HomeMy WebLinkAbout1997-07-07 City Council (26)City of Palo Alto
Manager’s Report
TO:HONORABLE CITY COUNCIL 17
FROM:CITY MANAGER DEPARTMENT: Planning and
Community Environment
AGENDA DATE: July 7, 1997 CMR:314:97
SUBJECT:AGREEMENT WITH PALO ALTO HOUSING CORPORATION
FOR ACQUISITION OF THE 12-UNIT PROPERTY AT 290-310
VENTURA AVENUE
Council is requested to approve an Agreement with the Palo Alto Housing Corporation
(PAHC) for the acquisition, rehabilitation and operation of the 12-unit property at 290-310
Ventura Avenue in fulfillment of the Below Market Rate (BMR) program agreement for the
provision of seven off-site rental units between the City and The Hamilton Group, the
developer of the 36-unit senior condominium project at 651 Hamilton Avenue.
RECOMMENDATIONS
Staff recommends that the Council:
1)
2)
3)
Approve the attached agreement (with its attached form of promissory note) with the
Palo Alto Housing Corporation, in order to regulate rents and occupancy of the seven
units as affordable low and very low income rental housing, and to secure the City’s
interest in the value of the developer’s contribution for 40 years;
Authorize the Mayor to execute the agreement in substantially similar form; and
Authorize the City Manager to execute any other documents necessary to close the
transaction acquiring 290-310 Ventura Avenue including, but not limited to, a
subordination agreement, and direct the City Manager to administer the provisions of
the agreement.
CMR:314:97 Page 1 of 5
POLICY IMPLICATIONS
The actions recommended in this staffreport are consistent with the City’s affordable housing
development objectives as stated in the Consolidated Plan for 1995-2000 adopted by the
Council on May 1, 1995 and are also consistent with the Housing Element of the
Comprehensive Plan. These actions are consistent with terms of the BMR program
agreement as stated in Ordinance 4173, passed September 27, 1993, approving the Planned
Community zone for the 651 Hamilton Avenue project and the Subdivision Agreement,
executed December 11, 1995, between the City and The Hamilton Group.
BACKGROUND
In satisfaction of Programs 9 and 13 of the City’s Housing Element, the developers of"The
Hamilton" senior condominium project agreed to acquire and rehabilitate at least seven off-
site rental units and then transfer ownership to PAHC at no cost. On June 10, 1996, Council
approved the selection of the 12-unit apartment building at 290-310 Ventura Avenue to meet
those requirements. The complex contains 10 two-bedroom units and 2 three-bedroom units
grouped around a landscaped courtyard. Although about 40 years old, the apartments are
attractive and well-suited for family housing. The Hamilton developers acquired the
property on June 27, 1996.
Because the property contains more than the required seven units, City Staff, PAHC and The
HamiltOn Group negotiated a cost sharing agreement, with seven-twelfths to be paid by
Hamilton Group and five:tweltlhs by PAHC. The City is not providing any cash funding to
this transaction. PAHC has secured a 30-year fixed rate loan of up to $700,000 from a local
ba~k for their share of project costs, including acquisition, rehabilitation, funding a reserve
account and transaction costs. Due to its age, and accumulated deferred maintenance, the
property needed about $150,000 in rehabilitation to meet the condition standards set forth in
the BMR agreement. The Hamilton Group is responsible for seven-twelfths of the cost of
this work. PAHC has also identified another $74,000 in desirable improvements, upgrades
and replacements (such as new wall heaters, appliances, new windows, carpeting and interior
painting) which are beyond the standards in the.BMR agreement. PAHC will pay for this
work with a portion of the new bank loan they have secured. By agreement with The
Hamilton Group, PAHC conducted the initial property inspections, prepared the
rehabilitation specifications, selected the construction contractors and supervised the work
on a percentage fee basis.
CMR:314:97 Page 2 of 5
The following summary provides an overview of project costs and sources and responsibility
for funding (some figures are estimated; all are rounded):
PROJECT COSTS PAHC Hamilton TOTAL
Acquisition
Rehabilitation & Supervision
Improvements, Upgrades and
Replacements
Financing, Transaction, Inspections
(Hamilton)
Financing, Transaction, Inspections
(PAHC)
Initial Funding of Replacement
Reserve (PAHC)
$511,955 $716,745
63,375 96,325
74,100 --
15,500
10,000
14,000
$1,228,700
159,700
74,100
14,000
15,500
10,000
TOTAL $674,930 $827,070 $1,502,000
SOURCES OF FUNDS
The Hamilton Group: Estimated Direct Subsidy Costs
PAHC: .New Bank Loan Secured by Property
$827,000
$675,000
TOTAL $1,502,000
The estimated $827,000 subsidy amount from The Hamilton Group does not consider income
and expenses attributable to their ownership of the property during the last year. While final
costs are not yet known, PAHC estimates that total expenses will be about $1.5 million or
$125,000 per unit, including acquisition, rehabilitation and the improvement upgrades.
DISCUSSION
The attached agreement restricts the use and occupancy of the seven units provided in
satisfaction of the BMR agreement as affordable rental housing for low and very low income
households for 40 years. The agreement also includes mechanisms under which a significant
portion of the value of the developer’s contribution will return to the City’s housing fund, in
the event of a sale or foreclosure of the property or a default of the agreement. This
agreement is modeled closely on the agreement approved by Council last year for the 4-unit,
330 Emerson Street project, which was an off-site BMR contribution for the housing
development on the former Times-Tribune site.
CMR:314:97 Page 3 of 5
The rent and occupancy restrictions for the seven restricted units conform to HOME program
rules for consistency with other similar City rental housing regulatory agreements. The
agreement requires that three units must be occupied, at affordable rents, by low income
households, whose incomes are within 60 percent of the HUD area median, and four units,
including one, three-bedroom unit, must be rented to very low income households, with
incomes below 50 percent of median. Because PAHC’s bank financing has been
underwritten based on the assumption that all twelve units would be rented at even lower
rents than the maximums required by this agreement, PAHC expects to be able to rent all the
units to very low income households.
The agreement protects the City’s future interest in the property in several ways. While
PAHC will own the property in fee simple, should it ever be sold or transferred, PAHC and
the City will share in the net proceeds based on each party’s share of the current value of the
property limited by the rent restrictions. The present "restricted value", agreed to by staff and
PAHC, is $1,064,755. PAHC’s interest, based on this value, is calculated as 63.39 percent
based on the estimated $675,000 they are contributing from the bank loan for their share of
project expenses. The City’s interest is the remainder of the total value or $389,755, or 36.61
percent. The exact amounts and percentages will be calculated after close of escrow and
completion of all rehabilitation. The City’s initial interest will be secured by a note and deed
of trust recorded in second position behind the bank loan. The City note bears interest at 3
percent per annum on a simple interest basis with no payments required during the 40 year
term of the note. The City also holds an option to purchase the property for 40 years at the
"restricted value" based on the affordable rents then in effect, in the event of a proposed sale
or transfer by PAHC or a default of the agreement. At the end of the 40 year term, or if the
City chooses not to exercise its option, the property could be sold by PAHC for market value,
and the net proceeds of the sale would then be divided between the City and PAHC, based
on each parties percentage interest, after any bank loans, and the City’s loan and interest,
were paid. The agreement also gives the City a first fight of refusal, for an additional 20 year
period, to purchase the property at market value, should PAHC decide to sell.
FISCAL IMPACT
There is no effect on City housing funds. PAHC has obtained sufficient private bank
financing for its share of the project costs. Thus, no cash assistance is being provided by the
City. Repayments of the City loan, and any proceeds from a future disposition of the
property, would be deposited in the Residential Housing In-Lieu Fund.
ENVIRONMENTAL ASSESSMENT
Actions by a public agency related to the acquisition of existing housing units, as part of an
affordable housing program, are categorically exempt under Section 15326 of the California
Environmental Quality Act (CEQA) Guidelines.
CMR:314:97 Page 4 of 5
STEPS FOLLOWING APPROVAL
Close of escrow for PAHC’s acquisition of the property is scheduled for about July 21. The
exact date is dependant upon the substantial completion of the rehabilitation of the Ventura
Apartments and the issuance of an occupancy permit for the units in the 651 Hamilton
project. Construction activities for both projects are presently proceeding on schedule. Once
PAHC assumes ownership, the existing tenants of the Ventura Apartments (who have been
on month-to-month rental agreements) will be offered a one year lease of their apartments.
Existing households with incomes in excess of the low income maximum under this
Agreement (which is estimated to be about nine of the twelve households) will be informed
that they will need to move at the expiration of the new lease. As over-income households
leave, PAHC will fill vacancies with qualified low and very-low income households from
their waiting list.
