HomeMy WebLinkAboutHotel Frezno Hotel Fresno Rehab ProjectRemNN at are Request of
and Men Remrhad Return to:
uc City of Fresno
,t CRY Clark
2800 Fresno Street Room 21M
Fresno, CA 83721-3603
1lP-r-.,
iW County Recorder
FRESNO County Recorder
Paul Dictos, C.R.R.
DOC— 2011-0153295
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This Agreement is recorded at the request and for the benefit of the City of Fresno and is
exempt from the payment of a recording fee pursuant to Government Code
,Section
,8103.
By: /4 /o
Mark Swu
It's: City Manager
Date: i-ZH-//
CITY OF FRESNO
HOME INVESTMENT PARTNERSHIPS(HOME) AGREEMENT
by and between
CITY OF FRESNO,
a municipal wrporatlon
and
Hotel Fromo, LLC
regarding
The Hotel Fresno RehabilXation Project
1241 Broadway Pla3a, Fresno, California 93721 (APN: 466-214-01)
(Downtown Fresno Business District)
TABLE OF CONTENTS
ARTICLE 1.
DEFINITIONS .................... __........ _._.... _.._......... _.................. _..... „.__..__2
ARTICLE 2.
TERMS OF THE LOAN .___....... ........................ ....._.........................._..........6
ARTICLE 3.
REPRESENTATIONS AND WARRANTMS OF DEVELOPER...................7
ARTICLE I.
COVENANTS OF DEVELOPER..__....._.._ ...... ......._.._._..... ....................
8
ARTICLE 5.
PROPERTY MAINTENANCE ....... ___.._........ _.._._ .......... ..... __..............
15
ARTICLE 6.
DISBURSEMENT OF NOME FUNDS ......... _...... _... _... ......... .._..............
18
ARTICLE 7.
DEVELOPMENT AND REHABH.ITATION.._..... _._...... _......... _.........
29
ARTICLE 8.
PRO.IF.CT OPERATIONS ........ ......... ............... __.... _.._...__..... _..............
26
ARTICLE 9.
INSURANCE AND INDEMNIFY. .... _.._.... ..... _....... _..._... ... .... _._.........
29
ARTICLE M
DEFAULT AND REMEDIES ..... ..... ._.......__..... _...... _........ _..... ........ _....
32
ARTICLE It.
GENERAL PROVISIONS .... __........ ......... ......._........_.......__..._..........
34
HOME INVESTMENT PARTNERSHIPS PROGRAM AGREEMENT
This HOME Investment Partnerships Program Agreement (hereinafter referred to
as the "Agreement") is entered into this ,t. RA , 2011, by and between the CITY
OF FRESNO. a municipal corporation, acting through its Development and Resource
Management Department - Housing and Community Development Division (hereinafter
referred to as the. "CITY"), and Hotel Frezno, LLC, a California limited liability company
(hereinafter referred to as "DEVELOPER").
RECITALS
A. The CITY anticipates it will receive HOME Investment Partnerships
Program (hereinafter referred to as "HOME Program") grant funds from the U:S-
Department of Housing and Urban Development (hereinafter referred to as "HUD'%
under Title II of the Cranston -Gonzalez National Affordable Rental Housing Act of 1990,
as amended (hereinafter referred to as the "Acn.
B. To advance the supply of Affordable rental housing within the CIry
of Fresno, the CITY desires, among other things, to encourage private investment in
affordable rental housing market.
C. The Project will provide for the rehabilitation and ground Boor
expansion of the former Hotel Fresno, a proposed seventy -Iwo (72) unit
lofts/retail/commercial complex with six (6) fixed units designated as HOME -assisted
affordable rental housing units at the Property identified In EXHIBIT "A".
D. The DEVELOPER desires to act as the owner/developer exercising
effective project control, as to the rehabilitation of Hotel Fresno into a seventy-two (72)
unit apartment building of which six (6) fixed units will be HOME -assisted units and shall
be preserved as Law- and Very Low -Income rental housing, and ground floor retail,
hereinafter referred to as the "Project", as more particularly described in the Project
Description attached hereto as EXHIBIT "B". incorporated herein.
E The Project will be reconstruction on HOME Program eligible
Property owned by the DEVELOPER and located within the boundaries of the City of
Fresno, as more particularly described in the attached EXHIBIT "A".
F. To further its goal to increase the supply of Affordable Radial
Housing, the CITY desires to assist the DEVELOPER by providing a total of up to Eight
Hundred Fifty Nine Thousand Eight Hundred Sixty Eight dollars and 00/100 ($859,888)
in annually allocated and available fiscal year 2011-2012 HOME Program funds for a
residual receipts HOME Program Loan to the Project (hereinafter referred to as "Loan"),
for payment of the HOME Program eligible costs, as further identffied in the Project
Budget, EXHIBIT "C", variously secured by the underlying real property and the
Affordable Housing covenants, upon the terms and conditions in this Agreement. The
simple interest will be at 1% annually. Principal and interest will be payable from
Residual Receipts at times prior to the Maturity Date and in full upon the Maturity Date.
G. A June 29, 2011 environmental review of the Project pursuant to
Me National Environmental Policy Act ('NEPA°) guidelines resulted in a Finding of No
Significant Impact. Additionally, a July 1, 2011, environmental review of the Project
pursuant to the California Environmental Quality Act ('CEQA') guidelines resulted in a
Mitigated Negative Declaration.
H. The CITY has determined that this Agreement is in the best
interests of and will materially contribute to, the Housing Element of the General Plan.
Further, the CITY has found that the Project: (i) will have a positive influence in the
neighborhood and surrounding environs; (ii) is In the vital and best interests of the CITY,
and the health. safety, and welfare of CITY residents; (iii) complies with applicable
federal, state, and local laws and requirements; (iv) will increase, improve, and preserve
the community's supply of Low -Income Housing available at Affordable Rental Housing
cost to Very Low- and Low -Income households. as defined hereunder, (v) planning and
administrative expenses incurred in pursuit hereof are necessary for the production,
improvement, or preservation of Low -Income Housing; and (vi) will complywlth any and
all owner participation mlea and criteria applicable thereto.
I. The CITY and DEVELOPER have determined Nat the Project's
HOME Assisted Units constitute routine programmatic/grantee lender activities utilizing
available and allocated program/grantee funding, outside the reach of California
Constitution Article XXXIV and enabling legislation.
J. OnA , 2011 the Housing and Community Development
Commission of the City o Fresno reviewed this Agreement and recommended
approval,
K. On 2011 the Hotel Frezno, LI -C's governing
body/managing member reviewed and approved Me development and authorized entry
of a HOME Program Project agreement.
NOW, THEREFORE, IN CONSIDERATION of the above recitals, which
recitals are contractual in nature, the mutual promises herein contained. and for other
good and valuable consideration hereby acknowledged, the parties agree as follows:
ARTICLE 1. DEFINITIONS
The following terms have the meaning and content set forth in this Article wherever
used in this Agreement, attached exhibits or attachments that are incorporated into this
Agreement by reference.
1.1 ADA means the Americans with Disabili0es Act of 1990, as most recently
amended
1.2 Affrirafve Marketing means a good faith effort to attract eligible persons
of all racial, ethnic and gentler groups, in the housing market area, to rent the proposed
Affordable Project units, as hereinafter defined.
1.3 Affordability Period means fifty-five (55) years commencing from the date
the Project Budget and Tenant Information is entered into HUD's Integrated
Disbursement and Informaton System (IDIS), provided as an administrative amentlmerd
to the Agreement.
1.4 A— able Unit means the proposed fixed Affordable Housing Units,
consisting of one (1) unit rented as Very Low -Income housing and five (5) units rented as
Low -Income housing, each of which will be required to meet the affordability
requirements of this Agreement and 24 CFR 92.252 which affordability requirements
shall run with the land for the Affordability Period subject to release as provided in this
Agreement.
1.5 Budget means the pro -forma Budget attached hereto as EXHIBIT "C", for
the Project, as may be amended upon Me approval of the CITY'S Housing and
Community Development Division Manager, provided any increase in HOME Program
Funds hereunder requires City Council Approval.
1,6 Cerfificate of Completion means that certificate attached as EXHIBIT "E'
to be issued to the DEVELOPER by the CITY evidencing completion of the Project, a
release of construction related covenants for the purposes of the Agreement.
1.7 CFR means 'he Code of Federal Regulations.
1,8 Commencement of Rehabilitation means the date that the DEVELOPER
or DEVELOPER'S wnstruction contractor begins substantial physical rehabilitation work
on the Property, including, without limitation, delivery of materials and any work, beyond
maintenance of the Property in its status quo condition which shall occur with respect to
the Property at the times act forth in the Project Schedule. EXHIBIT W.
1.9 Completion Data means the data that the CITY issues a recorded
Certificate of Completion for the Project. The Completion Data for the Project is
identified in EXHIBIT "B".
1.10 Debt Service means payments made in a calendar year pursuant to the
financing obtained for the acquisition, rehabilitation, operation and/or ownership of the
Project, but excluding payments made pursuant to the Note.
1.11 Declaration of Restrictions means the Declaration of Restrictions, as
outlined substantially in the form attached hereto as EXHIBIT "H", which shall be
recorded against the Property no later than the date of disbursement of Loan funds,
setting and requirements of this Agreement which shall run YAM the land. DEVELOPER
shall record both the De6aration of Restrictions and retard a deed restriction for the
Declaration of Restrictions.
1 1 Deed of Trust means that standard. subordinate no worse than third (3rd)
position Deed of Trust including assignment of rens am security agreement given by
the DEVELOPER, as Trustor, to the CITY as beneficiary, issued through Chicago Title
Company escrow, established by the DEVELOPER at Rs sole cost and estuaries,
acceptable to the CITY, recorded against the Property, insured in the full amount of the
Loan and acceptable to the City Attorney, as well as any amendments to, modifications
of. and restatements of said Deed of Trust. The terms of any such Deed of Trust shall
be substantially the farm attached hereto as EXHIBIT "G'.
1.13 EI a ble Cass means any and all HOME Program eligible Project costs as
may be reimbursed by Me Loan, consistent with the Budget, attached as EXHIBIT "C",
allowable under 24 CFR Part 92, as speared in 24 CFR 92.205 and 92.208 and not
disallowed by 24 CFR 92.214, provided. however, that costs incurred in connection with
any activity that is determined to be ineligible under the Program by HUD or the CITY
shall not constitute Eligible Costs.
1.14 Event of Default shall have the meaning assigned to such term under
Section 19.1 hereunder.
1.15 Familv has the same meaning given that term in 24 CFR 5.403
1.16 Federal HOME Investment Partnerships Funds (also referred to in this
Agreement as "HOME Funds" or "HOME Program Funds") means the federal HOME
Program monies conssting of the Loan, in an amount not to exceed the sum of Eight
Hundred F@ry Nine Thousand Eight Hundred Sixty Eight dollars and 00/100 ($859,868)
to be used for eligible Project costs.
1.17 Funding Sources means: (i) The CITY's HOME Funds, (Ii) me HUD 220
Program Loan, (iii) Redevelopment Agency Loan, and Iiv) Bank loans referenced in the
Budget as sources) of funding for the Project, and any other financing sources
described in the Budget.
1.18 Hazardous Materials means any hazardous or toxic substances,
materials, wastes, pollutants or contaminants which are defined, regulated or listed as
"hazardous substances," "hazardous wastes," "hazardous materials/' "pollutants,"
"contaminants" or "toxic substances" under federal or state environmental and health
safety laws and regulations, including without limitation, petroleum and Petroleum
byproducts, flammable explosives, urea formaldehyde insulation, radioactive materials,
asbestos and lead. Hazardous Materials do not include substances that are used or
consumed in the normal course of developing, operating or occupying a housing
project, to the extent and degree that such substances are stored. used and disposed of
in the manner and in amounts that are consistent with normal practice and legal
standards.
1.19 Householtl means one or mon: persons occupying a Unit in the proposed
Project
1.20 HUD means the United States Department of Housing and Urban
Development.
1.21 Loan means the non -assumable, loan of HOME Funds, in an amount not
to exceed the lesser of the sum of Eight Hundred Fifty Nine Thousand Eight Hundred
Sixty Eight dollars and 001100 ($859,888) and the aggregate HOME Program per unit
cap (24 C.F.R. 92.250) for Me Affordable Units, as determined by the CITY made
available by the CITY to the DEVELOPER for the Project pursuant to this Agreement,
as more specifcally described in the Budget attached hereto as EXHIBIT 'C', and in the
Note attached hereto as EXHIBIT "F".
1.22 Loan Documents are cDllecdvely this Agreement, the Note, Deed of Trust,
Declaration of Restrictions, and all related documents/instruments as they may be
amended, modified or restatetl from time to time along with all exhibits and attachments
thereto, relative to the Loan.
1.23 Low -Income for the purposes of this Agreement means those whose
annual income does not exceed sixty-five (65%) of the median income for the Fresno
County area as determined by HUD, except as HUD may establish income ceilings
higher or lower than 65% of the median for the area on the basis of HUD findings that
such variations are necessary.
1.24 Note means the non -assumable, HOME Program Loan Nate in a principal
amount of the Loan, given by the DEVELOPER as promissor. in favor of the CITY as
promissee, evidencing the Loan, secured by Me Deed of Trust and provided to the CITY
no later than the date of Project funding disbursement hereunder In the form attached
hereto as EXHIBIT 'F0, and Incorporated herein, as well as any amendments to,
modifications of and restatements of said Note consented to by CITY.
1.25 Ooerat no Expenses means Opemfing Expenses defined in the Exhibit "F"
Promissory Note.
1.26 Protect Unit means Me seventy-two (72) mixed income housing units
constructed on the property of which six (6) fixed units will be preserved as Affordable
Units.
1.27 Project Schedule means the schedule for commencement and completion
of the Project included within the Project Description and Schedule, EXHIBIT "B".
1.28 property means the property located at 1241 Broadway Plaza, Fresno,
California 93721, (APN: 466-214-01), more specifically described in the attached
EXHIBIT "A", including an existing structure that is a poured in place concrete building.
1.29 Rent means Me total monthly payment a tenant pays for an Affordable
Unit including the fofiowing: use and Occupancy of the Unit and land and associated
facilities. including parking, any separately charged fees or service charges assessed
by the DEVELOPER which are required of all tenants (other than security deposits), Me
cost of an adequate level of service for utilities paid by the tenant (including garbage
collection, sewer, water, common area electricity, but not telephone service), any other
interest, taxes, fees or charges for use of the land or associated facilities and assessed
by a public or private entity other than the DEVELOPER, and paid by the tenant. Rent
does not include payments for any optional services provided by the DEVELOPER.
1.30 Residual Receipts means Residual Receipts as defined in the Exhibit "F"
Promissory Note, consistent with the preliminary 55 year cash flow statement attached
hereto as EXHIBIT Or and incorporated herein.
1.31 Unit means a" oiling unit of the Project.
1.32 Very Low -Income for Me purposes of this Agreement means those whose
annual income does not exceed fifty -percent (50%) of the median income for the
Fresno, California area as determined by HUD, except as HUD may establish income
ceilings higher or lower than 50% of the median income for the area on the basis of
HUD findings that such variations are necessary.
ARTICLE 2. TERMS OF THE LOAN
2.1 Loan of HOME Funds. The CITY agrees to provide a Loan of HOME
Funds to the DEVELOPER in an amount not to exceed Eight Hundred Fifty Nine
Thousand Eight Hundred Sixty Eight dollars and 001100 ($859,888) under the terms and
conditions provided in this Agreement, The HOME Funds shall only be used for
payment of HOME Eligible Costs.
2.2 Loan Documents. The DEVELOPER shall execute and deliver to the
Nate to the CITY and the Deed of Trust to the Title Company for recordation against the
Property, as provided for In this Agreement.
2.3 Term of Agreement. This Agreement is effective upon the Effective Data
and shall remain to force with respect to the Project for the duration of the Affordability
Period unless earlier terminal as provided herein. After the idly -five (55) year
Affordability Period, this Agreement will expire, except as to financial obligations then
due and owing. It is understood and agreed upon, however, that if for any reason this
Agreement should be terminated in wholeor in part as provided hereunder by the
DEVELOPER prior to disbursement of the Loan, the CITY agrees to record a Notice of
Cancellation regarding this Agreement and instruments recorded hereunder, upon the
written request of the DEVELOPER.
2.4 Loan Repayment add Maturity. The Loan will be due and payable in
accordance with the Note and not later than the maturity date provided in the Note.
25 Incomorafon of Documents. The City Council approved Minutes of
.�. 2011 approving this Agreement, the Loan Documents, the Act and HUD
regulations at 24 CFR Part 92, and all exhibits, attachments, documents and
instruments referenced herein, as now in effect and as may be amended from time to
time. constitute part of this Agreement and are incorporated herein by reference. All
such documents have been provided to the parties herewith or have been otherwise
provided tolprocured by the parties and reviewed by each M Nem prior to execution
hereof.
2.6 Covenants of DEVELOPER. The DEVELOPER for Itself and its
agentslassigns covenants and agrees to comply with all the terms and conditions of this
Agreement and the requirements of 24 CFR Part 92 that are applicable to Me Project.
2.7 Subordination. The Dead of Trust and/or Declaration of Restrictions may
be subordinated to certain approved financing as provided herein (In each case, a
"Senior Lender"), to no worse than 3" position, but only on condition that all of the
following conditions are satisfied: (a) All of the proceeds of Me proposed Senior Loan,
less any transaction casts, must be used to provide construction or permanent financing
for the Project consistent with an approved financing plan; (b) DEVELOPER must
demonstrate to Me CITY's reasonable satisfaction that subordination of Deed of Trust
and/or Declaration of Restrictions is necessary to secure adequate construction or
Permanent financing to ensure the viability of the Project; (c) the subordination
agement must be reasonably acceptable to the CITY and must provide the CITY with
adequate rights to cure any defaults by the DEVELOPER including providing the CITY
or its successor with copies of any notices of default; (d) upon a determination by Me
City Manager that the conditions in this Section have been satisfied, the City Manager
or his/her designee will be authorized to execute the approved subordination agreement
without Me necessity of any further action or approval, subject to prior approval to forth
by the Fresno City Attorney.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF DEVELOPER
3.1 Existence and Qualification. The DEVELOPER represents and warrants
to Me CITY as of the date hereof, that Me DEVELOPER Is a duly organized limited
liability company in goad standing with the State of California; the DEVELOPER has the
requisite power, right, and legal authority to execute, deliver, and perform its obligations
under this Agreement and has taken all actions rreceasary to authorize Me execution,
delivery, performance, and observance of its obligations under this Agreement. This
Agreement, when executed and delivered by the DEVELOPER and the CITY, shall
constitute Me legal, valid, and binding obligations of the'DEVELOPER enforceable
against the DEVELOPER in accordance with its respective terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other similar laws of general applicability affecting the
enforcement of creditors' rights generally, and (b) the application of general principles of
equity without the joinder of any other parry.
3.2 No Lifcafon Material to Financial Condition. The DEVELOPER
represents and warrants to the CITY as of the data hereof that, except as disclosed to
and approved by the CITY in writing, no litigation or administrative proceeding before
any court or governmental body or agency is now pending, nor, to the best of the
DEVELOPER's knowledge, is any such litgation or proceeding now threatened, or
anticipated against the DEVELOPER that, if adversely determined, would have a
material adverse effect on the financial condition, business, or assets of the
DEVELOPER or on performance of this Agreement or the operation of the Project.
3.3 No Conflict of Interest. The DEVELOPER represents and warrants to the
CITY' as of the date hereof that no official, officer, agent, or employee. of the CITY
directly or indirectly owns or controls any interest in the DEVELOPER, and no person,
directly or indirectly owning or controlling any interest in the DEVELOPER, is an official,
officer, agent or employee of the CITY.
