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HomeMy WebLinkAbout0125.095" -' ~ . ~,.". -'". --', -~,' ,-, /, .' .-­. r ~~ __ ;. r..... . . 'k TO: FROM: .' " . -.-.: City of Palo Alto City Manager's Summary Report HONORABLE CITY COIJNCIL CITY l\tA."IAGER 'DEP ARTMF,NT: Plallll.ial and Community EBvironme.t AGE!IIDA DATE: February 6. 1995 CMR:l1S:9S 12 SUBJECT: Approval or .. Agreemeaf 10 Provide FBDds to th. A .. stnd.ro Park Apart .... at. Corporation for AcquisItion of A .... stradero Park Apamuenls REOVESl' This report bwards ~ ~ • requesllo approve an agreement Mth the Arastradero Park Apartments Corporation (APAC) and the Palo AlIo Housing Co<poration (FAile), which provides funds to assist w;th the acquisition by AP AC of the li6-uni( low and moderate in<:otne renlal hoosing project at 574 AnIsIradero Road, Palo Mo. in order to preserve the ~ect as af!Ordabl. low and moderate income rental housing, The report also addresses the cummI status offederal funding lOr the project, which toold Affect the viability ofPAllC's plan 10 preserve the apartments as low and moderate income housing, RECQMMEl'!'DA nON~ Sttff re.."O!l1IIleDds !bat the Counc11: I. Approve the attached fund"mg agreement (Mth its attached IOnn cf promissory note). M!h the Arastradero Park HouSmg COIJlOfatloo and the p.uo Aha Housing Co<poratioo, 10 provide. loan oCup 10 $325.000 of 1994-95 Community DeveJopment Block GTant funds 10 APAC, for acquisition and financing e",'P"nses related to .4J>.&.C's proposed purchase of Arastradero Park Apartments. 2, Auth«ize the Mayor 10 execute Ibe egreement and the promissory Dote in substantially sirru1ar form. and any Olher &>cuments required to close the Iransaction lOr the acquisition of lbe property_ 4. "-, ,. -:-.-~ / 3. Direct the City Manager, or ber designee, to administer the provisions of the agreement and authorize the City Manager 10 make modifications 10 the agreement as may be requited by HIJD. POLICY IMPLICATIONS Supporting Ille preservation of existing sul>si<fl2ed rental boosing in general, and the preservation of Arastradero PaIl< in particular, is in accordance wilh City polley as stated in Program 26 of fI1e City's Housing Element It is also ;oontified as a priority in the City's adopted Comprehensive Housing AflOrdabiJity Strategy (CHAS). EXECUTIVE SUMMARY The attached City funding agreement is being brought 10 Council 10< action at this time, because the commitn •• nt of City funds is an impona!!! requirement to obtain HUD'. approval of the financing, rental subsiCies and grant funds needed 10 acquire and preserve the project as low income housing. A summary of the current project budget and sourc.,. of funding is attached 10 this report. The agreement provKles uj> to a maximum of 5325,000 in federal Community Development Bloc" G..-ant (COBG) funds for acquisition and financing costs. The funds are provided in the fum! of. HUD approved residual recelpll! loan at 3 percent simple interest. If there is surplus cash flow from project operations, !hen payments would be made on the City's loan. Any remaining principal and interest would be due and payable at the end of the fifty year HLID regulato<y agreement on the project Most of the Cry's funding will be used for the HUD required purchaser's 5 percent equity contribution, which is estimated at 5302,990. The remainder will be used, if netessaiy. 10< financing and lransa!:tion costs not covered by other sources. In February, the Clinton Adminislralioo is expected 10 introduce legislation as part of the federal 1996 fiscal year l>udget, which would .... ·erely curtail the Low Inccme Housing Preservation and Resident Homeownership Act (LlIiPRHA, COO1IIl<Y.lIy known as Title Vl), especially in areas with high real estate values h1<e Palo Alto. The administration is proposing that the cbanges be retroactive 10 projects, such as Arastradero Pork, which are already in the Title Vl processing pipeline. However. as the legislation is DOW written, any Title V1 project "'ith • HUD approved Plan of Action will be grandfatllered and allowed 10 proceed under the existing rules. PAHC. Plan of Action KIf Ar.,,1radero PaIl< was just approved I>y HlID on January 21. 1995. However, timing is still cri6<:a1 for the preservation of Arastradero Park as low income housing, because the project does not qualitY for preservatioo .SSL'iIance under the proposed legislation. PAHC must obtain a firm commitment on the financing package and close escrow 10 have the project completely protected. om.,\2U5 ~JoC1 -' jf . . -)J' . -'t .~->-~-. -' .. ,.-, If Arastradero Park is DO! preserved, the only options for the Cunenl' ownen "ill be 10 rootlnue 10 own and cpe<1Ite !he projea under lb. original Section 236 HUD regulatory rules, Of \0 prepay Ibeir existing loan and coover! !he projea 10 madel rate rental bousing. CtuTently, the legislation does DO! address exactly bow projects would transition \0 mari.e( rate, It states cnly that eligible very low and low income tenants would be provided with Section 'vouchers, In addition. Illen: is no mention in !he proposed legislation of how quickly the rents for "moderate" incom. families (DJOSl of wbcm, in A:astradero Park, have incomes just above !he Section , Iimlts) would be adjusted 10 mari.eI Ievelll. The details of the situation are chsnging daily and cannot be predicted in 1his volatile poIjtkaI climate. fiSCAL IMPACT On May 16, 1994, !he City Council IIpPrO'ed Iimdlng for the 1994-1995 COOO program, including $345,000 tCr expe!'<e5 related 10 the acquisitioo and rehabilitation of the Aros!radero Part. Apartments. On June 20, 1994, $20,000 was obligated in an egreemenl with P AHC lOr pre-ac<jlrlsition costs. Approval of lhis agreement will fully obligate the remaining allocation for this project. ENVIRONMENTAL ASSESSMENT Approval of the ilcquisition fimcfmg agrrement is categorically exempt under Section 15326 of the Cal00mia Envlrorunental Quality Act (CEQA). The provisioo of CDBG funds for the project is exempt under !he Natioo.al Environmental PoIic)' Act (NEPA) regulatioru, at 24 CFR Part ~.35 (4). PREPARED BY: Catherine Siegel. Housing Coord"malor DEPARTMENT htAD REVlEW:~4'llK-£~4 TIl R. SCHREIBER Director of Pla!lIling and Comrn· ovironment CITY MANAGER APPROVAL: ~~~g~;;;~ ....,,,·u""G ..... 1.17 . <. -. ...... I!t" .... -:, ,f .,-~. -.~,-.­ ... ; City Manager's Report (In-Depth) . SUBJECT: ApproVal of an A&!eement to Provide Fllnds :0 the Arastradero ParIi: Apartments Corpocaticn tor Acqulsition or Arastradero J'ark Apartments RF£QMMENJ)ATIONS Staff recommends that Ihe CoonciI: I. Approve the attached funding .greemelll (with its attached furm of promlsSO<)' ooIe), with the Arastradero Park Housing C&poration and the Palo Alto Housing Corporation. 10 provide • loan of up 10 $325,000 of 1994--95 Community Development Block Gran! funds 10 APAC. for acquisition and financing e~ reWed 10 APAC's prarosOO purchase of Arastradero Park Apartments. 2. Authorize Ihe Mayor 10 execute the agreement and the prornisSO<)' note in subsianlially similar form. and any other Oocwnenls Iequired 10 close Ihe transaction for the acquisition of the property. 3. Dire<:\: the City ManageI 10 administer !he provisions of the agteemenl and authorlze the City Manager 10 make mocfUlCaOOns 10 the agreement as may be required by HUD. BACKGROUND The Palo Alto Housing Corporation (P ARC) is sponsorl.ng Ihe pUIcbase of the 66 unit ArastradeIC> Park ApartmenlS, under the provisions of Title VI of the federal Low Income Housing Preservation and Resident Homeownership Act (UHl'RHA). In occordance with HUD regulations. PARe bas formed • new. tax~xempt. single asset oonprofil entity. with tenanI participatloo. called the Arastradero Park Apartments Corporation {AP AC), 10 own and operate the project. APAC entered into. purcbase agreement for the property on May I. 1994. Escrow is scheduled 10 close, at the latest. by May I, 1995. Previous Council actions 00 Ibis project lIe: • May 16. 