HomeMy WebLinkAbout1996-04-22 City Council (14)TO:
City
City of Palo Alto
Manager’s Report
HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: Planning and
Community Environment
AGENDA DATE: April 22, 1996 CMR: 186:96
SUBJECT:Agreement with Palo Alto Housing Corporation Concerning the Acquisition and
Operation of a Four-Unit Apartment Building at 330 Emerson Street for Use As
Low and Very Low-Income Rental Housing Pursuant to the Below Market Rate
Agreement Between the City and Classic Communities, Inc. for the Residential
Project At 245 Lytton Avenue
REQUEST
Council action is requested to approve an Agreement with the Palo Alto Housing Corporation
(PAHC) for the acquisition of the four-unit property at 330 Emerson Street for use as low and very-
low income rental housing, in accordance with the Below Market Rate (BMR) program agreement
between the City and Classic Communities, Inc., the developer of the residential project at 245
Lytton Avenue, a portion of the former Times-Tribune property.
RECOMMENDATIONS
Staff recommends that the Council:
1)Approve the attached agreement (with its attached form of promissory note and deed of trust)
with the Palo Alto Housing Corporation, in order to regulate rents and occupancy and to
secure the City’s interest in the value of the BMR contribution, for the purpose of preserving
the property at 330 Emerson Street as affordable low and very low-income rental housing for
40 years;
2)Authorize the Mayor to execute the agreement in substantially similar form; and
3)Authorize the City Manager to execute any other documents necessary to permit the parties
to close the transaction acquiring 330 Emerson Street including, but not limited to, a
subordination agreement, and direct the City Manager to administer the provisions of the
agreement.
POLICY IMPLICATIONS
The actions recommended in this staff report are consistent with the City’s affordable housing
development objectives as stated in the Consolidated Plan for 1995 - 2000 adopted by the Council
CMR: 186:96 Page 1 of 3
on May 1, 1995 and are aIso consistent with the Housing Element of the Comprehensive Plan. The
actions are consistent with provisions of Ordinance No. 4262, passed March 6, 1995, approving the
Planned Community zone for 330 Emerson Street, and with the BMR agreement, executed August
1, 1994, between the City and Classic Communities Inc., the developer of the residential project at
245 Lytton Avenue.
EXECUTIVE SUMMARY
In fulfillment of Program 13, the Below Market Rate Program, of the City’s Housing Element, City
staff negotiated an agreement with the developer of 245 Lytton Avenue whereby he agreed to
construct a 4-unit rental apartment building at 330 Emerson, and then transfer ownership of the
completed building and land to PAHC for the negotiated amount of $150,000. The developer
acquired the lot at 330 Emerson as part of the purchase of the former Times-Tribune property. The
provision of four off-site rental units was accepted by the City in lieu of the normal BMR
requirement of two, on-site BMR ownership units within the 22-unit residential project.
The purpose of the attached agreement is to restrict, for 40 years, the use and occupancy of the
property as affordable rental housing for low and very low-income households and to provide
mechanisms under which a significant portion of the value of the original BMR contribution by the
developer will be returned to the City’s housing fund, in the event of a sale or foreclosure of the
property or a default and breach of the agreement. The City is not providing any cash funding to
this transaction. PAHC has secured a loan of $156,000 from a local bank, on favorable terms, for
the acquisition price and closing costs.
The agreement’s rent and occupancy restrictions conform to HOME program rules in order for the
$420,000 difference between the current estimated market value ($570,000) of the property (without
rent restrictions) and the $150,000 purchase price to be used as local "match" for future HOME grant
applications. The agreement requires that three units must be rented to low-income households,
whose incomes are within 60 percent of the HUD area median, and at least one unit must be rented
to a very low-income household, whose income is within 50 percent of median. These rent
restrictions also conform with the public benefit findings of Ordinance No. 4262, passed on March
6, 1995, which established the Planned Community zoning of the site to allow construction of the
4-unit building.
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 based on
restricted rents. The present "restricted value", agreed to by staff and PAHC, is $292,600. PAHC’s
interest is calculated as 52.24 percent based on the $156,000 it is contributing from the bank loan
for the purchase price and closing costs of the property. The City’s interest is the remainder of
$142,600, or 47.76 percent. The City’s initial interest will be secured by a note and deed of trust
recorded after the bank’s deed of trust. 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 during the term of the agreement at the "restricted value"
based on the affordable rents then in effect, in event of a proposed sale or transfer by PAHC or a
CMR: 186:96 Page 2 of 3
default of the agreement. At the end of the 40 year term, unless the City exercises its right to acquire
the property, 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.
