Resolution No. 2013-070RESOLUTION NO. 2013-70
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF,
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF
AN AMENDMENT TO THE LOAN AGREEMENT BY AND BETWEEN
THE CITY OF VERNON AND META HOUSING CORPORATION
WHEREAS, on June 18, 2013 the City Council of the City of
Vernon adopted Resolution No. 2013-62 approving a Loan Agreement
between the City and Meta Housing Corporation (the "Developer"); and
WHEREAS, the City Council has determined that the amount of
the loan to the Developer to be made through the Loan Agreement
(the "City Loan") needs to be modified; and
WHEREAS, the City desires to make a loan to Developer to
assist in the development of the Housing Development on the Site
(the "City Loan"); and
WHEREAS, in the City Council's approval of the resolution
approving the Loan Agreement on June 18, 2013, the City Council found
that the Housing Development was not subject to Article 34 of the
California Constitution ("Article 34"); and
WHEREAS, On February 19, 2013, the City Council adopted
Resolution No. 2013-31 approving a Mitigated Negative Declaration and a
Mitigation Monitoring Reporting Program prepared for the Housing
Development, and specifically including the Housing Development in the
Project Description, which Mitigated Negative Declaration concludes
that the Housing Development will have no significant adverse impact on
the environment, provided that the mitigation measures set forth in the
Mitigation Monitoring Reporting Program are implemented; and
WHEREAS, the Loan Agreement, as it is proposed to be amended,
makes no changes to the project analyzed in the Mitigated Negative
070313850
Declaration; and
WHEREAS, the City's provision of the City Loan to the
Developer and the Developer's borrowing of the City Loan pursuant to
the terms of the Loan Agreement are in the vital and best interest of
the City and the health, safety, and welfare of its residents, and in
accord with the public purposes and provisions of applicable state and
local laws.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON:
SECTION 1: Recitals. The City Council of the City of Vernon
hereby finds and determines that the above recitals are true and
correct.
SECTION 2: Findings. In adopting this resolution, the City
Council of the City of Vernon makes the following findings:
a) The Loan Agreement, as it is proposed to be amended, makes no
changes to the project analyzed in the Mitigated Negative
Declaration, and therefore it can be seen with certainty that there
is no possibility that the approval or implementation of the Loan
Agreement, as it is proposed to be amended, will have a significant
effect on the environment. Accordingly, the approval of the
proposed amendment to the Loan Agreement is not subject to CEQA
pursuant to Section 15061(b)(3) of the CEQA Guidelines.
b) The Housing Development, as it is proposed to be amended, makes no
changes to the project which would cause it to be subject to
Article 34.
c) The making of the City Loan pursuant to the terms of the Loan
Agreement, as it is proposed to be amended, is in the vital and best
interest of the City and the health, safety, and welfare of its
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070313850
residents, and in accord with the public purposes and provisions of
applicable state and local laws.
SECTION 3: Action. The City Council of the City of Vernon
hereby amends the Loan Agreement as follows:
The amount of the City Loan is revised from Six Hundred Fifty
Thousand Dollars ($650,000) to One Million Five Hundred Thousand
Dollars ($1,500,000). The City Attorney is hereby directed to make
modifications to the Loan Agreement to conform to the following
amendment.
SECTION 4: Appropriation. The City Council of the City of
Vernon hereby appropriates the additional sum of Eight Hundred Fifty
Thousand Dollars ($850,000) from the City's general fund for the
purpose of increasing the loan pursuant to the Loan Agreement, as
amended herein.
SECTION 5: The City Council of the Vernon hereby authorizes
the Mayor or Mayor Pro-Tem to execute the Loan Agreement as so amended,
for and on behalf of, the City of Vernon, and the Interim City Clerk,
or Deputy City Clerk, is hereby authorized to attest thereto.
SECTION 6: The City Council of the City of Vernon hereby
instructs the City Administrator, or his designee, to take whatever
actions are deemed necessary or desirable for the purpose of
implementing and carrying out the purposes of this Resolution and the
transactions herein approved or authorized, including but not limited
to, any non -substantive changes to the Loan Agreement attached herein.
SECTION 7: Notice of Exemption. The Interim City Clerk, or
the Interim City Clerk's designee, of the City of Vernon shall file a
Notice of Exemption from CEQA with the County Clerk of the County of
Los Angeles.
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070313850
SECTION 8: Certification. The Interim City Clerk, or
Deputy City Clerk, of the City of Vernon shall certify to the passage,
approval and adoption of this resolution, and the Interim City Clerk,
or Deputy City Clerk, of the City of Vernon shall cause this resolution
and the Interim City Clerk's, or Deputy City Clerk's, certification to
be entered in the File of Resolutions of the Council of this City.
APPROVED AND ADOPTED this 3rd day of July, 2013.
ed, Interim City Clerk
APPROVE TO FORM:
1�Ak)
Nicholas George Rodriguez,
City �torgeW
Jon EAGoetz,vEsq.
Kronic , Moskovitz, Tiedemann & Girard,
Special Counsel to City
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Name: W. Michael McCormick
Title: Mayor / Mayor p -mom 1
070313850
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Dana Reed, Interim City Clerk / Deputy City Clerk of the City
of Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 2013-70, was duly passed, approved and adopted by the
City Council of the City of Vernon at a special meeting of the City
Council duly held on Wednesday, July 3, 2013, and thereafter was duly
signed by the Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this -L-- day of July, 2013, at Vernon, California.
(SEAL)
Reed, Interim City Clerk
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070313650
Christopher. B. Maffris
Vice President
Meta Housing Corporation`
1640 S. Sepulveda Blvd., Suite 425
Los Angeles, CA 90025
RE: Amended Loan Agreement
Dear Mr. Maffris:
Please find enclosed a fully executed original amended agreement as referenced above, approved
by City Council on July 3, 2013, through Resolution No. 2013-70.
If you have any questions, please contact Kevin Wilson at (323) 583-8811 extension 245.
Thank you.
Sincerely,
Deborah R. uare"
Records Management Assistant
Enclosure
c: S. Kevin Wilson
Jon Goetz
Purchasing Department
Resolution No. 2013-70
Agreement No. 13-055
h
CONTRACT/AMENDMENT SIGNATURE ROUTING FORM
CONTRACTOR: i '1F� ��U�tS yC� C� ?��ZAnoki
CONTRACT PURPOSE: L o{pv `
CONTRACT IS: ❑ FEDERAL ❑ PREVAILING WAGE ❑ COMPETIVE SELECTION & NOTICED RFP
❑ COMPETITIVE BID & NOTICED INVITATION TO BID
❑ EXEMPT FROM COMPETITIVE PROCESS (APPROVAL ATTACHED)
❑ SERVICES o MATERIALS o BUDGETED o NOT BUDGETED
TOTAL CONTRACT VALUE: $ co --J Ot 00L) Charge Acet. No(s) (2) i l . l -L I • 9 O C7 o iJ
Amendment Value $ o Contract is an Amendment to Contract No. if Applicable)
RESPONSIBLE DEPARTMENT PERSON: 'Kt-y ),A W I L-� Oast PHONE: X 2,4 j
AUTHORIZATION: $'Approved by Council on -) �-. t tf: 1` Zo' 13
(Check One) Resolution No.2,4,i3 -62 (if applicable)
G/3T��
❑ Approved by City Administrator on
Note: Attach supporting documentation
❑Amendment Approved by
ROUTING SEQUENCE: (Please Follow In Order - Do not use N/A)
(1) Responsible Department Person
Checks substance of contract and assembles two (2) copies of
Contract, insurance & bond documents, certifies compliance
With Competitive Bidding and Purchasing Ordinance
(2) Liability and Claims
Approves insurance and sureties, if bonds required
(3) Finance (Purchasing)
Checks compliance with Competitive Bidding & Living Wage Ordinances
And reflected in current budget
(4) City Attorney A ,,
Approves contract as to form, verifies bonds and insurance included AV _
(5) City Signatory f.
Signs all copies on behalf of City
(6) City Clerk
Attests signatures, numbers, files contract, insurance and bonds, and
transmits duplicate original to contractor
Rev. 4/25/13
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is entered into as of July 3, 2013, by
and between the CITY OF VERNON, a California charter city and municipal corporation (the
"City"), and META HOUSING CORPORATION, a California corporation (the "Developer").
RECITALS
The following recitals are a substantive part of this Agreement:
A. The City and the Developer have entered into a Disposition and Development
Agreement dated as of February 19, 2013 (the "DDA'), which provides for the City to ground
lease to the Developer certain real property located at 4675 52"d Drive in the City of Vernon (the
"Site"), and for the Developer to agree to develop a housing project (the "Housing
Development") on the Site. The Housing Development will generally consist of a rental housing
complex containing forty-five (45) units, with associated parking, landscaping and community
facilities.
