HomeMy WebLinkAboutStaff Report 363-06City of Palo Alto
City Manager’s Report
TO:
FROM:
DATE:
HONORABLE CITY COUNCIL
CITY MANAGER
SEPTEMBER 18, 2006
DEPARTMENT: PLANNING AND
COMMUNITY ENVIRONMENT
CMR:363:06
SUBJECT:AGREEMENT BETWEEN THE CITY OF PALO ALTO, EDEN
HOUSING, INC. AND COMMUNITY HOUSING ALLIANCE, INC. TO
FUND A DEPOSIT FOR SITE ACQUISITION AND TO CONDUCT
PREDEVELOPMENT ACTIVITIES FOR THE PROPOSED ALMA
STREET FAMILY RENTAL HOUSING PROJECT.
RECOMMENDATION
Staff recommends that the City Council approve the Alma Street Family Rental Housing Project
Agreement between the City, Eden Housing and the Community Housing Alliance. The
agreement provides for the funding of a deposit for site acquisition and conducting of
predevelopment activities for the planned project.
BACKGROUND
Since the spring of 2003 Eden Housing, Inc. has been under contract to the City of Palo Alto to
identify potential sites suitable for a higher density affordable housing project. Given the
extremely highprice of land in Palo Alto, Eden began to focus on the Alma Street substation site
(841 Alma) since it was City-owned and the Utilities Department had indicated an interest in
relocating the substation to its Quarry Road site. At a City Council study session held on
September 27, 2004, the City Council noted there was a great need for workforce housing
although senior housing appeared to be the best option due to the size constraints of the
substation site.
Eden Housing is now partnered with the Community Housing Alliance (CHA), an affiliate of the
Community Working Group. The proposed partnership with the three parties is similar to the
successful collaborative partnership that resuked in the Opportunity Center. CHA has entered
into a contract with the property owner of 801/809 Alma (Ole’s Car Shop) to purchase the ske.
This site would be combined with the substation site (841 Alma) to form an expanded site,
making possible the development of a family housing project (see Exhibit A for a project site
map). Eden and CHA, working with architect Rob Wellington Quigley, have developed
preliminary designs for a family housing project.
The City Council held a study session on the proposed project on July 10, 2006. Eden Housing
and CHA presented an overview of the project. Council questions focused on the profile of
CMR:363:06 Page 1 of 4
future tenants, the fiscal implications of the purchase of the Ole’s (801/809 Alma) site, the
relocation of the substation and the development of the project. On July 24, 2006, the Council
approved an agreement with Stanford University to relocate the substation and an agreement
with Palo Alto High Street Partners (800 High St.) to accept one million dollars in exchange for
the substation being removed by early 2008.
The current Eden/CHA plans for the project show the development of 53 one-three bedroom
housing units. The target income level for future residents are extremely low income families at
30% to 35% of the Area Median Income (AMI). In Santa Clara County, those incomes would
range from $22,290 to $26,005 for one person, up to $36,930 to $43,085 for a family of six.
Rents would not exceed 30% of income.
DISCUSSION
The agreement before the Council authorizes the City of Palo Alto, Eden Housing and CHA to
continue joint efforts to develop housing on the combined parcels of 841,809 and 801 Alma St.
The City has agreed to relocate the substation to make available the City-owned site of 841 Alma
and has selected Eden Housing to develop this City parcel. CHA and Ole’s Car Repair have
entered into a purchase and sale agreement to purchase the Ole’s site (801 and 809 Alma) for
$4.0 million. CHA and Eden Housing entered into an agreement on May 16, 2006 to work
together to form a limited partnership to develop an affordable housing project on the combined
city and Ole’s sites.
Under the terms of the three party agreement before the Council:
CHA has made an initial deposit into escrow of $20,000 toward the purchase of the Ole’s
site. An additional $980,000 deposit must be made by September 30, 2006.
The City agrees to contribute the additional $980,000 needed for the deposit on the purchase
of the Ole’s site, to be deposited into escrow by September 30, 2006.
Prior to the City’s deposit of the $980,000, CHA will execute and deliver to the City a
Promissory Note for $480,000 (Exhibit B) and Eden Housing will execute and deliver to the
City a Repayment Guaranty (Exhibit C) for actual repayment of $480,000 of the deposit.
The Promissory Note requires repayment by September 18, 2007.
[]The City pledges to contribute an additional $3 million towards the purchase price of the
Ole’s site when and as needed to close escrow at the time of purchase. The purchase date is
August 1, 2008. The additional $3 million City contribution means the City will be
contributing a total of $3.5 million to the purchase of the Ole’s site.
The City, Eden Housing and CHA will enter into good faith negotiations to negotiate a
Development and Disposition Agreement (DDA). The DDA will provide for the transfer of
the City parcel to the Eden/CHA partnership and the transfer of the Ole’s parcel from CHA
to the Eden/CHA partnership. It will address, among other things, the financial investment by
the parties in the proposed project, project entitlement responsibilities and schedule, project
unit mix and rental levels, and site layout, design and architectural plan issues. The parties
agree to negotiate, approve and execute a DDA within six months of this agreement.
CMR:363:06 Page 2 of 4
*If CHA does not exercise its right to purchase Ole’s, CHA will reimburse the City for the
$500,000 actual deposit the City has made. ($980,000 minus the $480,000 already repaid by
Eden Housing).
[]Should the Ole’s site not be used for affordable housing by the CHA/Eden partnership or its
successors, title to the site would revert to the City.
A tentative performance schedule (Exhibit D) reflecting the above referenced dates as well as
project site development dates is attached to the agreement. The project site is located within the
SOFA 2 Coordinated. Area Plan and will require a Planned Community (PC) Rezoning.
Preliminary staff and ARB level review of a proposed project is anticipated to begin in the first
quarter of 2007 with a formal PC application to follow. The PC process requires ARB and
Planning and Transportation Commission review, and City Council approval.
RESOURCE IMPACT
The City will contribute $3.5 million towards the purchase of the Ole’s site. This amount
includes the $980,000 deposit made by September 30, 2006 minus the $480,000 guaranteed
reimbursement from Eden Housing, plus the $3 million to be paid for site purchase at the close
of escrow, August 1, 2008.
In addition to the above funding, Eden and CHA expect to need approximately $7 million in City
subsidies for construction costs together with funding from tax credits, the County Housing
Trust, and the State to make up an estimated $24 million development budget. The amount and
type of additional financial assistance from Palo Alto, above and beyond its contributions to the
purchase of the Ole’s site, will be spelled out in the DDA. All City financial funding for the
project will come from the City’s Commercial and Residential Housing Funds, not the General
Fund.
The City of Palo Alto is also contributing the 841 Alma substation site to the project. The
estimated value of the 15,750 square foot site at $125 per square foot is$1,968,750.
POLICY IMPLICATIONS
This project will provide 53 units of extremely low income workforce, family housing. Both
workforce and family housing have been long-identified Council priorities and are specifically
stated as priorities for the City’s affordable housing funding in both the Housing Element and in
the HUD Consolidated Plan. These 53 units will be a substantial step towards closing the gap on
the City’s t07 unit unmet share of our regional very low income and below housing needs.
The project is consistent with Comprehensive Plan’s Housing Element and the Phase 2 South of
Forest Avenue (SOFA) Coordinated Area Plan (CAP) which encourages the development of new
housing and expanding the supply of affordable housing. In order to encourage affordable
housing within.the SOFA area, the SOFA CAP includes a program that allows floor area bonuses
for housing projects that provide below market rate units in excess of the requirement. The
project site is zoned RT-50; multiple family uses are permitted in the RT-50 zone.
