HomeMy WebLinkAbout0624.093i
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Oecemb€r g. 1993
HONORABLE CITY COUNCIL
Palo Alto, California
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Approval of a Regulat_o~AgreeliltlP,t with ~
l!P.llrtm!Tt.f me. and the Palo Alte Housing
Corporatigp to Provide Pundino for the Ac~~i~ition
and Rehabilitation of the Barker Botel Property
and for the Operation of the Proiect as Low Income
Rental Boa.Lng and Approval of Related
Budget Amen.....,e," t Ordinance
Mew~ers of the Council:
REPORT IN BRID
Council action is re~~ested to approve an agreement with PARe
Apartments~ Inc. and the Palo Alto Housing Corporation (PARe). to
fund the aCq'.J.isition and rehabilitation of the Barker Hotel
building at 435-441 Emerson Street. in order to preserve the
existing 20 lo'..r-rent 2ingle Room Occupan=y (SRO) units and,
through rehabilitation .and conversion of some existing commercial
space, to increase the number of dwelling units by 6 for a total
of 26 units upon completion.
The City's agreement provides a funding subsidy package for the
project from three sources: CDBG~ HOME and Commercial Housing In
Lieu funds, totaling $2.070 million or 67.78 percent of the total
project cost of $3.050 million. The re~~ining funds are from a
private bank loan to b~ secured by the property_
CMR:524:93
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La.st Anril. Council provided PAHC wit~ a $175, 500 l,~an from CDBG
funds for pre-development cost..s. Action is needed n~")w to approve
a contract a,:;d regulatory agreement, sa PARe' Apart:r:ents, l!1c. car:
aCq'J.ire the property and proceed · ... ith the rehabilit~tjon. A("ti~[j
is also needed to authorize the allocation of the $1 million HOME
funds and the $400,D.QQ in Commercial Mousing In-Lieu funds to the
project. The additional $494,500 is already ~vailable in the
CDBG Housing Development Fund approved by Council on May 17,1993,
Resolution No. 7185. If the HOME funds ~re not under contract by
Dece~~er 31, 1993, the City risks losing the 51 Xillion gran~.
BACKGROUND
On Cctcber 26, 1992, CO'.mcil amended the FY $12-93 con':"xact with
the Palo Alto Reusing Corporation, to pro'Jide $18,0(10 in CDBG
funds for PARe staff expenses, for evaluating th~ teasibili~y of
pur-chasing the Barker Hotel and preparing financing and fund.ing
applications.
On Januarf 6. 1993, PARe executed a purchase option agreement
with the seller of the Barker Hotel property for an acq~isition
price of $1.5 million. The purch~se price was based upon the
property's fair market: value, determined through an appraisal
process conducted in accordance with federal procedures fc-=
acquisitions by nonprofits using federal funds.
On March 29 1 1993. the City was awarded $1 million in federal
HOME funds by the State for the acquisition and rehabilitation of
the Barker Hotel.
On April 26. 1993, Council approved a loan of $175,500
from FY 92-93 CDBG funds for pre-development expenses.
$40.606 has been expended \L~der that contract.
to PARe
To dat:e,
On Novernber 15, 1993. Council adopted the City'S Comprehensive
Housing Affordability Strategy (CHAS) for FY 1994. The CHAS
identifies the preservation of the Barker Hotel, as the key
housing activity during the year l to meet the CHAS priorities of
"housing for hOr.!eless individuals" and "rer;.tal housing
preservation" .
PROJECT COST
The total cost of the projecc is $3,050,000 for acquisition,
substa~tial rehabilitation, conversion of commercial space to add
the new units, perrr~nent and temporary relocation, pre
development expenses 1 developer fee, miscellaneous and
CMR:624:93 12/9/93
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contingency. Abo~-:. $875, DOG of t!;~ total cc.!sts aye att-r-ib'..lt.able
to, or of b-=nefit t,~, the cOr.Lr>:l.ercial portian of the building (40%
of the after rehabili tation squar~ foctage) Thl..:.s, the cos~ t<:l
preserv€/create 26 units of low in~Qme SRO housing is about
$2.175 million or about $83,500 per unit. "he cost per u;.it is
less than other affordable housing project.; ....,hic~ are under ..... ay or
recently completed.
PROJECT BUDGET APRIL 1993 BUDGET CURRENT BUDGET
}o.cquisition
Rehabilitation
Relocatior:
Pre-develcpment, Financing,
Escrow, Fees, Misc.
Operating Deficit During
Construction
Developer Fee
Furnishings, C~ntingency
TOTAL ESTIMATED COST
Projected Bank Loans
Required Subsidy
$1,90C,000
400,000
25,500
150,000
o
Not Known
24,500
2~500,OOO
980,000
:;51.57 Million
$1..90'0,000
cas, ,J':J~
86,000
181,COO
79,O'JO
60,000
59,000
$3,050,000
980,000
$2.07 Million
Last April, as shown above, tetal costs were projected at about
$2.5 million, based on preliminary estimates with many costs
unknown or roughly estimated. since that time, the building has
been thoroughly inspected. The inspection reports detailed more
extensive problems with the bUilding's electrical and plumbing
systems and found safety problems and deterioration that
necessitate additional rehabilitation work. PARe also proposes
to install fire sprinklers within thE entire struct~re.
Additions to the rehabiJ.itation specifications and mo:=e adequate
allowance for contjngen,:::y, contrac:"or profit and overhead
resulted in the rehabilitation budget increasing from .$4DO, ODD t.o
$685,000. ether miscella... ..... ~eou6 costs, primarily reloc2.tion and an
operating deficit during the consLruction period, make up the
remainder of the cost inczeases.
The relocation budget ha.'3 increased because the expanded
construction work requires that all reside~~ial tenants be
temporarily relocated. where previously it was thought they wculd
be able to remain in t.heir unit.s. The operatJng deficit item is
due partly to the more extensive construction work which reduces
rental income and partly to the need for a bridge loan to cover
the bank's share of the project funding from the date of
acquisition to project corr,pletion. Prev-iously it was thought
that th.e bank could provide its funds at acquisition.
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I' '; FUNIl!NIJ SOURCES
1'he propcsed fundi!".q sources are;
CDSG -"J.'OT.b..L:
FY 92-93: $175,5QO
(already under r:ontract)
FY 93-94: 5434,500
HOME ,City's FY 92 Grar.t)
Housing Reserve:
Private iBank Loa.n;
AHP Gr ... nti :
Toeal Sources of Fucds:
$ 67{),QO-o 22.G%-
1,000,000 :;2.Bt
{CO,DOO 1:=·.1%
9S0,CD0 32.1%-
$3,rJSC,OOO lOG%
Presently, $175,500 in FY 92-93 CDBG funds a~e under ccntr~ct for
the project for pre-development expenses. The additicnal
$494, seo in CDBG funds is a'.~ailable in the CDBG '·i-!o ...... :=:ing
Development F",md" approved by C:;)uncil as pa.!"t of the FY 93-34
CDBG budget. The Stat.e has res,=rved (.:t-.e $1,000,000 in HOME
funding for the Ba:rker, but the HO!offi f\,mds rr:ust be under contract
by December 31, 1993, or the City r~sks losing the gra~t a~ard.
If the proposed $400,000 in Commercial Housing Reserve funds is
provided to the Barker, about $2.1 ~illion will remain in the
commercial Housing In-Lieu Fund in unreser.'€'.d and uncommitted
funds. The $980,000 bank financing is in the form of a
permanent~ thirty year i take out loan of $640,000 and a ten year
loan of $140,000 that converts to a g~ant. The lender is First
Nationwide Bank, and the funding is provided under th~ Federal
Home Loan Bank's Affordable Housing program (.~Fi. The bank
loans are committed. but will not be available until after the
rehabilitation is completed and the units are re-occupied.
PROJEC'T FDUlNCINIJ
The City funding is :in the form of three loans (reflecting each
funding so~rcej secured by deeds of trust on the property. Under
the attached reg'J.lat.cry agre~me!'.t and tbe notes, no repayment of
the loans is required for the first ten years. However, at ten
and one-half years and every ten yea::-s thereafter l the project's
financial condition will be evaluated and, if feasible, a
repayment schedule will be established based upon available
surplus cash flow. The ten year periods are meant to follow the
interest rate adjustments on the bank loan and the renewals of
the corr:mercial leases. Should the prope=-ty ever be sold, the
City will Ehare in the sales proceeds based on the City's
contribution to the original project costs. The loa.n terms also
give the City a first right of refusal to purchase the property,
should PARe ever decide to sell.
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The :regt!lato.ry ag.reerr.en:: alsC' i~-=lud~s reguiremer1::'s ccr,cerr.:,ing
the operation of the pl:'oject and enforces the rental
affordability and occupanC'y y€strlctin:r.s dilring the 4(; year to?y:n
of the agreement. The regulatory' agreeme-nt is require-d by the
HOME program reg'...llations and is m~ant to er:sure the use of the
proj ect as 10\1; rent housing, rega!:"dless of changes ir. or,.,'11ersnip
or prepayment of the City loar.. The project will also be
regulated by terms and conditions of the bank's loan, which has
special requirements for affordable rents and occupancy.
NEED FOR BARKER HOTEL SRO
The Barker Ho~e! property cOr'.tains 20 occupied SRO units
{including the unit C'cc'..lpied by the resident manager) on the
second floor. Three cornmercial tena:1ts o'=Cl.:.PJ.' the ground floor
and mezzanine. Existing SRQ rents range from $250 to $433 per
month, which is lower than at other SROs in the City. The
occupants are all lew or very low il'1come tenants. Somr: tenants
have lived at the Barker for many years and others have :Lived
there just a short time. While not ideal hO:.J.sing, the Bar-ker
units meet the hO'.Jsing needs of many types of 10 .... · income and
disabled single people. Some can afford to pay rent only by the
week; others cannot handle the financial responsibilities of
paying separate utility bills; others do :lot need or \o,'ant to cook
for themselves; some need a central loc.:ltion neaY public transit,
restaurants and sr~opping; and others just need their O-;,rrl private,
affordable living space, With the on-site assistance and
services of the Urban MJ.nistry, the Barker units will provide
permanently affordable housing for 26 persons, many of whom would
otherwise probably be living on the streets or in local shelters.
!~ILITATION PLAN
PAHe has develcped a plan for the rehabilitation of the building.
The ground floor commercial space now occupied by Colossal
Graphics 1fdll be comrerted into five new handicapped accessible
units, an enlarged SRO e~t=ance and offices for the resident
manager and the Urban Ministry. The strt;.cture will undergo a
major seismic upgrading~ and the electrical system sel.,,'ing the
residential units will be complete::"y replaced. A fire sprinkler
system and neW' roof will be installed. Rot and water damage will
be repaired in the baths, safer emergency exiting will be
provided, and general interior and exterior paint and facade
improvements will be completed. The b~ilding's exterior
modifications were approved by the ARB at its meeting of Juu~ 17,
1993.
PROJECT SClmI)ULE
December, 1993 Council Appro .. :es Contract, Funding, etc
Begin Relocation Plan
CMR,624,93
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12/9/93
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January, 1994 Prepare Bid Documents
Ccmplete Construct-ion Dr.:l'..rings
Submit. Plans fc.r Building Pe:.~it
Feb:::uary, 1994 Close Acquisition Escrow
Construl:tion Bidding
March, 1.9 94 Relocate Tenants
A· .. ·ard Const:r'...!c:tion c.ontretct.s
April~ 1994.
Nov€.mber, 1994 Finish CO!1struction; Begin Rent-up
December, 1994 Complete Occupancy & Reporting
CloSE: P~.rmanent BaI"_k Loan; Complete Proj ect
REVIEW BY CDBG CITIZEN ADVISORY COMMITTEE
. ,
Because the revised project will utilize almost all funds in the
FY 93-94 CDBG "Rousing Development Fund", a special meeting of
the CDBG Citizen Advisc.L-Y Committee [CAe) was held on DeC'ewe::-1.
The C~C tour~d the project site and had an opportunity to aak
questions of staff and of the Palo Alto Housing Corpo:;-aticn. The
CAe did not take any a~tion on the projecc. Individual CAe
members wer.e encQu:r-agea. to attend the City Council. Meeting or to
submit a written statement.
The CDBG -Housing Development Pund n has been established to
assist housing projects identified in the Corr.prehensive Housing
Affordability Strategy [eRAS). At this time, other potential
housing projects are not far enough along to need funding from
the CDBG Housing Fund. Additional CDBG funds will be available
for other housiIl£ activities as of July 1994. The Barker Hotel
Project has now progressed to a point that commitment of the
majority of the FY 93-94 Fund balance is app:r-opriate. A balance
of $4,784 .. ill remain in the CDBG Housing Development Fund.
Obligating the CDBG fur..ds will also keep the City in compliance
with HU~ requirements for the timely expenditure of CDBG funds.
ENVIRONMENTAL REVIEW
An environmental assessment has been completed under the Nationa:
Environmental Protection Act (NEPA). A Finding of No Significant
Impact on the Environment (FONSli notice was published on
November 7, 1993. There have been no public comments in response
to the notice. A Request for Release of ~r.ds was transmitted to
HUD (for the CDBG funds) and to the State (for the HOME funds) on
November 23, 1993. Assuming chere are no public objections to
the City's request, HUD and State's Offic€: of Housing and
Community Development (ReO) will each release their respective
funding on or after December 8, 1993. ApPLoval of the Release
CMR: 624 :93 l2/9i93
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of Funds is necessa!."Y before t.he City can appro-"e the cont.ra.ct
with PAHC. Thi9 project has been determined LC be categc-ric:ally
exempt for purposes of the Califc,rnia Envirorltl'.en':al Q1.lality Act.
(CEQJt) under Sections 15301 I,d), Naintoenance of an Existing
Fa.::ility, and Section 15303 (bl, Ne ... · construction or Conversion
of Small St't"Uctures (Conversion of Six Dr PeINe:-Units) .
RZCOMMXNDATroN
Staff recommen~s that the City Co~ncil,
1. Adopt the attached Budget ArrIendment Ordinance a:..:.thorizin3' the
transfer of the following funds to the 8arker Hotel project~
a. $1,000,000 in fiscal year 1952 HO~S grant funds, LO be
~sed for acquisition and other eligible costs, and
b. $400, (JOO in In-Liel.l. Housina Funds, to be used for
varicus project costs associated wi~h the addi~ior.al
six units.
:2. Approve the attached reg'.,llatory agreement (with i tE attached
for:ns of promissory notes) with the Palo Alto Housing Corporation
and PAHC Apartments, Inc., to provide dn additional $1,894,500 in
funding for a total of $2,070 ,oeo ir. loans for pre-development. ..
acquisition, rehabilitation and other costs related t.o the
preservat ion of the Barker Hot.el, and tc, restrict the use and
occupancy of t.he residential portion of the property to low
income housing for 40 years in accordance with HOME program
regulations.
3. Authorize the Mayor to execute the agreement in substantially
similar form, and any other documents necessary-to close the
transaction, includins, if necessary .. to execute the promissory
notes and deeds of trust against the property.
4. I:'irect the City Manager to administer the provisions of the
agleement.