B. In order to develop the IIousing Development on the Site, the Developer requires
certain financial assistance from the City.
C. The parties desire by this Agreement for the City to agree to make a loan to
Developer to assist in the development of the Housing Development on the Site (the "City
Loan").
D. The making of the City Loan pursuant to the terms of this Agreement is in the
vital and best interest of the City and the health, safety, and welfare of its residents, and in accord
with the public purposes and provisions of applicable state and local laws.
E. On February 19, 2013, the City Council adopted Resolution No. 2013-31
approving a Mitigated Negative Declaration and a Mitigation Monitoring Reporting Program
prepared for the Housing Development, and specifically including the Housing Development and
the DDA in the Project Description. The Mitigated Negative Declaration concludes that the
Housing Development and the DDA will have no significant adverse impact on the environment,
provided that the mitigation measures set forth in the Mitigation Monitoring Reporting Program
are implemented. This Agreement makes no changes to the project analyzed in the Mitigated
Negative Declaration, and therefore it can be seen with certainty that there is no possibility that
the approval or implementation of this Agreement will have a significant effect on the
environment.
NOW, THEREFORE, City and the Developer hereby agree as follows:
1. City Loan. The City hereby agrees to loan to Developer the amount of One
Million Five Hundred Thousand Dollars ($1,500,000) (the "City Loan"), subject to the terms and
conditions set forth in this Agreement.
2. Repayment of City Loan. The Developer's obligation to repay the City Loan
1029355.2
shall be set forth in the "Promissory Note" in the form of Exhibit A attached hereto, which is
incorporated herein.
a. The Promissory Note shall be for a term of sixty-five (65) years from the
date of the Promissory Note, and shall bear simple interest at the rate of three percent (3%) per
annum commencing upon the date of the Promissory Note.
b. The Promissory Note shall be payable from the "Residual Receipts" of the
Housing Project after payment of (i) all normal and customary costs and expenses reasonably
incurred, paid, and attributable to the operation, recordkeeping, maintenance, management and
taxes of the Housing Project, including those costs of repair and replacement of the Housing
Development capital improvements, furnishings, fixtures, and equipment which are cannot be
paid through applicable reserve funds, to the extent consistent with an annual independent audit
performed by a certified public accountant using generally accepted accounting principles, and
(ii) debt service which is senior to the Promissory Note, (iii) deposits to reserve accounts
required by the permanent loan or limited partnership agreement ("Reserve Deposits"), (iv)
deferred developer fee payments subject to a maximum annual amount approved by the City, (v)
a partnership management fee payable to the managing general partner of Developer required by
the limited partnership agreement in an amount approved by City, (vi) an asset management fee
payable to one or more of the limited partners of Developer required by the limited partnership
agreement in an amount approved by City, and (vii) tax credit shortfall payments required by the
limited partnership agreement, until the Promissory Note has been paid in full.
C. The annual Promissory Note payment shall be equal to fifty percent (50%)
of the Residual Receipts until such time as the City shall have received Fifteen Thousand Dollars
($15,000) in Residual Receipts payments, and thereafter shall be equal to one hundred percent
(100%) of the Residual Receipts, until such time as the Promissory Note is repaid in full.
Beginning in the second year of Residual Receipts payments, the foregoing Fifteen Thousand
Dollars ($15,000) Residual Receipts threshold shall increase annually over the previous year by
the same percentage as the annual increase in the federal Low Income Housing Tax Credit rents
for Los Angeles County, but in all cases shall never decrease lower than that of the previous
year. If the calculation of Residual Receipts results in a negative number, Residual Receipts
shall be zero for that year.
d. In the event that the Developer obtains other approved financing which
also requires payment from Residual Receipts, the City shall negotiate with such other lender to
allocate the Residual Receipts to repayment of both loans in percentages proportionate to the
relative amount of such loans or in another equitable manner mutually agreeable to the parties.
e. The Developer shall annually, on or before March 31 of each year,
commencing in the year after the funding of the permanent loan for the Housing Development,
submit to the City a Residual Receipts Report, in the form attached hereto as Exhibit B and
incorporated herein, which shall provide the basis for the Developer's payment of Residual
Receipts to the City.
f. The Note shall be non -recourse to the Developer.
1029355.2
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3. Other Loans. Developer shall use commercially reasonable efforts to apply for
all other governmental and other subsidized loan programs available for affordable housing
projects of this type, and for which the Developer, in its reasonable discretion, believes the
Housing Development will be competitive, including without limitation the Affordable Housing
Program of the Federal Home Loan Bank. If any such grants or loans are awarded or obtained
prior to the final disbursement of the City Loan, the City shall have the option in its sole
discretion to reduce the principal amount of the City Loan by the amount of such grants or loans.
In addition, the proceeds of such grants or loans shall be used, to the extent permitted by the
terms of those programs, to repay the outstanding balance of the City Loan.
4. Refinancing and Sales Proceeds. If Developer refinances the first priority
permanent loan, Developer shall use the City's Pro Rata Share of the Net Financing Proceeds (as
defined in the Ground Lease) to repay the City Loan. If Developer sells or assigns its interest in
the Housing Development and the Ground Lease, other than through a Permitted Transfer (as
defined in Section 703.2 of the DDA), Developer shall will use City's Pro Rata Share of the Net
Sales Proceeds (as defined in the Ground Lease) to repay the City Loan. Section 4.3(b) and (c)
of the Ground Lease shall be amended to provide that until the City Loan is repaid in full, the
payments due pursuant to those sections will be applied as repayment of the City Loan rather
than as Additional Rent.
5. City Utility Rebates. Developer shall apply for all City and other utility rebates
available to the Housing Development. Any rebates received by Developer from City utilities
shall be paid to City as a repayment of the City Loan.
6. Security for City Loan. The Promissory Note shall be secured by a Deed of
Trust to be recorded as an encumbrance to the Developer's leasehold interest in the Site,
substantially in the form of Exhibit C attached hereto, which is incorporated herein.
7. Disbursement of City Loan. The proceeds of the City Loan shall be disbursed
(a) first, for costs incurred by City in connection with the approval of the Housing Development,
land use entitlements for the Housing Development, revisions to the General Plan Land Use
Element and Housing Element, and CEQA documentation and approvals; (b) second, for the
payment of governmental fees and permit fees attributable to the Housing Development; and (c),
third, costs of construction of the Housing Development. The amounts payable pursuant to (a)
above shall be credited to the City upon the commencement of the Ground Lease. The amounts
payable pursuant to (b) above shall be credited to the City and paid to other governmental
agencies upon the commencement of the Ground Lease. The amounts payable pursuant to (c)
above shall be disbursed to Developer upon the completion of construction of the Housing
Development, conditioned upon Developer's delivery to City of contractor invoices and City
approval of the items of construction for which such disbursement is requested.
8. Subordination. The Deed of Trust shall be made subordinate to the deed of trust
for the primary construction and permanent financing which is approved by the City pursuant to
the DDA. Upon request of the Developer, the City shall subordinate the Deed of Trust to any
substitutions, modifications, extensions, increases or replacements of the primary construction
and permanent financing which is approved by the City, which approval shall not be
unreasonably withheld.
1029355.2
3
9. Assumption. The Promissory Note shall not be assumable by successors and
assigns of Developer except for those successors approved or permitted pursuant to the DDA.
10. Governing Law. This Agreement and the documents and other instruments
given pursuant hereto shall be construed in accordance with and be governed by the laws of the
State of California. Any references herein to particular statutes or regulations shall be deemed to
refer to successor statutes or regulations, or amendments thereto.
11. Default Remedies. A material failure by either party to perform any action or
covenant required by this Agreement within the time periods provided herein following notice
and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party
claiming a Default shall give written notice of Default to the other party specifying the Default
complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not
institute any proceeding against any other party, and the other party shall not be in Default if
such party cures the Default within thirty (30) days from receipt of such notice, or if the nature of
such default is such that the Default cannot reasonably be cured within such thirty (30) day
period, such party shall immediately, with due diligence, commence to cure, correct or remedy
such failure or delay and shall complete such cure, correction or remedy with diligence, but in no
event later than ninety (90) days from receipt of such notice. Notwithstanding anything to the
contrary contained herein, City hereby agrees that any cure of any default made or tendered by
one or more of Developer's limited partners shall be deemed to be a cure by Developer and shall
be accepted or rejected on the same basis as if made or tendered by Developer. Copies of all
notices which are sent to Developer shall also be sent to Developer's limited partner at the notice
provided by Developer.
12. Institution of Legal Actions. In addition to any other rights or remedies and
subject to the restrictions otherwise set forth in this Agreement, either party may institute an
action at law or equity to seek specific performance of the terms of this Agreement, or to cure,
correct or remedy any Default, to recover damages for any Default, or to obtain any other
remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in
the Superior Court of the County of Los Angeles, State of California.