CMR:363:06 Page 3 of 4
ENVIRONMENTAL REVIEW
A Final EIR entitled "South of Forest Avenue (SOFA) Coordinated Area Plan (CAP)" addressed
the environmental impacts of future development within the SOFA area. The project site is
located within the SOFA CAP. Impacts from acquisition of the properties and approval of the
predevelopment agreement for future housing on the site are adequately covered in this FEIR.
Environmental impacts from future development of the site will be further analyzed through
subsequent environmental review when a development application is submitted to the City for
the properties.
PREPARED BY:
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
Andy Coe
Col~sulta_gt, .P.tlN~d Community Environment
S~e~e En~ie
D1F~nd Community Environment
City Manager
ATTACHMENTS
Attachment A: Agreement between City of Palo Alto, Eden Housing and the Community
Housing Alliance
Attachment A has the following exhibits as part of the Agreement:
Exhibit A: Property Description
Exhibit B: Promissory Note
Exhibit C: Repayment Guaranty
Exhibit D: Tentative Performance Schedule
cc:
Community Housing Alliance
Eden Housing Corporation
Ole’s Repair Shop
CMR:363:06 Page 4 of 4
Attachment
AGREEMENT BETWEEN THE CITY OF PALO ALTO, EDEN HOUSING, INC. AND
COMMUNITY HOUSING ALLIANCE, INC. TO FUND A DEPOSIT FOR SITE
ACQUISITION, TO NEGOTIATE A DISPOSITION AND DEVELOPMENT
AGREEMENT AND TO CONDUCT PREDEVELOPMENT ACTIVITIES FOR THE
PROPOSED ALMA STREET FAMILY RENTAL HOUSING PROJECT
This Agreement (this "Agreement") is entered into by and among The City of Palo
Alto, a chartered city (the "City"), Community Housing Alliance, Inc., a California
nonprofit public benefit corporation ("CHA") and Eden Housing, Inc., a California
nonprofit public benefit corporation ("Eden"), as of September 18, 2006.
RECITALS
A. City owns property, known as 841 Alma Street, currently occupied by the Alma
Street Electrical Substation ("City Parcel") and proposes to relocate the electrical
substation offsite in order to make the City Parcel available for the development of
affordable workforce housing.
B.City has selected Eden to develop the City Parcel.
C. CHA and the owner ("Seller") of the "Ole’s Car Shop" property, known as 801
and 809 Alma Street, adjacent to the City Parcel ("Ole’s Parcel") have entered into a
purchase and sale agreement for the sale of the Ole’s Parcel for $4.0 million (the "Ole’s
Purchase Agreement").
D. CHA and Eden have entered into that certain Memorandum of Understanding
dated as of May 16, 2006, pursuant to which CHA and Eden have agreed to work
together to develop affordable workforce housing (the "Project") on a combined site (the
"Housing Site") comprised of the City Parcel and the Ole’s Parcel, as described in
Exhibit A - Property Description.
E. The City, CHA and Eden mutually desire that the Project will provide up to sixty-
five (65) family units of workforce housing at rents that are affordable to persons and
families whose household income does not exceed fifty percent (50%) of the area
median income.
Now, therefore, the City, CHA and Eden agree as follows:
AGREEMENT
1. Pursuant to the Ole’s Purchase Agreement, CHA has made an initial
deposit into the escrow held by FirstAmerican Title Insurance Company (the "Escrow
Holder") pursuant to the Ole’s Purchase Agreement (the "Escrow") in the amount of
$20,000 (the "Initial Deposit"), and has obtained the agreement of the Seller to amend
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the Ole’s Purchase Agreement to extend the date for an additional $980,000 deposit
(the "Additional Deposit", which, together with the Initial Deposit, shall be referred to as
the "Deposit") to September 30, 2006 (the "Deposit Date"). Pursuant to the Ole’s
Purchase Agreement, the close of Escrow is scheduled for August 1, 2008 (the
"Purchase Date").
2. CHA, Eden and City agree to cooperate in carrying out a method of
financing to purchase the Ole’s Parcel, as follows:
a.CHA and Eden’s obligations will be as follows:
(1) Prior to the City’s deposit of $980,000 into Escrow, CHA
shall execute and deliver to the City a promissory note in the principal amount of
$480,000, due and payable in full on September 18, 2007 (the "CHA Note"),
substantially in the form attached to this Agreement as Exhibit B, and cause Eden
Housing, Inc. to execute and deliver to the City a Repayment Guaranty, substantially in
the form attached to this Agreement as Exhibit C.
(2) CHA and Eden shall use good faith efforts to obtain, through
private fundraising, sufficient moneys to fund the anticipated project development
budget gap.
b.The City’s obligations will be as follows:
(1) The City shall initially contribute $980,000 towards the
purchase price, when and as needed to pay the Additional Deposit (of which, $480,000
shall be repaid in accordance with the CHA Note) and, subject to entering into the DDA
(defined in Section 4, below), another $3,000,000 towards the purchase price (for a total
of $3,500,000), when and as needed to close Escrow. The City shall deposit the initial
$980,000 into Escrow, consisting of: (a) an unsecured, guaranteed loan to CHA in the
principal amount of $480,000; and (b) an advance in the amount of $500,000 (the
"Advance"), which shall either be returned to the City by the Escrow Holder in the event
the Escrow is terminated, or repaid to the City by the Partnership (defined in Section 3,
below) as provided in the DDA.
(2) Subject to the satisfaction of all conditions precedent to be
set forth in the DDA, including but not limited to the recordation of a map in satisfaction
of the Subdivision Map Act to combine the Ole’s Parcel and City Parcel to create the
Housing Site, and the concurrent closing and conveyance of the Ole’s Parcel to the
limited partnership to be formed as described in Section 3, below (the "Partnership"),
the City will convey the City Parcel to the Partnership on the Closing, in accordance with
the terms and conditions of the DDA.
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(3) The City will use its best efforts to take such actions as may
reasonably be required to relocate the Alma Street Electrical Substation from the City
Parcel so that the transformers will be turned off by December 31, 2007 and the City
Parcel will be vacated no later than January 1, 2008.
c. The parties to this Agreement acknowledge and agree that if, after
the City makes the Additional Deposit, CHA does not exercise its right to purchase the
Ole’s Parcel when and as required by the Ole’s Purchase Agreement, CHA shall be
subject to $300,000 in liquidated damages pursuant to Section 21 of the Ole’s Purchase
Agreement. In that event, concurrently with the cancellation of Escrow and release of
the Deposit from Escrow, CHA shall reimburse the City or cause the Escrow Holder to
return to the City the sum of $500,000, and CHA shall be solely responsible for the
$300,000 liquidated damages.
d. In the event that the sale transaction memorialized by the Ole’s
Purchase Agreement fails to close for any reason other than a breach by one or more
parties to this Agreement, then the City shall take such steps as it deems necessary
and prudent to acquire the Ole’s Parcel, which steps include, at the sole discretion of
the City Council, exercise of the City’s power of eminent domain to acquire the property
at its fair market value.
3. CHA and Eden shall cooperate in good faith as provided in the MOU to
negotiate and enter into an agreement of limited partnership prior to the Purchase Date,
forming (a) a nonprofit 501(c)(3) corporation (the "Nonprofit"); and (b) a limited
partnership (the "Partnership"), whose sole general partner shall be the Nonprofit and
whose initial limited partner shall be Eden, to take title to the Housing Site upon the
Closing, obtain financing for, construct, own, operate and manage the Project, and
providing for the respective roles and responsibilities of CHA and Eden regarding the
development and operation of the Project, which shall be subject to the reasonable
consent of the City Manager or designee (the "Partnership Agreement"). It is anticipated
that the Project will be financed in part with Low Income Housing Tax Credit proceeds
(the "Tax Credit").
