ton Assistant City Manager ~CAS: kd\ lagunagr, cas Attachment ./ Filed in the County o{ Orange, California Gary L. nville. Clerk/Recorder Illlll lllilllllilllllh,,...,,llliilllliililllillilll 19968000730 2' 15pm 08/14/96 856 5050181 05 45 Z01 1 38.00 COMMUNITY DEVELOPMENT DEPARTMENT 300 Centennial Way, Tustin, CA 92780 (714) 573-3105 NEGATIVE DECLARATION Project Tifle: TENTATIVE TRACT 15326~ CONDITIONAL USE PERMIT 96-013, VARIANCE 96-005, DESIGN REVIEW 96-026 AND DISPOSITION'AND DEVELOPMENT AGREEMENT (VISTA EQUITIES) Project Location: 1361 EL CAMINO REAL .~ Project Description: CONVERSION OF A 64 UNIT APARTMENT COMPLEX TO CONDOMINIUM OWNERSHIP Project Proponent: VISTA EQUITIES LeadAgency Contact Person: DANIEL FOX, SENIOR PLANNER Telephone: (714) 573-3115" 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 envkbnment_ 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 Study 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 Date AUGUST 14, 1996 NEGDEC.PM5 '3704 .A POSTE AUG 1 b, 1996 SEPTEMBER 3, 1996 Elizabeth A. Binsack Dommunity Development Director FILED AU6 1 1996 GABY L. GBANVILLE, Clelk-Recorder By_ ..( )(z; __DEPUTY GARY L~VILLE. Clork-Recotdor By /I_.y..~- DEPUTY ,' COMMUNITY DEVELOPMENT DEPARTMENT 300 'Centennial Way, Tustin, CA 92780 (714).573-3105 INITIAL STUDY BACKGROUND ProjectTifle:. TENTATIVE TRACT 15326~ CONDITIONAL USE PERMIT 96-013, VARIANCE 96-005, DESIGN REVIEW 96-026 AND DISPOSITION AND DEVELOPMENT AGRLEMkNI .Lead Agency: City of Tustin 300 Centennial Way Tustin, California 92780- Lead Agency Contact Person: DANIEL FOX, SENIOR PLANNER Phone: (714) 573-3115 Project Location: · 1361 EL CAMIN0 REAL Project Sponsor's Name and Address! VISTA EQUITIES 5000, BIRCH STREEI, SUI ik 9~OO NEWPORT BEACH,i CA 9ZbbU ATT' CH/~LES FRY General Plan Designation: HIGH DENSITY RESIDENTIAL Zoning Designation: R-3 (MULTIPLE-FAMILY RESIDENTIAL) Project Description: TO CONVERT AN EXISTING 64 UNIT APARTMENT.COMPLEX 'TO CONDOMINIUM OWNERSHIP Surrounding Uses; ' North TUSTIN HIGH SCHOOL South . SANTA ANA FREEWAY Other public agencies whose approval is required: Orange County Fire Authority Orange Coumy Health Care Agency South Coast Air Quality Management District Othcr Mst RETAIL West TUSTIN HI.GH SCHOOL City oflr,'ine City ofSanta Ana Orange County EMA 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. UI Land Use and PI.arming I~1 Population and Housing I~! Iwl Geological Problems [] Water [21' F! Quality E] 12] Transportation & Circula~i0n 0 ~ Biological Resources I~l 12] Energy and l~aeral Resources Hazards Noise Public Services Utilities and Service Systems Aesthetids Cultural Resources · -~ Recreafi6n Mandatory Findings of significance 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 ~511 be prepared. I find that although the proposed project could have a significam effect on the environment, there will not be a siL'mificant effect in this case because thc mitigation measm'~ descn~ on an attached sheets have been added to the project. A NEGATIVE D~OBI will be prepared. I find that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required. [51 [3 [51 I find that the proposed project MAY have a siLmificant effect(s) on the environment, but at least one effect I) has been adequately analyzed in aa earlier document pursuant to applicable legal standards, and 2) has .been addressed by mitigation measures based on the earlier analYsis as descn'bed on attached sheets, if the effect is a "Potentially Significant Impact" or "Potentially Si~tmificant'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 I) have been analyzed adequatelyin an'earlier EIR pursuant to applicable standards, and 2) have been avoided or mitigated pursUant to that earlier EIK 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 stanchrds, and 2) have been avoided or mitigated pursuant to that earlier NEGATIVE DECLARATION, including revisions or mitigation measures th.at are imposed upon the proposed project.-~-.., Printed Name Date Title ENVIRONMENTAL IMPACTS: Earlier analyses used: Available for review at: City of Tustin Community Development Deportment . · LAND USE & PLANNING - Would the proposal: a) Conflict with general plan designation or zoning7 b) Conflict with .applicable environmental plans or polities. adopted by agencies with jurisdiction over the project? c) Be incompatible with existing land uses in the vicinity? d) Affect agricultural resources or operations? e) Disrupt or divide the physical arrangement of an , established community (including a Iow-income or · minority community)? 2. POPULATION & HOUSING - WouM the'proposah ,, a) Cumulatively exceed official regional or local population projections? b) Induce substantial growth in an area either directly or indirectly (e.g., through projects in an undeveloped area or extension of major infrastructure)? c) Displace existing housing, especially affordable housing? GEOLOGIC PROBLEMS - WouM the proposal result in or expose.people to potential,impacts involving:. a) Fault rupture7 b) Seismic ground shaking? c) Seismic ground failure, including liquefaction? d) Seiche, tmmami, or volcanic ba?ard? e) Landslides or mudflows? f) Erosion, changes in topography or unstable soil conditions from excavation, grading, or fill7 g) Subsidence of land? h) Expansive soils? i) Unique geologic or physical features? 4. WATER - IVould the proposal result in: a) Changes in absorption rates, drainage patterns, or the rate and amount of surface runoff? b) Exposure of people or property to water related hazards such as flooding? c) Discharge into surface waters or other alteration of surface water quality (e.g., temperature, dissoh'cd ox3'gcn or turbidity)? d) Changes in the amount of surface water in an3' water body? c) Changes in currents, or thc course or direction of water nlOVCII1CIlt$? Potentially Significant Impact Potentially Significant Unless 34itigation . Incorporated Less than Significant Itnpact No lmpaci 0 0 0 0 0 0 0 0 O. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 '3 . Change in the quantity of ground x~aters, either through direct additions or withdrawals,, or through interception of an aquifer by cuts or excavations or through substantial loss of groundwater recharge capability? g) Altered direction or rate of flow of groundwater? h) Impacts to groundwater quality? i) Substantial reduction in the amount of groundwater otherwise available for public water supplies~ 5. AIR QIJALITY - WouM the proposal: a)' Violate any air quality standard or contn'bute to an existing or projected air quality violation7 b) Expose sensitive receptors to pollutants? c) Alter air movement, moisture, or temperature, or cause any change in climate? d) create objectionable odors? TRANSPORTATION & CIRCIJLATION- Would the proposal result in: a) Increased vehicle trips or traffic' congestion? b) I-taT~rd~ to safety from design features (e.g., sharp curves or dangerous intersections) or- incompatible uses (e.g., farm equipment)? . ' c) Inadequate emergency access or access to nearby uses? d) Insufficient parking capacity onsite or offsite? e) Hazards or barriers for pedestrians or bicyclists7 f) Conflicts with adopted policies supporting alternative ~rtation (e.g. bus turnouts, bicycle racks)? g) Rail, waterborne or air traffic impacts? B I0 LO GICAL RESOURCES - Would the proposal result in impacts to: a) Endangered, threatened oi' rare species or their habitats (including but not limited to plants, fish, insects, animals, and birds? b) Locally designated species (e.g., heritage trees)7 c) Locally designated natural communities (e.g., oak forest, coastal habitat, etc.)? d) Wetland habitat (e.g., marsh, riparian, and vernal pool)? c) Wildlife dispersal or migration corridors7 ENERGY & MINERAL RESOURCES - libuld the propo sa 'l : a) Conflict with adopted energy conscrvation plans? b) Use nonrenewable resources in a wasteful and inefficient lll3nncr'? C)- Rcsul~ in thc loss of availability ofa known mineral resource tim! would bc of fl~lurc valuc l() Iht region'? Potentially Significant Impact Potentially Significant Unless Mitigation Incorporated Less than Significant Impact No Impact 0 0 0 . · 0 0 O' 0 0 0 E] 0 0 0 0 0 0 0 0 0 0 0 0 E] 0 0 0 0 0 0 0 0 O. 0 0 0 0 0 0 0 E] -0 0 0 0 0 © 0 Potentially Significant Impact Potentially Significant Unless Mitigation Incorporated Less than Significant Impact No Impact 9. HAZARDS - Would the proposal involve: 10o' 11. 12. a) A risk of accidental explosion or release of ha?ardous substances (including, but not limited to, oil, pesticides, chemicals, or radiation)? b) Possible interference with emergency response plan or emergency evacttation plan? c) The creation of any health l~_~rd'or potential health hazard? d) Exposure of people to existing sources of potential health e) Increased fire ha?ard in areas with flammable brash. grass, or trees? ·~ NOISE - Igould the proposal result in: a) Increases in existing noise levels? b) Exposure of people to severe noise levels? PUBLIC SERVICES - Would the proposal have an effect upon, or result in a need for new or altered government services in any of the following areas: a) Fire protection? b) Police protection? ' c) Schools? d) Maintenance of public facilities, including roads? e) Other government services? UTELITEES & SERVICE SYSTEMS - Would the proposal result in a need for new systems or supplies, or substantial alterations to the following utilities: a) Power or natural gas? b) Communications systems7 c) ' Local or regional water treatment or distribution facilities? ' d) Sewer or septic tanks? e) Storm water drainage? f) Solid waste disposal? g) Local or regional water supplies? 13. AESTHETICS - IFould the proposal: a) Affect a scenic vista or scenic highway? b) Have a dcmonstrable negative acsthctic cffect? c) Create light or glare? O El 0 O' 0 0 0 0 D O. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 14. CULTURAL RESOURCES - Would the proposal: a) Disturb paleontolOgical resources? b) Disturb archaeological resources? c) Have the potential to cause a physical change which would affect unique ethnic cultural values? d) Restrict .existing religious or sacred uses within the potential impact area7 15. RECREATION - Would the proposal: a) Increase the demand for neighborhood or regional parks or. other recreational facilities? b) Affect existing recreational oppommities? 16. MANDATORY FINDINGS OF SIGNIFICANCE a) . Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or ,,x41dlife species, cause a fish or wildlife 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 plant or animal or eliminate important examples of the major periods of California history or prehistory? b)' Does the project have the potential to achieve short-term, to the disadvantage of long-term, environmental goals? c) Does the project have impacts that are individually limited, but cumulatively considerable? ("Cumulatively considerable" means that the in6remental effects ora project 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). d) Does the project have em4ronmental effects which xx411 cause substantial adverse effects on human beings, either directly or indirectly? Potentially Significant Potentially Unless Significant. Mitigation Impact Incorporated Less than Significant Impact No Impact 0 0 0 0 0 0 EVALUATION OF ENVIRONMENTAL IMPACTS Please refer to Attachment A for an evaluation of the environmental impacts identified in Section D above. ~ITSTUD. PM 5 ?02A , ATTACHMENT A INITIAL STUDY RESPONSES TENTATIVE TRACT 15326, CONDITIONAL USE PERMIT 96-013, VARIANCE 96-005, DESIGN REVIEW 96-026 A1TD DISPOSITION AND DEVELOPMENT AGREEMENT (VISTA EQUITIES) BACKGROUND The proposed project is a request to covert an existing 64 unit apartlnent complex to condominium ownership and includes the following': le Tentative Tract 15326 - to subdivide an approximate 5 acre . site into one lot to accommodate 64 condominium units; e Conditional Use Permit 96-013 and Design'Review 96-'026 - to authorize the conversion from apartments to condominium units with related site and building improvements; · Variance 96-005 - to allow a perimeter fence to exceed three feet in height within the front yard setback area, reduce the minimum amount of required parking from 144 spaces to 133 spaces, and modify the amount and type of relocation assistance; and, e Disposition and Development Agreement - to identify the extent of Redevelopment Agency.and Developerobligations with respect to implementing the project. The subject site is located on the north side of E1 Camino Real, west of Red Hill .Avenue at 1361 E1 Camino Real. The .site. is bordered by Tustin High School on the west and north, commercial uses on the east and the Santa Ana (I-5) Freeway on the squth. · LAND USE & PLANNING Items' a through e - "No Impact":.. The subject property is designated by the General Plan Land Use Map as High Density Residential-(up to 25 dwelling units per acre). The subject property is zoned Multiple Family Residential (R-3) which allows condominiums with the approval of a conditional use permit. The site is currently developed with 64'apartments at a density of 12.8 dwelling unit per acre.. The existing density is consistent with the General Plan Land Use and Zoning Designations. The project does not propose to add new or remove existing units and would not alter existing or future land uses. Sources" Submitted Plans Tustin General Plan & Zoning Code Attachment A - Initial Study Responses TT 15326 August 14, 1996 Page 2 · Mitiqation/Monitoring Required: None Required. POPULATION &.HOUSING Items a and b - "No Impact": The ~existing development includes a total of 64 apartment Units which are prop6sed to be converted to condominium ownership. The project does not propose to add new units or remove existing units. Item C ~ "Potentially Siqnificant- Unless M~tigation Incorporated": The conversion of the existing apartment units to condominium ownership will not result in the loss-or addition of any residential units. It is 'anticipated that some of the existingtenants will purchase within-the project. However, some of the existing tenants may choose to relocate' · from the existing complex. The Tustin Community Redevelopment Agency's action of a Disposition'and Development Agreement (DDA) requires the preparation of a Relocation Plan consistent with California Redevelopment Law which defines the relocation assistance for those tenant who wish to relocate. A'Variance is proposed, to modify the actual dollar amount of relocation assistance which is to be equal to tWice the last month's rent paid or a minimum of $750 (City Code Section 9274e(4)'(a)). The Relocation Plan required by California Redevelopment. Law Will provide more benefits and overall assistance _to those residents who wishes to relocate from the project than the City Municipal Code. California Com~unity Redevelopment Law requires that at least 15 percent of the units developed in a project by public or private entities other than the Redevelopment' AgencY (including such entities receiving Agency assistance) must be affordable to low and moderate income persons and houSeholds. Of those units, 40 percent must be affordable to very low income households. The units must remain affordable for the longest time feasible, but not less than the period of the land use controls established in the Redevelopment Plan, which would be enforced through CC&R's and deed restrictions on the specific units. Policy 1.4 of the Housing Element promotes dispersion and integration of housing for low and very low income families throughout a community as opposed to within a particular geographic area or neighborhood. Based upon 64 proposed ~nits, ten (10) units (15 percent) would need to be identified as affordable to satisfy the requirements of Redevelopment Law. Of those ten units, four (4) units (40 percent) would need to be affordable to very low Attachment A - Initial Study Responses TT 15326 August 14, 1996 Page 3 income.households- However, the proposal will provide fourteen (14) units to identified as affordable. Of these, four (4)~ will be affordable to very low income households, five (5) will e affordable to'low income households, and five~(5) will be affordable to moderate income, households. Affordable expenses-are defined to include principal and interest, insurance, taxes, 'utilities and association fees. 'The. State Department of- Housing.'and Community Development (HCD) publishes figures which are the accepted standards to determine income eligibility requirements. -Moderate income groups would.be those households with incomes between 81 percent and 120 percent of area median; Low income groups between 51 percent and 80 percent of area median; and Very Low income groups below 50 percent of'area median. BaSed upon published HCD figures as of January 1996, the median income for a family of four in Orange County-is $61,300. Based upon the median income, the affordable' units would need to be affordable to those households of four with the incomes as follows: Moderate Income $73,550 Low Income $41,600 Ve .ry LOw $30,650 These HCD figures v~ry depending upon household size and'are adjusted to reflect the change in median income over time. The most current HCD figures would be used for each particular unit .at the time building permits are issued for 'each respective unit. Sources~ Tustin General Plan,HoUsing Element California Community Redevelopment Law U.S. Department of Housing and urban Development Mitiqation/Monitorinq Required' An Affordable Housing Program consistent with California Community Redevelopment Law.shall be prepared and implemented- Selected units to satisfy affordable requirements shall be dispersed throughout the development so as to not concentrate the selected units in any one portion of the project based upon Policy 1.4 of the General Plan Housing Element. Provisions Shall be made in the CC&R's for the development and separate deed restrictions recorded on each selected unit identifying the Affordable Housing Program, including income restrictions and time limits Attachment A - Initial Study Responses TT 15326 August 14, 1996 Page 4 under the program. Details of the Affordable Housing Program and provisions contained in.othe CC&R's and deed restrictions shall be subject to the approval of the Community Development Department and Redevelopment Agency Attorney prior to the issuance of any permits for the project or approval of the final map which ever occurs first. -~.~ In addition,, through the DDA, the Tustin Community Redevelopment Agency will provide $1,174,000 to assist in providing the fourteen, affordable units as required by · RedeveloPment ,Law, as well as, maintaining affordabili~y of all units in the project. The $1,174,000 includes a permanent subsidy .in an amount equal to $498,000 and a loan in the amount of $685,000.. · gEOLOGICAL PROBLEM~ Items a throuqh e, q throuqh.i.- "No Impact": -The proposed development, will not expose people to potential fault ruptures, liquefaction, volcanic hazards 'or mudflows. The site is deVeloped and free of any unique geologic structures..- Item f - "Less than Siqnificant Impact": Minor grading and site improvements are proposed related to conversion of the existing units to condominium ownership, including a new entry driveway on the westerly portion of the site and .other modifications to the existing private street~improvements. Sources: Field Verification Submitted Plans Tustin City Code Mitigation/Monitoring Required: Grading, Erosion Control and Street Improvements Plans are required as a condition of approVal to ensure that all grading activities on the site ~inimize grading impacts. e WATER Items a through i - "No Impact": The proposed project development will 'not change absorption rates, drainage patters,'or flooding. The project site is not location around any standing bodies of water. Attachment A - Initial Study Responses TT 15326 August 14, 1996 Page 5 · Sources: Field Verification Submitted Plans· Tustin City Code Mitigation/Monitoring Required: None Required. AIR OUALITY Items a through d - "No Impacts": The conversion of the existing apartment units to condominium ownership and related site improvements will not alter air movemeDt, moisture, temperature or cause any changes in climate, or create objectional odors. No units are proposed to be added or removed from-the site. Sources: Field Verification Submitted Plans Tustin City Code Mitigation/Monitoring Required: None Requried. e TRANSPORTATION & CIRCULATION · Item b and e - "Potentially Significant Uhless Mitigation Incorporated": Access to the site. is proposed by a new 26 foot wide private entry from E1 camino Real near the westerly property line. The private entry drive is proposeto include vehicle gates and would include acceptable vehicle stacking, guest spaces and turn around accommodations for the project. A secondary'gated exit drive is proposed from E1 Camino Real' at the existing easterly driveway. The existing driveway on E1 Camino Real in the center of the proPerty is proposed to be removed and replaced with standard curb, gutter and sidewalk. The street syStem within the development will be modified to accommodate the new entry drive on the westerly property line. A 32 foot wide private street with parking on one side is proposed to connect with the existing main'east/west drive. The existing median located in the east/west drive will be removed to accommodate parking on each side of the street. The Engineering Division has identified potential conflicts with the morning peak .operations of the proposed westerly driveway and its proximity to the existing driveway on the Tustin High School property immediately to the west. Due to Attachment ~A - Initial Study Responses TT 15326 August 14, 1996 Page 6 the close proximity of the tw° driveways, residents exiting the site will likely conflict with the students pedestrian, and icul~r, entering the High School site in the morning. ~eh~:A--~ ~-'e been included to restrict exi%i~ from the ~ona~Llu~l~ -.~- . :00' - 9:00 proposed westerly driveway between the hours o~ - ~-~ a.m on school days. Item d - "Less than si nlflcant Im ac · . . The site presently has 64 co~ered parking spaces, 47 open spaces for .a total of 111 parking spaces. A total of-~128 covered assigned spaces and 16 guest spaces.for a total of 144 spaces are required (City Code sections 9274a(3), 9224g(7)). h additional parking is proposed to be added to the Althoug ' ~= ~ ~ ce the number of ' ' e esL~u ~ ~edu . ~ro~ect, a Variance is r qu ...... ~ ~ snaces provided. ~ov~red assigned spaces and overa£1 nu~=~ ~ ~ open spaces The proposed plans include 64 covered spaces, 64 and 5 guest sPaces for a total of 133 spaces. No additional units are proposed for the project which would create a higher parking demandthan currently exists. The additional parking will improve existing parking conditions. Items a c .~_ ~d ~ ~ ~ The site is currently developed with 64 apar~me units and no'additional units are proposed. The conversion to condominium ownership will not increase vehicular trips or~ traffic cOngestions on the surrounding street system. E1 Camino Real has been designed and improved'to- Secondary Arterlal~ st~nd~r~ and can accommodate the anticipated peak hour ~eman~ o~ ~n~ project. sources. : Field Verification Submitted Plans Tustin city Code Tustin General plan, circulation Element Public Works/Engineering Division Miti ation Monitorin Re ired: A. Due to the proximity of the proposed westerly driveway to the existing driveway on the adjacent High School site, exiting from the proposed westerly driveway will be prohibited between the hours of 7-00 a.m. and 9-00 a.m. on school days. Signs shall be posted clearly indicating this restriction and instructing vehicles to exit at the easterly driveway- ~ Attachment A'- Initial study Responses TT 15326- August 14, 1996 Page 7 C. De E· signs shali be posted clearly indicating the easterly driveway is ,,Exit Only" and not an entrance· A separate' 24" X 36" street Improvement Plan, as prepared · istered civil Engineer, will be b a Callfornl. a R.e~. _ ~=~ t of any missing or ired. construction or re~-emen Ye adjacent to this development r qu damaged public' improvements will be required which shall include, but not 'be limited to, the following: a) curb and Gutter b) Sidewalk c) Drive Aprons d) Underground utility Connections · 'ble work area traffic control plan' ~ 74" x 36" reproducl - -- -~ be Drepared .. bY a ~ ~ ' ' his lan ~=~ ~. .' · will be required. T ~=P:- ~neer or C~v~l Engineer california Registered Tra~.~ experienced w~th this type of plan preparation- 'be . . The existing easterly ' driveway apron shall reconstructed and .t~.e. new___w_e_s~e~YA driveway shall be' reqUirements. The constructed to meet the cur~ . be 10% and a maximum ramp slope of the drive apron shall 'four (4) foot wide sidewalk with a maximum cross slope of 2% shall be constructed at the back of each driv~ apron. Additional Street right-of-way dedication will be required to accommodate this construction' · BIOLOGICAL RESOURCES_ Items a-e - ".No Im act". The project site is .in an urban area and is currently developed with 64 apartment units, including a variety of-ornamental landscaping- Additional ornamental landscaping is proposed throughout' the project to supplement and augment 'the existing .landscaping- , sources: Field verification -submitted Plans ~a t i on / M~ Requ i red__'. None Required- Attachment A - Initial Study Responses TT 15326 August 14, 1996 Page 8 · · ENERGY & MINERAL RESOURCES Items a through c - "No Impact": The proposed conversion of the existing apartments to 'condominium ownership will not create impacts on energy conservation or mineral resources with respect to adopted energy conservation plans,'dem~nd for energy, or loss of available known'mineral resources. No additional units are proposed. All utilities are presently in place to service the project. Sources: Field .Verification Submitted Plans :-..,- Public Works/Engineering Division Mitigation/Monitoring Required: None Required. HAZARDS Items a throuqh e - "No Impact": The proposed project will not risk accidental explosion, releaSe of .hazardous substances, or interference with emergency response plans.' Given the scope and nature of the residential development, the conversion of the'project to condominium ownership would not create or expose any person, to health hazards. The project site is not adjacent to any wildlands. Sources: Submitted Plans Uniform Building and Fire COdes Orange County Fire Authority Mitiqation/Monitorinq Required: None required. 10. .NOZSE Item a - "No Impact''. The proposed project would not add any noise sources into the area as the site is presently developed with 64 apartment units. Item b - "Potentially Siqnificant Unless Mitiqation Incorporated''. Construction activity related to the minor site improvement and building improvements will result in short term construction noise impacts. Compliance with the City's Noise Ordinance related to construction hours will be required. Attachment A - Initial Study Responses TT 15326 August 14, 1996 Page 9 The existing noise levels along E1 Camino Real adjacent to the project are identified in the Tustin General Plan Noise Element to be approximately 70 dBa CNEL. All. residential units will need to be sound'attenuated against present and projected noises so not to exceed 65 dBa CNEL in outdoor living areas and an interior standard of 45 dBa CNEL~-~n all . habitable rooms. An Acoustical Report prepared by 'Colia Acoustical Consmltants indicates that the first row of buildings which,face the freeway (Units 7, 8, 15, 16, 23, '24, 27 and 28) will need to have entrY door and living and dining room window upgrades. Sources: Submitted Plans Tustin City Code Acoustical Report,. Colia Acoustical Consultants, February 28, 1996 Mitiqation/Monitorinq Required: ae A ~final acoustical analysis report describing the acoustical design features of the structures required to satisfy the exterior 'and interior noise standards shall be submitted to the Tustin Community Development Dep~rtment for approval along with satisfactory evidence which indicates 'that' the sound attenuation measures specified in the approved acoustical report(s) have been incorporated into the design of the project. The acoustical analysis shall be prepared-by an expert or authority in the field of acoustics. Ail residential dwellings shall be sOund attenuated against present and projected noises, which shall be the sum of all noise impacting the project, so as not to exceed an exterior standard 65 dBa CNEL in outdoor areas and an interior standard of 45 dBa CNEL in all habitable rooms is required. Evidence prepared under the supervision of an ~acoustical consultant that these standards will be satisfied in a manner consistent with applicable zoning regulations, shall be provided. Be Ail construction operations, including engine warm-up, deliveries of materials and equipment, shall be subject to the provisions of the City of Tustin Noise Ordinance, as amended, and may take place only during'the hours of 7:00 a.m. until 6:00 p.m., Monday through Friday, and Attachment A - Initial Study Responses TT 15326 Augxlst 14, 1996 Page 10 : Saturday unless the Buildin. g , ~n = TM to 5:00 p.m on -.= ~e~vitv will be in · · ~ ~-~rm~nes tha · ^-~-=nce and that Offlcla£ u=~ _ - o-~'th the No~se u~u~,,~ substantial conformance w~ . be impaired subject to ~,/bliC health and safety will not . application being made at-the time the permit for the 's awarded or during progress of the worK.. No w_ork. 1 __ ~4Aav construction shall be permitted- · ion hours' shall be clearly posted on the project Construct . _ ~-. __ _~ e Building official- ~ite to the satisIacu~un ¥~ ~he . _PUB~ SERVICES. ' - -~' ~ -"No~ The project is a conversion No Ite throu n ~ - . of ~. existing apartment units to condominium ownership- new ~elopment is proposed that would create a demand for new pub]~ services- ~ Field Verification -- - submitted Plans Public works/Engineering Division Police Department ' Orange county Fire Authority Mit~ ~on Monitorin Re ired: None Required- 12. UTI S & SERVICE SYSTEMS ' "o Im act": The project is a conversion Ite~a throuqh q - N . P .. --=- condominium ownership- No of ~existing apartment un,ts ~u new~elopment is proposed that would create a demand for new pub]~utilities- All, utilities are existing and adequate to se~he development- Sou~. Field verification submitted Plans PubliC. Works/Engineering Division Mi__~ti~on/Mo~ RecDaired: None required- Attachment A - Initial Study Responses TT 15326 August 14, 1996 Page 11 13. AESTHETICS Items a and b - "No Impact": Proposed plans include a variety of interior and exterior.improvements t© repair structural defects and to make the buildings marketable for condominium ownership. Some of the interior improvements inClUde new kitchen counters and appliances, new paint and Carpet, new fixtures and door hardware. Some of the exteriorimprovements include replacing the existing~rock roof with'asphalt singles, reaping and replacing eaves, ~ adding' garage doors to the existing carports,.repairing p~ivate yard f~nces and adding trim detail around windows and doors. The proposed improvements will improve the overall appearance of the project. Item c - "Potentially Significant Unless Mitiqation Incorporated": New site lighting will need to be prOvided to comply with the City's Security Ordinance with respect to minimum lighting requirements. A minimum of one (1) footcandle will need to be provided in the vehicular areas and .25 footcandles will need to be provided in the pedestrian areas. sources: Field Verification Submitted Plans Tustin City code Mitiqation/Monitoring Required: A photometric study for the property shall be prepared to demonstrate compliance with the City's Security Code which requires a minimum of one (1) foOtcandle of illumination on the street and parking surface, and a minimum of .25 footcandles on sidewalks, pool area and other pedestrian areas. Be No lights shall create, any glare or have a negative impact on adjoining properties shall be permitted. 14. CULTURAL RESOURCES Item a throuqh d - "No Impact"- The project is existing within an urban area and is not within an area identified as an archaeolOgical site. Attachment A - Initial Study Responses TT 15326 August 14, 1996 Page 12 Sources: Field Verification Submitted Plans Tustin General Plan, Conservation Element Mitiqation/Monitoring Re'~ired: None Required. 