1994: $345.O:X> in FY 94-95 CDBG PJOOS w.re allocated for acquisition . and related costs as pan of Ihe annual CDBG budget; CMJt,12H5 he< C.17 ,/ . • June 20,1994: $20,000 of the COBG funds were placed under COIlUacl ... ith PAMe tor acquisiti<>n ~xpenses DQ( reimbursable under PARC's HtiD cecllllIcal assistance grant; • November 28, 1994: Cooperative Agreemenl with the San>.2 Clara County Housing AlIlhority was approved 10 perm;t the Housing Au1JJo<ily 10 is3ue tu-exempl revenue bonds 10 f'.nan.oe the major portion of the project costs. On August 30, 1994, PA...'l.C subrilltted its PIan of Action 10 R1.1D, as required by Title VI. Ia the Plall, P AMC requested a finn .:onL'llitnieOl 10 provide FHA mortgage in..<ura~ 00 the madmum loan permitted under the Title VI regulations, a Section 8 r"lIi subsidy commitmeDl for 51 units, and a HUD gran! of about $600,000 to cover costs in excess of the rille VI program'. cost limits. These funds, together with about $303,000 in City CDBG fUnds, were coosidered sufficient, at that time, 10 cover the IO!aI expected costs of $8.36 million. POIJCY IMPlJCATIONS Supporting the preservation of existing subsidized rental hoosinf, in general. and the preservation of Arastradero Park, in particular, is in accordance willl City policy as staled in i'rogram 26 of the City's Housing ElemenL II is also identified as a priority in the City's adop!cd Comprehensive Housing Affordability Strategy (elIAS}. DISCUSSION The agreement provIde. up 10 a maximum of $325.000 in federal Community Development Block Gran! (CDBG) funds foe acquisition and fi.'WICing costs. The proposed funding agreement is ronsistent with pmious Council actions 10 provide CDBG funds for the preservation of !he Arastradero Pari project. Since Council's last action on this project in November, then: have been a number 0( deve\QpmeIll.<, outlined below, which affect PAMC's plan to preserve the apartments as low and lIlOderlite incorn< bousing. The ley developments are: I. A Qinlon Administration proposal for legislation which would severely curtail the rltle VI program and eliminate fund"mg for the preservation of projects like Araslr.lder<> Park. which require special grants and higher rent subskfJeS. It appears !hat Arastradero Park will no! be subject 10 those changes because it has reached the stage in processing necessary 10 be ' grandfatbered"; and 2. The recognition, by HUD staff. !hat HUD's initial estimate of rehabilitation costs of $14,038 was lOIaIJy insufficient. HUD's cwn inspector has now proposed that $950,000 in work is required, which is nearly double the $51&,000 figure proposed last August by PAMC', inspeclDr. The primary issue is whether the deteriooUed .,,:' ; . -------. . . slAirs l!Id decb should be repaired. or <:OOIpletely rebuilt, and whether wood, or coocrete and steel, should be used for the new stairs. PAHC is DOW worling willl their architect, contractors and engineers k> amv., at an a<:curate fig'~re; and 3. The determination by PARC's financial consultant (based OIl • final miew ol all . costs, including an adjustment for inlerest rate increases) lhat a !O!al HUD gran! ol about $1.88 million is needed 10 make MAC's purcbase feasible. While PAHC is optimistic thai this gran! will be forthcoming, it is impo<sible 10 predict wbat HUD will fina1Jy approve; and 4. The discovery by HUD otaff 0( I technical error in HUD's interpretation ol the Title VI regul.alloos. so wt Section 8 sub5idies will be available 10 fewer residents than expected when the plan was submitted last August. This then resulLo; in the need for HUD 10 authorize hJgher Secti.-"ll 8 subsidies on the rem 2 ining qualified unjLo;. There are several po<Sible actions HUD could take at this point. BUD could app."'Ove ol PARC's revised plan and authorize the $1.88 million gran! re<jUest However, this is a IIlIlCh higher gran! than Ihose previously.pproved; and the current sentiment Iowards the Title VI program in Washington is not CavORble. Alternatively, it is possible thai HUD will determine lhatless extensive rehabilitation is sufficient, reduce other items in the propo<ed budget, and approve a smaller grant. If. solution is 001 arri...J at quicIdy, the project could be become subject 10 the new rules in the proposerllegislation and thus becoiI1e ineligible for Title \1 assistance. In that case, the curren! owner woold be able 10 prepay the origil:al mortgage, terminate the affordabilily restriclloos, and convert the project 10 market rate housing. • ALTERNATIVES The agr<emen! COO!alns language wbleh makes the prov'.sion 0( the City's funds cont:ingen! upon issuance by HUD 0( • firm commitment foe an accepIable level of funding I£) make the project financiaIly feasible. CitY funds will be disbursed only after a satisfactor)' firm COIIlII'JlmelK is Issued. If HUD refuses 10 fully fund the project, PAHC could request additiooal COBG funds from the City. There are presently about $278,000 in unaIlocated, IT 94-95 CDBG buusing funds lhat could be UI11ized foe Arastradem Park, and possibly some IT 95-96 COBG funds cooId a1.., be made available. There are no O(ber Ci!y funds available for a project vf this type. AJJy additional City funding, beyond the curren! $345,000 2IJocation. would require Council approval 0( a budge! amendment ordinance and an amendmenl 10 Ihis agreement. Nev<TIheless. preservation of the project is dependan! upon. substantia! grant from HUD, sinre DO CitY funds on the magnitude 0( needed $1.88 million are available. -.---. '" fJSCAL IMPACT On Mo.y 16. 1994.1lle City Cout>;:il approved funding fur the 1994-1995 CDBG progr.un, inclodlng $345,000 _ fur expenses related 10 the acquisition and rebabilitation ol the -Arasttadero Pad: Aparonell!S. 00 June 20, 1994, $20,000 was OOIig.ted in an agreement with PAHC fur pre-acquisition costs. Approval 0( this agreement will fully obligate the remaining aDocation fur Ibis project. Approval 0( the 3CQUisitioo funding agreement is categoricaIiy exempt under Secfioo 15326 0( !he Califurnia Environmental Quality Act (CEQA)_ The provision 0( CDBG funds fur the projec( is ex..-mpt under !he NaOOna! Emiroomelllal PorlC}' Act (NEP A) regulafioos at 24 CFR. Part 58.35 (4). STEPS FOLLOWING APPROVAL ·Staff will caotinue 10 work ~..ely with P AHC, their financial consultant, and HVD 10 preserve Arastradero Park Apartments :as affordable low and moderate income bousing. Staff ",,11 keep Council informed 0( any significan1 devel<lpmenls. AITACHMENTS I. Proposed Sources and Uses olFUllds ~. Agreement For P.mding 0( Acquisition 0( Aras!radero Park Apartments cc: Palo A.'to Housing CcIporafioo Arastradero Pad: Apartments Corporation wf copies 10 tenant Board members California Hoo:sing Partnership Co<poration CDBG Citizen Advisory Committee '.'.: ., . ~-.. Attachment 1 ARASTRADERO PARK APARTMENTS PROPOSED SOURCES AND USES OF FUNDS AS OF JANUARY, 1995 Soun:es of Funds: AssumpIion of Existing BUD Section 236 l<>an New Sec!ioo 241 (I) Loan HUD Teclmical Assistance Grant BUD Cost.Limil Grant City COSO Loan TOTAL sotJRCES OF FUNDS Uses 0{ 1'uMs: Purcb3se Price Rehal>ilitalion • Hard Costs Rebabililaoon • Soft ('.osts '" Contingency Replacement Reserv. ACCOUDIs SubIo!aJ Trmsac60n Costs BoOO Issuance Costs FlllId for Operallng Deficits During Rent Pha."" In Sub!ocaI 'fOTAL USES OF FUNDS S 969,203 5,946,300 123,000 1,883,495 302,990 9,224.988 1.(J29.W;> 950,000 199.500 160.000 1,309,500 331,250 208,121 341,111 886,488 $9,224,988 RECORDING RSQCESTED B't' ~ WIlEN RECORDE:D MAl L TO: City of Palo Alto Office of City Attorney 250 BamiltOQ Avenue Palo Alto, CA 9130~ Recorded wi thou t charge_ Govt_ Code sections El03 an<'! 27383 A'TTACRMENT 2 SPACE ABOVE TIlLS LINE FOR RECORDER'S USE AGUlIImln' !!1iTwBmr THE CITY 01' PALO A.LTO, Till! AJASTRADUO PAU lU'll'DCEIITS CORPORATION, 10ND TEE PALO ALTO EOtrSDfG CORPORATZOlil TO Ftr.m '1'liE ACWISITIOlil 01> AlIASTRAIlnO PAn APAJ!'l'l!Ell'rS A'l' SH AlIASTRAIlERO ROAD, PALO ALTO Tins AGREEMENT ''"Agreement-. is-made and entered into on ~ ___ ~_~~' 1995, by and among the CITY OF P~.LO ALTO. a chartered city organized and existing under the consti~ut~on and 13.ws of __ the State of california (-City·), the A.RASTAADBRO PARX APAATMENTS CORPORATION .. a corporation duly organized and existi.ng under the Nonprofit Corporation Law -of the State of California ,'"A.PAC"'), and t.be PALO ALTO ROUSING CORPOIU.TION. a corporation duly organized and existIng unGer the Nonprofit CcrporatiOIl Law o,t the State of California ,-PARe-j. RECITALS: WEERE...l\S, on May 16 .. 