HomeMy WebLinkAboutC-9806-1 - Affordable Housing Loan Agreement for the Travelodge North Homekey Project at 1400 Bristol Street, Costa MesaAFFORDABLE HOUSING
LOAN AGREEMENT
by and between
CITY OF NEWPORT BEACH,
a California municipal corporation and charter city
and
AMERICAN FAMILY HOUSING,
a California nonprofit, public benefit corporation
1400 BRISTOL PROJECT
1400 Bristol Street
Costa Mesa, California
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RECITALS
ARTICLE 1
ARTICLE 2
ARTICLE 3
ARTICLE 4
ARTICLE 5
ARTICLE 6
ARTICLE 7
ARTICLE 8
ARTICLE 9
ATTACHMENTS
TABLE OF CONTENTS
DEFINITIONS......................................................................3
FINANCING.......................................................................13
DEVELOPMENT OF PROJECT...............................................19
USEOF PROPERTY............................................................. 23
OPERATING STANDARDS ................................................... 24
DEFAULT AND REMEDIES .................................................. 26
ASSIGNMENT AND TRANSFER.............................................28
NONDISCRIMINATION.........................................................28
GENERAL.........................................................................30
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AFFORDABLE HOUSING LOAN AGREEMENT
This AFFORDABLE HOUSING LOAN AGREEMENT ("Agreement") is made and
entered into on 'V-Ona �, 24 , 2025, by and between the CITY OF NEWPORT
BEACH, a California municipa corporation and charter city ("City"), and AMERICAN FAMILY
HOUSING, a California nonprofit, public benefit corporation ("Developer").
RECITALS
A. The County of Orange ("County") is in the process of acquiring the buildings and
related structures located at 1400 Bristol Street, Costa Mesa, California, currently known as
Travelodge, and legally described and depicted in Attachment No. 1, attached hereto and
incorporated herein by reference, and which is identified as Assessor's Parcel Number 439-312-
12 ("Property"), and intends to lease the property to the Developer.
B. In connection with this Agreement and associated documents, Developer will
rehabilitate, construct and operate the Property as seventy-six (76) affordable units ("Affordable
Units") for households experiencing homelessness or who are at risk of homelessness (as defined
in Part 578.3 of Title 24 of the Code of Federal Regulations), who are impacted by the COVID-19
pandemic, and who earn thirty percent (30%) or less of the Area Median Income (AMI), plus
supportive facilities and two unrestricted Manager's Units ("Project"). The Scope of Development
of the Project is further described in Attachment No. 2, attached hereto and incorporated herein by
reference. The make-up of the tenant distribution and assistance for the Project is detailed in the
Tenant Leasing Plan in Attachment No. 3, attached hereto and incorporated herein by reference.
C. Developer has requested assistance from the City to assist Developer to lease,
rehabilitate, manage and maintain the Project as long-term affordable housing at an Affordable
Rent throughout the Affordability Period, as set forth in more detail in this Agreement and the
Regulatory Agreement. The City desires to assist Developer by providing financial assistance to
Developer in the form of a loan of in an amount not to exceed Three Million Dollars
($3,000,000.00) from the City's general fund ("City Loan"). The City Loan is being utilized by
Developer to finance eligible construction costs associated with completing the Project and
initiating operations. The permitted income levels of the tenants of each Qualified Housing Unit
and the permissible rents to be charged for tenancy and occupancy of each Qualified Housing Unit
are set forth in this Agreement.
D. As apart of the implementation of the Project, the County in cooperation with and
through the U.S. Department of Housing and Urban Development ("HUD"), will provide forty-
eight (48) project -based vouchers to Developer, including ten (10) Veterans Affairs Supportive
Housing (VASH) project -based vouchers in the Project.
E. With the City Loan, the Project will be subject to this Agreement, the Regulatory
Agreement, Affordability Covenants and Restrictions, and other associated documents and
requirements as set forth in this Agreement.
F. As further described herein, the Project provides affordable housing for occupancy
by qualified and eligible Extremely Low Income Households, and covenants and restricts
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occupancy and tenancy of the Affordable Units to qualified Extremely Low Income Households
at an Affordable Rent for the 55-year Affordability Period as further described herein.
G. The City Loan will be funded and sourced only from the general fund.
H. The development of the Project is in the best interest of the City and the health,
safety, and welfare of the residents of the City, and in accordance with the public purposes and
provisions of applicable federal, state, and local laws and requirements.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and
conditions herein contained, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
For the purposes of this Agreement, the following capitalized terms not defined elsewhere
in this Agreement shall have the following meanings:
1.1 "Affiliate" means (1) any Person directly or indirectly controlling, controlled by or
under common control with another Person; (2) any Person owning or controlling ten percent
(10%) or more of the outstanding voting securities of such other Person; or (3) if that other Person
is an officer, director, member or partner, any company for which such Person acts in any such
capacity. The term "control" as used in the immediately preceding sentence, shall mean the power
to direct the management or the power to control election of the board of directors. It shall be a
presumption that control with respect to a corporation, limited liability company or limited
partnership is the right to exercise or control, directly or indirectly, more than fifty percent (50%)
of the voting rights attributable to the controlled corporation, limited liability company or limited
partnership, and, with respect to any individual, partnership, trust, other entity or association,
control is the possession, indirectly or directly, of the power to direct or cause the direction of the
management or policies of the controlled entity.
1.2 "Affordability Period" shall mean the duration of the affordable housing
requirements and other covenants of and as required by this Agreement and as set forth in the
Regulatory Agreement. The Affordability Period shall be from the earlier of: (i) fifty-five (55)
years from the date the Notice of Commencement of Affordability Restriction is issued by City
and caused to be recorded in the Official Records of Orange County (the "Official Records")
against the Property; or (ii) if not able to be determined, fifty-seven (57) years after the date of this
Agreement. Commencement of the Affordability Period shall be memorialized in a Notice of
Commencement of Affordability Restriction and recorded as provided in Section 2.8 of this
Agreement.
1.3 "Affordable Rent" means the maximum affordable rent, including a reasonable
utility allowance, for extremely low-income households which shall not exceed the product of 30
percent times 30 percent of the AMI adjusted for family size appropriate for the unit pursuant to
California Health and Safety Code Section 50053.
1.4 "Affordable Unit" means the seventy-six (76) housing units (not including the two
(2) Manager's Units) to be developed as part of the Project and will go through the County's
Coordinated Entry System. Sixteen (16) of which shall have a local preference of residents of the
City of Costa Mesa ("Costa Mesa") and twelve (12) of which shall have a local preference of
residents of the City ("Newport Beach Preference Units").
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1.5 "Agreement" shall mean this Affordable Housing Loan Agreement between City
and Developer, including all Attachments, exhibits and other documents attached hereto.
1.6 "Area Median Income or AMI for Orange County" means the most recent
applicable county family income published by HCD.
1.7 "Annual Financial Statement" shall mean the certified financial statement of
Developer for Project using generally accepted accounting principles (GAAP), as separately
accounted for this Project, including Operating Expenses and Annual Project Revenue, as prepared
annually and provided to the City at Developer's expense, by an independent certified public
accountant reasonably acceptable to the City.
1.8 "Annual Project Revenue" shall mean all gross income and all revenues of any kind
from the Project in a calendar year of whatever form or nature, whether direct or indirect, with the
exception of the items excluded below, received by or paid to or for the account or benefit of
Developer or any of their agents or employees, from any and all sources, resulting from or
attributable to the ownership, operation, leasing and occupancy of the Project, determined on the
basis of generally accepted accounting principles applied on a consistent basis, and shall include,
but not be limited to: (i) gross rentals paid by tenants of the Project under leases, and payments
and subsidies of whatever nature, including without limitation any payments, Portable Vouchers,
other vouchers or subsidies from HUD or other governmental agency (including Section 8
payments by HUD, the State of California, County of Orange, or any other governmental agency,
any person or any organization, received on behalf of tenants under their leases), (ii) amounts paid
to Developer on account of Operating Expenses for finther disbursement by Developer to a third
party or parties, (iii) late charges and interest paid on rentals, (iv) rents and receipts from licenses,
concessions, vending machines, coin laundry and similar sources; (v) other fees, charges or
payments not denominated as rental but payable to Developer in connection with the rental of
office, retail, storage, or other space in the Project; (vi) consideration received in whole or in part
for the cancellation, modification, extension or renewal of leases, and (vii) interest and other
investment earnings on security deposits, reserve accounts and other Project accounts to the extent
disbursed. Notwithstanding the foregoing, Annual Project Revenue shall exclude the following
items: (a) security deposits from tenants (except when applied by Developer to rent or other
amounts owing by tenants); (b) capital contributions to Developer by its members, partners or
shareholders (including capital contributions required to pay any Deferred Developer Fees); (c)
condemnation or insurance proceeds; (d) funds received from any source actually and directly used
for acquisition of the Property and/or initial development of the Project; or (e) receipt by an
Affiliate of management fees or other bona fide arms -length payments for reasonable and
necessary Operating Expenses associated with the Project.
1.9 "Applicable Federal Rate" shall mean the interest rate set by the United States
Treasury from time to time pursuant to Section 1288(b) of the Internal Revenue Code. The
Applicable Federal Rate is published by the Internal Revenue Service in monthly revenue rulings.
1.10 "Building Permit" or "Building Permits" shall mean each and all of the building
permit(s) issued by Costa Mesa and required to commence and complete construction of the
Project and includes any permit or other approval required by any other public or governmental
agency with jurisdiction over the Property and/or Project.
1.11 "Capital Replacement Reserve" shall mean a separate reserve fimd account to be
established and maintained by Developer equal to not less than Five Hundred Dollars ($500.00)
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per year for each Housing Unit in the Project, to be used as the primary resource to fund capital
improvements, and replacement improvements. The amount of $500.00 for each Housing Unit
that is set aside by Developer (or its Property Manager) shall be allocated from the gross rents
received from the Property and deposited into a separate interest -bearing trust account for capital
repairs and replacements to the improvements, fixtures and equipment at the Property that are
normally capitalized under generally accepted accounting principles, including, without limitation,
the following: carpet and drape replacement; appliance replacement; exterior painting, including
exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs,
showers, toilets, lavatories, sinks, and faucets; air conditioning and heating replacement; asphalt
repair, replacement, and seal coating; roofing repair and replacement; landscape tree replacement;
irrigation pipe and controls replacement; gas line pipe replacement; lighting fixture replacement;
elevator replacement and upgrade work; miscellaneous motors and blowers; common area
furniture replacement; and common area repainting. The non -availability of funds in the Capital
Replacement Reserve does not in any manner relieve Developer of the obligation to undertake
necessary capital repairs and improvements and to continue to maintain the Property and all
common areas and common improvements in the manner prescribed herein. Pursuant to the
procedure for submittal of each annual Operating Budget to the City Manager by Developer, the
City Manager will evaluate the cumulative amount on deposit in the Capital Replacement Reserve
account and exercise his or her sole, reasonable discretion to determine if existing balance(s) in,
proposed deposits to, shortfalls, if any, and/or a cumulative unexpended/unencumbered account
balance in such Capital Replacement Reserve account are adequate to provide for necessary capital
repairs and improvement to the Property.
1.12 "Capitalized Operating Reserve" shall mean the capitalized operating reserve for
the Project, which shall be funded by loan proceeds.
1.13 "Certification of Continuing Program Compliance" shall mean the form of annual
certification of the affordable housing requirements for operation of the Project.
1.14 "City" shall mean the City of Newport Beach, a California municipal corporation
and charter city, having its offices at 100 Civic Center Drive, Newport Beach, CA 92660.
1.15 "City Loan" shall mean and consist of the financial assistance of Three Million
Dollars ($3,000,000.00) sourced solely from the City's general fund, as more particularly provided
in Section 2.1. The City Loan is evidenced by the City Note and is secured by the City Deed of
Trust and Security Agreement.
1.16 "City Deed of Trust" shall mean a deed of trust securing the City Note and other
obligations of Developer hereunder substantially in the form of Attachment No. 4, attached hereto
and fully incorporated herein by this reference. The City Deed of Trust shall be a third mortgage
deed of trust, subordinate only to a loan or loans issued by an approved lender. Developer has been
awarded a Twenty Nine Million Dollars ($29,000,000.00) Homekey Award ("Homekey"). It is
currently contemplated that Developer will be obtaining certain loans from the County of Orange
in the total amount of Six Million Seven Hundred Eighty One Thousand Five Hundred Twenty
Dollars ($6,781,520.00) ("County Loan"), a loan in an amount not to exceed Two Million Five
Hundred Thousand Dollars ($2,500,000.00) from the Housing Authority of the City of Costa
Mesa's Low to Moderate Income Housing Asset Fund ("Costa Mesa Loan") and a grant of Costa
Mesa ARPA funding in an amount not to exceed One Million Five Hundred Thousand Dollars
($1,500,000.00) ("Costa Mesa ARPA Grant"), and deferred development fees in the amount of
Eight Hundred Nineteen Thousand Six Hundred Sixty Dollars ($819,660.00). The County Loan
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shall be known as the "Primary Loan." In the event Developer were to obtain a new loan or funding
that is not approved by or otherwise permitted under this Agreement without the prior written
consent of the City, the City Note and City Deed of Trust shall not be subordinated and shall be
and remain a senior lien and encumbrance against the Property and Project, subordinate only to
the Regulatory Agreement.
1.17 "City Note" shall mean the promissory note, substantially in the form of
Attachment No. 5, attached hereto and fully incorporated herein by this reference, which evidences
the City Loan consisting of general funds.
1.18 "City Title Policy" shall have the meaning set forth in Section 2.6.9 and shall be a
lender's policy of title insurance insuring the full amount of the City Loan.
1.19 "Closing" and "Closing of Financing" shall mean the closing of the Escrow and
recordation in the Official Records of Orange County, California of the City Deed of Trust,
Regulatory Agreement, and related instruments evidencing this transaction.
1.20 "Commercial Lease" shall mean either of the following: (i) that certain
Supercharger Agreement dated as of December 1, 2021, in favor of Tesla, Inc., as may be amended
from time to time; or (ii) any lease by the Borrower to any third party of the approximately
[...... ] square feet of commercial space located on the ground floor of the Project provided
that the use of such space is compatible with the operation of the Project in accordance with this
Agreement.
1.21 "Developer" shall mean American Family Housing, a California non-profit public
benefit corporation, having its principal offices at 15161 Jackson Street, Midway City, California
92655 or its newly created limited liability company, 1400 Bristol LLC, in which American Family
Housing is the sole member. The term "Developer" includes any legally permissible assignee or
successor to the rights, powers, and responsibilities of Developer hereunder, in accordance with
Article 8 of this Agreement.
1.22 "Effective Date" shall mean the date this Agreement is approved by the City, which
date shall be inserted in the preamble to this Agreement.
1.23 "Eligible Expenses" shall mean expenses incurred by Developer for construction
related activities (e.g. hard costs) for the Rehabilitation of the Project, and converting the units
from nonresidential to residential. Any remaining funds may be used for expenses such as
furniture, fixtures, and equipment for purposes of preparing the Affordable Units for operation as
Permanent Supportive Housing. Eligible Expenses do not include: (1) expenses that have already
been funded through other sources; (2) site acquisition; and/or (3) certain soft costs such as
financing services and fees and/or initial operating deficit reserve.
1.24 "Escrow" shall mean the escrow established for the disposition of the Property by
to the Developer and the closing concurrently of the financings that include the lenders referenced
in 2.9 below.
1.25 `Extremely Low -Income Household" shall mean a household with annual income
not exceeding thirty percent (30%) of AMI as provided under the income standard of HSC Section
50106, and such households shall pay an Affordable Rent pursuant to HSC Sections 50052.5 and
50053.
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1.26 `Extremely Low -Income Units" or "Extremely Low Units" shall mean the seventy-
six (76) Affordable Units to be leased and occupied by Extremely Low -Income Households at an
Affordable Rent during the Term of the Project.
1.27 "Funding Conditions" shall mean the conditions set forth in Section 2.6 of this
Agreement that must be satisfied prior to the City providing the City Loan to Developer.
1.28 "Funding Conditions Satisfaction Date" shall mean the date on which all of the
Funding Conditions are actually satisfied or waived by the City.
1.29 "HCD" means the California Department of Housing and Community
Development.
1.30 "Housing Unit" or "Housing Units" means the seventy-eight (78) individual
apartment units at the Property to be rehabilitated, managed, and operated by Developer as a long-
term affordable housing and in implementation of the Project. The Project shall have thirty-six
(36) studio Housing Units, forty (40) one -bedroom Housing Units, and two (2) two -bedroom
onsite Manager's Unit.
1.31 "Improvements" means all improvements, improvements pertaining to the realty,
furnishings, fixtures, works of improvement now existing or hereafter constructed on any portion
of the Property and all work of rehabilitation, new construction, or other revitalization to the
existing improvements at the Property, including, without limitation, buildings; landscaping, trees
and plant materials; and offsite improvements, including, without limitation, streets, curbs, storm
drains, and adjacent street lighting, which will be caused to be undertaken by Developer in
completion of the Project pursuant to this Agreement and all other Project Documents.
1.32 "Notice of Affordability Restriction" shall mean that document attached to this
Agreement as Attachment No. 6.
1.33 "Notice of Commencement of Affordability Restriction" shall mean the document
attached to this Agreement as Attachment No. 7.
1.34 "Operating Budget" shall mean the annual operating budget for the Project that sets
forth the projected Operating Expenses for the upcoming year that is submitted to and reviewed
and approved by the City Manager in his or her discretion, which shall not be unreasonably
conditioned, delayed or denied. During and for the Affordability Period, the City Manager's
discretion in review and approval of each proposed annual Operating Budget shall include, without
limitation, (a) the budget shall be reasonably consistent with comparable Permanent Supportive
Housing projects in Orange County, California, (b) may include review of individual categories,
line items, and accounts, such as the following: (i) extent, type, and amount for social/supportive
services, if any, at or associated with the Project; (ii) existing balance(s) in and proposed deposits
to the Capital Replacement Reserve and Capitalized Operating Reserve to evaluate shortfalls
and/or cumulative unexpended/unencumbered deposits (provided that required annual deposits
into the Capitalized Replacement Reserve are not required to exceed $500/per unit and the amount
maintained in the Capitalized Operating Reserve is not required to exceed the Target Amount);
(iii) limitation of payments under loans for approved and scheduled Debt Service; (iv) conformity
of any annual increases in the partnership management fee, asset management fee, and general
partner guaranty fee with the increases permitted in the definition of "Residual Receipts'; (iv)
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reasonableness and conformity to prevailing market rates in Costa Mesa and rates and fees for
goods and services to be provided by Developer or any Affiliate.
1.35 "Operating Expenses" shall mean actual, reasonable and customary (for
comparable high quality, fully rehabilitated, multi -family rental housing developments in Costa
Mesa) costs, fees and expenses directly incurred and attributable to the operation, maintenance,
and management of the Project in a calendar year, which are in accordance with the Operating
Budget (or any amendments thereto) approved by the City through its City Manager under this
Agreement, and not a part or paid as a part of the rehabilitation of the Property, including, without
limitation, Debt Service; painting, cleaning, repairs, alterations, landscaping; utilities, refuse
removal, certificates, permits and licenses, sewer charges, taxes, filing fees, assessments,
insurance, security, advertising and promotion, janitorial services, cleaning and building supplies,
purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings
which are not paid from the Capital Replacement Reserve, -fees and expenses of property
management (not exceeding five percent (5%) of gross scheduled income) and common area
expenses, fees and expenses of accountants, attorneys and other professionals, the cost of
social/supportive services, if any, in an amount equal to the social/supportive services requirement,
if any, imposed by HUD or HCD with respect to the Project, and other actual, reasonable and
customary operating costs which are directly incurred and paid by Developer, but which are not
paid from reserve accounts, and provided, however, that any fees incurred or services provided by
Developer or any Affiliate shall not exceed fair market fees or rates for goods or services that are
customary and prevailing within the corporate limits of Costa Mesa for such fees, goods, or
services. To the extent Developer's only asset is the Project, Operating Expenses shall include
actual, reasonable and customary costs, fees and expenses paid to unaffiliated third parties for the
operation of Developer, including administrative, accounting and legal fees and expenses.
Operating Expenses may include costs, fees or expenses paid to unaffiliated third parties that were
not set forth in the approved Operating Budget to the extent such costs, fees or expenses were not
foreseen at the time the applicable Operating Budget was created, but nonetheless were actual,
reasonable and customary for comparable affordable housing developments; provided, evidence
of such expenses must be submitted to the Director for verification purposes prior to payment
thereof (except in emergency situations, in which case evidence of such expenses must be
submitted to the Director for verification purposes as soon as reasonably practicable).
Notwithstanding any provision to the contrary, the term "Operating Expenses" shall include
salaries of employees of Developer working on site at the Project, or expenses, costs and fees paid
to an Affiliate of Developer, to the extent any of the foregoing does not unreasonably exceed the
expenses, costs or fees that would be payable in a bona fide arm's length transaction between
unrelated parties in Costa Mesa for the same work or services. Given the nature of services
provided under this Agreement, Developer shall from time -to -time survey the costs charged by
other entities engaged in similar services and adjust its rates accordingly to reflect the current
market. If the Developer claims employees' salaries as Operating Expenses, Developer shall
maintain accurate, complete and contemporaneous records of all costs incurred for employee
salaries in connection with the management and operation of the Project. Such records shall
include, but are not limited to: (1) employe names, (2) job titles and descriptions, (3) dates of
employment, (4) hourly rates or salaries, including benefits )e.g. (e.g., health insurance, retirement
contributions, etc.) (5) time cards or hours worked, (6) detailed descriptions of work performed
related to the Project, (7) supporting documentation for all payroll disbursements (e.g., timecards,
invoices). The Developer shall insure that employee salary information is included as part of
Developer's Annual Financial Statement.
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The term "Operating Expenses" shall exclude all and any of the following: (i) any amounts paid
directly by a tenant of the Project to a third party in connection with expenses which, if incurred
by Developer, would be Operating Expenses; (ii) optional or elective payments with respect to any
financing senior to the City Loan unless approved in writing by the City; (iii) any payments with
respect to any Project -related loan or financing other than Debt Service; (iv) expenses,
expenditures, and charges of any nature whatsoever arising or incurred by Developer prior to
completion of the Project with respect to the acquisition, development, maintenance, and upkeep
of the Project, or any portion thereof, including, without limitation, all costs and expenses incurred
by Developer in connection with the acquisition of the Property, all pre development and pre
rehabilitation activities conducted by Developer in connection with the Project, including without
limitation, the preparation of all plans and the performance of any tests, studies, investigations or
other work, and the rehabilitation of the Project and any on -site or off -site work performed in
connection therewith; (v) depreciation, amortization, and accrued principal and interest expense
on deferred payment debt; and (vi) other expenses not related to the operation, maintenance, or
management of the Project.
1.36 "Permanent Supportive Housing" shall mean housing, dwellings, or other living
accommodations where the landlord does not limit the tenant's length of tenancy, the landlord
does not restrict the tenant's movements, and the tenant has a lease and is subject to the rights and
responsibilities of tenancy and has the same meaning as "supportive housing," as defined at Health
and Safety Code section 50675.14, subdivision (b)(2), except that it shall include associated
facilities if used to provide services to housing residents.
1.37 "Permanent Supportive Housing Period" shall mean the period, during which time
Developer shall develop and operate the Property as Permanent Supportive Housing.
1.38 "Permitted Transfer" means any of the following:
a. An assignment for financing purposes to an Approved Primary Lender to
secure the funds necessary for the Rehabilitation and operation of the Project, so
long as such loan documents have been duly reviewed and approved by City, and
City has approved such financing or permitted refinancing thereof pursuant to this
Agreement;
b. An assignment of this Agreement and all of Developer's interests in the
Property to an Affiliate or a conveyance back from the Affiliate to Developer,
including a limited partnership or limited liability company in which Developer
and/or an Affiliate is the managing general partner or sole member, respectively;
C. The lease for occupancy of all or any part of the units in the Project in
accordance with this Agreement;
d. The granting of easements or permits to facilitate the development of the
Property and/or the Project in accordance with this Agreement;
e. A transfer of the Developer's interest in the Property by foreclosure or deed
in lien of foreclosure to any bona fide third -party lender holding a lien encumbering
the Property or the Project (or its nominee);
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f. Any Commercial Lease approved by the County, so long as the lease is
consistent with the purpose of the project, is permitted in the zone where the Project
is located, and would not otherwise require a use permit; or
g. A transfer otherwise approved in writing by the City.
1.39 "Person" means an individual, partnership, limited partnership, trust, estate,
association, corporation, limited liability company, or other entity, domestic or foreign.
1.40 "Plans" means the architectural and construction plans and drawings prepared on
behalf of Developer for the Project in accordance with this Agreement.
1.41 "Prevailing Wage Action" shall mean any of the following: (a) any determination
by the California Department of Industrial Relations that prevailing wage rates should have been
paid, but were not; (b) any determination by the California Department of Industrial Relations that
higher prevailing wage rates than those paid should have been paid; (c) any administrative or legal
action or proceeding arising from any failure to comply with the Federal Davis -Bacon Act
(codified as 40 U.S.C. §§ 3141 et seq.) or California Labor Code Sections 1720 through 1781, as
amended from time to time, regarding prevailing wages, including maintaining certified payroll
records; or (d) any administrative or legal action or proceeding to recover wage amounts at law or
in equity.
1.42 "Prescribed Rent Levels" shall mean, based upon the most restrictive requirements
of all Project funding sources, for the seventy-six (76) Affordable Units, Affordable Rent
calculated at no more than thirty percent (30%) of AMI (HCD rents).
1.43 "Project" shall mean the acquisition of the Property and existing improvements on
the Property, the Rehabilitation of the Improvements as Permanent Supportive Housing for
seventy-six (76) housing units and two (2) manager's units, with landscaping, driveways, and
related improvements, and all other on -site and off -site improvements required for such
rehabilitation, with all improvements to be consistent with the development and building plans and
permits to be approved by the City. In the event of any inconsistency between the description of
the Project in this Agreement and the approved plans and permits, the approved plans and permits
shall govern.
1.44 "Project Budget" shall mean the cost estimates for Developer's development of the
Project set forth in Attachment No. 8 to this Agreement. The Project Budget may not be materially
changed without the prior written approval of City, which shall not be unreasonably withheld or
delayed (a material change is a change that causes the total Project costs to increase or decrease
from what is shown in the Project Budget or that causes any line item in the Project Budget to
increase or decrease by more than 10%). Any changes to the Project Budget, whether or not
requiring the approval of City, shall be submitted to City. If the Project Budget is revised as
permitted herein, all references herein to the "Project Budget" shall be deemed to refer to the
revised Project Budget.
1.45 "Pro Forma" shall mean the document attached to this Agreement as Attachment
No. 9.
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1.46 "Property" shall mean that certain real property located at 1400 Bristol Street, Costa
Mesa, California, Assessor's Parcel Number 439-312-12, more particularly described in the legal
description attached hereto as Attachment No. 1.
1.47 "Qualified Household" means a Qualified Extremely Low -Income Household.
1.48 "Qualified Extremely Low -Income Household" means a household whose gross
annual income does not exceed 30 percent (30%) of AMI adjusted for family size as set forth from
time to time by regulation of HCD.
1.49 "Regulatory Agreement" shall mean that certain joint document between the
Developer, the City and Costa Mesa, attached to this Agreement as Attachment No. 10 regulating
the operation and maintenance of the Project. The Joint Regulatory Agreement shall be known in
this Agreement as Regulatory Agreement.
1.50 "Rehabilitation" or "Substantial Rehabilitation" shall mean the entire work of
rehabilitation, repair, construction, and improvement to the Housing Units and overall Property
that are required to be completed under this Agreement; a narrative description of such work with
detailed specifications therefor is set forth in the Scope of Development, Attachment No. 2. The
Rehabilitation shall meet the Uniform Physical Condition Standards (UPCS) for the as
promulgated by HUD in 24 CFR 5.703 so that housing is decent, safe, sanitary, and in good repair
for use and occupancy by qualified tenants; such standards are established for inspectable items
for each of the following areas: site, building exterior, building systems, dwelling units, and
common areas.
1.51 "Release of Construction Covenants" shall mean the document attached to this
Agreement as Attachment No. 11.
1.52 "Residual Receipts" shall mean Annual Project Revenue less the sum of:
a. Operating Expenses;
b. Debt Service on the "must pay" loans referenced in 1.16 above and in
Section 2.9;
C. Reserve Deposits to the Capital Replacement Reserve;
d. Reserve Deposits to the Capitalized Operating Reserve;
C. Contributions made by Developer for the benefit of the Project;
f. Property management fee for the Project which remains unpaid after
payment of Operating Expenses, if any;
g. Member asset management fees or equivalent for the Project which remain
unpaid after payment of Operating Expenses, if any;
h. Deferred Developer Fee for the Project which remains unpaid, if any,
including interest at the Applicable Federal Rate; and
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i. Repayment of outstanding development and operating loans and/or
contributions for capital expenses for which no Project revenues are available, if
any, made by the administrative and/or managing general partners of the Developer
entity for the Project, including interest at the Applicable Federal.
Developer shall make loan payments to debtors on all assumed debt not included in the items listed
in (a) to (i) above ("soft loans") from the remaining fifty percent (50%) of residual cash flow. The
specific percentage of cash flow to be received by each debtor is based on the percentage of funds
loaned to the Project as compared to the sum of all soft loans assumed by the Project. Developer's
loan payments on the City Loan shall be paid by Developer to City from the City's Proportionate
Share of fifty percent (50%) of Residual Receipts received from operation of the Project, which is
anticipated to be twelve and two hundred thirteen thousandths percent (12.213%), until the City
Loan Maturity Date at which time full payment, principal and interest, is due on the City Loan as
set forth in the City Note without regard to Residual Receipts. The "City's Proportionate Share"
is a fraction, the numerator of which is equal to the original principal amount of the City Loan,
and the denominator of which is equal to the original principal amounts of the County Loans, the
Private Loan and the City Loan.
In addition, none of the fees, costs, expenses, or items described above in calculation of Residual
Receipts shall include any duplicate entry/item, or double accounting for a cost item.
1.53 "Schedule of Performance" shall mean that certain document attached to this
Agreement as Attachment No. 12 setting out the dates and/or time periods by which certain
obligations set forth in this Agreement must be performed.
1.54 "Scope of Development" shall mean that certain document attached to this
Agreement as Attachment No. 2.
1.55 "Target Amount" shall mean an amount equal to three (3) months of (i) Debt
Service on the Primary Loan and (ii) Operating Expenses for the Project.
1.56 "Target Population" shall mean individuals and families who are experiencing
homelessness or who are at risk of homelessness, as defined in Part 578.3 of Title 24 of the Code
of Federal Regulations, and who are or were impacted by the COVID-19 pandemic or other
communicable diseases, as set forth in the Scope of Development.
1.57 "Tenant Leasing Plan" shall mean that plan created by Developer and approved by
the County of Orange, City of Newport Beach and the City, which plan is attached hereto as
Attachment No. 3.
1.58 "Tenant Selection Plan" shall mean that certain document attached to this
Agreement as Attachment No. 13 and as set forth in Section 3.4 of the Regulatory Agreement.
1.59 "Term" shall be from the earlier of: (i) fifty-five (55) years from the date the Notice
of Commencement of Affordability Restriction is issued by City and caused to be recorded in the
Official Records against the Property; or (ii) if not able to be determined, fifty-seven (57) years
after the date of this Agreement.
1.60 "Transfer" shall mean:
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a. the sale, agreement to sell, transfer or conveyance of the Property the
Project, or any portion thereof or interest therein (including, without limitation, a
beneficial interest), whether voluntary, involuntary, by operation of law or
otherwise, the execution of any installment sale contract or similar instrument
affecting all or a portion of the Property or Project, or the lease of all or substantially
all of the Property or Project.
b. "Transfer" also includes the transfer, assignment, hypothecation or
conveyance of legal or beneficial ownership of any interest in Developer, or any
conversion of Developer to an entity form other than that of Developer at the time
of execution of this Agreement.
C. Notwithstanding paragraphs a and b, "Transfer" will not include Permitted
Transfers.
ARTICLE 2. FINANCING
2.1 City Loan. The City hereby agrees to loan to Developer and Developer hereby
agrees to borrow from the City the sum of up to Three Million Dollars ($3,000,000.00) ("City
Loan") of general funds, subject to the terms and conditions set forth in this Agreement, and
subject further to the terms and conditions set forth within the Project Documents, including the
City Note, City Loan Deed of Trust, and Regulatory Agreement.
The anticipated sources and uses of funds for the development of the Project are set
forth in the Project Budget, Attachment No. 8. The financial projections for the Project are set
forth in the Project Pro Forma, Attachment No. 9. Developer and City acknowledge that the
Project Budget and Project Pro Forma are estimates as of the Agreement Date and are subject to
change based on changes in costs, AMI, and other such matters related to the development of the
Project. Developer shall submit updated Project Budget and Project Pro Forma upon written
request from City.
2.2 City Note and City Deed of Trust. The City Loan shall be evidenced by the City
Note and secured by the City Deed of Trust, which shall be recorded against the Property in the
Official Records of the County in a position junior and subordinate to the lenders set forth in
Section 2.9.1(b).
2.2.1 Terms of City Note. The City Note shall be for a term commencing upon
the date of initial disbursement of funds at Closing and continuing for a period of fifty-five (55)
years after the date of recordation of the Release of Construction Covenants ("Maturity Date").
The City Note shall bear simple interest at the rate of three percent (3%) per annum from the date
of disbursement of City Loan proceeds. Commencing the calendar year immediately after the
recordation of the Release of Construction Covenants and annually on or before June 1 of each
succeeding year, Developer shall make annual payments to City allocable from City's share of
Residual Receipts, until the Maturity Date. On the Maturity Date of the City Note all principal
and interest shall be due in full by Developer to City (without regard to Residual Receipts
calculation).
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a. The City Note shall be repaid through an annual Residual Receipts
calculation based on operation of the Project. The City Note shall be payable from the City's
Proportionate Share of fifty percent (50%) of Residual Receipts, which is anticipated to be seven
and twelve and two hundred thirteen thousandths percent (12.213%), for the Project until the City
Note has been paid in full, but all amounts due, including the full principal amount principal and
any and all accrued interest, shall be due and payable in full on the City Loan Maturity Date.
Developer shall make annual payments on the City Loan payable from the City's
Proportionate Share of fifty percent (50%) of Residual Receipts, which is anticipated to be twelve
and two hundred thirteen thousandths percent (12.213%), received from operation of the Project
until the City Loan matures and full payment, principal and any accrued and unpaid interest, is
due on the City Loan as set forth in the City Note. In the event that the City's Proportionate Share
of fifty percent (50%) of Residual Receipts, which is anticipated to be twelve and two hundred
thirteen thousandths percent (12.213%), is insufficient to provide for payment of the entire annual
interest payment due under the City Note, then such unpaid interest (referred to as the "past -due
interest amount") shall begin to accrue interest from the date on which such interest payment was
due at the interest rate applicable to outstanding principal under the City Note. The next annual
payment shall be increased by the amount of the past -due interest amount plus interest accrued
thereon. All past -due interest amounts shall continue to accrue interest until all such amounts and
accrued interest thereon have been paid to City.
b. The City Note shall be accelerated and due in full in the event Developer
refinances to take cash out or transfers the Project or any part thereof (but excluding residential
leases to tenants and Permitted Transfers), without prior written approval of the City, and the City
Note shall be paid in full from Refinancing Net Proceeds, if any, immediately upon any refinancing
of the Project (or any part thereof) or as applicable from Transfer Net Proceeds (excluding
Permitted Transfers), if any, immediately upon any transfer in whole or in part of the Project
(excluding residential leases to tenants). The terms of the City Loan are more particularly
described in the City Note.
2.2.2 Security for City Loan. The City Loan shall be secured by the City Deed of
Trust, Attachment No. 4, which shall be recorded against the Leasehold Interest in the Property in
the Official Records of the County in fourth lien position.
2.2.3 Request for Notice of Default. The City hereby requests that a copy of any
notice of default and that a copy of any notice of sale hereunder be mailed to it at the address set
forth in Section 9.2 of this Agreement. City shall record a Request for Notice of Default in the
official records of Orange County, California.
2.2.4. Consent Required for Assignment and Assumption. Except for Permitted
Transfers and other Transfers permitted pursuant to Article 8 below, the City Note shall not be
assignable or assumable by any successor or assignee of Developer without the prior written
consent of City, which consent may be withheld in the sole and absolute discretion of the City
Manager.
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2.3. Disbursement of City Loan. Subject to satisfaction by Developer or waiver by City
of each and every Funding Conditions to the City Loan set forth in Section 2.6, as applicable, the
proceeds of the City Loan shall be disbursed only to pay for a portion of certain eligible Costs of
Rehabilitation set forth in the Scope of Development and approved Final Budget (or as otherwise
modified under change orders approved by the City's City Manager). City's obligation to disburse
the City Loan proceeds as set forth in Section 2.5 is subject to the fulfillment by Developer or
waiver by City of the Funding Conditions set forth in Section 2.6 hereof, as well as compliance
with the Disbursement Procedures, as applicable.
2.4 Permissible Use of City Loan; Eligible Ex eenses. Pursuant to all of the terms and
conditions of this Agreement, Developer shall be permitted to use the City Loan only for the
Eligible Expenses that are actually and reasonably incurred by Developer and approved by the
City (such approval not to be unreasonably withheld or delayed), and for no other purpose. The
proceeds of the City Loan shall not be used for Project reserve accounts, monitoring, or servicing
and origination fees, or for expenditures incurred more than one year after the issuance of the
Release of Construction Covenants.
2.5 Proceeds of City Loan Disbursed, Provided Developer is not in default of this
Agreement, from and after the Funding Conditions Satisfaction Date, City shall disburse City Loan
funds to an escrow account, mutually agreed upon by both parties, for the purpose of fulfilling the
90% construction contract progress billing and/or the final payment obligation under the
construction contract.
Developer shall submit to City itemized statements, with such supporting information as
City may reasonably require, documenting all of Developer's costs eligible to be considered in
calculating the Eligible Expenses, including invoices, contracts, or similar documentation. City
shall calculate and approve the amount of Developer's Eligible Expenses. Approval of the amount
determined by City shall be made by City, in City's reasonable discretion, within thirty (30) days
after Developer's submission of its completed payment request. Any disapproval of a payment
amount shall be provided to Developer in writing (including the specific reasons for such
disapproval) within thirty (30) days after City has received information necessary to make the
determination that the payment amount cannot be approved and must be returned by Developer.
City's obligation to make disbursements of the City Loan proceeds to Developer shall be
contingent and conditional upon Developer's continuing satisfaction and the timely performance
of all of its obligations under this Agreement. Upon the occurrence of any event which, with the
lapse of time or the giving of notice or both, would constitute a default under this Agreement, after
any applicable notice and cure period, City may at any time thereafter and while such event
remains uncured, withhold or stop payment of any pending amount until all such defaults are cured
to the reasonable satisfaction of City. Further, following expiration of any applicable cure period,
but only prior to final disbursement of the City Loan, City may demand return of (and Developer
shall return) amounts paid until all such defaults are cured to the reasonable satisfaction of City.
In the event the Eligible Expenses for which any disbursement of City Loan funds are
advanced are not incurred by Developer within thirty (30) days after City's disbursement, or such
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longer time as City approves in its sole discretion, City shall have the right to require that
Developer return such proceeds to City. In addition, if it is determined, as a result of an audit or
otherwise, that any of the disbursements of the City Loan proceeds were improper or made for
expenditures not eligible for payment, Developer shall immediately repay to City the amounts of
such disbursements, with accrued interest at a rate of 10% per annum from the date City provides
notice until the date paid.
Notwithstanding the foregoing, City shall have the right to contract with a third party,
including without limitation an escrow company to disburse the City Loan proceeds to Developer.
2.6 Funding Conditions. Notwithstanding any other provision of this Agreement to the
contrary, City shall have no obligation to disburse any of the City Loan proceeds to Developer
unless all of the following conditions (collectively the "Funding Conditions") are satisfied:
2.6.1 Execution and Delivery of Documents. Developer shall submit (a) a copy of
the recorded memorandum of ground lease evidencing Developer's leasehold interest in the
Property, (b) all documents evidencing that funding from Homekey, the Primary Loan, and Costa
Mesa has been received for or irrevocably committed to the Project, (c) a copy of the fully executed
general construction contract with a licensed general contractor covering the Rehabilitation and
construction of the Project, (d) fully executed City Note, City Deed of Trust, Regulatory
Agreement, and (e) any other documents required hereunder in connection with the City Loan and
the acquisition and Rehabilitation of the Project by Developer.
2.6.2 Demonstration ofSuffitcientFunding. Developer shall submit a final project
budget and provide documentation to the City demonstrating that it has commitments for sufficient
funding for the Project.
2.6.3 Subordination Agreement, City shall have approved the form of any
subordination agreements, if any.
2.6.4 Insurance. Developer shall have provided to City evidence of the insurance
required under Section 3.9 of this Agreement.
2.6.5 Permits. Developer shall submit evidence to the City that Developer has
satisfied all conditions precedent to the issuance of all permits necessary for the rehabilitation and
construction of the Project.
2.6.6 Management Plan. Developer shall submit for City review and reasonable
approval a Management Plan and Management Agreement for the Project in accordance with the
Regulatory Agreement,
2,63 Social Services. Developer shall submit for City review and reasonable
approval a Social Services Plan, including proposed budget, describing the social service programs
to be provided to the Project and identifying the service providers.
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2.6.8 No Default. Developer shall not be in default of any of its obligations set
forth in this Agreement, and there shall be no event which, with the passage of time or the giving
of notice, would constitute a default.
2.6.8 Tenant Lease Agreement. Developer shall have submitted to the City, and
the City shall have approved the standard form lease/rental agreement in conformance with the
Regulatory Agreement for rental of the Housing Units to eligible tenants in accordance with the
terms of this Agreement.
2.6.9 ALTA Lender's Policy. City shall have received an ALTA lender's title
insurance policy excluding any survey, creditor's rights or arbitration exceptions, or one or more
pro forma policies and evidence of a commitment therefor, reasonably satisfactory to the City
Manager ("Title Policy") relating to the City Loan, Such Title Policy shall have a liability limit
of not less than the fall amount of the City Loan and shall insure City's interest under the City
Deed of Trust as a valid lien or charge upon the Property with the priority required by this
Agreement. The Title Policy shall include mechanics' lien coverage and such other endorsements
as the City may reasonably require. The Title Policy shall contain only such exceptions from
coverage as shall have been approved in writing by the City Manager.
In the event that all of the Funding Conditions are not satisfied on or before December 31,
2025, or such earlier time period as provided for herein, or such later deadline as may be mutually
approved in writing by City and Developer in the sole and absolute discretion of each of them,
either party not in default may terminate this Agreement by delivering written notice to the other
party. No termination under this Agreement shall release either party then in default from liability
for such default.
2.7 Re on rting Requirements. Developer shall provide quarterly written reports to the
City showing, at a minimum, (a) all Eligible Expenses incurred on the Project to which funds were
applied, (b) a comparison of such expenses against line items in the Project Budget, (c) the use of
the funds, (d) documentation/receipts of the funds spent, and (e) description and status of
completion of the Project. Developer shall, thereafter, within sixty (60) days after the recording
of the Notice of Release of Construction Covenants provide a final written report to City with the
same minimum information as set forth in the immediately preceding sentence.
2.8 Execution and Delivery of Documents. No later than five (5) days after the date the
Funding Conditions in subparagraphs (a)-(e) in Section 2.6.1 are satisfied, Developer shall deliver
to City the Notice of Affordability Restriction, Attachment No. 10, executed and acknowledged
by Developer. Within five (5) days after the Funding Conditions Satisfaction Date and prior to
City's disbursement of any loan proceeds to Developer, City shall execute the Regulatory
Agreement and shall cause the Regulatory Agreement to be recorded in the Official Records of
Orange County, California. The Notice of Commencement of Affordability Restriction shall be
recorded in the Official Records of Orange County, California upon completion of the Project
concurrently with Costa Mesa's Notice of Affordability Restrictions.
2.9 Additional Financing.
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2.9.1 Sources offinancing. Developer and City anticipate the following funding
sources to be obtained by Developer and utilized in addition to the City Loan for the Rehabilitation
and operation of the Project. The final sources and amounts of funding for the Project as well as
the final cost estimates with respect to the Rehabilitation and operation of the Project shall be set
forth in the Final Budget.
a. Homekey award in the amount of Twenty Nine Million Dollars
($29,000,000.00)].
b. Developer will enter into loans with the County of Orange in an
approximate combined original principal amount of Six Million Seven Hundred Eighty One
Thousand Five Hundred Twenty Dollars ($6,781,520.00).
C. Developer will enter into a loan with Costa Mesa in the amount of
Two Million Five Hundred Thousand Dollars ($2,500,000.00) and receive a grant from Costa
Mesa in an amount not to exceed One Million Five Hundred Thousand Dollars ($1,500,000.00).
d. Developer will be receiving Eight Hundred Nineteen Thousand Six
Hundred Sixty Dollars ($819,660.00) in deferred developer fees.
2.10 Subordination. The City Manager shall have the City execute and deliver
subordination agreements as he or she determines are commercially reasonable and consistent with
the purpose and effect of this Agreement; provided that any such subordination agreement is
approved by HCD. In connection therewith, the Regulatory Agreement implements the
affordability requirements imposed under the entitlements and must be senior to all financing
unless otherwise agreed to by the City Manager or designee in his or her reasonable discretion.
