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Better Opportunities Builder - Brierwood Court Apts. - HOME Agmt. (2004) and 1st Amdt - 2021
Fresno County Recorder Paul Dictos, CPA 2021 -0125046 RECORDING REQUESTED BY: Recorded at the request of: ERECORDING PARTNERS NETWORK Placer Title Company P-460439 DE 08/02/2021 12:41 39 WHEN RECORDED MAIL TO: Titles: 1 Pages:67 Fees:$0.00 CITY OF FRESNO CA SB2 Fees:$0.00 CITY CLERK Taxes: $0.00 2600 FRESNO STREET, ROOM 2133 Total: $0.00 FRESNO; CA 93721-3603 APN s 509-220-(03s thru 10s), 5 9-210-(02s thru 18s) SPACE ABOVE FOR RECORDER'S USE ONLY FIRST AMENDMENT TO CITY OF FRESNO HOME INVESTMENT PARTNERSHIPS PROGRAM_ AGREEMENT Document Title Pursuant to Senate Bill 2—Building Homes and Jobs Act(GC Code Section 27988.1), effective January 1,2018,a fee of seventy-five dollars ($75.00)shall be paid at the time of recording of every real estate Instrument, paper, or notice required or permitted by law to be recorded,except those expressly exempted from payment of recording fees, per each single transaction per parcel of real property. The fee Imposed by this section shall not exceed two hundred twenty-five dollars($225.00) Exempt from fee per GC27388.1(a)(2); recorded concurrently"in connection with" a transfer subject to the Imposition of documentary transfer tax(DTT) Exempt from fee per GC27388.1(a)(2); recorded concurrently"in connection with"a transfer of real property that Is a residential dwelling to an owner-occupier. i Exempt from fees per GC27388,1(a)(1);fee cap of$225 reached Exempt from the fee per GC27388.1(a)(1); not t,elated to real property Exempt from the fee per GC27388.1(a)(1)for the following reasons: Governmental document Failure to include an exemption reason will result in the imposition of the$75.00 Building Homes and Jobs Act fee. Fees collected are deposited to the State and may not be available for refund. THIS PAGE IS ADDED TO PROVIDE DECLARATION OF BUILDING HOMES &JOBS ACT(SB2-2017) FEE EXEMPTION ADDITIONAL RECORDING FEE APPLIES ORIGINAL Do Not Destroy Recording requested b7: PLACIR TITLk COMPANY RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City of Fresno City Clerk 2600 Fresno Street, Room 2133 Fresno. CA 93721-3603 i �L (SPACE ABOVE THIS LINE `T FOR RECORDER'S USE) J This First Amendment to HOME Investment Partnerships 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 6103. 21 --2-293-2- !S CITY O FRESN By: Name: o as queda Its: C' y n Date. FIRST AMENDMENT TO CITY OF FRESNO HOME INVESTMENT PARTNERSHIPS PROGRAM AGREEMENT by and between City of Fresno a municipal corporation and Better Opportunities Builder, Inc., a California nonprofit public benefit corporation (formerly known as Housing Assistance Corporation), General Partner of E.P. Investors, LP, A California Limited Partnership regarding Brierwood Court Apartments 4402-4464 W. Avalon and 4293, 4301-4347 W. Regency FIRST AMENDMENT TO HOME INVESTMENT PARTNERSHIPS PROGRAM AGREEMENT (AFFECTING REAL PROPERTY AND INCLUDING COVENANTS RUNNING WITH THE LAND) This First Amendment to the HOME Investment Partnerships Program Agreement (Affecting Real Property and Including Covenants Running with the Land) (hereinafter referred to as the Amendment), by and between the City of Fresno, a municipal corporation, acting through its Planning and Development Department - Housing and Community Development Division (the City) and Better Opportunities Builder, Inc., a California nonprofit public benefit corporation (formerly known as Housing Assistance Corporation and hereinafter referred to as BOB) is effective this 31 day of July, 2021. RECITALS WHEREAS, the City and Housing Assistance Corporation, a California non-profit public benefit corporation, entered into that certain HOME Investment Partnerships Program Agreement (Affecting Real Property and Including Covenants Running with the Land) on June 25, 2004, recorded in the Fresno County Recorder's Office on June 25, 2004, as document number 2004-0140487 (the Agreement) attached as Exhibit A; and WHEREAS, pursuant to the Agreement the City provided a $900,000 forgivable HOME Program loan at zero percent interest to Housing Assistance Corporation (the City HOME Loan) as evidenced by that certain Promissory Note Secured by Deed of Trust by BOB to the City dated June 25, 2004 (the City HOME Note), to be used as permanent financing for a 75-unit housing apartment complex with 73 units subject to affordability restrictions, known as Brierwood Court (the Project); and WHEREAS, the Project is currently owned by E.P. Investors, A California Limited Partnership, organized under the laws of the State of California (the Partnership); and WHEREAS, pursuant to that certain Certificate of Amendment of Articles of Incorporation executed on April 29, 2005 and filed with the Secretary of State of the State of California on May 11, 2005, the Board of Directors of the Housing Assistance Corporation changed the name of the corporation to Better Opportunities Builder, Inc., and WHEREAS, pursuant to that certain Amended and Restated Agreement of Limited Partnership of E.P. Investors, A California Limited Partnership dated as of June 1, 2004, as amended by that certain First Amendment to Amended and Restated Agreement of Limited Partnership of E.P. Investors, A California Limited Partnership dated October 1, 2004, that certain Second Amendment to Amended and Restated Agreement of Limited Partnership of E.P. Investors, A California Limited Partnership dated November 1, 2004, and that certain Third Amendment to Amended and Restated Agreement of Limited Partnership of E.P. Investors Limited Partnership dated December 21, 2006, BOB is the general partner of the Partnership and, pursuant to that certain Assignment and Assumption Agreement effective August 31, 2020, BOB and Silvercrest, Inc., a California nonprofit public benefit corporation, are the current limited partners of the Partnership; and WHEREAS, BOB provided the proceeds of the City HOME Loan to the Project via a general partner loan to the Partnership in the amount of $900,000 as evidenced by that certain Residual Receipts Deed of Trust between the Partnership as Trustor, Chicago Title Company as Trustee, and BOB as beneficiary, recorded with the Fresno County Recorder July 1, 2004 (the Deed of Trust) as Instrument No. 2004-0145822 of Official Records; and WHEREAS, to secure the City's interest in the Property, BOB assigned the Deed of Trust to the City pursuant to that certain Assignment of Beneficial Interest in Trust Deed effective June 20, 2004, recorded with the Fresno County Recorder July 1, 2004 (the Assignment) as Instrument No. 2004-0145823 of Official Records; and WHEREAS, to secure the City's continued interest in the affordability and habitability of the Project and the covenants therein, the City and BOB with the written acknowledgement and consent of the Partnership executed the Agreement and that certain Declaration of Restrictions dated June 25, 2004 and recorded with the Fresno County Recorder June 25, 2004 (the "Declaration" and, collectively with the City HOME Note, the Deed of Trust, the Assignment, and the HOME Agreement, referred to herein as the "City HOME Loan Documents") as Instrument No. 2004-0145820 of Official Records; and WHEREAS, the City intended that the City HOME Loan Documents subject 73 of the Project's units to certain income and rental restrictions, including requiring that twenty-two (22) of the Project's units be reserved for individuals and families with income at 50%AMI or below (Very Low-Income), and fifty-one (51) of the Project's units be reserved for individuals and families with income at 60% AMI or below ("Low-Income" and collectively with the Very Low-Income restrictions referred to herein as the "Affordability Restrictions"); and WHEREAS, there are certain provisions in the Agreement that appear to conflict with the Affordability Restrictions including Sections 4.17, 5.2 and 9.8 of the HOME Agreement (the "Conflicting Terms"); and WHEREAS, the Section 5.11 of the Agreement requires the City's written consent for any additional mortgages and/or liens on the Property; and WHEREAS, the Partnership and BOB wish to refinance two loans, including the mortgage loan held by Wells Fargo Bank in the approximate aggregate amount of $2,744,337 and an operating loan made by BOB to the Partnership for the Project in the approximate amount of $869,230 (collectively, the Loans) by consolidating them into one long-term mortgage loan to be held by JPMorgan Chase Bank, N.A. (New Senior Lender) in the approximate amount of$3,800,000, (the New Brierwood Financing); and WHEREAS, as a condition precedent to the New Brierwood Financing, the New Senior Lender will require that the City execute that certain Subordination Agreement (City of Fresno — Home Program Loan) by and among the Partnership, BOB, and the Senior Lender (the Subordination Agreement), which requires that the City HOME Loan Documents be subordinate to the liens and charges of the New Brierwood Financing documents; and WHEREAS, the Agreement does not currently provide for subordination at refinancing of the property finance structure; and WHEREAS, the City agrees to subordinate the City HOME loan to allow the Partnership an opportunity to refinance the property; and WHEREAS, the City and the BOB wish to amend the Agreement to evidence the City's consent and authorization of the New Brierwood Financing and the subordination of the City HOME Loan to the New Brierwood Financing and to reaffirm and clarify the Affordability Restrictions that apply to the Project by correcting the contradictory language and deleting the Conflicting Terms. AMENDMENT 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, and in accordance with Section of the Agreement, the parties hereby agree that the Agreement is amended as follows: 1. All references to Housing Assistance Corporation shall now mean Better Opportunities Builder, Inc., a California nonprofit public benefit corporation (formerly known as Housing Assistance Corporation and hereinafter referred to as "BOB"). 2. The second sentence of Section 4.17 is hereby deleted in its entirety and replaced with the following: "The Units shall, at a minimum, be rented to and occupied by, or, if vacant, available for rental and occupancy by, Low-Income and Very Low-Income Families, with 100% of the Units preserved as Low-Income and Very Low-Income Rental Housing, for the Affordability Period except upon foreclosure by a lender or transfer in lieu of foreclosure following default under a Deed of Trust. 3. The first sentence of Section 5.2 is deleted in its entirety and replaced with the following: BOB covenants and agrees that the Project shall constitute Affordable Housing with 100% of the Units preserved as Low-Income Rental Housing and Very-Low Income Housing (as variously provided at 24 CFR 92.252) during the entire Affordability Period. 4. The first sentence of Section 9.8 is hereby deleted in its entirety and replaced with the following: BOB covenants and agrees that all 73 of the Units shall constitute Affordable Housing, with not less than 100% of the Units preserved as Very Low-Income Rental Housing and Low-Income Rental Housing during the entire Affordability Period. 5. In accordance with Section 5.11, this Amendment evidences the Council of the City of Fresno's consent to subordination of the City HOME Loan and the City HOME Loan Documents to the New Brierwood Financing, as set forth in the Subordination Agreement. 6. The City Manager hereby is authorized to take such actions as necessary to execute, deliver and/or file all documents deemed necessary or appropriate to support the New Brierwood Financing, including but not limited to execution of the Subordination Agreement, subject to review and approval as to form by the City Attorney. 7. In the event of any conflict between the body of this Amendment and any exhibit or attachment hereto, the terms and conditions of the body of this Amendment shall control and take precedence over the terms and conditions expressed within the exhibit or attachment. Furthermore, any terms or conditions contained within any exhibit or attachment hereto which purport to modify the allocation of risk between the Parties, provided for within the body of this Amendment, shall be null and void. 8. Except as expressly provided herein, the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the authorized agents of the parties hereto have executed this First Amendment to the Owner Participation Agreement, at Fresno, California, the day and year first above written. CITY OF FRESNO, BETTER OPPORTUNITIES BUILDER, a California munici al corporation INC., a California nonprofit public benefit Q:A���� corporation By. Thom qu By: b-gz2_ City a ger Name: Michael Duarte (Attach n certiff I to of acknowledgment) Title: CEO ! (Attach Notary certificate of acknowledgment) Date: -7 Date: 71 /z/ APPROVED AS TO FORM: DOUGLAS T. SLOAN City Attorney By- POA VITA Aak,,-" *racyy . anian Senior D ty City Attorney Date: OF FR��y ATTEST: o BRIANA PARRA, Interim City Clerk +�rEA Oct• Deputy K/l u'w wlvrweva -:�-(2l.. j 20 2-1 Exhibit A: HOME Investment Partnerships Program Agreement ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validiN of that document. State of California County of Fresno ) On July 26, 2021 before me, Linda Cunha Reitz, Notary Public (insert name and title of the officer) personally appeared Thomas Esqueda who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. "- • LINDA CUNHA REITZ Notary Public-California WITNESS my hand and official seal. =`?' Fresno County Commission k 2215504 My Comm.Expires Sep 23,2021 Signature (Seal) CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached,and not the truthfulness,accuracy,or validity of that document. State of California County of FRESNO On July 20, 2021 , before me,Jaicee Kiara Felan. Notary Public, personally appeared, Michael Duarte . who proved to me on the basis of satisfactory evidence to be the persons whose name(4 is/ff@ subscribed to the within instrument and acknowledged to me that he/oko*" executed the same in his/ko*Aheir authorized capacity(, and that by his signatures on the instrument the person, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. JAME K}ARA FELAN Notary PubiIc-Cattfvmla WITNESS my hand and official seal. commhsian 0 iaz6105 My Comm.Uoras Apr 4,2024 (Notary Seal) S ature of Notary Public Exhibit "A" HOME Agreement RECORDED AT THE REQUEST OF County t rd AND WHEN RECORDED RETURN TO: Robert County Recorder Polylrrt C, lJerner City of Fresno DOC— 2004-0140487 Department of Planning and Development Friday, JUN 25, 2004 10:21:17 Housing and Community Development Division Ttl Pd $@.@0 Nbr-0001518561 2600 Fresno Street, Room 3076 c r r/R3/1-58 Fresno, CA 93721-3605 Attention: Housing Manager (SPACE ABOVE THIS LINE FOR RECORDER'S USE) 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 6103. CITY OF RESNO By:_Ue"�l�'� Andrew T. Souza, Assistant Cit anager City of Fresno Dated: (p_o� s--D q ` Home Investment Partnerships Program (Affecting real property and including Covenants Running with the Land) by and between CITY OF FRESNO, a municipal corporation and HOUSING ASSISTANCE CORPORATION, a California non-profit public benefit Corporation, General Partner of E.P. INVESTORS, LP, a California limited partnership regarding "BRIERWOOD COURT" (Formerly The Emerald Palm Apartments) (4402 through 4464 W. Avalon & 4293, 4301 through 4347 W. Regency, Fresno CA) E966 W900Z'900Z/L0/90 TABLE OF CONTENTS Page RECITALS........................................................................................................................... 2 ARTICLE1. DEFINITIONS. ............................................................................................. 4 ARTICLE2. TERMS. ....................................................................................................... 7 ARTICLE 3. GENERAL REPRESENTATIONS AND WARRANTIES OF HOUSING ASSISTANCE CORPORATION..................................................... ..... 8 ARTICLE 4. HOME PROGRAM REPRESENTATIONS AND WARRANTIES BY HOUSING ASSISTANCE CORPORATION. ............................................. 10 ARTICLE 5. COVENANTS AND AGREEMENTS OF HOUSING ASSISTANCE CORPORATION........................................................................................ 14 ARTICLE 6. DISBURSEMENT OF HOME FUNDS. ...................................................... 17 ARTICLE 7. PREDEVELOPMENT OF PROJECT......................................................... 20 ARTICLE 8. DEVELOPMENT OF PROJECT................................... ........ 21 ARTICLE 9. PROJECT OPERATIONS. ...................................................... .._ 25 ARTICLE 10. INDEMNITY AND INSURANCE. ............................................... ......... 29 ARTICLE 11. DEFAULT AND REMEDIES...................................... ........ 33 ARTICLE 12. GENERAL PROVISIONS. ......................................................................... 