1334,. the Cit.y Coun<:il approved the funding .of the fiscal year 1994-95 Community Development Block Grant (·~1 program, including $:345,,000 in funding for certain expenses to be incurred in cocnection with the pre-devel~nt and acquisition of an existing 66-unit multi-family low-and moderate­ in<:ome federally subsl.~i~ed rental hO'..lsi:og develop."'!\E:Ilt commooly known as t.he Arastradero Park Apal:tments located at 574 A=astradez'o Road ... Palo Alto t·Proj~t"). tAPN 137-25-1.10). the legal description of which is set forth in Exhibit "A"; am:! WHEREAS.,. on June 2'0..-1994, under-a contract vith P,..FiC ... the City-granted $20 t 0 100 io. CDBG funds to PARe for costs not reimburseahle u,nder any federal -grant relating to the ac-quisition of the Project. and WHEREAS... as a condition preced.ent to the securing of federal financing assistan~e and subsidies, PARe created and is sponsoring APAC. a community-based nonprofit organization, for the sole pur;pcse of acquiring and rehabilitating the Project vith both fed~ra.l and City funds .. and APAC has entered into a .contr:-act of purchase and sale, dated May 1, 1994$ con~erniog the Project with Ara.spark Associates CSeller"); and 1 -.. ~ ... ' .c-.'---, trdBREAS 6 APAC 6 the equitable owner of the Project 6 has appHed to the Federal Housing lIdministration ot the United Statu Depaxtment o! Housing and Urban Development ("H1JO"/ tvr primary financing assistance authorized under Title VI of the ~ Income Housing l'reservatioo Residen.t !kxneownership Act of 1990 ("LIHP;U!A"I. as amended from Hme loo time. 12 U.S.C. 4101 n §.N •• whicll assistance includes the est~ted amounts more fully described in Exhibit "B": an assumption of the Seller's existing llUD Section 236 mort-aage: a Deiif' HUO Section 241 (f) FHA-insured mortgage; a litlD t:e.chltical assistance grant; and a h'1JD cost limit gr.a.nt (<;ollectively. "Title Yl funding"), and WHEREAS,. _ APAC has applied to the C"it.y for secondary financing assistance "authorized under Title I Qf che Rousing aDd carmunity Develcp:r.en.t Act of 1914" as amended frem time to time .. 42 U.S.C. 9901 tt ~ .• with the funding of the buyer"s equity in crd"r to C.anply with the federal financing rules and regulati-oas eCOBG fund i119" j. and WHEREAS.. the a.cquisition of the Project by APAC will prOl.t1Ot.e thg retent.ion of affo:rdable very lOllo·~, low-.. and moderate~ income household rental housing in Palo ~to, consistent with the purposes of the Cit:y~s CDBG progra .. n aDd the affordable housing goals .. descrl.bed in Program No. 26 of tbe g·-=ru.sing Element of the City"s Canprehensive Plan and establisbed as a priority in the Cit~e Comprehensive Housing ~fordability Strategy; and WHEREAS .. the City seeks to fulfill its commitmen,t to affordable housing in Palo Alto by providing CDBG funds to APAC under the terD"aB Cl!ld conditions Of this Agreemen·t; NOW, TKEREFORB... in consideration of the following covenants,_-agreements 6 terms and cooditioDS. the parties agree: ARTiCL!! 1 • Dl!K OP AGP.EEMENT l~l. Term This AgreemeLt sball commen~e ~pon its exec~tion by the parties 6 and shall continue ~ntil the close of the initial escrow affect.ing t.he cransfer 'Of title in tbe project to APAC~ The parties cootemplate that initial escrow will close on or before ·June 3G~ 19~5~ and in any event ~ later than June 30~ 1996~ The City reserves the right to unilaterally ter.minate this Agre~ent~ if APAC is unable to complete the purchase of the Project and close ~he initial es~rcw. Upon the close of the initial escrvw 1 the term shall be automatically extended for a term of fifty (SOl years coincident -with t.he t.erm of the agreement between APAC and the Secretal.Y of HOD concerning thE Title VI funding of the Proj eet ("Regulatory Agreernent"~ ~ unt.il t.he Regulatory Agreement expires cr is earlier terminated. ~I! 2 • ..cAN OF FUNDS 2 .1. p.mqunt and Purpose 2 .' ,-' -. 2.1.1 The City agrees to ~e a loan to APAC at the offics a~sa of APAC in an a~9re~ate principal a~nt at anyone time QUt;Standlng up to but not exceeding three hundred and twenty five t.bousand dcllars ($325,0,00). Any f,moe disbUrsed to APAC hereunder shall be deposited into tho initial escrow by MAC to pay for five percent (5\) o-f the Transfer Preservation Eq\.1ty (a.M ~~r necessary ~ransac~lon costs~~ as such term is de!ine6 in the Regulatory Agreement or by BUD rules and regulations .. which is ~equired to be ~epo9it~~ by APAC as buyer under the contract of purchase and sale with Seller. 2.1.2 As cooditlops precedent to the making o.f a loan by the City under this Agreement, ~2AC shall obtain the approval of Hl~ with respect to the foll~ing: A. Plan of Actlon~ as s;J-ch term is d~fined in the R~latory Agreement or BUD rules and r~~lations. respecting APA~s obligations to acqulre~ re­ habilitate .. aDd ~Anage t~e Project: and 8. Transfer of physical a9sets of t.he Project by the Seller to APAC; and C~ New HUD Section' 241 (f) firm commitment to provide FHA-insured financing. APAC shall give the City's Director of Planning and COIIl!!IllIlity Environmen,t '''Project Manager"j writt:en confirmat.ioo. .af su<:h approvals within ten (10) days ~f ~heiE receipt~ 2.2 ~omiS5Qry Note 2.2.1 At the initial ~lose of escrow, the aggregate principal amount loa.ned by the City to APAC und .. r this Agreemenc shall be 'evidenced by a HOD-approved Residual Receipts Note~ FHA Fo= No. 1710 (form dated 2/691 (Exhibit "C'"). as may be cmen<!ed from t:ime to time l1!Note'll). made payable -to t.be City of Palo Alto .. as payee, and executed by a duly authorixed cfficer or representative of APAC. as 6flaker .. .-'j. 2.:2.2 The term 0,[ the Note sball be identical -to the ?! t.erm of t.his Agreemen,t. 2.2.:3 Interest shall accrue at the rate of thre~ percent C3') simple i~terest PEr year .. commencing on a date one (li year after tbe initial close of escro~~ 2.2.4 APAC shall commence payment of the loan after che end of, in the following order ~f preference, any semiannual, annual. or other periodic fiscal period, in which HUD declares that funds in t.he Residual Receipts i\lrA .. as that term is defined in the Regulatory Agreement or by HtX) rules and regulations .. are made available for payment o,f the financial obligations of APAC incurred in connec~ion ~~h the acquisition or rehabilltation~ or ~h .. of the Project~ Nothing h~rein shall prohibit APAC from paying the 1 ,$DUO liji'll 0010111 " .. loan .. or any part ther~f, to the City 'before the NOte shall becoa~e due. l.2.S The aggregate principal amount disbursed to ~~ under this Agr~tlt sha.ll become il!1l:ledia.tely due a.nd pa.yable without the d~ of the City 1tl the event that APAC shall fail to aoq~!re the Project and close the initial escrow. 2.1 Deed; of Trust To secure the repayment of the loan lr'.ade under this Agreemen,t., APAC, as tr-tJetor. shall execute a Cleed of tnlst ("Deed of Trust") in sobst.aotielly similar form to that set forth itl EXhibit ~~ in favor of the ~ity as ~neficiary, and identifying the First American Title Guaranty Co~ as trustee. P.'fiCLI 1 -lU-ACOOIS1TIQIf QBI:XGA,TIONS 3.1 Obliga~tgns of FARe In accordan~e with the terms of Contract No. CSD7014S, lI\ade and entered into between the City and Pft..HC ("'COlltract"~. the terms of vhicb are in~orporated herein by reference, PAHC shall uses its best efforts t:o assist -".PAC -to obtain E"'JD approval of those matters set forth in tbe Contract and subsection 2.1.2. (A) through (e), inclusive. 