FISCAL IMPACT
There is no effect on City housing funds, as PAHC has obtained sufficient private bank financing to
purchase the property. Thus, no cash assistance is being provided by the City. This approach has
been taken due to the anticipated demands on available City and CDBG funds from new construction
and rehabilitation housing projects which are currently active or proposed.
ENVIRONMENTAL ASSESSMENT
The development of the project at 330 Emerson Street was previously determined to be categorically
exempt under Section 15303 (b) of the California Environmental Quality Act (CEQA) Guidelines.
Actions by a public agency related to the acquisition of existing housing units, as part of an
affordable housing program are also categorically exempt under Section 15326 of the CEQA
Guidelines.
STEPS FOLLOWING APPROVAL
Acquisition of the property is scheduled for early May 1996. The building is currently under
construction and the work is proceeding on schedule. According to the conditions of approval for
the project at 245 Lytton Avenue, the construction of the 330 Emerson Street building must be
completed "prior to final inspection or occupancy, whichever is first, of 12 of the 22 units in the 22-
unit project". Acquisition by PAHC is required to occur as soon as possible after completion of
construction of the 330 Emerson property, which is defined in the BMR agreement as within 30 days.
ATTACHMENTS
1. Agreement Between the City of Palo Alto and the Palo Alto Housing Corporation Concerning the
Acquisition and Operation of a Four-Unit Apartment Building at 330 Emerson Street, Palo Alto
PREPARED BY:
DEPARTMENT HEAD REVIEW:
CITY MANAGER APPROVAL:
Catherine Siegel, Housing Coordinator
KENNETH R. SCHREIBER
Director of Planning and
Community Environment
BERNARD M. S’TROJNY (\ ~
Assistant City Manager
CC:Palo Alto Housing Corporation
Scott Ward, Classic Communities, Inc.
CMR: 186:96 Page 3 of 3
.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
SPACE ABOVE THIS LINE FOR RECORDER’S USE
AGREEMENT BETWEEN THE CITY OF PALOALTO AND THE PALO ALTO
HOUSING CORPORATION CONCERNING THE ACQUISITION AND OPERATION
OF A FOUR-UNIT APARTMENT BUILDING AT 330 EMERSON STREET,
PALOALTO
THIS AGREEMENT is entered into , 1996, 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 Stateof 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").
RECITALS:
WHEREAS, the development and preservation of affordable
housing for Low-Income and Very Low-Income Households is an
objective of CITY’s Consolidated Plan and CITY’s Housing Element;
and
WHEREAS, in satisfaction of Program 13 (the Below Market
Program) of CITY’s Housing Element, the developer of the
residential project at 245 Lytton Avenue and 305-337 Emerson Street
has agreed to construct and sell to PAHC a four-unit apartment
building located at 330 Emerson Street, Palo Alto, APN 120-25-095
("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
WHEREAS, PAHC desires to acquire and operate the Property
for the purpose of providing affordable rental housing to Low-
Income Households and Very Low-Income Households; and
WHEREAS, CITY, which qualifies as a "State Recipient" for
purposes of the federal HOME Program and the Regulations
promulgated thereunder, intends that PAHC operate 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 CITY’s affordable housing program, to
qualify as "match" for future City applications for HOME funds; and
960416 syn 0070941
WHEREAS, all payments of principal and interest are
intended to be deposited in CITY’s Residential Housing In-lieu Fund;
NOW, THEREFORE, in consideration of the following
covenants, agreements, terms and conditions, the parties agree:
ARTICLE i - 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 housing unit on the Property that
is used for .residential rental purposes as of the Close of Escrow.
"Close of Escrow" means the date of recordation of the
grant deed to 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 as a tenant.
"HUD" means the United States Department of Housing and
UrbanDevelopment.
"Income Certification" means a determination of a
Household’s annual income according to Section 92.203 and Section
92.2 of the Regulations, from the written assertion provided by one
or more members of the Household and other supporting evidence,
using the form set forth in Exhibit "B"
"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 Gross 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 written direction
of CITY.
"Regulations"means the regulations promulgated under the
HOME Program, 24 CFR Part 92.
960416 syn 0070941
"Very L~w-Income Household" means a Household whose
annua! 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 Gross 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 CITY,
and wil! remain in full force and effect until forty (40) years
after the Close of Escrow. If PAHC will be unable to c!ose escrow
after the execution of this Agreement, then this Agreement may be
terminated by CI~£Y.
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 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(m) (5) of the Regulations under the subordination
agreement between the Lender and CITY. The affordability
restrictions of this Agreement wil! 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 purchase the Property for $150,000.
PAHC will pay normal buyer’s closing costs and will prepay one
year’s property insurance, estimated to be $3,400. PAHC will also
fund a reserve account for the Property for operating costs and
replacements in the amount of at least $2,124. CITY wil! not be
responsible for the acquisition costs, closing costs, or the cost
of any additional 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 financing for the Property from the Lender in the
estimated amount of $156,000. The Lender’s loan will be evidenced
by a promissory note and secured by a deed of trust.