35 SCHEDULE OF EXHIBITS Exhibit A: Legal Description of Property and Project Description Exhibit B: Promissory Note Exhibit C: Budget Exhibit D: Declaration of Restrictions Exhibit E: [Exemplar] Certificate of Completion Exhibit F: Owner Acknowledgment of IRS Section 42 (h) (6) (e) (ii) 1 HOME INVESTMENT PARTNERSHIPS PROGRAM AGREEMENT (AFFECTING REAL PROPERTY AND INCLUDING COVENANTS RUNNING WITH THE LAND) This HOME Investment Partnerships Program Agreement (hereinafter referred to as the "Agreement") is entered into this June 25, 2004 by and between the CITY OF FRESNO, a municipal corporation, acting through its Planning and Development Department - Housing and Community Development Division, (hereinafter referred to as the "CITY"), and HOUSING ASSISTANCE CORPORATION, a California nonprofit public benefit corporation, (hereinafter referred to as the "HOUSING ASSISTANCE CORPORATION"). RECITALS A. CITY has received a HOME Investment Partnerships Program (hereinafter referred to as "HOME Program") grant from the U.S. Department of Housing and Urban Development (hereinafter referred to as "HUD"), under Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990, as amended (hereinafter referred to as "ACT"). B. To advance the supply of Affordable Housing within the City of Fresno, the CITY desires, among other things, to encourage private investment in the affordable housing market. C. HOUSING ASSISTANCE CORPORATION desires to act as developer and sponsor, as to a seventy-five (75) Unit apartment complex consisting of 25 triplexes to be acquired, rehabilitated and preserved as 73 Low-Income and Very Low-Income Rental Housing, with no less than 100% of the Units preserved as Low-Income and Very Low-Income, 30% (22) Units for individuals and families with income at 50% AMI or below and 70% (51) Units for individuals and families with income at 60% or below AMI (the Units and the associated on site improvements are collectively referred to as the "Project"), upon property currently owned by Fresno Emerald Palms, a California Limited Partnership, located at 4402 through 4464 W. Avalon & 4293, 4301 through 4347 W. Regency, Fresno, CA, (hereinafter referred to as the "Property"), as more particularly described in the attached EXHIBIT "A". D. All on-site and off-site improvements will directly benefit the Project and cannot otherwise be reasonably paid for or financed. E. HOUSING ASSISTANCE CORPORATION desires to use the HOME Program Funds, in conjunction with other Funding Sources, as permanent financing for the Project. Use of HOME Program monies will help achieve financial feasibility for the Project and maximize the affordability of the Rental Housing. F. To further its goal to increase the supply of Affordable Housing within the City of Fresno, CITY desires to assist the Project by providing a no interest earning forgivable loan (hereinafter referred to as "Loan") of HOME Funds upon the terms and conditions in this Agreement which will serve as permanent (non-construction) financial assistance for the Project. HOME Funds in the amount of Nine Hundred Thousand Dollars and no/100 ($900,000.00) will allow HOUSING ASSISTANCE CORPORATION to provide Low- and Very Low-Income Families, in the community, with Affordable Housing with no less than 2 100% of 73 Units preserved as Low-Income and Very Low-Income Rental Housing, 30% (22) Units for individuals and families with income at 50% AMI or below and 70% (51) Units for individuals and families with income at 60% or below, for the intended uses and purposes of the Project. G. CITY has conducted an environmental review of the Project pursuant to the National Environmental Protection Act (hereinafter referred to as "NEPA") and HOME regulations and has determined that the Project will have or cause no adverse or reportable conditions or effects pursuant to NEPA and HOME regulations. H. The Loan shall be paid through an escrow established by HOUSING ASSISTANCE CORPORATION at its sole cost and expense with a title company acceptable to CITY. The Loan and performance of the related HOME Program affordability, habitability and other covenants and restrictions set forth in this Agreement shall be evidenced in covenants and restrictions running with the land as more fully provided hereunder. I. As a condition to disbursement of the Loan funds, HOUSING ASSISTANCE CORPORATION shall execute or cause execution of, prior to CITY's disbursement of HOME funds hereunder, among other things a Trust Deed Note and a Declaration of Restrictions, which shall be recorded against the Property. These instruments are intended to secure CITY's continuing interest in the affordability and habitability of the Units, as well as secure the performance of other covenants contained in that document and this Agreement. J. 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 Very Low-Income Housing and Low-Income Housing available at affordable housing cost to persons and families of Very Low-Income and Low-Income, as defined hereunder, (v) planning and administrative expenses incurred in pursuit hereof are necessary for the production, improvement, or preservation of Very Low-Income Housing and Low-Income Housing, and (vi) will comply with any and all owner participation rules and criteria applicable thereto. K. HOUSING ASSISTANCE CORPORATION has determined that the HOME Funded Project constitutes available and allocated programmatic funding outside the reach of California Constitution Article XXXIV and enabling legislation. 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: 3 ARTICLE 1. DEFINITIONS. The following terms have the meanings 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. ADA means the Americans with Disabilities Act of 1990. 1.2 Affirmative Marketing. The term "Affirmative Marketing" shall mean a good faith effort to attract eligible persons from all racial, ethnic and gender groups in the housing market area to rent that portion of the eligible Property (as hereinafter defined) that is to be constructed as part of the Project. 1.3 Affordability Period. Affordability Period means the period of fifty-five (55) years commencing from the date the CITY issues and records the Certificate of Completion. 1.4 Affordable Housing. Affordable Housing means the Units acquired with HOME Funds meet the requirements of 24 CFR 92.252, which requirements shall be enforceable variously by covenants running with the land and deed restrictions imposed by HOUSING ASSISTANCE CORPORATION pursuant to 24 CFR 92.504 (c)(3)(vii). 1.5 Budget. Budget means the budget for the Project including construction, financing and related costs, attached hereto as EXHIBIT "C". 1.6 Certificate of Completion. Certificate of Completion means that certificate issued in the form attached as EXHIBIT "E" to HOUSING ASSISTANCE CORPORATION by CITY evidencing completion of construction or rehabilitation on the Property for purposes of this Agreement. 1.7 CFR. CFR means the Code of Federal Regulations. 1.8 Commencement of Construction. Commencement of Construction means the time physical work on the Property begins, including, without limitation, delivery of materials and any work beyond maintenance of the Property is its status quo condition, which shall be a date not later than 90 days following the effective date of this Agreement. 1.9 Deed of Trust. Deed of Trust means that standard, subordinate no worse than fourth (4«') position Deed of Trust including assignment of rents and security agreement given by E. P. Investors LP as trustor to the CITY as beneficiary, issued through an escrow established by HOUSING ASSISTANCE CORPORATION at its sole cost and expense with a title company acceptable to 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 are hereby incorporated into this Agreement by this reference. 1.10 Developmentally Disabled. Developmentally Disabled means Person with Disability per 24 CFR 92.2. 4 1.11 Eligible Costs. Eligible Costs means those Project costs listed in the Budget attached as EXHIBIT "C" and any amendments thereto approved in writing by the CITY, allowable under 24 CFR Part 92 incurred on the HOME Funded Project for which HOME Funds may be used as specified in 24 CFR 92.205 and 92.206 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 CITY shall not constitute Eligible Costs. 1.12 Event of Default. Event of Default shall have the meaning assigned to such term under Section 11.1 hereunder. 1.13 Family. Family has the same meaning given that term in 24 CFR 5.403. 1.14 Funding Source, Funding Source means (i) Equity raised from the sale of Federal Tax Credits, CITY's HOME Funds, (ii) Bank Loans referenced in the Budget as source(s)of funding for the Project, (iii) private activity tax exempt bonds, and (iv) any other financing sources for the Project except HOME Funds. 1.15 Hazardous Materials. 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 foderal 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. 1.16 HOME Invest Partnership Funds. HOME Investment Partnership Funds are the HOME Program monies in an amount not to exceed the sum of Nine Hundred Thousand Dollars and no/100 ($900,000.00) provided to HOUSING ASSISTANCE CORPORATION as a Nine Hundred Thousand Dollars and no/100 ($900,000.00) Loan by CITY pursuant to this Agreement to be used for"Real Property Acquisition" financing for 15% (11) of the seventy- five Units of Brierwood Court Project. 1.17 HOME Unit. HOME Unit(s) means Project units receiving HOME Funding Assistance hereunder. 1.18 Household. Household means one or more persons occupying a Unit. 1.19 HUD. HUD means the United States Department of Housing and Urban Development. 1.20 Lease. Lease means the lease in a form satisfactory to CITY entered into between E. P. Investors LP and a tenant of a Unit. 1.21 Loan. Loan means the no interest earning forgivable loan of Nine Hundred Thousand Dollars and no/100 ($900,000.00) in HOME Funds for use in paying Eligible 5 4 Costs made by CITY through HOUSING ASSISTANCE CORPORATION to E.P. Investors LP pursuant to this Agreement, as more specifically described in this Agreement and the Note. 1.22 Loan Documents. Lean Documents are collectively this Agreement, the Note, the Deed of Trust and all related escrow and other documents/instruments as they may be amended, modified or restated from time to time along with all exhibits and attachments thereto, relative to a Loan. 1.23 Low-Income Families. Low-Income Families means families whose annual income does not exceed eighty percent (80%) of the median income for the Fresno, California area as determined by HUD, except as HUD may establish income ceilings higher or lower than 80% of the median for the area on the basis of HUD findings that such variations are necessary. 1.24 Note. Note means that certain no interest earning promissory note in a principal amount not to exceed Nine Hundred Thousand Dollars and no/100 ($900,000.00), in the form of EXHIBIT "B" hereto, given by HOUSING ASSISTANCE CORPORATION as promissor, in favor of the CITY as promissee, evidencing the Loan and performance of the affordability, habitability and other covenants and restrictions set forth in this Agreement, secured by a standard subordinated no worse than fourth position Deed of Trust recorded against the Property, insured by an ALTA lender's policy 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 Note. The terms of the Note are hereby incorporated into this Agreement by this reference. 1.25 Project. Project means the rehabilitation of a 75 Unit apartment complex, commonly known as Brierwood Court, including certain utility connections (including sewer branches), fencing and landscaping improvements, to be rehabilitated and preserved as Low-Income and Very Low-Income Rental Housing, with not less than 100% of 73 Units preserved as Low-Income and Very Low-Income, 30% (22) Units for individuals and families with income at 50% AMI or below and 70% (51) Units for individuals and families with income at 60% or below, Rental Housing upon the Property and preservation of the Project and the Property, with the assistance of HOME Funds while meeting the Affordable Housing, income targeting and other requirements of 24 CFR 92.252 for the fifty-five (55) year Affordability Period. HOME Funds will assist in real property acquisition financing for 15% (11) of the seventy-five Units. 1.26 Project Completion Date. Project Completion Date means the date that CITY shall have determined that the Project has reached completion in accordance with the plans and specifications approved by CITY in compliance with all Housing Standards and a Project-wide Certificate of Occupancy has been issued or other written evidence satisfactory to the City in its sole discretion of the acquisition and rehabilitation of all units. The project Completion Date for this project is December 30, 2005. 1.27 Property means that vacant property commonly known as 4402 through 4464 W. Avalon & 4293, 4301 through 4347 W. Regency, Fresno, CA, and more specifically described in the attached EXHIBIT "A". 6 1.28 Rent means the total monthly payments a tenant pays for a Unit including the following: use and occupancy of the Unit and land and associated facilities, including parking (other than parking services acquired by tenants on an optional basis), any separately charged fees or service charges assessed by E. P. Investors LP which are required of all tenants (other than security deposits), the cost of an adequate level of service for utilities paid by the tenant (including garbage collection, sewer, water, 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 E. P. Investors LP, and paid by the tenant. 1.29 Rental Housing is 73 of the seventy five Units of Low-Income apartment complex, commonly known as Brierwood Court, located at the Property. 1.30 Unit means a dwelling unit of the Rental Housing. 1.31 Very Low-Income Families means families whose annual income does not exceed fifty percent (50%) of the median income as established by HUD for the Fresno, California area as determined by HUD, except as HUD may establish income ceilings higher or lower than 50% of the median for the area on the basis of HUD findings that such variations are necessary. ARTICLE 2. TERMS. 2.1 Loan of HOME Funds. CITY agrees to provide a Forgivable Loan of HOME Funds to HOUSING ASSISTANCE CORPORATION in an amount not to exceed Nine Hundred Thousand Dollars and no/100 ($900,000.00) under the terms and conditions provided in this Agreement. The HOME Funds shall only be used for HOME Program Eligible Costs. 2.2 Loan Documents. HOUSING ASSISTANCE CORPORATION shall execute and deliver to the CITY the Loan Documents including the Note and the Deed of Trust that shall be recorded against the Property, as provided for in this Agreement. 2.3 Term of Agreement. This Agreement is effective upon the date of execution and shall remain in force for the federally required Affordability Period unless terminated as otherwise provided herein. After the fifty-five (55) year Affordability Period, this Agreement will expire. It is understood and agreed upon, however, that if for any reason this agreement should be terminated as provided hereunder, without default, by HOUSING ASSISTANCE CORPORATION prior to disbursement of HOME Funding hereunder, the CITY agrees to record a Notice of Cancellation regarding this Agreement upon the written request of HOUSING ASSISTANCE CORPORATION. 2.4 Loan Repayment and Maturity. The Loan shall be due and payable in full upon any early termination of this Agreement including a termination due to Article 11 default, or expiration of the Agreement. 2.5 Incorporation of Documents. HOUSING ASSISTANCE CORPORATION Proposal to CITY dated November 3, 2003, HOUSING ASSISTANCE CORPORATION Board Meeting Minutes dated August 12, 2003, authorizing pursuit of the Project according 7 1{ to the terms and conditions herein, CITY Council Approved Minutes of December 9, 2003 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 to/procured by the parties and reviewed by each of them prior to execution hereof. 2.6 Covenants of HOUSING ASSISTANCE CORPORATION. HOUSING ASSISTANCE CORPORATION covenants and agrees to comply with all terms and conditions of this Agreement, and HOUSING ASSISTANCE CORPORATION covenants and agrees that the Project will comply with all requirements of 24 CFR Part 92 and this Agreement, provided CITY may approve of assignment/assumption of this Agreement/portions thereof in the manner provided herein. ARTICLE 3. GENERAL REPRESENTATIONS AND WARRANTIES OF HOUSING ASSISTANCE CORPORATION. 3.1 Existence and Qualification. HOUSING ASSISTANCE CORPORATION represents and warrants as of the date hereof that HOUSING ASSISTANCE CORPORATION is a duly organized California nonprofit corporation in good standing and a qualified charitable organization exempt from certain taxes under IRC 501(c)(3) and Cal. R&T 23701 (d). HOUSING ASSISTANCE CORPORATION is neither controlled by, nor under the direction of, individuals or entities seeking to derive profit or gain from the organization. HOUSING ASSISTANCE CORPORATION has among its corporate purposes the provision of decent housing that is affordable to Low-Income and Very-Low Income persons. HOUSING ASSISTANCE CORPORATION has the requisite power, right, and legal authority to execute, deliver, and perform its obligations under this Agreement and has taken all actions necessary to authorize the execution, delivery, performance, and observance of its obligations under this Agreement. This Agreement, when executed and delivered, shall constitute the legal, valid, and binding obligations of HOUSING ASSISTANCE CORPORATION enforceable against HOUSING ASSISTANCE CORPORATION 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 party. 3.2 No Litigation Material to Financial Condition. HOUSING ASSISTANCE CORPORATION represents and warrants as of the date hereof that except as disclosed to and approved by CITY in writing, no litigation or administrative proceeding before any court or governmental body or agency is now pending, nor, to the best of HOUSING ASSISTANCE CORPORATION knowledge, is any such litigation or proceeding now threatened, or anticipated against HOUSING ASSISTANCE CORPORATION that, if adversely determined, would have a material adverse effect on the financial condition, business, or assets of HOUSING ASSISTANCE CORPORATION or on the operation of the Project. 8 3.3 No Conflict of Interest. HOUSING ASSISTANCE CORPORATION represents and warrants as of the date hereof that no official, officer, agent, or employee of CITY directly or indirectly owns or controls any interest in HOUSING ASSISTANCE CORPORATION, and no person, directly or indirectly owning or controlling any interest in HOUSING ASSISTANCE CORPORATION, is an official, officer, agent, or employee of CITY. 3.4 No Legal Bar. HOUSING ASSISTANCE CORPORATION represents and warrants as of the date hereof that the execution, delivery, performance, or observance by HOUSING ASSISTANCE CORPORATION of this Agreement will not, to the best of HOUSING ASSISTANCE CORPORATION knowledge, materially violate or contravene any provisions of: (a) any existing law or regulation, or any order of decree of any court, governmental authority, bureau, or agency; (b) governing documents and instruments of HOUSING ASSISTANCE CORPORATION; or(c) any mortgage, indenture, security agreement, contract, undertaking, or other agreement or instrument to which HOUSING ASSISTANCE CORPORATION is a party or that is binding on any of its properties or assets, the result of which would materially or substantially impair HOUSING ASSISTANCE CORPORATION's ability to perform and discharge its obligations or its ability to complete the Project under this Agreement. 