15. RECREATION Items a and b - "Potentially Significant Unless Mitigated": The project is a conversion of existing apartment units to condominium ownership. No new units are proposed to'. be constructed which would affect existing recreational facilities. Sources: Submitted Plans Tustin City Code Mitigation/Monitorinq Required:. None Required. 16. MANDATORY FINDINGS OF SIGNIFICANCE Items a-d - "No Impact,,: The project in and of itself will not cause negative impacts to wildlife habitat, nor limit the' achievement of any long,term environmental goals, nor have impacts which are potentially individually-limited but are cumulatively considerable and could Potentially have an indirect adverse impact on human beings. Sources: As Previously Stated Mitiqation/Monitorinq Required: As Previously Stated. DF:br:~15326.ENV 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. RDA 96-4 A RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY FINDING THAT THE USE OF TAXES ALLOCATED FROM THE TOWN CENTER PROJECT AREA FOR THE PURPOSE OF REHABILITATING THE PROPERTY AT 1361 EL CAMINO REAL AND CONVERTING THE APARTMENTS INTO OWNERSHIP UNITS WILL BE OF BENEFIT TO THE PROJECT. The Tustin Community Redevelopment Agency doe's hereby resolve as follows: WHEREAS, the Tustin Community Redevelopment Agency (the "Agency") has adopted a Redevelopment Plan (the "Redevelopment Plan") for the Town Center Project Area (the "Project"); and WHEREAS, the Redevelopment Plan provides for the allocation of taxes from the Project· Area; and wHEREAS, Section 33445 of the Health and Safety Code provides that Redevelopment tax increment funds may be used outside of a project area if a finding is made by action of the Agency and the City Council that such use will be of benefit to the adjacent Project Area and there are no other reasonable means of financing the acquisition and' cost of improvements; and WHEREAS, the City of Tustin has determined that rehabilitation of the property at 1361'E1 Camino Real and its conversion into ownership units would benefit the Town Center Project Area but is outside the Town Center Redevelopment Project Area; and WHEREAS, the Agency's Town Center Redevelopment Project Area, Five Year Town Center Project Implementation Plan and The A~ency's Comprehensive Housing Affordability Strategy authorizes the rehabilitation of older housing units and encourages the creation of home ownership opportunities in the Town Center PrQject Area. NOW, THEREFORE, the Tustin, Community Redevelopment Agency do'es hereby find and resolve as follows: Section 1: The Agency hereby finds that the use of taxes allocated from the Town Center Project Area to be used outside the boundaries of the Project Area for the purpose of the rehabilitation of.housing units at 1361 E1 Camino Real and its conversion to home ownership will be of direct, benefit to the Town Center Project Area and that no other reasonable means of financing for said project are available in the Community. 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 26 27 28 Resolution No. RDA 96-4 Page 2 PASSED AND ADOPTED at a regular meeting of the Tustin Community Redevelopment Agency held on the 3rd day of September, 1996. Tracy Wills Worley Chair Pamela Stoker City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF TUSTIN ) SS CERTIFICATION FOR RESOLUTION NO. RDA 96-4 PAMELA STOKER, City Clerk-of the City of Tustin and Recording Secretary of'the Tustin Community Redevelopment Agency does hereby certify that the whole number of the members'of the Tustin Community Redevelopment Agency is 5; that the above and foregoing Resolution No. RDA 96-4 was duly and regularly introduced, passed and adopted at a regular meet of the Tustin Community Redevelopment Agency, held of the 3rd day of September, 1996. AGENCY MEMBER AYES: AGENCY MEMBER NOES: AGENCY MEMBER ABSTAINED: AGENCY MEMBER ABSENT: PAMELA STOKER Recording Secretary 1 RESOLUTION NO. RDA 96-3 10 11 12 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY CERTIFYING THE FINAL NEGATIVE DECLARATION AS ADEQUATE FOR THE AD.OPTION OF A DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY AND LAGUNA GARDENS ASSOCIATES, LLC., INCLUDING REQUIRED FINDINGS PURSUANT TO THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. The Tustin Community Redevelopment Agency does hereby resolve as follows: I o The Redevelopment Agency finds and determines as follows: no The adoption of the Disposition and Development Agreement by and .between the Tustin Community Redevelopment Agency and Laguna Gardens Associates, LLC. is considered a "project" pursuant to the terms of the California Environmental Quality Act. m o C . A Negative Declaration has been prepared for this project and has been distributed .for public review. Whereby, the Tus~in Community Redevelopment Agency has considered evidence presented by the Executive Director and other interested parties with respect to the subject Negative Declaration. D . The Tustin Community Redevelopment Agency has evaluated the proposed final Negative Declaration and determined it to be adequate and complete. II. A Final Negative Declaration has been completed in compliance with CEQA and State guidelines. The Tustin Community Redevelopment Agency, approval authority for the adoption of the Disposition and Development Agreement, has received and considered the information contained in the Negative Declaration, prior to approving the proposed project, and found that it adequately discussed the environmental effects of the proposed project. On the basis of the initial study and comments received during the public review process, the Tustin Community Redevelopment Agency has found that, the proposed project would not have a significant effect on the environment. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Resolution No. RDA 96-3 Page 2 PASSED AND ADOPTED by the Tustin Community Redevelopment Agency at a regular meeting held on the 3rd day of September, 1996. TRACY WILLS WORLEY Chair PAMELA STOKER Recording Secretary STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF TUSTIN ) SS CERTIFICATION FOR RESOLUTION NO. RDA 96-3 PAMELA STOKER, City Clerk of the City of Tustin and Recording Secretary of the Tustin Community Redevelopment Agency does.hereby certify that the whole number of the members of the Tustin Community Redevelopment Agency is 5; that the above and foregoing Resolution No. RDA 96-3 was duly and regularly introduced, passed and adopted at a regular meet of the Tustin Community Redevelopment Agency, held of the 3rd day of September, 1996. AGENCY MEMBER AYES: AGENCY MEMBER NOES: AGENCY MEMBER ABSTAINED: AGENCY MEMBER ABSENT: PAMELA STOKER Recording Secretary DISPOSITION AND DEVELOPMENT AGREEMENT by and between THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY, as Agency, and LAGUNA GARDENS ASSOCIATES, LLC, as Developer .... ,1996 1101-0(X)03 34343..1 August 26, 1996 DISPOSITION AND DEVELOPMENT AGREEMENT THIS AGREEMENT is entered into by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic, to wit, a California community redevelo_pment agency ("Agency"), and LAGUNA GARDENS ASSOCIATES, LLC, a California limited liability company ("Developer"). Agency and Developer hereby agree as follows: i. [100] SUBJECT OF AGREEMENT A. [101] Purpose of Aqreement The general purpose of this Agreement is to benefit the Town Center Redevelopment Project (the "Project Area"), by providing for the rehabilitation.iand upgrade of a 64-unit apartment complex on the hereinafter described Site, and the conversion of the 64 units from rental apartments to owner-occupied condominiums (the "Project"). While the Site is not located within the Project Area, Agency has found that the Project will benefit the Project Area. The deyelopment 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 also eliminate blightnear the Project Area, maintain the supply of Iow to moderate income housing in the community, 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 for the Project Area (the "Redevelopment Plan"). B. [102] The Redevelopment Plan This Agreement is made subject to the provisions of the Redevelopment Plan which was approved and adopted by the City Council of the City of Tustin by Ordinance No. 701 as amended by Ordinance Nos. 855, 1021 and 1141. Said ordinances and the Redevelopment Plan, as amended, are incorporated herein by reference and made a part hereof. C. [103] Description of The Site The "Site" is that portion of the City, near the Project Area, designated and illustrated on the Assessor Parcel Map, attached hereto as Attachment No. 1, and having the legal description set forth in the "Legal Description of the Site", incorporated herein as Attachment No. 2 to this Agreement. The Site is currently owned by the following persons/entities, in the respective portions shown (collectively, the "Current Owner"): (1) Salomon Investment Company, a California limited partnership, as to an undivided ninety- eight percent (98%) interest; and (2) Louis M. Wolfsheimer, as trustee of the Louis Marcus Wolfsheimer, Jr. Gift Trust dated December 14, 1993, Exempt Trust "A", as to an undivided one-half interest, and Louis M. Wolfsheimer, as trustee of the Alison Wolfsheimer Gift Trust dated December 14, 1993, Exempt Trust "A", as to an undivided one-half interest, collectively as to an undivided two percent (2%) interest. The Current Owner is in escrow to sell the Site to Developer. D. [104] Parties to the Agreement 1. [105] Agency 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 92680. "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, and any'assignee of or successor to its rights, powers and responsibilities. 2. [106] Developer Developer is Laguna Gardens Associates, LLC, a California limited liability company. The mailing address of Developer is: 5000 Birch Street, Suite 9400, Newport Beach, California, 92660. VVhenever the term "Developer" is used herein, such term shall include any permitted nominee or assignee as herein provided. o [107] Prohibition Against Change in Ownership, Management and Control of Developer Developer recognizes that, in view of the following, the qualifications and identity of the Developer is of particular concern to the community and Agency: a. the importance' of the redevelopment of the Site to the general welfare of the community; b. the public assistance that has been made available by law and by the City and Agency for the purpose of making such redevelopment possible; c. the fact that a change in ownership or control of DeveloPer or of a substantial part thereof, 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 property then owned by Developer. Developer further recognizes that it is because of such qualifications and identity that Agency is entering into this Agreement with Developer. 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. Except as otherwise expressly provided herein: (a) Developer shall not assign all or any part of this Agreement or its right or obligations herein without the prior written approval of 1101-00003 August 26. 1996 Agency, pursuant to Section 321. below, which approval shall not be unreasonably withheld, (b) no voluntary successor in interest of Developer shall acquire any rights or powers under this Agreement without the prior written approval of Agency, pursuant to Section 321 below, which approval shall not be unreasonably withheld, (c) there shall be no change in the membership, ownership, management or control of Developer without Agency's prior written consent, and (d) this Agreement may be terminated by Agency without penalty to Agency if Developer assigns or attempts to assign all or a portion of its interests in this Agreement without the prior written consent of Agency, pursuant to Section 321 below. Unless Developer obtains the prior written consent of Agency, pursuant to Section 321 below, for any of the matters described in the preceding sentence, Developer shall continue to be bound under the terms of this Agreement notwithstanding any attempted assignment, transfer or change in membership, ownership, management or control. No involuntary successor in interest of Developer shall acquire any rights or powers under this Agreement. Any involuntary transfer of the Site or of the ownership or control of Developer, or any purported involuntary transfer of Developer's interest in this Agreement, shall be an event of default to which the provisions of Section 1100 et seq. shall apply. The provisions of this Section 107 shall terminate upon the recor~lation of the Certificate of Completion pursuant to Section 325 of this Agreement. 4. [108] Representations and Warranties of Developer As an inducement to Agency to enter into this Agreement, Developer represents and warrants to Agency as follows: a. Developer has the experience, qualifications and legal status necessary to perform as Developer pursuant to this Agreement; b. Developer is a duly organized, validly existing California limited liability company, formed and in good standing under the laws of the State of California, and has the power and authority to own property and carry on business in the State of California. Developer has the full legal power, right and authority to enter into and to consummate, and has duly authorized, executed and' delivered, this Agreement and any and all other agreements and documents required to be executed and delivered by Developer in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement; c. The copies of the documents, previously delivered to Agency and evidencing the formation and organization of Developer, are true and correct copies of the originals thereof, as amended to the date of this Agreement; d. All requisite action has been taken by Developer 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, shareholder, creditor, investor, judicial or administrative body, authority or other party is required; e The individual executing this Agreement and the instruments referenced herein on behalf of Developer and the members, managers, partners, officers and trustees of Developer, if any, have the legal power, right and. actual authority to bind Developer to the terms and conditions hereof and thereof; 1101-00003 34343_1 August 26. 1996 f. This Agreement and all documents required hereby to be executed by Developer are and shall be valid, legally binding obligations of and enforceable against Developer 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; g. 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 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 is a party or affecting the Site; h. No attachments, execution proceedings, assignments for the benefit of creditors, bankruptcy, reorganization or other proceedings are pending or threatened against Developer Or, to the best of Developer's knowledge, any members, managers, or officers of Developer nor are any. such proceedings contemplated by Developer or, to the best of Developer's knowledge, any member, manager or officer of Developer; i. 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; j. Developer has no knowledge of the presence, use, treatment, storage, release or disposal of any Hazardous Substances at, on or beneath the Site which has 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; k. Developer has no actual kno~,ledge that asbestos or polychlorinated byphenyls ("PCB's") are contained in or stored on the Site. However, based on the age of the Site, Developer assumes that there is asbestos on the Site. If it is confirmed that there is asbestos on the Site, Developer shall be obligated to comply with all applicable environmental laws and regulations, and to complete remediation of the Site in compliance with such laws and regulations, in the manner and to the extent required thereunder; I. To the best of Developer's knowledge, there are no underground storage tanks located in, on or under the Site; m. To the best of Developer's knowledge, all reports, documents, instruments, information and forms of evidence delivered by Developer, to Agency, concerning or required by this Agreement are accurate, correct, and sufficiently complete to give Agency true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission; 1101-00003 34343_1 August 26, 1996 n. Developer has, and shall maintain throughout the term of this Agreement, sufficient equity and capital to (i) pay through completion, all costs of development, construction, marketing and sale of all of the improvements as defined in the Scope of Development attached hereto as Attachment No. 3 (the "Improvements"); 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 and capital for the purposes expressed in the preceding sentence. o. 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; p. There are no material legal proceedings either pending or, so far as is known to Developer, threatened, to which Developer 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'which could materially adversely affect the ability of Developer to carry out its obligations hereunder; and q. Developer has performed all of its obligations to be performed on or prior to the date of this Agreement, in accordance with the Schedule of Performance, as defined in Section 308, below, and is not in default thereunder. Each of the foregoing items, a through q, inclusive, is deemed to be an ongoing representation and warranty. Developer shall promptly advise Agency in writing if there is any change pertaining to any matters set forth or referenced in the foregoing items, a through q, inclusive. 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. Whenever the term "Developer" is used herein, such term shall include any other permitted successors and assigns as herein provided. 5. [109] Relationship of Agency to Developer' It is hereby acknowledged that the relationship of Agency to Developer is neither that of a partnership nor that of a joint venture and that Agency shall not be deemed or construed for any purpose to be the agent of Developer. Nor shall Developer be deemed or construed to be the agent of Agency. II. [200] ACQUISITION OF THE SiTE A. [201] Developer Purchase of Site Developer represents and warrants that, prior to the execution of this Agreement, Developer (1) has entered into a purchase agreement with the Current Owner, to acquire the Site, consistent with Developer's obligations under this Agreement, and (2) in order to effectuate the purchase, has entered into an escrow (the "Escrow"), between Developer, the Current Owner and Orange Coast Title Company ("Escrow Holder"), whose address 1101-00003 34343_1 AuguSt 26, 1996 is 640 North Tustin Avenue, Suite 205, Santa Ana, California, 92705 (Attn. Mr. Dennis Chaplin, Escrow Officer/Escrow No. 17909). Developer represents and warrants that the total cost to acquire the Site from the Current Owner will be Three Million Four Hundred Twenty-Three Thousand Dollars ($3,423,000.00). B. [202] Zoning of the Site; Other Governmental Approvals Agency represents and warrants that the zoning of the Site would permit conversion of the sixty-four (64) units from rental apartments to owner-occupied condominiums, subject to the City's granting of certain governmental land use approvals. Within the time period provided in the Schedule of Performance (Attachment 4), Developer shall apply for and obtain the required governmental land use, architectural and site plan approvals for development of the Project, including: (1) design review., conditional use permit and subdivision approvals as required by the Tustin Municipal Code, and (2) any necessary variance approvals as may be required by the Tustin Municipal Code. Agency shall provide Developer with all reasonable assistance and cooperation in such regard. If Developer has not received the approvals within the applicable time period provided in the Schedule of Performance, except on account of default by either Agency or City, or if such approvals have been given but are subject to conditions that Developer fails to satisfy within such applicable time period, then Agency shall provide Developer with written notice of default. Developer shall have forty-five (45) business days from receipt of the notice of default in which to cure the default. It the default is not cured within such forty-five-day period, this Agreement shall terminate automatically at the end of such forty- five-day period, unless extended in writing by Agency, in its sole and absolute discretion. In the event of termination of this Agreement for the reason stated in this section, any and all amounts then paid by Agency to Developer shall be returned to Agency immediately thereafter. After such return of funds, neither Agency nor Developer shall have any further right or obligation under this Agreement.. III. [300] DEVELOPMENT OF THE SITE A. [301] Scope of Development 1. [302] Development of The Site The Site shall be developed by Developer as provided in (a) the Scope of Development,(Attachment 3), (b) this Agreement, and (c) all plans approved by Agency and/or City. 2. [303] Basic Concept Drawings Agency has basic concept drawings and related documents for the development of the Site. The Site shall be developed as generally established in the basic concept drawings and related documents (attached hereto and incorporated herein by reference as Attachment 5), except as changes may be approved in writing by both Developer, and either Agency, or City, through the design review, conditional use permit and/or subdivision 1101-00003 34343_1 August 26, 1996 approval process. Any such changes shall be within the limitations of the Scope of Development (Attachment 3). . [304] Construction Plans, Drawinqs and Related Documents Developer shall prepare and submit preliminary and, ' thereafter, final construction plans or other drawings or plans and all related documents pertaining to the Site (the "Construction Drawings") to Agency for Agency's review and written approval within the time established in the Schedule of Performance, as defined in Section 308, below. Construction Drawings are hereby defined as those required for, and in sufficient detail to obtain, City of Tustin building permits for all Improvements for which permits are required. During the preparation of all Construction Drawings, Agency staff and Developer shall hold regular progress meetings to coordinate the preparation of Construction Drawings, and the submission of Construction Drawings to, and review of Construction Drawings by, Agency. Agency and Developer shall communicate and consult informally as frequently as is necessary to ensure that Construction Drawings, once formally submitted to Agency, can receive prompt and speedy consideration. . [305] Agency Approval of Construction Drawings Subject to the terms of this Agreement, Agency shall have the right of architectural and site planning review of all Construction Drawings, including any changes thereto. However, nothing herein shall relieve Developer of any obligation to submit plans and other documents required for special development permits or building permits, to City departments or other public agencies. Agency shall approve or disapprove the Construction Drawings within the time established in the Schedule of Performance (Attachment 4). Failure by Agency to either approve or disapprove the Construction Drawings within the time established in the Schedule of Performance shall be deemed approval of the same. Any disapproval shall state in writing the reasons therefor and the changes which Agency requests be made. Such reasons and such changes must be 'consistent with the Scope of Development (Attachment 3), any approvals by City for design review, conditional use permit and/or the subdivisio.n process, and any items previously approved or deemed approved hereunder by Agency. Developer shall revise such Construction Drawings and resubmit them to Agency as soon as possible after receipt of the notice of disapproval, and in no event later than thirty (30) days after receipt of the notice of disapproval. If Developer desires to make any substantial change in the Construction Drawings after their approval by Agency, Developer shall submit the proposed change to Agency for its approval. If the Construction Drawings, as modified by the proposed change, conform to the requirements of Section 304 of this Agreement, the approvals previously granted by Agency under this Section 305, and the Scope of Development (Attachment 3), Agency shall approve the' proposed change and notify Developer in writing within thirty (30) days after submission to Agency. Such change in the Construction Drawings shall, in any event, be deemed approved by Agency unless Agency delivers to Developer, within such thirty- day period, a written notice of disapproval of the Construction Drawings, in whole or in part, setting forth in detail the reasons for such disapproval. Developer, upon receipt of a notice of disapproval, shall revise such portions of the Construction Drawings as are disapproved 1101 ~00003 34343_.1 August 26, 1996 and resubmit them to Agency within thirty (30) days after, receipt' of the notice of disapproval. 5. [306] Cost of Construction' Developer shall bear the cost of planning, designing, and preparing the Site and constructing all Improvements thereon. 6. [307] Agency--No Responsibility for Development of Site Agency has no responsibility for the development of the Site and nothing herein shall imply, nor be construed to, place any such responsibility on Agency. 7. [308] Schedule of Performance Developer shall begin and complete all construction and development of the Improvements as provided in the Scope of Development (Attachment 3) and within the times specified in the Schedule of Performance (Attachment 4). Agency may, at its sole discretion and upon written request from Developer, extend the times specified in Section D of the Schedule of Performance (Attachment 4) dealing with Construction of Improvements. Any such extensions shall not be deemed as amendments to this Agreement, as defined in Section 1400, hereof. Any such extensions shall be evidenced by written notice from Agency's Executive Director or his/her designee. B. [309] Conditions of Construction 1. [310] Required Licenses and Permits Before commencement of construction of the Improvements on the Site, 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 or the approved contractor must (a) submit plans for permits, (b) complete the plan check process, (c) obtain permits, and (d) commence work, within the applicable time periods specified in the Schedule of Performance (Attachment 4). 2. [311] Cost of Rehabilitation The proceeds of the financing which is approved pursuant to Section 318 hereof shall be used for and expended toward the cost of the acquisition and development of the Site and construction of the Improvements, and any additional costs of completing the acquisition and development of the Site and the construction of the Improvements shall be at the sole expense of Developer. Before close of Escrow for the acquisition of the Site, and as a condition precedent to close, Developer shall submit to Agency a final line item budget for the acquisition and development of the Site and the construction of the Improvements. Agency's Executive Director, or his designee, shall reasonably approve such budget if the budget is reasonably calculated to fund the acquisition and development of the Site and the construction of the Improvements in accordance with all of the requirements of this Agreement. 1101-00003 34343_1 August 26. 1996 3. [312] Construction Contracts Developer shall proVide to Agency a signed copy of the contract between Developer and the duly licensed and insured general contractor Developer has selected for the development of the Site. Developer shall certify that the copy is a true and correct copy of the original. Should Developer subsequently select a different or additional general contractor for the development of the Site, such different or additional general contractor shall also be duly licensed and insured, and Developer shall provide Agency with a signed copy of the contract between Developer and such different or additional general contractor, certified by Developer to be a true and correct copy thereof. Agency's Executive Director, or his designee, shall reasonably approve such contract or contracts if Agency's Executive Director, or his designee, finds that such general contractor or general contractors have sufficient experience and expertise necessary to Perform the development of the Site in a first class manner in accordance with all of the requirements of' this Agreement. A general contractor utilized to construct all or any portion of the Improvements shall provide a one (1) year guarantee of all materials and labor, in addition .to applicable manufacturing guarantees. In the event a general contractor is not utilized, Developer shall provide such limited warranties as is its standard practice with regard to similar developments. 4. [313] Quality of Work All work shall be of good quality and all workers and subcontractors shall be skilled in their trades. 5. [314] Quality of Materials Unless otherwise specified, all materials shall be new, and shall be of good quality. 6. [315] 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 Improvements and keep the Site reasonably free from any debris and waste materials; and, at completion of the work, Developer shall remove'from the Site all debris and waste materials, and all implements, surplus materials, and surplus equipment; except that this obligation shall terminate as to individual units, or as to common areas, as the same are conveyed to the individual homeowners, or the homeowner's association, respectively. (Developer shall remain responsible for paying the homeowner's dues for each unsold unit until such time as the last unit is sold.) C. [316] Use 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 during construction and thereafter until November 22, 2016, Developer, its successors and such assigns, shall develop and devote the Site to the uses specified in the Redevelopment Plan, the Scope of Development (Attachment 3) all plans approved by Agency pursuant to this Agreement, the Agreement to be Recorded Affecting Real Property attached hereto as Attachment 6, and 1101-00003 34343_1 August 26. 