3.2 Promissory Note
3.2.1 To secure the performance of all covenants,
agreements, terms and conditions of this Agreement, PAHC will
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execute and deliver, prior to the Close of Escrow, a promissory
note ("Note") in the amount of $142,600, made payable to CITY, as
payee, and executed by a duly authorized officer or representative
of PAHC, as maker, the form of which 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 CITY in the event that PAHC is in default
under this Agreement, the Note, or the Deed of Trust, and 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 CITY asbeneficiary and First American Title Guaranty Co.,
as trustee, the form of which is set forth in Exhibit "D"
3.4 Subordination
3.4.1 CITY agrees to subordinate the Note and the Deed
of Trust to the Lender’s promissory note and deed of trust,
described in 3.[i;2, for the initia! purchase of the Property, to
the extent any such subordination agreement is consistent with
applicable law, including, without limitation, CITY’s laws, rules,
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 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
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 CITY and PAHC each will hold a
beneficial interest in the Property, as provided herein. The
initia! beneficial interests of each party in the Property will be
established at the Close of Escrow, or as soon thereafter as
960416 syn 0070941
practicable, and based on the actual closing costs paid by PAHC and
the final loan amount made by the Lender, and 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". PAHC will
inform CITY, in writing, in a timely manner, of the date and cost
of such capital improvements and the source of funds to be used to
pay for the capita! improvements°
4.2 Reporting to City
PAHC will submit reports in a format and at a time
specified by CITY. The reports will contain such information as
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 510740. 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.
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 CITY as beneficiary in
regard to CITY’s beneficial interest, in an amount acceptable to
CITY, which wil! be free and clear of any encumbrances thatwould
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
For a period of forty (40) years after the Close of
Escrow, PAHC will operate the Property as rental housing at
affordable rents for occupancy by Low-Income Households 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.
5.2 Qualification As Affordable Rental Housing
5.2.1 Except as provided in this Section, PAHC will
maintain the rents and occupancy of the Assisted Units in
accordance with Section 92.252 of the Regulations, for a period of
forty (40) years after the Close of Escrow.
960416 s~ 0070941
5.2.2 The four (4) Assisted Units will be rented at all
times, as follows:
(a) At least one(l) Assisted Unit will be occupied by a
Very Low-Income Household, and will be rented in accordance with
Section 92.252 (a) (2) (ii) of the Regulations~
(b) Up to three (3) Assisted Units will be occupied by
Low-Income Households, and will be rented as follows: at the
commencement ofthe initial fixed-term occupancy of any Low-Income
Household, the Household’s annua! income will not exceed sixty
percent (60%) of the Median Gross Income for the Palo Alto Area;
and at the commencement of any subsequent fixed-term occupancy by
such Low-Income Household, the Household’s annual income will comply
with the Regulations.
(c) The rents for those Units will be no greater than
the lesser of:
(i) the rent determined under Section 92.252(a) (i) (i) of
the Regulations [the Section 8 Fair Market Rents]; or
(ii) the rent determined under Section 92.252(a) (I) (ii)
of the Regulations, however, the rent will be calculated based on
a gross income of not more than sixty percent (60%) of the Median
Gross Income for the Palo Alto Area, rather than the sixty-five
percent (65%) of the Median Gross Income for the Palo Alto Area, as
set forth in the Regulations.
5.2.3 If, at the annual anniversary of the submittal of
the income certffication, 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(c) of the Regulations as a condition of continued occupancy
of the Assisted Unit.
5.2.4 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 Section 5.2.2 and
within thirty percent (30%) of such Household’s income as certified
annually.
5.2.5 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.
5.2.6 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.
5.2.7 A failure by PAHC to maintain the affordability
(levels and occupancy) restrictions required by this Agreement and
the Regulations will constitute a default of this Agreement. The
960416 syn 0070941
Property will qualify as affordable housing, notwithstanding a
temporary noncompliance with the provisions of Section 5.2.2, if
the noncompliance arises as a result of an increase in the income
of any Assisted Unit tenant and if al! vacancies are filled in
accordance with Subsection 5.2.2. Priority in the rental of vacant
units #ill be given, first, to compliance with the Very Low-Income
Household occupancy and rental requirements referred to in Section
5.2.2 (a) .
5.3 Designation 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 wil! be made at the time of
initia! 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 al! applicable CITY ordinances,
including the site development regulations of Ordinance No. 4262,
attached hereto as Exhibit "G", which governs the conditions of
approval for the Planned Community zone affecting the Property.
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 in
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 wil! 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 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 CITY, upon request, will constitute a default
under this Agreement.