3.5 No Violation of Law. HOUSING ASSISTANCE CORPORATION represents and warrants as of the date hereof that to the best of HOUSING ASSISTANCE CORPORATION knowledge, this Agreement and the operation of the Project as contemplated by HOUSING ASSISTANCE CORPORATION do not violate any existing federal, state, or local laws or regulations. 3.6 No Litigation Material to Project. HOUSING ASSISTANCE CORPORATION represents and warrants as of the date hereof that except as disclosed to and approved by CITY in writing, there is no action, proceeding, or investigation now pending, or any basis therefor known or believed to exist by HOUSING ASSISTANCE CORPORATION that questions the validity of this Agreement or of any action to be taken under this Agreement that would, if adversely determined, materially or substantially impair HOUSING ASSISTANCE CORPORATION's ability to perform and observe its obligations under this Agreement or that would either directly or indirectly have an adverse effect on or impair the completion of the Project. 3.7 Assurance of Governmental Approvals and Licenses. HOUSING ASSISTANCE CORPORATION represents and warrants as of the date hereof that HOUSING ASSISTANCE CORPORATION has obtained and, to the best of HOUSING ASSISTANCE CORPORATION knowledge, is in compliance with all federal, state, and local governmental reviews, consents, authorizations, approvals, and licenses presently required by law to be obtained by HOUSING ASSISTANCE CORPORATION for the Project as of the date hereof. 9 r f ARTICLE 4. HOME PROGRAM REPRESENTATIONS AND WARRANTIES BY HOUSING ASSISTANCE CORPORATION. HOUSING ASSISTANCE CORPORATION represents and warrants that: 4.1 Accessibility. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that it shall comply with 24 CFR Part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), including, without limitation, rehabilitation of the Rental Housing so that it meets the applicable accessibility requirements. 4.2 Affirmative Marketing. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that it shall comply all affirmative 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 racial, ethnic and gender groups in the housing market. HOUSING ASSISTANCE CORPORATION shall be responsible for complying with the CITY's "Affirmative Marketing Requirements" document as amended from time to time. HOUSING ASSISTANCE CORPORATION shall maintain records of actions taken to affirmatively market Units and to assess the results of these actions. 4.3 Availability of HOME Funds. HOUSING ASSISTANCE CORPORATION understands and agrees that the availability of HOME Funds is subject to the control of HUD or other federal agencies and should said Funds be encumbered, withdrawn or otherwise made unavailable to the CITY, whether earned by or promised to HOUSING ASSISTANCE CORPORATION, HOUSING ASSISTANCE CORPORATION shall not be provided said Funds unless and until they are made available for payment to the CITY by HUD and CITY receives said Funds. No other funds owned or controlled by the CITY shall be obligated under this Agreement. 4.4 Compliance with Agreement. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that, in accordance with the requirements of 24 CFR 92.252 and 24 CFR Part 85, upon any uncured default by HOUSING ASSISTANCE CORPORATION within the meaning of Article 11 of this Agreement, CITY may suspend or terminate this Agreement and all other agreements with HOUSING ASSISTANCE CORPORATION without waiver or limitation of rights/remedies otherwise available to CITY. 4.5 Conflict of Interest. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that it shall comply with the Conflict of Interest requirements of 24 CFR 92.356 including, without limitation, that no officer, employee, agent or consultant of HOUSING ASSISTANCE CORPORATION, (other than an employee or agent of HOUSING ASSISTANCE CORPORATION who occupies a Unit as'the project manager or maintenance worker) may occupy a Unit. HOUSING ASSISTANCE CORPORATION 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 responsibilities 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 ties, during his or her tenure or for 10 i i 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 a Unit. 4.6 Construction Standards. HOUSING ASSISTANCE CORPORATION shall construct any housing assisted under this Agreement in compliance with all applicable local codes, ordinances and zoning requirements in effect at the time of issuance of Certification of Completion. In the absence of a local code for construction, HOUSING ASSISTANCE CORPORATION agrees to comply with the applicable standards identified in 24 CFR 92.251. 4.7 Covenants and Restrictions to Run with the Land. CITY and HOUSING ASSISTANCE CORPORATION expressly warrant, covenant and agree that the covenants and restrictions set forth in this Agreement shall run with the land by deed restriction, and shall bind all successors in title to the Rental Housing, provided, however, that on expiration of this Agreement and the Affordable Housing requirements therein said covenants and restrictions shall expire. CITY and HOUSING ASSISTANCE CORPORATION further warrant, covenant and agree that the covenants and restrictions set forth herein shall run in favor of the CITY. A. The CITY and HOUSING ASSISTANCE CORPORATION hereby declare their understanding and intent that the covenants and restrictions set forth herein directly benefit the land (a) by enhancing and increasing the enjoyment and ownership of the Rental Housing by certain Low-Income and Very Low-Income Families, and (b) by making possible the obtaining of advantageous financing for construction. B. HOUSING ASSISTANCE CORPORATION covenants and agrees that until the expiration of the Affordability Period it shall cause the Rental Housing to be used for Affordable Housing. C. Without waiver or limitation, CITY shall be entitled to injunctive or other equitable 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 Rental Housing 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 deed of conveyance to the Rental Housing 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 Rental Housing, all as though such covenants and restrictions were recited and stipulated at length in each and every deed, conveyance, mortgage or lease thereof. E. The failure or delay at any time of 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 right 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. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that pursuant to 24 CFR 92.353, it will take all reasonable steps to minimize the displacement of any persons (families, individuals, businesses, nonprofit organizations and farms). 4.9 Income Certification and Reporting. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that it shall comply with the procedures for annual income determinations at 24 CFR 92.203. HOUSING ASSISTANCE CORPORATION shall obtain, complete and maintain on file, immediately prior to initial occupancy and annually thereafter, annual income certifications from each tenant Household renting any Unit. HOUSING ASSISTANCE CORPORATION shall make a good faith effort to verify that the annual income provided by an applicant or occupying Household in an income certification is accurate by taking one 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 form from the applicant's current employer; (3) obtain an income verification form from the Social Security Administration and California Department of Social Services if the applicant receives assistance from either of such agencies; or(4) if the applicant is unemployed and has no such tax return, obtain another form of independent verification. Copies of tenant income certification and verification shall be available to CITY upon its written request. 4.10 Lead-Based Paint. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees 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 982.401(j), except for 24 CFR 982.401(j)(1)(1), including any amendments thereto. These requirements apply to all Units and common areas in the Rental Housing. HOUSING ASSISTANCE CORPORATION shall incorporate or cause incorporation of this provision in all contracts and subcontracts for work performed on the Rental Housing which involve the application of paint. HOUSING ASSISTANCE CORPORATION shall be responsible for all disclosure, inspection, testing, evaluation, control and abatement activities. 4.11 Minority Outreach Activities. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that it shall comply with all federal laws and regulations described in Subpart H of 24 CFR Part 92, including, without limitation, any requirement that HOUSING ASSISTANCE CORPORATION comply with the CITY's minority outreach program. 4.12 Other Laws and Regulations. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that, in addition to complying with the federal laws and regulations already cited in this Agreement, HOUSING ASSISTANCE CORPORATION 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. 4001-4128). A. The Project is not located in a tract identified by the Federal Emergency Management Agency as having special flood requirements. 12 4.13 Project Requirements. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees to comply with the Project requirements Subpart F of 24 CFR Part 92, as applicable and in accordance with the type of Project assisted, including, but not limited to, the limit on per-unit subsidy amount at 24 CFR 92.250; property standards at 24 CFR 92.251; the requirements for rental projects at 24 CFR 92.252 (initial Rents and the procedures for Rent increases shall be contained in CITY's "Affordable Housing" document); the tenant participation protections at 24 CFR 92.253; and the Project "Labor' requirements, as applicable, of 24 CFR 92.354 including Davis Bacon prevailing wage requirements (40 U.S.C. 276a-276a- 5), and the overtime provisions of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-332). 4.14 Religious Organizations. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that it is a secular entity and not a primarily religious organization and that it shall not engage in any prohibited activities described in 24 CFR 92.257. Subject to the foregoing, HOUSING ASSISTANCE CORPORATION does not intend to utilize HOME Funds to construct housing owned primarily by religious organizations or to assist primarily religious organizations in acquiring housing. 4.15 Reporting Requirements: HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that it shall submit performance reports to the CITY as detailed in Section 8.16. Furthermore, HOUSING ASSISTANCE CORPORATION agrees to provide, at the sole cost of HOUSING ASSISTANCE CORPORATION, annual audited Financial Statements for Brierwood Court, for the expenses and ongoing financial transactions which occur as a result of this Agreement as detailed in Section 8.2. HOUSING ASSISTANCE CORPORATION agrees to account for the expenditure of HOME Funds using generally accepted financial accounting procedures, which financial documentation shall be made available to CITY and HUD upon their respective written request(s). 4.16 Request for HOME Funds. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that it shall request HOME Funds limited to the amount needed, and only as needed, for reimbursement for Eligible Costs. In the event HOME Funds are requested to reimburse Eligible Costs which subsequently lose eligibility as Eligible Costs, and subject to section 11.2 notice and cure provisions, HOUSING ASSISTANCE CORPORATION shall immediately return such HOME Funds to CITY. 4.17 Affordability Period. HOUSING ASSISTANCE CORPORATION warrants, covenants and agrees that the Rental Housing will meet the Affordable Housing, income targeting and other requirements of 24 CFR 92.252 during the Affordability Period. The Units shall, at a minimum, be rented to and occupied by, or, if vacant, available for rental and occupancy by, Low-Income and Very Low-Income Families, with at least 100% of the Units preserved as Very Low-Income Rental Housing, for the Affordability Period except upon foreclosure by a lender or transfer in lieu of foreclosure following default under a Deed of Trust. However, if at any time following transfer by foreclosure or transfer in lieu of foreclosure, but still during the Affordability Period, the owner of record prior to the foreclosure or transfer in lieu of foreclosure, or any newly formed entity that includes such owner of record or those whom such owner of record has or had family or business ties, obtains an ownership interest in the Project or Property, the Affordability Period shall be revived according to its original terms. In the event HOUSING ASSISTANCE 0 13 1 CORPORATION fails to comply with this Section or the Affordability Period is not revived following transfer by foreclosure or transfer in lieu of foreclosure, HOUSING ASSISTANCE CORPORATION shall return to CITY all HOME Funds disbursed to HOUSING ASSISTANCE CORPORATION by CITY. 4.18 Terminated Projects. HOUSING ASSISTANCE CORPORATION understands and agrees that, if the Project is terminated before completion, either voluntarily or otherwise, such constitutes an ineligible activity and any HOME Funds disbursed hereunder must be repaid to the CITY's HOME Investment Trust Fund in accordance with 24 CFR 92.503(b) (except for any project-specific assistance to HOUSING ASSISTANCE CORPORATION as provided in 24 CFR sections 92.301(a)(3) and 92.301(b)(3)). ARTICLE 5. COVENANTS AND AGREEMENTS OF HOUSING ASSISTANCE CORPORATION. HOUSING ASSISTANCE CORPORATION covenants and agrees to the following for the entire term of the Agreement: 5.1 Adequate Repair and Maintenance. HOUSING ASSISTANCE CORPORATION shall maintain the eligible Property and Project in compliance with all applicable codes, laws, and ordinances. 5.2 Affordable Housing. HOUSING ASSISTANCE CORPORATION covenants and agrees that the Project shall constitute Affordable Housing with at least 100% of the Units preserved as Very Low-Income Rental Housing, (as variously provided at 24 CFR 92.252) during the entire Affordability Period. This covenant as to Affordable Housing shall remain in effect and run with and restrict the land during the entirety of the Affordability Period. In the event that HOUSING ASSISTANCE CORPORATION fails to comply with the time period in which the Project must constitute Affordable Housing, CITY shall without waiver or limitation be entitled to injunctive relief, as HOUSING ASSISTANCE CORPORATION acknowledges that damages are not an adequate remedy at law for such breach. 5.3 Compliance With Environmental Laws. HOUSING ASSISTANCE CORPORATION shall cause the Project to be in compliance with, and not to cause or permit the Project to be in violation of, any environmental law, rule, regulation, ordinance, or statute. Although CITY will utilize its employees and agents for regular inspection and testing of the eligible Property, HOUSING ASSISTANCE CORPORATION agrees that, if CITY has reasonable grounds to suspect any such violation, HOUSING ASSISTANCE CORPORATION shall be entitled to thirty (30) days' notice and opportunity to cure such violation. If the suspected violation is not cured, CITY shall have the right to retain an independent consultant to inspect and test the eligible Property for such violation. If a violation is discovered, HOUSING ASSISTANCE CORPORATION shall pay for the reasonable cost of the independent consultant. 14 Additionally, HOUSING ASSISTANCE CORPORATION agrees: A. That CITY shall not be directly or indirectly involved 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 HOUSING ASSISTANCE CORPORATION; B. Not to transport to or from the Rental Housing, or use, generate, manufacture, produce, store, release, discharge, or dispose of on, under, or about the Rental Housing or surrounding real estate or transport to or from the Rental Housing 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 CITY of the following: i. Any proceeding or inquiry by any governmental authority with respect to the 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; ii. All claims made or threatened by any third party against HOUSING ASSISTANCE CORPORATION or such properties relating to any loss or injury resulting from any hazardous or toxic chemicals, materials, substance, or waste; and iii. HOUSING ASSISTANCE CORPORATION'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 D. To indemnify, defend, and hold CITY harmless from any and all claims, actions, causes of action, demands, judgments, damages, injuries, administrative orders, consent agreements, orders, liabilities, penalties, costs, expenses (including attorney's fees and expenses), and disputes of any kind whatsoever arising out of or relating to HOUSING ASSISTANCE CORPORATION or any other party's use or release of any hazardous or toxic chemicals, materials, substance, or wastes on the eligible 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. 5.4 Compliance With Laws. HOUSING ASSISTANCE CORPORATION shall promptly and faithfully comply with, conform to 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. HOUSING ASSISTANCE CORPORATION acknowledges that the use of HOME Funds subjects the Project to extensive federal regulation and covenants and agrees that it shall comply with, conform to and obey (and take such steps as are required of HOUSING ASSISTANCE 15 CORPORATION to enable CITY to comply with, conform to and obey) all federal statutes, regulations, rules and policies applicable to the Program and the Project. 5.5 Discharge of Liens and Stop Notices. HOUSING ASSISTANCE CORPORATION shall discharge, bond, or insure over or otherwise release or collateralize to CITY's reasonable satisfaction any mechanic's, laborer's, materialman's, warehouseman's, or other lien or stop notice filed against the Eligible Property or Project funding within twenty (20) days after the date the lien or stop notice is filed. 