1.2 Estahlish Escrgw APAC liM!1 open an escrow, and all lean proceeds shall be placed in escrow ~th the First'American Title Guarantee Co~, 1137 NOrth First Street, San vose, CA. 95112 ... under escrov number 508439 ... togeth.er with documents of title .. writ.ten ir..stru"Ctions .. and «her info~tion as shall be necessary ~o close tbe initial e~crow. 3~3 Titl~ Insun~ At tha close of the inl~ial escrow ... APAC~ at its ~ cost aDd expense, shall eecure an ALTA poliC'..1 of title ir..suran<:e, or c-ther form of .titlE ins·u.rao-ce acceptable to BUD. insuring APA.C's right, title, and interest ie. the Project and the Cit.Ys lien therein, and ... pr~ly thereafter .. shall provide a copy of the S~~ to t~e Project MaLager. lo!!'UCL!! 4 -COVENA!I'l'S lIND CONDITIONS 4.1 As~i(J.pme:nts Neither this Agreemen,t!1O-r t.he ~ights and. ooligation.s of APAC hereunder, nor title to the Project sl".all be assigned or otherwise transferred without the prior express written consent of the City .. Which CODsell,t shall be eviden-ced by a resolution of t.he Cit.y Council_ No consent may be granted" unless and until the proposed assignee agrees. in writing, to ass~~ the obligations of 4 ." , " , ' MAC under t.his Agreement, the Note, and Deed of Trust. ALy attempted assignment or transfer hereunder without the express v¥i.tten coc.e~.c.t of t.h.e City shall be void, and shall be deemed. a cefa.ult. under, ,and a breac.h ot, this "'-9reernent. The foregoing proviSions shall be enforceable Ag'ainst APAC to the extent su'ch provieior..s are not in conflict. with the terms of the ~egulatory Agreement or BUD rules Gr regulations. 4.2 Cbrporgte Stat~5 APAC ccvenants and agrees to maintain its status as a corporation d~ly ~rgani%ed, validly existing, and in g~ standing under the Nonprofit Corporation Law of t~e State of California at all times durIng the ter.m of this Agreement. -4.). MaintenaAC€ pC Afford.~Boosing 4.3.1 During the ter.m of this Agreement, APAC shall be deemed in coq>liance with the City's requiremeats oc. maintaining­ affordable housing in palo Alto if APAC is in c~~liance with its occupanc-y" and rent restrictions imposed UDdeT the Regulatory Agreement or UI Ht10 rules and regulations, subsection 4.3.2 notvithstanding. If tbe :Regulatory Agreement is terminated o:r ~ified to perw~t less than fifty-one percent (51'] of the units in the Project to be occupied and rented at affordable rents to very low-income o:r low-income households ... or i.f HUi) tend.nates the Section B rental assistance subsidies to' the Project ... effectively causing fewer than fifty-one percent iS1\) of t.he u-nits in the Project to be eligib:e for such rental sUbsidies. ~hen APAC shall maintain _ the-Project as very lOilf-income cr 10-"-income housing at. affordable rents with at least fift.y-one percent (51" of the units in t.be Project to be occupied by very low-or 1 OW'-incorne OO-.lseholc5s _ The terms "very low-incOI!1e households"... '"low-income households'". and '"affordable rent-s-el"'~11 have the meanings .of identical terms defined under ~he Regulatory Agree~ent or by COBG rules and re~~lations. 4.3.2 At t-he .cloee of the initial escrow., a.t least . fifty-oce percent (51t) of the units in t.he Project shall he occupied by households ""hose incomes do not exce:ed the income limits for very low~ and low-in.cOU!e households for purposes Clf the CDBG pr~ram. as defined by .mD. ;-,,-.4.-1 Complians:e with Fftdera,l Agsuran.ces Du~in9 the term of this Agreemen~., APAC shall comply ~th the federal assuran'Ces described in Exhibit -E'" and the additional te~ and co~itioOB of this AgreeIDent; if any_ 4.5 Conflicts of tnteresL MAC shall comply with the provisi=s of Title ", Section S70.~11 of t-ne Code of Federal Regulations; as ~~nded. concerning conflicts of interests. No person who shall ~~ve any such conflict of ir.terest under applicable laws shall be employed ! , . .. '-k:- :"-. -.-:-:":::.~ .-. . . by APAC. With the exceptio" of the use ¢·f CDOO funds to pay the salaries and oeher related '~AC adn~nistrative or personnel costs. DO person wbo is an employee, agent, cons1l1tant, officer. director" or o.tlicial ot )..PAC o.r PARe wbo exercises or has exercised a.ny functions or respocsibl1ities concerning the activities under this Agreement, or who is in a position to participate in a decisioo­ making proces~ or gain inside information concerning such activltl-es.-may <lbtain a personal or financial interest in or benefi.t from. any such activity.. or have an interest in any contract. sUbcontract, or agreem~nt with respect thereto, or the proceeds thereunder, either fo~ himself or herself or for those with wnom he or sbe has a f~ily or business relationship, during his or her tenure or for one '1) year thereafter. ".6' Insura::x;e APAC', at its sole 'Cost and expense. shall obt.ain and ~Alntain during the ter.m cf this Agreement. insurance provided by responsible companies authorized to engage in the offering of insurance services in california in s'Jch a.."nOl..m,ts and against such risks as shall be satisfactory to the City·s risk manager. including .. without limitation,. vorker·s compensa.tioll~ 'ernployer~s liabillty~ commercial general liability .. comprehensive automobile ltability .. personal injury and property damage insurance lExhibit .V') .. as appropriate, insuring against all liatdllty.of APAC and its dS,r~etors .. Clfticers~ enployees. agents .. and representatives arising out of or in connection with the acquiSition .of the Project: or APAC"s performance or nonperformance under this ft.greeme:o.t. §lCTXCN 5 ~ UPusENTATIQllS 5.1 Corporate Authority The making and perfonrance by APAC of tllis Agreement and the Note have been duly authorized by all necessary corporate action and vill ~ violatE any prevision of law or of its chart~r or bylaws. or result in the breach of or cocstitute a default or require any consent under any lien, charge, or eIlC~ra.!lCe upon any property or ass.ets of APAC pursuant. t.o any inde.o.ture or ocher agreement t.o whlch JtPAC is a party cr by which APAC or its property may be bound. The President of APAC has been duly authori.zed to execute t.his Agreement on behalf of APAC. S.:iJ Litlgation ThEre are no suits or proceedings pending or.. to the knowledge of APAC,. threatened against or affecting APAC which. if adversely determined. ~~uld have a material adverse effect on the financial condition or business of APAC, and there are no proceedings pending cr.. to the knowledge of UAC, -threatened ... against APAC which would have a material adverse effect on the . perforR".an<:e of this Agreeme:nt by APAC. s.~ Conflicts of IpLerest 6 .' i -. , . -, .~-.;, .. > .... ~ j:-= '\ APAC pres~"t1y !las no interests ~ .lull ·cot acquire an)' interest, direct or indire~t# financial or otherwise, which would conflict. in any JtI.anner or degree with the perfonnance of its obligations under tbis Agreement, In tt&e performance of tbi. Agreement. no subcontractor c-r pe.rson who has or will have a financial interest under this Agreement is an officer or empl~fee of tb~ City, . . SEC1IOlI! 6 • SUlIQRDnp.VOll This Agreement is subject and subordinatE to the provisions of LIHPRHA... as amended.. and all applical:>le HUD regulations a.od administrative requirements~ In the event of a cocfllct between the proviSions of this A9re~nt and the prqyisions of ~ny applicable HOD regulations l related HOD administrative requirements~ or the ~0D,loan ~uments, then the m;o regulations ... related WJD adrnlnistrative require.."'