ATTACHMENTS
1. Agreement Between the City of Palo Alto and the Palo Alto Housing Corporation
Concerning the Acquisition, Rehabilitation and Operation of a Twelve-Unit
Apartment Building at 290-310 Ventura Avenue, Palo Alto
PREPARED BY: Catherine Siegel, Housing Coordinator
DEPARTMENT HEAD REVIEW:
KENNETH R. SCHREIBER
Director of Planning and
Community~~/ronment
CITY MANAGER APPROVAL:~~.~
~Manager
CC:Palo Alto Housing Corporation
CDBG Citizens Advisory Committee
James B. Hill, The Hamilton Group
CMR:314:97 Page 5 of 5
RECORDING REQUESTED BY AND
WHEN RECORDED, MAIL TO:
City of Palo Alto
Office of City Attorney
250 Hamilton Avenue
Palo Alto, CA 94301
RECORDED WITHOUT CHARGE.
GOVERNMENT CODE SECTIONS 6103, 27383
Attachment 1
SPACE ABOVE THIS LINE FOR RECORDER’S USE
AGREEMENT BETWEENTHECITYOF PALOALTOANDTHE PALOALTO
HOUSING CORPORATION CONCERNING THE ACQUISITION,
REHABILITATION AND OPERATION OF A TWELVE UNIT APARTMENT
BUILDING AT 290 510 VENTURAAVENUE, PALOALT0
THIS AGREEMENT is made and entered into ,
1997, by and between the CITY OF PALO ALTO, a chartered city and .a
municipal corporation duly organized and existing under the
Constitution and laws of the State of California ("CITY"), and the
PALO ALTO HOUSING CORPORATION, a corporation duly organized and
existing under the Nonprofit Corporation Law of the State of
California ("PAHC"), in reference to the following facts:
1. The development ’and preservation of affordable
housing for Low-Income and Very Low-Income Households is an
objective of the CITY’s Consolidated Plan and CITY’s Housing
Element; and
2. In satisfaction of Programs 9 and 13 (the loss of
rental housing and the Below Market Rate Programs) of the CITY’s
Housing Element, the developer of the residential project at 651
Hamilton Avenue has agreed to acquire, rehabilitate and sell to
PAHC a twelve-unit apartment building located at 290-.310.Ventura
Avenue, Palo Alto, APN 132-41-042 ("the Property"), the legal
description of which is set forth in EXHIBIT "~’, for a price which
is below the fair market value of the Property; and
3. PAHC desires to acquire and operate the Property for
the purpose of providing a minimum of seven affordable rental
housing units to Low-Income Households and Very Low-Income
Households; and
4. The CITY, which qualifies as a State Recipient for
purposes of the federal HOME Program and the Regulations
promulgated thereunder, intends that PAHC will operate the seven
units on the Property in accordance with the applicable rent and
occupancy regulations of the HOME Program, in order for the fair
market value of the developer’s contribution to the CITY’s
affordable housing program to qualify as "match" for future CITY
applications for HOME funds;
970701 syn 0071237
1
In consideration of the following covenants, agreements,
terms and conditions, the parties agree:
ARTICLE 1 -DEFINITIONS
The following terms which are used in this Agreement will
have the meanings set forth below, unless the context clearly
indicates otherwise:
"Assisted Unit" means a residential rental unit on the
Property that qualifies as affordable housing under the rent and
occupancy restrictions of this Agreement.
"Closeof Escrow" means the date of recordation of the
grant deed to PAHC for the Property.
"Event of Default" means any of the defaults referred to
in Section i0.I hereof.
"HOME Program" means the HOME Investment Partnerships
Program established under the HOME Investment Partnerships Act, 42
U.S.C. ~ 3535(d) and §~ 12701 12839.
"Household" means one or more individuals who occupy an
Assisted Unit.
"HUD" means the United States Department of Housing and
Urban Development.
"Income Certification" means a determination of a
Household’s annual income, as defined in Section 92.203(b) (1),
according to the. procedures specif-ied in either Section 92.203(a)
(I) (i) or (iii), if appropriate, of the Regulations.
"Lender" means Comerica Bank-California, a California
chartered bank, the financial institution that will provide initial
financing to PAHC to acquire the Property.
"Low-Income Household" means a Household whose annual
income, adjusted for Household size, does not exceed the Low-Income
limit for the HOME program for the Palo Alto Area, established
periodically by HUD.
"Median Income for the Palo Alto Area" means the median
income for the San Jose, California, Primary Metropolitan
Statistical Area, as determined by the Secretary of HUD under
Section 8(f) (3) of the United State Housing Act of 1937. In the
event that programs under Section 8(f) are terminated, the median
income will be determined in accordance with the writtendirection
of The CITY.
"Regulations" means the regulations promulgated by HUD
for the HOME Program at 24 CFR Part 92, and published as a Final
Rule in the Federal Register on September 16, 1996, and as may be
subsequently amended during the term of this Agreement.
970701 syn 0071237
2
"Very Low-lncome Household" means a Household whos~
annual income, adjusted for Household size, does not exceed the
Very Low-Income limit for the HOME program for the Palo Alto Area,
established periodically by HUD, which currently is fifty percent
(50%) of the Median Income for the Palo Alto Area.
ARTICLE 2 TERM OF AGREEMENT
2.1 Term
2.1.1 Subject to the provisions of Section 6.2 hereof,
this Agreement will commence on the date of its execution by the
CITY, and will remain in full force and effect until forty (40)
years after the Close of Escrow. If PAHC has not closed escrow
within one year after the date of execution of this Agreement, then
this Agreement may be terminated by the CITY.
2.1.2 In the event of a foreclosure of the Property, or
a transfer in lieu of foreclosure, the affordability restrictions
of Article 5 hereof will terminate and be of no further force and
effect, provided that the Lender has expressly granted, in writing,
the right of the CITY to cure a default of PAHC or to exercise its
option to purchase the Property pursuant to Article 6 hereof and
Section 92.252(e) of the Regulations under the subordination
agreement between the Lender and the CITY. The affordability
restrictions of this Agreement will be revived and made applicable
to the person taking title upon foreclosure of the Property or
pursuant to a transfer in lieu of foreclosure if, at any time
during the forty years after the Close of Escrow, the owner of
record before the foreclosure, or the transferor of a transfer in
lieu of foreclosure, or any entity that includes the former owner
or those with whom the former owner has or had family or business
ties, obtains an ownership interest in the Property.
ARTICLE 3 -ACQUISITION OF PROPERTY; SECURITY
3.1 Purchase of Property
3.1.1 PAHC will acquire the Property according to the
terms and conditions of the purchase contract dated June 26, 1997
between PAHC and Hamilton Avenue Properties, Inc. ("Purchase
Contract"). The purchase price shall be calculated according to
the formula in the Purchase Contract, which is set forth in EXHIBIT
"G". PAHC shall pay closing costs and transfer taxes as specified
in the Purchase Contract. PAHC will fund a reserve account for the
Property for operating costs and replacements in the amount of at
least $i0,000. The CITY is not responsible for the property
acquisition costs, closing costs, or the cost of any repairs,
rehabilitation or improvements, features or fixtures which PAHC may
choose to have constructed or installed in or on the Property.
3.1.2 The parties acknowledge that PAHC has obtained a
commitment of permanent financing for the Property from the Lender
of up to $700,000. The Lender’s loan will be evidenced by a
promissory note and secured by a deed of trust.
970701 syn 0071237
3
3.1.3 The parties acknowledge that the Property is being
rehabilitated by the seller in order for the units to meet the
standards set forth for the provision of off-site units in the
Below Market Program agreement for the 651 Hamilton Avenue project
as required in Planned Community Ordinance No. 4173. PAHC agrees
that the rehabilitation work described as "Hamilton I" and °’Hamilton
II" in EXHIBIT "B" to the "Supplemental Agreement Re: BMR
Contribution for Project at 651 Hamilton Avenue, Palo ~ito", in
EXHIBIT "H", shall be substantially completed prior to close of
escrow for PAHC’s purchase of the Property. Substantial completion
is defined as completion of the work to the satisfaction of PAHC
and the CITY’s Director of Planning and Community Environment
("Director") and in compliance with all local codes and permits,
except that the Director may authorize the close of escrow prior to
the completion of minor punch list items and the expiration of the
retention period for final payment to the construction ’contractors.
Any outstanding, unpaid amounts due from seller for the
rehabilitation work shall be deposited, prior to Close of Escrow,
as a credit to PAHC as the buyer°
3.2 Promissory Note
3.2.1 To secure the performance of all covenants,
agreements, terms and conditions of this Agreement, PAHC will
execute and deliver, prior to the Close of Escrow, a promissory
note ("Note") in the amount of the CITY’s initial beneficial
interest as calculated in accordance with EXHIBIT "E", made payable
to the CITY, as payee, and executed by a duly authorized officer or
representative of PAHC, as maker, the form of ~which Note is set
forth in EXHIBIT "C".
3.2.2 The Note will become due and payable not later
than forty (40) years after the Close of Escrow.
3.2.3 Interest on the outstanding principal balance of
the Note will accrue at the rate of three percent (3%) simple
interest per year, commencing on the Close of Escrow.
3.2.4 Except as otherwise provided in this Agreement, no
payments of principal or interest are required on the Note.