13. Attorneys' Fees. In any action between the parties to interpret, enforce, reform,
modify, rescind, or otherwise in connection with any of the terms or provisions of this
Agreement, the prevailing party in the action shall be entitled, in addition to any other relief to
which it might be entitled, reasonable costs and expenses including, without limitation, litigation
costs and reasonable attorneys' fees.
14. Amendment. This Agreement may not be changed orally, but only by agreement
in writing signed by Developer and the City.
15. Notices. Any approval, disapproval, demand, document or other notice
("Notice") which either party may desire to give to the other party under this Agreement must be
in writing and may be given either by (i) personal service, (ii) delivery by reputable document
delivery service such as Federal Express that provides a receipt showing date and time of
delivery, or (iii) mailing in the United States mail, certified mail, postage prepaid, return receipt
requested, addressed to the address of the party as set forth below, or at any other address as that
1029355.2
4
party may later designate by Notice.
To City: City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Attention: City Administrator
Copy to: City Attorney
Copy to: City Director of Community Services and Water
To Developer: Meta Housing Corporation
1640 A. Sepulveda Blvd., Suite 425
Los Angeles, CA 90025
Attention: John Huskey
With copy to: Bocarsly, Emden, Cowan, Esmail & Arndt, LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Attention: Nicole Deddens
Any written notice, demand or communication shall be deemed received immediately
upon receipt; provided, however, that refusal to accept delivery after reasonable attempts thereto
shall constitute receipt. Any notices attempted to be delivered to an address from which the
receiving party has moved without notice shall be effective on the third day from the date of the
attempted delivery or deposit in the United States mail.
1029355. 2
IN WITNESS WHEREOF, City and the Developer have executed this Loan Agreement
as of the date first set forth above.
CITY:
CITY OF VERNON, a California charter city and
municipal corporation
By:
4o
. Michael McCormick, Mayor
DanV Reed, Interim City Clerk
APP11VED AS TO FORM:
Ni olas George Rodriguez,
City AtMmey
Kronick
Special
to
& Girard,
DEVELOPER:
META HOUSING CORPORATION, a
e4--�1b�-VT
1029355. 2
EXHIBIT A
PROMISSORY NOTE
$1,500,000
,201_
Vernon, California
FOR VALUE RECEIVED, [META HOUSING CORPORATION ENTITY], a
California limited partnership (the "Borrower"), promises to pay to the CITY OF VERNON, a
California charter city and municipal corporation (the "City"), or order, at the City's office at
4305 Santa Fe Avenue, Vernon, California 90058, or such other place as the City may designate
in writing, the sum of One Million Five Hundred Thousand Dollars ($1,500,000) (the "Note
Amount"), or so much of such sum as is disbursed to or on behalf of Borrower, in currency of
the United States of America, which at the time of payment is lawful for the payment of public
and private debts.
1. Agreement. This Promissory Note (the "Note") is given in accordance with that
certain Loan Agreement executed by the City and Meta Housing Corporation, dated as of July 3,
2013 (the "Agreement"), and a Disposition and Development Agreement executed by the City
and Meta Housing Corporation, dated as of February 19, 2013 (the "DDA"). The rights and
obligations of the Borrower and the City under this Note shall be governed by the Agreement
and by the additional terms set forth in this Note. In the event of any inconsistencies between the
terms of this Note and the terms of the Agreement or any other document related to the Note
Amount, the terms of this Note shall prevail.
2. Interest. The Note Amount shall bear simple interest at the rate of three percent
(3%) per annum from the date hereof.
3. Repayment of Note Amount from Residual Receipts. The Note Amount shall
be paid by the Borrower's annual payment to the City of an amount equal to fifty percent (50%)
of the annual Residual Receipts [Note: change residual receipts percentage if there is another
residual receipts loan] until such time as the City shall have received Fifteen Thousand Dollars
($15,000) in Residual Receipts payments, and thereafter an amount equal to one hundred percent
(100%) of the Residual Receipts, until such time as the Note Amount is repaid in full. Beginning
in the second year of Residual Receipts payments, the foregoing Fifteen Thousand Dollars
($15,000) Residual Receipts threshold shall increase annually over the previous year by the same
percentage as the annual increase in the federal Low Income Housing Tax Credit rents for Los
Angeles County, but in all cases shall never decease lower than that of the previous year.
Annual Residual Receipts payments shall be made by the Borrower by cashier's check and shall
be delivered to City on or before March 31 of each year during the term of this Note first
following the date of funding of the permanent loan for the Housing Development, until the Note
Amount and all unpaid interest thereon has been repaid in full. Any remaining portion of the
Note Amount shall be due and payable on the sixty-fifth (65a') anniversary of the date of this
Note. Notwithstanding the foregoing, the full Note Amount may be accelerated as set forth in
Section 15 hereof.
As used herein, "Annual Project Revenue" shall mean all gross income and all revenues
of any kind from the Housing Development in a calendar year, including without limitation,
Exhibit A-1
1029355.2
Housing Development rents, Section 8 housing assistance payments, if any, late charges, vending
machine income, and any other revenues of whatever kind or nature from the Housing
Development, except that interest on security deposits and required reserves shall not be
considered Annual Project Revenue.
As used herein, "Debt Service" means regularly scheduled payments of principal and
interest made in a calendar year pursuant to the permanent financing approved pursuant to
Section 401 of the DDA, which is senior in lien priority to the City Loan, including any
substitutions, modifications, extensions, increases or replacements of the primary and permanent
financing which is approved by the City, which approval shall not be unreasonably withheld,
which is senior in lien priority to the City Loan. Debt Service excludes payments made pursuant
to this Note.
As used herein, "Deferred Developer Fees" shall mean any deferred developer fee
allowable under the financing approved by the City pursuant to Section 401 of the Agreement.
As used herein, "Operating Expenses" shall mean all normal and customary costs and
expenses reasonably incurred, paid, and attributable to the operation, recordkeeping,
maintenance, management and taxes of the Housing Development, including those costs of
repair and replacement of the Housing Development capital improvements, furnishings, fixtures,
and equipment which are cannot be paid through applicable reserve funds, to the extent
consistent with an annual independent audit performed by a certified public accountant using
generally accepted accounting principles, including: painting, cleaning, repairs, alterations,
landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and
personal property taxes, assessments, insurance, security, advertising and promotion, janitorial
services, cleaning and building supplies, purchase, repair, servicing and installation of
appliances, equipment, fixtures and furnishings which are not paid from capital replacement
reserves, fees and expenses of property management, fees and expenses of accountants, attorneys
and other professionals, and other actual, reasonable and customary operating costs and capital
costs which are directly incurred and paid by the Borrower, but which are not paid from
operating reserve or other reserve accounts. The Operating Expenses shall not in any event
include expenses unrelated to the Housing Development's operations, including without
limitation depreciation, amortization, and accrued principal and interest expense on deferred
payment debt.
As used herein, "Reserve Deposits" shall mean deposits to reserve accounts required by
the permanent loan or limited partnership agreement.
As used herein, "Residual Receipts" shall mean Annual Project Revenue less the sum of
(i) Operating Expenses, (ii) Debt Service, (iii) Reserve Deposits, (iv) Deferred Developer Fees,
(v) a partnership management fee payable to the managing general partner of Borrower required
by the limited partnership agreement in an amount approved by City, (vi) an asset management
fee payable to one or more of the limited partners of Borrower required by the limited
partnership agreement in an amount approved by City, and (vii) tax credit shortfall payments
required by the limited partnership agreement, for each calendar year; provided, however, that if
such calculation results in a negative number, Residual Receipts shall be zero for that year.
Exhibit A-2
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On or before March 31 of each year commencing in the year of the issuance of a
certificate of occupancy for the Housing Development, the Borrower shall annually provide the
City a Residual Receipts report, in the form attached to the Agreement as Exhibit B or such other
form which is reasonably acceptable to the City, which shall describe in detail the Annual Project
Revenue, Debt Service, Operating Expenses, Reserve Deposits, Asset Management Fees,
Deferred Developer Fees, and Residual Receipts for that year. The Borrower shall also submit to
the City, on or before March 31 of each year commencing in the year of the issuance of a
certificate of occupancy for the Housing Development, annual financial statements with respect
to the Housing Development that have been reviewed by an independent certified public
accountant, together with an expressed written opinion of the certified public accountant that
such financial statements present the financial position, results of operations, and cash flows
fairly and in accordance with generally accepted accounting principles.
