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HomeMy WebLinkAbout1996-06-10 City Council (29)City of Palo Alto1 ,City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: Planning and Community Environment AGENDA DATE: June 10, 1996 CMR:289:96 SUBJECT:Assignment of Pre-Development Agreement for Alma Single Room Occupancy (SRO) Housing from the Palo Alto Housing Corporation to Alma Place Associates; Agreement with Alma Place Associates to Provide Funds for the Acquisition of the Site for the Alma Place SRO Housing Project at 725-753 Alma Street, Palo Alto and for Other Expenses Through Start of Construction REQUEST Council action is requested to. adopt a resolution consenting to the assignment of the "Agreement between the City of Palo Alto and the Palo Alto Housing Corporation to Fund Pre-Development Expenses for a Proposed SRO Housing Development at 725/753 Alma Street" from the Palo Alto Housing Corporation to Alma Place Associates. Alma Place Associates is a new limited partnership entity established by PAHC to acquire the SRO site and to own the completed project. Council action is also requested to approve an agreement with Alma Place Associates for pre-construction activities related to the proposed Alma Place single room 0ceupancy (SRO) housing project at 725-753 Alma Street, which provides $1,030,725 in Commercial Housing In-Lieu funds for the acquisition of the site and for reimbursement of Alma Place Associates’ direct project costs through start of construction. These funds are part of the $2.4 million in Commercial Housing In-Lieu funds, which were appropriated for SRO project costs by the Council on November 27, 1995, under Ordinance No. 4312. RECOMMENDATIONS Staff recommends that the Council: Approve the attached resolution consenting to the assignment of the pre-development agreement from the Palo Alto Housing Corporation to Alma Place Associates. CMR:289:96 Page 1 of 4 Approve the attached Assignment and Assumption Agreement between the Palo Alto Housing Corporation (PAHC), Alma Place Associates and the City of Palo Alto, and authorize the Mayor to execute the agreement in substantially similar form, and direct the City Manager to administer the ,provisions of the agreement. Approve the attached agreement (with its attached form of promissory note and deed of trust) with Alma Place Associates, to provide a new loan of up to $1,030,725 for site acquisition and other expenses related to the development of the Alma Place single room occupancy housing project. Authorize the Mayor to execute the agreement with Alma Place Associates in substantially similar form, and direct the City Manager to administer the provisions of the agreement and to execute any other documents required to close the transaction for the acquisition of the 725-753 Alma Street property. POLICY IMPLICATIONS This action is consistent with previous Council actions supporting the acquisition of the 725- 753 Alma Street site for development by the Palo Alto Housing Corporation as very low income SRO housing. EXECUTIVE SUMMARY On May 8, 1996, PAHC received a preliminary reservation letter from the California Tax Credit Allocation Committee (TCAC) awarding the necessary federal and state tax credits for the development of the Alma Place SRO project. Pursuant to the terms of the option agreement for the site, the optionee (currently PAHC) must close escrow on the site purchase within 70 days of the award of the tax credits, or by July 17, at the latest. Staff supports PAHC’s intention to close escrow by June 30, 1996, to eliminate the need for further option payments. PAHC is also proceeding with the legal, architectural and engineering work necessary to submit a building permit application, secure a binding commitment of the bank financing and to obtain the final tax credit reservation. While PAHC will continue to perform the roles of sponsor and developer of the SRO project, tax credit regulations and procedures require that a new entity be formed to own the project. Alma Place Associates is a new limited partnership entity established by PAHC to acquire the SRO site and to own the completed project. A new nonprofit corporation has been established, named PAHC Alma Place, Inc., as the general partner of Alma Place Associates. After project completion, the tax credit investors will become the limited partners; in the interim, PAHC is acting as the limited partner. The Board of Directors of PAHC Alma Place, Inc. is identical to the PAHC board. The new partnership, Alma Place Associates, must hold legal title to the site by the end of the year to meet tax credit regulations. The partnership must also incur, and pay for, various other project expenses. For these reasons, CMR:289:96 Page 2 of 4 assignment of the pre-development funding agreement to the new partnership is necessary, as is the provision of City funding directly to Alma Place Associates for pre-construction activities. The proposed agreement with Alma Place Associates will provide funds for site acquisition and holding costs and reimbursement for necessary out-of-pocket pre-construction costs,. such as expenses related to obtaining a building permit, and costs to secure the private lender financing and the tax credit allocation. The funds will be secured by a deed of trust recorded against the property, and will be loaned at no interest and with no payments required. FISCAL IMPACT A total of $2,695,000 in Commercial Housing In-Lieu funds has been appropriated by Council for subsidies of the project’s development cost. Under the existing pre-development agreement, $295,000 was appropriated and provided to PAHC on January 17, 1995. By approving the assignment of that agreement from PAHC to Alma Place Associates, the City is permitting the $97,929 in unexpended funds (as of April 1, 1996) from that agreement to be used for expenses for the pre-construction phase. A $2,400,000 Budget Amendment Ordinance was approved by Council on November 27, 1995, to meet requirements for the tax credit application. The proposed agreement with Alma Place Associates provides $1,030,725 (of the $2.4 million) as interim funding for site acquisition and other necessary expenses through the start of construction. Prior to construction, a permanent funding and regulatory agreement between the City and Alma Place Associates will be scheduled for Council action. The permanent agreement will allocate the remaining City funding for the project, and set the terms of the