3.2.5 The outstanding principal amount and accrued
interest of the Note will become immediately due and payable
without the demand of the CITY in the event that PAHC is in default
under this Agreement, the Note, or the Deed of Trust, and the CITY
may initiate foreclosure proceedings under the Deed of Trust.
3.3 Deed of Trust
To secure the payment of amounts evidenced by the Note,
PAHC, as trustor, will execute a deed of trust ("Deed of Trust"),
naming the CITY as beneficiary and First American Title Guaranty
Co., as trustee, the form of which is set forth in EXHIBIT "D".
970701 syn 0071237
4
3.4 Subordination
3.4.1 The CITY agrees to subordinate the Note and the
Deed of Trust to the Lender’s promissory note and deed of trust,
described in 3.1.2, for the initial purchase of the Property, to
the extent any such subordination agreement is consistent with
applicable law, including, without limitation, the CITY’S laws,
ru~es, regulations, and requirements, the HOME Program, ~and the
Regulations.
3.4.2 After the Close of Escrow, PAHC will have no right
to refinance, or to apply for refinancing, or to apply for, or
incur, any other debt that would result in a lien or other
encumbrance on the Property, or engage in any action which will
require the further subordination of the CITY’s secured interest in
the Property without ~the prior written consent of the City Manager.
Any application for financing, or the incurring of debt, without
the CITY’s prior written permission will constitute a default
hereof.
ARTICLE 4 RIGHTS AND OBLIGATIONS OF PAHC
4.1 Beneficial Interest in Property
PAHC will be the sole owner of the Property at the Close
of Escrow, provided, however, that The CITY and PAHC each will hold
a beneficial interest in the Property, as provided herein. The
initial beneficial interests of each party in the Property will be
established at the Close of Escrow, or as soon thereafter as
practicable, and will be calculated in accordance with EXHIBIT "E".
The beneficial interests will be adjusted during the term of this
Agreement whenever major capital improvements, other than normal
maintenance and repairs, are made to the Property, as more fully
set forth in EXHIBIT "E, Part II’i. PAHC will inform the CITY, in
writing, in a timely manner during the term of this Agreement, of
the date and cost of such capital improvements and the source of
funds to be used to pay for the capital improvements.
4.2 Reportinq to the CITY
PAHC will submit reports in a format and at a time
specified by the CITY. The reports will contain such information
as the CITY or HUD may then require to document compliance with the
use and occupancy restrictions and other requirements of this
Agreement.
4.3 Establish Escrow
This transaction will be completed through an escrow
with First American Title Guaranty Company, 1737 North First
Street, San Jose, CA 95112, under Escrow Number 512984. The
parties to this Agreement will place all funds, documents and other
information, together with appropriate written escrow instructions,
into the escrow in order to fulfill the terms of this Agreement.
970701 syn 0071237
4.4 Title Insurance
At the Close of Escrow, PAHC, at its own cost and
expense, will secure the issuance of an ALTA extended coverage
lenders’ policy of title insurance, naming the CITY as beneficiary
in regard to the CITY’s beneficial interest, in an amount acceptable
to the CITY, which will be free and clear of any encumbrances that
would unduly impede or restrict PAHC’s ability to use and operate
the Property in accordance with the provisions of this Agreement.
ARTICLE 5 -USE OF PROPERTY
5.1 Use; Limitations on Use; Transition Period
5.1.1. For a period of forty (40) years after the Close
of Escrow, PAHC will operate at least seven units in the Property
(°’Assisted Units") as rental housing at affordable rents for
occupancy by Low-IncomeHouseholds and Very Low-Income Households~
and observe and comply with all covenants, agreements, terms, and
conditions of this Agreement and with the applicable requirements
of the HOME Program and the Regulations (generally referred to
throughout this Agreement as "affordability restrictions"),
irrespective of the time of full payment of the Note by PAHC or any
other person~
5.1.2. Notwithstanding the foregoing, or any other
provisions of this Agreement, PAHC shall provide all existing
households occupying the Property as of the Close of Escrow, who do
not qualify as Low or Very Low-Income Households, the offer of a
one-year lease or rental agreement for their unit at a rent to be
determined’ by PAHC without regard to the provisions of this
Agreement. All other existing households, who qualify as Low-
Income or Very Low-lncome Households, shall be offered a one-year
lease or rental agreement at rents not in excess of the maximum
amounts specified in Section 5.2.
5.2 Qualification As Affordable Rental Housing~
5.2.1 PAHC will maintain the rents and occupancy of the
seven (7) Assisted Units in accordance with Section 92.252 of the
Regulations except as modified by this Agreement, for a period of
forty (40) years after the Close of Escrow.
5.2.2 At least four (4) Assisted Units, including one
(i) three bedroom unit, will be designated as Very-Low Income Units
and will be occupied by Very Low-Income Households, and rented in
accordance with Section 92.252 (b) (i) of the Regulations.
5.2.3 The remaining three (3) Assisted Units will be
designated as Low-Income Units and will be:
(a) Occupied by Low-Income Households whose annual
household income does not exceed sixty percent (60%) of the Median
Gross Income for the Palo Alto Area as determined by PAHC according
to the Income Certification .conducted immediately prior to the
households commencement of its initial occupancy of the Assisted
970701 syn 0071237
Unit, and thereafter whose household income, as annually
recertified, complies with the definition of a Low-Income Household
in the Regulations.
(b) The rents for Units occupied by Low-Income
Households will not exceed the lesser of:
(~ the rent determined under Section 92.252(a) (1) of the
Regulations [the most recent HUD Section 8 Fair Market Rents for
the Palo Alto Area]; or
(ii) the rent determined under Section 92.252(a) (2) of
the Regulations, however, the rent will be calculated based on
sixty percent (60%) of the Median Gross Income, rather than the~
sixty-five percent (65%) of the Median Gross Income, as set forth
in the Regulations.
5.2.4 If, at any annual anniversary of the determination
of the Income Certification, a Household ceases to qualify as a
Low-Income Household under the Regulations, PAHC will require that
Household to pay rent determined in accordance with Section
92.252(i) of the Regulations, as a condition of continued occupancy
of the Assisted Unit.
5.2.5 To the extent financially feasible, PAHC will
maintain rents for all Very Low-Income and Low-Income Households at
levels below the maximum rents specified in this Agreement and will
maintain rents within thirty percent (30%) of such Household’s
income as certified annually.
5.2.6 As a continuing ~obligation, PAHC will seek the
award of HUD Section 8 rent subsidies, or any other eligible HUD
subsidies that may become available during the term of this
Agreement, for all Assisted Units.
5.2.7 All leases and rental agreements for Assisted
Units on the Property will conform to the tenant’s protection
requirements of Sections 92.253(a) and 92.253(b) of the
Regulations, as they may apply to HOME-eligible "match" projects as
directed by HUD.
5.2.8 A failure by PAHC to maintain the rent
affordability levels and occupancy restrictions required by this
Agreement and the Regulations will constitute a default of this
Agreement. The Property will qualify as affordable housing,
notwithstanding a temporary noncompliance with the provisions of
Subsections 5.2.2 and 5.2.3, if the noncompliance arises as a
result of an increase in the income of any Household, and if the
next vacancy is filled in accordance with Subsections 5.2.2 and
5.2.3. Priority in the rental of vacant units will be given,
first, to compliance with the Very Low-Income Household occupancy
and rental requirements referred to in Section 5.2.2.
970701 syn 0071237
7
5.3 Desiqnation of Assisted Unit
PAHC may designate an Assisted Unit as a Low-Income
Household unit or a Very Low-Income Household unit as vacancies
occur and tenant incomes change, in order to comply with the
occupancy requirements of this Agreement, as practicable.
Determination of the status of a Household as a Very Low-Income
Household or a Low-Income Household will be made at the-time of
initial occupancy of an Assisted Unit by the Household and annually
thereafter based on the Household’s Income Certification°
5°4 Property Standards
PAHC will maintain the Property in a manner consistent
with the property standards set forth in Section 92.251 of the
Regulations, the housing quality standards set forth in Section
882.109 (24 CFR Part 882), and with all applicable CITY ordinances.
5.5 Record Keeping
5.5.1 PAHC will maintain records of the Property as
required by Sections 92.508(a) (3), 92.508(c), and 92.508(d) of the
Regulations, as applicable.
5.5.2 PAHC will document all costs incurred by it by
maintaining complete and accurate records of all financial
transactions~ including, without limitation, contracts, invoices,
time cards, cash receipts, vouchers, canceled checks, bank
statements, and other official documentation evidencing in proper
detail the nature and propriety of all charges.
5.5.3 All records, including, without limitation, lists,
applications, verifications and annual certifications pertaining to
Households and their income and the Property will be segregated
from any other businesses of PAHC that are unrelated to the
Property, will be maintained by PAHC in a reasonable condition
which will enable the CITY to audit them during PAHC’s business
hours, °subject to applicable laws and regulations concerning
privacy and confidentiality. The failure of PAHC to ’keep such
records or make them available to the CITY, upon request, will
constitute a default under this Agreement.