2.11 Notice of Default to Construction; Right to Cure. Whenever City shall deliver any
notice or demand to Developer with respect to any default by Developer under this Agreement
(each, a "Notice"), City shall at the same time deliver a copy of such Notice to any lender or
funding source that has provided City written request for such notice or demand. The other lenders
or funding sources for the Project shall (insofar as the rights of City are concerned) have the right,
within ninety (90) days after receipt of the Notice, to cure or remedy any such default.
2.12 Right of the City to Cure Default. In the event of a default or breach by the
Developer, Developer shall promptly deliver to City a copy of any notice of default or breach
received from any other lender or funding source and City may, but shall not be required to, cure
the default following prior notice thereof to the Developer. In such event, Developer shall be
liable for, and City shall be entitled to reimbursement from Developer within ten (10) days of
written demand, of all reasonable costs and expenses associated with and attributable to the curing
of the default, including any default consisting of a breach of this Agreement by the Developer,
which are incurred by City. Any sums which become due to City from Developer under the
provisions of this Section 2.12 shall constitute a lien on the Property, effective upon recordation
by City or City's authorized agent of a notice of lien ("Notice of Lien") concerning nonpayment
of any sum due hereunder, the lien priority of which shall be the date the Notice of Lien is recorded
in the Official Records of Orange County, California. The Notice of Lien shall state (i) the amount
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due, which amount shall include interest at the rate of 10% per annum from the date due to the
date paid, and shall also include the cost of preparing and recording the Notice of Lien, (ii) the
expenses of collection in connection with any nonpayment, including without limitation
reasonable attorneys' fees, (iii) a description of the Property, (iv) the name and address of City,
(v) the name of Developer, and (vi) in order for the lien to be enforced by non -judicial foreclosure,
the name and address of the trustee authorized by City to enforce the lien by sale. The lien
established pursuant to this Section may be enforced by sale of the Property by City, City's
attorneys, any title insurance company authorized to do business in California, or other persons
authorized to conduct the sale as a trustee, after failure of Developer to pay any sum due pursuant
to this Agreement within thirty (30) days after recordation of the Notice of Lien. The sale shall be
conducted in accordance with the provisions of the California Civil Code applicable to the exercise
of powers of sale in mortgages and deeds of trust, or in any other manner permitted by law. City,
through its agents, shall have the power to bid on the Property at the foreclosure sale, and to acquire
and hold, lease, mortgage and convey the same. Suit to recover a money judgment for any amounts
due under this Agreement shall be maintainable without foreclosing or waiving any lien securing
the same, but this provision or any institution of suit to recover a money judgment shall not
constitute an affirmation of the adequacy of money damages. Any recovery resulting from a suit
at law or in equity initiated pursuant to this Section shall include reasonable attorneys' fees as
fixed by the court.
ARTICLE 3, DEVELOPMENT OF THE PROJECT
3.1 Scope of Development. The Project shall be developed in accordance with and
within the limitations established in the Scope of Development, Attachment No. 2. The Project
shall generally consist of the acquisition of the former Travelodge Motel Property and
Improvements, use of the Property as a seventy-six (76) unit income -qualified Permanent
Supportive Housing rental project with two (2) manager's units. The Project shall also include
parking, landscaping, lighting, signage, and other amenities, and all other on -site and offsite
improvements required for operation of the Project, with all such improvements, following
rehabilitation, to be first class in architectural design and quality for a Permanent Supportive
Housing project, compliant with state and federal laws regarding adaptability and accessibility by
persons with disabilities, and consistent with the development and building plans and permits to
be approved by Costa Mesa (provided, however, that nothing herein shall represent, warrant, or
guarantee that Costa Mesa shall approve any of such plans and permits). Developer shall cart'
out the development, management, and operation of the Project in conformity with all applicable
requirements.
3.2 Development Standards. Developer agrees to design a project that meets all
applicable development standards in the City of Costa Mesa Municipal Code. It is the
responsibility of Developer, without cost to the City, to ensure that zoning of the Property and all
applicable City land use requirements will be such as to permit construction and completion of the
Project and the use, operation, and maintenance of the Project in accordance with the provisions
of this Agreement. The review and approval rights set forth in this Article 3 are for the benefit of
the City acting in its capacity as a lender to the Project, and will not be deemed to waive, limit or
condition in any way the power and authority of Costa Mesa, acting in its governmental capacity.
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Nothing contained herein shall be deemed to entitle Developer to any Costa Mesa permit or other
Costa Mesa land use approval necessary for the development of the Project, or waive any
applicable governmental requirements relating thereto. This Agreement does not (a) grant any land
use entitlement to Developer, (b) supersede, nullify, or amend any condition which may be
imposed by Costa Mesa in its governmental capacity in connection with approval of the
improvements described herein, (c) guarantee to Developer or any other party any profits from the
development of the Property, or (d) amend any Costa Mesa laws, codes, or rules. This is not a
Development Agreement under Government Code Section 65864.
3.3 Plans
3.3.1 Construction Drawings and Related Documents.
a. At the City's written request, Developer shall provide a copy or
make available construction drawings and related documents for the Permanent Supportive
Housing improvements (collectively called the "Plans") to the City for review. Final Construction
Drawings and as built plans shall be made available to the City upon written request. Final
Construction Drawings are hereby defined as those in sufficient detail to obtain all building
permits.
3.4 Cost of Construction
3.4.1 The development costs of the Project, including all offsite (if any) or onsite
improvements required by the City in connection therewith, shall be the responsibility of
Developer, without any cost to the City except as expressly set forth in this Agreement.
3.4.2 Developer will establish procurement procedures to ensure that materials
and services are obtained in a cost-effective manner.
3.5 Right of Access. City and its officers, officials, employees, agents, and
representatives shall have the right of access to the Property, upon reasonable prior written notice,
without charges or fees, for the purposes of this Agreement, including but not limited to, the
inspection of the work being performed in connection with the Project, so long as City
representatives comply with all safety rules and do not interfere with, delay or interrupt
Developer's construction activities, It is understood that City does not by this right of access
assume any responsibility or liability for a negligent inspection or failure to inspect.
3.6 Schedule of Performance. Subject to the force majeure provisions of Section 9.8,
Developer shall commence, prosecute, and complete the Project within the time set forth in the
Schedule of Performance. Rehabilitation and construction work shall be continuously and
diligently pursued to completion and shall not be abandoned for more than thirty (30) consecutive
days, except when due to causes beyond the control and without the fault of Developer, as set forth
in Section 9.8 of this Agreement.
FAILURE TO SATISFY ANY ONE OF THE PERFORMANCE MILESTONES IN THE
SCHEDULE OF PERFORMANCE FOLLOWING NOTICE AND EXPIRATION OF THE
APPLICABLE CURE PERIOD WILL CONSTITUTE A BREACH OF THIS AGREEMENT
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AND AN EVENT OF DEFAULT, AND SHALL ENTITLE THE CITY TO MANDATE THE
DEVELOPER TO RETURN TO THE CITY ANY FUNDS DISBURSED; IN ANY SUCH
INSTANCE, THE CITY MAY ALSO CANCEL THIS AGREEMENT WITHOUT OWING ANY
DAMAGES OR OTHER PAYMENT TO DEVELOPER.
3.7 Reporting. At the City's written request, Developer shall submit to the City written
reports on the progress of the rehabilitation and construction of the Project. The report shall be in
such form and detail as may be reasonably required by the City and shall include the use of the
funds, documentation/receipts of the funds spent, and description and status of completion of the
Project.
3.8 Compliance with laws/permits.
3.8.1 Laws, Developer shall carry out the design, construction, and operation of
the Project in conformity with this Article 3 and all applicable federal, state, and local laws,
including the City zoning and development standards, building, plumbing, mechanical and
electrical codes, and all other provisions of the City of Costa Mesa Municipal Code, all applicable
disabled and handicapped access requirements, and all environmental mitigation measures
imposed as conditions of approval of the Project. In addition, Developer shall carry out the
construction of the Project and the development of the Property in conformity with all applicable
federal and state labor laws (including, without limitation, the requirement under California law
to pay prevailing wages and hire apprentices).
3.8.2 Permits. Before commencement of construction of any buildings,
structures, or other work of improvement upon any portion of the Property, Developer shall, at its
own expense, secure or cause to be secured, any and all permits which may be required by Costa
Mesa, acting in its governmental capacity, or any other govermnental agency with jurisdiction
over such work. The disbursement of the City Loan proceeds is subject, among other conditions,
to the issuance of all building permits required by the City for the development and construction
of the Project.
3.8.3 Prevailing Wage. In accordance with the California Labor Code (Sections
1770 et seq.), the Director of Industrial Relations has ascertained the general prevailing rate of per
diem wages in the locality in which the work is to be performed for each craft, classification, or
type of workman or mechanic needed to execute the contract. A copy of said determination is
available by calling the prevailing wage hotline number (415) 703-4774, and requesting one from
the Department of Industrial Relations. All parties to this Agreement shall be governed by all
provisions of the California Labor Code — including, but not limited to, the requirement to pay
prevailing wage rates (Sections 1770-7981 inclusive) during the Rehabilitation. A copy of the
prevailing wage rates shall be posted by the Developer at the Project during the Rehabilitation.
Developer acknowledges and understands that other federal and/or state funding sources and
financing scenarios may trigger compliance with applicable state and federal prevailing wage laws
and regulations. The highest applicable wage requirements will apply. Notwithstanding the
foregoing in this Section, Developer shall carry out the construction through completion of the
Rehabilitation of the Property in conformity with applicable federal, state and local labor laws and
regulations, including, without limitation, as and if applicable, the requirements to pay prevailing
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wages under federal law (including Davis -Bacon Act, 40 U.S.C. Section 3141, et seq., and the
regulations promulgated thereunder set forth at 29 CFR Part 1 (collectively, "Davis -Bacon")) and
California law (Labor Code Section 1720, et seq.). As such, and specifically in connection with
the Rehabilitation, Developer acknowledges and agrees that it shall be required to, and shall be
required to cause all of its contractors and their contractors to, pay prevailing wages in compliance
with California Labor Code Section 1770 et seq., and shall be responsible for the keeping of all
records required pursuant to Labor Code Section 1770 et seq., including but not limited to Labor
Code Section 1776, and complying with the maximum hours requirements of Labor Code Sections
1810 through 1815, and complying with all regulations and statutory requirements pertaining
thereto. Developer acknowledges and agrees that it shall be independently responsible for
reviewing the applicable laws and regulations with respect to the payment of prevailing wages and
complying therewith. Upon request by City, Developer shall provide a true and correct copy of
such payroll records as are required under applicable state law.
(a) Developer Compliance. In this regard, Developer shall be solely
responsible, expressly or impliedly, for determining and effectuating compliance with all
applicable federal, state and local public works requirements, prevailing wage laws, labor laws
and standards, and Costa Mesa and Newport Beach make no representation, either legally and/or
financially, as to the applicability or non -applicability of any federal, state and local laws to the
Rehabilitation and the Project, both onsite and offsite, as applicable. Developer expressly,
knowingly and voluntarily acknowledges and agrees that Costa Mesa and the City have not
previously represented to Developer or to any representative, agent or Affiliate of Developer, or
its general contractor or any subcontractor(s) for the construction of the Rehabilitation, in writing
or otherwise, in a call for bids or otherwise, that the work and construction undertaken pursuant to
this Agreement is (or is not) a "public work," as defined in Section 1720 of the Labor Code or
under Davis -Bacon (if applicable).
(b) Indemnification re Prevailing Wages. Developer knowingly and
voluntarily agrees that Developer shall have the obligation to provide any and all disclosures or
identifications with respect to the Rehabilitation as required by Labor Code Section 1781 and/or
by Davis -Bacon (if applicable), as the same may be amended from time to time, or any other
similar law or regulation. Developer hereby indemnifies the Indemnified Parties (as defined in
Section 9.13)and shall indemnify, protect, pay for, defend (with legal counsel acceptable to City
and City) and hold harmless the Indemnified Parties, from and against any and all loss, liability,
damage, claim, cost, expense and/or "increased costs" (including reasonable attorneys' fees, court
and litigation costs, and fees of expert witnesses) which, in connection with the development,
construction (as defined by applicable law) and/or operation of the Project, including, without
limitation, any and all public works (as defined by applicable law), results or arises in any way
from any of the following: (i) the noncompliance by Developer with any applicable local, state
and/or federal law or regulation, including, without limitation, any applicable federal and/or state
labor laws or regulations (including, without limitation, if applicable, the requirement to pay state
and/or federal prevailing wages); (ii) the implementation of Section 1781 of the Labor Code and/or
of Davis -Bacon (if applicable), as the same may be amended from time to time, or any other similar
law or regulation; and/or (iii) failure by Developer to provide any required disclosure or
identification as required by Labor Code Section 1781 and/or by Davis -Bacon (if applicable), as
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the same may be amended from time to time, or any other similar law or regulation. It is agreed
by the parties that, in connection with the development and construction (as defined by applicable
law or regulation) of the Project, including, without limitation, any and all public works (as defined
by applicable law or regulation), Developer shall bear all risks of payment or non-payment of
prevailing wages under applicable federal, state and local law or regulation and/or the
implementation of Labor Code Section 1781 and/or by Davis -Bacon (if applicable), as the same
may be amended from time to time, and/or any other similar law or regulation. "Increased costs,"
as used in this Section 3.8.3, shall have the meaning ascribed to it in Labor Code Section 1781, as
the same may be amended from time to time. The foregoing indemnity shall survive termination
of this Agreement and shall continue after completion of the Rehabilitation by Developer.
3.8.4 Nondiscrimination. Developer shall not discriminate on the basis of race,
sex, religion, national origin, ethnicity, sexual orientation, sexual preference, gender, gender
identity, gender expression, age, disability, medical condition, or military or veterans status in the
solicitation, selection, hiring or treatment of any contractors or consultants, to participate in
subcontracting/subconsulting opportunities. Developer understands and agrees that violation of
this clause shall be considered a material breach of this Agreement and may result in termination,
debarment, or other sanctions. This language shall be incorporated into all contracts between
Developer and any contractor, consultant, subcontractor, subconsultants, vendors and suppliers.
3.9 Insurance. Without limiting Developer's indemnification of City, and prior to
comment of work for the Project, Developer shall obtain, provide and maintain and its own
expense during the Term of this Agreement or for other periods as specified in this Agreement,
policies of insurance of the type, amount, terms and conditions described in the Insurance
Requirements, Attachment No. 14. Developer understands and agrees that no Improvements,
Rehabilitation or work as detailed in Scope of Development shall commence on the Property until
all insurance policies including the coverages outlined in Sections 1.3.6 (Professional Liability),
1.3.7 (Pollution Legal Liability), and 1.3.8 (Crime Bond) of this Attachment No. 14. have been
obtained and provided to the City in accordance with Attachment No. 14.
ARTICLE 4. USE OF THE PROPERTY
4.1 Use. Developer and its successors and assigns shall use, operate, and maintain the
Property as an affordable rental housing project in accordance with the provisions of this
Agreement and the Regulatory Agreement. This Agreement and the Regulatory Agreement
provides that the Project will be developed as Permanent Supportive Housing providing for all of
the units in the Project to be rented to income -qualified tenants at Affordable Rents, as that term
is defined in the Regulatory Agreement, for fifty-five (55) years as provided in Section 1.58.
4.2 Monitoring. The City, and its successors and assigns, shall have the right, but not
the obligation, to monitor and enforce the provisions in this Article and the Regulatory Agreement.
Developer covenants that it shall comply with any monitoring program set up by the City to
enforce the covenants in this Agreement and the Regulatory Agreement. In complying with such
monitoring program, at the City's request, Developer or its agent shall annually prepare, or more
frequently as reasonably requested by City, prepare and submit to the City an occupancy report
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and financial information and income verification documents for each tenant, and all supporting
documentation, on forms provided or approved by the City, setting forth the required information
for the preceding year. The City may review such reports to confirm the continuing affordability
of the units and the eligibility of tenants required by this Agreement and the Regulatory
Agreement. To the extent permitted by law, to defray the City's cost of monitoring the Project,
Developer shall pay to the City an annual monitoring fee of $1,600.00, increasing annually at a
rate of three percent (3%).
The City shall have the right to participate in all meetings of the Coordinated Entry System (CES)
and Multidisciplinary Team (MDT) meetings. This includes, but is not limited to, meetings related
to: (1) Development and implementation of the CES; (2) Review of client referrals and
assessments; (3) Coordination of services and resources; (4) Monitoring and evaluation of the
CES; and (5) Policy development and decision -making.
The City shall be provided with timely notice of all CES and MDT meetings, including agendas
and meeting materials. The City shall have the opportunity to present its views and concerns at
these meetings and provide input regarding any matters that require a decision by the CES or
MDT.
4.3 Unit Occupancy Prohibition. No officer, employee, agent, official, or consultant of
Developer may occupy any of the Affordable Units.
ARTICLE 5. OPERATING STANDARDS
5.1 Selection of Tenants. The City desires that the Project serve as many local residents
and those working in the City who are members of the Target Population and who are thirty percent
(30%) of AMI. Developer shall set aside twelve (12) Affordable Units for Eligible Tenants as
provided in the Tenant Selection Plan. Developer shall also set aside sixteen (16) Affordable Units
for Eligible Tenants who are residents of, or work or formerly worked in, Costa Mesa.
Developer shall provide advance written notice to City as provided in Section 9.2 of any unit
vacancy or anticipated unit vacancy to allow City ninety (90) days, at no cost, to fill an Affordable
Housing Unit with an eligible or qualifying tenant that is on the County's CES list. Such notice
shall be provided within five (5) business days of the Developer becoming aware or receiving
notice of the vacancy or anticipated vacancy. The City has the option to extend the vacancy of an
Affordable Unit beyond the ninety (90) day period by reimbursing the Developer the Affordable
Rent rate applicable to the Affordable Unit. The Affordable Rent payment shall be prorated after
the ninety (90) day period based on the number of days the Affordable Unit remains vacant at
City's request.
Developer shall be responsible for the selection of tenants for the units in compliance with this
Agreement, the Regulatory Agreement and the Tenant Selection Plan, consistent with the
Prescribed Rent Levels. Developer shall conduct due diligence and background evaluation of all
prospective tenants, including, without limitation, a criminal background check and third -party
verification of Target Population status and income, to evaluate references, credit worthiness, and
related qualifications.
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5.2 Occupancy Limits. To the greatest extent allowed by law, the maximum occupancy
of the units shall not exceed more than two persons.
5.3 Income of Tenants. For the Permanent Supportive Housing, each person or family
qualifying to occupy one of the units shall do so at the appropriate Affordable Rent, based on the
most restrictive limits of Developer's funding sources, which meets the eligibility requirements
established for the corresponding unit, and Developer shall obtain a certification from each tenant
renting or leasing each unit which substantiates such fact.
5.4 Property Manager. Developer shall manage or cause the Project, and all
appurtenances thereto that are a part of the Project, to be managed in a prudent and business -like
manner, consistent with good property management standards for other comparable first quality,
well managed Permanent Supportive Housing projects in the County of Orange. Developer may
contract with a property management company or property manager, to operate and maintain the
Project; provided, however, that the selection and hiring of the Property Manager (and each
successor or assignee), including any Affiliate, is and shall be subject to prior written approval of
the City Manager (or designee) in his or her reasonable discretion. During the Term, the Property
Manager shall manage the Project in accordance with the definitions of Affordable Rent herein,
the tenant selection requirements contained in Section 5.1, and the definitions relating to income
contained in Section 5.3. Developer shall conduct due diligence and background evaluation of any
potential third -party property manager or property management company to evaluate experience,
references, credit worthiness, and related qualifications as a property manager. Any proposed
property manager shall have significant and relevant prior experience with affordable housing
projects and properties comparable to the Project and the references and credit record of such
property manager/company shall be investigated (or caused to be investigated) by Developer prior
to submitting the name and qualifications of such proposed property manager to the Manager for
review and approval. A complete and true copy of the results of such background evaluation shall
be provided to the City Manager.
Approval of a Property Manager by the City Manager shall not be unreasonably withheld,
conditioned, or delayed, and the City Manager shall use good faith efforts to respond as promptly
as practicable in order to facilitate effective and ongoing property management of the Project on
either a temporary or permanent basis. The replacement of a Property Manager by Developer
and/or the selection by Developer of any new or different Property Manager during the Term shall
also be subject to the foregoing requirements, except in the case of temporary management by a
lender or limited partner of Developer, which shall be immediately submitted to City for approval
and will not last longer than is reasonably necessary to select a suitable replacement property
manager; provided, however, that in no event shall such temporary management continue for
longer than sixty (60) days.
5.5 Property Management Plan. Within the time set forth in the Schedule of
Performance, Developer shall prepare and submit to the City Manager for review and approval, a
management plan for the Project which must include a detailed plan and strategy for long term
marketing, operation, maintenance, repair and security of the Project, inclusive of social services
for the residents of the units, on -site parking policies, and the method of selection of tenants, rules
and regulations for tenants, and other rental policies for the Project ("Property Management Plan").
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The City Manager shall review and shall act reasonably to approve or disapprove the Property
Management Plan within a reasonable time. During the Term, Developer and its Property Manager
may from time to time submit to the City Manager or proposed material amendments to the
Property Management Plan, the implementation of which shall also be subject to the prior written
approval of the City Manager.
5.6 Maintenance. Developer shall maintain the Property in accordance with the
requirements of this Agreement and the Regulatory Agreements.
5.7 Rights of Access. For purposes of assuring compliance with this Agreement,
representatives of the City shall have the right of access to the Property, subject to the rights of
tenants, at reasonable times without charges or fees, upon twenty-four (24) hour written notice to
Developer during the period of this Agreement for the purposes of ensuring compliance with this
Agreement, including, but not limited to, the inspection of the work being performed in
rehabilitating the Project, so long as they comply with all safety rules. Such representatives of the
City shall be those who are so identified in writing by the City Manager,
ARTICLE 6. DEFAULTS AND REMEDIES
6.1 If any dispute arises under this Agreement, City and Developer shall meet and
confer as provided in Section 8.2 of the Regulatory Agreement.
6.2 Defaults -General. Notwithstanding Section 6.1 of this Agreement, failure or delay
by either party to perform any term or provision of this Agreement constitutes a default under this
Agreement; provided, however, such party shall not be deemed to be in default if (a) it cures,
corrects, or remedies such default within thirty (30) days after receipt of a written notice from the
other party specifying such failure or delay, or (b) for defaults that cannot reasonably be cured,
corrected, or remedied within such time period, if such party commences to cure, correct, or
remedy such failure or delay within such time period after receipt of a notice from the other party
specifying such failure or delay, and diligently prosecutes such cure, correction or remedy to
completion, within an additional sixty (60) days following the conclusion of such thirty (30) day
period (for a total of ninety (90) days). If the defaulting party requires more time to cure, correct,
or remedy the default, the parties will negotiate in good faith to determine a mutually agreeable
extended deadline. The injured party shall give written notice of default to the party in default,
specifying the default complained of by the injured party. Except as required to protect against
further damages, the injured party may not institute legal proceedings against the party in default
until the time for cure, correction, or remedy of a default has expired. Except as otherwise
expressly provided in this Agreement, any failure or delay by a party in giving a notice of default
or in asserting any of its rights and remedies as to any default shall not constitute a waiver of any
default, nor shall it change the time of default, nor shall it deprive such party of its right to institute
and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce
any such rights or remedies.
6,2 Termination by City. Subject to the notice and cure provisions set forth in Section
6.1 above, the City shall have the right to terminate this Agreement by providing written notice to
Developer in the event any of the following occurs:
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a. Failure of any condition precedent to the occurrence of the City Loan
funding.
b. Except for a Permitted Transfer, Developer (or any successor in interest)
assigns or attempts to assign the Agreement or any right therein, or transfers the Property (or any
portion thereof or interest therein), in violation of this Agreement.
C. There is substantial change in the ownership of the Developer, or with
respect to the identity of the parties in control of Developer, or the degree thereof, in violation of
this Agreement.
d. Developer is in default with any requirements in the Schedule of
Performance.
e. Completion of the Permanent Supportive Housing or Senior Housing does
not occur within the time provided in the Schedule of Performance, subject to Force Majeure
delays.
f. Developer abandons or suspends the Project for a period of sixty (60) days,
subject to Force Majeure Delays.
g. Developer otherwise materially breaches this Agreement.
6.3 Institution of Legal Actions. In addition to any other rights or remedies, either Party
may institute legal action to cure, correct, or remedy any default, to recover damages for any
default, or to obtain any other remedy consistent with the purposes of this Agreement. Such legal
actions must be instituted and maintained in the Superior Court of the County of Orange, State of
California, or in any other appropriate court in that county.
6.4 Additional City Remedies. In addition to any other rights or remedies available at
law or in equity, upon a default of Developer, City may do any of the following: (a) to the extent
the City Loan has not yet been disbursed by City to Developer, refuse to advance all or any part
of the proceeds; (b) to the extent the City Loan have not yet been disbursed by City to Developer,
wholly or partially suspend or terminate the award of the proceeds; (c) wholly or partially suspend
or terminate this Agreement by giving at least thirty (30) days' advance written notice to
Developer; and (d) to the extent Developer has not expended such funds, require Developer to
repay any or all of the City Loan funds. Upon the occurrence of an event which, with the passage
of time or the giving of notice, would constitute a default of Developer, City may, to the extent
not already disbursed, temporarily withhold disbursement of the City Loan pending correction of
the default by Developer. Any termination by the City of the Agreement will not limit any other
remedies that may be available to the City under this Agreement, at law, or in equity.
6.5 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this
Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party
of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different
times, of any other rights or remedies for the same default or any other default by the other party.
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ARTICLE 7. ASSIGNMENT AND TRANSFER
7.1 Assignment and Transfer by Developer. The qualifications and identity of
Developer are of particular concern to City. It is because of those qualifications and identity that
City has provided financial assistance to Developer and entered into this Agreement with
Developer. Accordingly, Developer shall not, whether voluntarily, involuntarily, or by operation
of law, undergo any significant change in ownership or assign all or any part of this Agreement or
any rights hereunder or in the Property or in the Project except as approved by the City. In
considering whether it will grant approval to any assignment by Developer of its interest in the
Property and this Agreement, City shall consider factors such as the financial strength and
capability of the proposed transferee to perform Developer's obligations hereunder and the
proposed assignee's experience and expertise in the planning, financing, development, and
operation of similar projects. Notwithstanding the foregoing, the following transfers shall be
permitted hereunder without the prior consent of City:
a. The conveyance or dedication of any portion of the Property and/or Project
to City or other appropriate governmental agency, or the granting of easements or permits to
facilitate the Rehabilitation (as defined herein).
b. An assignment of this Agreement and all of Developer's interests in the
Property to an Affiliate, or a conveyance back from the Affiliate to Developer;
C. An assignment for financing purposes to an Approved Primary Lender to
secure the funds necessary for the Rehabilitation and operation of the Project, so long as such loan
documents have been duly reviewed and approved by City, and City has approved such financing
or permitted refinancing thereof pursuant to this Regulatory Agreement.
d. Leasing of individual Housing Units to a Qualified Household in
accordance with the Regulatory Agreement.
C. A Permitted Transfer as defined and set forth in Section 1.38 above.
£ A transfer otherwise approved in writing by the City.
In the event of a permitted Transfer by Developer not requiring City's prior approval, Developer
nevertheless agrees that at least twenty-one (21) days prior to such Transfer it shall give written
notice to City of such assignment and satisfactory evidence that the assignee will and shall assume
all of the obligations of this Regulatory Agreement and the Agreement in writing through an
assignment and assumption agreement in a form reasonably acceptable to City. The form of each
assignment and assumption agreement shall be submitted to City for review and approval by City's
legal counsel not later than twenty-one (21) days prior to the proposed date of the Transfer.
ARTICLE 8. NONDISCRIMINATION
8.1 Nondiscrimination. Except to the extent legally permissible in connection with the
Preference Units and to comply with the Project's public financing requirements, Developer
covenants by and for itself and any successors in interest that there shall be no discrimination
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against or segregation of any person, or group of persons on any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926,
12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section
12955.2 of the Government Code, in the sale, rental, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the Property and Project, or any part thereof, nor shall Developer, or any
person claiming under or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees of the Property or Project, or any part thereof.
8.1.2 Covenants Run with the Land. The covenants established in this Article
shall, without regard to technical classification and designation, be binding for the benefit and in
favor of the City and its/their successors and assigns, and shall remain in effect in perpetuity.
8.1.3 Clauses in Contracts and Leases. All contracts and leases relating to the
Property shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
a. In deeds:
"The grantee herein covenants by and for himself or herself, his or her heirs,
executors, administrators, and assigns, and all persons claiming under or through
them, that there shall be no discrimination against or segregation of, any person or
group of persons on account of any basis listed in subdivision (a) or (d) of Section
12955 of the Government Code, as those bases are defined in Sections 12926,
12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer,
use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall
the grantee or any person claiming under or through him or her, establish or permit
any practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendees in the premises herein conveyed. The foregoing covenants
shall run with the land."
b. In leases: "The lessee herein covenants by and for himself or herself,
his or her heirs, executors, administrators, and assigns, and all persons claiming under or through
him or her, and this lease is made and accepted upon and subject to the following conditions:
"That there shall be no discrimination against or segregation of any person or group
of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955
of the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (in) and paragraph (1) of subdivision (p) of Section 12955, and Section
12955.2 of the Government Code, in the leasing, subleasing, transferring, use,
occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee
himself or herself, or any person claiming under or through him or her, establish or
permit any such practice or practices of discrimination or segregation with
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reference to the selection, location, number, use, or occupancy, of tenants, lessees,
sublessees, subtenants, or vendees in the premises herein leased."
C. In contracts:
"There shall be no discrimination against or segregation of, any person or group of
persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of
the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section
12955.2 of the Government Code, in the sale, lease, sublease, transfer, use,
occupancy, tenure, or enjoyment of the premises which are the subject of this
Agreement, nor shall the grantee or any person claiming under or through him or
her, establish or permit any practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The
foregoing covenants shall run with the land."
ARTICLE 9. GENERAL PROVISIONS
9.1 Attorneys' Fees. If either party commences an action against the other party arising
out of or in connection with this Agreement, the prevailing party shall be entitled to recover
reasonable attorney's fees and costs of suit, including appeals, from the losing party.
9.2 Notices. All notices to be delivered under this Agreement to the other party shall
be addressed to the respective parties as set forth below or to such other address and to such other
persons as the parties may hereafter designate by written notice to the other parties hereto:
To City:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: City Manager
Copy to:
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
Attn: City Attorney
To Developer:
American Family Housing
15161 Jackson Street
Midway City, California 92655
Attention: Myles Anthony Peinemann II
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Copy to:
Goldfarb & Lipman
1300 Clay Street, Eleventh Floor
Oakland California 94612
Attention: William F. DiCamillo
Notices personally delivered; delivered through the United States mail, by registered or certified
mail, postage prepaid; by means of prepaid overnight delivery service; or by email are acceptable
forms of notice. Notices shall be deemed given upon receipt in the case of personal delivery, two
days after deposit in the mail, or the next business day in the case of email or overnight delivery.
Such written notices, demands, and communications shall be sent in the same manner to such other
addresses as any Party may from time to time designate in writing.
9.3 Binding on Heirs. This Agreement shall be binding upon the parties hereto and their
respective heirs, representatives, transferees, successors, and assigns.
9.4 Entire Agreement, Waivers, and Amendments. This Agreement incorporates all of
the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotiations
and previous agreements, oral or written, between the parties with respect to all or part of the
subject matter hereof. All waivers of the provisions of this Agreement must be in writing and
signed by the appropriate authorities of the party to be charged. Any amendment or modification
to this Agreement must be in writing and executed by City and Developer.
9.5 Internretation; Governing Law. This Agreement shall be construed according to its
fair meaning and as if prepared by both parties hereto. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of California, without regard to such
state's conflict of law principles.
9.6 Execution Authority. The person(s) executing this Agreement on behalf of the
parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly
authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing this
Agreement, such party is formally bound to the provisions of this Agreement, and (iv) the entering
into this Agreement does not violate any provision of any other agreement to which said party is
bound.
9.7 Non -liability of City Officials and Employees. No member, official, employee, or
contractor of City shall be personally liable to Developer in the event of any default or breach by
City or for any amount which may become due to Developer or any obligations under the terms
of this Agreement.
9.8 Enforced Delav; Extension of Times of Performance. In addition to specific
provisions of this Agreement, and except as expressly set forth in this Section, performance by
either party hereunder shall not be deemed to be in default and such party shall be entitled to an
extension of time to perform its obligations hereunder where delays in performance are due to
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causes beyond the reasonable control and without the fault of such party, including as applicable:
war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of the public
enemy; epidemics; pandemics; local public health emergency; quarantine restrictions; freight
embargoes; lack of transportation; unusually severe weather; inability to secure necessary labor,
materials or tools; delays of any contractor, subcontractor or utility provider supplies; acts of the
other party; acts or the failure to act of City or any other public or governmental agency or entity
(except that any act or failure to act of or by City shall not excuse performance by City).
Notwithstanding the foregoing, Developer's inability to secure satisfactory financing, interest
rates, and market and economic conditions shall not entitle Developer to an extension of time to
perform. An extension of time for any cause permitted under this Section shall be limited to the
period of the enforced delay, which period shall commence to run from the time of the
commencement of the cause, if notice by the party claiming such extension is sent to the other
party within thirty (30) days of knowledge of the commencement of the cause. If no written notice
is sent within thirty (30) days, for purposes of measuring the extension period for performance of
the obligation in question, the period of the enforced delay shall commence to run from the date
written notice is sent to the other party.
Times of performance under this Agreement maybe extended by mutual written agreement
of City and Developer.
9.9 Severability. If any term, provision, covenant, or condition of this Agreement is
held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of
this Agreement shall not be affected thereby to the extent such remaining provisions are not
rendered impractical to perform taking into consideration the purposes of this Agreement. In the
event that all or any portion of this Agreement is found to be unenforceable, this Agreement or
that portion which is found to be unenforceable shall be deemed to be a statement of intention by
the parties; and the parties further agree that in such event, and to the maximum extent permitted
by law, they shall take all steps necessary to comply with such procedures or requirements as may
be necessary in order to make valid this Agreement or that portion which is found to be
unenforceable.
9.10 Representations and Warranties. Developer and each person executing this
Agreement on behalf of Developer represents and warrants that: (a) Developer is a California
nonprofit, public benefit corporation in good standing and authorized to do business in the State
of California; (b) Developer has all requisite power and authority to carry out its business as now
and whenever conducted and to enter into and perform its obligations under this Agreement and
the agreements attached to this Agreement; (c) by proper action of Developer, Developer's
signatories have been duly authorized to execute and deliver this Agreement; (d) the execution of
this Agreement by Developer does not violate any provision of any other agreement to which
Developer is a party; and (e) except as may be specifically set forth in this Agreement, no approvals
or consents not heretofore obtained by Developer are necessary in connection with the execution
of this Agreement by Developer or with the performance by Developer of its obligations
hereunder.
9.11 City Contract Administration. The City Manager for the City (or his or her
authorized representative) shall administer this Agreement on behalf of City and shall have the
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City to issue interpretations, waive provisions, extend deadlines, enter into amendments of, and
terminate this Agreement on behalf of City, subject to City Council approval whenever applicable
under City policy or law.
9.12 Execution in CounterRart. This Agreement maybe executed in several counterparts,
and all so executed shall constitute one agreement binding on all parties hereto, notwithstanding
that all parties are not signatories to the original or the same counterpart.
9.13 Indemnity. Developer shall defend, indemnify, assume all responsibility for, and
hold City and their respective officers, officials, agents, employees, representatives, volunteers,
successors or assigned (collectively, "Indemnified Parties") from and against any and all claims
(including, without limitation, claims for bodily injury, death or damage to property), demands,
obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities,
costs and expenses (including, without limitation, reasonable attorneys' fees, disbursements and
court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims"),
which may arise from or in any manner relate (directly or indirectly) to any breach of the terms
and conditions of this Agreement, any damages to property or injuries to persons directly or
indirectly related to or in connection with this Agreement, the Project, the Subordination
Agreement entered into between the City, Developer and the County of Orange for the Project,
and/or the Rehabilitation, operation, management, or ownership of the Property including, without
limitation, defects in workmanship or materials or Developer's presence or activities conducted
on the Project (including the negligent, reckless, and/or willful acts, errors and/or omissions of
Developer, its principals, officers, agents, employees, vendors, suppliers, consultants,
subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may
be liable, or any or all of them).
Notwithstanding the foregoing, nothing herein shall be construed to require Developer to
indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful
misconduct of the Indemnified Parties, or any Claim arising from either City's refusal to permit
the Developer to amend, modify, or implement the Tenant Selection Plan in accordance with any
applicable law provided that the Developer provided written notice to the Cities regarding
Developers' proposed amendment or implementation. Nothing in this indemnity shall be
construed as authorizing any award of attorneys' fees in any action on or to enforce the terms of
this Agreement. This indemnity shall apply to all claims and liability regardless of whether any
insurance policies are applicable. The policy limits do not act as a limitation upon the amount of
indemnification to be provided Developer. The foregoing indemnity shall survive termination of
this Agreement.
9.14 Attachments. Attachment Nos. 1-14 attached to this Agreement are incorporated
herein by this reference and made apart hereof. Said Attachments are identified as follows:
Attachment No, 1 Real Property Legal Description
Attachment No. 2 Scope of Development
Attachment No. 3 Tenant Leasing Plan
Attachment No. 4 City Deed of Trust
Attachment No. 5 City Note
33
2211\08\3882959.2
Attachment No. 6 Notice of Affordability Restriction
Attachment No. 7 Notice of Commencement of Affordability Restriction
Attachment No. 8 Project Budget
Attachment No, 9 Project Pro Forma
Attachment No. 10 Regulatory Agreement
Attachment No. 11. Release of Construction Covenants
Attachment No. 12 Schedule of Performance
Attachment No. 13 Tenant Selection Plan
Attachment No. 14 Insurance Requirements
[Signatures on the following page]
34
2211\08\3882959.2
IN WITNESS WHEREOF, City and Developer have executed this Affordable Housing
Loan Agreement as of the date set forth above.
"CITY"
CITY OF NEWPORT BEACH,
a California municipal corporation and charter City
By:
43--2--
Grace
City ager
ATTEST:
-FUr Leil n1 Brown
City Clerk aklp
APPROVED AS TO FORM:
By:
Aaron rp a1'�alaS per'
City Attorney
"DEVELOPER"
AMERICAN FAMILY HOUSING,
a California nonprofit, public benefit corporation
By: _
Name:
Title:
Myles Anthony Peinemann II
Chief Executive Officer
Date: 2124 llb2-5
Date: Z / Z 4 lza z5
Date: �X1I,��,icd 2-14 Z07 S
Date:
35
221110813882959.2
IN WITNESS WHEREOF, City and Developer have executed this Affordable Housing
Loan Agreement as of the date set forth above.
"CITY"
CITY OF NEWPORT BEACH,
a California municipal corporation and charter City
By:
Grace Leung
City Manager
ATTEST:
By:
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
Date:
Date:
By: Date:
Aaron Harp
City Attorney
"DEVELOPER"
AMERICAN FAMILY HOUSING,
a California nonprofit, public benefit corporation
By: Date:�2�-�2�2�
Name: Myles Anthony Peinemann II
Title: Chief Executive Officer
35
2211\08\3882959.2
ATTACHMENT NO. 1
REAL PROPERTY LEGAL DESCRIPTION
That real property located in the State of California, County of Orange, Costa Mesa, and described
as follows:
PARCEL 2, IN THE COSTA MESA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
PER MAP FILED IN BOOK 24 PAGE 23 OF PARCEL MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM THAT PORTION CONVEYED TO MESA CONSOLIDATED
WATER DISTRICT BY DEED RECORDED DECEMBER 31, 1986 AS INSTRUMENT NO.
86-656909, OFFICIAL RECORDS,
ALSO EXCEPTING ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL
GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER
NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND
HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFORE AND REMOVING
THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS
INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE
DESCRIBED, AND TO BOTTOM SUCH WHIPSTCKED OR DIRECTIONALLY DRILLED
WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR
LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR,
DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE
RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OF THE
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AS RESERVED IN DEED FROM THE IRVINE COMPANY, A CORPORATION, RECORDED
MARCH 5, 1968 IN BOOK 8535 PAGE 62 OF OFFICIAL RECORDS.
APN: 439-312-12
2211\08\3882959.2
ATTACHMENT NO. 2
SCOPE OF DEVELOPMENT
2211\08\3882959.2
Development Plan
The County of Orange and American Family Housing (AFH) are co -applicants for the
1400 Bristol Project, a proposed 78-unit permanent supportive housing facility
located at 1400 Bristol Street, Costa Mesa CA, 92626
Project Site
The site is currently a 120 unit, fully operational Travelodge Inn motel with a
restaurant named Pom & Olive and Tesla charging station located on the same site
but are a separate structure from the Travelodge Inn motel. The project will be a
mix of studios, one -bedroom units, and 2 two -bedroom managers' units. The
commercial component will continue unchanged.
The existing property is composed of 3 two-story hotel buildings with open
corridors and units that open onto the common outdoor area.
The existing property also includes a restaurant and Tesla charging station that will
continue to operate on the property. The restaurant's property value will be
subtracted from the total purchase price and funds from the City of Costa Mesa will
be used to purchase this component. Although Homekey funds will not be used to
purchase this portion of the property, it is anticipated that the estimated $3,600 in
monthly revenue from the Tesla charging station, and $10,000 in monthly lease
revenue from the restaurant will go toward funding project operations for the
residential portions of the property.
Purchase Agreement
American Family Housing has entered into a Purchase Agreement with the owner of
the site. The site purchase price is $24,000,000 with an initial close date of July 29,
2024. Based on the Homekey award and funding process, we do not expect to meet
the initial closing date. The Ivey terms of the Purchase Agreement include:
Purchase Price:
Deposit:
Escrow Close Date:
With Extensions:
Four 30-day Extensions:
Architect and Engineers
$24,000,000
$100,000
October 30, 2024
February 28, 2025
$15,000 each
Even before the award, the project architects and engineers walked the site and
have prepared conceptual plans that include 5% ADA units and 2% sensory units.
Page 1 of 13
Construction
T. Morrissey Corporation will act as General Contractor for the project. Upon plan
check approval, they expect to begin construction by March 2025 and complete
construction with an approved Certificate of Occupancy by December 2025.
The property has three two-story structures which contain 120 units. The existing
structures currently operate as an open-air hotel, with open corridors and units that
open onto the parking lot, a courtyard, and a pool. Each unit receives an abundance
of natural light. Overall, the existing hotel is in very good condition. Transitioning
the structure from a hotel to a permanent housing use adds additional cost.
The current development concept calls for the rehabilitation of the site to allow for
36 studio units, 40 one -bedroom units, and 2 managers' units, laundry room, site
office space and a community room, with outdoor common area. The commercial
components on the site of the Tesla charging station and the restaurant will remain
at the site.
Financing Structure
In addition to the current funds, AFH will defer up to $819,660 of developer fee to
defray expense arising from the increase in costs of labor and materials for
construction.
Timeline
Our construction and development timeline is summarized below:
Notice of Award
Initiate Plan
Check Submittals
Mobilize Construction
Staff
Procurement and Bid
Obtain Building Permit
Purchase Site
Construction Start
Homekey Funds
Capital Expenditure
Mobilize Site Staff
Begin Tenant Selection
Construction Completion
Full Occupancy
July 2024
January 2025
February 2025
February - March 2025
March 2025
February 2025
March 2025
August 2025
December 2025
January 2026
December 2025
March 2026
Site Work
Add security fencing around the site, restripe parking lot, and upgrade / repair
exterior lighting. ADA path of travel requirements and upgraded landscaping are
Page 2 of 13
also included.
Building Exterior
Repair walkways, roof and remove existing building signage.
Management / Service Office and Community Center
Build out the current hotel lobby into management offices, program space, and
community room. Upgrade the fire alarm control panel and add
audio/communications for 2% of the units. Create a project layout that encourages a
sense of community and camaraderie among its residents.
Building Interior
Complete pest control and asbestos abatement as necessary. Interior demolition as
needed to consolidate hotel rooms into residential units.
Replacement/Repair/Upgrade of existing HVAC/ Electrical/water & sewer systems
and addition of a fire sprinkler fire suppression systems in all units. Addition of
kitchens in all units and additions of bedrooms in one- and two -bedroom units.
Repair drywall, paint, replace flooring, replace ac units, replace interior lighting,
replace cabinetry and storage, and replace unit -plumbing fixtures. Add central
laundry facilities. Reconfigure units to make ADA compliant and build out according
to code which includes counter adjustments, bathroom reconfigurations, changes to
hardware and flooring replacements.
Commercial Component
The Tesla charging station and the restaurant are expected to stay and operate post -
close and during construction. Renovations to the restaurant or charging station are
not included in the scope of work for the Homekey project. The restaurant and
charging station are on the same lot as the residential component but are stand-
alone components and will not be part of the renovations at the site.
Neighborhood Description
The project lies within the East Side Costa Mesa Neighborhood. East Side Costa Mesa
is situated east of the city of Costa Mesa and west of the city of Newport Beach. It is a
predominantly residential area known for its convenient location, vibrant
atmosphere, and desirable coastal living. One of the defining features of East Costa
Mesa is its proximity to the Pacific Ocean. Residents enjoy easy access to the beautiful
beaches of Newport Beach, including the renowned Newport Harbor.