4. The City, CHA and Eden shall cooperate in good faith to negotiate and
enter into an agreement (the "Disposition and Development Agreement" or "DDA"), prior
to the Purchase Date, providing for the concurrent conveyance (by long-term ground
lease or grant deed, as determined in the DDA) of the City Parcel to the Partnership by
the City and the conveyance of the Ole’s Parcel to the Partnership by CHA (the
"Closing"), and the financing and construction of the Project on the combined Housing
Site, subject to the following:
a. The City, CHA and Eden shall diligently and in good faith negotiate
the terms of the DDA for the conveyance of the City Parcel and development of the
Project on the Housing Site, and shall cooperate in conducting such Project feasibility
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activities as each party deems appropriate. It is the intention of the City, CHA and Eden
that the DDA shall be negotiated, approved and executed within six months after
execution of this Agreement, subject to a six-month extension if mutually agreed by the
City, CHA and Eden, but in any event prior to the Purchase Date for the Ole’s Parcel, as
the same may be extended from time to time.
b. Among the issues to be addressed in the negotiations are the total
development costs of the Project, the nature and amount of financial investment in the
Project by the parties, remediation of any adverse site conditions, the Partnership’s
responsibility to obtain entitlements and any environmental clearances, the entitlement
and development schedule for the Project, financing of the Project, management and
operation of the Project, maximum income of tenants and maximum rents that may be
charged, unit mix, design and aesthetic considerations of the Project, site layout, design
and architectural plans, the quality and type of construction, and the provision of public
improvements related to the Project. Attached to this Agreement as Exhibit D is a
tentative performance schedule setting forth anticipated milestones.
c. As part of the negotiations of the DDA, City, CHA and Eden shall
make available such staffing, consultants and other resources as may be required for
the timely resolution of issues which may arise during negotiations and for the
expeditious review of documents to be prepared by or on behalf of City. It is anticipated
that, except as City may otherwise determine, negotiations and other meetings between
the City, CHA and Eden will take place at City’s offices, and draft documents will be
prepared by City or its attorneys and consultants and provided to CHA and Eden and
their attorneys and consultants for review and comment.
d. If each of the following conditions has not occurred by the Purchase
Date (as the Purchase Date may be extended from time to time), then this Agreement
shall terminate, the City shall have no further obligation to provide funds for the
purchase of the Ole’s Parcel, and neither the City, CHA or Eden shall have any further
rights or obligations under this Agreement (except that CHA shall be obligated to repay
to the City the $500,000 Advance upon the cancellation of Escrow and return of the
Deposit to CHA by the Escrow holder): (i) the Partnership Agreement, in a form that is
acceptable to the City, shall have been mutually agreed to and executed by the
authorized representatives of CHA and Eden and the Partnership shall be authorized to
enter into the DDA; (ii) the DDA shall have been mutually agreed to, approved by the
City Council and executed by the authorized representatives of the City and the
Partnership; and (iii) the Alma Street Electrical Substation transformers shall have been
turned off and the City Parcel shall have been vacated and any environmental
contamination shall have been removed. However, the parties to this Agreement may
mutually agree to extend this Agreement for reasonable periods of time, but in any
event not later than the Purchase Date, as the same may be extended from time to
time, subject to the approval of the City Manager or designee. If the parties cannot
agree upon such an extension, this Agreement shall automatically terminate.
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e. This Agreement may also be terminated if the parties agree in
writing that a successful consummation of the negotiations is not likely to occur.
5. The essential terms and conditions of the DDA to be negotiated and
drafted pursuant to this Agreement shall be guided by the following requirements and
conditions:
a. The DDA shall contain a Scope of Development setting forth design
parameters for the Housing Site and a requirement for the submission of plans to the
City for approval.
b. The DDA shall contain a Schedule of Performance setting forth the
respective times in which City and the Partnership are obligated to perform their
respective obligations.
c. The DDA shall include a "sources and uses" budget and describe a
feasible method of financing the Project. The DDA shall require submittal of
documentation of all proposed construction and permanent funding, including tax credit
equity, State and local housing loans, private donations, construction and permanent
loans and developer equity needed to develop the Project. CHA and Eden agree to
make continuing full disclosure to City of their proposed methods of financing the
Project. The City agrees to reasonably cooperate with CHA and Eden, without cost to
the City, in all applications for bond financing, State financing, low income housing tax
credits and similar matters.
d. The DDA may provide for City financial assistance, to the extent
needed to make the affordable housing Project feasible, and may include, but not be
limited to, a land write-down, construction and permanent.financing and off-site public
improvements. To the extent the City provides financial assistance for the Project, (i) the
terms of repayment, if any, shall be negotiated and shall be set forth in the DDA, and (ii)
such financing shall be evidenced by a promissory note and secured by a deed of trust,
the forms of which shall be negotiated at the same time as the DDA and attached to the
DDA. City financial assistance, if any, shall be subject to the satisfaction of all conditions
applicable to the source of funds available to the City, including, without limitation,
affordable housing grants from the State of California under Proposition 46, which
requires that (1) at least thirty percent (30%) of the units be occupied by extremely low
income households having incomes not exceeding thirty percent (30%) of the area
median income, at an affordable rent; and (2) at least thirty percent (30%) of the units
must have three or more bedrooms.
e. The DDA shall provide for the conveyance of the City Parcel.
During negotiations of the DDA, the parties shall reasonably consider a structure
whereby the Housing Site is owned in fee by the City and ground leased to the
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Partnership. Any such ground lease shall contain such reasonable provisions as may be
necessary to obtain financing for the Project without, however, subordinating the City’s
fee ownership of the Housing Site.
f.The DDA shall set forth conditions precedent to the conveyance of
any interest in the Housing Site to be conveyed by City to the Partnership, and to the
disbursement of any funds by the City, to ensure that the Project will be developed and
used as required by the DDA.
g. The DDA shall prohibit, without City consent, any assignments or
transfers by the Partnership until completion of any construction required by the DDA,
including any assignment of a security interest in the property for financing purposes.
h. The DDA shall set forth use restrictions requiring the Housing Site
to be used for affordable housing, which use restrictions shall be incorporated into deed
restrictions or a recorded regulatory agreement running with the land (the "Affordable
Housing Restriction"). The DDA shall provide that title to the Housing Site shall revert to
the City (whether by right of termination as to the City Parcel, exercise of an option as to
the entire Housing Site and/or other appropriate means) in the event the Partnership or
its successors or assigns shall fail to comply with the Affordable Housing Restriction, as
specified in the DDA.
The DDA shall set forth the City’s standard insurance requirements.
j.The DDA and other documents and instruments that may be
provided for in the DDA relating to the financing and operation of the Project, shall
incorporate all other applicable terms and conditions that are customarily included in
such agreements.
6. CHA and Eden shall provide the City with copies of all final reports,
studies, analyses, non-privileged correspondence, architectural plans and drawings,
and similar documents, prepared or commissioned by CHA or Eden with respect to this
Agreement and the Project, promptly upon their completion. The City shall provide CHA
and Eden with copies of all reports, studies, analyses, correspondence, and similar
documents prepared or commissioned by the City with respect to this Agreement and
the Project, promptly upon their completion. Nothing in this Section 6 obligates the City
to undertake any studies or analyses. Any document provided to any party pursuant to
this section shall be without warranty. CHA and Eden acknowledge that the City will
need sufficient, detailed information about the proposed Project to make informed
decisions about the content and approval of the DDA and that all documents and
reports submitted to the City pursuant to this Agreement shall become the property of
the City, and will be subject to the California Public Records Act (Government Code
Section 6250 et seq.).