34 No Least Ba'. The DEVELOPER represents and warrants to the CITY as
of the date hereof that the execution, delivery, performance, or observance by the
DEVELOPER of this Agreement will not, to the best of the DEVELOPER's knowledge,
materially violate or contravene any provisions of. (a) any existing law or regulabon, or
any order of decree of any court, governmental authority, bureau, or agency applicable
to the DEVELOPER: (b) governing documents and instruments of the DEVELOPER, or
(c) any mortgage, indenture. security agreement, contract, undertaking, or other
agreement or instrument to which the DEVELOPER is a party or that is binding on any
of its properties or assets, the result of which would materially or substantially impair the
DEVELOPER'S ability to perform and discharge Ils obligations or its ability to complete
the Project under this Agreement.
3.5 Assurance of Governmental Ap d Licenses. The DEVELOPER
represents and warrants, as of the data hereof that the DEVELOPER has obtained
and, to the best of the DEVELOPER's knowledge, is in compliance with all federal,
state, local governmental reviews. consents, authorizations, approvals, and licenses
presently required by law to be obtained by the DEVELOPER for the Project.
ARTICLE 4. COVENANTS OF THE DEVELOPER
4.1 Accessibility. The DEVELOPER covenants and agrees with the CITY that
it shall comply with all federal regulations concerning accessibility requirements in
federally funded housing, including, but not limited to the following:
A. At least five percent (5%) of the dwelling units, or at least
four (4), whichever is greater, must be constructed to be accessible for persons with
mobility disabilities. An additional two percent (2%) of the dwelling units, or at least one
(1) unit, whichever is greaten must be accessible for persons with hearing or visual
disabilities. These units must be constructed in accordance with the Uniform Federal
Accessibility Standards (UFAS) or a standard that is equivalent or stricter. These
mandates can be found at 24 CFR Pad 8, which implements Section 504 of the
Rehabilitation Act of 1973 (29 U.S.C. 794). These units shall be rented on a priority
basis to person(s) who are eligible as disabled and/or families of which a member is
eligible as disabled, provided that these units may be rented to non -disabled
person(s)Ifamilies t an eligible disabled personflamily does not apply for rent following
thirty (30) days of aggressive and documented marketing of the mitts),
B. The design and construction requirements of the Fair
Housing Ad (Title VIII of the Civil Rights Act of 1988, as amended), including the
following seven (T) requirements of the Fair Housing Accessibility Guidelines:
(i) Provide at least one accessible building entrance on an
accessible route.
(it) Construct accessible and usable public and common use areas.
(iii) Construct all doors to be accessible and usable by persons in
wheelchairs.
(iv) Provide an accessible route into and through Ne covered
dwelling unif
(v) Provide light switches, eleddcal outlets, thermostats and other
environmental controls in accessible locations.
(vi) Construct reinforced bathroom walls for later installation of grab
Was around toilets, tubs, shower stalls and shower seats, where
such facilities are provided.
(vii) Provide usable kitchens and bathrooms such that an individual
who uses a wheelchair can maneuver about the space.
C. Nle III of the ADA as it relates to the required accessibility of
Public and common use area of the Project.
4.2 Affirmiative Marketing. The DEVELOPER warrants, covenants and agrees
that it shall comply with all aRnnative marketing requirements, Including without
limitation, those set Out at 24 CFR 92.350, 24 CFR 92.351, in order to provide
information and otherwise attract eligible persons from all meal, ethnic and gander
groups in the housing market. The DEVELOPER shall W responsible for complying
with the CITY's "Affirmative Marketing Policy" document as amended from time to time.
The DEVELOPER shall maintain records of actions taken to affirmatively market units,
and to assess the results of these actions.
4.3 Availability of HOME Funds. The DEVELOPER understands and agrees
Nat the availability of HOME Funds is subject to the control of HUD, or other federal
agencies, and should the HOME Funds be encumbered withdrawn or otherwise made
unavailable to the CITY, weather eamad by or promised to Ne DEVELOPER, and/or
should the CITY in any Fiscal year hereunder fail to allocate said Funds, the CITY shall
not provide said Funds unless and until they are made available for payment to the
CITY by HUD and the CITY receives and allocates said Funds. No other funds owned
or controlled by the CITY shall be obligated under this Agreement.
4.4 Compliance with Agreement The DEVELOPER warrants, covenants and
agrees that, in accordance with the requirements of 24 CFR 92.252 and 24 CFR Part
B5, upon any uncured default by the DEVELOPER within the meaning of Article 10 of
this Agreement, the CITY may suspend or terminate this Agreement and all other
agreements with the DEVELOPER without waiver or limitation of rightslremedies
otherwise available to the CITY.
4.5 Conifct of Interest. The DEVELOPER warrants, covenants and agrees
that it shall comply with the Conflict of Interest requirements of 24 CFR 92.356
including, without Inflation. that no officer, employee, agent or consultant of the
DEVELOPER may occupy any of the six (6) fixed Affordable Units. The DEVELOPER
understands and acknowledges that no employee, agent, consultant, officer or elected
official or appointed official of the CITY, who exercises or has exercised any functions or
responsiblltties with respect to the Project, or who is In a position to participate in a
decision making process or gain Inside information with regard to these activities, may
obtain a financial interest or benefit from the Project, or have an interest in any contract,
subcontract or agreement with respect thereto, or the proceeds thereunder, either for
him or herself or for anyone with which that person has family or business lies, during
his or her tenure or for one year thereafter. To the extent provided at 24 CFR 92.356(f).
no owner, developer or sponsor of the Project, or officer, employee, agent or consultant
thereof, may occupy any of the six (6) Affordable Units.
4.6 Rehabilitation Standards. The DEVELOPER shall rehabilitate the
proposed Project Units assisted under this Agreement in compliance with all applicable
local codes, ordinances and zoning requirements in effect at the time of issuance of
CITY budding permits.
4.7 CnvenaMs and Restrictions to Run with the Land. The CITY and the
DEVELOPER expressly warrent, covenant and agrees to ensure that the covenants and
restrictions set forth in this Agreement am recordetl and will run with the land, provided,
however, Mal, on expiration of this Agreement such covenants and restrictions shall
expire. The CITY agrees that this Agreement, the Note, the Dead of Trust and the
Declaration of Restrictions shall be made junior and subordinate to liens given in
connection with the Project financing, including any refinancing thereof established and
obtained pursuant to and in compliance with Me previsions of this Agreement, and to
any other regulatory agreement. The City Manager of the CITY is hereby authorized
and directed to execute such subordination agreements, interaredflor agreements,
standstill agreements, anNor other documents as may be reasonably requested by the
Lender to evidence subordination to the Project financing, without further authorization
from the CITY, provided that such agreements contain written previsions that are no
more onerous and which are consistent with the customary standard requirements
imposed by the financing source(s), on subordinate cash flow obligations under their
then existing senior financing policies, and further provided that City Attorney
reasonably approves of such document as to form.
A. The CITY and the DEVELOPER hereby declare their
understanding and intent that the covenants and restrictions set forth herein directly
10
benefit the land; (a) by enhancing and increasing the enjoyment of the proposed Project
by certain Low- and Very Low -Income households, and (b) by making Possible the
obtaining of advantageous financing for rehabilitation.
B. The DEVELOPER covenants and agrees that upon
nofification from the CITY that the fixed Affordable Unit tenant information has been
entered into HUD's Integrated Disbursement and Information System unfil the expiration
of the Affordability Penod, it shall cause one (1) of the Units to be rented as Affordable
Housing for Very Low -Income households and five (5) of the Units to be rented as
Affordable Housing for Low -Income households.
C. Without waiver or limitation, the CITY shall be entitled to
Injunctive or other egudable relief against any violation or attempted violation of any
covenants and restrictions, and shall, in addition, be entitled to damages available
under law or contract for any injuries or losses resulting from any violations thereof.
D. All present and future owners of the Property and other
persons claiming by, through, or under them shall be subject to and shall comply with
the covenants and restrictions. The acceptance of a dead of conveyance to the
Property shall constitute an agreement that the covenants and restrictions, as may be
amended or supplemented from time to time, are accepted and ratified by such future
owners, tenant or occupant, and all such covenants and restrictions shall be covenants
running with the land and shall bind any Person having at any time any interest or estate
in the Property, all as though such covenants and restrictions were recital and
stipulated at length in each and every deed, conveyance, mortgage or lease thereof.
E. The failure or delay at any time of the CITY or any other
person entitled to enforce any such covenants or restrictions shall in no event be
deemed a waiver of the same, or of the night to enforce the same at any time or from
time to time thereafter, or an estoppel against the enforcement thereof.
4.8 Displacement of Persons. The DEVELOPER covenants and agrees with
the CITY mat pursuant to 24 CFR 92.353, it will take all reasonable steps to minimize
the displacement of any persons (families, Individua5, businesses, nonprofit
organizations and farms). The parties acknowledge and agree mat me Property is not
occupied with tenants.
4.9 I ti l and Annual Income Certification. The DEVELOPER covenants and
agrees with the CITY that It shall comply with me procedures for annual income
determinations at 24 CFR 92.203 for the six (B) fixed Affordable Units. The
DEVELOPER shall obtain, complete and maintain on file, immediately prior to initial
occupancy, and annually thereafter, income certifications from each tenant Household
renting any HOME -assisted Unit. The DEVELOPER shall make a good faith effort to
verify that the income provided by an applicant or occupying Household in an income
certification is accurate by taking afire or more of the following steps as part of the
verification process: (1) obtain a pay stub for the most recent pay period; (2) obtain an
income verification forth from the applicant's current employer, (3) obtain an inane
11
verification forth from the Social Security Administration and Calromia Department of
Social Services if the applicant receives assistance from either of such agencies; or (4)
If the applicant is unemployed, obtain another forth of independent verification. Copies
of household income certification and verification must be available for review by the
CITY. The DEVELOPER further warrants, covenants and agrees that it shall cooperate
with the CITY in the CITY's Income certification/aRordability monitoring activities.
4.10 Lead -Based Pant. The DEVELOPER covenants and agrees with the
CITY that it shall comply with all applicable requirements of the Lead -Based Paint
Poisoning Prevention Act of 42 U.S.C. 4821 et seq., 24 CFR Part 35, including the HUD
1012 Rule, and 24 CFR 982.4010), and any amendments thereto, and EPA Section
402( c)(3) of the Toxic Substances Control Act (TSCA) to address lead-based paint
hazards created by renovation, repair, and painting activities that disturb lead-based
paint in target housing and child -occupied facilities. Contractors performing renovations
in lead-based paint units must be EPA-ceRRied renovators. These requirements apply
to all Units and common areas of the Project The DEVELOPER shall incorporate or
muse incorporation of this provision in all contracts and subcontracts for work
performed on the Project, which involve the application of paint. The DEVELOPER
shall be responsible for all disclosure, inspection, testing, evaluation, and control and
abatement activities.
4,11 Minority Outreach Activities. The DEVELOPER covenants and agrees
with the CITY Mat it shall comply with all federal laws and regulations described in
Subpart H of 24 CFR Part 92, including, without limitation, any requirement that the
DEVELOPER comply with the CITY's minority outreach program.
4.12 Other Laws and Reoulations. The DEVELOPER covenants and agrees
with the CITY that, in addition to complying with the federal laws and regulations already
cited in this Agreement, the DEVELOPER has reviewed, and shall comply with, all other
federal laws and regulations that apply to the HOME Program, including, without
limitation, requirements of 24 CFR 58.6 and the Flood Disaster Protection Act of 1973,
as amended (42 U.S.C. 40014128) and the following:
A. The DEVELOPER does not intend to use any financing that
is secured by a mortgage insured by HUD in connection with the Project as part of he
rehabilitation of the Project unless reflected in the EXHIBIT -Cm Budget and approved by
HUD and the CITY.
B. The Project is not located in a tract identified by the Federal
Emergency Management Agency as having special flood requirements.
C. The Project requirements. Subpart F of 24 CFR Part 92, as
applicable and in accordance with the type of Affordable Units assisted, including, but
not limited to, the limit on the HOME per-unit subsidy amount at 24 CFR 92.250,
D. The property standards at 24 CFR 92.251.
fe]
E. The Project "Labor' requirements, as applicable, of 24 CFR
92.354 including Davis Bawn prevailing wage roquirements (40 U.S.C. 276a - 2786-7),
assupplemented by Department of Labor regulations (29 CFR Part 5).
F. The provisions of Section 102 and 107 of the Contract Work
Hours and Safety Standards Act (40 U.S.C. 327-333), as supplemented by Department
of Labor Regulations (29 CFR Part 5), In regards to the construction and management
of the proposed Project.
G. The DEVELOPER and its contractors, subcontractors and
service providers for the Project, shall comply with all applicable local, state and federal
requirements concerning equal employment opportunity, including compliance with
Executive Oder ("E.0.") 11246, "Equal Employment Opporluniy," as amended by E.O.
11375, "Amending Executive Oder 11246 Relating to Equal Employment Opportunity,"
and as supplemented by regulations at 41 CFR part 60, "Ogce of Federal Contract
Compliance Programs, Equal Employment Opportunity, Departmem of Labor."
H. The previsions of the Copeland "And -Kickback" Act (18'
U.S.C. 674), as supplemented by Department of Labor regulations (29 CFR Part 3,
"Contractors and Subcontractors on Public Building or Public Work Financed in Whole
or in Part by Loans or Grants from the United States").
I. The provisions of the Clean Air Act (42 U.S.C. 7401 at seq.)
and the Federal Water Pollution Control Act (33 U.S.C. 12510 seq.), as amended.
U: S.0 1352). J. The provisions of Me Byrd And -Lobbying Amendment (31
,
K. The provision of E.Oa 12549 and 12689, "Debarment and
Suspension," asset forth at 24 CFR Part 24.
L. The provisions of the Drug -Free Workplace Ad of 1988 (42
U.S.C. 701), in accordance with the Ad and with HUD's roles at 24 CFR Pad 24,
Subpart F.
M. This 8 of the Civil Rights Act of 1968 PL. 90.284.
N. Executive Oder 11063 an Equal Opportunity and Housing.
1868. O. Section 3 of the Housing and Urban Development Act of
P. The Housing and Community Development Act of 1974.
Q. Clean Water Requirements 33 U.S.C. 1251
13
R. Civil Rights Requirements, 29 U.S.C. § 623, 42 U.S.C. §
2000, 42 U.S.C. § 6102, 42 U.S.C. § 12112, 42 U.S.C. § 12132, 49 U.S.C. § 5332, 29
CFR Part 1630, 41 CFR Paris 60 at seq.
4.13 Faith Based Activities. DEVELOPER warrants, covenants and agrees that
it shall not engage in any prohibited activities described in 24 CFR 92.257.
4.14 Riportno Requirements. The DEVELOPER warrants, covenants and
agrees with the CITY Nat It shall submit performance reports to the CITY as detailed in
Section 7.16. Furthermore, Me DEVELOPER agrees to provide, at Me sole cost of the
DEVELOPER, annual audited Financial Statements for the Project expenses and
ongoing financial transactions which occur as a result of this Agreement as detailed in
Section 5.6. The DEVELOPER agrees to account for the expenditure of HOME Funds
using generally accepted accounting principles, which financial documentation shall be
made available to Me CITY and HUD, upon their respective written request(s).
4.15 Housima Aff rolb'litv. The DEVELOPER covenants and agrees with Me
CITY that six (6) of the Project Units will be affordable to Very Low. and Low -Income
households and other requirements of 24 CFR 92.252 during Me Affordability Period.
One (1) Unit shall, at a minimum. be rented to and occupied by, or, if vacant. available
for rental and occupancy by (a) person(s) whose annual household income at the time
of initial occupancy is not greater Man fifty percent (50%), and No (5) Units shall, at a
minimum, be rented to and occupied by or, H vacant available for rental and occupancy
by a p irsom(s) whose annual household income at the time of Initial occupancy is not
greater Man silly -five (65%) of the most recent annual median income calculated and
published by HUD for the Fresno Metropolitan Statistical Area applicable to such
household's size, and at an affordable rent consistent with HOME Program regulations.
for the Affordability Period provided Mat upon foreclosure by a lender or other transfer in
lieu of foreclosure, or assignment of an FHA -insured mortgage to HUD, the Affordability
Period shall be terminated it Me foreclosure or other transfer in lieu of foreclosure or
assignment recognizes any contractual or legal rights of public agencies, nomproft
sponsors, or others to take actions Mat would avoid the termination of low-income
affordability. However. Me requirements with respect to Me Project shall be revived
according to their original terms, if during the original Affordability Period, Me owner of
record before the foreclosure or other transfer, or any entity that includes Me former
owner or those with whom the former owner has or had family or business ties, obtains
an ownership interest in the Project or the Property, the Affordability Period shall be
revived according to ds original terms. In Me event the DEVELOPER fails to comply
with his Section or the Affordability Period is not revived following transfer by
foreclosure or transfer in lieu of foreclosure, the DEVELOPER shall returnto the CITY
all HOME Funds disbursed to the DEVELOPER by the CITY.
4.16 Terminated Pro'ect. The DEVELOPER understands and agrees that, if
the Project is terminated before the completion, either voluntary or otherwise, such
constitutes and ineligible activity and Me CITY, without waiver or limitation upon other
rights and remedies will not be required to provide any further HOME Program
assistance funding to the Project Units.
14
ARTICLE 5. PROPERTY MAINTENANCE
The DEVELOPER covenants and agrees with the CITY to the following, for the
entire tenn of the Agreement.
5.1 Ad to Repair and Maintenance After completion of the rehabilitation
of the Project, the DEVELOPER shall maintain the Project and Property in compliance
with all applicable codes, laws, and ordinances.
5.2 Affordable Rental Housim. Shall constitute six (6) fixetl affordable rental
housing units preserved as Very Low -to Low -Income Rental Housing (as provided at 24
CFR 92.252) during the entire Affordability Period. This covenant shall remain in effect
and run with and restrict the land during the entirety of the Affordability Period. In the
event that the DEVELOPER fails to comply with the time period in which the Affordable
Units constitute Affordable Housing. the CITY shall without waiver or limitation is entitled
to injunctive relief, as the DEVELOPER acknowledges that damages are not an
adequate remedy at law for such breach.
5.3 Compliance ith Environmental Lam. The DEVELOPER shall reuse the
Affordable Units to be in compliance with, and not to cause or permit the Project to be in
violation of, any Hazardous Materials law, rule, regulation, ordinance, or statute.
Although the CITY will utilize its employees and agents for regular inspection and
testing of the eligible Property, the DEVELOPER agrees that, it the CITY has
reasonable grounds to suspect any such violation, the DEVELOPER shall ba entitled to
thirty (30) daysnotice and opportunity to cure such violation. If the suspected violation
is not cured, the CITY shall have the right to retain an independent consultant to inspect
and test Me Property for such violation. If a violation is discovered, the DEVELOPER
shall pay for the reasonable cost of the independent consultant.