5.5.4
available for
PAHC will preserve its records and make them
review by CITY, including its designated
960416 syn 0070941
representatives, in accordance with Section 92.508(c) and (d) of
the Regulations.
5.6 On-site Inspections
CITY will have the right to make periodic on-site
inspections of the Property during working hours.
ARTICLE 6 CITY’S RIGHT TO ACQUIRE PROPERTY
6.1 Option to Purchase: Appraisal Value Based on
Restricted Rents
6.1.1 PAHC hereby grants CITY an option to purchase the
Property at any time during the term of this Agreement, whenever
PAHC decides to dispose of the Property prior to the expiration of
the term of this Agreement, which decision shall be communicated by
PAHC, in writing, to CITY, or upon the occurrence of an Event of
Default. The option may be exercised by CITY by the act of
communicating its election to purchase to PAHC and paying the
purchase price determined by appraisal in accordance with the
provisions of Section 6.1.2 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 Within 45 days of PAHC’s decision to dispose of the
Property or its failure to cure an Event of Default, the option
price shal! be~determined by an appraiser whose services will be
obtained by and mt CITY’s expense. 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 CITY exercises the option to
purchase set forth in Section 6.1, or the value of the Propertyas
restricted by the applicable federal regulatory requirements and
use restrictions referred to in this Agreement. If PAHC does not
agree on the value of the Property determined by CITY’s appraiser,
then, within 15 days of 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. CITY shal! close escrow within 120 days or
such option shall expire.
6.1.3 In the event that CITY fails to exercise its
option to purchase the Property within 120 days, then, upon CITY’s
receipt of payment of all amounts due and payable under the Note
and in accordance with CITY’s beneficial interests in the Property,
which is calculated in accordance with the provisions of Part III,
Exhibit "E", 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.
960416 s>m 0070941
6.2°Right of First Refusal: Appraisal Value Based on
Market Rents
6.2.1 PAHC hereby grants 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. CITY may exercise such
right of first refusa! after PAHC has first given CITY notice of
its intent to sell the Property, provided it communicates to PAHC
its election to exercise its right of first refusa! and pays a
purchase price °equal to the fair market value of the Property
without regard to the affordability restrictions.
6.2.2 Within 45 days of CITY’S notice to PAHC that it
will exercise its right of first refusal, the fair market value of
the Property shall be determined by an appraiser whose services
will be obtained.by and at CITY’s expense. If PAHC does not agree
on the fair market value of the Property as determined by CITY’s
appraiser, then, within 15 days of CITY’s receipt of PAHC’s notice
rejecting such appraisal, the parties shall jointly select an
independent appraiser who shall determine the fair market 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.
6.3 Distributions Upon Sale In the event of a sale of
the Property, the proceeds of such sale shall be~.~distributed in the
fol!owing 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 CITY pursuant to the terms of Section 3.4.2
which stands in a superior position to CITY’s loan;
(c) To CITY, to repay the principal amount and all other
sums due and payable under the Note and Deed of Trust; and
(d) To CITY and PAHC, based on each party’s respective
beneficial interests determined pursuant to Section 4.1 hereof, the
balance of the proceeds.
6.4. Assignment of Option
CITY, in its sole discretion, may appoint an agent to
exercise its option to purchase the Property on 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 against 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
960416 syn 0070941
9
CITY, which consent shall be granted by adoption of a resolution of
the 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 assigrament or transfer hereunder without the express
written consent of CITY shall be void, and shall be deemed a
default of this Agreement.
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 of._the date of Close of Escrow, PAHC, at its sole cost
and expense, .and~&ny 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 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
960416 syn 0070941
lO
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
financia! condi5ion or business of PAHC, and there are no
proceedings pending or, to the knowledge of PAHC, threatened,
against PAHC which would have a materia! 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 acquire 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 CITY.
ARTICLE 9 -INDEMNITY
PAHC agrees to protect, indemnify, defend and hold
harmless CITY, its Council members, officers, emp!oyees, 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 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 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
ii
960416 s>m 0070941
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
writing, its inability to pay its debts as they fall due, or makes
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) PA_HC 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.