Page 3 of 13
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Target Population
The Project's 48 voucher units will target homeless/chronically homeless/ at -risk
individuals/households. Prospective tenants will be contacted through CES. The
additional units will target individuals/households earning 30% of the Area Median
Income or less.
AMI Levels
The 76 residential units will house households who are earning 30% or less of the
area median income. 48 of these units will be supported by Project Based Vouchers.
Relocation Information
The Project is currently a Travelodge motel and as such does not contain any tenants
with long-term leases. Please see relocation plan and -narrative for additional
information.
Page 4 of 13
Experience Overview
American Family Housing
American Family Housing (AFH) is 501(c)3 nonprofit organization that provides a
continuum of housing and an array of services to support homeless and low-
income families and adults to secure a stable home, to be an active part of their
community, and to achieve a fulfilling life.
AFH brings over 30 years of experience in developing and managing affordable
housing to meet the needs of communities and residents. Our goal is 100 units
per year with a goal of adding 1,000 units over a 10-year period. Together with
our partners, we have site control today for 240 future permanent supportive
housing units that are now in predevelopment.
We are uniquely qualified to operate housing and social services together, with both
in-house property management and in-house supportive services. We are investing
in our existing portfolio, while maintaining a construction pipeline of new and
rehabilitated housing units, prioritizing units for homeless households.
Experience Owning and Operating Permanent Supportive Housing
Currently, AFH operates at 63 sites, offering affordable housing and permanent
supportive housing to households in Los Angeles, Orange, and San Bernardino
Counties. AFH owns nine buildings in South Gate and five buildings in the City of
Long Beach. AFH also provides third -party Homekey services and property
management in two former motels. About 25% of AFH's affordable housing units
are considered service -enriched permanent supportive housing and are reserved
Page 5 of 13
for households with one disabled family member, while about 10% of the units are
set aside for formerly homeless Veterans.
Potters Lane
American Family Housing developed Potters Lane, which opened in 2017 in Midway
City, CA. Potters Lane had a great impact on the narrative around supportive
housing for Veterans, as well as the need to innovate in order to reduce construction
costs. Potters Lane was the first residential community funded by state bond funds
under the Veterans Housing and Homelessness Prevention Program (VHHP) to open
in California. Its remarkably rapid construction was made possible by AFH's use of
recycled shipping containers.
There are 15 qualifying units and 1 manager unit. Eight (8) of the units are
prioritized for chronically homeless Veterans under the Veterans Affairs Supportive
Housing (VASH) program. Two (2) more units are prioritized for Veterans who do
not work with the US Dept. of Veterans Affairs. The remaining five (5) qualifying
units have been prioritized for Veterans, but is expected to be shifted for use by
chronically homeless individuals (regardless of Veteran status) as Orange County is
rapidly approaching "functional zero" homelessness.
The purpose of the program is to provide tenants with supportive services that
include case management, life and social skills development, linkages to medical and
mental services, job search and resume writing, recovery groups and family
reunification.
• Operational funding source: Rental revenues from project -based
vouchers and from tenant rent, and the VA
• Capital funding source: State of California Dept. of Housing and
Community Development, Federal Home Loan Bank of San Francisco
Affordable Housing Program (AHP).
• Capital Funding Source.
• Number of households / clients: 15/15
• Location: Midway City, CA.
• Services Planning Area: Central.
• Population: referred to AFH through the US Dept. of Veterans Affairs if
they are qualifying Veterans who are eligible for VASH; otherwise,
through the Coordinated Entry System (CES).
Della Rosa
Della Rosa is a residential community in the City of Westminster, CA that opened in
September 2020. Della Rosa is a two- and three-story, four building, affordable
housing development. Della Rosa offers 50 apartment units with 25 studio units
Page 6 of 13
housing formerly homeless individuals; these are supportive housing units. The
other 25 units are comprised of one- and two -bedroom apartments for families and
individuals earning 50% area median income or less in the County of Orange.
Resident amenities include a community room with shared kitchen, on -site laundry,
on- site management, and on -site supportive services.
• Operational funding source: Rental revenues from project -based
vouchers and from tenant rent.
• Capital funding source: Low Income Housing Tax Credits, County of
Orange, City of Westminster.
• Number of households / clients: 25/27
• Location: Westminster, CA.
• Services Planning Area: Central.
• Affirmed Housing is the owner and developer.
• AFH is the services provider in this partnership and has no ownership
interest. Affirmed and AFH have a fantastic working relationship and
we have strong potential to partner more with them in the future in
both OC and LA counties.
• The management company is Solari Enterprises.
• Population: Affordable units are referred to Solari through the
Westminster Family Resource Center; for Supportive Housing units,
through the Coordinated Entry System (CES)
The SH population is comprised of single and coupled adult clients. The affordable
housing population is comprised of single individuals and families. Two onsite case
managers provide general support and life skills to all tenants and intensive case
management services are provided to the clients who reside in the 25 SI-I units.
Supportive Housing - Scattered -Site Programs
LA County Dept. of Health Services /DHS
The purpose of the DHS Program is to provide intensive case management services
that will assist high utilizers of the health care system to secure and maintain
permanent housing.
The DHS Program consists of a multidisciplinary team of Clinicians and Case
Managers that serve nine -nine (99) families, individuals and transitional -aged youth
that reside in scattered -sites or rather independent apartments across Los Angeles
County. The DHS Program utilizes the evidenced -based practices of the Harm
Reduction Model and Housing First Philosophy to create individualized housing
plans that meet clients "where they are" while actively addressing barriers specific
to housing stability. DHS Program services include, but are not limited to— referrals
and linkages to shelters, mainstream benefits, identification and birth certificates,
Page 7 of 13
medical and mental health services, critical housing navigation, and wrap-
around/aftercare services upon placement into PSH.
• Operational funding source: Rental revenues from project -based
vouchers or from DHS flexible housing subsidies. All staff costs funded
by DHS.
• Capital funding source: N/A. Often uses AFH-owned apartments.
• Number of households / clients: 99/120
• Location: Lomita, Los Angeles, Huntington Park, Gardena, San Pedro,
Artesia, Long Beach, South Gate, El Monte, Alhambra, Bellflower,
Whittier, Downey, Pasadena, and El Monte.
• Services Planning Area: Services Planning Area 4, 3, 6, 7,8
• Population: referred to AFH through LA DHS.
Addressing racial equity
AFH is committed in our current work, putting our core values into action with
every person that rises out of homelessness. But we cannot achieve our nonprofit
mission if we do not integrate into our work approaches that address the impact of
institutional and structural racism that is present in education, criminal justice,
housing, employment, healthcare and access to opportunities.
Our staff receives extensive training in cultural competencies specific to racial and
gender identity, as well as to the cultural competencies in working with vulnerable
populations whose success benefits from AFH's ability to operate with a trauma -
informed approach to all aspects of its work.
AFH is an operation that aims to align its own diversity to that of the target
populations we serve. Our latest annual survey indicates our staff is 46%
Hispanic/Latinx,14% Asian American, 12% African American, and 26% white; 59%
are women while 35% are men. In terms of sexual orientation, 13% identify as
asexual, bisexual, gay, lesbian, pansexual, queer or other, while 68% identify as
heterosexual.
State and federal accessibility requirements:
AFH's Director of Real Estate Development has extensive experience in managing
both new construction as well as rehabilitation affordable housing projects that are
subject to state and federal accessibility requirements. He works with well qualified
CASp consultants to ensure that building design and construction adheres to the
code, and engages in creative problem solving to find cost effective yet compliant
solutions.
Page 8 of 13
sere urt"tiWUVINYINMUTUNNY
AFH provides both property management and services for 130 Homelcey units at
two sites in Orange County.
• AFH has operated the Stanton Inn and Suites Homelcey sites since the
day before Thanksgiving Day in 2020, when AFH tools over operations
of the Project RoomKey site. The site is operated jointly by its
Property Management and Services teams, in conformance with
Orange County.
• As of March 2021, 86 participants have been served year - to - date,
with an average length of stay of 53 days.
• AFH took over the property management of the Tahiti Motel in late
2020, and more recently its services team stepped in to commence
what is now a nearly - complete lease - up of qualifying Homekey
households.
• As of March 2021, of 34 participants served, with an average length of
stay of 3 days.
• AFH is shifting from stabilizing the property to amore
housing - placement focused program.
Key Leadership
Milo Peinemann, Chief Executive Officer, leads American Family Housing with 15
years of experience in housing and homeless services, and brings an in-depth
understanding of homeless services and housing policy and development, including
real estate lending and investment, asset management of permanent supportive
housing, the leasing and operations of supportive services for supportive housing
and bridge housing, and real estate project management. As CEO, he drives the
organization to fulfill its mission, overseeing all aspects of operations including
development, finance, real estate, and program design and management. Milo holds
a BA from the University of California, Berkeley, and a Master of Planning from the
University of Southern California.
Ryan Lehman, Director of Real Estate Development, has extensive experience in the
affordable housing field, with particular expertise in developing supportive housing
on complex urban sites in Southern California. With 20 plus years of real estate
development experience, he most recently served as a Senior Project Manager at A
Community of Friends, a developer of supportive housing based in Los Angeles.
Ryan is passionate about innovative approaches that can improve the development
process and result in beautiful, sustainable and cost effective developments. He
holds a Bachelor of Arts Degree from Goshen College and a Master of Arts Degree
from UCLA in Urban Planning
Page 9 of 13
Sean Theile, Director of Property Management, has 14 years of experience in the
real estate field and specializes in managing affordable housing communities. Before
I oining American Family Housing, Sean was the Director of Property Management
for Solari Enterprises, Inc., managing affordable communities throughout the state
of CA, from the early pre -development stages through their extended compliance
periods and beyond. Born and raised in Los Angeles, and having attended California
State University of Fresno, Sean has a strong passion for Southern California and
recognizes the urgent need to provide quality housing for our growing homeless
population. As AFH's Director of Property Management, Sean is dedicated to an
operation which provides quality housing and superior customer service to our
Residents, and which creates a strong community where our residents can thrive.
Page 10 of 13
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ATTACHMENT NO. 3
TENANT LEASING PLAN
2211\08%3882959.2
�! American
k)Family
Housing
1400 Bristol Street
Costa Mesa, CA 92626
Total Units: 78
76 Qualifying Rental Units: 36 Studios and 401-bedrooms
2 Non -Qualifying (Management Units): 2 2-bedrooms
Page 1 of 16
LEASE -UP PLAN
The Lease -Up Plan supports role awareness and coordination among the owner and partner
agencies, all of whom must work collaboratively. The experience of the applicant, as potential tenant,
is centered in all procedures. In support of communications, this document is or will be updated over
time as part of the collaborative pre -leasing and leasing "Crosswalk" process. This document shall be
consistent with the Tenant Selection Plan, but is not the Tenant Selection Plan.
PROJECT DESCRIPTION
1400 Bristol consists of a three two-story affordable housing development serving households
experiencing homelessness, chronic homelessness, and households who are at -risk of becoming
homeless.
_ .. _
Voucher
Local Preferences
Costa Newport
Mesa Beach
CES
Homelessness Criteria Studios - (3fiJ
- -__- - - -
CH H AR Studio Studio
- MHSA
1BR-{40J
12BR
OC HCA
1BR
1BR
1BR
2BR
1BR
PSVASH
MHSA
MHSA
PBV
38
38
35
3
-
28
3
5
28
6
-
24
24
PBVASH
10
28 -
8
16
12
10 3
- 28_
7
10
-
-
Non
— ._.,..----...._...
Staff
_.
-
_....16
-
-
.._.—.
-
_.
-
_..............
-
_
2
-
TOTAL
76
16
12
76
38
_
10 28
76
36
6 10
36
24
40
2
24
2
Of the 78 total units, 76 of the units are restricted for occupancy by Qualifying Households. The
remaining two (2) units are set aside for property management staff, and do not have income
restrictions.
For all 76 Qualifying units, there are a set of eligibility standards that may apply, including Tenant
Eligibility, Program Eligibility, and eligibility for Rental Subsidy, as follows:
• Housing status: 38 households experiencing chronic homelessness, 10 households experiencing
homelessness, and 28 at -risk of homelessness.
• Income Limits: All units are restricted to households with incomes equal to or less than 30% of
Area Median Income (AMI).
• Additional Restrictions:
24 of the 1-bedroom units are restricted to households that qualify through the Orange
County Health Care Agency (HCA) pursuant to the Mental Health Services Act (MHSA).
Any unit may count towards MHSA requirements, or both, so long as total project
requirements are met. This means that the designations might "float" overtime and so,
upon unit turnover, the exact requirements of any unit might change so long as total
project requirements are met. All referrals shall be pre-screened by HCA for
presumptive eligibility for MHSA qualification.
Page 2 of 16
Of the 76 Qualifying rental units, 48 are subject to a project -based rental subsidy:
• 48 units are subject to a Housing Assistance Payment (HAP) Contract from the Orange County
Housing Authority (OCHA). These units are specifically designated by unit number as either
Housing Choice Project -Based Vouchers (PBV) or Veterans Affairs Supportive Housing (VASH)
Project -Based Vouchers under the HAP Contract, and do not change if the occupying
leaseholder household changes. These applicant households shall be referred by the
Coordinated Entry System (CES) as managed by the County of Orange (County) Continuum of
Care (CoC).
• Of these 48 HAP units:
■ 38 are PBV units, of which 30 PBV units are 1-bedroom units and 8 are studio
units. 24 (all 1-bedroom units) are overlaid with the requirements of the MHSA
program.
• 10 are VASH units, of which 10 VASH are 1-bedroom units.
• For both PBV and VASH units, the units shall be permanently designated by unit number prior
to initial leasing; and these designations shall appended to the HAP contract(s) and remain in
place for those specific units for the life of the HAP contracts, unless later revised or amended.
• 28 units are not subject to the HAP Contract. All of these 28 units are studios. Of these 28 units:
• 16 units have a local preference for persons connected to the City of Costa Mesa. These
households will come from CES as managed by the CoC and based on local preference
criteria developed in conjunction with the City of Costa Mesa.
• 12 units have a local preference for persons connected to the City of Newport Beach.
These households will come from CES as managed by the CoC and based on local
preference criteria developed in conjunction with the City of Newport Beach.
American Disability Act (ADA) Standards:
Of the 76 Qualifying units, at a minimum, 5% of units will be full mobility units and a separate 5%will
be full visual/hearing impaired units to ensure American Disability Act (ADA) compliance, as follows:
• Four (4) will be full mobility units pursuant to the ADA.
• Four (4) will be visual/hearing impaired units.
Distribution of Units
Page 3 of 16
The initial leasing process shall support maximizing the matching of these ADA units to appropriate
referrals, in order to reduce the need for Reasonable Accommodations post -occupancy.
The HAP contract (PBV, VASH) and program standards (MHSA, Chronic Homeless status, Homeless
status, At -Risk status) shall be distributed throughout the building to the greatest extent feasible,
and not intentionally grouped together.
A higher qualifying standard is always acceptable; thus, a Homeless unit may be occupied by a
household qualifying as experiencing Homeless or Chronically Homeless, and an At -Risk unit may be
occupied by a household qualifying as At -Risk, Homeless or Chronically Homeless. However,
households referred in by CES must otherwise qualify for the unit as pertains to income
qualifications, local preferences and other such criteria, which will be spelled out in the Tenant
Selection Plan.
Coordinated Entry System (CES)
Because all qualifying units in the property are funded under the California Department of Housing
and Community Development (State HCD) Homekey program, all 76 qualifying units must utilize CES
or an equivalent. Thus, there is no broad -based marketing for the site except as provided for under
the Orange County CES. The procedures established by CES, and the cities of Costa Mesa and
Newport Beach, are as follows:
• Referrals for the 38 units under the HAP contract (PBV) shall be for households experiencing
chronic homelessness, and come from the CES, as managed by the CoC.
• Referrals for 10 units under the HAP Contract (VASH) shall be for VASH-eligible households, for
referral into VASH units, and come from CES as managed by the CoC, including as appropriate,
direct referrals from the VA Long Beach Healthcare System.
• Referrals for 16 units shall be for tenants who are at -risk of becoming homeless, for referral into
units without PBVs, and come from CES as managed by the CoC and based on local preference
criteria developed in conjunction with the City of Costa Mesa.
• Referrals for 12 units shall be for tenants who are at -risk of individuals who are experiencing
chronic homelessness, homelessness, and individuals who are at -risk of becoming homeless for
referral into units without PBVs, and come from CES as managed by the CoC and based on local
preference criteria developed in conjunction with the City of Newport Beach.
Management Agent: American Family Housing (AFH) will be the property management company
and will oversee staffing, including an on -site property manager and maintenance/janitorial staff, as
well oversight of the building's systems, operations, and vendors.
Page 4 of 16
Lead Services Provider: AFH, as Lead Services Provider (LSP), shall coordinate all services with third -
party providers, and shall perform all annual compliance reporting required for services. AFH as LSP
will offer the 76 permanent supportive housing (PSH) units wrap -around services, intensive case
management services, and services coordination to all tenants at no less than the levels required by
Homekey. The required ratio of direct onsite services staff -to -tenant households is no less than 1:15
for households with a qualifying head of household who was chronically homeless; 1:20 for
households with a qualifying head of household who was homeless, and 1:25 for a household with a
qualifying head of household who was at -risk. Additionally, there shall be other support staff such as
supervisors and interns as outlined in the services plan and budget. Levels of services for any given
household is based on individualized approaches to services based on individual household acuity
and needs.
Orange County Housing Authority (OCHA): 48 PBVs (including 10 VASH): OCHA will run its own
background checks to determine eligibility of applicants for the PBVs. OCHA and property
management will process applicants concurrently. Applicants must be approved by both OCHA and
property management prior to move in. Once applicants are approved to execute a lease, OCHA will
oversee issuance of the PBVs for the PBV units.
OC Health Care Agency (HCA): HCA will confirm MHSA eligibility of applicants referred by CES and
provide property management with the MHSA Certificate as eligibility is confirmed. HCA will oversee
the collection and submission of the application to OCHA and property management for the 24 MHSA
units, in partnership with their contracted service provider. HCA or the contracted service provider
will provide supportive services to the MHSA tenants. Supportive services are designed to be
provided onsite as well as off -site and are tailored to the level, intensity, and type of housing
interventions to meet individual needs. All services are voluntary and acknowledge the individuals
strengths and the environmental factors that affect a person's wellbeing and housing stability,
including the experience of trauma. Services will provide community -based programing in order to
deliver seamless, coordinated services that integrate housing support, and linkage to community
services to this target population. Services are intended to improve housing stability and retention,
as well as the individuals overall wellbeing.
In addition to the HCA BHS onsite support staff, the Residential Clinical Services Coordinator (RCSC)
will play a key liaison role to the property. The RCSC provide County contract monitoring support.
RCSCs are clinicians who have extensive training and many years of experience in permanent
supportive housing, with significant expertise providing services and coordinating with a wide range
of housing resources and partners. The RCSCs role is to ensure an effective collaborative process with
tenants, service providers and property managers, as well as to support tenants in their recovery
goals and to achieve the greatest tenant outcomes. RCSCs will ensure coordination of services with
on -site service provider and partner agencies and also in arranging community events to increase
engagement and decrease tenant isolation. RCSCs offer an extra layer of support when needed to
tenants, on -site service providers and property management by providing consultation and
facilitating collaboration. RCSCs will engage in one-on-one discussions with tenants to support
housing stability and to ensure each resident has access to a variety of responsive supports.
Page 5 of 16
California Department of Housing and Community Development: AFH shall handle all direct
reporting to HCD.
Cal Optima Health: The LSP, AFH, is a provider of Tenancy, Navigation, Day Use Rehab, and Enhanced
Care Management services. Once applicants are referred by CES, AFH shall screen via CalOptima for
eligibility under the CalAIM program. Where possible, applicants shall be enrolled in CalAIM at the
time of initial occupancy. Continued enrollment is not a criteria of continued occupancy. Where
enrolled, enrollment with the LSP is not a criteria, and so applicants already enrolled with other
providers contracted with CalOptima Health may choose to remain enrolled with their provider of
choice.
Furniture: All restricted units for the life of the property shall be furnished upon initial occupancy at
no cost to tenants. This initial furnishings shall include: Bed frame, mattress, nightstand, a kitchen
table and two chairs.
Common area amenities:
• A large multi -purpose community room for group events, classes, or meetings, including a fully
furnished community kitchen.
• Outdoor gathering spaces adjacent to indoor community rooms.
• Two laundry rooms (one on each floor)
• Common area spaces are meant to be open for use by tenants during regular business hours,
and during off -hours as practical. The Management Agent and Services team shall coordinate
access to and scheduling for use of all common area spaces, with oversight and procedures to
be determined and/or altered on a working basis by the site -level staff team, with ongoing input
from tenants through a formal input process, such as a Tenant Council,
Services Staffing Requirements
Funding Source
Staffing Commitments
Notes
(Greater/most restrictive
applies)
OCHA- PBVs
None specified
Supportive services
38 Housing Choice Vouchers (HCV)
are required and
provided by the
Sponsor (AFH) for
non-MHSA units.
VA - VASH
None specified
VA will provide in -
kind supportive
services and case
management.
HCD — Homekey- 76
• 3.0 FTE Case Managers.
Minimum staffing
ratios for Case
Management
Page 6 of 16
pursuant to the 2023
Homekey NOFA
(Round 3):
1:20 for chronically
homeless tenants,
1:25 for homeless
tenants, and 1:40 for
at -risk tenants.
HCA - MHSA
• 1.5FTE Case Managers.
HCA will provide in -
kind MHSA supportive
• 0.5 FTE Resident Services
services and case
Coordinator
management through
a full -service
® 0.5 FTE Peer Support
partnership.
i 0.15 HMIS Admin.
Qualifying Standards for Occupancy
Housing First
1400 Bristol is a Housing First community that prioritizes permanent housing followed by access to
voluntary supportive services such as medical and mental healthcare, substance use services,
benefits assistance, and legal aid, which promote long-term stability. This project will screen
applicants and support residents to maintain their tenancy using Housing First principles, in
compliance with SB1380. As such, the following practices will apply:
• Applicants will be considered for tenancy regardless of their current sobriety or past use of
substances, completion of treatment, or participation in services. Participation in services or
program compliance is not a condition of application approval. The use of alcohol or drugs in
and of itself, without other lease violations, is not a reason for denial of tenancy or eviction once
housed.
• Applicants will not be rejected based on poor credit or financial history, poor or lack of rental
history, criminal convictions unrelated to tenancy, housekeeping ability, or behaviors that
indicate a lack of "housing readiness."
• Once housed, residents can work with Case managers and service coordinators who are trained
in and actively employ evidence -based practices for client engagement, including, but not
limited to, motivational interviewing and client -centered counseling. Services are informed by
a harm -reduction philosophy that recognizes drug and alcohol use and addiction as a part of
tenants' lives, where tenants are engaged in nonjudgmental communication regarding drug and
alcohol use, and where tenants are offered education regarding how to avoid risky behaviors
Page 7 of 16
and engage in safer practices, as well as connected to evidence -based treatment if the tenant
so chooses.
Guidelines — Maximum Occupancy Limits Upon Date of Move -In
Upon Initial Qualification & Occupancy (strictest shall apply)
OBR 1BR
Min Max Min Max
OCHA
1
2
1
4
Costa Mesa
1
2
1
3
Newport Beach
1
2
1
3
Guidelines — Responsibility for Eligibility Standards:
There are three primary categories of eligibility criteria for applicant households:
(1) Tenant eligibility: These criteria are spelled out in the Tenant Selection Plan, are tied to the
deed restricted covenants of the property, and shall not change from year to year.
• Pursuant to the Tenant Selection Plan, the Management Agent shall be responsible for
confirming that applicants are eligible prior to move -in, and shall oversee annual re -
certifications of income. For this property, all units are set at 30% AMI for income
qualification.
(2) Rental subsidy eligibility: These criteria are tied to two types of rental subsidies, which apply to
some but not all units:
• The Housing Choice Vouchers, which cover38 of the 76 rental units. Some referral criteria
may be altered by OCHA over the years within the requirements of the vouchers, in which
case this leasing plan shall be updated to conform. For these units, OCHA shall be
responsible for confirming that applicants are eligible for rental assistance prior to move -
in. The Management Agent shall be responsible for confirming that applicants have
Certificates of Eligibility prior to move -in, and shall facilitate annual re -certifications with
OCHA. The units that are assigned PBV are fixed and will not change over time.
• The Veterans Affairs Supportive Housing units, which cover 10 of the 76 rental units. For
this geography, verification of eligibility shall be provided by the VA Long Beach Healthcare
System to the Management Agent.
• The HAP contracts are tied to specific unit numbers. The applicable criteria may change
from year to year at the discretion of OCHA or the VA.
Page 8 of 16
(2) Program eligibility: The program criteria are tied to the deed -restricted covenants of the
property, and shall not change from year to year.
The Lead Services Provider shall be responsible for supporting the Management Agent in
documenting that applicants are eligible for these criteria, prior to final approval for lease execution
and initial occupancy. This scope of work includes assisting the Management Agent in coordinating
with HCA and/or the VA Long Beach Healthcare System to secure documentation of eligibility for
MHSA and the VASH programs, where applicable. The Management Agent shall work with tenants
after Initial Occupancy to support ongoing enrollment, re -enrollment, or access to other resources,
due to post -occupancy changes in program eligibility or enrollment.
For this property:
• Verification of housing status (Chronically Homeless, Homeless, and At -Risk) shall apply to
all 76 Qualifying units.
• MHSA, as administered by the HCA, applies to 24 units.
• Eligibility for VASH services administered by the VA Long Beach Healthcare System shall
apply to the 10 units which have project -based VASH subsidies.
• Referral through CES: All 76 units are required to receive referrals through the CES
administered by the CoC.
Of those 76 units accepting referrals through CES, 28 of the units are also subject to a local
preference:
16 of the units are subject to a City of Costa Mesa preference. The Management
Agent shall make best efforts to provide information to the City regarding the
availability of the units and provide guidance and instructions to interested local
parties. To the greatest extent legally allowable, preference will be afforded to
applicants who are residents of the City of Costa Mesa, or who are verifiably living
or employed (or have lived or been employed) within City limits, as determined by
the City and AFH. In the event no referral is received by AFH, or any applicant is
not accepted for tenancy by AFH, in accordance with the requirements of this
Lease -Up Plan, within 60 days after such unit has been made available for tenancy,
then AFH may enter into a lease with any eligible applicant (regardless of residency
or employment status), and such lease shall be deemed to satisfy the preference
imposed by the City of Costa Mesa. AFH does not guarantee that any of the 16
units will be occupied by applicants that are verifiably living or employed (or have
lived or been employed) within the City of Costa Mesa limits.
12 of the units are subject to a City of Newport Beach preference. The
Management Agent shall make best efforts to provide information to the City
regarding the availability of the units and provide guidance and instructions to
interested local parties. To the greatest extent legally allowable, preference will
be afforded to applicants who are residents of the City of Newport Beach, or who
Page 9 of 16
are verifiably living or employed (or have lived or been employed) within City
limits, as determined by the City and AFH. In the event no referral is received by
AFH, or any applicant is not accepted for tenancy by AFH, in accordance with the
requirements of this Lease -Up Plan, within 60 days after such unit has been made
available for tenancy, then AFH may enter into a lease with any eligible applicant
(regardless of residency or employment status), and such lease shall be deemed
to satisfy the preference imposed by the City of Newport Beach. AFH does not
guarantee that any of the 12 units will be occupied by applicants that are verifiably
living or employed (or have lived or been employed) within the City of Newport
Beach limits.
Page 10 of 16
Documents Needed by Applicants- See Property Management Plan (PMP)
Supportive
Services
Notify CoC, local
providers, Fair
Housing
Marketing
Screen referrals
through CES and
provide direct
one-on-one
support to
applicants filling
out applications
Attach CES
Match/Referral
Sheet to the front
of the
application
Applications &
Applicant
Interviews
Services will
support applicant
with appeals
process
American Family Housing
LSP
Management Agent
Agreement, LSP
Agreement,
Regulatory
Agreements
Property
Management
Review services
applications
Schedule applicant
Interview to
complete
application
Process application
compliance
internally. Do a BC
Submit application
to Housing
Authority & other
services funders
Update
Services/applicant
regarding any
missing documents
and status
Page 11 of 16
Case Management/Property Management Roles
item/Area
Case Manager
Property Management
Refer Client to submit maintenance request
Provide notice to the client, assess
with PM. Ensure clients understand to
repairs, complete within appointment
Repairs
always submit issues and concerns in
time frame, and document repairs.
writing to PM as soon as they happen.
Inform client how to submit their concern.
Respond according to procedures
Find out facts, forward to PM if needed,
outlined in lease and property
Complaints/Suggestions
clarify and explain policy to client. Support
management grievance procedures.
client. Inform client of any on -site
suggestions box.
Goal Setting/
Discuss dreams/goals to be
Stabilization Planning
Accomplished and create an individualized
No Action Required
plan for reaching those goals
Promote a safe environment, build tenant
Promote and maintain a safe
skill/behavior, role-play conflict resolution
environment, set clear expectations,
strategies, interact with police department o
enforce rules/policies, interact with
other psychiatric support services as -needed,
police department as -needed.
Safety (On -Site)
explain house rules to resident and advocate
Inform CM when inspections or
as needed with the PM.
auditors are coming to the property
with ample notice for case
management to prep client or provide
any documentation that may be
requested.
Work with clients individually
Address disruptions/arguments,
Conflict Resolution amongst
to understand conflict resolution strategies,
explain rules, encourage and enforce
Tenants
roles of on -site staff,
rules as witnessed, respond to
managing behaviors, good neighbor
complaints, distribute lease
commitments, and adherence to
violations/notices (and coordinate with
property rules.
CM)
Assist with getting VOE for new
Assist the client in obtaining Driver's license,
applicants
Obtaining Vital
Identification card, Social Security Card, Birth
Certificate, Homeless and Disability
Documents
Certification, and other documents needed
for qualification and
recertification in PSH
Page 12 of 16
Assist clients in applying for any cash and
Complete recertification of eligibility
Application for
non -cash benefits they are eligible for.
for housing.
If requested, provide income
Income/Entitlements
llow-up,set timelines for
Coorapplications,
information so that CM can complete
Lions,nate
applications,
refer to PM when there are significant
Annual Assessments of eligibility for
changes in income to address adjustments in
PSH (if required for the particular
rental calculations.
funding program).
Refer reports to PM, In-depth training on
Assess infestation, Set up/coordinate
Pest Management/
apartment care and housekeeping,
abatement w/ pest control company,
Abatement
Activities of Daily Living (ADL) skills,
outline preparation and follow-up
preparation and follow up for abatement,
steps by resident, assess the outcome
coordination with pest and on -site staff.
Notify PM of needs for health and safety
Contact the local police department
Health and Safety check of
checks as appropriate. Help coordinate
and ask them to conduct a wellness
client
follow-up care, referrals, hospitalization,
check to determine the safety and/or
and discharge as needed if concerns
well-being of the resident.
identified.
If observed by PM: enforce guidelines
for the lease,
If observed by CM: Work with client on
contact police department if needed,
increasing sobriety and compliance if desired
request that supportive services check -
Known or Suspected Drug
by the client, with respect their
in with the client. If in violation of lease
Use
a
confidentiality in the program. Alert
guidelines: PM should document the
authorities if client intends self -harm or harm
activity and issues an appropriatenotice
to another within established agency
or document the conversation
with the resident. (If a conversation, it
reporting protocols.
should occur with CM present).
The client wants counseling
Work with the client to identify nature/cause
Refer to CM
or someone to talk to
for need and refer to appropriate counseling,
if applicable.
Client Admits Suicidal
Assess for safety, refer to Emergency and
Assess for basic safety, call 911 or refer
Ideation/Intent to Harm
psychiatric services (911) or Contracted third-
to CM and follow up to ensure care
others
parties or partnerships for safety
received
Attend Resident Meeting and provide
Resident (Townhall)
Coordinate meetings with PM and run
requested updates or information
Meetings
meeting and prepare agenda
residents need to know about the
property/operations.
Ix/week between Property Manager and
1xweek between Property Manager
On -site staff meetings
Supportive Services, CM creates agenda and
and Case Manager
runs meetings and circulates minutes
Rental Calculation
Refer resident to PM upon loss/gain of
Perform Annual Rental Calculation
Procedures
income or if questions on how rent is
(move -in anniversary) and upon
calculated.
I loss/gain of resident income
Page 13 of 16
Housing Team Roles and Responsibilities
Successful Housing Teams:
• Are committed to a collaborative team approach and support each other's roles
• Have mutual respect and understanding regarding each agencies roles and responsibilities
• Educate and orient staff and residents regarding the role and responsibilities of the
Service Provider/Case Managers and Property Management
• Have mutual respect for each other's professional boundaries, roles, and areas of expertise
• Work as a team to resolve problems and conflicts
• Respect and maintain resident confidentiality regarding treatment plans
• Meet and communicate regularly to review challenges and successes to address
problems and create solutions
• Work together to improve policies and procedures within the housing community.
Service Provider/Case Manager Role within the Housing Team:
Case Manager's, while maintaining confidentiality regarding mental and physical health
diagnosis, provide updates on tenant progress, behavior issues that pertain to property
management, and planned community activities.
Role during Lease Up/Move-in
• Screen referrals through CES and provide direct one-on-one support to applicants filling out
voucher application
• Print out and attach CES Match/Referral Sheet to the front of the voucher application
• Submit voucher applications to Property Management team and schedule applicant
interview with Property Management team
• Provide documents and back-up to Property Management team as requested
• Report to Property Management team regarding status of appeal process for denied applicants
• Oversee appeal process for applicants denied (i.e. submitting back-up documentation)
• Be the primary contact person to verify homeless/disability certifications
Ongoing Role
• Link residents with services and resources to address needs
• Provide direct support, services, and resources when applicable to address resident needs
• Coordinate support and service plans
• Provide support and referrals for residents to assist them with remedying lease violations
and help prevent evictions
• Participate in the Housing Retention Plan Protocol
• Coordinate the delivery of prevention programs for residents such as safety and wellness
• Coordinate, deliver, and promote community building activities to support resident retention
• Work with Property Management in collecting past due rent by assisting resident in
developing a payment plan if they are late or fall behind on rent payments.
Page 14 of 16
Property Manager Role within the Housing Team:
Property Management staff provide information related to vacancies, resident lease violations,
verbal and written warning's, inspections, delayed rent payments, and property maintenance
issues which will affect residents.
Role during Lease Up/Move-in
• Review voucher application for errors or discrepancies
• Schedule interview with applicant to complete Property Management application
• Process Property management application through internal compliance
• Submit voucher applications to Housing Authority
• Communicate with housing authority, Service Provider and applicant regarding
missing documents and update applications with documents received from Service
Provider/Applicant
• Help move applicant progress along through all parts of the process, including timely
submission of applications to Housing Authority
Ongoing Role
• Oversee physical maintenance of the property
• Oversee safety and security of the property
• Manage the property
• Collect rent
• Manage occupancy issues and communicate and collaborate with Service Provider
in filling vacancies
• Enforce terms of the lease
• Participate in the Housing Retention Plan Protocol
• Conduct fire drills/inspections regularly
• Provide information to the Service Provider Case Managers regarding resident issues
and lease violations prior to issuing any violation or notice
• Oversee provision of supplies in Community Room, including daily coffee, water, hand
sanitizer, snacks.
Shared Roles:
• Work collaboratively and cooperate on issues related to the health and safety of
residents and building/unit maintenance
• Share relevant written materials, memos, lease violations, notices, and application
updates on a regular basis
• Establish clear eviction prevention policies and work together to provide appropriate
support to tenants in violation of lease and/or house rules or delinquent in rent
• Support problem solving and mediation attempts through collaboration with Service Providerteam
• Hold new tenant orientation and welcome newtenants
• Building maintenance and security: Case Managers to notify observed problems or
issues to Property Manager and Property Manager to respond to issues as they
arise
• Support rent collection
• Support housing stability of residents
• Health and safety of residents
Page 15 of 16
• Tenant grievance process and follow-up
• Lease and House Rule enforcement
• Handling inappropriate behavior
• Participate in weekly team meetings
• Emergency procedures during crisis.
Team Meetings
MultidisciplinaryTeam Meetings including Case Managers, Property Manager, and AFH will be
held on an ongoing weekly basis to discuss safety, operations, and Resident related business.
The purpose of all team meetings is to ensure site staff work together as a team with the
common goal of sustaining a residential environment that is safe, secure, and well -maintained,
while enhancing a sense of community and ensuring Resident's housing retention. Additionally,
ongoing crosswalk meetings will be held either monthly or quarterly with OCHA and the VA
upon reaching 100%occupancy to discuss tenant challenges and resident retention.
Page 16 of 16
ATTACHMENT NO. 4
CITY DEED OF TRUST
2211\08\3882959.2
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: City Manager
APN: 439-312-12
[Free Recording Requested
Government Code Sections 6103 and 27383]
GROUND LEASEHOLD DEED OF TRUST WITH ASSIGNMENT OF RENTS
This GROUND LEASEHOLD DEED OF TRUST WITH ASSIGNMENT OF RENTS
("Deed of Trust"), dated as of , 2025 for identification purposes only, is made by
and among AMERICAN FAMILY HOUSING, a California Nonprofit Public Benefit Corporation
("Trustor"), COMMONWEALTH LAND TITLE INSURANCE COMPANY, a Florida
corporation ("Trustee"), and CITY OF NEWPORT BEACH, a California municipal corporation
and charter city ("Beneficiary");
Trustor grants, transfers and assigns to Trustee in trust, upon the trusts, covenants,
conditions and agreements and for the uses and purposes hereinafter contained, with power of sale,
and right of entry and possession, all of its title and interest in that real property (the "Property")
in the City of Costa Mesa, County of Orange, State of California, described in Exhibit A attached
hereto and incorporated herein by this reference;
Together with Truster's interest in all buildings, structures and improvements of every
nature whatsoever now or hereafter situated on the Property; and
Together with the rents, issues and profits thereof; and together with all buildings and
improvements of every kind and description now or hereafter erected or placed thereon, and all
fixtures, including but not limited to all gas and electric fixtures, engines and machinery, radiators,
heaters, furnaces, hearing equipment, laundry equipment, steam and hot-water boilers, stoves,
ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other
plumbing and heating fixtures, mantles, cabinets, refrigerating plant and refrigerators, whether
mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings, screens,
blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings shall to
the extent permitted by law be deemed to be permanently affixed to and a part of the realty; and
Together with all building materials and equipment now or hereafter delivered to said
premises and intended to be installed therein; and
Together with all plans, drawings, specifications, and articles of personal property now or
hereafter attached to or used in and about the building or buildings now erected or hereafter to be
erected on the Property which are necessary to the completion and comfortable use and occupancy
of such building or buildings for the purposes for which they were or are to be erected, including
all other goods and chattels and personal property as are ever used or furnished in operating a
2211\08\3884044.2
building, or the activities conducted therein, similar to the one herein described and referred to,
and all renewals or replacements thereof or articles in substitution therefor, whether or not the
same are, or shall be attached to said building or buildings in any manner.
To have and to hold the property hereinbefore described (including the Property and all
appurtenances), all such property being referred to collectively herein as the "Property," to Trustee,
its successors and assigns forever.
FOR THE PURPOSE of securing (1) payment of indebtedness of Truster to the
Beneficiary in the principal sum of THREE MILLION DOLLARS ($3,000,000) (the "City
Loan"), evidenced by a promissory note dated , 2025 between Truster and
Beneficiary (the "City Loan Note"), together with all sums due thereunder including interest and
other charges; and (2) the performance of each agreement of Trustor in this Deed of Trust and the
City Loan Note, including, without limitation, that certain Affordable Housing Loan Agreement
entered into by and between Trustor and Beneficiary on or about the same date hereof (the
"AHA"), and that certain Joint Regulatory Agreement and Declaration of Covenants and
Restrictions entered into by and between Truster, Beneficiary, and the City of Costa Mesa on or
about the same date hereof (the "Regulatory Agreement'), and together with the City Loan Note,
the Deed of Trust, and the AHA, collectively the "City Loan Documents"). Said City Loan Note
and all of its terms are incorporated herein by reference and this conveyance shall secure any and
all extensions, amendments, modifications or renewals thereof however evidenced, and additional
advances of the City Loan evidenced by any note reciting that it is secured hereby.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS
AND AGREES:
1. That it will pay the City Loan Note at the time and in the manner provided therein;
2. That it will not permit or suffer the use of any of the Property for any purpose other
than the use for which the same was intended at the time this Deed of Trust was executed, namely,
as permanent supportive housing;
3. That the City Loan Note is incorporated herein and made a part of this Deed of
Trust. Upon default under the City Loan Note or this Deed of Trust, Beneficiary, at its option, may
declare the whole of the indebtedness secured hereby to be due and payable;
4. That all rents, profits and income from the Property covered by this Deed of Trust
are hereby assigned to Beneficiary for the purpose of discharging the debt hereby secured.
Permission is hereby given to Trustor so long as no default exists hereunder, to collect such rents,
profits and income;
5. That upon default hereunder and the expiration of any applicable notice and cure
periods, Beneficiary shall be entitled to the appointment of a receiver by any court having
jurisdiction, without notice, to take possession and protect the Property described herein and
operate same and collect the rents, profits and income therefrom;
6. That Trustor will keep the improvements now existing or hereafter erected on the
Property insured against loss by fire and such other hazards, casualties and contingencies as may
be required in writing from time to time by Beneficiary, and all such insurance shall be evidenced
2
2211\08\3884044.2
by standard fire and extended coverage insurance policy or policies, in the amount of the
replacement value of the improvements. Such policies shall be endorsed with a standard mortgage
clause with loss payable to Beneficiary and certificates thereof together with copies of original
policies shall be deposited with Beneficiary. Such policies shall be endorsed with a standard
mortgage clause with loss payable to Beneficiary subordinate to the rights and interest of the
beneficiary of the deed of trust securing the Senior Loan, as described in paragraph 29 below) and
certificates thereof together with copies of original policies shall be deposited with Beneficiary;
7. To pay, before delinquency, any taxes and assessments affecting said Property
when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof
which appear to be prior or superior hereto, all costs, fees and expenses of this Trust unless
exemption is obtained therefrom;
8. To keep said Property in good condition and repair, not to remove or demolish any
buildings thereon, to complete or restore promptly and in good and workmanlike manner any
building which may be constructed, damaged, or destroyed thereon and to pay when due all claims
for labor performed and materials furnished therefor (unless contested in good faith if Trustor
provides security satisfactory to Beneficiary that any amounts found to be due will be paid and no
sale of the Property or other impairment of the security hereunder will occur); to comply with all
laws affecting said Property or requiring any alterations or improvements to be made thereon; not
to commit or permit waste thereof, not to commit, suffer or permit any act upon said Property in
violation of law and/or covenants, conditions and/or restrictions affecting said Property; not to
permit or suffer any alteration of or addition to the buildings or improvements hereafter
constructed in or upon said Property without the consent of Beneficiary;
9. To appear in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses,
including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or
proceeding in which Beneficiary or Trustee may appear;
10. Should Trustor fail to make any payment or do any act as herein provided, then
Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligation hereof, may make or do the same in
such manner and to such extent as either may deem necessary to protect the security hereof.
Beneficiary or Trustee, being authorized to enter upon said Property for such purposes, may
commence, appear in and/or defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest or compromise
any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior
hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay
counsel's reasonable fees;
11. Beneficiary shall have the right to pay fire and other property insurance premiums
when due should Trustor fail to make any required premium payments. All such payments made
by Beneficiary shall be added to the principal sum secured hereby;
12. To pay immediately and without demand all sums so expended by Beneficiary or
Trustee, under pennission given under this Deed of Trust, with interest from date of expenditure
at the rate specified in the City Loan Note;
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221 1\08\3884044.2
13. That the City Loan advanced hereunder is to be used for Eligible Expenses as the
term is defined in the AHA; and upon the failure of Trustor to keep and perform such covenants,
the principal sum and all arrears of interest, and other charges provided for in the City Loan Note
shall, at the option of Beneficiary, become due and payable, anything contained herein to the
contrary notwithstanding;
14. Trustor further covenants that it will not voluntarily create, suffer or permit to be
created against the Property, subject to this Deed of Trust, any lien or liens (other than the lien of
a deed of trust recorded prior in time and right to this Deed of Trust and/or the lien of a deed of
trust to which Trustor has expressly agreed to subordinate the lien of this Deed of Trust, with
City's written permission) except as authorized by Beneficiary, and further that it will keep and
maintain the Property free from the claims of all persons supplying labor or materials which will
enter into the construction of any and all buildings now being erected or to be erected on the
Property;
15. That any and all improvements made or about to be made upon the Property, and
all plans and specifications, comply with all applicable municipal ordinances and regulations and
all other regulations made or promulgated, now or hereafter, by lawful authority, and that the same
will upon completion comply with all such municipal ordinances and regulations and with the
rules of the applicable fire rating or inspection organization, bureau, association or office.