Additionally, the DEVELOPER agrees:
A. That the CITY shall not be directly or indirectly responsible,
obligated or liable with the inspection, testing, removal or abatement of asbestos or
other hazardous or toxic chemicals, materials, substances, or wastes and that all cost
expense and liability for such work shall be and remain solely with the DEVELOPER;
B. Not to transport to or from the proposed Property, or use, generate,
manufacture, produce, store, release, discharge, or dispose of on, under, or about the
Property, or surrounding real estate, or transport to or from Me Property, or surrounding
real estate, any hazardous or toxic chemicals, materials, substance, or wastes or allow
any person or entity to do so except in such amounts and under such terms and
conditions permitted by applicable laws, rules, regulations, ordinances, and statutes;
C. To give prompt written notice to Me CRY of the following:
(p Any proceeding or Inquiry by any governmental authority with
respect to Me presence of any hazardous or toxic chemicals, materials, substance, or
waste in or on the eligible Property or the surrounding real estate or the migration
thereof from or to other property; and
(it) All claims made or threatened by any third parry against the
DEVELOPER or such properties relating to any loss or injury resulting from any
hazardous or toxic chemicals, materials, substance, or waste; and
(iii) The DEVELOPER's discovery of any occurrence or condition
on any real property adjoining or in the vicinity of such properties that would cause such
properties or underlying or surrounding real estate or part thereof to be subject to any
restrictions on the ownership, occupancy, transferability, or use of the property under
any environmental law, rule, regulation, ordinance or statute; and
(iv) To indemnify, defend, and hold the CITY harmless from any
and all claims, actions, causes of action, demands, judgments, damages, injuries,
administrative orders, consent agreements, orders, liabilities, penalties, costs, expanses
(including attorneys fees and expenses), and disputes of any kind whatsoever arising
out of or relating to the DEVELOPER or any other party's use or release of any
hazardous or toxic chemicals, materials, substance, or wastes on Ne Property
regardless of cause or origin, including any and all liability arising out of or relating to
any investigation, site monitoring, containment, cleanup, removal, restoration, or other
remedial work of any kind or nature.
5A Compliance with Laws. The DEVELOPER shall be responsible for and
promptly and faithfully comply with, conform m and obey all present and future federal,
state and local statutes, regulations, rules, ordinances and other legal requirements
applicable by reason of this Agreement or otherwise to the Project including without
limitation as to prevailing wage requirements. The DEVELOPER acknowledges that the
use of federal funds on the Project Is subject to extensive federal regulation and
covenants and agrees that 9 shall comply with, conform to and obey (and take such
steps as are required of the DEVELOPER to enable the CITY to comply with, conform
to and obey) all federal statutes, regulations, rules and policies applicable to the Project.
5.5 Existence Qualification d A rth dtv. The DEVELOPER shall provide to
Ne CITY any evidence required or requested by the CITY to demonstrate the continuing
existence, qualification, and authority of the DEVELOPER to execute this Agreement
and to Perform fire acts necessary to carry out Ne Project.
5.6 Financial 51atements and Audits. The DEVELOPER (or He successor who
shall receive federal financial assistance), as a recipient of federal financial assistance,
is required to comply with the provisions of the Single Audit Act of 1994 (31 U.S.C.
Sectors 7501 at se.), as amended Annually, within one hundred and eighty (160)
days following: t) the end of fiscal year(s) in which the federal funds are disbursed
hereunder, and 2) the end of fiscal year(s) in which this contract shall temrinate, and
otherwise upon the CITY's, written request during lite term of this Agreement,
DEVELOPER, at its sole cost and expense shall submit to the CITY.
12
A. Audited annual financial statements that are current, signed, and
Prepared according to generally accepted accounting principles consistently applied
(except as otherwise disclosed therein).
B. Audited Financial Statements covering the income and expenses,
and the financial transactions for the Affordable Project during the prior fiscal year.
57 Inspection d Audit of Books. Records rM Documen[s. The
DEVELOPER shall be accountable to the CITY for HOME Funds disbursed for this
Project pursuant to this Agreement. Any duly authorized representative of the CITY or
HUD shall, at all reasonable times, have access to and the right to inspect, copy, make
excerpts or transcripts, audit, and examine all books of accounts, records, files and
other papers or property, and other documents of the DEVELOPER pertaining to the
Project and for up to six (6) years after the expiration or termination of this Agreement.
A. The DEVELOPER will maintain books and records for the Project
using generally accepted amounting principles. The DEVELOPER agrees to maintain
books and records that accurately and Polly show the data amount, purpose and payee
of all expenditures financed with HOME Funds and to keep all invoices, receipts and
other documents related to expenditures financed with HOME Funds for not less than
six (6) years after the expiration or termination of the Agreement. Books and records
must be kept accurate and current. For purposes of this section, 'books, records and
documents' include, without limitation; plans, drawings specifications, ledgers, journals,
statements, coneactsmgreements, funding Informetlon, funding applications, purchase
orders, invoices, loan documents, computer printouts, correspondence, memoranda,
and electronically atoned. versions of the foregoing. This section shall survive the
termination of this Agreement
B. The CITY may audit any conditions relafirg to this Agreement at
the CITYs expense, unless such audit shows a signicent discrepancy in information
reponed by the DEVELOPER in which case the DEVELOPER shall bear the cost of
such audit. The DEVELOPER shall also comply with any applicable audit requirements
of 24 CFR 92.51)6. This section shall survive the termination of this Agreement.
C. The DEVELOPER will cooperate fully with the CITY and HUD in
connection with any interim or final audit relating to the Programs and the Project that
may be performed relative to the performance of this Agreement.
5.8 Insoection of Prooertv. Any duly authorized representative of the CITY or
HUD shall, at all reasonable times, have access and the right to inspect the Property
until completion tithe Project and expiration of the applicable Affordability Period within
72 hours written notice, subject to the rights of the tenants.
5.9 No Other Lens. The DEVELOPER shall not create or incur, or suffer to
be created or incurred, or to exist, any additional mortgage, pledge, encumbrance, lien,
charge, or other secuffty interest of any kind on the eligible Property, other than those
17
related to rehabilitation or predevelopment loans in relation to the Project consistent
with the attached Budget, EXHIBIT 'C'.
5.10 Nondiscrimination, The DEVELOPER shall comply with and cause any
and all contractors and subcontractors to comply with any and all federal, slate, and
local laws with regard to illegal discrimination, and the DEVELOPER shall not illegally
discriminate against any persons on account of race, religion, sex, family status,
handicap, or place of national origin in its performance of this Agreement and the
completion of the Project.
5.11 Qythership. Except as required in pursuit hereof, the DEVELOPER shall
not sell, lease, transfer, assign or otherwise dispose of ("Trensfee') all or any material
part of any interest R might hold in the Property or the Project without prior written
consent of the CITY, which consent shall not be unreasonably withheld or delayed.
5.12 Payment of Liabilities. The DEVELOPER shall pay and discharge in the
ordinary course of its business all material obligations and habiliGes, the nonpayment of
which could have a material or adverse impact on its financial condition, business, or
assets or on the operation of the Project, except such obligations and liabilities that
have been disclosed to the CITY in wri ing and are being contested in good faith.
5.13 Report Of Events f Default The DEVELOPER shall promptly give written
notice to the CITY upon becoming aware of any Event of Default under this Agreement.
ARTICLE 6. DISBURSEMENT OF HOME FUNDS
Without waiver of limitation, the parties agree as follows, regarding disbursement
of HOME Funds:
6.1 Lgain Commitments d Financing Plan. The DEVELOPER shall submit
Its most current Finance Plan for the Project to the CITY within the time frame provided
In the Project Schedule. So long as the Finance Plan is consistent with the Budget, the
CITY shall accept the Finance Plan. If the Finance Pian is net consistent with the
Butlget, then within thirty (30) days after receiving the Finance Plan, the CITY, through
its Development and Resource Management Department, Housing and Community
Development Division, will review the Finance Plan and deliver notice to the
DEVELOPER either approving or disapproving the Finance Plan In its reasonable
discretion. If the CITY disapproves the Finance Plan, it will specify the reason for the
disapproval and ask the DEVELOPER to provide any additional information Rte CITY
may need to approve the Finance Plan. The failure of the CITY to send rotice within
such thirty (30) day lime period shall be deemed an approval of the Finance Plan.
6.2 Finance Plan Content. The Finance Plan shall contain all Project pre-
constmdion, cons"ction and post-constmctioNpennanent loan or letters of intent from
one or more qualified public/private lenders or funding sources, in sufficient amounts,
combined with any other developer financing, for the DEVELOPER to complete
rehabilitation of the Project. The total amount of the liens to be recorded against the
In
Property as presented In the Finance Plan shall not exceed the DEVELOPER's
estimated construction Budget.
6.3 Use of HOME Funds. The DEVELOPER warrants, covenants and agrees
that it shall request HOME Funds only for reimbursement of eligible costs incurred as
identified in the attached Budget, limited to the amount needed for the Affordable Units,
including costs allowable under 24 CFR 92.206, aggregating not more than the Loan
amount. The CITY's obligations shall in no event exceed the HOME Funds amount
specified in this Agreement.
A. If any such Funds shall be determined to have been requested
and/or used by the DEVELOPER for costs other than for eligible costs, and subject to
the notice and cure provisions of Section 10.2 hereunder, an equal amount from
nonpublic funds shall become immediately due and payable by the DEVELOPER to the
CITY', provided. however, Mat the DEVELOPER shall, subject to its full cooperation with
the CITY, be entitled to participate in any opportunity to remedy, contest, or appeal such
determination.
B. In the event HOME Funds are requested to reimburse Eligible
Costs which subsequently lose eligibility as Eligible Costs, the DEVELOPER shall
immediately return such HOME Funds to the CITY.
C. The CITY will disburse HOME Funds, only to the DEVELOPER
through proper invoicing, for eligible costa of the Affordable Units as provided In his
Article 6.
6.4 Conditions Precedent to Disbursement The CITY shall not be obligated
to make or authorize any disbursements of HOME Funds unless all the following
conditions are satisfied:
A. There exists no Event of Default as provided in Article 10, nor any
act, failure, omission or condition that with the giving of notice would constitute an Event
of Default
B. The DEVELOPER has submitted the Finance Plan to the CITY, and
all supporting financial documents including appraisals to be approved at the discretion
of the Council Finance and Audit Subcommittee.
C. The CITY has approved the requested reimbursement of eligible
Project costs.
D. The DEVELOPER has obtained insurance coverage and delivered
to the CITY evidence of insurance as required in Article 9.
E. The DEVELOPER is current with its compliance of all reporting
requirements set forth in this Agreement.
Mil
E The DEVELOPER has provided the CITY with a written request for
Funds (in a CITY-approved Form), for reimbursement of eligible Pmject costs, and
detailing such Eligible Costs applicable to the request.
G. The CITY has received Certification required by Section 6.6 of this
Agreement.
HOME Funds.
H. The CITY has received, and continues to have the right to disburses,
6.5 Request for d Disbursement of HOME Fund . The DEVELOPER shall
request disbursement of HOME Funds using the CITY's Request for Disbursement of
Funds form. The DEVELOPER shall only request a maximum of the Loan amount in
HOME Program assistance for the Project. All requests must provide in detail such
Eligible Costs applicable to the request. All requests for HOME Funds disbursement
shall be accompanied with the Certification required by Section 6.6 of this Agreement.
6.6 DEVELOPER Certification. The DEVELOPER shall submit to the CITY a
written certification that, as of the data of the Request for Disbursement ("Cerincation"):
A. The representations and warranties containetl in or incomoraled by
reference in this Agreement continue to be true, complete and accurate in all material
respects;
R. The DEVELOPER has canned out all of its obligations and is in
compliance with all line material obligations or covenants specked in this Agreement, to
the extent Nat such obligations or covenants are required to have been carried out or
are applicable at the time of the request for the Disbursement;
C. The DEVELOPER has not committed or suffered an ad, event,
occomince, or circumstance that consiltutes an Event of Default or that with giving of
notice would constitute an Event of Default; and
D. The Disbursement requested will be used solely for reimbursement
of eligible costs and must be supported by the ilemiud obligations that have been
properly incurred and are properly chargeable in connection with the Project.
6l Disbursement of Funds. Disbursements of HOME Program Loan
proceeds shall occur virthin thirty (30) days after the CITY receives the Certification and
to the extent of annually allocated and available HOME Funtls.
ARTICLE 7. DEVELOPMENT AND REHARI LITATION
Without waiver of limitation, the parties agree as follows:
7.1 Pre-construction M fin R arding Procram Processes and Procecure
The CITY will schedule, and the DEVELOPER shall stand a meeting prior to
20
construction with the CITY for the purpose of outlining Project processes am
Procedures.
7.2 C t and Completion of Prosig The DEVELOPER shall
commenm. construction and, record a Notice of Completion upon completion of
reconstruction of Ne Project in accordance with the Project Schedule.
7.3 Contacts and Subcompacts. Consistent with Section 5.3. all demolition,
hazardous waste abatement, construction work and professional services for the Project
shall be performed by persons or entities licensed or otherwise legally authorized to
perform Ne applicable work or service in the State of California and the City of Fresno.
The DEVELOPER shall provide the CITY with copies of all agreements it has entered
into with any and all general conbacors for the Project. The DEVELOPER shall require
that each such general contractor agreement contain a provision whereby the partyides)
to the agreement other Nan the DEVELOPER agree to; (i) notify the CITY immediately
of any event of default by the DEVELOPER Hereunder, (ii) notify the CITY immediately
of the filing of a mechanic's lien; (iii) notify Ne CITY immediately of termination or
cancellation of Ne agreement; and (iv) provide the CITY, upon the CITY's request, an
Estoppel Certificate certifying Nat Ne agreement is in full force and effect and the
DEVELOPER is not In default thereunder. The DEVELOPER agrees N notify the CITY
immediately of termination or cancellation of any such agreement(s), notice of filing of a
mechanic's lien, or breach or default by other partyhes) thereto.
7.4 Damage to Property. To the extent consistent with Ne requirements of
any permitted encumbrance, or as otherwise approved by the CITY, and subject to
Article 9 of this Agreement If any building or improvement constructed on Ne Property
is damaged or destroyed by an insurable cause, the DEVELOPER shall, at its cost and
expense, diligently undertake to repair or restore mid buildings and improvements
consistent with the original Plans and Specifications of the Project. Such work or repair
shall commence within ninety (90) days after the insurance proceeds are made
available to the DEVELOPER and shall be complete within two (2) years thereafter. All
insurance proceeds collected for such damage or destruction shall be applied N the
cost of such repairs or restoration and, If such insurance proceeds shall be insufficient
for such purpose, the DEVELOPER shall make up the deficiency.
7.5 Fees, Taxes and Other L . The DEVELOPER shall be responsible for
payment of all fees, assessments, taxes, charges and levies imposed by any public
authority or until company with respect to Ne Project Property, and shall pay such
charges prior to delinquency. However, she DEVELOPER shall not be required to pay
and discharge any such charge so long as: (a) the legality, thereof is being contested
diligently and in goad Fath and by appropriate proceedings, and (b) If requested by the
CITY, the DEVELOPER deposits with the CITY any funds or other fortes of assurances
that the CITY, in good faith, may determine from time to time are appropriate to protect
the CITY from the consequences of the contest being unsuccessful. The DEVELOPER
shall have the right to apply for and obtain an abatement and/or exemption of the
Project from real property taxes in accordance with all applicable rules and regulations,
including Section 214(g) of Ne California Revenue and Taxation Code.
21
7.6 Financing. The DEVELOPER shall promptly inform the CITY of any new
financing or funding net included in the Budget for the Project, and the DEVELOPER
shall provide the CITY copies of all agreements with any and all Funding Sources for
the Project. The DEVELOPER shall require each agreement with any and all Funding
Sources not included in the Budget to contain a provision whereby the parly(ies) to the
agreement other than the DEVELOPER, it permitted by the partes' applicable rules and
regulations, agree to: (1) notify the CITY immediately of any event of default by the
DEVELOPER thereunder; (ii) notify the CITY immediately of termination or cancellation
of the agreement; and (iii) provide the CITY, upon CITY's request, an Estoppel
Certificate certifying that the agreement is In full force and effect and the DEVELOPER
is not in default thereunder. The DEVELOPER agrees to nobly the CITY immediately of
termination or cancellation of any such agreement(s) or receipt of notice of default
thereunder. The DEVELOPER shall comply with all obligations of any such
egmement(s) with any and all Funding Sources until the respectbre expiration of such
agreement(s).
7.7 Identification Sional Before the start of rehabilitation, the DEVELOPER
shall place a poster or sign, with a minimum four feet by four feet in size, identifying the
City of Fresno as a Project participant. The sign shall also include the CITY's Housing
Logo, as well as HUD's Equal Housing Opportunity logo, as mandated by HUD. Font
size shall be a minimum of 4 inches. The poster/sign shall be appropriately placed and
shall remain in place throughout the Project construction.
TS Inspections The DEVELOPER shall permit, facilitate, and require its
contractors and consultants to permit and fecililale observation and inspection at the job
site by the CITY and other public autiortlies during reasonable business hours, for
determining compliance with this Agreement, including without limitation biennial on-site
inspections.
7.9 Utili ies. The DEVELOPER shall be responsible, at its sole cost and
expense, to determine Me location of any utilities on the Property and to negotiate with
the utility companies for and to relocate the utilities, ff any, as necessary to complete the
Project.
7.10 Insurance an Bonds. Upon the Cll reasonable request, the
DEVELOPER shall submit for CITY approval, bonds, certificates. and/or applicable
endorsements for all insurance and bonds required by this Agreement in accordance
with Article 9.
7.11 Meolm c s Lens and Stop Notices, If any claim of lien is filed against the
Property or a stop notice affecting any financing, HOME Funds or Funding Sources for
the Project, is served on the CITY or any other thiM parry in connection with the Project,
the DEVELOPER shall, within twenty (20) days of such fling or service, either pay and
fully discharge the lien or stop notice, effect the release of such lien or stop notice by
delivering to the CITY a surety bond in sufficient form and amount, or provide the CITY
with other assurance satisfactory to the CITY that the claim of lien or stop notice will be
paid or discharged.
22
A. If the DEVELOPER fails to discharge, bond or otherwise satisfy
the CITY with respect to any lien, encumbrance, charge or claim referred to in this
Section 7.12, then, in addition to any other right or remedy, the CITY may, but shall not
be obligated to, discharge such lien, encumbrance, charge, or claim at the
DEVELOPER's expense. Alternatively, the CITY may require the DEVELOPER to
Immediately deposit With the CITY the amount necessary to satisfy such lien or claim
and any costs, pending resolution thereof. The CITY may use such deposit to satisfy
any claim or lien that is adversely determined against the DEVELOPER. The
DEVELOPER hereby agrees to indemnify and hold the CITY harmless from liability for
such liens, encumbrances, charges or claims together with all related costs and
expenses.
7.12 Permits and Licenses. Upon CITY's reasonable request, the
DEVELOPER shall submit, for CITY approval, all the necessary perms; and licenses
required for Commencement of rehabilitation Of the Project As the CITY may
reasonably request, the DEVELOPER, at as sole coat and expense, shall provide to the
CITY copies of any and all permit approvals and authorizations Including plot plan, plat,
zoning variances, sewer, building, and other perms required by govemmental
authorities other then the CITY in Pursuit of the Project, and for its stated purposes in
accordance with all applicable building, environmental, ecological, landmark,
subdivision, zoning cotles, laws, and regulations. The DEVELOPER is responsible, at
IN sole cost and expense, to determine the location of any utilities on the Property and
to negotiate with the utility companies for and to relocate the utilities. H any, as
necessary to complete the Project.
7.13 Plans and Stmucrhcafianl
A. The DEVELOPER has submitted to the CITY preliminary plans and
specifications for the Project under Cordikenal Use Perms file number C-11-120
("Affordable Preliminary Plans"} The DEVELOPER volt rehabililatlon the Project in full
conformance with the CITY -approved Conditional Use Permit and plans and
specifications and modifications thereto approved by the CITY. The DEVELOPER shall
Obtain the CITY's prior written approval for any Modifications to the plans and
specifications.
B. The HOME Agreement shall contain by reference the design and
site plan of Me Project, such design must be approved by Me City Council with the
HOME Agreement.
C. Before commencement of rehabilitation. Me DEVELOPER shall
submit to the CITY, for Its review and approval, the final Plana and Specifications for the
Project. The DEVELOPER will rehabilitate Me Projed in full conformance with the
Plans and Specification and modifications thereto approved by Me CITY. The
DEVELOPER shall obtain the CITY's prior written approval for any modifications to the
Plans and Specifications.
