HomeMy WebLinkAbout0465.094TO,
FROM:
'~itY of Palo Alto 1
City Manager's Summary Report
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HONORABLE CITY COUNCIL
CITY MAN.~GrR DEPARTMENT:PI ... ing
AGENDA DATE: 0ctt>be1-17, 1m
SUBJECT: A_t.dme.t 'Or tM HOtish_1I! RlI!'Wn'e Goidttines aDd Fondillg IDd
Repl:ltory A~""i!lf.1 ,.;th Pak> Alt" Hous\ng Corponoon
Co.centitt$!: .~('qui$ittl)a of Apartment Coropln at 3051-30fil
frot-NOD StT'«(
Cuur:.:lI a,:ti(,m i" requ.::;:.I~~llc· :'.rrr,.l\(, DJj dm,!~dn~~ra iL) t~c HOtl'.lng Ht"'~erY(' t}l.lideli.r1e':i
and O'l funding and re~lal('r:~ a~emt"nt with the hs.]o A!lO f-L.lllsing Corporation (PAHC),
to partially fur.d, from Hou5:ng Re-ser"~' Funds. tile a~-tui,i(iOli of a six unit. aJi studio,
ar.artmerll building on fmcT'ScIII SUttt. in nnkr 10 pro\ ide affordabk rental huu~i.ng fer
",,'fT)' low income households.
RECOMMENDATIONS
Staff reconunends that L~e Cit)' C ouru; i!:
1. Adopt th¢ attached modifkdtit"tl to the e)']5ti.'lg Housing Resen;e Guidelines to :lilow,
00 a case-hy-case ba~is \Jt;th Council approval, Lie funding of acquisition and/or
rehabilitation of existing housing for 1~' and moderate ioc{)me households from the
Industrial-Commertial account of the City's Housing Reserve Fund.
2. Adopt the attached Budget A;-nendment Ordinanc~ aut,'oii.zing the tra.nst~r of$375,OOO
in Conun:-rcial Housing Reserve Funds to be used for acquisition of 3051 -3061 Emerson
Street.
3. Approve the al'.ache<l funding and regulator)' agreement (with its attached fonn or
promissory oot(:) \\ith the Palo Alto Housing Corr-<)ratiorl, to pro\.·ide a loan of up to
S37;,OOO for ac.:quisi1icn, dosing, lin:.ncing and rcla1Cd costs m;cessaIY for the purchase
and presen'ation of 3051 -3Ct6 t Emenon Street for very Ilm: income rental housing.
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4. Authorize the Mayor to execute tht agreement in subs'".antially similar form. and any
other doc;:uments nccessary to close the trB.nsal.1.lon purchasing .3051 . 300 1 Emer$(~il Street
including, but not limited to, the promissory nl..1te. deed of trust and &n~ necessary
subcrdination agreement.
5. Di~"t the City Mai1.ager to administer tht pru\'bions of the flLflding and rt"g'.ltatory
agreement
POLICY IMl'LICATIONS
The Housing Reserve Guidelines. as adot'ltr:d on Febru4Y 3. i 9$(, ;md Gm(~r,jj\.~J ~\l', (mfl<:r
19) 1990, limit u.':;e of the Commercia! Fund nlllrll;:<; to :'l,:ti'l'lll':j \,l'Ldl SUpr",):1 !ht
creation of newly constructed housing unit':'. The pUrp0.'~ oj the "\'I1\';>:r:her 1(;'),:1
amendment was to allo\.\" k·aos from lhe Commercial III the Rt'~.:dn·i]l runJ 1-:"1 ':,uf'f,O;1
the acquisition ofexisling rental units. It (~no\\ pr0p<.'s-;;d H131 the (rtliJdin.::;, h: "!fT".'r;d.;:u
to allow the Commercial Fund moniC) to t:-e llsr:d dire(.:tl~ !i)r lht;' 3cqui,ition and
rehabilitation of e)dsting units on a cas.e 4 by.casc bdSis.
EXECUTIVE SY:JlfMAR.1:
The proposed property acquisition is. a continuation of PAHC's pr0gTam of acqLiiring and
rehabilitating existing, rental apartments for convers.ion to affordahlC'. !~W Income housing.
The City's housing funds will be leveraged \~'ith a bank Joan aJ',d Ca11 :s,ef".'f: as the iocal
match to obtain federal rehab,litation funding for the project. The parchase mus' dose
by November 9th. Aitemative funding sources would be a combinatiun of CUBG and
the Residential Reserve; however, ,tail' re<ommends that availabk (,DBG funds be
roserved for the Arastrarlero Park project at this time.
FISCAL IMPACT
This loan agreement will reduce the av.ilable S3,016.058 balance of the Commmial
Housing Reserve by $375,000.
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ENVIRONMENTAL ASSESSMENT
Actions by a public agency rela!e<l to the acquisition of existing housing units as part of
on affordable housing program arc c"legoricaUy exempt under Section 15326 of the
California Environmental Quality Act (CEQA) Guidelines, The project is also
categorical I)' e"'-'"IIlpt under the National Environmental Protection Act (NEPA),
PREPARED BY: Calhetine Siegel, Senior Planner
CMR,465:94 ~. 3 of~
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Page" of 9
City Manager's Report (In-Depth)
SUBJECT; Atne ••• t with Palo A110 Roa.ing Corporation ror tbe Aequl<itioD of
"" Aportlllul Balldiag at 3051<1%1 Em.non Stroet
EL'QMMENDAIIONS
Staff =omrnends that the Cit) Council:
L Ad0pt the anachC!J modifi""'lIion to the e,xis:!ing Housing Reserye Guidelim:s. to aliow,
('n 3 ca.s.~·hy·;';;"I5t" ha.."~s. wit~ Councii appro',aL the tunding Dr a.::quisi!fon and/or
r{;.ha.biiitatic·{'. of (,'\i',!in~ ]1':)~I:"'1g for !ow ';"'I.d moderate in;::orr:c households from the
Inumlfial·Comm('rclai .'i~'(1U.'lt of t!J( Cit~·'s HOtl\ing Re-ser .... e Fund .
. ?, Adc'pt Ih e :.itiach::d Budget Am r:ndmen~ Ordlna.r1c{; al!thorizing thl! transfei of S3 '7 5,0'00
in Lcmrrrerejal H0lJS~ng Keserve F~ll1ds to i'x' us'!d for a'Cqu~sttion of :~051 -306'-Emerson
Street.
3. Appro.\'e the lltt3chcd fu.'"\din~ and n~gulatl1ry agreement (with its attached form of
promis,5{I!')· nOie) with t.l-Jc Palo Aito Housing CorporatIon, to providr;: a loan of up tll
5375.000 for acquisition, clodng:, Iinancing and relat\:d costs necessary for the purcnase.
aJ1d prcs.ervatioo of 3051 -306] F!TIeTWn SU't:"er for ver)' low income-rental housing.
4. Auti>Ori.u the Mayor to execute the agreement in substantially similar form, and ony
other cIocum<nt5 n«cssary to ciese the tnns.ction purthasing 3051 -3061 Emerson Street
including. but not limitoo 10, the promissory note. deed of 1...·11 • .'.t and any nC':essary
subordination agrcetIlent.
5. Dir<ct the Cit)· Manager to administer the provisions of the funding and regulatory
agr=t.
BACKGROUND
The Cit)' has prmide<i financial assistance to the Palo Allo Housing Corporation to acquire
and rehabilitate existing apartment buildings since 19.82. Over the last twelve years, se·ven
properties have been acquired, providing 91 units of affordable housing. The last
acquisition was the ten unll Plum Tree Apanmcn~ in J 991.
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~KY lMPLlCAT!QNS
The Housing Reserve" Guidelines, as adopted on February 3. 1986 and arn.:nded November
19, ]990, limit use of the Commcrd.aJ fund m;mic-s to actlvicies whkh suppon the
creatio" of newly consl:T\lctro housing units. The purpo:.e d the November 1m
amendment was to allcrn' loam. from the Commen:ial to lhe R~identiai Fund [0 support
the acquisition of existiJ.,s ralta1 units. It is now proposed that th~ Guid-c/incs t-.c further
ameoded to allow the: Commercial Fund monies to ~ u...~ directly 10 support tm
acquisition and re-habilitatioo of existing units on a c.Lc:c-by-.ca..o;.e basis. FelT nwr.-erous
reasons, COIlStnlction of ne\lr!: low and mod(T3.te income housing has proved to be very
difficult and expenshc"e in Palo Alto. The last new. suh->idiLed family rental project in
Palo Alto was California Pa.l"');. Apartments huilt in i'18-}, 'Ine C't1ffimercla\ Fund -presently
has a 1.'Ialance of $3,016.658 in uncommit1t.'d. ;.nai:2.h!e fl.mds.,
The draft "Ne:\us Analysis" prerar~d by Keyser \1J,r.:ttlr1 A';''S0 ... :iJl~';'" hH' ((Hldt.:d't::'. t1,:11
the use oftht: CDmrrh'rcbi Fund, to Jcqulrc J.r,c r.("il.lhilit,1k ~,\~~ii:lf rl'r:1J! unih tn CiCJk'
pemmnentl:. atford3ble iow JJ1d m('·,krJle in(;limC h::';_h~!l.s:', i~ ~lrrrl~fii;l\l', ~tnc·_' (ltn.:-r
City hous.ing funds (COBO and Rc_~~u.:n(;31 Re'~'T\c} <!Jt~ ah',hj~ ":~'mm~llcd 1\-r ~:\p(.;.;ted
to. b,~ committed \\;ithi1\ the n::-(;~1 ~-,,:v') t(\ ,li.hr,'( h'"u~~ni'-rr<I,\~'.:l" '~'r ,'"1.:\\\ ~il..:;' ('P,:lltli;.
acquisition of AnistIadero P,lf~ Armmen!; ,in,] ,1dmir'li~rr;;lilll1 tlf the nl.:hHI ~\brkel R<ll~'
Program), stalTis prllpo:.in!5-chat Ihe HOli~in!; R'::i;:n(~ (;wld,liili.''' h< amended <:'1 Ihis lilTIt:
in order to partially fund this pa.1icuJar rrl'"\jcci.
Staff plans to bring a complete rey;ew of the "Nexus Anal.\'=,i~" 11nd (lousing Rescn,'e
Gu!delines. to Counc-iI in the latter part (If 1 <f?5, after cOmpkli(l!l of Phase 1Il of the
Comprenen"j\'e Plan, As pa .... Df thJt re,'iew. sulff an:icip4tcs developing mere "pecific
evaluation criteria and priorities for the use of the: Commercial hmd. that .... HlUld :still give
a strong priority to the support IJf projects which crea~e n:-w unil'io ',,,'bile allowing s.ome
assistance to projects involving only ex.ist~ng housing
DISCUSSION
The Palo Alto Housing COf)Xlration has r«luested funds from the Cit), in the amount of
5375,000 to assist with the purchase of a six Wlit ~tudio apartment building. which is
located bern'ecn rn"o other apartment bUlidings PAHC m\TIS on Emers.l)n Str-cet. PAHC
has desir('4 to acquire-the property for SOnIC time. since irs location create;:; the opportunity
to assemble parcels for future mc:rget and denlcproeot. The three properties together
comprise 30,420 "loa", feet iUld are zoned R.>,f-30, If redeveloped as a single pM«1
under L~e City's .7.oning and site development standard'S, a total .of 21 units could ~ built
compared to L.'1e 18 units that C'xist today There would be a potential for higher densir,.'
jf the site were redeveloped under the Planned Community (PC) wr:e.
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City housing funds will leverage a IS year, first mortgage through. local bank. The
terms (lfth~ City's loan are zero ",terest with all payments fully deferred until the end "f
the 15 year term of the bank loan, For the remain"'g 25 year tenn of the regulator)
agteement, 3 percent simple interest will be charged; and payments of principal "'"
interest will commenoe from available surplus cash now, At the end of the tolal 40 year
term of the City's regulatory agreement, any unpaid principal and interest will be due.
PAHC's inspoctions have identified about $20,000 in nepairs and safety it,ms that n<Cd
immediate attention, PAHC will complete this wori< with funds credited by the seller at
closing, Based on their experience with similar properties, P AHC eslimates tl-.at a total
of almost $100,000 in rehabilitation "ill be necessary to com:ct deferred m.inte-nAnce a"d
bring the units up to PAHC's standards, Federal HOME fund." obtained either through
the County or the State, or CDBG funds an! the likely resourcC' fur toe reha~lljlation
work. For this reason, the agreement has been prepared 10 b-": comp'E!libJe \ ... ·i!h HOME and
CDBG regulations,
The total costs of the-project, and funding source\), are '5Urilman7cd 8~ f(11!('!"~~s:
Purcha3c Pd ce
Title. Escrow, Flnandng, ~'H:)c.