5.5.4 PAHC will preserve its records and make them
available~ for review by the CITY, including its designated
representatives, in accordance with Section 92.508 (c) and (d) of
the Regulations.
5.6 On-site Inspections
The CITY will have the right to make periodic on-site
inspections of the Property during working hours.
ARTICLE 6 -The CITY’S RIGHT TO ACQUIRE PROPERTY
6.1 Option to Purchase:
Restricted Rents
Appraisal Value Based on
970701 syn 0071237
8
6.1.1 PAHC hereby grants the CITY an option to purchase.
the Property at any time PAHC decides to dispose of the Propert=~
prior to the expiration of the forty-year term of this Agreement,
which decision shall be communicated by PAHC, in writing, to the
CITY, or upon the occurrence of an Event of Default. The option
may be exercised by the CITY by the act of communicating its
election to purchase to PAHC and the purchase price shall be
determined by appraisal in accordance with the provisions of
Section 6.3 and Part IV, EXHIBIT "E", and, as applicable, such right
shall have priority over the rights of any other individual or
entity.
6.1.2 In the event that the CITY fails to exercise its
option to purchase the Property within 140 days of the CITY’s
receipt of PAHC’s notice of intent to dispose of the Property, then,
upon the CITY’s receipt of payment of all amounts due and payable
under the Note and in accordance with the CITY’s beneficial
interests in the Property, which is calculated in accordance with
the provisions of Part III, EXHIBIT "E", the CITY shall duly execute
and record such instruments as will release and discharge PAHC from
the covenants, agreements, terms and conditions of this Agreement
and releases the Property to PAHC. ~Thereafter, subject to the
affordability restrictions and other applicable provisions of this
Agreement, including Section 2.1.1 hereof, PAHC or its successors
or assigns may dispose of the property without regard to the
covenants, agreements, terms and conditions of this Agreement.
6.2. Right of First Refusal: Appraisal Value Based
Fair Market Value Without Rent Restrictions
PAHC hereby grants the CITY a right of first refusal to
purchase the Property for a period of twenty (20) years after the
term of this Agreement has expired. The CITY may exercise such
right of first refusal after PAHC has first given the CITY
reasonable notice of its intent to sell the ~roperty, provided the
CITY communicates to PAHC its election to exercise its right of
first refusal and pays a purchase price equal to the fair market
value of the Property without regard to the affordability
restrictions in accordance with the provisions of Section 6.3.
6.3 Procedures In Event of Sale and Determination of
Purchase Price For Sale to the CITY Within 60 days of the CITY’s
receipt of PAHC’s notice to dispose of the Property or its failure
to cure an Event of Default, the option price shall be determined
by an appraiser whose services will be obtained by and at The
CITY’s expense. For a sale pursuant to Article 6.1, the appraiser
shall determine the value of the Property based on the lesser of
the actual rents in effect for the Property on the date the CITY
exercises the option to purchase set forth in Section 6.1, or the
value of the Property as restricted by the applicable federa’l
regulatory requirements and use restrictions referred to in this
Agreement. For a sale pursuant to Article 6.2, the appraiser shall
determine the fair market value of the Property without regard to
the affordability restrictions of this Agreement. PAHC shall
accept or reject the appraiser’s determination of the purchase price
within fifteen (15) days of receipt of the CITY’s appraisal together
970701 syn 0071237
9
with a written offer from the CITY to acquire the Property at the
appraised value. If PAHC does not agree on the value of the
Property determined by the CITY’s appraiser, then, within fifteen
(15) days of the CITY’s receipt of PAHC’s notice rejecting such
appraisal, the parties shall jointly select an independent
appraiser, who shall determine the value of the Property within 30
days of hire. Such determination shall be binding on the parties.
The parties, shall share .equally the fees and costs of the
independent appraiser. The CITY shall exercise its option, or
right of first refusal, within 140 days of the CITY’s receipt of
PAHC’s first notice of intent to dispose of the Property and shall
close escrow within 160 days or the CITY’s option or right to
acquire the Property shall expire.
6.4 Distributions Upon Sale In the event of a sale of
the Property, the proceeds of such sale shall be distributed in the.
following order:
(a) To various parties, to cover the costs of the sale;
(b) To Lender, to repay the loan obtained for the
initial purchase of the Property, or any other subsequent loan
expressly authorized by The CITY pursuant to the terms of Section
3.4.2 which stands in a superior position to the CITY’s loan;
(c) To the CITY, to repay the principal amount and all
other sums due and payable under the Note and Deed of Trust; and
(d) To the CITY and PAHC, based on each party’s
respective beneficial interests determined pursuant to Section 4.1
hereof, the balance of the proceeds.
6.5. Assignment of Option
The CITY, in the exercise of its sole discretion, acting
by and through the City Manager, may appoint an agent to exercise
its option to purchase the Property on the CITY’s behalf, or may
assign its option to purchase to any person, including any private,
governmental, or.for-profit or non-Profit entity.
ARTICLE 7 - COVENANTS AND CONDITIONS
7.1 Prohibition aqainst Assiqnments
Neither this Agreement nor the rights and obligations of
PAHC hereunder, nor title to the Property shall be assigned or
otherwise transferred without the prior express written consent of
the CITY, which consent shall be granted by adoption of a
resolution of the CITY’s city council. No consent may be granted,
unless and until the proposed assignee agrees, in writing, to
assume the obligations of PAHC under this Agreement, the Note, and
Deed of Trust. Any attempted assignment or transfer hereunder
without the express written consent of the CITY shall be void, and
shall be deemed a default of this Agreement.
970701 syn 0071237
10
7.2 Corporate Status
PAHC covenants and agrees to maintain its status as a
corporation duly organized, validly existing, and in good standing
under the Nonprofit Corporation Law of the State of California at
all times during the term of this Agreement.
7..3 Conflicts of Interest
PAHC covenants that, in the performance of this
Agreement, no person having a financial interest therein shall be
employed by PAHC in connection with the performance of the
provisions of this Agreement or in the acquisition or development
of the Property, except as the CITY may approve, in advance, waive,
or ratify such conflict of interest.
7.4 Insurance
As off.the date of Close of Escrow, PAHC, at its sole cost
and expense, and any subcontractors assigned to the performance of
the terms of this Agreement on the behalf of PAHC, shall obtain and
maintain throughout the term of this Agreement, insurance provided
by responsible companies authorized to engage in the offering of
insurance services in California in such amounts and against such
risks as shall~ be satisfactory to the CITY’s risk manager,
including, without limitation, workers’ compensation, employers’
liability, commercial general liability, comprehensive automobile
liability, personal injury and property damage insurance, and fire
and extended coverage insurance, as set forth in EXHIBIT "F",
insuring against all liability of PAHC and its directors, officers,
employees, agents, and representatives arising out of or in
connection with the acquisition,~ improvement, management, and
operation of the Property, and PAHC’s performance or nonperformance
under this Agreement.
ARTICLE 8 REPRESENTATIONS
8.1 Corporate Authority
The making and performance by PAHC of this Agreement, the
Note, and the Deed of Trust have been duly authorized by all
necessary corporate action and will not violate any provision of
law or of its charter or bylaws, or result in the breach of or
constitute a default or require any consent under any lien, charge,
or encumbrance upon any property or assets of PAHC pursuant to any
indenture or other agreement to which PAHC is a party or by which
PAHC or its property may be bound. The individual who executes
this Agreement has been duly authorized to execute this Agreement
on the behalf of PAHC.
8.2 Litigation
There are no suits or proceedings pending or, to the
knowledge of PAHC, threatened against or affecting PAHC which, if
adversely determined, would have a material adverse effect on the
financial condition or business of PAHC, and there are no
970701 syn 0071237
11
proceedings pending or, to the knowledge of PAHC, threatened,
against PAHC which would have a material adverse effect on the
performance of this Agreement by PAHC.
8.3 Conflict of Interest
PAHC represents that it presently has no interest and
shall not aGquire any interest, direct or indirect, financial or
otherwise, which would conflict in any manner or degree with the
performance of its obligations under this Agreement. In the
performance of this Agreement, no person who has or will have a
financial interest under this Agreement is an officer or employee
of the CITY.
ARTICLE 9 - INDEMNITY
PAHC agrees to protect, indemnify, defend and hold
harmless the CITY, its city council members, officers, employees,
and agents, from any and all demands, claims, or liability of any
nature, including death or injury to any person, property damage or
any other loss, caused by or arising in connection with the
negligent acts or omissions, or willful misconduct of, PAHC or any
of its directors, officers, employees, representatives, and agents,
in the performance of or failure to perform its obligations under
this Agreement.