5.6 Financial Statements. HOUSING ASSISTANCE CORPORATION, at its sole expense shall provide to CITY audited annual financial statements that are current, signed, and prepared according to generally accepted accounting principles consistently applied (except as otherwise disclosed therein) (i)within one hundred and eighty (180) days following the end of fiscal year(s) in which the HOME Funds are disbursed hereunder, and (ii) upon CITY's written request during the term of this Agreement. 5.7 Inspection and Audit. Any duly authorized representative of CITY, the State, or HUD shall, at all reasonable times, have access to and the right to inspect, copy, audit, and examine all books of account, records, and other documents of HOUSING ASSISTANCE CORPORATION relating to the Project for a period of six (6) years after the expiration of the Affordability Period. HOUSING ASSISTANCE CORPORATION will cooperate fully with CITY, the State, 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 Inspection of Property. Any duly authorized representative of CITY, the State, or HUD shall, at all reasonable times, have access and the right to inspect the Property until completion of the Project and expiration of the applicable Affordability Period within 72 hours written notice given in the manner provided hereunder. 5.9 Insurance. HOUSING ASSISTANCE CORPORATION shall maintain insurance with the coverages and in the amounts provided in Article 10. 5.10 Maintenance of Existence, Qualification, and Authority. HOUSING ASSISTANCE CORPORATION shall maintain the existence, qualifications, and authority necessary to continue its business and shall comply with all laws and regulations applicable to it, its property, and its operations, the noncompliance with which could materially affect its business, its financial condition, or the Project. 5.11 No Other Liens. HOUSING ASSISTANCE CORPORATION shall not create or incur, or suffer to be created or incurred, or to exist, any additional mortgage, pledge, encumbrance, lien, charge, or other security interest of any kind on the eligible Property, other than those related to the project's equity investment, deferred developer fee loan and construction or pre-development loans, without the prior written consent of CITY. 5.12 Nondiscrimination. HOUSING ASSISTANCE CORPORATION shall comply with and cause any and all contractors and subcontractors to comply with any and all federal, state, and local laws with regard to illegal discrimination, and HOUSING ASSISTANCE CORPORATION shall not illegally discriminate against any persons on 16 account of race, religion, sex, family status, age, handicap, or place of national origin in its performance of this Agreement and the completion of the Project. 5.13 Ownership. Except as required in pursuit hereof, HOUSING ASSISTANCE CORPORATION shall not sell, lease, transfer, assign or otherwise dispose of all or any material part of any interest it might hold in the Property or the Project without the prior written consent of CITY, which consent shall not be unreasonably withheld or delayed. 5.14 Payment of Liabilities. HOUSING,ASSISTANCE CORPORATION shall pay and discharge in the ordinary course of its business all material obligations and liabilities, 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 CITY in writing and are being contested in good faith. 5.15 Report of Events of Default. HOUSING ASSISTANCE CORPORATION shall promptly give written notice to CITY upon becoming aware of any Event of Default under this Agreement. 5.16 Use of Funds. HOUSING ASSISTANCE CORPORATION covenants and agrees that it shall use the HOME Funds only for Real Property Acquisition financing Eligible Costs. If any such Funds shall be determined to have been used by HOUSING ASSISTANCE CORPORATION for something other than an Eligible Cost, and subject to the notice and cure provisions of section 11.2 hereunder, an equal amount from nonpublic funds shall become immediately due and payable to CITY; provided, however, that HOUSING ASSISTANCE CORPORATION shall, subject to its full cooperation with CITY, be entitled to participate in any opportunity to remedy, contest, or appeal such determination. ARTICLE 6. DISBURSEMENT OF HOME FUNDS. Without waiver of limitation, the parties agree as follows regarding disbursement of HOME Funds: 6.1 Amount of Disbursement. HOME Funds shall be disbursed for Eligible Costs aggregating not more than Nine Hundred Thousand Dollars and no/100 ($900,000.00). CITY's obligations shall in no event exceed the HOME Funds amount specified in this Agreement. Any Project costs exceeding Nine Hundred Thousand Dollars and no/100 ($900,000.00), whether or not the costs qualify as Eligible Costs, shall be the sole responsibility of HOUSING ASSISTANCE CORPORATION. 6.2 Conditions Precedent to Disbursement. CITY shall not be obligated to make or authorize any disbursements of HOME Funds or take any other action under this Agreement unless the following conditions are satisfied: A. There exists no Event of Default as provided in Article 11, nor any act, failure, omission or condition that with the passage of time or the giving of notice or both would constitute an Event of Default; r� s 17 r } B. HOUSING ASSISTANCE CORPORATION has acquired insurance coverage and delivered to CITY evidence of insurance as required in Article 10; C. HOUSING ASSISTANCE CORPORATION has received and delivered to CITY a recorded Regulatory Agreement from the California Tax Credit Allocation Committee ("TCAC")for federal low-income housing tax credits in an amount not less than $201,777 annually for no more than ten (10) years; D. HOUSING ASSISTANCE CORPORATION has entered into, and upon written request has timely provided to CITY copies of Project surety bonds, agreements with all Funding Sources, and contractors for this Project; E. HOUSING ASSISTANCE CORPORATION has submitted evidence that the combined monies from the Funding Sources and the HOME Funds are not less than Six Million Six Hundred forty five Thousand Dollars and 00/100 ($6,445,000.00) attached hereto in EXHIBIT "C", the amount necessary to complete the Project; F. HOUSING ASSISTANCE CORPORATION is current with its compliance of all reporting requirements set forth in this Agreement; G. HOUSING ASSISTANCE CORPORATION has delivered a Project schedule satisfactory to CITY; H. CITY has received, and continues to the have the right to disburse, HOME Funds; I. HOUSING ASSISTANCE CORPORATION has provided CITY with a written request for HOME Funds for real property acquisition financing of Eligible Costs, and detailing such Eligible Costs applicable to the request; J. The environmental effects of the Project have been assessed in accordance with the provisions of NEPA, and HOME Funds have been approved for release pursuant to 24 CFR Part 58, which is the CITY's sole and complete responsibility; K. The Certification required by section 6.3 of this Agreement; and L. Rehabilitation of the Project has been completed using construction financing provided by a third party lender in an amount not less than the Loan combined, a Project-wide Certificate of Occupancy has been issued, and any required Loan Documents have been executed and delivered into escrow by HOUSING ASSISTANCE CORPORATION as provided for in this Agreement. 6.3 HOUSING ASSISTANCE CORPORATION Certification. HOUSING ASSISTANCE CORPORATION shall submit to CITY a written certification signed by HOUSING ASSISTANCE CORPORATION that, as of the date of the Disbursement: A. The representations and warranties of HOUSING ASSISTANCE CORPORATION contained in or incorporated by reference in this Agreement continue to be true, complete and accurate; f 18 B. The Project will be completed in accordance with Plans and Specifications and the construction contract(s), and that all labor and materials supplied or furnished and invoiced by the general contractor will be paid in full and that there are no liens or rights to liens with respect to such labor and materials; C. HOUSING ASSISTANCE CORPORATION has carried out all of its obligations and is in compliance with all the obligations or covenants specified in this Agreement, to the extent that such obligations or covenants are required to have been carried out or are applicable at the time of the request for the Disbursement; D. HOUSING ASSISTANCE CORPORATION has not committed or suffered an act, event, occurrence, or circumstance that constitutes an Event of Default or that with the passage of time or giving of notice or both would constitute an Event of Default; and E. The Disbursement requested will be used solely for real property acquisition financing of Eligible costs. HOUSING ASSISTANCE CORPORATION certification shall include a statement that the itemized obligations have been properly incurred, are properly chargeable in connection with the Project. 6.4 Disbursement of HOME Funds. CITY will disburse HOME Funds for real property acquisition financing of Eligible Costs of the Project as provided in this Article 6. 6.5 Documentation. HOUSING ASSISTANCE CORPORATION shall submit to CITY such other documentation, including but not limited to estimated closing statements, invoices for work completed and in place and for materials purchased and suitably stored, as CITY may reasonably request. 6.6 Existence, Qualification, and Authority. HOUSING ASSISTANCE CORPORATION shall provide to CITY any evidence required or requested by CITY to demonstrate the continuing existence, qualification, and authority of HOUSING ASSISTANCE CORPORATION to execute this Agreement and to perform the acts necessary to carry out the Project. 6.7 Marketing Plan. HOUSING ASSISTANCE CORPORATION shall adopt and provide CITY with a marketing plan detailing the procedures, requirements, and assessment criteria for affirmatively marketing the Affordable Housing that comprises the Project. HOUSING ASSISTANCE CORPORATION shall provide CITY with affirmative housing documents/instruments to be used in connection with the Project, which shall be in conformance with Section 4.2 of this Agreement. 6.8 Permits and Approvals. As CITY may reasonably request, HOUSING ASSISTANCE CORPORATION, at its sole cost and expense, shall provide to CITY copies of any and all permit approvals and authorizations including plot plan, plat, zoning variances, sewer, building, and other permits required by governmental authorities other than the CITY in pursuit of the Project and for its stated purposes in accordance with all applicable building, environmental, ecological, landmark, subdivision, zoning codes, laws, and regulations. 19 6.9 Property Insurance. HOUSING ASSISTANCE CORPORATION shall itself or through E.P. Investors LP, in addition to any and all insurance coverage required by Article 10, during the term hereof, maintain in full force and effect (a) policy(ies) of property insurance, acceptable to the CITY, covering the Project premises with limits reflective of the value of the Project premises upon issuance of the Certificate of Completion or substantial completion of all the rehabilitation work referenced in this agreement. ARTICLE 7. PREDEVELOPMENT OF PROJECT. Without waiver of limitation, the parties agree as follows regarding Predevelopment of the Project: 7.1 Contracts and Subcontracts. The Project work shall be performed by persons or entities licensed or otherwise legally authorized to perform the applicable work or service in the State of California and City of Fresno. HOUSING ASSISTANCE CORPORATION agrees to notify 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 party(ies)thereto. In the event HOUSING ASSISTANCE CORPORATION fails to comply with its obligations hereunder, HOUSING ASSISTANCE CORPORATION shall return to CITY all HOME Funds disbursed to HOUSING ASSISTANCE CORPORATION by CITY. 7.2 Financing. HOUSING ASSISTANCE CORPORATION shall promptly inform CITY of any changes in the amount, terms and/or sources of financing or funding for the Project. HOUSING ASSISTANCE CORPORATION shall provide CITY copies of all agreements with any and all Funding Sources for this Project upon CITY's written request. HOUSING ASSISTANCE CORPORATION shall require each agreement with any and all Funding Sources to contain a provision whereby the party(ies) to the agreement other than HOUSING ASSISTANCE CORPORATION, agree to (i) notify CITY immediately of any event of default by HOUSING ASSISTANCE CORPORATION thereunder; (ii) notify CITY immediately of termination or cancellation of the agreement; and (iii) provide CITY, upon CITY's request, an Estoppel Certificate certifying that the agreement is in full force and effect and HOUSING ASSISTANCE CORPORATION is not in default thereunder. HOUSING ASSISTANCE CORPORATION agrees to notify CITY immediately of termination or cancellation of any such agreement(s) or receipt of notice of default thereunder. HOUSING ASSISTANCE CORPORATION shall comply with all obligations of any such agreement(s) with any and all Funding Sources until the respective expiration of such agreement(s). In the event HOUSING ASSISTANCE CORPORATION fails to comply with its obligations of this Section and subject to Section 11.2 notice and cure provisions, HOUSING ASSISTANCE CORPORATION shall return to CITY all HOME Funds disbursed to HOUSING ASSISTANCE CORPORATION by CITY. This Section shall survive expiration or termination of this Agreement. 7.3 Insurance. HOUSING ASSISTANCE CORPORATION shall submit for CITY approval certificates and applicable endorsements for all insurance required by this Agreement in accordance with Article 10. 7.4 Permits and Licenses. HOUSING ASSISTANCE CORPORATION shall submit, for CITY approval, all the necessary permits and licenses required for Commencement of Construction or Rehabilitation. 20 7.5 Plans and Specifications. Before Commencement of Construction or Rehabilitation, HOUSING ASSISTANCE CORPORATION shall submit to CITY, for its review and approval, the final Plans and Specifications for the Project, which approved plans and specifications are by this reference incorporated herein. HOUSING ASSISTANCE CORPORATION will construct or rehabilitate the Rental Housing in full conformance with the Plans and Specifications and modifications thereto approved by CITY. HOUSING ASSISTANCE CORPORATION shall obtain CITY's prior written approval for any material modifications to the Plans and Specifications. ARTICLE 8. DEVELOPMENT OF PROJECT. Without waiver of limitation, the parties agree as follows regarding Development of the Project: 8.1 ADA/Barriers to the Disabled. The Rental Housing shall be maintained to comply with all applicable federal, state and local accessibility requirements, including without limitation, the multifamily residential construction or rehabilitation accessibility requirements set out at 24 CFR parts 8 and 9. There are no units designated for ADA compliance at this time. In the future, if required, HAC will accommodate ADA requirements. 8.2 Audits. Annually, within one hundred and eighty (180) days following the end of fiscal year(s) in which the HOME Funds are disbursed hereunder, and otherwise upon CITY's written request during the term of this Agreement, HOUSING ASSISTANCE CORPORATION, at its sole cost and expense shall submit to CITY audited Financial Statements covering the income and expenses, and the financial transactions for the Project during the prior fiscal year. HOUSING ASSISTANCE CORPORATION shall make available for examination at reasonable intervals and during normal business hours to CITY all books, accounts, reports, files and other papers or property with respect to all matters covered by this Agreement, and shall permit CITY to audit, examine and make excerpts or transcripts from such records. CITY may audit any conditions relating to this Agreement at the CITY's expense, unless such audit shows a significant discrepancy in information reported by HOUSING ASSISTANCE CORPORATION to CITY in which case HOUSING ASSISTANCE CORPORATION shall bear the cost of such audit. HOUSING ASSISTANCE CORPORATION shall also comply with any applicable audit requirements of 24 CFR 92.506. This Section shall survive expiration or termination of this Agreement. 8.3 Books, Records and Documents. HOUSING ASSISTANCE CORPORATION shall be accountable to CITY for all HOME Funds disbursed to HOUSING ASSISTANCE CORPORATION pursuant to this Agreement. The CITY shall have the right at all reasonable times to inspect or perform an audit, in accordance with Section 8.2, of HOUSING ASSISTANCE CORPORATION books, records and other documents pertaining to the Project or this Agreement and for up to six (6) years after the expiration or termination of this Agreement. HOUSING ASSISTANCE CORPORATION will maintain books and records for the Project using generally accepted accounting principles. HOUSING ASSISTANCE CORPORATION agrees to maintain books and records that accurately and fully show the date, 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 21 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, contracts/agreements, funding information, purchase orders, invoices, loan documents, computer printouts, correspondence, memoranda, and electronically stored versions of the foregoing. This section shall survive the expiration or termination of this Agreement. 