Initial Funding of RC"s:eT\'e~~
TOTAL USES OF FUNDS:
SOURCES OF FUNDS FOR AC()t!lSmON:
Estimated Bank Loan
Cit)' Loan
Estimate of Rehab Costs
(lncludes Construction Work & Supervision)
TOTAL ESTIMATED COST:
COST PER UNIT:
~~~:-'.,nth)
3,65!.l
6,350
S455.f{)(1
S 10,000
375,000
97,000
$552,000
S 92,000
The funding agreement requires that ail of the units be remed to very low income
households at affordable rents. Currently, fiye of the six units are occupied by very low
income households, with four of the fi\'e paying o,'er 30 pencent of their mcome for rent.
The City's s~bsid)' of the purchase will enable PAHC to lower rents to levels affcro.t>!e
to household with incomes ranging from 2t) to 50 pencent of !he Santa Clara County
median income. All unit,; mw:;t be converted 10 low income OI.:cupancy v-.'ithin one year
of purchase,
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AL TERNA TIVES
AiternAtive Funding SQurces: Should the Council decide not to amend the Hou..~ing
Reserve Guideline,s fo utilize the Commercial Fund to support this project, then the only
available funding would be the unallocated balance in the CDBG HOllsing Fund of about
$279.500 and the Residential Resen'e Fund availabk balance of $83,000, The total
available amoont of $362,500 is less than the $375,000 PAHC requested, The $12.500
difference could be made up by targeting the units to somewhat higher income households
within the very low income spectrum. Higher rents could th"" justify. correspondingly
higher bank loan. The attached funding agreement would have to be mocitied if federal
funds were use.d tor the purthftie.
However, both staff and PAHC recommend against committing the CDRG balance 10 an)
new projects, until Lhe total funding for the acquisition and rehabilitation of Arastradero
Park Apar!ments is assured, There is some p('lssibilily thaI n further commitmen~ of City
CDBG fhnds, above the 5345,000 aln.·ady hudgeted, may he requ.hed heron: th~ end of
the fiscal ye-ar.
~QJ:::jtL __ AsSlstanC.e: PAHC cannOt acql.llfi! rhl! property and ncn maintain the current
market rate rellt'i wilhout a significant tinancial subsidy from the City. IfPAliC does not
acquire the property at t.1C present time, It will he sold to another buy-:r-, 'lnd it wiil then
be unlikely thot PAHC will ever be able to purchas. it.
A Budget Amendment Ordinanc~, in the amount (1[$375.000, is required to alloca:e funds
for thls new activit)'. This loan agreement will reduce the availahlc $3,016,658 balance
of the CommcrcirJ Housing Reserve by $375.000.
ENVIRONMENTAL ASSESSMENT
Actions by a public agency related to the acquisition of existing housing units as part of
an affordable housing program are categorically exempt under S«tion 15326 of the
California Environmental Quality Act (CEQA) Guidelines. The project is also
categorically exempt under the National Env!ronm.:!ntal Protection Act (NEPA}.
STEPS FOLLOWING APPROVAL
Escrow is scheduled to close by November 9, 1994. PAHC will develop detailed
rehabilitation plan..'i and cost estimates after acquiring title to the property. PAHC \.\'ilJ
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seek rrilabili1ati'>!l funding duriilg the next year, from HOME or eDEG. If City funding
is ~oo for rehabilitation, then that request will be prosenled to Council for approvaL
AlTACDMENISlEXHIBITS
I. Housing Reserve Guidelines "'ith Proposed Text Amendment
2. Budget Ammdment Ordina-",:~
3. Funding and Kegulalory Agreement with Palo Allo Housing Corporation
4. Letter From Palo Aile Housing Requesting Funding and FinaI,dal Proforma
C(,: Pa!u AltD Housing Corpor'11ion
CDBCI Citi7e1l. Advisol)' Committee
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HOUSING RESERVE GlilDELINES
Thr Housing Rescn-e {UK Reserve) is a S.ep.ar2IC City fund set aside for the specific
purpose of a..qisting in ~ den·lopment of housing that 15 affOidable to low, m~)(fera(e
and middle lnCC'fm f.a.rnilic!O iUld in Il..,-~sting ~Il the housing needs of low and moderate
income pcrwn5 All monies contributro to the Reserve and LT'1tereSi earnings accrued
shall be used solely f", ~ purposes, subject fO guidelines set forth below,
The R~·e is maGe up of ~'O J:cco~ts. the "lndu$trial-Commncial" and the
"ResidenriaJ~Miscellaneous" accounts Monies recei\'t"d fwm lndlliotrial a...,d commercial
de,,'eioptt'i, pu..-suant h) ChapteT 16A7 cf the PaJ(l Alto Municipal ('0<):':'·. are deposited
by t.h~ Cit) Fifl3-11C~ l'.repa.rm;eTH in me fr:du'i.tnal-CommrTcia! 31.'i,'Ount ~'donies
re~ei\"ed frrrm r~.;;idential deyclopcr5. in-lieu of Pf0\'idil1g hous.!n~ und~r the City's
Beicw, \!ar~,;t Rate (W,'R) Progra."11 {Pfl'polm 13 (1f tht H(""l.lsin,~ j·'icment), are
dep<1sited by th.: Finan.::t [kpartment in t11e R{s.:dential j\li';,~d!ane,'us account This
sec0r;d 3"Ol~i1: ah'~1 indudt,) m('nje:~ from Ini'"celh,-ne('1u~ snurt:{'5 tk~,-! an: intended for
hcolls-ing purpD~e::J (~ ~, \f(1rtrage Re\':!,rwe Fh'Hld fee pii\Tnent. W,;:-htcr Wood
pa)menl$, and any re-p"":'TIH'nl of loans from the Rt:sidential·~lisceliJll<:TU::; account).
The Reserye 'i\il~ be used to redu,e the cost of housing 10 leyds th,'jt aft." afford::tbie to
lo .... , mooeratr and middle Income ta.~ilie-s, a!-defmed in the City'$ Comprehensive
Plilfl. A prcferrnce \\oil] be-given to projects. \\ith housinS for families wiTh mmor
children; howevtf, this preference does nol preclude the use of funds for other f)"pes of
housing Lffordable to th~ low, moocTatc and middl.e income. i\,,1onies that have been
cre.dited 10 the Industrial...commercial a~c<Junt mU5t be used to suppon the construction
of Dew housing dcv(lopment, ",'herea.s. monies credited to the Residential~Miscdlaneous
accowlt may be: used for eima new or existitlg housing" lIe9tt\'el, Pte Httelest lelBs
II..., he ""aSf! en • tiltS h:. ene easil as 4cKlftimea h, the Cia, CStI!.eil Hem tilt!
IBati'!ilriel CeRilfterej~ le~Blief t6 tat Re"iEle~ 'liseeHanestt:i aeeetml te 51t:1Pf1e~
lIetll:tHiriMt ef e~~ hel:l!i61! te he t!Scd far 16 Me! fft6Eiefl!k ifteoffte familie!ii~
j'}fun'l!'Ver, on a case-~·-<Ilje basi.ro as deterl'1lu,ed by the City Councill Industria}
COlftJtlCciilJ account mol'i~y MQ}' also ~ used to luppotl the acquisiJimt and/oT
reJlldJiJitJIlio" of aisting itolt5irrg 10 ~ usd for low tlIId moderaJe income
householJ.tt. ~ fligiblt uses include, but are not limited to, the following:
Joduding pa~mcnt.s reqt.!ired pursWIII: to Lhe CaliJ"rma Lm ironment.1J Qu~li\y Act prior to
enactment of Chapter 16.47
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Eligible Use;; jn Sunport of New Low/}.·foderate/1\-iiddle [p~musing Development
I. Purchase of land or air rights for resale to developers at a reduced CC.5t to
facilitate housing development for tow, moderate and middle in,,-ome
households;
2. Reduction of inUttst rates for wnstruction loans or permanent rrnJlnci.n~ usro
by developers or purchasers of low, mcAierate and middle income housing;
3, Payment of predevelopment and d<Y<lopment costs. including the co,ts
associated with obtaining Mortgage Revenue Bond financi.ng~ aad
4. Payment of off-site-costs diYectly relating 10 1o,",:. moderat~ ~nd middle-inc(Jme
housing development (e,g. .. utility cO:'!'1(nl0ns. wad lnlpfow'ments')
2. Ree.s':lr1Bbh: ;;xptnsc'S fLeees:;"ry to admkni:>h'l th~' City":;. th:l~'"-,, \'a.r~,d i';,alt
Prograrrl or other City-Spolls:)rcd housing pro.8ra.."n::.
Procedures
Request f('lf usc of the Reserye Illnds shall be submitttd to the City \bnager for
re"i~w and recommendation to the City Council. '
A request for funding should provide the: following mtrJmUll1 infnrmauOlr
1, Size of Joan or grant requested~
2, A description of the propo>al to be fimded and Ih< organiz>tions im o,,'ed in the
project. Public benef1~ and relevant Comprehensive Plan Housing policies and
programs ,hould be identified.
3. Identification of the numbei of law, moderalc and middie in';i)f!lC P':T--.on~ to be
assisted and the spedfic incom e range of those assis.ted;
4, Rea.,ons why a gran~ rather than" loan. is requested (if applicable);
5 Identification of loan :-atr and terTn'i, s.ecUlity or colla!erai aniJ :lomc\:' ,A
repa,ment funds (if applicable); and
6, Identification of leverage achieved through City grant or loan
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AI !he close of each fisc.al year, the Director of Finance and the Director of Planning
and Community Environment shall report on activity during the previous year (deposits
and transfers) and .""il.ble funds. The City Auditor's Office shall pmodically
examine this report and all Housing Resm'. funds, and shall report on the results of
this examination.
Approved I;ry Palo Alto Cttr Council OD t"ebruar}' 3, 1986. amended No .. 'ember 19,1990
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ORDINANCE NO.
ORDr~~CE OF THE COUNCIL OF THE CITY OF PALO ALTO
i~ING THE BUDGET FOR TIlE FISCAL YF ... lU{ 1994-9S
TO PROVIDE PARTIAL FUNDING FOR THE 1'.CQUISITION OF
A SIX-UNIT APARTMENT BUILD:NG AT 3051-3061 EMERSON STREET
WHEREAS, pursuant to the provisions of Section 12 of Article
III of the Charter of the City of Palo Alto, the Council on June
20, ~~94 did adopt a budget foy fiscal year 199~-95; and
WHERF...t..:3, the City of Pillo Alto recognizes the need for low and
n:,::derate income housing in its Co~prehen.sive Plan and Comprehensive
HCrusing Affordabi 1.it.y St.rategy; and
WHERE..~, the non"proiit Pall) Alto Housing COt-poration (PAHCi
it;! :teq'.lestir:.g funds to assist '..;i. t.h the purchase cf o. six-unit
studio opartment. buildiu9 ':it 30')1-3061 Ernerscm Street; and
:""HER.EAS, the tunding agn:ement req'Ji.res that all of the units
be Tented to low income households at affordable rent8.
NOW; THEREFORE, the COLlncil of the City of Palo Alto does
ORDAIN as follows:
SECTTON..l. "The Sum of Three Hundred .Seventy Five Thousand
Dollars ($375,000) is hereby authorized to be loaned to the Palo
Alto Housing Corporation, The Commercial In-Lieu Housing Fund is
cDrrespondingly reduced and the Reserve for Notes Receivable is
correspondingly increased.
SECTION 2. This transaction will decrease the commercial In
Lieu Housing Fund from $3,0751566 to $2,700,556 and will increase
the Reserve for Notes Receivable from .$0 to $315,000 as of
September 21, 1994.
SECTION J. As specified in S~ction 2.28.0eO(a) of the Palo
1>.1to Municipal Cede, a tWQ-thirds vote of the City Council is
required to adopt this Qrdinance.
SECTION 4. The Council of the City ot Palo Alto hereby finds
that the enactment of t.his ordinance is not a project under the
California Environmental Quality Act and, therefore, no
envi.ronmental impact assessment if) necessary.
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SgCT'fON 5,
Municipal Code,
adoption.