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7.14 Project ResponsibilffieSIPublic Work-Previning Wage Requirements. The
DEVELOPER shall be solely responsible for all aspects of Me DEVELOPER's conduct
in connection with the Project, including but not limited to, compliance with all local,
state and federal laws including without limitation, as to prevailing wage and public
bidding requirements. This Project is a "public work' project for federal purposes
including David Bacon and Related Acts wage requirements absent written
direction/determination otherwise by U.S. HUD ora court of competentjurisdiction. The
Project Is a "public wank" project for state purposes including California Labor Code
Section 1720 et seq. wage requirements, to which Section 1771 applies, absent written
directioNdetermination otherwise the California Department of Industrial Relations or a
court of competent jurisdiction. Based thereon the DEVELOPER shall cause the
Project work to be Performed as a "public work." The Council of the City of Fresno has
adopted Resolution No. 62-297 ascertaining Me general prevailing rate of Per them
wages and per them wages for holidays and overtime in the Fresno area far each craft,
classification or type of workman needed in the execution of contracts for Me CITY. A
copy of the resolution is on file at the Office of the City Clerk. Actual wage schedules
are available upon request at the City's Construction Management Office. Without
limiting the foregoing, the DEVELOPER shall be solely responsible for the quality and
suitability of the work completed and the supervision of all contracted work,
qualifications and financial conditions of and performance of all contracts,
subcontractors, consultants and suppliers. Any review or inspection undertaken by the
CITU with reference to the Project and/or payroll monitoring/auditing is solely for the
purpose of determining whether Me DEVELOPER is property discharging its obligation
to the CITY, and shall not be relied upon by Me DEVELOPER or by any third parties as
a warranty or representation by Me CITY as to governmental compliance end/or the
quality of work completed for the Project
7.15 Property, Condition. The DEVELOPER shall maintain the Property and all
improvements on of in a good condition and repair (and, as M landscaping, in a
healthy condition), all according to Me basic design and related plans, as amended from
time to time. The DEVELOPER and those taking direction under the DEVELOPER
shall. (i) maintain all on-site improvements according to all other applicable law, rules,
governmental agencies and bodies having or claiming Jurisdiction and all their
respective departments. bureaus, and officials; (ii) keep Me Improvements free from
graffiti; (iii) keep the Property, free from any accumulation W debris or waste material;
(iv) promptly make repairs and replacements to on-site improvements; and (v) promptly
replace any dead, or diseased plans and/or landscaping (g any) with comparable
materials.
7.16. Quality of Work. The DEVELOPER shall ensure that rehabilitation of the
proposed Project employs building materials of a quality suitable for the requirements of
Me Project. The DEVELOPER shall cause completion of the rehabilitation of the
proposed Project in full conformance WM applicable local, state and federal laws,
statutes, regulations, and building and housing codes.
7.17 RelQcatio . If and to Me extent that rehabilitation of Me proposed Project
results in Me permanent or temporary displacement of residential tenants, homeowners
24
or businesses. the DEVELOPER shall comply with all applicable local, state, and
federal statutes and regulatory with respect to relocation planning, advisory assistance
and payment of monetary benefits. The DEVELOPER shall be solely responsible for
payment of any relocation benefit to any displaced persons and any other obligations
associated with complying with said relocation laws.
7.18 Reporting Reau rements. The DEVELOPER shall submit to the CITY the
following Project reports:
A. From the data of the execution of the Agreement, until
issuance of the recorded Certificate of Completion, the DEVELOPER shall submit a
Quarterly Report, in a form approved by the CITY, which will include the progress of
rehabilpafion of the Project and affirmative marketing efforts (as applicable). The
Quarterly Reports are due within fifteen (15) days after each March 31st, June 30th,
September 30th, and December 31st, during said period
B. Annually, beginning on the first day of the month following
the CITY's issuance of the recorded Cedificate of Completion, and continuing until the
termination of the Agreement, the DEVELOPER shall submit an Annual Report to the
CITY for the Project, containing the following information: the rent, Me annual income.
and the family sue of the Households. The report shall also state the date tenancy
commenced for each Affordable rental Unit, certification from an officer of the
DEVELOPER that the Affordable Project Units are in compliance with the Affordable
Rental Unit Requirements, and such other information the CITY may be required by law
to obtain. The DEVELOPER shall provide any additional information reasonably
requested by the CITY.
C. Annually, beginning on the first day of the month following
the CITY's issuance of the recorded Certificate of Completion for the Project, and
continuing until the expiration of the Agreement, the DEVELOPER shall submit proof of
Insurance as required in Article 9,
7.19 5chredgling and Extension of Ti ' Unilygicatig Delay in Performanoe. It
shall be the responsibility of the DEVELOPER to coordinate and schedule the work to
the performed so that the Commencement of the Project and issuance of Me Certificate
of Completion will take place in accordance with the provisions of the Agreement and
Project Schedule. The time for performance contained in the Project Schedule shall be
automatically extended upon the follovng:
A. The time for performance of provisions of the Agreement by either
parry shall be extended for a period equal to the period of any delay directly affecting
the Project or this Agreement which is mused by: war, insurrection, strike or other Tabor
disputes, tock -outs, dols, floods, earthquakes, firea, casualties, acts of God, ads of a
public enemy, epidemics, quarenfins restrictions, freight embargoes, lack of
transportation, suits fled by third parties concerning of arising out of this Agreement, or
unseasonable weather conditions. An extension of time for any of the above specified
causes shall be granted only R written notice by the party claiming such extension is
25
sent to the other party within thirty (30) calendar days from Me date the affected parry
learns of Me commencement of the cause and the resulting delay and such extension of
time Is accepted by the other party In writing. In any event, Me Project must be
completed no later Man one hundred eighty (180) calendar days after the scheduled
completion date specified in this Agreement, notvnthstanding any delay caused by that
included in this section.
B. Any and all extensions hereunder shall be by mutual written
agreement of the CITY's Housing and Community Development Division Manager and
the DEVELOPER and shall not cumulatively exceed one hundred eighty (180) days.
7.20 CertTcate(s) Of Complebon. Upon completion of the rehabilitation of Me
Project, Me DEVELOPER shall: 1) cerfify in writing to the CITY that the Project has
been reconstructed in accordance with the Final Plans l 2) submit to the CITY a cost -
certifying final budget for the Project where the DEVELOPER shall identify the actual
costs of reconstruction of the Project; 3) submit to Me CITY a Certificate of Occupancy
for the Project; 4) submit to the CITY a recanted Notice of Completion for the Project;
and 5) submit to the CITY an Architects certification in a form reasonably acceptable by
Me CITY. Upon a determination by the CITY Mat the DEVELOPER is in compliance
with all of the DEVELOPER's reconstruction obligations, as specified in this Agreement,
the CITY shall furnish, within thirty (30) calendar days of a written request by the
DEVELOPER, a recorded Certificate of Complefion for the Project in Me form attached
hereto as EXHIBIT "E". The CITY will not unreasonably withhold or delay furnishing the
recorded Certificate of Completion. If the CITY fails to provide the recorded Certificate
of Completion within the specified time, it shall provide the DEVELOPER with a written
statement Indicating in what respects the DEVELOPER has fallen to complete Me
Project in conformance with this Agreement or has otherwise failed to comply with the
terms of this Agreement, and what measures the DEVELOPER will need to take or what
standards it will need to meal in order to obtain Me recorded Certficate of Completion.
Upon the DEVELOPER I taking the specified measures and meeting the speed
standards, Me DEVELOPER will certify to the CITY in writing of such compliance and
the CITY shall deliver the recorded Certificate of Completion to the DEVELOPER in
accordance with Me provisions of this section.
ARTICLE 8. PROJECT OPERATIONS
8.1 Operation of Me PaDiect. The DEVELOPER shall lease, operate and
manage Me Project in full confornity with the terns of this Agreement.
8,2 O R pts, One (1) of the HOME Assisted Affordable
Units shall be rented and occupied by, or if vacant, available for rental occupancy by
Mose whose annual household income at the time of initial occupancy is not greater
Man fifty percent (50%) of the most recent annual median income, calculated and
published by HUD for the Fresno Metropolitan Statistical Area, applicable to such
household's size, and at an affordable rent consistent with HOME Program regulations
(as provided at 24 CFR 92.252) for the term of this Agreement. Five (5) of the HOME
Assisted Affordable Units shall be rented and occupied by, or if vacant, available for
Q
rental occupancy by those whose annual household income at the time of initial
occupancy is not greater than sixty-five percent (65%) of the most recent annual median
income, calculated and published by HUD for the Fresno Metropolitan Statistical Area,
applicable to such household's size, and at an affordable rent consistent with HOME
Program regulations (as provided at 24 CFR 92.252) for the term of this Agreement.
The DEVELOPER shall comply with the income targeting requirements of 24 CFR
92.216,
8.3 Leasing the HOME Units. Before leasing any Affordable Units, the
DEVELOPER shall submit its proposed form of lease agreement for the CITY'S review
and approval. The DEVELOPER covenants and agrees to ufilize only leases that have
been approved! in advance by the CITY. The CITY shalt respond to the DEVELOPER's
submission of a sample lease agreement within thirty (30) days. Should the CRY not
respond within thirty (30) days of the lease agreement submittal, the DEVELOPER shall
be authorized to use the submitted sample lease agreement. Additionally,
DEVELOPER agrees not to terminate the tenancy or to refuse to renew or lease with a
tenant of the Affordable Units assisted with HOME Funds except for serious or repeated
violation of the terms and conditions of the lease agreement, for violation of applicable
federal, state. or local law, or for other good cause. Any such termination or refusal to
renew must be preceded by not less than thirty (30) days' wrilden notice served by the
DEVELOPER or its au iu ized management entity upon the tenant specifying the
grounds for such action. The DEVELOPER agrees it shall annually report to the CITY
the number of leases that were not renewed or temninated and the reason for such non-
renewal or termination.
8.4 Lease of HOME Units Provisions In addition to the requirements of 24
CFR 92.253, the leases are subject to the following:
A. The DEVELOPER shall include in its lease agreement for the
Affordable Units, provisions which authorize the DEVELOPER to immediately terminate
the tenancy of any Household of which one or more of members misrepresented any
fact material to the Household a qualification as a Very Law- or Low -Income household.
Each such lease agreement shall also provide that the Household is subject to annual
certification, and that, if the Household's annual Income increases above the applicable
limits for Low Income such Household's rent may be subject to increase to the lesser of
(1) the amount payable by tenant under state or local law; or (2) Miry percent (30%) of
the Household's actual adjusted monthly income.
8.5 Final Management Plan. Before leasing and at least sixty (60) calendar
days prior to the Completion Date, me DEVELOPER shall submit to the CITY, for
review and approval, a plan for marketing and managing the proposed Project ("Final
Management Plan"). The Final Management Plan shall address in detail how the
DEVELOPER or Its designated management entity plans to market the av iilablldy of
Affordable Units to prospective tenants and how the DEVELOPER plans to certify the
eligibility of potential Low -Income tenants. The Final Management Plan shall also
address how the DEVELOPER and/or the management entity plan to manage and
maintain the Affordable Project Units in accoviance with HOME Program regulations at
27
Section 92.251 Property Standards, am shall include appropriate financial information
and documentation. The Final Management Plan shall contain detailed descriptions of
policies and procedures with respect to tenant selections and evictions. Topics to be
covered In these procedures shalt include at a minimum the following:
Interviewing procedures for prospective tenants;
Previous rental history of tenants with references;
Credit reports and checks;
Criminal background checks;
Deposit amounts, purpose, use and refund policy;
Employmentllncome verification;
Occupancy restrictions;
Income Limits;
Equal Housing Opportunity Statement;
Restrictions on use of the premises; and
TenanfAandlord dispute resolution procedures.
The Final Management Plan shall contain copies of all standardized forms
associated with the above listed topics. The Final Management Plan shall include a
form lease agreement that the DEVELOPER proposes to enter into with Me Very Low
and LowIncometenants. The DEVELOPER shall abide by the terms of this Final
Management Plan, approved by me CITY, in marketing, managing and maintaining the
Affordable Project Units.
At least ninety (90) calendar days prior to the Project Completion Date, the
DEVELOPER shall also submit any proposed management contract to the CITY for
prior review. The CITY shall have the right to review any proposed amendments, other
than renewals to the management contract, and any new management contracts during
the term of this Agreement. Such management contract(s) shall contain a provision
expressing this right.
8.6 Prooertv Management. The DEVELOPER shall comply with the following:
A. Management Responsibilities. The DEVELOPER directly and/or
through its designated management entity, is specifically responsible for all
management functions with respect to the Project including, wnbout limitation, the
selection of tenants, certification and re -certification of Household size and income,
evictions, collection of Rents and deposits, construction management, stimrative
marketing, maintenance, landscaping, routine and extraordinary repairs, replacement of
capital items and security. The CITY shall have no responsibility for such management
of the Affordable Units.
8.7 Maintenance and Sectirity. The DEVELOPER shall at its own expense
maintain the Project in good condition, in gootl repair and In decent, safe, sanitary,
habitableand tenantableliving conditions for the benefit of the Unit occupants. The
DEVELOPER shall not commit or Permit any waste on or 0 the Project, and shall
prevent and/or rectify, any physical deterioration of the housing. The DEVELOPER shall
maintain the Affordable Units in conformance with all applicable federal, state and local
laws, ordinances, codes and regulations, the Final Management Plan, and this
Agreement.
8.8 Nondiscrimination All of the HOME Units shall be available for occupancy
on a continuous basis to households who are income eligible. The DEVELOPER shall
not illegally discriminate or segregate in the reconstructed complex, the use, enjoyment,
occupancy or conveyance of any part of the Project or Property on the basis of race,
color, ancestry, national origin, religion, sex, marital areas, family status, source of
income/rental assistancesubsidy, physical or mental disability, Acquired Immune
Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC), sexual orientation, or
any other arbitrary basis. The DEVELOPER shall otherwise comply with all applicable
local, state and federal laws conceming noMiscrimination in housing. Neither the
DEVELOPER nor any person claiming under or through the DEVELOPER. shall
establish or permit any such practice or practices of illegal discrimination or segregation
wdh reference to the selection. location, number, use or occupancy of tenants or
vendees of any Unit or in connection with employment of persons for the reconstruction
of any Affordable Unit. All deeds or contracts made or entered into by the DEVELOPER
as to the Affordable. Units or me project or portion thereof. shall contain covenants
concerning nondiscrimination consistent with this section. The DEVELOPER shall
include a statement in all advertisements, matrices and signs for availability of Affordable
Units for rent to the effect that the DEVELOPER is an Equal Housing Opportunity
Provider.
A. Nothing in this section is intended to require the DEVELOPER to
change the character, design, use or operation of the Project; or to require the
DEVELOPER to obtain licenses or permits other man those required for the Project,
8.9 Rent Schetl i d UGI N All The DEVELOPER covenants and
agrees not to charge rent to tenants for HOME Units in an amount which ezceeds those
rents prescribed to me Affortlable Units as they associate vnth particular income and
rent limitations levels as established annually by HUD, consistent with me HOME
Program requlremerds applicable to me ARortlable Units in the Fresno, Calitomia area,
as establishetl by HUD, and arther covenants not to impose a monthly allowance for
ubl'dy services to tenants of such Affordable Unita in excess of an amount approved by
HUD in accord ance with 24 CFR 92.252. The DEVELOPER e9rees to famish to the
CITY with a certiticate selling arth me mezimum monthly rentals for HOME Units and
the monthly allowances for utilities arM services to be chargetl tluring any annual peand
ung/ me expiration of me AffoMability Period. The DEVELOPER shall reexamine the
froul
Income of each tenant Household Ilving In me Affordable Units on an annual basis.
ARTICLE 9. INSURANCE AND INDEMNITY
Without waiver of limitation, the parties agree as follows regarding the
DEVELOPER's Insurance and Indemnity Obligations:
Nn
9.1 Indemnification The DEVELOPER shall indemnify, hold harmless and
defend the CITY and each of ds officers, officials, employees, agents and volunteers
from any and all loss, liability, fines, penalties, fodeitures, vests and damages (whether
in contract, tort or strict liability, Including but not limited to personal injury, death at any
time and property damage) incurred by the CITY, the DEVELOPER or any other
person, and from any and all claims, demands and actions in law of equity (including
attorney's fees and litigation expenses), arising or alleged to have arisen directly or
indirectly out of performance of this Agreement. The DEVELOPER's obligations under
the preceding sentence shall apply regardless of whether CITY or any of its officers,
officials, employees, agents or authorized volunteers are negligent, but shalt not apply
to any loss, liability, fines, penalties, forfeitures, costs of damages caused solely by Me
gross negligence, or caused by the willful misouriduct, of CITY or any of its officers,
officials, employees, agents or authorized volunteers.
A. If the DEVELOPER should contract all or any portion of the work to
be performed under this Agreement, the DEVELOPER shall require each contractor and
subcontractor to indemnify, hold harmless and defend the CRY and each of its officers,
officials, employees, agents and volunteers in accordance with the terms of the
preceding paragraph.
B. This section shall survive termination or expiration of the
Agreement.
9.2 Insurance. Throughout the life of this Agreement, to DEVELOPER shall
itself and/or trough Its consultant(s), assignee(s), nominee(s), contractors and
subcontractors pay for and maintain in full force and effect all policy(ies) of insurance
required hereunder with (an) insurance company(ies) either (1) admitted by the
California Insurance Commissioner to do business In to State of Callfomia and rated
not less than "A -VII" in Best's Insurance Rating Guide, or (2) authorized by the CITY's
Risk Manager. The following policies of insurance are required:
A. Until issuance of Certificate(s) of Completion, BUILDERS RISK
(Course of Construction) Insurance in an amount equal to the completed value of the
Affordable Project with no coinsurance penalty provisions.
B. Following issuance of Cerfmcate(s) of Completion, Commercial
Property insurance which shall be at least as broad as the most current version of
Insurance Service Office (ISO) Commercial Property Form CP 10 30 (Cause of Loss —
Special Farm), with Ilmits of Insurance in an amount equal to full one hundred percent
(100%) replacement cost (without deduction for depreciation) of to Improvements with
no coinsurance penalty provisions. Such insurance shall include coverage for business
Income, including "rental value", in an amount equal to the two (2) years of the annual
rent generated by the improvements. Coverage for business income, including "rental
value", shell be at least as broad as to most current version of Insurance Service
Office (ISO) Commercial Property Form CP 00 30.
30
1. The above described policyUes) of insurance shall be endorsed to
provide that the coverage shall not be cancelled, non -renewed, reduced in coverage or
in limits except after thirty (30) calendar day unrestricted written notice in favor of the
CITY, of policy cancellation, change or reduction of coverage. Upon issuance by the
insurer, broker, or agent of a notice of cancellation, non -renewal, change or reduction in
coverage, the DEVELOPER or its contractoriusubcontractors, as the case may be, shall
furnish CITY with a new certificate and applicable endorsements for such policy(iea). In
the event the policy is due to expire during the term of this Agreement, the
DEVELOPER shall provide a new caUfficate, and applicable endorsements, a new
certificate evidencing renewal of such policy shall be provided not less than fifteen (15)
days prior to the expiration date of the expiring policy. Upon issuance by the insurer,
broker, or agent of a notice of cancellation, change or reduction in coverage, the
DEVELOPER or its contractors/subcontractors, as the case may be, shall file with the
CITY a mudded copy of the new or renewal policy and certificates for such policy.
Z The Builders Risk (Course of Construction) and Property Insurance
policies shall name the CITY as loss payee. The insurance required herein shall
contain no special limitations on the scope of protection afforded to the CITY.