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7. During the term of this Agreement, CHA and Eden may conduct such test,
surveys, and other analyses of the Housing Site as CHA and Eden deem necessary to
determine the feasibility of the Project, and shall complete such tests, surveys and other
analyses as promptly as possible prior to the Purchase Date. The City shall provide to
CHA, Eden and their respective agents and representatives the right to enter onto the
City Parcel and to conduct such tests, surveys, and other procedures (the "Tests") after
entering into a right of entry agreement between the City, CHA and Eden. CHA and
Eden shall indemnify and hold harmless the City from any loss, cost, or damage
(including, without limitation, reasonable attorney’s fees) arising out of any such entry
on the City Parcel by CHA and Eden and their respective agents or representatives. As
a condition to any such entry on the Housing Site prior to the Closing, CHA and Eden
shall present the City with evidence of a general liability insurance policy in an amount
of at least $2 million dollars, naming the City as an additional insured and meeting all
other City insurance requirements. The insurance policy shall cover all liability and
property damage arising from Eden’s, its agents’, or its representatives’ presence on the
City Parcel during Tests.
8. CHA and Eden shall prepare and submit to the City such plans,
specifications, drawings, and other information, as specified by the City, that are
reasonably necessary to perform the environmental review process, if any, required by
the California Environmental Quality Act ("CEQA") and the National Environmental
Policy Act ("NEPA") for the Project, and to prepare all environmental documentation
required by CEQA and NEPA. During the term of this Agreement and subject to CHA
and Eden providing the necessary information to the City, the City shall undertake the
necessary steps, if any, to conduct the required level of environmental review
determined to be appropriate by the City pursuant to CEQA and NEPA requirements.
9. CHA and Eden acknowledge that the Project will require discretionary
approvals and entitlements from the City. During the term of this Agreement, CHA and
Eden shall prepare and submit site plans and designs for a Planned Community zone
application for the Project to the City and the appropriate City departments for their
review.
10. CHA and Eden shall provide the City with a detailed financial analysis for
the Project containing matters typically contained in such analyses; including without
limitation, a detailed development cost budget and a detailed operating income and
expense estimate. The financial analysis will be used to evidence the financial feasibility
of the Project and to assist in the negotiation of terms regarding the financing of the
Project. The analysis shall describe the proposed amount and uses of any financial
assistance requested to be provided by the City.
11. CHA and Eden shall exercise good faith efforts to provide the City with
executed written commitments (containing usual and customary conditions) for
construction and permanent financing for the Project when and as required by the DDA.
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12. Eden and CHA shall be responsible for reasonable community outreach
and neighborhood liaison efforts, including but not limited to organizing and/or attending
a reasonable number of public information meetings.
13. CHA and Eden and the City agree to negotiate a detailed schedule of
performance to be incorporated into the DDA for the Project which shall include but not
be limited to: the date for the submittal of construction plans to the City, the date for
submission of evidence of financing (which shall include three opportunities to apply to
the California Tax Credit Allocation Committee for an allocation of Low Income Housing
Tax Credits) the commencement of construction of the Project, and the date for
completion of construction and the opening of the Project.
14. Upon reasonable notice, as from time to time requested by the City, CHA
and Eden shall make progress reports including efforts to apply for and obtain financing,
advising the City on studies being made, and matters being evaluated by CHA or Eden
with respect to this Agreement and the Project. Such progress reports shall be in
writing, if so requested by the City. The City shall not request written reports more
frequently than once each month.
15. This Agreement shall not obligate either City, CHA or Eden to enter into a
DDA or to enter into any particular DDA. The City, Eden and CHA do not intend this
Agreement to be a purchase agreement, ground lease, license, option or similar
contract, or to be bound by this Agreement except to the extent specifically set forth
herein. By execution of this Agreement, the City is not committing itself to or agreeing
to approve the Project. This is not a Development Agreement as provided in California
Government Code Section 65864 et seq.. Execution of this Agreement by the City, Eden
and CHA is merely an agreement to negotiate during the term of this Agreement and to
conduct reasonable predevelopment activities relating to such negotiations, and
preparing recommendations to the City Council in accordance with the terms hereof,
reserving for subsequent City Council action the final discretion and approval regarding
the execution of a DDA, the approval of the Project and all proceedings and decisions-in
connection therewith. Any DDA resulting from negotiations pursuant to this Agreement
shall become effective only if and after such DDA has been considered and approved
by the City Council following conduct of all legally required procedures. Each party
acknowledges and assumes the risk that, notwithstanding this Agreement and good
faith negotiations, the City, CHA and Eden may not enter into a DDA due to a failure to
agree upon essential terms, CHA and Eden may not enter into the Partnership
Agreement due to a failure to agree upon essential terms, and the City may not relocate
the Alma Street Electrical Substation due to the failure of any condition precedent to
such relocation as determined by the City. Except as expressly provided in this
Agreement, the City, CHA and Eden shall have no obligations or duties to the other
parties to this Agreement and no liability whatsoever in the event the City and CHA and
Eden fail to execute a DDA, in the event CHA and Eden fail to execute the Partnership
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Agreement or in the event the City fails to relocate the Alma Street Electrical Substation,
all as contemplated by this Agreement.
16. Eden and CHA shall each indemnify, defend, and hold the City, its elected
and appointed officials, officers, employees, agents, and successors and assigns
(collectively, the "lndemnitees" in this Section) harmless against all suits and causes of
action, claims, costs, and liability, including, but not limited to, reasonable attorney’s
fees and costs of any litigation, or arbitration or mediation, if any, brought by a third
party (1) challenging the validity, legality or enforceability of this Agreement or (2)
seeking damages which may arise directly or indirectly from the negotiation, formation,
execution, enforcement or termination of this Agreement, or which are incident to the
performance of the activities contemplated in this Agreement; provided, however, that in
the event of litigation or claims arising under the California Environmental Quality Act
("CEQA"), in which the City controls or is responsible for the preparation and/or review
of CEQA documentation, the indemnification provided in this Section 16 shall be limited
to fifty percent (50%) of such fees, costs and damages. Nothing in this Section shall be
construed to mean that Eden or CHA shall hold the Indemnitees harmless and/or
defend it to the extent of any claims arising from, or alleged to arise from the gross
negligence or willful misconduct of the Indemnitees. The City agrees that it shall fully
cooperate with Eden and CHA in the defense of any matter in which Eden or CHA is
defending and/or holding the Indemnitees harmless. The City may make all reasonable
decisions with respect to its representation in any legal proceeding, including, but not
limited to, the selection of attorney(s). This indemnity obligation shall survive the
termination of this Agreement.
17. Formal notices, demands and communications between the parties to this
Agreement shall be sufficiently given if, and shall not be deemed given unless,
dispatched by certified mail, postage prepaid, return receipt requested, or sent by
express delivery or overnight courier service, to the address of the parties shown as
follows, or such other addresses as the parties to this Agreement may designate in
writing from time to time:
City:
With copy to:
The City of Palo Alto
P.O. Box 10250
Palo Alto, CA 94303
Attention: City Manager
Office of City Attorney
City of Palo Alto
P.O. Box 10250
Palo Alto, CA 94303
Attn: Donald Larkin
PALO ALTO/PREDEVELOPMENT6
9-5-06
-9-
With copy to:
EDEN:
CHA:
Director of Planning & Community Environment
City of Palo Alto
P.O Box 10250
Palo Alto, CA 94303
Eden Housing, Inc.