IT IS MUTUALLY AGREED THAT:
16. Subject to any cure rights under the AHA, if the construction of any improvements
as herein referred to shall not be carried on with reasonable diligence, or shall be discontinued at
any time for any reason other than events of Force Ma'e7 ure pursuant to Paragraph 34 hereof,
Beneficiary, after due notice to Trustor or any subsequent owner, is hereby invested with full and
complete authority to enter upon the Property, employ watchmen to protect such improvements
from depredation or injury and to preserve and protect the personal property therein, and to
continue any and all outstanding contracts for the erection and completion of said building or
buildings, to make and enter into any contracts and obligations wherever necessary, either in its
own name or in the name of Trustor, and to pay and discharge all debts, obligations and liabilities
incurred thereby. All such sums so advanced by Beneficiary (exclusive of advances of the principal
of the indebtedness secured hereby) shall be added to the principal of the indebtedness secured
hereby and shall be secured by this Deed of Trust and shall be due and payable on demand;
17. In the event of any fire or other casualty to the Project or eminent domain
proceedings resulting in condemnation of the Project or any part thereof, Trustor shall have the
right to rebuild the Project, and to use all available insurance or condemnation proceeds therefor
subject to the prior right to any insurance proceeds or condemnation awards of the beneficiary of
the deed of trust securing the Senior Loan, as described in paragraph 29;
18. Upon default by Trustor in making any payments provided for herein or in the City
Loan Note secured hereby, and if such default is not made good within fifteen (15) calendar days
after notice from Beneficiary, or if Trustor shall fail to perform any covenant or agreement in this
Deed of Trust within thirty (30) calendar days after written demand therefor by Beneficiary (or, in
the event that more than thirty (30) calendar days is reasonably required to cure such default,
should Trustor fail to promptly commence such cure, and diligently prosecute same to completion),
Beneficiary may declare all sums secured hereby immediately due and payable by delivery to
4
2211\08\3884044.2
Trustee of written declaration of default and demand for sale, and of written notice of default and
of election to cause the Property to be sold, which notice Trustee shall cause to be duly filed for
record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with
Trustee this Deed of Trust, the City Loan Note and all documents evidencing expenditures secured
hereby;
19. After the lapse of such time as may then be required by law following the
recordation of said notice of default, and notice of sale having been given as then required by law,
Trustee, without demand on Trustor, shall sell Trustor's interest in said Property at the time and
place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order
as it may determine at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. Trustee may postpone sale of all or any portion of said interest by
public announcement at the time and place of sale, and from time to time thereafter may postpone
the sale by public announcement at the time fixed by the preceding postponement. Trustee shall
deliver to the purchaser its deed conveying Trustor's interest in the property so sold, but without
any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall
be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or
Beneficiary, may purchase at the sale. Trustee shall apply the proceeds of sale to payment of (1)
the expenses of such sale, together with the reasonable expenses of this trust including therein
reasonable Trustee's fees or attorneys' fees for conducting the sale, and the actual cost of
publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other
evidence of title procured in connection with such sale and revenue stamps on Trustee's deed; (3)
all sums expended under the terms hereof, not then repaid, with accrued interest at the rate
specified in the City Loan Note; (4) all other sums then secured hereby; and (5) the remainder, if
any, to the person or persons legally entitled thereto;
20. Beneficiary may from time to time substitute a successor or successors to any
Trustee named herein or acting hereunder to execute this Deed of Trust. Upon such appointment,
and without conveyance to the successor trustee, the latter shall be vested with all title, powers,
and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment
and substitution shall be made by written instrument executed by Beneficiary, containing reference
to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the
county or counties in which the property is situated, shall be conclusive proof of proper
appointment of the successor trustee;
21. The pleading of any statute of limitations as a defense to any and all obligations
secured by this Deed of Trust is hereby waived to the full extent permissible by law;
22. Upon written request of Beneficiary stating that all sums secured hereby have been
paid, and upon surrender of this Deed of Trust and the City Loan Note to Trustee for cancellation
and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property
then held hereunder. The recitals in such reconveyance of any matters of fact shall be conclusive
proof of the truthfulness thereof The grantee in such reconveyance may be described as "the
person or persons legally entitled thereto';
23. The trust created hereby is irrevocable by Trustor;
24. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto,
their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term
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221 I\08\3884044.2
"Beneficiary" shall include not only the original Beneficiary hereunder but also any successor to
Beneficiary's rights, powers, and responsibilities, and any future owner and holder including
pledgees, of the City Loan Note secured hereby. In this Deed of Trust, whenever the context so
requires, the masculine gender includes the feminine and/or neuter, and the singular number
includes the plural. All obligations of each Truster hereunder are joint and several;
25. Trustee accepts this trust when this Deed of Trust, duly executed and
acknowledged, is made public record as provided by law. Except as otherwise provided by law,
Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of
any action or proceeding in which Truster, Beneficiary, or Trustee shall be a party unless brought
by Trustee;
26. The undersigned Truster requests that copies of any notice of default and of any
notice of sale hereunder be mailed to it at:
American Family Housing
15161 Jackson Street
Midway City, California 92655
Attention: Myles Anthony Peinemann II
With a copy to:
Goldfarb & Lipman
1300 Clay Street, Eleventh Floor
Oakland California 94612
Attention: William F. DiCamillc
Truster agrees, at any time after receipt of a written request from Beneficiary, to
furnish to Beneficiary a detailed statement in writing of income, rents, profits, and operating
expenses of the premises, and the names of the occupants and tenants in possession, together with
the expiration dates of their leases and full information regarding all rental and occupancy
agreements, and the rents provided for by such leases and rental and occupancy agreements, and
such other information regarding the Property and their use as may be requested by Beneficiary.
27. In order to induce Beneficiary to make the loan evidenced hereby, Trustor agrees
that in the event of any Transfer of the Property without the prior written consent of Beneficiary
(other than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure,
by the holder of the deed of trust securing the Senior Loan), Beneficiary shall have the absolute
right at its option, without prior demand or notice, to declare all sums secured hereby immediately
due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right
to require consent to future or successive transactions. Beneficiary may grant or deny such consent
in its sole discretion and, if consent should be given, any such transfer shall be subject to this
paragraph 27, and any such transferee shall assume all obligations hereunder and agree to be bound
by all provisions contained herein. Such assumption shall not, however, release Truster from any
liability thereunder without the prior written consent of Beneficiary.
(a) As used herein, "transfer" includes the sale, agreement to sell, transfer or
conveyance of the Property, or any portion thereof or interest therein, whether voluntary,
2211\08\3884044.2
involuntary, by operation of law or otherwise, the execution of any installment land sale contract
or similar instrument affecting all or a portion of the Property, or the lease of all or substantially
all of the Property. "Transfer" shall not include the leasing of individual residential units on the
Property or any transaction that doesn't require approval by the Beneficiary pursuant to Section
7.1 of the AHA.
(b) The term "sale" means any transfer, assignment, conveyance or lease (other
than to a tenant for occupancy) of the Property and/or the improvements thereon, or any portion
thereof, or any interest therein by the Trustor, but excludes any purchase option agreement given
to Trustor's general partner(s), if any. Sale includes a sale in condemnation or under threat thereof.
Sale does not include dedications and grants of easements to public and private utility companies
of the kind customary in real estate development. Sale shall also not include any transaction that
doesn't require approval by the Beneficiary pursuant to Section 7.1 of the AHA.
28. Trustor shall permit Beneficiary and its agents or representatives to inspect the
Property at any and all reasonable times, with twenty-four (24) hours advance notice. Inspections
shall be conducted so as not to interfere with the tenants' use and enjoyment of the Property.
29. It is hereby expressly agreed and acknowledged by Trustor and Beneficiary that
this Deed of Trust will be a subordinate deed of trust only to the two (2) deeds of trust securing the
County Loan. Further, and that the City Loan secured hereby, and the City Loan Note will be
subject and subordinate only to these deeds of trust as such are defined in the AHA (collectively
referred to as the "Senior Loan").
30. For purposes of this Deed of Trust, "Hazardous Materials" means any substance,
material, or waste which is or becomes regulated by any local governmental authority, the State of
California, or the United States Government, including, but not limited to, any material or
substance which is (i) defined as a "hazardous waste", "acutely hazardous waste", "extremely
hazardous waste", or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or
listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter
6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316
of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner
Hazardous Substance Account Act), (iii) defined as a "hazardous material", "hazardous
substance", or "hazardous waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv)
defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code,
Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi)
asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as "hazardous" or
"extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations,
Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water
Act (33 U.S.C. Section 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section
6903), (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., (xii)
methyl -tertiary butyl ether, (xiii) perchlorate or (xiv) any other substance, whether in the form of
a solid, liquid, gas or any other form whatsoever, which by any governmental requirements either
requires special handling in its use, transportation, generation, collection, storage, handling,
treatment or disposal, or is defined as "hazardous" or harmful to the environment. For purposes
221I\08\3884044.2
hereof, "Hazardous Materials" excludes materials and substances in quantities as are commonly
used in the construction and operation of an apartment complex provided that such materials and
substances are used in accordance with all applicable laws.
31. In addition to the general and specific representations, covenants and warranties set
forth in this Deed of Trust or otherwise, Trustor represents, covenants and warrants, with respect
to Hazardous Materials, as follows:
(a) Neither Truster nor, to the best knowledge of Trustor, any other person, has
ever caused or permitted any Hazardous Materials to be manufactured, placed, held, located or
disposed of on, under or at the Property or any part thereof, and neither the Property nor any part
thereof, or any property adjacent thereto, has ever been used (whether by Trustor or, to the best
knowledge of the Trustor, by any other person) as a manufacturing site, dump site or storage site
(whether permanent or temporary) for any Hazardous Materials;
(b) Trustor hereby agrees to indemnify Beneficiary, its officers, employees,
contractors and agents, and hold Beneficiary, its officers, employees, contractors and agents
harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and
claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against
Beneficiary, its officers, employees, contractors or agents for, with respect to, or as a direct or
indirect result of, the presence or use, generation, storage, release, threatened release or disposal
of Hazardous Materials on or under the Property or the escape, seepage, leakage, spillage,
discharge, emission or release of any Hazardous Materials from the Property (including, without
limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising
under CERCLA, any so-called "Superfund" or "Superlien" law, or any other federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous Materials), caused by Trustor.
(c) Trustor has not received any notice of (i) the happening of any event
involving the use, spillage, discharge or cleanup of any Hazardous Materials ("Hazardous
Discharge") affecting Trustor or the Property or (ii) any complaint, order, citation or notice with
regard to air emissions, water discharges, noise emissions or any other environmental, health or
safety matter affecting Trustor or the Property (`Environmental Complaint") from any person or
entity, including, without limitation, the United States Environmental Protection City ("EPA"). If
Trustor receives any such notice after the date hereof, then Trustor will give, within seven (7)
business days thereafter, oral and written notice of same to Beneficiary.
(d) Without limitation of Beneficiary's rights under this Deed of Trust,
Beneficiary shall have the right, but not the obligation, to enter onto the Property or to take such
other actions as it deems necessary or advisable to clean up, remove, resolve or minimize the
impact of, or otherwise deal with, any such Hazardous Materials or Environmental Complaint
upon its receipt of any notice from any person or entity, including without limitation, the EPA,
asserting the existence of any Hazardous Materials or an Environmental Complaint on or
pertaining to the Property which, if true, could result in an order, suit or other action against Truster
affecting any part of the Property by any governmental agency or otherwise which, in the sole
opinion of Beneficiary, could jeopardize its security under this Deed of Trust. All reasonable costs
and expenses incurred by Beneficiary in the exercise of any such rights shall be secured by this
Deed of Trust and shall be payable by Trustor upon demand together with interest thereon at a rate
2211\08\3884044.2
equal to the highest rate payable under the City Loan Note secured hereby.
32. The following shall be an "Event of Default:"
(a) Failure of Truster to pay, when due, principal and interest and any other
sums or charges on the City Loan Note, in accordance with the provisions set forth in the City
Loan Note and such failure is not cured within fifteen (15) calendar days after receipt of written
notice from Beneficiary; or
(b) A violation of the terms, conditions or covenants of the City Loan Note, this
Deed of Trust, the AHA or Regulatory Agreement after the expiration of any applicable cure
period.
33. Subject to the extensions of time set forth in paragraph 34, and subject to the further
provisions of this paragraph 33 and of paragraphs 35 and 36, failure or delay by the Trustor to
perform any tern or provision of this Deed of Trust constitutes a default under this Deed of Trust.
The Truster must immediately commence to cure, correct, or remedy such failure or delay and
shall complete such cure, correction or remedy with reasonable diligence.
(a) The Beneficiary shall give written notice of default to the Truster with a
copy to the limited partners of trust (if applicable) for which Beneficiary has been supplied with
address for notice, specifying the default complained of by the Beneficiary. Delay in giving such
notice shall not constitute a waiver of any default nor shall it change the time of default.
(b) The Truster shall not be in default so long as it endeavors to complete such
cure, correction or remedy with reasonable diligence, provided such cure, correction or remedy is
completed within thirty (30) calendar days after receipt of written notice (or such additional time
as may be reasonably necessary to correct the cause).
(c) Any failures or delays by the Beneficiary in asserting any of its rights and
remedies as to any default shall not operate as a waiver of any default or of any such rights or
remedies. Delays by the Beneficiary in asserting any of its rights and remedies shall not deprive
the Beneficiary of its right to institute and maintain any actions or proceedings which it may deem
necessary to protect, assert, or enforce any such rights or remedies.
34. Notwithstanding specific provisions of this Deed of Trust, performance hereunder
shall not be deemed to be in default where delays or defaults are due to: war; insurrection; strikes;
lock -outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public
enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation;
governmental restrictions or priority; litigation; unusually severe weather; inability to secure
necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party;
acts or failure to act of the Beneficiary, or any other public or governmental agency or entity
(except that any act or failure to act of Beneficiary shall not excuse performance by Beneficiary);
or any other causes beyond the reasonable control or without the fault of the party claiming an
extension of time to perform. An extension of time for any such cause shall be for the period of
the enforced delay and shall commence to run from the time the party claiming such extension
gives notice to the other party, provided notice by the party claiming such extension is given within
fifteen (15) calendar days after the commencement of the cause. Times of performance under this
Deed of Trust may also be extended in writing by the Beneficiary and Trustor.
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2211\08\3884044.2
35. If a monetary event of default occurs under the terms of the City Loan Note or this
Deed of Trust, prior to exercising any remedies thereunder Beneficiary shall give Truster written
notice of such default. Trustor shall have a period of fifteen (15) calendar days after such notice is
given within which to cure the default prior to exercise of remedies by Beneficiary under the City
Loan Note and this Deed of Trust.
36. If a non -monetary event of default occurs under the terms of the City Loan Note or
this Deed of Trust, prior to exercising any remedies hereunder or thereunder, Beneficiary shall
give Trustor notice of such default. If the default is reasonably capable of being cured within thirty
(30) calendar days, Truster shall have such period to effect a cure prior to exercise of remedies by
the Beneficiary under the City Loan Note and this Deed of Trust. If the default is such that it is not
reasonably capable of being cured within thirty (30) calendar days, and Truster (a) initiates
corrective action within said period, and (b) diligently, continually, and in good faith works to
effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably
necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event shall
Beneficiary be precluded from exercising remedies if its security becomes or is about to become
materially j eopardized by any failure to cure a default or the default is not cured within one hundred
eighty (180) calendar days after the first notice of default is given.
37. Subject to paragraph 34, Truster, upon the occurrence of an Event of Default as
described in paragraph 32 that has not been cured with the applicable cure period set forth in
paragraph 35 or 36, shall be obligated to repay the City Loan and, subject to the nonrecourse
provision of the City Loan Note, Beneficiary may seek to enforce payment of any and all amounts
due by Truster pursuant to the terms of the City Loan Note.
38. All expenses (including reasonable attorneys' fees and costs and allowances)
incurred in connection with an action to foreclose, or the exercise of any other remedy provided
by this Deed of Trust, including the curing of any Event of Default, shall be the responsibility of
Trustor.
39. Except as provided in paragraph 29, each successor owner of an interest in the
Property, other than through foreclosure, deed in lieu of foreclosure or an owner who takes an
interest in the Property after a foreclosure has occurred, shall take its interest subject to this Deed
of Trust.
40. Notwithstanding anything to the contrary herein, Beneficiary agrees that any
extended low-income housing commitment (as such term is defined in Section 42(h)(6)(B) of the
Internal Revenue Code) (the "Extended Use Agreement") shall be subordinate to this Deed of
Trust and shall be recorded against the Property; provided that such Extended Use Agreement, by
its terms, will terminate upon foreclosure or upon a transfer of the Property by instrument in lieu
of foreclosure in accordance with said Section 42(h)(6)(B).
[Signature on the following page]
10
2211\08\3884044.2
"Trustor"
AMERICAN FAMILY HOUSING, a California
Dated: 12025 Nonprofit Public Benefit Corporation
MYLES ANTHONY PEINEMANN II
Chief Executive Officer
Francisco Flores
Chief Financial Officer
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2211\08\3884044.2
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 }
On 20 before me, , Notary
Public, personally appeared who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
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
(seal)
On 20 before me, , Notary
Public, personally appeared 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 signatures(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(seal)
12
2211\08\3884044.2
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
LEGAL DESCRIPTION
That real property located in the State of California, County of Orange, City of Costa Mesa, and
described as follows:
PARCEL 2, IN THE CITY OF COSTA MESA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP FILED IN BOOK 24 PAGE 23 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM THAT PORTION CONVEYED TO MESA CONSOLIDATED
WATER DISTRICT BY DEED RECORDED DECEMBER 31, 1986 AS INSTRUMENT NO.
86-656909, OFFICIAL RECORDS.
ALSO EXCEPTING ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL
GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER
NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND
HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFORE AND REMOVING
THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS
INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE
DESCRIBED, AND TO BOTTOM SUCH WHIPSTCKED OR DIRECTIONALLY DRILLED
WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR
LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR,
DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE
RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OF THE
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AS RESERVED IN DEED FROM THE IRVINE COMPANY, A CORPORATION, RECORDED
MARCH 5, 1968 IN BOOK 8535 PAGE 62 OF OFFICIAL RECORDS.
APN: 439-312-12
13
2211\08\3884044.2
ATTACHMENT NO. 5
CITY NOTE
2211\08\3882959.2
PROMISSORY NOTE
Loan Amount: $3,000,000.00
Newport Beach, California
NO=
FOR VALUE RECEIVED, AMERICAN FAMILY HOUSING, a California Nonprofit
Public Benefit Corporation ("Borrower") promises to pay to the CITY OF NEWPORT BEACH,
a California municipal corporation and charter city ("City'), the principal sum of Three Million
Dollars and 00/100 ($3,000,000.00), or so much of such principal as may be disbursed pursuant
hereto and in accordance with that certain Affordable Housing Loan Agreement between the City
and Borrower dated for identification purposes only as of , 2025
("Agreement"), plus interest on the outstanding principal balance, in accordance with the terms
and conditions set forth herein. This Note evidences the obligation of Borrower to City for the
repayment of certain funds ("City Loan") loaned to Borrower by City pursuant to the Agreement,
in connection with the rehabilitation, construction, ownership and operating of the Project located
at 1400 Bristol Street, in the City of Costa Mesa, California ("Property"). All capitalized terms
unless otherwise defined herein shall have the same meaning as set forth in the Agreement, which
is incorporated herein by this reference.
Reference is also made to the following additional agreements and documents, of even date
herewith, involving City and Borrower and/or pertaining to the Property:
(i) Ground Leasehold Deed of Trust with Assignment of Rents by and between
Borrower as Trustor, City as beneficiary, and Commonwealth Land Title Insurance
Company as Trustee, and recorded in the Office of the Orange County Recorder
("City Deed of Trust"). The City Deed of Trust secures repayment of this Note and
performance under the Agreement and City Regulatory Agreement.
(ii) Joint Regulatory Agreement by and between Borrower, the City of Costa Mesa and
City, for the benefit of City, and recorded in the Office of the Orange County
Recorder ("City Regulatory Agreement").
1. Definitions.
"Affiliate" shall mean any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Borrower which, if
Borrower is a partnership or limited liability company, shall include each of the constituent
members or general partners, respectively, thereof. The term "control" as used in the immediately
preceding sentence means, with respect to a person that is a corporation, the right to the exercise,
directly or indirectly, of more than 50% of the voting rights attributable to the shares of the
controlled corporation, and, with respect to a person that is not a corporation, the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of the controlled person.
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"Annual Financial Statement" shall mean the financial statements prepared by Borrower
for each calendar year beginning in the first year for which payment is due under this Note until
the Maturity Date, including a balance sheet, income statement, statement of retained earnings,
statement of cash flows, and footnotes thereto, prepared in accordance with generally accepted
accounting principles consistently applied, as audited by an independent certified public
accountant.
"Assignment" shall mean any voluntary or involuntary conveyance, disposition,
assignment, encumbrance (other than a Refinancing as defined below or the creation of the Senior
Loan or any other financing permitted by the Agreement), sublease, sale or transfer of the Property,
including, without limitation, any transfer by Borrower of all or any portion of its rights under or
interest in the Property, any unpermitted change of ownership or control of Borrower, any
foreclosure of Borrower's interest in the Property, whether by judicial proceedings, or by virtue of
any power contained in a deed of trust, indenture or other instrument creating a lien against the
Property, or any assignment of Borrower's estate in the Property through, or in lieu of, foreclosure
or other appropriate and bona fide proceedings in the nature thereof; provided, however, that the
term "Assignment" as used herein shall not include any permitted transfer as set forth in Section
8 hereof or in Section 7.1 of the Agreement.
"City Manager" shall mean the individual duly appointed to the position of the City
Manager of the City of Newport Beach, or his or her authorized designee.
"Debt Service" shall mean scheduled debt service (including impounds, expenses, and
other amounts payable) on the Senior Loan.
"Developer Fee" shall mean the fee to be paid to the Developer for rehabilitating the
Property. A portion of the Developer Fee may be deferred (the "Deferred Developer Fee").
"Fiscal Year" shall mean the fiscal year of Borrower, which is the calendar year.
"Maturity Date" shall mean the date the Term expires.
"Net Operating Income" shall mean, for the applicable period of time, (i) the amount, if
any, by which Operating Income for such period exceeds Operating Expenses paid by Borrower
during such period; and, provided there is such an excess, less (ii) the Developer Fee, until such
fee is paid in full.
"Operating Expenses" shall have the meaning set forth in Section 1.35 of the Agreement.
"Operating Income" shall mean, for the applicable period of time, all proceeds received
by Borrower from the operation of the Property and from any and all sources resulting from or
attributable to the operation of the Property, including, without limitation, all rentals, parking
receipts, laundry income received by Borrower, forfeited security deposits, and all expense
reimbursements paid to Borrower by tenants of the Property. Operating Income shall be calculated
on a cash basis. Operating Income excludes insurance proceeds and/or condemnation proceeds.
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"Senior Loan" shall mean the Costa Mesa Loan, Newport Beach Loan and. County Loan,
and any loans made to Developer by its principals in compliance with its organizational
documents.
"Senior Loan Documents" shall mean any and all agreements and documents related to a
Senior Loan.
"City Loan Documents" shall mean, collectively, the Agreement, this Note, the City
Regulatory Agreement, and the City Deed of Trust.
"Term" shall mean the period commencing on the execution hereof and terminating fifty-
five (55) years from the date the Notice of Commencement of Affordability Restriction is issued
by City and caused to be recorded in the Official Records against the Property; or (ii) if not able
to be determined, fifty-seven (57) years after the date of the Agreement.
2. Interest and Repayment.
2.1 Basic Interest Rate. Except as provided in section 2.5 below, the disbursed and
unpaid principal balance of the City Loan shall bear interest at the simple rate of three percent
(3%) per year (the "Basic Interest Rate"), As used herein, the term "disbursed" shall mean and
refer to the time when the City has disbursed such funds to Borrower, pursuant to the Agreement.
2.2 Payment Dates and Amounts.
(a) Principal and Interest Payments. Interest and principal payments on this
Note shall be payable annually on April 1 of the first year following the disbursement of City
Loan. This Note shall be repaid through an annual Residual Receipt, as defined in the Agreement,
calculation based on the Net Operating Income of the Project. Borrower shall make annual
payments to this Note from the City's Proportionate Share of fifty -percent (50%) of Residual
Receipts received from operation of the Project, which is anticipated to be twelve and two hundred
thirteen thousandths percent (12.213%). For any year in which no payment is due or there is no
Net Operating Income available for payment of principal and interest, then interest shall continue
to accrue on the City Loan during such year. On or before each April 1 during the Term on which
a payment is due, regardless as to whether any payment of principal and interest is remitted,
Borrower shall provide City with an accounting documenting the calculation of Net Operating
Income for the previous calendar year.
(c) Interest First. All payments shall be applied first to accrued interest and
thereafter to principal.
2.3 Financial Statements. On each April 1 on which a payment is due pursuant to
Section 2.2(a), Borrower shall submit to City its Annual Financial Statement (as the term is defined
in the City Regulatory Agreement) for the preceding year. Net Operating Income shall be
calculated by Borrower for each year for which payment is due pursuant to Section 2.2(a) (and
certified by an authorized officer of Borrower) and reported by Borrower to City annually for each
calendar year no later than April Ist of the following calendar year. All calculations and records
2211\08\3884045.2
shall be based upon Borrower's Annual Financial Statement and shall be subject to audit by City.
In connection with any audit, Borrower shall provide to City for inspection and copying any
records, receipts, account books, ledgers, checks, or other documents or other evidence reasonably
requested by City for the purpose of verifying Borrower's calculation of Net Operating Income,
and shall promptly pay to City any further amount due but not paid as a result of any miscalculation
by Borrower. City shall promptly pay Borrower any overpayments made by Borrower as shown
by such audit.
2.4 Maturity Date. The outstanding principal balance together with any outstanding
interest due thereon and any other sums payable under this Note shall be due and payable in full
on the date the Term terminates (the "Maturity Date").
2.5 Default Rate. Any amounts (including but not limited to amounts of principal and
interest on the City Loan) which Borrower does not pay when otherwise due under the terms of
this Note, shall bear interest at the rate of the lesser of ten percent (10%) per annum or the
maximum rate allowed per law per annum ("Default Rate"), simple interest, from the date which
is ten (10) days after such amount would otherwise be due until the date paid.
3. Prepayment; Application of Payments.
At any time after the disbursement of the City Loan proceeds, Borrower may prepay all or
a portion of the unpaid principal amount of the City Loan and accrued interest and any other sums
outstanding without penalty or fee. All payments, including any prepayments or funds received
upon acceleration pursuant to Section 9.2(a) below, shall be applied first toward any outstanding
costs of collection or other amounts (excluding City Loan principal or interest thereon) due under
this Note or the Agreement, then toward outstanding interest accrued at the Default Rate, if any,
then toward outstanding interest accrued at the Basic Interest Rate, if any, and finally toward the
remaining principal balance under the Note.
4. Security and Source of Payment.
Borrower's obligations under this Note, the Agreement and the City Regulatory Agreement
shall be secured by the City Deed of Trust.
The City Loan shall constitute a nonrecourse obligation of Borrower, and neither Borrower
nor any partner, member, or shareholder thereof shall have any personal liability for repayment.
The foregoing limitation of liability is intended to apply only to the obligation for the
repayment of the principal of, and payment of interest on this Note; nothing contained herein is
intended to relieve the Borrower and, if Borrower is a partnership, limited liability company, or
corporation, any general partner, member, or shareholder of Borrower of liability for damages
caused to City as a result of (i) fraud or willful misrepresentation; (ii) the failure to pay taxes,
assessments or other charges which may create liens on the real property described in the City
Loan documents that are payable or applicable prior to any foreclosure under the Deed of Trust
(to the full extent of such taxes, assessments or other charges); (iii) the retention of any rental
income or other income arising with respect to the Property collected by Borrower after an Event
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22110\3884045.2
of Default to the full extent of the rental income or other income retained and collected by
Borrower after the giving of any such notice, and not used to pay Operating Expenses of the
Property; (iv) the misapplication of any proceeds under any insurance policies or awards resulting
from condemnation or the exercise of the power of eminent domain or by reason of damage, loss
or destruction to any portion of the Property; and (v) breach of any environmental covenant or
representation made by the Borrower relating to the Property.
Obligation of Borrower Unconditional.
The obligation of Borrower to repay the City Loan and all accrued interest thereon shall be
absolute and unconditional, and until such time as all of the outstanding principal of and interest
on this Note shall have been fully paid, Borrower agrees that it: (a) will use the funds solely for
the purposes set forth herein and in the Agreement; and (b) will not terminate or suspend any
payment or obligations under this Note, the Agreement, or any other document executed hereunder
or in connection herewith for any cause, including without limitation, any acts or circumstances
that may constitute failure of consideration, commercial frustration of purpose, or any duty,
liability or obligation arising out of or in connection with this Note, the Agreement or any
document executed hereunder or in connection herewith.
6. Purpose of City Loan.
The City Loan proceeds shall be used by Borrower for Eligible Expenses of the Project as
outlined in the Agreement. In no event shall Borrower use or otherwise invest the proceeds of the
City Loan except as expressly provided in this Note and in the Agreement.
7. Covenants of Borrower.
As additional consideration for the making of the City Loan by City, Borrower covenants
as follows:
7.1 Compliance with Agreement, City Re ug latory Agreement, and City Deed of Trust.
Borrower shall comply with all of its obligations under the Agreement, City Regulatory Agreement
and the City Deed of Trust. Any amounts payable by Borrower under the Agreement, City
Regulatory Agreement, or the City Deed of Trust (other than amounts also payable hereunder)
shall be deemed added to the principal amount of the City Loan payable hereunder.
7.2 Other Loans. Borrower shall comply with all monetary and non -monetary
covenants associated with any loan secured by an interest in the Property. Borrower shall provide
to City a copy of any notice of default within five (5) calendar days after receiving any notice of a
default or alleged default of such covenants by Borrower, and Borrower shall promptly cure any
such default and cooperate in permitting City, to the extent City in its sole discretion elects to do
so, to cure or assist in curing the default. Any cost or expenditure incurred by City in providing or
assisting in such a cure shall be deemed added to the outstanding principal amount of the City
Loan.
221 1\08\3884045.2
7.3 Pavment of Deferred Developer Fee. Borrower shall not pay the Deferred
Developer Fee or make any payments of any partnership management fees (if applicable) unless
and until Operating Income exceeds Operating Expenses.
8. Assignment of this Note.
This Note shall be assignable by Borrower in compliance with Section 7.1 of the
Agreement. Notwithstanding anything which may be or appear to be herein to the contrary, no
purported assignment of this Note and/or the City Loan shall be effective if such assignment would
violate the terms, conditions and restrictions of any applicable ordinances, laws, or regulations.
City's consent to such assignment shall be expressly conditioned upon (a) the assignee's execution
of such documents as required by City including, without limitation, any and all documents
deemed necessary by City to provide for said assignee's assumption of all of the obligations of
Borrower hereunder, under the City Regulatory Agreement, under the City Deed of Trust, and
under the City Loan Documents, and (b) City's approval of the financial and credit worthiness of
such proposed assignee.
9. Events of Default and Remedies.
9.1 Borrower Events of Default. The occurrence of any of the following shall, after the
giving of any notice and expiration of any applicable cure period as described therein, constitute
an event of default by Borrower hereunder ("Event of Default"):
(a) The failure of Borrower to pay or perform any monetary covenant or
obligation under the terms of. this Note without curing such failure within ten (10) calendar days
after receipt of written notice of such default from City (or from any party authorized by City to
deliver such notice as identified by City in writing to Borrower);
(b) The failure of Borrower to perform any non -monetary covenant or
obligation under this Note without curing such failure within thirty (30) calendar days after receipt
of written notice of such default from City (or from any party authorized by City to deliver such
notice as identified by City in writing to Borrower) specifying the nature of the event or deficiency
giving rise to the default and the action required to cure such deficiency. Provided, however, that
if any default with respect to a non -monetary obligation is such that it cannot be cured within a
30-day period, it shall be deemed cured if Borrower commences the cure within said 30-day period
and diligently prosecutes such cure to completion thereafter. Notwithstanding anything herein to
the contrary, the herein described notice requirements and cure periods shall not apply to any Event
of Default described in Sections 9.1(e) or 9.1(f) below;
(c) The failure of Borrowers to perform any covenant or obligation under the
Agreement, City Deed of Trust or City Regulatory Agreement, unless the default is cured within
the applicable cure period (if any).
(d) The material falsity of any representation or breach of any representation or
warranty made by Borrower under the terms of this Note, the Agreement, the City Regulatory
Agreement or the City Deed of Trust;
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221108\3884045.2
(e) Borrower or any constituent member or general partner, or majority
shareholder, of Borrower shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian or the like of its property, (ii) fail to pay or admit in writing its inability to
pay its debts generally as they become due, (iii) make a general assignment for the benefit of
creditors, (iv) be adjudicated bankrupt or insolvent or (v) commence a voluntary petition that is
not withdrawn within ten (10) calendar days of the filing thereof or answer seeking an arrangement
with creditors or an order for relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it in any bankruptcy or
insolvency proceeding;
(f) If without the application, approval or consent of Borrower, a proceeding
shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, in
respect of Borrower or any constituent member or general partner or majority shareholder of
Borrower, for an order for relief or an adjudication in bankruptcy, a composition or arrangement
with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of Borrower or of all or any substantial part of Borrower's assets, or other
like relief in respect thereof under any bankruptcy or insolvency law, and, if such proceeding is
being contested by Borrower, in good faith, the same shall (i) result in the entry of an order for
relief or any such adjudication or appointment, or (ii) continue undismissed, or pending and
unstayed, for any period of ninety (90) consecutive days;
(g) Voluntary cessation of the operation of the Property for a continuous period
of more than thirty (30) calendar days or the involuntary cessation of the operation of the Property
for a continuous period of more than sixty (60) days;
(h) A transfer in violation of Section 7.1 of the Agreement; or
(i) Subject to the notice and cure provisions set forth in the Agreement,
Borrower shall be in default under any of the terms of the Senior Loan, any other financing, or any
other secured or unsecured obligation relating to the Property, unless the default is cured within
the cure period, if any, applicable thereto under the terms and obligation which is in default.
9.2 City Remedies. Upon the occurrence and during the continuance of an Event of
Default hereunder, City may, in its sole discretion, take any one or more of the following actions:
(a) By notice to Borrower except in the case of a default by Borrower under
Section 9.1(e) or Section 9.1(t) in which event no notice pursuant to this Note shall be required,
declare the entire then unpaid principal balance of the City Loan immediately due and payable,
and the same shall become due and payable without further demand, protest or further notice of
any kind, all of which are expressly waived. Upon such declaration, outstanding principal and (to
the extent permitted by law) interest and any other sums outstanding in connection with the City
Loan shall thereafter bear interest at the Default Rate, payable from the date of such declaration
until paid in full;
(b) Subject to the nonrecourse provisions of Section 4 above, take any and all
actions and do any and all things which are allowed, permitted or provided by law, in equity or by
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2211\08\3884045.2
statute, in the sole discretion of City, to collect the amounts then due and thereafter to become due
hereunder, to exercise its rights under the City Deed of Trust, and to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this Note, the
Agreement or under any other document executed in connection herewith;
(c) Subject to the nonrecourse provision of Section 4 above, upon the
occurrence of an Event of Default which is occasioned by Borrower's failure to pay money, City
may, but shall not be obligated to, make such payment. If such payment is made by City, Borrower
shall deposit with City, upon written demand therefor, such sum plus interest at the Default Rate.
In either case, the Event of Default with respect to which any such payment has been made by City
shall not be deemed cured until such repayment (as the case may be) has been made by Borrower.
Until repaid, such amounts shall have the security afforded the amounts evidenced by this Note;
or
(d) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default described in Section 9.1(e) or 9.1(f) hereof, City shall be entitled
and empowered by intervention in such proceedings or otherwise to file and prove a claim for the
whole amount owing and unpaid on the City Loan and, in the case of commencement of any
judicial proceedings, to file such proof of claim and other papers or documents as may be necessary
or advisable in the judgment of City and its counsel to protect the interests of City and to collect
and receive any monies or other property in satisfaction of its claim.
9.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to City is
intended to be exclusive of any other available remedy or remedies, but each such remedy shall be
cumulative and shall be in addition to every other remedy given under this Note or now existing
at law or in equity or by statute; and may be exercised in such number, at such times and in such
order as City may determine in its sole discretion. No delay or omission to exercise any right or
power upon the occurrence of any Event of Default hereunder shall impair any such right or power
or shall be construed to be a waiver thereof, but any such right and power may be exercised from
time to time and as often as may be deemed expedient by City. In order to entitle City to exercise
any right or remedy reserved to it under this Note, no notice shall be required except as expressly
provided herein.
10. Agreement to Pay Attornevs' Fees and Expenses
In the event that City brings any action or files any proceeding in connection with the
enforcement of its rights under this Note or the City Deed of Trust, as a consequence of any breach
by Borrower of its obligations thereunder, the prevailing party in such action or proceeding shall
be entitled to have its reasonable attorneys' fees and out-of-pocket expenditures paid by the losing
party. The attorneys' fees so recovered shall include fees for prosecuting or defending any appeal
and shall be awarded for any supplemental proceedings until the final judgment is satisfied in full.
In addition to the foregoing award of attorneys' fees, the prevailing party in any lawsuit on this
Note or the City Deed of Trust shall also be entitled to its reasonable attorneys' fees incurred in
any post judgment proceedings to collect or enforce the judgment. In addition to the foregoing,
Borrower agrees to pay or reimburse City, upon demand by City, for all costs incurred by City in
connection with enforcement of this Note or the City Deed of Trust, including without limitation,
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2211\08\3884045.2
reasonable attorneys' fees and costs, if there shall be filed by or against Borrower any proceedings
under any federal or state bankruptcy or insolvency laws, whether City is a creditor in such
proceedings or otherwise.
11, Notices.
All notices, demands, requests, elections, approvals, disapprovals, consents or other
communications given under this Note shall be in writing and shall be given by personal delivery,
first class mail certified or registered, return receipt requested, or reputable overnight delivery
service that provides a receipt with the time and date of delivery and addressed as follows:
To City City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: City Manager
With a copy to:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: Community Development Director
American Family Housing
To Borrower: 15161 Jackson Street
Midway City, California 92655
Attention: Myles Anthony Peinemann II
With a copy to: Goldfarb & Lipman
1300 Clay Street, Eleventh Floor
Oakland California 94612
Attention: William F. DiCamillo
Any Notice shall be deemed received immediately if delivered by hand or by overnight
courier, and shall be deemed received on the third day from the date it is postmarked if delivered
by registered or certified mail.
12. Severability.
The invalidity or unenforceability of any one or more provisions of this Note will in no
way affect any other provisions.
13. Inter retation.
Whenever the context requires, all words used in the singular will be construed to have
been used in the plural, and vice versa, and each gender will include any other gender. The captions
of the paragraphs of this Note are for convenience only and do not define or limit any terms or
provisions. Time is of the essence in the performance of this Note by Borrower. Borrower has
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22110\3884045.2
been represented by counsel in the negotiation of this Note, and it shall not be interpreted in favor
of or against any party on account of relative responsibilities in drafting. Notwithstanding any
other provision of this Note, nothing herein or in this Note shall be deemed to require Borrower to
pay interest in an amount in excess of any applicable usury law or other legal limitation on interest,
and the terms of this Note shall be interpreted to require in each instance the lesser of (a) the
amount stated in this Note, and (b) the maximum applicable legal limit.
14. No Waiver; Consents.
Any waiver by City must be in writing and will not be construed as a continuing waiver.
No waiver will be implied from any delay or failure by City to take action on account of any
default of Borrower. Consent by City to any act or omission by Borrower will not be construed to
be a consent to any other or subsequent act or omission or to waive the requirements for City's
consent to be obtained in any future or other instance.
15. Govemina Law and Jurisdiction.
This Note shall be governed by the internal laws of the State of California without regard
to conflict of law principles. Any legal actions must be instituted in the Superior Court of the
County of Orange, State of California, or in the Federal District Court in the Southern District of
California.
16. Representations and Warranties of Borrower.
Borrower hereby warrants and represents to City that:
16.1 Organization and Standing. Borrower is a California legal entity as described in the
Agreement, duly organized, qualified to operate in California and validly existing and in good
standing under all applicable laws, and has all requisite power and authority to enter into and
perform its obligations under this Note, the Agreement, the City Deed of Trust, the City Regulatory
Agreement and all other documents executed in connection herewith.
16.2 Enforceability. This Note and all other instruments to be executed by Borrower in
connection with the City Loan constitute the legal, valid and binding obligation of Borrower,
without joinder of any other party.
16.3 Authorization and Consents. The execution, delivery and performance of this Note
and all other instruments to be executed in connection herewith is consistent with the operating
agreement, partnership agreement and any articles and bylaws governing Borrower and have been
duly authorized by all necessary action of Borrower's members, partners, directors, officers and
shareholders.
16.4 Due and Valid Execution. This Note and all other instruments to be executed in
connection herewith, will, as of the date of their execution, have been duly and validly executed
by Borrower.
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221 1\08\3 884045.2
16.5 Licenses. Borrower will obtain and maintain all material licenses, permits, consents
and approvals required by all applicable governmental authorities to own and operate the Property.
16.6 Litigation and Com liance. To the best of Borrower's knowledge, there are no suits,
other proceedings or investigations pending or threatened against, or affecting the business or the
properties of Borrower (other than those as have been previously disclosed in writing to City)
which could materially impair its ability to perform its obligations under this Note, nor is Borrower
in violation of any laws or ordinances which could materially impair Borrower's ability to perform
its obligations under this Note.
16.7 Default. To Borrower's current actual knowledge, there are no facts now in
existence which would, with the giving of notice or the lapse of time, or both, constitute an "Event
of Default" hereunder, as described in Section 9.
16.8 No Violations. To the best of Borrower's knowledge, the execution and delivery of
this Note, the Agreement and all other documents executed or given thereunder, and the
performances hereunder and thereunder by Borrower, as applicable, will not constitute a breach
of or default under any instrument or agreement to which Borrower may be a party nor, to the best
of Borrower's knowledge, will the same constitute a breach of or violate any law or governmental
regulation.
17. Approvals.
Any review or approval of any matter by the City or any City official or employee under
this Note shall be solely for the benefit of City, and neither Borrower nor any other person shall
rely upon such review or approval as an indication of the wisdom, soundness, safety,
appropriateness, or presence or absence of any matter. Without limiting the generality of the
foregoing, Borrower and not City shall be solely responsible for assuring compliance with laws,
the suitability of the Property for the Project, the adequacy of the plans, and the safety of the
Project construction site, the completed Project, and the operation thereof.
18. Waiver
Subject to Section 4, Borrower agrees that it will still be liable for repayment of this Note,
even if the holder hereof does not follow the procedures of presentment, protest, demand,
diligence, notice of dishonor and of nonpayment, which requirements are hereby waived. Failure
of City or other holder hereof to exercise any right or remedy hereunder shall not constitute a
waiver of any future or other default. No acceptance of a past due installment or indulgence granted
from time to time shall be construed to be a waiver of, or to preclude the exercise of, the right to
insist upon prompt payment thereafter or to impose late charges retroactively or prospectively, or
to waiver or preclude the exercise of, the right to insist upon prompt payment thereafter or to
impose late charges retroactively or prospectively, or to waive or preclude the exercise of any other
rights which City may have.
[Signatures on the following page]
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221 n08\3884045.2
IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year first
above written.
Dated: .2025
AMERICAN FAMILY HOUSING, a California
Nonprofit Public Benefit Corporation
MYLES ANTHONY PEINEMANN II
Chief Executive Officer
Francisco Flores
Chief Financial Officer
APPROVED AS TO FORM:
Dated: 2025 Aaron C. Harp
City Attorney
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221 1\08\3 884045.2
ATTACHMENT NO. 6
NOTICE OF AFFORDABILITY RESTRICTION
2211\03882959.2
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: Citv Manaeer
Exempt From Recording Fee Pursuant to Government Code § 27383
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and title
companies, and other persons, regarding affordable housing restrictions on the real property
described in this Notice: Affordable housing restrictions have been recorded with respect to the
property described below (referred to in this Notice as the "Property") which require that the
Property be developed as a seventy-six (76) permanent supportive housing units ("PSH Unit" or
"PSH Units"), plus two (2) unrestricted managers units (the "Project"), with City of Costa Mesa
receiving local preference for no less than sixteen (16) permanent supportive housing units ("Costa
Mesa Preference Unit") and the City of Newport Beach, a California municipal corporation and
charter city ("City"), receiving local preference for no less than twelve (12) PSH Units ("Newport
Beach Preference Unit") with all of such units restricted for rental and occupancy by "Eligible
Tenants" at an "Affordable Rent" (as those terms are defined in the City Regulatory Agreement)
for a term of fifty five (55) years from the date the Notice of Commencement of Affordability
Restriction is issued by City and caused to be recorded in the Official Records of Orange County
against the Property; or (ii) if not able to be determined, fifty-seven (57) years after the date of the
Affordable Housing Loan Agreement by and between City and American Family Housing, a
California nonprofit public benefit corporation ("Owner").
Title of Document Containing Affordable Housing Restrictions: Joint Regulatory
Agreement and Declaration of Covenants and Restrictions ("Regulatory Agreement").
Parties to Regulatory Agreement: City, City of Costa Mesa, a California municipal
corporation, and Owner.
The Regulatory Agreement is recorded concurrently with this Notice, in the Official
Records of Orange County.
Legal Description of Property: See Exhibit "A" attached hereto and incorporated herein
by this reference.
92626.
Location of Property: 1400 Bristol Street, Costa Mesa, County of Orange, California
Assessor's Parcel Number of Property: 439-312-12
221110813884046.2
Summary of Regulatory Agreement:
o The Regulatory Agreement restricts rental of twenty-eight (28) units as described
in Exhibit B hereto.
o The term of the Regulatory Agreement is 55 years.