3, If at any time during the Ills of this Agreement or any extension, the
DEVELOPER fails to maintain the required insurance in full farce and effect, all work
under this Agreement shall be discontinued immediately, unfit notice is received by the
CITY that the required Insurance has been restored to full force and effect and that the
premiums therefore have been paid for a period satisfactory to the CITY. Any failure to
maintain the required insurance, subject to notice and cure requirements herein, shall
be sufficient cause for the CITY to terminate this Agreement.
9.3 Bond . DEVELOPER shall pay for and maintain good and sufficient surety
bonds from a corporate surety, admitted by the California Insurance Commissioner to
do business in the State of California and Treasury -listed, in a form satisfactory to the
CITY and naming the CITY as Co -Obligee.
A. The "Faithful Performance Bond" shall be at least equal to one
hundred percent (100%) of the DEVELOPER's estimated construction costs, as
reflected in the DEVELOPER's pro forma budget. attached hereto as EXHIBIT "C", to
guarantee faithful performance of the Project, within the time prescribed, in a manner
satisfactory to the CITY, consistent with this Agreement and that all materials and
workmanship will be hem from original or developed defects.
B. The "Material and Labor Bond' shall be at least equal to one
hundred percent (100%) of the DEVELOPER's estimated construction costs, as
reflected in the DEVELOPER's pro tonna budget, attached hereto as EXHIBIT "C", to
satisfy claims of material supplies and of mechanics and laborers employed for this
Project. The bond shall be maintained by the DEVELOPER in full farce and effect until
the Project is completed, and until all claims for materials and labor are paid, released,
31
or time bared, and shall otherwise comply with any applicable provisions of the
California Civil Code.
C. In lieu of the bonds required above. CITY, in its sale discretion, may
accept from the DEVELOPER an Irrevocable Standby Letter of Credit issued with the
CITY named as the sole beneficiary in the amounl(s) of the bonds required above. The
Irrevocable Standby Letter of Cre ift is to be issued by a bank, and in a form acceptable
to CITY. This Irrevocable Standby Letter of Credit shall be maintained by the
DEVELOPER in full force and effect until CITY is provided with a recorded Notice of
Completion for reconstruction of the Project and shall be subject to and governed! by Me
laws of the State of California."
ARTICLE I0. DEFAULT AND REMEDIES
10.1 Events of Default. Each of the following shall constitute an "Event of
Default" for purposes of this Agreement after the cure period in Section 10.2 has
expired without a cure.
A. DEVELOPER's use of HOME Funds, for coals other than Eligible
Costs or for uses not permitted by the terns of this Agreement,
13. DEVELOPER's failure to obtain and maintain the insurance
coverage as required under this Agreement;
C. Except as otherwise provided in this Agreement, the failure of the
DEVELOPER to punctually and properly perform any other covenant or agreement
contained in this Agreement Including without limitation the following. (1) the
DEVELOPER's Substantial deviation in the reconstruction of the Project from the Final
Plans, without the CITY's prior written consent; (2) the DEVELOPER's use of defective
or unauthorized materials or defective workmanship in pursuit of the Pmject; (3) the
DEVELOPER's failure to commence or complete the Project, unless delay is permitted
under Section 7.19 of this Agreement; (4) the cessation of work on the Project for a
period of more Man fifteen (15) consecutive days (other Man as provided at Section
7.19 of this Agreement) prior to submitting to the CITY, pursuant to Section 7.20,
certification that the Project is complete; (5) any material adverse change In the financial
condition of the DEVELOPER or the Project that gives the CITY reasonable cause to
believe that Me Project cannot be completed by the Completion Dale according to the
terms of this Agreement (6) Me DEVELOPER's failure to remedy any deficiencies in
record keeping or failure to provide records to the CITY upon the CITYS request; (7) the
DEVELOPER's failure to substantially comply with any federal, state or local laws or
applicable CITY restrictions governing the Project, including but not limited to provisions
of this Agreement pertaining to equal employment opportunity, nondiscrimination and
lead-basetl paint;
D. Any representation, warranty, or certificate given or furnished by or
on behalf of the DEVELOPER shall prove to be materially false as of the date of which
the representation, warranty, or certification was given, or that the DEVELOPER
ad
concealed or failed to disclose a material fact to the CITY, provided, however, that if any
representation, warranty, or certification that proves to be materially false is due merely
to the DEVELOPER's inadvertence, the DEVELOPER shall have a thirty (30) day
opportunity after written notice thereof to cause such representation, warranty, or
certification to be true and complete in every respect;
E. The DEVELOPER shall file, or have filed against it, a petition of
bankruptcy, insolvency, or similar law, state or federal, or shall file any petition or
answer seeking, consenting to, or acquiescing In any reorganization, arrangement.
composition, readjustment, liquidation, dissolution, or similar relief, and such petition
shall not have been vacated within ninety (90) days; or shall be adjudicated bankrupt or
Insolvent, under any present or future stimm, law, regulation, under state or ledeml law,
and such judgment or decree is not vacated or set aside within ninety (90) days;
F. The DEVELOPER's failure, Inability or admission in writing of its
inability to pay its debts as they became due or the DEVELOPER's assignment for the
benefit of creditors;
G. A receiver trustee, or liquidator shall be appointed for the
DEVELOPER or any substantial part of the DEVELOPER's assets or properties, and
not be removed within ten (10) days;
K DEVELOPER's breach of any other material condition, covenant,
warranty, promise or representation contained in this Agreement not otherwise identified
within this Section;
I. Any substantial or continuous breach by the DEVELOPER of any
material obligation owed -by the DEVELOPER imposed by any other agreement with
respect to the financing, of the Project, whether or not the CITY Is a party to such
agreement after expiration of all notice and cure periods contained within such
document.
10.2 Notice of Default and O ortunity to Cum. The CITY shall give written
notice to the DEVELOPER of any Event of Default by specifying. (1) the nature of the
event or deficiency giving nse to the default, (2) the action required to cure the
deficiency, If any action to cure is possible, and (3) a data which shall not be less than
the lesser of any time Period provided in this Agreement, or thirty (30) calendar days
from the date of the notice, by which such deficiency must be cured, provided that if the
specified defidency or default cannot reasonably be cured whin the specified time, the
DEVELOPER shall have an additional reasonable period to cure so long as it
commences cure within the specified time and thereafter diligently pursues the cure in
good faith. The CITY acknowledges and agrees that the DEVELOPER shall have the
right to cure any defaults hereunder and that notice and core rights hereunder shall
extend to any and all partners of the DEVELOPER that are prior identified in a wring
delivered to the CITY In Ne manner provided in this Agreement.
33
10.3 Remedies Uoan an Event of Def H. Upon the happening of an Event of
Default by the DEVELOPER and a failure to cure said Event of Default within the time
specified, the CITY's obligation to disburse any undisbursed Funds shall terminate. The
CITY may also at its option and without notice institute any action, sult, or other
proceeding in law, in equity or otherwise, which it shall deem necessary or proper for
the protection of its interests and may without limitation proceed with any or all of the
following remedies in any order or combination that the CITY may choose in its sole
discretion
A. Terminate this Agreement immediately upon when notice to the
DEVELOPER',
B. Bring an action in equitable relief (1) seeking specific performance
by the DEVELOPER of the terms and conditions of this Agreement, and/or (2) enjoining,
abating or preventing any violation of said terms and conditions, and/or (3) seeking
declaratory relief; and
Agreement. C. Pursue any other remedy allowed by law or in equity or under this
ARTICLE 11. GENERAL PROVISIONS
Without waiver of limitation, the parties agree that the following general
provisions shall apply in the performance hereof
11.1 Amendments. No modification or amendment of any provision of this
Agreement shall be effective unless made in writing and signed by the parties hereto.
11.2 Attorney's Feea. If either Party Is required to commence any proceeding
or legal action to enforce or interpret any term, covenant or condition of this Agreement
the prevailing party will be entitled to recover from the other party its reasonable
allomey's fees and legal expenses.
11.3 Binifin a All Su ssons and Assions Unless otherwise expressly
provided in this Agreement, all the terms and provisions of this Agreement shall be
binding on and Inure to the benefit of the parties hereto, and their respective nominees,
heirs, successors, assigns, and legal representatives.
11.4 Qounterimits. This Agreement may be executed in counterparts, each of
which when executed and delivered will be deemed an original, and all of which
together will constitute one instrument The execution of this Agreement by any parry
hereto will not become effective until counterparts hereof have been executed by all
parties hereto.
11.5 Dischlimer of Relationship. Nothing contained In this Agreement, nor any
act of the CITY or of the DEVELOPER, or of any other Person, shall in and by itself be
deemed or construed by any person to create any relationship of third party beneficiary,
or of principal and agent, of limited or general partnership, or of joint venture.
34
11.6 Oiscretiona GOvOrimBrital Actl0flut Certain planning, land use. zoning
and other permits and public actions required in connection with the Prefect including,
without limitation, the approval of this Agreement, the environmental review and
analysis under NEPA, CEOA or any other statute, and other transactions contemplated
by this Agreement are discretionary government actions. Nothing In this Agreement
obligates the CITY or any other governmental entity to grant final approval of any matter
described herein. Such actions are legislative, quasi-judicial, or othermse discretionary
in nature. The CITY cannot take action with respect to such matters before completing
the environmental assessment of the Project under NEPA, CEOA and any other
applicable statutes. The CITY cannot and does not commit in advance that It will give
final approval to any matter. The CITY shall not be liable, in contract, taw or county, to
Me DEVELOPER or any of its executors, administrators, transferees, successors -in -
interest or assigns for any failure of any governmental entity to grant approval on any
matter subject to discretionary approval.
11.7 Effective Date. This Agreement shall be effective upon the data fired
above written on Page 1, upon the Parties' complete execution following City Council
approval.
11.8 Entire Ao t This Agreement represents the entire and integrated
agreement of the parties with respect to the subject matter hereof. This Agreement
supersedes all prior negotiations, representattons or agreements, either written or oral.
11.9 Exh bits. Each exhibit and attachment referenced in this Agreement is, by
Me reference, incorporated Into and made a part of this Agreement.
11.10 Exprenissi incimi Unon Event of Defk. The DEVELOPER shall
reimburse the CITY for all reasonable expenses and costs of collection and
enforcement, including reasonable abomey's fees, incurred by the CITY as a result of
one or more Events of Default by the DEVELOPER under this Agreement.
11.11 Governing Law and Venue Except to the extent preempted by applicable
federal law, the laws of the State of California shalt govern all aspects of this
Agreement, including execution, interpretation, performance, and enforcement. Venue
for fling any action to enforce or interpret this Agreement will be Fresno, California
11.12 Headings. The headings of the articles, sections, and paragraphs used in
this Agreement are for convenience only and shall not be read or constroed to affect the
meaning or construction of any provision.
11.13 JIMOMIQUIthen. This AgreemeM in its final forth is the result of Me
combined efforts of the parties. Any ambiguity will not be construetl in favor or against
any party, but rather by construing the terms in accordance with their generally
accepted meaning.
11.4 No Assignment or Succession. The DEVELOPER shall not sell, lease,
transfer, assign or otherwise dispose of all or any material part of any interest It might
35
hold in the Property without the prior written consent of the CITY, which consent shall
not be unreasonably withheld or delayed.
11.15 No Third -Party Beneficiary. No contractor, subcontractor, mechanic,
materialman, laborer, vendor, of other person hired or retained by the DEVELOPER
shall be, nor shall any of them be deemed to be, third -parry beneficiaries of this
Agreement, but each such person shall be deemed to have agreed (a) that they shall
look to the DEVELOPER as their sole source of recovery If not paid, and (b) except as
otherwise agreed to by the CITY and any such person in writing, they may not enter any
claim or bring any such action against the CITY under any circumstances. Except as
provided by law, or as otherwise agreed to in writing between the CITY and such
person, each such person shall be deemed to have waived in writing all right to seek
redress from the CITY under any circumstances whatsoever.
11.16 No Waiver. Neither failure nor delay on the part of the CITY in exercising
any right under this Agreement shall operate as a waiver of such right, nor shall any
single or partial exercise of any such right preclude any further exercise thereof or the
exercise of any other right. No waiver of any provision of this Agreement or consent to
any departure by the DEVELOPER therefrom shall be effective unless the same shall
US in writing, signed on behalf of the CITY by a duly authorized officer thereof, and the
same shall be effective only in the speck instance for which it is given. No notice to or
demand on the DEVELOPER in any case shall enti le the DEVELOPER to any other or
further notices or demands in similar or other circumstances, or constitute a waiver of
any of the CITYs right to take other or further action in any circumstances without notice
or demand.
11.17 Nonrefance. The DEVELOPER hereby acknowledges having obtained
such independent legal onother advice as g has deemed necessary and declares that in
no manner has it relied on the CITY, d agents, employees or attorneys in entering into
this Agreement.
11.18 NNoti�. Any notice to be given to either party under the terms of this
Agreement shall be given by certified United States mail, postage prepaid. return receipt
requested, at the addresses specified below, or at such other addresses as may be
specked in writing by the parties.
If to the CITY: City of Fresno
Development and Resource Management Dept.
Housing and Community Development Division
2000 Fresno Street, Room 3070
Fresno, CA 93721-3805
If to DEVELOPER: Hotel Frame. LLC
Abortion: Mehran Rohn Baghgegian
Executive Director
180 N. Holliston Ave., Suite 201
Pasadena, CA 91106
36
11 19 Precedence of Documents In the event of any conflict between the body
of this Agreement and any exhibit or attachment hereto or document incorporated
herein, the terms and conditions of the body of this Agreement will control.
11.20 Remrd'na of Documents. The DEVELOPER agrees to cooperate with the
CITY and execute any documents required, promptly upon the CITY's request, the
Dead of Trust, and any other documents/mstruments that the CITY requires to be
recorded, in the Official Records of Fresno County, California, consistent with this
Agreement.
11.21 Remedies Cumulative. All powers and remedies given by this Agreement
shall be cumulative and in addition to those othewdse provided by law.
1122 Severab'Ity. The invalidity, illegality, or unenforceability of any one or
more of the provisions of this Agreement shall not affect the validity, legality, or
enforceability of the remaining provisions hereof or thereof.
/r
m
37
IN WITNESS WHEREOF, the parties have executed this Agreement in Fresno,
California, the day and year first above written.
CITY OFF FRES/NO, a Municipal Corporation
By: /Llwd.lr
Mark Scott, Cfty Manager
(Affew notary cemllcate of acknoo4edgment)
Date:
ATTEST:
REBECCA E. KLISCH
City Cle �/II
BY EO.iid! �rQd•.
Depa
Date: �! ��R ( u
HOTEL FREZNO, LLC
a California limited liability company
APPROVED AS TO FORM:
JAMES SANCHEZ
City Attorney
By Q
Robert R. Coyle
Senior Deputy City Attorney
Date: 9 - n.a - I I
By
Anson n ami Bag s A g ve Director
(AX nno,,I a of 66cknowbagmem7
Date:
Attachments'
EXHIBIT A:
PROPERTY DESCRIPTION
EXHIBIT B.
PROJECT DESCRIPTION AND SCHEDULE
EXHIBIT C:
BUDGET
EXHIBIT D:
55 -YEAR CASH FLOW STATEMEN7tl QVr'Am•c)3
EXHIBIT E:
FORM OF CERTIFICATE OF COMPLETION
a c
EXHIBIT F:
PROMISSORY NOTE
EXHIBIT G:
DEEDOFTRUST
EXHIBIT H:
DECLARATION OF RESTRICTIONS
9M
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
stare of California
County or
Coof ly }'7 II
On J before me, MAR/(J /� F✓u F�+n �� VMS
(xmewnmumi Maof lvoSsl �1 ,�—
pemonallvappemeri I/•PAA/ Eo Mt R9g
who proved to me on the basis Of satisfactory evidence to be the person(s) whose name(» idxwsulescaibed to
the within msvument and aclmowledged to me that helshegie y ezecoted the same in hiAmethow authorized
capmity(ies), end that by his4MErAeE it sigaao re*f m the msmment the person(e), Or the entiry upon behalf of
which the person(ayacsed, exacontl the msbumeni
I certify under PENALTY OF PERIM under the laws of the Stare of California that the foregoing paragreph
is true and correct.
KIWU
COMM. 91798597 i
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.ADDITIONAL OPTIONAL INFO1i nObl
DBMFlk FIDNS FOR COh@LFIING=S FORM
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Sams of CalGomle
County or xresno i
On 09/29/2011 Eeiare me. Ratpecvn vor ell. rlpy�
laaaeonelly appmrea **Mark Scott******
a..wlaay.Ia
who Vowed to me on the bink oh mr'lelaclary
aimlre to be the pereonM whom nvrepe were
to me thaWwimp By
locrpeMaWnwlea in
m me roar nebbaa c execulea the mine
NaheNlwir eutlonzed coon me i and mat by
poses
ARair signature(.) on inn inmumem me
palmnsN, or ma trophy upon il¢bnX rs wnlM me
personny ached. 9aecNed mor mslrument.
Signs, Is Spar rift Slgmrla RnPremri6ng:
I many under PENALTY OF PERJURY under the
MTIFPYtl cdRxttt
lawn M me $Ole W CelMomie mel the lcregollg
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WITNESS my hand aM OXkiel mel.
Signature: "Aftr./
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OPTIONAL
mown me.vcoo.w. roue o mrrewr..erylew. Nmypmy raayewmpwwv Tynpm Xs vocument
mroaawa.+..r nrem.,�ww ane mnMr manayawmnna.m.
HeNorlRhlonnhEOncu resn
Investment(HOE)
rineorrypvofDocurri. Y Of Fresno reznra
and RoteFoLLca
Dccumenloeta 09/29/2011
ravroerol Pepin:++31**
m(sl OmerlMn NvreE yLJwe' Non
CN o) Cltlmea 0y &ITarU)
Sly er'c Name:
Slpnelz Name:
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Signs, Is Spar rift Slgmrla RnPremri6ng:
EXHIBIT "A"
PROPERTY DESCRIPTION
AEN' 466-214-01
Legal Description:
Real Property in the City of Fresno, County of Fresno, State of California, described as
follows:
LOT 1,2,3,4,5 AND 6 I BLOCK 630E THE TOWN (NOW CITY) OF FRESNO, IN THE
CITY OF FRESNO, COUNTY OF FRESNO, STATE OF CALIFORNIA, ACCORDING TO
THE MAP THEREOF RECORDED JUNE 8, 1876, IN BOOK 1, PAGE 2 OF MAPS,
RECORDS OF SAID COUNTY,
EXHIBIT "B"
PROJECT DESCRIPTION AND SCHEDULE
The Projed will consist of related on- and o8 -site improvements, approximately
19,508 square feet of ground floor rattail, and construction of seventy-two (72) mixed
income housing units, of which six (6) will be HOME Program Assisted fixed units
Preserved as Very Low and Low -Income Housing Units In accordance with the
following chart.
HOME FUNDED FIXED UNITS
Percent of
Median Income
Studio
One Bedroom Units
Two Bedroom Units
30%to 50%
1 -(1-
-51%to
March 1, 2012
Com late CoraWdion
07-A to85%
1
2
2
Total
3
1 2
Six (6) of the units will be reserved as Very Low -and Low -Income Affordable Units
for a period of fifty-five (55) years.
HOME Funds will be made available by the CITY for payment of HOME eligible costs
not to exceed the lesser of Eight Hundred Fifty Nine Thousand Eight Hundred Sixty
Eight dollars and DO/100 ($859,868), the aggregate HOME Program per unit cap (24
C.F.R. 92.250) for the six (6) HOME -assisted Units as determined by the CITY, as
needed, for HOME eligible project development costs.