As prcvided in Sect.ion 2.04.375 of ::he Palo Alto
this ordinance shall become effective upon
NOES:
S!". Mat . Ci t~;-ittorney-
. '-PPROVED:
City Manager
Director of PlariJ'ling and
Community Environment
APPROVED:
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:.~.Tyor
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This document is reco't'ded
for the benefit of the City
of Palo .~to and is entitled
to be recorded free of cr.argp
in accordance with Section 61Q3
of the GgyerqmeDt Cpdp,
After Recordation. msil to:
OFFICB OF THE ern-J\.'.M'('.o?J.,~y
250 Hamilto~ Avenue
?alo ~to, CA 94301
FO!I!lmG AND REGULATOi!T l\!iR1!EM!NI'
BR'J.'MERri err'! OF PALO ALTO l-JID 'PALO ALTO RQUSING CORPORATION
~ ACQUISITION OF APAR'Il'4KN"I' C'CMt'LEX U}CATIID AT
30.~1-3061 EME:RSON S'TRZF.T
TrUS AGRE~E..~_'!IT :'.8 .~,3.j0 -:1.[::1 Entered if.itu on the
day of: 199~, by f.n'~~ bec'lieen ch.;;> CI'n' OF &'.;DCi
A1/1'O, a ;';"!unici~-:al cl;),".~,:::,-1~.ti-:,n c'!-tr~o;, ~,t;:;.u-~ n: ;':-,],U~~o,!fJ.i<.i ("CITY'),
and the pAL':) ;\..LT"O W::;._'S::-:'·,~ e,y?; :.".;:Xj:':;:C;, d (;;;: 1 i f f)nli a.. ':Dn];.'l.ot i t
carp':lral ion (' C0~\TRtl.CTOR. ~) ..
RBCITAI....S
WHE'RRAS, CON"I"RACTOR has applied to CITY for as~"istance
with the cost of CCih-rFJ\CTOR's acg-1.lisiticn cf the real p:ropezt)' and
impr,:'lVements locatt'd at 3051-'3.061 S:rlerSoD Str~~t in the City of
Pale· ll..l.'to! cons:i.sU.ng of a six··unit api3.rtment:. complex {the.
·project· or the ·PrcpeIty, ~ including as hereinafter more
particularly described); and
WHE.RBAS. t.l".e project will provide rental .housing
affordable to low and very low income households; and
WHEREAS, a.fter t.he acquisition of the Pro-perty CONTRACTOR
ant.icipates applying for funds to renovate the Project, under t:r_e
HOMB IaveatJ:iellt Pa.rtne!"ships Progra.r.t established by t.he National
AffOrclable HouBing Act of 1990, or under ::he federal Community
Development Block Grant program, administered by the Uniced States
Department of Hous ing. and Urban Deve 1 aprr.ent; 3.!".d
WHEREAS. the a'..:quisit ion and preservation of affordable
rental housing fulfills one of the purposes of the Cit}'·' S
Coomercial Housing ResErve Jollnd and is also consistent with the
affordable hcusing goalf' of CITY as out.l ined in CITY's
Comprehensive Housing Aftordab~licy Strategy;
NOW, 'i""".tiEREFOKE [ in consid~ra.LiQn of t,he Thutual Covenants
and agreements specit~ed t.erein, al.lo subject t.o its terms aud
provisions, the parties to this Agr~~ent agree as tollows~
1
9.11(112' I.;c 0020910
I
\,.
:~
PART 1: FQNDTNG
1. "A.~sisted Unit~ means one of the six {6J res.ide:~~_ial
d ..... elling units that will be available for rental i!'l the PI'ojec: as
of the date of "Project CornpleO.on., ~ as tnat te~n is defined under
Section (I} (Pt.J (12) hereof .
2. .. CO:N'I'RAC'TOR • means the Pa 1 0 Alto HC;J.sicg
Corpor.ation, a California nonprofit public i:::e:Jo,et it corpora t ion.
3.
Development.
Housing and
allocated to
"CD:BG~ or ~CD:aG pzograr!1." If,eans tn.'? Cc~, .. mity
Block Grant. program, e~tabiished -pursuant to thE.
Cotmr.m.ity DevelQ~;rLellt Act cf 1974, acd the :Ur:.d.'3
C!TY pursuant to cr,3.t prcgrart:, ty HT.;::-.
4. "'CITi" rr,~ans the City of P('c':':' .: .. \,::,=,. ,_ c',.:",c;-::,:e-:;
municipal cQ:rporation of c:'lI:" Stau:~ of C;'i~.,~Ei)r;-.. :.c...
~Qljalified State f1er.:ipi8r,t"~" for t:l"l~',:-''i;e'" c: ,,;''.i::' :-' .,~ L·.':;:;3r,'-,~,~'
Partnerships Progra.TI,
5_ "!-!C'XE" ~eal~S :.~"e !--:C~'8 _:rNeSV:-2r.': :;,;;='c:-,,,;:::'~~ : .. c,:
Pr.ograI!'. est""..blished by U-.e Nati~nal ;'.tfordat-le H.::'...:si"g .-\ct 'Jf ~S9:;,
wr.1.<.::.h is al'i!':'.inistered ,by !:{T,JD pursuant t,:" t~,'E! reS'-l~_2-.·_ l(',ns :;y,.l.bl i3r.;:::'
at 24 CFR Part 92. as arr,ended \ tl" .. e "RE:g'..llati.cns ")
6. "Household~ rr,.:;:ans the tot-al r,'..:.:-T1::.'er ot ~etsr.:;n:::.
residing in a single reside!:tial ur~it. iAs:si5t~6 UniLJ '.'~ tr,['
Pr-oject. Those persons r.a.y also be refe::-r:ed tG, i.r.:divid:..:.G.!.Ly 0,-
collectively, as woccupants· or "tenants", Household in~c~~ is the
combined income of the Household ar:.d is used to ctet~!""!':'1ine i.!'CQ:r,,e
eligibility, in accordance · ... ·ith the Regulations ar.d wic.h t.hi::
Agreement.
7. nmm-means th~ United, States Depa:rt.r:"Le-nt of, HC'\:lsing
and Urban De .... elopment, and its successors .
.8. "Inc(" ... rne Certificat.ion~ means a cer-t.ificatiQH as to
income executed by member-s of a Household in the Project, in
aubSl"rantiallj' the form attachoed heret.o as Exhibit -A, ~ , ... hich is
incorporated herein by this ref~rence.
9:. "Low Inco:ne Household" mear;s a r.cu::;ehold ... ·ilier.
adjusted income, adjusted for household size, as computed pursuant
to the Income Certification, does not exceed sixty percEnt (50%) of
the Mediarl Gross Income fOl: t.he Area, as hereinafter defined.
Determination of the' status of a Household as a Low Inceme
HQuseholct s11al1 be made upon L:iti&l oc:r:upan.-:y of ar: :;'ssisted Unit
by each occupant, ",od recerr ifj.Ed Cl,nnually"
income
10.
for
Slatist:ical
~Median Gross Income for the AI'ea~ rr-.eans tbe median
the San Jose, Califor-nia Primary ~etropoll tan
Area, as de.Lel:Y.1.ined by Lhe Se.c!:etar'j ot tfl'JD under
2
.'':'
Section a (f) (3) of the United States Housing Act of 1937, as
amended. In the event that programs under Section 8 (f) are
terminated~ Lhe mediatJ income shall be determined in accordance
with the written direction of CITY in a manner similar to CITY's
then~CUrrgDt income fO~Jla deterrr~nation.
:11.. ~Proj~ctOl or tlPr.operty" means the real property and
improvements located at. 3051·3061 Emerson Street. Palo Alto,
California, and more particularly described in Exhibit ~8~ to this
A.greement.. 'Which is attached hereto and incorporated t.erein by this
reference. The Project i~ more fully (If.':scriLH~d in Section {I) (C)
hereof.
12. NProject
Agreement, ~eRns the date
purc~..ase of the Property.
Completion", for purposes of toif:!
of the close of escrow for COlV"TRACTOR r s
11, "V~r':l Low Income Househo1d~ ~,ean~ 2 hO!.lse~old '.·;hich
adjustec. inco.:ne, adjust-eO. for householc''. size, as c(:J:rr;p'JL::d pursuant
to t.hE. Income Certification, does not exceed fjft:.y percc:.t i'':,O!:; of
the l'!edian Gross InCOl1'.e fo!' the A:-ea, Determination of the st.a.tus
cf a Household as. .:l "Very Lo;.,! Incc~r,S Household~' sInH b~ rr.i:l.-,-:le UDcm
initial occupa.ncy o( an A'5::iisted Unit b~' each r;r.c~par.t, and
re:cert,ified -anr.:1..1ally,
The purpose cf this Agreement is to set forth the
resp6ctiv~ duties: and respon~;ibilittes of CITY and. CO~mACTOR ',.:ith
respect <:0 CITY's loan of funds for CONTRACTOR's ar.:q'.lisitior. of the
Froperty.
C. DBSCRIPTIQN OF THB j?Ro.:rn.c:r
The Proj ect shall consist of the following activiti.es of
CONT'AACTOR:
1. Acmlisit.ion. CONTRActOR shall acquire the Pz:operty
in fee simple. AS of ~he date of execution of this Agreement, the
Property consists of six (6) apartment dwelling units.
2. Rchabilitatign. CC~~CTOR ackncwledges that
certain renovatio:J and rehabilit.ation wiLl be necessary for r.he
Proper'Cy following the: close of escrow. provided sufficient funding
is obtained by CONTRACTOR, rehabilitati.on of the Froperty shall be
complet.ed no later than three (3) }rears following the date of
Project Completion and shall at a minim'_Ul'I jnclude, but not be
limited to i terns of work necessary to bring the Property into
compliance with the Prope.rty $tandal.-ds set tortr. i.f! S~c::ion (II) (G)
hereof.
3.. R<:.lQcation Duri.;r:}o RE!.habil:i.t'9t.ion. Di.Hing tr,e
renovation or rehabilitation of che Property, COr-.""RACTQR shall
temporilrj ly reloca.te existing residential tenants as may be
necE"ssary and as required under the Reg'..llations or the CDBG prograr.1
3
.. :
I
!
\'
'>
*
requirement.!:>, depending on the source or sources of funds for the
rehabilitatio>1.
-!. ~~;;;At.i..QJ!. From and after project Completion, for
a period of forty (40) years therefrom, except during any
~elocation period to accomplisf'. the rehabilitation, CONTRAC'TOR,
shall operate the Project as rental housing at affordable rents for
Low Income Households and Very Lew Income Ho,!seholds, according to
t:he terms c·E this Agreernemt.
The total c.:ost of acquiring the Property, including
closing ccst.s and funding of. resenres, is Four Hundred Fifty Five
Thousand Dollars ($455,000.00) Projected sour.ces of funds are as
fcl.lcws:
?I."ivate bank lC(';.n
Ci ty Cow .. 1'·e:r.'c j,al Hou.s ing
Rese:r:ve Fund
'rOT):"L SOli-XCE"S OF F'-J'?''"[.S
$ 90,000.00
;c1 ''; . '.) OQ .. "-.JLQ
$ .;.s:::',COO.OO
CiTY s~lall cont!:i,cl.ltP. a ~".axirr,um of Three Hundred Seventy
Fi'<'e Thc1.lsa.nd Dollars ($]75 .. 00Q,OO} in Prop-?~ty a~::r.:.isiti,.:m c.cst.s
under this Agreement, as set forth under Section (II IE) hereof,
CO~"TRJ;CT(:R shall be solely responsible for obtaL1.ir.g all other
fiil3..ncin'J ne.cesf'ary for a.('quisitiOl~ ot the Pr·oJect.
Notwi thstanctlng the fcn~"30i'J.g, CON'TR/ .. CTOR estimates at
the lime of execution of this Agreement that the total c:cst or
re.hQ.bilitatiop. of the Pz.'operty ..... i11 be an addit:i anal Ninety Seven
Thousand Dollars ($97,000.00). CONTRACTOR sr.all be solely
respo~~ible for obtaining all financing necessary for the
Property' 51 rehabilitation. However, the parties acknowledge that
COYTR1-.CTCR ant..icipa'Ces applying [or HOME funds or CDBG funds t.o
cove= the rehabilitation expenses. CITY shall assist CONTRACTOR
wi th the application process {es) to obt.ain such HOME or CDBG funds.
E. CITY AGRI1BMRNT TO LO~
Subj ect to t.he terw.s and conditions under this Agree:inent,
CITY hereby agrees te lear:. to CmrrR .. ~CTOR the sum of Three Hund!""ed
Seventy Five Thousand Dol:ars (S~JS, 000.00) from CITY's Ccrnrr.ercial
Housing Reserve Pund (the ~ Loan ~ 1
This Agreer:'H~nt shall cen'.rt\e.nce as of the dc:.te of its
ex~cutiQn by CITY, and shall remain in full ferce and effect until
torty (40) }'ears from th~ date of p:roject Completion.