4. Repayment of Note Amount from Proceeds of Other Loans. Borrower is
required under Section 3 of the Agreement to use commercially reasonable efforts to apply for
all other governmental and other subsidized loan programs available for affordable housing
projects, and for which the Borrower in its reasonable discretion believes the Housing
Development will be competitive, including without limitation the Affordable Housing Program
of the Federal Home Loan Bank. If any such grants or loans are awarded or obtained prior to the
final disbursement of the City Loan, the City shall have the option in its sole discretion to reduce
the principal amount of the Note Amount by the amount of such grants or loans. In addition, the
proceeds of such grants or loans shall be used, to the extent permitted by the terms of those
programs, to repay the outstanding Note Amount balance.
5. Repayment of Note Amount from Refinancing and Sales Proceeds. If
Borrower refinances the first priority permanent loan, Borrower shall use City's Pro Rata Share
of the Net Financing Proceeds (as defined in the Ground Lease) to repay the Note Amount. If
Borrower sells or assigns its interest in the Housing Development and the Ground Lease, other
than through a Permitted Transfer (as defined in Section 703.2 of the DDA), Borrower shall use
City's Pro Rata Share of the Net Sales Proceeds (as defined in the Ground Lease) to repay the
Note Amount.
6. Repayment of Note Amount from City Utility Rebates. Any rebates received
by Borrower from City utilities shall be paid to City as a repayment of the Note Amount.
7. Security. This Note is secured by a Deed of Trust (the "Deed of Trust") dated as
of the same date as this Note.
8. Waivers
a. Borrower expressly agrees that this Note or any payment hereunder may
be extended from time to time at the City's sole discretion and that the City may accept security
in consideration for any such extension or release any security for this Note at its sole discretion
all without in any way affecting the liability of Borrower.
b. No extension of time for payment of this Note made by agreement by the
City with any person now or hereafter liable for the payment of this Note shall operate to release,
Exhibit A-3
1029355.2
discharge, modify, change or affect the original liability of Borrower under this Note, either in
whole or in part.
C. The obligations of Borrower under this Note shall be absolute and
Borrower waives any and all rights to offset, deduct or withhold any payments or charges due
under this Note for any reasons whatsoever.
d. Borrower waives presentment, demand, notice of protest and nonpayment,
notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or
interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the
rights of interests in or to properties securing of this Note, and the benefit of any exemption
under any homestead exemption laws, if applicable.
e. No previous waiver and no failure or delay by City in acting with respect
to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach, default, or
failure or condition under this Note, the Deed of Trust or the obligations secured thereby. A
waiver of any term of this Note, the Deed of Trust or of any of the obligations secured thereby
must be made in writing and shall be limited to the express written terms of such waiver.
9. Attorneys' Fees and Costs. Borrower agrees that if any amounts due under this
Note are not paid when due, to pay in addition, all costs and expenses of collection and
reasonable attorneys' fees paid or incurred in connection with the collection or enforcement of
this Note, whether or not suit is filed.
10. Joint and Several Obligation. This Note is the joint and several obligation of all
makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs,
successors and assigns.
11. Amendments and Modifications. This Note may not be changed orally, but
only by an amendment in writing signed by Borrower and by the City.
12. City May Assign. City may, at its option, assign its right to receive payment
under this Note without necessity of obtaining the consent of the Borrower.
13. Borrower Assignment Prohibited. In no event shall Borrower assign or transfer
any portion of this Note without the prior express written consent of the City, which consent
shall not unreasonably be withheld, except pursuant to a transfer which is permitted or approved
under Section 703 of the DDA.
14. Terms. Any terms not separately defined herein shall have the same meanings as
set forth in the Agreement.
15. Acceleration and Other Remedies. Upon: (a) the occurrence of an Event of
Default as defined in the Agreement, Ground Lease or DDA, or (b) the termination of the
Agreement, Ground Lease or DDA, or (c) Borrower selling, contracting to sell, giving an option
to purchase, conveying, leasing, further encumbering, mortgaging, assigning or alienating the
Borrower's interest in the Housing Development (other than (i) financing approved by the City
or otherwise permitted pursuant to Section 401 of the DDA, (ii) leasing of individual Housing
Exhibit A-4
1029355.2
Units to tenants in the ordinary course of business, or (iii) a purchase option and/or right of first
refusal granted to Borrower's general partner(s) or affiliates thereof), whether directly or
indirectly, whether voluntarily or involuntarily or by operation of law, or any interest in the
Housing Development, or suffering its title, or any interest in the Housing Development to be
divested, whether voluntarily or involuntarily, without the consent of the City or as otherwise
approved or permitted under the DDA, City may, at City's option, declare the outstanding
principal amount of this Note, together with the then accrued and unpaid interest thereon and
other charges hereunder, and all other sums secured by the Deed of Trust, to be due and payable
immediately, and upon such declaration, such principal and interest and other sums shall
immediately become and be due and payable without demand or notice, all as further set forth in
the Deed of Trust. All costs of collection, including, but not limited to, reasonable attorneys'
fees and all expenses incurred in connection with protection of, or realization on, the security for
this Note, may be added to the principal hereunder, and shall accrue interest as provided herein.
City shall at all times have the right to proceed against any portion of the security for this Note in
such order and in such manner as such City may consider appropriate, without waiving any
rights with respect to any of the security. Any delay or omission on the part of the City in
exercising any right hereunder, under the Agreement or under the Deed of Trust shall not operate
as a waiver of such right, or of any other right. No single or partial exercise of any right or
remedy hereunder or under the Agreement or any other document or agreement shall preclude
other or finther exercises thereof, or the exercise of any other right or remedy. The acceptance
of payment of any sum payable hereunder, or part thereof, after the due date of such payment
shall not be a waiver of City's right to either require prompt payment when due of all other sums
payable hereunder or to declare an Event of Default for failure to make prompt or complete
payment.
16. Consents. Borrower hereby consents to: (a) any renewal, extension or
modification (whether one or more) of the terms of the Agreement or the terms or time of
payment under this Note, (b) the release or surrender or exchange or substitution of all or any
part of the security, whether real or personal, or direct or indirect, for the payment hereof, (c) the
granting of any other indulgences to Borrower, and (d) the taking or releasing of other or
additional parties primarily or contingently liable hereunder. Any such renewal, extension,
modification, release, surrender, exchange or substitution may be made without notice to
Borrower or to any endorser, guarantor or surety hereof, and without affecting the liability of
said parties hereunder.
17. Successors and Assigns. Whenever "City" is referred to in this Note, such
reference shall be deemed to include the City of Vernon and its successors and assigns,
including, without limitation, any subsequent assignee or holder of this Note. All covenants,
provisions and agreements by or on behalf of Borrower, and on behalf of any makers, endorsers,
guarantors and sureties hereof which are contained herein shall inure to the benefit of the City
and City's successors and assigns.
18. Miscellaneous. Time is of the essence hereof. This Note shall be governed by
and construed under the laws of the State of California except to the extent Federal laws preempt
the laws of the State of California. Borrower irrevocably and unconditionally submits to the
jurisdiction of the Superior Court of the State of California for the County of Los Angeles or the
United States District Court of the Central District of California, as City hereof may deem
Exhibit A-5
1029355.2
appropriate, in connection with any. legal action or proceeding arising out of or relating to this
Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue.
19. No Personal Liability. In the event of any default under the terms of this Note or
the Deed of Trust, the sole recourse of the City for any and all such defaults shall be by judicial
foreclosure or by the exercise of the trustee's power of sale, and Borrower and its partners shall
not be personally liable for the payment of this Note or for the payment of any deficiency
established after judicial foreclosure or trustee's sale; provided, however, that the foregoing shall
not in any way affect any rights the City may have (as a secured party or otherwise) hereunder or
under the Agreement or Deed of Trust to recover directly from Borrower any amounts secured.
by the Deed of Trust, or any funds, damages or costs (including without limitation reasonable
attorneys' fees and costs) incurred by City as a result of fraud, misrepresentation or waste, and
any costs and expenses incurred by the City in connection therewith (including without
limitation reasonable attorneys' fees and costs).
us] VTIWiI/-W1;
[META HOUSING CORPORATION LIMITED
PARTNERSHIP]
am
53
Exhibit A-6
1029355.2
EXHIBIT B
FORM OF RESIDUAL RECEIPTS REPORT
Residual Receipts Report
for the Year Ending
Date Prepared
Please complete the following information and execute the certification at the bottom of this
form.
Annual Proiect Revenue
Please report Annual Project Revenue for the year ending on the following lines:
Rent Payments (including Section 8 tenant assistance payments, if any) (1)
Interest Income (do not include interest income from replacement and operating
reserves nor interest income on tenant security deposits)
Additional Income Related to Project Operations (for example, vending
machine income, tenant forfeited deposits, laundry income)
Total Annual Project Revenue (Add lines 1, 2, and 3)
Oneratine Exnensest
Please report Operating Expenses incurred in relation to the operations of the
Project for the year ending , on the following lines:
Operating and Maintenance Expenses
Utilities
Property management Expenses and On -Site Staff Payroll
Administrative Expenses Incurred by Project
Property Taxes
Insurance
(2)
(3)
(4)
(5)
(6) $
(7) $
(8)
(9)
(10)
' Do not include expenses unrelated to the Project's operations, such as depreciation, amortization, accrued principal
and interest expense on deferred payment debt, or capital expenditures.