\E!n·ts ... or t.he £TX) loan documen.ts shall control .. SEC'lIOlil 7 • PIDgKNI n APAC and PAHC a:;ree to protect .. indemnify, defend and bold harm1ess the City. its C~Jncil members; officers, employees, aDd agents. fram any and all demands, clai~~~ or liability of any nature ... including dea.th or injury to any person, property damaS's or any other loss., caused by or arising in connect-ion with t.he negligent. acts or omissions .. or willful misconduct of .. APAC or PARe or any of thei.r direc-tors .... officers. employees,. representatives I and agen.ts.. i.n the perfcrmanc:e of cr failure t.o perform. their individual,. and joint obligations under this Agreement. SG7:IQH a .. PEFAULTS The City sr..all be permitted.. upon writt.en notice,. to declare a breach .of this Agreement by APAC,. and to declare t.he principal of the loan. plus accrued interest .. if any .. and the NOte to be im:nediately due and pa.ycCo~e .. wbereupon the same shall beccxr.e immediately due a.od payable.. if any of t.he following eVents of default have occurred and have not been remedied:- A.. MAC makes a representat.ion in this Agreement which sball prove t.o have "be-en false in aI'.y material "("espect~ or B, prinr.ipal of or any other AFAC shall default in the payment.. "When due, of any the leaD. plus accrued interest~ if any .. or" t.he Note sums payable by APAC under this Agreement; or c. APAC shall default fo·r a period of thirty (30) days in t.he perto:rmanc:e of any other non-financial obligation to be ~rfor.med by APAC under tbis Agreemen~i or 0.. . APAC shall apply for or -conse!l.e t.o the appointment. of a receiver .. trustee, or liquidator .. or is ~nable~ or admits in writing its inabi!ity to pay its debts as they fall due~ ~r makes a general assignment for -the benefit of its creditors, or is 7 " __ ._r .... -~ ," " ,~" adjudicated a. bankrupt. or insclve;;lt .. or files a voluntary petition ill bankruptcy; or . B~ APAC is subjected. to the entry of an order,; decree .. or judgment app-raving the reorga.c.ization of APAC,. and such ot"der .. decree, or j~nt is unstayed for a period ~f more than thirty {3D} days, or SUCh. period as may be permitted by law. ~Ol!! , -J!OTZC2S Any notice whIch :may be or is required to be given under this Agreement shall be deemed given oc the second day following t.he, date on which the sa:me has been mailed by first class ;r.ail .. poStage prepaid, addressed as follows: City Copy to: APAC PABC city Of Palo Alto 2S0 Hamilton Avenue Palo Alto,. CA 94301 At.tn: Ci~y Clerk Director of Planning" Communi ty E!l"./1 rC-fI..:ment City of Palo Alto 250 Hamilton A·.renue Palo Alto, CA $4301 Arastradero park Apartments Corporation S4G Cowper Street.. Suite 2'01 Palo ~~to. CA 94301-1806 Attn: President. Board of Directors Palo Alto Housing Corporation 540 COwper Street. Suite 201 Palo Alto, CA 54301-1906 Attn: Executive Director iSSCTIOB 10 -KISCILLANEOOS 10.1 Neither t~ failure nor the delay on the part of the City t.o exercise any rigb-t" power, or privilege hereunder shall operat.e as a waiver thereof" nor sr..all any single or part.ial exercise of A!lY right, power, or privilege herel~nder preclude any other or further exercise thereof or the e.."'<.ercise of any other right, power, or privilege. 10.2 Nothing contai.ned in this Agreement is intended to.. or sha11 be construed J.n any manner" as creating or establishing the relationship cf employer and employee be~~een the parties. APAC Eball at. all .times r-emain an independent contractor with respect to the services t.o be rendered or york to be perfol."'1ned. or bot.h" under this Agreement ~ 1(Ll The covenant.s .. agreements" terms, and conditions of a this Agreement eMll in·.lre to and be binding 00 t.be· su-ccessors and. assigns of the parties. Any provision of this Agreement which is characteri~ed a5 a covenant or a condition shall be deemed ~h a covenant and a cOGditioo. 10.( Any amendmsnt to this Agreement shall be binding upoc . the part.~es" prO\t'"ided such a~ndrr.ent is set forth in a writing signed by the party to be charsed. The City Manager is a'.ltoorized to execute any amendments to this Agr-eement.. including any amendment" which :ray be required of APAC, PARe, or the City by SUO. 1.0..5 This Agree..-rnent sl'..all not be construed or deemed to. be an agreement tor the benefit of any third party. and no third party shall have any cla~ or right of action hereande~ tor any cause wba t.soever ~ . 10.5 If any p~CVi5iOQ of t.his Agreement shall be determined by a -court of competent jurisdiction to be invalid .. illegal .. void .. or unenforceable in any respect .. the validity of all ~ber provisions herein sball r~in in full force and effect. i(). '1 APAC and PAl!C, jointly and individually, shall lack any authority or power to pledge the credic of the City or incur any Obligation in the name of the City. 10·.e This Agreement -constitutes the entire agreement: of the par~ies concerning its subject I~tter. and there are no oCber oral or ~-ritten agre.ements of t.oe part.ies not. in-corporated in. t.his Agreement. 10.9 The Agreemen·t and tbe Note shall be deemed t.o be a cootract made under the laws of the State of Califor.nia~ and for the purpoSes hereof shall.be governed and construed by and ill accordance with the laws of the State of California. 11).10 All ex.~1.bits referred to in this Agreement: and any addenda l append!ces~ attachments. and schedules which may# from t.ime to ti.!ne~ be refe:rred to in any duly executed amendIrlE:ot hereto are by su~h refe~en~e incorporate1 in this Agreement ~ shall be deemed to be part of this Agreement::. 10.11 This Agreement ray be executed in any number of counterparts, each of "Which sl-.all be an original. but all of "'hich together shall constitute one and the same instnk~ent~ 10 .. 12 The paragraph headings are not a part of this AgreeI!lent and shall have no effect upo.n t.he construction or interpretation of ·any part. .c·f this Agreement. I / I I I tJD LXI I)"D 00"'1072' IN WITNESS WHEREOF. the parties :t.ave eXE:cuted t.his Agree-. ~.' . r , : > • ' ... . ; , / I I f I I ment in palo Alto~ california on the date first above written~ CUT 1'A1oO ALro )layor A'1"l'BS'l', City Clerk AP~ AS ro 7OlIX. AltASTJ1AI)ERO PAD »nna:N'l'S CORPORATION lfp~ 17{. t:A.,(. ~"" Title: Board President PALO ALTO BOOSING CORPORATION Senior Assistant City Attorney APPROVED. City Manager Di_rector~ Planning and Comnr..mity Enviromnent Exhibit A. Exllibit B. Exhibit C. Exhibit D, Exhibit E: Exhibit F: ATI"ACHMEli'rs Legal Descri~ion of 574 Arastradero Road Estimated Project Financing and Funding SOurces Promi ssory Not e '"' Deed of Trust Federal Assur~nces In$u~ance ~equirements 10 --.,. . STATE OP CALIFOR.'1IA COUN'l"l OF SAIIT A CLAM ) } ss. } .. - On • 1995. before me. a Notary Fubli~ ill a.nd for said CounCYa!ld State. personally appeared JOSSPIl S IKrT IAN, personally Jtncwn to ine to be the person .whose name 1s sUbscribed to the vithir. instrument and acknowledged. to Ire that he -executed the same in his authorized "".,acHy as Mayer ()f the City ; of Palo Altc,.1 it lI)UIl.!cipal corporation ... and that by bis signature on the instrument acknowledged that said Immieipal corporation exe<:\J,ted: t.~e same ~ D! WlTIIESS WHEREOP. I ha.ve bereunto ~et my hand and affixed my -official sea] the day and year in this certificate first above written. Nota_ry Public in and fer said County and State 11 "/ STATE OF CALIFORNIA COON'lT OF S1IlITA CLAR.>. I I S9. J on "A~~_~ " • 19~5. ~fore 1M, a Notary t'ublic in and for ea16 County .. 00 StUe, perso.""lly appeared ELLEN Cl!RIST:ENSBN, persooally knoWn to me to be the person "hose name is su!>ecril>ed to the Yithin instr\lrnent and acknowl~ed to me n.at sbe executed the same in ber authorized capacity as PresS-dent .. Board of DireCtors of Arastra..dero Park Ap6.rtmen·ts Co:rporatioo ... a california nonprofit corporatioo l and that by her signature on tbe instrument acknowledged t~at said nonprofit co~ration execute6 t~ S~. IN ~ ~F, I have b~reunto set my Mnd and affix..<>d my official seal tbe MY and. year in this certificate first above W1-itten~ • STATB or C".LlFORNIA = OF SANTA CLARA ) ) ss. I On -:t""e. ...... ~ :>' ,,1995 ... before me .. a Notary Public 10 and for said Co y and State, personally appeared MARLENB H. PRENDERGAST, personally,known to me to be the person 'Whose name is B-ubecribed to the within instrument and a.cknowledged to me that she executed the same in her authorized capacity as Executive Direc~or of. "the Palo Alto Housing Corporation.. a California nonprofit 'corporation.. and .that by her signature on t.he inst~nt acknowledged that said nonprofit corporation executed the s~e. IN WInlESS W/!ER.EOP, I have hereunto set my r.and and affixed my official seal the .day and year !D this certificate first above written .. ~ .... 2-,.-~. ~\ b*...J:J Notary Public in and fO~ t:i'­ Coun·ty and State :'. EX1Hall 'A' 0nIer No. 5OB439 Page No •• RE.A!. FMf'ERTY ., ... CI!y tI Palo _. Cold)' rI Sanla CIato. SIal. rI c.frfomia, doSaIled .. -= ,., f1aI _ """ ~ _Ii " fie Oty ~ Pt.lo NID. CO<I!l!y tI _ oar.. SIal. '" caJlfomla and being ol>QtliCn c( lot t '" IoIljoteI frad IS shown Q'\ _ m8j) ~.b1e 18. 