PROJECTSCHEDULE
Finance Plan
Janua 1, 2012
Obtain BuiMin Permits
Februa 1, 2012
Start Construction
March 1, 2012
Com late CoraWdion
December 3l 2012
Com lete Lease U
Februa 15, 2013
Page 1 0 1
EXHIBIT "C"
PROJECT SOURCES AND USES
Tentative sources
City HOME Program Loan
$ 859,868
RDA Loan
$ 1,900,000
HUD Section 220 Loan
$11,109,459
Limited Members
$ 1,845,000
Managing Members
$ 825.290
Total
$16,639,617
Uses
Land
$ 1,065,000
Pre -Construction
$ 1,691,500
Consbudion
$10,433,710
Construdion Management
$ 600,000
Contingency
$ 1,043,371
Permitsllnsurance&Bond
$ 380,000
HUD Financing & other charges
$ 793,708
Lease Up Loan Fees
$ 532.33
Total
$16,639,617
EXHIBIT "D"
55 -YEAR CASH FLOW STATEMENT (Tentative)
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EXHIBIT "E"
RECORDED AT THE REQUEST OF
AND WHEN RECORDED RETURN TO:
City of Fresno
City Clerk
2600 Fresno Street, Room 2133
Fresno, CA 93921-3605
Ismosm ETRE LINErMRECCR[ERSUSEI
CERTIFICATE OF COMPLETION
This Certifcate of Completion is recorded at the request and for the benefit of the City of
Fresno and is exempt from the payment of recording fee pursuant to Government Code
Section 6103.
APN: 466-214-01
City of Fresno
By:
Doug Scharlon, Assistant Director
Development and Resound
Management Department
Date:
Page 1 of 3
MIXED-USE HOUSING PROJECT
APN: 466214-01
Recitals:
A. By a HOME Investment Partnerships (HOME) Program Agreement dated
2011 ("HOME Agreement") between the City of Fresno. a munidpal corporation
("CITY"), and Hotel Fresno, LLC a California finned liability company (hereinafter reamed to
as "DEVELOPER"), agreed to rehabilitation Hotel Fresno into a seventy-two (72) unit
complex consisting of sixty-six (66) market rate units and six (6). affordable rental units, of
which one (1). of the six (6) units would be reserved for rental by a Very Low -Income
household and five (5) of the six (6) will be reserved for rent by Low -Income households
("Project"). upon the premises legally described in EXHIBIT "A° attached to the HOME
Agreement as amended from time to lime, made a part hereof by this reference, (the
"Property') for the purposes of the Project, with the assistance of HOME Funds while
meeting the affordable housing, income targeting and other requirements of 24 CFR 92
according to the terms and conditions of the HOME Agreement and the Loan Documents
and other document/instruments referenced Mersin for the six (6) Affordable Units.
B. The HOME Agreement or a memorandum of It was recorded on 2011
as Instrument No 'n the Official Records of Fresno County, California.
C. Under the arms of the HOME Agreement, after the DEVELOPER completes
Me Project, the DEVELOPER may ask CITY to record a Certificate of Completion.
D. The DEVELOPER has asked CITY to furnish DEVELOPER with a recordable
Certificate of Comptetion.
E. The CITY's issuance of this Certificate of Completion is conclusive evidence
that the DEVELOPER has completed construction the Project as set forth in the HOME
Agreement.
NOW THEREFORE:
1. The CITY certifies that the DEVELOPER commenced the Project on
rid completed the Project on 20= and has done so in full compliance
with the HOME Agreement.
2. This Certificate of Completion is not evidence of the DEVELOPER'S
compliance with, or satisfaction of, any obligation to any mortgage or security Interest
holder, or any mortgage or security interest insurer, securing money lent to finance work on
Me Property or Project, or any part of the Property or Project,
3. This Certificate of Completion is not a notice of completion as referred
to in California Civil Code Section 3093.
4. Nothing contained herein modifies; any provision of the HOME
Agreement.
Page 2 of 3
IN WITNESS WHEREOF, CITY has executed this Ceafcate of Completion as of this
—day of 20—.
CITY OF FRESNO
By:
Craig Scharton, Assistant Director
Development and Resource Management Department
ATTEST:
CITY CLERK
Deputy
Date:
HOTEL FREZNO, LLC
a CalRomia limited liability oompmry
APPROVED AS TO FORM:
JAMES SANCHEZ, CITY ATTORNEY
By:
Assistant/Deputy
By: Data: �—
(A"ChnW2gry ! hawknowadsnenp
Name:
Tale:
Page 3 o 3
EXHIBIT 'i
DO NOT DESTROY THIS NOTE: When paid. this note must he surrendered to Borrower for
Cancellation.
PROMISSORY NOTE
Loan Amount: $859 B68 W Date: �(,�, 2011
Fresno, California
For value received, the undersigned, Hotel Frei LLC, a Calgorria limited liability
company ("Borrower'), promises to pay to the order of the City of Fresno, a California
municipal corporation, ("Lender), the sum of Eight Hundred Fifty Nine Thousand Eight
Hundred Sixty Eight dollars and 00/100 ($859,888), to the extent that such funds are loaned
to Borrower, with interest on the unpaid principal balance running from ten (10) years from
the date of the recorded Certificate of Completion at the rate of 1% annually in accordance
with the HOME Investment Partnerships Agreement dated .]9, 2011, entered into
between the BORROWER and Lender, ("Agreement"), with all principal and Interest due and
payable on or before the earlier of: (i) Borrowers uncured default under the Agreement with
respect to the Project, and (ii) fifty-five (55) years from the date of this Note, ("Maturity Date'),
on which date the unpaid balance of principal with unpaid interest thereon shall be due and
payable, along with attorney's fees and costs of collection, and without relief from valuation
and appraisement laws.
This is a Residual Receipts Note. Principal and interest payments in the amount of
20% of Residual Receipts, to the extent that Residual Receipts exist and are Itemized in
audited financial statements supplied to Lender with each payment hereunder, shall be due
ten (10) years following the recordation of the Certificate of Completion, and said payment
continues each successive year thereafter until the Maturity Data upon which all principal
and interest shall be due and payable (prorated amounts to be paid for the first and last year
of the Note), Any failure to make a payment required hereunder within ten (10) days after
such payments are due shall constitute a default under the Agreement with respect to the
Project and this Note. It shall not be a default hereunder if no payment was made because
Project Residual Receipts did not exist for any particular year. Additionally any failure to
timely submit to Lender audited financial statements within thirty (30) days after such financial
statements are due shall constitute a default under the Agreement with respect to the Project
and Nate.
Residual Receipts means in each operating year after the conversion of the Project financing
to its permanent phase, twenty percent (20%) of the sum of (i) all cash received by the
Project from (A) rents, lease payments, and all sources generally considered in the apartment
industry to be "other income" (which does not include payments for optional services provided
by Borrower), (B) payments from HUD under a Housing Assistance Program Section 8
Contract to the Project, if any. and excluding (a) tenant security or other deposits required by
law to be segregated, and (b) interest on reserves not available for distribution, and (ii) the
net proceeds of any insurance (including rental interruption insurance), other than fire and
extended coverage and title insurance, to Me extent not reinvested, less the sum of: (1) all
cash expenditures, and all expenses unpaid but properly accrued, which are Operating
56missne.a Page 1 of 5
Expenses incurred in the operation of the Project's business, excluding expenditures paid
from any reserve account (whether or not such expenditure U deducted, amortized or
capitalized for tax purposes), (ii) contributions to any prudent and reasonable cash receives
for working capital, capital expenditures, repairs, replacements and anticipated expenditures,
in such amounts as may be reasonably required by the lenders to the Project for the
operation of the Project not to exceed the amount required by the Project's permanent
lender, annually adjusted in proportion to the average increase of the following indices (a) the
United States Bureau of Labor Statistics for Hourly Wage Rates of all workers in
manufacturing, and (b) of all Commodity Wholesale Prices, said indices shall be re -defined to
the mutual satisfaction of the parties in the event of change in farm and basis of inclose, all
increases shall use the Indices for calendar year 2011 as their base, (iii) the payment of
principal and interest, and any associated fees, expenses, and costs, with respect to the
Senior Financing.
Operating Expenses means actual, reasonable and customary (for comparable quality,
newly reconstructed rental housing developments in Fresno County) costs, fees and
expenses directly incurred, paid. and attributable to the operation, maintenance and
management of the Project in a calendar year, including, without limitation: painting, cleaning,
repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses,
sewer charges, real and personal property taxes, assessments, insurance, security,
advertising and promotion, janitorial services, cleaning and building supplies, purchase,
repair, servicing and installation of appliances, equipment, fixtures and furnishings which are
not paid from the capital replacement reserve, fees and expenses of property management
and common area expenses, fees and expenses of accountants, attorneys and other
professionals, the cost of social services, and other actual operating costs and capital costs
which are incurred and paid by Borrower, but which are not paid from reserve accounts.
All capitalized terms used in this Note, unless otherwise defined, will have the respective
meanings specified in the Agreement. In addition, as used in this Note, the following terms
will have the following meanings:
Business Ca means any day other than Saturday, Sunday, or public holiday or the
equivalent for banks generally under the laws of California. Whenever any payment
to be made under this Note is stated to be due on a day other than a Business Day,
that payment may be made on the next succeeding Business Day.
This Note, and any extensions or renewals hereof, is secured by a Dead of Trust,
Security Agreement and Fixture Filing with Assignment of Rents on real estate in Fresno
County, California, that provides for acceleration upon stated events, dated as of the same
data as this Note, and executed In favor of and delivered to the Lender ('Deed of Trust').
insured as a 3nd posifion lien on the Property.
Time is of the essence. It will be a default under this Note 4 Borrower defaults
under the .Agreement, any other Loan Document w@h Ne Lender, or this Note and such
default continues beyond the notice and pore period as provided in such documents. In me
event of a default by Borrower with respect to any sum payable under this Note and the
failure to cure such default within ten (10) days, the Borrower shall pay a late charge equal to
the lesser of 2% of any outstanding payment or the maximum amount allowed by law. All
payments collected shall be applied first to payment of any costs, fees or other charges due
r=Q`rma3 Page 2 of
under this Note or any other Loan Documents then to Ne interest and then to principal
balance. On the occurrence of an uncured default or on the occurrence of any other event
that under the terms of the Loan Documents give rise to the right to accelerate the balance of
the indebtedness, then, at the option of Lender, this Note or any notes or other instruments
that may be taken in renewal or extension of all or any part of the indebtedness will
immediately become due Without any further presentment, demand, protest, or notice of any
kind Lender acknowledges and agrees that it shall send notice of any default hereunder to
the managing members of Borrower and shall accept any cure offered by such limited
partners on the same basis as it would accept a cure from Borrower.
The indebtedness evidenced by this Note may, at the option of the Borrower, be
prepaid in whole or in part without penalty. Lender will apply all the prepayments first to the
payment of any costs, fees, late charges, or other charges due under this Nate or under any
of the other Loan Documents and then to the interest and then to the principal balance.
All Loan payments are payable in lawful money of the United States of America at
any place that Lender or the legal holders of this Note may, from time to time, in writing
designate.
Borrower agrees to pay all costs Including, without limitation, reasonable anomey
fees, incurred by the holder of this Note in the successful enforcement of payment, whether
or not suit is filed, and Including, without limitation, all costs, reasonable attorney fees, and
expenses incurred by the holder of this Note in connection with any bankruptcy,
reorganization, arrangement, or other similar proceedings involving the Borrower that in any
way affects the exercise by the holder of this Note of its rights and remedies under this Note.
All costs incurred by the holder of this Note in any action undertaken to obtain relief from the
stay of bankruptcy statutes are specifically included in those costs and expenses to be paid
by Borrower.
Any notice, demand, or request relining to any matter set forth herein shall be in
writing and shall be given as provided in the Agreement.
No delay or omission of Lender in exercising any night or power arising in
connection with any default will be construed as a waiver or as acquiescence, nor will any
single or partial exercise preclude any further exemise. Lender may waive any of the
conditions In this Note and no waiver will be deemed to he a waiver of Lender's rights under
this Note, but rather will be deemed to have been made in pursuance of this Note and not in
modification. No waiver of any default will be construed to be a waiver of or acquiescence in
or consent to any preceding or subsequent default.
The Deed of Trust provides as follows
Except as provided herein or in the Agreement. if the Trustor/Grantor shall sell,
convey or alienate said property, or any pad thereof. or any interest therein, or shall
W divested of his title or any interest therein in any manner or way, whether
voluntarily or involuntarily, without the written consent of the Beneficiary, being first
had and obtained. Beneficiary shall have the right, at its option, except as prohibited
by law; to declare any indebtedness or obligations secured hereby, irrespective of
Nrez9nn52513 Page 3 of 5
the maturity date specified in any Note evidencing Me same, immediately due and
payable.
Lender may transfer this Note and deliver to the transferee all or any part of the
Property then held by it as security under this Note, and the transferee will then become
vested with all the powers and rights given to Lender; and Lender will then be forever relieved
from any liability or responsibility in the matter, but Lender will retain all rights and powers
given by this Note with respect to Property not transferred.
If any one or more of the provisions in this Note Is held to be invalid, illegal, or
unenforceable in any respect by a court of competent jurisdiction, the validity, legality, and
enforceability of the remaining provisions will not in any way be affected or impaired. This
Note will be binding on and inure to the benefit of Borrower, Lender, and than respective
successors and assigns.
Borrower and Lender agree that this Note will be deemed to have been made under
and will be governed by the laws of California In all respects, including matters of
construction, validity, and Pert000ance, and that none of its terms or provisions may be
waived, altered, modified, or amended except as Lender and Borrower may consent to in a
witting duly signed by Borrower or Lender or its authorized agents.
This Note shall be nonrecourse to Borrower and all its constituent members and may
be prepaid at any time without penalty. Nether Borrower nor any of its members shall have
any personal liability for repayment of the Loan. The sole recourse of the Lender under the
Loan Documents for repayment of Ne Loan shall be the exercise of its rights against the
Property pursuant to the Deed of Trust and Lender shall have no right to seek or recover any
deficiency amount from Borrower or any partner of Borrower.
I/
%839 M25v3 Page 4of5
IN WITNESS WHEREOF, Borrower has mused this Promissory Note to be executed
as of the date and year first above written.
HOTEL FREZNO, LLC,
a California limited liability company
By
Mehd n Romi Bagh acutive Director
(Alaanotarycecatmenp
Date: 5 1 I
Xqi®
ecazen2:szs.3 Pape5 05
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
Stere of California
Co mty of J
On beflare me,
personally appears �fEHiPiJA/ A N% ,
who moved to me on the basis of satisfactory evidence to ba rhe p xinabbs) whose name(s) 'a4ao- suhuribed to
the within ina¢ument and acknowhidgm! m me that Wyevo'lhe>• eboecut rf the same m hi4hevsh eu manothied
capacity(es), and Char by hiV%w4*eir sigoatute(* on the intonational the petaon*,, or the entity upon behalfof
which the Pm aMbbai acted, eaeculed the Inmaumeot.
1 certify Imder PENALTY OF PER.IIIRY ondw Ne laws Of the State of California Nat Ne foregoing paegsph
u we and correct
COMM. !19859) z
WIT[JES hod official seal. xu,o IMaa
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La "Pea (Nabiv
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ADDITIONAL OPTIONAL MFORMARON
IN51 UMDNEFO0.COMPLEN'G][HIEFORM
DESCRStION OF IM Alt`Eyf p DOCUMINf
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RECORDING REOUESTED BY
Chicago Title. Company
AND WHEN RECORDED MAIL TO
City of Fresno
City Clerk
2600 Fresno Street, Room 2133
Fresno, CA 83]21-3603
File No.:
A.P.N.: 48¢-21_191,
DEED OF TRUST AND ASSIGNMENT OF RENTS
THIS DEED OF TRUST, made this ,2011, by
TRUSTOR: Hotel FI.I.C.California [linked I bIIIN company
Whose address is 12,111 Bperive vPlaca Fresno CA 93721
TRUSTEE: Chlcal TAIa Company, a platforms conserallon
and BENEFICIARY: Cor ofF Cafa municipal possession
Witnesseth. That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to TRUSTEE IN TRUST.
WITH POWER OF SALE, that property In the City of Fresno, Fresno County, Stere of California, described as:
See Exhibit "A" attached hereto.
TOGETHER WITH the rents, issues, and profits thereof SUBJECT, HOWEVER. Is the right. Power and
authority given to and conkrretl upon Beneficiary by paragraph 10 of the provisions, incorporated by
reference, to cull and apply such rents, Issues and Mass,
FOR THE PURPOSE OF SECURING
1. Performance of each agreement of Tmsror incorporated by reference or wmainM herein including without
limitation the HOME Agreement entered between Hole) Fresno, LLC, a Celflorl Tried liability company and
Senafinary datetl 4Y1]I"2011
2. Payment of the Indebtedness evidenced by a Promissory Note of even data herewith, and any extension or
renewal therecL In the Mndpal sum of $059,898 b City of Fresno a domed by Truslor In favor of BaneflcUry
or order.
3. Payment of such former sums as the than record Owner of saved popeM hereafter may borrow ham
Beneficiary, when evidenced by another Note (or Notes) reciting it is so secured.
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:
(1) To keep said property in good duration and repair, not to remove or demafsb any building thereon, to
complete or restore promptly and In good and workmanlike manner any building which may W consbuded,
damaged ar destroyed thereon and to pay when due all claims for labor performed and materials furnished
therefore, to comply wim all laws affecting and property or requiring any alterahons or improvements to be
made thereon', not to commit or permit waste thereof Trot to coma suffer or permit any act upon said
property In vl0labon of law', to cultivate, whose. bodies fumigate, prune and do all other door which from the
oWg12mi)rl Pau Iof4
character or use of said property may be reasonably necessary. Me spedfio enumerations herain net
excluding the general,
(1) To provide, maintain and deliver M Mendel fire insurance cashed, Wend with loss payable to
Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary
upon Seawall secured hereby and In such Omer as Benefol may determine, or at option of
Beneficiary the errors amount so collected OF any part thereof may be released to Trader. Such application or
release shell not cure or waive any default or notice Of default hereunder or irwaklate any ad done pursuant
to such norm
(3) To appear in and defend any action in pacesding Proarig to affect the secumy hereof or Me tights or
powers of Benet ery or Tastes', and M pay all costa and expenses, including cost of evdence of the and
atbmeys' fees in a reasonable sum, in any such action or proceeding In which botanical or Taffiee may
appear, and in any suit brought by Benefidary to forepkde this Baad Wyman.
(4) To payW least ten days before delirguendy all taxes and mammoths; affecting mid property, including
waremosents on appurtenant water stack, when due, all encume arms, charges arts liens, with Interest, on
sold properly or any part thereof, wmpn appear to ra poor or supercar hereto; all toad, fees and expenses of
bus Tri
Should TmWortdll to make any payment or M do any ad as herein provided, Nen Beneficiary or TmWtt, bid
whhout Obligation so to do and adhout notice to or demand upon Taadm and without releasing Tai Man
any obligation hereof, maymake Or do the same In soon manner and W such extent as either may deem
necessary to protect the security hereof, Befled'i Or Thaw¢ being authorbred d after upon mid papery
far such W rposes', appear In and defend any action Or produreffinit purpororg te aped the security hereat or
the ngh a or powers of Benefldary or Trade: Pay, purchase, contest or compamwse any encumpranre,
charge Or Iran which In Me fragment of either appears te ba poor or superior hereto, and, in exerdsing any
such powers, pay necessary expenses, empby counsel and pay he normaaole lees.