Exhibit B-1
1029355.2
Other Expenses Related to Operations of the Project
Please list these expenses:
Total Annual Operating Expenses
(Add lines 5, 6, 7, 8, 9,10, and 11)
Net Operating Income (Subtract Line 12 from Line 4)
Additional Cash Flow Payments
Obligated Debt Service Payments (as approved by the City and other parties
that may have such approval rights)
Scheduled Deposits to Reserves (as approved by the City)
(12)
(13) $
(14)
(15)
Additional Payment Obligations (such as partnership management fees, (16)
deferred developer fees, or repayments on loans to partners, as approved by the
City to have priority over Residual Receipt Payment to the City
Total Additional Cash Flow Payments (Add lines 14,15, and 16)
Residual Receipts for Year Ending
(Subtract Line 17 from Line 13)
Percentage of Residual Receipts to be Paid to the City (as shown in the
Promissory Note by and between the City and Borrower dated
Amount Payable to the City (Multiply Line 18 by Line 19)
(17) $
(18) $
(19) 50%ofls`
$30,000 and 100%
above $30,000
(20)
The amount payable to the City listed on Line 2 is subject to payment according to the terms of the
Promissory Note by and between the City and Borrower dated . If Line
20 is $0.00 or negative, you owe nothing to the City this year. If Line 20 is a positive number, remit
check payable to and attach to this report.
Exhibit B-2
1029355.2
Computation of Residual Receipts
for the Year Ending
The following certification should be executed by the Executive Director or Chief Financial
Officer of the Borrower, or the Managing General Partner of the Borrower.
I certify that the information provided in this form is true, accurate, and correct in all respects.
Date
(Print Name)
(Title)
Exhibit B-3
1029355.2
L 41I t YY4
RECORDING REQUESTED BY AND
WHEN RECORDED, RETURN TO:
LEASEHOLD DEED OF TRUST AND FINANCING AGREEMENT
THIS LEASEHOLD DEED OF TRUST (the "Deed of Trust") is made effective as of
, 201_, by [META HOUSING ENTITY], a California limited
partnership ('Borrower"), as trustor, in favor of ("Trustee"), as
trustee, and for the benefit of the CITY OF VERNON, a California charter city and municipal
corporation, as beneficiary (referred to herein as the `Beneficiary" or the "Lender"). The loan
secured by this Deed of Trust is being made in connection with Borrower's ground lease from
Lender, simultaneously with this Deed of Trust, of that certain real property more particularly
described in Exhibit "A" attached hereto and made a part hereof (the "Property").
The Borrower, in consideration of the indebtedness recited and the trust created in this
Deed of Trust, irrevocably grants and conveys to Trustee, in trust, with power of sale,
(i) Borrower's leasehold interest in the Property, including, but not limited to, that certain leasehold
interest created by that certain Ground Lease dated as of 201_, by and between
Beneficiary as Lessor, and Borrower as Lessee (the "Ground Lease"); (ii) all buildings and other
improvements and fixtures now or hereafter located on the Property, including, but not limited to, all
apparatus, equipment, and appliances used in the operation or occupancy of the Property, it being
intended by the parties that all such items shall be conclusively considered to be a part of the
Property, whether or not attached or affixed to the Property (collectively, the "Improvements");
(iii) all development rights or credits, air rights, water, water rights and water stock related to the
Property, the Ground Lease or the Improvements; (iv) all minerals, oil and gas, and other
hydrocarbon substances in, on or under the Property, (v) all appurtenances, easements, rights and
rights of way appurtenant or related to the Property; (vi) all interest or estate which Borrower may
hereafter acquire in any of the property described above; and (vii) all additions and accretions to, and
the proceeds of, any of the foregoing (all of the foregoing being collectively referred to as the
"Property").
Together with all of the improvements now or hereafter erected on said property, and all
easements, rights, appurtenances, rents (subject, however, to the rights and authorities given in
this Deed of Trust to the Lender to collect and apply such rents), royalties, mineral, oil and gas
rights and profits, water, water rights, and water stock, and all fixtures now or hereafter attached
to said property, all of which including replacements and additions thereto, shall be deemed to be
Exhibit C-1
1029355.2
and remain a part of the property covered by this Deed of Trust; and all of the foregoing,
together with said property are referred to in this Deed of Trust as the "Property."
To secure for the benefit of Lender the repayment of the indebtedness evidenced by the
Borrower's Promissory Note of even date herewith (the "Promissory Note") in the principal sum
of One Million Five Hundred Thousand Dollars ($1,500,000), and the performance of the
covenants and agreements of the Borrower contained in this Deed of Trust and in the Promissory
Note that is secured hereby.
The Borrower covenants that the Borrower is lawfully seized of the estate conveyed by
this Deed of Trust and has the right to grant and convey the Property, that, with the exception of
some other earlier or later security instruments securing promissory notes which the Borrower
has expressly disclosed to the Lender, or to which the Lender has expressly subordinated its lien
priority rights, the Property is unencumbered, and that the Borrower will warrant and defend
generally the title to the Property against all claims and demands, subject to any declarations,
easements or restrictions listed in a schedule of exceptions to coverage in any title insurance
policy insuring the Lender's interest in the Property.
Borrower covenants and agrees as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay
when due the interest and the principal of the indebtedness evidenced by the Promissory Note.
2. COMPLIANCE WITH SENIOR DEEDS OF TRUST. Borrower covenants and
agrees to comply with the terms and conditions of any deeds of trust encumbering the Property
which are a prior lien against the Property (the "Senior Deeds of Trust") and consents to
subordinate this Deed of Trust to the Senior Deeds of Trust. Lender shall permit the refinancing
of the first lien Deed of Trust conveyed by Trustor to Trustee for the benefit of
and which secures that certain Promissory Note secured by Deed of
Trust (Construction and Permanent Loan) in the amount of $ .00 (the "First
Deed of Trust and Promissory Note") in amounts not to exceed its original principal balance
(including the combined balances if the refinancing is provided by one lender), and shall
subordinate this Deed of Trust and its secured Promissory Note to a subsequent lender's secured
interest in the property for the purpose of refinancing the existing First Deed of Trust and
Promissory Note in connection with a loan which is reasonably acceptable to Lender, and,
without limiting the foregoing, specifically covenants to subordinate this Deed of Trust and
Promissory Note to new financing which is reasonably acceptable to Lender and its security
instrument recorded to evidence the new financing in connection with the purchase of the
partnership interest of the Investor Limited Partner (defined hereinbelow), or its affiliates or
successors in interest.
3. SALE OR TRANSFER OF PROPERTY. Before sale or transfer of title, the
Borrower, or the Borrower's representative, shall notify the Lender of its intention to sell or
otherwise transfer title. Except as otherwise provided in this Deed of Trust, in the Promissory
Note, the DDA, or in Borrower's Amended and Restated Agreement of Limited Partnership
(including, without limitation, a transfer pursuant to a purchase option or right of first refusal
Exhibit C-2
1029355.2
held by a general partner of Borrower), of even date herewith, when Borrower transfers title, the
entire loan which is evidenced by the Promissory Note shall be immediately due and payable,
unless such transfer is approved in the sole discretion of the Lender.
4. CHARGES AND LIENS. Borrower shall pay all taxes (if any), assessments and
other charges, fines and impositions attributable to the Property which may attain a priority over
this Deed of Trust. Borrower shall promptly furnish to Lender all notices of amounts due under
this paragraph and in the event the Borrower shall make payment directly, Borrower shall
promptly furnish to Lender receipts evidencing such payments. The Borrower shall promptly
discharge any lien which has priority over this Deed of Trust; provided that the Borrower shall
not be required to discharge any such lien so long as Borrower shall agree in writing to the
payment of the obligation secured by such lien in a manner acceptable to the Lender, or shall in
good faith contest such lien by, or defend enforcement of such lien in, legal proceedings which
operate to prevent the enforcement of the lien or forfeiture of the Property or any part thereof
The Borrower shall not allow the attachment of any subordinate lien or other encumbrance on
the Property without the prior written consent of the Lender.
The Borrower shall promptly pay when due all installments or payments required by
Lender and comply with all obligations of any deed of trust that is prior to this Deed of Trust.
5. INSURANCE PROCEEDS. Any insurance proceeds received as a result of
damage to the Property from fire or other calamity shall be first expended as required by any
senior deeds of trust. Any remainder shall be applied as set forth in the Promissory Note.