4
On or before the clC'se of escrow for purchase ot the
property by COlflRl"CTOR. CQNTi<:ACL'OR sl".a] 1 exec:ut e a pro..'ni~.sory note
for t-he !..oarl (the ·Not:e~), sel:ured by do deed of trust which shall
be subordinat.ed only 'to the first-deed of trust for CO::-'"TRACTOR's
private financing for t.he Project in the a!f:Qunt of Eighty Thousand
Dollars ($80,000.00). The terll'l of the Note shall include the
follo"-ling;
\. ~. The fo~ of the Note shall be substantially
s.ixJJ l;j.r to t.np f0'1""!'1 ;;>.tt~C'h'9d her etc .)8 E.x. ... ~ibi t "D ~ ailC iilC<·.1LPOratea
hereio by this reteren'::e.
2. T~. 'I'"r,0 terr, of repayn-.ent at t.he LoaD under the
Nc.t~ shall b~ f'.)J'--ty {"'OJ yea.T~ !.':."<:'71 lhe date of project Completion .
J. .!JJ..u.r~1.. 'l'ht': L:)-i1.)J Shiill bc:.1r incet·~st at tbe I'ate
ot zer\) ~;€:::'c;_>!lt (.H) per ar.m.:;~"1 rDr tlH.c ;irt'~ fittec:n (15) years of
tl::e -;--;c1tE t>"'~;l":"':. YO::' tr.e :r.=::-ail1.i.r:l} t· .. 'entJLtiv~ (25) years of the
Note tex.,
;;~:TC!;;-Tlt. i 3\)
is: !:"':-Fai-:i.
thE! L-8"an ~h:l.J.j t,ea;.· interest: at thE' r.lt.e of three
'1')2-:' dm'~~ C':i -3. 8'irr'p~ e i-:1t.er'est bas~.s, until the Loan
.... ra\'":""".;-:1t,,? Exc~;J'; :-:.r r':2jificar:ions tb",.l rn . .:!.:!, be m:tde
a(tr..:r ~r.('. ~~e! __ ic:iic Rev ie ... · descrit,'E-d in thF. following subparagraph
(1) IF) (5). Qr. excepl in case of def.:tult OI: as othcr",ise pJ."ovided
t;:oder-tr.is ~.gr~e...~nt or ur.der th..:-Note, no repaymer.t of the Luau
shall be req~i~ed under this Agreexent until th~ date of fifteen
(15) yean~, frem the date of Yrojec.t Corr::pleticn. Ho·..,rever,
CONTRAC'I'C'R; ac its oDtior., l":'la.}' :rak:~ earlier paYHlentS or full
r~Pdyr'(1ent of the Loan tro:n a.ny suq'I]us cash flow fro:n thE' project,
01' fz."om any ether soul.-ce, ~ithO'Jt penalty at" any time during I:.he
term Df this Agr~ernent.
5. Pcrietdic Revie,,!. On or before the date of fi.t:teen
{lS} year.s fran t.he d3.te of project Co.~letion, CONTRACTOR shall
submit to CITY a curI"ent ~ncorne and expense ,;-roforrna on the
Project.. The pro!Q;c:ma shall include updated first rnortgag'e,
payment!! based 0:::::' the most recent adjusteo interetlt rate (if
applicable) and ~r~izilr-"ion scheduls of COl-.'TRAC'TOR'S private bank
103ll r it tlJe private lean is not yet repaid. Tbe proforma shall
also include an updated budget for operat.ing cost.s; including
::-ese.z:ve8 for replacement and a cental income and. rnanagement fee
based on custOti.arj chaI'ges in the market for s.ilr.i lar properties and
on COti""I'RAC'r\)R' s experience Over the previous fifteen (15) years
wir.h t~e p.!"oject itself. The figures used in the proforma shall be
reconciled wit.h the information in the most ~ecent audit of the
Prcj ect I s income and. e.xpenses.
If the r:ar"t is:s iigree that U:e prOfOl"I!'.a project.s -J.
reI iat.le and suft icient. sur{:.lus cash t low that. .".ould thereafter
allow regular p3yn':ients on the Loan, CONTt.'ACTOR sball comn.ence
making annual p--3.ym~nts to tbe CITY fro:n such surplus cash flow.
Such Loan repayment shall be defined under arnendrnents to this
Agreement and ths N\)te, ..... ith such a~endtnenls co be processed S~ set
s
.:g1011 t.~ 00.20910
o o
forth under Section III (E} hereof. Th~ parties a.gree that
CON".rR.ACTOR's compensation Eot' Project rr.anage;."rient shall be deducted
from cash flo.., prior to a determination of whether surplus cash
flow exists for purposes cf requiring Loan repay~",ent.
6. Fayment of ~_U_p; __ o;~. Not ... i t",hsta..""dir.g any oth-e> .....
provisions of this Agreemeut or the Note, as of the date of f0rt.y
(40) years from the date of Project Completion, COm"RACTO~ shall
pay t.o CITY the total remaining unpalG balance, p1l.1s ac.:n . .:.ed
int.erest, i~ any, an the L'~L.
7he Loan proceeds shall ce funded tr,rcl:qh. an 2SC:::O ... · · .. ·i :::-.
First American 'Title Guaranty C~any (Che • ~:5( '!:"C" .. • j. 'T~:€ part i~s
to this Agree:menr: shall place al'!. fm:ds .3.;'.':! ::c:::..:.. ..... >2n~s, t>29f:the!."
with appropriatE' escro· ... ' itlstrlJcti~';l:5. ir:l,~ t.h.e E<::;cl"c .. ,.; i,f'. c.-:'~e"!: '':'::;
fulfill the terms of l~is Agre':'·-:-:-."::r:':.
CITY 51".&11 p::t.y Tr:!:ee E:~:--.rj::>':j ::'.:':':'r::!· ?::".
{$375.,0(0) in the [,':':"::--, (;" .c-.. ..;:~e',: ::::'.':".iC Oollars
t.oward the cost c:: prep.:,r:::.:: o.CqJiSl:':"'-)~":'" -:']-'-"
:'-:SC ::::':':"".
,,-~::?l:' .. '
funded frcrr: th2 Cr.::--~"'~~'·-;"3.2 ::\.r.:,1 ,'..:':C,::'U::-'.[ .'''' ,~::-'\."
Fund.
At the c"l(Jse of ~:scrD·"'· t."".''::'' r'.::!:":;}-:3.St' ~" ::-.h"" f f'';'''':'''"'~'/
CONTRA.CTOR, at its C'wn CQse and expeLs::!, sr:a.l:' :3c:"",rE: r::11E: is;~,;;c~
of an ALTA extende.d coverage lender' oS policj' c,t ':it le ir:sC;I"nl:C-e
naming CITY as beneficiary, in tt,e a.r.cc",t cf t:"":e ~"..!rd~,:o;e pric,:' C::
the Property, clear of an',;' title defects t;;~t ',.,':::',..:ld pr,-".er'.t ~:-~e
rehabilitation and c,peratio:l of thF: ProJect.
H. ~ ON SALE PROVISION
The full and total alT.cunt c,f any ct.:.tstar.di •. g Lear. balance
under this Agreement-ehall irr.mediac.Ely becc:r.e due. a.."1d payable :.ir-0~l
any of the following occurrences:
1. Voluntary sale by CO}j7RACI'OR, or any othel: t.ransfE-.!",
assignment or furtl'1.er enC1..l.rl\ber.ing of t.he propert)', in \IIr,ale (}r in
part. including but not li.mi.ted to ani" judicial or ~oniudicia.l.
foreclcsure of the Property or t.l':'anster in lieu -of for.-;:closure,
d·..J.l:ing the term of this Agree-ment;
2. 'TeYmination of. th~ Lo· ... '/Very L,:..,." Incc.':e :;:-estrictior;s
set forth in Part II of this AgreE1T.ent;
3. Any other default
accordancp,. with Section (II) (Ji of
Q
941007 t "c: OO?C>911.)
that :Ls not
this Agree::-.ent.;
reC'":edi.:.rJ.,
or
in
I. SUBORDINATION; DISTRIBUTIONS CIPON S~E
CITY agrees that it shall subordinate the Loan and
related deed of trust tu the private bank financing obtained by
CONTRACTOR :for the initial purchase of the Project, provided that
any n.ecessary subordination agreement to be executed by CITY
complies with CITY's re~~irements and the Re~ulaticns.
CON'I'R.ACTOR s~"tall have no right to apply for or to
refinance the private bank loan after Pr.oject Completion, or to
apply for or incur any other debt that would result, in a lien or
other encumbcance on the Property, or require furt.her subordinaticn
of CITY's secured interest i!l the:-Property, wilhout tbe prior
written consent of the City ~...anager to make st:ch application vI: to
ino.lr such additional debt. _e...~y atte1!!pted application o:t in::urri,:g
of debt without CIT"f's pT.i.or .... ritten perrniss Lon shall be t:u11 ar;d
void.
!n the event of arw saloe at. the ~.~'c:09.<:.rt't·, thoe pr'.~cee:j,s ~~:"
such sale shall be distributed in [hE' fol1J ..... ing Ql::der-:
1, 'To cover the costs of t.he sale;
2. To the Driv<).te ba.nk, to t.eF3.Y the lcs.n ,:bt.;>.L;€:d "'i-'''
the inir.ial pl.l.rch.3se of thE: proj~ct;
3 < To CITY. to repay the Loan; and
4. Any reIT'aining proceeds to CON'lRJ~.CTOF..
J. ~ OR TRANSFER OF '!'JTI,E
No assignment or t.ransfer of title to the Project silall
be permitted, except with the prior written approval ot the City
Manager. No such approval may be given until and un:'ess t.r.e
proposed assignee or new holder of title agrees in writing to
assU!!:~e all obligations of this Agreement and the !';ot;e. Ar'.y
attempted assignment or transfer of title shall be void without the
requil;ed prior written consent of CIT'f as set forth in this
Agreement.
A. SW!QRDINA1;'ION TO !!QP REQUI~
The parties acknowledge that CO~'TRACTOR «ntlcipates
applying for HOME or C.'OBG funde to assist wi th the cost C"-!:
renovating or rehabilitating the PropB:rty. ":")-,e p.:·tl::l:ie~, furth>2r
acknowledge that in order fO,t" CITY fundin'3" for the ProjEct to bE:
eligible as HOME match funds .. this Agrec"ir:em: and the Project must
comply with the applicable secti ons of the HC?-:E Regulations.
Therefore, it is agreed and understood that the tenliS dnd
.,
,. ,
condi tions ot this Agreemen~ are subj E>ct and subordinate to the
provisions of the HOME Regulations ~nd the CDBG program
regulatioDS~
These reg'J.latory require.l1ents, includlng the Projr;ct's
use restrit:tions. shall .be il':i effect. fot' fo'!'ty {40i years h;"om the
date of Project: Completion, and shall survive ani' ear-Iy payoff of
the Lean under the Note by CO~'"TR..~ __ crOR or any other person or
entity.
c. USB OF PROPERTY
AS of the date of project. Completion, the P1"cperty shall
be used as six (6) Assisted Units of rental housing, for-Lo''''' and
very Low Income Housenold:;;, as defined und·'3'r U·,is Agreern'Jnt.
CONTT'u\CTOR shall lTc-3intain rents and occupancy of all the
.!:!.Ssisted Units in ccmpliance · .... i:.:h Section 92.252 of erie
Regulae ions. as arnende-d, throughout the t'2rn: of r.;,is ~.'?"reem~nt.
(Jlli~· ... 'i tilstandin':r the for'J9c') ng, and subj eel to tbe e;'~CeptiOrl s~t
:c.rth ii! Section (II) (F) ot ti1is .P_gr€e~ent for exi$til-.9 tenant::; as
of the date of c.lose of Escro ..... for CO;-'::'I'RJ,CTCR' s ac~is':t ion of the
project, the Assisted Units shall be rented as follc· ... ·s:
1. Four (41 of the Assisted Units shall be oC.'cl.lpied by
Vel.""'j Low .lnccme Houser.olds and shall be rented in acco!:'dance ~ ... ith
Se~tion 92.'252 ~a) (2:) tii) of the Regulat.ion9, as arM.mde-d.