~:Y:l;;;ed'
CATHERINE SIEGEL
Senior Planner
~~ ~E FLEMING
City Manager
C~:524:93
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KENNETH R. SCHP£IBER
Oil"ector of Planning and
Community Environment
12/9/93
Page "7
1} 3udge~ Amendment Ordinance
2) F">..lnding and Regulat.ory Agreement With Palo Alto Heusing
Corporat:ior~ and PAHC Apartments. Icc.
3) Letter From Palo Alto H01;.sir.g Corporatl.on Reql.lesti:-,g
Additional Funding To Complete The Barker Hcte:l Froj~c~ and
Financial Proforma
cc: Palo Alto Housing Corpo~atior.
PARe Apartments I Inc.
CDBO Citizens Advisory Comltittee
495 university Avenue Parlners
Urban Ministry
Resident Manager, Barker Hotel
CMR.:624:93 12/9/93
Fage 8
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING THE eUDGET FOR T~E FISCAL YEAR 1993-94
TO PROVIDE FOR
THE ACQUISITION AND REHABILITATION OF 'rHE BARKER HOTEL
WHEREAS, pvrsuant to the provisiorts of Section 12 of Article
III of the Charter ot the City of Palo Al to, the. council on June
21, 1993 did adopt a budget for fiscal year 1993-54; and
WHEREAS, on October 26, 1992, the Cit}· Council amended the
fiscal year 1992-93 cont~act with the Palo Alto Housing Corporatipn
(PJLqC) to evaluate the feasibility of purchasing the Barker Hotel
building at 435-441 Emerson Street; and
w~EREAS, on January 6, 1993, PARe executed a purchase option
agreement for an acq~isitivn price of $1.9 ~illion; and
WHEREAS, the acquisition and rehabilitation of the Barker
Hotel will allow the city of Palo Alto to preserve 20 existing low
rent Single Room Occupancy {"SRO") hotel units (including the unit
occupied by the re.sidential manaqer) and add 6 SRO residential
units; and
WHEREAS, funding for this project will come from three
separate sources: a Com~unity Development Block Grant (CDBGJ
allocation, a Federal grant under the HO~2 Investment partnerships
Proqram (-HOME Grant-) and the City's Commercial Housing In-Lieu
Fund;
NOW, THEREFORE, the Council of the City of Palo Alto does
ORDAIN as follows:
SECTION 1. The sum of Six Hundred Twenty Nine Thousand Three
Hundred Ninety Four Dollars ($629,394) is hereby reduced from CDBG
Project Number 01053, aNew Housi~g Development M , and is credited to
the Unreserved Fund Balance in the CDBG Fund. Notes Receivable in
the coac Fund is increased by $67C,OOO, rep:-esenting the total
amount of the project funded from COBG funds, including $40~606
e~~nded last fiscal year.
SECTION 2. This transaction 'Will increase the community
Develop=ent Block Grant Reserve for Notes Receivable f~om $0 to
$670,000 as of Cecember 1, 1993. There will be no net change to
the Unreserved Fund Balance in the COBG ~~nd~
~. A Federal HOME Grant award in the amount of
$1,000,000 is hereby accepted.
ATTACHMENi 1
~ECTIQN 4. The sum ot One Million Dollars ($1,000,000) is
hereby appropriated 't.o the Federal Housing Fund for Notes
Receivable and Federal Housing Fund Grant Inco~e is correspondingly
increased.
SECTION 5~ This w:ransaction will increase the Federal Housing
FUnd Reserve for Note;; Receivable fro!I1 $0 to $1,000,000 as of
December 1, 1993.
~~. The sum (If Four Hundred ThousanCi Dollars
'$400,000) is hereby appropriated to the commercial Housing In Lieu
Fund tor Notes Receivable and the Commercial Housin~ In Lieu
Unreserved FUnd Balance is correspondingly reduced.
SECTION" 7. This t.ransaction 'Will reduce the Commercial
Housing In Lieu Unreserved Fund Balance from $1~924,830 to
$1,524,830, and the Reserve for Notes Receivable will increase from
$0 to $400,000 as of December 1, 1993.
SECTION 8. As specified in section 2.28. OB0i,a) of the Palo
Alto Municipal Code, a tvo-thirds vote of the City council is
required to adopt this ordinanc~~
SECTION~. The Council of the City of Palo Alto hereby finds
that the enactment of this ordinance i~ not a project under the
California Envir-onl'tlental QuC\lity Act ana, th@refore, no environmen
tal impact assessment is necessarY4
SECTION 10.
Municipal Code,
adoption.
As provided in section 2.04.375 of the Palo Alto
this ordinanCe shall become effective upon
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST: APPROVED:
city Clerk =",.,,----_._-----Mayor
,
APPROVED AS TO FORM:
Sr. Asst. City Attorney
APPROVED:
Clty Man~a~g~e~r=-----------
Dlrector of Financ=e~-----
O~rector of Planning and
community Development
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This dccurne~t is recordad fo.::-the
benefit of the City of pal~ Alto
and is eutitled to he recorded
free of charge in accordance with
sections 2i3S3 and 6103 of thE
Government Cod~
After Recordation, mail to;
OFFICE OF THE CITY ATTORNEY
25Q Hamil~on Avenue
Palo ~to. CA 94301
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FOND XNG AND UGULATORY AGREEMENT
Rl!LAT rNG ro TO BUlCEIl HOTEL
BET'IIIEEN crTY OF PALO ALTO
AIm PAIIC AP AIlTMEN"l'S, mc .
THIS AGRE~!ENT is made and entered into on the day of
, 1953, by and between the CITY OF PALO .~TO. a
municipal corporation of the State of california (~CITY") and PARe
APARTMENTS. INC.. a California nonprofit corporatior:.
( "CONTRACTOR· ) ..
RBCI.TALS
WHEREAS, CONTRACTOR has applied t.o CITY for assistance with
the cost of acquisition and rehabilitation of the real property and
improvements located at 435-441 Smerson Street in the City of Palo
Alto. most. of which houses the Barker Hotel, a Single Room
Occupancy C·SRO"', hotel, and for costs relating to ccnversion of
existing space i.:1 the hotel to add,itional SRO hotel unlt5 (the.
~Projectr~ including as hereinafter more partic~larly described);
and
WHER.EAS~ the Project will provl.oe long le:m rent.al housing
affordable to low and very low income households; and
'WrlEREAS, the Project qualifies for funding under .the HOME
Investment Partnerships Program established by the Natio03l
Affordable Housing Act of 19.90. and CrTY t~s been assured by the
State Department c·f Heusing and COUliflunity Development (-HCD") that
CITY will receive One ~llion Dollars ($l,OOO~DOO) of HOME funds
for the Project; and
WHEREft~. certain Project costs also qualify for funding under
the federal COlmrn..mity Development Block Grant (-CDBG·} p:rogram,
administered by the United States Department of Housing and Urb~~
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Development ("h'UO"), and CITY and the Palo Alto Hcusirg 'CorpoI'.:;.tioll
{~PAHC"! have previously entered into an agreement and promissoI~
note, whereby CITY has loaned One Hundred Seye:n~y-fiv€ Thousand
Five Hundred ($175,500) in CDBG funds to FAHC for the p'Jrposes of
funding pre·acquisition costs relating to the Prcject; and
WHEREAS. the developI':'le.:1t of new afford.::;.b! e rental hou.sing
fulfills one af the purposes of t..r.e City' 5 Commercial Housiflg
Reserve Fund and is also consistect 'll/'ith the affordable housing
goals of CITY as outlined in CITY' 5 Corr.prehensive Housing
Affordability Strategy (~CHAS~j j
NOW, THEREFORE, in consideration of the Ir.'utual covenants and
agreements specified herein, and subject to its terms and
provisions, Lhe parties to this Agreement agree as follows:
PART I: FUNDING
A. DEF+N}TIONS
1. ".Assisted Unit" means one of the twenty-five (25)
residential dwelling units that will be available for rental in the
Project as of the dat~ of "Project Completion~. as that te~ is
defined under Section (ll (A) (1.3) hereof.
2. "CONTRACTOR" means PARe Apartments, Inc~, a California
nonprofit public benefit corporation.
3. nCDBG program~ means the Community Development Block
Grant program, established pursua..l'lt to the Housing and COmITlunity
Development Act of 1974~ ~d the funds allocated to CITY pursuant
to that program l by HUD.
4 • " CIT"f " means the Ci ty of Palo Alto, a
m\L'":Iicipal corporation of the State at California.
"Qualified State Recipient" for purposes of the HOME
Partnerships Program.
chartered
CITY is a
Itlvesti:1.ent
5. ~HOME" means the HOME Icvestment partners!:ips Program
established by the Nation~l ~fordable Housing Act of 1990, which
is administ.ered .by HUn pursuant to the regu.lations publi.shed at 24
CFR Part 92 (the ~Regulations~).
6. II Household !! means the total number of persons residing
in a single residential uni~ {Assjsted Unit) of the Project. Those
persons may also be referred to, individually or COllectively, as
"occupants" or !!tenants~. Household income is the combined inc~~e
of the Household and is used to determine income eligibility, in
accordance with the Re~~lations and with this Agreement.
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7. I:HUD" means the United States D-epartzr,ent of Housing and
Urban Development j and its succes.:;ors.
e. ~Income Certification-means a certification as: to income
executed by members of a Household in the Project, in s'clbscar:.tially
the form at.tached "hereto as Exhibit "A:'I, which is incorporated
herein by this reference.
9. -Low Income Housel'lOld" means a hO'Jsehold whose adjusted
income, adjusted fot' household size, as cOI'I'lputed purs'~ant to the
In,come C~rt.ific~tion, dOes not exceed sixty percent (60%) of the
~.ediatl Gross Inco.."Tl.€ for the Area, as hereinafter define-d.
Determination of tt~e status of a Household as a Low Income
Household shall be ~ade upon initial occupancy of an As~isted Unit
by each occupant, and recert.ified annually.
10. -Median Gross Income for the J!..rea" means tbE median
income for the San Jose~ California Prirr.ary Metropolitan
Statistical Area, as determined by the Secretary of P.TJD under
Section 8 (f) (3) of the United States Housing Act of 1937, as
am2nded. In the event that p:-ogr?..ms under Section 8 (f) are
terminated, the median income shall be determined in accordance
with the written directio~ of CITY in a manner similar to CITY's
then-current income formula determination.
11. ·PAHC~ means the Palo Alto Housing Corporation, a
California nonprofit public benefit corporation.
12. "Projectl: or • Property " means the real property and
improvements located at 435·441 Em2rson Street$ Palo Alto,
California, and more particularly described in Bxhibit ~B-to ~his
Agreement, which is attached hereto and incorporated herein by this
reference. The Project is more fully described in Section (I) (C)
hereof.
13. "Project Completion" means the phrase as defined and set
fort.h i:o t.he Regulations (specifically, 24 CFR Part 92, §92.:2).
For the purposes of this Agreement, -Project Completion-shall
furt.her be defined as the date of closing of CONTRAcrOR's permanent
("take·out-) financing for the Project.
14. -Very Low Income Household· means a household whose
adjusted income, adjust.ed for household size; as computed pursuant.
to the IrJ.come Certification, does not exceed fifty percent (SO%) of
the MSdian Gross Income for the Area. Deter.mination of the status
of a Househcld as a ·Very Low Income Household r shall be made upon
initial occupancy of an Assisted Unit by each occupant, and
•. :ecert if ied annually.
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B ~ PURPOS'$ OF AGREEMENT
The purpose of this Agreement is to set forth the respe~tive duties
and responsibilities of CITY and CONTRACTOR with reSpEct tv CITY's
loan or funds fer the Proje~t~
c~ DESCRIPTION OP _ ... ~ PROJ]!:CT
The Project shall consist of the follc:.wing activities of
C'ONTPACTOR:
1. Acquisition. CON'I'RA.CTOR shall acquirE the Proper~y in
fee simple. As of the date of ~xec~tion of thi~ Agreem~nt~ the
Propert.y consists of nineteen (19) BRO housing units. one (1)
manager's unit .. one {1} r:lanager's office, one (1) social service
office. and three (3} -llnit5 occupied by cctnmercial business uses
whic!l are currently under lease or s·.ili1ease.
2. Rehabilitation. CONTRACTOR ehall substantially
rehabilitate the building located on t!'-~e Property, including bllt
not limited to~ {a) performing seismic safety impraver-,\ents; (b)
installation of a new roof; {c) installation of fire sprinkler
5}'stem; (d) replace.rnent or repair of the residential pcrtio;l of the
building systems, including electricaL heating, and pl-wrobiIlg;
(e) repair of rot in common baths; 'f) installation of new rear
exiting; (g) new paint; and (h) installation of new carpets.
3. CQnversion. CONTRACTOR shall convert one {l} ground
floor comnercial use, known as 437 Emecson Street. into residential
uses including at least five (5) Dew, handicapped accessible, SRO
unit.s ... drh sr..ar-ed shower facilities and a nelll hotel entry. A
residential hotel manager's office and an cffice for tenant
counseling and support services shall be provided in the buildiDg~
During const.ruc:tion/ CONTRAC'I'OR shall tempcrarily relocate existing
reside:J.tial tenants of th(; building a.s m.3..y be necessary and iD.
accordance with the Regulations and the CD~; progr~, re~~i~ements.
CONTRACTOR shall further provide the existing cOrmT".ercial tenant of
437 Emerson Street with permanent relocation assistance in
accordance with the Regulation~ and the CDBG pr-ogram requirements.
4~ OperaLion. From and after Project Completioc.~ CONTRACTOR
shall operate the residential po=tion of the Property as SRO
housing, as defined under Section 92.2 of the Regulations, and in
acccrdance l,dth the terms of this Agr-eement; provided, however,
that City's funding for the ~roject shall not_ include cost.s
incurred by CONTRACTOR after Project Completion.
CONTRACTOR shall perioDm the activities described in this Section
(I} Ie} in accordance with the Proj ect Development Schedule attached
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to this. Agreement as Exhibit ·C," ""hier. is incorporated herein br
t:.his reference.
D. B.QJECT COSTS Arm FINASCING SOURel1~
The total cost of the Pl'Oj.ect is estimated to be Three Mill.ion
Fifty Thousand Dollars ($3,05C,G00). Projected sources of funds
ars; a.s foll~'Jfs:
HOME funds
Existing CDBG loan funds
Additional CDBG funds
City Commercial acusing funds
Private bank loan
Private bank grant
TOTAL SOURCBS OF FUNDS
$1.000,000
175,500
494,500
400,000
840,000'
11iJ,(l00*
$3,050,000
CITY shall contribute a total of Two Million Seventy Thousand
Dollars ($2.070,aOO) in total Project costs under this Agreement,
as set forth under Section (I) {E) hereof. CONTRACTOR shall be
solely responsible fer obtaining all other financing necessary for
t.he Project.
-This represents per.manent ~take-out' fir~ncing. OO~~CTOR will
private:y obtain a bridge loan of approxiIllately One 1.,j,.i.l1ion Dollars
($l,OOOrOOO) for temporary pre-Project Completion financing.
E. ern AG~ TO LQ"" Yl!lJI)S
CITY hereunder agrees to loan to CONTRACTOR the following amounts
of rr~ney from the following Bources (the ~Loans~)~ subject to the
terms and conditions hereinafter set forth:
.I.. CITY ag.!'ees to loan to C'ON'TRAC'l'OR the Gl..lJ!l of Four Ru..'"ldred
Thousand Dollars ($4.00, COO) from CITY's COInme:.rcial Ro ...... sing In-Lieu
Fund, in accordance with the ter.ms of this Agreement.