This Notice does not contain a full description of the details of all of the terms and
conditions of the Regulatory Agreement. You will need to obtain and read the Regulatory
Agreement to fully understand the restrictions and requirements which apply to the Property.
This Notice is being recorded and filed in compliance with Health and Safety Code Section
33334.3(t)(3) and (4), and shall be indexed against the City and the Owner of the Property.
[Signatures on the following page]
2
2211\08\3884046.2
Date:
"City"
CITY OF NEWPORT BEACH, a California
municipal corporation and charter city
Grace K. Leung
City Manager
ATTEST:
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
Aaron C. Harp
City Attorney
2211\08\3884046.2
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, accurac , or validi of that document.
State of California
County of
On 120 before me, , Notary
Public, personally appeared who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
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
(seal)
On 20 before me, , Notary
Public, personally appeared who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature (seal)
4
2211\08\3884046.2
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
LEGAL DESCRIPTION
That real property located in the State of California, County of Orange, City of Costa Mesa, and
described as follows:
PARCEL 2, IN THE CITY OF COSTA MESA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP FILED IN BOOK 24 PAGE 23 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM THAT PORTION CONVEYED TO MESA CONSOLIDATED
WATER DISTRICT BY DEED RECORDED DECEMBER 31, 1986 AS INSTRUMENT NO.
86-656909, OFFICIAL RECORDS,
ALSO EXCEPTING ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL
GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER
NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND
HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFORE AND REMOVING
THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS
INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE
DESCRIBED, AND TO BOTTOM SUCH WHIPSTCKED OR DIRECTIONALLY DRILLED
WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR
LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR,
DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE
RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OF THE
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AS RESERVED IN DEED FROM THE IRVINE COMPANY, A CORPORATION, RECORDED
MARCH 5, 1968 IN BOOK 8535 PAGE 62 OF OFFICIAL RECORDS.
APN: 439-312-12
5
221 1\08\3 884046.2
EXHIBIT "B"
RESTRICTED UNIT MATRIX*
City:
Newport Beach Studio
Costa Mesa Studio
Size No. of Units 30% AMI
Household Unit
12 12
16 16
*The Project includes two (2) unrestricted Manager's Units that shall each be occupied by an on -
site property manager and not an Eligible Tenant,
2211\08\3884046.2
ATTACHMENT NO. 7
NOTICE OF COMMENCEMENT OF AFFORDABILITY RESTRICTION
2211\08\3882959.2
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: City Clerk
xempt from Recording Fees pwsnant to Govt. Codi
APN: 439-312-12
NOTICE OF COMMENCEMENT OF AFFORDABILITY RESTRICTIONS
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and
title companies, and other persons regarding affordable housing restrictions on the real
property described in this Notice: Affordable housing restrictions have been [or are being
recorded] with respect to the property described below (referred to in this Notice as the "Property")
which require that units of the Property be developed as Permanent Supportive Housing Units and
be rented to and occupied by persons and households of limited income at affordable rents.
AMERICAN FAMILY HOUSING, a California Nonprofit Public Benefit
Corporation, hereby provides notice that the Property is subject to certain affordable housing
requirements:
Location of Property: 1400 Bristol Street, Costa Mesa, California 92626.
2. Assessor's Parcel Number(s) of Property: 439-312-12.
Legal Description of Property: see Exhibit "1" attached hereto and incorporated herein by
reference.
4. Title of Document(s) Containing the affordable housing requirements:
4.1. Affordable Housing Loan Agreement by and between City of Newport Beach, a
California municipal corporation and charter city, and AMERICAN FAMILY
HOUSING, a California Nonprofit Public Benefit Corporation, dated
("Agreement").
4.2. Joint Regulatory Agreement and Declaration of Covenants and Restrictions, as
recorded with the Official Records of Orange County, California, on
, 20_ as Instrument No. ("City Regulatory
Agreement").
5. Summary of Affordable Housing Restrictions:
5.1. Affordability Period. Not less than (76) permanent supportive housing units ("PSH
Unit' or "PSH Units"), plus two (2) unrestricted managers units, with City of Costa
Mesa receiving local preference for no less than sixteen (16) permanent supportive
housing units and the City receiving local preference for no less than twelve (12)
PSH Units with all of such units restricted for rental and occupancy by "Eligible
Tenants" at an "Affordable Rent' (as those terms are defined in the City Regulatory
Agreement) for a term of fifty five (55) years from the Commencement Date.
5.2. The Commencement Date is
6. This Notice does not contain a full description of the details of all the terms and conditions
of the Agreement or the Declaration. You will need to obtain and read the Agreement and
Declaration to fully understand the restrictions and requirements which apply to the
Property.
[Signatures on the following page]
CITY OF NEWPORT BEACH,
a California municipal corporation
By:
Grace K. Leung
City Manager
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
By:
Aaron C. Harp
City Attorney
ATTEST:
By:
Leilani I. Brown
City Clerk
AMERICAN FAMILY HOUSING, a
California Nonprofit Public Benefit
Corporation
MYLES ANTHONY PEINEMANN II
Chief Executive Officer
Francisco Flores
Chief Financial Officer
[SIGNATURES MUST BE NOTARY ACKNOWLEDGED FOR RECORDING]
EXHIBIT G°1"
LEGAL DESCRIPTION OF SITE
PARCEL 2, IN THE CITY OF COSTA MESA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP FILED IN BOOK 24 PAGE 23 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM THAT PORTION CONVEYED TO MESA CONSOLIDATED
WATER DISTRICT BY DEED RECORDED DECEMBER 31, 1986 AS INSTRUMENT NO.
86-656909, OFFICIAL RECORDS.
ALSO EXCEPTING ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL
GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER
NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND
HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFORE AND REMOVING
THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS
INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE
DESCRIBED, AND TO BOTTOM SUCH WHIPSTCKED OR DIRECTIONALLY DRILLED
WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR
LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR,
DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE
RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OF THE
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AS RESERVED IN DEED FROM THE IRVINE COMPANY, A CORPORATION, RECORDED
MARCH 5, 1968 IN BOOK 8535 PAGE 62 OF OFFICIAL RECORDS.
APN: 439-312-12
ATTACHMENT NO. 8
PROJECT BUDGET
2211\08\38829592
1400 Bristol
Construction Projections & Flow of Funds
Pro forma
Code Description Budget Budget
Land/Acq
1000-10
Land Cost or Value
$
$
24,000,Ooo
1000-15
Demolition
$
$
-
1000-20
Legal
$
$
-
1000-25
Land Lease Rent Prepayment
$
$
1000-30
Existing Improvements Value
$
$
-
1000-35
Off -Site Improvements
$ -
$
-
1002-05
Acquisition Loan Fees
$
$
-
1002-10
Predev Loan Interest
$
$
-
1002-15
Holding Costs
$ -
$
-
Relocation
1003-05
Relocation
$ -
$
750,000
Construction
1004-05
Site Work
$ -
$
274,000
1004-10
Structures
$ -
$
9,738,447
GC Contract
1004-15
Commercial
$ -
$
-
Totol
1004-20
General Requirements
$ -
$
1,090,215
$ 13,647,380
1004-25
Contractor Overhead
$ -
$
451,695
1004-30
Contractor Profit
$ -
$
451,695
1004-35
Prevailing Wages
$ -
$
1,367,275
1004-40
General Liability Insurance
$ -
$
199,078
1004-45
Other: (P & P Bonds)
$ -
$
74,975
Arch & Eng
1005-05
Architect (Excl Supervision)
$ -
$
311,020
Need code Architect (Supervision)
$
138,200
1005-10
Arch. Reimbursables
$ -
$
-
1005-15
CASp
$ -
$
10,000
1005-20
Interior Design
$ -
$
-
1005-25
Misc (Acoustic, Addressing, EBM, Historic,
Lighting, Waterpr
$
-
1005-30
Landscape
$ -
$
-
1005-35
Modular (Consultant)
$ -
$
-
1005-40
Modular (Factory Deposit)
$ -
$
-
1005-45
Sustainability/LEER
$
$
-
1006-05
Civil
$ -
$
-
1006-10
Soils (incl tribal monitor)
$
$
-
1006-15
Deputy Inspector
$ -
$
-
1006-20
Survey (ALTA)
$ -
$
20,470
1006-25
Misc (Dry Utilities)
$ -
$
10,000
Construction
1007-05
Construction Loan Interest
$
$
-
Interest & Fees
1007-10
Origination Fee
$ -
$
-
1007-15
Credit Enhancement/AppFee
$ -
$
-
1007-20
Bond Premium
$ -
$
-
1007-25
Title & Recording
$ _
$
50,000
1008-05
Property Taxes
$ -
$
50,000
1008-10
Annual Partnership fee
$
$
-
1009-05
Builder's Risk
$
$
270,730
1009-10
General Liability Insurance
$
$
226,152
1009-15
Other: (Inspections)
$
$
-
Permanent
1100-05
Loan Origination Fee
$
$
-
Financing
1100-10
Credit Enhancement/App Fee
$
$
-
1100-15
Title & Recording
$
$
1100-20
Taxes
$
$
1100-25
Insurance
$ -
$
Legal
1200-05
Lender Legal Paid by Applicant
$ -
$
-
1200-10
Other: (Owner Legal)
$ -
$
30,000
Reserves
1300-05
Rent Reserves
$ -
$
-
1300-10
Capitalized Rent Reserves
$ -
$
-
1300-15
Capitalized Replacement Reserve
$ -
$
-
1300-20
3-Month Operating Reserve
$
$
397,465
1300-25
Other: (Transition Reserve)
$
$
50,000
Other Proj
1400-05
TCAC App/Allocation/Monitoring Fees
$
$
-
Costs
1400-10
Environmental Audit (incl CEQA/NEPA)
$
$
30,256
1400-15
Local Development Impact Fees
$
$
-
1401-05
City fees Related to Entitlements
$
$
-
1401-10
Permit Fees
$
$
50,000
1401-15
Capital Fees
$
$
-
1401-20
Marketing
$ -
$
10,000
1401-25
Furnishings
$ -
$
273,000
1401-30
Market Study
$ -
$
8,250
1401-35
Accounting/Audit
$ -
$
-
1401-40
Audits & Tax Returns
$ -
$
-
1401-45
Cost Cert
$
$
-
1401-50
Appraisal
$
$
17,075
Other: PM & 55 Start-up Fees
$
$
128,565
1401-60
Other: Construction Manager
$
$
112,000
1401-65
Other: Entitlements Consulant
$
$
-
1401-70
Other: Permit Expeditor
$
$
32,408
Developer
1500-05
Developer Overhead/Profit
$ -
$
1550,000
Costs
1500-10
Consultant/Processing Agent
$
$
10,000
1500-15
Project Administration
$ -
$
-
1500-20
Broker Fees Paid to a Related Party
$ -
$
-
1500-25
Constr Oversight by Developer
$ -
$
-
Syndication
1600-05
Organizational Fee-
(Investor/GP)
1600-10
Bridge Loan Fees/Exp.
$
$
-
1600-15
Legal Fees
$
$
-
1600-20
Consultant Fees
$
$
-
1600-25
Accountant Fees
$
$
-
1600-30
Tax Opinion
$
$
-
Other
Hard Cost Contingency
$
1,248,613
Soft Cost Contingency
$
169,596
43,601,280
Sources
Homekey
$
29,000,000'
County of Orange
$
6,781,520
City of Costa Mesa
$
4,000,000'
City of Newport Beach
$
3,000,000
AFH Deferred Fee
$
481,660
AFH Deferred Fee
$
338,000
Total
$
43,601,180
Check
$
ATTACHMENT NO. 9
PROJECT PRO FORMA
2211\00882959.2
AFH - 1400 Bristol
Sources of Funds
Permanent
Amount
Rate Term Comments
Homekey
29,000,0110
Deferred Fee
819,660
County of Orange Commitment 1
4,421,520
3.00%
County of Orange Commitment 2
2,360,000
3.00%
City of Costa Mesa
4,000,000
3.00%
City of Newport Beach
3,000,000
3.00%
0.00%
Total
$ 43,601,180
Surplus/(Gap)
Construction
Amount
Rate Term Comments
Homekey
29,000,000
Deferred Fee
819,660
County of Orange Commitment 1
4,421,520
3.00%
County of Orange Commitment 2
2,360,000
3.00%
City of Costa Mesa
4,000,000
3.00%
City of Newport Beach
3,000,000
3.00%
Total
$ 43,601,180
Surplus/(Gap)
AFH -1400 Bristol
v
Uses of Funds
Total
Residential
No,1 �. �.. °
100.0%
,9..,ax�.x�;ki gun �.. r� ,..;, ��a:-,naAA�s.uv.�..;
Land Cost or Value $ 1,500,000
1,200,000 $
Demolition $ -
-
Legal
-
Existing Improvements Cost or Value $ 22,500,000
19,800,000
Off site Improvements $ -
Predevelopment Interest/Holding Cost $ -
-
Total Land Cost/Acquisition Cost $ 24,000,000
21,000,000
(�p�'���� R, a ff R� i.,y�'.+.
1i.a,e$"'
aiou..Sn..Y MEN
Relocation $ 750+,00ry0
750,000
$ .d
Site Work $ 274,000
$ 274,000
Residential Structures $ 9,738,447
$ 9,738,447
Commercial Structures $ -
General Requirements $ 1,090,215
$ 1,090,215
Contractor Overhead $ 451,695
451,695
Contractor Profit $ 451,695
$ 451,695
General Liability Insurance $ 199,078
$ 199,078
Prevailing Wages $ 1,367,275
$ 1,367,275
P&P Bond $ 74,975
$ 74,975
Contingency Costs $ -
$ -
Total New Construction Costs $ 13,647,380
13,647,380
aIFUK
'
,
Design $ 311,020
311,020
Supervision $ 138,200
138,200
Survey & Engineering $ 20,470
20,470
Misc. $ 20,000
$ 70,000
Architecture & Engineering $ 489,690
539,690
��ryry {{Total
Yy
nuii FT'S4Y.�. ��
Fyy'a �.rNla.,w'3V"L 4`.v�`}
Loan Interest $ -
-
Origination Fee $ -
-
Title and Recording $ 50,000
50,000
Taxes $ 50,000
50,000
Insurance $ 496,882
496,882
Other Expenses/Legal $ -
-
Other $ -
-
Total Construction Interest & Fees S 596,882
596,882
p
vFF''
Legal Paid by Applicant
-
Other: Owner Legal $ 30,000
30,000
Total Attorney Costs $ 30,000
30,000
Commercial
300,000.00
2,700,00(
Operating Reserve
$
397,465
397,465
Required Capitalized Replacement Reserve
$
-
-
4 Month Operating Reserve
$
-
-
Other: Transition Reserve
$
50,000
50,000
Total Reserve Costs
$
447,465
447,465
Construction Hard Cost Contingency
$
1,248,613
1,248,613
Soft Cost Contingency
$
169,596
169,596
Total Contingency Costs
$
1,418,209
1,418,209
ry,
S4r�t,SeXt$ ei fit k0'x.,...,.U.152�x s.
, T%Wwa
Environmental Audit
$
30,256
30,256
Local Devel Impact Fees
$
-
-
Permit Processing Fees
$
50,000
50,000
Capital Fees
$
-
-
Marketing/Tenant Lease -up
$
10,000
10,000
Furnishings
$
273,000
273,000
Market Study
$
8,250
8,250
Accounting/Reimbursable
-
Appraisal Costs
$
17,075
17,075
Other (Startup Fees)
$
128,565
128,565
Other -Construction Management
$
112,000
112,000
Other: Permit Expeditor
$
32,408
32,408
Total Other Costs
$
661,554
661,554
Developer Overhead/Profit $ 1,550,000 1,550,000
Consultant/Processing Agent $ 10,000 10,000
Project Administration $ - -
Broker Fees Paid to a Related Party $ - -
Construction Oversight by Developer $ - -
Other $
Total Developer Costs $ 1,560,000 1,560,000
Project Cost $ 43,601,180 $ 40,651,180 3,000,000
Per Unit $ 558,989
AFH- 1400 Bristol
Income
Unit Type -
Gross Utility`
Net
Total
PBV
Total
Total Net
Annual
%ofAMI
Units
Rent Allowance
Rent
Net Rent
FMR
Increment
Increment
Monthly Rent
Rent
Studio (Homeless)
30%
5
711
711
5,688
2,035
1,324
10,592
16,280
195,360
Studio (Atriskof Homelessness)
30%
28
721
711
19,908
19,908
238,896
1 bedroom (Chronically Home#—)
30%
38
762
762
28,956
2,219
1,457
55,366
84,322
1,011,864
1 bedroom (Homeless)
30%
2
762 -
762
1,524
2,219
1,457
2,914
4,438
53,256
Studio( Homeless)
30%
728 -
72R
-
-
-
-
1 bedroom
30%
728 -
728
-
-
-
2 bedroom
30%
-
728 -
728
-
-
-
-
Studio
30%
728 -
728
-
-
-
1 bedroom
30%
-
728 -
728
-
-
-
-
2 bedroom
30%
-
728 -
728
-
-
-
-
Manager-2 bedroom
NA
2
Total Units
78
Total Tenant Rent
56,076
Total PBV Increment
69,872
Total Income
1,499,376
Laundry
5,616 $
6 Perunitpermonth
Tesla
3,600
43,200
Commercial Space
S,000
50,000
Total Income
103,200
$
1,608,192
- Landlord will pay all utilities
Contracts
Security Contract
Total Maintenance
Per Unit Per Year
AFH -1400 Bristol
Expenses
On -site Managers
119,934
On -site Maintenance Employee
58,000
Payroll Taxes
20,250.00
Workers Compensation
20,250,00
Employee Benefts
20,250.00
Total Employee Expenses (not including services)
238,684
65,520
Office Expenses 15,000
Legal Expense 51000
Audit Expense 6,000
Garbage and Trash Removal 23,400
Administrative 49,400
Electricity 86,190
Water 27,300
Gas 15,000
Sewer 27,300
Utilities 155,790
60,400
iupplies 10,500
124,950
119,000
254,450
$ 824,244
39,000
19,500
34,863
�y;uz $ 917,607
services $ 11,764
Supportive Services Staff Supervisor(s) 66,750
Supportive Services, On -site 65,000
Other Supportive Services Staff 192,500
Total Services 324,250
Asset Management Fees
Asset Management Fee 10,000
Total Other 10,000
927,607
Per Unit Per Year $ 11,892
$ 500
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ATTACHMENT NO. 10
REGULATORY AGREEMENT
2211\08\3982959.2
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: City Manager
WITH A CONFORMED COPY TO:
City of Costa Mesa
77 Fair Drive
Costa Mesa, California 92626
Attn: City Manager
(Space Above This Line for Recorder's Office Use Only)
(Exempt from Recording Fee per Gov. Code § 27383)
REGULATORY AGREEMENT AND
DECLARATION OF COVENANTS AND RESTRICTIONS
This REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND
RESTRICTIONS ("Agreement") is made and entered into this day of ,
2025 ("Effective Date"), by and between the CITY OF NEWPORT BEACH, a California
municipal corporation and charter city ("Newport Beach"), the CITY OF COSTA MESA, a
California municipal corporation ("Costa Mesa"), and AMERICAN FAMILY HOUSING, a
California Nonprofit Public Benefit Corporation ("Developer"). Costa Mesa and Newport Beach
are herein collectively referred to as the "Cities."
RECITALS:
A. Pursuant to that certain ground lease between the County of Orange, as lessor (the
"County"), and the Developer, as lessee (the "Ground Lease"), Developer has a leasehold interest
in that certain real property and the existing improvements thereon located at 1400 Bristol Street
North, Costa Mesa, California, Assessor's Parcel Number 439-312-12, which was formerly known
as Travelodge Motel more particularly described in Exhibit "A," attached hereto and incorporated
by reference herein ("Property").
B. Pursuant to an Affordable Housing Loan Agreement entered into by and between
Developer and Newport Beach, dated ("Newport Beach AHA"), Newport
Beach has agreed to provide financial assistance to Developer in an amount up to Three Million
Dollars ($3,000,000.00) ("Newport Beach Loan"); and pursuant to an Affordable Housing Grant
and Loan Agreement entered into by and between Developer and Costa Mesa dated
(the "Costa Mesa AHA"), Costa Mesa has agreed to provide financial
assistance to Developer in an amount up to Four Million Dollars ($4,000,000.00) (Newport Beach
AHA and Costa Mesa AHA are hereinafter together referred to as "AHAs").
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C. The AHAs were entered into for the purpose of assisting Developer to finance the
rehabilitation of the existing building and related improvements on the Property, in accordance
with the Ground Lease, and to make available, and restrict occupancy to, seventy-six (76)
Permanent Supportive Housing ("PSH" or "PSH Units") units plus two (2) unrestricted managers'
units, with Costa Mesa receiving local preference for no less than sixteen (16) PSH Units and
Newport Beach receiving local preference for no less than twelve (12) PSH Units, subject to the
terms of this Agreement and the AHAs ("Project").
D. The affordability period under the AHAs, and Sections 1.2 and 6.1 of this
Agreement is 55 years as more particularly set forth below ("Affordability Period").
E. Developer intends to rehabilitate and operate the Project at the Property utilizing
the proceeds of: (1) the Newport Beach Loan sourced solely from the Newport Beach General
Fund, or as much thereof as is disbursed by Newport Beach to Developer; (2) a loan in the amount
of Two Million Five Hundred Thousand Dollars ($2,500,000.00) from the Housing Authority of
the City of Costa Mesa ("Authority") Low Moderate Income Housing Asset Funds and a grant in
the amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) from the American
Rescue Plan Act ("ARPA") (collectively the loan and the grant are known as the "Costa Mesa
Loan"); (3) proceeds from the following sources that Developer will obtain: State of California,
Housing and Community Development Project Homekey funding in the amount of Twenty Nine
Million Dollars ($29,000,000.00), County loans in amounts of Four Million Four Hundred Twenty
One Thousand Five Hundred Twenty Dollars $4,421,520.00 for the County's Mental Health
Services Act (MHSA) loan and Two Million Three Hundred Sixty Thousand Dollars
($2,360,000.00) for the OC Housing Fund 15G loan (collectively the "County Loans"); and (4)
deferred developer fees in the approximate amount of Eight Hundred Nineteen Thousand Six
Hundred and Sixty Dollars ($819,660.00).
F. Newport Beach has agreed to make the Newport Beach Loan to Developer on the
condition that the Project be maintained and operated in accordance with the covenants, conditions
and restrictions of the Newport Beach AHA and this Agreement related to the long-term
ownership, affordability, operation, management, and maintenance of the PSH Units. Costa Mesa
has agreed to make the Costa Mesa Loan to Developer on the condition that the Project be
maintained and operated in accordance with the covenants, conditions and restrictions of the Costa
Mesa AHA and this Agreement related to the long-term ownership, affordability, operation,
management, and maintenance of the PSH Units. This Agreement is intended to ensure that
Developer, its successors, its assigns and every successor in interest to the Property or any part
thereof, shall use, maintain and operate the Project in accordance with the terms and conditions of
this Agreement and AHAs, including that the PSH Units shall be available only to Eligible
Tenant(s) at an Affordable Rent (as those terms are defined in Article 1 below) during the
Affordability Period.
G. The provision of the Newport Beach Loan and the Costa Mesa Loan to Developer
and the completion of rehabilitation and subsequent operation of the Project pursuant to the terms
and conditions of the AHAs and this Agreement are in the vital and best interest of Newport Beach
and Costa Mesa and the health, safety and welfare of its residents, and are in accord with the public
purposes and provisions of applicable state and local laws.
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AGREEMENT:
NOW, THEREFORE, Newport Beach, Costa Mesa, and the Developer declare, covenant
and agree, by and for themselves, their heirs, executors, administrators, successors and assigns,
and all persons claiming under or through them as follows:
The Recitals above form an integral and substantive part of this Agreement and are hereby
incorporated by reference into this Agreement.
ARTICLE 1
DEFINITIONS
1.1 Affiliate. As used in this Agreement, the term "Affiliate" shall mean (1) any Person
directly or indirectly controlling, controlled by or under common control with another Person; (2)
any Person owning or controlling ten percent (10%) or more of the outstanding voting securities
of such other Person; or (3) if that other Person is an officer, director, member or partner, any
company for which such Person acts in any such capacity. The term "control" as used in the
immediately preceding sentence, shall mean the power to direct the management or the power to
control election of the board of directors. It shall be a presumption that control with respect to a
corporation, limited liability company or limited partnership is the right to exercise or control,
directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the
controlled corporation, limited liability company or limited partnership, and, with respect to any
individual, partnership, trust, other entity or association, control is the possession, indirectly or
directly, of the power to direct or cause the direction of the management or policies of the
controlled entity.
1.2 Affordability Period. As used in this Agreement, the term Affordability Period
shall mean the duration of the affordable housing requirements and other covenants of and as
required by the AHAs and as set forth is this Agreement. The Affordability Period shall be fifty-
five (55) years and shall be memorialized in a Notice of Commencement of Affordability
Restrictions as provided in the AHAs.
1.3 Affordable Rent. As used in this Agreement, the term "Affordable Rent" shall be
defined in Section 3.3 of this Agreement.
1.4 AMI. As used in this Agreement, the term "AMI" or "Area Median Income" shall
mean the median family income (adjusted for family size) for the Orange County area established
by the U.S. Department of Housing and Urban Development ("HUD").
1.5 Annual Financial Statement, As used in this Agreement, Annual Financial
Statement shall mean the certified financial statement of Developer for the Project using generally
accepted accounting principles (GAAP), as separately accounted for this Project, including
Operating Expenses and Annual Project Revenue, as prepared annually and provided to the City
at Developer's expense, by an independent certified public accountant reasonably acceptable to
the City.
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1.6 Capital Improvements. As used in this Agreement, the term "Capital
Improvements" means all work and improvements with respect to the Property for which costs
and expenses may be capitalized in accordance with generally accepted accounting principles as
in effect from time to time, consistently applied.
1.7 City Manager. As used in this Agreement, the term "City Manager" shall mean
the individual duly appointed to the position of City Manager of the City of Newport Beach or the
City of Costa Mesa, or either of their authorized designees. Whenever an administrative action is
required by either City to implement the terms of this Agreement, the City Manager, or his or her
authorized designee, shall have authority to act on behalf of City. The City Managers, or their
designees, agree to work together so as not to cause any undo delay in any decision.
1.8 Eligible Tenant. As used in this Agreement, the term "Eligible Tenant" shall mean
a household experiencing homelessness, a household at risk of homelessness, those chronically
homeless, persons with mobility disabilities, persons with hearing or vision disabilities whose
annual income does not exceed the thirty percent (30%) of the AMI level.
1.9 Manager's Unit. As used in this Agreement, the term "Manager's Unit" shall mean
a Unit occupied by an on -site property manager who does not need to be an Eligible Tenant. The
Project contains two (2) Manager's Units.
1.10 Operating Expenses. As used in this Agreement, the term "Operating Expenses"
shall have the meaning ascribed in the AHAs.
1.11 Rehabilitation. As used in this Agreement, the term "Rehabilitation" shall mean
the entire work of rehabilitation, repair, construction, and improvement to the overall Property that
are required to be completed under this Agreement and the AHAs. The Rehabilitation shall ensure
that the housing units are decent, safe, sanitary, and in good repair for use and occupancy by
Eligible Tenants; such standards are established for inspectable items for each of the following
areas: site, building exterior, building systems, dwelling units, and common areas.
1.12 Restricted Unit Matrix. As used in this Agreement, the term "Restricted Unit
Matrix" shall mean that certain matrix attached hereto and incorporated herein as Exhibit `B."
1.13 Term. As used in this Agreement, the term "Term" shall mean the period
commencing on the Effective Date and terminating fifty-five (55) years from date on which a
Notice of Commencement of Affordability Restrictions, as provided in the AHAs, is recorded in
the Official Records of Orange County, or if such date cannot be determined, fifty-seven (57) years
after the Effective Date,
ARTICLE 2
REHABILITATION, COMPLETION, AND OPERATION OF PROJECT
2.1 Rehabilitation. Developer agrees to cause the rehabilitation of the Property
subject to the terms and in accordance with the provisions of the AHAs including the Scope of
Development, Schedule of Performance, the approved Rehabilitation Plans ("Project
Documents"), the Costa Mesa Municipal Code, Uniform Codes, and all other applicable federal,
state and local codes, regulations, and ordinances.
0
ARTICLE 3
LAND USE RESTRICTIONS AND
AFFORDABLE HOUSING COVENANTS
3.1. Permitted Uses. The Property and Project shall be used only for a permanent
supportive affordable housing project that is comprised of private rental dwelling units and related
amenity uses and for no other purposes in accordance with this Agreement and the AHAs. None
of the PSH Units at the Property shall at any time be utilized on a transient basis, nor shall the
Property or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority
house, rooming house, short-term rental, vacation home such as AirBnB or VRBO, or hospital,
nursing home, sanitarium or rest home. Developer shall not convert the Property to condominium
ownership during the Affordability Period without the prior consideration and action approving
such conversion by the respective City Councils of Newport Beach and Costa Mesa, which
approval may be granted, withheld or denied in their sole and absolute discretion and until such
approval is granted, if at all by both City Councils. Developer shall be in material breach of this
Agreement if Developer files a "White Report" and/or records a condominium plan for the
Property. Developer shall not maintain or cause to be maintained any public nuisance or private
nuisance on or about the Property. Nothing in this Section shall prohibit the Developer from
entering into Commercial Leases as defined in the AHAs, or as permitted by the Ground Lease.
3.2 Number and Allocation of PSH Units to Costa Mesa and Newport Beach.
Developer covenants and agrees to develop, operate, and maintain seventy-six (76) PSH
Units with no less than sixteen (16) Units for which Costa Mesa shall receive local preference, as
set forth in the Costa Mesa AHA ("Costa Mesa Preference Units"), and no less than twelve (12)
Units for which Newport Beach shall receive local preference, as set forth in the Newport Beach
AHA ("Newport Beach Preference Units"), all at an Affordable Rent as defined in Section 3.3
below, including two (2) additional Units designated as the Managers" Units that are reserved for
occupancy by an onsite property managers. The Costa Mesa Preference Units and Newport Beach
Preference Units are herein collectively referred to as the "Preference Units." Nothing in this
Agreement shall require Developer to violate any law in connection with the Preference Units, and
provided that the Developer selects Eligible Tenants in accordance with the Tenant Selection Plan,
the Cities shall not be permitted to declare any breach of this Agreement in connection with
Developer's obligation to lease the Preference Units. The AHAs require Developer to enter into
this Agreement, which provides, among other requirements, that the seventy-six (76) Units within
the Project be rented to and occupied by "Eligible Tenants" (as those terms are defined in Article
1 above). Developer shall require that all Eligible Tenants occupying Preference Units execute a
Lease Rider as attached hereto and incorporated herein by reference as Exhibit "C." To the extent
an Eligible Tenant cannot be located for any vacant PSH Unit, in accordance with the Tenant
Selection Plan (as defined below), the Developer may continue to hold such PSH Unit vacant, or
may lease such vacant unit to any household, subject to Section 3.4 below, whose annual income
does not exceed the thirty percent (30%) of the AMI level, and Developer shall be deemed to be
in compliance with this Section.
3.3 Affordable Rent Defined. Pursuant to California Health and Safety Code Section
50053, the maximum Affordable Rent, including a reasonable utility allowance for extremely low-
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income households shall not exceed the thirty percent (30%) of the AMI adjusted for family size
appropriate for the unit ("Affordable Rent"). Affordable Rent shall be charged for all Preference
Units (excepting the Manager's Units) throughout the Affordability Period. Provided however,
that Affordable Rent and income limits for Eligible Tenant(s) shall be subject to the possibility of
adjustment, if applicable, under Section 3.6 herein.
Further, the term Affordable Rent includes the total of monthly payments by the tenants of
a PSH Unit for (a) use and occupancy of a PSH Unit and facilities associated therewith, (b) any
separately charged fees or service charges assessed by Developer that are required of all tenants
of the PSH Units, other than security deposits, (c) a reasonable allowance for utilities not included
in (a) or (b) above, including (as applicable) garbage collection, sewer, water, electricity and gas,
and (d) possessory interest, taxes or other fees or charges assessed for the use of the PSH Units
and facilities associated therewith by a public or private entity other than Developer.
3.4 Tenant Selection Covenants. The Project shall utilize the County Coordinated
Entry System ("CES") for the referral of potential tenants for the PSH Units in compliance with
the applicable federal, state and local laws during the Affordability Period, as applicable and
subject to lawful and reasonable criteria, all of which shall be set forth in the Tenant Selection
Plan, as provided in Section 3.4.3 below ("Tenant Selection Plan"). The Tenant Selection Plan
shall establish the eligibility criteria for the selection of tenants that meet the applicable
requirements of this Section 3.4, with first reasonable preference to rent vacant Preference Units
to an Eligible Tenant on the County's CES list who qualifies for a Preference Unit.
3.4.1 Minimum Occupancy Limits. As included in the annual income
certification provided by Developer, or as otherwise reasonably requested by either City,
Developer shall make available for both City Manager's review and approval such information
that Developer reviewed and considered in its tenant selection process, together with its statement
that Developer has determined that each selected tenant will comply with the income, rent, and
operational covenants and all applicable terms and conditions of this Agreement. Subject to
applicable law, the minimum occupancy of the PSH Units in the Project shall be one person per
bedroom.
3.4.2 PSH Units Intended as Replacement Housing by Newport Beach, Costa
Mesa, and their Affiliated Entities. Developer acknowledges that the Cities are investing in the
Project and providing their respective loan to Developer to cause long-term permanent supportive
housing, qualifying as reserved or banked replacement housing under federal or state laws, as, if,
and when applicable to each respective City or its affiliated entities. Therefore, this Agreement
shall serve as notice and evidence that each City is investing in the Project and providing its
respective City financial assistance to Developer under the AHAs to qualify, use, and bank the
PSH Units in this Project (excluding the Manager's Units) for purposes of replacement housing as
defined and required under federal and state laws, as, if and when applicable, to either City and
Housing Authority,
3.4.3 Tenant Selection Plan. Developer shall operate the Project in compliance
with the approved Tenant Selection Plan as described in the AHAs. The Tenant Selection Plan
includes tenant eligibility criteria, method of selection of tenants. income qualifications, and local
preferences. Subsequent to approval of an amendment or new Tenant Selection Plan by both City
Managers for the ongoing management and operation of the Project, Developer shall be in full
compliance with this Agreement, applicable law, and the AHAs. In this regard, Developer and
Property Manager may from time to time submit to the Cities City Managers proposed
amendments to the Tenant Selection Plan, which are also subject to the prior written approval of
the Cities City Managers, which shall not be unreasonably withheld, delayed or conditioned, or
required in the event any amendment is solely to comply with any applicable law.
3.4.4 Supporting Documentation of Tenant Selection. As included in the
annual income certification provided by Developer, or as otherwise reasonably requested by Cities,
Developer shall make available for both City Manager's review such information that Developer
reviewed and considered in its selection process, together with its statement that Developer has
determined that each selected tenant satisfies the income eligibility requirements, Affordable Rent
requirements, and other requirements of this Agreement.
(a) In this regard, Developer covenants and agrees that (i) each
Preference Unit tenant (other than the on -site Property Managers) shall and will be an Eligible
Tenant (at initial occupancy, and Developer will use commercially reasonable efforts to comply
with the Tenant Selection Plan for each subsequent tenant placed in a Preference Unit), and (ii) the
cost to each tenant household (other than onsite Property Managers) for the corresponding
Preference Unit on the Property shall be at and within the defined applicable Affordable Rent, and
(iii) each tenant household (other than onsite Property Managers) shall meet HUD Housing Quality
Standards ("HQS") occupancy standards for the PSH Unit, and (iv) the occupancy and use of the
PSH Units and Property shall comply with all other covenants and obligations of this Agreement
(collectively, "Tenant Selection Covenants").
3.5 Income Certification Requirements. Following the completion of the
Rehabilitation and occupancy by Eligible Tenant(s) of the PSH Units, and annually thereafter (on
or before March 31 of each calendar year), Developer shall submit to the Cities, at Developer's
expense, a written summary of the income, household size, and rent payable by the tenants of the
PSH Units. At either City's request, but not less frequently than prior to each initial and subsequent
rental of each PSH Unit to a new tenant household (but not lease renewals) and every sixth -year
thereafter, Developer shall prepare income computation, asset evaluation, and certification forms,
for any such tenant or tenants. Developer shall obtain, or shall cause to be obtained by the Property
Manager(s), an annual certification from each household leasing a Preference Unit demonstrating
that such household is an Eligible Tenant.
Developer shall determine if the Eligible Tenant of the Preference Units continue to qualify
as Eligible Tenant(s) under this Agreement. Developer shall require each tenant of a Preference
Unit to provide documentation supporting and certifying that the occupant continues to meet the
income requirements of an Eligible Tenant, and Developer may rely upon such certification and
supporting documentation in recertifying the tenant.
3.6 Affordable Rent during the Affordability Period. Maximum monthly rent
chargeable for the Preference Units shall comply with the definition of Affordable Rent applicable
to the Preference Units as set forth in Section 3.3 above.
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3.6.1 Rent Schedule and Utility Allowance. Developer shall annually
reexamine the income of each tenant household of the PSH Units for compliance with the AHAs
and this Agreement. The maximum monthly rent must be recalculated by Developer, and the
Cities shall have the right to review such recalculated rent levels annually with respect to the
Preference Units. Any increase in rents for the PSH Units is subject to the provisions of outstanding
leases. Developer must provide all tenants not less than thirty (30) days, or such longer period
pursuant to applicable federal, state or local laws, prior written notice before implementing any
increase in monthly rent.
3.6.2 Increases in Eligible Tenant Income. A tenant who qualifies for a
Preference Unit (e.g. Eligible Tenant) shall be deemed to continue to be so qualified until such
time as the annual re -verification of such tenant's income demonstrates that such tenant no longer
qualifies as an Eligible Tenant. A tenant household whose income increases such that such tenant
household ceases to be income qualified to occupy any Preference Unit at the Project, may
continue to occupy his or her Preference Unit and be charged rent including a reasonable utility
allowance, not greater than the lesser of thirty percent (30%) of the household's adjusted monthly
income, recertified annually, or the market rent applicable to the PSH Unit as published by the
California Department of Housing and Community Development for a period of six (6) months
after the tenant household no longer income -qualifies to continue to occupy a PSH Unit in
compliance with this Agreement. Thereafter, Developer shall use commercially reasonable efforts
to assist such tenant in relocating to alternative housing outside of the Project.
3.7 Maintenance.
3.7.1 At Occupancy of the PSH Units at Completion of Rehabilitation. As of
the date of and prior to initial occupancy of each of the Preference Units by Eligible Tenant(s),
Developer shall rehabilitate and improve each unit so that the condition of each unit is decent, safe
and sanitary and complies with HQS.
3.7.2 During Operation of the Project. Developer shall, at its sole cost and
expense, maintain or cause to be maintained the interior and exterior of the Project and all PSH
Units thereof and the Property in a decent, safe and sanitary manner, in accordance with HQS and
the standards of maintenance of comparable high quality, well -managed permanent supportive
housing projects within Orange County, California such as and comparable to those owned or
operated by other highly reputable owners and developers of high quality permanent supportive
housing projects in Orange County. If at any time Developer fails to maintain the Project or the
Property in accordance with this Agreement and such condition is not corrected within ten (10)
days after written notice from Costa Mesa with respect to graffiti, debris, and waste material, or
thirty (30) days after written notice from Costa Mesa with respect to general maintenance,
landscaping and building improvements, then Costa Mesa, in addition to whatever remedy it may
have at law or at equity, shall have the right to enter upon the applicable portion of the Project or
the Property and perform all acts and work necessary to protect, maintain, and preserve the Project
and the Property, and to attach a lien upon the Property, or to assess the Property, in the amount
of the expenditures arising from such acts and work of protection, maintenance, and preservation
by Costa Mesa and/or costs of such cure, including a reasonable administrative charge, which
amount shall be promptly paid by Developer to Costa Mesa upon demand. The liens created under
this Section 3.7 shall be subject and subordinate to the lien of the mortgages or deeds of trust
encumbering the Property (or any part of the Property). Nothing in such lien rights diminish or
lessen Costa Mesa's rights under applicable federal, state and local laws, including but not limited
to code enforcement, inspection warrants, public or private nuisance, or receivership laws.
3.8 Management of the Project.
3.8.1 Property Manager. Developer shall cause the Project, and all
appurtenances thereto that are a part of the Project, to be managed in a prudent and business -like
manner, consistent with property management standards for other comparable high quality, well -
managed rental housing projects in Orange County, California. Developer itself may be the
property manager or Developer shall contract with a property management company or property
manager to operate and maintain the Project in accordance with the terms of this Article 3;
however, the selection and hiring of the Property Manager (and each successor or assignee
Property Manager) is and shall be subject to prior written approval of the Cities' City Managers at
their sole, reasonable discretion. The City Managers shall work together in their decision so as not
to cause any undo delay. For each and any subsequent Property Manager, Developer shall conduct
due diligence and background evaluation of any potential outside property manager or property
management company to evaluate experience, references, credit worthiness, and related
qualifications as a property manager. Any proposed property manager shall have prior experience
with rental housing projects and properties comparable to the Project, including prior experience
in managing permanent supportive housing projects, and the references and credit record of such
manager/company shall be investigated (or caused to be investigated) by Developer prior to
submitting the name and qualifications of such proposed property manager to the to the Cities City
Managers for review and approval. A complete and true copy of the results of such background
evaluation shall be provided to the Cities City Managers. Approval of a Property Manager by the
Cities City Managers shall not be unreasonably delayed but shall be in their sole, reasonable
discretion, and the City Managers shall use good faith efforts to respond as promptly as practicable
in order to facilitate effective and ongoing management of the Project. Upon request, Developer
shall make available for the Cities review support documentation that substantiates the annual
property management fee.
(a) Gross Mismanagement. In the event of "Gross Mismanagement"
of the Preference Units, the Cities shall require any condition(s), acts, or inactions of Gross
Mismanagement to cease and/or be corrected immediately, and further to direct and require the
immediate removal of the Property Manager and replacement with a new qualified and approved
Property Manager, if such condition(s) is/are not ceased and/or corrected after expiration of thirty
(30) days from the date of written notice from either City. If Developer or Property Manager has
commenced to cure such Gross Mismanagement condition(s) on or before the 20th day from the
date of written notice (with evidence of such submitted to the Cities), but has failed to complete
such cure by the thirtieth (30a') day, then Developer or Property Manager shall have an additional
ten (10) days to complete the cure of such Gross Mismanagement condition(s). Due to the
importance and nature of good property management of permanent supportive housing and the
provision of Supportive Services in connection there with as defined and provided in Section 3.12
of this Agreement, in no event shall any condition of Gross Mismanagement continue uncured for
a period exceeding forty-five (45) days from date of the initial written notice of such condition(s)
from either City. If such condition(s) does persist beyond such period, the Cities shall have the
sole and absolute right to immediately and without further notice to Developer (or to Property
Manager or any other person/entity) replace the Property Manager with a new property manager
of the Cities City Managers selection at the sole cost and expense of Developer. If Developer
takes steps to select a new Property Manager that selection is subject to the requirements set forth
above for selection of a Property Manager.
(i) For purposes of this Agreement, the term
"Gross Mismanagement" shall mean management of the Project (or any part of the Project) in a
manner which materially violates the terns and/or intention of this Agreement to operate a high
quality permanent supportive housing complex comparable to other similar complexes in Orange
County, California, and shall include, but is not limited to, any one or more of the following:
(A) Knowingly leasing to tenants who exceed the
prescribed income levels;
(B) Knowingly allowing the tenants to exceed the
prescribed occupancy levels without taking immediate action to stop such overcrowding;
(C) Knowingly allowing the tenants to allow or use any
PSH Unit for vacation rental purposes without taking immediate action to stop such activity;
(D) Underfunding required reserve accounts, and not
making timely Reserve Deposits, unless funds are not available to deposit in such accounts despite
commercially reasonable efforts to operate the Project and fund such accounts;
(E) Failing to timely maintain the Project in accordance
with the Leasing Plan (as the term is defined in the Newport Beach AHA), Tenant Selection Plan
and the manner prescribed herein;
(F) Failing to submit timely and/or adequate annual
reports to City as required herein;
(G) Fraud or embezzlement of Project funds, including
without limitation funds in the reserve accounts;
(H) Failing to reasonably cooperate and communicate
with the Costa Mesa Police Department or other local law enforcement agency(ies) with
jurisdiction over the Project, in maintaining a crime -free environment within the Project;
(I) Failing to reasonably cooperate and communicate
with the Costa Mesa Fire Department or other local public safety agency(ies) with jurisdiction
over the Project, in maintaining a safe environment within the Project;
(J) Failing to reasonably cooperate and communicate
with the Costa Mesa Planning & Building Department, including the Code Enforcement Division,
or other local health and safety enforcement agency(ies) with jurisdiction over the Project, in
maintaining a safe environment within the Project; and
(K) Spending funds from the Capital Replacement
Reserve account(s), as provided in the AHAs, for items that are not defined as capital costs under
the standards imposed by GAAP (and/or, as applicable, generally accepted auditing principles.)
(ii) Notwithstanding the requirements of the Property Manager
to correct any condition of Gross Mismanagement as described above, Developer is obligated and
shall use commercially reasonable efforts to correct any defects in property management or
operations at the earliest feasible time and, if necessary, to replace the Property Manager as
provided above. Developer shall include advisement and provisions of the foregoing requirements
and requirements of this Agreement within any contract between Developer and its Property
Manager.