City’s permanent loan. It will be some type of deferred payment loan, structured to be compatible with the tax credit program requirements and to ensure permanent affordability of the SRO units. To reduce the cost of construction financing, it is planned that the full amount of City funding would be made available at the start of construction. A final project budget, with updated projections of all sources of funding, will be presented to Council with the permanent funding agreement. At that time, PAHC should have a fairlyaccurate estimate of the proceeds and timing of the financial contribution from the tax credit investors. ENVIRONMENTAL ASSESSMENT The Council certified a mitigated negative declaration (95-EIA-2) on June 26, 1995, covering the provision of City housing subsidies for the SRO project, in connection with the adoption of the project’s Planned Community zone (Ordinance No. 4238). STEPS FOLLOWING APPROVAL The major milestones in the development schedule are: CMR:289:96 Page 3 of 4 Acquire site Submittal to ARB for review of final design details Permanent bank loan commitment Submittal of building permit application Council action on final City funding & agreement Start of construction Completion of construction Complete rent-up & close permanent financing ATTACHMENTS June, 1996 August, 1996 September, 1996 October, 1996 October, 1996 Jan. - April, 1997 March- June, 1998 Sept. - Dec., 1998 ° Resolution regarding Assignment of Pre-Development Agreement to Alma Place Associates Assignment and Assumption Agreement between City of Palo Alto, Palo Alto Housing Corporation and Alma Place Associates Agreement between the City of Palo Alto and Alma Place Associates to Fund Pre- Development and Pre-Construction Expenses for a Single Room Occupancy Housing Development at 725/753 Alma Street, Palo Alto Letter from Palo Alto Housing Corporation PREPARED BY: Catherine Siegel, Housing Coordinator KENNETH R. SCHREIBER ~ Director of Planning and Community Environment CITY MANAGER APPROVAL: Palo Alto Housing Corporation Alma Place Associates Charles J. Keenan III and Mark T. Gates, Jr. CMR:289:96 Page 4 of 4 ATTACHMENT 1 RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO APPROVING THE ASSIGNMENT OF ALL RIGHTS AND OBLIGATIONS OF THE PALO ALTO HOUSING CORPORATION UNDER ITS AGREEMENT WITH THE CITY TO FUND PRE- DEVELOPMENT EXPENSES CONCERNING THE PROPOSED SRO PROJECT AT 725-753 ALMA STREET, PALO ALTO TO ALMA PLACE ASSOCIATES WHEREAS, the Council approved an assignment of the City’s option to acquire real property at 725-753 Alma Street, Palo Alto ("Property") to the Palo Alto Housing Corporation ("PAHC"), and also approved funds for the disbursement of pre-development expenses associated with preliminary efforts which will lead to the acquisition the Property; and WHEREAS, PAHC proposes to assign to Alma Place Associates ("APA"), a California limited partnership, its rights and obligations under the terms of section 3.6 of the "Agreement between the City of Palo Alto and the Palo Alto to Fund Pre- Development Expenses for a Proposed SRO at 725-753 Alma Street", dated January 17, 1995 ("Agreement"), in connection with the development of the Property for single room occupancy rental housing purposes; and WHEREAS, the City Council finds that it is reasonably necessary for PAHC to assign its rights and obligations under the Agreement to APA, which will assume all rights and obligations of PAHC under the Agreement; NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION i. The City Council hereby approves, and authorizes the Mayor to execute, the Assignment and Assumption Agreement ("Assignment Agreement"), attached hereto, wherein the Palo Alto Housing Corporation assigns all of its rights and obligations under the Agreement referred to above to Alma Place Associates, a California limited partnership, and Alma Place Associates expressly assumes the rights and obligations of the Palo Alto Housing Corporation arising under the Agreement. SECTION 2.The City Council finds and determines that the approval of the Assignment Agreement does not constitute a project for purposes of the California Environmental Quality Act, and, therefore, no environmental assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: 960604 syn 0070996 ABSTENTIONS : ATTEST : City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney APPROVED: Mayor Assistant City Manager Director of Planning & Community Environment Deputy City Manager, Administrative Services 960604 syn 0070996 ATTACHMENT ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement (the "Agreement") is entered into as of this ~ day of , 1996, by and between Palo Alto Housing Corporation, a California nonprofit public benefit corporation ("Assignor"), Alma Place Associates, a California Limited Partnership ("Assignee") and the City of Palo Alto, a chartered city existing under the constitution and laws of the State of California (the "City") with reference to the following facts: A. The City and Assignor entered into an Agreement to Fund Pre-Developm~nt Expenses dated January 17, 1995 (the "Loan Agreement") pursuant to which the City agreed to loan Assignor not more than Two Hundred Ninety-Five Thousand Dollars ($295,000) to be used in connection with Assignor’s development of a single room occupancy rental housing project (the "Project"). B.Assignor now wishes to assign its rights and obligations under the Loan Agreement to Assignee, and Assignee wishes to assume Assignor’s rights and obligations under the Loan Agreement. NOW, THEREFORE, in consideration of the foregoing, of the mutual promises of the parties hereto and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties mutually agree as follows: 1.AssiRnment ~. Assignor hereby assigns to the Assignee all of its E : \830\001\assign. cry ( rights and obligations under the Loan Agreement. 2.Acceptance of Assignment. Assignee hereby accepts the above assignment and hereby assumes, agrees and undertakes to perform all of the obligations, covenants and agreements of Assignor under the Loan Agreement. Any reference to Assignor in the Loan Agreement described above shall be deemed a reference to the Assignee. 3.Release of Assignor. Assignee hereby releases Assignor from all of its obligations, covenants and agreements imposed under the Loan Agreement. 4.Representations. Assignor hereby represents and warrants that it has not previously assigned, pledged, hypothecated or otherwise transferred any of its rights or obligations under the Loan Agreement. 