1905" 8001< K '" MIIjlI a page 88, Sanla Clara CooJnIy ~ 0/1."ll>e1ng ...,.. paJ1ieJ!arfy _ .. _. ~ 01 fie __ E.as!r.i _ d oaic! lot 8, 03id comer being an ... original NortI ••• fetfy .... '" ~.~ {4O lee! wide]; I1enco _ 211' 48' _ Ilong \he ~ .... '" oa!d lot t,. cSsta._ '" 215.34 _ {2H.93 lee! 1!I9Pl; fIefU Norf1 61' 12' Wesll1~ IN -""Y Ino ., sold lot ... cIisIanct cf 588.61 lee! ~ _ mapj; t.ence t-ror.h 2Ii' 48' EasI. I!ong \he ~ Ine cf ooJd lot 9, _ NorII1-""'1' In8 "" being IN ~ Ine of Majt>eR Awnue (40 Iee!_J • IfsIanoe d 215.34 foe! (214.93 lee! map): ,.,,"" So<I.I1 61' 12' E.as! IIioog ... NcrbI"!ady Ine 0/ said LeI t •• dsIance d 588.Bl lee! (S88 _ INIPI to \he po1ll! r:J ~inning. A.~ 137-25-1\~ A"S; 137-25-101 - <:';,§ ... ~~~:"~" ·G'f';{{~· 'i .. < "-> ~-; ,'-..,-:~--...... SXBIBIT 'S' ESTOOTEJ) PRlA.'TECT F INltNCINQ AND FUNDING SOURCES A2AC anticipates receiviIl9 flnane!.Il9 for the Proje~t from several fuMing sources describo=.d. belov... The finac.eins shall be used, _to pay for, among others. transactiorl costs ... costs associated with the acquisitlO<l and rehabilitation of tl:e project, and temporary relocation expenses for existing residents of the Pl:'oject" the initial funding of sevezal reserve accounts.. and. operating costs defici~s which ~Ay be incurred ~uYin9 the phase-in of rent increases .. and PARe's spoIlsor"s fees. ROO Secti"" 236 ll10rtgage assumption New HUO Section 24.1 (f) .FAA-inS\lred loan fer acq-.. lisit::ion .. rehabilltati 00. BUD preservation tec~~iea1 assistance gC"oJ'lt . Proposed h"'tJi:' cost limit gr.ant City of Palo Alto local sovernment equity loan from CDBG fuods Total Estimat.ed Fundina ~ $ 509,203 5,946,30<l 1~8S31495 302,990 $ 9,224.988 • aU mtv.Q': _ In ~tIJ d· ,.",!\.IIlIio" all' r>.'talio ... : "" '" 1l'f.I'''II'l'k(i(T OF ~.,..~ vel ~~ OEv;::I.C~, jl!DE .... I"IoO..J!;'"'I:l ~ ... t$.rR.lTI(t4 IE5Ilttl.L 1£'£lrxS '!IOTE (r't-.,..'" 1I .. '4""''''~ • tll l"r:im::,..r 11M "'I~ "'. ~ ."'ta .~11 !II .,.. o~ ,1l,Yllblll e.G l'M 1II0000..rii, iDlo 'If If .. ut.;IOa' lJow1. p~ t-u. \f a. SeclCUq or I!hu1nr: .". o<!! .. De .. et",.~~ ~"lICiq FiiI4 P"'i-« ': ... _' __ • • r.: .. ild I1at 1: ~ .r.rn",ioj l.uu ..... ' 1111'\. a , ... ;*1' Uo fun, e,.a hllol,., .... Iiolll IICH .. ,. iu ~"110 .. till .~ o..vo.., •• , e-..;.ta ... ~ ... bol. ,.r .. c!;al" ... 131 0< .11)" hto . .oe. tfI • .-.d, to., .. \.hIlf 01111 "':...c .. ,ell "'.'""-t.llle:oon.1d..r he aU" ,..·.111 .. OJ PI2!&)'>ra:I. tIo",:ia"'~""" ..... t •• lISt .... I'!!..i. acr. ••• ,l! II. "3"" clll,!ro., dr.. rD.Il~ .... ! "=";JU ~=I • .. :fl. tar. r. adll1~ ia tb.4 R.l(llla~cul "1 ....... 1\.1 J.el.~ell a. ",.lter uc!!::t., .$«:'Ctlo.", "'K .. ~l1!.i.a <GUled.i", witl. o..e or..."" "..;Iien. D1Id" I!II!J: .ft .... !>ta .... j~1l 6.e , ........ It! .. :a .,p"!"llvtl IJ' ~I SH "i.,.,. Ktoi.q li, 01 ~l.Lr:. [fu, r",d"otru Soul ..... COIO!II;uioo.er. Soz<:l11 .... , • ..r .... ntJ: II., •• II.-If • .oalJ .~e. I:io:!...t OCUr..rscll<"<'1 • a.. Dar. IDo-~e 0 }.,. If;. S«"'~'l' a:l.4 artu Co ell!! or • u:! ;ua~.l ...... Oll2ll"ll n.e&l.,~!..,. {.1:] !'lit. aom iii U"-II1!COWrbJ. ......... .1 1101 to •• ,,1111. tru.sr ..... II'<ii. e.il:lIoK.. o. ,1J,..t lit ~ ,pll .. e ·!U;.C'!I .. t • irlI Bu:,riof .. ::lt1Oll .;, .... .: of '6. <:: C)III.Ol'.';"",.r.. Jri.;::c"'l' .... ,. )"4" B.J' __ _ rIM jUly" 1u:fe~J: e .. tilia til&! tlilI :;. • lIotU1 & •• tn..oIlI~'C)'" .8111 0..1 it fa!!, .... I!: ...... tu.a 01:1 >joo: l'e'l.OIJI"e:l::ellti • ~tII lIc)to., ut4 di.1IC ... .p'.,p'.1-act or pri.rtcOiIll _ i:ata:rcst .. un "' oeceetad .i~ ... i6uC:1 :hat '!lie J"ei=,101 1"0000illlr:-e:".ilsia" ... hili ."llIo.4e,,,.<:1; .P'~ • .rlll"'..t. If h .,..alll.Dri.:zd ,..q..y ...... 1 PI Icn"ail. ~I fom4o. ah:I. .. ~l. 1I.r I:b 1'*IH1a ln$l 'ilf dI • .lnlj..:t..: '''------.,'',.:0.; ~ ... ~ .. " Co "'U.s ~ ~Qf'J,a ~ ~·Z5.l'lCi .;.".-.. P.EO:>RDING REQUESTED EY ~ liKEN RECORDED KUL TO: City ~f palo Alto Office Qf City Attorney 250 Hamilton Avenue Palo Alto. C;t. 94301 Recorded wi tbout. charge. Govt. Code sections 6103 and 27383 EXHIBIT 'D" SPACE ABOve THIS Ln'1i: FOR RECORDER·S OSE DeED OP TRUST »m MSIGNMEN]' OF RENTS HIS DEED OF fttfST". mad~ t.his __ day -o,f ________ , 1995.. between the Arastradero Park Apartments Corporation.. a california nonprofit public henefit corporation CT:ru.stor~j. 'Whose address is 540 ~owper St~eet .. Suite 201 .. Palo ~tO, CA 94301·1906, First America..n Title GUaranty Company I a California corporation C-Trustee"), whos:e address is 1737 North First Street .. San Jose, California 95112, and toe City of Palo Alto, a municipal co....-poratioll ","Beneficiary"l .. whose address is 250 Hamilton Aven.ue .. Palo Alto l CA 94301, lIIl:'mIiSSl!'!'II: That Tr<lstor DUlEVOCABLY GlU>oN'l'S, TlUIJISl'ERS JlNI) ASSIGNS 1"0 i"R'Os'l"D DI TmJS'r ... WID POWEll OF BA:LB .. th~t. property ill the City of Palo Alto .. CooDty of Santa Clara, State of CalIfornia. described in Exhibit. ·A"'"#. attached bere'to and made a part hereof by refereooee \ 'property" I • TOGETHER WITH .the rents I. issues arid prof i ts thereof It SUBJECT, HOWEVER. t.o t.he right, power, and authority given \:0 and conferred upon Beneficiary" by subd.ivisioc. B of.t.h.e fictitio"J.s -de-ed of trust recorded in the office of the Recorder of the County of Sant.a Clara. in Book 533£ of Official Records~ at Page 341~ a~ed and inco:rporated herein by reference a.OO made a part h.ereof as if fully set forth herein. t.o collect and apply such rents.. issues and. pro·fits .. poa ~ PURPOSE OF SECURING; 1. Performance of Each agre~p-nt of Trustor set forth in tne ·Agreemeot bet~een the City of Palo Alto, the Arastra-dero Park Apartroen·ts Corporation, and the palo lito Housing ~orpo~ation to Fund the Acquisition of Arastradero Park Apartme.o.·ts at ~74 Arastradero Road~ Palo .J..l.to" .... Agreement·,. in~orporated herein by reference. 2. Payment of the indebtedness evidenced by that. Residual Receipts Note ("Nc.te-' of even date herewith~ and any extensions or renewals thereof. in th~ prin~ipal amount of $ 325,000 execut.ed by Trustor in fa.vor of Beneficiary or order~ '1'0 Pi:OTEC'r nIB SECOU'1"Y OF THIS DEED OF nOST, ftOSTOR. AGREES: 1 ~:;;..-'-:--~ , • By the execution all'3 deliverj of this Deed of Trust and the NG<e secured hereby ... that the ~rovieions of subdivisions A and B inclusive. of th~ fictiti~s deed of trus~ recorded in the office of the Recorder of the County of Santa Clara in Sock 5336 of Otti~ial Reocrds. at Page 341, hereby are a~ed and 1ncorporated herein and made a part hereof as fully as thoush set fortb herein at lens-tn; that. it Yill observe and perform. said provisions; a.nd that lbe references to property, Obligations. and parties in said provisions shall be construed to refer to the property. obligatiocs. and parties Bet forth in this Deed of 'frust. 2. Trustor shall not:. volunt.arily or involuntarily or by operation of law .. sell .... transfer ... lease ... pledge .. encwr.ber, create a security in·terest in,. or otherwise hypothecate or ali.enate all or any part of the Security .. without Beneficiary"'s prior written consent. The consent 'by Beneficiary to any sale.. .transfer, lease.. pledge .. encumbrance, ~reat!on of a s~~rity interest in.. or other hypothecation of the Security shall not be do!'emed to constitute a nO"o'"ation or a consent -to any further sale, transfer. lease, pledge .. eocumb~ance, creation Qf a security interest i~ ~r c~ber hypothecation. Beneficiary may.. subject to the prior written approval of the PepartJr.ent of Housing all'3 Urban Development. at its opc;ion.,. declare .the indebt.edness seC".J.:red hereby irr£!\ediately due and pa~le. without notice t:o Trosto-r or any other ~rson or en·tity {eJtcept: as provided herein}, upon any such sale, tranSfer", lease pledge~ encumbrance, creation o-f a secu~ity interest in .. or ocher hypothecation or alienation in violatIon hereof. Without the WTitten consent of Beneficiary. no 5ale~ transfer, lease, p~edge .. ~~ran~e. creation of a security interest in, or ~her by.pothecatl00 of t~e Security shall relieve or release TrJ$tor from primary liability Onder the Deed of 'rTUst or the Note. as the case tray be. . As used in this Sectio-:1 2., the tel."'D.