409 Jackson Street
Hayward, CA 94544
Attn: Linda Mandolini
Community Housing Alliance, Inc.
948 Ramona Street
Palo Alto, CA 94301
Attn: Donald A. Barr
Such written notices, demands and communications shall be effective on the date
shown, on the delivery receipt as the date delivered or the date on which delivery was
refused.
18. Each party shall be responsible for its own costs and expenses in
connection with any activities and negotiations undertaken in connection with this
Agreement and the performance of its obligations under this Agreement.
19. The City shall not be liable for any real estate commissions or brokerage
fees that may arise from this Agreement or any DDA. that may result from this
Agreement. The City represents that it has engaged no broker, agent, or finder in
connection with this transaction. Eden and CHA shall defend and hold the City
harmless from any claims by any broker, agent, or finder retained by Eden or CHA.
20. a. Subject to Force Majeure, and subject to the further provisions of this
Section 20, failure or delay by any party to perform any term or provision of this Agreement
shall constitute a default under this Agreement ("Default"). After receipt of written notice,
the party in default must promptly commence to cure, correct, or remedy such failure or
delay and shall complete such cure, correction or remedy with reasonable diligence, but in
any event within 30 days after notice of default.
b. The injured party shall give written notice of default to the party in default,
specifying the default complained of. Delay in giving such notice shall not constitute a
waiver of any default nor shall it change the time of default.
c. Any failures or delays by the injured party in asserting any of its rights and
remedies as to any default shall not operate as a waiver of any default or of any such
rights or remedies. Delays by the injured party in asserting any of its rights and remedies
shall not deprive the injured party of its right to institute and maintain any actions or
-10-
PALO ALTO/PREDEVELOPMENT6
9-5-06
proceedings which it may deem necessary to protect, assert, or enforce any such rights or
remedies.
21. Notwithstanding specific provisions of this Agreement, non-monetary
performance hereunder shall not be deemed to be in default where delays or defaults are
due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts
of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes;
lack of transportation; governmental restrictions or priority; litigation, including litigation
challenging the validity of this transaction or any element thereof; unusually severe
weather; inability to secure necessary labor, materials or tools; delays of any contractor,
subcontractor, or suppliers; acts of the other party; acts or failure to act of the Agency or
any other public or governmental agency or entity (except that acts or failure to act of the
City shall not excuse performance by the City); or any other causes beyond the control or
without the fault of the party claiming an extension of time to perform. Notwithstanding the
foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and
until the party claiming such delay and interference delivers to the other parties written
notice describing the event, its cause, when and how such party obtained knowledge, the
date the event commenced, and the estimated delay resulting therefrom. Any party
claiming a Force Majeure Delay shall deliver such written notice within fifteen (15) days
after it obtains actual knowledge of the event. An extension of time for any such cause
shall be for the period of the enforced delay and shall commence to run from the time of
the commencement of the cause. Times of performance under this Agreement may also
be extended in writing one or more times, for such periods of time as the parties may
deem appropriate, by the mutual agreement of the City Manager or designee, Eden and
CHA.
22. This Agreement may be executed by each party on a separate signature
page, and when the executed signature pages are combined, shall constitute one single
instrument.
23. The language in all parts of this Agreement shall in all cases be construed
simply, as a whole and in accordance with its fair meaning and not strictly for or against
any party. The parties hereto acknowledge and agree that this Agreement has been
prepared jointly by the parties and has been the subject of arm’s length and careful
negotiation over a considerable period of time, that each party has been given the
opportunity to independently review this Agreement with legal counsel, and that each
party has the requisite experience and sophistication to understand, interpret, and agree
to the particular language of the provisions hereof. Accordingly, in the event of an
ambiguity in or dispute regarding the interpretation of this Agreement, this Agreement
shall not be interpreted or construed against the party preparing it, and instead other
rules of interpretation and construction shall be utilized.
24. If any term or provision of this Agreement, the deletion of which would not
adversely affect the receipt of any material benefit by any party hereunder, shall be held
PALO ALTO/PREDEVELOPMENT6
9-5-06
by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement shall not be affected thereby and each other term and provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law. It is the
intention of the parties hereto that in lieu of each clause or provision of this Agreement
that is illegal, invalid, or unenforceable, there be added as a part of this Agreement an
enforceable clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible.
25. References in this instrument to this "Agreement" mean, refer to and
include this instrument as well as any riders, exhibits, addenda and attachments hereto
(which are hereby incorporated herein by this reference) or other documents expressly
incorporated by reference in this instrument. Any references to any covenant, condition,
obligation, and/or undertaking "herein," "hereunderi" or "pursuant hereto" (or language
of like import) shall mean, refer to, and include the covenants, obligations, and
undertakings existing pursuant to this instrument and any riders, exhibits, addenda, and
attachments or other documents affixed to or expressly incorporated by reference in this
instrument.
26. As used in this Agreement, and as the context may require, the singular
includes the plural and vice versa, and the masculine gender includes the feminine and
vice versa.
27. This Agreement shall be executed in any number of duplicate originals
each of which is deemed to be an original. This Agreement shall constitute the entire
understanding and agreement of the parties.
28. This Agreement integrates all of the terms and conditions mentioned
herein or incidental hereto, and supersedes all negotiations or previous agreements
between the parties with respect to all or any part of the Property.
29. All waivers of the provisions of this Agreement and all amendments hereto
must be in writing and signed by the appropriate authorities of the parties. This
Agreement and any provisions hereof may be amended by mutual written agreement of
the parties.
30. This Agreement, when executed by CHA and Eden and delivered to City,
must be authorized, executed and delivered by the City within thirty (30) days after the
delivery of the Agreement signed by CHA and Eden or this Agreement may be
terminated by either CHA or Eden upon written notice to the City. This Agreement shall
not be effective until executed by the City, but upon execution by the City, the date of
this Agreement shall be the date first set forth above.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first set
forth above.
PALO ALTO/PREDEVELOPMENT6
9-5-06
-12-
THE CITY OF PALO ALTO
a chartered California municipal corporation
ATTEST:
By:
Judy Kleinberg
Mayor
City Clerk
APPROVED AS TO FORM:
City Attorney
APPROVED:
City Manager
Director of Planning and Community
Environment
Signatures continue on following page
PALO ALTO/PREDEVELOPMENT6
9-5-06
-13-
COI~II~lUNITY HOUSING ALLIANCE, INC.
California nonprofit public benefit corporation
Name:
Its: ~
Taxpayer Identification No.
.2o~ ~q zco
EDEN HOUSING, INC., a California nonprofit
public benefit corporation
By:
Name:
Its:
By:
Name:
Its:
Taxpayer Identification No.
PALO ALTO/PREDEVELOPMENT6
9-5-06
-14-
COMMUNITY HOUSING ALLIANCE, INC. a
California nonprofit public benefit corporation
By:
Name:
Its:
By:
Name:
Its:
Taxpayer Identification No.