5.Reimbursement. The City shall reimburse Assignor for any amounts advanced by Assignor for the Project through the date of this Agreement to the extent the aggregate amount of draws by Assignor does not exceed $295,000. 6.Effective Date. The assignment set forth above shall be effective as of the date of this Agreement. 7.Consent of Cit~’. The City hereby consents to the assignment of Assignor’s rights and obligation.s under the city Loan Agreement to the Assignee. The consent of the City shall be binding upon the City upon its execution of this Agreement and upon the adoption of a resolution of the Council of the City which approves this Agreement. E : \830\O01\assign. cry 2 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. CITY: City of Palo Alto By: Its: Attest: ASSIGNOR: Palo Alto Housing Corporation, a California nonprofit public b,~rc’t~it corporation Its: q~~~ City Clerk Approved as to form: Senior Assistant City Attorney Approved: Assistant City Manager ASSIGNEE: Alma Place Associates, a California Limited Partnership By: PAHC Alma Place, Inc., a California nonprofit public benefit corporation, its~l partn~r£~) Its: Deputy City Manager for Administrative Services E:\830\001\assign.cty ATTACHMENT 3 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND ALMA PLACE ASSOCIATES TO FUND PRE-DEVELOPMENT AND PRE-CONSTRUCTION EXPENSES FOR A SINGLE ROOM OCCUPANCY HOUSING DEVELOPMENT AT 725/753 ALMA STREET, PALOALTO THIS AGREEMENT ("Agreement") is made and entered into on , 1996, by and between the CITY OF PALO ALTO, a chartered city organized and existing under the constitution and laws of the State of California ("City") and ALMA PLACE ASSOCIATES, a California limited partnership, with offices at 540 Cowper Street, Suite 201, Palo Alto, California 94301 ("APA"). W I T N E S S E T H: WHEREAS, on November 27, 1995, Ordinance No. 4312 was adopted for the purpose of funding certain pre-development expenses for the acquisition of single room occupancy ("SRO") housing development ("Project") at 725/753 Alma Street, Palo Alto, Santa Clara County, California [APN 120-27-80, APN 120-27-81, and APN 120-27-82] (collectively, the "Property", the legal description of which is set forth in Exhibit "E"); and WHEREAS, on November 29, 1995, the City assigned to the PALO ALTO HOUSING CORPORATION ("PAHC"), the developer of the Project, the option to purchase the Property for development as very low income, SRO rental housing; and WHEREAS, PAHC received a preliminary award of certain tax credits and the acquisition of the Property and payment of pre- development and pre-construction expenses associated with the construction of the SRO building is required to secure a final tax credit allocation; and WHEREAS, with the approval of the City Council, PAHC has assigned (or will assign forthwith after the execution of this Agreement) to APA’all right, title and interest in both the Option Agreement and the Agreement between the City of Palo Alto and the Palo Alto Housing Corporation to Fund Pre-Development Expenses; and WHEREAS, the development of new affordable SRO rental housing will further the City’s affordable housing goals as stated in the City’s Comprehensive Plan, Housing Element and Consolidated Plan; and WHEREAS, APA has applied to the City for financial assistance with the pre-development expenses, including pre- construction expenses, in connection with the Project; and WHEREAS, the City is willing to make a loan to APA to cover certain pre-development and pre-construction expenses in order to secure building permits, tax credits and other housing subsidies, and permanent financing for the development of the Project; 960604 syn 00709~ I NOW, THEREFORE, in consideration covenants, agreements, terms and conditions, agree: SECTION 1 -TERM OF AGREEMENT of the following the parties hereto i.i Term and Extension The term of this Agreement shallcommence on the date of its execution by the parties, and shall terminate on December 31, 1997, unless earlier terminated in accordance with Section 5 hereof, or as otherwise provided herein. The term may be extended for an additional period not to exceed one (i) year, provided, however, any extension may be approved by the City’s Director of Planning and Community Environment ("Project Manager") only upon the receipt of written evidence, acceptable to the Project Manager, that the development of the Project then remains feasible, and that reasonable progress in the development of the Project and has been made and can continue to be made by APA. If the Project Manager determines that APA has unreasonably delayed the development of the Project, or APA has failed to perform any ~material provision of this Agreement, then the request for an extension of the term shall be denied, all funds loaned to APA under this Agreement shall be returned to the City, upon demand, and this Agreement may be terminated by the City upon ten (i0) days’ prior written notice. A failure by APA to immediately return such funds shall constitute a default under this Agreement. SECTION 2 -LOAN AND DISBURSEMENT OF FUNDS 2.1 Loan Amount The City agrees to make a loan to APA at its office address in an aggregate principal amount at any one time outstanding not exceeding one million thirty thousand seven hundred twenty-five dollars ($1,030,725). Within such limit, APA may borrow and repay from time to time from the date hereof to and including the date of expiration of this Agreement, or the date on which a notice of earlier termination of this Agreement is dispatched, whichever may be applicable. In the event that the amounts payable by APA to any and all sources for pre-development and pre-construction expenses exceed the sum of $1,030,725, then APA shall be solely responsible for paying any and all amounts in excess of $1,030,725, and the City shall not be obligated to loan in excess of the commitment set forth herein. 