2. CITY further agrees to loa.'"1 to CONTRACTOR the sum of Six.
Hundred seventy Thousand Dollars ($670,000) frClfl CITY's CDBG fi....l..Dds.
in accordance with the terms of this Agreement and the CDBG
program. This amount represents the sum of Four Hundred Ninety
four Thousand Five Hundred DOllars ($~94/500~ allocated for fiscal
year 1993-94, plus One Hundred Seventy-five Thousand Five Hundred
Dollars ($17515aO}~ which ~s allocated to the Project from fis~al
year 1992 -93 funds, pursuant to t.hat certain agreement between CITY
and PARe, dated April 26, 1993, filed with CITY's City Clerk as
Document No. C 3043320 (the "'CDBG Agreement"). PAHC has request.ed
that CITY consent to an assigr.ment of the CDBG Agreement'. to
CONTRACTOR, to become effective on the close of Escrow {as defined
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herein) for the Property, and CIT'; hereby giv.es its consent to such
assisnrnent. The part ~_es intend and hez:e~y agree that this
Agreement shall supersede the CDBG Agreement in its entirety, and
that l.lPC!1 close of Escrow fer the Project, the CDEG Agreement and
its related promissory nete shall be of :JO furt:her force and
effe:ct.
3. CITY further ag~ees to loan to CO!,;~hACTOR the su..'T1 of O~e
~llion Dollars ($1,000,000) in HOME funds, in accordance with the
terms of this Ag!'eement~ the HOME Investment Partnerships Progra..'T1
anj the Regulations.
This Agreement shall con:roence as of the dat,= of its execution by
CITY, and shall remain in full force aod effect ~ntil forty (40)
years from the date of project Completion.
As of close of escrow for purchase of the Property by CONTRACTOR~
CONTRACTOR st.all execute a separate Note ('!!Note-Gr "Notes")}
secured by a deed of trust (which shall be subordinated to the deed
of trust for CONTRACTOR~S private financing), for the total amount
of each Df the three (3) sources of funcls loaned to CONYXACTOR by
CITY hereunder/ as de~cribed in Section (Il (El hereof. The terms
of the Notes shall be as follows:
1. ~ The form of the Notes shall be substantially
similar to the forms attached hereto and incorporated
herein by this reference as Exhibits -D·l'!! ~ ·D-2 -, and
-D-.)-~ respectively.
2. Int~~t. The Loans 6hal~ bear no interest.
3. Payments. Except for modifications that may be made
after the Periodic Review described in the following ~ubparagraph
(I) {F) {4), or except in case of default or as othe~ise provided
under this Agreement or under the NoteS, DO repa~~nt ~f the Loans
sha~l be required under this Agreement until the date of forty (40)
years from the date of Project Completion. However, CONTRACTOR~ at
its option, .may make earlier payments on the Loans frotn any surplus
cash flow from the Prcperty~ or from any other source~ at.any time
during the ter.m of this Agreement.
4. Periodic Review. As of the date of 10.5 years from
Project Completion, and then on each of the dates of 20.5 and 30.5
year5~ respectively, from Project Completion, CONTRACTOR shall
submit to CITY a current income and expense proforma on tile
property and the Project. Each profo:nna shall include updated
first mortgage payments based on the most recent adjuEted interest
rate and amortization sch~dule of CONTRACTOR'S private bank loan.
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Th~ proforma shall also include an updated budgst fo~ cperati~g
costs, including reserves for replacement and an estimated
rr.a.nagem-ent fee based on cu,stoma.n-charges in the m.i.rke'::. for simila.!"
propez-ties and on CONTRACTOR' s ~xpe:rience over the pt'evio'..ls ten
(10) years ,.,dth the Proje·::t itself _ The figures used in the
proforma shall be reconciled with the inf.:;rtTldtion in the rtlost
rece.nt audit of the Pr::iperty a.nd 'Project is ::..nc().rne and expenses.
CONTRACTOR shall accurately record the time spent by its staf f and
Board members in managing the proje~t.
If the parties agree that the proforma projects a reli o ble and
sufficient surplus cash flow that would thereafter allow regula~
payments on ~he Loans, CONTRACTOR shall cornme:Jc.e mak.ing armual
paymF.:nts to the CITY from such 6urpl'u,s casr_ floW'. Such Loa!"l
repayment shall be defined under ~.end.rnents to this Agreement and
che NoteS, with such amend.'nents tD be processed as set forth under
Section III (G} hereof. The parties a-gt'e~ that CQN7RAC!OR' s
compensation for Project management shall be deducted from cash
flo",,", prior to a determination of whether surplus cz..sh flo\!{ exists
for purpo~e9 of requiring Loan repayments.
5. Payment of Ealap_G~R'.J..§.. Notwithstallding any other
prov:i.sions of this Agreement. or th'3 Notes; as 0: :he date of forty
(40} yea.rs from Project Completion, CONTRACTOR shall pay to CITY
all of the remaining unpaid balaDces~ if any, on each of the Loans
under the Notes.
G. D XSBYRSEMSR'l' OF FONDS F T.ITLE l:N$URANCi
The loan proceeds shall be funded through an escrow with First
~~erican Title Guaranty Company (the ~Bscrow"). The parties to
this Agreement shall place all funds and documents, together with
appropriate escroW' instructions, into the Escrow in order to
fulfill the terms of this Agreement.
The funds loaned to CONTRActoR in accordance with Section (I) (E) of
this Agreement shall be disbursed to CONTRACTOR as follows~
1. Acquisition. CITY' shall pay Nine Hundred Twenty Thousand
Dollars ($920,000) by check or checks to CONTRACTOR, toward the
cost of Property acquisition. That aroolmt shall be funded from a
combination of HOME ~~d CDBG funds; as deterrrcined appropriate by
CITY's City Manager or her designee. At the close of Escrow upon
purchase of the Property~ CONTRACTOR, at its own cost and expense,
shall secure the issuanCE of a CLTA policy of title insurance
naming CITY as beneficiary, in the amount of the purchase price of
the PropertYJ clear of any title defects that would prevent the
CO!l.struction and operation of the Project ~ Notwithstanding the
foregoing, CITY shall not pay the funds to CONTRACTOR as set forth
in this Section (I) (G) {l) unless~ prior to the close of Escrow on
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the propet'ty, CONTRAcTOR has pro·"ided assurances sat.isfact·"JrY to
the City M3.r:ager that tht; follo'Wir.g t'WQ (2) iS5'ues aff.;ct.ing the
Property have been resolved:
(a) All k..'"lowr. asbestos-containing-rr..ar.erial located at
the Property shall have beer~ removed b)' a cO!J.tractor certified by
~he State of California for such asbestos work, with suc~ abatement
acc~~plish~d in compliance with all applic~le Federal. Sta~€ and
IQcal laws, ordinances ar_d :!':"egulations; and
\~l All wo~k resulting from the SQi1 analysis in the
vicinity of the f:.leJ oil tank bu-cied on the prupertr shall have
been performed, including re.rnoval of the tar'_k if requil-ed by law,
any draillin']. filli.ng, closing and sealing of the tank, and any
necessary remediation associated wit~ the cank. in ccmpliance with
all applicable Federal; State anc loce..l 1,;,w5, ordir..ances and
regulations.
:2 0 Pre-Deve' opmeQ1;.o ReJ:.ccatioD Construct.ion and
.Rehabilitation. Upon written request to the City Ma:1ager. CITY
shall pay CONTRACTOR far authori zed expenses incurred by
CONTRACTOR, in accordaI':1.ce with the Project Budget attached heret.o
as Exhibit ·En and incorporated herein by this reference. With
each payment request. CONTRACTOR sball certif}' in writing that the
services have been satisfactorily perfor.Med and that the expenses
for which payment is requested are reasonable and necessary t.o
complete the project. The City Manager reserves tho<:: right to
disallow any cost not approved in advance by CITY.
3 _ Devel.oper's Fee. CITY shall pay to CONTRACTOR, at the
time of Project Completion., a developer's fee in the amount of
Sixty Thousand Dollars ($60,000)_
B ~ CI TY ~ S INTBRES T .~ TIm PROPER.TY
CONTRACTOR shall be the Bole owner of the P~operty and the Proj8ct;
provided~ hO"lriever, that CITY and CONTRACTOR shall snare in the
appreciated value. if any. of the Property, based upon CONTRACTOR's
and CITY's respective initial share of the Project funding, which
shall be dete~ined as of the date of Project Completion. For the
purposes of this Asreement; CITY's and CQNTRJtCTOR; s :respective
initial sllares shall be known as t.heir ·beneficial interests" 0
The parties' respective beneficial interests in the ~roperty~ as
determined at Project completion, shall be adjusted during the term
of this Agreement whenever addit ional capital improvements are made
to the building located there which are funded from sou~ces other
than the Loans which are the subject of this Agreement; or whenever
CONTRACTOR makes payments to CITY on the Loans. CONTRACTOR shall
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infort:l CITY in "II'riting, in a timely ma~neri whenever such capital
improvements have been made.
Under anj' of the circ\lmStc.nces set forth in S€'cticn (IJ (I) h2n:Gf,
CITY s~~ll have the first right of refusal to purchase tne Property
by paying to CONTRACTOR the then~c'.l.rrent fai:::-rrarket value of
CON'I'RA.--'"'TCR's beneficial interest ir. the PrClperty, less any
outstanding loans on the Property other tha~ frcm CITY. The fair
rr.arket value of the Property shall be d€te::rnined by an appraisaL
obtained at CITY's sole expense. The appraisal shall consider the
value of the property as restricted by the applicable regulatory
rEquirements of this Agreement. If the parties cannot agree at;. the
appraisal, then each party 51"411 designate an appraiser who,
j ointly ~ will then select an independent cl.pprai sex. whose appraisal
shall be the final determination 0:: the then-fair rr<arket value cf
the Property. The parties shall split the cost of the independent
appraisal.
CITY shall r..ave the absolute right. in its sole discretion, t.o
assign CI'l'Y's right of first refusal to p\:rcnase t:he Property to
any othe~ individual or entity, or to designate an agent to
purchase the property on CITY's behalf.
I. DUB ON SAL' PROVISION
The full and total amount of any outstanding Loan balance under
this Agreement shall immediately become due and payable upon any of
"the folloving occurrences:
1. Voluntary sale by COt-.""rRACTOR or any other transfer,
including but. not limited to sale pursuant to any judicial or
nonjudicial foreclo6ure~ of the Property during the term of this
Agreement,
:2. Terrnl.nation of the Low/Very Low Income rest:t"ictions set
forth in Part II of this Agreemen~.
3. Any other default that is not remedied. in accordance
with Section (III) (Al of this Agreement.
CITY agrees that it shall subordinate its Loans and related deeds
of trust to the private bank financing obtained b}~ CONTRACTOR for
the initial purchase, rehabi11tatiou and conversion of the project
as set forth unde= Section II) (C) n-3) of this Ag:reement:~ provided
'that any necessary Subordination ag:t·eement to be executed by CITY
complies with CITY's requirements ar~ the Regulations.
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CONTRACTOR she-.ll have no right to apply fer or to retJ.nance the
private bank lo~ns after P~oject Co~pletion~ or ~o apply !~r or
incur any ether deb':, that would result in a. lien cr other
encul':".brance on the Property! or require further subordination of
CITY's secured interest in th~ Property. ~ithout the prior writt~n
consent of the City Manager to ~~ke such application or to incur
such additional debt. A."y attempted applicatiofl or incurring of
debt without CITY's prior written p'Z!rmission shall be null and
void.
In the event of any sale of the Property, the proc~eds of such sale
s~~ll be distributed in the following order:
1. to cover the cost.s of '[he sale;
2. to the privac:e bank(s), to repay any loan(s) ob'Cained for
the initial purchase, rehabilitation and conversion of the Project;
3. to CITY, to repay the Loa~s, and CITY shall allocate such
repayment to C:;:TY's three (3] funding sources in a::::cordance 'Wit.h
their respective percentass sr~ares oE the Proj ect' s original
funding; and
4. any remaining proceeds to CITY and CONTRACTOR, ba.sed on
their respective, remaining beneficial interests in the Property~
x. ASS.:J::.GNHENT 01t TRANSFER Of TITL!!;
No assignment or transfer of title to the project shall he
permitted, except with 't.he prior written approval of the City
Manager. No such app~oval rr.ay be given until and unless the
proposed assignee or ne..-holder of title agrees in writ:i.ng to
assume all obligations of this Agreement and the Not.es. Any
attempted assignment or transfer of title shall be void without the
requ.ired prior 'Written consent of CITY as set forth in this
Agreement.
PART II ~ REGUJAl'QRY RliQUIP:D!EN'TS
A. SUBaRPINATION TO ~@EOOlREMENTS
It is agreed and understood that the tern~ and conditions of this
Agreement are subject and subordinate to the provisions ot the HOME
Regulations and the CDBG program regulations~ and all applicable
HOD administrative requirements~ including. but not. limited to, the
uniform administrative requirements set forth undEr Section 92.505
(b) of the Regulations. as amended. CONTRACTOR shall also perform
all of its activities under this Agreement in compliance with all
federal laws and reg-'Iollations described in Subpa:t::t II of the
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Regulacions. In t.he ev~nt of any cor.~l let between the provisions c,f
this documen!:. and the provisions o-t any applicable laws. HUn
regulations ot' :!:elated HUD ad:ninist.rative rCqt!i:r-eITIcnts, then the
laws, H"'u;) regulacior..s or related administrative requ:':rements shall
control.
These regulatory requirements shall be in effect for farcy (40)
years from the date af Project Completio~. and shall survive any
early payoff of t.he Loans by CONTRJ..CTOR under th-e Notes.
c. OSE 01' PROPERTY
As of the date of Project Completicn, the Prop~rty shall be used
for a minirr'.uJ'r'. of twenty~five (25) Assisted Units oE SRO housing, as
defi.ned under Section 92.2 of the Reg'J.latior!s, as a!'nended, for Low
and Very Low Income Households, plus one (l) manager's Unit, one
(l) room for the manager's office, and one (l) separate room for
on-site provisiOll of social services for Project occupants. '1'wo
(2) of the three (3) units c'.lrrer:tly used for commercial purposes
may continue to be used for commercial purposes during the tenm of
t~is Agreement ~
D. RENT LRYELS I OCCUPANCY
Maximum rent levels at the time of project Cornp.letior., and for the
remainder of the term of this Agreement, shall be as follows;
~. Five (5) of the Assisted Units shall be occupied by very
Low Income Households and shall be rented in accordance with
Section 92.252 (2) (ii) of the Regulations, as amended.
~. Tee re~aining twenty (20) Assisted Units shall be occupiec
by Low Income Households. The rents for those Units shall be no
greater than the lesser of:
a. The rent determined under Section 92.252{a) (1) (i) of
the Regulations. as amended; or
b. The rent deterIUi.ned under Section .92.252 (a) (~) (ii)
of the Regulations, as amended. however. based on gross incOi!1.e of
no more than sixty percent (60t) of the Median Income for the Area,
rather than sixty· five percent (65%), as set forth in such
Regulation.
3. In accordance with the Regulations. CONTRACTOR may evict
a tenant only for s.erious or repeated violations of the lease; tor
violation of applicable federal, state or local law; or for other
good cause.