EDEN HOUSING, INC., a California nonprofit
public benefit corporation
By:
Name:
Its:
Taxpayer Identification No. ’Z.~-_~-
PALO ALTO/PREDEVELOPMENT6
9-5-06
-14-
Exhibit A
SHOP
ALMA
SUBSTATION
Palo Alto
Whole Foods
Parking
ALMA SUBSTATION
AND
OLE’S CAR SHOP
EXHIBIT A
This map is a product o[ the
City of Palo Alto GIS
Exhibit B
$48O,OO0
0% interest
UNSECURED PROMISSORY NOTE
TO THE CITY OF PALO ALTO
September [~r., 2006
Palo Alto, California
FOR vALUE RECEIVED, COMMUNITY HOUSING ALLIANCE, INC., a California
nonprofit public benefit corporation ("Borrower"), hereby promises to pay to the CITY OF PALO
ALTO, a charteredcity ("City") the sum of FOUR HUNDRED EIGHTY THOUSAND DOLLARS
($480,000) in accordance with this Note. This Note is givento City by Borrower pursuant to that
certain "Agreement Between the City of Palo Alto, Eden Housing, Inc. and Community Housing
Alliance, Inc., to Fund a Deposit for Site Acquisition, To Negotiate a Disposition and Development
Agreement and to Conduct Predevelopment Activities for the Proposed Alma Street Family Rental
Housing Project" dated as of September 18, 2006 (the "Loan Agreement"). The obligation of
Borrower to City hereunder is subject to the terms of the Loan Agreement and this Note. Said
documents are public records on file in the office of the City Clerk of the City, and the provisions
of said documents are incorporated herein by this reference.
1. Obligation. This Note evidences the obligation of Borrower to pay to the City the
sum of $480,000 when and as required herein:
2. Where Payments are to be made. Payments pursuant to this Note are payable at the
principal office of City, City Hall, 250 Hamilton Avenue, Palo Alto, CA 94301, Attention:
Director of AdministrativeServices, or at such other place as the holder hereof may inform Borrower
in writing, in lawful money of the United States.
o
Borrower.
Security. The obligations evidenced by this Note shall be unsecuredobligationsof the
4. Interest Except in the event of a Default hereunder, the obligations evidenced by this
Note shall bear no interest. In the event of a Default, the obligations evidenced by this Note shall
bear interest at the interest rate then earned by the City on its portfolio of invested funds.
5. Maturity. The unpaid balance of this Note shall be due and payable in full on
September 18, 2007 (the "Maturity Date"),
6. Transfers. The entire outstanding indebtedness evidenced by this Promissory Note
shall be due and payable immediately in the event Borrower makes any total or partial sale, transfer,
palo alto\notel Promissory Note
8-30-06 Page 1 of 4
conveyance or assignment of the whole or any part of Borrower’s interest in that certain Standard
Offer, Agreement and EscrowInstructions for Purchase and Sale of Real Estate dated February 17,
2006, as amended ("Purchase and Sale Agreement")by and between Borrower ("Buyer" therein) and
Ole Christensen and Pamela Christensen (collectively, "Sellers" therein) or any portion thereof or
interest therein (referred to hereinafter as a "Transfer") without the prior written consent of City.
7. Waiver. Borrower waives presentment for payment, demand, protest, and notices of
dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the
ground of any extension or extensions of the time of payment or of any due date under this Note,
in whole or in part, whether before or after maturity and with or without notice. Borrower hereby
agrees to pay all costs and expenses, including reasonable attorney’s fees, which may be incurred by
the holder hereof, in the enforcement of this Note or any term or provision of either thereof.
8. Rights and Remedies. Upon the failure of Borrower to perform or observe any term
or provision of this Note, subject to applicable notice and cure provisions, the City may exercise its
rights or remedies hereunder.
9.Default Procedure.
a.Subject to the extensions of time set forth in.Section 10, and subject to the
further provisions of this Section 9, failure or delay by Borrower to pay the obligations evidenced
by this Note on the Maturity Date or perform any other material term or provision of this Note
constitutes a default under this Note.
b.City shall give written notice of default to Borrower, specifying the default
complained of by the City. Delay in giving such notice shall not constitute a waiver of any default
nor shall it change the time of default.
c.Any failures or delays by City in asserting any of its rights and remedies as
to any default shall not operate as a waiver of any default or of any such rights Or remedies. Delays
by City in asserting any of its rights and remedies shall not deprive City of its right to institute and
maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any
such rights or remedies.
d.If a monetary event of default occurs, prior to exercising any remedies
hereunder, the City shall give Borrower written notice of such default. Borrower shall have a period
of fifteen (15) calendar days after such notice is received or deemed received within which to cure
the default prior to exercise of remedies by City.
palo alto\hotel Promissory Note
8-3o-o6 Page 2 of 4
e.If a non-monetary event of default occurs, prior to exercising any remedies
hereunder, City shall give Borrower notice of such default. If the default is reasonably capable of
being cured within thirty (30) calendar days after such notice is received or deemed received,
Borrower shall have such period to effect a cure prior to exercise of remedies by City. If the default
is such that it is not reasonably capable of being cured within thirty (30) days, and Borrower (i)
initiates corrective action within said period, and (ii) diligently, continually, and in good faith works
to effect a cure as soon as possible, then Borrower shall have such additional time as is reasonably
necessary to cure the default prior to exercise of any remedies by City. In no event shall City be
precluded from exercising remedies if the non-monetary event of default is not cured within ninety
(90) days, or City’s rights under this Note or the City Deed of Trust becomes or is about to become
materially jeopardized by any failure to cure a default.
f.Any notice of default that is transmitted by electronic facsimile transmission
followed by delivery of a "hard" copy, shall be deemed delivered upon its transmission; any notice
of default that is personally delivered (including by means of professional messenger service, courier
service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed
received on the documented date of receipt by Borrower; and any notice of default that is sent by
registered or certified mail, postage prepaid, return receipt required shall be deemed received on the
date of receipt thereof.
10. Force Majeure. Notwithstanding specific provisions of this Note, non-monetary
performance hereunder shall not be deemed to be in default where delays or defaults are due to war;
insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the
public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation;
governmental restrictions or priority; litigation, including litigation challenging the validity of this
transaction or any element thereof; unusually severe weather; inability to secure necessary labor,
materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; acts
or failure to act of the City or any other public or governmental agency or entity (except that acts
or failure to act of the City shall not excuse performance by the City); or any other causes beyond
the control or without the fault of the party claiming an extension of time to perform.
Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Maj eure Event
unless and until the party claiming such delay and interference delivers to the other parties written
notice describing the event, its cause, when and how such party obtained knowledge, the date the
event commenced, and the estimated delay resulting therefrom. Any party claiming aForce Maj eure
Delay shall deliver such written notice within fifteen (15) days after it obtains actual knowledge of
the event. An extension of time for any such cause shall be for the period of the enforced delay and
shall commence to run from the time of the commencement of the cause.
palo alto\hotel Promissory Note
8-30-06 Page 3 of 4
11. Partial Invalidity. If the rights created by this Note shall be held by a court of competent
jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the
remaining obligations shall be completely performed and paid.
12. Payoff. Borrower shall have the right to pay off the obligationevidenced by this Note
at any time, without penalty.
13. Borrower Address. The address of Borrower for purposes of receiving notices
pursuant to this Note is as follows:
Community Housing Alliance, Inc.
948 Ramona Street
Palo Alto, CA 94301
Attn: Donald A. Barr
IN WITNESS WHEREOF Borrower has executed this Note as of the day and year set forth
above.
"Borrower"
COMMUNITY HOUSING ALLIANCE, INC. a
California nonprofit public benefit corporation
Taxpayer Identification No.
Zo.-q’q c/,z co)
palo alto\note 1
8-30-06
Promissory Note
Page 4 of 4
Exhibit C
REPAYMENT GUARANTY
(Unsecured Loan)
THIS REPAYMENT GUARANTY ("Guaranty".) is made as of September/_~_, 2006, by
EDEN HOUSING, INC. a California nonprofit public benefit corporation ("Guarantor") in favor
of the CITY OF PALO ALTO, a chartered city ("City").