1996 any covenants required by this Agreement and this Section 316. The covenants expressed in this Section 316 are covenants running with the land. After Developer has sold all sixty-four (64) units and has complied with all obligations under this Agreement, and the Certificate of Completion has been recorded pursuant to Section 214 above, Developer shall have no further liability under this Section 316. Developer's liability with respect to individual units sold shall terminate on close of escrow for the sale of the respective units. Do [317] Submission of Evidence of Financing and Improvement Completion Documents As a condition precedent to Agency's obligation to make available any Agency assistance to Developer, and within the times established therefor in the Schedule of Performance (Attachment 4), Developer shall submit to Agency the following: 1. [318] Evidence of Financing. (a) The final loan documents for the financing of the acquisition and development of the Site and the construction of the Project, including: (a) a promissory note in an amount not to exceed Three Million Four Hundred Thousand Dollars ($3,400,000.00) (the "Construction Loan"); (b) a deed of trust securing the Construction Loan (the "Construction'Deed of Trust"); (c) all other loan documents between Developer and the lender issuing the Construction Loan and the Construction Deed of Trust (the "Construction Lender"); and (d) such other documents, as Agency, in its good faith discretion, determines will assist in the evaluation of whether Developer is able to acquire the Site, construct the Improvements and perform this Agreement. The final loan documents shall demonstrate that Developer has the requisite financing to pay through completion all costs of development, construction, marketing and sale of the Improvements, and enable Developer to perform and satisfy all of the covenants of Developer contained in this Agreement; (b) Proof of Equity in an amount not less than Two Hundred Thousand Dollars ($200,000.00) and sufficient to cover any gap between the financing available for the Project and the cost of the Project. "Equity" shall be defined to include cash (documented as segregated funds), booked deferred reimbursements and booked deferred Project overhead costs, and may include expended and booked relocation costs and the $65,000.00 amount shown on the acquisition cost line of the pro forma provided by Developer to Agency on July 12, 1996 (the "Pro Forma"). That $65,000.00 amount shall continue to be counted as Equity after deposit into Escrow. Developer shall provide a cash flow analysis for the Project that shows this minimum Equity level at all times until Agency's issuance of the Certificate of Completion. In addition, to ensure that the minimum Equity level is maintained, Developer shall provide Agency with written monthly reports showing the minimum Equity level by virtue of documented Segregated funds, documented unreimbursed expenses and/or documented deferred Project overhead costs. The $20'0,000.00 in Equity required in this subparagraph shall be over and above Developer's $150,000.00 in costs to operate the Project as a rental through Project completion, as reflected on the cash flow line of the Pro Forma; and (c) Proof of a financing commitment that will make available, to 1101-00003 34343_1 August 26, 1996 3.0 individual unit purchasers, various long term loan programs for their unit purchases. The loans should typically meet Fannie Mae, Freddie Mac and/or FHA guidelines and be marketable in the secondary loan marketplace. This requirement shall be satisfied by Developer's delivery to Agency of a letter from Developer's take-out lender cohtaining the following information: (i) a descriptiOn of several different financing options that the lender is committed to make available to unit purchasers at the Project, and (ii) either (A) a statement that Fannie Mae, Freddie Mac and/or FHA has approved of Agency's'secondary financing documents, which approval may be conditioned on Developer's fulfillment of certain requirements unrelated to the form and content of Agency's secondary financing documents, or (B) a statement that the take-out lender is prepared to certify to Fannie Mae, Freddie Mac, and/or FHA that Agency's secondary financing documents meet all of the requirements of Fannie Mae, Freddie Mac, and/or FHA, respectively. Agency's secondary financing documents, within the meaning of this Section 318, consist of the Affordable Promissory Note, the Affordable Deed of Trust, and the Right of First Refusal, each as defined in Section 602, below, and the deed containing the covenants required under Sections 702 and 802 below. Agency shall approve or reasonably disapprove the evidence of financing described in this paragraph 1 (the "Evidence of Financing") within the times established in the Schedule of Performance (Attachment 4). The failure of Agency to approve or disapprove any such Evidence of Financing within such time shall be deemed an approval. If Agency shall disapprove any such Evidence of Financing, Agency shall do so by written notice to Developer stating the reasons for such disapproval. Upon receipt of notice of disapproval, Developer shall promptly obtain and submit to Agency new Evidence of Financing. Agency shall approve or disapprove such new Evidence of Financing in the same manner and within the same period of time established in the Schedule of Performance (Attachment 4) for the approval or disapproval of the Evidence of Financing initially submitted to Agency. 2. [319] Improvement Completion Documents (a) Copies of the contract(s) between Developer and (i) any or all general contractors, if used by Developer, or (ii) subcontractors, if Developer acts as the general contractor, for the construction of the Improvements, certified by Developer to be true and correct copies thereof; (b) A detailed budget for the Project showing anticipated "hard" and "soft" costs or other evidence reasonably satisfactory to Agency establishing that the financing will be sufficient to pay off any outstanding acquisition costs and develop the Site as required by this Agreement; and (c) A performance bond in satisfying the requirements of Section 409, subparagraph (j) below. Agency shall approve or reasonably disapprove the improvement completion documents described in this paragraph 2 (the "Improvement Completion Documents") within the times established in the Schedule of Performance (Attachment 4) for the approval of Improvement Completion Documents. The failure of Agency to approve or disapprove the Improvement Completion Documents within such time shall be deemed an approval. If Agency shall disapprove any such Improvement Completion Documents, 1101-00003 34343_1 August26,1996 Agency shall do so by written notice to Developer stating the reasons for such disapproval. Upon receipt of notice of disapproval, Developer shall promptly obtain and submit to Agency new Improvement Completion Documents. Agency shall approve or disapprove such new Improvement Completion Documents in the same manner and within the same period of time established in the Schedule of Performance (Attachment 4) for the approval or disapproval of the Improvement Completion Documents initially submitted to Agency. E. [320] Prohibition Aqainst Transfer 1. [321] General Prohibition (a) ' No Assiqnments. The identity and qualifications of Developer as an experienced and successful developer and operator of multifamily heusing projects are of particular concern to Agency. It is because of this identity and these qualifications that Agency has entered into this Agreement with Developer. Except as otherwise expressly provided herein, no voluntary successor in interest of Developer shall acquire any rights or powers under this Agreement, by assignment or otherwise. Moreover, prior to the recordation of the Certificate of Completion, as defined in Section 325, below, Developer shall not, except as expressly permitted by this Agreement, assign or attempt to assign this Agreement or any right herein, no.r make any total or partial sale, transfer, conveyance, encumbrance to secure financing (except Agency-approved Evidence of Financing, or encumbrances approved by Agency under Section 323 below), assignment or lease of the whole or any part of the Site, the Improvements, or the Project without prior written approval of Agency, which approval shall not be unreasonably withheld pursuant to this Section 321. In the absence of specific written approval, by Agency, as provided above, no sale, transfer, conveyance, encumbrance to secure financing (except Agency-approved Evidence of Financing, or encumbrances approved by Agency under section 323 below), assignment or lease of the Site, the Improvements or the Project, or any portion thereof, shall be deemed to relieve Developer or any other party from any obligatiOns under this Agreement. (b) Agency Consideration of Requested Transfer. Agency agrees that it will not unreasonably withhold approval of a request made pursuant to this Section 321, provided (i) Developer delivers written notice to Agency requesting such approval, (ii) the proposed assignee or transferee possesses comparable development and/or operational experience and capability, and comparable net worth and resources, as the proposed transferor or assignor, and (iii) the proposed assignee or transferee executes an assignment and assumption agreement, in a form reasonably acceptable to Agency. Such notice shall be accompanied by evidence regarding the proposed assignee's or transferee's development qualifications and experience and its financial commitments and resources sufficient to enable Agency to evaluate the proposed assignee or transferee pursuant to the criteria set forth in this Section 321 and other criteria as reas°nably determined by Agency. Agency shall approve or disapprove the request within thirty (30) days of its receipt of Developer's notice and all information and materials required herein. In no event, however, shall Agency be obligated to approve the assignment or transfer of the Agency Loan pursuant to this Section 321, except to an Agency-approved assignee or transferee of Developer's rights in and to the Site. Within ten (10) days after the receipt of Developer's written notice requesting 1101-00003 34343_1 August 26, 1996 3.2 Agency approval of an assignment or transfer pursuant to this Section 321, Agency staff shall respond in writing by stating what further information, if any, Agency staff reasonably requires in order to determine the request complete and for Agency to determine whether or not to grant the requested approval. Upon receipt of such a response, Developer shall promptly furnish to Agency such further information as may be reasonably requested. (c) Proceeds of Transfer. If Agency consents to the transfer of Developer's interest in the Site, any proceeds of such transfer shall be applied first to the repayment of the Agency-approved financing, second to the repayment of the Agency Loan, third to the payment of Agency's Share of Rehabilitation Cost Savings ('if any), and any transfer proceeds which remain after making such payments shall be paid to Developer. (d) Successors and Assigns. This Agreement shall run with the land,, and all of the terms, covenants and conditions of this Agreement shall be binding upon Developer and the permitted successors and assigns of Developer. Whenever the term "Developer" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. . [322] Non-Applicability of Prohibition Aqainst Transfer for Sale of Individual Units Recognizing the Site will be developed with the intent to sell individual, owner- occupied units to the general public, the general prohibition against transfer outlined in Section 321, above, shall not be applicable to the sale of individual'units at the Site to the general public as part of this Agreement or to the transfer of "common area" property to the homeowners association being established, pursuant to the laws and regulations of the State of California, for the management of the Site. The general prohibition in Section 321, however, shall be applicable to the sale of more than two units to any person, group of persons or legal entities. 3. [323] No Encumbrances Except Mortgages, Deeds of Trust, Conveyances and Leases-Back or Other Conveyances for Financinq for Development Notwithstanding Section 321, 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 Improvements as required by this Agreement. Developer shall notify Agency in advance of any mortgage, deed of trust, conveyances and leaseback, or other form of conveyance for financing if Developer proposes to either increase encumbrances approved by Agency under Se.ction 318 above or enter into new financing before recordation of the Certificate of Completion, as defined in Section 325 below. Developer shall not enter into any such conveyance for financing without the prior written approval of Agency, and such approval shall not be unreasonably withheld or delayed. In no event, however, shall Agency be required to approve additional financing to which Agency would be expected to subordinate the Agency Loan, or which Agency, in its sole and absolute discretion, believes would jeopardize the ability of Developer to repay the Agency Loan, Agency's Share of Rehabilitation Cost Savings, Agency's Share of Proceeds, or any other amounts due Agency under this Agreement. 1101-0o003 34343_1 August 26, 1996 3.3 The words "mortgage" and "deed of trust" as used herein includes all other 'appropriate modes of financing real estate acquisition, construction and land development. Fo [324] Right of Agency 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 the Certificate of Completion, as defined in Section 325, below, Agency may cure the default prior to completion of any foreclosure. In such event, Agency shall be entitled to reimbursement from Developer of all costs and expenses incurred by Agency in curing the default. Agency 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. G. [325] Certificate of Completion Agency shall furnish Developer with a Certificate of Completion, in such fOrm as further defined in this Section 325, after (1) Agency receives written request therefor by Developer, and (2) Agency, in its reasonable discretion, determines that all Improvements have been completed and all construction and development and other obligations required of Developer, pursuant to this Agreement, have .been fulfilled (the "Certificate of Completion"). Agency shall furnish the Certificate of Completion within thirty (30) calendar days after request therefor by Developer. The Certificate of Completion shall constitute evidence of satisfactory completion of the requirements of this Agreement. The Certificate of Completion shall be in such form as to permit it to be recorded with the Orange County, California, Recorder's Office. After the recordation of the Certificate of Completion, any party then owning or thereafter purchasing or otherwise acquiring any interest in the Site or any portion thereof, including any unit constructed thereon, shall not (because of such ownership, purchase or acquisition) incur any obligation or liability under this Agreement, except that such party shall be bound by such covenants as required by this Agreement in Sections 700-702 and 802. If Agency refuses or fails to furnish the Certificate of Completion for the Project within thirty (30) calendar days after request therefor by Developer, Agency shall, within three (3) working days after expiration of such 30-day period, provide to Developer a written statement setting forth the reasons for such refusal or failure to furnish the Certificate of Completion. Said statement shall also contain Agency's opinion of such action Developer must take to obtain the Certificate of Completion. If Agency fails to provide such written statement within said 3-day period, Developer shall be deemed, conclusively and withoUt further action by Agency, to have satisfied the requirements of this Agreement with respect to the Site as if the Certificate of Completion had been issued therefor. The Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Improvements, or any part thereof. The Certificate of Completion is not a notice of completion as referred to in Section 3093 of the 1101-00003 34343_1 August 26. 1996 3.4 Civil Code. Ho [326] On-going Responsibility of Developer Commencing with Developer's execution of this Agreement and continuing through the recordation of a Certificate of Completion, Developer shall immediately notify Agency of its discovery of any Hazardous Substances on the Site. In the event that any Hazardous Substances are discovered, it shall be the sole responsibility of Developer, its heirs, assigns and successors in interest to undertake all remedial removal and/or other actions necessary to clean up all Hazardous Substances on or affecting the Site in accordance with all applicable federal, state and local laws, regulations, rules and policies. Further, commencing with Developer's execution of this Agreement and continuing through the recordation of the Certificate of Completion, Developer shall provide to Agency, upon reasonable written request by Agency (but, in no event, more than once a year), Developer's representation substantially similar to the following: 1. To the best of Developer's knowledge, using due diligence and reasonable investigation, the property is not in violation of any federal, state or local law, ordinance or regulation relating to environmental conditions on, under or about the Site, including, but not limited to, soil and groundwater conditions. 2. Neither Developer, nor any third parties (to the best of Developer's knowledge, after due inquiry and investigation) has used, generated, transported, manufactured, refined, produced, processed, stored, released, or disposed of on, under or about the Site or transported to or from the Site any "Hazardous Substances" nor does Developer intend to use the Site in the future for the purpose of. using, generating, manufacturing, refining, producing, storing, releasing, disposing, handling, transferring, processing or transporting of Hazardous Substances. IV. [400] FINANCIAL ASSISTANCE TO DEVELOPER/RELOCATION COSTS A. [401'] Purpose of Agency Financial Assistance to Developer The purpose of Agency financial assistance to Developer is to further the goals of the Redevelopment Plan by assisting Developer in the: (1) acquisition of the Site, (2) rehabilitation and upgrade of the 64 apartment units on the Site, which have been deemed to be a blighting influence on the Project Area; (3) conversion of the 64 units from rental apartments to owner-occupied condominium units; and (4) recordation of covenants requiring the maintenance of affordability, for the life of the Redevelopment Plan (i.e., until November 22, 2016), of (a) five (5) of such owner-occupied condominium units to moderate income households as defined by Section 50093 of the Health and Safety Code, (b) five (5) of such owner-occupied condominium units to Iow income households as defined by Section 50079.5 of the Health and Safety Code, and (c) four (4) of such Owner-occupied condominium units to very Iow income households as defined by Section 50105 of the Health and Safety Code. 1101 -O0003 34343_1 August 26, 1996 B. [402] Agency Loan 1. [403] Subject to all of the terms, covenants and conditions set forth herein, Agency shall lend to Developer an amount equal to One Million One Hundred Seventy-Four Thousand Dollars ($1,174,000.00) (the "Agency Loan"). It shall be the responsibility of Developer to obtain the additional funds necessary to develop the Site in accordance with this Agreement. 2. [404] The One Million One Hundred Seventy-Four Thousand Dollar ($1,174,000.00) amount of the Agency Loan is based on the following: (1) a permanent subsidy in an amount equal to Four Hundred Eighty-Nine Thousand Dollars ($489,000.00) (the "Permanent Subsidy Amount"), and (2) a loan in an amount equal to Six Hundred Eighty-Five Thousand Dollars ($685,000.00) (the "Repayment Amount"). The Six Hundred Eighty-Five Thousand Dollar ($685,000.,00) Repayment Amount is to be allocated as follows: Three Hundred Seventy-Four Thousand Dollars ($374,000.00) toward Developer's acquisition of the Site and Three Hundred Eleven Thousand Dollars ($311,000.00) toward the construction of the Improvements on the Site. The.Four Hundred Eighty-Nine Thousand Dollar ($489,000.00) Permanent Subsidy Amount and the Three Hundred Seventy-Four Thousand Dollar ($374,000.00) acquisition portion of the Repayment Amount shall be referred to hereinafter as the "Acquisition Funds." C. [405] Terms of Agency Loan 1. [406] Loan Documents. The Agency Loan shall be evidenced by Developer executing and delivering to Agency a promissory note (the "Promissory Note") in the form of Attachment 7 hereto, in 'the amount of the Agency Loan described in Section 403. The Promissory Note shall be executed concurrently herewith. The Promissory Note shali be secured by an irrevocable letter of credit and a deed of trust. The irrevocable letter shall (a) be in the amount of Fifty-Nine Thousand Dollars ($59,000.00), (b) be in form and substance acceptable to Agency's counsel and issued by such federally insured financial institution as Agency's Executive Director, or his designee, may reasonably approve, (c) secure the repayment of the Promissory Note, and the performance of all of Developer's obligations under the Promissory Note, the Deed of Trust (defined below) and this Agreement, and (d) shall terminate on the first escrow closing for a unit sold at the Project. The security for the irrevocable letter of credit may be cash that.is counted towards Developer's Equity, as described in Section 318 above. The deed of trust shall be recorded as a second priority deed 'of trust against the Site, subordinate only to the lien of the Construction Deed of Trust, which shall be in an amount not to exceed Three Million Four Hundred Thousand Dollars ($3;400,000.00) and shall be used for financing the acquisition of, and the construction of Improvements on, the Site. The deed of trust securing the repayment of the Promissory Note shall be in the form of Attachment 8 hereto (the "Deed of Trust"). 2. [407] Monetary Consideration. (a) Interest. The'Promissory Note (Attachment 7) shall bear no interest for the first twenty-four (24) months. Thereafter, the Promissory Note shall bear interest at the rate of seven percent (7%) per annum, compounded monthly, on the principal balance until paid. The Promissory Note shall be due and payable in full 'in 1101-00003 34343_1 August 26, 1996 16 three (3) years. No interest payments shall be required until the due date of the Promissory Note, when all principal and accrued interest shall be due and payable in full. (b) Agency Share. In consideration for the making of the Agency Loan, and for the initial interest free period, Agency shall be entitled to participate in the Project cost savings over the initial rehabilitation budget. The initial rehabilitation budget is agreed between the parties to be One Million One Hundred Thirty-Two Thousand Six Hundred Seventy-Four Dollars ($1,132,674.00). If actual rehabilitation costs should be less than that amount, Developer shall be entitled to keep the initial cost savings in an amount not to exceed One Hundred Thousand Dollars ($100,000.00), and the remaining cost savings shall be divided equally between Agency and Developer. Agency's share of such cost saVings shall be referred to herein as "Agency's Share of Rehabilitation Cost Savings." Within fifteen (15) business days following completion of the Improvements, Developer shall provide Agency with documentation, in form and substance reasonably satisfactory to Agency (the "Rehabilitation Costs Documentation"), of the actual rehabilitation costs. If the Rehabilitation Costs Documentation shows an amount owing to Agency hereunder, such Agency's Share of Rehabilitation Cost Savings shall be due and payable within twenty (20) business days following completion of the Improvements. Agency shall not issue the Certificate of Completion until Developer has paid the Agency's Share of Rehabilitation Cost Savings, if any. D. [408] Distribution of Agency Loan Proceeds Agency shall distribute the Agency Loan proceeds in increments, as provided below. 1. [409] Conditions Precedent to Disbursement of Acquisition Funds. Agency shall disburse the Acquisition Funds to the Escrow Holder on close of Escrow for Developer's acquisition of the Site, subject to the following terms and conditions: (a) Execution and Delivery of Documents. Developer shall have executed and delivered into Escrow the Promissory Note, the Deed of Trust and any other documents.and instruments required to be executed and delivered by Developer. (b) Recordation. The Escrow Holder is prepared to record the Deed of Trust against the Site, in the proper recording order pursuant to eScrow instructions approved by Agency. (c) Pro Forma Information. There shall be no material adverse change in the projected pro forma for the acquisition and development of the Site from the July 12, 1996 pro forma which has been prepared by Developer and delivered to Agency. (d) Financing. Agency shall have approved the Evidence of Financing, and all documentation related thereto, for the acquisition and development of the Site pursuant to Section 318 hereof, and such financing shall have been disbursed, 1101-00003 34343_.1 August 26, 1996 or shall be ready to be disbursed concurrently with the disbursement of the Acquisition Funds. (e) Property Appraisal. Developer shall have submitted to Agency a true and correct copy of an appraisal of the fair market value of the Site in its condition before close of Escrow, demonstrating to the satisfaction of Agency that the sum of the Construction Loan (as defined in Section 318) proceeds paid into Escrow plus the Acquisition Funds is not greater than the sum of the fair market value of the Site as of close of Escrow plus the amount of the irrevocable letter of credit described in subparagraph (k) below. (f) Budget. Developer shall have submitted to Agency and Agency shall have approved the budget for the development of the Project, as set forth in Section 319 hereof. (g) Title to Land. Agency shall be reasonably satisfied that upon the disbursement of the Acquisition Funds Developer will have good and marketable fee title to the Site, and there will exist thereon or with respect thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever other than liens for current real property taxes and assessments not yet due and payable, the Construction Deed of Trust in an amount not to exceed Three Million Four Hundred Thousand Dollars ($3,400,000.00), and any other matters specifically approved in writing by Agency. (h) Title Insurance. The Escrow Holder is Prepared at the time of the disbursement of the Acquisition Funds to issue, or cause to be issued, to Agency, by a title insurance company approved by Agency, a CLTA lender's title insurance policy (a) showing fee simple title to the Site as vested in Developer and Agency as the insured lender, (b) with mechanic's lien coverage and such endorsements as Agency may require, and (c) insuring the Deed of Trust as a lien upon the Site subject only to the Construction Deed of Trust in an amount not to exceed Three Million Four Hundred Thousand Dollars ($3,400,000.00) and any other items approved by Agency herein. (i) Insurance. Developer shall have furnished to Agency proof of insurance coverage as provided in Sections 1001 and 1002. (j) Performance Bond. Developer, as principal, shall have provided a performance bond guaranteeing the lien-free completion of the Improvements. The bond shall be in form and substance acceptable to Agency's counsel and issued by a bonding company that is an Admitted Surety in the State of California. (k) Letter of Credit. Developer shall have provided Agency with an irrevocable letter of credit, in the amount of Fifty-Nine Thousand Dollars ($59,000.00), in form and substance acceptable to Agency's counsel and issued by' such federally-insured financial institution as Agency's Executive Director, or his designee, may reasonably approve, securing the performance of all of Developer's obligations hereunder and under the Promissory Note and Deed of Trust. The irrevocable letter of credit shall guarantee such performance and the repayment of the Agency Loan in all events, irrespective of the equity in the Project. The irrevocable letter of credit shall terminate on the date of the first escrow closing for a unit sbld at the 1101-00003 34343_1 August 26, 1996 3.8 Project. Agreement; and (I). Default. Developer is not then in default under this (m) Representations and Warranties. All representations and warranties of Developer herein contained shall be true and correct. 2. [410] Disbursement of Remainder of Agency Loan. After close of Escrow, Agency shall disburse the remaining Three Hundred Eleven Thousand Dollar ($311,000.00) portion of the Agency Loan as follows: (a) Conditions Precedent. Agency shall not be obligated to make any further Agency Loan disbursements until all of the following conditions are fulfilled to the satisfaction of Agency: (i) Close of Escrow. Escrow shall have closed and all of the conditions precedent described in paragraph 1 above shall have been satisfied. (ii) Permits and approvals. Developer shall have obtained (or shall be eligible to obtain, upon payment of required fees) any and all permits and approvals required by Agency or any other governmental agency for the development of the Site in accordance with this Agreement. (iii) Construction Drawings. Developer shall have submitted to Agency and Agency shall have approved the Construction Drawings for the Site, as set forth in Section 305 hereof. (iv) Construction Contracts. Developer shall have submitted to Agency one or more construction contracts for the development of the Site in conformance with the terms of this Agreement, and Agency shall have approved such construction contracts pursuant to Section 312 hereof. (v) Proof of Equity. Developer shall have continued to verify, to the satisfaction of Agency, that Developer is maintaining at all times a minimum Equity (as defined in Section 318) level of not less than Two Hundred Thousand Dollars ($200,000). (vi) Relocation. Agency shall have adopted a relocation plan for the rehabilitation of the Project. (vii) Applicable Laws and Approvals. Developer shall have complied with all applicable laws, rules and regulations required for the development of the Project and obtained any necessary governmental approvals. (b) Disbursement Procedures. Provided the conditions precedent set forth in subparagraph (a) above have then been met, and shall continue to be met at the time of each loan draw request as described below, Agency shall disburse the remainder of the Agency Loan as follows: 1101-00003 34343_1 August 26, 1996 (i) Loan Draw Requests. Developer shall be responsible for the payment of all general contractors, subcontractors and materialmen for the Project. Developer will submit construction loan draw requests to Agency and Developer's Construction Lender, seeking reimbursement for such payments. The loan draw requests will be for payment of work performed in the construction of the Agency- approved Improvements and in accordance with the Scope of Development and the approved Construction Drawings. Each loan draw request will be approved by each of the Construction Lender and Agency. Each loan draw request shall clearly state the amount of the request, the specific work completed on the Improvements, and the identity of the party who performed the individual items of completed work (i.e., Developer, general contractor, subcontractor or materialman) Each loan draw request will be accompanied by a conditional lien release, in form and substance satisfactory to Agency's counsel, from each of Developer and each general contractor, subcontractor and/or materialman who performed the individual items of completed work for which the particular payment is being made. The Construction Lender will inspect the work and confirm that the work has been completed or that materials have been delivered to the Site as agreed and have been secured. The Construction Lender will inform Agency that it is prepared to disburse its share of the loan draw request and request that Agency fund its share concurrently. Each loan draw request shall be paid one-half by each of the Construction Lender and Agency, except as provided in subparagraph (ii) below, and Section 412, regarding Relocation Costs. Agency shall deliver its check, payable to Developer and in the amount of the Agency's one-half share of the particular approved loan draw request, to Developer in exchange for the concurrent delivery to Agency of the conditional lien release of Developer and of each general contractor, subcontractor, and/or materialman who performed the completed work in question. Notwithstanding the foregoing, however, the final payment to be made hereunder shall not be made except in exchange for an unconditional lien release, for the entire Project, from each of Developer and each general contractor, subcontractor and materialman who has performed work or furnished materials in connection with the Improvements. (ii) Relocation Costs. Agency shall withhold $100,000 in Agency Loan disbursements until Agency, at its sole discretion, determines that Agency Relocation Costs, as defined in Section 412 below, will not exceed $400,000. In the event it is determined that Relocation CoSts will exceed $400,000, Agency shall notify Developer in writing of Developer's portion of any excess Relocation Costs (the ' "Developer's Excess Relocation Costs"). Developer shall notify Agency, within 30 days after receipt of Agency's notice, whether it wishes Agency to reduce the Agency Loan by the amount of Developer's Excess Relocation Costs or whether it wishes to provide Agency with a cash payment in the amount of Developer's Excess Relocation Costs. If Developer makes a cash payment, the remaining One Hundred Thousand Dollars ($100,000.00) of the Agency Loan may be disbursed subject to all the requirements of subparagraph (i) above. 