Notwithstanding anything to the contrary contained herein, so long as the value of Lender's lien
is not impaired, any insurance proceeds may be used by Borrower for repair and/or restoration of
the Property.
6. PROTECTION OF LENDER'S SECURITY. If Borrower fails to perform the
covenants and agreements contained in this Deed of Trust, or if any action or proceeding is
commenced which materially affects the Lender's interest in the Property, including, but not
limited to, default on or foreclosure of a prior deed of trust, eminent domain, insolvency, code
enforcement, or arrangement or proceedings involving a bankrupt or decedent, then the Lender at
Lender's option, upon notice to the Borrower, may make such appearances, disburse such sums
and take such action as is necessary to protect the Lender's interest including, but not limited to,
disbursement of reasonable attorney's fees and entry upon the Property to make repairs.
Any amounts disbursed by the Lender pursuant to this Section 6, with interest thereon,
shall become additional indebtedness of Borrower secured by this Deed of Trust. Unless
Borrower and Lender agree to other terms of payment, such amounts shall be payable upon
notice from Lender to Borrower requesting payment thereof, and shall bear interest from the date
of disbursement at the rate of ten percent (10%) per annum, unless payment of interest at such
rate would be contrary to applicable law, in which event such amounts shall bear interest at the
highest rate permissible under applicable law. Nothing contained in this Section 6 shall require
Lender to incur any expense or take any action thereunder.
Exhibit C-3
1029355.2
7. INSPECTION. Lender may make or cause to be made reasonable entries upon
and inspections of the Property, provided that the Lender shall give Borrower notice prior to any
such inspection specifying reasonable cause therefor related to the Lender's interest in the
Property.
8. CONDEMNATION. Any proceeds of any award or claim for damages, direct or
consequential, in connection with any condemnation or other taking of the Property, or part
thereof, or for any conveyance in lieu of condemnation, shall be first expended as required by
any senior deeds of trust. Any remainder shall be applied as set forth in the respective
Promissory Note(s).
In the event of a total taking of the Property, the proceeds shall be treated as if received
from a sale of the Property. The proceeds shall be applied to the sums to be repaid in the amount
and manner described in the respective secured note(s). Any part of the proceeds remaining after
these amounts have been paid shall be paid to the Borrower. In the event of a partial taking of
the Property, unless Borrower and Lender agree in writing, the proceeds shall be treated as if
received from a sale of that portion of the Property which is taken in the condemnation. The
percentage value of the portion taken, as compared to the full value of the entire Property, shall
be determined by dividing the condemnation proceeds by the fair market value of the entire
Property just prior to the taking. This percentage value, once determined, shall be used in the
following manner to allocate the condemnation proceeds:
a. First, to the amount of principal owing under the first Senior Deed
of Trust and the senior Promissory Note secured thereby;
b. Second, to payment of the Promissory Note and any amounts due under
this Deed of Trust;
C. Third, to the payment of any subordinate deeds of trust and Promissory
Notes; and
d. Fourth, to the Borrower.
If the Property is abandoned by Borrower, or if, after notice by Lender to Borrower that
the counter offers to make an award or settle a claim for damages, Borrower fails to respond to
Lender within thirty (30) days after the date such notice is mailed, Lender is authorized to collect
and apply the proceeds, at the Lender's option, either to restoration or repair of the Property or to
the sums secured by this Deed of Trust.
9. BORROWER NOT RELEASED. Extension of the time for payment or
modification of amortization of the sums secured by this Deed of Trust granted by the Lender to
any successor in interest of Borrower shall not operate to release, in any manner, the liability of
the original Borrower and Borrower's successors in interest. Lender shall not be required to
commence proceedings against such successor or refuse to extend time for payment or
modification of amortization of the sums secured by this Deed of Trust by reason of any demand
made by the original Borrower and Borrower's successors in interest.
Exhibit C-4
1029355.2
10. FINANCING AGREEMENT. Trustor shall execute and deliver to Beneficiary
such financing statements pursuant to the appropriate statutes, and any other documents or
instruments as are required to convey to Beneficiary a valid perfected security interest in the
Security. Trustor agrees to perform all acts which Beneficiary may reasonably request so as to
enable Beneficiary to maintain such valid perfected security interest in the Security in order to
secure the payment of the Promissory Note in accordance with its terms. Beneficiary is
authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem
appropriate from time to time in order to protect the security interest established pursuant to this
instrument.
11. FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by the
Lender in exercising any right or remedy hereunder, otherwise afforded by applicable law, shall
not be a waiver of or preclude the exercise of any such right or remedy. The procurement of
insurance or the payment of taxes or other liens or charges by Lender shall not be a waiver of
Lender's right to accelerate the maturity of the indebtedness secured by this Deed of Trust.
12. REMEDIES CUMULATIVE. All remedies provided in this Deed of Trust are
distinct and cumulative to any other right or remedy under this Deed of Trust or afforded by law
or equity, and may be exercised concurrently, independently or successively.
13. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY;
CAPTIONS. The covenants and agreements contained in this Deed of Trust shall bind, and the
rights hereunder shall inure to, the respective successors and assigns of Lender and Borrower,
subject to the provisions of Sections 16 hereof. All covenants and agreements of Borrower shall
be joint and several. The captions and headings of the Sections of this Deed of Trust are for
convenience only and are not to be used to interpret or define the provisions hereof.
14. NOTICE. Except for any notice required under applicable law to be given in
another manner, (a) any notice to Borrower provided for in this Deed of Trust shall be given by
personal delivery, a nationally recognized overnight courier service, or by mailing such notice by
certified mail addressed to Borrower at:
To Borrower: [Limited Partnership]
c/o Meta Housing Corporation
1640 A. Sepulveda Blvd., Suite 425
Los Angeles, CA 90025
Attention: John Huskey
With copy to: Bocarsly, Emden, Cowan, Esmail & Arndt, LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Attention: Nicole Deddens
With copy to:
Exhibit C-5
1029355.2
(b) notice to the Lender shall be given by personal delivery, a nationally recognized overnight
courier service, or by mailing such notice by certified mail, return receipt requested, to:
To Lender: City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Attention: City Administrator
Copy to: City Attorney
Copy to: City Director of Community Services and Water
(c) notice to the Senior Lender shall be delivered to:
With a copy to:
The Lender agrees that, so long as the Investor Limited Partner has a continuing
ownership interest in the Borrower, effective notice to the Borrower under the Loan Documents
shall require delivery of a copy of such notice to the Investor Limited Partner. Such notice shall
be given in the manner provided in this Section 14, at the Investor Limited Partner's respective
addresses set forth below:
With a copy to:
The Lender agrees that, notwithstanding its rights to invoke the remedies permitted by Section
12 of this Deed of Trust, upon the breach of any covenant or agreement by the Borrower in this
Deed of Trust (including, but not limited to, the covenants to pay when due sums secured by this
Deed of Trust), or any other Loan Document, the Lender shall not, so long as the Investor
Limited Partner has a continuing ownership interest in the Borrower, conduct a foreclosure sale
of the Mortgaged Property, receive a deed -in -lieu of foreclosure or exercise any other remedy in
Exhibit C-6
1029355.2
connection therewith, until such time as the Investor Limited Partner has first been given thirty
(30) days written notice of such default and has failed, within such 30-day period to cure such
default; provided, however, that the Lender shall be entitled, during such 30-day period, to
continue to accelerate the Promissory Note and to pursue its remedies.
Any notice provided for in this Deed of Trust shall be deemed to have been given to Borrower or
Lender upon receipt or refusal of delivery by the addressee. Delivery of notice to either party's
counsel shall not be deemed delivery of notice to such party.
Lender acknowledges that Lender's remedies upon default are limited pursuant to the
terms of the Promissory Note.
15. GOVERNING LAW; SEVERABILITY. This Deed of Trust shall be governed
by the laws of the State of California. In the event that any provision or clause of this Deed of
Trust or the Promissory Note as incorporated herein conflicts with applicable law, such conflict
shall not affect other provisions of this Deed of Trust or the Promissory Note which can be given
effect without the conflicting provision, and to this end the provisions of the Deed of Trust and
Promissory Note are declared to be severable.
16. BORROWER'S COPY. Borrower shall be furnished a conformed copy of the
Promissory Note and of this Deed of Trust at the time of execution or after recordation hereof.
17. TRANSFER OF THE PROPERTY. If all or any of the Property or an interest in
it is sold or transferred by Borrower, excluding permitted transfers pursuant to this Deed of
Trust, the DDA or the aforementioned Amended and Restated Agreement of Limited
Partnership, all the sums secured by this Deed of Trust shall be immediately due and payable. In
the event of such an acceleration, Lender shall mail Borrower notice of the acceleration in
accordance with Section 14 hereof. Such notice shall provide a period of not less than thirty (30)
days from the date the notice is mailed within which the Borrower may pay the sums declared
due. If the Borrower fails to pay such sums prior to the expiration of such period, Lender may,
without further notice or demand on Borrower, invoke any remedies permitted by Section 18
hereof.