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4. If a Household ceases
required l:iy this Sect.i,:)I~ (!I) (e) •
accordance with Section 92.252{c}
to qualify as Lo'''; Income, as
th~ Household shall pay rent i~
of the R.egulations, as amended.
T.;:r:ants shall be offer~o leases for a minimt;rr. term of o~e 11) year;
however I a shorter lease, inc1uding a tenr. of one ill or rr.ore ·.·(-~eks
or months. may be entered into by ~mtuo.l C).-;rreement of tenant and
CO:r-.'TRACTOR. All leases under the Project sr:all be consistent. with
the requirements c,f th~ Reg1.:.1ations.
pailure by CONTRACTOR to maintain the affordability levels and
occupancy restrictions required cy this Agreement shall be
ccnsidered a default under this Agreement. H:-...... ever, the Prnj ect.
shall qualify as affordable housing despite a temporary
noncompliance wit.h this Secr.icn(II) (0) 0.) and [2} if :he
noncompliance is caused by incre~ses in the incomes of existing
tenants and if all vacancies are filled in ac;:ordanc~ ",,'ith SectiQn
(Ill {E) hereof until the noncompliance is corrected.
CONTRACTOR shall operate the Project in accordance with the
Regulations, including, but not limiteo to, adopting written tenant
selection policies a.."1d criteria~ with respect to selecting tenanr.s.
However, to the exten~ feasible, priority for occupancy shall be
given to tenants from the following categories. Further definitions
of these categories s1"..all he as Bet fClrth in CITY's adopted CHAS:
1. Unsheltered homeless personsj
2. Shelte:.-ed homeless persons;
3. Persons with disabilities; and
4. Persons with extremely lo~ incorn~.
In accordance with the Regulations, CITY shall adopt affirnative
mark€ting procedures and requirements with respect to marketing the
availability of the project. CO~~~CTOR shall follow such
procedures and require.ments in its marketing and public infGrmation
efforts concerning the Pr0ject.
The current tenants of the Property I w~a are eligible tenants of
Households with Low or Very Low Incomes under the Regulations l
shall be entitled to becorr~ tenants of the Project ~t the time of
project Completion, with rents to be determined in accordance with
this Agreement and the Regulations at the time of Project
Completion; provided, however, that there shall be no restriction
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~e9arding the use or rental charge of the commercial un.\ ts upon the
expiration of t.he existing leases for those units.
Notwithstand':ng the maximum rent levels for the Assisted Units set
forth in Section (II) (D) hereof, CONTRACJ:'OR shall make reasonable
efforts, as financially feasible and in accorcl~nce with the
Regulat.ions, ':'0 maintain rents for all Assisted Units at the levelS
existing as of the date ct purchasE oE the Project, phlS reasonable
increases for operating costs and inflat.ion.
CONTP~CTOR shall continue to seek HUn Section S rent subsidies, or
any other eligible HL~ subsidies that may beComE available during
the tr=rm of this Agrce:nent, for all Assis:.ed Units, as the
subsidies or any other '1lssistance beC',o1ne: available.
G. ~ERVICES TO TENANTS
CONTRACTOR shall provide.-during the term of this Agreement, at no
cost, an office in the Proj eet to be used by a social ser.rice
provider for the Project. The parties intend that social services,
such as counseli~g and case management, will remain available to
tenants of the i'roj eet throughout the term of this Agreement.
CO~'TRACTOR shall not boe required to pay the other costs of
providing the social services. but shall cooperate with CITY, any
private entity and any other governmental agency that may provide
the services tr.rougbout the terrr, of this bgreement.
II. PROJECT H1!NAGI!!!E>!T
CONTRACTOR shall at all times during the term of this Agreement
comply with the Regulations ana with the uniform administrative
r~~irements as set forch in Section 92.S0S(bJ of the Regulations,
as amended.
CONTRACTOR shall at all times during the term of this Agreement
maintain the Property in a mann~~ so as to )ueet the minimum housing
quality standards set forth in 24 CFR ~a82.109, as ~~ended.
I. FINANCIAL AUDITS
CONTRACTOR shall provide CITY I during the term of this Agreement I
with copies of audited financial statements of CONTRACTOR,
including any management letter comments on the adequacy of
internal or operational controls, within one hundred twenty (120)
days of the close of each fiscal year. The audits shall be
conducted in accordance with 24 CFR part 44 and Otoffi Circular A-133,
as amended. CITY reserves the right. during the term of this
Agreement, to audit the records, including the financial records
supporting t.he aforementioned financial statements. a."ld other
records and documents pertaining to the operations of the project.
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CONTRAC"I'CR shall maintain r2cords of the Pro] ect as required by
Secti~n 92.509 of the Reg~lations and as rr~y be required unde~ the
CDBG progra.-.t. as amended.
CONTRACTOR shall document all C05't.S by main~aining complete and
accurat.e records of all financial tra:,.sactions. including. but not
limited tc. contracts.. invoices. time cards, cdsh receipts,
vouchers, c2!;,ncell-ed checks, bar..k stat~ments. and/or other official
documentation evidencing in proper det.ail th-e nature and propriety
of all charges.
All tenant li~ts, applications, verification of tenant. income and
waiting lists relating to the Pl-oject. shall at all times be kept
separate and identifiable :EreII'. any othe:z: business of CONTRACTO'R
that is unrelated to thE-Proj ect, shall be maintained by CONTRACTOR
in a reasonable condition for proper audit. e-.r.ci shall be made
available to CITY during business hours, to the extent permissible
under ~aw5 and regulations protecting i~dividual confidentiality.
Failure to keep such lists and applications or to make them
available to CITY shall be considered a de:ault under this
Agreement.
CQm'RACTOR shall preserv-",-its records and II'ake them available for
review by CITY:
1. Por a period of three (3) years from the date of the
submission of the final expenditure report under this Agreement;
or,
2. For such longer period, if any. as is required by
applicable law; or,
3. If this Agreement is terminated, the records relating to
the work termir~ted 5hall be preserved and made available for a
period of three OJ years from the date of 3..&"1.y resulting final
set.tlement; and
4. For a period of three (3) years from the final termination
date of this Agreernent~
K. ON SlTE rNSPBCIIONS
CITY shall have the right to make periodic on-site inspections of
the project during wondng hours. including during the
rehabilitation of the Property_CITY shall also make at least one
(1) on-site inspection of the Project eac~ year during th€ term of
this Agreement.
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L. DEFAVLTS: &lMEprES
If, as determined in the sole discretion of CITY, CON1'RACTO~ fails
to observe or perform a.ny ccvenant, condit ion or agreeII'ient
contain~d in this Agreement for a period 0f thirty (3D) days after
written notice fl:cm CITY specifying such failur'02 and reque.=ting
that it be remedied, unless CITY shall agree in ..... riting t.o an
extension of such time prior to its expiratio~, ~hich consent ~hall
not be unreasonably withheld in the eve-nt that the faihlre
sp.::cified in the notice cann.ot b"" corrected within the applicable
time period and CONTRACTOR has instituted correcciv? aClion within
the a?plicable period and has diliger..t:.ly pursued suc~ ccrrective
~ction, then ar.d in such event (ar. ~~fent of Default~l, err! shalJ
be entitled, and in addition to all other remedies provided by la~
or in equity!
1. To
obligations
cODlpr::nsatioD
in the event
compel specific performance by COt\7RA.CTOR of its
under this Agreement, it beins recognized that
by monetary damages will not be adequate cOIT1pensation
of CONTRACTOR's default;
2. To exercise its rigllts under the Notes to accelerate
payment in full of the Loans, in acco!"dance with Section (1) (Il
hereof;
3. To exercise its right of first refusal to purchase the
property, in accordance with Section (I) (H) hereof, or to cure any
default. Any election by CITY to C1.lre any default shall oot be
deemed a waiv~r by CITY of any dut.ies or obligations imposed on
CONTRACTOR by Chis Agreement or by the Regulations; and
4. Notwithstanding any ethel: prevision of law relating to the
acquiSition. management or disposal of real property by the State,
to do any or all of the following:
a. Possess, operate, complete, lease, rent, renovate,
modernize. insure. or sell for cash or credit, in its sale
discretion any properties conveyed to it in exchange for debEntures
as provided in the Insurance Law;
b. P'<,lrsue to final collection by 'lriay of compromise or
otherwise all claims against CONTRACTOR assigned by CONTRACTOR to
C::rTY; and
c. Convey and execu te in the name of CITY deeds of
conveyance, deeds of release. assignments and satisfactions of the
deeds of trust, and any other writteD instrument relating to real
or personal property or any interest therein acquired by CITY.
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H . SERVICE ~EMEN::t
CONTRACTOR shall. as of the close of Escrow, enter i~t:.o a service
agreement .... ith PARe, whereby PARe .. .'ill perfonn certain senrices
relat.i~g to this Agreement. Tr.e-service a.greerr.en't 5:1a11 be in a
form ~atisfactcry to CITY's City A~torney~ and shnll provide CITY
wir:.h the right t.o enforce 't;:he service agroee::nent.
A ~ INDBPENDENT COt:TAACl'.PR
CONTRACTOR shall maiI!tai nits nor.;profi t corporate status as defined
by California Corporations Code section 5060~ as amended, duri,lg
the term of this Agreereent. No~hins contained in this Agreement is
intenaed to, or shall be construed ic any manner, as creating or
establishing the relationship of employer/employee: betllleen the
parties. CONTAACTOR shall ,3.t all times remain an independ~nt
contractor with respect to the 6-:r"Jices to be performed under this
AgreemeD t .
B.. INDEMN'Ipr~J:ON
CONTRACTOR. shall protect, indemnify. defend and hold harmless CITY
froro and agains~ any and all claims, actions, Suits, liability.
charges and judgments wbatsoever that arise out of, or are caused
by~ CONTRACTOR'S negligent perf:J.rmance or nonperformance of the
terms of this Agreement or COz.."TR.ACTOR's willful rnisccnduct or
conduct for which thto law imposes strict liability on CONTRACTOR in
connectio~ with t.he performance of or fai lure to perfonr. und~:r this
Agreement.
CONTRACTOR's obligations under this Section (III) (D} include t}",e
d ...... \ty to protect, indemnify, hold harmless and defend CITY, its
Council merr~ers, officers, agents a;ld E:IDployees from and against
any and all claims, deroanGs~ liabilit.ies, losses. damages, costs,
e-xpenses, lians, penalties~ suits, 01.' judgments that may arise at
any time~ in connection with or as a result of this Agreement or
the Project, under tne Comprehensive F-nviro~~ental Response,
Compensation and Liability Act (42 U.S.C., §§ 9601·75, as ~~ended);
the Resource Conservation and Recovery Act {42 U.S.C., §§-69Q~-SZ.
as amend~d); the F~zardous Waste Control Act (Heal. & Saf. Code, §§
25100-25250.24, as amended); the Safe Drinking Water and Toxies
Enfo:i.."cement Act (Heal. & Saf. Code, §§ 25249.5'2::':249.1.3. as
amended); the-Underground Storage of Hazardous Substances Act.
(Heal. & Saf. Code, §§ 25280·99.6! as amended); the Hazardous
Substance Account Act (Heal. & Saf. Code, §§ 25300·95. as amended);
the Toxic Substances Control Act U.S U.S.C .• §.§ 260~-257~, as
amended) j the Carpenter~Presley·Tanner Hazardous Substance AC~OUDt
Act (Heal. , Sa!. Code, §§ 25300-25395, as amended); or any ot.her
16
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~'~f~1~,: ." ;"":ic~,,·.
-:~.>-
c,"",j;,., ,..~ ,/
~ '1-:"_" ______ -'-" __ ,;..__.' __ • __ _
local; State or Federal ordinance, law or rEgulation that may now
exist cr hereinafter be enactee, or at CO~T.on law.
C. ~CE
As oE the close of the Escrow for the Property, CONTRACTOR, at its
sole cost:. and expense, s-hall have sec'.lred and shall continue to
maintain throughout. the term of this Agree!!lent, workers'
cornpensation~ comprehensive general liability, automobile
liability. personal inj~ry, property damage, and fire and extended
coverage insurance, insuring agaiDst all 1 iability of CONTRACTOR
and its authoriz.:d rep't'"2sentatives arising out of or in connection
wi th the Proj ect, th~ Property or CONTRACTOR's perfonnance or
nonperformance -under this Agrc:ement. In addi t ion, CON'I'RACTOR, at
its sole cost and eJ.."'Pense. shall secure and m.ni L:.tain course o!"
construction insurance covering all construction activities to b~
undertaken pursuant tD this Agreement. CONTRACTOR and any
subcontractors aSSigned to the performa:r!ce "f the terms and
conditions of this Agrea~ent shall comply with the coverage
~t6, required endorsements, certificates of insuranc~ ~~d
coverage-verifications as defined in EXJUBIT ~ F· I .. Insurance
Requirements·. attached hereto and incorporated herein by this
reference~
D. ASSIGNXg!I'1:
Al.l rights granted hereunder arE:: personal to CONTRAC'l'OR and are not
assignable or transferable absent the prior written consent of the
Ci t.y Manager on behalf of CITY, and any attempted assignment
thereof shall be void~
E.~
Amendments to the terms and conditions of this AgreemenL shall be
requested in writing by the party desiring suc~ revision~ and any
such adjustment to this Agreement shall be deterI''I1ined and be
effective only upon the mutual agreement ot CITY and CONTRACTOR, as
sec forth in a written and executed amendment to this Agreement.
Amendments made by HOD, or any authorized Fede!."al official, will be
deemed to be incorporated herein. Any duly authorized and executed
amendment hereto shall be recorded in the Office of the Recorder of
Santa Clara County, california.
F. NO THIED PA..~TY BEHEFICrARY
This Agreement shall not be construed or deemed to be an agreement
for the benefit of any third party or parties, and no chird party
or parties shall have any claim or right of action he.ceunder for
any cause whatsoever.
c:~ SiYERJI.BI:LITY Cr..ItoUSE
In case anyone or more of the provis ions contained t.e-rein shall,
tor ar.y raasonj be held invalid, illegal, or '.,;.nenEorceable in a:1y
respect. it shall not affect t!-H~ validity of the other provisions:
herein, which shall remain in full force and ~~fect.
H. ~il.....i';'EDGING Q? CITY' S c~
Under no circur.tS~ance5 shall C0~'TRACTOR have the authority or power
to pledge the credit of CITY or incur any obligation in the name of
CITY.
I. NOTICES
Any notice which may be or is required to be given under this
Agreement 5~ll be deemed given on the second day followi~g the
date on which the s,:;une t.ave been mailed by first class mail.
postage prepaid, addressed as follows:
CITY:
City Clerk
250 Hamilton Avenue
Palo Alto, CA 94301
{41S} 329-2563
A copy of all notices and
correspondence must also be
sent to:
Director, Planning & Community
Environment
City of Palo Alto
250 Hamilton Avenue
Palo ~to~ CA. 94301
Phone: (41S) 329-2441
FAX: {-415) 329 -224.0
J. JmRGIR C!&AUSB
CONTRA~OR:
Executive Director
PARe Apartments, I~c.