2. 'the ::emainiug t'Wo
o~cupied by Low Income Households.
be ne greater tr-..an the-lesser of:
(2} Assisted Units shall be
The Lents for thos~ Units ~hall
a. ~he =ent determined
92.252Ia) (1) Ii) of the
amended; ot'
under Section
Regulations, as
b. The rent deteJ:mined under Section
92.252{a)(1)(ii) of the Regulat.ions, ~s
amended, however. b~sed on gross incorr,e of no
more than sixty pe~'c8nt (6D%) of the Nedian
IncomG for' th-e Area, ratht~r than siXly-five
percent (6S%-) , .as set forth in such
Regulation.
3. If a Household ceases to quality as Law I~come, as
required by thi~ :3ecUon (II) (0), the HOllsehoJ d shall pay :cent in
.J..ccorciance with Section 92, '252 {c) of the Regulations, as .::.mcnded.
8
I J *
.---.
,
\
4. Notwithstar.ding the foregoing, to the extent
financially feasible during the term of this Agreement, CONTRACTOR
shall maint.ain rents tor the Assisted Units at levels belo"4 the
!!'.<iXi.J:r!um rents specified in sut'sections (l} and (2) of this Section
{Ill (D). I.a addition, CONTRACTOR Shall, as financially fea,sible,
maintain rents for al r the L':lW Income tenants 'Within thirty percent
\ 30t} of each tenant's :lledian income as certified annually_
COt-.'"TRAC'TOR shall continue to seek mm SBction 8 rent
subsidies. or any othe= eligible HtJD subsidies that rr.ay become
available during the terrtl cf this Agreement, :for all Assisted
Units, as the subsidies or any other assistance become available.
Tenants shall be offered leases for a miniITi1.ilTL term. of one
(1) year. However, a shorter lease, ir..cludiIig a term of one (1.) oz'
~,ore months, may be entered in~o by ~.utual agree!nent of tenant and
CC:\7'RAC'TOR. ;a-ll leases under nH:~' Project sha.,ll be consistenc ;.;itr.
~he require:;:l.E-UlS of the Re~::l:.llations, inclc.dircS' Section 92.2S3la)
~.'":.d Ibl, a.s ,L~pnde(l. i:~ <J.cc0r.dan('e ' .... ith t.ne .Regulations,
C-2~:-r?~.',-'T'C:;';' !':'e_~' evict a t e~dnt ,:::r;::' "l fo: s~ri·:Jus or repeated
viD!atic~~ of the lea~e; fer violacic~ of applicable federal, s~ate
or lO~51 la~; cr for" ether 90:d ~~us~ .
• -aj"ll1:::-~~~ by CC:;T.:v\C:,)::; co iT:aint.J.::!.D the affcl'dabilitv
::'i.~\."e}::: a:-:j ,:CCUp~=i!1c,/ r"':'5tric::~on3 re01irect by I~his Agreement shali
Le ',::ansidf-!'f';(', a default u!:der t".!l}.s Agreement.. HO\\reve_r., the Project
s~ ... "t,l_l qtJ.,al ify as at fordabl ~ housing despir,e a temporary
"or',c::J;:'"pliance with Sc:ction(ili (D} (1) and (2) i::: the noncompliance
is cal.lse-d by' increaees in t.r,e incG~l',~S of exis,t ing tenants and if
a::.i vacancies are filled '..n accordance I-iith Section (II) (E) hereof
I . .:tlt i1 :he noncompliance is corrected.
To the exte;lt feasible as determined by CONTRACTOR,
priority in tl".e ~election of t.enants for occupancy of the Pro) ect
shal) be given to applicant3 who meet the following criteria:
" preference for
tventy percent
2.
preference far
thirty f:E:rcent
Two (2) of the six ~6) units shall be designated (or
occupancy by Households wi th annual incomes within
(20'") of t.he Median Gross Income for the Area;
Two (2) of the six (6 J units shall be designated tor
occupancy by Households • ... ·it"_h annual incomes within
(30%) of the ~~dian Gross Income for the Area; and
30" Two (2) of the six (6,\ units shall be designated for
preference for occupancy by Households with annUAl incomes within
tHty percent (50\) of the Hedian Gross Income ;:or the Area.
CO~';:TRACT0R r''.dy chang-c-, ~_he dE'signacion o( particular units
~5 vacancies occur and as L~rants' incomes change, in order to
maint.ain, as closely as possible, the occupancy objectives staced·
herein.
9
.-';'\.~ ",
'~c''''''':';' :
i
\
.. .-----
All tenants ot the PrOle~t in cesidence as of the date of
Project C0Ir.pletion shall be e~ltitle-d to rcrnain tenants after
Project Completion, ,.,rith rents to be detennined in accordan-:::e 'With
thi8 .~gree:neJlt and t.he Regula t iens. CG~7RACTOR shall conduct an
incc-me ce:rtification of each Household as seon as possible
follo ..... ing Proiect: coa:pletJ.o!l. Any e:dsti.ng tenants of the Project
who do not quallfy as tenants of Hcuseholds .,..ith L·a .... or VerY Low
Incc;ro2:s sr.all be entit).ed to r"e.'T.ain tenants only until the ea~lier
of either:
One (1) year t~cm the date-af Project Cr::r.pletion; or
2. The date
CO:NTR...o\l'?:':?, and a:JY p'ililic
funds iur.der-tr~e fi'::~ ~r
a..--:y · ... ay.
of exeCtit ion of a.'1Y aqree::-.ent cet· ... 'een
ent!ty ~~ ~u~~sdi~~ion to prDvld~ federal
C;;3-3 p:-:c:r:-:,a.::-.sl :'0 .:'l.:isist ~he Projec~ in
l:;:,<'r;; .':..r:y !::'~\'p~::::-,-'l.~~ i,~':,_ C:-c :.2:";'--0:.';'." C ~:"'.:::: re;'.':.,) 2 2~'::-':£'>:-·"'.:1': s,
suerl e;-:~~~_iG2' ::,::::;.2.:-;[S' ~,,-:'.~~ ~r,:;;..::" _e a.';'~;:.lSr':'E:'. ~_O cC'~~P~'/ · .... 'i.th
Sf,ctic~: (::;:) ;,:JJ '''.t~!",.;::.,;::.
t:r.t,3..:',~,f:,r 2tS f-:!i::",p1.2<C2,i :_~",,:-s..:,;"',-; "r" ,.y ,:::--.-~ . .-,-c ,:':'a..t:..c:::::,;-r_hc HC';'~ or
f'jJB'; prc3"r"d."'..s as a rEsult ,_ ... ~ ('C:~-,'?.J;,,::-,:,?.· s e:i.;,:;,rcs ,:c cbto.:.r: ~oE:de::-a.!.
t'J.!:QS :0:::: th'2 Prc-j-e-,:::::'s reI' . .:::';,'-'::.a.t.iC'r~. t:':elj C:::NT:{ACi\,R shall
(0110·",' ,all f .. ce-ral !:elc:=!".1.C:-l Pl.·(;::.'~.:L:-:"t:5 c>.::-.:l ;;r':"'ide any rt!:"ccatior:
benefits as req\li:-ed t:r:J,=,r C:·H? ,..:C;-IT--;::-c?"t"a..'":"~ a::d ?eg1...!la.ticrJ~~ or CDE:;
prog::-ar., ar.d l':"-::-9"'".ulatic.;:1s, d.S a.Pf"lic3:Cl~.
CON7R-.l..CI'C'P. sb~ll a:: .3.J1 t i~,es during-the tenT, of thi 5
1..g!:'eement'. t:'.3.intain the Prape_rty i~ a ;-!,.aJ.'1.ner so as to ;!',eec the
Property Sta.r:da:rds set forth i::. Sec::iQn 92.251 of the Regul.ar.ions
and the miILirnum housing m.:alitv standards set t'ort1". i~ 2'; CPR
Section 882,109, as a.~e{':ded, . I!: addir: ic-C"., CONTI'..}.CTOR shall
c:o~lete such repairs as al'e necessary so that r.he Proj !'::let is free
from all known heal th and safety defects not later than six (6)
months iollo~ing the date o~ Project Completion. Provided
s1.:.tficiellt funding is obtained. (::')NTRACTOR shall complete the
rehabilitation of che Project \\Iithin thirty~six (36) f.'":anths
following the dat.e of Project Cc=pJ,ecior... Said r~habilir_a.tion
~hall, at a minimum, r,-,e;et tIle hcusir:.-] qt:..ality s(ancctLds SAt forth
in 24 Ci-'R Sect.ion 882,109, -5.S ar;,ended, ar1(j all applicable CITY
building and zllUing code,s and ordinances, rE:-r~abilitatj,on st.andards
and'any olher applicable cedes and ordina.nces.
10
\
H. Jl,BCORPPjEEP;mG
CONTRACTOR shall rr.aint.ain recorc£ of the PrC'je("t. as
required by Section 92.508 of thE: Regulations, as a.pplicable, and
as may be required under the CDBG progcam, as amended.
CONTR.;K'TOR shall dOC1JlI\ent all costs by ~intaj ning
complete and accurat.e -records of all fir::.anc1.al t.ransaC'.tions,
including, but not limited to, contracts, invC'':ces, tine cards,
cash receipts, vouchers, cancelled ch'<:!cks, banjo( state.....··lImts, anc/or
other official docutnentatiClD evidencing in proper detail tr.e natur-e
and pr.':Jp:riety of a.ll cbarges.
All te,nan t_ lists, applications, verification. a.c.d ,~~r'~llo.l
recertification of tenant income relating to the ?"!'oject sha i.l .~::
all ti..u.es b-e kept separate and identifiable !rC:::1 a:l}' ccr.c!" t'U3:::';..ess
of CONTP..ACTOR tI-lat is unrelated to the i=l:cjO:'~'~, Sf',3._"._: t.e ::--l:.~':"_.=:.::~=-d
by CQNT'""'-..AC!OR ::"n a r~asonable c?ndi~::',Jn for 9:--·~::e,: c.'Jdit" a~:i .'3;-.,'..2.2
be rr..3.de available to CITY d!..lriI:g bus i;--,A'sS 'r.c'.:::s, to '~~.e i"X~ .C'"'"'.:
pe:nnl:;::::;ible under laws a.nd n::gul.titl.Cr.s ~.':r.:.:.~;:ec: i::-;; :r . .2"'''-:''~:'~,~,,:,
f;onfidem:iality. Failure CO :,:e':~D 8='.: cr. ':i5::S ,0.:,;; ,2,~·'p~i(~-:.c;_:s ~~,r t~·,
r:al<c ther.t av.:>.ilable to CITY si'..all r-e C8:':"'::"~~'::-e:: i cs:~.=-'.J.~~: "~ '...:'
this Agreemerlt.
CON'I'RA.CTOR s.hall p:"~se:r/E
availabl e 1:0:( review by CI'I'Y:
.'i::j
1. For a period of three (3) ye::1~'.::; f.::r:-:-:-. t.he 'la.te 0-:: :he
subrhission of the: final exper'.iiiture report 't.l;:::er ti~is M.9ree:r,r~T".t i 0--..:-
2. For s\_lch longer I>ericd, if .a.)', <>.s is :ceq;.:J.ir?c, by
applicable law; or
3, If this Agrse.'1H:!ot is r:e~nate-d, elle !"0c(:rds
::elating to the 'Work terminated shall be pr~se"!:"Ved ani i::'.ade:
available for a period of three (3) years frcm the date ot any
resulting fina~ settlement j and
4. For a period of three (3: years !r:C'ro the final
termination date ot this Agreern~nt.
r 4 ON SITE _INS~E~~
CITY shall have the ri.gbt. too IT'cake p,=yiodic ()n'sitE'
inspections of the l'roject uLa."ing ' .... orking hour~, including duri':.g
the r.ehabilitation of the Pr~perty.