RECITALS
No City has agreed under that certain "Agreement Between the City of Palo Alto,
Eden Housing, Inc. and Community Housing Alliance, Inc., to Fund a Deposit for
Site Acquisition, To Negotiate a Disposition and Development Agreement and to
Conduct Predevelopment Activities for the Proposed Alma Street Family Rental
Housing Project" dated as of September 18, 2006 (the "Loan Agreement"), City is
making a loan to Community Housing Alliance, Inc. ("Borrower") in the original
principal amount of $480,000 (the "Loan") for the purposes specified in the Loan
Agreement, which purposes relate to that certain real property more particularly
described in the Loan Agreement (the "Property").
The Loan is evidenced by that certain Unsecured Promissory Note executed by
Borrower in favor of City, dated as of the date hereof (the "Note"). The Loan
Agreement and the Note shall be referred to collectively as the "Loan
Documents". ~
The term "Loan Documents" for purposes hereof shall mean the Loan Agreement
and the Note. Any capitalized term not otherwise defined herein shall have the
meaning ascribed to such term in the Loan Agreement.
THEREFORE, to induce City to enter into the Loan Agreement and to disburse the Loan,
and in consideration thereof, Guarantor unconditionally guarantees and agrees as follows:
GUARANTY. Guarantor hereby guarantees and promises to pay to City or order, on
demand, in lawful money of the United States, in immediately available funds, all sums
that may be due and owing under Note, a copy of which is attached hereto (the
"Obligations").
o REMEDIES. If Guarantor fails to promptly perform its obligations under this Guaranty,
City may from time to time, and without first requiring performance by Borrower, bring
any action at law or in equity or both to compel Guarantor to perform its obligations
hereunder, and to collect in any such action compensation for all loss, cost, damage,
injury and expense sustained or incurred by City as a direct or indirect consequence of
the failure of Guarantor to perform its obligations together with interest thereon at the
highest non-usurious rate of interest permitted by applicable law.
RIGHTS OF CITY. Guarantor authorizes City, upon reasonable notice to Guarantor, but
without obtaining Guarantor’s consent and without affecting the liability of Guarantor,
from time to time to: (a) renew or extend all or any portion of the Obligations; (b) declare
k:\cg\Palo Alto\repayment guaranty2
9-7-06
all sums owing to City under the Note due and payable upon the occurrence of a Default
under the Loan Documents; (c) make non-material changes in the dates specified for
payments of any sums payable in periodic installments under the Loan Agreement, but
not including the Note; (d) release, substitute or add any one or more endorsers of the
Loan Agreement or guarantors of Borrower’s Obligations; (e) assign this Guaranty in
whole or in part; and (f) assign, transfer or negotiate all or any part of the indebtedness
guaranteed by this Guaranty.
GUARANTOR’S WAIVERS. Guarantor waives: (a) any defense based upon any legal
disability or other defense of Borrower, any other guarantor or other person, or by reason
of the cessation or limitation of the liability of Borrower from any cause other than full
payment of all sums payable under the Note; (b) any defense based upon any lack of
authority of the officers, directors, members or agents acting or purporting to act on
behalf of Borrower or any principal of Borrower or any defect in the formation of
Borrower or any principal of Borrower; (c) any defense based upon the application by
Borrower of the proceeds of the Loan for purposes other than the purposes represented by
Borrower to City or intended or understood by City or Guarantor; (d) any and all rights
and defenses arising ont of an election of remedies by City, even though that election of
remedies has destroyed Guarantor’s rights of subrogation and reimbursement against the
principal; (e) any defense based upon City’s failure to disclose to Guarantor any
information concerning Borrower’s financial condition or any other circumstances
bearing on Borrower’s ability to pay all sums payable under the Loan Agreement or any
of the other Loan Documents; (f) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in any other
respects more burdensome than that of a principal; (g) any defense based upon City’s
election, in any proceeding instituted under the Federal Bankruptcy Code, of the
application of Section 1111(b)(2) of tl~_e Federal Bankruptcy Code or any successor
statute; (h) any defense based upon any borrowing or any grant of a security interest
under Section 364 of the Federal Bankruptcy Code; (i) any right of subrogation, any right
to enforce any remedy which City may have against Borrower and any right to participate
in, or benefit from, any security for the Loan Agreement or the other Loan Documents
now or hereafter held by City; (j) presentment, demand, protest and notice of any kind;
and (k) the benefit of any statute of limitations affecting the liability of Guarantor
hereunder or the enforcement hereof.
GUARANTOR’S WARRANTIES. Guarantor warrants and acknowledges that: (a) City
would not make the Loan but for this Guaranty; (b) there are no conditions precedent to
the effectiveness of this Guaranty; (c) Guarantor has established adequate means of
obtaining from sources other than City, on a continuing basis, financial and other
information pertaining to Borrower’s financial condition, the Property and Borrower’s
activities relating thereto and the status of Borrower’s performance of the Obligations,
and Guarantor agrees to keep adequately informed from such means of any facts, events
or circumstances which might in any way affect Guarantor’s risks hereunder and City has
made no representation to Guarantor as to any such matters; (d) the most recent financial
statements of Guarantor, if any, previously delivered to City are true and correct in all
respects, have been prepared in accordance with generally accepted accounting principles
consistently applied (or other principles acceptable to City) and fairly present the
k:\cg\Paio Alto\repayment guaranty2
9-7-06
2
7.
financial condition of Guarantor as of the respective dates thereof, and no material
adverse change has occurred in the financial condition of Guarantor since the respective
dates thereof; and (e) Guarantor has not and will not, without the prior written consent of
City, Sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or
substantially all of Guarantor’s assets, or any interest therein, other than in the ordinary
course of Guarantor’s business.
SUBORDINATION. Guarantor subordinates all present and future indebtedness owing
by Borrower to Guarantor to the obligations at any time owing by Borrower to City under
the Note until termination of this Guaranty. Guarantor assigns all such indebtedness, if
any, to City as security for this Guaranty. Guarantor agrees to make no claim for such
indebtedness until termination of this Guaranty, excluding claims for payments of any
reimbursement for predevelopment costs due Guarantor. Guarantor further agrees not to
assign all or any part of such indebtedness unless City is given prior notice and such
assignment is expressly made subject to the terms of this Guaranty. If City so requests,
(a) all instruments evidencing such indebtedness shall be duly endorsed and delivered to
City, (b) all security for such indebtedness shall be duly assigned and delivered to City,
(c) such indebtedness shall be enforced, collected and held by Guarantor as trustee for
City and shall be paid over to City on account of the Obligations but without reducing or
affecting in any manner the liability of Guarantor under the other provisions of this
Guaranty, and (d) Guarantor shall execute, file and record such documents and
instruments and take such other action as City deems necessary or appropriate to perfect,
preserve and enforce City’s rights in and to such indebtedness and any security therefor.
If Guarantor fails to take any such action, City, as attorney-in-fact for Guarantor, is
hereby authorized to do so in the name of Guarantor. The foregoing power of attorney is
coupled with an interest and Cannot be revoked.