(b) Marketing. Developer shall comply with an affirmative marketing
plan reasonably approved by the Cities, including methods for informing the public and potential
tenants about the federal fair housing laws, procedures to inform and solicit applications from
persons in the housing market area not likely to apply for tenancy at the PSH Units without special
outreach and recordkeeping methods that will permit City to evaluate the actions taken by
Developer (or Property Manager) to affirmatively market the PSH Units at the Project. Specific
procedures for marketing and leasing PSH Units shall be set forth in the Tenant Selection Plan and
shall include:
(i) Posting advertisements and notices of the availability of the
Housing Unit(s) in local newspapers and other publications. Such advertisements and notices shall
include a description of the age and income requirements applicable to the Housing Unit(s).
(ii) Posting advertisements and notices of the vacancy(ies) at
local religious institutions, community centers, public buildings such as post -offices and at:
(i) City Hall for the Cities, (ii) Newport Beach OASIS and Costa Mesa Senior Center, and (iii)
Family Resource Centers, or other locations as the Cities may suggest.
(iii) Posting advertisements and notices of the vacancy(ies)
anywhere Developer believes tenant households eligible for occupancy in the PSH Units at the
Project are likely to become informed.
3.8.2 Operation and Management of Property Post -Closing. After the
rehabilitation of the Project, the day to -day management and operation of the Project and the
overall Property shall be undertaken by and shall be the sole legal and financial responsibility of
Developer. After completion of the Rehabilitation and during the Affordability Period, Developer
is and shall remain responsible for and shall exercise its best efforts to manage and operate the
Property consistent with good property management standards of comparable permanent
supportive housing properties in Orange County, California such as those owned or operated by
Developer and by other highly reputable owners and developers of high -quality permanent
supportive housing projects in the Orange County.
3.9 Code Enforcement. Developer acknowledges and agrees that Costa Mesa and its
employees and authorized agents shall have the right to conduct code compliance and/or code
enforcement inspections of the Project and the individual units, both exterior and interior, during
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normal business hours and upon reasonable written notice (not less than 72 hours prior notice) to
Developer and/or an individual tenant. If such notice is provided by City representative(s) to
Developer, then Developer (or its Property Manager) shall immediately and directly advise tenant
of such upcoming inspection and cause access to the area(s) and/or units on the Project to be made
available and open for inspection. Developer shall include express advisement of such inspection
rights within the approved lease/rental agreements for each Housing Unit in the Project in order
for each and every tenant and tenant household to be aware of this inspection right. Costa Mesa
and Developer acknowledge and agree that the Property and Project is located within the sole
jurisdiction of Costa Mesa and that Newport Beach has no legal obligations or authority to enforce
the Costa Mesa Municipal Code including violations of housing, fire code, zoning, public nuisance
and all other applicable laws.
3.10 Operating Budget. Developer shall submit to both Cities on not less than an
annual basis the operating budget for the Project that sets forth the projected Operating Expenses
for the upcoming calendar year.
3.11 Monitoring and Recordkeeping.
3.11.1 Affordability Period Compliance. Developer shall comply with all
applicable recordkeeping and monitoring requirements including this Section 3.11 and shall
annually complete and submit to both Cities a Certification of Continuing Program Compliance
substantially in the form of attached hereto as Exhibit "D" or other form provided by the Cities
("Program Certification").
(a) Cities shall be entitled to monitor compliance with this Agreement,
to inspect the records of the Project, and to conduct an independent audit or inspection of such
records. Developer agrees to maintain records in a businesslike manner, to make such records
available to the Cities upon seventy-two (72) hour notice, and to maintain such records for the
entire Affordability Period.
3.11.2 Annual Monitoring Fee. Concurrently with the delivery of each annual
report and Program Certificate to City, to the extent not prohibited by any applicable law,
Developer shall pay an Annual Monitoring Fee to each City in the amount One Thousand Six
Hundred Dollars ($1,600) increased annually by 3%, which shall compensate the Cities for their
costs incurred to monitor Developer's compliance with this Agreement.
3.12 Supportive Services. Developer shall use its best efforts to create a comprehensive
supportive services program that is targeted to the needs of the residents of the Project ("Support
Services"). Any change in the scope, amount, or type of Supportive Services to be provided at the
Property shall be subject to prior approval of both Cities, which approval shall not be unreasonably
withheld or conditioned. Developer shall provide (or cause the provision of) Supportive Services
at the Project throughout the entire Affordability Period. While Developer intends to provide the
Supportive Services and pay the expenses therefor from the Project's operating budget, Developer
and the Cities agree to cooperate in good faith to obtain additional or other funding sources to
provide the various Supportive Services and other programs that shall be provided to the residents
throughout the Affordability Period.
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3.13 Capital Reserve Requirements. Developer shall annually deposit into a set aside
Capital Replacement Reserve account an amount equal to Five Hundred Dollars ($500.00) for each
PSH Unit, or shall cause the Property Manager to do so; provided, that funding of replacement
reserves under the requirements of any other funder, so long as such replacement reserve deposits
are not less than the amount required under this Section, shall satisfy this requirement. The Capital
Replacement Reserve deposits shall be allocated from the gross collections for all rents received
from the operation of the Property and shall be deposited into a separate interest -bearing trust
account. Funds in the Capital Replacement Reserve shall be used for capital replacements to the
fixtures and equipment on the Property (including common areas) that are normally capitalized
under generally accepted accounting principles and shall include the following: carpet and drape
replacement; appliance replacement; exterior painting, including exterior trim; hot water heater
replacement; plumbing fixtures replacement, including tubs, showers, toilets, lavatories, sinks,
faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating;
roofing repair and replacement; landscape tree replacement; irrigation pipe and controls
replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and
upgrade work; miscellaneous motors and blowers; common area furniture replacement; and
common area repainting. The non -availability of funds in the Capital Replacement Reserve does
not in any manner relieve Developer of the obligation to undertake necessary capital repairs and
improvements and to continue to maintain the Property and all common areas and common
improvements in the manner prescribed herein.
3.13.1 Annual Accounting of Capital Replacement Reserve. Not less than once
per calendar year, Developer, at its expense, shall submit to the Cities an accounting for the Capital
Replacement Reserve set forth in the Annual Financial Statement, demonstrating compliance with
this Section.
3.14 Capitalized Operating Reserve. In connection with operation of the Project,
Developer shall, or shall cause the Property Manager to, deposit in an amount equal to three (3)
months of Operating Expenses for the Project ("Target Amount") in a Capitalized Operating
Reserve to be held in a separate interest bearing trust account, which initial deposit shall be funded
using proceeds of any primary loan, provided that funding of, and disbursements from, a
capitalized operating reserve under the requirements of any primary loan, so long as such
capitalized operating reserve amounts are no less than the amount required under this Section, shall
satisfy this requirement. The Capitalized Operating Reserve shall thereafter be replenished from
Annual Project Revenue (if any) only to the extent required by any fonder. The amount in the
Capitalized Operating Reserve shall be retained to cover shortfalls between Annual Project
Revenue and actual Operating Expenses but shall in no event be used to pay for distributions to
Developer, capital items or capital costs properly payable from the Capital Replacement Reserve.
3.14.1 Annual Accounting of Capitalized Operating Reserve. Not less than once
per calendar year, Developer, at its expense, shall submit to the Cities an accounting for the
Capitalized Operating Reserve set forth in the Annual Financial Statement, demonstrating
compliance with this Section.
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ARTICLE 4
COMPLIANCE WITH LAWS.
4.1 Property Standards. Developer agrees to ensure that Rehabilitation and operation
of the Project will comply with all applicable requirements, including the following:
4.1.1 State and Local Requirements. The Project and all PSH Units and
common areas at the Property shall meet all applicable State and local codes, ordinances, and
zoning requirements, including all applicable requirements set forth in the Costa Mesa Municipal
Code and all applicable State and local residential and building codes. The Project and all PSH
Units and common areas at the Property must meet all such applicable requirements upon Project
completion.
4.1.2 Ongoing Property Condition Standards: Rental Housing. Developer
shall ensure that the Project, including all PSH Units and common areas at the Property, comply
with City of Cosa Mesa established property standards for rental housing ("City Property
Standards") throughout the Affordability Period. In accordance with City Property Standards,
Developer shall maintain the Project, including all PSH Units and common areas at the Property:
(a) as decent, safe, and sanitary housing in good repair, (b) free of all health and safety defects and
all life -threatening deficiencies, and (c) in compliance with the lead -based paint regulations and
requirements in 24 CFR Part 35.
4.1.3 Inspections; Corrective and Remedial Actions. The parties understand
that the County of Orange will undertake ongoing inspections of the Project. Developer agrees it
will take all remedial actions to address and correct deficiencies and other issues identified by the
County.
4.1.4 Handicapped Accessibility. Developer shall comply with, as and to the
extent applicable, (a) Section 504 of the Rehabilitation Act of 1973, and implementing regulations
at 24 CFR 8C governing accessibility of projects assisted with federal funds; (b) the Americans
with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36 in order to provide
handicapped accessibility to the extent readily achievable; (c) the Uniform Federal Accessibility
Standards (UFAS) pursuant to the Architectural Barriers Act of 1968, 42 U.S.C. 4151-4157, as
amended; and (d) any other applicable law.
4.1.5 Use of Debarred, Suspended, or Ineligible Participants. To the extent
applicable during the Rehabilitation, Developer shall comply with the provisions of 24 CFR 24
relating to the employment, engagement of services, awarding of contracts, or funding of any
contractor or subcontractor during any period of debarment, suspension, or placement in
ineligibility status. Developer, each subcontractor, and any other contractors or subcontractors or
agents of Developer (subject to compliance with 24 CFR part 135) shall have provided to Costa
Mesa the certification in appendix B of 24 CFR Part 24 that neither it nor its principals is presently
debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from
participation from this Project, and Costa Mesa shall be responsible for determining whether each
contractor has been debarred.
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4.1.6 Maintenance of Drug -Free Workplace. Developer shall certify that
Developer will provide a drug -free workplace in accordance with 2 CFR 2429.
4.1.7 Lead -Based Paint. Costa Mesa, as a recipient of federal fonds, has
modified and conformed all of its federally funded housing programs to the Lead -Based Paint
Poisoning Prevention Act, Title X of the 1992 Housing and Community Development Act, 42
U.S.C. §4800, et seq., specifically §§4821 4846, and the implementing regulations thereto. In this
regard, Developer shall comply with all applicable federal requirements relating to lead -based
paint.
4.1.8 Affirmative Marketing. Developer shall adopt and implement affirmative
marketing procedures and requirements at the Property.
4.1.9 Nondiscrimination, Equal Opportunity and Fair Housing. Developer
shall carry out the Project and perform its obligations under this Agreement in compliance with all
of the federal laws and regulations regarding nondiscrimination equal opportunity and fair housing
described in 24 CFR 92.350 and 24 CFR 5.105.
4.1.10 Energy Conservation Standards. As applicable to the Project, Developer
shall cause the Property to meet the cost-effective energy conservation and effectiveness standards
in 24 CFR 965 and 24 CFR 990.185.
4.1.11 Displacement and Relocation. Developer acknowledges and agrees that,
pursuant to Federal Program Limitations and consistent with the other goals and objectives of that
part and pursuant to a Relocation Plan, Developer must ensure that it has taken all reasonable steps
to minimize the displacement of persons as a result of the Rehabilitation work. Furthermore, to
the extent feasible, residential tenants must be provided a reasonable opportunity to lease and
occupy a suitable, decent, safe, sanitary and affordable PSH Unit at the Property or comparable
outside property upon completion of the Rehabilitation work. Developer shall cause all Relocation
of tenants and occupants of the Property to be conducted in accordance with the Relocation Laws
and all Federal Program Limitations. Developer further agrees to cooperate with Costa Mesa in
meeting the requirements of the Federal Program Limitations and shall take all actions and
measures reasonably required by Costa Mesa's City Manager (or his or her duly authorized
representative) in connection therewith.
4.1.12 Documentation and Monitoring Requirements. Developer shall maintain
records, reports and information as required by Exhibit "E" hereof. Upon request, Developer shall
make records available for the Cities review.
4.1.13 Conflict of Interest. Developer shall comply with and be bound by the
conflict of interest provisions set forth at 24 CFR 570.611.
4.1.14 Conflicts between and among Federal Program Limitations and State
or Local Law. If and to the extent applicable for any source of federal revenue expended to
implement the Project and in the event of any conflict or inconsistency between applicable Federal
Program Limitations and/or and State or local law, then the more stringent requirement(s) shall
control.
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4.1.15 Layering Review. To the extent applicable, Developer acknowledges that
a layering review will be performed in accordance with Federal Program Limitations. In
connection with such review Developer acknowledges and agrees it shall be required to represent
and certify to City that no government assistance other than the Costa Mesa Loan, the Newport
Beach Loan, the County Loan, the Homekey grants, the welfare exemption under California
Revenue and Taxation Code Section 214(g), and the HAP Contract assistance has been obtained
or is contemplated to be obtained for the Rehabilitation and operation of the Property. After such
layering review, Developer agrees to notify City in the event that it applies for or proposes to use
governmental funds, other than as listed in the previous sentence, for the Property or the Project.
4.2 Compliance with Laws. Developer shall carry out the design and construction of
the Rehabilitation and operation of the Project in conformity with all applicable federal, state and
local laws, including, without limitation, applicable state labor standards, City zoning and
development standards, building, plumbing, mechanical and electrical codes, and all other
provisions of the Costa Mesa Municipal Code, and all applicable disabled and handicapped access
requirements, including without limitation (to the extent applicable) the Section 8 laws, Americans
With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq.,
Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51,
et seq., HOTMA, and any other applicable governmental requirements. Developer (and its
Affiliates and successors and assigns) shall pay prior to delinquency all ad valorem real estate
taxes, possessory interest taxes, and assessments, if any, as to the Property and Project, subject to
Developer's (and its Affiliates and successors and assigns) right to contest in good faith any such
taxes. Developer may apply for and receive any exemption from the payment of property taxes or
assessments on any interest in or as to Property and Project without the prior approval of Costa
Mesa.
4.2.1 Prevailing Wage Laws. In accordance with the California Labor Code
(Sections 1770 et seq.), the Director of Industrial Relations has ascertained the general prevailing
rate of per diem wages in the locality in which the work is to be performed for each craft,
classification, or type of workman or mechanic needed to execute the contract. A copy of said
determination is available by calling the prevailing wage hotline number (415) 703-4774, and
requesting one froin the Department of Industrial Relations. All parties to this Agreement shall be
governed by all provisions of the California Labor Code — including, but not limited to, the
requirement to pay prevailing wage rates (Sections 1770-7981 inclusive) during the Rehabilitation.
A copy of the prevailing wage rates shall be posted by the Developer at the Project during the
Rehabilitation. Developer acknowledges and understands that other federal and/or state funding
sources and financing scenarios may trigger compliance with applicable state and federal
prevailing wage laws and regulations. The highest applicable wage requirements will apply.
Notwithstanding the foregoing in this Section, Developer shall carry out the construction through
completion of the Rehabilitation of the Property in conformity with applicable federal, state and
local labor laws and regulations, including, without limitation, as and if applicable, the
requirements to pay prevailing wages under federal law (including Davis -Bacon Act, 40 U.S.C.
Section 3141, et seq., and the regulations promulgated thereunder set forth at 29 CFR Part 1
(collectively, "Davis -Bacon")) and California law (Labor Code Section 1720, et seq.). As such,
and specifically in connection with the Rehabilitation, Developer acknowledges and agrees that it
shall be required to, and shall be required to cause all of its contractors and their contractors to,
pay prevailing wages in compliance with California Labor Code Section 1770 et seq., and shall be
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responsible for the keeping of all records required pursuant to Labor Code Section 1770 et seq.,
including but not limited to Labor Code Section 1776, and complying with the maximum hours
requirements of Labor Code Sections 1810 through 1815, and complying with all regulations and
statutory requirements pertaining thereto. Developer acknowledges and agrees that it shall be
independently responsible for reviewing the applicable laws and regulations with respect to the
payment of prevailing wages and complying therewith. Upon any request by either City, Developer
shall provide a true and correct copy of such payroll records as are required under applicable state
law.
(a) Developer Compliance. In this regard, Developer shall be solely
responsible, expressly or impliedly, for determining and effectuating compliance with all
applicable federal, state and local public works requirements, prevailing wage laws, labor laws
and standards, and Costa Mesa and Newport Beach make no representation, either legally and/or
financially, as to the applicability or non -applicability of any federal, state and local laws to the
Rehabilitation and the Project, both onsite and offsite, as applicable. Developer expressly,
knowingly and voluntarily acknowledges and agrees that Costa Mesa and Newport Beach have
not previously represented to Developer or to any representative, agent or Affiliate of Developer,
or its General Contractor or any subcontractor(s) for the construction of the Rehabilitation, in
writing or otherwise, in a call for bids or otherwise, that the work and construction undertaken
pursuant to this Agreement is (or is not) a "public work," as defined in Section 1720 of the Labor
Code or under Davis -Bacon.
(b) Indemnification re Prevailing Wages. Developer knowingly and
voluntarily agrees that Developer shall have the obligation to provide any and all disclosures or
identifications with respect to the Rehabilitation as required by Labor Code Section 1781 and/or
by Davis -Bacon, as the same may be amended from time to time, or any other similar law or
regulation. Developer hereby indemnifies the Indemnified Parties and shall indemnify, protect,
pay for, defend (with legal counsel acceptable to City and City) and hold harmless the Indemnified
Parties, from and against any and all loss, liability, damage, claim, cost, expense and/or "increased
costs" (including reasonable attorneys' fees, court and litigation costs, and fees of expert witnesses)
which, in connection with the development, construction (as defined by applicable law) and/or
operation of the Project, including, without limitation, any and all public works (as defined by
applicable law), results or arises in any way from any of the following: (i) the noncompliance by
Developer with any applicable local, state and/or federal law or regulation, including, without
limitation, any applicable federal and/or state labor laws or regulations (including, without
limitation, if applicable, the requirement to pay state and/or federal prevailing wages); (ii) the
implementation of Section 1781 of the Labor Code and/or of Davis -Bacon, as the same may be
amended from time to time, or any other similar law or regulation; and/or (iii) failure by Developer
to provide any required disclosure or identification as required by Labor Code Section 1781 and/or
by Davis -Bacon, as the same may be amended from time to time, or any other similar law or
regulation. It is agreed by the parties that, in connection with the development and construction
(as defined by applicable law or regulation) of the Project, including, without limitation, any and
all public works (as defined by applicable law or regulation), Developer shall bear all risks of
payment or non-payment of prevailing wages under applicable federal, state and local law or
regulation and/or the implementation of Labor Code Section 1781 and/or by Davis -Bacon, as the
same may be amended from time to time, and/or any other similar law or regulation. "Increased
costs," as used in this Section 4.2.1, shall have the meaning ascribed to it in Labor Code Section
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1781, as the same may be amended from time to time. The foregoing indemnity shall survive
termination of this Agreement and shall continue after completion of the Rehabilitation by
Developer.
ARTICLE 5
NONDISCRIMINATION COVENANTS
5.1 Nondiscrimination. Except to the extent legally permissible in connection with the
Preference Units and to comply with the Project's public financing requirements, Developer
covenants by and for itself and any successors in interest that there shall be no discrimination
against or segregation of any person, or group of persons on any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926,
12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section
12955.2 of the Government Code, in the sale, rental, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the Property and Project, or any part thereof, nor shall Developer, or any
person claiming under or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees of the Property or Project, or any part thereof.
5.2 Covenants Run with the Land. The covenants established in this Article 5 shall,
without regard to technical classification and designation, be binding for the benefit and in favor
of the Cites and their successors and assigns, and shall remain in effect in perpetuity.
5.3 Clauses in Contracts and Leases. All contracts and leases relating to the Property
shall contain or be subject to substantially the following nondiscrimination or nonsegregation
clauses:
(a) In deeds:
"The grantee herein covenants by and for himself or herself, his or her heirs,
executors, administrators, and assigns, and all persons claiming under or
through them, that there shall be no discrimination against or segregation
of, any person or group of persons on account of any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those
bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of
the Government Code, in the sale, lease, sublease, transfer, use, occupancy,
tenure, or enjoyment of the premises herein conveyed, nor shall the grantee
or any person claiming under or through him or her, establish or permit any
practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees, or vendees in the premises herein conveyed. The
foregoing covenants shall run with the land."
(b) In leases: "The lessee herein covenants by and for himself or herself, his or
her heirs, executors, administrators, and assigns, and all persons claiming under or through him or
her, and this lease is made and accepted upon and subject to the following conditions:
"That there shall be no discrimination against or segregation of any person
or group of persons, on account of any basis listed in subdivision (a) or (d)
of Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the Government Code, in the
leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of
the premises herein leased nor shall the lessee himself or herself, or any
person claiming under or through him or her, establish or permit any such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants, lessees,
sublessees, subtenants, or vendees in the premises herein leased."
(c) In contracts:
"There shall be no discrimination against or segregation of, any person or
group of persons on account of any basis listed in subdivision (a) or (d) of
Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the Government Code, in the
sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the
premises which are the subject of this Agreement, nor shall the grantee or
any person claiming under or through him or her, establish or permit any
practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees, or vendees in the premises herein conveyed. The
foregoing covenants shall run with the land."
ARTICLE 6
TERM AND EFFECT OF COVENANTS
6.1 Affordability Period. The provisions of this Agreement shall apply to the
Property, even if the Costa Mesa and Newport Loans are paid in full, until the end of the
Affordability Period, This Agreement shall bind any successor, heir or assign of Developer,
whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise,
with or without the approval of City, except as expressly released by City. The Cities awarded
funding to Developer based on the condition, and in consideration of, this provision, and would
not do so otherwise.
6.2 Covenants to Run with the Land. Cosa Mesa, Newport Beach and Developer
hereby declare their express intent that the covenants and restrictions set forth in this Agreement
shall run with the land, and shall bind all successors in title to the Property. Each and every
contract, deed or other instrument hereafter executed covering or conveying the Property or any
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portion thereof shall be held conclusively to have been executed, delivered and accepted subject
to such covenants and restrictions, regardless of whether such covenants or restrictions are set forth
in such contract, deed or other instrument, unless the Cities expressly release such conveyed
portion of the Property from the requirements of the Agreement.
ARTICLE 7
TRANSFERS
7.1 Transfers; General Prohibition of Transfer without Cities Consent. The
qualifications and identity of Developer as the qualified Developer and as an experienced and
successful developer and operator/manager of affordable housing, in particular permanent
supportive rental housing, are of particular concern to City. It is because of these identities and
the qualifications of the Developer that each City has entered into their respective AHA and this
Agreement with Developer. Accordingly, commencing upon the execution of the AHAs and this
Agreement and continuing until the end of the Affordability Period, no voluntary or involuntary
successor in interest of Developer shall acquire any rights or powers under the AHAs or this
Agreement, nor shall Developer make any total or partial sale, transfer, conveyance, assignment,
subdivision, refinancing or lease of the Property (excepting rental/lease of PSH Units), or any part
thereof, or the AHAs or this Agreement (collectively referred to herein as a "Transfer") without
the prior written approval of the Cities in their sole, reasonable discretion, except as expressly set
forth in the AHAs (each a "Permitted Transfer"), Approval of a Permitted Transfer, pursuant to
the AHAs, shall not waive, limit, or otherwise impair the Cities rights regarding any subsequent
Permitted Transfer.
ARTICLE 8
ENFORCEMENT AND REMEDIES
8.1 Remedies. In the event of default or breach of any of the terms or conditions of
this Agreement by Developer, its heirs, executors, administrators or assigns, the Cities may pursue
the remedy thereof by any and all means of enforcement, both in equity and at law, as provided by
the laws of the State of California, including, but not limited to, injunctive relief and/or specific
performance.
8.2 Dispute Resolution. The Cities and Developer agree that they will engage in a
meaningful meet and confer process on demand of either party during the life of this Agreement
to discuss and resolve any disputes arising out of or related to this Agreement, including but not
limited to, discrepancies in the Tenant Selection Plan and/or Tenant Leasing Plan, the allocation
or distribution of Units, and issues with CES. The parties shall meet and confer within thirty (30)
days after the date of such written notice with the objective of attempting to arrive at a mutually
acceptable solution to the disputes. The parties shall exchange information relevant to the subject
matter of the meeting in a timely manner.
8.3 Rights of Cities. Except as limited by Section 3.9 of this Agreement, Costa Mesa
and Newport Beach have the right to enforce all of the provisions of this Agreement. This
Agreement does not in any way infringe on the right or duties of Costa Mesa to enforce any of the
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provisions of the Costa Mesa Municipal Code including, but not limited to, the abatement of
dangerous buildings. In addition to the general rights of enforcement, Costa Mesa shall have the
right, through Costa Mesa's agents and employees, to enter upon any part of the Property upon
seventy-two (72) hours' written notice and during normal business hours for the purpose of
enforcing the California Vehicle Code and the ordinances and other regulations of City, and for
maintenance and/or repair of any or all publicly owned utilities.
8.4 Nuisance. The result of every act or omission whereby there is a material violation
by Developer of any of the covenants contained in this Agreement in whole or in part is hereby
declared to be and constitutes a nuisance, and every remedy allowable at law or equity against a
nuisance, either public or private, shall be applicable against every such result and may be
exercised by Costa Mesa or its successors in interest, without derogation of Costa Mesa's rights
under law. Developer does not by this Section 8.3 waive any procedural rights under applicable
law (including, without limitation, the rights to notice, cure, and appeal, if any).
8.5 No Third Parties Benefited. Except as provided herein as to the Cities, which
shall be third -party beneficiaries hereunder, this Agreement is made for the purpose of setting forth
rights and obligations of Developer and the Cities, and no other person shall have any rights
hereunder or by reason hereof.
8.6 Right of Entry for Maintenance and Repair. Costa Mesa has the right of entry
during normal business hours and upon and after reasonable attempts to contact Developer or
Property Manager, to effect emergency repairs or maintenance which Developer has failed to
perform. Subsequent to sixty (60) days written notice to Developer (or Property Manager)
specifically outlining the noncompliance, Costa Mesa shall have the right of entry during normal
business hours to enforce compliance with this Agreement which Developer or Property Manager
have failed to perform.
8.7 Costs of Repair. The costs borne by Costa Mesa of any such repairs or
maintenance emergency and/or non -emergency pursuant to Section 8.5 above, shall become a
charge for which Developer shall be responsible and may, if unpaid, be assessed as a lien against
the Property, subordinate to all existing financing liens.
8.8 Cumulative Remedies. The remedies herein provided for breach of the covenants
contained in this Agreement shall be deemed cumulative, and none of such remedies shall be
deemed exclusive.
ARTICLE 9
HOLD HARMLESS, INDEMNITY AND INSURANCE
9.1 Hold Harmless and Indemnity.
To the fullest extent permitted by law, Developer shall defend, indemnify, assume all
responsibility for, and save and hold harmless Costa Mesa and Newport Beach, and their respective
officers, officials, agents, employees, representatives, volunteers, successors or assigned
(collectively, "Indemnified Parties") from and against any and all claims (including, without
limitation, claims for bodily injury, death or damage to property), demands, obligations, damages,
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actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses
(including, without limitation, attorneys' fees, disbursements and court costs) of every kind and
nature whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any
manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement,
any damages to property or injuries to persons directly or indirectly related to or in connection
with this Agreement, the Project, and/or the Rehabilitation, operation, management, or ownership
of the Property including, without limitation, defects in workmanship or materials or Developer's
presence or activities conducted on the Project (including the negligent, reckless, and/or willful
acts, errors and/or omissions of Developer, its principals, officers, agents, employees, vendors,
suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or
for whose acts they may be liable, or any or all of them). The foregoing indemnity shall survive
termination of this Agreement.
Notwithstanding the foregoing, nothing herein shall be construed to require Developer to
indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful
misconduct of the Indemnified Parties, or any Claim arising from either City's refusal to permit
the Developer to amend, modify, or implement the Tenant Selection Plan in accordance with any
applicable law provided that the Developer provided written notice to the Cities regarding
Developers' proposed amendment or implementation. Nothing in this indemnity shall be construed
as authorizing any award of attorneys' fees in any action on or to enforce the terms of this
Agreement. This indemnity shall apply to all claims and liability regardless of whether any
insurance policies are applicable. The policy limits do not act as a limitation upon the amount of
indemnification to be provided Developer.
9.2 Developer Insurance Requirements. Developer, for the term of this Agreement,
shall procure and keep in full force and effect or cause to be procured and kept in full force and
effect for the mutual benefit of Developer, Costa Mesa and Newport Beach, insurance policies
reasonably determined by both Cities and commensurate with industry standards for the area, as
are required in the AHAs.
9.3 Knowledge of Claim. If at any time Developer or any of its contractors and/or
subcontractors becomes aware of a claim or a potential claim related to the Project in which the
demand or probably ultimate cost exceeds $25,000,00, Developer (and as applicable each and all
of its contractors and subcontractors) shall promptly provide written notice ("Claim Notice") to
the Cities which sets forth the nature of the claim or potential claim and the date on which
Developer became aware of such claim or potential claim and shall provide the Cities with copies
of any documents relating to such claim or potential claim.
9.4 Notice of Change in Coverage. If, at any time, Developer or any of its contractors
and/or subcontractors becomes aware that any of the coverages provided above are going to be
canceled, limited in scope or coverage, terminated or non -renewed, then Developer and each
contractor and/or subcontractor shall promptly provide the Cities with written notice ("Insurance
Notice") of such cancellation, limitation, termination or non -renewal. Upon the receipt of the
Insurance Notice or the Claim Notice, or at any time when the Cities have knowledge of (i) the
cancellation, limitation, termination or non -renewal of one or more of Developer's or any of its
contractors and/or subcontractors insurance policies enumerated above or (ii) a claim or potential
claim under one or more of such policies in accordance with Section 9.3 above, then, in addition
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to its other rights and remedies pursuant to this Agreement, the Cities shall have the right to
suspend each City's obligations under this Agreement until such time as Developer and each of its
contractors and/or subcontractors furnishes, or causes to be furnished to Cities, duplicate originals
or appropriate certificates of insurance for coverages in the amount of not less than those specified
above or until the time such claim or potential claim has been resolved to the reasonable
satisfaction of Cities, whichever first occurs.
9.5 Waiver of Subrogation. Developer and each of its contractors and subcontractors
hereby waive all rights to recover against the Indemnified Parties for any loss incurred by
Developer and each or any of its contractors and subcontractors from any cause insured against or
required by any Project Document to be insured against; provided, however, that this waiver of
subrogation shall not be effective with respect to any insurance policy if the coverage thereunder
would be materially reduced or impaired as a result. Developer and each of its contractors and
subcontractors shall use their best efforts to obtain only policies that permit the foregoing waiver
of subrogation.
9.6 Obligation to Repair and Restore Damage Due to Casualty Covered by
Insurance. Subject to the provisions below and to the rights of the County, pursuant to the Ground
Lease, and the primary lender and any replacement primary lender if the Project shall be totally or
partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to
be insured against by Developer, subject to the rights of the primary lender, Developer shall
promptly proceed to obtain insurance proceeds and take all steps necessary to begin reconstruction
and, immediately upon receipt of insurance proceeds, to promptly and diligently commence the
repair or replacement of the Project improvements to substantially the same condition as the
Project improvements existed immediately prior to the casualty, if and to the extent the insurance
proceeds are available and sufficient to cover the actual cost of repair, replacement, or restoration,
then subject to the rights of the primary lender. Developer shall complete the sane as soon as
possible thereafter so that the Project Improvements can be occupied in accordance with this
Agreement. Subject to force majeure delays, in no event shall the repair, replacement, or
restoration period exceed two (2) calendar years from the date Developer obtains insurance
proceeds unless each Cities City Manager, in their reasonable discretion, approves a longer period
of time. Costa Mesa shall cooperate with Developer, at no expense to Costa Mesa, in obtaining
any governmental pen -nits required for the repair, replacement, or restoration. If, however, the
then -existing laws of any other governmental agencies with jurisdiction over the Property do not
permit the repair, replacement, or restoration, Developer may elect not to repair, replace, or restore
the Project Improvements by giving notice to both Cities (in which event Developer will be entitled
to all insurance proceeds but Developer shall be required to remove all debris from the applicable
portion of the Property) or Developer may reconstruct such other improvements on the Property
as are consistent with applicable land use regulations and approved by Costa Mesa and the other
governmental agency or agencies with jurisdiction.
9.7 Non -Liability of Cities. Developer acknowledges and agrees that:
(a) The relationship between Developer, Cosa Mesa and Newport Beach is and
shall remain solely that of borrower and lender, and by this Agreement or any of the other Project
documents, Costa Mesa and Newport Beach neither undertake nor assume any responsibility to
review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter
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in connection with the Project, including matters relating to: (i) the scope of Rehabilitation, (ii)
architects, contractors, subcontractors and materialmen, or the workmanship of or materials used
by any of them, or (iii) the progress of the Rehabilitation of the Project and its conformity with its
scope; and Developer shall rely entirely on its own judgment with respect to such matters and
acknowledges that any review, inspection, supervision, approval or information supplied to
Developer by Costa Mesa or Newport Beach in connection with such matters is solely for the
protection of Cities and that neither Developer nor any third party is entitled to rely on it;
(b) Notwithstanding any other provision of any Project document: (a) Cities
are not a partner, joint venturer, alter -ego, manager, controlling person or other business associate
or participant of any kind of Developer and Cities do not intend to ever assume any such status;
(b) Cities activities in connection with the Property shall not be "outside the scope of the activities
of a lender of money" within the meaning of California Civil Code Section 3434, as modified or
recodified from time to time, and Cities do not intend to ever assume any responsibility to any
person for the quality or safety of the Property; and (c) Cities shall not be deemed responsible for
or a participant in any acts, omissions or decisions of Developer;
(c) Cities shall not be directly or indirectly liable or responsible for any loss or
injury of any kind to any person or property resulting from any construction on, or occupancy or
use of, the Property, whether arising from: (a) any defect in any building, grading, landscaping or
other on -site or off -site improvement; (b) any act or omission of Developer or any of Developer's
agents, employees, independent contractors, licensees, invitees or volunteers; or (c) any accident
on the Property or any fire or other casualty or hazard thereon; and
(d) By accepting or approving anything required to be performed or given to
Cities under the Project Documents, including any certificate, financial statement, survey,
appraisal or insurance policy, Cities shall not be deemed to have warranted or represented the
sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a
warranty or representation by Cities to anyone.
Nothing in this Article 9 shall be construed as limiting in any way the extent to which
Developer may be held responsible for payments of damages to persons or property resulting from
Developer's performance of the work covered under the AHAs or this Agreement.
9.8 Reimbursement of City for Enforcement of Project Documents. Developer
shall reimburse Cities within thirty (30) days following written demand itemizing all costs
reasonably incurred by Cities (including the reasonable fees and expenses of attorneys,
accountants, appraisers and other consultants, whether the same are independent contractors or
employees of Cities) in connection with the enforcement of the Project documents including the
following: (a) Cities commencement of, appearance in, or defense of any action or proceeding
purporting to affect the rights or obligations of the parties to any Project document, and
(b) all claims, demands, causes of action, liabilities, losses, commissions and other costs against
which Cities are indemnified under the Project documents and defense of any action if Costa Mesa
and/or Newport Beach have tendered the defense of such action to Developer and Developer fails
to defend any such action. Such reimbursement obligations shall bear interest commencing upon
the expiration of such 30-day notice, at a simple interest rate of six percent (61/o) per annum, and
shall be secured by Costa Mesa's or Newport Beach's deeds of trust. If not fully paid, then such
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reimbursement obligations shall survive the cancellation of the Costa Mesa and Newport Beach
promissory notes, release and reconveyance of the Cities' deeds of trust, issuance of the Release
of Construction Covenants, and termination of the AHAs and this Agreement.
ARTICLE 10
ASSIGNMENT OF AGREEMENT
This Agreement shall be binding upon Developer, its executors, administrators and assigns
and all persons claiming under or through Developer. Wherever this Agreement employs the term
"Developer," it shall be deemed to include Developer, its executors, administrators and assigns
and all persons claiming under or through Developer. Except for Permitted Transfers, Developer
shall not voluntarily assign any of its rights or obligations under this Agreement without the prior
written consent of City and any purported assignment made without said consent shall be null and
void for all purposes.
ARTICLE 11
RECORDATION
Developer agrees that this Agreement and any amendment or cancellation hereof shall be
recorded in the official records of Orange County by Developer within ten (10) days after the
effective date of this Agreement and within ten (10) days after any amendment or cancellation
hereof. Developer agrees to provide Cities with two copies of the recorded Agreement (or any
amendment) within five (5) days of the recording date.
ARTICLE 12
NOTICE
Written notice, demands and communications between Costa Mesa, Newport Beach and
Developer shall be deemed sufficient if dispatched by personal delivery, overnight delivery by a
reputable courier service, registered or certified mail, postage prepaid, return receipt requested to
the principal offices of Costa Mesa, Newport Beach and Developer, the addresses of which are
hereinafter set forth. Such written notices, demands and communications may be sent in the
manner prescribed to each other's addresses as either party may, from time to time, designate by
mail, or the same may be delivered in person to representatives of either party upon such premises.
Said addresses are as follows:
To Developer: American Family Housing
Attention: Chief Executive Officer
15161 Jackson Street
Midway City, California 92655
Copy to: Goldfarb & Lipman LLP
1300 Clay Street, 101 Floor
Oakland, CA 94612
Attention: William DiCamillo
-25
If to Newport Beach: City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: City Manager
With Copies to: City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
Attn: City Attorney
If to Costa Mesa: City of Costa Mesa
77 Fair Drive
Costa Mesa, California 92626
Attn: City Manager
With copies to: Jones Mayer
3777 N. Harbor Boulevard
Fullerton, California 92835
Attention: Kimberly Barlow, Esq.
Notices herein shall be deemed given as of the date of personal service or three (3) consecutive
calendar days after deposit of the same in the custody of the United States Postal Service.
ARTICLE 13
WAIVER
Failure by a party to insist upon the strict performance of any of the provisions of this
Agreement by the other party or the failure by the party to exercise its rights under or upon a
default by the other party herein shall not constitute a waiver of such party's right to demand strict
compliance from such other party in the future.
ARTICLE 14
SUBORDINATION OF CITY LOAN
14.1 Subordination Agreements. Costa Mesa, Newport Beach, Developer and initial
approved primary lender have agreed to enter into or will enter into a subordination agreement,
each of which authorize Cosa Mesa and Newport Beach Loans as subordinate mortgage liens
against the Property subject to all of the conditions contained therein; provided however in all
events this Agreement is and shall remain a senior, non -subordinate encumbrance against the
Property, subject to the Ground Lease and any deed of trust in favor of the County. Further, the
subordination agreement establishes rights, benefits and obligations between and among the
parties relating defaults, mortgagee protections, rights to cure, etc. and shall apply as and between
Cities and Developer until the maturity date as set forth therein.
-26-
14.2 Estoppels and Reaffirmation of Subordination. A subordination agreement may
include the terms, conditions and limitations relating to estoppel(s) and/or reaffirmation thereof
subject to the condition therein and as provided herein; provided however, the reaffirmation shall
be evidenced by an agreement in a form reasonably acceptable to Cities and their respective legal
counsel. If and to the extent any reaffirmation, new, or amended subordination, or any estoppel
certificates, or similar documents are requested and/or necessary, Developer expressly
acknowledges and agrees that any and all third -party cost incurred or to be incurred by Cities,
including for example attorney fees or other consultant's costs, are and shall be the sole financial
responsibility of Developer (or its Lender or other third party, but in no event Cities). Cities shall
have no obligation to continence work on such additional work relating to subordination or
reaffirmation of subordination without a deposit of the estimated third -party costs which Cities
may draw upon to pay such third -party costs. Cities agrees that the fees for such third party(ies),
including consultants and attorneys, will be pursuant to current fee or consulting agreement(s) at
the time of such request, which as of the effective date of this Agreement are materially less than
rates charged to private entity clients.
ARTICLE 15
SEVERABILITY
If any one or more of the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall
be deemed severable from the remaining provisions contained in this Agreement, and this
Agreement shall be construed as if such invalid, illegal or unenforceable provision(s) had never
been contained herein.
ARTICLE 16
CAPTION AND PRONOUNS
The captions and headings of the various Articles and Sections of this Agreement are for
convenience only, and are not to be construed as confining or limiting in any way the scope or
intent of the provisions hereof. Whenever the context requires or permits, the singular shall include
the plural, the plural shall include the singular, and masculine, feminine and neuter shall be freely
interchangeable.
ARTICLE 17
NO ATTORNEYS'FEES
In any action to interpret or enforce any provision of this Agreement, the prevailing party
shall not be entitled to attorneys' fees.
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ARTICLE 18
MODIFICATION OF AGREEMENT
This Agreement may be modified or amended by mutual consent of the parties, provided
that all amendments are in writing.
ARTICLE 19
01]".T"!VXXTABQW
The AHAs, this Agreement, and all other Project Documents contain the sole and entire
agreement and understanding of the parties with respect to the subject matter hereof.
No representations, oral or otherwise, express or implied, other than those contained herein, have
been made by the parties. In the event of a conflict between the provisions of this Agreement and
the AHAs, this Agreement shall control.
ARTICLE 20
COUNTERPARTS; MULTIPLE ORIGINALS
This Agreement may be executed in counterparts, and in multiple originals, each of which shall
constitute one, and the same, agreement.
[Signatures appear on the following pages]
IN WITNESS WHEREOF, the Cities and Developer have executed this Regulatory
Agreement and Declaration of Covenants and Restrictions by duly authorized representatives on
the Effective Date.
"NEWPORT BEACH"
CITY OF NEWPORT BEACH, a California
municipal corporation and charter city
Dated: 12025 By:
Grace K. Leung
City Manager
ATTEST:
Dated: 12025 By:
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
Dated: 12025
By:
Aaron C. Harp
City Attorney
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"COSTA MESA"
CITY OF COSTA MESA, a California municipal
corporation
Dated: 2025 By:
City Manager
ATTEST:
Dated: 2025 By:
City Clerk
APPROVED AS TO FORM:
Dated: , 2025 By:
City Attorney
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Dated: _, 2025 "DEVELOPER"
AMERICAN FAMILY HOUSING, a California
nonprofit public benefit corporation
By:
Myles Anthony Peinemann II
Chief Executive Officer
Attachments: Exhibit A — Legal Description
Exhibit B — Restricted Unit Matrix
Exhibit C — Lease Rider
Exhibit D — Certification of Continuing Program Compliance
Exhibit E — Documentation and Monitoring Requirements
-31-
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
STATE OF CALIFORNIA
)ss.
COUNTY OF
On before me, , Notary Public,
(here insert name and title of the officer)
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
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
)ss.
COUNTY OF
(seal)
On before me, , Notary Public,
(here insert name and title of the officer)
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(seal)
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EXHIBIT "A"
LEGAL DESCRIPTION OF SITE
PARCEL 2, IN THE CITY OF COSTA MESA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP FILED IN BOOK 24 PAGE 23 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM THAT PORTION CONVEYED TO MESA CONSOLIDATED
WATER DISTRICT BY DEED RECORDED DECEMBER 31, 1986 AS INSTRUMENT NO.
86-656909, OFFICIAL RECORDS.
ALSO EXCEPTING ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL
GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER
NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND
HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFORE AND REMOVING
THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS
INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE
DESCRIBED, AND TO BOTTOM SUCH WHIPSTCKED OR DIRECTIONALLY DRILLED
WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR
LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR,
DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE
RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OF THE
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AS RESERVED IN DEED FROM THE IRVINE COMPANY, A CORPORATION, RECORDED
MARCH 5, 1968 IN BOOK 8535 PAGE 62 OF OFFICIAL RECORDS.
APN: 439-312-12
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EXHIBIT `B"
RESTRICTED UNIT MATRIX*
City: Size No. of Units 30% AMI
Household Unit
Newport Beach Studio 12 12
Costa Mesa Studio 16 16
*The Project includes two (2) unrestricted Manager's Units that shall each be occupied by an on -
site property manager and not an Eligible Tenant.
-34-
EXHIBIT "C"
LEASE RIDER
[See following page]
-35-
PERMANENT SUPPORTIVE HOUSING PROJECT
Lease Rider
M' iy .jWW
(if there is more than one adult occupant, each person must sign the rider)
LEASE DATE:
UNIT NO.:
The undersigned tenant(s) hereby certify and agree as follows:
Income Certification. The attached income certification is true, correct and complete. I/we
agree to provide a similar certification annually upon request during the term of my occupancy.
2. Employer Verification. The landlord or property manager has my permission to verify my/our
income from any sources of income I/we receive.
3. False Statements. If the income certification and/or lease application submitted by me/us is
false, or if I/we fail to provide annual certifications, the landlord or property manager will have
the right to terminate my/our lease and recover possession of my/our unit. I/we understand
that the landlord and property manager are relying on this income certification and the related
third -party income and asset verifications in accepting me/us as a tenant, and the landlord or
property manager will be seriously harmed if my/our income does not qualify the unit for the
affordable housing program.
4. This rider shall be considered as part of my/our lease.
Date:
Tenant
Tenant
Tenant
Tenant
-36-
EXHIBIT "D"
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
a duly authorized officer of and on behalf of
AMERICAN FAMILY HOUSING ("Owner/Operator"), hereby represents and warrants that:
1. He/she has read and is thoroughly familiar with the provisions of the Regulatory
Agreement and Declaration of Covenant and Restrictions ("Agreement") by and between the City
of Costa Mesa, the City of Newport Beach (collectively "Cities") and American Family Housing
of which this certification is an attachment.