~40 Co~~er Street
Suite G
Palo Alto, CA 943Gl~1S06
This Agreement constitutes the sale agreement of the parti.es hereto
relating to the Proj ect and fully states the right5 1 duties and
obligations of each party as of the date of this: Ag-reerne.nt. Any
prior agre~~nt (including the CDBG Ag~eement {No. C3043320} which
wil.l be superseded at close of Escrowj, promises, negotiatic.ns, or
representations between the parties not expr~ssly stated in this
Agreement are not binding.
E. RECORDATION
This 1I.greement and any amendments or supplements theret.o shall be
recorded in the Office of the county R,,=ccrder of Santa Clara
county, California.
18
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L. SUCCESSOas BOCNn
This Agreement and the covenants and conditions co~tained herein
shall ru.~ with the land and shall bind, and the rJenefits shall
inure to CONTRAcrOR and its respective S'\.:.ccessors and assigns and
all subsequent O\lllIlers of the Pr::;j eel: or Property cr al'''ly ir:terest
therein, and to CIT!" and its successors and assigns.
IN WITNESS WHEREOF, the parties have e:.<ecutec' this Agz:eement
on the date fi~st above written.
CITY Oll PALO ).LTO
Mayor
A'I'"'rEST:
City Clerk
APPROVED AS TO FORM,
S~nior Aasistant City Attorney
City Manager
Director of Finance
Director of Planning and
Co~,ity Enviro~~n~
City Auditor
Risk Manager
Exhibit A~ Income Certification Form
Exhibit B: Property Description
President
Board of Directors
Exhibit C: Project Development Schedule
Exhibits D-1i D~2. D-3: Promissory Nc~es
Exhibit E: Project Budget
Exhibit F: Insurance Requirements
19
STATE OF CALIFORNIA
s.s~
COmITY OS SANTA CLARA
On 19.93. before mer 3-
notary public j n and fer said County. personally appeared JEA.'N
McCOWN'r personally known to me (or proved to me on the basis of
satisfacto:i.:Y eyidence,1 to be the person whose name is subscribed to
the within instrument and dcknowledg€'d La me that he execute·:j the
same in his authorized capacity, and tr~t by his signature on tbe
instrument the person, .or the entity upon behalf of which the
person acted. executed the instruroent.
WITNESS my hand and o~ficial seal~
Notary Public in and for said
county and State
20
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STATE OF CALIFOP~IA
ss.
COUNTY OF SANTA CLARA
On :12ecc"~'\....P'r= ~--:7-:-__ r :i993, before me, a Notary Pu.blic
in and for said Countr and State j personally appeared JOSEPH F.
~mRT!GN~rrIr JR., personally known to me to b~ the person whose
name is subscribed to the withi:::J instr>.uner:.t. and acknowledged to rr.e:
that he exeC'.lted t:-Le same in his authorized cap3.cit}· as Fresident,
Board of Directors of PARe _~artments, Inc. a California nonprofit
corporat.ion , and t1'l.at by his signature on the inst-1ument
acknowledged that said corporation executed the sa~~.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in c.his certificate first above
written.
...... * ........... .,. ...................... *"**l .. @ omCIALSEAL :: i .. B. VIU.ERIE GLASSfORD :
I · WOTAII~ P09UC c.u\f~N1'" ::
$ANT A CL""" COUN"N" t
.... COI,IWSSIOI<E1P10E.lIlo.\!lC.I8.1S94 .. • *,,*, •• ,.***~*****.t
,.............-------=:t::.. \...S)~,~ ~\ .
Notary Public in ana f~ sai
county and State --...~._
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EXHlBIT A
!~C.O¥.E/.;S!;ETS WOR::'.Sl:'i!:!:1'
•
INC(1HE CEp.TIFrCN1I0:-r FOR!'l
A??I.!C".I,,~"'£? A:-'-:;,.L3,,!.
--:-:c:"'='~!"",Q~Y:-,I~.~'C~O~""=_~/~A~S~S~S~·~. __ -,-_y~£~s ... -,-I_~,,=o_-,-___ ~co.'·t:e
S EC"l'I ON !:
E:n'Olovr.letlt -1
E."tlt;l~\.~ent -']
L-:::-l~V!:I~r.t -j
Se:).! ~clC~!'l=
~o<::i'!.l 5ec'J:--it...,
SSI
V;'!,I'E OP
;"S5E.TS
---------
-------I -.J __ _
I
I
re:l.sicn /~eti =-~:!l.e:":t i"":!"lo!
VA ~e.:"J.~ion
~is~bi!i~v/~aat~ !~~e=~~s
_' _____ ~~--_-~------
r_N'''DC
Alir..onv
C!'Iild S";:.-tj~rt.
IRS £a,net! I!l.c::""M: C:ee!. 't.
t~ Sum Pa~~~.
S.:ot:olar",hic'l
Gr .. rot.s
St1~d.s
~on-C~sh ~mo~aatioa
RIi!tC:l:z:r1.nCl Gift$
t.!D~~lIce Bene£!t.lI
I O1!her
S~at~~~ ef ~o Ine~e
E EC'rl OR r 'rO'l'Jo.L
SECI!'IOlri I::.
!<lvincrs AccOnr.t.s
Check~a Acc~~n~s
Stcc:lr:s/S<::nds
~-Bil1&/CDG~~ey ~rke~a
IiLUJK_oans.
l-eal Estate lEatitvl
!l"f<;,estt:lel'lts:
Di~rcsed of A2$e~a
C'thc
StC~!ON II TOTAL
I
1\\\\\'\\\\\'\ I
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.If !"QU,l. VAU1E ~p ASSETS is. < ss-~oao. us.e, act::;cl "''N~tJA!. I:'CO~E !:-:::.m SEC'l'lOS 1-1 8.'i;cvt! in
the-!'I~ary :Ct=:101-"~
!f ro'!'AL V".l..tJE DE" .1IS5ETS is ) $5.000, use t..~e la::-<;er of !l:c~·.J.,l Ai4Na ..... L I~CO~E Gr i~pl.:.ted
incol!ae i=OlI; 6sset.5 (TOTAL VALUE O~' 1.s5E~.5 1t ~055} in tl::.e. s:;.:lr.Iary b~lo"'4 .
$UX1".}.,p.:: 'I'otal Earnad !r'lco'Oe (SECtlOB I TCl'JU.)
L 1 ~o~al ~ct~al Inc~~ fro~ ~~se~s CR
r 1 !o~~l l~pcte~ lnco~e f:orn ~sse~5
:-Ul},L F.!V!EW or I}.!CO~..E/1>.sS.:::rs: By:
,----
,----
-
.-
OH1BTI &
6MKER KOTEl 435-441 Emerson Str-eet~ PaTo Alto
L..E.~ DESCR.IPTlON
PortiOrt dl.Dt5 12 and 13, .B!odc 13. as ~ on ttre Map c1 me Mills Su:xfJvJ$iOt'! ot BIDCk 13 ill tI1e Tovm
at UnivGr$iCy P&1t;. rvcorded F«xuil)' 2E, 'tS851 in &x»~ 0 01 Ma.,:r.:;, page 71, San:a Clara C:o~my .~d$,
desa!h<>d ... toll"",,:
6egInrJn~ tTl f"Ie ~~ 6ne of Smersor. Sjreet, dislanl 1r.e"$On 1 SO fee! Northwesterly from ~ poir\l.
Of lnt!il'rsection of She Norfhe.asierf;. ~ne Of Emerson Str~, wtttl tt1e NarthWEiSltlrfy ftne 01 Unjl,"£!~~ AY9rwe;
tj'I,ellCe (:()r.tinuing Nc~erly fdtl~ 1it.e Northeasterly line al' ErnetSOl'l Street. 50 i&et lhence lilt f.wht a.,gIes
~ortrlfiaslerl)' PS fHt;. 1tHilnc€ m right angies SoJ.r.hiJaslerJy 50 fefl~ ~r.c.e at ri~N .jllgfes SoU'thwest.~t 9S
("ili 10 1hi: ~ter.y liM c:f £me~n Stteet, v.d 1I1e-~inl of begiMi..,~.
,
1.
2.
3.
4.
5.
6.
EXliIlllT C
PRQ.TEC'T DEVELC,PMENT SCHSDULE
Close JI..cquisition Escro ..... /PurcnasE:·
of Property
Complete Relocation of Commercial
Tenant and Temporary Relocation of
Residential Tenants
Begin Rehabilitation of Property
Complete Rehabilitation of Property
Complete Occupancy of Property
Complete Final Reporting and
Documentation; Close Permanent
Financing
"
Febn...ary 1994
March 199-4
April 1994
Novert'lber 1994
December 1994
t,',
$670,000.00
EXHIBIT D-.l
PIWMI SSORY .IOTE
(CDBG FUNDS)
~-.,'
;,.
;..:.~:~::
D&te:
Pa.10 "'A'l""tCCo-,~caiifornra-
FOR VALUE RBCI;IVED, PADC APAR'I'MEN'l'S. INC •• a corporation
organized under the Nonprofit Public Benefit Corporation Law of the
State of California (·BQRRO~"ER" l. promises to pay to the orc€:r of
the CITY OF PALO ALTO. a charter city and a municipal co~pcration
("CITY" l. the principal sum of Six Hundred Seventy Thousand Dollars
($670 6 00'0.00) at t.he office of Revenue Collections of the City of
Palo. ~.lto. 250 Hamilton A\.~enue, P. O. Box :10250. Palo Alto r
California 943 ()3. or at such other place as CITY T!'.ay from time to
time designate. from the date of this PFOrJIISSORY NOTE :the "Note-).
until paid. at the rate of zero percent (ot} p~= year on che unpaid
principal balance~ as required hereunder or as reqtdred under the
agreement referenced belo~_
This Note is secured by a deed of trust executed by BORROWER in
favor of CITY as beneficiary~ in the a~~unt of $670,000. a9ainst
BORROWER's interest in that certain real property and improvements
located at 435-441 Emerson Street, Palo Alto, California,
Assessor's Parcel NU1J>.Der 120-:26-023 (the -Property").
This Note is made in connection with an agreement
entitled -FUnding ~d Regulatory Agreement Relating to tl18 Barker
Hotel Between the City of Palo Alto and P~~C Apartments, Inc.-(the
VAgreement~). The Agreement provides t.hat BORROWER is the recipient
of certain federal Cocmru.nity Development Block Grant ('CDBG·) funds
(under this Note! designated for certain costs, including some of
t.he costs necessary to acquire the Property for the pr~.servation,
rehabilitation a..""ld expansion of the lo~ income, single room
occupancy hotel located there~ known as the Barker Hotel (the
·Project·)~
Any amounts advanced under this Note shall, at the option
of CITY, become immediat.ely due and palo"able upon the occurrence of
the earlier of any of the following:
(a) BORP~OWER'9 un~emedied 6efault or failure to comply
with all of the terms of the Agreement, including any termination
of the L,:-.w/Very Low Income restrictions set forth in Part II of the
Agreezr-.en t ,
(b) The termination of the Agreement with or without
causei or
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(c) {Io1'itt"~out prior written consent of CITY, the sal~.
conveya:1ce, assignm.ent, hypothecation or furtr~er encu.'1'!b-.:ance of the
Property or the Project, tr.e retinan::-ir:.g of the Propert:y or the
Project, or the transfer to any vther party or parties any interest
of BORROh'"ER in ':he Property or t~e Prcject, inc::h!ding but nat
limited to sale p-w.rsuant to any judicial cr nonjudicial
foreclosure.
Should none o:!: the foregoing e-vents occur~ the tErms of
repayment of the principal balance under rhis Notoe shall be as
fellows:
(a) This Note shall accrue interest at the ratE of zero
percent (0%) per year from the date of its execution by BORROWER,
um:il paid.
(b} The cerm of this Note shall be fr~~ the dat~ of its
execution bv BORROWER until the earlier of: ~i) the date of
"Project Completion· as defined u:.1der Section (I) {A} (13) of the
Ag=eement {be:reinafter. 1i Project Completion~) plus forty (40)
years; or {iij tbe date of BORROWER's full repa~~ent to CrTY under
this Note.
(c) From the date of execution of this n~te until thE
date of forty (40) years followi:" -Project Completion~ repayment
under this Note shall be deferred ~ _ set forth under Section {I} (F)
of the Agreeme~t. Ro~everl on or before the date of ten and one
half (.10.5) years following PI'oject Completion, the Project's
financial condition shall be evaluated by CITL with the assistance
and cooperation of BORROWER as set forth in Lhe Agree.m,ent. ': ::::
parties may at ~hat time establish a repayment schedule based on
the Project's surplus cash flow aV'ailable. if anYI to support debt
payments resulting from this Note. as set forth in the Agreement.
The same financial review shall occur on or before the dates ~f
twenty and one-half {20.5) years after Prcject Completion and
tr.irty and one-r~lf (3D.5) years after Project Completion. as set
forth in the Agreement. Whenever the parties determine that a
repayment schedule should be implemented or modified du::ing the
term of this Note l C!TY and BORROWER shall execute written
amendments to the Agreeme!l'c and this Note sE:I .. .'cing forth the t,erms
of the repa}~ent schedule or any changes :hereto.
(d) Not'Witr..sta~1.ding any prevision of this Note or the
Agreement, BORROWER shall mak.e full repayment under thiS! Note to
CITY on or before the date of forty {48) years aiLer the date of
Project Completion.
BORROn~R. any endorser of this Note, and any others who
may become liable for all or any part of the obligations evidenced
by this Note~ may prepay from any source all or any portion of the
principal SutT'1. of this Note~ without penalty. Any and all payments
made hereunder sr~ll be credited on the principal halance.
2
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BORROWER, any endorser of th.1.s NOtE. and any others ".-ho
may become liable for all or part of t~e obligations evidenced by
th.is Nat.e, ot' chis Note as a.rnended, hez:eby indi.vidually \oi"aive
dema~d. pr~seIl,;ment for payment, demand and p::'otest, notice of
protest I demand, and of dighonor and nonpayment. and CO~Sent to any
m.urner of extel"lsionS! or renewals of time hereof. A..T'J.y such
extensions or rene~;ls rr~y ~e made wi~hou~ n0~ic~ to any of the
obligated part.ies and without affecting their liability. The
pleading of any statute Q[ limitations as a defense to any derrta.:1d
against. BORROWER is expressly waived by BOR...'I(OWER. If BORROWER
cO!'lsists of more than one person c'r individual, each person or
individual shall be jointly and severally liable under this Note.
BORJ\OWER shall nc't furthE:r encumber. r:';.Qx-tgage cr subj ect
the Project or the property, or any interest therein~ to a deed of
tr..lst. mortgage. indenture., or other document:. of legal enc'..U't1brance
\individually, "Encumbrance-and jointly, 1!Encumbrances·} without:.
the pI."L:-r written consent of CITY.
Unless CITY shall expressly agree otherwise, in writing.
any Encumbrance affecting the Proj ect or the property shall provide
that ~ in the. event 'Of any default or breac.h by 'BORROWER under any
Encumbrance entitling ar.y party thereunder to accel~.rate the
indebtedness secu'ced thereby and foreclose upon tJ:e Project. or t.he
Property., CITY shall have the right, but not the obliga.tion. to:
(1) cure the default prior to the completion of any foreclosure ~~d
reinstate the Encumbrance; or ~2) pay the total unpaid
ir.debtea..'"1ess secured by such Bncumbrance~ in which eve.ot, such
Encumbrance shall be released~ cancelleo k or otherwise reconveyed.