8.4 Certificate of Completion. Upon completion of the construction and/or rehabilitation of the Project, HOUSING ASSISTANCE CORPORATION architect shall certify in writing to CITY that the Project Rental Housing has been constructed or rehabilitated in accordance with the Plans and Specifications and this Agreement. Upon (1) the architect's certification, (2) issuance of the Final Cost Certification to the California Tax Credit Allocation Committee, (3) issuance of a Certificate of Occupancy for that work or rehabilitation for which a Certificate of Occupancy is required (4) a determination by CITY that HOUSING ASSISTANCE CORPORATION is in compliance with all of HOUSING ASSISTANCE CORPORATION obligations under this Agreement, and (5) completion of an independent audit of the Project, CITY shall furnish within 30 calendar days of a written request by HOUSING ASSISTANCE CORPORATION, a recordable Certificate of Completion for the Project in the form attached hereto as EXHIBIT "E". CITY will not unreasonably withhold or delay furnishing the Certificate of Completion. If CITY fails to provide the Certificate of Completion within the specified time, it shall provide HOUSING ASSISTANCE CORPORATION with a written statement indicating in what respects HOUSING ASSISTANCE CORPORATION has failed to complete construction or rehabilitation of the Project in conformance with this Agreement or has otherwise failed to comply with the terms of this Agreement, and what measures HOUSING ASSISTANCE CORPORATION will need to take or what standards it will need to meet in order to obtain the Certificate of Completion. Upon HOUSING ASSISTANCE CORPORATION taking the specified measures and meeting the specified standards, HOUSING ASSISTANCE CORPORATION will certify to CITY in writing of such compliance and CITY shall deliver the recordable Certificate of Completion to HOUSING ASSISTANCE CORPORATION in accordance with the provisions of this section. HOUSING ASSISTANCE CORPORATION shall complete the Project no later than June 30, 2006. 8.5 Commencement of Construction or Rehabilitation. HOUSING ASSISTANCE CORPORATION shall begin construction or rehabilitation no later than ninety (90) days from the date of this Agreement. HOUSING ASSISTANCE CORPORATION shall not begin construction until all Predevelopment requirements in Article 7 have been met. 8.6 Completion of Construction or Rehabilitation. Following Commencement of Construction or Rehabilitation, HOUSING ASSISTANCE CORPORATION shall cause diligent prosecution of construction or rehabilitation to completion. HOUSING ASSISTANCE CORPORATION shall complete the rehabilitation work no later than June 30, 2006. 8.7 Configuration of the Project. HOUSING ASSISTANCE CORPORATION shall rehabilitate the Rental Housing in accordance with the Plans and Specifications. 8.8 Damage to Property. To the extent consistent with the requirements of any permitted encumbrance, or as otherwise approved by CITY, and subject to Article 10 of this 22 Agreement, if any building or improvement on the Property is damaged or destroyed by an insurable cause, HOUSING ASSISTANCE CORPORATION shall, at its cost and expense, diligently undertake to repair or restore said buildings and improvements consistent with the original Plans and Specifications for the Project. Such work or repair shall commence within ninety (90) days after the insurance proceeds are made available to HOUSING ASSISTANCE CORPORATION and shall be complete within one (1) year thereafter. All insurance proceeds collected for such damage or destruction shall be applied to the cost of such repairs or restoration and, if such insurance proceeds shall be insufficient for such purpose, HOUSING ASSISTANCE CORPORATION shall make up the deficiency. 8.9 Equal Employment Opportunity. HOUSING ASSISTANCE CORPORATION and its contractors, subcontractors and service providers for the Project shall comply with all applicable local, state, and federal requirements concerning equal employment opportunity and shall incorporate such requirements in all contracts for work on the Project. 8.10 Inspections. HOUSING ASSISTANCE CORPORATION shall permit, facilitate, and require its contractors to permit and facilitate observation and inspection at the job site by CITY and by public authorities during reasonable business hours for the purpose of determining compliance with this Agreement upon 72 hours written notice given in the manner provided herein, including without limitation those biennial on-site inspections required of CITY by 24 CFR 92.504(d). 8.11 Fees, Taxes and Other Levies. HOUSING ASSISTANCE CORPORATION shall be responsible for payment of all fees, assessments, taxes, charges and levies imposed by any public authority or utility company with respect to the Property or the Project, and shall pay such charges prior to delinquency. However, HOUSING ASSISTANCE CORPORATION shall not be required to pay and discharge any such charge so long as (a) the legality thereof is being contested diligently and in good faith and by appropriate proceedings, and (b) if requested by CITY, HOUSING ASSISTANCE CORPORATION deposits with CITY any funds or other forms of assurance CITY in good faith from time to time determines appropriate to protect CITY from the consequences of the contest being unsuccessful. 8.12 Mechanic's Liens 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 CITY or any other third party in connection with the Project, HOUSING ASSISTANCE CORPORATION shall, within twenty (20) days of such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to CITY a surety bond in sufficient form and amount, or provide CITY with other assurance satisfactory to CITY that the claim of lien or stop notice will be paid or discharged. A. If HOUSING ASSISTANCE CORPORATION fails to discharge, bond or otherwise satisfy CITY with respect to any lien, encumbrance, charge or claim referred to in Section 8.13, then in addition to any other right or remedy, CITY may, but shall not be obligated to, discharge such lien, encumbrance, charge, or claim at HOUSING ASSISTANCE CORPORATION expense. Alternatively, CITY may require HOUSING ASSISTANCE CORPORATION to immediately deposit with CITY the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. CITY may use such 23 deposit to satisfy any claim or lien that is adversely determined against HOUSING ASSISTANCE CORPORATION. HOUSING ASSISTANCE CORPORATION hereby agrees to indemnify and hold CITY harmless from liability for such liens, encumbrances, charges or claims together with all related costs and expenses. 8.13 Project Responsibilities. HOUSING ASSISTANCE CORPORATION shall be solely responsible for all aspects of HOUSING ASSISTANCE CORPORATION conduct in connection with the Project, including, but not limited to, the applicability of and compliance with all local, state and federal laws, the quality and suitability of the Plans and Specifications, the supervision of construction and rehabilitation work and the qualifications, financial conditions of and performance of all contractors, subcontractors and suppliers. Any review or inspection undertaken by CITY with reference to the Project is solely for the purpose of determining whether HOUSING ASSISTANCE CORPORATION is properly discharging its obligations to CITY, and shall not be relied upon by HOUSING ASSISTANCE CORPORATION or by any third parties as a warranty or representation by CITY as to the quality of the construction or rehabilitation of the Rental Housing. 8.14 Quality of Work. HOUSING ASSISTANCE CORPORATION shall ensure that construction or rehabilitation of the Rental Housing employs building materials of a quality suitable for the requirements of the Project. HOUSING ASSISTANCE CORPORATION shall cause completion of construction of the Rental Housing on the Property in full conformance with applicable local, state and federal laws, statutes, regulations, and building and housing codes. 8.15 Relocation. If and to the extent that development of the Project results in the permanent or temporary displacement of residential tenants, homeowners or businesses, HOUSING ASSISTANCE CORPORATION shall comply with all applicable local, state and federal statutes and regulations with respect to relocation planning, advisory assistance and payment of monetary benefits. HOUSING ASSISTANCE CORPORATION shall be solely responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with said relocation laws. For purposes of this section the parties acknowledge and agree that as of the date of this Agreement the Property is vacant. 8.16 Reporting Requirements. HOUSING ASSISTANCE CORPORATION shall submit to CITY the following reports: A. From the date of execution of this Agreement until issuance of a Certificate of Completion, HOUSING ASSISTANCE CORPORATION shall submit a Quarterly Report, in a form approved by CITY, which will include, at a minimum, the following information: progress of the Project and affirmative marketing efforts. The quarterly reports are due on February 28, May 31, August 31 and November 30. B. Annually, beginning on the first day of the month following City's issuance of the Certificate of Completion, and continuing until the expiration of this Agreement, HOUSING ASSISTANCE CORPORATION shall submit an Annual Report to CITY, in a form approved by CITY. The Annual Report shall include for each rental Unit covered by this Agreement: the rent, the annual income and the family size of the Household. The report shall also state the date the tenancy commenced for each rental 24 Unit, certification from an officer of HOUSING ASSISTANCE CORPORATION that the Project is in compliance with the Affordable Housing requirements, and such other information the CITY may be required by law to obtain. HOUSING ASSISTANCE CORPORATION shall provide any additional information reasonably requested by CITY. C. Annually, beginning on the first day of the month following CITY's issuance of the Certificate of Completion, and continuing until the expiration of the Agreement, HOUSING ASSISTANCE CORPORATION shall submit proof of insurance as required in Article 10. 8.17 Scheduling and Extension of Time; Unavoidable Delay in Performance. It shall be the responsibility of HOUSING ASSISTANCE CORPORATION to coordinate and schedule the work to be performed so that Commencement of Construction or Rehabilitation and issuance of the Certificate of Completion will take place in accordance with the provisions of the Agreement. CITY, through its CITY Manager or his/her designee, may extend such time in writing at its sole and absolute discretion. A. The time for performance of provisions of the Agreement by either party shall be extended for a period equal to the period of any delay directly affecting the Project or this Agreement which is caused by: war, insurrection, strike or other labor disputes, lock-outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of a public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, suits filed by third parties concerning or arising out of this Agreement, or unseasonable weather conditions. An extension of time for any of the above specified causes will be granted only if written notice by the party claiming such extension is sent to the other party within ten (10) calendar days from the date the affected party learns of the commencement of the cause and the resulting delay and such extension of time is accepted by the other party in writing. In any event, construction of the Rental Housing must be completed no later than one hundred eighty (180) calendar days after the scheduled completion date specified in this Agreement, notwithstanding 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 City Manager and HOUSING ASSISTANCE CORPORATION and shall not cumulatively exceed one hundred eighty (180) days. ARTICLE 9. PROJECT OPERATIONS. 9.1 Operation of Project. HOUSING ASSISTANCE CORPORATION or HOUSING ASSISTANCE CORPORATION authorized agents shall Lease, operate and manage the Project in full conformity with the terms of this Agreement. 9.2 Occupancy Requirements. Seventy of the Units shall be rented and occupied by or, if vacant, available for rental and occupancy by Low-Income and Very Low-Income Families with 100% of the Units preserved as Low-Income and Very Low-Income Rental Housing, (as variously provided at 24 CFR 92.252) for the term of this Agreement. HOUSING ASSISTANCE CORPORATION shall comply with the income targeting requirements of 24 CFR 92.216. 25 9.3 Leasing the Project. Before leasing any Units, HOUSING ASSISTANCE CORPORATION shall submit its proposed form of Lease for CITY's review and approval. HOUSING ASSISTANCE CORPORATION covenants and agrees to utilize only Leases that have been approved in advance by CITY. The CITY shall respond to HOUSING ASSISTANCE CORPORATION submission of a sample Lease within thirty (30) days. Should CITY not respond within thirty (30) days of Lease submittal, HOUSING ASSISTANCE CORPORATION shall be authorized to use the submitted sample Lease. Additionally, HOUSING ASSISTANCE CORPORATION agrees not to terminate the tenancy or to refuse to renew a Lease with a tenant of Rental Housing assisted with HOME Funds except for serious or repeated violation of the terms and conditions of the Lease, 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 30 days written notice served by HOUSING ASSISTANCE CORPORATION or its authorized management entity upon the tenant specifying the grounds for such action. HOUSING ASSISTANCE CORPORATION agrees it shall annually report to CITY the number of Leases that were not renewed or terminated and the reason for such non-renewal or termination. 9.4 Lease Provisions. In addition to the requirements of 24 CFR 92.253, the Leases are subject to the following: A. HOUSING ASSISTANCE CORPORATION shall include in Leases for all Units, provisions which authorize HOUSING ASSISTANCE CORPORATION to immediately terminate the tenancy of any Household one or more of whose members misrepresented any fact material to the Household's qualification as a Household for Low- Income or Very Low-Income Families and/or Developmentally Disabled. Each such Lease 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 or Very Low-Income Families 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) thirty percent (30%) of the Household's actual adjusted monthly income, except that, consonant with the Act, tenants of HOME Funds-assisted units that have been allocated Low Income Housing tax credits by a Housing Credit Agency pursuant to Section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42) must pay rent governed by Section 42. For purposes of Section 8.18 of this Agreement, the CITY hereby acknowledges the Owner Acknowledgment of IRS Section 42 (h) (6) (e) (ii) attached hereto as EXHIBIT "F". B. In addition, the Leases for Units shall provide that if the Project is subject to state or federal rules governing Low Income Housing tax credits, the provision of those rules regarding continued occupancy by, and increases in Rent for, Households whose incomes exceed the eligible income limitation, shall apply in place of the provisions set forth in Subsection (A) above. 9.5 Property Management. With respect to the Project and the Rental Housing, HOUSING ASSISTANCE CORPORATION shall comply with the following: A. Management Responsibilities. HOUSING ASSISTANCE CORPORATION, directly and/or through its designated management entity, is specifically responsible for all management functions with respect to the Project and the Rental Housing including, without limitation, the selection of tenants, certification and re- 26 1 I�. certification of Household size and income, evictions, collection of Rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items and security. CITY shall have no responsibility for such management of the Project. B. Management Entity. CITY shall have the right to review any management entity chosen by HOUSING ASSISTANCE CORPORATION for the Project. Any contracting of management services by HOUSING ASSISTANCE CORPORATION shall not relieve HOUSING ASSISTANCE CORPORATION of its primary responsibilities for proper performance of management duties. C. Final Management Plan. Before leasing the Rental Housing and at least sixty (60) calendar days prior to the Project Completion Date, HOUSING ASSISTANCE CORPORATION shall submit to CITY for review and approval a plan for marketing and managing the Rental Housing Final Management Plan (hereinafter referred to as the "Final Management Plan"). The Final Management Plan shall address in detail how HOUSING ASSISTANCE CORPORATION or its designated management entity plans to market the availability of Units to prospective tenants and how HOUSING ASSISTANCE CORPORATION plans to certify the eligibility of potential tenants. The Final Management Plan shall also address how HOUSING ASSISTANCE CORPORATION and the management entity plan to manage and maintain the Rental Housing, and 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 shall 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; • Employment/Income verification; • Occupancy restrictions; • Restrictions on use of the premises; and • Tenant/Landlord dispute resolution procedures. (1) 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 HOUSING ASSISTANCE CORPORATION proposes to enter into with Project tenants. HOUSING ASSISTANCE CORPORATION shall abide by the terms of this Final Management Plan, approved by CITY, in marketing, managing and maintaining the Rental Housing. (2) At least ninety (90) calendar days prior to the Project Completion Date, HOUSING ASSISTANCE CORPORATION shall also submit any proposed management contract to CITY for prior review. 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. 27 ' r l D. Maintenance and Security. HOUSING ASSISTANCE CORPORATION shall at its own expense maintain the Rental Housing in good condition, in good repair and in decent, safe, sanitary, habitable and tenantable living conditions for the benefit of Unit occupants. HOUSING ASSISTANCE CORPORATION shall not commit or permit any waste on or to the Rental Housing, and shall prevent and/or rectify any physical deterioration of the Rental Housing. HOUSING ASSISTANCE CORPORATION shall maintain the Rental Housing in conformance with all applicable federal, state and local laws, ordinances, codes and regulations, the Final Management Plan approved by CITY and this Agreement. 