2. As of the date of this certification, each PSH Unit on the Property (other than the two on -
site manager's units) (i) is currently occupied by tenants qualifying as an Eligible Tenant(s) at an
Affordable Rent (as such terms are defined in the Agreement); or (ii) is currently vacant and being
held available for occupancy by such Eligible Tenant(s) in accordance with the Agreement and
have been so held continuously since the date the previous qualifying Eligible Tenant vacated such
PSH Unit, as indicated: [describe number of vacant PSH Units and length of time each such PSH
Unit has remained vacant]; or (iii) is occupied by qualifying Eligible Tenant(s) whose incomes
have increased above such qualifications in accordance with the terms and conditions of Sections
3.4, 3.5 and 3.6 of the Agreement.
3. The unit size, the rental amount charged and collected by Owner/Operator, the number of
occupants and the income of the occupants for the Property is set forth below: [Add attachment if
needed]
This affidavit is made with the knowledge that it will be relied upon by Authority to determine
compliance with the Agreement, Owner/Operator warrants that all information set forth in this
document is true, correct and complete and based upon information Owner/Operator deems
reliable and based upon such investigation as Owner/Operator deemed necessary.
Owner/Operator acknowledges that Owner/Operator has been advised that the making of any
misrepresentation or misstatement in this affidavit will constitute a material breach of the
Agreement with both Cities and may entitle both Cities to initiate and pursue all applicable legal
and equitable remedies with respect such Agreement.
Owner/Operator does hereby swear under penalty of perjury that the foregoing statements are true
and correct and that this certificate was executed on 120,
"OV,INER/OPERATOR"
By:
By:
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EXHIBIT "E"
DOCUMENTATION AND MONITORING REQUIREMENTS
Developer shall comply with the requirements set forth in this Exhibit at all times during the term
of that certain Newport Beach AHA and Costa Mesa ABA (collectively referred to as the "AHAs")
and that certain Regulatory Agreement to which this Exhibit is attached ("Agreement").
Documentation and Recordkeeping.
(a) Records to be maintained. Developer shall maintain all records pertinent to the
Construction and operation of the Project funded under the AHAs. Records shall be maintained
for each tenant household, each PSH Unit, and each expenditure of Newport Beach and. Costa
Mesa Loans (collectively referred to as "City Loan") for the Project pursuant to the Agreement.
Such records shall include but are not limited to:
(i) Records providing a full description of each activity undertaken for which City
Loan funds were applied.
(ii) Records required to determine the eligibility of activities for use of City Loan funds.
(iii) Records (including property inspection reports) demonstrating that each PSH Unit
meets the City Property Standards upon occupancy and at the time of each annual
inspection and was constructed and is maintained in accordance with the Agreement.
(iv) With respect to the Preference Units, Records demonstration Developers
compliance with the tenant selection covenants and tenant selection policies pursuant to
Section 3.4 of the Agreement.
(v) Records (e.g. all source documentation collected by Developer or the Property
Manager, written eligibility determinations and documentation regarding any appeals of
eligibility determinations) demonstrating the eligibility of each tenant household, including
documentation showing income eligibility as Eligible Tenant(s).
(vi) Records demonstrating that each rental agreement or lease for tenant household
occupying a PSH Unit complies with the requirements of this Agreement including
Sections 3.2 & 5.3.
(vii) Records documenting compliance with Developer's marketing and outreach
obligations under the Agreement.
(viii) Records documenting compliance with the lead -based hazards requirements under
the Agreement.
(ix) Records demonstrating compliance by Developer, and each of its contractors and
subcontractors with all applicable prevailing wage and labor compliance requirements set
forth in the Agreement or otherwise required by applicable law.
(b) Retention. Developer shall retain all financial records, supporting documents, statistical
records, and all other records pertinent to the Agreement for a period of five (5) years after the end
of each Developer's fiscal year. Notwithstanding the above, if there are litigation matters, claims,
audits, negotiations or other actions that involve any of the records cited and that have started
before the expiration of the five-year period, then all pertinent records must be retained until
completion of the actions and resolution of all issues, or the expiration of the five-year period,
whichever occurs later.
(c) Client Data. Developer shall maintain data regarding each tenant household that rents and
occupies a Preference Unit at the Project demonstrating eligibility under the Agreement. Such
data shall include, but not be limited to, client name, address, and income level. Such information
shall be made available to City monitors or their designees for review upon request.
(d) Disclosure. Developer understands that client information collected under this Agreement
is private and the use or disclosure of such information, when not directly connected with the
administration of the Cities or Developer's responsibilities with respect to Developer's
performance under this Agreement, is prohibited unless written consent is obtained from such
person receiving housing or any services and, in the case of a minor, that of a responsible
parent/guardian.
(e) Audits and Inspections. All Developer records with respect to any matters covered by
this Agreement shall be made available to the Cities or any of their authorized representatives, at
any time during normal business hours, as often as deemed necessary, to audit, examine, and make
excerpts or transcripts of all relevant data. Any deficiencies noted in audit reports must be fully
cleared by Developer within 30 days after receipt by Developer. Failure of Developer to comply
with the above audit requirements will constitute a violation of this Agreement and may result in
the withholding of future payments. Upon request by the Cities, Developer hereby agrees to
conduct an annual audit in accordance with requirements and policies set by the Cities.
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ATTACHMENT NO. 11
RELEASE OF CONSTRUCTION COVENANTS
2211\08\3882959.2
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
APN: 439-312-12 Space above for Recorder's use
Exempt from Recording Fee per Gov. Code§ 27383
RELEASE OF CONSTRUCTION COVENANTS
This RELEASE OF CONSTRUCTION COVENANTS ("Release") is made this day of
20, by the CITY OF NEWPORT BEACH, a California municipal corporation and
charter city ("City"), in favor of AMERICAN FAMILY HOUSING, a California nonprofit public
benefit corporation ("Developer").
RECITALS
A. Developer is the owner of that certain real property located in the City of Costa Mesa, County
of Orange, State of California, more particularly described in the legal description attached
hereto as Exhibit "A" ("Site").
B. On or about , 2025, City and Developer entered into that certain
Affordable Housing Loan Agreement ("AHA") which provides for Developer to develop a
permanent supportive housing project on the Site, more particularly described therein as the
"Project." Capitalized terms not defined herein shall have the meanings set forth in the AHA.
C. Pursuant to the AHA, City is required to furnish Developer with this Release upon request by
Developer after completion of construction of the Project as long as: (1) Developer is not in
default under the AHA, (2) the Regulatory Agreement or any documents related hereto, (3)
and the Developer obtains a final waiver of claims and liens and release of rights for the Project.
D. The issuance by City of this Release shall be conclusive evidence that Developer has complied
with the terms of the AHA pertaining to the construction of the Project.
NOW, THEREFORE:
As provided in the AHA, City does hereby certify that the construction of the Project has
been satisfactorily performed and completed, and that such development and construction
work complies with the AHA.
2. This Release does not constitute evidence of compliance with or satisfaction of any
obligation of Developer to any holder of a mortgage or any insurer of a mortgage security
2211\08\3884051.2
money loaned to finance the work of construction of improvements and development of the
Site, or any part of thereof.
This Release is not a notice of completion as referred to in Section 3093 of the California
Civil Code.
[Signatures on the following page]
2
221 1\08\3 884051.2
IN WITNESS WHEREOF, City has executed this Release as of the date set forth above.
ATTEST:
IM
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
Aaron C. Harp
City Attorney
"CITY"
CITY OF NEWPORT BEACH,
a California municipal corporation and charter
City
Grace K. Leung
City Manager
CONSENT TO RECORDATION
NEWPORT VETERANS HOUSING, LP, a California limited partnership, owner of the Site
described herein, hereby consents to the recordation of this Release against the Site.
"DEVELOPER"
AMERICAN FAMILY HOUSING, a California
Nonprofit Public Benefit Corporation
MYLES ANTHONY PEINEMANN II
Chief Executive Officer
Francisco Flores
Chief Financial Officer
3
2211\08\3884051.2
EXHIBIT "A"
LEGAL DESCRIPTION OF SITE
LEGAL DESCRIPTION
That real property located in the State of California, County of Orange, City of Costa Mesa, and
described as follows:
PARCEL 2, IN THE CITY OF COSTA MESA, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP FILED IN BOOK 24 PAGE 23 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM THAT PORTION CONVEYED TO MESA CONSOLIDATED
WATER DISTRICT BY DEED RECORDED DECEMBER 31, 1986 AS INSTRUMENT NO.
86-656909, OFFICIAL RECORDS.
ALSO EXCEPTING ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL
GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER
NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND
HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFORE AND REMOVING
THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS
INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE
DESCRIBED, AND TO BOTTOM SUCH WHIPSTCKED OR DIRECTIONALLY DRILLED
WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR
LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR,
DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE
RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OF THE
UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AS RESERVED IN DEED FROM THE IRVINE COMPANY, A CORPORATION, RECORDED
MARCH 5, 1968 IN BOOK 8535 PAGE 62 OF OFFICIAL RECORDS.
APN: 439-312-12
4
2211\08\38840512
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 validL of that document.
State of California
County of
On 20 before me, , Notary
Public, personally appeared who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature (seal)
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
On 20 before me, , Notary
Public, personally appeared 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 signatures(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(seal)
221 1\08\3 884051.2
ATTACHMENT NO. 12
SCHEDULE OF PERFORMANCE
2211013882959.2
ATTACHMENT NO. 12
SCHEDULE OF PERFORMANCE
Our construction and development timeline is summarized below:
Notice of Award
Initiate Plan Check Submittals
Mobilize Construction Staff
Procurement and Bid
Obtain Building Permit
Purchase Site
Construction Start
Homekey Funds
Capital Expenditure
Mobilize Site Staff
Begin Tenant Selection
Construction Completion
Full Occupancy
June 2024
June 2024
February 2025
February 2025 - March 2025
March 2025
February 2025
March 2025
December 2025
December 2025
January 2026
December 2025
March 2026
ATTACHMENT NO. 13
TENANT SELECTION PLAN
221 1\08\3 882959.2
ATTACHMENT NO. 13
TENANT SELECTION CRITERIA
A. PROJECT DESCRIPTION
1400 Bristol is an affordable housing development consisting of a three, two-story improvements
serving households experiencing homelessness, chronic homelessness, and households who are at -
risk of becoming homeless.
Voucher
Local Preferences
Costa
Mesa
(Hamel
Newport US CH
Beach_
PBV
38
38
35
PBVASH
10
_
30
3
Nan-PBV
28
16
12
28
_
staff
-
TOTAL
76
16
12
76
38
;s Criteria [Studios - (36)
H AR Studio Studio
MHSA
3 - 3 -
7 - -- g
1BR
16R
12BR I OC HCA
16R 2BR SBR
MHSA MHSA
ABVASH
6
-
24
-
24
-
10
-
- 28
28
10 28
6
10
24
` 2
36
24
76
36
40
2
Of the 78 total units, 76 of the units are restricted for occupancy by Qualifying Households. The
remaining two (2) units are set aside for property management staff, and do not have income
restrictions.
B. TENANT ELIGIBILITY STANDARDS
For all 76 Qualifying units, there is a set of eligibility standards that may apply, including Tenant
Eligibility, Program Eligibility, and eligibility for Rental Subsidy, as follows:
1. Housing status: 38 households experiencing chronic homelessness, 10 households
experiencing homelessness, and 28 at -risk of homelessness.
2. Income Limits: All units are restricted to households with incomes equal to or less than
30% of Area Median Income (AMI).
3. Additional Restrictions:
a. 24 of the 1-bedroom units are restricted to households that qualify through the
Orange County Health Care Agency (HCA) pursuant to the Mental Health Services
Act (MHSA). Any unit may count towards MHSA requirements, City of Newport
Beach requirements, or both, as long as the total project requirements are met. This
means that the designations might "float" over time and, upon unit turnover, the
exact requirements of any unit might change so long as the total project
requirements are met. All referrals shall be pre-screened for presumptive eligibility
for MHSA qualification.
Of the 76 Qualifying rental units, 48 are subject to a project -based rental subsidy:
48 units are subject to a Housing Assistance Payment (HAP) Contract from the Orange
County Housing Authority (OCHA). These units are specifically designated by unit
number as either Housing Choice Project -Based Vouchers (PBV) or Veterans Affairs
Supportive Housing (VASH) Project -Based Vouchers under the HAP Contract, and do not
change if the occupying leaseholder household changes. These applicant households shall
be referred by the Coordinated Entry System (CES) as managed by the County of Orange
(County) Continuum of Care (CoC).
a. Of these 48 HAP units:
i. 38 are PBV units, of which 30 PBV units are 1-bedroom units and 8 are
studio units. 24 (all 1-bedroom units) are overlaid with the requirements of
the MHSA program.
1 10 are VASH units, of which 10 VASH are 1-bedroom units.
28 units are not subject to the HAP Contract. All of these 28 units are studios. Of these 28
units:
a. 16 units have a local preference for persons connected to the City of Costa Mesa.
These households will come from CES as managed by the CoC and based on local
preference criteria developed in conjunction with the City of Costa Mesa.
b. 12 units have a local preference for persons connected to the City of Newport
Beach. These households will come from CES as managed by the CoC and based
on local preference criteria established by the City of Newport Beach.
3. For both PBV and VASH units, the units shall be permanently designated by unit number
prior to initial leasing; and these designations shall appended to the HAP contract(s) and
remain in place for those specific units for the life of the HAP contracts, unless later revised
or amended.
American Disability Act (ADA) Standards:
Of the 76 Qualifying units, at a minimum, 5% of units will be full mobility units and a separate
5% will be full visuabbearing impaired units to ensure American Disability Act (ADA)
compliance, as follows:
1. Four (4) will be full mobility units pursuant to the ADA.
2. Four (4) will be visual/hearing impaired units.
C. DISTRIBUTION OF UNITS
The initial leasing process shall support maximizing the matching of the ADA units to appropriate
referrals, in order to reduce the need for Reasonable Accommodations post -occupancy.
The HAP contract (PBV, VASH) and program standards (MHSA, Chronic Homeless status,
Homeless status, At -Risk status) units shall be distributed throughout the buildings to the greatest
extent feasible, and not intentionally grouped together.
A higher qualifying standard is always acceptable; thus, a Homeless unit may be occupied by a
household qualifying as experiencing Homeless or Chronically Homeless, and an At -Risk unit
may be occupied by a household qualifying as At -Risk, Homeless or Chronically Homeless.
However, households matched by CES must otherwise qualify for the unit with regard to income
qualifications, local preferences and other such criteria, which will be spelled out in the Tenant
Selection Plan.
D. COUNTY OF ORANGE COORDINATED ENTRY SYSTEM (CES)
Because all qualifying units in the property are funded under the California Department of Housing
and Community Development (State HCD) Homekey program, the76 qualifying units must utilize
CES or an equivalent. Thus, there is no broad -based marketing for the site except as provided for
under the Orange County CES. The procedures established by CES, and the cities of Costa Mesa
and Newport Beach, are as follows:
1. Referrals for the 38 units under the HAP contract (PBV) shall be for households
experiencing chronic homelessness.
Referrals for 10 units under the HAP Contract (VASH) shall be for VASH-eligible
households, for referral into VASH units, and come from CES as managed by the CoC,
including as appropriate, direct referrals from the VA Long Beach Healthcare System.
3. Referrals for 16 units shall be for tenants who are at -risk of becoming homeless, for referral
into units without PBVs, and come from CES as managed by the CoC and based on local
preference criteria developed in conjunction with the City of Costa Mesa.
4. Referrals for 12 units may be for individuals who are experiencing chronic homelessness,
homelessness, and individuals who are at -risk of becoming homeless, for referral into units
without PBVs, and come from CES as managed by the CoC and based on the following
local preference criteria, in no particular order of significance, as developed with the City
of Newport Beach criteria include, but are not limited to:
5. Individuals who are experiencing chronic homelessness, homelessness, and individuals
who are at -risk of becoming homeless; and
a. Households with strong ties (i.e. live, work, school, and/or family) in the City of
Newport Beach, defined as.:
i. 36 months' tenancy in the City of Newport Beach;
ii. Current, active employment in the City of Newport Beach with documented
income; or
iii. Having a child enrolled in a school within the Newport -Mesa Unified
School District, or having a child who attended such a school in the last two
(2) years.
City of Newport Beach shall have the sole discretion to evaluate the above criteria and determine
whether an individual satisfies the City's local preference criteria. City of Newport Beach staff or
agents thereof may assist with obtaining proper documentation to satisfy the above criteria.
E. QUALIFYING STANDARDS FOR OCCUPANCY
I . Housing First. 1400 Bristol is a Housing First community that prioritizes
permanent housing followed by access to voluntary supportive services such as
medical and mental healthcare, substance use services, benefits assistance, and
legal aid, which promote long-term stability. This project will screen applicants
and support residents to maintain their tenancy using Housing First principles, in
compliance with S131380. As such, the following practices will apply:
a. Applicants will be considered for tenancy regardless of their current
sobriety or past use of substances, completion of treatment, or
participation in services. Participation in services or program compliance
is not a condition of application approval. The use of alcohol or drugs in
and of itself, without other lease violations, is not a reason for denial of
tenancy or eviction once housed.
b. Applicants will not be rejected based on poor credit or financial history,
poor or lack of rental history, criminal convictions unrelated to tenancy,
housekeeping ability, or behaviors that indicate a lack of "housing
readiness."
c. Once housed, residents can work with case managers and service
coordinators who are trained in and actively employ evidence -based
practices for client engagement, including, but not limited to, motivational
interviewing and client -centered counseling. Services are informed by a
harm -reduction philosophy that recognizes drug and alcohol use and
addiction as a part of tenants' lives, where tenants are engaged in
nonjudgmental communication regarding drug and alcohol use, and where
tenants are offered education regarding how to avoid risky behaviors and
engage in safer practices, as well as being connected to evidence -based
treatment if the tenant so chooses.
2. Guidelines — Maximum Occupancy Limits Upon Date of Move -In
Upon Initial Qualification & Occupancy (strictest shall apply)
Min Max Min Max
OCHA
1
2
1
4
Costa Mesa
1
2
1
3
Newport Beach
1
2
1
3
ATTACHMENT NO. 14
INSURANCE REQUIREMENTS
2211\08\3882959.2
INSURANCE REQUIREMENTS
1.1 Provision of Insurance. Without limiting American Family Housing's
("Developer") indemnification of the City of Newport Beach ("City"), and prior to commencement
of Scope of Development under the Affordable Housing Loan Agreement, Developer shall obtain,
provide and maintain at its own expense during the term of this Agreement, policies of insurance
of the type and amounts described below and in a form satisfactory to the City. Developer agrees
to provide insurance in accordance with requirements set forth here. If Developer uses existing
coverage to comply and that coverage does not meet these requirements, Developer agrees to
amend, supplement or endorse the existing coverage.
1.2 Acceptable Insurers. All insurance policies shall be issued by an insurance
company currently authorized by the Insurance Commissioner to transact business of insurance in
the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size
Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide,
unless otherwise approved by the City's Risk Manager.
1.3 Coverage Requirements.
1.3.1 General Liability Insurance. Developer shall maintain commercial general
liability insurance, and if necessary excess umbrella liability insurance, with coverage at least as
broad as provided by Insurance Services Office form CG 00 01 covering CGL on an "occurrence"
basis, including products and completed operations, property damage, bodily injury and personal
& advertising injury with limits no less than two million dollars ($2,000,000) per occurrence. The
general aggregate limit shall apply separately to this project/location or the general aggregate limit
shall be twice the required occurrence limit.
City, its City Council, boards and commissions, officers, agents, volunteers, employees are to be
covered as additional insureds on the CGL policy with respect to liability arising out of work or
operations performed by or on behalf of the Developer including materials, parts, or equipment
furnished in connection with such work or operations and automobiles owned, leased, hired, or
borrowed by or on behalf of the Developer. General liability coverage can be provided in the form
of an endorsement to the Developer's insurance (at least as broad as ISO Form CG 20 10, CG 11
85 or both CG 20 10 and CG 20 37 forms if later revisions used).
1.3.2 Property Insurance. Developer shall maintain property insurance on an "all
risk" basis equal to the full replacement cost of the property with no coinsurance penalty. Such
coverage shall name the City as a loss payee as their interest may appear.
1.3.3 Builder's Risk Insurance. For any property constructed, insurance shall be
maintained to cover "all risk" of physical loss and providing coverage for loss or damage from
collapse, including collapse resulting from builder's design error. All property stored off -site or in
transit must be covered. The value insured shall cover 100% of the completed contract cost,
including boiler & machinery and soft costs and shall be maintained until full acceptance of the
work. Such coverage shall name the City as a loss payee as their interest may appear. At the
discretion of the City, the requirement for such coverage may include additional protection for
Earthquake and/or Flood. Developer shall provide the City with a copy of the policy.
1.3.4 Automobile Liability Insurance with coverage at least as broad as Insurance
Services Office Form CA 00 01 covering any auto (Code 1), or if Developer has no owned autos,
coverage for hired autos (Code 8) and non -owned autos (Code 9) with limit no less than one million
dollars ($1,000,000) each accident for bodily injury and property damage.
1.3.5 Workers' Compensation as required by the State of California with statutory
limits, and Employer's Liability Insurance with a limit of not less than one million dollars
($1,000,000) per accident for bodily injury or disease.
1.3.6 Professional Liability with limit of not less than two million dollars
($2,000,000) each claim and four million dollars ($4,000,000) aggregate. Covered professional
services shall specifically include all work to be performed under the Agreement and delete any
exclusion that may potentially delete coverage for the work to be performed.
1.3.7 Pollution Legal Liability including onsite and offsite coverage for bodily
injury (including death and mental anguish), property damage, non -owned disposal site liability,
defense costs, cleanup costs, and pollution conditions that arise from or in connection with the
transportation (including loading and unloading) of any waste or waste materials off or away from
the premises. Coverage shall be provided for both sudden and accidental and gradual and
continuous pollution events with limits no less than five million dollars ($5,000,000) each loss and
five million dollars ($5,000,000) in the aggregate. The policy shall not exclude any hazardous
materials for which there is exposure.
1.3.8 Crime Bond in an amount not less than five million dollars ($5,000,000)
with coverage including, but not limited to theft, forgery, alteration, computer fraud, and funds
transfer fraud.
1.3.9 Excess Umbrella Liability Policies. If any excess or umbrella liability
policies are used to meet the limits of liability required by this Agreement, then said policies shall
be "following form" of the underlying policy coverage, terms, conditions, and provisions and shall
meet all the insurance requirements stated in this Agreement, including, but not limited to the
additional insured, primary & non-contributory and waiver of subrogation insurance requirements
stated herein.
1.4 Other Insurance Requirements. The policies are to contain, or be endorsed to
contain, the following provisions:
1.4.1 Waiver of Subrogation. All insurance coverage maintained or procured
pursuant to this agreement shall be endorsed to waive subrogation against the City, its City
Council, boards and commissions, officers, agents, volunteers, employees or shall specifically
allow Developer or others providing insurance evidence in compliance with these requirements to
waive their right of recovery prior to a loss. Developer hereby waives its own right of recovery
against the City and shall require similar written express waivers and insurance clauses from each
of its subcontractors.
1.4.2 Additional Insured Status. All liability policies including general
liability, excess liability, pollution liability, and automobile liability, but not including professional
liability shall provide or be endorsed to provide that City, its City Council, boards and
commissions, officers, agents, volunteers, employees.
1.4.3 Primary and Non -Contributory. All liability coverage shall apply on a
primary basis and shall not require contribution from any insurance or self-insurance maintained
by the City.
1.4.4 Notice of Cancellation. All policies shall provide the City with thirty (30)
days' notice of cancellation (except for nonpayment for which ten (10) days' notice is required) or
nonrenewal of coverage for each required coverage.
1.5 Additional Agreements Between the Parties. The parties hereby agree to the
following:
1.5.1 Evidence of Insurance. Developer shall provide certificates of insurance to
the City as evidence of the insurance coverage required herein, along with a waiver of subrogation
endorsement for workers' compensation, additional insured and primary and non-contributory
endorsements for commercial general liability and auto liability, and a loss payee endorsement for
property and builders risk, and other endorsements as specified herein for each coverage.
Insurance certificates and endorsement must be approved by the City's Risk Manager prior to
commencement of development. Current certification of insurance shall be kept on file with the
City at all times during the term of this contract. The City reserve the right to require complete,
certified copies of all required insurance policies, at any time.
1.5.2 City's Right to Revise Requirements. City reserves the right at any time
during the term of the Agreement to change the amounts and types of insurance required by giving
Developer sixty (60) calendar days advance written notice of such change.
1.5.3 Insurance Procurement Period. Developer shall have a period of six (6)
weeks, commencing on the Effective Date of this Agreement, to procure and provide evidence of
the insurance coverages outlined in Sections 1.3.6 (Professional Liability), 1.3.7 (Pollution Legal
Liability), and 1.3.8 (Crime Bond) of this Attachment No. 14.
1.5.4 Enforcement of Contract Provisions. Developer acknowledges and agrees
that any actual or alleged failure on the part of the City to inform Developer of non-compliance
with any requirement imposes no additional obligations on the City nor does it waive any rights
hereunder.
1.5.5 Insurance Obligations of Developer. The City require and shall be entitled
to the Developer's broader coverage and/or the higher limits if Developer maintains broader
coverage and/or higher limits than the minimums shown above. Any available insurance proceeds
excess of the specified minimum limits of insurance and coverage shall be available to the City.
No representation is made that the minimum insurance requirements of this Agreement are
sufficient to cover the obligations of Developer under this Agreement.
1.5.6 Self -insured Retentions. Any self -insured retentions must be declared to
and approved by the City. The City reserve the right to require that self -insured retentions be
eliminated, lowered, or replaced by a deductible. Self-insurance will not be considered to comply
with these requirements unless approved by the City.
1.5.7 The City's Remedies for Non -Compliance. If Developer or any
subcontractor fails to provide and maintain insurance as required herein, then the City shall have
the right but not the obligation, to purchase such insurance, to terminate this agreement, or to
suspend Developer's right to proceed until proper evidence of insurance is provided. Any amounts
paid by the City shall, at the City's sole option, be deducted from amounts payable to Developer
or reimbursed by Developer upon demand.
1.5.8 Timely Notice of Claims. Developer shall give the City prompt and timely
notice of claims made or suits instituted that arise out of or result from Developer's performance
under this Agreement, and that involve or may involve coverage under any of the required liability
policies. The City assumes no obligation or liability by such notice, but has the right (but not the
duty) to monitor the handling of any such claim or claims if they are likely to involve the City.
1.5.9 Maintenance of General Liability Coverage. Developer agrees to maintain
commercial general liability coverage for a period of ten (10) years after completion of the project
or to obtain coverage for completed operations liability for an equivalent period.
1.5.10 Developer's Insurance. Developer shall also procure and maintain, at its
own cost and expense, any additional kinds of insurance, which in its own judgment may be
necessary for its proper protection and prosecution of the work under the Scope of Development
as outlined in the AHA.
1.5.11 Contractual Liability. The coverage provided shall apply to the obligations
assumed by Developer under the indemnity provisions of this Agreement.
1.5.12 Claims Made Policies. If coverage is written on a claims -made basis, the
retroactive date of such insurance and all subsequent insurance shall coincide or precede the
effective date of Developer's initial Agreement with the City and continuous coverage shall be
maintained, or an extended reporting period shall be exercised for a period of at least ten (10) years
from termination or expiration of this Agreement.
1.5.13 Insurance For Subcontractors. Developer shall be responsible for causing
subcontractors to purchase the same types and limits of insurance in compliance with the terms of
this Agreement, including adding the City as an additional insured, providing primary and non-
contributory coverage and waiver of subrogation to the subcontractor's policies. Commercial
general liability additional insured endorsements shall be as broad as ISO Form CG 20 10 11 85
or if not available, through the addition of both CG 20 38 and CG 20 40.
PROMISSORY NOTE
Loan Amount: $3,000,000.00
Newport Beach, California
2025
FOR VALUE RECEIVED, AMERICAN FAMILY HOUSING, a California Nonprofit
Public Benefit Corporation ("Borrower") promises to pay to the CITY OF NEWPORT BEACH,
a California municipal corporation and charter city ("City"), the principal sum of Three Million
Dollars and 00/100 ($3,000,000.00), or so much of such principal as may be disbursed pursuant
hereto and in accordance with that certain Affordable Housing Loan Agreement between the City
and Borrower dated for identification purposes only as of je� � J CC , 2025
("Agreement"), plus interest on the outstanding principal balance, in accordan e with the terms
and conditions set forth herein. This Note evidences the obligation of Borrower to City for the
repayment of certain funds ("City Loan") loaned to Borrower by City pursuant to the Agreement,
in connection with the rehabilitation, construction, ownership and operating of the Project located
at 1400 Bristol Street, in the City of Costa Mesa, California ("Property"). All capitalized terms
unless otherwise defined herein shall have the same meaning as set forth in the Agreement, which
is incorporated herein by this reference.
Reference is also made to the following additional agreements and documents, of even date
herewith, involving City and Borrower and/or pertaining to the Property:
(i) Ground Leasehold Deed of Trust with Assignment of Rents by and between
Borrower as Trustor, City as beneficiary, and Commonwealth Land Title Insurance
Company as Trustee, and recorded in the Office of the Orange County Recorder
("City Deed of Trust"). The City Deed of Trust secures repayment of this Note and
performance under the Agreement and City Regulatory Agreement.
(ii) Joint Regulatory Agreement by and between Borrower, the City of Costa Mesa and
City, for the benefit of City, and recorded in the Office of the Orange County
Recorder ("City Regulatory Agreement").
1. Definitions.
"Affiliate" shall mean any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Borrower which, if
Borrower is a partnership or limited liability company, shall include each of the constituent
members or general partners, respectively, thereof. The term "control" as used in the immediately
preceding sentence means, with respect to a person that is a corporation, the right to the exercise,
directly or indirectly, of more than 50% of the voting rights attributable to the shares of the
controlled corporation, and, with respect to a person that is not a corporation, the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of the controlled person.
1
2211\08\3884045.2
"Annual Financial Statement" shall mean the financial statements prepared by Borrower
for each calendar year beginning in the first year for which payment is due under this Note until
the Maturity Date, including a balance sheet, income statement, statement of retained earnings,
statement of cash flows, and footnotes thereto, prepared in accordance with generally accepted
accounting principles consistently applied, as audited by an independent certified public
accountant.
"Assignment" shall mean any voluntary or involuntary conveyance, disposition,
assignment, encumbrance (other than a Refinancing as defined below or the creation of the Senior
Loan or any other financing permitted by the Agreement), sublease, sale or transfer of the Property,
including, without limitation, any transfer by Borrower of all or any portion of its rights under or
interest in the Property, any unpermitted change of ownership or control of Borrower, any
foreclosure of Borrower's interest in the Property, whether by judicial proceedings, or by virtue of
any power contained in a deed of trust, indenture or other instrument creating a lien against the
Property, or any assignment of Borrower's estate in the Property through, or in lieu of, foreclosure
or other appropriate and bona fide proceedings in the nature thereof; provided, however, that the
term "Assignment" as used herein shall not include any permitted transfer as set forth in Section
8 hereof or in Section 7.1 of the Agreement.
"City Manager" shall mean the individual duly appointed to the position of the City
Manager of the City of Newport Beach, or his or her authorized designee.
"Debt Service" shall mean scheduled debt service (including impounds, expenses, and
other amounts payable) on the Senior Loan.
"Developer Fee" shall mean the fee to be paid to the Developer for rehabilitating the
Property. A portion of the Developer Fee may be deferred (the "Deferred Developer Fee").
"Fiscal Year" shall mean the fiscal year of Borrower, which is the calendar year.
"Maturity Date" shall mean the date the Term expires.
"Net Operating Income " shall mean, for the applicable period of time, (i) the amount, if
any, by which Operating Income for such period exceeds Operating Expenses paid by Borrower
during such period; and, provided there is such an excess, less (ii) the Developer Fee, until such
fee is paid in full.
"Operating Expenses" shall have the meaning set forth in Section 1.35 of the Agreement.
"Operating Income " shall mean, for the applicable period of time, all proceeds received
by Borrower from the operation of the Property and from any and all sources resulting from or
attributable to the operation of the Property, including, without limitation, all rentals, parking
receipts, laundry income received by Borrower, forfeited security deposits, and all expense
reimbursements paid to Borrower by tenants of the Property. Operating Income shall be calculated
on a cash basis. Operating Income excludes insurance proceeds and/or condemnation proceeds.
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"Senior Loan" shall mean the Costa Mesa Loan, Newport Beach Loan and County Loan,
and any loans made to Developer by its principals in compliance with its organizational
documents.
"Senior Loan Documents" shall mean any and all agreements and documents related to a
Senior Loan.
"City Loan Documents" shall mean, collectively, the Agreement, this Note, the City
Regulatory Agreement, and the City Deed of Trust.
"Term" shall mean the period commencing on the execution hereof and terminating fifty-
five (55) years from the date the Notice of Commencement of Affordability Restriction is issued
by City and caused to be recorded in the Official Records against the Property; or (ii) if not able
to be determined, fifty-seven (57) years after the date of the Agreement.
2. Interest and Re Ument.
2.1 Basic Interest Rate. Except as provided in section 2.5 below, the disbursed and
unpaid principal balance of the City Loan shall bear interest at the simple rate of three percent
(3%) per year (the "Basic Interest Rate"). As used herein, the term "disbursed" shall mean and
refer to the time when the City has disbursed such funds to Borrower, pursuant to the Agreement.
2.2 Payment Dates and Amounts.
(a) Principal and Interest Payments. Interest and principal payments on this
Note shall be payable annually on April 1 of the first year following the disbursement of City
Loan. This Note shall be repaid through an annual Residual Receipt, as defined in the Agreement,
calculation based on the Net Operating Income of the Project. Borrower shall make annual
payments to this Note from the City's Proportionate Share of fifty -percent (50%) of Residual
Receipts received from operation of the Project, which is anticipated to be twelve and two hundred
thirteen thousandths percent (12.213%). For any year in which no payment is due or there is no
Net Operating Income available for payment of principal and interest, then interest shall continue
to accrue on the City Loan during such year. On or before each April 1 during the Term on which
a payment is due, regardless as to whether any payment of principal and interest is remitted,
Borrower shall provide City with an accounting documenting the calculation of Net Operating
Income for the previous calendar year.
(c) Interest First. All payments shall be applied first to accrued interest and
thereafter to principal.
2.3 Financial Statements. On each April 1 on which a payment is due pursuant to
Section 2.2(a), Borrower shall submit to City its Annual Financial Statement (as the term is defined
in the City Regulatory Agreement) for the preceding year. Net Operating Income shall be
calculated by Borrower for each year for which payment is due pursuant to Section 2.2(a) (and
certified by an authorized officer of Borrower) and reported by Borrower to City annually for each
calendar year no later than April 1 st of the following calendar year. All calculations and records
2211\08\3884045.2
shall be based upon Borrower's Annual Financial Statement and shall be subject to audit by City.
In connection with any audit, Borrower shall provide to City for inspection and copying any
records, receipts, account books, ledgers, checks, or other documents or other evidence reasonably
requested by City for the purpose of verifying Borrower's calculation of Net Operating Income,
and shall promptly pay to City any further amount due but not paid as a result of any miscalculation
by Borrower. City shall promptly pay Borrower any overpayments made by Borrower as shown
by such audit.
2.4 Maturity. The outstanding principal balance together with any outstanding
interest due thereon and any other sums payable under this Note shall be due and payable in full
on the date the Term terminates (the "Maturity Date").
2.5 Default Rate. Any amounts (including but not limited to amounts of principal and
interest on the City Loan) which Borrower does not pay when otherwise due under the terms of
this Note, shall bear interest at the rate of the lesser of ten percent (10%) per annum or the
maximum rate allowed per law per annum ("Default Rate"), simple interest, from the date which
is ten (10) days after such amount would otherwise be due until the date paid.
3. Prepayment; Application of Pam.
At any time after the disbursement of the City Loan proceeds, Borrower may prepay all or
a portion of the unpaid principal amount of the City Loan and accrued interest and any other sums
outstanding without penalty or fee. All payments, including any prepayments or funds received
upon acceleration pursuant to Section 9.2(a) below, shall be applied first toward any outstanding
costs of collection or other amounts (excluding City Loan principal or interest thereon) due under
this Note or the Agreement, then toward outstanding interest accrued at the Default Rate, if any,
then toward outstanding interest accrued at the Basic Interest Rate, if any, and finally toward the
remaining principal balance under the Note.
4. Security and Source of Payment.
Borrower's obligations under this Note, the Agreement and the City Regulatory Agreement
shall be secured by the City Deed of Trust.
The City Loan shall constitute a nonrecourse obligation of Borrower, and neither Borrower -
nor any partner, member, or shareholder thereof shall have any personal liability for repayment.
The foregoing limitation of liability is intended to apply only to the obligation for the
repaymenf of the principal f, and payment ofinterest on this Note; nothing co n ned-herein is
intended to relieve the Borrower and, if Borrower is a partnership, limited liability company, or
corporation, any general partner, member, or shareholder of Borrower of liability for damages
caused to City as a result of (i) fraud or willful misrepresentation; (ii) the failure to pay taxes,
assessments or other charges which may create liens on the real property described in the City
Loan documents that are payable or applicable prior to any foreclosure under the Deed of Trust
(to the full extent of such taxes, assessments or other charges); (iii) the retention of any rental
income or other income arising with respect to the Property collected by Borrower after an Event
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2211\08\3884045.2
of Default to the full extent of the rental income or other income retained and collected by
Borrower after the giving of any such notice, and not used to pay Operating Expenses of the
Property; (iv) the misapplication of any proceeds under any insurance policies or awards resulting
from condemnation or the exercise of the power of eminent domain or by reason of damage, loss
or destruction to any portion of the Property; and (v) breach of any environmental covenant or
representation made by the Borrower relating to the Property.
5. Obligation of Borrower Unconditional.
The obligation of Borrower to repay the City Loan and all accrued interest thereon shall be
absolute and unconditional, and until such time as all of the outstanding principal of and interest
on this Note shall have been fully paid, Borrower agrees that it: (a) will use the funds solely for
the purposes set forth herein and in the Agreement; and (b) will not terminate or suspend any
payment or obligations under this Note, the Agreement, or any other document executed hereunder
or in connection herewith for any cause, including without limitation, any acts or circumstances
that may constitute failure of consideration, commercial frustration of purpose, or any duty,
liability or obligation arising out of or in connection with this Note, the Agreement or any
document executed hereunder or in connection herewith.
6. Purpose of City Loan.
The City Loan proceeds shall be used by Borrower for Eligible Expenses of the Project as
outlined in the Agreement. In no event shall Borrower use or otherwise invest the proceeds of the
City Loan except as expressly provided in this Note and in the Agreement.
7. Covenants of Borrower.
As additional consideration for the making of the, City Loan by City, Borrower covenants
as follows:
7.1 Compliance with Agreement City Regulatory Agreement, and City Deed of Trust.
Borrower shall comply with all of its obligations under the Agreement, City Regulatory Agreement
and the City Deed of Trust. Any amounts payable by Borrower under the Agreement, City
Regulatory Agreement, or the City Deed of Trust (other than amounts also payable hereunder)
shall be deemed added to the principal amount of the City Loan -payable -hereunder. - - - -
7.2 Other Loans. Borrower shall comply with all monetary and non -monetary
covenants associated with any loan secured by an interest in the Property. Borrower shall provide
—to-City—a- copy of any notice of -default within Eve (5) calendar days -after receiving any notice of -a----
default or alleged default of such covenants by Borrower, and Borrower shall promptly cure any
such default and cooperate in permitting City, to the extent City in its sole discretion elects to do
so, to cure or assist in curing the default. Any cost or expenditure incurred by City in providing or
assisting in such a cure shall be deemed added to the outstanding principal amount of the City
Loan.
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2211\08\3884045.2
7.3 Payment of Deferred Developer Fee. Borrower shall not pay the Deferred
Developer Fee or make any payments of any partnership management fees (if applicable) unless
and until Operating Income exceeds Operating Expenses.
8. Assignment of this Note.
This Note shall be assignable by Borrower in compliance with Section 7.1 of the
Agreement. Notwithstanding anything which may be or appear to be herein to the contrary, no
purported assignment of this Note and/or the City Loan shall be effective if such assignment would
violate the terms, conditions and restrictions of any applicable ordinances, laws, or regulations.
City's consent to such assignment shall be expressly conditioned upon (a) the assignee's execution
of such documents as required by City including, without limitation, any and all documents
deemed necessary by City to provide for said assignee's assumption of all of the obligations of
Borrower hereunder, under the City Regulatory Agreement, under the City Deed of Trust, and
under the City Loan Documents, and (b) City's approval of the financial and credit worthiness of
such proposed assignee.
9. Events of Default and Remedies.
9.1 Borrower Events of Default. The occurrence of any of the following shall, after the
giving of any notice and expiration of any applicable cure period as described therein, constitute
an event of default by Borrower hereunder ("Event of Default"):
(a) The failure of Borrower to pay or perform any monetary covenant or
obligation under the terms of this Note without curing such failure within ten (10) calendar days
after receipt of written notice of such default from City (or from any party authorized by City to
deliver such notice as identified by City in writing to Borrower);
(b) The failure of Borrower to perform any non -monetary covenant or
obligation under this Note without curing such failure within thirty (30) calendar days after receipt
of written notice of such default from City (or from any party authorized by City to deliver such
notice as identified by City in writing to Borrower) specifying the nature of the event or deficiency
giving rise to the default and the action required to cure such deficiency. Provided, however, that
if any default with respect to a non -monetary obligation is such that it cannot be cured within a
30-day periods it -shall be deemed cured if Borrower commences the -cure -within said 30-day period --
and diligently prosecutes such cure to completion thereafter. Notwithstanding anything herein to
the contrary, the herein described notice requirements and cure periods shall not apply to any Event
of Default described in Sections 9.1(e)_or 9.1(f) below
(c) The failure of Borrowers to perform any covenant or obligation under the
Agreement, City Deed of Trust or City Regulatory Agreement, unless the default is cured within
the applicable cure period (if any).
(d) The material falsity of any representation or breach of any representation or
warranty made by Borrower under the terms of this Note, the Agreement, the City Regulatory
Agreement or the City Deed of Trust;
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2211\08\3884045.2
(e) Borrower or any constituent member or general partner, or majority
shareholder, of Borrower shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian or the like of its property, (ii) fail to pay or admit in writing its inability to
pay its debts generally as they become due, (iii) make a general assignment for the benefit of
creditors, (iv) be adjudicated bankrupt or insolvent or (v) commence a voluntary petition that is
not withdrawn within ten (10) calendar days of the filing thereof or answer seeking an arrangement
with creditors or an order for relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it in any bankruptcy or
insolvency proceeding;
(f) If without the application, approval or consent of Borrower, a proceeding
shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, in
respect of Borrower or any constituent member or general partner or majority shareholder of
Borrower, for an order for relief or an adjudication in bankruptcy, a composition or arrangement
with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of Borrower or of all or any substantial part of Borrower's assets, or other
like relief in respect thereof under any bankruptcy or insolvency law, and, if such proceeding is
being contested by Borrower, in good faith, the same shall (i) result in the entry of an order for
relief or any such adjudication or appointment, or (ii) continue undismissed, or pending and
unstayed, for any period of ninety (90) consecutive days;
(g) Voluntary cessation of the operation of the Property for a continuous period
of more than thirty (30) calendar days or the involuntary cessation of the operation of the Property
for a continuous period of more than sixty (60) days;
(h) A transfer in violation of Section 7.1 of the Agreement; or
(i) Subject to the notice and cure provisions set forth in the Agreement,
Borrower shall be in default under any of the terms of the Senior Loan, any other financing, or any
other secured or unsecured obligation relating to the Property, unless the default is cured within
the cure period, if any, applicable thereto under the terms and obligation which is in default.
9.2 City Remedies. Upon the occurrence and during the continuance of an Event of
Default hereunder, City may, in its sole discretion, take any one or more of the following actions:
(a) By notice to Borrower except in the case of a default by Borrower under
Section 9.1(e) or Section 9.1(f) in which event no notice pursuant to this Note shall be required,
declare the entire then unpaid principal balance of the City Loan immediately due_ and payable,
and the same shall become due and payable without further demand, protest or further notice of
any kind, all of which are expressly waived. Upon such declaration, outstanding principal and (to
the extent permitted by law) interest and any other sums outstanding in connection with the City
Loan shall thereafter bear interest at the Default Rate, payable from the date of such declaration
until paid in full;
(b) Subject to the nonrecourse provisions of Section 4 above, take any and all
actions and do any and all things which are allowed, permitted or provided by law, in equity or by
7
2211\08\3884045.2
statute, in the sole discretion of City, to collect the amounts then due and thereafter to become due
hereunder, to exercise its rights under the City Deed of Trust, and to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this Note, the
Agreement or under any other document executed in connection herewith;
(c) Subject to the nonrecourse provision of Section 4 above, upon the
occurrence of an Event of Default which is occasioned by Borrower's failure to pay money, City
may, but shall not be obligated to, make such payment. If such payment is made by City, Borrower
shall deposit with City, upon written demand therefor, such sum plus interest at the Default Rate.
In either case, the Event of Default with respect to which any such payment has been made by City
shall not be deemed cured until such repayment (as the case may be) has been made by Borrower.