2.2 Promissory Note All requests for reimbursement ("borrowing") under this Agreement shall be evidenced by one promissory note ("Note") of APA, in substantially the form set forth in Exhibit "A", payable to the City of Palo Alto, upon demand, in.writing, and executed by a duly authorized officer or representative of APA. The Note shall bear 960604 syn 0070981 no interest° No periodic payments shall be required during the term of this Agreement. Nothing herein shall prohibit APA from paying the loan, or any part thereof, to the City before the Note shall become due. 2.3 Deed of Trust To secure the repayment of the loan made under this Agreement, APA, as trustor, shall execute a deed of trust ("Deed of Trust") in substantially the form set forth in Exhibit "D", in favor of the City as beneficiary, and identifying the First American Title Guaranty Company as trustee° 2°4 Disbursement of Funds 2o4ol The City will disburse loan funds under this Agreement to APA on an expense-reimbursement basis only upon the receipt by the Project Manager of written proof of actual costs incurred and paid for by APA. Before APA may request the reimbursement of its costs, it shall submit to the Project Manager one (i) legible copy each of any and all contracts and subcontracts for services to be rendered or work to be performed, or both, in connection with the Project. 2.4.2 Every contract shall clearly and fully describe the nature and scope of services to be rendered or work to be performed, or both, and the basis of payment of applicable costs. Any and all such costs shall be reasonable and necessary in order to secure the development approvals, financing, and construction permits for the Project° The Project Manager may refuse to reimburse APA for any costs not approved, in advance, by him. 2.4.3 Any borrowing under this Agreement shall be made in accordance with the City’s policies and procedures. APA shall submit with each application for borrowing a written certification that (i) the services or work, or both, has been satisfactorily rendered or performed, (2) the costs have been paid in accordance with the applicable contracts and subcontracts, and (3) all funds have been expended on the behalf of and exclusively for the obligations of APA under the Project. 2.4.4 The disbursement of funds for PAHC’s Project administration and overhead costs shall be established on a fixed fee basis and shall be disbursed as follows: (i) $20,000 will be paid upon the submittal of a complete application for the review of the final Project design by the City’s Architectural Review Board; and (ii) $20,000 will be paid upon the completion of all necessary action to be taken by the City Council with respect to a permanent funding agreement for the Project° 2.5 Pre-Development and Pre-construction Expenses Funds shall be loaned to APA under the terms of this Agreement for the payment of certain pre-development and pre- construction expenses, including, without limitation, the 960604 syn 0070981 acquisition costs of the Property; closing costs; site demolition, clearance and holding costs; fees charged by attorneys, architects, engineers, and marketing and management consultants; fees of a contract project manager; costs of environmental studies, tests and remediation; permit application and the City’s cost-recovery fees; fees and costs associated with the securing of financing and housing subsidies to make the Project financially feasible, including construction and permanent loans and the tax credit subsidies; payment of a fixed amount for Project administration and overhead costs of PAHC; and other reasonable and necessary expenses, as generally described in the Budget, set forth in Exhibit "B". 2.6 Establish Escrow APA shall open an escrow, and all loan proceeds to be disbursed for the purchase price and necessary closing costs shall be placed in escrow with the First American Title Guarantee Company, 1737 North First Street, San Jose, CA 95112, under escrow number 507079, together with all necessary documents of title, written instructions, and other pertinent information. The City will deposit the sum of six hundred fifty thousand dollars ($650,000), by negotiable instrument payable to the title company, into escrow, for the purchase price of the Property. 2.7 Title Insurance At the close of the escrow, APA, at its own cost and expense, shall secure an ALTA extended coverage lender’s policy of title insurance, or other form of title insurance acceptable to the City Manager, for an amount not less than the amount of the purchase price of the Property, and insuring against any title defects as would prevent the construction of the Project. The policy will name the City as beneficiary and insure APA’s right, title, and interest in the Property and the Project and the City’s lien therein, and, promptly after the close of escrow, APA shall provide a copy of the same to the City’s Director of Planning & Community Environment. SECTION 3 COVENANTS AND CONDITIONS 3.1 Project Development APA covenants and agrees to prepare, or cause to be prepared, written plans, specifications, and applications for the Project, generally consistent with the Project plans approved by the City Council on July 17, 1995 under Ordinance No. 4283. 3.2 Project Funding APA covenants and agrees to undertake all actions necessary to secure the final allocation of Federal and California low income housing tax credits for the Project in accordance with the "Preliminary Reservation Letter", dated May 6, 1996, submitted by the California Tax Credit Allocation Committee to the PAHC. APA 960604 syn 0070981 shall secure the final private financing commitments for the construction loan and permanent loan and other public or private funding programs, as appropriate, in addition to the funding provided by the City under this Agreement. APA shall seek aggregate funding from all available sources in order that the Project will be financially feasible, and will provide affordable rental housing for very low income households (defined, for purposes of this Agreement, as average monthly rents not exceeding one-twelfth (i/12th) of thirty percent (30%) of a household income that does not exceed forty percent (40%) of the then current HUD median household income for Santa Clara County, adjusted by household size)° 3.3 Insurance APA, at its sole cost and expense, shall obtain and maintain during the term of this Agreement, insurance in responsible companies in such amounts and against such risks as is satisfactory to the City’s risk manager, including, without limitation, workers’ compensation, commercial general liability, comprehensive’ automobile liability, personal injury and property damage insurance, as appropriate, insuring against all liability of APA and its authorized representatives arising out of or in connection with the development of the Project, the development of the Property, or APA’s performance or nonperformance under this Agreement. APA and general contractors and subcontractors assigned to the performance of the terms and conditions of this Agreement or to the development of the Project shall comply with the coverages described in the Insurance Requirements, set forth in Exhibit "C". Modifications of any insurance requirements set’ forth in Exhibit shall be submitted, in writing, to the Project Manager. Any such modification shall receive the concurrence of the Office of City Attorney. 