9.6 Nondiscrimination. All of the Units shall be available for occupancy on a continuous basis to members of the general public who are income eligible. HOUSING ASSISTANCE CORPORATION shall not illegally discriminate or segregate in the development, construction, use, enjoyment, occupancy, conveyance, lease, sublease or rental of any part of the Project or Property on the basis of race, color, ancestry, national origin, religion, sex, age, marital status, family status, source of income/rental assistance subsidy, physical or mental disability, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC), sexual orientation, or any other arbitrary basis. HOUSING ASSISTANCE CORPORATION shall otherwise comply with all applicable local, state and federal laws concerning nondiscrimination in housing. Neither HOUSING ASSISTANCE CORPORATION nor any person claiming under or through HOUSING ASSISTANCE CORPORATION, shall establish or permit any such practice or practices of illegal discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees of any Unit or in connection with employment of persons for the operation and management of any Unit. All deeds, leases or contracts made or entered into by HOUSING ASSISTANCE CORPORATION as to the Units or the Rental Housing or portion thereof, shall contain covenants concerning nondiscrimination consistent with this section. HOUSING ASSISTANCE CORPORATION shall include a statement in all advertisements, notices and signs for availability of Units for rent to the effect that HOUSING ASSISTANCE CORPORATION is an Equal Housing Opportunity Provider. A. Nothing in this section is intended to require HOUSING ASSISTANCE CORPORATION to change the character, design, use or operation of the Project; or to require HOUSING ASSISTANCE CORPORATION to obtain licenses or permits other than those required for a rental housing development for persons capable of independent living. 9.7 Rent Schedule and Utility Allowances. HOUSING ASSISTANCE CORPORATION covenants and agrees not to charge rent for Units in an amount which exceeds those rents prescribed to the Project as they associate with particular income and rent limitation levels as established annually by the California Tax Allocation Committee and contained in a recorded Regulatory Agreement with said State agency, consistent with HOME Program requirements applicable to the Affordable Housing in the Fresno, California area, as established by HUD, and further covenants and agrees not to impose a monthly allowance for utility services to tenants of such Units in excess of an amount approved by HUD in accordance with 24 CFR 92.252. HOUSING ASSISTANCE CORPORATION agrees to furnish to CITY a certificate setting forth the maximum monthly rentals for Units and the monthly allowances for utilities and services to be charged during any annual period until the expiration of the Affordability Period. HOUSING ASSISTANCE 28 CORPORATION shall reexamine the income of each tenant Household living in the Units at least annually. 9.8 Affordable Housing. HOUSING ASSISTANCE CORPORATION covenants and agrees that 70 Units of the Project shall constitute Affordable Housing, with not less than 100% of the Units preserved as Very Low-income Rental Housing during the entire Affordability Period. In the event that HOUSING ASSISTANCE CORPORATION fails to comply with the time period in which the Project must constitute Affordable Housing, CITY shall be entitled to enjoin HOUSING ASSISTANCE CORPORATION from leasing the Units in the Project, as HOUSING ASSISTANCE CORPORATION acknowledges that damages are not an adequate remedy at law for such breach. ARTICLE 10. INDEMNITY AND INSURANCE. Without waiver of limitation, the parties agree as follows regarding HOUSING ASSISTANCE CORPORATION Insurance and Indemnity Obligations: 10.1 Insurance Coverage. Throughout the life of this Agreement, HOUSING ASSISTANCE CORPORATION shall itself and/or through its contractors/subcontractors pay for and maintain in full force and effect all policies of insurance required hereunder with an insurance company(ies) either(1) admitted by the California Insurance Commissioner to do business in the State of California and rated not less than "A-VII" in Best's Insurance Rating Guide, or (2) authorized by CITY's Risk Manager. The following policies of insurance are required: (i) COMMERCIAL GENERAL LIABILITY insurance which shall include contractual, products and completed operations coverages, bodily injury and property damage liability insurance with combined single limits of not less than $1,000,000 per occurrence. (ii) COMMERCIAL AUTOMOBILE LIABILITY insurance, is not applicable. (iii) WORKERS' COMPENSATION insurance as required under the California Labor Code. A. The above described policies of insurance shall be endorsed to provide an unrestricted thirty (30) day written notice in favor of CITY, of policy cancellation, change or reduction of coverage, except for the Workers' Compensation policy which shall provide a ten (10) day written notice of such cancellation, change or reduction of coverage. In the event any policies are due to expire during the term of this Agreement, 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(ies). Upon issuance by the insurer, broker, or agent of a notice of cancellation, change or reduction in coverage, HOUSING ASSISTANCE CORPORATION or its contractors/subcontractors, as the case may be, shall file with CITY a certified copy of the new or renewal policy and certificates for such policy. B. The General Liability and Automobile Liability insurance policies shall be written on an occurrence form and shall name CITY, its officers, officials, agents, 29 employees and volunteers as an additional insured. Such policy(ies) of insurance shall be endorsed so HOUSING ASSISTANCE CORPORATION insurance shall be primary and no contribution shall be required of CITY. HOUSING ASSISTANCE CORPORATION shall furnish CITY with the certificate(s) and applicable endorsements for ALL required insurance prior to CITY's execution of this Agreement. HOUSING ASSISTANCE CORPORATION shall furnish CITY with copies of the actual policies upon the request of CITY's Risk Manager at any time during the life of the Agreement or any extension. C. If at any time during the life of this Agreement or any extension, HOUSING ASSISTANCE CORPORATION fails to maintain the required insurance in full force and effect, all work under this Agreement shall be discontinued immediately, and all payments due or that become due to HOUSING ASSISTANCE CORPORATION shall be withheld until notice is received by CITY that the required insurance has been restored to full force and effect and that the premiums therefore have been paid for a period of one (1) year thereafter. Any failure to maintain the required insurance, subject to Section 11.2, notice and cure, shall be sufficient cause for CITY to terminate this Agreement. D. If HOUSING ASSISTANCE CORPORATION should contract all or any portion of the work to be performed under this Agreement other than to professional service providers as provided in Section 10.3, HOUSING ASSISTANCE CORPORATION shall require each contractor and subcontractor to provide insurance protection in favor of CITY, its officers, officials, employees, agents and volunteers in accordance with the terms of each of the preceding paragraphs, except that the contractors' and subcontractors' certificates and endorsements shall be on file with HOUSING ASSISTANCE CORPORATION and CITY prior to the commencement of any work by the respective contractor or subcontractor. E. The CITY's Risk Manager may, but is not obligated to, accept other than an "any auto" endorsement for commercial automobile liability insurance upon prior written request certifying the reasons for the request. 10.2 Indemnity. HOUSING ASSISTANCE CORPORATION shall indemnify, hold harmless and defend CITY and each of its officers, officials, employees, agents and volunteers from any and all loss, liability, fines, penalties, forfeitures, costs 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 CITY, HOUSING ASSISTANCE CORPORATION or any other person, and from any and all claims, demands and actions in law or equity (including attorney's fees and litigation expenses), arising or alleged to have arisen directly or indirectly out of performance of this Agreement. HOUSING ASSISTANCE CORPORATION obligations under the preceding sentence shall apply regardless of whether CITY or any of its officers, officials, employees, agents or volunteers are passively negligent, but shall not apply to any loss, liability, fines, penalties, forfeitures, costs or damages caused by the active negligence or by the willful misconduct of CITY or any of its officers, officials, employees, agents or volunteers. A. If HOUSING ASSISTANCE CORPORATION should contract all or any portion of the work to be performed under this Agreement other than professional service providers as provided in Section 10.3, HOUSING ASSISTANCE CORPORATION shall require each contractor and subcontractor to indemnify, hold harmless and defend CITY 30 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 this Agreement. 10.3 Professional Services. If HOUSING ASSISTANCE CORPORATION should contract all or any portion of the work to be performed under this Agreement to any consultant, architect, landscape architect, engineer, or construction project manager, then HOUSING ASSISTANCE CORPORATION shall require each such contractor to indemnify, hold harmless and defend CITY and each of its officers, officials, employees, agents and volunteers in accordance with the terms of the following Subsection A and to provide insurance protection in favor of CITY, its officers, officials, employees, agents and volunteers in accordance with the terms of the following Subsection B, except that the contractors' certificates and endorsements shall be on file with HOUSING ASSISTANCE CORPORATION and CITY prior to the commencement of any work by the respective contractor. A. Indemnification. Except with regard to professional negligent errors and omissions, as provided in the paragraph below, such contractor shall indemnify, hold harmless and defend CITY and each of its officers, officials, employees, agents and volunteers from any and all loss, liability, fines, penalties, forfeitures, costs 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 CITY, contractor, subcontractor or any other person, and from any and all claims, demands and actions in law or equity(including attorney's fees and litigation expenses), arising or alleged to have arisen directly or indirectly out of performance of this Agreement. Contractor's obligations under the preceding sentence shall apply regardless of whether CITY or any of its officers, officials, employees, agents or volunteers are passively negligent, but shall not apply to any loss, liability, fines, penalties, forfeitures, costs or damages caused by the active negligence or by the willful misconduct of CITY or any of its officers, officials, employees, agents or volunteers. (1) Specifically regarding professional negligent errors and omissions, contractor shall indemnify, hold harmless and defend CITY and each of its officers, officials, employees, agents and volunteers from any and all loss, liability, fines, penalties, forfeitures, costs 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 CITY, contractor, or any other person, and from any and all claims, demands and actions in law or equity (including attorney's fees and litigation expenses), to the proportionate extent that it arises out of or in connection with the professional negligent errors or omissions of contractor in the performance of this Agreement. (2) If contractor should subcontract all or any portion of the work to be performed under this Agreement, contractor shall require each subcontractor to indemnify, hold harmless and defend CITY and each of its officers, officials, employees, agents and volunteers in accordance with the terms of the preceding paragraphs. (3) This section shall survive termination or expiration of this Agreement. 31 B. Insurance. Throughout the life of this Agreement, contractor shall pay for and maintain in full force and effect all policies of insurance required hereunder with an insurance company(ies) either(i) admitted by the California Insurance Commissioner to do business in the State of California and rated not less than "A-VII" in Best's Insurance Rating Guide, or(ii) authorized by CITY's Risk Manager. The following policies of insurance are required: (i) COMMERCIAL GENERAL LIABILITY insurance which shall include contractual, products and completed operations coverages, bodily injury and property damage liability insurance with combined single limits of not less than $1,000,000 per occurrence. (ii) COMMERCIAL AUTOMOBILE LIABILITY insurance, N/A. (iii) PROFESSIONAL LIABILITY insurance (Errors and Omissions)with a limit of liability of not less than $1,000,000 per occurrence. (iv) WORKERS' COMPENSATION insurance as required under the California Labor Code. (1) The above described policies of insurance shall be endorsed to provide an unrestricted thirty(30) day written notice in favor of CITY, of policy cancellation, change or reduction of coverage, except for the Workers' Compensation policy which shall provide a ten (10) day written notice of such cancellation, change or reduction of coverage. In the event any policies are due to expire during the term of this Agreement, contractor shall provide a new certificate evidencing renewal of such policy not less than fifteen (15) days prior to the expiration date of the expiring policy(ies). Upon issuance by the insurer, broker, or agent of a notice of cancellation, change or reduction in coverage, contractor shall file with CITY a certified copy of the new or renewal policy and certificates for such policy. (2) The General Liability and Automobile Liability insurance policies shall be written on an occurrence form and shall name CITY, its officers, officials, agents, employees and volunteers as an additional insured. Such policy(ies) of insurance shall be endorsed so contractor's insurance shall be primary and no contribution shall be required of CITY. In the event claims made forms are used for any Professional Liability coverage, either(i)the policy(ies) shall be endorsed to provide not less than a five (5) year discovery period, or(ii)the coverage shall be maintained for a minimum of five (5) years following the termination of this Agreement and the requirements of this section relating to such coverage shall survive termination or expiration of this Agreement. Contractor shall furnish CITY with the certificate(s) and applicable endorsements for ALL required insurance prior to Commencement of Construction. Contractor shall furnish CITY with copies of the actual policies upon the request of CITY's Risk Manager at any time during the life of the Agreement or any extension. (3) If at any time during the life of the Agreement or any extension, contractor fails to maintain the required insurance in full force and effect, all work under this Agreement shall be discontinued immediately, and all payments due or that become due to 32 contractor shall be withheld until notice is received by HOUSING ASSISTANCE CORPORATION and CITY that the required insurance has been restored to full force and effect. (4) If contractor should subcontract all or any portion of the work to be performed under this Agreement, contractor shall require each subcontractor to provide insurance protection in favor of CITY, its officers, officials, employees, agents and volunteers in accordance with the terms of each of the preceding paragraphs, except that the subcontractors' certificates and endorsements shall be on file with HOUSING ASSISTANCE CORPORATION and CITY prior to the commencement of any work by the respective subcontractor. 10.4 Property Insurance. Upon Acquisition of the Property, HOUSING ASSISTANCE CORPORATION shall pay for and maintain, throughout the remaining life of this Agreement, property insurance including fire and ECE coverage in an amount, form, substance, and quality as outlined in E. P. Investors LP Investment Agreement with the Project's syndicator, acceptable to the CITY's Risk Manager. ARTICLE 11. DEFAULT AND REMEDIES. 11.1 Events of Default. The parties agree that each of the following shall constitute an "Event of Default" for purposes of this Agreement: A. HOUSING ASSISTANCE CORPORATION use of HOME Funds for costs other than Eligible Costs or for uses not permitted by the terms of this Agreement; B. HOUSING ASSISTANCE CORPORATION failure to obtain and maintain the insurance coverage required under this Agreement; C. The failure of HOUSING ASSISTANCE CORPORATION to make any payment according to the tenor and effect of this Agreement and the Loan Documents, including, but not limited to, any payment of principal, interest, premiums, penalties, taxes, etc., when and as the same shall become due and payable, whether at maturity, by acceleration, or otherwise; D. Except as otherwise provided in this Agreement, the failure of HOUSING ASSISTANCE CORPORATION to punctually and properly perform any other covenant or agreement contained in this Agreement including without limitation the following: (1) HOUSING ASSISTANCE CORPORATION substantial deviation in the rehabilitation or construction work specified in the Plans and Specifications submitted to CITY, without CITY's prior written consent; (2) HOUSING ASSISTANCE CORPORATION use of defective or unauthorized materials or defective workmanship in constructing the Rental Housing; (3) HOUSING ASSISTANCE CORPORATION failure to commence or complete construction or rehabilitation, as specified in this Agreement, unless delay is permitted under Section 8.17 of this Agreement; (4) the cessation of rehabilitation or construction for a period of more than 15 consecutive days (other than as provided at Section 8.17 of this Agreement) prior to submitting to CITY, pursuant to Section 8.4, certification that the Project is complete; (5) any material adverse change in the condition of HOUSING ASSISTANCE CORPORATION or the Project that gives CITY reasonable 33 cause to believe that construction on the Rental Housing cannot be completed by the scheduled completion date according to the terms of this Agreement; (6) HOUSING ASSISTANCE CORPORATION failure to remedy any deficiencies in record keeping or failure to provide records to CITY upon CITY's request; (7) HOUSING ASSISTANCE CORPORATION failure to substantially comply with any federal, state or local laws or applicable CITY restrictions governing construction of the Rental Housing hereunder, including but not limited to provisions of this Agreement pertaining to equal employment opportunity, nondiscrimination and lead-based paint; E. Any representation, warranty, or certificate given or furnished by or on behalf of HOUSING ASSISTANCE CORPORATION shall prove to be materially false as of the date of which the representation, warranty, or certification was given, or that HOUSING ASSISTANCE CORPORATION concealed or failed to disclose a material fact to CITY, provided, however, that if any representation, warranty, or certification that proves to be materially false is due merely to HOUSING ASSISTANCE CORPORATION' inadvertence, HOUSING ASSISTANCE CORPORATION 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; F. HOUSING ASSISTANCE CORPORATION 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 fourteen (14) days; or shall be adjudicated bankrupt or insolvent, under any present or future statute, law, regulation, under state or federal law, and such judgment or decree is not vacated or set aside within fourteen (14) days; G. HOUSING ASSISTANCE CORPORATION failure, inability or admission in writing of its inability to pay its debts as they become due or HOUSING ASSISTANCE CORPORATION assignment for the benefit of creditors; H. A receiver, trustee, or liquidator shall be appointed for HOUSING ASSISTANCE CORPORATION or any substantial part of HOUSING ASSISTANCE CORPORATION's assets or properties, and not be removed within ten (10) days; I. The failure of HOUSING ASSISTANCE CORPORATION to cause completion of the Project prior to June 30, 2006; J. HOUSING ASSISTANCE CORPORATION breach of any other material condition, covenant, warranty, promise or representation contained in this Agreement not otherwise identified within this Section 11.1; K. Any substantial or continuous breach by HOUSING ASSISTANCE CORPORATION of any material obligation owed by HOUSING ASSISTANCE CORPORATION imposed by any other agreement with respect to the financing, development, construction or operation of the Project or the Rental Housing, whether or not CITY is a party to such agreement; and 34 L. Any failure to comply with Section 8.18 subject to any time allowed to cure contained within said section. 