If, as detE::1."11',ii:leO in thE ~oJ::: d ~ sc;:-et. ien of C::'"i-'l',
C01-IT:R.,o\CTOR fails to observe or pert-om ?iD,/ C(:";'''r.ant) cQEdit-ion or
agreement. contained in t.his Agreen".ent fr.lr a 'f'er:iod ot thi'::-LY ~30)
days after written notice from CITY specifyi fig sucb fail ur("~ and
requ.€sting that it be remedied, unless CITY shall agn:e in '",'rit ing
11
'I
--~---
o
to an extension of such time prior to its expiration, which consent
shall not be unrEa90nablj~ withheld in the event that the failure
specified in the notice cannot be corre~ted within the applicable
time period and CO~~CTOR bas instituted corrective action within
the applicable period· and has diligently pur-sued such corrective
action, then and in such event (an ~:eveDt of Default"), CrTY shall
be enc.itl-ed, and in addition to all other relItBdi-=s provide.d by la ....
or in equity:
1.
obligations
compensation
in the event
To compel specific performance by CONTRACTOR ot its
under this Agre-en:.ent r it being recognized that
by monetary damages will not be adequate ccmpensa~ion
of CONTRACTOR'S default;
2. To exercise its rights under the Note to accelerale
paYinent in full of. the Loan, in accordance with Sectio>J. err !H)
hereof;
3. To cure any default; any elect.ion by C1Tl" to cure
any default shall noc. be deerr.eci. a \I:aivo;I" by CITY of. J..!ly o\.!ties or
obligation.s imposed on CONTR. ... '2roR by thi.s Ag·J:"'2'E;IT.~n.t 0;: by cbe
R'2g'.llation~; and
4.. Nat .... itr,standing-~n::· other· TYtcvisi.on of. 1F.;.w rE.la..t':"r~~~
1;0 the acquisition, rn.ar:a"]e~er::.t or· t3.isposal of :rea'. prop"2rty ;;:,.: ~be
State, to do any tJr all of the follc· ...... ing:
a. possess, opera':e, complet.e, lcu.se, .r~nt,
renovace, moo.erni2:~ I insure, or se II for:-caEh
or credit, in its sol E.' di.scr-eticr::; any
properties conveyed to it in exchi.inge .for
debentures as provided in the Insuranc€ L3.W;
b. pursue to final collection by way of
compromise or ot:herwise all cla.ims o.gainst
CONTRACTOR assigned by CONTRACTOR to crTY; and
c. Convey a.nd execute in the name of CITY deeds
of conveyance, deeds of release, assignments
and satisfactions of the deeds of trust, and
any other wricten instrument relaLing to real
or personal property or any interest cher"3in
aC~Jired by CITY.
RAR1' IIlL GRr-lJtAAL R?otJIR~.EN'rS
A. rNDEP~~ CONTRACTOR
CONTRACTOR. sha.ll mainta in its nanprofi t corporate staLu:.,
as defined by Caiifcrnia Corporations Code secticIJ 50 6~!, il:"3
amended, during the tel."1TI of this Agreement. Nothul.g contained in
this Ag·reement is iutended to, or shall be construed in any .manner,
as creating or establishing the relationship of employer-/employee
bet.ween the parties. CONTRACTOR sh~ll at '3.:i.l times l:emain an
1141001 IBCO ()()lO';l1(1
independent. contractor with respect to the services to be perf~"';!rroed
under this Agreement.
B. Il!lLBMlfIFICATIQN
r.Or.'"I'RACTCR shall protect, indemnify. defend and hold
ha~ess ~ITY from and against any and all claims, actions, suits,
liability, charges and judgments whatsoever that arise out of, or
are caused by, CONTRACTOR's negligent performance or nonperformance
of the terms of thls Agreement or CONTRACTOR's willful misconduct
or conduct for which tlH:! law iw..poses strict liability on CONTRACTOR
in eOI!.t'1,ect.ion with the performance o.f o:r failure to perform under
this Agreement.
CONTRACTOR'S obligations under this Section (III} (B)
iDclude the duty to protect, ind€rnnify, hold harmless and detend
CITY, its Cc~cil members, officers, agents and employees from and
aga~n:3t any auG. all clairrs, demands, liabilities, losses, d2'.Inages,
C0stS f expenSES. liens, ;:enal ties, suits, or judgmen.ts that m'3..y
arisE.: at any time, in connection with or as a result cf this
i;':rrE'e:r,-,,;nc or the c-roj .ect, under the Co:t"ip",(-:;h'cnsi ve :2n.vironmental
r~es!=nr:.se, (',cmpensation and Liability .il.ct (42 U.S.C., §.§ 96l)l-75, as
a:.,:".'?r,d<:·ci~; ch~ I<,>::sclJ:r~e Conservati{m ar.u R.ecoveri .!i.c>: (42 U. S. C., §§
69C 1· 82, ,J.S -:1rnende,j); ':.:-.e Haza:nj()us :';",,~~te Cant !'"C' 1 Act. {Heal. & S.o.f.
Cede, §§ LS10Q~2S~:SC.):';r as a.Til:;,ndecl.J; (he ,safe Drinking Water and
'To.d_cs EntorCe::r'.ent Act (He"l. & Saf. Cede, §§ 25249.5'25249.13, as
Ql:'.ended); the Underground Sto("age of HazardQus Subs'CancE's Act
(Heal. &: Sat. Co,je, §§ 25~aO·99.6, a;;; arr,cnded); the Hazal-dous
Substance Account Act (Real. .& Saf. Cede, §§ 25300·95, as amended);
the TC."":ic Substances: Conttol Act (lS U.S.C., !]§ 2501-2671, as
amEn::ied); the Car-penter-Presley·'r,=\nner liazaraous Substance Account
Act (Heal, &. Saf. Code, §§ 25300·253:95, 3:!:l arnended); or any other
local, State or Federal ordinance, law or regulation th~t may now
exist or hereinafter be enacted, or a'C-common law.
c. INSURANCE
As of the date of Project Cou~letion, CONrRAr.rOR, at its
sale cost and ex:pense, shall have Gecured and shall continue to
maint.ain throughout the term of this Agreement, workers'
compensation, comprehensive general liability, auto~obile
liability, personal injury, property damage, ana fire and extended
coverage insurance, insuring against all liability of CONTRli.CTOR
and its authorized representatives arising out of or in connection
wit:' tl'"le proJect, th~ Property or CONTRAC70R's performance or
nonperformance under this Agreement. CONTRACTOR and any
subcontractors assigned to tne performance of the terms and
conditicns of this Agreement shall comply with the coverage
amounts, required endorsements, certifJ.cates of insurance and
coverage verifications as d".Jfined in EXHIBTT ~D," ~In811rance
Kf-,~'Ui rements, a::tach::d heretc-· and inco:rPQrated herein by this
re.-ference.
13
-
) ,
--------'-
All rights granted hen~und~r are pers:onal to CONTRACTOR
and are not assignable or transferable absent the uriOl' written
consent .:If the City ~nag.r·r on behalf of CITY, and any attempted
a~sigome~t tbereof s~ll ~ void.
Amendz~nts tD ~he te~ a~d conditions of this Agreement
s~~ll ~~ requested in ~riting by the par~y desiring such revision,
ar:d any ~1J.c...~ adjust!!lent to this Agreement. shall be determined and
t"'E! ei.fective only u?On tr,e :Lt:utual agreetr.ent of CITY and CONTRACI'OR,
as set fc?;"th in a .... : it len ar.d executeJ at!'.en~,ent to this Agreement.
~.€-r'.d.-.~",':.s :::-.ade by i-n .. 'l"1 or a.ny i?d.J.thclr~zed federal official, will be
de~"'!'.e:j tc ti? in.:::.rpar'lte:l herei:"l. ADY duly a1.!tlwr'ized and e:-:ecuted
3.!:',er.:c.,"",e::-I·~ ;".02r.;~:C> st-:c.11 be ::.--eco-roed i:-l t.~.,:: Of:~ce of the R"2corder of
Fa.rt~' or pa:cti.:~s, and no
cla~:n Qr rigf'.t of ac~ion
10 cz..sE: o:'l:rl)' one or mClre of the l)revisions <:'ontained
ht~rein shalL for arw reasc..-::, be held invalid, Lllegal, or
unenforceable in any r~spect r it. s:lall nat .lfiect t.h~ validity of:'
che ether ~rovi5icns herein, .... ·hich stlalJ. rer..ain in full farce and
effect.
Under no circUITstances shall
autho:r:ity or pO'ole!" to pledge tt'l.e cre,:lit
obligation in the name of CITY.
r. NO'!'1_gs
CONTRACTOR
of CITY or
have the
incur any
hny notice .... ·j~ich ~0y be o~ ;i.;3 :required to be given under
tr.is Agref:,7.~n!. shall be deeme,j given on the s2cond day follcwing
t.he date on lihich the Sa.'T",e _have be~,n mailed by first class mail,
postage prepaid, addressed as follows:
CITY,
City Cloer:.:::
:.20:,0 Bamillcm A'.r-:nue
Palo Alto, C~ 94101
(415) 329+2563
14
CONTRACTOR:
Sxecut:j,ve nirector
f'a.l() .",l~_o Housing Corpo;t:-atian
540 Cowper Street
su:ite 201
Palo .'t.lt.o, CJ-1. 94]rn-18(J6
~,,----.. ---
•
----..
'A capy of all notices and
correspondence must. ;;l~o be
sent. to:
Di:r;ector~ Planning !<-COO'Clunity
Environment
City Of Palo Alto
250 Hamilton Avenue
Palo Alto. CA. 94301
»hone: (415) 329-2441
FAX: (US) 329-2240
J . lfFRmtp CLAUSE
'!'his Agreement canst itutf:'S t.he ~"'c,:'e agree:nent of th~
parties hereto relating to the project ar-:,j full:,' states the rights,
duties and obligdtiaT;s c·t each party as of r;,,:; date of this
lJ..sreement, Any p:r:--io r ,3.~ree:;.e,:t, prc~is(os. r:"fgcti;Uc.'}s, or
representati.:'lns bet""een tr.8 ~>J..::tl.S':3 n.:·':, f'X~·Ir-,:s::".}y state::':. ill t:Lis
Agree~ent are not bincii;:::::.
Telis AGree",~t'd:. 2J.j an:,' ,:o~·,':r:i.-,:o::·:" ':',-,-s'-'r:.'lr-,"""r,c:'-.; c.:--::1-('1:0
sh:;i.ll be rer.:ord,=.-d. in the Off:"('o:. JC t'ri"" C>::'..:-:~~./ ;'~t->.:'~J.':·d,_o"( i)f ··~,~;:tc.
Cllu:a ccunty, C~lif01. n:ia,
This AgreeX,ent ar::d the CI.;.1Ven3.nts and ':::'~r:di t ions r;OIlCu ined
r.erein shaD run with the land arlO sha.\l bir.d, dnd U,e ben-:fits
shalJ. inure to, CO'NTPJ\,c;CR, including its I-es!;~c::ive successors o.W)
as~igns. and all subsequent_ owners of the Pr-oj e-ct CiT Propert.y or
any iz:n:erest therein (regardless of he .. any such O'WT"lE:l"ship interest
is obtained in the Froj ect or Property. incll.:dir..g t.hrough any
foreclosure or t.ransfer in lieu of foreclcsuri:). a!~d to ,'-:ITY and
its SUCCeSsors and assigns.
IN WITNESS WHEREOF, the parties l"".a'/e executed this
Agreement on the date first cDove writtEn.
CITY OF Pl\U) ALTO PALO ALTO HOUSING CORPORATION
Mayo-r---·-----
ATTEST:
9<.1001 (I(; 0020910
o
APl'ROVIID AS TO FO!!.'!:
Senior Assistant City~ Attorney
APPROVED:
Cit)' Manager
Director of Finance
Director of Planning and
Corr.muni!:y Environrr,ent
Exhibit A:
Exhibit 8:
Exhibit c;
ExhilJit D:
Income Cer-tificacian For-,,,
Property DescriDtion
Promissory Note
Insurance Requ~rement.s
91;1007 lac 002~910 16
STATE OF
CERTIFICATE OF ACKNO'HI.JIDG!o!RNT
(Civil Code § 1189)
COUNTY OF __________________ __
.'
On , :Oefore me, ,
a notary public in ~d for said County, personally appea~ed LiZ
KNISS, personally known to me (or proved to me on the basis of
satisfactory eviden.c~) to be the person (s1 whose name (:5) is/are
subscribed to the within instr~ent, and acknowledged to me that
he/she/they executed the same in his/her/their authorized
capacity(iesJ / and that by his/her/t..hel.r signature{s) en the
instrument the p2rson(s), C'r the e:1tity upon b~half of which Lhe
person (s) acted, ex-ecuted the :i.nst rument .
w"1'!'NESS my tland and offi cial meal.