3.4 Books and Records APA shall maintain in accordance with generally accepted accounting principles on a current basis complete records, including books of original entry, source documents supporting accounting transactions, service records, a general ledger, canceled checks, time sheets, and related documents and records to assure the proper accounting of funds and the performance of this Agreement° APA shall furnish any and all information and reports which may be required by the Project Manager or other officer, employee, or representative of the City and any other entity that may provide funds for the development of the Property. APA shall permit access to its books, records and accounts by the representatives and employees of the City and any other entity that may provide funds for the development of the Property, during regular business hours, for the purpose of investigation or audit to ascertain compliance with all applicable laws, regulations, rules and orders and for the purpose of evaluating and monitoring APA’s compliance with the provisions of this Agreement. All such records shall be retained by APA and 960604 syn 0070981 5 shall be made available to the City, its officers, employees, and representatives, and any other entity that may provide funds for the development of the Property, upon request, for review or audit for a period of at least three (3) years following the expiration or termination of this Agreement. 3.5 Conflict of Interest APA covenants that, in the performance of this Agreement, no person having a financial interest therein shall be employed by APA in connection with the performance of the provisions of this Agreement or in the development of the Project, except as the City may approve, in advance, waive, or ratify such conflict of interest. 3.6 Assignment Neither this Agreement nor, to the extent permitted by applicable law, the rights and obligations of APA hereunder shall be assigned without the prior written approval of the City, acting through its City Manager. Any attempted assignment shall be void and, at the sole discretion of the City, shall be deemed a default under this Agreement and a breach of this Agreement. 3.7 Partnership Status APA covenants and agrees to maintain its status as a limited partnership duly organized, validly existing, and in good standing under the laws of the State of California at all times during the term of this Agreement and any substituted agreement. SECTION 4- REPRESENTATIONS 4.1 Financial Interest APA 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 rendering of services or the performance of work, or both, under this Agreement or substituted agreement for the Project. APA further represents that no person who has or will have any financial interest under this Agreement or substituted agreement is an officer, employee, or official representative of the City. 4.2 Legal Authority The making and performance by APA of this Agreement, the Note and Deed of Trust have been duly authorized by all necessary action and will not violate any provision of law or of APA’s partnership agreement or its 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 APA pursuant to any indenture or other agreement to which APA is a party or by which APA or its property may be bound. The person executing this Agreement on the behalf of APA has been duly authorized to execute 960604 syn 00709~ I the same, and such person represents that it is duly organized and validly existing under the laws of the State of California. 4.3 Litigation There are no suits or proceedings pending or, to the knowledge of APA, threatened against or affecting APA which, if adversely determined, would have a material adverse effect on the financial condition or business of APA, and there are no proceedings pending or, to the knowledge of APA, threatened, against APA which would have a material adverse effect on the performance of this Agreement by APA. SECTION 5 - SUBSTITUTION OF AGREEMENT AND NOTE The parties intend to enter into a substitute agreement for the construction and operation of the Project for affordable SRO rental housing. The terms and conditions of this Agreement, the Note and the Deed of Trust shall be renegotiated, provided that APA has secured the site on which the Property will be located. All amounts which are loaned to APA under this Agreement and which have been loaned to PAHC under agreements relating to the Project, which have been assigned to APA, shall be aggregated with the amount to be loaned by the City at the time that APA secures a construction loan commitment from a commercial banking lender. The aggregate loan amount made by the City shall become a permanent loan for a term of at least forty (40) years secured by a promissory note and deed of trust on the Property in favor of the City. SECTION 6 -APPLICATION OF FEDERAL REGULATIONS APA shall cooperate with the City to secure additional funding from other sources such as the federal HOME program. APA agrees to perform its obligations under this Agreement in a manner that will not jeopardize or interfere or conflict with, or otherwise prevent, the obtaining of future federal funding. APA shall comply . with all applicable federal HOME and other governmental rules and regulations, if federal HOME funds are sought or received by the City for the Project. SECTION 7 - INDEMNITY APA agrees to protect, indemnify, defend and hold harmless City, its Council members, officers, agents and employees, 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 out of APA’s, its officers’, agents’, subcontractors’ or employees’ negligent acts, errors or omissions, or willful misconduct, or conduct for which APA may be strictly liable in the performance of or failure to perform its obligations under this Agreement. 