3. [411] Repayment. The principal balance of the Promissory Note (Attachment 7) shall be due and payable as follows: (a) Repayment Amount. The portion of the Promissory Note pertaining to the Six Hundred Eighty-Five Thousand Dollar ($685,000.00) Repayment Amount shall be repaid as provided in this subparagraph (a). Commencing with the first escrow closing for a unit sold at the Project, Developer shall pay ninety percent (90%) of 1101-00003 34343_1 August26,1996 2O the net sales proceeds of each unit sold at the Project to the Construction Lender and ten percent (10%) of the net sales proceeds of each unit sold at the Project to Agency. Net sales proceeds shall be defined as gross sales proceeds minus sales and marketing costs and Developer's closing costs. After the Construction Lender has been repaid the Three Million Four Hundred Thousand Dollar ($3,400,000.00) principal amount, plus any interest accrued thereon, owing to it under the Construction Loan and Construction Deed of Trust, but excluding the amount of any additional principal advances as may have been made pursuant to the Construction Loan and without written Agency approval and the amount of any interest thereon or costs or expenses pertaining thereto, Developer shall pay to Agency one hundred percent (100%) of the net sales proceeds of each unit sold at the Project minus the overhead allocation permitted to Developer under the Pro Forma (which allocation is subject to adjustment as necessary on account of changed loan terms since the date of the Pro Forma and to Developer's maintenance of the minimum required Equity level under Section 318), until such time as the Repayment Amount, together with all interest, costs and expenses pertaining thereto, is paid in full. In the event escrow has closed for the sixty-fourth unit to be sold at the Project, and net sales proceeds are insufficient to pay the. amounts due hereunder, such remaining amounts shall be immediately due and payable in full. Notwithstanding the foregoing, however, the Repayment Amount, together with all interest, costs and expenses pertaining thereto, shall be due and payable in full on the date that is three years following close of Escrow for the acquisition of the Site, irrespective of the amount of sales proceeds available for payments and irrespective of whether the Construction Lender has then been paid the amounts owing to it under the Construction Loan. (b) Permanent Subsidy Amount. The portion of the Promissory Note pertaining to the Permanent Subsidy Amount will not be required to be repaid if Developer performs all of its obligations under this Agreement, the Promissory Note, the Deed of Trust, the Agreement to Be Recorded Affecting Real Property, and any other agreements executed by the parties in connection with this Agreement, and the Certificate of Completion is recorded. If the Certificate of Completion has not then been recorded, the Permanent Subsidy Amount, and all interest, costs and expenses pertaining thereto, shall be due and payable in full on the date that is three years following close of Escrow for the acquisition of the Site, irrespective of the amount of sales proceeds available for payments and irrespective of whether the Construction Lender has then been paid the amounts owing to it under the Construction Loan. (c) Reconveyance of Deed of Trust and Cancellation of Promissory Note. Agency shall make a request for partial reconveyance of the Deed of Trust with respect to each of the fourteen (14) respective affordable units sold, on close of escrow for each such respective affordable unit, provided (1) Developer is not then in material default Under the terms of this Agreement, the Promissory Note, the Deed of Trust, the Agreement to be Recorded Affecting Real Property, or any other agreement executed by the parties in connection with this Agreement, (2) a deed containing the covenants required by Sections 702 and 802, and in the form approved by Agency, has been recorded for the respective unit, (3) the purchaser of the respective unit has executed and delivered the Affordable Promissory Note to Agency, (4) the Affordable Deed of Trust for the respective unit has been recorded in the priority required hereunder, (5) the Right of First Refusal for the respective unit has been recorded in the priority required hereunder, (6) the portion of the net sales proceeds due 1101-00003 34343_1 August 26. 1996 23. Agency on close of the respective escrow has been paid, and (7) and such other terms and conditions as are required under the Deed of Trust have been fulfilled. Agency shall make a request for partial reconveyance of the Deed of Trust with respect to each individual market rate unit sold, on close of escrow for each such respective unit, provided, (1) Developer is not then in material default under the terms of this Agreement, the Promissory Note, the Deed of Trust, the Agreement to Be Recorded Affecting Real Property, or any other agreement executed by the parties in connection with this Agreement, (2) the portion of the net sales proceeds due Agency on close of the respective escrow has been paid, and (3) a deed containing the covenants required by Sections 701 and 802, and in the form approved by Agency, has been recorded for the respective unit. ' Notwithstanding the foregoing, however, Agency will not be obligated to request a partial reconveyance of the Deed of Trust with respect to the sixty-fourth (64th) unit to be sold at the Site (i.e., the "Request for Final Reconveyance"), if Agency determines, in its reasonable discretion, that either (a) the proceeds of the sale of such sixty-fourth (64th) unit may be insufficient to repay the amounts owing under the Promissory Note and Deed of Trust in full, or (b) all terms and conditions of thiS Agreement, the Promissory Note, the Deed of Trust, the Agreement to Be Recorded Affecting Real Property, or any other agreement executed by the parties in connection with this Agreement have not been satisfied in full (collectively, the "Final ReconveYance Conditions"). Developer shall provide Agency with written notice when only one unit remains to be sold. Within ten (10) business days of receipt of that notice, Agency shall provide Developer with written notice as to whether it has determined to withhold the Request for Final Reconveyance on close of escrow for such unit. Agency's written notice shall identify the Final Reconveyance Condition that has not been met. Agency shall provide the Request for Final Reconveyance as soon thereafter as all of the Final Reconveyance Conditions are met. In addition, no portion of the Promissory Note shall be cancelled at the time of the individual partial reconveyances. The Promissory Note shall be cancelled once all of Developer's obligations under this Agreement, the Promissory Note, the Deed of Trust, the Agreement to Be Recorded Affecting Real Property, and any other agreements executed by the parties in connection with this Agreement, have been fulfilled, anid the Certificate of Completion has been recorded. E. [412] Relocation Developer has represented that it will make a good faith effort to undertake the development, in such a manner as to minimize, to the maximum extent feasible, any relocation of existing tenants in accordance with applicable law, including providing opportunities for existing tenants to purchase their units. The tenants renting apartment units at the Site, in any event, shall be provided all rights, benefits and services which are required under applicable laws and regulations. In the event that relocation is necessary, Agency shall provide relocation assistance and benefits, as required by law and any implementing regulations adopted by the State of California and Agency (collectively the "Relocation Laws"), to each tenant household required to be temporarily or permanently relocated from the Site for purposes of completing the Project. Agency shall be responsible for administering determinations of eligibility for 1101-00003 34343_1 August 26, 1996 assistance, benefits and payments pursuant to the relocation. The cost of permanent or temporary relocation shall include, but not be limited to consultant fees, relocation benefits paid to eligible persons as determined by Agency, attorney fees and witness fees and court costs arising or in any way connected with claims for relocation assistance or benefits as may be asserted by any resident of the Site ("Relocation Cost"). Developer and Agency shall be responsible for Relocation Costs based on the following formula: 1) Agency shall pay the first $400,000; 2) Developer shall pay any excess Relocation Costs, not to exceed $100,000, and 3) thereafter Agency shall be responsible for any additional Relocation Costs. V. [500] AFFORDABLE HOUSING REQUIREMENT A. [501] Affordable Housing Requirement Developer shall identify and set-aside: (1) five (5) dwelling units to be sold at a price no higher than the "Affordable Housing Cost" for sale to moderate income households as defined in Section 504, below, (2) five (5) dwelling units to be sold at a price no higher than the "Affordable Housing Cost" for Iow income households as defined in Section 505, below, and (3) four (4) dwelling units to be sold at a price no higher than the "Affordable Housing Cost" for sale to very Iow income households as defined in Section 506, below. Those units that are to be priced no higher than the Affordable Housing Cost for Moderate Income Households shall be sold exclusively to moderate income households as defined in Section 504, below. Those units that are to be priced no higher than the Affordable Housing Cost for Low Income Households shall be sold exclusively to Iow income households as defined in Section 505, below. Those units that are to be priced no higher than the Affordable Housing Cost for Very-Low- Income Households shall be sold exclusively to very Iow income households as defined in Section 506, below. Developer, within the time identified in the Schedule of Performance (Attachment 4) shall submit these units to Agency for approval. Agency, in its reasonable discretion, shall approve, in writing and within the time identified in the Schedule of Performance (Attachment 4), the specific units to be sold exclusively to moderate income households, Iow income households, and very Iow income households, respectively. B. [502] Purchaser Selection Process and Criteria Within the time established in the Schedule of Performance (Attachment 4), .Developer shall present to Agency, for approval in its reasonable discretion, a moderate ~ncome purchaser selection process and criteria, a Iow income purchaser selection process and criteria, and a very-low income purchaser selection process and criteria, each of which criteria shall meet the goals of this Agreement and the Redevelopment Plan. Developer shall also, within the time established in the Schedule of Performance, present to Agency for approval in its reasonable discretion the initial sales prices for those units identified as moderate income, Iow income, and very Iow income units, identified pursuant to Section 501 above. Developer has .informed Agency that the initial 1101-00003 34343_1 August 26, 1996 23 sales price at which similar non-restricted units will be offered for sale to the general public will be Eighty Six Thousand Dollars ($86,000.00) for Plan I units and Eighty Seven Thousand Four Hundred Dollars ($87,400.00) for Plan 2 units. At no time shall any moderate income, Iow income or very Iow income unit be priced for sale at a price higher than that at which similar non-restricted units are then offered for sale to the general public. C. [503] Definition of Moderate, Low and Very-Low Income Households 1. [504] Moderate income Household. For the purposes of this Agreement, "moderate income household" as more particularly defined in Health and Safety Code Section 50093, shall mean persons and families whose adjusted family income (1) does not exceed one hundred twenty percent (120%) of the Orange County Median Income, as defined by the State of California Department of Housing and Community Development, but (2) does exceed the income limit for lower income households, as defined in Health and Safety Code Section 50079.5. 2. [505] Low Income Household. For the purposes of~his Agreement, "low income household" as more particularly defined in Health and Safety Code Section 50079.5, shall mean persons and families whose adjusted family income does not exceed eighty (80%) of the Orange County Median Income, as defined by the State of California Department of Housing and Community Development. 3. [506] Very-Low Income Household. For the purposes of this Agreement, "very-low income household" as more particularly defined in Health and Safety Code Section 50105, shall mean persons and families whose adjusted family income does not exceed 50% of the Orange County Median Income, as defined by the State of California Department of Housing and Community Development. D. [507] Definition of Affordable Housing Cost 1. [508] Moderate Income Household. "Affordable Housing Cost" for moderate income households shall mean the "Affordable Housing Cost" for moderate income households, as defined in Health and Safety Code section 50052.5, and as generally described below. "Affordable Housing Cost" for moderate income households shall mean a price per unit which results in annual housing payments for the purchaser which shall not exceed thirty-five percent (35%) times one hundred ten percent (110%) of the Orange County Median Income, adjusted for family size, and shall take into account principal and interest, loan insurance, property taxes, fire and casualty insurance, utilities and the homeowners association fees. In addition, for moderate income households, "Affordable Housing Cost" (taking into account principal and interest, loan insurance, property taxes, fire and casualty insurance, utilities and the homeowners association fees) shall not be less than twenty-eight percent (28%) of the gross income of the household. In accordance with Health and Safety Code section 50052.5(b)(3), Agency has determined and hereby agrees that, for any moderate income household that has a gross income that exceeds one hundred ten percent (110%) of the Orange County Median Income adjusted for family size, the thirty-five percent (35%) maximum component of the "Affordable Housing Cost" limitation described above need not be 1101-00003 34343_1 August 26, 1996 applied. 2. [509] Low Income Household. "Affordable Housing Cost" for Iow income households shall mean the "Affordable Housing Cost" for lower income households, as defined in Health and Safety Code Section 50052.5, and as generally described below. For Iow income hoUseholds whose gross incomes exceed the maximum income for very Iow income households and do not exceed seventy percent (70%) of the Orange County Median Income, adjusted for family size, "Affordable Housing Cost" shall mean a price per unit which results in annual housing payments for the purchaser which shall not exceed thirty percent (30%) times seventy percent (70%) of the Orange County Median Income, adjusted for family size, and shall take into account principal and interest, loan insurance, property taxes, fire and casualty insurance, utilities and the homeowners association fees. In accordance with Health and Safety Code Section 50052.5(b)(2), Agency has determined and hereby agrees that, for any Iow income household that has a gross income that exceeds seventy percent (70%) of the Orange County Median Income (but does not exceed eighty percent (80%) of the Orange County Median income), adjusted for family size, the thirty percent (30%) "Affordable Housing Cost" limitation described in the preceding sentence need not be applied. 3. [510] Very-Low Income Household. "Affordable Housing Cost" for very Iow income households shall mean a price per unit which results in annual housing payments for the purchaser which shall not exceed thirty percent (30%) times fifty percent (50%) of the Orange County Median Income, adjusted for family size as provided in Health and Safety Code Section 50052.5, and shall take into account principal and interest, loan insurance, property taxes, fire and Casualty insurance, utilities and the homeowners association fees. VI. [600] AGENCY FINANCIAL ASSISTANCE TO VERY-LOW, LOW, AND MODERATE INCOME BUYERS A. [601] Agency Subsidy Loan for Affordable Units 1. [602] Promissory Note, Deed of Trust and Riqht of First Refusal Each purchaser of a unit identified in Section 501, above, shall execute and deliver to Agency, upon the close of escrow for the purchase of the unit, a promissory note, in the form of Attachment 9 hereto (or in such substantially similar form as Agency may subsequently direct), in the amount of Seven Thousand Five Hundred Dollars ($7,500.00) (the "Agency Subsidy Loan" or the "Affordable Promissory Note"). The Affordable Promissory Note (Attachment 9) shall be secured by a deed of trust which shall be recorded as a lien against the property and subordinate to any trust deeds required for financing the purchase of the unit. The deed of trust shall be in the form of Attachment 10 hereto (or in such substantially similar form as Agency may subsequently direct) (the "Affordable Deed of Trust"). If, on November 22, 2016, either the purchaser, or a transferee who has assumed the Affordable Promissory Note pursuant to Section 603 below, owns the unit originally ac.quired with the proceeds of theAffordable Promissory Note, then the Affordable Promissory Note shall be cancelled at that time. 1101-00003 34343_1 August26.1996 ?.5 In addition, each purchaser of a unit identified in Section 501, above, shall execute, upon the close of escrow for the purchase of the unit, a Resale Restriction Agreement and Option to Purchase, in the form of Attachment 11 hereto (or in such substantially similar form as Agency may subsequently direct) (the "Right of First Refusal"). The purchaser's execution of the Right of First Refusal and the delivery of the same to the escrow holder for recordation shall be a condition precedent to Agency's obligation to accept the Affordable Promissory Note and Affordable Deed of Trust, with respect to the .particular unit being sold. The Right of First Refusal shall be recorded through escrow ~mmediately after the deed conveying the unit to the purchaser, and before any deed of trust or other financing documents affecting the unit conveyed, 2. [603] Resale Restrictions If, prior to November 22, 2016, the purchaser of an affordable unit, as identified by Developer and approved by Agency pursuant to Section 501, above, sells the unit, the purchaser must sell it at an Affordable Housing Cost, as defined in Section ' 507, to another moderate income person or household, a Iow income person or household, or a very-low income person or household, as applicable and as defined in Section 503, who assumes the obligations under the Affordable Promissory Note described in Section 602 above, with the prior written consent of Agency. Agency shall consent to the assumption, 'by such transferee, of the obligations under the Affordable Promissory Note, on receipt of evidence, reasonably satisfactory to Agency, that the sales price qualifies as an Affordable Housing Cost, as defined in Section 507, and the transferee qualifies as a moderate income person or household, a Iow income person or household, or a very-low income person or household, as applicable and as defined in Section 503. If either of these conditions is not met, then the provisions of Section 604 below shall apply. 3. [604] Alternative to Resale Restrictions If, prior to November 22, 2016, the purchaser of an affordable unit, as identified by Developer and approved by Agency pursuant to Section 501, above, sells the unit but does not comply with Section 603, aboVe, the purchaser shall repay to Agency the principal balance of the Affordable Promissory Note described in Section 602 above and, in addition, shall pay to Agency the "Agency's Share of Equity" earned in the unit during the time the purchaser was the owner of the unit. "Agency's Share of Equity" shall be the product of: the ratio that the Agency Subsidy Loan bears to the sales price at the time of the original purchase, times the equity earned in the unit during .the time the purchaser was the owner the unit. "Equity" shall be defined as the difference between the sales price at which the purchaser enters into a contract to resell the unit and the sum of (i) any mortgages outstanding at the time the unit is resold, including the Affordable Deed of Trust securing the Affordable Promissory Note described in Section 602 above, and any other mortgages oWed to Agency, (ii) the down payment the purchaser originally paid at the time purchaser bought the unit, and (iii) normal and reasonable loan fees and closing costs paid for bY purchaser when originally purchasing the unit. 1101-00003 34343_1 August 26, 1996 4. [605] Covenants In addition to such other covenants required by this Agreement, DevelOper shall cause to be included in the grant deed for the sale of each unit the Covenants identified in Section 702, below. B. [606] Mortgage Credit Certificate Program Providing Agency has adequate Mortgage Credit Certificate authority available to it, Agency shall make available Mortgage Credit Certificates to all purchasers of units who: (1) are first-time home buyers, and (2) meet the requirements for a Mortgage Credit Certificate, as issued by the United States Internal Revenue Service and the County of Orange. If Agency does not have adequate Mortgage Credit Certificate authority to make Mortgage Credit Certificates available to all purchasers of units who meet the qualifications set forth in the preceding sentence, priority in the issuance of certificates, provided any authority is available, shall be given first to such.purchasers · who also qualify as very-low income households, as defined in Section 506 above, second to such purchasers who also qualify as Iow income households, as defined in Section 505 above, third to such purchasers who also qualify as moderate income households, as defined in Section 504 above, and fourth to other such purchasers of units at the Site. VII. [700] ANTI-SPECULATION PROVISIONS In order to achieve a stable community of owner-occupied units, to avoid artificial inflation of prices caused by resales to speculators and to prevent scarcity caused by vacant homes awaiting resale by speculators, Developer covenants and agrees to require that the residences be owner-occupied as defined in Section 704. A. [701] Non-Restricted Units For the purposes of implementing this Section 700, Developer shall cause to be included in the grant deed for the sale of each unit, except those units identified by Developer and approved by Agency pursuant to Section 501 above, the following language: "The grant made by this Deed shall be conditioned upon and subject to the following covenants, conditions and restrictions: o Grantee shall use and occupy the premises as Grantee's principal place of residence upon acquisition of title or possession, whichever is earlier, and Grantee shall not transfer any interest in the premises, nor enter into any sale of the premises prior to the close of escrow, for the sale of the Premises to Grantee; and ° Occupancy shall be limited to five (5) persons. Notwithstanding the foregoing, this occupancy restriction shall not apply if Grantee was a tenant of the premises as of ,1996 [Insert date Developer acquired the Site]; and 1101-00003 34343_1 August 26. 1996 o Any transfer of any interest in the premises, or any contract or lease or sale of the premises prior to the acquisition of title to the premises by Grantee shall be void; and , Except as set forth in this Paragraph 4, Grantee shall use and occupy the premises as Grantee's principal place of residence immediately upon the close of escrow and shall continue to so use and occupy the premises for the duration of Grantee's ownership of the premises. For a period of five (5) years from the date of this deed, Grantee shall not lease or rent the premises for any reason unless Grantee obtains the prior written consent of the Tustin Community Redevelopment Agency, which consent shall not be unreasonably withheld. After such five (5) year period, Grantee may lease or rent the premises without restriction; and o The provisions of this part shall terminate and become void automatically on November 22, 2016 and the same shall constitute covenants which shall run with the land and be binding upon Grantee and Grantee's successor in interest, and all parties having, or acquiring any right, title interest in or to the Premises; and , The covenants, conditions and restrictions established by this part are made expressly for the benefit of and shall inure to the Tustin Community Redevelopment Agency and the City of Tustin, a municipal corporation." B. [702] Moderate, Low and Very-Low Income Units For the purposes of implementing this Section 700 for those units identified by Developer and approved by Agency pursuant to Section 501 above as for sale to moderate, Iow or very-low income households, as applicable, Developer shall cause to be included in the grant deed for the. sale of each unit, the following language (or such substantially similar language as Agency may subsequently direct in writing): I o , "The grant made by this Deed shall be conditioned upon and subject to the following covenants, conditions and restrictions: Grantee shall use and occupy the premises as Grantee's principal place of residence upon acquisition of title or possession, whichever is earlier, and Grantee Shall not transfer any interest in the premises, nor enter into any sale of the premises prior to the close of escrow for the sale of the Premises to Grantee; and · 'Occupancy shall be limited to five (5) persons. Notwithstanding the foregoing, this occupancy restriction shall not apply if Grantee was a tenant of the premises as of ,1996 [Insert date Developer acquired the Site]; and . o Any transfer of any interest in the premises, or any contract or lease or sale of the premises prior to the acquisition of title to the premises by Grantee shall be void; and 1101-00003 August 26, 1996 28 . o o Except as set forth in this Paragraph 4, Grantee shall use and occupy the premises as Grantee's principal place of residence immediately upon the close of escrow and shall continue to so use and occupy the premises for the duration of Grantee's ownership of the premises. For a period of five (5) years from the date of this deed, Grantee shall not lease or rent the premises for any reason unless Grantee obtains the prior written consent of the Tustin Community Redevelopment Agency ("Agency"), which shall be granted if the Grantee demonstrates, to the reasonable satisfaction of Agency, the proposed rental is at affordable cost, as defined in Health and Safety Code Section 50053, to [Insert applicable clause depending on income level of grantee: a moderate income person or family, as defined in Health and Safety Code Section 50093/a Iow income household, as defined in Health and Safety Code Section 50079.5/a very Iow income household, as defined in Health and Safety Code Section 50105]. After such five (5) year period, Grantee may lease or rent the premises without restriction; and If, prior to November 22, 2016, Grantee sells the premises, Grantee must sell it at an Affordable Housing Cost, as defined in Section 50052.5 of the Health and Safety Code, for a [Insert applicable clause depending on income level of grantee: moderate income person or family, as defined in Section 50093 of the Health and Safety Code, and the moderate/Iow income household, as defined in Section 50079.5 of the Health and Safety Code, and the Iow/very-low income household, as defined in Section 50105 of the Health and Safety Code, and the very-low] income transferee, with the prior written consent of Agency, must assume the obligations under the promissory note, in the original principal amount of Seven Thousand Five Hundred_ Dollars ($7,500.00), between Grantee, as obligor, and Agency, as payee, which promissory note (the "Agency Promissory Note") is secured by a deed of trust recorded of even date herewith. Agency shall consent to the assumption, by such transferee, of the obligations under the Agency Promissory Note, on receipt of evidence, reasonably satisfactory to Agency, that the sales price qualifies as an Affordable Housing Cost, as defined in Section 50052.5 of the Health and Safety Code, for a [Insert applicable provision for income level: moderate income person or family, as defined in Section 50093 of the Health and Safety Code/Iow income household, as defined in Section 50079.5 of the Health and Safety Code/very-low income household, as defined in Section 50105 of the Health and Safety Code], and the transferee qualifies as a [Insert applicable provision for income level: moderate income person or family, as defined in Section 50093 of the Health and 'Safety Code/low income household, as defined in Section 50079.5 of the Health and Safety Code/very-low income household, as defined in Section 50105 of the Health and Safety Code]; and If, prior to November 22, 2016, Grantee sells the premises but does not comply with No. (5), above, Grantee shall repay the Agency the principal balance of the Agency Promissory Note, and, in addition, shall pay to Agency the "Agency's Share of Equity" earned in the unit during the time 1101-00003 August 26, 1996 ?.9 Grantee held title to the unit. "Agency's Share of Equity" shall be the product: of the ratio that the Seven Thousand Five Hundred Dollars ($7,500.00) bears to the contracted sales price at the time of the original purchase, times the equity earned in the unit during the time the purchaser was the owner the unit. "Equity" shall be defined as the difference between the sales price at which the purchaser enters into a contract to resell the unit and the sum of (i) any mortgages outstanding at the time the unit is resold, including the Agency Promissory Note, (ii) the down payment the purchaser originally paid at the time purchaser bought the unit, and (iii) normal and reasonable loan fees and closing costs paid for by purchaser when originally purchasing the unit; and 7. The provisions of this part shall constitute covenants which shall run with the land and be binding upon Grantee and Grantee's successors in interest, and all parties having, or acquiring any right, title interest in or to the Premises; and 8. The covenants, conditions and restrictions established by thi~ part are made expressly for the benefit of and shall inure to Agency and the City of Tustin, a municipal corporation; and 9. The provisions of this part and the covenants running with the land shall terminate automatically and become thereafter void on the earlier to occur of: (1) November 22, 2016, (2) payment by Grantee of Seven Thousand Five Hundred Dollars ($7,500.00) plus the Agency's Share of Equity pursuant to No. (6) above, (3) the date on which the premises are Conveyed by trustee's deed pursuant to foreclosure of the deed of trust of any institutional lender whose deed of trust has first priority over all other deeds of trust affecting the premises, (4.) the date of any deed-in-lieu of foreclosure pursuant to which the premises are conveyed to any institutional lender whose deed of trust has first priority over all other deeds of trust affecting the premises, or (5) the date of any assignment, to the Department of Housing and Urban Development, of both (a) a note which is (i) payable to any institutional lender and (ii) secured by a deed of trust that has first priority over all other deeds of trust affecting the premises, and (b) such deed of trust." C. [703] Fulfillment of Developer Obligation The responsibility of Developer to assure compliance with this Section 700 shall be fulfilled upon the recordation of grant deeds containing the covenants enumerated above for each of the units at the Site. Following the recordation of each of such grant deeds, it shall be the responsibility of Agency to enforce such covenants with respect to each such unit conveyed. D. [704] Definition of Owner Occupied. "Owner-Occupied" shall mean that the residences are occupied by the owner thereof, as said owner's principal place of residence, for the duration of each of said ' owner's ownership thereof. For the purpose of this Agreement, "owner" shall mean the 1101-0(X)03 August 26, 1996 3O individual(s) appearing on the title of the property. VIII. [800] NON-DISCRIMINATION A. [801] 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, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any residential uses 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. B. [802] Form of Non-discrimination and Non,Segregation Clauses Developer shall refrain from restricting the rental, sale or lease (including sublease) of the Site, or any residential units developed on the Site, on the basis of race, color, creed, religion, sex, marital status, age, disability, national origin or ancestry of any person. All.deeds, leases or contracts.for the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Site or any portion thereof, including any residential units developed on the Site, shall contain or be subject to substantially the · following non-discrimination or non-segregation clauses: 1. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that: (1) 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, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, and (2) neither the grantee himself or herself, nor any person claiming under or through him or her, shall establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." . In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "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, disability, age, ancestry or national origin in the leasing, subleasing: transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the 1101-00003 34343_1 August 26, 1996 33. o lessee himself or herself, or any person claiming under or through him or her, 'establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." In contracts: "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, disability, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises. The foregoing provisions shall be binding upon and shall obligate the. contracting party or parties and any subcontracting party or parties, or other transferees under this instrument and shall be covenants running with the land." C. [803] Effect and Duration of Covenants The Covenants established in this Agreement shall, without regard to technical classification and designation, be binding on Developer and any succesSor in interest to the Site or any part thereof for the benefit and in favor of Agency, its successors and assigns, and the City. Such covenants as are to survive the issuance of the Certificate of Completion by Agency shall be as contained in the Agreement to Be Recorded Affecting Real Property in the form of Attachment 6 hereto and shall remain in effect for the periods specified therein. The covenants in Sections 801 and 802 of this Agreement, insofar as they relate to anti-discrimination and non-segregation, shall remain in effect in perpetuity. IX. [900] LIENS AND STOP NOTICES Developer shall not allow to be placed on the Site or any part thereof any lien or stop notice. If a claim of a lien or stop notice is given or recorded affecting the Improvements or the Site, Developer shall, within thirty (30) days of such recording or service or within five (5) days of Agency's demand, whichever last occurs: (a) pay and discharge the same; or (b) effectuate the release thereof by recording and delivering to Agency a surety bond in sufficient form and amount, as determined by Agency; or (¢) provide Agency with other assurances which Agency deems, in its sole and absolute discretion, to be satisfactory for the payment of such lien or bonded stop notice and for the full and continuous protection of Agency from the effect of such lien or bonded stop notice. ' 1101-0(X)03 August 26, 1996 X, [~000] A. [1001] INSURANCE AND INDEMNIFICATION Worker's Compensation, Bodily Injury_ and Property Damage Insurance During the period commencing with the execution of this Agreement and ending with the recordation of the Certificate of Completion, Developer shall furnish to Agency duplicate originals of appropriate certificates of insurance for the work to be performed by Developer under this Agreement, as follows: 1. Worker's Compensation Insurance, providing coverage as required by the California State Worker's Compensation Law. 2. Liability for bodily injury and death. 3. Liability for Property Damage. Each policy shall have coverage of not less than One Million'Dollars ($1,000,000) combined single limit, and shall be occurrence-based. B. [1002] Insurance Endorsements 1. Each such policy of Liability Insurance shall contain endorsements providing the following: a. The City of Tustin and the Tustin Community Redevelopment Agency are hereby declared to be additional insureds under the terms of this policy with respect to this subject property and Agreement with Agency. b. This insurance policy is primary insurance and no insurance held or owned by the City shall be called upon to cover a loss under said policy. c. Owners Loss Payable giving priority to the City for the proceeds and the insurance benefits, to be used to restore the damaged property. 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 Agency of a written 'notice of such cancellation or reduction ~n 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 Admitted Sureties in the State of California, in good standing, h,ave an agent for service of process in California, and have a Best's Key Rating of at least A-VII. 2. As evidence of such insurance, Developer shall deliver to Agency, within ten (10) business days following the effective date of this Agreement, an insurance certificate in the form of Attachment 12 hereto. 1101-00003 34343_1 August 26. 1996 33 C. [1003] Indemnification From and after execution of this Agreement, Developer shall defend, indemnify, and hold harmless the City and Agency, 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 sales, leases and/or rental agreements, (v) any relocation activity of Developer that is inconsistent with Agency's adopted relocation plan, or (vi) the construction activity undertaken by Developer for the redevelopment of the Site. This indemnity shall apply to losses, injuries or damage suffered by City or Agency, their respective officers, employees or agents. To the best of Agency's knowledge, there have been no claims filed under the California Tort Claims Act (Government Code Section 810 et seq.) against either Agency or City arising OLJt of the relocation or removal of any tenant from the Site. D oo] DEFAULTS, REMEDIES AND TERMINATION A. [1101] Default Each of the following shall constitute a Default under this Agreement: 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 (Attachment 4), as such times may be extended pursuant to Section 1208 of this Agreement. . 2. Failure of or delay by Developer to develop the Site substantially in accordance with the Scope of Development (Attachment 3), plans, and construction drawings and any revisions thereto approved by Agency. 3. Breach of any covenant, warranty, representation or agreement contained or incorporated in this Agreement. 4. Any representation or warranty contained in any application, financial statement, certificate or report submitted by Developer to Agency in connection with the Agency Loan or this Agreement proves to have been incorrect in any material respect when made, or has become incorrect and Developer has failed to so notify Agency. Any application, financial statement, certificate or report submitted by Developer to Agency in connection with the Agency Loan or this Agreement proves to have contained a material omission when made, or has come to contain a material omission and Developer has failed to so notify Agency. 5. Failure or delay by Developer to perform any term or provision of the Promissory Note, the Deed of Trust, the Agreement to Be Recorded Affecting Real Property, the Construction Loan, the Construction Deed of Trust, or any other loan document(s) between Developer and the Construction Lender, or any other financing for the Project (as expressly approved by Agency herein). 1101-00003 34343_1 August 26, 1996 6. An involuntary transfer of the Site, the Developer or the ownership interests in Developer, or Developer's interest in this Agreement, including but not limited to a decree from a court of competent jurisdiction: (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 Developer's 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 ninety (90) days unless a lesser time period is permitted for cure under any other mortgage on the Site, in which event such lesser time period will apply under this subparagraph 6 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 subparagraph 6 shall act to accelerate automatically, without the need for any action by Agency, the indebtedness evidenced by the Promis.sory Note. 7. Developer shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of, or execution on, any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) days after such event (unless a lesser time periocl is permitted for cure under any other mortgage on the Site, in which event such lesser time period shall apply under this subparagraph 7 as well) or prior to sooner sale pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of default in this subparagraph shall act to accelerate automatically, without the need for any action by Agency, the indebtedness evidenced by the Promissory Note. In the event that Developer is diligently working to obtain a return or release of the Site and Agency's interests under the Promissory Note are not imminently threatened, Agency shall not declare a default under this subparagraph 7. 8. Developer shall have voluntarily suspended its business or Developer shall have been dissolved or terminated. The occurrence of any of the events of default in this subparagraph 8 shall act to accelerate automatically, without the need for any action by Agency, the indebtedness evidenced by the Promissory Note. 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. B. [1102] Notice Except as otherwise specifically provided in Section 1101, subparagraphs 6, 7 and 8, regarding automatic acceleration of the Promissory Note, 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 ir'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 hereunder without delivering the Default Notice as provided herein. 1101-00003 34343_1 August 26. 1996 35 C. [1103] 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 1103 and in no event shall the cure period set forth in this Section 1103 be added onto any other cure period set forth in this Agreement. In addition, the automatic acceleration provisions of Section 1101, subparagraphs 6, 7 and 8, shall control to the extent of any inconsistency between those provisions and this Section 1103. 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. D. [1104] Rights and Remedies Upon the occurrence of an event of Default and the expiration of the applicable cure period provided herein or by law (unless the automatic acceleration provisions of. Section 1101, subparagraphs 6, 7 and/or 8 apply), 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. In' addition, in the case in which Agency is the injured party, such rights and remedies shall include the right to discontinue performance under this Agreement and to discontinue making disbursements under the Agency Loan, and the right to proceed with any and all remedies set forth in this Agreement and/or the Promissory Note and the Deed of Trust, and the right to draw down upon the irrevocable letter of credit. Agency shall have the right to cause all indebtedness of Developer to Agency under this Agreement and the Promissory Note, together with any accrued interest thereon, to become immediately due and payable. Developer waives all right to presentment, demand, protest or notice of protest or dishonor. Developer shall be liable to pay Agency on demand all expenses, costs and fees (including, without limitation, attorney's fees, costs and related 'expenses) paid or incurred by Agency in connection with the collection of the Agency Loan, the default hereunder and the preservation, maintenance, protection, sale, or other disposition of the security given for the Agency Loan. E. [1105] Legal Actions 1. [1106] 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 1101-00003 34343_1 August26.1996 36 Federal District Court in the Central District of California. 2. [1107] Service of Process Service of process on Agency shall be made by personal service upon the Executive Director of Agency, 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. 3. [1108] Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this Agreement. F. [1109] _Rights of Termination , 1. [1110] Termination by Developer In addition to other remedies set forth in this Agreement, Developer shall have the right to terminate this Agreement 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 obtain financing for the Project. Upon termination by Developer, Developer shall have no further obligation to Agency except that in the event Developer terminates this Agreement pursuant to this Section 1110 after receiving funds from Agency, Developer shall, within thirty (30) days, return to Agency all funds received from Agency. 2. [1111] Termination by Agency In addition to other remedies set forth in this Agreement, Agency shall have the right to terminate this Agreement if: a. ~ Agency delivers a Default Notice pursuant to Section 1102, above, and any pertinent cure period applicable pursuant to Section 1103, above, with respect thereto has expired; b. 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. 1101-00003 34343_1 August 26, 1996 3'7 c. Developer fails t© 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 (Attachment 4); d. Developer fails, in violation of this Agreement, to perform any of its obligations hereunder. Upon termination by Agency, Agency shall have no further obligation to Developer. G. [1112] Rights and Remedies Are Cumulative Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the defaulting party. H. [1113] Effect of Violation of the Terms and Provisions of this Agreement Agency is 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, without regard to whether Agency has been, remains, or is owner of any land or interest there in the Site or in the Project Area. Agency 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. XlI. [1200] GENERAL PROVISIONS A. [1201] Disputes to be Determined by Agency Any disagreement arising out of this Agreement or from breach thereof, shall be submitted to Agency for determination. Agency shall make its determination within thirty (30) days after the matter is submitted to Agency 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. B. [1202] Local, State and Federal Laws Developer shall carry out all construction of the Improvements and all responsibilities under this Agreement in conformity with all applicable local, state and federal laws, including, but not limited to, all applicable federal immigration laws and federal and state labor standards. 1101-00003 34343_1 August 26. 1996 38 C. [1203] _Taxes1 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, nor to limit the remedies available to the Developer in respect thereto. D. [1204] Rights of Access Representatives of Agency and the 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 Improvements. E. [1205] Conditions, Covenants and Restrictions Developer shall cause the provisions regarding maintenance, anti-discrimination, and rights of access to be included in the Conditions, Covenants and RestrictiOns (CC&R's) for the Project, which CC&R's Shall be presented to Agency for its reasonable approval within the time established in the Schedule of Performance. F. [1206] Notices, Demands and Communications Between the Parties Written notices, demands and communications between Agency and Developer shall be sufficiently given if (i) delivered by hand (and a receipt therefor is obtained or is efused to be iven), (ii) dispatched by registered or certified mail, postage prepaid, quested, or (iii) delivered by private delivery service (and a receipt rreturn receipt gre ' . . . therefor is obtained or is refused to be given), to the principal offices of Agency 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 1206. 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 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: A.qenc¥: Christine A. Shingleton, Assistant Executive Director '- - Tustin Community Redevelopment Agency 300 Centennial Way Tustin, CA 92680 1101-00003 34343_1 August26,1996 Developer: Laguna Gardens Associates, LLC Attn: Charles H. Fry 5000 Birch Street, Suite 9400 Newport Beach, CA 92660 G. [1207] Conflicts of Interest No member, official or employee of Agency 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. H. [1208] Forced Dela · 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; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of trans.portation; governmental restrictions or priority; liti_g, ation 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 any public or governmental agency or entity (other than the acts or failures to act of either the City of Tustin or 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 forced delay, if notice by the party claiming such extension is sent t© 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 Agency and Developer. I. [1209] Nonliabilit of Officials and Em Io ees of A enc No member, official or employee of Agency shall be personally liable to Developer, or any successor in interest,, in the event of any default or breach by Agency or for any amount which may become due to Developer Or its successors, or on any obligations under the terms of this Agreement. j. [1210] _Inspection of Books and Records.. Developer shall keep such books and records as shall be necessary or 1101-00003 34343_1 Augu~ 26.1996 40 appropriate with respect to the development of the Site, which shall be kept and prepared in accordance with generally accepted accounting principles. Agency shall have free access to such books and records at all reasonable times, including the right to inspect, copy, audit and make records and transcripts from such records. In the event that an audit Conducted by or on behalf of Agency determines that the amount of Agency Loan repayments or the Agency's Share of Rehabilitation Costs Savings payments, made pursuant to Sections 407 and 411 is less than the amounts due pursuant to those sections, or the amount of Developer's Equity is less than required pursuant to Section 318 hereof, Developer shall immediately reimburse Agency for the shortfall in such repayments or payments, with interest at the maximum legal rate on such amounts accruing from the date such amounts originally were required to be paid, and shall immediately raise the level of Equity to the amount required under Section 318. If the shortfall in Agency Loan repayments, Agency's Share of Rehabilitation Costs Savings payments, or Equity level, disclosed by such audit is more than five percent (5%) of the amount which was originally required to have been paid or, in the case of an Equity deficiency, the amount which was originally required to have been maintained, Developer shall further reimburse Agency for all costs incurred by Agency .in connection with such audit. Xlll. [1300] SPECIAL PROVISIONS A. [1301 ] 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. B. [1302] Incorporation by Reference All of the Attachments hereto (Attachments 1-12) are hereby incorporated herein by this reference and made a part hereof. C. [1303] Memorandum of Agreement. Concurrently herewith, the parties shall execute the Agreement to Be Recorded Affecting Real Property (Attachment 6). Immediately following execution of the same and of this Agreement, Agency shall record the Agreement to Be Recorded Affecting Real Property, in order to create the covenants running with the land as expressed herein. XlV. [1400] 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 42 pages and 12 Attachments, which constitute 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 1101-00003 34343_1 August 26, 1996 4=3. matter hereof. All waivers of the provisions of this Agreement must be in writing by the appropriate authorities of Agency, Developer, and all amendments hereto must be in writing by the appropriate authorities of Agency, Developer. In any circumstance where, under this Agreement, either party is required to approve or disapprove any matter, approval shall not be unreasonably withheld. xv. DATE OF THE AGREEMENT BY AGENCY The effective date of this Agreement shall be the date when it. shall have been signed by Agency. IN WITNESS WHEREOF, Agency and Developer have signed this Agreement on the respective dates set forth below. "Agency" Dated: TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency By: ., Chairman APPROVED AS TO FORM: By: Lois E. Jeffrey,- Agency Counsel ATTEST: Recording Secretary Dated: 1101-00003 August 26, 1996 "Developer" LAGUNA GAR.I~EI~I~ A.~.SOCI~S, LLC, a C a I 'f°rn/~~~~,~ ~b~~_~7 By:. ( _,/'///¢'~,¢c. ~i[ ~ Char-les H. Fry, Member/Mar/tiger / A2 ATTACHMENT 1 ASSESSOR PARCEL MAP 1101-00003 34252 1 August 25, 1996 I · · '-3' ! : · '. .i '.;:- ... . · .. ; · · · · . · . . · · : .; :-, · .~.. .. ...:~..~ .... :.. . .. ATTACHMENT 2 'LEGAL DESCRIPTION 1101-00003 34252 1 August 25, 1996 LEGAL DESCRIPTION THE SOUTHWESTERLY HALF OF LOT 31,1N BLOCK 12 OF IRVINE'S SUBDIVISION, AS SHOWN ON A MAP DESCRIBED AS "PLAT NO. I OF THE RANCHOS SANTIAGO DE SANTA ANA AND SAN JOAQUIN" RECORDED IN BOOK 5, PAGE 7 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA. EXCEPTING THEREFROM THAT PORTION LYING SOUTHWESTERLY OF THE NORTHEASTERLY LINE OF THE LAND DESCRIBED IN THE FINAL ORDER OF CONDEMNATION RECORDED JULY 18, 1991, AS INSTRUMENT NO. 91-385500, OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION LYING NORTHWESTEF~LY OF THE SOUTHEASTERLY LINE OF THE LAND DESCRIBED IN THE DEED TO TUSTIN UNION HIGH SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED.JULY 20, 1955, IN BOOK 3145, PAGE 534 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT pORTION OF SAID LAND AS DESCRIBED IN THE DIRECTOR'S DEED TO TUSTIN UNIFIED SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED APRIL 5, 1995, AS INSTRUMENT NO. 95- 0143025, OFFICIAL RECORDS. ALSO EXCEPT THEREFROM THE SOUTHEASTERLY 350.00 FEET. 1101-00003 33787_1 ATTACHMENT 3 SCOPE oF DEVELOPMENT 1101-00003 34252 1 August 25, 1996 SCOPE OF DEVELOPMENT I. GENERAL DESCRIPTION A. Developer Improvements (the "Improvements"). Laguna Gardens currently consists of 64 apartments in 16 fourplex buildings totaling approximately 60,800 square feet. The buildings were built in 1965 and provide a garden style Iow density setting at 12.5 dwelling units per acre. Units are two bedrooms and one bath, and approximately 950 square feet in size. The scope of development will consist of rehabilitation of the buildings and grounds of the Laguna Gardens project and the conversion of the project to an owner occupied, residential condominium subdivision consisting of.64 ownership' units and areas held in common. Developer exterior and interior improvements will include but will not be limited to the following: Exterior Rehabilitation Sitework: Landscaping upgrades Development of a play area Driveway improvements Installation of access gates Installation of street (masonry pylons with wrought iron) fencing Installation of play area fencing Installation of project signage Upgrades and installation of common area lighting -including garages Driveway repairs/replacements Mailbox relocation and repair Pool area upgrades Building Exteriors: New roofs on units, garages, clubhouse, laundry, fascia replacement New exterior siding and door trim Exterior painting Patio fencing upgrades Garages - division of garages into doubles and addition of garage doors Creation of a clubhouse/office - including furniture 1101-O0003 34297_1 August 24. 199~ Laundry room improvements Addition of new building and unit addresses Resurfacing of patios and patio repairs Window replacements - street units only Window screens -including clubhouse Fumigation Other miscellaneous general renovation Interior Rehabilitation Kitchens: New ovens New cooktops New venthoods New floor tile Cabinet repairs Cabinet door replacement New cabinet hardware New counter tops/sink replacements Ceiling fan installation New water heaters New dishwashers New garbage disposals Bathrooms: New sinks/countertops New vanities New tub wraps Repair tubs Install shower doors New floor tiles General Interiors: Provide vertical window coverings New paint/drywall repair New carpet Replace and repair all wall heaters Replace and repair all air conditioners Installation of smoke alarms Installation of attic draft stops Installation of new light fixtures 1101..00003 34297_1 August 24, 1996 , Installation of new electricallswitcheslreceptacleslplates Installation of new door knobs/hardware Miscellaneous general renovation B. Architecture and Desiqn. The Developer's Improvements shall be Of high architectural quality, the common areas shall be well-landscaped, and the Project shall be effectively and aesthetically designed. The exterior design and finish of buildings shall be an enhancement to the Site and adjacent buildings in the vicinity. C. Applicable Codes. The Developer's Improvements shall be constructed in accordance with all Uniform Building Codes (with city modifications) and the Tustin City Code. The Developer shall commence and complete the Developer- Improvements by the respective times established in the Schedule of Perf6rmance (Attachment No. 4 of the Agreement). I!. DEVELOPMENT STANDARDS All of. the Improvements shall conform to all applicable federal, state and county codes and regulations, the Tustin City Codes and any conditions imposed by, the City of Tustin Planning Commission and City Council. The Developer acknowledges responsibility to obtain any approvals required by any governmental agency, utility or other agency, including the City of Tustin, which has jurisdiction over all or any portion of the Developer Improvements. The Developer shall make all necessary applications by such time(s) as will be consistent with the timely commencement and completion the Improvements by the times established therefor by the Schedule of Performance (Attachment No. 4 of the Agreement). III. SALES REQUIREMENT The Developer is aware that Agency's participation in this Agreement is to provide financial assistance to Developer: (1) to rehabilitate the existing improvements on the Site, which have been deemed a blighting influence in the Project Area; (2) to provide for the development of 64 owner occupied residential units; (3) to record covenants requiring the maintenance of affordability of five (5) owner occupied units to moderate income households as defined by the California Health and Safety Code for the life of the Redevelopment Plan; (4) to record covenants requiring the maintenance of affordability of five (5) owner occupied units to lower income households as defined by the California Health and Safety Code for the life of the Redevelopment Plan; and (5) to record covenants requiring the maintenance of affordability of four (4) owner occupied units to very Iow income households as defined by the California Health and Safety Code for the Life of the Redevelopment Plan. 1101-00003 34297 1 August"24, 1996 3 To accomplish such purpose, the Developer covenants and promises to conduct such marketing and sales, and provide resale restrictions, in a manner consistent and in full conformance with the provisions of the Agreement. Specifically, Developer shall sell five (5) units to moderate income households, five (5) units to lower income households and four (4) units to very Iow income households pursuant to the provisions of the Agreement. 1. As to the five (5) units to be sold to moderate income households, five (5) units to be sold to lower income households and four (4) units to be sold to very Iow income households, Developer shall not assess, charge or receive a separate commission or other compensation from a buyer, which compensation is intended to compensate Developer for his costs of marketing for sale, including advertising, of such units. Developer's marketing and sales costs are already factored into the sales prices for the units. 2. The above-referenced five (5) units to be sold to moderate income households, five (5) units to be sold to lower income households and four (4) units to be sold to very Iow income households shall be sold consistent with the requirements of the California Community Redevelopment Law as such applies to the provision of affordable housing, including, but not limited to, qualifying buyers' income levels and provisions for resale restrictions which ensure that such units' resale is accomplished in a manner which maintains the unit as an affordable unit. 3. The Developer agrees that a condition to the close of any escrow which will convey title to a qualified buyer shall be the receipt by the escrow Officer of a written approval by the Agency of the following: (a) in the case of an escrow pertaining to any one of the fourteen (14) affordable units - pre-approved standard form escrow instructions, standard form notesl deeds of trust and rights of first refusal (Attachment Nos. 9-11 to the Agreement), and deeds containing the anti-speculation and anti- discrimination covenants required by Sections 702 and 802 of the Agreement, and (b) in the case of an escrow pertaining t° any one of the other fifty (50) units - Escrow Officer's written certification to the effect that the deed to be recorded through escrow is in the form of the standard form deed which has been pre-approved by Agency at the time provided in the Schedule of Performance (Attachment No. 4 to the Agreement), which deed shall contain the anti-speculation and anti-discrimination covenants contained in Sections 701 and 802 of the Agreement.- 4. Marketing Program The Developer shall be solely responsible for the marketing of the residential units, and any and all costs related specifically to the marketing of the five (5) units to be sold to moderate income households, five (5) units to be' sold to lower income households and four (4) single family units to be sold to the very Iow income households. 1101-00003 34297 1 August-'24. 1996 , 4 IV. CHANGES IN BUILDING PLANS AND SPECIFICATIONS If the Developer desires to make any substantial changes in the building plans and specifications approved by the Planning Commission and City Council of the City of Tustin, the Developer shall submit the proposed change(s) to the City of Tustin and the Redevelopment Agency for approval. Such changes shall be approved or disapproved by the City of Tustin pursuant to the applicable provisions of the Tustin Municipal Code. after approval has been given by the Agency. 1101-00003 34297 1 August-24, 1996 5 ATTACHMENT 4 SCHEDULE OF PERFORMANCE 1101-00003 34252 1 August 25, 1996 ATTACHMENT 4 SCHEDULE OF PERFORMANCE A. B, C. PERFORMANCE EXECUTION OF AGREEMENT 1. Agreement executed ~nd delivered by Developer to Agency. 2. Agency executes Agreement. 3. Agency causes recordation of appropriate documents and attachments. ENTITLEMENT APPROVAL 1. Developer submits completed final application to City for entitlement approval. 2. Approval of land use, Governmental entitlements. PLAN SUBMITTALS 1. SubmissiOn of preliminary construction plans. 2. Submission of final construction plans for building and related permits. 3. Approval- Final construction plan. TIMING ' 5 calendar days after Agency action on the Agreement. Within 5 calendar days following Developer delivery of exect3ted Agreement. Within 15 calendar days of Development Agreement execution or at close of escrow, contingent Upon complying with all conditions precedent in Agreement. Prior to Agency 'execution of Agreement. Within 90 calendar days of submission to Agency. Within 30 calendar days of City entitlement approval. Within 30 calendar days after Agency approves preliminary plans. Within 30 calendar days after receipt by Agency, and Developer's completion of all City requirements. 1101-00003 34:296_1 August 24. 1996 Do Eo CONSTRUCTION OF IMPROVEMENTS 1. Developer obtains building permits. 2. Developer commences construction. 3. Developer completes all construction required to be performed by Developer. FINANCE/AGENCY LOAN 1. Developer submits all conditions precedent to disbursement of Acquisition Funds. 7 calendar days after submittal for phases complying with initial approved building plans. Within 30 calendar days after issuance of building permits. Within two years after commencement of construction. 15 calendar days prior to close of escrow on Developer's site acquisition. 2. Payment by Agency to developer of $489,000 in permanent subsidy and $374,000 in loan funds. 3. Developer submits all conditions precedent to disbursement of remainder of Agency Loan. 4. Payment by Agency of up to an additional $311,000. To be drawn down over construction and subject to relocation expenses. 