10o2 Remedies for Default
Upon the occurrence of a default by PAHC, CITY shall have
the following rights and remedies, in addition to all other rights
and remedies provided by law, to which 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 CITY;
(c) Compel PAHC’s performance of its obligations under
this 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
960416 s}~ 0070941
12
to the acquisition, management or disposal of real property by the
State of California, engages in the following:
(i) Possess, operate, complete, lease, rent, renovate,
modernize, insure, or sell for cash or credit, the Property;
(ii) Pursue to final collection by way of compromise or
otherwise all claims against PAHC which are assigned by PAHC to
CITY; and
(iii) Convey and execute in the name of CITY all deeds
of conveyance, deeds of release, assignments and satisfactions of
the deeds of trust, and any other written instrument relating to
real or personu~ property, or any interest of PAHC therein
subsequently acquired by 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
(415) 329-2145 (FAX)
PA~C Palo Alto Housing Corporation
540 Cowper Street, Suite 201
Palo Alto, CA 94301-1806
Attn: Executive Director
(415) 321-9709
(415) 321-4341 (FAX)
ARTICLE 12 -MISCELLANEOUS PROVISIONS
12.1 Neither the failure nor the delay on the part of
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 emp!oyee between the
parties. PAHC shall at all times remain an independent contractor
960416 syn 0070941
13
with respect to the services to be rendered or work to be
performed, or both, under this Agreement.
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 a 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 a~y
cause whatsoever.
12.6 If any provision of this Agreement shall be
determined by a :court of competent jurisdiction to be invalid,
illega!, void, D~ 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 CITY or incur any obligation in the name of 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 and the Note shall be deemed to be 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 referred to in this Agreement 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 may be 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.
12.13 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.
960416 s.’,’n 0070941
14
12.14 This Agreement and any amendments or supplements
thereto shal! 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:
PALO ALTO HOUSING CORPORATION
By
Ti~
City Clerk
APPROVED AS TO FORM:
Senior Assistant City Attorney
APPROVED:
City Manager
Deputy City Manager,
Administrative Services
Director of Planning and
Community Environment
Risk Manager
Exhibit "A":
Exhibit
Exhibit "C":
Exhibit "D":
Exhibit "E":
Exhibit
Exhibit
Legal Description of Property
Income Certification Form
Promissory Note
Deed of Trust
Calculation of Beneficia! Interests of Parties
Insurance Requirements
Ordinance No. 4262
960416 syn 0070941
15
CERTIFICATE OF ACKIqOWLEDGMEIqT
(Civil Code § 1189)
STATE OF
COUNTY OF
))
)
On , before me,,
a notary public in and for said County, personally appeared HELENE
S. WHEELER, 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.
960416 s}~ 0070941
16
CERTIFICATE OF. ACKI~OWLEDGMEIT~
(Civil Code § 1189)
STATE OF C__~-~~ )
COUNTY OF
On ~V~\u_ \~, \%q~ , before me,~).~~\~ qu6sS~
a notary public in~nd for said County, persoDally appea~ed
~. bO~o~, 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. ~
COMM. #1024186co ~
960416 syn 0070941
17
EXHIBIT "A"
LEGAL DESCRIPTION
REAL PROPERTY in the City of Palo Alto, County of Santa Clara, State of California, described as follows:
A portion of Lot 3 in Block 3 as shown on the Map of University Park (now Palo Afro) recorded in Book D,
page 69 of Maps, records of Santa Clara County, California, and being described as follows:
Commencing at a point on the Southwesterly line of Emerson Street, distant thereon 150 feet; Northwesterly
from the intersection of the Northwest~ty line of Lytton Avenue as said Avenue formerly existed 60 feet wide
with ~he Southwesterly line of Emerson Street;, running thence Southwesterly and parallel with Lytton Avenue
112 feet 6 inches; thence at right angles Northwesterly and parallel with Emerson Street 50 feet; thence at
dght angles Northeasterly and parallel with Lytton Avenue 112 feet 6 inches to said Southwesterly line of
Emerson Street; thence Southeasterly aJong said Southwesterly line of Emerson Street 50 feet to the point
of beginning.
APN: 120-25-095
Sample Format for Calculating Income
EXHIBIT B
INCOME CERTIFICATION FORM
PART !. SUMMARY OF FAMILY INCOME DATA
1. Name 2. Identification
ASSETS
Family
Member
3. Total Net Family Assets
Current
Cash VaiueAsset Description
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
ANTICIPATED ANNUAL INCOME
Family
Member
a.Wages/
Salaries
b.Benefits/
Pensions
c.Public
Assistance
d.Other
Income
6. Totals a.b.c.d.e.
7. Enter total of items from 6a. through 6e.
This is Annual Income.7.
e.Asset
Income
Enter the
greater of
lines 4 or 5
from above
in e.