11.2 Notice of Default and Opportunity to Cure. CITY shall give written notice to HOUSING ASSISTANCE CORPORATION of any Event of Default by specifying (1)the nature of the event or deficiency giving rise to the default, (2) the action required to cure the deficiency, if any action to cure is possible, and (3) a date, which shall not be less than the lesser of any time period provided in this Agreement, any time period provided for in the notice, or thirty (30) calendar days from the date of the notice, by which such deficiency must be cured, provided that if the specified deficiency or default cannot reasonably be cured within the specified time, with CITY's written consent HOUSING ASSISTANCE CORPORATION 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. 11.3 Remedies Upon an Event of Default. Upon the happening of an Event of Default by HOUSING ASSISTANCE CORPORATION and a failure to cure said Event of Default within the time specified, CITY's obligation to disburse HOME Funds shall terminate. CITY may also at its option and without notice institute any action, suit, 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 CITY may choose in its sole discretion: A. Terminate this Agreement immediately upon written notice to HOUSING ASSISTANCE CORPORATION, in which event all HOME Funds disbursed to HOUSING ASSISTANCE CORPORATION by CITY shall be returned to CITY; B. Bring an action in equitable relief(1) seeking specific performance by HOUSING ASSISTANCE CORPORATION 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 C. Pursue any other remedy allowed by law or in equity or under this Agreement. ARTICLE 12. GENERAL PROVISIONS. Without waiver of limitation, the parties agree that the following general provisions shall apply in the performance hereof: 12.1 Amendments. No modification or amendment of any provision of this Agreement shall be effective unless made in writing and signed by the parties hereto. 12.2 Attorney's Fees. 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 attorney's fees and legal expenses. 35 12.3 Binding on All Successors and Assigns. 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 heirs, successors, assigns, and legal representatives. 12.4 Counterparts. 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 party hereto will not become effective until counterparts hereof have been executed by all parties hereto. 12.5 Disclaimer of Relationship. Nothing contained in this Agreement, nor any act of CITY or of HOUSING ASSISTANCE CORPORATION, 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. 12.6 Discretionary Governmental Actions. Certain planning, land use, zoning and other permits and public actions required in connection with the Project including, without limitation, the approval of this Agreement, the environmental review and analysis under NEPA 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 otherwise discretionary in nature. The CITY cannot take action with respect to such matters before completing the environmental assessment of the Project under NEPA 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, law or equity, to HOUSING ASSISTANCE CORPORATION 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. 12.7 Effective Date. This Agreement shall be effective upon the date first above written. 12.8 Entire Agreement. This Agreement represents the entire and integrated agreement of the parties with respect to the subject matter hereof. This Agreement supersedes all prior negotiations, representations or agreements, either written or oral. 12.9 Exhibits. Each exhibit and attachment referenced in this Agreement is, by the reference, incorporated into and made a part of this Agreement. 12.10 Expenses Incurred Upon Event of Default. HOUSING ASSISTANCE CORPORATION shall reimburse CITY for all reasonable expenses and costs of collection and enforcement, including reasonable attorney's fees, incurred by CITY as a result of one or more Events of Default by HOUSING ASSISTANCE CORPORATION under this Agreement. 12.11 Governing Law and Venue. Except to the extent preempted by applicable federal law, the laws of the State of California shall govern all aspects of this Agreement, including execution, interpretation, performance, and enforcement. Venue for filing any action to enforce or interpret this Agreement will be Fresno, California. 36 12.12 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. 12.13 Interpretation. This Agreement in its final form is the result of the combined efforts of the parties. Any ambiguity will not be construed in favor or against any party, but rather by construing the terms in accordance with their generally accepted meaning. 12.14 No Assignment or Succession. Except as may be otherwise expressly provided by this Agreement, neither this Agreement, nor any interest of HOUSING ASSISTANCE CORPORATION in, under, or to this Agreement, or the Project, may be assigned or transferred by HOUSING ASSISTANCE CORPORATION without the prior written consent of CITY, which consent shall not be unreasonably withheld or delayed. Any assignment without consent is null and void. 12.15 No Third-Party Beneficiary. No contractor, subcontractor, mechanic, materialman, laborer, vendor, or other person hired or retained by HOUSING ASSISTANCE CORPORATION shall be, nor shall any of them be deemed to be, third-party beneficiaries of this Agreement, but each such person shall be deemed to have agreed (a) that they shall look to HOUSING ASSISTANCE CORPORATION as their sole source of recovery if not paid, and (b) except as otherwise agreed to by CITY and any such person in writing, they may not enter any claim or bring any such action against CITY under any circumstances. Except as provided by law, or as otherwise agreed to in writing between CITY and such person, each such person shall be deemed to have waived in writing all right to seek redress from CITY under any circumstances whatsoever. 12.16 No Waiver. Neither failure nor delay on the part of 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 HOUSING ASSISTANCE CORPORATION therefrom shall be effective unless the same shall be in writing, signed on behalf of CITY by a duly authorized officer thereof, and the same shall be effective only in the specific instance for which it is given. No notice to or demand on HOUSING ASSISTANCE CORPORATION in any case shall entitle HOUSING ASSISTANCE CORPORATION to any other or further notices or demands in similar or other circumstances, or constitute a waiver of any of CITY's right to take other or further action in any circumstances without notice or demand. 12.17 Nonreliance. HOUSING ASSISTANCE CORPORATION hereby acknowledges having obtained such independent legal or other advice as it has deemed necessary and declares that in no manner has it relied on the CITY, it agents, employees or attorneys in entering into this Agreement. 12.18 Notice. 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 specified in writing by the parties. 37 If to the CITY: Planning and Development Department Housing and Community Development Division Attn: Division Manager 2600 Fresno Street, Room 3076 Fresno, CA 93721-3605 If to HOUSING ASSISTANCE CORPORATION: Chief Executive Officer P.O. Box 11863 Fresno, CA 93775-1863 12.19 Precedence of Documents. In the event of any conflict between the body of this Agreement and any exhibit or attachment hereto, the terms and conditions of the body of this Agreement will control. 12.20 Recording of Documents. HOUSING ASSISTANCE CORPORATION agrees to cooperate with CITY and execute any documents required, promptly upon CITY's request, and to promptly effectuate the recordation of this Agreement, the Declaration of Restrictions, the Deed of Trust, and any other documents/instruments that the CITY requires to be recorded, in the Official Records of Fresno County, California, consistent with this Agreement. 12.21 Remedies Cumulative. All powers and remedies given by this Agreement shall be cumulative and in addition to those otherwise provided by law. 12.22 Severability. 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. 38 IN WITNESS WHEREOF, the parties have executed this Agreement at Fresno, California, the day and year first above written. CITY OF FRESNO a Municipal Corporation By: ANDREW T. SOUZA Assistant City Manager (Attach notary certificate of acknowledgment) ATTEST: APPROVED AS TO FORM: REBECCA E. KLISCH HILDA CANTO MONTOY City Clerk City Attorney -41 �� Deputy DetxW/A—ssistant HOUSING A,$SISTANCE CORPORATION, a California ilonprofit public benefit corporation. Kathleen Paley, Chief Fzxecuti Officer (Attach notary certificate of acknowledgment) Attachments: EXHIBIT A: Legal Description of Property and Project Description EXHIBIT B: Promissory Note EXHIBIT C: Budget EXHIBIT D: Declaration of Restrictions EXHIBIT E: [Exemplar] Certificate of Completion EXHIBIT F: Owner Acknowledgment of IRS Section 42 (h) (6) (e) (ii) °r r 39 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT t State of California ss. I County of Fresno I On June 25, 2004 before me, Maureen L. Barnes, Notary Public Dale Name and TAW of Officer(e.g,'Jane Doe,Notary Pubilo personally appeared Andrew T. Souza** Name(s)of Signer(s) 1 & personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed INAlJ12EEN L.BARNES the same in his/her/their authorized COMM.#1402455 c, � F'iJ9L1C,CAI.IFpRNIp � capacity(ies), and that by his/her/their f�IflTAR!' �- FREUBM-CPm' signature(s) on the instrument the person(s), or ) hty Corrlrn,Expkes Feb.z5,2007 the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Place Notary Seal Above S3gnalwa ul Notary Public i OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document I• Title or Type of Document:Agreement with Housing Assistance Corporation Document Date: Julaa 25, 2004 Number of Pages: 55 I � 1 Signer(s) Other Than Named Above: i acity(ies) Claimed by Signer Signer's M. I ❑ Individual Top of lhurlib here ❑ Corporate Officer—Title s . ❑ Partner—❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: rl Signer Is Representing: ©1997 National Notary Association-9350 De Solo Ave.,P.O.Box 2402-Chatsworth,CA 91313-2402 Prod,No.5907 Reorder:Call Toll-Free 1-800-876-6827 ALL-PURPOSE ACKNOWLEDGEMENT State of California SS. County of _GYP",no On June 11 , 2004 before me, Barbara J. Russell Notary Public , (DATE) (NOrA RY) personally appeared Xa h1 PPn F I _y _ SIGNER{S1 [X] personally known to me - OR - ❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. +� BARBARA J.RUSSELL U COMM.#1336257 (� NOTARY PUBLIC-CALIFORNIAG) WITNESS my hand and official seal. FRESNO COUNTY n COMM.EXP.JAN.21,W NOTA SIGNAT R[ OPTIONAL INFORMATION The information below is not required by law. However, it could prevent fraudulent attachment of this acknowl- edgement to an unauthorized document. CAPACITY CLAIMED BY SIGNER (PRINCIPAL) DESCRIPTION OF ATTACHED DOCUMENT ❑ INDIVIDUAL ❑ CORPORATE OFFICER TITLE OR TYPE OF DOCUMENT TirLE(s) ❑ PARTNER(S) ❑ ATTORNEY-IN-FACT NUMBER OF PAGES ❑ TRUSTEE(S) ❑ GUARDIAN/CONSERVATOR DATE OF DOCUMENT ❑ OTHER: OTHER v d SIGNER IS REPRESENTING: RIGHT THUMBPRINT NAME OF PERSON(S)OR ENTITY(IES) .Q OF E SIGNER 0 a APA 5/99 VALLEY-SIERRA, 800-362-3369 EXHIBIT "A" Legal Description Parcel 1: Lots 2 through 18 of Tract No. 3648, RIVERVIEW, in the City of Fresno, County of Fresno, State of California, according to the map thereof recorded in Book 42, Page 75 of Plats, Fresno County Records. Excepting therefrom one half of all oil, gas, minerals and hydrocarbon rights, without right of surface entry as reserved by American Physical Fitness Research Institute, Inc., a California non-profit corporation by deed recorded November 15, 1968, in Book 5635, Page 256 of Official Records, as Document No. 81246. Parcel 2: Lots 2 through 10 inclusive, and Lot 18 of Tract No. 3647, RIVERVIEW, in the City of Fresno, County of Fresno, State of California, according to the map thereof recorded in Book 42, page 74 of Plats, Fresno County Records. Excepting therefrom one half of all oil, gas, minerals and hydrocarbon rights without right of surface entry as reserved by Gateways Mental Health Center Endowment Fund in that Deed recorded August 28, 1968, in Book 5608, Page 1 of Official Records as Document No. 60629. 40 ,: EXHIBIT "A" (continued) Fresno Emerald Palms —Avalon/Regency-APN's Address APN Numbers 4402 West Avalon 509-210-105 4403 West Avalon 509-210-095 4410 West Avalon 509-210-115 4411 West Avalon 509-210-085 4418 West Avalon 509-210-125 4419 West Avalon 509-210-075 4426 West Avalon 509-210-135 4427 West Avalon 509-210-065 4434 West Avalon 509-210-145 4435 West Avalon 509-210-055 4442 West Avalon 509-210-155 4443 West Avalon 509-210-045 4450 West Avalon 509-210-165 4451 West Avalon 509-210-035 4458 West Avalon 509-210-175 4459 West Avalon 509-210-025 4464 West Avalon 509-210-185 4293 West Regency 509-220-035 4301 West Regency 509-220-045 4311 West Regency 509-220-055 4319 West Regency 509-220-065 4327 West Regency 509-220-075 4335 West Regency 509-220-085 4340 West Regency 509-220-105 4347 West Regency 509-220-095 41 EXHIBIT "A" (continued) Project Description Brierwood Court consists of twenty five triplexes comprising 75 units of existing rental housing. The project includes 75 garages and zero parking spaces. The property is located in the vicinity of Gates and Salinas Avenues in Northwest Fresno, with units fronting the 4400 block of West Avalon and the 4200 and 4300 block of West Regency Avenues in Fresno CA. Upon acquisition and rehabilitation of the property, the units will be rented according to the following: • 22 Units will rent to family of households earning at or below 50% of Area Median Income; - 51 Units will be rented to family of households earning at or below 60% of Area Median Income; • 1 Unit will be for the resident property manager; and 1 Unit will be converted to a community multipurpose use facility. 42 EXHIBIT "B" DO NOT DESTROY THIS NOTE: When paid, this note, must be surrendered to Borrower for Cancellation. PROMISSORY NOTE $900,000.00 �—Fresno, California , 2004 For value received, the undersigned, HOUSING ASSISTANCE CORPORATION, a Not-For-Profit Development Corporation, a California nonprofit public benefit corporation, ("Borrower"), promises to pay to the order of the City of Fresno, a California municipal corporation, ("Lender"), the sum of NINE HUNDRED THOUSAND Dollars, (590fl 000.00), without interest; all due and payable on or before the earlier of termination or expiration of the parties' Home Investment Partnerships Program Agreement and the Fifty five (55) year Affordability Period provided therein dated [_ j ("HOME Agreement") to which this Promissory Note relates, on which date the unpaid principal balance (interest free) together with unpaid penalties or late charges where applicable thereon shall be due and payable, along with attorney's fees and costs of collection, and without relief from valuation and appraisement laws, provided that if Borrower fully complies with the terms of the HOME Agreement, Loan Documents (including this Promissory Note) and HUD regulations at 24 CFR Part 92 for the entire Affordability Period, then all principal due shall be forgiven, this Note canceled and the trustee instructed to reconvey pro rata the securing Deed of Trust. All capitalized terms used in this Note, unless otherwise defined, will have the respective meanings specified in the HOME Agreement In addition, as used in this Note, the following terms will have the following meanings: Business Day 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. However, if the extension would cause the payment to be made in a new calendar month, that payment will be made on the next preceding Business Day. Maturity Date means the earlier of termination or expiration of the HOME Agreement and its twenty (20) year Affordability Period. The Affordability Period begins on the date the Lender issues the Certificate of Completion. This Note, and any extensions or renewals hereof, is secured by a Deed 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 date as this Note, and executed in favor of and delivered to the Lender("Deed of Trust"), through escrow# 5624846-JP, insured as a not worse than 3rd position lien on the Property. Time is of the essence. It will be a default under this Note if Borrower defaults under 43 the HOME Agreement, defaults under any other Loan Documents, or if Borrower fails to pay when due any sum payable under this Note. In the event of a default by Borrower, 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 under this Note or any other Loan Documents then to the interest and then to principal balance. On the occurrence of a 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. 