\ rtransfez:-in-cl"tldes ... without limitation, the following transactions: fa} Jm.y t.otal -or partial sale. assignment or coc.veyance. or creation of any trust or power ... O~ any transfer in any oCher ~ode or fcnn"vith respect to the Se~~rity or any part hereof or any interest herein~ or any contract or agreement to do the saIne; (b} The cumulative transfer of tnOre than ten percent (l.O%) of the capital stock. partnersnip profit and loss interest .. or other form of int.erest in Trustor; and (cl Any rr.erger.. consolidation.. sale or lease of all or substantially all of the assets of Trustor .. provided that this proviSion shall nc< be interpreted to pr~~ibit the leasing ~ the Property to tenants leasing the individual units c~~rising the Project ... as such term in described in the Agre~~nt~ located upon the Property. :3 • In t.he event Trust. or it the t:herein is sold .. of default by the Trustor under Propert.y or any part. thereof cr agreed to be sold.. con~eyed$ 2 this Deed of any interest alienated or " '.c:--' refinanced! by the Trustor" Or by the operation of law or otherwise .. without t.he wrItten coc.sent. of the Beneficiary .. all obligations secured by this instrument irrespective of the maturity dates expressed therein.. at the option of the E~.oeficiary h-ereo~ and without demand or notice shall immediately become d~e and payable. 4. Beneficiary.. for itself and its successors and assigns, covenants and agrees that all ~f its rights and powers under this D-eed of Trust are subordinate and eubject to t.he rights of t.he under that certain Fir6~ Deed of Trust .. -dat.ed 1995 .. and recorded on .. 1995, in Sook at Page __ 10 tbe Official Records cof Sant:.a Clara County, Cal :tfornla ("First. Deed o·f Trust") .. and that. Security Agreement .. dated .. 1955 1 and are subordinate 'and subject to the rignts of under that. certain Second Deed of Trust l dated I 1.995 .. and recorded on • 1395 .. in Book at: Page in 'the Official Records o·f santa Clara COUD·ty .. California ("Second: Deed of Trust"').. and that certain Sec"J.rity Agreement dated .' 1995 and to the rights of the secretary of t.he United States Housing and Urban Devel"{..mant ("Secretary"l urader t.hat certain F.eg'l..llatory Agreement, dat.ed • ,lSiS5, and recorded on .. 1.995 .. in Book ___ at Page in the Official Records 0= Santa Clara Co-.. mty* California CReg'J.latory Agreement"" ~ s. Beneficiary .. ~Qr itself and its successors anC assIgns, turther .cove.!1aZl·ta and agrees that in· the event of t.he appointment .o·f a receiver ~r of the appoinbment of the Beneficiar; as mortgagee-in­ possession .. in any action by tbe Benefic.iary .. i':.s su,ccessors and assIgns, t.o foreclose the mortgage.. no rents. reve~ue or other income of t.he Project collected by the receiver or by the mortgagee-in· possession shall be utilized for 'the payment of interest., prin<:lpa1 .. or any other charges due and pay-~le UDder this Deed of Trust .. excepc from Residual Receipts, if any~ as the term 1s defl.c.ed iIi the-Regulat.ory Agreement; and... further, t.he receiver o~.mortgagee-in·possession shall operate the Project in accordance with all the proviSions of the First Deed of Trust .. thor: Second Deed of Trust l and the Regulatory Agreement_ 6. In the event the secretary acquires title to the Project by a d~ed in lieu of foreclosure ... the lien of this Deed of Trust will automatically tenninate subject. to the conditions hereinafter described. The Benefi.ciary of this Deed of Trust lfay ..cure a default under the First Deed of Trust or the Second Deed of 'I'rust, or both .. prior to a conve.yance by a deed in lieu of foreclosure. The secretary shall give written notice to the Beneficiary of this Deed of Trust of a proposed tender o·t tit,l-e in the event. (1) the Secretary decides to acce~ a deed in lieu of foreclosure or {2) the Secretary rec~ives notice from the Ben~ficiary of the First Deed of Trust or the. S-:cond Deed c·f Trust of its election t.o accep-t a deed in lieu ~f foreclosure. Tbe Secretary will only sive su·ch written n~ice if ... at the time of the placing of the subordinate lien against the Project.. the Secretary receives a copy o,t an endorsement: t.o the title insurance policy or the Truster or Beneficiary of the }'irst Deed of Trust or Second Deed oE Trust 3 -: . . , •. ,"_ l, ;},) , I indicate .. that (11 this Deed of Trust bas been recorded. and 12) the Secretary is required to 9ive notice of any proposed election .to or tender a deed in lieu of foreclosure. Such notice shall be give.a at the address stat.ed her-ein or su'ch ocher address as may be subseque!),·tly. upon written notice to the Secret3!'y_ <1e9ignated trj'" the Beneficiary of this Deed of Trust ~ Be.ceficiary shall have thirty (lO) days to cure che default after the cot ice of intent to .a~c~~ a rleed in lieu of for~closure is ~11ed. ,.. Notilfltbst.a.nding the above reqtJ.irements .. in the event that Truetor t;oote:mplates e;cecuting a deed in lieu of foreclosure, the Trustor shall Urst give .the BenefiCiary thirty nO) daYE prior written ~lce; provided .. however .. that the failure of Trustor to give said notice shall have no effect on the ~ight of the Secreta~ to ac~e~ a deed in lieu of foreclosure4 B. Recorciatioc. of this Deed of Tr\!st. provides cotlst.ru'ctive not.ice of certain occupancy and affordability restrictions applicable to the Property. as required by the Beneficiary~ The undereigned Trustor requests that a copy· of any Notice of Default and of. .any Notice of Sale hereunder be C".ailed to its address bereiDbefore set forth. ARASTRADERO PA.1U!: APAR~NTS CO.R.PORATION,J Trustor By: Its: ATTACI! SO'IART '. A. APAC hereby assures and certifies that! (1) It possoesses lega.l authority to receive federal grant funds and to carry out the proposed program(s) assiste~ thereby. 12) Ita governing body bas duly acquainted itself with the funds application, including all understandin3~ and assurances 'COntained _ therein.. and directed and authorized the person 1den·tifled as the official representative of APAC to pro,,-ide such additional info~tiOQ as may be req~ired bereunder. (3) It consents to-accept the jurisdiction of t.he federal or California court.s for 'the purpose of enforcement Qf its responsibH tties ilrpose<1 hereunder. (.t.) The P'I'oposed pr..;,gram Ca} bas been developed 50 as to give ~ feasible priority to activities whic'h rill benefit low and .. ooerate income persons. {s} The receipt. of iUly program in.o:ome .. as defined in 24 CFR 510..5·00 fa) .. alS amended .. qenerated by the use of grant funds under this Agreement: .. will be recorded .. reported and returned to ~he City of Palo Alto {-City·] in accordance with 24 CFR 570.504, as amended. (6) It will comply vith tbe provisions set forth in 24 CFR 85.43 and 24 CFR. ~5~44 regarding the suspension or termination of a grant agreement for cause or convenien~e~ (7) It. will maintain· and retain all books..-docU1!'.ents" "papers .. ti~ial .. or ~her records which are pertinent to the grant for a peEiod ~f not less than three f3. years follo~ng the expiration of this Agreement. APAC will allow City and the U.S .. Department of Housing and Urban Development .. through any au·thorized representatives .. access to such ~"entsr p.3.!=>'Srs and records ~ (8) If MAC is a primarily religiCA.ls entity ... in connection with t.he provision of services required under this Agreement. .. APAC agrees to comply ~th federal regulations specified in 24 CFL 510. 