Any amounts expended by CITY under the contingencies set
forth in (1) or (2} of the preceding paragraph shall be reimburfled
by BORROWER upon demand of CI~~ therefor. and, in any event~ shall
bear interest at the maximum rate permitted by Article XV, Section
1(2} of the California Constitution, as may be amended fram time to
time, from the date such all'iOunts -lIIi'ere advanced by CITY until paid
by BORROWER in full. All sucl"'~ aIttounts i including interest and any
penalty authorized under the Agreement~ this Ncte~ or any deed of
trust. s~~ll be added to the principal of this Note. The approval
by BORROWER of any Enct.lIl1brance. and the plaCing of a security
interest therefor OD the Proj~ct or the Property, or any portion
thereof, not containing the pr~~isions of the preceding paragraph
and this paragraph shall constitute a default under this Note.
If any default is made hereunder, BORROWER further
premises to pay reasonable attcrneys' fees and' costs and expenses
incurred by CITY in corJlection with any such default or any other
action or other proceeding brought to enforce any of the provisions
of this Note. CITY's right to such fees shall Dot be limited to or
by its representation by staff attorr..eys of CITY's Offfee of the
City Attorney. and such represEntation shall be valued at the
customary and reasonable rates for private sector legal se~Jices.
3
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The ~elatianship of CITY and BORROWER evidenced by this
Note shall be deemed to be one of creditor and debtor, and nc~ of
partn~rship or joint venture.
This Note may not be modified O~ arnende=, exc~pt by an
instrumE:it in writins which expresses SIJch intention of the parties
sought to be bound thereby. and such writing shall be fJ.rrr.:i.y
attached to this Note and ~dde a part hereof.
Ar:.y failure of CITY or o':..h'.:!r holder to exercise ar:y
rights under this Note shall not constitute a waiver of such rights
or of any other rights under this Note.
This Note and the Agreement hereby in::o:-porate a!"lQ
supersede the promissory no:".:-:-, ~enefitting C.ITY executed by t.he Palo
Alto Housing Corporation =il ____ 1993, in the amount of One
Hundred Seventy Five Thou:s: :'ive Hundred Dollars ($175,500.1 (the
lInit1.al Note"). which wa.=. _,.:_~e in connection with Agreement No.
C3043320 between CITY and the Palo Alto Housing Corporation for
pre-development costs incurred in connection with the Project. ~
of BORROWER's execution of this Note. the Initial Note sr-..all have
no further force or effect and shall be null and void_
This No~e shall be governed i--' and construed in
accordance with the laws of the State of Cal~fornia_
To the extent assignment of this Note is permitted by
CITY, the ter.ms of this Note ~hall apply to, inure to the benefit
of. and bind all of the parties thereto, their heirs, successors
and assigns.
Notices, demands and communication between CITY and
BORROWER UI!der this Note sp~ll b~ sufficiently given if. and shall
not be given unless, dispatched by certified mail, pestage prepaid,
return receipt requested or sent by express delivery service or
over-night courier service. to the principal office of CITY and
BORROWER as follows, or at such other aodress as the parties may
designate in 'M'rit.ing from time to time:
City of Palo ~to
ATTN: CiLY Clerk
250 Hamilton Avenue
Palo Alto. California 94301
With a copy to: Director of Planning and
Community Environment
250 Hamilton Avenue
Palo Alto, California 943D1
4
r i::~:.. , .. ;..
STATE OF CALIFORWIA
55.
COON7Y 0;' SAJ'IT A CLAR.'\
On • 1993, before me, • a
not.ary public in and forsaid C:"unty. personally appeared JOSEPH P.
MARTIGNBTTI .. JF .. , personally known to me lor pra ...... ed to me on t.he
basis of satisfactory evidence} to be the person whose r:ame is
subscribed to the 'Within instr:..unent and acknowledged to rne that he
executed the saroe in his autho:-ized c':;.pacity, and that by his
signature on the in9trurn::nt the person, or the entity upon behalf
cf which the person acted~ executed the ~nstrument.
WITh"'ESS my hand and official seal.
Notary Public in and for said
County and State
6
,'-{r>;
$1,000,000.00
---"-.----
EXHI!IT D·2
FRmiISSORY NOTE
(HOME FUNDS)
Date~
Palo Altor Ca11fo~i8
FeR VJl.LTJE RECEIVED, t.he unde.reigned, PARC APAR.'I'MD..'TS,
INC., 2l California nonprofit public benefit corpora.tiun (the
"Borrower"}; hereby premises to pay to the order of the CITY 011'
PALO ALTO i a charter city and a municipal co.rpo=a.tion. 250 Hamilton
Avenue, Palo Alto i California 94301 l the "HoldF2r~ ,l. tnt: p:rincipal
sum of One Killion Pollao,r5 ($l~ 000, OOO) pursuant to the terms and
condi tion..." set forth in this Promissory Note (the "'Note") and the
agreeIl"..cnt referenced below. The Holder shall be Entitled to mil.ke
demand fer payment hereun.der only in accordance with the provisions
of this Note or said agreement.
ThiS Notei:e-made in connection with an agreement
entitled "Funding and Regulatory Agreement Relatiog to the B2~ker
Hotel Between the City of Palo ~to and PJLqC Apartments, Inc~~ ithe
"Agreement"}. The Agreement provides that the Borrover is the
subrecipient of certain HOME Investment PG...:-tnerships Program funds
received by the Holder, designated for certain costs necessary to
acquire the real property and improvements located at 435-441
Emersoc Street~ Palo Alto, California. Assessor~s Parcel Number
~20-26-023 <the ·Property"), for the purpose of preservation~
rehabil it.at.ion and expansion of the low income. sin'31e :room
occupanC".1 hotel located there, known as the Barker Hotel (the
rproje.ct. 'l .
~) Borrgwer's Obligation. 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
hereu.nder to the Borrower by the Holder ~ Such funds are co be used
solely by the Borrower for the project.
21 Ii."'..terest.~ Tbe principal amount o! t.his Note shall
bear interest at the rate of zero percent (Oli per annum:
3) Security. This Note is secured by a deed of trust
against the property. execut.ed by the Borrower in favor of the
Holder as the beneficiary, in the amount of $l.OOO~OOO.
4) Term of Note and Repayment S~~~~ The term of
this Note shall be trom tbe date of its execution by the Holder
until t.he earlier of: {il the elate of -project Completion" as
defined und-er Section (1) (1).) {~3} of the Agreement (h~reinaft.er ~
1
aproject Completion") plus forty (.~_G) years; or fiiJ the date '.Jf
the Borrower's full repayment to the Holder under this Note.
From th:e dat-= of execution cf this Note unt.il the date of
forty (40) years following Project Compl~tion, repayme~t. under this
:';ote shall be deferred as set forth uncer Section (I) (F) of the
Aqreerne:Jt. However, on or before the date of ten and oOle-half
(io.5) rears fQllowing Project Completion, the project's financial
condition shall be evaluated by tr_e Ho.!.der. It/Iitr. the assistance and
c:oopera~ion of the Borrower as set forth in the AgreeI'fl2nt. The
parties rray at that time E5tablish a repayment schedule based on
the Project's surplus cash flow available, if any, to support debt
pa~ents resulting from this Note, as set forth in the Agreement_
The same financial review shall occor on or be-fore the dates of
twenty and one-half {20 _ SI ye:ars aftoer Prcj set Completion and
thirty and one-ha.lf (30.S) rears after Projecc Completion, as set
forth in the Agreement. """henever the parties do:terrnine tl-.!at a
repayment schedule should be implemented or modified durin.g the
term of this Note, the Holder and the Borr-or,.,ler shall execute
written amendments to the Agreement and this Note setting forth the
ter.ms of the repayment schedule or any changes thereto_
Notwithstanding any provision of this Note or the
Agreement, the Borrower shall make f1...:.11 repayment. lJ.nder this Note
to the Holder on or before the date of forty (4G) years after the
date of Project Comp2_etion.
5) Immediate Payment. Notwithstanding Section 4
hereof. any amounts advanced under this Note shall, at the option
of the Holder ~ become immediately due and payable upun the
occurrence of any of the following: {a} the abandonment by the
Borrower of the Project; (b} the voluntary or involuntary
assignment, sale, transfer, or-other dispositior.. by the Borrower-of
its assets or its obligations ~nder this NotE under the bankruptcy;
insolve:ncy, receivership, or other creditors' rights la'wosj tc) the
unremedied default or failure of the Bcrro'Wer to observe and comply
with all the terms, conditions and provisions of this Note ~~d the
AgreeroEnt~ including any termination of the Low/Very Low Income
Restrictions set forth in Part II of the Agreement; {d) the
termination of the Agreement with or without cause; or (e) without
prior ~ritteo consent of the Holder, the sale~ conveyance,
assi9nment~ hypoth~cation, or further encumbrance of the -Prcperty
or the Project, the refinancing of the Property or the Project, or
the transfer to any other party or parties any i-ar-erest of the
Borrower in the Propert:;,' or the Proj ect. including but Dot limited
to sale pursuant: to any j-.J.dicial or nonjuai cial foreclost.~L"e. If
none of the foregoing occurs, repayment of the princtpal S\LT. loaned
hereunder shall be due as set forth in Section 4 of this Note.
2
•
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6} Illac:e and ¥..anne"!" of payme!1t.. The full amount due
and. payable under this Nate: is payable at tr..e ot! ice of Revenue
collections of the Holder i at the address of tt.e He.lder set forth
above, or at such other place or pla;:es as the Holder may designate
to the Borro .... er in writ ing frc·t:\ time tc time, in legal t.ender fer
the pa}'lTlent of public and private dE'!bts and which c.r, the respect.ive
date on whil;h such payment is due and pai.:j shall "be irr:rnediately
available funds.
7) PreDawent. The EorrO"il'e:r rna}' prepa.y to the Holde-r
from any source, at any time prior to the date such obligation
becomes due hereunder, all or any part of the principal sum of this
Note 'Without the payment of penalties or pre..'1'.i'lll!l . .':;.
8) ~rowet:.:...a Waiver. The Borrower hereby waives: (a)
notice of default or delinquency; (b) noticoe of acceleration; (c)
notice of nonpayment; (dJ nctic:e of costs, expenses, lc.sses and
late charges; (e) diligence in taking any action to collect any
sums owing under this .. -~; (f) presentment far pa:y~ent. demand,
protest. and notices O~ ;..;.isho!lor and of protest; (g} the benefits
of all waivab-1e exemptions j and {h) all defenses of time of pa:}"f" ·t
or of any due date lind":,, -this Note. in whole or in part. whe:. .. -ar
before or after ma.tur:..~y and with o'!:" without notice, except
extensions in writing. The pleading of any statute of limitations
as a defense to ~~y demand against thE Borrower is also expressly
waived by the Borrower.
9) At,t;orneys' Fe~. If any o'=!fault is made hereunder,
the Borrower promises to pay reasonable attorneys' fees and costs
and expenses incurred by the HoldE:r :in connection with any such
default or any other action :'!' other proceeding brought to enforce
any of the provisions of th~s Note. The Holder's right to such
fees shall not be limited to its represe~tacion by staff attorneys
of the Hold.er's Office of the City At.to!ney. and SlJch
representation shall be valued at the customary and reasonable
rates for private sector legal services.
10) Default Un~er Note and Acceleration. The Borrower
agrees that the unpaid balance of the principal amount of this Note
sl"..all. at the option of the Holder. become i..mmediately due and
payable upon the failure 0:: the Borro'Wer to make any payment
hereunder as and ~hen due or upon the failure of the Borrower to
perfor~m or observe any other term or provision of this Note or the
Agreement. If the balance of this Nate is not paid within thirty
nO} days of demand therefor, the Borrower shall pay to the HoldlO:!r
a late charge of one percent (1\) per calendar month, or fraction
thereof. or the highest rate pe~~tted by law~ whichever is less~
on the amouilt past due and remaining unpaid. If this Note be
reduced to judgment, such judgment shall b-ear the statutory
interest rate on judgments.
3
--"
,
"
~1' ~Q Er~_~rance of PropFrty. The Borrower shall r.ot
further encumber; rr.o:!'tgage or subject the Project, or the Property,
or any interest therein, to a deed of ~rust. mortgage, indenture,
or other document of legal encurr.branc~ (individually. "Errcu. ... nbra.r-ce'"
and jointly, "'Encumbrances -J Tlldthout tn.: prior written consent of
the Holder.
unless the Bolder sh<!ll expressly agree. ot'.he:cwis:e. in
writing, any BncU1t'.brance affecting the Proj ect c,r the Property
shall provide that; in the E!vent: of any default or breach by the
Borrower undsr ar;,y Encllinbrance entitling any party the:nmr..der to
accelerate the indebtedness sec~red thereby and foreclose upon the
Project or the Property. OJ the Holder shall have t~.e right .. but
not the obligation, to cure tne Cefa\.ll t prior to the completio~ of
any foreclosure and reinstate the Encumbrance; or (2) pay the total
unpaid indebtedness secured by such EncU1!'.brance, in 'Which event.
such Encumbrance shall De released, cancelled, or oth~rwise
reccnveyed.
Any amounts expended by th.:: Holder under the
contingencies set forth in (1) or (2) of the preceding paragrapb
shall be reiIIlOursed by the Borrmli'er t!pon demand of the Holder
therefor, and, in any event. sl"..all bear inte::'est at the Ir.aximurr,
rat-e p.e.tlnitted by Article ¥:Il~ Section 1(2} of. t.he California
Constitution~ as may be amecded tro~ time to time, from the date
such amounts ~ere advanced by th~ Holder until paid by th~ Borrower
in full. All such amounts. including interest 3.nd any penal ty
authorized under the Agreement, this NotE; or the d~~d of trust;
snaIl be added to the principal of this Note. The approval by the
Borrower of any Encunibrance; and the placing of a security interest
therefor on the Project or the property, or a~y portion thereof;
not containing the pr~visions o! the preceding paragraph and this
paragrapb shall constitute a default 1L~der this Note.
~2) l!Q.~. Notices~ demands and comrr.unication
betwee~ the Holder and the Borrower shall be sufficiently given if,
and f:lhall not be given unless; dispatched by certified mail.
postage prepaid; return receipt requested or sent by express
del ivery servico:: or over-night courier service, to the principal
office of the Helder and the Borrower as follows~ or at such other
address as the parties may designate in ~riting from time to tilrte:
Holder: City of Palo Alto
ATTN: City Clerk
250 Hamilton Aven~e
Palo Alto, California 94301
4
, . ...,...:.
·,i
.~ :". ,
.";
Borrower ~ PAHC Apartrr,ents, !.rI.C.
ATTN: ExeC\,ltive Director-
Sllch vritte.l:'. notices, den\a.nds and corrmur..ic;i.tion shall be effective
on the date shown on the delivery receipt as th.e date delivered or
th~ date on which the delivery was refused.
13) GoYUning Law. This Nate sr..all be constr,;ed in
accordance with and be governed by the laws of the State of
california~
14} S .. IE:;L~ ... iJ •. iU. If any provision of this Note shall
be ipvalid, illegal or unenforceable, the validity, legalit.y and
enforceability of the remaining provisions hereof shall not i~ any
way La affected or impaired thereby.
15) Time. Time is of the essence of thi& Note.