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 Note 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, and in the absence of that designation. Borrower agrees to pay all costs including, without limitation, attorney fees, incurred by the holder of this Note in enforcing payment, whether or not suit is filed, and including, without limitation, all costs, attorney fees, and expenses incurred by the holder of this Note in connection with any bankruptcy, reorganization, arrangement, or other similar proceedings involving the undersigned 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. Borrower will pay to Lender all attorney fees and other costs referred to in this paragraph on demand. Any notice, demand, or request relating to any matter set forth herein shall be in writing and shall be given as provided in the HOME Agreement. No delay or omission of Lender in exercising any right or power arising in connection with any default will be construed as a waiver or as an acquiescence, nor will any single or partial exercise preclude any further exercise. Lender may waive any of the conditions in this Note and no waiver will be deemed to be 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: DUE ON SALE—CONSENT BY BENEFICIARY. Beneficiary may, at its option, declare immediately due and payable all sums secured by this Deed of Trust upon the sale or transfer, without the Beneficiary's prior written consent, of all or any part of the Property, or any interest in the Property. A "sale or transfer" means the 44 conveyance of the Property or any right, title or interest therein; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three (3) years, lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Property, or by any other method of conveyance of land interest. If any Trustor is a corporation, partnership or limited liability, company, transfer also includes any change in ownership of more than twenty-five percent (25%) of the voting stock, partnership interests or limited liability company interests, as the case may be, of Trustor. However, this option shall not be exercised by Beneficiary if such exercise is prohibited by applicable law. 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 their respective successors and assigns. Borrower agrees 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 performance, and that none of its terms or provisions may be waived, altered, modified, or amended except as Lender may consent to in a writing duly signed by Lender or its authorized agents. In witness whereof, Borrower has caused this Promissory Note to be executed by its authorized agent as of the date and year first above written. HOUSING ASSISTANCE CORPORATION, a California nonprofit public benefit corporation. By: Kathleen Paley, Chief Executive Officer (Attach notary certificate of acknowledgment) Date: 45 r y f EXHIBIT "C" PROFORMA BUDGET Sources and Uses Brierwood Court (previously Emerald Palms) Sources of Funds Equity Investor $1,545,651.00 Washington Mutual 3,902,457.00 HOME Funds (City of Fresno) 900,000.00 Deferred Developer Fee 264,070.00 Net Rent During Construction 66.000.00 TOTAL $6,678,178.00 Uses of Funds Acquisition $4,100,000.00 Rehabilitation 1,080,000.00 Financing Costs 376,539.00 Soft Costs 980,839.00 Reserves 140.800.00 TOTAL $6,678,178.00 46 EXHIBIT "D" DECLARATION OF RESTRICTIONS Recorded at the Request of and When Recorded Return to: City of Fresno Planning and Development Department Housing and Community Development Division 2600 Fresno Street, Room 3076 Fresno, CA 93721-3605 Attention: Housing Manager (SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY) DECLARATION OF RESTRICTIONS THIS DECLARATION OF RESTRICTIONS, ("Declaration"), is executed as of this day of , 2004, by HOUSING ASSISTANCE CORPORATION, a California nonprofit public benefit corporation, ("Declarant'), in favor of the City of Fresno, a California municipal corporation ("CITY'). WHEREAS, E. P. Investors, LP ("E. P. Investors") is the owner of the real estate in the county of Fresno, state of California, consisting of APNs attached, which is more particularly described in EXHIBIT "A", attached hereto and made a part hereof, including the improvements thereon (the "Property"), and by its subscription below consents to the recordation of this Declaration; and WHEREAS, Declarant and CITY have entered into a certain Home Investment Partnerships Program Agreement dated ("Home Agreement'), whereby Declarant agrees to rehabilitate and maintain upon the Property certain rental housing with not less than 100% of 73 Units to be preserved as Low Income and Very Low Income Affordable Rental Housing, 30% (22) Units for individuals and families with income at 50% AMI or below and 70% (51) Units for individuals and families with income at 60% or below, subject to the terms and conditions set forth in the HOME Agreement; and WHEREAS, in addition to the covenants and conditions contained in the Home Agreement, the Declarant has agreed at the special instance and request of the CITY and upon good and sufficient consideration, to impose or cause to be imposed certain U.S. HUD HOME Program (24 CFR 92.252; 24 CFR 92.504(c)(3)(vii)) affordability requirements, covenants and restrictions upon the 11 Units on the Property funded under the Home Agreement, which affordability restrictions must be enforceable for a fifty five (55) year period; and 47 WHEREAS, these restrictions are intended to bind Declarant, E. P. Investors, and all purchasers of the Property and their 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, restrictions, and limitations set forth in this Declaration, all of which are declared and agreed to be in furtherance of Brierwood Court, the CITY's general, consolidated and annual action plans and housing element(s)therein and Home Program requirements. 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 or other transferee of an interest covering any right, title or interest in any part of the Property, by accepting a deed or a contract of sale or agreement of purchase, accepts the document subject to, and agrees to be bound by, any and all restrictions, covenant, and limitations set forth in this Declaration for the period of fifty five (55) years running from and after recordation of CITY's Certificate of Completion constituting the Affordability Period. 1. Declarations, Declarant hereby declares that the Property is and shall be subject to the covenants and restrictions hereinafter set forth, all of which are declared to be in furtherance of the Property, Brierwood Court, the Home Agreement, the CITY's general, consolidated and annual action plans and housing element(s) therein including Home Program affordability requirements, covenants and restrictions at 24 CFR 92.252; 24 CFR 92.504 (c) (3) (vii)), and are established and agreed upon for the purpose of enhancing and protecting the value of the Property and in consideration the Home Agreement and the above recitals. All terms not otherwise defined herein shall have the meaning ascribed to such term in the Home Agreement. 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 the CITY and shall run with the Property and be binding on any future owner's of the Property and inure to the benefit of and be enforceable by CITY. These covenants and restrictions are as follows: a. Declarant for itself and its successor(s) on title covenants and agrees that from the date of recordation of CITY's Certificate of Completion until the expiration of the fifty five (55) year Affordability Period it shall cause the 11 of the 75 Project Units funded under the HOME Agreement to be used as housing affordable to low and very low-income families with 100% of 73 Units preserved as Low Income and Very Low-Income Rental Housing, 30% (22) Units for individuals and families with income at 50% AMI or below and 70% (51) Units for individuals and families with income at 60% or below, as provided for in the Home Agreement. Declarant further agrees to file a recordable document setting forth the project Completion Date and the Affordability Period as and when determined by the CITY. Unless otherwise provided in the HOME Agreement, the term affordable rental housing shall include without limitation compliance with the following requirements: 48 ✓ i. r Nondiscrimination. There shall be no discrimination against nor 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 Declarant, 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 Property. Principal Residence. Each of the Units constituting the Project upon the Property shall be leased only to natural persons, who shall occupy such as a principal residence. Income Requirements. Each of the 73 Units constituting Affordable Rental Housing upon the Property may be leased only to (a) natural person(s) whose annual household income at the time of initial occupancy is not greater than sixty percent (60%) 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 price consistent with the rules established by the California Tax Credit Allocation Committee for the Brierwood Court Project and the applicable Home Program regulations. Iniunctive_Relief and Recapture. Should any of the 73 Units constituting Affordable Rental Housing upon the Property not continue to be, at the time of initial occupancy, the principal residence of a Household that qualifies as a low-income or very low income Household with 100% of the Units preserved as Very Low-Income Rental Housing during the period of Affordability, such Unit(s) shall be made available for subsequent lease only to Households that qualify as a low-income or very low-income for use as the Household's principal residence with 100% of the Units preserved as Very Low-Income Rental Housing. b. Item (a) above is hereinafter referred to as the Covenant and Restriction. 3. Enforcement of 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, and shall, in addition, be entitled to damages for any injuries or losses resulting from any violations thereof. 4. Acceptance and Ratification. 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 Restriction. The acceptance of a deed of conveyance to the Property shall constitute an agreement that the Covenant and Restriction, as such may be amended or supplemented from time to time, is accepted and ratified 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 or estate in the Property, all as though such Covenant and Restriction was recited and stipulated at length in each and every deed, conveyance, mortgage or lease thereof. Provided, however, if this Declaration has been subordinated to a Deed of Trust and the Property is transferred by foreclosure to the holder of the Deed of Trust or an assignee of such holder, 49 ��'� who is not Declarant or an affiliate of Declarant, then this Declaration shall be of no further force and effect except that if the Property is subsequently transferred to any party prior chargeable with this Declaration, then the Declaration shall revive. 5. Benefit_ This Declaration shall run 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 Fresno, state of California, and expiring upon the expiration of the Affordability Period. The failure or delay at any time of CITY and/or any other person entitled to enforce this Declaration shall in no event be deemed a waiver of the same, or of the right to enforce the same at any time or from time to time thereafter, or an estoppel against the enforcement thereof. 6. Costs and Attorne s Fees. In any proceeding arising because of failure of Declarant or any future owner of the Property to comply with the Covenant and Restriction required by this Declaration, as may be amended from time to time, CITY shall be entitled to recover its respective costs and reasonable attorney's fees incurred in connection with such default or failure. 7. Waiver. Neither Declarant nor any future owner of the Property may exempt itself from liability for failure to comply with the Covenant and Restriction required in this Declaration. 8. Severabili# . The invalidity of the Covenant and Restriction 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. 9. Pronouns. Any reference to the masculine, feminine, or neuter gender 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. 12. Recordation. Declarant acknowledges that this Declaration will be filed of record in the Office 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 HOME Agreement. 14. Headings. The headings of the articles, sections, and paragraphs used in 50 this Declaration are for convenience only and shall not be read or construed to affect the meaning or construction of any provision. IN WITNESS WHEREOF, Declarant has executed this Declaration of Restrictions on the date first written above. Declarant: HOUSING ASSISTANCE CORPORATION, a California nonprofit public benefit corporation. By: Kathleen Paley, Chief Executive Officer (Attach notary certificate of acknowledgment) Date: CONSENT OF OWNER E. P. Investors, LP, the owner of record of the Property, consents to recording this Declaration of Restrictions against the Property described herein. E. P. Investors, LP By: Date: (Attach notary certificate of acknowledgment) 51 r EXHIBIT "E" [SPECIMEN] CERTIFICATE OF COMPLETION RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City of Fresno Planning and Development Department Housing and Community Development Division 2600 Fresno Street, Room 3076 Fresno, CA 93721-3605 Attention: Housing Manager (SPACE ABOVE THIS LINE FOR RECORDER'S USE) This Certificate of Completion 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 6103. City of Fresno By: Its: Housing Manager Dated: 200 52 L' ] J 1 Certificate of Completion Recitals: A. By a HOME Investment Partnerships Program Agreement dated _ ("Home Agreement") between the City of Fresno, a municipal corporation ("CITY"), and HOUSING ASSISTANCE CORPORATION, a California nonprofit public benefit corporation, ("HOUSING ASSISTANCE CORPORATION"), HOUSING ASSISTANCE CORPORATION agreed to construct or rehabilitate an affordable housing rental project known as Brierwood Court ("Project") upon the premises legally described in Attachment "A" hereto (the "Property") and preserve not less than 73 of the Units as Affordable Rental Housing, with the assistance of HOME funds while meeting the affordable housing, income targeting and other requirements of 24 CFR 92.252 for the fifty five (55) year Affordability Period according to the terms and conditions of the HOME Agreement and the Loan Documents referenced therein. B. The HOME Agreement or a memorandum of it was recorded 200_ as Instrument No. in the Official Records of Fresno County, California. C. Under the terms of the HOME Agreement, after HOUSING ASSISTANCE CORPORATION completes the rehabilitation or construction on the Property, HOUSING ASSISTANCE CORPORATION may ask CITY to record a Certificate of Completion. D. HOUSING ASSISTANCE CORPORATION has asked CITY to furnish HOUSING ASSISTANCE CORPORATION with a recordable Certificate of Completion. E. The CITY's issuance of this Certificate of Completion is conclusive evidence that HOUSING ASSISTANCE CORPORATION has completed the rehabilitation or construction on the Property as set forth in the Home Agreement. NOW THEREFORE: 1. CITY certifies that HOUSING ASSISTANCE CORPORATION commenced the construction or rehabilitation work on the rental housing Project on _ and completed the construction work on the rental housing Project on and has done so in full compliance with the HOME Agreement. 2. This Certificate of Completion is not evidence of HOUSING ASSISTANCE CORPORATION 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 the Property or Project, or any part of the Property or Project. Nothing contained herein modifies any provision of the HOME Agreement. 3. This Certificate of Completion is not a notice of completion as referred to in 53 California Civil Code Section 3093. 4. Nothing contained herein modifies any provision of the HOME Agreement. IN WITNESS WHEREOF, CITY has executed this Certificate of Completion as of this day of . 2004. CITY OF FRESNO By: Its: CONSENT OF OWNER E. P. Investors, LP, the owner of record of the Property, consents to recording this Certificate of Completion against the Property described herein. Dated: Owner: E. P. Investors, LP HOUSING ASSISTANCE CORPORATION, A Not-For-Profit Development Corporation a California nonprofit public benefit corporation its general partner. By: Kathleen Paley, Chief Executive Officer (Attach notary certificate of acknowledgment) Date: THE ABOVE PARTIES ARE TO SIGN THIS INSTRUMENT BEFORE A NOTARY PUBLIC. ATTEST: APPROVED AS TO FORM: CITY CLERK CITY ATTORNEY By_____..__ By= Deputy Assistant/Deputy Dated: Dated: 54 EXHIBIT "F" [EXEMPLAR - INCLUDE IF REQUIRED PER TAX CREDIT FINANCING] Owner Acknowledgment of IRS Section 42 h 6 e ii As indicated by the signature below, the Owner executing the carryover allocation for The Brierwood Court acknowledges that IRS Section 42 (h) (6) (e) (ii) does not permit the eviction or termination of tenancy(other than for good cause) of an existing tenant of any low-income unit or any increase in the gross rent with respect to such unit not otherwise permitted under Section 42 for a period of three years after the date the building is acquired by foreclosure or instrument in lieu of foreclosure. The owner further agrees that this requirement will be acknowledged in lender loan documents and will be incorporated in the California Tax Credit Allocation Committee Regulatory Agreement which will be recorded against the property. Owner: E. P. Investors, LP By: HOUSING ASSISTANCE CORPORATION, A Not-For-Profit Development Corporation a California nonprofit public benefit corporation its general partner. By: Kathleen Paley, Chief Executive Officer (Attach notary certificate of acknowledgment) Date: 55 " .. �A.