42--Technical Guide for Determining Income hnd Allowances for the HOME Program
HUD May, 1994
EXHIBIT C
PROMISSORY NOTE
SECURED BY
DEED OF TRUST AND ASSIGNMENT OF RENTS
$ 142,600 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 principa! sum of one hundred
forty-two thousa!~d six hundred dollars ($142,600) 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 principa! 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 330
Emerson Street, Palo Alto, California, Assessor’s Parcel Number 120-
25-095 ("Property")°
This Note is made in connection with an agreement entitled
"AGREEMENT BETWEEN THE CITY OF PALO ALTO AND THE PALO ALTO HOUSING
CORPORATION CONCERNING THE ACQUISITION AND OPERATION OF A FOUR-U-NIT
APARTMENT BUILDING AT 330 EMERSON STREET, 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 immediate2y 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 shal! 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 principal 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,
presentment for payment, demand and protest, notice of protest,
960416 syn 0070932
1
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 the 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 the contingencies 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, this Note, or the Deed
of Trust, shal! be added to the principa! 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 any default is made hereunder, BORROWER further promises to pay
reasonable attorneys’ fees and costs and expenses incurred by CITY
in connection wigh 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.
This Note may not be modified or amended except by an instrument in
writing which expresses such intention of the parties sought to be
960416 syn 0070932
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 shal! 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
960416 s.~m 0070932
3
EXHIBIT D
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.
GOVERIWI~ENT CODE SECTIONS 6103, 27383
SPACE ABOVE THIS LINE FOR RECORDER’S USE
DEED OF TRUST AND ASSIGNMENT OF RENTS
APN 120-25-095
This Deed of Trust, made this ~ day of , 1996, 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 T1TLE 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 property 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
$142,600 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 Funding and Regulatory
Agreement, dated , 1996 ("Funding Agreement"), and recorded on , 1996 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 work.man.like 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 requiring any alterations or improvements to be made thereon; not to
commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to
cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property
may be reasonably necessary, the specific enumerations herein not excluding the general.
960416 syn 0070923
1
(2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to
Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon
any indebtedness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary
the entire amount ~ collected or any part thereof may be released to Trustor. Such application or release shall not
cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
(3) To appear in and defend any action or proceeding purporting to affect the security hereof or the fights 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 costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but
without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to
protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes;
appear in and defend any action or proceeding purporting to affect the security hereof or the fights 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 necessary
expenses, employ counseLand 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 exceed the maximum allowed by law at the time when 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 fight
either to require prompt payment when due of all other sums so secured or to declare a default for failure so to pay.
(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 reconveyance may
be described as "the person or persons legally entitled thereto." Five years after issuance of such full reconveyance,
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 Beneficiary the fight, power and
authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving
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
960416s~0070923
2
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 indebtedness secured hereby, or in performance of any
agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery
to Trustee of written declaration of default and demand for sale and of written notice of default and of election to
cause to be sold said property which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit
with Trustee this Deed of ~i’i’ust, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and
notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said
property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such
order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States,
payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement
at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement
at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the
property so sold, but without any covenant or warranty, express or impled. The recitals in such deed of any matters
or facts shall be conclusive proof of the truttffulness 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
connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms
hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other
sums then secured hereby; mad the remainder, if any, to the person or persons legally entitled thereto.
(12) That Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time,
by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder,
which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder
of the county or counties where .said property is situated, shall be conclusive proof of proper substitution of such
successor Trustee or Trustees~ who shall, without conveyance from the Trustee predecessor, succeed to all its title,
estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and
Beneficiary hereunder, the book and page where this Deed 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 masculine 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.
(15) 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,
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 note 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 Deed of Trust encumbering the
960416 s~0070923
subject property, then Beneficiary shall have the right, at its option, to declare any indebtedness or obligations
secured hereby, irrespective 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 immediately 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 Trustor 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 Palo Alto, Planning
Department, Housing Coordinator, P. O. Box 10250, Palo Alto, CA 94303.
Notwithstanding anyprovision in the Funding 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 Tmstor in favor of University Bank
& Trust Company; the Funding Agreement and the Deeds of Trust made by Trustor in favor of University Bank
& Trust Company and the City of Palo Alto, respectively, in connection with the acquisition of the subject property
are recorded concurrently herewith.
PALO ALTO HOUSING CORPORATION
By:Marlene tI. Prendergast
Title:Executive Director
STATE OF CALIFORNIA )
)
COUNTY OF SANTA CLARA )
On , before me, , a notary public in and for said County, personally
appeared Marlene 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.
Name~
960416s~0070923
4
EXHIBIT
CALCULATION OF BENEFICIAL INTERESTS
PART I. Initial Beneficial Interests of PAHC and CITY:
Property’s Restricted Value At Acquisition: $292,6001
Plus: Initial Costs To Acquire: [closing costs,
funding of reserve accounts, insurance, etc.] $6,000 (est.)