Until repaid, such amounts shall have the security afforded the amounts evidenced by this Note;
or
(d) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default described in Section 9.1(e) or 9.1(f) hereof, City shall be entitled
and empowered by intervention in such proceedings or otherwise to file and prove a claim for the
whole amount owing and unpaid on the City Loan and, in the case of commencement of any
judicial proceedings, to file such proof of claim and other papers or documents as maybe necessary
or advisable in the judgment of City and its counsel to protect the interests of City and to collect
and receive any monies or other property in satisfaction of its claim.
9.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to City is
intended to be exclusive of any other available remedy or remedies, but each such remedy shall be
cumulative and shall be in addition to every other remedy given under this Note or now existing
at law or in equity or by statute; and may be exercised in such number, at such times and in such
order as City may determine in its sole discretion. No delay or omission to exercise any right or
power upon the occurrence of any Event of Default hereunder shall impair any such right or power
or shall be construed to be a waiver thereof, but any such right and power may be exercised from
time to time and as often as may be deemed expedient by City. In order to entitle City to exercise
any right or remedy reserved to it under this Note, no notice shall be required except as expressly
provided herein.
10. Agreement to Pay Attorneys' Fees and Expenses.
In the event that City brings any action or files any proceeding in connection with the
enforcement of its rights under this Note or the City Deed of Trust, as a consequence of any breach
by Borrower of its _obligations _thereunder, _the _prevailing -party _in -such _action -or _proceeding -shall
__
be entitled to have its reasonable attorneys' fees and out-of-pocket expenditures paid by the losing
party. The attorneys' fees so recovered shall include fees for prosecuting or defending any appeal
and shall be awarded for any supplemental proceedings until the final judgment is satisfied in full.
In addition to the foregoing award of attorneys' fees, the prevailing party in any lawsuit on this
Note or the City Deed of Trust shall also be entitled to its reasonable attorneys' fees incurred in
any post judgment proceedings to collect or enforce the judgment. In addition to the foregoing,
Borrower agrees to pay or reimburse City, upon demand by City, for all costs incurred by City in
connection with enforcement of this Note or the City Deed of Trust, including without limitation,
8
2211\08\3884045.2
reasonable attorneys' fees and costs, if there shall be filed by or against Borrower any proceedings
under any federal or state bankruptcy or insolvency laws, whether City is a creditor in such
proceedings or otherwise.
11. Notices.
All notices, demands, requests, elections, approvals, disapprovals, consents or other
communications given under this Note shall be in writing and shall be given by personal delivery,
first class mail certified or registered, return receipt requested, or reputable overnight delivery
service that provides a receipt with the time and date of delivery and addressed as follows:
To City City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: City Manager
With a copy to:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: Community Development Director
American Family Housing
To Borrower: 15161 Jackson Street
Midway City, California 92655
Attention: Myles Anthony Peinemann II
With a copy to: Goldfarb & Lipman
1300 Clay Street, Eleventh Floor
Oakland California 94612
Attention: William F. DiCamillo
Any Notice shall be deemed received immediately if delivered by hand or by overnight
courier, and shall be deemedreceived on the third day from the date it is postmarked if delivered
by registered or certified mail.
12. Severability.
The invalidity or unenforceabilit_y of one_ or -more _provisions _of this-NotewilLinmo
way affect any other provisions.
13. Interpretation.
Whenever the context requires, all words used in the singular will be construed to have
been used in the plural, and vice versa, and each gender will include any other gender. The captions
of the paragraphs of this Note are for convenience only and do not define or limit any terms or
provisions. Time is of the essence in the performance of this Note by Borrower. Borrower has
9
2211\08\3884045.2
been represented by counsel in the negotiation of this Note, and it shall not be interpreted in favor
of or against any party on account of relative responsibilities in drafting. Notwithstanding any
other provision of this Note, nothing herein or in this Note shall be deemed to require Borrower to
pay interest in an amount in excess of any applicable usury law or other legal limitation on interest,
and the terms of this Note shall be interpreted to require in each instance the lesser of (a) the
amount stated in this Note, and (b) the maximum applicable legal limit.
14. No Waiver; Consents.
Any waiver by City must be in writing and will not be construed as a continuing waiver.
No waiver will be implied from any delay or failure by City to take action on account of any
default of Borrower. Consent by City to any act or omission by Borrower will not be construed to
be a consent to any other or subsequent act or omission or to waive the requirements for City's
consent to be obtained in any future or other instance.
15. Governing Law and Jurisdiction.
This Note shall be governed by the internal laws of the State of California without regard
to conflict of law principles. Any legal actions must be instituted in the Superior Court of the
County of Orange, State of California, or in the Federal District Court in the Southern District of
California.
16. Representations and Warranties of Borrower.
Borrower hereby warrants and represents to City that:
16.1 Organization and Standing. Borrower is a California legal entity as described in the
Agreement, duly organized, qualified to operate in California and validly existing and in good
standing under all applicable laws, and has all requisite power and authority to enter into and
perform its obligations under this Note, the Agreement, the City Deed of Trust, the City Regulatory
Agreement and all other documents executed in connection herewith.
16.2 Enforceability. This Note and all other instruments to be executed by Borrower in
connection with the City Loan constitute the legal, valid and binding obligation of Borrower,
without joinder -of any other party.---- ---__-
16.3 Authorization and Consents. The execution, delivery and performance of this Note
and all other instruments to be executed in connection herewith is consistent with the operating
duly authorized by all necessary action of Borrower's members, partners, directors, officers and
shareholders.
16.4 Due and Valid Execution. This Note and all other instruments to be executed in
connection herewith, will, as of the date of their execution, have been duly and validly executed
by Borrower.
10
2211\08\3884045.2
16.5 Licenses. Borrower will obtain and maintain all material licenses, permits, consents
and approvals required by all applicable governmental authorities to own and operate the Property.
16.6 Litigation and Compliance. To the best of Borrower's knowledge, there are no suits,
other proceedings or investigations pending or threatened against, or affecting the business or the
properties of Borrower (other than those as have been previously disclosed in writing to City)
which could materially impair its ability to perform its obligations under this Note, nor is Borrower
in violation of any laws or ordinances which could materially impair Borrower's ability to perform
its obligations under this Note.
16.7 Default. To Borrower's current actual knowledge, there are no facts now in
existence which would, with the giving of notice or the lapse of time, or both, constitute an "Event
of Default" hereunder, as described in Section 9.
16.8 No Violations. To the best of Borrower's knowledge, the execution and delivery of
this Note, the Agreement and all other documents executed or given thereunder, and the
performances hereunder and thereunder by Borrower, as applicable, will not constitute a breach
of or default under any instrument or agreement to which Borrower may be a party nor, to the best
of Borrower's knowledge, will the same constitute a breach of or violate any law or governmental
regulation.
17. Approvals.
Any review or approval of any matter by the City or any City official or employee under
this Note shall be solely for the benefit of City, and neither Borrower nor any other person shall
rely upon such review or approval as an indication of the wisdom, soundness, safety,
appropriateness, or presence or absence of any matter. Without limiting the generality of the
foregoing, Borrower and not City shall be solely responsible for assuring compliance with laws,
the suitability of the Property for the Project, the adequacy of the plans, and the safety of the
Project construction site, the completed Project, and the operation thereof.
18. Waiver.
Subject to Section 4, Borrower agrees that it will still be liable for repayment of this Note,
- - -- ---even- if the —holder hereof —does —not follow the procedures of presentment, protest, demand, ---
diligence, notice of dishonor and of nonpayment, which requirements are hereby waived. Failure
of City or other holder hereof to exercise any right or remedy hereunder shall not constitute a
waiver of any future or other default. No acceptance of a past due installment or indulgence granted
from time to time shall be construed to be a waiver of, or to preclude the exercise of, the right to
insist upon prompt payment thereafter or to impose late charges retroactively or prospectively, or
to waiver or preclude the exercise of, the right to insist upon prompt payment thereafter or to
impose late charges retroactively or prospectively, or to waive or preclude the exercise of any other
rights which City may have.
[Signatures on the following page]
11
2211\08\3884045.2
IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year first
above written.
Dated: , 2025
AMERICAN FAMILY HOUSING, a California
Nonprofit Public Benefit Corporation
MYLES ANTHONY PEINEMANN II
Chief Executive Officer
Francisco Flores
Chief Financial Officer
APPROVED AS TO FORM:
Dated: 2025 Aaro C. Harp V
City Attorney
12
2211\08\3884045.2
IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year first
above written.
AMERICAN FAMILY HOUSING, a California
Nonprof Public Benefit Corporation
Dated: 2025
MYLES ANTHONY PEINEMANN II
Chief Executive Officer
'Francisco es
C ' inan '-Officer
APPROVED AS TO FORM:
� �—A 0 , Myll 4) �
Dated: Ee Ol alq ), ,j� , 2025 Aaro C. Harp
City Attorney
12
2211\08\3884045.2
294 L+ q 2 39 ® V
Q Search n Notes
Insured Name
Name: American Family Housing A
American Family Housing (FV00001318)
Aj Account Number: FV00001318
Address: 15161 Jackson Street, Midway
American Family Housing City, CA, 92655
Active Records Only Status: Currently in Compliance.
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reach out to Delton Walker at
dwalker@afhusa.org with any
deficiencies to be resolved. Thank
you!* Upload Action: "upload a
Certificate or Endorsement that DOES
require Customer Service Analyst
attention" *
Hi Carrera, Please upload the
insurance documents for the
subcontractors (if it is to maintain them
on the account only) using the ?
Upload other Document that DOES
NOT require Customer Service Analyst
attention? and add a Remark (snippet
below for reference). These uploads
are recorded in the Notes page of the
Ebix account and will show the
remarks you?ve added. I would
05/16/2025 recommend including at least the
EBIX Note 11:54 AM following information: 1) Indicate that
this upload is for a subcontractor 2)
provide the name of the subcontractor
3) what is the document type and what
coverage(s) (eg COI with GL, AL, WC
or if it is GL additional insured
endorsement, etc.). Thank you,
Caroline Hua Human Resources
Analyst Human Resources
Department Office: 949-270-8143 100
Civic Center Drive, Bay 2A Newport
Beach, CA 92660 Work Schedule Tue-
Thu 7:00-5:30, Fri 6:30-5:00
Thank you for clarifying, Carrera! I
added Delton?s email to Ebix so
hopefully they begin receiving the
deficiency notices. Currently, the
deficiencies are related to the missing
crime and professional liability
coverages, improper naming on the
workers? compensation waiver of
subrogation, and missing all 3 auto
endorsements. (Note that the auto will
be expiring next week.) Tanya ? I?m
not sure how to best do this on your
end, but can you make a note and add
FRIX Nnta 05/14/2025 these in as ?Information only? so that
06:42 AM
WSE Note 05/13/2025
10:54 AM
WSE Note 05/12/2025
02:43 PM
Ebix staff does not use these
certificates to satisfy the deficiencies?
These are subcontractors and the
contractor (American Family Housing)
will need to satisfy the insurance
requirements without regard to the
insurance policies held by their
subcontractors. Thank you, Gracie
Setter Human Resources Specialist
Human Resources Department Office
949-644-3304 100 Civic Center Drive,
Bay 2A Newport Beach, CA 92660
Work Schedule: Mon -Thu 7:00am-
5:30pm
Account modified to the database on
this date by WSE The following items
were modified: Country
Account modified to the database on
this date by WSE The following items
were modified: EmailAddress
Good Afternoon Andi: Please know
that I have confirmed with the City?s
Risk Management that no PNC
endorsement will be necessary for the
EBIX Note 05/08/2025 Professional Liability coverage. Thank
10:24 AM you, Carrera Mullinax, CP
Management Analyst Community
Development Department Office: (949)
644-3206 100 Civic Center Drive, Bay
1 D Newport Beach, CA 92660
Hi Tanya: Andi at American Family
Housing was sending over a COI that
they had for proof of subcontractor
coverage to be submitted to the
County, just as a sample to show is.
What they sent over to us was not a
certificate for the City. However, she
will be obtaining a similar COI for the
EBIX Note 05/07/2025 same subcontractor (City Fabrick) with
06:53 AM the City as an additional insured as
one of their subcontractors required to
provide proof of professional liability
coverage. Thank you, Carrera
Mullinax, CP Management Analyst
Community Development Department
Office: (949) 644-3206 100 Civic
Center Drive, Bay 1 D Newport Beach,
CA 92660
A Document has been uploaded by
Tanya Greggs and confirmation sent to
tanya.greggs@ebix.com. The following
WTG Note 05/06/2025 comments were included with the
10:11 AM upload: N/A* Upload Action: "upload a
Certificate or Endorsement that DOES
NOT require Customer Service Analyst
attention" *
A Document has been uploaded by
Tanya Greggs and confirmation sent to
tanya.greggs@ebix.com. The following
WTG Note 05/02/2025 comments were included with the
11:11 AM upload: N/A* Upload Action: "upload a
Certificate or Endorsement that DOES
NOT require Customer Service Analyst
attention" *
A Document has been uploaded by
Tanya Greggs and confirmation sent to
tanya.greggs@ebix.com. The following
WTG Note 05/02/2025 comments were included with the
11:11 AM upload: N/A* Upload Action: "upload a
Certificate or Endorsement that DOES
NOT require Customer Service Analyst
attention" *
A Document has been uploaded by
Tanya Greggs and confirmation sent to
tanya.greggs@ebix.com. The following
WTG Note 05/02/2025 comments were included with the
11:11 AM upload: N/A* Upload Action: "upload a
Certificate or Endorsement that DOES
NOT require Customer Service Analyst
attention" *
A Document has been uploaded by
Carrera Mullinax City Attorney's Office
and confirmation sent to
cmullinax@newportbeachca.gov. The
following comments were included with
04/24/2025 the upload: Hi Tanya: Please review
WCM Note 04:59 PM the attached and please contact Andi
Lau at alau@afhusa.org with any
deficiencies to be resolved. Thank
you!* Upload Action: "upload a
Certificate or Endorsement that DOES
require Customer Service Analyst
attention" *
A Document has been uploaded by
Carrera Mullinax City Attorney's Office
and confirmation sent to
cmullinax@newportbeachca.gov. The
following comments were included with
04/24/2025 the upload: Hi Tanya: Please review
WCM Note the attached and please contact Andi
04:58 PM Lau at alau@afhusa.org with any
deficiencies to be resolved. Thank
you!* Upload Action: "upload a
Certificate or Endorsement that DOES
require Customer Service Analyst
attention" *
Waiver Created -Pollution Liability -
Coverage does not meet required
WSE Note 03/13/2025 Aggregate minimumContract allows for
10:07 AM an extension until 4/1/25 on pollution
liability. - Waiver Expiration Date
04/10/2025
Waiver Created -Pollution Liability -
I,UVCI dyt, UUCJ IIUI IIICCL it::quII CU
WSE Note 03/13/2025 Each Occurrence minimum.Contract
10:07 AM allows for an extension until 4/1 /25 on
pollution liability. - Waiver Expiration
Date : 04/10/2025
Waiver Created -Pollution Liability -
03/13/2025 Coverage does not meet required
WSE Note 10:07 AM Aggregate minimumContract allows for
a 60 day extension on pollution liability
- Waiver Expiration Date : 03/13/2025
Waiver Created -Pollution Liability -
Coverage does not meet required
WSE Note 03/13/2025 Each Occurrence minimum.Contract
10:07 AM allows for a 60 day extension on
pollution liability - Waiver Expiration
Date : 03/13/2025
Waiver Created -Crime Coverage -
Missing Required Commercial Crime
Coverage.PER THE CONTRACT:
Insurance Procurement Period.
Developer shall have a period of six
(6) weeks, commencing on the
WSE Note 03/11/2025 Effective Date of this Agreement
12:40 PM [February 27, 2025], to procure and
provide evidence of the insurance
coverages outlined in Sections 1.3.6
(Professional Liability), 1.3.7 (Pollution
Legal Liability), and 1.3.8 (Crime
Bond) of this Attachment No. 14. -
Waiver Expiration Date : 04/10/2025
Waiver Created -Pollution Liability -
Missing Required Pollution Liability
CoveragePER THE CONTRACT:
Insurance Procurement Period.
Developer shall have a period of six
(6) weeks, commencing on the
WSE Note 03/11/2025 Effective Date of this Agreement
12:40 PM [February 27, 2025], to procure and
provide evidence of the insurance
coverages outlined in Sections 1.3.6
(Professional Liability), 1.3.7 (Pollution
Legal Liability), and 1.3.8 (Crime
Bond) of this Attachment No. 14. -
Waiver Expiration Date : 04/10/2025
A Document has been uploaded by
Carrera Mullinax City Attorney's Office
and confirmation sent to
cmullinax@newportbeachca.gov. The
following comments were included with
the upload: Hi Tanya: FYI on the
attached updated WRAP Binder:
CapSpecialty has issued an amended
binder which reflects lenders being
03/07/2025 scheduled as additional insured with
WCM Note 10:31 AM Primary non-contributory and waiver of
subrogation endorsement listed. We
will upload the endorsement forms
;--A . ,:
UI II.0 ICI:CIVCU vUL ILA VVGI UII II,. II IIJ
along for your records for now. If you
have any questions, please contact:
Andi Lau at alau@afhusa.org. Thank
you!` Upload Action: "upload a
Certificate or Endorsement that DOES
require Customer Service Analyst
attention" *
Waiver Created -Professional Liability -
Missing Required Professional Liability
Coverage.Good Afternoon Tanya:
Please know that the Insurance
Requirements for this agreement have
now been finalized under a fully
executed Affordable Housing
Agreement, and I am attaching these
hereto. These Insurance
Requirements are modified at Section
1.5.3 as follows: Insurance
Procurement Period. Developer shall
have a period of six (6) weeks,
commencing on the Effective Date of
this Agreement [February 27, 2025], to
procure and provide evidence of the
03/04/2025 insurance coverages outlined in
WTG Note 08:11 AM Sections 1.3.6 (Professional Liability),
1.3.7 (Pollution Legal Liability), and
1.3.8 (Crime Bond) of this Attachment
No. 14. Thus, the coverages for
Professional Liability, Pollution Legal
Liability, and Crime Bond do not need
to be submitted to the City until April
10, 2025. This was approved by Risk
Management and the City Attorney's
Office. Please modify the Insurance
Requirements in the Ebix account for
this entity accordingly. Thank you!
Thank you, Carrera Mullinax, CP
Management Analyst Community
Development Department Office: (949)
644-3206 100 Civic Center Drive, Bay
1 D Newport Beach, CA 92660 - Waiver
Expiration Date : 04/10/2025
A Document has been uploaded by
Lauren Wooding Whitlinger
Community Development - Real
Property and confirmation sent to
Iwoding@newportbeachca.gov. The
02/27/2025 following comments were included with
WLW Note 03:47 PM the upload: Please review updated
certificate for PI including Builder's
Risk. Thank you. Lauren 949-644-
3236* Upload Action: "upload a
Certificate or Endorsement that DOES
require Customer Service Analyst
attention" *
A Document has been uploaded by
Carrera Mullinax City Attorney's Office
and confirmation sent to
cmullinax@newportbeachca.gov. The
following comments were included with
the upload: HI Tanya: Please review
the attached COI for Property
WCM Note 02/27/2025 Coverage / Builder's Risk. The
10:01 AM endorsements for these should be
received tomorrow. PLease reach out
to Andi Lau at alau@afhusa.org with
any deficiencies to be resolved. Thank
you!* Upload Action: "upload a
Certificate or Endorsement that DOES
require Customer Service Analyst
attention" *
Page 1 of Pages 2 14 4 � H
PROMISSORY NOTE
Loan Amount: $3,000,000.00
Newport Beach, California
2025
FOR VALUE RECEIVED, AMERICAN FAMILY HOUSING, a California Nonprofit
Public Benefit Corporation ("Borrower") promises to pay to the CITY OF NEWPORT BEACH,
a California municipal corporation and charter city ("City"), the principal sum of Three Million
Dollars and 00/100 ($3,000,000.00), or so much of such principal as may be disbursed pursuant
hereto and in accordance with that certain Affordable Housing Loan Agreement between the City
and Borrower dated for identification purposes only as of �, 2025
("Agreement'), plus interest on the outstanding principal balance, in accordan e with the terms
and conditions set forth herein. This Note evidences the obligation of Borrower to City for the
repayment of certain funds ("City Loan") loaned to Borrower by City pursuant to the Agreement,
in connection with the rehabilitation, construction, ownership and operating of the Project located
at 1400 Bristol Street, in the City of Costa Mesa, California ("Property"). All capitalized terms
unless otherwise defined herein shall have the same meaning as set forth in the Agreement, which
is incorporated herein by this reference.
Reference is also made to the following additional agreements and documents, of even date
herewith, involving City and Borrower and/or pertaining to the Property:
(i) Ground Leasehold Deed of Trust with Assignment of Rents by and between
Borrower as Trustor, City as beneficiary, and Commonwealth Land Title Insurance
Company as Trustee, and recorded in the Office of the Orange County Recorder
("City Deed of Trust'). The City Deed of Trust secures repayment of this Note and
performance under the Agreement and City Regulatory Agreement.
(ii) Joint Regulatory Agreement by and between Borrower, the City of Costa Mesa and
City, for the benefit of City, and recorded in the Office of the Orange County
Recorder ("City Regulatory Agreement').
1. Definitions.
"Affiliate" shall mean any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Borrower which, if
Borrower is a partnership or limited liability company, shall include each of the constituent
members or general partners, respectively, thereof. The term "control" as used in the immediately
preceding sentence means, with respect to a person that is a corporation, the right to the exercise,
directly or indirectly, of more than 50% of the voting rights attributable to the shares of the
controlled corporation, and, with respect to a person that is not a corporation, the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of the controlled person.
1
2211\08\3884045.2
"Annual Financial Statement" shall mean the financial statements prepared by Borrower
for each calendar year beginning in the first year for which payment is due under this Note until
the Maturity Date, including a balance sheet, income statement, statement of retained earnings,
statement of cash flows, and footnotes thereto, prepared in accordance with generally accepted
accounting principles consistently applied, as audited by an independent certified public
accountant.
"Assignment" shall mean any voluntary or involuntary conveyance, disposition,
assignment, encumbrance (other than a Refinancing as defined below or the creation of the Senior
Loan or any other financing permitted by the Agreement), sublease, sale or transfer of the Property,
including, without limitation, any transfer by Borrower of all or any portion of its rights under or
interest in the Property, any unpermitted change of ownership or control of Borrower, any
foreclosure of Borrower's interest in the Property, whether by judicial proceedings, or by virtue of
any power contained in a deed of trust, indenture or other instrument creating a lien against the
Property, or any assignment of Borrower's estate in the Property through, or in lieu of, foreclosure
or other appropriate and bona fide proceedings in the nature thereof; provided, however, that the
term "Assignment" as used herein shall not include any permitted transfer as set forth in Section
8 hereof or in Section 7.1 of the Agreement.
"City Manager" shall mean the individual duly appointed to the position of the City
Manager of the City of Newport Beach, or his or her authorized designee.
"Debt Service" shall mean scheduled debt service (including impounds, expenses, and
other amounts payable) on the Senior Loan.
"Developer Fee" shall mean the fee to be paid to the Developer for rehabilitating the
Property. A portion of the Developer Fee may be deferred (the "Deferred Developer Fee").
"Fiscal Year " shall mean the fiscal year of Borrower, which is the calendar year.
"Maturity Date" shall mean the date the Term expires.
"Net Operating Income " shall mean, for the applicable period of time, (i) the amount, if
any, by which Operating Income for such period exceeds Operating Expenses paid by Borrower
during such period; and, provided there is such an excess, less (ii) the Developer Fee, until such
fee is paid in full.
"Operating Expenses " shall have the meaning set forth in Section 1.35 of the Agreement.
"Operating Income " shall mean, for the applicable period of time, all proceeds received
by Borrower from the operation of the Property and from any and all sources resulting from or
attributable to the operation of the Property, including, without limitation, all rentals, parking
receipts, laundry income received by Borrower, forfeited security deposits, and all expense
reimbursements paid to Borrower by tenants of the Property. Operating Income shall be calculated
on a cash basis. Operating Income excludes insurance proceeds and/or condemnation proceeds.
2
2211\08\3884045.2
"Senior Loan" shall mean the Costa Mesa Loan, Newport Beach Loan and County Loan,
and any loans made to Developer by its principals in compliance with its organizational
documents.
"Senior Loan Documents" shall mean any and all agreements and documents related to a
Senior Loan.
"City Loan Documents" shall mean, collectively, the Agreement, this Note, the City
Regulatory Agreement, and the City Deed of Trust.
"Term" shall mean the period commencing on the execution hereof and terminating fifty-
five (55) years from the date the Notice of Commencement of Affordability Restriction is issued
by City and caused to be recorded in the Official Records against the Property; or (ii) if not able
to be determined, fifty-seven (57) years after the date of the Agreement.
2. Interest and Repayment.
2.1 Basic Interest Rate. Except as provided in section 2.5 below, the disbursed and
unpaid principal balance of the City Loan shall bear interest at the simple rate of three percent
(3%) per year (the "Basic Interest Rate"). As used herein, the term "disbursed" shall mean and
refer to the time when the City has disbursed such funds to Borrower, pursuant to the Agreement.
2.2 Payment Dates and Amounts.
(a) Principal and Interest Payments. Interest and principal payments on this
Note shall be payable annually on April 1 of the first year following the disbursement of City
Loan. This Note shall be repaid through an annual Residual Receipt, as defined in the Agreement,
calculation based on the Net Operating Income of the Project. Borrower shall make annual
payments to this Note from the City's Proportionate Share of fifty -percent (50%) of Residual
Receipts received from operation of the Project, which is anticipated to be twelve and two hundred
thirteen thousandths percent (12.213%). For any year in which no payment is due or there is no
Net Operating Income available for payment of principal and interest, then interest shall continue
to accrue on the City Loan during such year. On or before each April 1 during the Term on which
a payment is due, regardless as to whether any payment of principal and interest is remitted,
Borrower shall provide City with an accounting documenting the calculation of Net Operating
Income for the previous calendar year.
(c) Interest First. All payments shall be applied first to accrued interest and
thereafter to principal.
2.3 Financial Statements. On each April 1 on which a payment is due pursuant to
Section 2.2(a), Borrower shall submit to City its Annual Financial Statement (as the term is defined
in the City Regulatory Agreement) for the preceding year. Net Operating Income shall be
calculated by Borrower for each year for which payment is due pursuant to Section 2.2(a) (and
certified by an authorized officer of Borrower) and reported by Borrower to City annually for each
calendar year no later than April 1 st of the following calendar year. All calculations and records
3
2211\08\3884045.2
shall be based upon Borrower's Annual Financial Statement and shall be subject to audit by City.
In connection with any audit, Borrower shall provide to City for inspection and copying any
records, receipts, account books, ledgers, checks, or other documents or other evidence reasonably
requested by City for the purpose of verifying Borrower's calculation of Net Operating Income,
and shall promptly pay to City any further amount due but not paid as a result of any miscalculation
by Borrower. City shall promptly pay Borrower any overpayments made by Borrower as shown
by such audit.
2.4 Maturity Date. The outstanding principal balance together with any outstanding
interest due thereon and any other sums payable under this Note shall be due and payable in full
on the date the Term terminates (the "Maturity Date").
2.5 Default Rate. Any amounts (including but not limited to amounts of principal and
interest on the City Loan) which Borrower does not pay when otherwise due under the terms of
this Note, shall bear interest at the rate of the lesser of ten percent (10%) per annum or the
maximum rate allowed per law per annum ("Default Rate"), simple interest, from the date which
is ten (10) days after such amount would otherwise be due until the date paid.
3. Prepayment; Application of Payments.
At any time after the disbursement of the City Loan proceeds, Borrower may prepay all or
a portion of the unpaid principal amount of the City Loan and accrued interest and any other sums
outstanding without penalty or fee. All payments, including any prepayments or funds received
upon acceleration pursuant to Section 9.2(a) below, shall be applied first toward any outstanding
costs of collection or other amounts (excluding City Loan principal or interest thereon) due under
this Note or the Agreement, then toward outstanding interest accrued at the Default Rate, if any,
then toward outstanding interest accrued at the Basic Interest Rate, if any, and finally toward the
remaining principal balance under the Note.
4. Security and Source of Pam.
Borrower's obligations under this Note, the Agreement and the City Regulatory Agreement
shall be secured by the City Deed of Trust.
The City Loan shall constitute a nonrecourse obligation of Borrower, and neither Borrower
nor any partner, member, or shareholder thereof shall have any personal liability for repayment.
The foregoing limitation of liability is intended to apply only to the obligation for the
repayment of the principal of, and payment of interest on this Note; nothing contained herein is
intended to relieve the Borrower and, if Borrower is a partnership, limited liability company, or
corporation, any general partner, member, or shareholder of Borrower of liability for damages
caused to City as a result of (i) fraud or willful misrepresentation; (ii) the failure to pay taxes,
assessments or other charges which may create liens on the real property described in the City
Loan documents that are payable or applicable prior to any foreclosure under the Deed of Trust
(to the fall extent of such taxes, assessments or other charges); (iii) the retention of any rental
income or other income arising with respect to the Property collected by Borrower after an Event
4
2211\08\3884045.2
of Default to the full extent of the rental income or other income retained and collected by
Borrower after the giving of any such notice, and not used to pay Operating Expenses of the
Property; (iv) the misapplication of any proceeds under any insurance policies or awards resulting
from condemnation or the exercise of the power of eminent domain or by reason of damage, loss
or destruction to any portion of the Property; and (v) breach of any environmental covenant or
representation made by the Borrower relating to the Property.
5. Obligation of Borrower Unconditional.
The obligation of Borrower to repay the City Loan and all accrued interest thereon shall be
absolute and unconditional, and until such time as all of the outstanding principal of and interest
on this Note shall have been fully paid, Borrower agrees that it: (a) will use the funds solely for
the purposes set forth herein and in the Agreement; and (b) will not terminate or suspend any
payment or obligations under this Note, the Agreement, or any other document executed hereunder
or in connection herewith for any cause, including without limitation, any acts or circumstances
that may constitute failure of consideration, commercial frustration of purpose, or any duty,
liability or obligation arising out of or in connection with this Note, the Agreement or any
document executed hereunder or in connection herewith.
6. Purpose of Cites.
The City Loan proceeds shall be used by Borrower for Eligible Expenses of the Project as
outlined in the Agreement. In no event shall Borrower use or otherwise invest the proceeds of the
City Loan except as expressly provided in this Note and in the Agreement.
7. Covenants of Borrower.
As additional consideration for the making of the City Loan by City, Borrower covenants
as follows:
7.1 Compliance with Agreement, Cit�Re u�ry Agreement, and City Deed of Trust.
Borrower shall comply with all of its obligations under the Agreement, City Regulatory Agreement
and the City Deed of Trust. Any amounts payable by Borrower under the Agreement, City
Regulatory Agreement, or the City Deed of Trust (other than amounts also payable hereunder)
shall be deemed added to the principal amount of the City Loan payable hereunder.
7.2 Other Loans. Borrower shall comply with all monetary and non -monetary
covenants associated with any loan secured by an interest in the Property. Borrower shall provide
to City a copy of any notice of default within five (5) calendar days after receiving any notice of a
default or alleged default of such covenants by Borrower, and Borrower shall promptly cure any
such default and cooperate in permitting City, to the extent City in its sole discretion elects to do
so, to cure or assist in curing the default. Any cost or expenditure incurred by City in providing or
assisting in such a cure shall be deemed added to the outstanding principal amount of the City
Loan.
5
2211\08\3884045.2
7.3 Payment of Deferred Developer Fee. Borrower shall not pay the Deferred
Developer Fee or make any payments of any partnership management fees (if applicable) unless
and until Operating Income exceeds Operating Expenses.
8. Assignment of this Note.
This Note shall be assignable by Borrower in compliance with Section 7.1 of the
Agreement. Notwithstanding anything which may be or appear to be herein to the contrary, no
purported assignment of this Note and/or the City Loan shall be effective if such assignment would
violate the terms, conditions and restrictions of any applicable ordinances, laws, or regulations.
City's consent to such assignment shall be expressly conditioned upon (a) the assignee's execution
of such documents as required by City including, without limitation, any and all documents
deemed necessary by City to provide for said assignee's assumption of all of the obligations of
Borrower hereunder, under the City Regulatory Agreement, under the City Deed of Trust, and
under the City Loan Documents, and (b) City's approval of the financial and credit worthiness of
such proposed assignee.
9. Events of Default and Remedies.
9.1 Borrower Events of Default. The occurrence of any of the following shall, after the
giving of any notice and expiration of any applicable cure period as described therein, constitute
an event of default by Borrower hereunder ("Event of Default"):
(a) The failure of Borrower to pay or perform any monetary covenant or
obligation under the terms of this Note without curing such failure within ten (10) calendar days
after receipt of written notice of such default from City (or from any party authorized by City to
deliver such notice as identified by City in writing to Borrower);
(b) The failure of Borrower to perform any non -monetary covenant or
obligation under this Note without curing such failure within thirty (30) calendar days after receipt
of written notice of such default from City (or from any party authorized by City to deliver such
notice as identified by City in writing to Borrower) specifying the nature of the event or deficiency
giving rise to the default and the action required to cure such deficiency. Provided, however, that
if any default with respect to a non -monetary obligation is such that it cannot be cured within a
30-day period, it shall be deemed cured if Borrower commences the cure within said 30-day period
and diligently prosecutes such cure to completion thereafter. Notwithstanding anything herein to
the contrary, the herein described notice requirements and cure periods shall not apply to any Event
of Default described in Sections 9.1(e) or 9.1(f) below;
(c) The failure of Borrowers to perform any covenant or obligation under the
Agreement, City Deed of Trust or City Regulatory Agreement, unless the default is cured within
the applicable cure period (if any).
(d) The material falsity of any representation or breach of any representation or
warranty made by Borrower under the terms of this Note, the Agreement, the City Regulatory
Agreement or the City Deed of Trust;
6
2211\08\3884045.2
(e) Borrower or any constituent member or general partner, or majority
shareholder, of Borrower shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian or the like of its property, (ii) fail to pay or admit in writing its inability to
pay its debts generally as they become due, (iii) make a general assignment for the benefit of
creditors, (iv) be adjudicated bankrupt or insolvent or (v) commence a voluntary petition that is
not withdrawn within ten (10) calendar days of the filing thereof or answer seeking an arrangement
with creditors or an order for relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it in any bankruptcy or
insolvency proceeding;
(f) If without the application, approval or consent of Borrower, a proceeding
shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, in
respect of Borrower or any constituent member or general partner or majority shareholder of
Borrower, for an order for relief or an adjudication in bankruptcy, a composition or arrangement
with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of Borrower or of all or any substantial part of Borrower's assets, or other
like relief in respect thereof under any bankruptcy or insolvency law, and, if such proceeding is
being contested by Borrower, in good faith, the same shall (i) result in the entry of an order for
relief or any such adjudication or appointment, or (ii) continue undismissed, or pending and
unstayed, for any period of ninety (90) consecutive days;
(g) Voluntary cessation of the operation of the Property for a continuous period
of more than thirty (30) calendar days or the involuntary cessation of the operation of the Property
for a continuous period of more than sixty (60) days;
(h) A transfer in violation of Section 7.1 of the Agreement; or
(i) Subject to the notice and cure provisions set forth in the Agreement,
Borrower shall be in default under any of the terms of the Senior Loan, any other financing, or any
other secured or unsecured obligation relating to the Property, unless the default is cured within
the cure period, if any, applicable thereto under the terms and obligation which is in default.
9.2 City Remedies. Upon the occurrence and during the continuance of an Event of
Default hereunder, City may, in its sole discretion, take any one or more of the following actions:
(a) By notice to Borrower except in the case of a default by Borrower under
Section 9.1(e) or Section 9.1(0 in which event no notice pursuant to this Note shall be required,
declare the entire then unpaid principal balance of the City Loan immediately due and payable,
and the same shall become due and payable without further demand, protest or further notice of
any kind, all of which are expressly waived. Upon such declaration, outstanding principal and (to
the extent permitted by law) interest and any other sums outstanding in connection with the City
Loan shall thereafter bear interest at the Default Rate, payable from the date of such declaration
until paid in full;
(b) Subject to the nonrecourse provisions of Section 4 above, take any and all
actions and do any and all things which are allowed, permitted or provided by law, in equity or by
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statute, in the sole discretion of City, to collect the amounts then due and thereafter to become due
hereunder, to exercise its rights under the City Deed of Trust, and to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this Note, the
Agreement or under any other document executed in connection herewith;
(c) Subject to the nonrecourse provision of Section 4 above, upon the
occurrence of an Event of Default which is occasioned by Borrower's failure to pay money, City
may, but shall not be obligated to, make such payment. If such payment is made by City, Borrower
shall deposit with City, upon written demand therefor, such sum plus interest at the Default Rate.
In either case, the Event of Default with respect to which any such payment has been made by City
shall not be deemed cured until such repayment (as the case may be) has been made by Borrower.
Until repaid, such amounts shall have the security afforded the amounts evidenced by this Note;
or
(d) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default described in Section 9.1(e) or 9.1(f) hereof, City shall be entitled
and empowered by intervention in such proceedings or otherwise to file and prove a claim for the
whole amount owing and unpaid on the City Loan and, in the case of commencement of any
judicial proceedings, to file such proof of claim and other papers or documents as may be necessary
or advisable in the judgment of City and its counsel to protect the interests of City and to collect
and receive any monies or other property in satisfaction of its claim.
9.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to City is
intended to be exclusive of any other available remedy or remedies, but each such remedy shall be
cumulative and shall be in addition to every other remedy given under this Note or now existing
at law or in equity or by statute; and may be exercised in such number, at such times and in such
order as City may determine in its sole discretion. No delay or omission to exercise any right or
power upon the occurrence of any Event of Default hereunder shall impair any such right or power
or shall be construed to be a waiver thereof, but any such right and power may be exercised from
time to time and as often as may be deemed expedient by City. In order to entitle City to exercise
any right or remedy reserved to it under this Note, no notice shall be required except as expressly
provided herein.
10. Agreement to Pay Attorneys' Fees and Expenses.
In the event that City brings any action or files any proceeding in connection with the
enforcement of its rights under this Note or the City Deed of Trust, as a consequence of any breach
by Borrower of its obligations thereunder, the prevailing parry in such action or proceeding shall
be entitled to have its reasonable attorneys' fees and out-of-pocket expenditures paid by the losing
party. The attorneys' fees so recovered shall include fees for prosecuting or defending any appeal
and shall be awarded for any supplemental proceedings until the final judgment is satisfied in fall.
In addition to the foregoing award of attorneys' fees, the prevailing parry in any lawsuit on this
Note or the City Deed of Trust shall also be entitled to its reasonable attorneys' fees incurred in
any post judgment proceedings to collect or enforce the judgment. In addition to the foregoing,
Borrower agrees to pay or reimburse City, upon demand by City, for all costs incurred by City in
connection with enforcement of this Note or the City Deed of Trust, including without limitation,
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reasonable attorneys' fees and costs, if there shall be filed by or against Borrower any proceedings
under any federal or state bankruptcy or insolvency laws, whether City is a creditor in such
proceedings or otherwise.
11. Notices.
All notices, demands, requests, elections, approvals, disapprovals, consents or other
communications given under this Note shall be in writing and shall be given by personal delivery,
first class mail certified or registered, return receipt requested, or reputable overnight delivery
service that provides a receipt with the time and date of delivery and addressed as follows:
To City City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: City Manager
With a copy to:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
Attn: Community Development Director
American Family Housing
To Borrower: 15161 Jackson Street
Midway City, California 92655
Attention: Myles Anthony Peinemann II
With a copy to: Goldfarb & Lipman
1300 Clay Street, Eleventh Floor
Oakland California 94612
Attention: William F. DiCamillo
Any Notice shall be deemed received immediately if delivered by hand or by overnight
courier, and shall be deemed received on the third day from the date it is postmarked if delivered
by registered or certified mail.
12. Severability.
The invalidity or unenforceability of any one or more provisions of this Note will in no
way affect any other provisions.
13. Interpretation.
Whenever the context requires, all words used in the singular will be construed to have
been used in the plural, and vice versa, and each gender will include any other gender. The captions
of the paragraphs of this Note are for convenience only and do not define or limit any terms or
provisions. Time is of the essence in the performance of this Note by Borrower. Borrower has
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been represented by counsel in the negotiation of this Note, and it shall not be interpreted in favor
of or against any parry on account of relative responsibilities in drafting. Notwithstanding any
other provision of this Note, nothing herein or in this Note shall be deemed to require Borrower to
pay interest in an amount in excess of any applicable usury law or other legal limitation on interest,
and the terms of this Note shall be interpreted to require in each instance the lesser of (a) the
amount stated in this Note, and (b) the maximum applicable legal limit.
14. No Waiver; Consents.
Any waiver by City must be in writing and will not be construed as a continuing waiver.
No waiver will be implied from any delay or failure by City to take action on account of any
default of Borrower. Consent by City to any act or omission by Borrower will not be construed to
be a consent to any other or subsequent act or omission or to waive the requirements for City's
consent to be obtained in any future or other instance.
15. Governing Law and Jurisdiction.
This Note shall be governed by the internal laws of the State of California without regard
to conflict of law principles. Any legal actions must be instituted in the Superior Court of the
County of Orange, State of California, or in the Federal District Court in the Southern District of
California.
16. Representations and Warranties of Borrower.
Borrower hereby warrants and represents to City that:
16.1 Organization and Standing. Borrower is a California legal entity as described in the
Agreement, duly organized, qualified to operate in California and validly existing and in good
standing under all applicable laws, and has all requisite power and authority to enter into and
perform its obligations under this Note, the Agreement, the City Deed of Trust, the City Regulatory
Agreement and all other documents executed in connection herewith.
16.2 Enforceability. This Note and all other instruments to be executed by Borrower in
connection with the City Loan constitute the legal, valid and binding obligation of Borrower,
without joinder of any other party.
16.3 Authorization and Consents. The execution, delivery and performance of this Note
and all other instruments to be executed in connection herewith is consistent with the operating
agreement, partnership agreement and any articles and bylaws governing Borrower and have been
duly authorized by all necessary action of Borrower's members, partners, directors, officers and
shareholders.
16.4 Due and Valid Execution. This Note and all other instruments to be executed in
connection herewith, will, as of the date of their execution, have been duly and validly executed
by Borrower.
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16.5 Licenses. Borrower will obtain and maintain all material licenses, permits, consents
and approvals required by all applicable governmental authorities to own and operate the Property.
16.6 Litigation and Compliance. To the best of Borrower's knowledge, there are no suits,
other proceedings or investigations pending or threatened against, or affecting the business or the
properties of Borrower (other than those as have been previously disclosed in writing to City)
which could materially impair its ability to perform its obligations under this Note, nor is Borrower
in violation of any laws or ordinances which could materially impair Borrower's ability to perform
its obligations under this Note.
16.7 Default. To Borrower's current actual knowledge, there are no facts now in
existence which would, with the giving of notice or the lapse of time, or both, constitute an "Event
of Default" hereunder, as described in Section 9.
16.8 No Violations. To the best of Borrower's knowledge, the execution and delivery of
this Note, the Agreement and all other documents executed or given thereunder, and the
performances hereunder and thereunder by Borrower, as applicable, will not constitute a breach
of or default under any instrument or agreement to which Borrower may be a party nor, to the best
of Borrower's knowledge, will the same constitute a breach of or violate any law or governmental
regulation.
17. Approvals.
Any review or approval of any matter by the City or any City official or employee under
this Note shall be solely for the benefit of City, and neither Borrower nor any other person shall
rely upon such review or approval as an indication of the wisdom, soundness, safety,
appropriateness, or presence or absence of any matter. Without limiting the generality of the
foregoing, Borrower and not City shall be solely responsible for assuring compliance with laws,
the suitability of the Property for the Project, the adequacy of the plans, and the safety of the
Project construction site, the completed Project, and the operation thereof.
18. Waiver.
Subject to Section 4, Borrower agrees that it will still be liable for repayment of this Note,
even if the holder hereof does not follow the procedures of presentment, protest, demand,
diligence, notice of dishonor and of nonpayment, which requirements are hereby waived. Failure
of City or other holder hereof to exercise any right or remedy hereunder shall not constitute a
waiver of any future or other default. No acceptance of a past due installment or indulgence granted
from time to time shall be construed to be a waiver of, or to preclude the exercise of, the right to
insist upon prompt payment thereafter or to impose late charges retroactively or prospectively, or
to waiver or preclude the exercise of, the right to insist upon prompt payment thereafter or to
impose late charges retroactively or prospectively, or to waive or preclude the exercise of any other
rights which City may have.
[Signatures on the following page]
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IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year first
above written.
Dated: , 2025
AMERICAN FAMILY HOUSING, a California
Nonprofit Public Benefit Corporation
MYLES ANTHONY PEINEMANN II
Chief Executive Officer
Francisco Flores
Chief Financial Officer
APPROVED AS TO FORM:
L'e' mlll�llk "119 0/
Dated: �� (;, , , 2025 Aar+ C. Harp
City Attorney
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IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year first
above written.
AMERICAN FAMILY HOUSING, a California
Nonpro Public Benefit Corporation
Dated: _.� �tC { , 2025 P�
MYLES ANTHONY PEINEMANN II
Chief Executive Officer
'-Francisco es
C inan ' icer
APPROVED AS TO FORM:
/ Dated: , , 2025 Aaro . Harp C
City Attorney
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