960604 syn 0070981 SECTION 8 - DEFAULTS The City shall be permitted, upon written notice, to (i) immediately terminate its commitment to loan funds hereunder, and (2) declare the principal of the loan or the Note to be immediately due and payable, whereupon the same shall become immediately due and payable, if any of the following events of default have occurred and have not been remedied: A. APA makes a representation in this Agreement which shall prove to have been false in any material respect when made; or B. APA shall default in the payment, when due, of any principal of the loan or the Note or any other sums payable by APA under this Agreement; or C. APA shall default for a period of thirty (30) days in the performance of any other non-financial obligation to be performed by APA under this Agreement; or D. APA shall apply for or consent to the appointment of a receiver, trustee, or liquidator, or is unable, or admits i.n 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. APA is subjected to the entry of an order, decree, or judgment approving the reorganization of APA, and such order, decree, or judgment is unstayed for a period of more than thirty (30) days, or such period as may be permitted by law. SECTION 9 -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 has 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 960604 syn 0070981 APA Alma Place Associates c/o Palo Alto Housing Corporation 540 Cowper Street, Suite 201 Palo Alto, CA 94301-1806 Attn: Executive Director SECTION i0 -MISCELLANEOUS i0.i 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. 10.2 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. APA 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. 10.3 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. 10.4 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 of the City is authorized on behalf of the City to approve any number of minor modifications to the Budget without obtaining the consent of the City Council, provided the aggregate amount of such budgetary modifications shall not exceed ten percent (10%) of the Budget. 10.5 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. 10.6 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. 10.7 APA shall lack any authority or power to pledge the credit of the City or incur any obligation in the name of theCity. 10.8 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. 960604 syn 0070981 10.9 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° i0oi0 All exhibits referred to in this Agreement and any addenda, appendices, attachments, and schedules which may, from time to time, 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° 10.12 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. 10.13 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. IN WITNESS WHEREOF, the parties have executed this Agreement in Palo Alto, California on the date first above written. CITY OF PALO ALTO ALMA PLACE ASSOCIATES Mayor ATTEST: City Clerk APPROVED AS TO FORM: B~ PAHC Alma Place, Inc. \~ Its Gene~,.a~ ~artner "Marlene H. Prenderg~ Executive Director Senior Assistant City Attorney APPROVED: Assistant City Manager Deputy City Manager, Administrative Services ATTACHMENTS Exhibit "A’: Exhibit "B": Exhibit "C": Exhibit "D" : Exhibit "E": Promissory Note Budget Insurance Requirements Deed of Trust Legal Description of the Property 960604 syn 0070921 i0 Exhibit A PROMISSORY NOTE (CITY HOUSING RESERVE FUNDS) $ 1,030,725 Date: Palo Alto, California FOR VALUE RECEIVED, the undersigned, ALMA PLACE ASSOCIATES, a California Limited Partnership ("Borrower"), hereby promises to pay to the CITY OF PALO ALTO ("Holder"), or order, at its office of Revenue Collections, 250 Hamilton Avenue, Palo Alto, or at such other place as may be designated, in writing, by the Holder, the principal sum of $1,030,725, pursuant to the terms and conditions set forth in this Promissory Note ("Note"). The principal amount of this Note shall bear interest at the rate of zero percent (0 %) per annum. Payment of the principal sum shall be due on the earlier of December 31, 1997 or the close of the construction loan for the Alma Street SRO. ADDITIONAL TERMS AND CONDITIONS 1. This Note is made in connection with a connection with a contract entitled "Agreement between the City of Palo Alto and Alma Place Associates to Fund Pre-Development and Pre- construction Expenses for a Single Room Occupancy Housing Development at 725/753 Alma Street", Palo Alto (the "Agreement"), and is attached to and incorporated into the Agreement as Exhibit A. All covenants, representations, and terms of default and remedies for default set forth in the Agreement are incorporated herein by reference, and made a part hereof. 2. This Note evidences the obligation of the Borrower for the full repayment to the Holder, in accordance with this Note and the Agreement, of the funds loaned thereunder to the Borrower by the Holder. Such funds are to be used solely by the Borrower for the proposed Project as described in the Agreement. 3. This Note is secured by a deed of trust executed by Borrower for the benefit of Holder and encumbering the real property located at 725/753 Alma Street, Palo Alto, California. 4. The term of this Note shall commence on the date of its execution by the Borrower, and, subject to the terms and conditions of the Agreement, shall expire or terminate on the date on which the Borrower makes full payment of the principal sum of this Note, but in no event later than December 31, 1997. E:\830\OOl\promnote~1419~ 5. At any time, and from time to time, the Borrower may prepay to the Holder the principal sum of this Note, or any part thereof, without penalty. 6. The Borrower and any maker, co-maker, indorser, guarantor, or any other party (collectively, the "Obligors"), and each of them: (i) waive notice of default, notice of acceleration, notice of nonpayment, presentment for payment, demand, protest, notice of demand, notice of protest, notice of nonpayment, and any other notice required to be given under the law to the Obligors; (ii) consent(s) to any and all delays, extensions, renewals, or other modifications of this Note or waivers of any term hereof or release or discharge by the Holder of any of the Obligors or release, substitution, or failure to act by the Holder, from time to time, and agree(s) that no such action, failure to act, or failure to exercise any right or remedy on the part of the Holder shall in any manner affect or impair the obligations of any Obligor or be construed as a waiver by the Holder of, or otherwise affect, any of the Holder’s rights under this Note or the Agreement, under any indorsement or guaranty of this Note; and (iii) (jointly and individually, if more than one) agree(s) to pay, on demand, any and all costs and expenses of collection of this Note or of any indorsement or any guaranty hereof, including attorney’s fees. 7. The pleading of any statute of limitations as a defense to any demand against the Borrower is expressly waived by the Borrower. 