5. Forgiveness of $489,000 of permanent subsidy. 6. Repayment of up to maximum $685,000 loan. Funded at close of escrow. 15 calendar days prior to funding of a loan draw request. 15 calendar days after submittal of a funding request and bank construction loan draw approval. At issuance of a certificate of completion. Per Agreement. 1101-00003 34296_1 August 24, 1996 Fo 7. Agency approves standard form deed for non-affordable units. 8. Escrow officer submits written certification that deeds to be recorded through escrow are in the form which has been pre- approved by Agency. 9. City confirmation the certification has been accepted. AFFORDABLE HOUSING REQUIREMENTS 1. Developer submits to Agency identification of units to be sold to moderate, lower and very-low income households. 2. Agency approves units to be sold to moderate, lower and very-low income households. 3. Developer submits to Agency Moderate, Lower and Very-Low Income Purchaser Selection and Criteria Plan; and standard qualifications and terms of escrow for buyers of moderate, lower and very-low income units. 4. Agency approves purchaser selection criteria, standard qualifications and terms of escrow for moderate, lower and very-low income units. Within 10 working days of submittal. working days before close of escrow. 5 working days after receipt of certification. Within 30 calendar days following execution of Agreement and prior to any unit sales. 5 working days after identification by Developer. Within 15 working days following execution of Agreement and prior to commencement of sales of moderate, lower and very-low income units. Within 10 working days of submission by Developer. 1101-00003 34296_1 August 24, 1996 O. 5. Submittal to Agency of individual escrow instructions for buyers of moderate, lower and very-low income units and all other information in Section III 3 of the Scope of Development. 6. Initiation of marketing and sales to moderate, lower and very-low income units. 7. Approval by Agency of individual escrow instructions for buyers of moderate, lower and very-low income units and other information in Section III 3 Scope of Development. CERTIFICATE OF COMPLETION 1. Developer submits request for Certificate of Completion to Agency. 2. Agency iSsues Certificate of Completion to Developer. 10 working days before close of escrow. Within 60 calendar days after Agency approval of units identified to be sold to moderate, lower and Iow income households and Agency approval of Moderate, Lower and Low-Income Purchaser Selection and Criteria Plan. Within 5 working days of receipt. Upon completion of all Improvements and all other requirements under the Agreement. Within 30 calendar days of Agency verification of completion of all Improvements and all other requirements under the Agreement. 1101-00003 34296_1 August 24, 1996 ATTACHMENT 5 BASIC CONCEPT DRAWINGS ' 1101-00003 34252 1 August 2S, 1996 I'~lttiil Page 1 of 8 · Page 2 of 8 Z ][-' Z . · , . Page 3. of/'8 I * ..,I .. Page 4 of 8 I Page 5 of 8 <z_~' Page 6 of 8 Page. 7 of 8 I11 I !! i !11 I I I I , ! 1 ATTACHMENT 6 AGREEMENT TO BE RECORDED AFFECTING REAL PROPERTY 1101-00003 34252 1 August 25, 1996 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: CITY OF TUSTIN COMMUNITY REDEVELOPMENT AGENCY Attention: Christine Shingleton 300 Centennial Way Tustin, CA 92680 (Space Above for Recorder). This Agreement is recorded at the request and for the benefit of the City of Tustin Community Redevelopment Agency' and is exempt from payment of a recording fee pursuant to Government Code Section 6103. CITY OF TUSTIN COMMUNITY REDEVELOPMENT AGENCY By: Its: Dated: ,1996 CITY OF TUSTIN COMMUNITY REDEVELOPMENT AGENCY AGREEMENT TO BE RECORDED AFFECTING REAL PROPERTY THIS AGREEMENT is entered into this. day of ,1996, by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and LAGUNA GARDENS ASSOCIATES, LLC, a California limited liability company ("DEVELOPER") with reference to the following: A. Developer is the fee owner of record of that certain real property (the "Property") located in the County of Orange, State of California as described in the attached Exhibit A. The Property is referred to in the "DDA" (defined in paragraph "C" hereof) as the Site. B. The Property is located near the Town Center Redevelopment Project' Area (the "Project") and is made subject to the provisions of the Redevelopment Plan for the Project adopted by Ordinance No. 701 and amended by Ordinances Nos. 855, 1021 and 1101-O0003 August 25, 1996 1141 by the City Council of the City of Tustin. Agency has full power and jurisdiction in respect to the Property pursuant to the Redevelopment Plan. C. Agency and Developer have entered into a Disposition and Development Agreem.ent (the "DDA") dated as of _, 1996 concerning the development and use of the Property, which DDA is on file with Agency as a public record and is incorporated herein by reference and which DDA provides for the execution and recordation of this document. Except as otherwise expressly provided in this Agreement, all terms shall have the.same meanings as set forth in the DDA. NOW, THEREFORE, AGENCY AND DEVELOPER AGREE AS FOLLOWS: 1. Developer covenants, by and for itself and any successors in in. terest, that it shall be bound by the terms, conditions, covenants and restrictions as outlined and detailed in the DDA and the Redevelopment Plan. 2. 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, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any residential uses 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. Developer and its successor in interest shall refrain from restricting the rental, sale or lease (including sublease) of the Site, Or any residential units developed on the Site, on the basis of race, color, creed, religion, sex, marital status, age, disability, national origin or ancestry of any person. All deeds, leases or contracts for the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Site or any. portion thereof, including any residential units developed on the Site, shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. in deeds: 'q'he grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and asSigns, and all persons claiming under or through them, that: (1) 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, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, and (2) neither the grantee himself or herself, nor any person claiming under or through him or her, shall 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, 1101-00003 34302_1 Augu~ 25,1996 Page 2 of 7 subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." bo In leases: 'q'he lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "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, disability, age, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or'practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." Co In contracts: 'q'here 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,. disability, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices, of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises. The foregoing proVisions shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under this instrument and shall be covenants running with the land." 3. The Covenants established in this Agreement shall, without regard to technical classification and designation, be binding on Developer and any successor in interest to the Site or any part thereof for the benefit and in favor of Agency, its successors and assigns, and the City. The Covenants are covenants running with the land. 4. The Covenants insofar as they relate to antidiscrimination and non- segregation, shall remain in effect in perpetuity. The Covenants contained in the Redevelopment Plan shall expire on November 22, 2016. The Covenants contained in the DDA shall expire on the dates provided therefor in the DDA. 5. All Covenants shall survive the issuance, by Agency, of the Certificate of Completion described in the DDA. Notwithstanding the foregoing, however, once Developer has complied with all obligations under the DDA, the Certificate of Completion has been ~o~.oooo3 Page 3 of 7 August 25, 1996 , recorded, and Developer has closed escrow for the sale of each unit to be sold under the DDA, Developer shall have no further liability hereunder. Developer's liability with respect to the enforcement of covenants pertaining to the individual units sold shall terminate on the respectiVe dates of close of escrow for such units. IN WITNESS WHEREOF, Agency and Developer has executed this Agreement. "Agency" Dated: TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency By: APPROVED AS TO FORM: , Chairman By: Lois E. Jeffrey, Agency Counsel ATTEST: Recording Secretary "Developer" Dated: LAGUNA GARDENS ASSOCIATES, California limite liab' ~ty ompany BY:charles Hi Fry, Member/Man/~er LLC, a 1101-00003 343o2_1 August 25, 1996 Page 4 of 7 ALL PURPOSE ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) SS: COUNTY OF O~r4 6-~-~ ) On this ol,-~r--day of ~:Lt~s-r-', 19~, before me, appeared Notary Public! personally Name(s) of Signer(s) personally known to me - OR proved,to me, on the basis of satisfactory evidence to be the pers.on(~ whose name(S.) is/~e subscribed to the withi.n instrument and acknowledged to me that he/s'l~e/t~ executed the same in his/h'~r/tl"r~ authorized capacity(De(s), and that by his/l~r/th~r signature(~) on the instrument the person(l~), or the entity upon behalf of,which the person~) acted, executed the instrument. Witness mY hand and °ffici_al sea!~ Nota~ ~ ~'? '~)~ Nota~ ~c -- Ca,f~ ~ ' ~ACI~ ~ BY SI~: SI~ IS ~P~S~~G: Name of Person(s) or E~ti~(~es) Individual (s) Co.orate Offfcers T file (s) Partner (s) General P~rtner of a Lfmfted ~artDers~iD Atto~ey- rD- Fact Trustee (s) S~scrfbfn9 ~ftness Gua~di~D/CoD~eD~tOr Other: THIS CERTIFICATE MUST BE ATTACHED.TO THE DOCUMENT DESCRIBED Title or Tv~e of __ Document .-'f~o (.~. Number Signer(s) Ot~r Than Named Above: 1101-00003 34302_1 Page 5 of 7 STATE OF CALIFORNIA COUNTY OF ALL PURPOSE ACKNOWI I::DGMENT On this~ day of ,19. ,beforeme, appeared Name(s) et Signer(=) , Notary Public, personally personally known to me - OR proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. VVrtness my hand and official seal. NOTARY SEAL Signature of Notary CAPACITY CLAXMED BY SIGNER: Individual(s) Corporate Officers Title(s) Partner(s) General Partner of a Limited Partnership Attorney-in-Fact Trustee(s) Subscribing Witness Guardian/Conservator Other: SIGNER IS REPRESENTING: Name of Person(s) or Entity(ies) THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENTDESCRIBED BELOW: Title or Type of Document: Number of Pages: Date of Document: Signer (s) Other Than Named Above: ~o~-oooo3 Page 6 of 7 Augur-25, 1996 EXHIBIT A LEGAL DESCRIPTION ALL THAT CERTAIN REAL PROPERTY LOCATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF TUSTIN DESCRIBED AS FOLLOWS: THE SOUTHWESTERLY HALF OF LOT 31, IN BLOCK 12 OF IRVINE'S SUBDIVISION, AS SHOWN ON A MAP DESCRIBED AS "PLAT NO. 1 OF THE RANCHOS SANTIAGO DE SANTA ANA AND SAN JOAQUIN" RECORDED IN BOOK 5, PAGE 7 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA. EXCEPTING THEREFROM THAT PORTION LYING SOUTHWESTERLY OF THE NORTHEASTERLY LINE OF THE LAND DESCRIBED IN THE FINAL ORDER OF CONDEMNATION RECORDED JULY 18, 1991, AS INSTRUMENT NO. 91-385500, OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION LYING NORTHWESTERLY OF THE SOUTHEASTERLY LINE OF THE LAND DESCRIBED IN THE DEED TO TUSTIN UNION HIGH SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED JULY 20, 1955, IN BOOK 3145, PAGE 534 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION Of SAID LAND AS DESCRIBED IN THE DIRECTOR'S DEED TO TUSTIN UNIFIED SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED APRIL 5, 1995, AS INSTRUMENT NO. 95-0143025, OFFICIAL RECORDS. ALSO EXCEPT THEREFROM THE SOUTHEASTERLY 350.00 FEET. 1101-00003 August 25, 1996 Page 7 of 7 units for "low income households," as defined in Section 50079.5 of the California Health and Safety Code, and five (5) of which shall be owner-occupied units for "moderate income persons or families," as defined in Section 50093 of the California Health and Safety Code (collectively, the "Affordable Units"). The remaining units may be sold without restriction as to buyer income (the "Market Rate Units"). The One Million One Hundred Seventy-Four Thousand Dollar ($1,174,000.00) amount of this note is based on the following: (1) a permanent subsidy in an amount (the "Permanent Subsidy Amount") equal to Four Hundred Eighty-Nine Thousand Dollars ($489,000.00), and (2) a loan in an amount (the "Repayment Amount") equal to Six Hundred Eighty-Five Thousand Dollars ($685,000.00). The Six Hundred Eighty-Five Thousand Dollar ($685,000.00) Repayment Amount is to be allocated as follows: Three Hundred Seventy-Four Thousand Dollars ($374,000.00) toward Obligor's acquisition of the Property and Three Hundred Eleven Thousand Dollars ($311,000.00.) toward the construction of the Improvements on the Property. The Four Hundred Eighty-Nine Thousand Dollar ($489,000.00) Permanent Subsidy Amount and the Three Hundred Seventy-Four Thousand Dollar ($374,000.00) acquisition portion of the Repayment Amount shall be referred to hereinafter as the "Acquisition Funds." II!. Security This note shall be secured by (1) an irrevocable letter of credit, in the amount of Fifty-Nine Thousand Dollars ($59,000.00), in form and substance acceptable to' Agency's counsel and issued by such federally insured financial institution as Agency's Executive Director, or his designee, may reasonably approve, (2) a deed of trust (the "Deed of Trust") which shall be recorded as a second priority deed of trust against the Property, subordinate only to the lien of the deed of trust (the "Construction Deed of Trust") of Obligor's construction lender, in an amount not to exceed Three Million Four Hundred Thousand Dollars ($3,400,000.00) and to be used for financing the acquisition of, and the construction of Improvements on, the Property (the "Construction Loan"). The irrevocable letter of credit shall terminate on the first escrow closing for a unit sold at the Project. IV. Disbursement A. General. The proceeds of this note shall be disbursed in increments, as provided below. B. Conditions Precedent to Disbursement of Acquisition Funds. Agency shall disburse the Acquisition Funds to the Escrow Holder on close of Escrow for Obligor's acquisition of the Property, subject to the following terms and conditions: 1. Execution and Delivery of Documents. Obligor shall have executed and delivered into Escrow this note, the Deed of Trust and any other documents and 1101-000O3 34307_1 2 August 26. 1996 instruments required to be executed and delivered by Obligor under the terms of the Agreement; 2. Recordation. The Escrow Holder is prepared to record the Deed of Trust against the Property, in the proper recording order pursuant to escrow instructions approved by Agency; " 3. Pro Forma Information. There shall be no material adverse change in the projected pro forma for the acquisition and development of the Property from the July 12, 1996 pro forma (the "Pro Forma") which has been prepared by Obligor and delivered to Agency; 4. Financing. Agency shall have approved the Evidence of Financing, and all documentation related thereto, for the acquisition and development of the Property' .pursuant to Section 318 of the Agreement and such financing shall have been disbursed, or shall be ready to be disbursed concurrently with the disbursement of the Acquisition Funds; 5. Property Appraisal. Obligor shall have submitted to Agency a true and correct copy of an appraisal of the fair market value of the Property in its condition before close of Escrow, demonstrating to the satisfaction of Agency that the sum of the Construction Loan proceeds paid into Escrow plus the Acquisition Funds is not greater than the sum of the fair market value of the Property as of close of Escrow plus the amount of the irrevocable letter of credit described in paragraph 11 below; 6. Budget. Obligor shall have submitted to Agency and Agency shall have approved the budget for the development of the Project, as set forth in Section 319 of the Agreement; 7. Title to Land. Agency shall be reasonably satisfied that upon the disbursement of the Acquisition Funds Obligor will have good and marketable fee title to the Property, and there will exist thereon or with respect thereto no mortgage, lien, Pledge or other encumbrance of any character whatsoever other than liens for current real property taxes and assessments not yet due and payable, the Construction Deed of Trust in an amount not to exceed Three Million Four Hundred Thousand Dollars ($3,400,000.00), and any other matters specifically approved in writing by Agency; 8. Title Insurance. The Escrow Holder is prepared at' the time of the disbursement of the Acquisition Funds to issue, or cause to be issued, to Agency, by a title · insurance company approved by Agency, a CLTA lender's title insurance policy (a) showing fee simple title to the Property as vested in Obligor and Agency as the insured lender, (b) with mechanic's lien coverage and such endorsements as Agency may require, and (c) insuring the Deed of Trust as a lien upon the Property subject only to (i) the Construction 1101-00003 3~3o7_~ 3 August 26, 1996 Deed of Trust in an amount not to exceed Three Million Four Hundred Thousand Dollars ($3,400,000.00) and (ii) any other items approved by Agency; 9. Insurance. Obligor shall have furnished to Agency proof of insurance coverage as provided in Sections 1001 and 1002 of the Agreement; 10. Performance Bond. Obligor, as principal, shall have provided a performance bond guaranteeing the lien-free completion of the Improvements. The bond shall be in form and substance acceptable to Agency's counsel and issued by a bonding company that is an Admitted Surety in the State of California, in good standing; 11. Letter of Credit. Obligor shall have provided Agency with an irrevocable letter of credit, in the amount of Fifty-Nine Thousand Dollars ($59,000.00), in form and substance acceptable to Agency's counsel and .issued by such federally-insured financial institution as Agency's Executive Director, or his designee, may reasonably approve, securing the performance of all of Obligor's obligations under this note, the Deed of Trust and the Agreement. The irrevocable letter of credit shall guarantee such Performance and the repayment of this note in all events, irrespective of the equity in the Project; 12. Default. Obligor is not then in default under the Agreement; and 13. Representations and Warranties. All representations and warranties of Obligor contained in the Agreement shall be true and correct. C. Disbursement of Remainder of Agency Loan. After close of Escrow, Agency shall disburse the remaining Three Hundred Eleven Thousand Dollar ($311,000.00) portion of this note as follows: 1. Conditions Precedent. Agency shall not be obligated to make any further disbursements until all of the following conditions are fulfilled to the satisfaction of Agency: (a) Close of Escrow. Escrow shall have closed and all of the conditions precedent described in paragraph B above shall have been satisfied; (b) Permits and approvals. Obligor shall have obtained (or shall be eligible to obtain, upon payment of required fees) any and all permits and approvals required by Agency or any other governmental agency for the development of the Property in accordance with the Agreement; (c) Construction Drawings. Obligor shall have submitted to'Agency and Agency shall have approved the Construction Drawings for the Property, as set forth in Section 305 of the Agreement; 1101-00003 34307_1 4 August 26, 1996 (d) Construction Contracts. Obligor shall have submitted to Agency one or more construction contracts for the development of the Property in conformance with the terms of the Agreement, and Agency shall have approved such construction contracts pursuant to Section 312 of the Agreement; (e) Proof of Equity. Obligor shall have continued to verify, to the satisfaction of Agency, that Obligor is maintaining at all times a minimum Equity level (as defined in Section 318 of the Agreement) of not less than Two Hundred Thousand Dollars ($200,000.00). (f) Relocation. Agency shall have adopted a 'relocation plan for the rehabilitation of the Project; and (g) Applicable Laws and Approvals. Obligor shall have complied with all applicable laws, rules and regulations required for the development of the Project and obtained any necessary governmental approvals. 2. Disbursement Procedure.~. Provided the conditions precedent set forth in subparagraph (1) above have then been met, and shall continue to be met at the time of each loan draw request as described below, Agency shall disburse the remainder of this note as follows: (a) Loan Draw Requests. Obligor shall be responsible for the payment of all general contractors, subcontractors and materialmen for the Project. Obligor will submit construction loan draw requests to Agency and Obligor's Construction Lender, seeking reimbursement for such payments. The loan draw requests will be for payment of work performed in the construction of the Agency-approved Improvements and in accordance with the Scope of Development and the approved Construction Drawings. Each loan draw request will be approved by each of the Construction Lender and Agency. Each loan draw request shall clearly state the amount of the request, the specific work completed on the Improvements, and the identity of the party who performed the individual items of completed work (i.e., Obligor, general contractor, subcontractor or materialman). Each loan draw request will be accompanied by a conditional lien release, in form and substance satisfactory to Agency's counsel, from each of Obligor and each general contractor, subcontractor and/or materialman who performed the individual items of completed work for which the particular payment is being made. The Construction Lender will inspect the work and confirm that the work has been completed or that materials have been delivered to the Property as agreed and have been secured. The Construction Lender will inform Agency that it is prepared to disburse its share of the loan draw request and request that Agency fund its share concurrently. Each loan draw request shall be paid one-half by each of the Construction Lender and Agency, except as provided in subparagraph (b) below, regarding Relocation Costs. Agency shall deliver its check, payable to Obligor and in the amount of the Agency's one-half share of the particular approved loan draw request, to Obligor in exchange for the concurrent deliVery to Agency 1101-00003 34307 1 August-26, 1996 5 of the conditional lien release of Obligor and of each general contractor, subcontractor, and/or materialman who performed the completed work in question. Notwithstanding the foregoing, however, the final payment to be made hereunder shall not be made except in exchange for an unconditional lien release for the entire Project from each of Obligor and each general contractor, subcontractor and materialman who has performed work or furnished materials in connection with the Improvements. (b) Relocation Costs. Section 412 of the Agreement provides that Obligor and Agency shall be responsible for Relocation Costs based on the following formula: 1) Agency shall pay the first $400,000.00; 2) Obligor shall pay any excess Relocation Costs, not to exceed $100,000.00 and 3) thereafter Agency shall be responsible for any additional Relocation Costs. Agency shall withhold $100,000.00 in proceeds under this note until Agency, at its sole discretion, determines that Agency Relocation Costs (as defined in Section 412 of the Agreement) will not exceed $400,000.00. In the event it is determined that Relocation Costs will exceed $400,000.00 Agency shall notify Obligor in writing of Obligor's portion of any excess Relocation Costs (the "Obligor's Excess Relocation Costs"). Obligor shall notify Agency, within 30 days after receipt of Agency's notice, whether it wishes Agency to reduce the maximum amount of this note by the amount of Obligor's Excess Relocation Costs or whether it wishes to provide Agency with a cash payment in the amount of Obligor's Excess Relocation Costs. If Obligor makes a cash payment, the remaining One Hundred Thousand Dollars ($100,000.00) of this note may be disbursed subject to all the requirements of subparagraph (a) above. De follows: Repayment. The principal balance of this note shall be due and payable as 1. 'Repayment Amount. The portion of this note pertaining to the Six Hundred Eighty-Five Thousand Dollar ($685,000.00) Repayment Amount shall be repaid as provided in this paragraph 1. Commencing with the first escrow closing for a unit sold at the Project, Obligor shall pay ninety percent (90%) of the net sales proceeds of each unit sold at the Project to the Construction Lender and ten percent (10%) of the net sales proceeds of each unit sold at the Project to Agency. Net sales proceeds shall be defined as gross sales proceeds minus sales and marketing costs and Obligor's closing costs. After the Construction Lender has been repaid the Three Million Four Hundred Thousand Dollar ($3,400,000.00) principal amount, plus any interest accrued thereon, owing to it under the Construction Loan and the Construction Deed of Trust (the "Approved Construction Loan Amounts"), but excluding the amount of any additional principal advances as may have been made pursuant to the Construction Loan and without written Agency approval and the amount of any interest thereon or costs or expenses pertaining thereto, .Obligor shall pay to Agency one hundred percent (100%) of the net sales proceeds of each unit sold at the Project, minus the overhead allocation permitted to Obligor under the Pro Forma (which allocation is subject to adjustment as necessary on account of 1101-00003 34307_1 6 August 26. 1996 changed loan terms since the date of the Pro Forma and to Obligor's maintenance of the minimum required Equity level under Section 318 of the Agreement), until such time as the Repayment Amount, together with all interest, costs and expenses pertaining thereto, is paid in full. In the event escrow has closed for the sixty-fourth unit to be sold at the Project, and net sales proceeds are insufficient to pay the amounts due hereunder, such remaining amounts shall be immediately due and payable in full. Notwithstanding the foregoing,' however, the Repayment Amount, together with all interest, costs and expenses pertaining thereto, shall be due and payable in full on the date that is three years following close of Escrow for the acquisition of the Property, irrespective of the amount of sales proceeds available for payments and irrespective of whether the Construction Lender has then been paid the Approved Construction Loan Amounts. 2. Permanent Subsidy AmOunt. The portion of this note pertaining to the Permanent Subsidy Amount will nOt be required to be repaid if Obligor performs all of its obligations under the Agreement, this note, the Deed of Trust, the Agreement to Be Recorded Affecting Real Property, and any other agreements executed by the parties in connection with the Agreement, and the Certificate 'of Completion is recorded. If the Certificate of Completion has not then been recorded, the Permanent Subsidy Amount, and all interest, costs and expenses pertaining thereto, shall be due and payable in full on the date that is three years following close of Escrow for the acquisition of the Property, irrespective of the amount of sales proceeds available for payments and irrespective of whether the Construction Lender has then been paid the Approved Construction Loan Amounts. 3. Reconveyance of Deed of Trust and Cancellation of Promissory Note. Agency shall make a request for partial reconveyance of the Deed of Trust with respect to each individual Affordable Unit sold, on close of escrow for each such respective unit, provided (a) Obligor is not then in material default under the terms of the Agreement, this note, the Deed of Trust, the Agreement to be Recorded Affecting Real Property, or any other agreement executed by the parties in connection with the Agreement, (b) a deed containing the covenants required by Sections 702 and 802 of the Agreement, and in the form approved by Agency, has been recorded for the respective unit, (c) the purchaser of the respective unit has executed and delivered the Affordable Promissory Note, in the form and substance provided under the Agreement, to Agency, (d) the Affordable Deed of Trust for the respective unit, in the form and substance required under the Agreernent, has been recorded in the priority required under the Agreement, (e) the Right of First Refusal for the respective unit, in the form and substance provided under the Agreement, has been recorded in the priority required under the Agreement, (f) the portion of net sales proceeds due Agency on close of the respective escrow has been paid, and (g) and such other terms and conditions as are required under the Deed of Trust have been fulfilled. Agency shall make a request for partial reconveyance of the Deed of Trust with respect to each individual Market Rate Unit sold, on close of escrow for each such respective unit, provided, (a) Obligor is not then in material default under the terms of the Agreement, this. note, the Deed of Trust, the Agreement to Be Recorded Affecting Real Property, or any 1101-00003 3~3o7_~ 7 August 26, 1996 other agreement executed by. the parties in connection with the Agreement, (b) the portion of net sales proceeds due Agency on close of the respective escrow has been paid, and (c) a deed containing the covenants required by Sections 701 and 802 of the Agreement, and in the form approved by Agency, has been recorded for the respective unit. Notwithstanding the foregoing, however, Agency will not be obligated to request a partial reconveyance of the Deed of Trust with respect to the sixty-fourth (64th) unit to be sold on the Property (i.e., the "Request for Final Reconveyance"), if Agency determines, in its reasonable discretion, that either (a) the proceeds of the sale of such sixty-fourth (64th) unit may be insufficient to repay the amounts owing under this note and the Deed of Trust in full, or (b) all terms and conditions of the Agreement, this note, the Deed of Trust, the Agreement to Be Recorded Affecting Real Property, or any other agreement executed by the parties in connection with the Agreement have not been satisfied in full (collectively, the "Final Reconveyance Conditions"). Obligor shall provide Agency with written notice when only one unit remains to be sold. Within ten (10) business days of receipt of that notice, Agency shall provide Obligor with written notice as to whether it has determined to withhold the Request for Final Reconveyance on close of escrow for such unit. Agency's written notice shall identify the Final Reconveyance Condition that has not been met. Agency shall provide the Request for Final Reconveyance as soon thereafter as all of the Final Reconveyance Conditions are met. in addition, no portion of this note shall be cancelled at the time of the individual partial reconveyances. This note shall be cancelled once all of Obligor's obligations under the Agreement, this note, the Deed of Trust, the Agreement to Be Recorded Affecting Real Property, and any other agreements executed by the parties in connection with the Agreement, have been fulfilled, and the Certificate of Completion has been recorded. V. General Provisions If any payment due under this note is not paid in full on or before the date such payment is due and within thirty (30) days after written notice of such default to Obligor, Obligor shall in addition pay to the holder of this note a late charge of five percent (5%) of the amount of such payment then due and payable but not so received by the holder of this note, which late charge shall constitute liquidated damages under California Civil Code Section 1671(b). The imposition of such late charge does not imply or constitute any agreement of the holder of this note to forbear collection of any delinquent amounts or to forbear the exercise of any other remedy under this note or under the Deed of Trust. Obligor acknowledges that this late charge is reasonable under the circumstances existing at the date of this note. Each payment shall be credited first to any late charges and other costs and expenses of enforcement and collection as provided herein, then to accrued but unpaid interest, and then to principal, and interest shall thereupon cease upon the principal so credited. 