ARTICLE i0 -DEFAULT; REMEDIES FOR DEFAULT
I0.I Events of Default
In addition to any action or inaction which is expressly
declared to be a default under this Agreement, the occurrence of
any of the following shall constitute a default by PAHC,-provided
PAHC has received written notice of default from the CITY, and PAHC
has failed to cure such default within sixty (60) days of the
occurrence of the same, or, if the default cannot be completely
cured within such period of time, PAHC has failed to commence
efforts, to cure and continue such efforts to cure within a
reasonable period of time, or where the-CITY receives notice of
PAHC’s default under any other agreement in connection with the
financing of the Property:
(a) A failure by PAHC to pay, when due, the unpaid
principal amount, and accrued interest, if any, and any other sums
payable by PAHC under this Agreement, the Note, or the Deed of
Trust; or
(b) A failure by PAHC to perform any non-financial
obligation required to be performed by PAHC under this Agreement,
the Note or the Deed of Trust; or
(c) PAHC makes a representation in this Agreement which
shall prove to have been false in any material respect; or
(d) PAHC applies for or consents to the appointment of
a receiver, trustee, or liquidator, or is unable, or admits, in
970701 syn 0071237
12
writing, its inability to pay its debts as they fall due, or make’~
a general assignment for the benefit of its creditors, or is
adjudicated a bankrupt or insolvent, or files a voluntary petition
in bankruptcy; or
(e) PAHC is subject to the entry of an order, decree, or
judgment approving the reorganization of PAHC, and such order,
decree, or judgment is not stayed for a period of more than sixty
(60) days, or such period as may be permitted by law; or
(f) PAHC sells, assigns, transfers or encumbers the
Property in a manner inconsistent with the terms of this Agreement
or applicable law, including, without limitation, a sale at a
judicial foreclosure or nonjudicial foreclosure, or a transfer in
lieu of foreclosure; or
(g) PAHC fails to comply with the covenants, terms and
conditions of the Agreement, including, without limitation, the
failure of PAHC to abide by the Low-Income and Very Low-Income
restrictions set forth in Article 5 of the Agreement; or
(h) PAHC terminates the Agreement without cause; or
(i) PAHC defaults under its agreement with the Lender or
any other agreement for private financing of the Property, which
may be secured by a deed of trust or any other encumbrance or lien
which is senior in priority to the Deed of Trust.
10.2 Remedies for Default
Upon the occurrence of a default by PAHC, the CITY shall
have the following rights and remedies, in addition to all other
rights and remedies provided by law, to which the CITY may resort
cumulatively, or in the alternative:
(a) Exercise the option to purchase the Property. in
accordance with Section 6.1 hereof;
(b) Declare the outstanding principal amount of the Note
immediately due and payable to the CITY;
(c) Compel PAHC’s performance of its obligations underthis Agreement, or perform PAHC’s obligations on its behalf;
(d) Cure any default of PAHC on the behalf of and at its
cost; and
(e) Notwithstanding any other provision of law relating
to the acquisition, management or disposal of real property in the
State of.California, to engage in the following:
(i) Possess, operate, complete, lease, rent, renovate,
modernize, insure, or sell for cash or credit, the Property;
970701 syn 0071237
13
(ii) Pursue to final collection by way of compromise or
otherwise all claims against PAHC which are assigned by PAHC to The
CITY; and
(iii) Convey and execute in the name of the CITY all
deeds of conveyance, deeds of release, assignments~ and
satisfactions of the deeds of trust, and any other written
instrument ~elating to real or personal property, or any interest
of PAHC therein subsequently acquired by the CITY.
ARTICLE II - NOTICES
Any notice which may be or is required to be given under
this Agreement shall be deemed given on the second day following
the date on which the same have been mailed by first class mail,
postage prepaid, addressed~as follows:
CITY :City of Palo Alto
250 Hamilton Avenue
Palo Alto, CA 94301
Attn: City Clerk
Copy to:Director of Planning &
Community Environment
City of Palo Alto
250 Hamilton Avenue
Palo Alto, CA 94301
(415) 329-2441; (650) 329-2441
(after 8/2/97)
(415) 329-2154 (FAX); (650) 329-
2154 (after 8/2/97)
PAHC:Palo Alto Housing Corporation
540 Cowper Street, Suite 201
Palo Alto, CA 94301-1806
Attn: Executive Director
(415) 321-9709; (650) 321-9709
(after 8/2/97)
(415) 321-4341 (FAX); (650)
321-4341 (after 8/2/97)
ARTICLE 12 -MISCELLANEOUS PROVISIONS
12.1 Neither the failure nor the delay on the part of the
CITY to exercise any right, power, or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other
right, power, or privilege.
12.2 Nothing contained in this Agreement is intended
to, or shall be construed in any manner, as creating or
establishing the relationship of employer and employee between the
parties. PAHC shall at all times remain an independent contractor
with respect to the services to be rendered or work to be
performed, or both, under this Agreement.
970701 syn 0071237
14
12.3 The covenants, agreements, terms, and conditions of
this Agreement shall inure to and be binding on the successors and
assigns of the parties. Any provision of this Agreement which is
characterized as a covenant or a condition shall be deemed both a
covenant and a condition.
12.4 Any amendment to this Agreement shall be binding
upon the parties, provided such amendment is set forth in at writing
signed by the party to be charged. The City Manager is authorized
to execute documents necessary to effect its rights and obligations
hereunder, including the execution of any amendments to this
Agreement.
12.5 This Agreement shall not be construed or deemed to
be an agreement for the benefit of any third party, and no third
party shall have any claim or right of action hereunder for any
cause whatsoever.
12.6 If any provision of this Agreement shall be
determined by a court of competent jurisdiction to be invalid,
illegal, void, or unenforceable in any respect, the validity of all
other provisions herein shall remain in full force and effect.
12.7 PAHC lacks any authority or power to pledge the
credit of the CITY or incur any obligation in the name of the CITY.
12.8 This Agreement constitutes the entire agreement of
the parties concerning its subject matter, and there are no other
oral or written agreements of the parties not incorporated in this
Agreement.
12.9 The Agreement, the Note and the Deed each shall be
deemed a contract made under the laws of the State of California,
and for the purposes hereof shall be governed and construed by and
in accordance with the laws of the State of California.
12.10 All exhibits, which may be amended from time to
time, and any addenda, appendices, attachments, and schedules
which, from time to time, may be referred to in any duly executed
amendment hereto, are by such reference incorporated in this
Agreement and shall be deemed to be part of this Agreement.
12.11 This Agreement maybe executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument°
12.12 The paragraph headings are not a part of this
Agreement and shall have no effect upon the construction or
interpretation of any part of this Agreement.
12o13 All references to federal, state or local laws,
rules and regulations in this Agreement shall be deemed to refer to
any and all laws, rules and regulations amendatory thereto.
970701 syn 0071237
15
12.14 This Agreement and any amendments or supplements
thereto shall be recorded in the OffiCe of the County Recorder of
Santa Clara County, California.
IN WITNESS WHEREOF, the parties by their duly appointed
representatives have executed this Agreement on the date first
above written in Palo Alto, California.
CITY OF PALO ALTO
Mayor
ATTEST:
PAL0 ALTO HOUSING CORPORATION
City Clerk
APPROVED AS TO FORM:
Senior Assistant City Attorney
APPROVED:
City Manager
Acting Director of
Administrative Services
Director~of Planning and
Community Environment
Risk Manager
EXHIBIT "A":
EXHIBIT "B":
EXHIBIT "C":
EXHIBIT "D":
EXHIBIT "E":
EXHIBIT "F":
EXHIBIT "G":
EXHIBIT "H":
LEGAL DESCRIPTION
INCOME CERTIFICATION FORM
PROMISSORY NOTE
DEED OF TRUST
CALCULATION OF BENEFICIAL INTERESTS
INSURANCE REQUIREMENTS
CALCULATION OF PURCHASE PRICE
DESCRIPTION OF REHABILITATION WORK AND COST
ESTIMATES
970701 syn 0071237
16
CERTIFICATE OF ACKNOWLEDGMENT
(Civil Code § 1189)
STATE OF
COUNTY OF
)
)
)
On , before me,a notary public in and for said County, personally appeared JOSEP~
H. HUBER personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument, and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(
ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which, the person(s) acted,
executed the instrument.
WITNESS my hand and official seal.
970701 syn 0071237
17
CERTIFICATE OF ACKNOWLEDGMENT
(Civil Code § 1189)
tar 0)nu c I.~ !n~d/~f~or~, be_fore.~.~.~I ~-~~6~~’nQ~ary Pl,b~c $~..(’~6[~j said Counny, personal~y appeared, ~!!y . knc:-;R--49~-m~ (or
proved to me on theJbasis of satisfactory evidence) to be the
person~s~ whose nameJ~ is/ar~ subscribed to the within instrument;
and acknowledged to me that-4%e/she/t-key executed the same in
!li~/her/tA%eir--authorized capacity(ies), and that by o~i~her/~&Aei~
signature,s9 on the instrument the personie@-, or the entity upon
behalf of which the person(~ acted, executed the instrument.
WITNESS my and official seal.