------.. -.... -
17
CBRTIPICATB OF ACltNOIfLRDGMRNT
{Civil Code § 11S9}
STATE OF G.!.,,,,"';" I
I
COUlfTY OF <;"";'1& <:..\~)
On 00.'10'---'"'I, '<>'<>"'x , before me, ~.\i""" .. ,,," S~f'Olt'j),
a notary public in and for said County, personally appeared MARLENE
PRENDERGAST, personally known to me {or proved to me on the basis
of satisfactory evidence) to be the person(s) whos~ natr,e{s) is/are
subscribed to the within ioatrument, and acknowledged to me that
he/she/t!Jey executed the-sa~e in hi.sjhe:r-/t:'leir authorized
capa':ity{~esJ, and that by his/her/their signature (5) on the
in5t.:r...l!:',!?'."'lt the person(s), or t.he entity upon behalf of ..... hich the
:r;erson; ~) .acted, exeC'.,.lt ed che insr:ru..rr:ent,
''"In;z.ss my hand and offici.al
18
9<.1001 llc 002'091[1
•
........ ""--,,---... ---~~.-" .. ~--.,.~-'"----~"""-----~
0.1-\1011 K
r~Ql"fE/.'-SSt7S WO!l:];SIi,::ET
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INCO.U.E CERTJFICt.TJON FC[U'. ----.---------
!:acl.c:v,aent. .. l
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$.e:ll" ~...lO"J'2e!l.t I
Social S.a<:'J.t"i t'!
55!
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v;\ ha3ion
Dl.sa.bi.1it .. '/'tIe.lt.. ... k:r.l!'L~o::s
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Chi lei S-;;:c:t-:?-!"t. ~_; __ _
I?·5 t..:::'":"e.; !:-:::.::"e C.:e::~~
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LE~ D£SCRIP'TlOH
30)1 -3061 ~~50N STP.EET
E:ruI!'o!1' B
Cln:f« No. 506722
?OQO No •
REAl. PROPERTY in 1IwI ClOy <:II Pa.io .....,. eo.ny <:II SarU oar.. SlaW at ~ ~ .. 1oOows,
PARCEL ONE
LDts e &'ld 7, 8kx::k 9, as sn.:twr. on I\ti .::ertUl ~'1 SIiarIIord Q!y, ~ t.6IIp ... SlId b" r-=:oro in hi
oItice <:II "'" ~ d Iho eo.ny <:II Sa;q CIani. S-<:II c.at:.mo "" ...., 3. "'0. n _ .. 01 Waps
page(Sj'IT.
The ScU',h~e.rti ~,S INt, !'9CtS.~! irl $.~ 04 WJ 2.04 oar": :5., 1.'1 ~ 9, lIS ~ 00 t'..e Ma,p 1'1-::.
1 ot Stli11fofd CIty, '-"¥t,~.., Map '....as ~,~ ~ reccrd f.r, ~ C~,:-e ~ :"ii3o F.&:tx~ " N c:.x . .nty d ~'":~ c:....."2.
S!.ate of CaJlf:lm~a 00 May 3, 1910 ~l ~ ~ ;;J/ Ma,Jl5, p.':;>.:' 97
,APN: '~2-4S-19
$375,00Q.00
EDIBIT C
PROMI S SORY NO"I'E
POR PURCHASE MONEY
Date:
Pa~o ~to. California
FOR VALUED RECEIVED, the PALO ALTO HOUSING CORPORATION,
a corporation organized under the Nonprofit Public Benefit
Corporation Law of the State of California (WBO~~OWER·), promises
to pay to the order of the CITY OF PALO ALTO, a charter city and a
municipal corporat.ion (~C:rTY"), t.he principal su..-n of Three Hundred
Seventy Pive Thousand Dollars ($375 1 000.00), plus accrued interest,
at the office of Revenue Collectio!J.s of t.he City of Palo Alto, 250
Hamilton Avenue, P. O. Box 10250, Palo A1t0, California 9431)1, ot
at such other place as CITY ,""flay fr(J)11 ti!":".e to time designate, fn):;1
the date af this PRO~nSSOR,{ NOTE (the "Note~), until pa.id, at thE
rate of zero percent (O%J intez:est per YE'ar fot" the first fift'20D
(15) years follo .... ing the date of this r'i0tc, '-4i" .. ,"': ,~her. ti-,cet: p'}rC'r:?nt
(3%) intere~t per year, on a simple ir:.ter€:~t basis, ";;'!l. the ur.paid
principal balanc~ for the balance of the Note tenn, :l.S :req~j::red
hereund€r or as required und~r thE :5.greement referenced bel..-) .....
This Note i~ secured by a deed of trust executed by
BORROWER in favor of CI'l'Y as beneficiary, in the a.'T,ount of
$375,000.00 against BORROWER's int.erest in that certain real
property and improvement.s located at 3051-~061 Emerson Street., Palo
Alto; California, Assessor's Parcel NI.J!t"l.ber 132"-48 19 (the
"Property") -'
This Note is rr\ade ill connection .... ith an agreement.
entitled "Funding and Regulatory _l,.gree.71ent Between City of Palo
Alto and Palo Alto Housing Corporation Concerning Acquisition of
Apartment Complex Locat~d at 3051-3061 Emerson Street~ (the
IIAgreement'). The Agree..·'lent provides that BORROWER is the
recipient of certain CITY Housing Reserve Funds from the Commercial
Account (under t.his Note), designated for expenses necessary to
acquire the property for the preservation of rental housing for low
and very low income households in CITY {the ~Project~i
Any ammLlts o.dvanced under this Note sha.ll, at the opt ion
ot" CITY, become irr..nediately due and payable lJPOn thf~ occurrence of
the earlier of any of the following:
(a) BOR.~OW'ERJ s unrerrLer.lied default or failure to
comply with all of the terms of the Agreement, including any
termination of the Low/very Low Income rest!'ictions set forth in
Part II of the Agr~ement;
1
9-41001 Lee 002(;' Il
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-"....,,---.. --,.",
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(b) The termination of the Agreement with or
without cause; or
{c} Without prior written consent of CITY I the
sale, conveyance, assignment. hypothecation or furtner encumbrance
of the Property or the Project, the refinancing of the Property or
the project. or the transfer to any other party or parties any
interest of BORROWER in the property or the Project r including but
not limited to sale pursuant to any judicial or nonjudicial
foreclosure or transfer in lieu of foreclosure.
Should none of the for~going events occur, the terms of
repayment under thie Note shall be as follcws~
(a) Thi~ Note shall aCCl~e interest at the rate of
zero percent tot} per year for the first fifteen {is) years from
the date of its exeC"J.tion by BORROWER, and then at the rate of
three percent (3%) per year, on a simple interest. basis, on the
unraiJ princiya] balance until paid.
0::,) Tne term of this Notc shall be from the date; of
its exe,."wtion by BORROWER until the earlier Of: (i) the date of
"'Proj.ect C,,,),"~:plE:tionr. 3S defined und::>r Sectior'l (I) (l~j (12) of the
Ag-r-eemenl [hS:.l.·einafter, ~Project Corr\pletion~) lJ1uG forty (4.0)
,/t~az:s; '~l:" (.U) thE! tiate of BORROWER's tull repa.yment. r.o CITY under
this Not.e.
(e) From the date ot exer:ution of this Note unti.l
the date of. fifteen (15) years follo·,.,ing Project Corr,pletion,
repayment under this Note shall be deterred as set forth under
section (I) (F} of th~ Agre.~ent. However, on or before the dat.e of
fifteen (lSi ye-ars following Project Completion, the Project's
financial condition shall be evaluated by CITY, with the assistance
and cooperation of BORROWER as set forth in the Agre~~ent. The
parties srUill at that tUne establish a repayment. schedule, based on
annual payments, from the Project's surplus cash flow available, if
any, to support debt payments resulting from this Note, as set
forth in the Agreemen"t. When the parties determine that the
repayment :::-chedule should be implemented or modified during the
term of this Note~ CITY and BOR1WWER shall execute written
amendments to the Agreement and this Note setting fOl"th the terms
of the repayment schedule or any changes thereto.
(d) Notwithstanding any provision of this Note or
the Agreement. BORROhl"ER shall m.:.tke full repayment under this Note
to CrTY on or before the date of forty (40) years following the
date of Project C~~letion.
80RROWER, any endorser of this Note, and any others whc;
may become liable for al) or any p.;trt of the obI igations evidenced
by this Note, may prepay trom auy source all or-any p{)1."tion ot t(H~
principal sum of this Note, without penalty. Any and all payments
made her~under shall be credited on the principal balance.
2
94100"1 w: romll
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BORROWER, any endorser of this Note, and any others who
may become liablE" fot' all or part of the obligations evidenced by
this Note, or this Note as amended, hereby individually waive
dema.nd. pregentment far payment, demand and protest I not-ice of
protest, de.mar.d, and of dishonor and nonpayment, and consent to any
number of e-X.t-ensions or renewals of time hereof. IUlY such
extensions or renewals: may be made without notice to any of the
obligated pa:rtie~ and without affecting their liabil ity. The
pleading of any statute of limitations as a defense to any demand
a.gainst SORROlfRR is ex::pressl y vai ved by BOR..t<.OW'ER. If BQPJWWER
consists ot: more than one person or. individ.ual, each persQIl or
individ>..lal shall be jointly and severally liable under lhis Note.
BDRRO"''ER sr.all not furthel.-encurnbel". mor;:gage or subj eet
the project or the Prope-rty, ox: any interest therein, to .a deed of
trust, .r:-.ort.gag€", ir..d~mt-ure, or other document of legal erlcurncrance
(indi"'idually, "En':::-u:;".brance~ and jointly. "Encumbrar...ces") 'i.'ithNlt
tete prior vritten consent cf CITY.
i;nlcss ('ITY s[,al.l exp1.·-,:ssly agre.e otrH~·r.wi_8e, .:J.n'tlriting,
<ony Ene:. -,:);':".Ece a:tfectiT'9 the Pl·Oject or. thE-property shall provide
tr.ar, in tf';e ·~·.'ent of <'1ny d!:~fault or breach by BO.~F-OWER undEr any
:'n:l...L'"'..tn:,ance e;!t;i.t.l~r:9 any p3.rty thsr.eunder to decelerate rrle
j ndebt-€.-1n-ess s;.:<.:u:ri".:i L'r.erL::.by olLd to.!'ecl()se upon the Project_ 01' r;.he
?rope:n·/I ern' 8[:;-..ll have the right, out not t:r.e obl:i.gB.tion, to:
[ i ':" cure -:;:;-"e d~~fa\ll t prior to the complet ion of any fo~eclosure and
reinst,,-:::~ the Bncu.'":1.bra.nce; or (2) pay the total unpaid
indcb-:::edness secur~d b)' such Encum.br.an-:~, in which event, such
RnclJr.brance shedl be releas~d, cancelled, 01' ot:herwis~ reconveyed.
Any a..n'.Ju.."lts c.xpend~d by CITY uncler t ne contj ngenci~s set
forth in (Ii or [ZJ of the prece-dir,g paragraph shall be reirr.burs-ed
by B(~R.ROWER upon d!O>lnand of CI'!'Y therefor, and, in any event, shall
Pear interest at the max~~ rate permitted by Article XV, Section
11.2) of the cal itornia Constitut ion, as [r.a.y .be a:n-!E!nded from time to
time, fr~ the date such amounts were advanced by CITY until paid
by BORROWSR in full. All such amounts, including: interest and any
p""'--Di:t.lt-y authorized under the Agreement. this Note, or any deed of
trust, shall be added tc the principal of this Note. The approval
by BORROWER ot· any Encumbrance, and the placing of a security
interest th~refor on the Project or the Property. or any portion
thereot, Dot c01lta.ining the provisions of the preceding paragraph
and this paragraph sohal! constitule a default under this Note.
If any default is made hereunder I BORROWER furthe::·
promises to pay reasonable attorneys' fees and costs and expenses
incurred by CITY in connection '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 feee sball not be 1 irniced to or
by its repn~ser.tat ion by stat!:. attorneys of C!TY's Office of the
Cir~y At ':;.orney, and such rep:iesentation 8hall be IJ;,).lued at t.h~
cust.O:Tk1ry and rea~onabl~, l:ates for private ~ector legal services.
3
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The relat~'.on.ghip ot CITY and BORROWER. evidenced b)l this
Note shall be deemed to be one of creditor and debtor, and not of
partnership or joint vent'>Jre.
This Note may not be modifioed or amended, except by an
inst~~nt in writing which expresses such in~ention of che parties
sought to be bound thereby, aod such wriling sl".all be-ti...nnly
attached to this Note and made a part hereof.
Any failure of CITY or other holder to exerci3e any
right a under this Note shall not constitute a ~iver of such rights
or of any other .rights under this Note.
This Note sP~ll be gav~rned by and construed in
accordance with the laws of t.be State o! California.
TO the E!xten~ flBsign ... "1".ent of th:'s Nc:te is ~~Il'\itted by
CITY, the terrr..s of t.hh: NotA shaLl 3.FP.ly to, im..l["E' t.o th.<:;' h2rl'2f:i.t
of, and bind all of c;,e p.:'.lrtie~ t~.-=:rf.:t(), tb""ir hc~'irs, Sl.!cc;:e.::;::.crs
and assigns.