16) No Waiver by th~ Holdpr. No waiver of any breach,
default or f-ailure of : .. -:Iition under the terms of the Note shall
be implied from any fa~ __ re of the Holder to take, or any delay by
the Holder in taking, -: .':on with respect. to such breach, default
or failure or from any p':--c. ~·iol.!s waiver of ~""ly similar or unrelat.ed
breach, default or failure; and a waiver of any term of the Note
must be made in vriting and shall be limited to the express written
terms of such waiver.
17) AssiCJIU11.ent.. All
personal to tne Borro-...er and are
absent. prior written conser.t by
assignment thereof shall be void.
rights granted hereunder are
not. assignable or transferable
the Holder, and the attempted
18) No Partnership. The terms of this Note shall in no
way be construed to create a partnership. joint venture or any
other joint relationship or agency agreement between the Holder and
the Borrower. Ratr .. er, the relationship 'Of the Holder and the
Borrower evidenced by this Note shall be deemed to be one of
creditor and debtor~ respectively.
19) Not~Bindina. The terms, covenants and conditions
of this Note shall apply to, and shall bind, the heirs, successors,
executors, administrators and assigne of both the Holder and the
Borrower.
20) 8ffi,§,nQmsnts. This Nate may not be modified or
amended except by an instrument in writing which expresses such
5
,--,: '
intention. of the parties sought to be bcund thereby ~ and such
writing shall be f irm1r attac:hed to t.his Note and made ,a part
bereof.
IN WITh~SS WHEREOF, this Note has been duly executed at
Palo Alto; California. The eEfective date of t~is Ncte is
199
Holder:
CITY OF PALO ALTO
AP PROVED AS TO FORM,
Senior As9t~ City Attorney
APPROVIro:
City Manager
Director of Finance
Director of Planning and
Community Environment
Borrower:
PAIIC M.\RT><ENTS. INC.
By ' ===-Joseph F. Martignetti , Jr.
President • .Board of I:'irecto!'s
6
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.,
',,-"
STATE OF CALIFOF~'IA
55.
COUNTY CF SAl'ITA CLARA
On , 1993~ before ~e. . a
not.ary public in and for said County, personally apP2ared JOSEPH F.
MART:tGNETTI. J'lL. personally known to me (or prav-ed to me on the
basis of satisfactor}" evidence) to be the person ""'hose name is
sabscribed to the within instruroent and acknowledged to me that he
executed the same in his authorized c=:.pacity, and that by his
signature on the instrument the person r or the entity upon behalf
of which the person acted, executed th€ instru-'1I.EJnt.
WI'INESS my hand and official se~l.
Notary Public in and fer said
County and State
7
-~-,-
EXHIBIT 0-3
PROMISSORY NOTE
(C!TY HOUSING RESER~~ ~~S)
$400,000 _ 00 Date!
Palo Alto. Ca1ifornia
FOR. VALUE RECEI\'''ED~ the undersigned, PASC APARTMENTS,
:INC. ~ a California nonprofit p".lblic: benefit cor-poration (the
~Borrowern), hereby promises to pay to the order of the CITY OF
PALO ALTO, a charter city and a municipal corporation~ 250 Hamilton
Avenue, Palo ~to. Califcrnia 94301 {the ~Holder"}~ the principal
sum of Pour Hundred Thousand DOllars ($ 400,000) pursuant to the
ter.ms and conditions set forth in this Promisso~ Note {the nNote"}
and the agreement referenced below. The Holder shall be entitled
to make d.emand for payment hereunder only in accordance with the
provisicns of this Note or said agreement.
This Note is made in ~onnection with an agre~~nt
entitled -Funding and Regulatory Agreement Relating ~o the Barker
Hotel Between the 'City of Palo Alto and !?AHC Apartment.s, Inc. -(the
"Agreement·). The Agreement provides that the Borrower is the
recipient of certain City of Palo ~~to Housing Reserve funds of the
Holder, designated for certain costs necessary to acquire the real
property and improvements located at 435-441 Emerson Street~ Pale
Alto. California, Assessor's Parcel N~~r 120-26-023 (the
-Property-J, for the purpose of preservation, rer4bilitation and
expansion of the low income, single room occupancy hotel located
t.here, knOll.'Il as the Barker Hotel (t.he "Prcject").
1} Eorrow""'r';s Obligatior.. This No~e evidences the
obligation of the Borrower for the full repayment to the Holder, in
accazdance with this Note and the A9~eernent, of the funds loaned
hereunder to the Borrower by the Holder. Such funds are to be used
solely by the Borrower for the Project.
2) Inrerest. The principal amoULt of this Note shall
bear interest at the rate of zero percent {ot) per fu~urn.
3} Security. This Ncte is secured by a deed of trul:St
against the Property, executed by the Borrower in favor of the
Holder as the beneficiary, in th~ amount of Four Hundred Tbousand
Dollars ($400,000)_
1
,.
4) Tern......2..Lll'ote and &epaymer:.t SChedule. The tenn of.
tl".is Note shall be frorr: the datE of its execut ion by t.!1e Holder
until the earlier of: (i) the date oE "Projecc Ccmpletion" as
defined unde::-Section III (Al (13) of the Agreement (hereinafter,
·Project Completion n ) plus forty (4D) years; or (ii) t.be date of
the Borro'lller's full repayment to the Holder unde:-this Note.
From the date of execution of this Nctel:ntil the date of
forty (40J yea~s following Project Completion, repayment undar this
Note s:hall be def':I-'red afl set forth under Section {I) (F) 0-: the
Agreement. Ho ..... ever. on or before the date DE ten a!""ld ODe -half
(10.5) years following project. Completi':lTI, the Project's financial
condition shall be evaluated by the Holder. wit.h t;'e assistancE: and
cooperation of the Borrower as set forth in the Agreement. The
parties may at that time establish a repayment schedule based on
the Project's surplus cash flow available, if aCYT to suppcrt debt
payments resulting from this Nate, as set forth in the Agreement.
The same financial review si:all occur on or before the dates of
twenty ar.d one-half {20. 5) years aftEr Proj-ect Completion an'1
thirty and one-half DC.S) years aft.er PI:ojec'C Completion, as set
forth in the Agreement. Whenever the partiES determine that a
repayment schedule should be implemented or modified during the
teIlIi of this Note.. t...!e Holder and the Borrower shall execute
written amendmenCE to the Agreem~nt and this Note setting forth the
terms of the repa}~nt schedule or any changes thereto.
Notwithstanding any prov'ision of this Note or the
Agreement. the Borrower shall make full repayment under this Note
to the Holder on or before the date of forty (40) years after the
date of project Completion.
5) Immedia,te _ Payment. Notwithstar.ding Section 4
hereof. any amounts advanced under this Note shall, at the option
of the Holder. become immediately due and payable upon the
occurrence of any of t.he following: (a) t.he abaIJ.donment by the
Borro'lller of the Project, (b) the voluntary or in~ ... -oluntary
assignment, sale, transfer. cr other disposition by the Borrowez-of
its assets or its obligations under this Note under the bankruptcy,
insolvency. receivership, or other creditors' rights laws; (c) the
un:::'eroedied defaul t or failure of the Borrower to observe and comply
with all the terms. conditions and provisions of this Note and the
Agreement .. including a...'1Y temd.nation of the Low/Very Low Income
.Restrictions set forth in Part II of th~ Agreement; (d) t.he
ter7.lination of the: Agreement with or withcut cause; or (e) without
priQr written consent of the Holder, the sale. conveyance.
assignment. hypothecation, or further encumbrance of the Property
or the Project. the refinancing of the Property or the Project, or
the transfer to any other pa:rty or parties any interest of the
Borrower in the Property or the Project .. including but not limited
to sale pursuant to any judicial or nonjudicial foreclosure. If
2
.1? .
/ -----.. ----.... ~-... -_._--,--'-
none of the foragoing occurs, repayment of the principal S\.l.m loaned
hereunder shall be due as set forth in Section 4 of ~his Note.
6) ~_ and ~4"'J,r,tE'r of Pa~. The full amount due
a!ld payable u!lder this Note is payable at the office of Reve:lue
Collec~ion5 of the Holder, at the; address of thE' Holder set forttl
above, or at such other place or places as the Holder rr~y designate
to ~he Borrower i~ writing from time to ti~ei in legal tender for
the payment of public and private debts and which on the respective
date on which such payme~t is due and paid shall be irnmed:iately
available funds.
7) £~oayrr~~. The Borrower ~ay prepay to th~ ~old=r
from any source, at any time prior to the date such obligation
becomes due hereunder, all or any part ~f the principal sum of this
Note without the payment of penalties or premi~~~.
Sl Borrower~s Waiver. The BorrowE-r hereby waives: (a)
notice of default or delinquency; {b) notice of acceleratj oni (c)
notice of nonpayment; (dl notice of costs, expenses, losses and
late charges; (e) diligence in taking any action to collect any
sums owing under ~his No~e; {fl presencment :or payment. d~d,
protest, and notice.s of dishonor and of protest .. (g) ?:he benefits
of all waivable exemptione: and (h) all d~fenses of time of payment
or of any due date under this Note~ in whole or in part. whether
before or aftear maturity and with or without r:otice, except
extensions in 'Writing. The pleading of any statute of limitations
as a defense to any demand against the Borrower is also (;xprEssly
waived by the Borrower.
9) Attgrnevs' Fees~ If any default is rr~de hereunder,
the Borrower promises to pay reasonable attorneys' fees and costs
and expenses incurred by the Holder in connection 'With any such
default or any other action or other proceeding brought to enforce
a.."ly of the provisions of this Note. The Holder's right to such
fees shall aot be limited to its representation by Etaff attorneys
of the Holder's Office of the Cit}~ Attorney, and such
reprEsentation shall be valued .:at the customary and reasonable
rates for private sector legal services~
~O) ~lt Under Note and Acceler~~. The.Borrower
agrees that the unpaid balance of the principal an',ount of this Note
shall. at the option of the Holder, beccme immediately due and
payable upon the failure of the BorroW'eI" to make any pa:yment
hereunder as and wnen due 0= upon the failure of the Borrower to
perfo~. or obs~rve any other term or provision of this Note or the
Agr~ernent. If the balance of chis Note is not paid ~ithin thirty
{30) days of dew3nd therefor, the Borrower shall pay to the Holder
a late charge of one percent (1%) per calendar month~ cr fraction
thereof, or the highest rate permitt2d by law, wrdchever is less,
3
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;;'.;>",-:-.",. f.
YL~~~;~Qj~ .. :\ .
on the arro'Jnt past du.E and rcmair.ing unpaid. If this Note be
redue'.eo. to ]udgrner.t j such judgrn~nt shall bear the statl..:.tory
interest rate on judgzr.ents.
11) No Encumhranc"" of propertv. The Borrower shall net
further encumber. mC'!!:"tgage or subject the Project, or the Property,
or any intel."est therein~ to a d~ed af trust, mortgage, indenture.
or other doc1J.ILIent of legal enc'..ll'ilbran.r:e (individually, ~Encu:mbra.ncelr
a:;.d jointly, "'Encurobranc.:::.s·) without the p.ci·:n: writte.n consent of
!-he Holder.
Unless the Holder shall expressly agree othen.rise, J.n
writing. .any Enr:uI!1brance affecting the Proj ~cC or the Property
shall pro',ride that i in the event e·f any default or breach by the
Borrcwer under any Encurobr"ance entitling any party thereunder to
accelerate tr.le indebtedness secured thereby and foreclose upon the
Project or the Property~ (1) th~ Holder shall have the right, but
Dot the obligation, to cure the default prior to the completion of
any foreclosure and reir~tate the Encumbrance; or (2) pay the total
llnpaid indebtedness secured by suer.. Enclli"'nbrance, in which e;vent ~
such EncUIl"..brance shall be rel.eased. cancelled. or otherwise
reconveyed.
Any amounts expended by the Holder under the
contingencies set forth in (l) or (21 of the pr2cedins paragraph
shall be reimbursed by the Borrov~. upon der .. =,nd of the Hol dEr
therefor, and, in any eve~t, shall bear interest at ~he max~mum
race permitted by Article XV. Section 1 {2) of the California
Constitution~ as may be amended from ti~e to time, from the date
such amounts lIiere advancoe:d by the Holder until paid by the Borrower
in full. AJ.l such amounts. including interest and any pena~ty
authorized under the Agreement~ this Note, or che deed of t~~st,
shall be added to the principal of this Ncte. The approval by the
Borrower of a.."'1Y Encumbrance, and the placing of a security interest
therefor on the Project or the property. or any pcrtion thereof,
not co~taining the provisions of the preceding paragraph and this
paragraph shall constitute a default under this Note.
1.2) Noti~. N-ctices, demands aDd c~unication
ber:ween the Bolder and the Borrower shall be sufficiently gi,.-en if~
and shall not be given unless l dispatched by certifi.ed mail~
postage prepaid, return receipt requested or sent by express
delivery service or over-night courier service, to the principal
office of the Holder and the Borrower as follows. or at su=h oth€r
address as the parties may designate in writing from time to time:
Holder:
.. ~.
City of Palo Alto
ATTN: City Clerk
2SQ Hamilton Avenue
Palo Alto, California 943C1
4
•
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".'.
Borrower: PARe Apartments, Ir.c.
ATTN: Exec~tive Director
Such written notices, demands and comr.lunication shall be effective
on the date sho'dll on tl"ie delivery receipt as the d~te dE;~iv~red or
the date on which the delivery was ref~sed.
13) Governing L.a:". This Note sha.ll be constn.:.ed in
ac~ordance with and be governed by the laws of the State of
California.
14) Severability. If any provision of this Note shall
be invalid~ illegal or unenforceable, the validity, l~gality and
enforceability of the rema.ining p:r-ovisions hereof shall not in any
way be affected or impaired the~eby.
~S) Time. Time is of the essence of this Note.
16) Nq Waiver by the Holder. No waiver of any breach,
default or failure .of condition under t.he te.t1nS of the Note shall
be implied from any fai.lure of Ute Holder to take, or any delay by
the Holder in taking, action -with respect to such breach, default
or failure or from any previoue waiver of any similar or unrelated
breach, default or failure; and a waiver of any term of the Not.e
muse be made in ~~iting and shall be l~ited to the express written
terms of such waiver.
:1."7) A$s-ignment. All
pereonal to the Borrower and are
absent prior written cons.e~~. b}~
assisnmenc t.he.I."eof shall be void.
rights granted hereunder are
not assignable or transferable
the Holder, and the attempted
~S) ~artnership. The ter.ms of this Note shall in DO
way be construed to create a partner8hip~ j oint venture 0:-any
other joint relationship .ar agency agreement between the Holder and
the Borrower. Rather. the relat.ionship of the Holder and the
Borrower evidenced by this Note shall be deemed to be OLe of
creditor and debtor l respectively.
19) Ngt"" Bir.d5ng. The ter!It:5. covena.nts and conditions
of this Note shall apply to, and shall bind, the hei~5. successors,
executors, administrators and assigns ot both the Holder and the
Barrowar.
20) Amendments. This Note may not be modified or
amended except by an instrument i~ vriting which expresses such
5
.00 Mi 7
intention of the parties sought to be bound thEreby. and such
\IIriting shall be fi:!'!l"1.1y attached to this Note and made a pa::-t
bereof.