(5) To pay immediately and aftOW demand al, sums m expanded by Beneficiary or Tai with Interest
tram data W expenditure at the rate calked W In Me none sawal hereby, or at Me amount allowed by year at
date of expenditure, whichever is greater, and to pay drany statement provided far by law Inetted aide data
hereof regaining Me oblgaoon seared hereby any amount demanded by the Beneficiary not to exceed Me
maximum Wowed by law at the Goa when said SbMnem Is demanded
(6) Than any award of damages In connection wNr any condensation for public Me of or Injury W each
properly or any pan thereof is hereby assigned! and shall m pad to Beneficiary who may apply or release
such moneys wall by him In this same manner and with to same efi¢I as above proi for disposltlon
Of proceeds of fire or other Insurance.
(7) That by accepting payment of any sum severed hereby after its due add, Berrefidary does not ¢sive his
right of ser te acquire prompt payment when due of all oder sums so secured or to dedare default M (allure
so to pay.
(8) That at any Some or from time to floe, a1theN,ledflty thandom and without nohw, upon Smash request W
Benefidary and pretension of this Beed of Trost and said nate for endowment and without standing the
persona, Gablpry of any person for payment of Me indebtedness secured hereby, Twaft may: rewnvey any
PA of said properly', dr aent M the making Of any "par pan thereop loin In granting any easement thereon
orlon in any extenwar agreement crony agaement aubydrmfing the wan or charge hereof.
(9) That upon women request W Benefrcory sating that all sums Seared hereby have been pad, and upon
surrender W this Bead of Trust and said Note M Tai far wassail and idea n and upon payment of
Id fees. Trustee shall reconvey, without warranty, Me property then held hereunder. The cachets In such
reconveyance of any nowees or fads shall ba mnduaire proof of the WMNlnees thereof. The Grantee a
such wenvayan a may bB described as 'Me parotin Or pemams legally ended theri Frva years after
issuance of such fall ream9yance, Trustee may destroy teak Nn and this pa rki of Train (unless directed in
such request to renin Mem.)
pp) That as spawner security Truster hereby gives M and centers upon Beneficiary Me mint, power and
authority, during the mnonuance of Mex Trusts, to celery the rens, issues and profit of sad papvty,
werving unto Trustor Me right Par to any default by Taster in payment of any Indebtedness meshed
Richribmi fare 2 of
hereby or in N dor 8tl of any agreement hereunder, to corks and retain such rents, woes and profits as
b
they psyedle. Upon any such default Benefivary may at any fire spout rubda, sMer In
person, by agent, or by a receiver to be appointed by a mutt, and without regal M Me adequacy of any
security for Me Indebtedness hereby secured, enter upon and rake pammsbn OF said property or any part
thereof, in his own name sue for or otherwise collect such ren%, issues and profile, Including those pen due
and unpaid. and apply the same, lase cords and expenses of operation and collection Including reasonable
atromaysfees, upon any indebtedness secured hereby, and In such oder as Bradficiary may determine.
The searing upon and faking possession of said propend. the correction of such rents, issues and profits aid
the application Mereof as depressed, shall not cure or weirs any do%ult or needs of dekuft hereuntler or
mvalidate any act pursuant to such notice.
(11) That upon defaud by Trustor in payment of any Indeblednms secured hereby or in performance a any
agreement hereunder after expiration of all applicable cure periods, Beneficiary may declare all sums se gmed
hereby immediately due and payable by delivery M Trustee of wherein declare4on of default and demand for
sale and of well notice of de%Yd and of election to cause M be sold said property, which notice Trustee
shall rause to be filed for reberd. Beneficiary also shall deposit whir Trustee this peed of Trust, said Nete($)
and all documents evidencing expendaurw severed hereby,
Mer Me lapse of such pee as may Men be required by law RUIPWIrg Me remdelion of said MUM of default
and notice of sale having been given as than mqulred by sew, Trustee, without demand on Trustor, shall sell
said properly at the time and place fixed by it In said notice of sere, eN r as a whole or in separate parce%.
and In such oder as It may deftem,Me, at public auction b Me highest bidder for cash in lawful money a Me
United Stores, payable at lime M sale.
True" may dwsipones sere ot all or any portion of said pindearty by public announcement s such time and
place of sand, and from time to are thereafter may puscene such mule by public announcement at Me time
fixed. by the preceding postponement, Trustee shel delimrto such pumhaser Its dead wnveying me pmpeny
sold but whimut any covenantor warranty. express or implled. The reclk% in such deed ot made% or
facts shall be conclusive pros of Me truthfulness thereof My person, induding Truster Troubled, or
Beneficiary as hereinafter defined, may purchase at such make
After deducing all reasonable cos%, fees and expenses Or Trustee and of M% Trus, including best of
evidence of the in connection wind sale, Thomas adult apply Me proceeds of sok M payment of all sums
expanded under the teme harm[ not Men repaN, wdh accrued interest al Me amount allowed by kw in effect
at the data ml all other sums Men secured hereby; and Me remainder, d any, M Me persons or permns
IegallyentNed thereto.
(12) Beeefic ary, or any suwmsor in Overal i0 of any Indebtedness dewretl hereby may, hoe fire M and,
by 'Insbummt M writing committees a successor Or sucraesers to any Teske named human W acting
hereuntler, which instrument. executed by Me BenGlclary and duly acknowledged and recoiled In Me Office
of Me recorder of the county or counties dmere sad propend a slMsed, shall be poen a proof of pro
subslMNon of such successor Trustee or Trustees, who shall, wel l conveyance ham Me Trustee
prummuca for, succere M all Xa its sell rights, wirers and duties, must contain The name of Me original
Tustor, Trustee and Beneficiary hereunder, Me dirk and page where this Daed of Tes is reduced and Me
name and address of Me new Trustee.
(is) That cors Deed of Trust applies to, ns en
s to me befit of and rands all parries harem, Meir heirs.
Indeed, devisees, administrative. seaculds, succaemrs and merged. The him Bemflckry shall mean Me
owner and holder , Including Pledgee, of the NOW mwred hereby, whether or not named as Beneficiary
herein. In this DeM of Trus[, whenever the context do required, the maseuline gander Includes Me feminine
andror neuRq and the singular number include Me plural.
(14) That Trustee accepts MIs Treat when this Beed a Trust, duly executed and srknawledgm, is made a
pubic record as provided by law. Trustee a not abfgeed M Mal any party hereto of pending sale under any
atter Dead of Trust or of any action or preceeding In which Tesar, Beneficiary ar Trustee shall be party
unless brought by Trustee.
(15) The Loan is a nonrecourse Obligation of Terror. Nadhm Trustor nor any of Its general and limited
farmers shall have any personal liability for repayment a Me Wan. The sold recourse of the Lender under
Me Loan Mcumees Mr repayment otthe lean r H � Me exarc of da ngh%against Me Property.
wooviufu.) Pam3m4
(16) The withdrawal, removal and/or replacement of (where Bpplkabw) a member W Theater pure pant m Me
halms Of artcles of Organbabon andbr operating ajrapmenl due 0 a vura(gn by a member m the wmis
thereof. or a voluntary wtrdrewal by a member, antl any Ideal of interests in Me same, Mall not con MuW
a del under any M Me Loan Documents, and any such Were Man not accewmle Me maWlRy of Me
Loan
(17) Prior m declaring or J log any remedy parroted under Loan Documents, (where applicable) Traders
embers shall have an additional period of not lass Man Mirtm re su
y (30) days cuch alwged default.
NONdthslanding Me foregoing. In the rase of a default Mat cannot with haMesm bra dllyMca be remedied or
cured wEMn thirty (30) days, Tmstor's members shall have such additional time as reasonably necessary to
remedy or cure such defeull, but in no event move Man ninety (g0) days from the asocial of Me notal thirty
(30) day Mercer above, and d Me Trustors members reasonably believe Mat in order M cum such deal
lL
Torsi members must am" " Tmsmr6 managing mambH(s) M order to Core such dewulL Truebr'6
members shall have and additional thirty (30) days following the at soMe data W sum removal to cum such
del
(19) Benimal Mall give Me Truster's members notice of any final under Me Loan Documents at Me
Wheal address
In accordance with Section 2gam Civil Code, request Is railer made that a ropy fe airy Notice of Default
and a copy o1 any Notice of addr be mailed to Tmsmr at Tmsmra adtlrett M1areinbemre sol wM, or N none
shown.mTmsmr at properly address.
NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE WILL BE SENT ONLY
TO THE ADDRESS CONTMNED IN THIS RECORDED REQUEST. IF YOUR ADDRESS CHANGES, A
NEW REQUEST MUST BE RECORDED.
Excepl as provided herein or in Me HOME Agreement, tithe Tmamr/Grenmr shall sell, convey or allenele raid
properly, orany part Maol, or any interest eis Me w in, or shall be covered of hany Interest Memin in
any manner or way, whether volunwnly or involunlanty, wdlmut Me women coneant of the Beneficiary being
first had and obtained. Somebody shall have Me night M its option, Moral as prohibited by law, m declare
any indebtedness or obligations secured hereby, Irrespective of Me maturity date spacfied in any Nate
evidencing Me same, immediately due and payable.
Signature of Trusmrm)
Its
ALL. SIGNATURES MUST BE NOTARIZED
5600012654113 Pre, <of4
HUD RIDER
TO
DEED OF TRUST
THIS RIDER is attached to and made a part of the foregoing notes) (herein, the "Junior
Note) and mortgages) or deed(s) of trust (herein, the "Junior Mortgage") between Hotel
Frezno. LLC, referred to herein as the "Mortgagor," and the City of Fresno, referred to herein
as the `Junior Lender (collectively, the "Junior Loan Documents), The terms and conditions
of the Rider supersede the farms of the Junior Loan Documents, and, should there be any
conflict or Inconsistency between this Rider and the Junior Loan Documents, the terns and
conditions of this Rider shall prevail. By acceptance of delivery and recordation of the Junior
Loan Documents, the Junior Lender agrees to the following provisions. By execution of the
Junior Loan Documents, the Mortgagor agrees to the Fallowing Provisions:
1. The Junior Loan Documents are specifically subordinate to the certain note and
mortgagradeed of trust between Me Mortgagor and U.S. Department of Housing and
Urban Development Section 220 Program (herein, the "Senior Mortgagee") dated
'011 and recordetl --2017 in the real property records of Fresno
County.
2, The Junior Note may not mature, and may not beer a maturity date, prior to the data
on which Me Senior Mortgage matures. The tern of the Junior Mortgage may be
extended if the Junior Note matures, there are no surplus cash funds available for
repayment and Me Senior Mortgage has not been refired in full or HUD grants a
deferment of amortizations or forbearance that results in an extended maturity of the
Senior mortgage.
3. The Junior Mortgage may be assumed when a sale or transfer of the physical assets
occurs under the following conditions:
a. Not more than 70 percent of the net proceeds of the sale or transfer is
applied to the reduction of the loan.
b. For these instructions, net proceeds are the funds available to the original
mortgagor after:
i. Correcting any monetary or covenant default on the firet
mortgage, and
ii. Making required contributions to any reserve funds and needed
improvements to the property as evidenced by HUD's annual
inspection reports.
Nov l of
4. If HUD approves a sale of the project pursuant to HUD guidelines for transfers to
assets, then Junior Mortgagee will agree to such transfer of the ownership of the
project.
5. The Junior Note and Junior Mortgage automatically terminate g HUD acquires title to
the project by a deed in lieu of foreclosure.
6. All work performed with the proceeds of the Junior Mortgage must be cost cerfified
and must confirm will Davis -Bacon requirements.
7. The Junior Mortgage is subject to and subordinate to Me Senior Mortgage, the HUD
Regulatory Agreement between HUD and the Mortgagor and the Building Loan
Agreement between the Mortgagor and the Senior Mortgagee.
e. Proceeds of the Junior Loan may only be used to cover allowable project costs or an
anticipated operating shortfall.
9. Payment Only From Surplus Cash. As long as the Secretary of Housing and Urban
Development, or his/her successors or assigns, is the insurer or holder of the Senior
Mortgage, any payments due from project income under the Junior Loan Documents,
or any prepayments made, shall be payable only form surplus cash of the project, as
the term is defined in Me Regulatory Agreement dated -201 1, between the
Secretary and the Mortgagor, and subject to the availability of such surplus cash in
accordance with the provision of said Regulatory Agreement. The restriction on
payment imposed by this paragraph shall not excuse any default caused by the failure
of Me maker to pay the indebtedness evidence by Me Junior Note.
10.Modgagor has obtained Me prior written consent of Me Senior Mortgagee to the
existence of the Junior Loan.
11. To the extent that the Junior Note provides for Me payment of principal and Interest,
such principal and interest shall be due and payable on the maturity date of the Senor
Mortgage, provided that H Me Senior Mortgage is prepaid in full, the holder of the
Junior Note, at Its; option and without notice, may declare the whole principal sum or
any balance thereof, together with interest thereon, immediately due and payable.
Interest due pursuant to the terms of the Junior Note that is not paid in accordance
therewith shall not create any default in the terms of Me Junior Note, but shall accrue
and be payable in full a the date of maturity of the Senior Mortgage.
Page 2 of 4
12.The Junior Note is non-negotiable and may not be sold, transferred, assigned, or
pledged by the Junior Mortgagee except with the prior written approval of HUD.
13. The Junior Mortgagee cues that the Junior Loan Documents represent a bona fide
transaction and that it fully understands all of the HUD's requirements for such
secondary financing, and that no prepayment of principal or interest shall be accepted
without evidence that the Federal Housing Commissioner has authorized such
prepayment. If an unauthorized prepayment is accepted, the funds shall be held by
the Junior Mortgagee in tmst for the project.
//
///
/11
Page 3 of 4
IN WITNESS WHEREOF, the Borrower and the CITY have each caused this Rider to be
executed by its duty authonzed officer and to be made effective on and as of the effective
date of the Agreement Documents.
City of Frresno,,a CalRomia municipal corporation
AL4
By: Mark Scoff, City Manage)
PtW@ notary CoMficaae of adrowletlgmentl
Dade ?--z-q-//
Hotel Fremo, a California limited liability company
By: N1 aa�P�-�
Mehran Romi Baghgeg�ecgrren DireRor
Innam notarycen�tcaae of adnmvi[dgmmfl
Title: 11AI3A1;g0Q Mt M e
Date: 9 A 111
rate 4 ofd *()Mf
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CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
Sum of Celifarmie
County of Zns
!1 /, ,p _
On FLQ/, T�/ before me.,/JeP/ iC/10�l.P.r ,
g A pp 3
personally appeared
who proved m me on the basis of satisfactory evidence m be the perso/n(e}• whose wnc(s) is/vs subscribed to
the within immummt and acknowledged to me that he/elnkhey executed the same in NA - IUem authorized
capaeity(i ), and Cher by the iBsdvmevtthe pvsav(g7, or the entity upon behalf of
which the person(da acted, executed the instrument.
I certify under PENALTY OF PEU Yunder Ne laws of the Smteof Calimmm that the foregoing peeg,nph
is true and correct.
/ YM YA
CO M. al ]9859) x
wlrNess my e andi offi seal. � BeMa na.. a�aei9 ;
rar.e9rMramn
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EXHIBIT "A" TO DEED OF TRUST
PROPERTY DESCRIPTION
APN: 456-214-01
Legal Description
Real Property in the City of Fresno, County of Fresno, State of CalBornis, described as
follows:
LOT 1,2,3,4,5 AND 6 I BLOCK 63 OF THE TOWN (NOW CITY) OF FRESNO, IN THE
CITY OF FRESNO, COUNTY OF FRESNO, STATE OF CALIFORNIA, ACCORDING TO
THE MAP THEREOF RECORDED JUNE 8, 1876, IN BOOK 1, PAGE 2 O MAPS,
RECORDS OF SAID COUNTY.
Page i of 1
EXHIBIT "H"
RECORDING REQUESTED DY ANO for Me benefit
of Me Cry of Fresno and h exempt from the
payment of a recording fee In aacoMenee with
Government Code Sections 6103 and 27383.
AND WHEN RECORDED MAL TO
CITY OF FRESNO
City Clark
2600 Fresno Street. Room 2133
Fresno, CA 93]21-3603
TUeOrdI Escrow No
DECLARATION OF RESTRICTIONS
THIS DECLARATION OF RESTRICTIONS, ('Declaration'), is executed as of this A
of , 2011 by Hotel Frezno. LLC, a California limited liability company
("Declarant") In favor of the City of Fresno, acting by and through its Development and
Resource Management Department, Housing and Community Development Division.
CITY").
WHEREAS, Declarent is the owner of the real estate in the county of Fresno, state of
California, consisting of APN. 466-214-01, which is more particularly descnbed in Exhibit
"A", attached hereto and made a part hereof (the "Property"); and
WHEREAS, Pursuant to a certain HOME Investment Partnerships Program
Agreement dated�. .d5 2011 incorporated herein ("HOME Agreement") and
instruments referenced therein, Declarent agrees to utilize; and CITY agrees to provide,
Certain HOME Program Funds from the United States Department of Housing and Urban
Development (HUD), to Declarant and Declarant agrees to preserve no less than six (6) of
the proposed seventy-two (72) Project Units as Very Low -Income (i. e., one Unit for
households earning fifty percent (50%) or below of the area median income for the Fresno
MSA) and Low -Income (i. e., five Units for households earning sixty-five percent (65%) or
below of the area median income for the Fresno MSA) (Collectively "Affordable Units"). The
six (6) Affordable Units shall be fixed studios, and one- and two-bedroom Units subject to
the terms and Conditions set forth in the HOME Agreement; and
WHEREAS, the HOME Program regulations promulgated by HUD, including without
limitation 24 CFR Section 92.252, and the HOME Agreement impose certain affordability
requirements upon Declarant -owned property, which affordability restrictions shall be
enforceable on the six (6) Affordable Units for a trity-five (65) year pence; and
WHEREAS, these restrictions are intended to bind Declarant and all purchasers and
Meir successors.
NOW THEREFORE. Declarant declares that the Property Is held and will be held,
transferred, encumbered, used, sold, conveyed and occupied subject to the covenants.
esexr120320 Pagel of
restrictions, and limitations set forth in this Declaration, all of which are declared and agreed
to be in furtherance of tha proposed Project. All of the restrictions, covenants and
limitations will run with the land and will be binding on all parties having or acquiring any
right, title or Interest in the Property or any part thereof, will inure to the benefit of the City,
and will be enforceable by it. Any purchaser under a contract of sale covering any right, title
or interest in any part of the Property, by accepting a dead or a contract of sale or
agreement of purchase, accepts the document subject to, and agrees to be bound by, any
and all restrictions, covenants. and limitations set forth in this Declaration commencing on
the date the Project Budget and Tenant information is entered into HUD's Integrated
Disbursement and Information System (IDIS), recorded as an administrative amendment to
this Agreement and continuing for fifty-five (55) years thereafter ('Affordability Period").
1. Declarations. Declarant hereby declares that the Affordable Units are and
shall be subject to the covenants and restrictions hereinafter set forth, all of which are
declared to be in furtherance of the Project and the HOME Agreement, and are established
and agreed upon for the purpose of enhancing and protecting the value of the Property and
in consideration for CITY entering into the HOME Agreement with Declarant.
2. Restrictions. The following covenants and restrictions on the use and
enjoyment of the Property shall be in addition to any other covenants and restrictions
affecting the Property, and all such covenants and restrictions are for the benefit and
protection of CITY, and shall run with the Property and be binding on any future owner's of
the Property and inure to the bent of and be enforceable by the CITY These covenants
and restrictions are as follows:
a. Declarant for itself and its successors) on title covenants and agrees
that from the date of recordation of the CITY's Certificate of Completion, until the expiration
of the Affordability Period it shall cause six (5) of Me Project Units to he used as fixed
Affordable Units. Declarant further agrees to file a recordable document setting forth the
Project Completion Dates) and the Affordability Period when determined by the CITY.