N(lt,ic.::-~, de~.al:r::.;:; dr:d ('c-:-_mic:;;,t.~c·" ::,-?t_',.;~-·e:-:; elit' ;l.nd
B0RRChER unde,':" this ~ic::te sl' . .all :rf~ ~uf:fjl;ie:-:tly given if, -}::,i sr:31.1
not b-2 given ':.1nl"",£s, 6-i.::;P3tC'r""rt !_:,y c(;!'ti[ipo r--.alt., r:;:':~t3.gl? h")rep.;tid,
return receipt I:eq"..,;,('stej or $ent by expl'ess rJeti'/-:"T)-sE':-,:ice or
ovel>nlght cQuriE'r service .. to the prin(:ipal off.l.c'2 of CITY aDd
BORRO-","'ER as folloOo's, 0:: at SUC~1 c.(.her addreSS ."l.S the par-Lies ma,y
designate in ',,;rJxing fron tia.e 1:.-:> tiinE':
CITY: Cit)' of Fd.lO Alto
a.'I'TN: City C] er-".
2S(l Hamilton Avenue
Palo Alto, C;ilifornia 94301
Wi~ a copy te: Director of Planning and
C~~nity Environment
2S0 Hamilton Avenue
Palo Alto, California 94301
BORROWER: Palo Alto Housing Corporation
AT7N: Rxecutiv~ Director
540 Covper Street
Suite 201
Palo Alto, CA 9 U01· 1806
Such written notices r demands or comnunications shall b€
effective on the date sho .... -n en the delivery receipt as the date
delivered or t.he date 0:, which the delivery \I.-as refused.
941007 h~ 0021)9])
•
.IN WlTNESS WHEREOF, this Note has been duly e.xecuted at
Palo Alto r California. '.rhe effective date of this Note is
199_
CITY,
CIn 01' PALO ALTO
By:
~Ma~y~o~r~-------------------
APPROVED 1'.B TO FORM:
Senior l\sst, City Attorn~y
City ~..ano.g~r-----
Director of Finance
Director of Planning and
Community Envirorl.ment
s
OORROWE!1 :
PALO ALTQ EotrS DfG COU>OI<ATION
By: ________ _
~~rlene Precdergast
E...-xecl.ltive Director
STATE OF
COUNTY OF
r' , \
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CERTIFICATE OF ACKNOWLEDGMEN'r
(Civil Code § 1189)
On , before me. ,
a notary public in and for 9aid County, personal1}~ appeared MARLENE
PRENDERGAST, per50D~11y known to me (or proved to me on the basis
of satisfactory evidence; to be the person (s) whose name (s) is/are
Subscribed to the within instnunent, and ac}-..nc",·ledged to m~ that
he/she/they executed the sa!"t".e in his/her/thei!:' authorized
capacity (ies), ar .. d that by his/lwr!thcir signature:-{s) 011 t11E
in$tr.unent '".he person ts) I or the enti ty upon behalf of whj en the
pel:s':::m {s) acted; E'x£cuted the instru.'T,E:nt.
WITNESS r(~y hand ~r::.d Official s~a.l,
6
9-4100710" 002O?II
STATE OF
COONrY OF
.~
ClDI.TIFICA'n OP AClOI'OlfLl:DGXZNl'
(Civil Code § 1189)
on r bet ore me, I
a notary public in and for said CountYt personally appearea-LIz
lC.~ISS, personally kDo'WI1 to me (or proved to me on the basis of
satisfactol:"Y evidencei to be the person(s) ...:hose name (s) is/are
S"ubs.::.cibed t.o the within instru.'nent., and acknowledged to me that
he/she/they executed the same in his/her/their authorized
capacity(ies), and th,s.t by his/her/the.ir sign<lture-(s) 011 the
instru~ent the perso:1 (s), or lhe entity upon bl-:'!half of which the
per-socllS) acted, executed thl::! instrument.
F!7NESS my hand -?,nd official seal.
7
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KXHIBIT D
1. FIRE AND EXTENDED CO\r"E..~E Insurance, to ccr;.'er not lesB than
One Hundred Percent (lOOt) of the naplacement cost of all insurable
improvements wit.hin or upon the Prcpet"ty. Such policies sr....all
include water damage and debri! cleanup pTovi~ion5. Additional Fire
a.od Extended Coverago! Iosura..tlce shall be obtained upon completion
ot the Propert;{' 8 rer-..abilitation, to COVE'" any increased value in
the l.mpr-O"'.retneot& wi thin or UPOD the Property as a result of its
rehabilitaticn.
POLICY
2 < "';ORKERS'
J.
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$tatut"_c,q'
C(:t!-1P:i3HE1\3 I II~
;'.i.,.JjG~:'~'3 I i,S
3~j.ily :::f)jL:::'.' $s,or;o,ooo ~a. person
S5,Of10,000 ea, UCCUrreT!Ce
LIl:..BILl:-"!', ,c':c-q:'2'! t.y C>L .. ..;:::':1.tc $~" ("toe 01](1 ea. o,::,('urrcnc,",
includiog uwn~j,
hin:"d, :;u:d nono;..,;{'::l
sutOO"tobiles
CCM"{5RCIAI. Bodily Injury
(;ENERAL
LIABtLITi,
ir.cludiny ?opr:rty Dar....3,g~
products and
completed operations,
broad form contractual,
and personal injury.
$=.OOO,COG ea. person
$5,000,000 ea. occurrence
$5.000,000 aggregate
$5,000,000 ea. occurrence
Each i~surance policy required by this Agre~~ent shall contain
the following clauses:
1. "This insura.nce shall not t.e-cancelled, limited in scope
of coverage or nonreneved until after thirty (30) days
writt>en notic(~ 1".<19 bp.en given to tr.e: CITY OF PALD
ALTO/Planning and Co~,mity .i::rNironment Department, P. O.
Box 10250, Palo ~tOf CA 94303.·
2:. "All rights of subrogation are hereby waived against r.he
CITY OF PALO ALTO and the me~~ers of tne City Council and
elective or appoinr.iv.::. officers or employees, when acting
",.i thin the scope ot their e:-:',!:d. o)'n'.ent. or i:i,_ppoini:.ment. "
3. -The CITY OF PALO ALTO i~ named as a loss payee on the
property insuran::::e policy described above."
1
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4. RThe CITY OF PALO ALTO is added as an additional insur~d
as respects operations of the named insured at or trO!"!'\
the pr('Jperty,'
5. -It is agreed that any in:::urance maintained by the CrTY
OF PALO ALTO will apply in excess of, and net contribute
to, iIlSurance provided by this policy.·
All insurance coverage requi~ed sf1..a.ll be provided through
carriers with a BEST r.ati.ng of ~:VII or higher tl">..at are admitted to
do business in the State of California. The C'er-tificate(s) of
ir~.lraD.ce evideocing such coverage shall be completed and executed
by an authorized representC";tive of the comp.any providios iIlBura_nce~
and shall be filed with and approved by the City.
2
9<.101 Z We 0CIlil912
Palo Alto Housing Corporation
5M) cowper Street· Suite 201 ' Palo Alto, CaliromLa 9430 l . t41~) ~:U·970g . r~ (40 15) 3"2l-4.34 I
September 25, 1994
June Fleming
City Manager
City of Palo Alto
P.O. Box i0250
Palo Alto, CA 9430.1
Re: Acquisition of Property at 3053 Emerson S!ri!"el
By Palo Alto Housing Corporation
Dear June:
Th~ Palo Alto Housing COlp-orali':m {PAHC) Mao, <In o~'r-oriwnily to a.::qmre prop:-:r1j'
Ihat we ha,..·:;: long b~=n intcres.ted~;1 The ~i,!(--sl1.rd;J-IJnil propr.:rty at JU53 EmerS(lll
Screet is i,x::~'ed betlveen two olher PAHC pror~rtles':'l Em{~r~on Sheet. ACqul~lli(':1
of this pror,crty pro\'tdes Ihe abii;ty w ,w,emble parcel:;. tor future re.Jt'\,t;Ic:pll:-..nt t'n:
nt,',' affor.j:?b!e ho'lsing.
PAHC hlS ~ntereJ ilito a purchase .;ontr.ac! for th.e pro[-'eny subject to a financial
contingency (If City Ccuncil approv;!.l of a loan of hOIl'S.il1g funds JO an amO'Jnt
.:J.uffic~pn[ to ma\.;e -lcquisition finar.ci?liy f!!3.siblt:' for it'S inicnckd use as affcrdJ.b!<:
Tt"ntal hOll.<:.jng. Tb;-tii1ancia~ conlinge;1Cy ror City Co.mcil approval ha;; been extei1dtd
to October 18, 199-+. Escrow must dost: w:thin nine-I)' days (from Aug.lJ~t 1 i, [99.t).
PAHC request:) a tOlal of S375,0'X) in City H~ ... us.ing Reserve Funds to be used (or tr,lS
acquisition. The attached acqllis.ition financial anaJY'iis indicates the need for this
amounl to operate the prop-eTty as low· income housing. PAHC anticipates ret",uesting
the Cly for HOME or CDBG monies 2.1 il. later date to accomplish appropriate
renovation. We request that you place Ihh item on the ftrs. available Council agenda
for approval of the appropriate actions, as deterrninro by City staff.
Thank you and the City for yOlJT continued support of PAHC effoits to provide
affordable housing to OUf community.
Sin~rely,
PALO ALTO HOUSING CORPORATION
~-,--<-~i
Marlene H,. pren~~;gast' U ~
Exec:.JI.lve Director
•
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ANM YS I.XI S
.. ouwa .. aa .... NO ........ .e~.
1~"tO I'd TO /lOUSING C(H<r'Cf\'AlION
ACQUrSlllON rlNANClt\l. I\1.JAl YSIS
rROl'e~IY lOCAIIO~1' JO:lJ f:M[/,501'>1 /I,.'U'WE, l'AtO AHO
ASSUMPTlOlj$
lIOURCf.S Of CAf'i:;:;'A~''". =~
fUIURI; fUNOiNG rOR ROlAIl.
HOUSING RES£lNE fUNDS
fiRST MORTCAGr,
$97.i}()t1
375.!X)()
00.000 _
IGljVr"~i~--~"-----'-----=l
V/',CAPer RA~-[-----I iV1.
'O'Al SOURCES or CArllAl _~ .I5$].OO'j
UJEJ 0'" CAI'IIA,,''--__
"URCIIASE PRICE
REIIADllII"IION
1JII"Jr.II"G & A/','f?AlSAl COSI~
kESfPVE ACCOUt4I·0I'fPAIING
RESERVE ACCOUNI-n'SURANCE
RESERVE ACCOlhH-PROPERfY f"XES
flHE & EKROW fEfS
R[liA6 son CO;;{5 & "Alle HE
CONTlHG(NCYa. MISCELlAHEOUS
.$-i~·j'<iO(l
YO.COO
FA}
J.l)/li)
0:,.0
1.:'iO(l
,).5i.YJ
-i.50(;
1.9(1)
IOTAl US[S Of CAI'JlAL ~5;j2,OO() -tB§RJGAG~.UIR~ fOR rURC;::'L $OO.0Xlj
/,(j9'-' I
''<''11 f'C;i[)f[..tfli'.I. Rr:Sf:P,VI;
IIt?S! M0R1GN.::;( I€RMlvtAf(S) 15
INI[R~5' RATE 'JX
l'I?Ot'fR{,' If,)( CkOWlil P."'E/Y~. 2.000:.
(.Ii'I PAIB,jG (Xi'f !·t'lF::' GROWIII RAlr /'fR. J_Uf}~
Ii:l;';II)l/HIAt iN(:OA·1( GPOWIII RAr(/YR. J.OO,:(
Mise Il~O)M£ GROWIH RAtUY~. Q.()(J')(
UlQ~~RV~CE COV(RAGt: RAllO LOS
i,'ES/t/[J..J-,'Ar orl'?RII,',NG fxNNSf.S-r€;;;rr--'
Al)MII,II,I;lr,"'lvE/ctl-:;UE MGR ." '1.760 l!JI~ 111[$
MA'!~:I )iAt~Cf !~U'A1P:;/:"ANOSCAr-t
IN~\Ji~ANC(
/\C'':OtJl-H ltJG/AUDIT
f'I{Ol'tRIY i.'\)(
r'~-Ol'rRIY M}\NI\CiMI.NI fEr.:;
kr:$(f<'l(S
0~Cr!tA.:':(OIJS ~~.
3.000
900
56~
i60
020
1,980
200
9/21/9" 4:29 PM
n
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