18. ACCELERATION; REMEDIES. Except as provided in Section 15 hereof or in
the Promissory Note, upon Borrower's breach of any covenant or agreement of Borrower in this
Deed of Trust or the Promissory Note as incorporated by reference in this Deed of Trust,
including the covenants to pay, when due, any sums secured by this Deed of Trust, Lender, prior
to acceleration, shall mail notice to Borrower as provided in Section 14 hereof specifying: (a) the
breach; (b) the action required to cure such breach; (c) a date, not less than thirty (30) days from
the date the notice is mailed to the Borrower, by which such breach must be cured; and (d) that
failure to cure such breach on or before the date specified in the notice may result in acceleration
of the sums secured by this Deed of Trust and sale of the Property. The notice shall further
inform Borrower of this or their right to a fair hearing on the existence of default, of the right to
reinstate after acceleration, and of the right to bring court action, after exhaustion of
administrative remedies, to assert the nonexistence of a default, or any other defense of Borrower
to acceleration or sale. If the breach is not cured on or before the date specified in the notice, the
Exhibit C-7
1029355.2
Lender at Lender's option may declare all of the sums determined by this Deed of Trust to be
immediately due and payable without further demand and may invoke the power of sale and any
other remedies permitted by applicable law. Lender shall be entitled to collect all reasonable
costs and expenses incurred in pursuing the remedies provided in this Section 18, including, but
not limited to, reasonable attorney's fees.
If Lender invokes the power of sale, Lender shall have appraised, or shall cause Trustee
to have appraised, the Property to determine its fair market value. The Lender shall also execute
or cause Trustee to execute a written notice of the occurrence of an event of default and of
Lender's election to cause Property to be sold, and shall cause such notice to be recorded in each
county in which the Property or some part thereof is located. Lender or Trustee shall mail copies
of such notice in a manner prescribed by applicable law. After the lapse of such time as may be
required by applicable law, Trustee, without demand on Borrower, shall sell the Property at
public auction to the highest bidder at the time and place and under the terms designated in the
notice of sale in one or more parcels and in such order as Trustee may determine. Trustee may
postpone sale of all or any parcel of the Property by public announcement at the time and place
of any previously scheduled sale. Lender or Lender's designee may purchase the Property at any
sale.
Trustee shall deliver to the purchaser Trustee's deed conveying the Property so sold
without any covenant or warranty, expressed or implied. The recitals in the Trustee's deed shall
be prima facie evidence of the truth of the statements made therein. Trustee shall apply the
proceeds of the sale in the following order: (a) to all reasonable costs and expenses of the sale,
including, but not limited to, reasonable Trustee and attorneys' fees and costs of title evidence;
(b) to all sums secured by the lien of some other or later security instrument, as evidenced by a
secured Promissory Note, by and between the Borrower and Borrower's lender, that is either
prior in lien priority to the priority of this Deed of Trust or to which the Lender has subordinated
its lien rights and, thereby, placed itself in a subordinated position, (c) to all sums secured by this
Deed of Trust, as evidenced by the Promissory Note; and (d) the excess, if any, to the person or
persons legally entitled thereto.
19. BORROWER'S RIGHT TO REINSTATE. Notwithstanding Lender's
acceleration of the sums secured by this Deed of Trust, Borrower shall have the right to have any
proceedings begun by Lender to enforce covenants of this Deed of Trust relating to sums due and
payable by Borrower discontinued at any time prior to five days before the Property is scheduled
for sale pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry
of a judgment enforcing this Deed of Trust if: (a) Borrower pays Lender all sums which would
be then due under this Deed of Trust and Promissory Note and any Promissory Notes issued
subsequently to secure future advances, if any, had no acceleration occurred; (b) Borrower pays
all reasonable expenses incurred by Lender and Trustee in enforcing the covenants and
agreements of Borrower contained in this Deed of Trust and in enforcing Lender's and Trustee's
remedies as provided in Section 18 hereof, including, but not limited to reasonable attorneys'
fees; (c) Borrower takes such actions as Lender may reasonably require to assure that the lien of
this Deed of Trust, Lender's interest in the Property, and Borrower's obligation to pay the sums
secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by
Exhibit C-8
1029355.2
Borrower, this Deed of Trust and the obligations secured hereby shall remain in full force and
effect as if no acceleration had occurred.
20. APPOINTMENT OF RECEIVER; LENDER IN POSSESSION. Upon
acceleration under Section 18 hereof or abandonment of the Property, Lender, in person, by
agent or by judicially appointed receiver, shall be entitled to enter upon, take possession of, rent
end manage the Property and to collect the rents of the Property. All rents collected by the
Lender or by a judicially appointed receiver shall be applied first to payment of the cost of
management of the Property and collection of rents, including, but not limited to, receiver's fees,
premiums on receiver's bonds and reasonable attorneys' fees, and then to the sums secured by
this Deed of Trust. Lender and the receiver shall be liable to account for those rents actually
received and expenditures actually incurred.
21. RECONVEYANCE. Upon payment of all sums evidenced by the Promissory
Note whose payment is secured by this Deed of Trust, Trustee shall reconvey the Property
without warranty and without charge to the person or persons legally entitled thereto. Such
person or persons shall pay all costs of recordation, if any.
22. SUBSTITUTE TRUSTEE. Lender, at Lender's option, may from time to time
remove Trustee and appoint a successor trustee to act as Trustee under this Deed of Trust.
Without conveyance of the Property, the successor trustee shall succeed to all the title, power
and duties conferred upon the Trustee in this Deed of Trust and by applicable law.
23. STATEMENT OF OBLIGATION. The Lender may collect a fee not to exceed
$15.00 for furnishing the statement of obligation as provided by Section 2943 of the Civil Code
of the State of California.
24. SUBORDINATION ACKNOWLEDGMENT. Beneficiary hereby acknowledges
that the loan secured by this Deed of Trust is also subordinate to the extended use agreement
required to be executed by Borrower pursuant to Section 42(h)(6)(B) of the Internal Revenue
Code, for purposes of the low-income housing tax credits to be allocated to Borrower. In
addition, Beneficiary hereby acknowledges that the loan secured by this Deed of Trust is further
subordinate to Section 42(h)(6)(e)(ii) of the Internal Revenue Code, which prohibits the eviction
or termination of a tenancy, other than for good cause, of an existing tenant of any low-income
housing tax credit unit or any increase in the gross rent with respect to such unit, not otherwise
permitted under Section 42, for a period of three (3) years after the date the Property is acquired
by Lender through foreclosure or instrument in lieu of foreclosure.
25. NON -RECOURSE. This is a Non -Recourse Deed of Trust. Neither the
Borrower, nor any of its partners shall have any personal liability for the payment of any portion
of the indebtedness evidenced by the Promissory Note or performance of Borrower's obligations
under this Deed of Trust. In the event of a default by the Borrower under the terms of the
Promissory Note or this Deed of Trust, the Beneficiary's sole remedy shall be limited to
exercising its rights under the Promissory Note and this Deed of Trust, including foreclosure and
the exercise of the power of sale or other rights granted under the Promissory Note and this Deed
of Trust, but shall not include a right to proceed directly against the Borrower, or any of its
Exhibit C-9
1029355.2
partners, or the right to obtain a deficiency judgment after foreclosure against the Borrower or
any of its partners. However, the foregoing shall not in any way limit or affect any rights Lender
may have hereunder or under the Promissory Note to recover directly from Maker or its partners
any amounts due hereunder or under the Promissory Note, or any funds, damages or costs,
including without limitation reasonable attorneys' fees and costs, incurred by Lender as a result
of fraud, misrepresentation or waste on the part of Maker or its partners.
IN WITNESS THEREOF, Borrower has executed this Deed of Trust on the day and year
first above written.
[META HOUSING CORPORATION LIMITED
PARTNERSHIP]
0
Lo
Exhibit C-10
1029355.2
State of California )
) ss
County of Los Angeles )
On this day of , 201 , before me, ,
personally appeared , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing is true and correct.
WITNESS my hand and official seal.
[Seal]
(Signature)
Exhibit C-11
1029355.2
EXHIBIT A
Legal Description of the Property
That real property located in the City of Vernon, County of Los Angeles, State of California,
described as follows:
Lot Nos. 45 through 53 of Tract No. 7923
APN: 6314-002-900(portion)
Exhibit C-12
1029355.2
,ECF.jV-E0
JUL
COMMUNITY SE RIVICES & WATER DEP
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RECEIVED
JUL 02 M3
CITYADMINISMATION
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TCAC scoring system is financial assistance provided by the governmental agency sponsoring the
project. The City had proposed to lease the land for a dollar a year for 65 years. in essence
contributing the land for the project. Without the TCAC allocation of tax credits or funding from
another source, the project does not make economic sense. Keyser Marston, a consultant to the City,
has evaluated the project and has determined that it cannot be constructed using market rates and that
financial assistance is required.