1101-00003 34307 1 August-26, 1996 8 Notwithstanding any other provision of this note to the contrary, if a default occurs (a) in the payment of any installment of principal or interest under this note when due, (b) under any other provision of this note or the Deed of Trust, (c) under the terms of the Agreement, and Obligor fails to cure such default pursuant to the applicable provisions of the Agreement, or (d) under the terms of the Agreement to Be Recorded Affecting Real Property between Obligor and Agency, then AgencY shall have the right to discontinue making disbursements hereunder and the entire unpaid principal balance and all unpaid accrued interest under this note shall at once become due and payable in full, without notice, at the option of the holder of this note, and Agency shall have all rights available to it under this note, the Deed of Trust and the irrevocable letter of credit,, and as otherwise provided by law, including but not limited to the right to foreclose under the Deed of Trust and the right to draw down the full amount of the irrevocable letter of credit. Failure to exercise such option shall not constitute a waiver of the right to exercise it in the event of any subsequent default. Obligor waives all right to presentment, demand, protest or notice of protest or dishonor. This note is secured by a Deed of Trust, of even date herewith, in favor of First American Title Insurance Company, a California corporation, as Trustee, which encumbers the Property. The Deed of Trust contains the following provision: Except as otherwise expressly provided in paragraph 2 below, if Trustor shall sell, convey or alienate the real property ("Property") encumbered by this Deed of Trust, or any part thereof, or any interest therein, or shall be divested of its title or any interest therein in any manner or way, whether voluntarily or involuntarily, without the written consent of Beneficiary being first had and obtained, which consent may be withheld for any reason whatsoever, Beneficiary shall have the right, at its option, except as prohibited by law, to declare all of the indebtedness or obligation secured hereby, irrespective of the maturity date specified in any note evidencing the same, immediately due and payable in full. The Deed of Trust also contains the following provision: If a default occurs (a) in the payment of any installment of principal or interest when due under the Secured Note, (b)-under any other provision of such note or this Deed of Trust, (c) under the terms of the Agreement, and Trustor fails to cure such default pursuant to the applicable provisions of the Agreement, or (d) under the terms of the Agreement to Be Recorded Affecting Real Property between Trustor and Beneficiary, then the entire unpaid principal balance and all unpaid accrued interest under the Secured Note shall at once become due and payable in full, without notice, at the option of the holder of the Secured Note, and Beneficiary shall have all rights available to it under the Secured Note and this Deed of Trust, and as otherwise provided by law, including but not limited to the right to foreclose 1101-00003 34307_1 August 26, 1996 under this Deed of Trust. Failure to exercise such.option shall not constitute a waiver of the right to exercise it in the event of any subsequent default. The Deed of Trust provisions quoted above are material provisions of this note. Except as otherwise expressly provided herein, this note, and the lien created by the Deed of Trust shall be subordinate to: (1) the Construction Loan, in an original principal amount not to exceed Three Million Four Hundred Thousand Dollars ($3,400,000.00) and excluding any additional advances thereunder, given by the Obligor for the purpose of financing the acquisition of, and the construction of improvements on, the Property, as required under the Agreement, provided such note is approved by Agency pursuant to the Agreement, and (2) the lien created by the Construction Deed of Trust, provided such deed of trust is approved by Agency pursuant to the Agreement. Obligor agrees to pay, on demand, the following costs, expenses, and attorneys' fees paid or incurred by the holder of this note, or adjudged by a court: (1) reasonable costs of collection or enforcement, including costs, expenses and attorneys' fees paid or incurred in connection with the collection or enforcement of this note, and the preservation, maintenance, protection, sale or other disposition of the security given for this note, whether or not suit is filed; and (2) costs of suit and such sum as the court may adjudge as attorneys' fees in any action to enforce payment of this note or any part of it. "Obligor" LAGUNA GARDENS ASSOCIATES, LLC, a California/limited liability company Char[es H. Fry, Member/Maneger ACCEPTED BY: TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency By: Its: 1101-00003 August 26, 1996 10 LEGAL DESCRIPTION Of PROPERTY ALL THAT CERTAIN REAL PROPERTY LOCATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF TUSTIN, DESCRIBED AS FOLLOWS: THE SOUTHWESTERLY HALF OF LOT 31, IN BLOCK 12 OF IRVINE'S SUBDIVISION, AS SHOWN ON A MAP DESCRIBED AS "PLAT NO. I OF THE RANCHOS SANTIAGO DE SANTA ANA AND SAN JOAQUIN" RECORDED IN BOOK 5, PAGE 7 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA. EXCEPTING THEREFROM THAT PORTION LYING SOUTHWESTERLY OF THE NORTHEASTERLY LINE OF THE LAND DESCRIBED IN THE FINAL- ORDER OF CONDEMNATION RECORDED JULY 18, 1991, AS INSTRUMENT NO. 91-385500, OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION LYING NORTHWESTERLY OF THE SOUTHEASTERLY LINE OF THE LAND DESCRIBED IN THE DEED TO TUSTIN UNION HIGH SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED JULY 20, 1955, IN BOOK 3145, PAGE 534 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION OF SAID LAND AS DESCRIBED IN THE DIRECTOR'S DEED TO TUSTIN UNIFIED SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED APRIL 5, 1995, AS INSTRUMENT NO. 95-0143025, OFFICIAL RECORDS. ALSO EXCEPT THEREFROM THE SOUTHEASTERLY 350.00 FEET. 1101-00003 34307_1 August 26. 1996 ATTACHMENT "A" TO PROMISSORY NOTE ATTACHMENT 8 DEED OF TRUST (AGENCY LOAN) 1101-00003 34252 1 August 25, 1996 Order No. Escrow No. Loan No. WHEN RECORDED MAIL TO: Tustin Community Redevelopment Agency 300 Centennial Way Tustin, California 92680 Attention: Christine Shingleton Assistant City Manager EXEMPT FROM RECORDING FEE PER GOVERNMENT CODE § 6103 SPACE ABOVE THIS LINE FOR RECORDER'S USE DEED OF TRUST WITH ASSIGNMENT OF RENTS (SHORT FORM) (AGENCY LOAN) This DEED OF TRUST, made LAGUNA GARDENS ASSOCIATES, LLC, a California limited liability company, herein called TRUSTOR, whose address is 5000 Birch Street, Suite 9400, Newport Beach, CA 92660, FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, herein called TRUSTEE, and TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency, herein called BENEFICIARY, , between WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, that property in the City of Tustin, County of Orange, State of California, described as: See legal description set forth on Exhibit 1 attached hereto and made a part hereof by this reference. For additional provisions of this Deed of Trust, refer to the Rider attached hereto as Exhibit 2 and made a part hereof by this reference. together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) payment of the sum of $1,174,000.00 with interest thereon according to the terms of a promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof, (2) the performance of each agreement of Trustor incorporated by reference or contained herein and (3) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promiSsory note or notes reciting that they are secured by this Deed of Trust. To protect the security of this Deed of Trust, and with respect to the property above described, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1 964, in the book and at the page of Official Records in the office of the county recorder of the county where said property is 'located, noted below opposite the name of such county, namely: (CONTINUED ON NEXT PAGE) ~158 (1/94) COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1288 556 Kings - 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 Lake 437 i 10 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621 Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427 Calaveras 185 338 Madera 911 136 San Benito 300. 405 Stanislaus 1970 56 Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 ~ sUtter 655 585 Contra Costa 4684 1 Mariposa 90 453 San.Francisco A-804 596 Tehama 457 183 Del Notre 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108 Fresno 5052 623 Modoc 191 93 San Marco 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237 Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 Inyo 165 672 Nevada 363 94 Shasta 800 633 Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774 shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions contained in said subdivisions A and B, (identical in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law. The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address hereinbefore set forth. Signature of Trustor Signature. of TrjJstor LAGUNA GARDEI~ company 77/'-77 .... Charles H. F~/, Member/Manager limited liability STATE OF CALIFORNIA }ss COUNTY OF On ,~, ~3-~.C~T personauy appeared Charles H. Fry p~,~u'l,(~;;y ,;~,;.w~, ;~. ,',;~ I or provecl to me on the basis of satistactory evidence) to be the person(ii, whose name{U~N is/~e subscribed to the within instrument and acknowledged to me that he/~/th~y executed the same in his/l~r/tlT~r authorized capacity(flail), and that by his/l~r/tl~ir signature(~ on the instrument the person(~ or the entity upon behalf of which the person~ acted, executed the instrument. Signature (This area for official notarial seal) DO NOT RECORD The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said heed of Trust as being a part thereof as if set forth at length therein. A. To protect the security of this Deed of Trust, Trustor agrees: 1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for lal~or performed and materials furnished therefor, to comply with all laws affecting said property or requiring an'y alterations or improvements to be made thereon, not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliVer to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. 4) To pay; at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may; make or. do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. B. it is mutually agreed: 1) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such monies received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof. 4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled thereto". 5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 6) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. ~o~-oooo3 (CONTINUED ON NEXT PAGE) 1158 (1/94) ..° After deducting all costs, fees and expenses of Trustee and of this Trust, including costs of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. 7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, ~Nhich instrument, executed by the Beneficiary and .duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. 8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. DO NOT RECORD REQUEST FOR FULL RECONVEYANCE TO FIRST AMERICAN TITLE INSURANCE COMPANY, TRUSTEE: The undersigned is the legal owner and holder of the note or notes, and of all other indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, and all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same. Dated Please mail Deed of Trust, Note and Reconveyance to Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made. Oo 1101-0oo03 LEGAL DESCRIPTION OF PROPERTY All that certain land Situated in the State of California, County of Orange, City of Tustin, described as follows: THE SOUTHWESTERLY HALF OF LOT 31, IN BLOCK 12 OF IRVINE'S SUBDIVISION, AS SHOWN ON A MAP DESCRIBED AS "PLAT NO. 1 OF THE RANCHOS SANTIAGO DE SANTA ANA AND SAN JOAQUIN" RECORDED IN BOOK 5, PAGE 7 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA. EXCEPTING THEREFROM THAT PORTION LYING SOUTHWESTERLY OF THE NORTHEASTERLY LINE OF THE LAND DESCRIBED IN THE FINAL ORDER OF CONDEMNATION RECORDED JULY 18, 1991, AS INSTRUMENT NO. 91-385500, OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM. THAT PORTION LYING NORTHWESTERLY OF THE SOUTHEASTERLY LINE OF THE LAND DESCRIBED IN THE DEED TO TUSTIN UNION HIGH SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED JULY 20, 1955, IN BOOK 3145, PAGE 534 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION OF SAID LAND AS DESCRIBED IN THE DIRECTOR'S DEED TO TUSTIN UNIFIED SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED APRIL 5, 1995, AS INSTRUMENT NO. 95-0143025, OFFICIAL RECORDS. ALSO EXCEPT THEREFROM THE SOUTHEASTERLY 350.00 FEET. EXHIBIT 1 TO DEED OF TRUST RIDER ATTACHED TO AND MADE A PART OF DEED OF TRUST WITH ASSIGNMENT OF RENTS (SHORT FORM) 1. Due on Transfer. Except as otherwise expressly provided in paragraph 2 below, if Trustor shall sell, convey or alienate the real property ("Property") encumbered by this Deed of Trust, or any part thereof, or any interest therein, or shall be divested of its title or any interest therein in any manner or way, whether voluntarily or involuntarily, without the written consent of Beneficiary being first had and obtained, which consent may be withheld for any reason whatsoever, Beneficiary shall have the right, at its option, except as prohibited by law, to declare all of the indebtedness or obligations secured hereby, irrespective of the maturity date specified in any note evidencing the same, immediately due and payable in full. 2. Partial Reconveyances. Beneficiary hereby agrees that, provided Trustor is not then in default under the terms of (i) the Disposition and Development Agreement dated , 1996 between Trustor and Beneficiary (a copy of which is on file with Beneficiary as a public record and the terms of which are incorporated herein by reference) (the "Agreement"), (ii) the note the performance of which is secured by this Deed of Trust (the "Secured Note"), (iii) this Deed of Trust, (iv) the Agreement to be Recorded Affecting Real Property, between Trustor and Beneficiary (a copy of which is on file with Beneficiary as a public record and the terms of which, are incorporated herein by reference), or (iv) any other agreement executed by Trustor and Beneficiary in connection with the Agreement, Beneficiary shall give Trustor partial reconveyances from the lien of this Deed of Trust, on Trustor's written request, of any portion of the Property constituting a lot or parcel shown on a recorded subdivision map covering all or any portion of the Property (either an "Affordable Unit" or a "Market Rate Unit" as defined in the Secured Note). Reconveyance shall be further conditioned on either of the following: (a) (i) the transfer, to a purchaser for value, of title to a Market Rate Unit, by a deed in the form required by the Agreement, as amended from time to time, and approved by Beneficiary, and (ii) the payment to Beneficiary of the portion of the net sales proceeds due Agency on close of escrow for the respective Market Rate Unit; or (b) (i) the transfer, to a moderate income buyer, a Iow income buyer or a very-low income buyer, of title to an Affordable Unit, by a deed in the form required by the Agreement, as amended from time to time, and approved by Beneficiary, (ii) the execution by such a buyer of a note evidencing an Agency Subsidy Loan (an "Affordable Note") in the amount and the form required by the terms of the Agreement, as amended from time to time, and the delivery of such Affordable Note to Beneficiary, (iii) the execution and recordation of a deed of trust in the form required by the Agreement, as amended from time to time, securing such Affordable Note, (iv) the execution by such a buyer of a right of first refusal, in the form required by the Agreement, as amended from time to time, and recorded after the deed conveying title to the buyer of an Affordable Unit and before the recordation of any deed of trust or other financing documents pertaining to such Affordable Unit, and (v) the payment to Beneficiary of the portion of the net sales proceeds due Agency on close of escrow for the respective Affordable Unit. Notwithstanding the foregoing, however, there shall be no partial reconveyance with respect to the sixty-fourth unit (whether Affordable or Market Rate) to be sold, so as to effectuate the complete reconveyance of this Deed of Trust (the "Final Reconveyance"), if the Trustor has not then complied with all terms and conditions of the Agreement, as amended from time to time, the Secured Note, this Deed of Trust, the Agreement to Be Recorded Affecting Real Property, or any other agreement executed by Trustor and Beneficiary in connection with the Agreement, or if Beneficiary determines, in its reasonable discretion, that the proceeds of the sale of such sixty-fourth unit may be insufficient to repay the amounts owing under the Secured ~o~-oooo3 EXHIRIT ? Note and this Deed of Trust in full (collectively, the "Final Reconveyance Conditions"). Trustor shall provide Beneficiary with written notice when only one unit remains to be sold. Within ten (10) business days of receipt of that notice, Beneficiary shall 'provide Trustor with written notice as to whether it has determined to withhold the Final Reconveyance with respect to such unit. Beneficiary's written notice shall identify the Final Reconveyance Condition that has not been met. Beneficiary shall provide the Final Reconveyance as soon thereafter as all of the Final Reconveyance Conditions are met. Trustor shall pay all costs of preparing, executing and recording all documents necessary to accomplish the partial release and reconveyance. With respect to any partial reconveyance, Trustor further agrees: (a) at Beneficiary's option, such partial reconveyance shall be conditioned upon Beneficiary receiving, at Trustor's expense, an endorsement to Beneficiar. y's title insurance policy, which insures that the portions of the Property remaining subject to this Deed of Trust have legal access to a public street; and/or (b) at Beneficiary's option, such partial reconveyance shall be conditioned upon Beneficiary receiving, at Trustor's expense, an endorsement to Beneficiary's title insurance policy, which insures that such partial reconveyance will not adversely affect the priority of this Deed of Trust with respect to the portions of the Property remaining subject to this Deed of Trust. 3. Acceleration Clause: If a default occurs (a) in the payment of any installment of principal or interest when due under the Secured Note, (b) under any other provision of such note or this Deed of Trust, (c) under the terms of the Agreement and Trustor fails to cure such default pursuant to the applicable provisions of the Agreement, or (d) under the terms of the Agreement to Be Recorded Affecting Real Property, then the entire unpaid principal balance and all unpaid accrued interest under the Secured Note shall at once become due and payable in full, without notice, at the option of the holder of the Secured Note, and Beneficiary shall have ali rights available to it under the Secured Note and this Deed of Trust, and as otherwise provided by law, including but not limited to the right to foreclose under this Deed of Trust. Failure to exercise such option shall not constitute a waiver of the right to exercise it in the event of any subsequent default. Trustor: LAGUNA GARDENS/SS/~IATES, LLC, a California ,imite/cl] li~ili~,~/com~y///~ Charles H. Fry, Member/Manager / '! ~ n143ooo3 I::~HIRIT 2 CERTIFICATE OF ACCEPTANCE OF DEED OF TRUST (Tustin Community Redevelopment Agency) This is to certify that the interest in real property conveyed by the deed of trust dated 199__ from LAGUNA GARDENS ASSOCIATES, LLC, as trustor, to the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a governmental agency, as beneficiary ("grantee"), is hereby accepted by the undersigned officer on behalf of the TUSTIN COMMUNITY REDEVELOPMENT AGENCY pursuant to authority conferred by Resolution No. 95-3 of the Tustin Community Redevelopment Agency adopted on April 3, 1995, and the grantee consents to recordation thereof by its duly authorized officer. Dated: Title: [Executive Director or Recording Secretary] ATTAC~NT 9 AFFORDABLE PROMISSORY NOTE 1101-00003 34252 1 August 25, 1996 DO NOT DESTROY THIS NOTE: WHEN PAID, THIS NOTE MUST BE SURRENDERED TO THE TRUSTEE FOR CANCELLATION, BEFORE RECONVEYANCE OF THE DEED OF TRUST SECURING THIS NOTE WILL BE MADE. PROMISSORY NOTE (Agency Subsidy Loan for Affordable Units) $7,500.00 Tustin, California ,199 1. For value received, ("Obligor") promises to pay to the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency ("Agency"), or order, at 300 Centennial Way, Tustin, California 92680, Attention: Assistant City Manager, or at such other place as the holder of this note may from time to time designate by written notice to Obligor, the principal sum of Seven Thousand Five Hundred Dollars ($7,500.00), plus such additional amounts as may be provided below. Principal and any such additional amounts shall be due and payable in lawful money of the United States of America as provided herein. 2. This note is made to assist Obligor in the purchase of the property described on Attachment A hereto, which is incorporated herein by this reference (the "Property"). The Property is intended to be an owner-occupied unit for [Insert applicable clause depending on income level of borrower: moderate income persons or families as defined in Section 50093 of the California Health and Safety Code ("Moderate Income Persons or Families")/a Iow income household as defined in Section 50079.5 of the California Health and Safety Code ("Low Income Household")/a very-low income household as defined in Section 50105 of the California Health and Safety Code ("Very-Low Income Household")]. 3. This note shall be cancelled on November 22, 2016, if either (1) Obligor still owns the Property at that time, or (2) the conditions expressly set forth in either paragraph 5 or paragraph 6 below are then met. 4. If title to the Property is transferred (whether voluntarily or involuntarily) before November 22, 2016, then this note shall be due and payable in full on transfer. In addition to the principal then owing, there shall be owing an amount equal to the "Agency's Share of Equity." The "Agency's Share of Equity" shall be the product of: the ratio that Seven Thousand Five Hundred Dollars ($7,500.00) bears to the contracted sales price at the time the Obligor acquired the Property, times the equity earned in the Property during the time the Obligor has owned the Property. "Equity" shall be defined as the difference between the sales price at which the Obligor enters into a contract to resell the Property and the sum 1101-00003 34299_1 August24,1996 of (i) any mortgages outstanding at the time the Property is resold, including this note and any other mortgages owed to the Agency, (ii) the down payment the Obligor originally paid at the time he or she bought the Property, and (iii) the normal and reasonable loan fees and closing costs paid for by the Obligor when originally purchasing the Property. 5. Notwithstanding the foregoing, however, if title to the Property is transferred (whether voluntarily or involuntarily) before November 22, 2016, to a transferee who qualifies as a [Insert applicable clause depending on income level of borrower: Moderate Income Person or Family/Low Income HouseholdNery-Low Income Household], and for a sales price that does not exceed the applicable "affordable housing cost," as that term is defined in Section 50052.5 of the California Health and Safety Code, the transferee, with the prior written consent of the Agency, may (1) take title to the Property subject to the deed of trust hereinafter described, and (2) assume this note. if such transferee still owns the Property on November 22, 2016, this note shall be cancelled at that time. 6. Notwithstanding any other provision of this note to the contrary, however, this note shall not be due on transfer of title to the Property if all of the following are then true: (1) the transfer is due to the death of the Obligor, (2) the transfer is to an "heir" (as that term is defined in the.California Probate Code) of the Obligor or to a person who would have been the heir of the Obligor had the Obligor not left a valid trust or will, (3) to the extent that the transferee is not already an Obligor hereunder, the transferee, with the prior written consent of Agency, assumes the loan, (4) the transferee pays no consideration in connection with the transfer, and (5) the total amount of all debt on the Property transferred is not increased in connection with the transfer. If such transferee still owns the Property on November 22, 2016, this note shall be cancelled at that time. 7. If the principal amount of this note and the Agency's Share of Equity are not paid in full when due, on a transfer of title to the Property which requires payment of this note as set forth above, both the principal amount of this note and the Agency's Share of Equity shall thereafter bear interest at the rate of seven percent (7%) per annum simple interest from the date of such transfer until the date paid. 8. Each payment shall be credited first to any late charges and other costs and expenses of enforcement and collection as provided herein, then to accrued but unpaid interest then due, and then to principal, and interest shall thereupon cease upon the principal so credited. If default occurs in the payment of any installment of principal or interest under this note when due, or if default occurs under any other provision of this note or the deed of trust securing this note, then the entire unpaid principal balance and all unpaid accrued interest shall at once become due and payable in full, without notice, at the option of the holder of this note. Failure to exercise such option shall not constitute a waiver of the right to exercise it in the event of any subsequent default. 9. This note is secured by a deed of trust, of even date herewith, in favor of First American Title Insurance Company, a California corporation, as Trustee, which encumbers 1101-00003 34299_1 August24,1996 the Property. The deed' of trust contains the following provision: If Trustor shall sell, convey or alienate the real property ("Property") encumbered by this Deed of Trust, or any part thereof, or any interest therein, or shall be divested of its title or any interest therein in any manner or way, whether voluntarily or involuntarily, without the written consent of Beneficiary being first had and obtained as provided in the promissory note the performance of which is secured by this Deed of Trust, Beneficiary shall have the right, at its option, except as prohibited by law, to declare all of the indebtedness or obligation secured hereby, irrespective of the maturity date specified in the promissory note, immediately due and payable in full. 10. This note, and the lien created by the above-referenced deed of trust, shall be subordinate to: (1) any note(s) given by the Obligor at the time of purchase of the Property in order to finance such purchase, and (2) the lien(s) created by the deed(s) of trust securing the performance of the obligations under such note(s). 11. Obligor agrees to pay the following costs, expenses, and attorneys' fees paid or incurred by the holder of this note, or adjudged by a court: (1) reasonable costs of collection or enforcement, including costs, expenses and attorneys' fees paid or incurred in connection with the collection or.enforcement of this note, whether or not suit is filed; and (2) costs of suit and such sum as the court may adjudge as attorneys' fees in any action to enforce payment of this note or any part of it. "Obligor" ACCEPTED BY: TUSTIN.COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency By: 1101-00003 34299_1 August24,1996 LEGAL DESCRIPTION OF PROPERTY All that certain real property situated in the State of California, County of Orange, City of Tustin, more particularly described as follows: [ESCROW HOLDER: DETACH AND REPLACE] 1101-00003 .34299_1 August 24, 1996 ATTACHMENT "A" TO PROMISSORY NOTE' COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1 288 556 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621 Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427 Calaveras 185 338 Madera 911 136 ' San Benito 300 405 Stanislaus 1970 56 Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585 Contra Costa 4684 I Mariposa 90 453 San Francisco A-804 596 Tehama 457 183 Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108 Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237 Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 Inyo 165 672 Nevada 363 94 Shasta 800 633 Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774 shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions contained in said subdivisions A and B, (identical in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law. The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address hereinbefore set forth. Signature of Trustor Signature of Trustor STATE OF CALIFORNIA }ss COUNTY OF } On personally appeared before me, personally known to me ( or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (This area for official notarial seal) 1101-00003 33491_1 (CONTINUED ON NEXT PAGE) 1158 (1/94) Pace ~ nf 4, DO NOT RECORD The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein. A. To protect the security of this Deed of Trust, Trustor agrees: 1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and t° pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon, not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. 4) To pay; at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may; make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or pr'oceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by .law at the time when said statement is demanded. B. It is mutually agreed: 1) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such monies received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof. 4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or' other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled thereto". 5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, eithej- in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents, isSues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. . 6) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration Of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. ~0~-000o3 (CONTINUED ON NEXT PAGE) 33491 I' After deducting all costs, fees and expenses of Trustee and of this Trust, including costs of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of.' all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. 7) Beneficiary, or any successor'in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers .and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. 