TOTAL AMOUNT FOR CALCULATION
OF INITIAL INTERESTS:$298,600 100.00%
PAHC Contribution & Initial Interest:2 $156,000 52.24%
City Contribution & Initial Interest:3 $142,600 47°76%
PART IIo Method for Adjustment of Beneficial Interests
Capital Improvements Are Made:
[The following figures are used as an example only:]
Property’s Initia! Value and Costs:$298,600
Additional Capit~ Costs Paid For by PAHC:4 $50,000
Additional Capital Costs Paid For by CITY:5 $i00,000
New Property Cost:$448,600 100%
Revised PAHC Contribution & Beneficial Interest:S206,000
[$156,000 + $50,000]
Revised CITY Contribution & Beneficial Interest:S242,600
[$142,600 + $i00,000]
When
45.92%
54.06%
Restricted value at acquisition was agreed to by the parties based
on commonly accepted methods of valuation which use the initial rents proposed
by PAHC.
Final calculation shall be made after the Close of Escrow.
Final calculation shall be made after the Close of Escrow.
Includes all costs paid directly by PAHC and by funds from loans
obtained by PAHC other than from CITY.
5 Includes costs paid for with funds obtained from CITY whether the
same was provided in the form of a grant or a loan.
960416 syn 0070941
18
PART III. Calculation of Amount Owed to CITY after Termination of
the Agreement or In Event of a Voluntary Sale or Other
Disposition, Prior to Expiration of Term, When CITY Does
Not Exercise Its Option to Purchase:
Greater of Actual Sales Price or Fair Market Value:$
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 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 City exercises option, but not exceeding the
value based on the maximum rents permitted at that
date by this Agreement]
Less:
Less:
Less:
Actual and Reasonable Selling Costs:
(if applicable)
Principal Balance of Any Outstanding Loans
On Property, Other Than CITY Loan(s), [If
Such Loans Have Been Approved by CITY
According to This Agreement]
Outstanding Principa! and Accrued Interest
Due On CITY Note(s):
Net Proceeds (or Net Market Value):
Less: CITY’s Beneficia! Interest
of Net Sales Proceeds(
Remaining Proceeds Equals PAHC Share:
%):
$
$
$
$
960416 s.,,aa 0070941
19
EXHIBIT
INSURANCE REQUIREMENTS
FIRE AND 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.
o
o
o
POLICY MINIMUM LIMITS OF LIABILITY
WORKERS’
COMPENSATION Statutory
COMPREHENSIVE Bodily Injury
AUTOMOBILE
LIABILITY,Property Damage
including owned,
hired, and nonowned
automobiles
$5,000,000 ea.person
$5,000,000 ea.occuro
$5,000,000 ea.occur.
COMMERCIAL Bodily Injury
GENERAb
LIABILITY,
including Property Damage
products and
completed operations,
broad form contractual,
and personal injury°
$5,000,000 ea.person
$5,000,000 ea.occuro
$5,000,000 aggreg.
$5,000,000 eaooccur.
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. 0. Box 10250, Palo
Alto, CA 94303."
o "All rights of subrogation are hereby waived
against the CITY OF PAL0 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."
°"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
960416 syn 0070941
2O
insured at or from the Property."
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 BEST rating of A:X or higher 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 CITY’s risk manager.
960416 syn 0070941
21
EXHIBIT G
ORDINANCE NO. 4262
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING SECTION 18 . 08 . 040 OF THE PALO ALTO
MUNICIPAL CODE (THE ZONING MAP)TO CHANGE THE
CLASSIFICATION OF PROPERTY KNOWN AS 330 EMERSON
STREET FROM RM- 3 0 TO PC
WHEREAS, the Planning Commission, after a duly noticed
public hearing held January 25, 1995, and the Architectural Review
Board, upon consideration at its meeting of January 19, 1995, have
recommended that Section 18.08.040 (the Zoning Map) of the Pa!o
Alto Municipal Code be amended as hereinafter set forth; and
WHEREAS, the City Council, after due consideration of the
recommendations, finds that the proposed amendment is in the public
interest and wil! promote the public health, safety and welfare.
NOW, THEREFORE, the Council of the City of Pa!o Alto does
ORDAIN as follows:
SECTION I. Section 18.08.040 of the Pa!o Alto Municipa!
Code, the "Zoning Map," is hereby amended by changing the zoning of
certain property known as 330 Emerson Street (the "subject
property") from "RM-30 Medium Density Multiple-Family Residential"
to "PC Planned Community." The subject property is shown on the
map labeled Exhibit "A", attached hereto and incorporated herein by
reference°
SECTION 2. The City Council hereby finds with respect to
the subject property that:
(a) The site is so situated, and the multiple-family
residential use proposed for the subject property is of such
characteristics that the application of general districts or
combining districts will not provide sufficient flexibility to
al!ow the proposed development. The permitted number of units in
the RM-30 District for lots up to 5,999 square feet is one unit,
compared to four units proposed. The project includes four parking
spaces compared to seven required parking spaces. The minimum
required site area is 8,000 square feet compared to 5,625 square
feet proposed.The minimum lot depth is 70 feet compared to 50
feet proposed.