21X11j ) . APAC furtber: (a) will noc discriminate against any employee or applicant for ernploymen·t <>n the basis of religion and will not limit employment or give preference in employment -to perscos on the basis of rel~.gion; " I , j" (b) vill llOI: discriminate against any person applying for such services on the ba~is of religion and will not limit such,services or 9iv~ preference eo persons on t~e basis of religion; (el viII prcvide no reli':1ious instro.l,C"t ion or cour..selit:"9, coc.duct 00 religious worship or" serv-ices .. engage in no religious proselytizing .. and exert no ot.her religious influence in th~ provision of such eerY'ices; and {d) ~11 ensure that the portion of APAC's facility used to provide the servjces shall contain no religious syrnbole or decorations. other than those perw4nently affixed to cr are part of the $tr~~ture. s. APAC also hereby assures that it shall: tl) Comply ~th the POOdiscYi~nation provi~ioos of pUblic law 88· 352 (Title VI of the Civil Rigbts Act of 19641. and the faIr housiog provisions of public lalli 90-284 'Title VIII o·f the Civil :Rights Act of 1968) and Executive Order 11063, as amended by Execu,tivs; order 1'2259. with respect to sale, lease .or tra,ns!er_ of land acquired .. cleared or iIr'..proved witb .grant assistance. t2) Comp1y with the provisions of Section 109 ~f 7itle L of the HouSing and Community oe,,·eloprnen,t Act of 1..97.( which prohibit discrlminatioc.. (3} Comply witb the Fair HouSing Act of 19 SS 142 USC 3601-20). which prohibits discriminatory housing practices based" on race .. coler .. religion .. eex, national origin. disability or familial etatu3_ (4) Comply with the Davis-Bacon Actll' a.s amenCled .. Federal Labor Standards provisions with respect to all construction contracts in excess of Two TbOusand Dollars ($210~O). (5) Comply with the requirement of the Flood Disaster Protection Act: of 1973 aod the National Flood Insurance Act of 1969 applicable to acquiSition or construction ~rojects. {E) Comply Yith the relocation ~~ displacement requirem~nts of t.he Uniform Relocat ion Assistance and Real Property AcquisiLion Policies Act of ~970~ as amended. (7) Canply -with provisions of Executive Order 11246, as amended by Executive Orders 11375 and 12086. on equal emplo}~ent opportunities and affirmative action relative to err:ploye~s and applicants and Qcoexempc contracts and subcontracts. (8) Comply vith 42 USC ~e31(b). acd 24 CFR 570.608 and 2~ CFR Part 3S of the BUD regulations s prOhibiting the use of lead-based paint in t.he <:Or1stru,ction or rehabilitation of residential structures. 2 • t91 Comply vith the provisions of 2( cn. Part 2-t· ·"hie;" proM.bit the utilization of ~ebarred, suspended, or ineligible APAC. or subrecipients. \10) Comply 'Iotith the uniform administrative requir~~ents and cost pr1n~ipals'ot 2' CPR. Part 85 and OMS circulars A-81~ A-ll~, A­ .122.,. and A--128 and A-111 as they relate t.o t.he ac-:ept.ance. and use of federal funds by nonprofit organi~atio!ls .. a.nd as other­ vise may be reqllite<! under 240 CFR S71L502, as amended. (111 Ctlnply ..nth the req'~irements of a CFR es. 36 and OI'!B circular A-110 with respect to.conflict of inte~est# and as otherwise may be required under 24 CFR 570.611, as amended. t12} Camply with th~ provisions of the Rat~h Act ~hich prOhibit the v..se of federal funds for lobbying activities. (13) C",,¥,ly vith Section 319 of public law 101·1:<1, ... !lieh generally prohibits recipi~nts of federal contyacts, 9~ants Gr loans from using appropriated funds tor Idbbying tbe eXecutive or the legislative br3Dches of th~ fed~ral 9~~ernment in ccnnectiou with a specific contract. gr-ant or loan~ Accordingly.. MAC hereby certi fies t.o the best of ita: knowledge aod belie! .. that: (a} Nci federal appropriated funds have been paid o:r will be paid... by or on b=ha.lf of APAC.. to any person for influencing or att.empting to influence an officer -or employee of any ag~. a ~r of Congress .. an officer or employee of Congress... or an employee of a Member of Congress in. c-onnectiotl vit.h the awarding .of any fede.ra.l contract ... the Ifakiog of any federal gr'ant .. the lI"aking of any federal loan ... the entering inte of any cooperative agreement.. or the extension. continuation... renewal" amenOcleu-t." or li:Odificatioo. of any federa1 contract. srant .. loan .. or cooperative agreemeDt; and (b) If any fuods ~her than federal appropriaced funds have been paid er will be paid to any person for in.fluen-:ing or attempting to influence an officer or employee of any agency. a Y~er of Con9ress~ an officer or employee of Cotlgress", or an employee -0£ a Member of Congress in ~onnection with this federal contract" srant~ loan or cooperative agreement. APAC s'hall cClr.plete and submit Standard Form-LLLI 'Disclosure Fc~~. to Report Lobbying­ ! n accordance vi th its, ins t ru,c-t i ons 4 f14} comply with the Age Discriminatiort Act of 1975.. as amer~ed$ which states that no persons in the United States shall, on the basis of age .. be denied the benefits of. or be subjected to discri!T!ination under,," any progra.."1l or activity re-ceivin9 tederal finan~ial assistance~ 3 .' /­ :. _ u ~ ,-~". 1151 Comply with Section 504 of the Reha1lilit&dO!1 Act of 1973, which prohibits discrimination against people with disabilities in any federally assisted program. f16) Comply with the Americans with Disabilities Act of 1;90, as ame~ed. and implementing regulations when published. {l'H TTansfe'r _to City 1Any CDBG funds co. haoo, _ and any account'S receivable attributable to the use of CDBG funds. at the time of expiration of this Agreement. In additioo. APAC shall ensure that any real property under APAC's con·t.rol t.hat was a.cquired c-r improved in ..,bole or in part 'With CD-BG funds in excess of $25,0'0.0 is either:. ra) used to meet one of the naticnal objecti ..... es in 24 eFR 570.208 until five years after ~ira~ion of ~his Agreement. Or for such longer period of time as determined appropriate herel.Jooer by City; or {bl is disposed ~f in a manner which resu~ts in City being reimbursed i~ the amount of the then current tair market value of the property less any portion thereof att.ributable to expenditures of non-CDBG funds for acqUisition .of .. or improvement to .. the property. 4 950131 .~ Q07'0721 .', • EXllIBIT F INSURANCB UQUI REKEIITS lr FIRE AND EXTENDED COVERAGE Insurance. to cover ~ less than One Hundred Percent (loot) ot the replacement <:oot of all insurable improvements rlthin or "poll tbe Property. Such policies sball inel~de water damage and debris cleanup provisions. Additional Fire and Extended Coverage Insurance shall be Obtained upon completion of the Property's rehabilitation~ to cover any in~reasej value in the impravemen,ts within or upon the Property a!l a result of its rehabilitation. 2. 3. ·4. ~..n WORllRS' COMPENSATION xnuMYM LOOTS OP L:I:Ult.ITY Statutory COMPREHENSIVE Bodily Injury AtJT0M08ILE LIABILITY, Property Damage i=luding owned, hired, and noncwned automobiles <.U¥.ER\:IAL GENERAL LIABI:~ITY • including , proOuct. and Bodily Injury Property Damage compl~ted operations .. broad fvrm c¢ntractual .. and personal injury. $5.-000 ... 0'0-0 ea .. persoo $5,0'00,.0'0'0 Ea .. occur-rex:-ce $ 5 .. 0'00 .. 0.0'0 ea. occu rrence $5,0'0:0,00,0 ea. person $ 5. 0-0,0. ()O 0 ea.. occurrenc e $5 ~ (I·C'o-.. COO-aggregate $S ~ 00,0 .. 0>00 ea. occurrence . , Each insurance policy required by this Agreeme:!lt shall contain the following clauses: 1.. -ThIs insurance shall net. be 'Can-celled, lirr.ited in soope of coverage or noarenewed until after thirty (30} days written notice has been given t.o the: CITY OF PALO ALTO/Planning and Corrnrunity Environment Departmeo.t~ P. o. Box 10250 .. palo Alto, CA 94303.- 2. -All rights of subrogation are hereby waived against the CI"IY OF PALO ALTO and the members of the City Couru:il and elective or appointive officers or employees I when acting within the scope of their employment (lr appointment.~- 3.. -The CITY OF PALO ALTO is_ named as a 10s5 payee Oil t.he property insurance policy described above~- 1 «. 'The CIT"t OF PALO ALTO is added as an additional insured as respact! operatl~s of the named insured at O~ from the Property.' S. lIt is agreed that any insurance Faiataioed by the CITY OF pAl.o ALTO rl.l1 apply in excess of. and not contribute to, insurance provided by this pol!cy~· All insurance c0'\7erage requ.ired: shall be provided through carriers with a BSST rating of A:X or higher that a~e admitted to do business in t.he State o,f California. The certificate: {s} of iOSUIa!lCe evid.encing-such coverage shall be completed and executed by an authorized representative of -the company p.r:oviding in-~ran-ce., and shall be filed with and approv=d by the City.