8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. DO NOT RECORD TO FIRST AMERICAN TITLE INSURANCE COMPANY, TRUSTEE' REQUEST FOR FULL RECONVEYANCE The undersigned is the legal owner and holder of the note or notes, and of all other indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, and all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without Warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same. Dated Please mail Deed of Trust, Note and Reconveyance to Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made. Oo  LU LU 1101-0OO03 33491 1 1158 (1/94) LEGAL DESCRIPTION OF PROPERTY All that certain land situated in the State of California, County of Orange, City of Tustin, described as.follows: [TO BE INSERTED] EXHIBIT 1 TO DEED OF TRUST 1101-00003 33491 I RIDER ATTACHED TO AND MADE A PART OF DEED OF TRUST WITH ASSIGNMENT OF RENTS (SHORT FORM) 1. Due on Transfer. if Trustor shall sell, convey or alienate the real property ("Property") encumbered by this Deed of Trust, or any part thereof, or any interest therein, or shall be divested of its title or any interest therein in any manner or way, whether voluntarily or involuntarily, without the written consent of Beneficiary being first had and obtained as provided in the Promissory Note the performance of which is secured.by this Deed of Trust, Beneficiary shall have the right, at its option, except as prohibited by law, to declare all of the indebtedness or obligations secured hereby, irrespective of the maturity date specified in the Promissory Note, immediately due and payable in full. 2. Subordination. The Promissory Note, and the lien created by this Deed of Trust, shall be subordinate to: (1) any note(s) given by the Trustor at the time of purchase of the Property in order to finance such purchase, and (2) the lien(s) created by the deed(s) of trust securing the performance of the obligations under such note(s). Trustor: 1101~00003 33491_1 EXHIBIT 2 TO DEED OF TRUST CERTIFICATE OF ACCEPTANCE OF DEED OF TRUST (Tustin Community Redevelopment Agency) This is to certify that the interest in real propertY conveyed by the deed of trust dated ,199__ from , as trustor, to the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a governmental agency, as beneficiary ("grantee"), is hereby accepted by the undersigned officer on behalf of the TUSTIN COMMUNITY REDEVELOPMENT AGENCY pursuant to authority conferred by Resolution No. 95-3 of the Tustin Community Redevelopment Agency adopted on April 3, 1995, and the grantee consents to recordation thereof by its duly authorized officer. Dated: Title: [Executive.Director or Recording Secretary] 1101-00003 33491 I ATTACHMENT 11 RIGHT OF FIRST REFUSAL 1101-00003 34252 1 August 25, 1996 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: CITY OF TUSTIN COMMUNITY REDEVELOPMENT AGENCY ATTN.: Christine Shingleton Assistant City Manager 300 Centennial Way Tustin, CA 92680 This Agreement is recorded at the request and for the benefit of the City of Tustin Community Redeveropment Agency and is exempt from the payment of a recording fee, pursuant to Government Code Section 6103. CITY OF TUSTIN COMMUNITY REDEVELOPMENT AGENCY By: Its: Date: RESALE RESTRICTION AGREEMENT AND OPTION TO PURCHASE Section 1. Parties. This Resale Restriction Agreement and Option to Purchase (the "Agreement") is entered into as of this day of .., 19 .., by and between the Tustin Community Redevelopment Agency, a California community redevelopment agency (the "Agency") and (the "Owner"). Section 2. Definitions. The following defined terms have the meanings indicated in this Section 2. Exhibits to this Agreement are hereby incorporated by reference. All recordings required by this Agreement shall be in the official records where deeds are recorded in the county where the land described on Exhibit A is located. (a) purchase. "Agreement" means this resale restriction agreement and option to 1101-00003 34300_1 August 24, 1996' (b) "Appraiser" means an appraiser who is a certified appraiser, an MAI member of the American Institute of Real Estate Appraisers or an SRPA member of the Society of Real Estate Appraisers (or in case such professional designations are modified or discontinued, the most nearly equivalent successor designations). (c) "Business Day" means a day other than a Saturday or Sunday on which banks located in the county seat of the county in which the Residence is located are not required or authorized to remain closed. (d) "BMR Unit" means the Residence, which has been designated as a below- market rate unit by Section 4 of this Agreement. (e) "Agency" means the Tustin Community Redevelopment Agency, a California redevelopment agency. (f) "Designee" means a government or nonprofit organization which the Agency has designated to become the Optionee pursuant to Section 7. (g) limitation." The term "including" or variants thereof shall mean "including without (h) "Index" means the Consumer Price Index for All Urban Consumers (CPI- U), All Items, for the Los Angeles, Anaheim, Riverside County Area, as published periodically by the United States Department of Labor, Bureau of Labor Statistics. (i) "Optionee" means the party who, pursuant to Section 7, is entitled to exercise the Purchase Option as provided in this Agreement. As provided in Section 7, the Optionee may be: (i) the Agency; (ii) a Designee; or (iii) an individual private buyer who meets the Agency's eligibility qualifications and to whom the Agency's rights as optionee have been assigned by the Agency, its Designee, or a prior Optionee. (j) "Owner" means (k) "Prepayment Fees" means the amount of any fees paid by Owner to Agency at the time of acquisition of the Residence. (I) "Prohibited Transfer" has the meaning stated in Section 8. (m) "ProPerty" means the real property described on Exhibit A, including all improvements and appurtenances. (n) "Purchase Option" means the option to purchase granted by the Owner, as optionor, to the Optionee, as optionee, by this Agreement. 1101-00003 34300_1 August 24, 1996 (o) "Residence" means the real property described on Exhibit A, including all improvements and appurtenances. (p) "Transfer" has the meaning stated in Section 8. Section 3. Agreement. Recitals. The following recitals of fact are a material part of this (a) WHEREAS, the Agency has developed a program to provide housing opportunities to very-low, Iow and moderate income households (as those terms are defined in Health & Safety Code Sections 50105, 50079.5 and 50093, respectively) to be offered for sale on terms that are better than those otherwise prevailing in the market; and (b) WHEREAS, the intent of the Agency is to preserve the affordability of the homes for very-low, Iow and moderate income households for as long as possible; (c) . NOW, THEREFORE, in consideration of the benefits received by the Owner, and for other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, and intending to be bound, the Owner and the Agency agree as follows: Section 4. The Residence. The Residence which is the subject of this Agreement has a street address of ! and its legal description is set forth in "Exhibit A" to this Agreement. The Residence is hereby designated as a below-market rate unit (the "BMR Unit") and shall be subject to the terms and conditions herein set forth. Section 5. Owner Representations and Warranties. The Owner represents and warrants to the Agency that the financial and other information previously provided to the Agency by the Owner for the purpose of qualifying to purchase the Residence was true and correct at the time it was given and remains true and correct as of the date of this Agreement. Section 6. Resale Restrictions. The deed by which the Owner is acquiring the Residence, and which is being recorded concurrently herewith, contains certain restrictions which prohibit the Owner from selling the Residence, except on the terms and provisions stated therein. These restrictions are covenants running with the land that terminate on the earlier to occur of: (1) November 22, 2016, (2) payment by the Owner to the Agency of a certain amount as stated therein, (3) the date of any assignment, to the United States Department of Housing and Urban Development, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation, of both (a) a note which is (i) payable to any institutional lender and (ii) 1101-00003 34300_1 August 24, 1996 secured by a deed of trust that has first priority over all other deeds of trust affecting the Residence, and (b) such deed of trust, (4) the date on which the Residence is conveyed by trustee's deed pursuant to foreclosure of the deed of trust of any institutional lender whose deed of trust has first priority over all other deeds of trust affecting the Residence, or (5) the date of any deed-in-lieu of foreclosure pursuant to which the Residence is conveyed to any institutional lender whose deed of trust has first priority over all other deeds of trust' affecting the Residence. This Agreement is designed to protect the Agency's interest in the Residence and to help the Agency maintain the supply of affordable housing, in the event of such foreclosure or deed-in-lieu of foreclosure. Section 7. Purchase Option. The Owner hereby grants to the Agency, as optionee (the "Optionee"), an option to purchase the Residence (the "Purchase Option") · on the terms of this Agreement. The Agency may designate a governmental or nonprofit organization (the "Designee") to exercise the Purchase Option. The Designee when so designated shall then be the Optionee. The Agency or its Designee, as the case may be, may assign the Purchase Option to an individual private buyer who meets the Agency's eligibility qualifications, who shall then become the Optionee. After the exercise of the Purchase Option by the then Optionee in the manner hereinafter prescribed, the Optionee may assign the Purchase Option to any substitute individual private buyer who meets the Agency's eligibility requirements and is approved by the Agency; provided, however, that such subsequent assignment shall not extend any time limits contained herein. Upon approval by the Agency, such substitute buyer shall become the Optionee. The Agency shall give the Owner notice of any designation of a Designee. The Agency, the Designee or the Optionee, as the case may be, shall give the Owner notice of any assignment to an Optionee. In addition to giving notice to the Owner, any designation of a Designee or assignment by the then Optionee of the Purchase Option shall be by a written instrument executed and acknowledged by the parties, in recordable form, which shall be recorded. Section 8. Transfer by Owner. Any attempt by the Owner to make a Prohibited Transfer of title to or any interest in the Residence in violation of this Agreement shall be void and subject to exercise by the Optionee of the Purchase Option described in Section 7. "Transfer" means any voluntary or involuntary sale, assignment or transfer of ownership of or any interest in the Residence pursuant to either (1) deed-in-lieu of foreclosure given to an institutional lender whose deed of trust has first priority over all other deeds of trust affecting the Residence, or (2) foreclosure of the deed of trust of any institutional lender whose deed of trust has first priority over all other deeds of trust affecting the Residence. Any Transfer without satisfaction of the conditions of this Agreement shall be deemed a "Prohibited Transfer". Section 9. Procedure on Sale. Whenever the Owner of the Residence intends 1101-00003 34300_1 August 24, 1996 to make a Transfer of title to or any interest in the Residence which, unless the Owner complies with this Section 9, would be a Prohibited Transfer, the Owner shall notify the Optionee to that effect. The Optionee, upon receipt of said notice, shall then have the right to exercise its Purchase Option by delivery of notice to the Owner of such exerqise at any time within thirty (30) days from the receipt by the Optionee of such written notice from the Owner of intent to sell or otherwise Transfer the Residence. If the Optionee exercises its right to purchase the Residence, closing shall be through an escrow with the title insurance company issuing the owners title insurance policy required by Section 11 of this Agreement, utilizing the form of escrow agreement customarily used by such escrowee in residential transactions in the City of Tustin, modified to the extent necessary to conform to this transaction. The Closing shall be within sixty (60) days of the opening of escrow by both parties. The escrow shall be opened upon delivery by the Optionee to the Owner of notice of the Optionee's exercise of the Purchase Option or as soon thereafter as possible. In the event the'Optionee decides to assign the Purchase Option, the' Optionee may postpone opening of escrow until selection of the new Optionee pursuant to Section 7, or as soon thereafter as possible, provided that the opening of the escrow shall occur no later than thirty (30) business days after the Owner is notified by the Optionee of the Optionee's exercise of its Purchase Option. In the event the Optionee postpones opening of escrow and is unable to select such an assignee, the Optionee retains the right to open escrow and complete the purchase provided that such escrow is opened within thirty (30) business days after the Owner is notified by the Optionee of the Optionee's exercise of its Purchase Option and the sales transaction is completed within ninety (90) days from the Owner's notice of intent to sell. Up to ten (10) days before close of escrow, the Owner may give notice to the Optionee of the Owner's intent to terminate the escrow. The Optionee shall retain the right by notice to the Owner to complete the purchase of the Residence for an additional period of (10) days commencing from the date of receipt of notice of the Owner's intent to terminate the escrow. Section 10. Transfer by Owner if Purchase Option is not exercised. In the event the Optionee does not exercise its Purchase Option within thirty (30) days of the Owner's notice pursuant to Section 9, the Owner may proceed to Transfer the Residence by deed-in-lieu of foreclosure and upon such Transfer the provisions of Section 18 below pertaining to subordination shall apply. Section 11. Purchase Price; Owner's Warranties; Title Insurance. (a) Closing costs and title insurance shall be paid pursuant to the custom and practice of the Agency at the time of the opening of such escrow. At the Closing the Owners shall furnish the Optionee an ALTA owner's residential title insurance policy, subject to the title insurance company's standard exclusions from coverage, special exceptions for current taxes and assessments not yet due, and such matters (other than taxes, 1101-00003 34300_1 August 24, 1996 assessments, and encumbrances created or suffered by the Owner who signed this Agreement and all' those claiming under that Owner) which were exceptions to title at the time of recordation of the deed described in Section 6 above. At the Closing Owner shall convey title to the Optionee or the Optionee's'nominee by grant deed which warrants title against matters created or suffered by the Owner and those claiming under the Owner. (b) The purchase price (the "Purchase Price") of the Residence shall be fixed at the lower amount arrived at via the following two methods. (i) The Optionee shall have an appraisal made by a neutral professional Appraiser of its choice to establish the market value. The Owner may also, at Owner's own expense, have an appraisal made by a neutral professional Appraiser of the Owner's choice to establish the market value. If agreement cannot be reached, the average of the two appraisals shall be deemed to be the market value. (~) the Residence] [insert the purchase price on the Owner's acquisition of ($ ) Dollars plus the amount of any Prepayment Fees paid by the Owner who initially entered into this Agreement at the time that Owner purchased the Residence (base price), plus an · amount, if any, to compensate for any increase in the Index. For that purpose, the Index prevailing on the date of the purchase of the Residence by the Owner who initially entered into this Agreement shall be compared with the latest Index available on the date of receipt by the Optionee of the Owner's notice of intent to sell. The percentage increase in the Index, if any, shall be computed and the base price shall be increased by that percentage; provided, however, that the price in no event shall be lower than the purchase price paid by the selling Owner when he purchased the Residence. This adjusted price shall be increased by the value of any documented, permanent capital real estate or fixed improvements approved by the Agency. No price adjustment will be made except upon presentation to the Agency of written documentation of all expenditures made by the Owner for which an adjustment is requested. (c) Any sale price determined through the use of the method described in Section 1 l(b) (ii) (base price adjusted by the Index and value of improvements, appurtenances, fixtures or equipment added) shall be adjusted by decreasing said price by an amount to compensate for deferred maintenance costs, which amount shall be determined as follows: Upon receipt of notice of the Owner's intent to sell, the Optionee shall have fifteen (15) days to determine whether any violations of applicable building, 1101o00003 34300_1 August24,1996 plumbing, electric, fire or housing codes or any other provisions of Municipal Code exist. In the event deficiencies are noted, the Optionee shall obtain estimates to cure the observed deficiencies. The Owner shall cure the deficiencies in a reasonable manner acceptable to the Optionee within forty-five (45) days of being notified of the results of the inspection, but in no event later than close of escrow. Should the Owner fail to cure such deficiencies prior to the scheduled date of close of escrow, at the option of the Optionee, exercised on or before closing, the escrow may be closed, title passed and money paid to the Owner subject to the condition that such funds as are necessary to pay for curing such deficiencies (based upon written estimates obtained by the Optionee) shall be withheld from the money due the Owner and held by the escrowee holder for the purpose of curing such deficiencies. The Optionee shall cause such deficiencies to be cured and upon certification of completion of work by the Agency, the escrowee shall utilize such funds to pay for said work. Any remaining funds shall be paid to the Owner. No other payment shall be due to the Owner. (d) In no event shall the Agency become in any way liable to the Owner, nor become Obligated in any manner to any other party, by reason of the assignment of its Purchase Option, nor shall the Agency be in any way obligated or liable to the Owner for any failure of the then Optionee to consummate a purchase of the Residence or to comply with the terms of the Purchase Option. (e) Until such time as the Optionee's Purchase Option is exercised, waived, or expired, the Residence shall not be Transferred, as defined in Section 6 above, except with the express written consent of Agency or its Designee, which consent shall be consistent with the Agency's goal of creating, preserving, maintaining, and protecting housing for very-low, Iow and moderate income households. Section 12. Termination of Purchase Option. The provisions set forth in this Agreement relating to the Optionee's Purchase Option shall terminate and become void automatically on November 22, 2016. Section 13. Default and Foreclosure. A request for notice of default and any notice of sale under any deed-of trust or mortgage with power of sale encumbering the Residence shall be recorded by the Agency, any Designee and any other Optionee. Any notice of default given pursuant to Civil Code Section 2924b, as amended, shall constitute an Owner's notice of intent to sell under Section 9 of this Agreement, and the Optionee may exercise its Purchase Option pursuant to the provisions of this Agreement; provided however, that, notwithstanding any language contained in this Agreement to the contrary, with regard to the rights of the lien holder, the Optionee must complete such purchase no later than the end of the period established by California Civil Code Section 2924c for reinstatement of a monetary default under the deed of trust or mortgage. In the event of default and foreclosure, the Optionee shall have the same right as 1101-00003 34300_1 August 24, 1996 the Owner to cure defaults and redeem the Residence prior to foreclosure sale. Such redemption shall be subject to the same fees, charges and penalties which would otherwise be assessed against the Owner. Nothing herein shall be construed as creating any obligation on the part of the Agency to cure any such default, nor shall this right to cure and redeem operate to extend any time limitations in the default provisions of the underlying deed of trust or mortgage. In the event that no request for notice is recorded, the Optionee's Purchase Option shall run from the date the notice of default is given to the Owner, unless the Agency then has a deed of trust of record affecting the Property, in which case the Optionee's Purchase Option shall run from the date the notice of default is served on the Agency as a junior lienholder pursuant to Civil Code Section 2924b, and any such purchase must be completed within the period established in this Section 13. In the event the Optionee elects not to exercise its rights to purchase upon default, and a foreclosure sale is consummated, any surplus proceeds to which the Owner may be entitled following foreclosure under California state law shall be paid as follows: After any required payment of encumbrances, that portion of surplus, if any, up to but not exceeding the net amount that the Owner would have received after any required payment of encumbrances under the formula set forth above had the Optionee exercised its right to purchase the Residence on the date of the foreclosure sale, Shall be paid to the Owner on the date of the foreclosure sale; the balance of surplus, if any shall be paid to the Optionee. Notwithstanding the foregoing, however, if the Agency has a deed of trust of record at the time of such foreclosure, and is paid the full amount owing under'such deed of trust and the note secured thereby, then the Agency shall be entitled to no additional payment under this Section 13. In the event that the Optionee does not elect to purchase the Residence pursuant to the provisions of this Section 13 and the Residence is sold through foreclosure, the provisions of Section 18 below pertaining to subordination shall apply. Section 14. Distribution of Insurance and Condemnation Proceeds. In the event that the Residence is condemned or destroyed (or in the event that the Residence consists of a unit in a condominium project and the condominium project is destroyed and insurance proceeds are distributed to the Owner, instead of being uSed to rebuild, or in the event of condemnation, if proceeds thereof are distributed to the Owner, or in the event of termination of the condominium, liquidation of the association and distribution of the assets of the association to the members thereof, including the Owner), any surplus proceeds from insurance or condemnation so distributed remaining after payment of encumbrances on the Residence shall be distributed as follows: That portion of the surplus up to but not to exceed the net amount that the Owner would have received under the formula set forth above had the Optionee exercised its Purchase Option on the date of the destruction, condemnation valuation date, or liquidation, shall the distributed to the Owner, and the balance of such surplus, if any, 1101-00003 34300_1 August 24, 1996 shall be distributed t'o the Optionee. Notwithstanding the foregoing, however, if the Agency has a deed of trust of record at the time of such condemnation or destruction, and is paid the full amount owing under such deed of trust and the note secured thereby, then the Agency shall be entitled 'to no additional payment under this .Section 14. Section 15. Notice of PrOhibited Transfer. Within thirty (30) days after receiving notification of a Prohibited Transfer, the Optionee will give written notice to the Owner, specifying the n'~ture of the Prohibited Transfer. If the violation is not corrected to the satisfaction of the'(~tionee within the (10) days after the date of the notice, or within such further time as the Optionee determines is necessary to correct the violation, the Optionee may declare a default under this Agreement. Upon the declaration of a default, the Optionee may apply to a court of competent jurisdiction for specific performance of this Agreement, for an injunction prohibiting a proposed sale or transfer in violation of this Agreement, for a declaration that the Prohibited Transfei' is void, or for any such other relief as may be appropriate. Section 16. Attorney Fees and Costs. If any action is brought to enforce the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees and costs. Section 17. Controlling Agreement. The Owner covenants that the Owner has not, and will not execute any other agreement with provisions contradictory to or in opposition to the provisions hereof, and that in any event, the Owner understands and agrees that this Agreement shall control the rights and obligations between and among the parties. Section 18. Subordination. A stated in Sections 10 and 13 above, in the event of the Optionee's failure to timely exercise its Purchase Option on foreclosure or deed- in-lieu of foreclosure on the terms stated herein: (1) This agreement and option is subordinate to any first deed of trust or mortgage on the Property made by or held by an institutional lender or investor; and (2) Any party, and its successors and assigns, receiving title to the Property through a trustee's sale, a judicial foreclosure sale or'deed in lieu of foreclosure, of such deed of trust or mortgage, and any conveyance of transfer thereafter, shall receive title free and clear of the provisions of this agreement and option.. Section 19. Severability; If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision(s) had never been contained herein. 1101-00003 34300 1 August-24, 1996 Section 20. Time of the Essence. Time is of the essence of this entire Agreement. Whenever under the terms of this Agreement the time for performance falls on a day which is not a business day, such time for performance shall be on the next day that is a business day. Section 21: Notices. All notices required herein shall be in writing and shall be considered as given when personally delivered or one business day following the day on which notice is delivered to Federal'Express or similar overnight delivery service with all delivery charges paid, addressed to the parties as follows: If to Agency: CITY OF TUSTIN COMMUNITY REDEVELOPMENT AGENCY Attn.: Assistant City Manager 300 Centennial Way Tustin, CA 92680 if to Owner: If to Optionee: (other than the Agency) at the address specified in the designation or assignment required by Section 7. The address of a party for notices may be changed by that party's designation to all other parties of the new address and the recording of the designation, which shall include the recording reference of this Agreement and the legal description of the Property, as shown on Exhibit A. Section 22. Covenants as to Use of and Title to the Residence. The Owner covenants and agrees with the Agency that the Owner will use and maintain the Residence as a single family residence and will perform ali obligations of any consensual lien encumbering the Residence, until purchase by the Optionee pursuant to this Agreement or Termination of this Agreement. Section 23. Captions and Pronouns. The captions and headings of the various Sections of the Agreement are for convenience only, and are not to be construed as confining or limiting in any way the scope of intent of the provisions hereof. Whenever the context requires or permits, the singular shall include the plural, the plural shall include the singular, and masculine, feminine and neuter shall be freely interchangeable. 1101-00003 August 24, 1996 3.0 Section 24. Running of Benefits and Burdens. All provisions of this Agreement, including the benefits and burdens, run with the land described in Exhibit A and are binding upon the heirs, successors, a~signs and personal representatives of the parties hereto and inure to the benefit of the heirs, personal representatives and permitted successors and assigns of the parties hereto. Section 25. Construction. The rule of strict construction does not apply to this Agreement. This Agreement shall be given a reasonable construction so that the intention of the parties, to create a valid and enforceable Purchase Option and to prevent any Prohibited Transfer or any use of the Residence in violation of this Agreement is carried out. Section 26. Termination. This Agreement shall terminate on the earlier of: (1) conveyance to the Optionee or its nominee pursuant to exercise of the Purchase Option, (2) acquisition of title through a foreclosure of any consensual lien'to which this Agreement has been subordinated, following the failure of the Optionee to timely exercise its Purchase Option hereunder,(3) recordation of a deed-in-lieu of such foreclosure, following the failure of the Optionee to timely exercise its Purchase Option hereunder, (4) (a) payment to the Agency of the amounts specified in (i) the deed referenced in Section 6 above for the release of resale restrictions and (ii) all Agency notes secured by deeds of trust affecting the Property, and (b) reconveyance of all . Agency deeds of trust affecting the Property, or (5) termination of the Purchase Option pursuant to Section 12. Upon termination of this Agreement, on request of the then record owner of the fee title to the Residence the Agency and any other Optionee shall execute, acknowledge and record a termination of this Agreement. To the extent permitted by law, any unfulfilled obligations of any Owner shall survive the termination of this Agreement, but this Agreement shall no longer affect title to the Residence. IN WITNESS WHEREOF, Agency and Owner have executed this Agreement. Dated: ,199 "Agency" TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California community redevelopment agency By: Title: Dated: ,199 "Owner" 1101-00003 34300_1 August 24, 1996 .EXHIBIT "A" Legal Description [ESCROW HOLDER: DETACH AND REPLACE] ALL PURPOSE ACKNOWLEDGMENT STATE OF CALIFORNIA COUNTY OF ) ) ss ) On,this day of ,19__, before me, , Notary Public, personally appeared (name(s) of Signers(s) personally known to me OR proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(les), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. W'rtness my hand and official seal. NOTARY SEAL Signature of Notary ALL PURPOSE ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ) On this day of ,19__, before me, Notary Public, personally appeared (name(s) of Signers(s) personally known to me OR proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, .and acknowledged to me that he/she/they exe.cuted the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. NOTARY SEAL Signature of Notary ATTACHMENT 12 INSURANCE CERTIFICATE 1101-00003 34252 1 Augus~ 25, 1996 ' CFFY OF TUg' MD TUS~N COMMUNFFY RE_~EV~-L C-~,~F1C, ATE OF/ _. ,ANCE AHD DESlG-NA~ON OF NAJMF ', / NO MODiFICATiONS OR ADDFFION$ MAY BE MADE TO THIS FORM AGENCY gDFT10 NAL~N S U~--.-D' TO:, CiTY OF' TUSTIN and ' PROJECT: TLISTIN COMMUNITY REDEVELOPMENT AGENCY P,O. B~x 353g .o Turn, CA 92681-353~ COMPANIES AFFORDING ¢OVEP. AGE Company Letter Company Lei=er El: Comport. y Letter C: Company Letter D: Company Letter E: Company Letter F: This is t~ certff7 that ~e policies of insurance ~ted below have been issued to the insured name above, are in force at this 5me, that the City of Turn and the Turn Commun~ Redevelopment Agency are named add'rUonaJ insureds thereon as respec= claims arising in c=nnectJon wi'J3 the I~ereinabove-named Proje~ and that such insurance shall be primary wff. h respect to any other insurance in force procured by either ~he City of Turn or the TustJn Community Redevelopment Agency. '. CO. Ltr. . . Type of Insurance Policy Number GENERAL L[AB1L~ [ ] Commer~ Gert er-'~ L.Ja~T~ [ ] Claims Made [ ] CCC. [ ] Owner's & Conff'act~rs' Protect~,e J=olicy E~r~tion Date ,~ l_im~ In Thousands General Aggregate j $ Prods-Comp/Cps Agg. I $ Pets. & Advg. Injury Each Occurrence Fire Damage (Any One Fire) Medical Expense (Any One Person) CSL Eodi~ Injury (P er Person) BodT~y Injury (Per Oc:urrence) Property · EACH OCCURRENCE AGGREGATE $ 5_ · [] [] Policy Effective Date AUTOMOBILE L[ABILr~ [.] ~y ~ [ ] All Owned Amos [ ] Scheduled Autos [ ] ~red Autos [ ] Non-Owned Autos' [ ] Garage I. Jab~Trb/ EXC. ESS LJABI~ ' [ ] Umbrella Form [ ] Other than Umbria Form WORKF-RS' COMPENSATION .AND EMPLOYER'S UAIBILJTY OT'HER STATUTORY S Each Ac.~dent Disease-Po[icy Limit Disease-EaCh Employee DescrfPtJon of OperatJons/LocatJons,N'ehicies/SpeciaJ Items: 'is cern, ed that a waiver af subrogatbn is hereby to the City of Tusfin and the Tus~n Community Redevelopment Agency as pertains to the ~rms of al~ Workers Compensation insurance. The Issuing company w'ii give thirty (30) days wrf~en notice to the City cf TustJn and the Turn ':.ornmunK'y Redev~bpment Agency prbr to mod'~cstion or ca~cellaUon. ~ATE ISSUED: Authorized Representa~e o.f the above-named insurance company(les)