(b) The project will result in public benefits not
otherwise attainable by application of the regulations of general
districts or combining districts, as follows:
(i)The project includes three additional
housing units above the maximum number
950307 h~c 00~0043
1
of units allowed under the current
zoning (RM-30). The only mechanism
available to achieve the increased
density is by rezoning the site to a
PC (Planned Community) District. The
additional housing units are a public
benefit because one objective of the
Housing Element is to increase the
supply of low and moderate-income
housing. Program 15 of the Housing
Element is to "provide zoning
flexibility to encourage the
development of smaller units
affordable to low and moderate-income
persons. "
(ii)The project provides four rental units
for individuals with very low incomes
¯ (30% to 60% of the County median)
instead of the normal BM~ requirement
of two "for-sale" units available to
!ow and moderate-income househ01.ds
(80% to 100% of the County median).
(~c) The proposed zone change is consistent with the
Multiple-Family Residential designation of the Palo Alto
Comprehensive Plan Land Use Element. The land use element states
that multiple-family densities range from i0 to 45 units per acre,
but that higher densities may be allowed where measurable community
benefit is to be derived, where services and facilities are
available to serve the increased density, and where the effect of
the increased density wil! be compatible with the Comprehensive
Plan. The proposed project, which is 31 units/acre, provides
additional housing within walking distance to shopping, services
and public transportation. The project also provides housing near
downtown, which makes it possible to work and live in one area
without daily use of an automobile.
SECTION 3. Sheets A.I, A!.I (carport only), AI.I (Scheme
B--main building only), A2.1 (Scheme B), A2.2 (Scheme B), A3.1 and
A3.2 of those certain plans entitled "330 Emerson" prepared by
David Baker Associates Architects, a copy of which is on file in
the Planning Division office, and to which copy reference is hereby
made concerning the full particulars thereof, are hereby approved
as the Development Plan for the subject property, pursuant to
Section 18.68.120. Said Development Plan is approved for the
following uses, and subject to the following conditions:
(a) Permitted Uses. The use shall be limited to
residential and accessory uses incidental thereto.
950307 h~¢ 00S0043
2
(b)
permitted.
Conditional Uses.No conditional uses shall be
(c) Site Development Regu.!ations. All improvements and
development shall be substantially in ’accordance with the approved
Development Plan. The fol!owing are site development regulations
which establish rules for modifications or additions to any
building, accessory structure or landscaping on the subject
property. Definitions of terms used shall be in accordance with
Chapter 18.~04 (Definitions) of Title 18 (Zoning) of the Pa!o Alto
Municipal Code.
(i)Final landscape and irrigation plans
which meet the requirements of the
City’s Landscape Water Efficiency
Standards shal! be submitted for
review and approva! by the
Architectural Review Board, City
Arborist, Utilities Energy Services
Division and Planning staff. All
utility meters, lines, transformers,
backflow preventers, and any other
required utilities, shall be shown on
the landscape and irrigation plans.
The plans shall show that no conflict
will occur between the utilities and
landscape materials. The utilities
shall be screened in a manner which
respects the building design and
setback requirements.
ii The six existing Ailanthus Altissma
trees along the southern side property
line shal! be preserved, if feasible.
If the trees are removed, they shall
be replaced on a 2 to ! basis with new
!5-gal!on trees.
(d) Parkinq and Loading Reauirements. The parking and
loading requirements governing the subject property shall be in
accordance with the Development Plan, except as follows:
(i)The project shall provide four Class
I bicycle parking spaces.
Specifications and details of the
required bicycle parking shall be
submitted to the Transportation
Division for review and approval prior
to issuance of a building permit.
950307 h~ 00S0043
(e) Development Schedule. Construction of the project
shall be completed and ready for occupancy on or before
February 28, 1996.
SECTION 4. The Council finds that this project will not
have a significant environmenta! effect.
SECTION 5. This ordinance shall be effective on the
thirty-first day after the date of its adoption.
INTRODUCED: February 21, 1995
PASSED: March 6, 1995
AYES: ANDERSEN, FAZZINO, MCCOWN, ROSENBAUM, SCHNEIDER, WHEELER
NOES :
ABSTENTIONS: HUBER
ABSENT: KNISS, SIM!TIAN
APPROVED
Manager
Director of Planning
and Community Environment
950307 tac 00S0043
4
JOHNSON PARK
PF
EXHIBIT "A"
ItlI~,,,I I I
RM-3
F
SITE LOCATION
PF
GRAPHIC ATTACHHENT DATE: 11/2/94
TO STAFF REPORT FILE NO. 94-ZC-12, 94-A_RB-207, 94-V-16
PROJECT: 330 Emerson Street -Zone Change From RM-30 to PC