970701 syn 0071237
EXHIBIT A
Order No.~512984
Page No. 5
LEGAL DESCRIPTION
The land referred to in this policy is described as real property in the City of Palo Alto, County of Santa Clara,
State of California, described as follows:
Beginning at the point of intersection of the center line of Ventura Avenue, formerly Chestnut Street, with lhe
line dividing Lots 10 and 11 as shown upon the Map hereinafter referi’ed to; thence along the center line of
Ventura Avenue S. 33° 33’ W. 82.50 feet; thence leaving the center line of Ventura Avenue and running
parallel with theline dividing said Lots 10 and 11 N. 56° 34’ W. 264.22 feet to a point on the line dividing Lots
9 and 10 as shown upon said Map; thence along the line dividing said Lots 9 and 10, N. 33° 33’ E. 82.50 feet
to the most Northerly corner of said Lot 10; thence a~ong the line dividing said Lots 10 and 11, S. 56° 34’ E.
264.22 feet to the point of beginning and being Northeasterly 82.50 feet; front and rear measurements of Lot
10, as shown upon the Map of J.J. Morris Real Estate Co’s Subdivision of a part of Wm. M. Curtner Tract
being a part of the Rancho Rincon de San Francisquito, which was filed for record in the office of the
Recorder of the County of Santa Clara, State of California, on March 30, 1905 in Volume "K" of Maps, page
57.
APN: 132-:41-042
Sample Format for Calculating Income
EXHIBIT B
~INCOME CERTIFICATION FORM
PART I. SUMMARY OF FAMILY INCOME DATA
1. Name
Family
Member
2. Identification
Asset Description
ASSETS
Current ’
Cash Value
3. Total Net Family Assets 3.
4. Total Actual Asset Income .................." .........................................
5.If line 3 is greater than $5,000, multiply line by ~ (Passbook Rate)
and enter result here; otherwise, leave blank.
Income from
Assets
4.
Family
Member
a.Wages/
Salaries
ANTICIPATED ANNUAL INCOME
b.Benefits/
Pensions
c.Public
Assistance
d.Other
Income
e.Asset
Income
Enter the
greater of
lines 4 or 5
from above
in e,
6. Totals a.b.c.d.e.
7. Enter total of items from 6a. through 6e..
This is Annual Income.7.
42--Technical Guide for Determining Income hnd Allo~vances fo~ the HOME Prbgbara
" HuD May, 1994
Exhibit
PROMISSORY NOTE
SECURED BY
DEED OF TRUST AND ASSIGNMENT OF RENTS
Date:
Palo Alto, California
FOR VALUE RECEIVED, the Palo Alto Housing Corporation, a
corporation duly organized and existing under the Nonprofit
Corporation Law of the State of California (’,BORROWER"), promises
to pay to the City of Palo Alto, a California municipal
corporation ("CITY"), or order, the principal sum of
($_ , ) at the Revenue
Collections office of the City of Palo Alto, First Floor, 250
Hamilton Avenue, P~ O. Box 10250, Palo Alto, CA 94303, or at such
other place as CITY may from time to time designate, with interest
from the date of this PROMISSORY NOTE SECURED BY DEED OF TRUST AND
ASSIGNMENT OF RENTS ("Note"), until paid, at the rate of three
percent (3%) per year on the unpaid principal balance.
This Note is secured by a deed of trust entitled "DEED OF TRUST AND
ASSIGNMENT OF RENTS" ("Deed of Trust") of even date herewith on
BORROWER’s equitable interest in real property located at 290 - 310
Ventura Avenue, Palo Alto, California, Assessor’s Parcel Number 132-
41-042 ("Property").
This Note is made in connection with an agreement entitled
"AGREEMENT BETWEEN THE CITY OF PAL0 ALTO AND THE PALO ALTO HOUSING
CORPORATION CONCERNING THE ACQUISITION, REHABILITATION .AND
OPERATION OF A TWELVE-UNIT APARTMENT BUILDING AT 290 - 310 VENTUP~A
AVENUE, PALO ALTO" ("Agreement"). Under the Agreement, BORROWER
agrees to acquire and operate the Property as affordable rental
housing.for Low-Income and Very Low-Income Households in the city
of Palo Alto.
All amounts advanced under this Note, at the option of CITY, shall
become immediately due and payable upon the occurrence of an Event
of Default, as such term is defined in the Agreement. Payment in
full of the unpaid principal balance shall be made by BORROWER not
later than forty (40) years after the Close of Escrow.
BORROWER, any endorser of this Note, and any others who may become
liable for all or a part of the obligations evidenced by this Note
may prepay all or any portion of the principal sum of this Note,
without penalty. Any and all payments made hereunder shall be
credited, first, on the interest then due .and, the remainder, on
the principa! balance, and interest on the principal balance so
credited shall thereupon cease.
BORROWER, any endorser of this Note, and any others who may become
liable for all or any part of the obligations evidenced by this
Note or this Note, as amended, hereby individually waive demand,
970630 syn 0071238
presentment for payment, demand and protest, notice of protest,
demand, and of dishonor and non-payment, and consent to any number
of extensions or renewals of time hereof. Any such extensions or
renewals may be made without notice to any of the obligated parties
and without affecting their liability. The pleading of any statute
of limitations as a defense to any demand against BORROWER is
expressly waived by BORROWER. If BORROWER consists of more than
one person or individual, each person or individual shall be
jointly and severally liable under this Note.
BORROWER shall not further encumber, mortgage or subject the
Property, or the real property on which it is located, or any
interest therein, to a deed of trust, mortgage, indenture, or other
document, of legal encumbrance (individually, ’,Encumbrance" and
jointly, "Encumbrances") without the prior written consent of CITY.
Unless CITY expressly agrees otherwise, in writing, any Encumbrance
affecting the Property shall provide that, in ~he event of any
default or breach by BORROWER under any Encumbrance entitling any
party thereunder to accelerate the indebtedness secured thereby and
foreclose upon the Property, CITY shall have the right, but not
the obligation, to (i) cure the default prior to the completion of
any foreclosure and reinstate the Encumbrance, or (2) pay the total
unpaid indebtedness secured by such Encumbrance, in which event,
such Encumbrance shall be released, canceled, or otherwise
reconveyed.
Any amounts expended by CITY under thecontingencies set forth in
parts (i) or (2) of the preceding paragraph shall be reimbursed by
BORROWER upon demand of CITY therefor, and, in any event, such
amounts shall bear interest at the maximum rate permitted by
Article XV, Section 1(2) of the California Constitution, as
amended, from the date such amounts were advanced by CITY until
paid in full by BORROWER. All such amounts, including interest and
any penalty authorized under the Agreement, th±s Note, or the Deed
of Trust, shal! be added to the principal of this Note. The
¯ approval by BORROWER of any Encumbrance, and the placing of a
security interest therefor on the Property, or any portion thereof,
not containing the provisions of the preceding paragraph and this
paragraph shall constitute a default of this Note.
If ~ny default is made hereunder, BORROWER further promises to pay
reasonable attorneys’ fees and costs and expenses incurred by CITY
in connection with any such default or any other action or other
proceeding brought to enforce any of the provisions of this Note.
CITY’s right to such fees shall not be limited to or by its
representation by staff attorneys of, CITY’s Office of the City
Attorney, and such representation shall be valued at the customary
and reasonable rates for private sector legal services.
The relationship of CITY and BORROWER evidenced by this Note shall
be deemed to be one of creditor and debtor and not of partnership
or joint venture.
970630 syn 0071238
2
This Note may not be modified or amended except by an instrument in
writing which expresses such intention of the parties sought to be
bound thereby, and such writing shall be firmly attached to this
Note and made a part thereof.
Any failure.of CITY or other holder to exercise any’rights under
this Note ~hall not constitute a waiver of such rights or of any
other rights under this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of California~
To the extent assignment of this Note is permitted by CITY, the
terms of this Note shall apply to, inure to the benefit of, and
bind all of the parties thereto, their heirs, successors and
assigns.
All terms in this Note which are capitalized shall bear the
meanings set forth in the Agreement.
EXECUTED BY BORROWER by its duly authorized
representative in Palo Alto, County of Santa Clara, State of
California, on the date first above written.
PALO ALTO HOUSING CORPORATION
By:
Title:
3
970630 syn 007123~
RECORDING REQUESTED BY ~ WHEN
RECORDED MAIL TO:
City of Palo Alto
Office of City Attorney
250 Hamilton Avenue
Palo Alto, CA 94301
RECORDED WITHOUT CHARGE.
GOVERNMENT CODE SECTIONS 6103,2738_~
Exhibit D
SPACE ABOVE THIS LINE FOR RECORDER’S USE
DEED OF TRUST AND ASSIGNMENT OF RENTS
APN 132-41-042
This Deed of Trust, made this __ day of , 1997, between the PALO ALTO HOUSING
CORPORATION, a California corporation duly organized .and existing under the Nonprofit Corporation Law of
the State of California (,Trustor"), located at 540 Cowper Street, Suite 201, Palo Alto, California 94301-1806,
FIRST AMERICAN TITLE GUARANTY COMPANY, a California corporation (" Trustee"), and the CITY OF
PALO ALTO, a California municipal corporation ("Beneficiary"),
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE IN TRUST,
WITH POWER OF SALE, that property in Santa Clara County, California, described as:
See Exhibit "A," attached hereto and incorporated herein by this reference.