Unless otherwise provided in the HOME Agreement, the term Affordable Project Units shall
include, without limitation, compliance with the following requirements:
(i) Nondiscrimination. There shall be no discrimination against not
segregation of any person or group of persons on account of race, color, creed, religion,
sex, marital status, national origin, ancestry, or handicap in the sale, transfer, use,
occupancy, tenure, or enjoyment of any of the Property, nor shall Declarant or any person
claiming under the Dedarant, establish or permit any practice of discrimination or
segregation with reference to the selection, location, number, use or occupancy of owners
or vendees of the Project and/or Property.
00 Principal Residence. Each of the Affordable Unita within the
Project upon the Property shall be leased only to eligible Very Low- and LowIncome
households. who shall ocwpy the Affordable Units as their a principal residence. The
foregoing requirement that Me Property tenants occupy the Affordable Units as their
principal residence does not apply to persons, other than natural persons, who acquire the
Property or portion thereof by foreclosure or deed in lieu of foreclosure; or HUD qualified
entities that acquire Me Property or portion thereof, with the consent of the CITY.
fill) Income Reau'rements. A total of one (1) fixed Affordable Units
may be leased only to eligible households whose annual household income at the time of
initial occupancy is not greater than fitly percent (50%) (for Very Low Income Unit) and a
waxerxssszre Pages or5
total of five (5) fixed Affordable Units may be leased only to eligible households whose
annual household income at the time of initial occupancy is not greater than sixty-five
percent (65%) (for Low -Income Units) of the most recent annual median income calculated
and published by HUD for the Fresno Metropolitan Statistical Area applicable to such
household's size, and at an affordable rent consistent HOME Program regulations.
3. Enforcement cf Restrictions. Without waiver or limitation, the CITY shall be
entitled to injunctive or other equitable relief against any violation or attempted violation of
any Covenant and Restriction.
4. Acceptance and Ratifcepon. All present and future owners of the Property
and other persons claiming by, through, or under them shall be subject to and shall comply
with the Covenant and Restrictions. The acceptance of a deed of conveyance to the
Property shall constitute an agreement that the Covenant and Restrictions, as may be
amended or supplemented from tune to time, are accepted and ratifietl by such future
owners, tenant or occupant, and such Covenant and Restriction shall be a covenant
running with the land and shall bind any person having at any time any interest of estate in
the Property, all as though such Covenant and ResMction was recited and stipulated at
length in each and every dead, conveyance, mortgage or lease thereof.
Notwithstanding the foregoing, upon foreclosure by a lender or other transfer
in lieu of foreclosure, or assignment of an FHA -insured mortgage to HUD, the Affordability
Period shall be terminated if the foreclosure or other transfer in lieu of foreclosure or
assignment recognizes any contactual or legal rights of public agencies, nonprofit
sponsors, or others to take actions that would avoid the termination of low-income
affordability. However, the requirements with respect to Affordable Rental Units shall be
revived according to their original terms, if during the original Affordability Period, the owner
of record before the foreclosure or other transfer, or any entity that includes the former
owner or those with whom the former owner has or had formerly, family or business use
obtains an ownership interest in the Project or the Property, the Affordability Period shall be
revived according to its original terms.
5. Benefit. This Declaration shall inn with and bind the Property for a term
commencing on the date this Declaration is recorded in the Office of the Recorder of the
County of Fresno, state of Calfomia, and expiring upon the expiration of the Affordability
Period. The failure or delay at any fine of Me CRY or any other person entitled to enforce
this Declaration shall in no event be deemed a waiver of the same, or of Me right to enforce
the same at any time or from time to fine thereafter, or an estoppel against the enforcement
thereof.
6. Costs and Attorney's Fees. In any protesting arising because of failure of
Declarant or any future owner of the Property to comply with the Covenant and Restrictions
required by this Declaration, as may be amended from time to time, the CITY shall be
entitled to recover its costs and reasonable attorney's fees incurred in connection with the
successful enforcement of such default or failure.
]. Waiver. Neither Declarant nor any future owner of the Property may exempt
itself from liability for failure to compty with the Covenant and Restrictions required in this
Declaration, provided however, that upon the transfer of the Property, Me transferring
owner shall be released from liability hereunder, upon CITY's written consent of such
transfer, which consent shall not be unreasonably withheld, conditioned or delayed.
5691 Page 3 of 5
e, Severability. The invalidity of the Covenant and Restrictions or any other
covenant, restriction, condition, limitation, or other provision of this Declaration shall not
impair or affect in any manner the validity, enforceability, or effect of the rest of this
Declaration and each shall be enforceable to the greatest extent permitted by law.
g. Pronouns. Any reference to the masculine, feminine, or neuter gentler herein
shall, unless the context clearly requires the contrary, be deemed to refer to and include all
genders. Words in the singular shall Include and refer to the plural, and vice versa, as
appropriate.
10. Interpretation. The captions and titles of the various articles, sections,
subsections, paragraphs, and subparagraphs of this Declaration are inserted herein for
ease and convenience of reference only and shall not be used as an aid in interpreting or
construing this Declaration or any provision hereof.
11. Amendment. No amendment or modification of this Declaration shall be
permitted without the prior written consent of the CITY and Declarant.
12. Recordation. Declarant acknowledges that this Declaration will be film of
record in the O five of the Recorder of county of Fresno, State of California.
13. Capitalized Terms. All capitalized terms used in this Declaration, unless
otherwise defined herein, shall have the meanings assigned to such terms in the
Agreement.
14. Headings. The headings of the articles, sections, and paragraphs used in this
Agreement are for convenience only and shall not be read or construed to affect the
meaning or construction of any provision.
15. Neither Declarant nor any of its members shall have any personal liability for
the obligations under this Declaration. The sole recourse of the City shall be the exercise of
is rights against the Property pursuant to the Dead of Trust and Lender shall have no right
to seek or recover any deficiency amount from Dedarant or any member of Declarant.
11
111
66929`12a KA Page 4 of 5
IN WITNESS WHEREOF, Declarant has executed this Declaration of Restrictions on
the date first written above.
DECLARANT.
HOTEL FREZNO, LLC
a California limited liability pp
gcom/any
MA &Baghg tractor
(Aaeoh notary cerhfirale of ac easmenm
5eaeet1zas3213 Paga 5ate
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT
Some of Cahifomia
County of
On , i I Bodine me,
KINeIe'm�w..m er�mae )
persowllY appeared AlYv- O'-//
who proved to me on to basis ofsatisfacmry evidence to be to peromort whose rleme(s) islwsubsrnbed to
the within huvummt and acknowledged to me Nat heAddeedhry cemented the sense io his/4eddI authorized
capacayi4eI end Bar by Ius4rMlhnr signsmre(a) an the instrument the persorsK orthe amity upon behelfof
which rhe perrOnKazted, execuod the NamlmenL
I certify under PENALTY OF PERRIRY oder Ne laws ofthe Smte of Cahiforno that Are foregoing paragraph
is true and cAtrect.
WITNE$$ Y,and an ffiial Seal. COMM eI)9&59) z
g IHn)RM[. GIIIYMr o
On n. Et� D�AIt
Sdvenee NN ��ll Mary9d1
ADDITIONAL OPTIONAL INFORMATION
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EXHIBIT "A" TO DECLARATION OF RESTRICTIONS
PROPERTY DESCRIPTION
APN: 466-214-01
Legal Description
Real Property in the City of Fresno, County of Fresno, State of California, described as
follows:
LOT 1,2,3,4,5 AND 61N BLOCK 63 OF THE TOWN (NOW CITY) OF FRESNO, IN THE
CITY OF FRESNO, COUNTY OF FRESNO, STATE OF CALIFORNIA, ACCORDING TO
THE MA.P THEREOF RECORDED JUNE 8, 18]6, IN BOOK 1, PAGE 2 OF MAPS,
RECORDS OF SAID COUNTY.
46
��pp���1n�
FRESNK/ REPORT 1'0 THE CITY COUNCIL AGENDA ITEM NO. 1 : 3Owr *
COUNCILMEETING eagimsunyor
September 29, 2011 _ AseenvaD BY
FROM: CRAIG SCHARTON.
Development and Re
CLAUDIACAZARES Owasso Menag
Housing and Community Develspm vision
CORRINA NUNEZ, Project Manag
Housing and Community Devviopml n sion
CONSIDER AND ADOPT THE ENVIRONMENTAL FINDING OF A MITIGATED NEGATIVE
DECLARATION PREPARED FOR ENVIRONMENTAL ASSESSMENT NO, EA -11412, AND
APPROVE A 9859,868 HOME INVESTMENT PARTNERSHIPS PROGRAM
AGREEMENT WITH HOTEL FREZNO, LLC, FOR REHABILITATION OF THE
FORMER HOTEL FRESNO, LOCATED AT 1241-1263 BROADWAY PLAZA, INTO A
72 -UNIT MIXED-USE MIXED -INCOME DEVELOPMENT
recommends that the City O uncil.
1) Consider and adopt the envvonmental finding of a Celdornw Environmental Quality Act
(CEQA) Mitigated Negative Declaration prepared for Environmental Assessment No. EA -
11 -012, and
2) Approve a $859,838 HOME Investment Partnerships (HOME) Program Agreement,
substantially in the tarn attached as Exhibit -W — HOME Agreement) with Hotel
Freznp, LLC, (Developer) for rehabilitation of the farmer Hotel Fresno, located 1241-
1233 Broadway Plaza, APN: 466-214-01 (please see Exhibit 'C- — Project Location
Map), into a 72unitmixed use mixed -income development, subject to prior approval
as to form by the City Attorney's Office.
The Hotel Fresno rehabilitation pmjnM cost is estimated at $16.5 million, of which $859,868 in HOME Prc
rune Is requested to help finance six affordable rental units_ If approved as recommended HOME Pro
funds will be provided to the Developer in the forth of a 55 -year loan at 1% interest, deferred fc
years, with the principal and interest repaid from 20% of the project's annual residual receipts
estimated $11 million in U.S. Department of Housing and Urban Development (HUD) Section 220 Pic
funds and $1.9 million in Redevelopment Agency funs are also expected to finance the rehabilitation
with the balance of financing to come from Most spumes. The esfimated completion date cf the rebabili
will be known once HUD approves the 220 Program loan. Once completed, Hotel Fresno will consist
affordable rental units. 19 moderate income units, 47 market rete units, and approximately 19.508 squan
of commerclallretail space on the ground hour. Disbursement of HOME funds to the Developer x
contingent upon secured financing for Ne balance of the project cost.
�� e
REPORT TO COUNCIL
APPROVAL OFA HOME AGREEMENT WITH HOTEL FREZNO. LLC FOR REHABIUTATION OFHOTEL
FRESNO
SePlember29 2011
Page 2 off!
The development team is led by, Mehron Rami Baghgegian, the majority shareholder of Hotel Frei LLC.
Mr. Baghgegian is a farmer restaurateur that began rehabilitating historic buildings in 1984 when he designed
and renovated his own restaurant located in Old Town Pasadena. Since 1996, Mr. Baghgegian has purchased
and rehabilitated three historic buildings incAuding the former Hotel Virginia located an Kern Street in downtown
Fresno. The Developer is currently rehabilitating the former Mayflower Apartments located at 1417 Broadway,
into an 18 -unit loft complex. During a visit to Fresno, Mr. Baghgegian and his partners though the Hotel would
make an Ideal project and on July 23, 2007, the partnership purchased the historic Hotel Fresno building for
$1,05,000, cash.
The. Hotel was designed by architect Edward T. Foulkes and constructed In 1912, making it the oldest
hotel structure in Fresno. The Hotel, which is listed on the City's Register of Historic Resources and is
eligible for the National Register of Historic Places, is a seven -story brick structure designed in a
classical revival style with comics stone work lining the eaves. Over the past 20 years. there have been
various owners, all which have allempted to restore the long-time vacant and dilapidated building.
However, the cost to bring the structure back to its original style proved financially infeasible and the
proposed restoration efforts never began. In March 2005, McCandless & Associates Architects, Inc.
completed a feasibility study for a proposed restoration project and estimated that restoring the structure
to its original historical grandeur, would coat an estimated $40 million.
The Developer's proposed $16.5 million rehabilitation budget Ia significantly less than Mat of the McCandless'
estimate because the developer is proposing to maintain only Ma historic aspects of the exterior and use
contemporary materials throughout the interior. This rehabilitation method is far less expensive than a
complete intenerle#erim historic innovation. The same rehabllitatlon method was used on the former Hotel
Virginia, which Is now fully occupied with once tenants and serves as one of the most successful historic
preservation and revitalization projects in recent years. This is also the same method the Developer is using
on the rehabilitation of the former Mayflower Apartments which is near completion. In abortion, the Developer
Intends to rehabilitate the Hotel using the Rehabilitation Protocol of the Secretary of the dntenor's Standards for
the Treatment of Historic Properties, b the fullest eters Possible. On May 19, 2008, the Histone Preservation
Commission reviewed the developers proposed rehabilitation plans and unanimously determined them to be
consistent with the Rehabilitation Treatment of Protocol of the Souetary, of Interior s Standards.
On April 19, 2010, the City received from Ma Developer, a HOME Program funding request In the amount of
$859,668 to help finance six affordable rental units wiMln dxs limjed Also, in addition to the Developer s cash
investment, the Developer has invested owner equity to help finance the project. Plans for rehabilitation of the
Hotel consists of a mixed-use mixed -income development with six affordable units. 19 moderateJncome units.
47 market rate units, and 19,508 square feel of commerciagretail space on the ground floor. The affordable
units will range in size from 661 square feet to 992 square feet with the rents ranging from $536 to $816 per
unit, depending on the location within the building The project residential cost Par square foot Is
estimated at $216.12 and the commercial cost is estimated at $27.66 per square foot The total
development cost per grass square foot is $176.62.
Pre -development of the proposed rehabilitation activities are approximately 95% complete. To date, rho
Developer has completed the preliminary design of the project, environmental assessments, hard constm tion
cost study, asbestos abatement, interior gutting of ifre entire structure, and has secured $1.9 mllllon In
Redevelopment Agency funds. Mr. Baghgegian, of the development team, is also working with Johnson
APPRUVAL or A HOME AGREEMENT WITH HOTEL FREZNO. LLC FOR REHABILITATION OF HOTEL
FRESNO
Seplember29, 2011
Capital, Inc. to prepare the HUD 220 Program (also known as the Multifamily Accelerated Processing
Program) applications for HUD funtling.
HUD'a 220 Program is expeced to fnance an estimated $11 million M the proposed $16.5 million rehabilitation
coat (please we Exhibit "A" — Project Cost Infor arminlProjec Sources and Uses of Funds). In antidpation d
funding the project HUD's appraiser, Duff Is Phelps, LLC, completed a May 4. 2010 report that determined the
Sales Comparisons Approach - As Completed and As Stabilized, market valuation to be $14.5 million, which
was sufficient to request the $11 million in Section 220 Program loan funds. HUD's Section 220 Program is a
federally -insured loan program used for the rehabilitation of housing in urban renewal areas, such as Fresno,
n which major revital'uation efforts have been undertaken by the local junsdicion. The 220 loan is athree
stage application process. Each application takes approximately 30 days to prepare. After submittal, HUD has
60 days to complete Is review, provided there are no additional questions or Outstanding requests for
information. The first application was reviewed by HUD on August 31, 2011, and was well received as a viable
nO Program project The 220 Program does not impose rent anmor affordability restrictions on the units;
however, it tices require the payment of a Davis -Bacon proved wage. Once HUD Informs Johnson Capital of
the loan approval, Johnson Capital, Inc. will use its funds to dose the ban, subsequently issue Ginnie Mae
securities against the loan with a HUD guarentee, and then service the loan thereafter.
This major rehabilitation project will be the City's fired 220 Program funded project and the first mixed-use
mixed -income project in Ne core downtown business area. Since downtown housing Is still in its infancy and
there is not enough comparable information by which to measure the Proper a rents and commercial space,
Johnson Capital will be requesting two additional market studies from two different consultants. All three
studies will be combined to provide more accurate information with regard to occupancy, construction line Item
costs, and demand for commercial space. Based on the outcome of the additional market studies, 4 may
became necessary to adjust the proposed rents and budget lire deme.
Once completed, the project will serve as a successful adaptive re -use of a long-time dilapidated building and
will assist the City in meeting its affordable housing goals as identified in the Housing Element of the 2025
General Plan, the 2010-2014 Consolidated Plan, and the HOME Program funding pdodties for housing
development. Rehabilitation Of the Hotel will also make a positive impact toward Ne City's Fulton Mall
revitalization efforts for the Central Downtown area by offering quality, sustainable, mixed -income housing.
The City will also benefit from the six affordable units within the project that will arty 55 -Year affordability
covenants
ENVIRONMENTAL FINDING
In anticipation of the funding and the subsequent rehabilitation of the historic Hotel Fresno, a Nation
Environmental Policy Act assessment was completed on June 29. 2011 and resulted in a Fining of Nr
Significant Impact. The City received authorization to use grant funds from HUD on August 10, 2011.
Staff also prepared an environmental assessment for this project In accordance with the requirements a
the CEPA Guidelines (please see Exhibit D - EA -11-012: Mdpated Negative Declaration). The Initial Mud,
resulted in staff concluding that a finding of a Mitigated Negative Declaration ('MND") was appropriah
since the proposed project has been determined to not be fully within the scope of Master Environments
Impact Report No. 101301 SCH No, 20010]109] prepared for the 2025 Fresno General Plan ("MEIR'
and Mitigated Negative Declaration No. A-09-02/SCH No. 2009051016 ("Air Quality MND"). With al
applicable mitigation measures of the MEIR applied to the project together with project specific mitigation
measures. impacts have been reduced to less than significant, and the project will not cause significan
adverse cumulative impacts, growth inducing impacts and irreversible significant effects beyond thosr
identified by MEIR and the Air Quality AND. No substantial changes have occurred with respect to In
REPORT TO COUNCIL
APPROVAL OF A HOME AGREEMENT WITH HOTEL FREZNO, LLC FOR REHABILITATION OF HOTEL
FRESNO
September29, 2011
Page 4 0/4
circumstances under which the MEIR was certified and that no new information, which was not known
and could not have been known at the time that the MEIR was certified as complete and the Air Quality
MND was adopted, has become available. Therefore, based on the attached environmental assessment
and the list of identified mitigation measures, staff recommends the City Council to find that the project
will not have a significant impact on the environment and that the filing of a MND Is appropriate in
accordance with the provisions of CEOA Section 21157.5(a)(2) and CEDA Guidelines Section
15178(6)(1) and (2). A Notice of Intent to Adopt the Mitigated Negative Declaration was noticed and
published on August 19, 2011, with one comment recelved within the 20 -day comment period.
The Housing and Community Development Commission considered and recommended this Rem for soon
an August 24, 2011.
FISCAL IMPACT
HOME Program funs for the Hotel Fresno project are available in the Development and Resor
Management Department's Fiscal Year 2012 Budge. The project's total cost is mbmated at $16.5 millior
which $659,868 in HOME Program funds is proposed to be Provided as gap financing. The Developer
invested $2 T million, and has secured a $1.9 million Redavetopment Agency loan. An estimated $11 milllc
Proposed to be provided by a HUD 220 Program can.
If the HOME Program Agreement is approved as recommended HOME funds will not be disbursed until all
funding necessary to complete the project is secured under a contract or letter of commitment If
Developer is unable to secure the balance of funds to complete the project by the end of HUD's 220 Prog
review, the City may terminate the Agreement. If the Agreement Is terminated, the $659,666 In HC
Program funds will be unencumbered and used forfulure affordable housing projects.
APPENDICES
Exhibit A- Project Cost InformaOONSources and Uses of Funds
Exhibit 8 - HOME Program Agreement
Exhibit C - Project Location Map
Exhibit D - EA -11-012'. Mitigated Negative Declaration