IN WIT!Io'"ESS WHEREOF. this Note has been duly execu~ed at
Palo .Alto~ California. The effective da::.e cf this Note i~
199
Holder:
C~TY OF l'ALO ALTO
By, uMa=y=o=r-----
APPROVRD AS TO FOR.",
Senior Asst. City Attorney
APPROVED:
City Manager
Director of Finance
Director of Planning and
Community Environment
Borro .... cr:
PAB'C APAR~S~ INC.
6
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.'-,-
STATE OF CALIFORNIA
SS.
com..'TY OF SANTA CLARA
On ~ 1993. before me, ~ a
notary public in and tor said County. personally appeared JOSEPH F.
MARTIGNETTI. JR .• personally krlown to me (or proved to me orr the
basis of satisfactory evidence) to be the pe::son whose name is
subsc~ibed to the within inst~~ent and acknowledged to me th3t ~e
executed the same in his authorized capacit}t, and that bj' his
signature on th.e instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WTTtffiSS my hand and official seal.
Notary Public in and for Bnid
County and State
7
,
:A.equisit;.iOP.
p,..enaDi1..itatiCn
t Fina.nCiD.t,:;.
?l"e._dSV"elOJ?D",en '~iscel'l_?rJ.eO\l:.'i
£SCiO';ll', 'fe.e~~ , 'r ?U ting con§tXuction
Qpe"Cat ing I)~fl-C).'"
geve1ope~ Fee
yurPisbing5, con~ingency
TOT.Al> cosT
$'l.9 0 1"J,DC'D
f,BSrO OG
19.000
,,0,000
--»~Q
~;3, eS O , 000
,'-j-'.-
EXHISIT F
INSURANCE REQUIREMENTS
1. COURSE OF CONSTRUCT!ON !nst:rar.ce, to .::over t.he Proj e::t} s
rehabilitation and construction. with cove::-age lirr.its in the tot2.1
amount of all of the constructic::1 contracts covering the project in
connecticn with this Agree.'nent. Such coverage shall rel'l'..;in H'l
effect until Project Ccmpletion~ as defined under the Agre8~ent.
2. FIRE AND EXTE1IDED COVERAGE Insurance, to cover not less tha~
One Hundred Percent (100%) of the replacement cost of all insurable
improvements withi!! or upon the Property. Such IJolicies sr.all
include water dar!".age: a.,d debris cleanup prc,lvisicms. Additional Fire
and Exr-.ended Coverage !r.surance shall be obtC"l.ined upon Proj eat
Completion~ to cover any increased yalue in the improvements within
or upon t.he Property as a r€sult of its rehabilit.ation.
3.
4.
5.
JUNIKUM LIMITS OF LIABILI~
WORKERS'
COMPE.Jo.JSATION Statutory
COMPREHENSIY~ Bodily Inju~~
AUTOMOBILE
LIABILITY. Property Da.'11age
including o~~ed.
hired. and nono.~ed
automobiles
COMMERCIAL
GENERAL
LIABILITY,
Bodily Injury
including ProperLY Darr.age
products and
completed operations,
broad form contractual,
and personal injury.
$5,000.000 ea. person
$5,000,000 ea. occurrence
$5,000,000 ea. occurrence
$5.000,000 ea. person
$5.000,000 ea. occurrence
$5.000,000 aggregate
$5,000,000 ea. occurrence
Each insurance policy required by this Agreement shall contain
the following clauses:
1. -This insurance shall not be cancelled, l.imited in scope
of coverage or nonrenewed until after thirty (30) days
written notice has been given to the: CITY OF PJU.O
ALTO/Planning and Community Environment Departrnent, P. O.
Box 10250, Palo Alto~ CA 94303.-
:2. 'All rights of subrog-ation are hereby waived against the
CITY OF PALO ALTO and the members of the City Council and
1
elective or appointive ,")f!ic~rs or employees, ""her:. acting
withi~ the scope of their ~mploJ~ent or appoint~ent. ~
3. ~The CITY OF ~~O ALTO is n~~ed as a loss payee on t~e
property ins~ranc~ policy described above+-
4. "The CITY OF PALO ALTO is added as an addit ional ins'J.!:"ed
as respects operations af the name1 insured at or from
the Property."
5. -It is: agreed that any insurance :nairitained by tbe-CITY
OF PALO ALTO ... il] apply in excess of, and not contributo;
to, insuran~~ provided by this policy+~
All insurance coverage required shall be provid-c?d through
carriers with a BEST rating of A: VII or higber that are admitted to
do business in the State of California. The certificate(s} of
insurance evid~ncing such coverage shall be completed and executed
by an au'C.horized representative of thE campany providing insurance;
and shall be filed with and approved by the City.
2
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Dec.ember 1. 1993
June Fleming
City Manager
City of Paio Alro
p,a,Box 10250
Palo Alto, CA 94303
Re: Barker Hmel
Dear June:
Palo Alto Housing Corporation
.~
.~r·
.~~{" . ',;:oc "~e,er",,'
.:.;-'1 ..
RECEIVED
DEC -31993
The Palo Alto City Council has taJ.:en severa] aclior.5 to SLIPPOr1 rl1e Palo Aito H~)u:s.ing
Corporation (PAHC) in ;l<;. efforts to purchase and rehabill'tatl! the Barker Hotel for use
as continued SRO hou ... ing At presc.:1t. PAHC has. been proceeding with pre
developmenr activities pursuant to a C0ntract wi!h [he City, l,I,:hich the emmei1 disc'ussed
in some detiiil in April 199), and m;a.t[ers afi? wen in ham ...
PAHC now intends to complete the project and offLcia:iy requests tnal the matter of
final Cit)' funding be placed. -, [he Cit:' Council ager.da of Decembt::r 13, 1993 for
approvai so that necessa~, 3grcements allocating certain HOME, CDBG, and Hou!.ing
Reserve monies to the project can be executed b,! year' 5 end.
After careful inspections of the Barker Hotel, PAHC seeks additional funding fOf
rehabilitation.so thai a complete seismic. cosmetic and safety renovation can be
accomplishee : the beginning of our ownership. Our analy.sis, based or. ex.tensive but
still ne:essariJy tentative b'put from bllilding trades professio:1als, indicates that
rehabilitation will COSI S685,(X)(), rather than $400.000, the estimate given us earlier.
Fede:-.J requiiemencs for ,eil)(.".ation and the loss of oper.ating revenue during renov<i.tion
fUither increase the costs.
PAHC requests a total of $2,07 0,000 from the following City funding sources: HOME:
I million; CDBG ('92-'93): SI75,500; CDBG ('93-'94): S494,500; Housing Reserves:
5400,000. This wiU be combined with a private mortgage of S84{),OOQ a..,d an
Affordable Housing Program/Federat Home Loan Bank grv.t of $140,000. Furt.~er
details are outlined in the accompanying proforma.
Sincerely,
Marlene H. Prendergast
Executi ..... e Direclor
540 Cowper Street. Suite G, Palo Alto, California 94301. (4i5) 32i,9709
ATIACHMENT 3
-. 5=
"-'-""'-"""
U'lIU PALO ALTO HOUSING CORPORATION
BARkER HOTEL ACQUISITION FINANCIAL ANALYSIS
A9$UMf'T1OH8 ._'.'IW. .... MPn~.----------~
V~CANcY AATE:· n£SIOENTIAL llJ'lb
touHC£t oP CAPIT At
1115,iD'O
'o/I,(":ANC'yRATE·CtJ., .. n:~CIAl ~ ... ~c].1982"1Ir.} AlLOCATION
CDBQ-I99lflll9. '''V4.l!iOO AfaUNnAt. AES£AVE AS 'l\,lX EfF OHl:J5-5 tN;.OM( 7'11.
HWSINO RE8f;~ Fl..tIOS ".00,000 (1")My,EACW. fESERVEA,S, {;4' IiFF. OHOSS K:0Mf.;: T"o ..,...""'" 1',000,000
o/¥,HT·"", S£COHD ("£fO or TFU~T 5uo,noo PAOf>l,ATY lAX OROWlI1 AA IE 'VA ~I SELLE'R f"AI'Ef! to a>FAATm EXPfNs[SGROWfH AATI' f 'I'll Of'~
Tor"l800"C&: Of' CAPITAL $2.110,'00 A£SIDENTIAL lNCot.IF. QADWlH f'IA ll'j VA ""-,
~~~~~~IY~ _____________ . ~:~I
."
~~s Of CAP,fAl
Puncl-Wif PRICE $1.900,000 r=.TlAC 'NCOO' YE,. , (>"",UlEO, -------Aj'u.)Oi),
I\Eti.I\BIlIT II nON 'GI5.000
&14 ~8<l1 ItmIRlE'CTC08T (A.ACH,'[NGtso/lJMEC~I) 1101 n'lO COMMERCIAL mCOME YEAR I (I'IT,t.I)ILIZED)
OY1-ER DIRECT C09TS(Ase~STO!3Il .. NKI 1$11,uuo .-----~-----' ~KINQ .. APPRAISAL COST9 SJ:t.ooo
( .. n:" REAI;AVE OLIA~ RENOVAT~ "',000 ~oii.'.'IAL OP'.'TI.n:""~'''.~R'----:::'=~==~=-~l Af.I.OCATIOf,COST8. "16.1)00 ON·SITI'MANA(';E~ SALI\AYlIII':NEFlrS :Ou
TIn.E,t;SCROW folO,lInn UTILITIEs :';0
lEOAl. PERMITS I nee &:i/o.aDO MA1Nl(,NANCEiFlI;P .... IRSlJAN ~u
FUANru~ SHlooO INSURAM::E ~'J I
p.6J1C. ovtflHEAOoFE£ StiO,OQII OI'FtGE E~fNI'£ !On
CGllWU£NCY .... "'" l P",,,,,"," "'J( """" I TOTI,L USES Of' CAPrrAL U,OlO,OjlO f'R()f1-:.1\"V """-IIi4Of.MENTs(·fwlI'ES ij;,{J
~~EOfOAPiJACHASE .~OOO PROfES!>I')t.I",-FEf:S(l~I~L. ETC) ~n
-~"" ,~;.c! Mo\NA~EMENf F_~L __ ~ ______ .. ~ __ ,_ .. __ ~~.~~;~ MOAlQAOE LWOEAWRmNQ f:A5T NATION!,~ fihR'ST t..«)RTGAcit: AK.'ONT &1140.0(10
. ',-.....~
c •• \.
~!1_oe.rriAi-o;.-e~iTiN«fr:kP[~~Sj~~AJft-=-_~_=-~'=--=-~=------=----FlRdT MOR~ CONsTANT
FIAST MOATwUlE All. TE "'" ON-SnE MANAGER SAlA.~"(.lIE"'EFns ~16_000
,:'j'
FIRST UORTONlf TERM IN lAS. " UTILITIES S\I,(,C'O
G"'M""",S{r.amDEro~ mJST $140.lIOO .... AINfENI\NCEIR .. PA..R$I ..... '" SR OLu . -.. '.
FEES """ N5UR.YlCE i;4.IlO(l
LOAN TO V.-L1J6 50 .. ·1""-OfTk:1; E)(I>t:;NSE '1,000
~,-lolR C;,p PRCf'f.:RTY TAl( '0 ... """ , "'" PAC:IP£oHr.' 'MNi\Uel.'f'.NT ~RVIC(:S 112.600
AMOflTllA TDH cr. LOM IN '(ElIAS " PROfES.·j,OWW .. FlOES (LEGAl, ETC ) S2.(J(")n
MIOC 'I:~~~ ! O£8T Bf::R\'ICE CO\fEAA.GE:'COfMEAC~l , " .ljSt'.F."r PNI"I.(\fUENT flOf:
~-"l SERVICE 9O\lEMQ£'flE~IOENflAl 1111
-~----------~~.".
_____ .---.1
~
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t '2/f/U
BARKER HOTEL
PALO AL TO HOUSING CORPORA TlON
ACQUISITION FINANCIAl.. ANALYSIS
ASamwrJONS FO" RENOVATION COSTS
1\'tOO'Itf.C1 cO!n'
... flUft1&~
f"E&f frtlilPOO"OOt(
pHAflt 1 .. ~AEtBf::9'fO~
TOTAl
OlHlROmlit:l en.,.
AWs100 REIIIOVN.
fAH(OE~
101M.
h$J)l)Q
\t,(lQQ
'~.oQo
'WI.t¥JfJ
111),000
\f,QI:)Q
111.000
""'Il .. oIlDP1tA'Ul cost'.
\.OH!fE£&AHOCOSlS
.-.fVFWSA.L!'t£
10rAt
Al:!lnc""ON CO&18
"""" ...... ArS'IICl£N'IA.\.
~LOCAlO>l(;ONSVI_tf\N.T
TOTAl.
DEFICIT nUlE.VIi; PIJ"INO H"HOVATII)H
W!AA TWOiX1>fNBf S04JJl»l Rt'Nl)VATrON
TOTAL
-~--
"UU)OO
.'(,.000
"3~,OOO
nO,QQO
U!>.ffim
,w.uua
,,60QI)
Sf'J <l00
I'll 000 ''iI' ,.-.; ,
a: <
· .. :~
000
0 ••
~<
~ ." :: :i •
I
I
· • •
· .~
::
· · · · ·
1;<
1 a/HI.
BARKER HOTEL
.. """" RENTAlIOOCWIE .. '"
TOTAl QIIOU WCOME
I."""",,,
PALO AL TO HOUSING CORPORA TlON
YEAR 10 OPERATING PRO FORMA
l.snroAfIfDFN. nAt/
'1'·1".l)
'ItJe,SI0
'"
1138,611)
$13,881
C:-"""l
Ittl.3ln ••
t;91,31()
':",919
[TOr~J
5:133,9i'0 ••
U31,OI'O
$18,1110
~~iiOi$~I~COIIIE i12~.J.lIn -----...~'---.-::tu,33.1
' ........
(IN·!Illli w,-.NAGeH '!lALAlmDSfC'l'lls
UTllITI(S
~INTEkANCEJnEPAIR~J~N
NAURAI«1':
OI'FICF-E)(fI(NIiF.
P~OPE'RT'(i1lJ(
PIn"{RlY~MENTSERvo;S
PfI;Of£OOIONAl F(1i1'J (I.f.~, Etc I
A~T~"'T~(F.:
"""
truu~---------
AESFfII,Il;8
~EfDiiERA~.2!!£"~ (l,QIsl
NOTES
UO,I"a
111,1A')
'10,A l~
't~ ... j
11,305
s.
116,310
&2,81(.0
,13,Od
$r,",'
'" " 50
" ..
$S.IHIi
" " '8,6i/~
50
$20.818
1J1l.1U
'HU3to!
'~,"19 't :tOIli
'1i.IitT"
'I.LHu
t".blt)
.. la.f.'l
$81i1'
~!lJOl _i12,4'1-=-~~£,i~
SfI,ODS $6,lIIll S 1">,2 LA
S)2-->-l,u ___ S7~,21~ __ $101.4~' t
I AU.cot.IM[RClIIlLE..ASI::SA~E ~ (TENANTPAV8% TNlW.IN8URANC~, HC.)
2', RESIDENTIAL. P~Of'EHlY T~xHI WLlBE EXfMPT DI.F-TO NON PJ«Jf1T STATUS
--'"-,
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,:.;,'"":.
',: '.:.t "~~.: .
. ,.~}~~~