8. If any default is made hereunder, the Borrower and the Obligors, jointly and individually, promise to pay the Holder’s reasonable attorneys’ fees and other related costs and expenses incurred by the Holder in connection with the enforcement of any rights of the Holder. The Holder’s right to such fees shall not be limited to its representation by staff attorneys of the Holder’s Office of the City Attorney, and such representation shall be valued at the customary and reasonable rates for private sector legal services. 9. The outstanding unpaid balance of the principal sum of this Note shall, at the option of the Holder, become immediately due and payable upon the failure of the Borrower to make any payment hereunder as and when due or upon the failure of the Borrower to perform or observe any other term or provision of this Note or the Agreement. If the outstanding unpaid principal balance of this Note is not paid within thirty (30) days of demand therefor, the Borrower shall pay to the Holder interest equal to one percent (1%) of the unpaid principal amount, or the highest rate permitted by law, whichever is less, per calendar month, or fraction thereof. If this Note be reduced to judgment, such judgment shall bear the statutory interest rate on judgments. 10. Any notice, demand, or other communication required hereunder shall not be deemed sufficiently given, unless sent by certified mail, postage prepaid, return receipt requested, or by express delivery service or overnight courier service, to the principal office of the addressee, or at such other address as may be designated, in writing, from time to time: E:\830\001\promnote6/4/96 Holder:City of Palo Alto 250 Hamilton Avenue Palo Alto, California 94301 Attn.: City Clerk Borrower:Alma Place Associates 540 Cowper Street, Suite 201 Palo Alto, CA 94301-1806 Attn.: Executive Director The delivery shall be effective on the date shown on the delivery receipt or the date on which the delivery was refused. 11. This Note shall be nonrecourse; provided, however, Holder shall not in any way be prohibited from naming Borrower or any of its successor and assigns or any person holding under or through them as parties to any actions, suit or other proceedings initiated by Holder to foreclose or otherwise realize upon any other lien or security interest created in the Property or in any other collateral given to secure the performance of the obligations of Borrower pursuant to this Note, and further provided, however, that nothing in this paragraph shall be deemed to prejudice the rights of Holder to recover any rents, condemnation or insurance proceeds, tenant security deposits or other similar funds or payments attributable to the Property which were misappropriated by Borrower. 12. The covenants, agreements, terms, and conditions of this Note shall inure to, and shall be binding on, the successors and assigns of the Borrower and the Obligors. 13. At the close of the construction loan, Holder intends to loan Borrower additional funds for a term of not less than forty (40) years and at such time, provided Borrower is not in default under this Note, the amount due and owing under this Note shall be added to the permanent loan note to Holder and this Note shall be cancelled. E:\830\OOl\promnote ALMA PLACE ASSOCIATES, a California Limited Partnership By: PAHC ALMA PLACE, INC., ,~s general partn, gr-~ Marlene H. Prendergast, /’ ) Executive Director "-~ 540 Cowper Street, Suite 201 Palo Alto, CA 94301 E:\830\001\promnote ~I~I~ EXHIBIT B BUDGET Architecture, Engineering, Landscape, General Contractor Financing, Fees, Appraisals, Financial Consultants, & Legal Fees Permit Applications & City Cost-Recovery Fees, Other Fees Contract Project Manager Advance of Sponsor Overhead & Administrative Cost Land Acquisition, Closing Costs, Site Work, & Holding Costs Miscellaneous & Contingency Total Budget for Pre-Construction Phase (Less: Amount to be Paid from Unexpended Funds Under Contract #C5074472, dated Jan. 17, 1995, as assigned to Alma Place Associates on June i0, 1996) $157,470 $131,664 $35 , 820 $30,000 $40,000 $693,700 $40,000 $1,128,654 ($ 97,929) TOTAL FUNDS PROVIDED UNDER THIS AGREEMENT $1,030,725 960604 syn 0070981 EXHIBIT C INSURANCE REQUIREMENTS POLICY MINIMUM LIMITS OF LIABILITY WORKERS’ COMPENSATION COMPREHENSIVE AUTOMOBILE LIABILITY, including owned, hired, and non.wried automobiles Statutory Bodily Injury $i,000,000 ea. person & $i,000,000 ea. occurrence Property Damage $I,000,000 ea. occurrence COMMERCIAL GENERAL LIABILITY, including products and completed operations, broad form contractual, and personal injury. Bodily Injury $i,000,000 ea. person & $i,000,000 ea. occurrence; $i,000,000 aggregate Propgrty Damage $i,000,000 occurrence ea. 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, Pal. 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." "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." "The CITY OF PALO ALTO is added as an additional insured as respects operations of the named insured, but only as to work performed under this Agreement. All insurance coverage required shall be provided through carriers with a BEST KEY RATING GUIDE 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 the City. 960604 syn 0070981 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° GOVERNMENT CODE SECTIONS 6103, 27383 SPACE ABOVE THIS LINE FOR RECORDER’S USE DEED OF TRUST AND ASSIGNMENT OF RENTS APN 120-27-80, 120-27-81 and 120-27-82 This Deed of Trust, made this __ day of ., 1996, between ALMA PLACE ASSOCIATES, a California limited partnership ("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 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 fight, 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 ~igreement 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 $1,030,725 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 Alma Place Associates to Fund Pre-Development and Pre- Construction Expenses for a Single Room Occupancy Housing Development at 725/753 Alma Street, Palo Alto", dated , 1996 ("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 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 requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not ~o commit, suffer or permit any act upon said property in violation of law; to 960603 syn 0070994 1 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 loss payable to 13enefieiary. 