BANKRUPTCY OF BORROWER. In any bankruptcy or other proceeding in which the
filing of claims is required by law, Guarantor shall file all claims which Guarantor may
have against Borrower relating to any indebtedness of Borrower to Guarantor and shall
assign to City all rights of Guarantor thereunder. If Guarantor does not file any such
claim, City, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of
Guarantor or, in City’s discretion, to assign the claim to a nominee and to cause proof of
claim to be filed in the name of City’s nominee. The foregoing power of attorney is
coupled with an interest and cannot be revoked. City or its nominee shall have the right,
in its reasonable discretion, to accept or reject any plan proposed in such proceeding and
to take any other action which a party filing a claim is entitled to do. In all such cases,
whether in administration, bankruptcy or otherwise, the person or persons authorized to
pay such claim shall pay to City the amount payable on such claim and, to the full extent
necessary for that purpose, Guarantor hereby assigns to City all of Guarantor’s rights to
any such payments or distributions; provided, however, Guarantor’s obligations
hereunder shall not be satisfied except to the extent that City receives cash by reason of
any such payment or distribution. If City receives anything hereunder other than cash,
the same shall be held as collateral for amounts due under this Guaranty. If all or any
portion of the obligations guaranteed hereunder are paid or performed, the obligations of
Guarantor hereunder shall continue and shall remain in full force and effect in the event
that all or any part of such payment or performance is avoided or recovered directly or
k:\cg\Palo Alto\repayment guaranty2
9-7-06
10.
12.
indirectly from City as a preference, fraudulent transfer or otherwise under the
Bankruptcy Code or other similar laws, irrespective of (a) any notice of revocation given
by Guarantor prior to such avoidance or recovery, or (b) full payment and performance of
all of the indebtedness and obligations evidenced and secured by the Loan Documents.
ADDITIONAL, INDEPENDENT AND UNSECURED OBLIGATIONS. This Guaranty
is a continuing guaranty of payment and not of collection and cannot be revoked by
Guarantor and shall continue to be effective with respect to any indebtedness referenced
in Section 1 hereof arising or created after any attempted revocation hereof or after the
death of Guarantor (if Guarantor is a natural person, in which event this Guaranty shall be
binding upon Guarantor’s estate and Guarantor’s legal representatives and heirs). The
obligations of Guarantor hereunder shall be in addition to and shall not limit or in any
way affect the obligations of Guarantor under any other existing or future guaranties
unless said other guaranties are expressly modified or revoked in writing. This Guaranty
is independent of the Obligations. City may bring a separate action to enforce the
provisions hereof against Guarantor without taking action against Borrower or any other
party or joining Borrower or any other party as a party to such action. Except as
otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed
to be secured by any security instrument unless such security instrument expressly recites
that it secures this Guaranty.
ATTORNEYS’ FEES; ENFORCEMENT. If any attorney is engaged by City to enforce
or defend any provision of this Guaranty against Guarantor, with or without the filing of
any legal action or proceeding, Guarantor shall pay to City, immediately upon demand all
attorneys’ fees and costs incurred by City in connection therewith, together with interest
thereon from the date of such demand until paid at the rate of interest applicable to the
principal balance, of the Loan as specified in the Note.
RULES OF CONSTRUCTION. The word "Borrower" as used herein shall include both
the named Borrower and any other person at any time assuming or otherwise becoming
primarily liable for all or any part of the Obligations. The term "person" as used herein
shall include any individual, company, trust or other legal entity of any kind whatsoever.
If this Guaranty is executed by more than one person, the term "Guarantor" shall include
all such persons. When the context and construction so require, all words used in the
singular herein shall be deemed to have been used in the plural and vice versa. All
headings appearing in this Guaranty are for convenience only and shall be disregarded in
construing this Guaranty.
CREDIT REPORTS. Each legal entity and individual obligated on this Guaranty hereby
authorizes City to order and obtain, from a credit reporting agency of City’s choice, a
third party credit report on such legal entity and individual.
GOVERNING LAW. This Guaranty shall be governed by, and construed in accordance
with, the laws of the State of California, except to the extent preempted by federal laws.
Guarantor and all persons and entities in any manner obligated to City under this
Guaranty consent to the jurisdiction of any federal or state court within the State of
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9-7-06
4
13.
California having proper venue and also consent to service of process by any means
authorized by California or federal law.
14.
MISCELLANEOUS. The provisions of this Guaranty will bind and benefit the heirs,
executors, administrators, legal representatives, nominees, successors and assigns of
Guarantor and City. The liability of all persons and entities who are in any manner
obligated hereunder shall be joint and several. If any provision of this Guaranty shall be
determined by a court of competent jurisdiction to be invalid, illegal or unenforceable,
that portion shall be deemed severed from this Guaranty and the remaining parts shall
remain in full force as though the invalid, illegal or unenforceable portion had never been
part of this Guaranty.
15.
ADDITIONAL PROVISIONS. Such additional terms, covenants and conditions as may
be set forth on any exhibit executed by Guarantor and attached hereto which recites that it
is an exhibit to this Guaranty are incorporated herein by this reference.
17.
ENFORCEABILITY. Guarantor hereby aclcnowledges that: (a) the obligations
undertaken by Guarantor in this Guaranty are complex in nature, and (b) numerous
possible defenses to the enforceability of these obligations may presently exist and/or
may arise hereafter, and (c) as part of City’s consideration for entering into this
transaction, City has specifically bargained for the waiver and relinquishment by
Guarantor of all such defenses, and (d) Guarantor has had the opportunity to seek and
receive legal advice from skilled legal counsel in the area of financial transactions of the
type contemplated herein. Given all of the above, Guarantor. does hereby represent and
confirm to City that Guarantor is fully informed regarding, and that Guarantor does
thoroughly understand: (i) the nature of all such possible defenses, and (ii) the
circumstances under which such defenses may arise, and (iii) the benefits which such
defenses might confer upon Guarantor, and (iv) the legal consequences to Guarantor of
waiving such defenses. Gnarantor acknowledges that Guarantor makes this Guaranty
with the intent that this Guaranty and all of the informed waivers herein shall each and all
be fully enforceable by City, and that City is induced to enter into this transaction in
material reliance upon the presumed full enforceability thereof.
TERMINATION OF GUARANTY. This Guaranty shall terminate in its entirety upon
the payment in full of the Obligations, and, if requested by Guarantor, City shall execute
a Release of Guaranty upon payment in full of such Obligation.
[Signatures appear on following page]
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
appearing on the first page of this Guaranty.
"GUARANTOR"
EDEN HOUSING, INC., a California nonprofit
public benefit corporation
Director
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6
EXHIBIT D
TENTATIVE PERFORMANCE SCHEDULE
o
10.
11.
12.
City Council approval of Agreement
City payment of "Additional Deposit"
into Escrow
Contract award for Alma Substation
relocation work
Eden and CHA develop project design
and conduct neighborhood outreach
Eden and CHA submit preliminary
plans for informal staff review and
preliminary ARB . .
City Council approval of DDA,
including loan of City subsidy funds, if
any, and Regulatory Agreement
Eden and CHA submit Planned
Community (PC) Zone application to
City
Project entities (nonprofit general
partner and limited partnership)
Fundraising and applications for City
and other subsidy funds
Planning Commission - Final Review
and action on PC application
city Council- Final Review and
action on PC application
Substation relocation completed and
site available for housing
13.Submit tax credit application -1st
round of 2008
September 18, 2006
September 30, 2006
September-October, 2006
Fall, 2006
January-.February, 2007
March, 2007, subject to a six-month
extension if mutually acceptable to the
City, Eden and CHA
April, 2007
2OO7
2007-2008
September, 2007
December, 2007
December 31, 2007
March, 2008
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15.
16.
17.
18.
19.
20.
Submit building permit and plan check
application
Tax credit allocation awarded
(preliminary reservation letter)
Tax credit investor limited partner
selected
"Purchase Date" for 801 Alma
Property
Parcel Map process completed to
merge lots into "Housing Site"
Conveyance of "Housing Site" to
Partnership and closing of
construction financing
Start construction work (150 days
after tax credit allocation)
Complete construction (17 months)
Complete rent-up and occupancy
May, 2008
June;2008
July, 2008
August, 2008
September, 2008
October, 2008
October, 2008
March, 2010
July, 2010
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