In the event the herein described prdperty or any part thereof, or any interest therein is sold, agreed to be
sold, conveyed or alienated by the Trustor, or by the operation of law or otherwise, all obligations secured
by this instrument, irrespective of the maturity dates expressed therein, at the option of the holder hereof and
without demand or notice shall immediately become due and payable.
Together With the rents, issues and profits thereof, SUBJECT, HOWEVER, to the right, power and authority
hereinafter given to and conferred upon Beneficiary to collect and supply such rents, issues and profits.
For the Purpose of Securing:
1. Performance of each agreement of Trustor herein contained. 2. Payment of the indebtedness evidenced by one
promissory note ("note") of even date herewith, and any extension or renewal thereof, in the principal sum of
$__,__ executed by Trustor in favor of Beneficiary or order. 3. Payment of such further sums as the then record
owner of said property hereafter may borrow from Beneficiary, when evidenced by another note (or notes) reciting
it is so secured. 4. Performance by Trustor of its obligations arising under that certain contract entitled
¯ "Agreement between The City of Palo Alto and the Palo Alto Housing Corporation Concerning the Acquisition,
Rehabilitation and Operation of a Twelve-Unit Apartment Building at 290 - 310 Ventura Avenue, Palo Alto", dated
, 1997 ("Agreement"), and recorded on , 1997 as Instrument No. ,
in Book ~ Page __ of Official Records, Santa Clara County, California.
To Protect the Security of This Deed of Trust, Trustor Agrees:
(1) To keep said property in good condition and repair; not to remove or demolish any building thereon; to
complete or restore promptly and in good 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; to comply
with all laws affecting said property, or requiting any alterations or improvements to be made thereon; not to
commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to
970701 syn 0071242
cultivate, irrigate, fertilize, fumigate, prune and do all other acts-which from the character or use of said property
may be reasonably necessary, the specific enumerations herein not excluding the general.
(2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with 10ss payable to
Beneficiary. The amount collected Under any fire or other insurance policy may be applied by Beneficiary upon
any indebtedness seq.u.red hereby and in such order as Beneficiary may determine, or at the option of Beneficiary
the entire amount s6 collected or any part thereof may be released to Trustor. Such application or release shall not
cure or waive any default or notice of default hereunder or invalidate any act done~ pursuant to such notice.
(3) To appear in and defend any action or proeecding purporting to affect the security hereof or the rights or
powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and
attorney’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear,
and in any suit brought by Beneficiary to foreclose this Deed of Trust.
(4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including
assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said
property or any part thereof, which appear to be prior or superior hereto; all eosts, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but
without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to
protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes;
appear in and defend any action or proceeding purporting to affect the security her~.of or the rights or powers of
Beneficiary or Trustee; pay, purchase, contest or compromise any incumbrance, charge or lien which in the
judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay neoessary
expenses, employ counsel and pay his or her reasonable fees, costs and expenses.
(5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from
date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided
for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by Beneficiary
not to exeecd the maximum allowed by law at the time ~vhen said statement is demanded.
(6) That any award of damages in connection with any condemnation for public use of or injury to said property
or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys
received by it in the same manner and with the same effect as above provided for disposition of proceeds of fire
or other insurance. ....,..~.
(7) That by accepting payment of any sum secured hereby after’its due date, Beneficiary does not waive its right
either to require prompt payment when due of all other sums so secured or to declare a default for failure ~o to pa~7.
(8) That at any time or from time to time, without liability therefor and without.notice, upon written request of
Beneficiary and presentation of this Deed of Trust and said note for endorsement, and without affecting the personal
liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said
property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any
extension agreement or any agreement subordinating the lien or charge hereof.
(9) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon
surrender of this Deed of Trust and said 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 or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyanee may
be described as "the person or persons legally entitled thereto." Five years after issuance of such full reeonveyance,
Trustee may destroy said note and this Deed of Trust (unless directed in such request to retain them).
(10) That as additional security Trustor hereby gives to and confers upon Beneficia~ the right, power and
authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving
970701 syn 0071242
onto Trustor the fight, prior to any default by Trustor in payment of any indebtedness secured hereby or in the
performance of any agreements hereunder, to collect and retain such rents, issues, and profits as the become due
and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or
by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness
hereby secured, enter upon and take possession of said property or any part thereof, in its own name sue for or
otherwise collect such. rents, issues and profits, including those past due and unpaid, and apply the same, less costs
and expenses of operation and collection, including reasonable attorney’s fees, upon any indebtedness secured
hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property,
the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any
default or notice of default hereunder or invalidate any act done pursuant to such notice.
(11) That upon default by Trustor in payment of any indebtddness secured hereby, or in performance of any
agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery
to Trustee of written declaration of default and demand for sale and of written notice of default and of election to
cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit
with Trustee this Deed of Trust, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may’ then be required by law following the recordation of said notice of defauli, and
notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said
property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such
order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States,
payable at time of sale. Trustee may’postpone sale of all or any portion of said property by public announcement
at such time and place of sale, and from time to time thereafter may postpone such sale by public armouneement
at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the
property so ~old, but without any covenant or warranty, express or impled. The recitals in such deed of any matters
or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary
as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in
eouneetion with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amotint allowed by law in effect at ’the date hereof; all other
sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto.
(12) That Beneficiary, or any successor in ownership of any indebtedness seeured hereby, may from time to time,
by instrument in writing, substitute a sueeessor or successors to any Trustee named herein or acting hereunder,
which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder
of the county or counties where said property is situated, shall be conclusive proof of proper substitution of such
sueeessor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title,
estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and
Beneficiary hereunder, the book and page where this Deed of Trust is recorded and the name and address of the
new Trustee.
(13) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees,
administrators, executors, successors and assigns. The term "Beneficiary" shall mean the owner and holder,
including pledges, of the note secured hereby; whether or not named as Beneficiary herein. In this Deed of Trust,
whenever the context so requires, the maseuline gender includes the feminine and/or neuter, and the singular number
includes the plural.
(14) That Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public
record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed
of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by
Trustee.
(i5) That Trustor shall not sell, convey, transfer, hypothecate or alienate the real property described herein, or any
part thereof, or any interest therein, or shall not be divested of title or any interest therein in any manner or way,
970701s~0071242
3
whether voluntarily or involuntarily, without the written consent of Beneficiary being first had and obtained, or
if Trustor shall fail to make any payments due under the not~ secured by this Deed of Trust, or fail to perform any
other obligation under this Deed of Trust or note secured hereby, or any other De~t of Trust encumbering the
subject property, then Beneficiary shall have the fight, at its option, to declare any indebtedness or obligations
secured hereby, irrespectiv~ of the maturity date specified in any notes evidencing the same, immediately due and
payable.
(16) That Trustor shall promptly pay when due the payments of interest, principal and all other charges accruing
under any superior or prior trust deed, mortgage, or other instrument encumbering the subject property. Beneficiary
shall have the right, but not the obligation, to cure any defaults on any superior or prior deed of trust or note
secured thereby and upon curing such default Trustor shall imm~iately reimburse Beneficiary for all costs and
expenses incurred thereby, together with interest thereon at the maximum legal rote permitted to be charged by non-
exempt lenders under the Constitution of the State of California, and Trustor’s failure to pay any such amount on
demand shall be a default hereunder. Trustor’s breach or default of any covenant or condition of any superior or
prior trust deed, mortgage or other instrument encumbering the Property shall be a default under this Deed of Trust.
(17) That Tmstor further acknowledges in the event of a default by Trustor on account of the note secured hereby,
and the expiration of any cure period provided therein, then Beneficiary at its sole option shall have the right to
declare the note secured hereby immediately due and payable.
The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder
be mailed to it at its address hereinbefore set forth and another copy be mailed to the City of Pale Alto, Planning
Department, Director of Planning and Community Environment, P. O. Box 10250, Pale Alto, CA 94303.
Notwithstanding any provision in the Agreement to the contrary, the lien of interest in this Deed of Trust
shall be subordinate to the lien of interest in the Deed of Trust made by Trustor in favor of Comeriea Bank-
California, the Agreement and the Deed of Trust made by Trustor in favor of Comeriea Bank-California and
Beneficiary in connection with the acquisition of the subject property may be recorded concurrently herewith.
PALO ALTO HOUSING CORPORATION
By:Marlene H. Prendergast
Title:Executive Director
STATE OF CALIFORNIA )
)
COUNTY OF SANTA CLARA )
On , before me, , a notary public in and for said County, personally
appeared Madene H. Prendergast, personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument, and "acknowledged to me that she executed the
same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
970701syn0071242
4
EXHIBIT E
290"310 VENTURA APARTMENTS
CALCULATION OF BENEFICIAL INTERESTS
Part I. Initial Beneficial Interests of PAHC and the CITY:
A. Greater of:
Actual Total Costs Paid by PAHC to Acquire
and Rehabilitate (or Construct) the PropertyI OR
B. Equals:
Property’s Value Based on Seven Units with
Restricted Rents, Five Units at Market Rents
& Miscellaneous Income. 2
AMOUNT FOR CALCULATION OF INITIAL INTERESTS.