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 so 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 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 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 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 necessary 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 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 right 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 right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving 960603 syn0070994 2 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 knd 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 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 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 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 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 su.ms 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 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 Trust.ees, who shall, without conveyance from the Trustee predecessor, succeed to a’i*~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, 960603 syn0070994 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 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 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 ~ereby, together with interest thereon at the maximum legal rate 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 atiy 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, Director of Planning and Community Environment, P. O. Box 10250, Palo Alto, CA 94303. ALMA PLACE ASSOCIATES PAHC Alma Place, Inc. Its General Partner Marlene H. Prendergast 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. 960603 syn0070994 EXHIBIT E Order No. 507079 Page No. 5 LEGAL DESCRIPTION REAL PROPERTY in the City of Palo Afro, County of Santa Clara, State of C~difomia, described as follows: PARCEL ONE: Portion of Lots 1 and 2, as shown upon that certain Map ent~ed, "Map of Subdivision of Block 7 University Park, now Palo Alto’, which Map was filed for record in the office of the Recorder of the County of Santa Clara. State of California on February 24, 1903 in Volume "F3" of Maps, a.t page 10, and more particularly described as follows: Commencing at a point on the Northeasterly line of Alma Street, said point being distant 100 feet Northwesterly from the point of intersection thereof with the Northwesterly line of Homer Avenue; running thence Northwesterly along said Northeasterly line of Alma Street, 93 feet; thence ~t dght angles Northeasterly 105 feet to the Southwesterly line of a 15 foot alley; thence Southeasterlyalong said line of said 15 foot alley 93 feet; thence at right angles Southwesterly 105 feet to the point of commencement. PARCEL TWO: Portion of Lot 1 as shown upon that certain Map entitled, "Map of Subdivision of Block 7, University Park,’ which Map was filed for record in the office of the Recorder of the County of Santa Clara, State of California on February 2,~, 1903 in Book F3 of Maps, at page 10 and more particularly described as follows: Beginning at a point on the Northeasterly line of Alma Street, distant thereon Southeasterly 132 feet from the point of intersection thereof with the Southeasterly line of F~rest Avenue, as said street and avenue are shown upon the map hereirmbove referred to; thence Southeasterly on and along said Northeasterly line of Alma Street, 50 feet; thence at s fight angle Northeasterly 105 feet to the Southwesterly line of a 15 foot alley; thence Northwesterly on and along the Southwesterly line of said alley and paralle~ with Re Northeasterly line of Alma Street, 50 feet; thenoe ~t s fight angle Southwesterly 105 feet to the point of beginning. PARCEL THREE: Portion of Lots 1 and 2 in Block 7 as shown upon that certain Map e~titled, "Map of Subdivision of Block 7 Univers~ Park, now Palo Alto," which Map was filed for rec~-d in the office of the Recorder of the county of Santa Clara, State of California, on February 24, 1903 in Book F3 of Maps, t~ page 10 ~nd more parllculady described as follows: Beginning at a point on the Northeasterly line of Alma Street, distant thereon 193 feet Northwesterly of the point of intersection of said line of Alma Street with the Northwesterly line of Homer Avenue; thence Northwesterly along said line of Alma Street, 25 feet; thence st a fight ~ngle Northeasterly 105 feet to the Southwesterly line of a 15 foot alley; thence Southeasterly along said line of said 15 foot alley, 25 feet; thence ~t fight angles Southwesterly 105 feet to the point of beginning. APN: 120-27=80 ATTACHMENT 4 Palo A~to Housing Corporation 540 Cowper Street ¯ Suite 201 ¯ Palo Alto, California 94301 ¯ (41,5) 321-9709 ¯ Fax (41,5) 321-4341 June 3, 1996 Ms. June Fleming City Manager City of Palo Alto P.O. Box 10250 Palo Alto, CA 94303 Re: Funds for Pre-Construction Activity on Alma Street SRO Dear Ms. Fleming: The Palo Alto Housing Corporation (PAHC) received word from the California Tax Credit Allocation Committee (TCAC) on May 8, 1996 that the proposed Alma Place SRO development received a preliminary reservation of federal and state tax credits. This is wonderful news and PAHC intends to proceed with the project. Under the requirements of the land option agreement and the regulations of the tax credit program, PAHC must accomplish various important tasks in the near future. We must acquire the site, receive final ARB approval, prepare final construction drawings in compliance with all City approvals, and make final arrangements for private permanent and construction loans. PAHC requests that the City of Palo Alto make funds immediately available for these efforts as part of its commitment to the project. PAHC has worked with City staff on a new predevelopment agreement to cover this next phase of project development. The proposed budget, in the amount of $1,030,725 covers necessary expenses from now to the funding of the construction loan. We request that you agendize the agreement at the earliest opportunity so that PAHC can move forward. We appreciate the Cit)’s continued support of our efforts. Sincerely, PALO ALTO HOUSING CORPORATION Marlene H. Prendergast Executive Director RECEIVED dUN 0,3 1996 Department c,~ .~:,:~m,:~2 Community Enviror:m:=- cc: Cathy Siegel, Housing Coordinator