Q
PAHC Cash Contribution [Amount of Debt
Obtained by PAHC from non-CITY sources, plus
actual cash paid by PAHC].
PAHC’s Beneficial Initial Interest [B2
divided by BI].
CITY Contribution & Amount of CITY Note [BI
less B2]~
CITY’s Initial Interest [B4 divided by BI].
Final calculation shall be made after the close of escrow and shall include actual final costs for acquisition,
rehabilitation, financing and closing costs and the cost of the initial deposit to a replacement reserve fund.
Restricted Value of Property is based on PAHC’s planned rent schedule for seven rent restricted units and
five market rent units. The restricted rents are within the maximum rent limitations of this Agreement, with 4-units
with rents at 30% of 40% of median income and 3-units with rents at 30% of 50% of median for a total gross income
of $ . A gross income multiplier [9.14] was applied to total gross income to estimate a restricted value.
1
970701 syn 0071239
Part Method for Adjustment of Beneficial Interests When
Capital Improvements Are Made:
A.Initial Restricted Value [Part I, Line B. i] :
B.Additional Capital Costs Paid For by’PAHC 3:
C.Additional Capital Costs Paid For by CITY 4:
D. New Restricted Property Value:$
[Lines A + B + C]
100%
Revised PAHC Contribution & Beneficial
Interest:
[Part I, Line B.2. + Part II, Line B]
Revised CITY Contribution & Beneficial
Interest:
[Part I, Line B.4. + Part II, Line C]
3 Includes all costs paid directly by PAHC and by funds from loans obtained by PAHC other than from the
CITY.
4 Includes costs paid for with funds obtained from the CITY, whether the funds were provided in the form of
a grant or a loan.
970701 syn 0071239
2
PART III. Calculation of Amount Owed to the CITY after
Termination of the Agreement or In Event of a Voluntary
Sale or Other Disposition, Prior to Expiration of Term,
When the CITY Does Not Exercise Its Option to Purchase:
Greater of ~ctual Sales Price or Fair Market Value:$
Less: Actual and Reasonable Selling Costs:$
(if applicable)
Less: Principal Balance of Any Outstanding Loans $
On Property, Other Than CITY Loan(s), [If Such Loans Have
Been Approved by the CITY According to This Agreement]
Less: Outstanding Principal and Accrued Interest
Due On CITY Note(s):
Net Sales Proceeds (or Net Market Value):
Less: CITY’s Beneficial Interest of
Net Sales Proceeds (____%):
Remaining Proceeds Equals PAHC Share:
PART IV. Calculation of Option Price When CITY Exercises Option
to Purchase (Sale or Transfer at Restricted Value):
Appraised Value of Property Based on Restricted Rents: $
[Value to be determined based on rents in effect when the City
exercises option, but not exceeding the value based on the
maximum rents permitted at that date by this Agreement]
Less: Actual and Reasonable Selling Costs:
(if applicable)
Less: Principal Balance of Any Outstanding Loans $
On Property, Other Than the CITY Loan(s)
[If Such Loans Have Been Approved by the CITY According ,to This
Agreement]
Less: Outstanding Principal and Accrued Interest
Due On the CITY’s Note(s):
Net Proceeds (or Market Value):
Less: The CITY’s Beneficial Interest
of Net Sales Proceeds( %):
Remaining. Proceeds Equals PAHC Share:
970701 syn 0071239
3
EXHIBIT
INSURANCE REQUI~S
FIRE A~D EXTENDED COVERAGE Insurance, to cover not less than
One Hundred Percent (100%) of the replacement cost of all
insurable improvements within or upon the Property. Such
policies shall include water damage and debris cleanup
provisions.
4.
POLICY MINIMUM LIMITS oF LIABILITY
WORKERS’
COMPENSATION
COMPREHENSIVE
AUTOMOBILE
LIABILITY,
including owned,
hired, and nonowned
automobiles
Statutory
Bodily Injury
Prop. Damage
$5,000,000 ea. person
$5,000,000 ea. occur.
$5,000,000 ea. occur.
COMMERCIAL Bodily Injury
GENERAL
LIABILITY,
including Prop¯ Dama~geproducts and
completed operations,
broad form contractual,
and personal injury.
$5,000,000 ea. person
$5,000,000 ea. occur.
$5,000,000 aggreg.
$5,000,000 ea. occur.
Each insurance policy required by this Agreement shall
contain the following clauses:
"This insurance shall not be canceled, limited in scope
of coverage or nonrenewed until after thirty (30) .days
written notice has been given to the: CITY OF PALO
ALTO/Planning and Community Environment Department, P.
O. Box 10250, Palo Alto, CA 94303."
"All rights of subrogation are hereby waived against
the CITY OF PALO ALTO and the members of the City
Council and elective or appointive officers or
employees, when acting within the scope of their
employment or appointment."
o "The CITY OF PALO ALTO is named as a loss payee on the
property insurance policy described above."
"The CITY OF PALO ALTO is added as an additional
insured as respects operations of the named insured at
or from the Property,"
970701 syn 0071239
o "It is agreed that any insurance maintained by the CITY
OF PALO ALTO will apply in excess of, and not
contribute to, insurance provided by this policy."
All insurance coverage required shall be provided through
carriers with a rating of A:X or higher in Best’s Key Ratinq
Guide that are admitted to do business in the State of
California° The certificate(s) of insurance evidencing such
coverage shall be completed and executed by an authorized
representative of the company providing insurance, and shall be
filed with and approved by the CITY’s risk manager.
970701 syn 0071239
EXHIBIT
CALCULATION OF PURCHASE PRICE FOR 290-510 VENTURA A~TUE
i) 5/12 of $1,228,692 Purchase Price Paid by
Hamilton Avenue Properties on June 27, 1996:
2) Plus 5/12 of the Total Cost of "Hamilton I"
and "Hamilton II" rehabilitation as described in
Exhibit "H" I.
3) Total Purchase Price:
$511,955
$
$
Actual purchase price paid by PAHC is to be determined prior to close of escrow by using the actual costs
of rehabilitation work verified by contracts, invoices and other documentation to the satisfaction of PAHC and the
CITY.
970701 syn 0071239
Q
0
Rehab" . ~tion Work and Cost Estimates
EXHIBIT H
O
F.,+
Z
EXHIBIT
EXHIBIT H
c)
Land Use Policies
Rural Unincorporated Area Issues and Policies
Description and Intent
R-LU 35
Ranchlands: Lands predominantly used as
ranches in rural unincorporated areas of the
county, remote from urbanized areas and
generally less accessible than other mountain
lands. Important resources include reservoir
watersheds for regional water supply, grazing
lands, mineral resources, forests and wildlife
habitat, rare or locally unique plant and animal
communities, historic and archeological sites,
and recreational and scenic areas of importance
that also serve to define .the setting for the urban
areas.
R-LU 36
The general intent of the Ranch]ands designa-
tionis to maintain the existing conditions of
very low intensity uses, rural lifestyle, and
limited public acc.ess. Development policies
shall protect and enhance the continued use of
the land for ranching.
R-LU 37
Population shall be held to a minimum, and
land uses shall be of a nature and intensity
which do not require higher levels of public
services than those presently provided.
R-LU 38
Subdivision and parcel creation data, including
the issuance of certificates of compliance, shall
be collected and monitored. If subdivision
activity reaches the thresholds established by the
policies of the General Plan, Ranchlands policies
shall be evaluated for possible revision.
Allowable Uses
R-LU 39
The primary use shall be ranching. Other
allowable uses shall be:
a.agriculture;
b.low intensity recreational uses;
c.mineral extraction;
d.land in its natural state;
e.hunting;
f.wildlife refuges;
g.very low density residential development;
and
h. very low intensity commercial, industrial, or
institutional uses, provided that they
primarily support ranching activities or the
enhancement, protection, study or apprecia-
tion of the natural resources of the area.
Development Policies - General Principles
for Ranchlands Areas
R-LU 40
General principles governing development and
land division in Ranchlands areas shall be as
follows:
1.No large ranches shall be allowed to fully
divide into small parcels.
2.The function of allowed subdivisions shall
be for the following, provided that very little
population is added to Ranchlands areas:
a. help ranchers trade land;
b. raise capital in times of need;
c. help settle estates; and
d. provide for family divisions.
3.The right of ranchers to build residences and
to divide "Williamson Act" property under
the terms of existing Land Conservation
contracts is affirmed.
4.There shall be a limit to the number of
parcels created within the Ranch]ands area.
5.The rural character of the area shall not be
changed, and land use decisions shall
prevent an influx of people into the Ranch-
lands area.