The City, working with the Developer, has determined that in order make the project more
competitive in the TCAC funding program, an additional loan from the City is necessary. Originally,
when the project was approved by the City, it was decided to allow the developer to submit a TCAC
tax credit application in the first cycle of 2013. It was hoped that given the current state of
redevelopment that the land value would be sufficient to gamer the TCAC funding, but it was
unsuccessful, we would get a better understanding of what type of loan would be necessary to be
successful in the second cycle of the TCAC program. Given the projeefs; score compared to other
projects and the potential of those projects receiving additional funding, City Staff is recommending
that an amendment to the loan agreement be approved authorizing the additional funds in amount of
be determined by City Council in order to make the project a viable candidate for tax credits under
the TCAC program in the second cycle of 2013.
The City in working with Jon Goetz of Kronick, Moskovitz, Tiedemann & Girard, Special Counsel to
the City, has developed an amendment to the loan agreement with META Housing Corporation. The
loan would be for 65 years and bear simple interest at a rate of 3% per annum. It would be payable
from "residual receipts", which is essentially the net profits of the project after other expenses are
paid. The annual promissory note payment shall be equal to fifty percent of the residual receipts up to
$30,000 and 100% of the residual receipts over $30.000. with the $30,000 threshold increased over
time. Additionally, the agreement requires the Developer to apply for all other governmental and other
subsidized loan programs available for affordable housing projects of this type. If the Developer
receives any such grants or loans prior to the final disbursement of the City Loan, then the principal
amount of the City Loan will be reduced by the amount of such loans or grants. In addition, if
Developer receives any utility rebates, the rebate amount shall be paid to the City as a repayment of
the loan. Lastly, the proceeds of the City loan shall be disbursed fast to the City for reimbursement of
costs incurred by the City directly in connection with the approval of the housing development,
revision to the City's Land Use Element and Housing Element, CEQA documentation and approvals
in an amount not to exceed $150,000.
Public Purpose.
The Legislature has declared that the availability of housing is of statewide importance, and that
the creation of decent housing and a suitable living environment for every Californian is a
priority of the highest order. State law requires the cooperative participation of government and
the private sector to expand housing opportunities and accommodate the housing needs of
Californians of all economic levels. The provision of housing affordable to low- and moderate -
income households requires the cooperation of all levels of government. California law states
that cities have a responsibility to use the powers vested in them to facilitate the improvement
and development of housing to provide for the housing needs of all economic segments of the
community. In addition, the Housing Element of the City's General Plan provides that the City
will assist in developing housing which is affordable to low and moderate income persons.
The City's loan of financial assistance to the project would assist the housing development to
obtain an allocation of tax credits by increasing the public assistance available to the housing
project to assist in its development. Obtaining an allocation ol'tax credits is a critical component
of financing the construction and operation of the housing development.
Article 34 of California Constitution.
Article 34 of the California Constitution ("Article 34`°) provides that no "low rent housing project'
shall be "developed, constructed, or acquired'' in any manner by any state public body until a majority
of the qualified electors of the jurisdiction votes to approve such project. The term "low -rent housing
project;' as defined in Article 34, does not apply to the development of privately owned housing,
receiving no ad valorem property tax exemption, other than exemptions granted pursuant to Revenue
and Taxation Code Section 214 (f) or (g), not fully reimbursed to all taring entities. where not more
than 49 percent of the apartments of the development may be occupied by persons of low income.
The words "develop, construct, or acquire" as used in Article 34 do not apply to activities of a state
public body when the body provides assistance to a low -rent housing project and monitors
construction or rehabilitation of such project and compliance with conditions of such assistance to the
extent of taming out routine governmental functions, performing conventional activities of a lender,
and imposing constitutionally mandated or statutorily authorized conditions accepted by a grantee of
assistance.
The proposed housing development is not a "low -rent housing project" as defined in Article 34,
because it is privately owned housing, receiving no ad valorem property tax exemption, other than
exemptions granted pursuant to Revenue and Taxation Code Section 214 (f) or (g), not fully
reimbursed to all taxing entities, and not more than 49 percent of the apartments of the housing
development are required by the DDA and Ground Lease to be occupied by persons of low income.
The City is not developing, constructing, or acquiring the proposed housing development as defined in
Article 34, because it is providing assistance to the housing development and monitoring construction
or rehabilitation of such project and compliance with conditions of such assistance to the extent of
carrying out routine governmental functions, performing conventional activities of a lender, and
imposing constitutionally mandated or statutorily authorized conditions accepted by a grantee of
assistance. In its approval of the resolution approving the DDA on February 19, 2013, the City
Council found that the housing development was not subject to Article 34.
CEOA
On February 19, 2013, the City Council adopted Resolution No. 2013-31 approving a Mitigated
Negative Declaration and a Mitigation Monitoring Reporting Program prepared for the housing
development, specifically including the housing development in the Project Description, which
Mitigated Negative Declaration concludes that the housing development will have no significant
adverse impact on the environment, provided that the mitigation measures set forth in the Mitigation
Monitoring Reporting Program are implemented. The amendment to the Loan Agreement makes no
changes to the project analyzed in the Mitigated Negative Declaration and therefore it can be seen
with certainty that there is no possibility that the approval of the amendment to the Loan Agreement
will have a significant effect on the environment. Accordingly, the approval of the amendment to the
Loan Agreement is not subject to CEQA pursuant to Section 15061(b) (3) of the CEQA Guidelines
and a notice of exemption will be filed.
Fiscal Impact
The proposed amendment to the Loan Agreement will be in an amount to be established by the City
Council. The City will be reimbursed from loan proceeds for costs incurred by the City directly in
connection with the approval of the housing development, such as revision to the City's Land Use
Element and Housing Element, and the CEQA documentation and approvals. Total reimbursement
cannot exceed $150,000. The loan will be repaid over 65 years. Funding for the loan will come from
the City's General Fund and will be budgeted in the 2013-14 budget.
NOTICE OF EXEMPTION
TO: County Clerk, County of Los Angeles FROM: City of Vernon ', , a 1V
Environmental Filings 4305 Santa Fe Avenue
12400 E. Imperial Highway Vernon, CA 90058
Norwalk, CA 90650
Project Title: Project Applicant:
5211 Street I lousing Development Project City of Vernon and Meta Housing
Project Location - Specific
4675 52°iI Street, Vernon, CA 90058
Project Location — City: Project Location — County:
Vernon - Los Angeles
Description of Nature, Purpose and Beneficiaries of Project:
Approving and authorizing the execution of an amendment to the loan agreement by and between the
City of Vernon and Meta Housing Corporation for the proposed housing development project at 4675
52oc1 Street.
Name of Public Agency Approving Project:
City of Vernon
Name of Person or Agency Carrying Out Project:
City of Vernon and Meta Housing
Exempt Status: (check one)
Ministerial (Sec. 21080(b)(1); 15268;
Declared Emergency (Sec. 21080(b)(3); 15269(a));
Emergency Project (Sec. 21080(b)(4); 15269(b)(c)).
Categorical Exemption. State type and section number:
Statutory Exemption. State code number:
General Rule Exemption. Section number: 15061
2013 148398
111111111111111111111111111111111111111111111111111111111111
FILED
Jul 17 2013
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Reasons why project is exempt:
On June 18, 2013, the City Council adopted Resolution No. 2013-62 approving a Loan Agreement
between the City and Meta Housing Corporation ("the Developer"). City Council has determined that
the amount of the loan to the Developer to be made through the Loan Agreement needed to be
modified. On February 19, 2013, the City Council adopted Resolution No. 2013-3 t approving a
Mitigated Negative Declaration and a Mitigation Monitoring Reporting Program prepared for the
housing development, specifically including the housing development in the Project Description,
which Mitigated Negative Declaration concludes that the housing development will have no
significant adverse impact on the environment, provided that the mitigation measures set forth in the
Mitigation Monitoring Reporting Program are implemented. The Loan Agreement, as it is proposed to
be amended, makes no changes to the project analyzed in the Mitigated Negative Declaration and
therefore it can be seen with certainty that there is no possibility that the approval or implementation
of the Loan Agreement, as it is proposed to be amended will have a significant effect on the
environment. Therefore, the approval of the proposed amendment to the Loan Agreement is not
subject to C'EQA pursuant to Section 15061(b) (3) of the CEQA Guidelines.
Lead Agency Contact Person;,
Samuel Kevin Wilson
Signature:
_ 7
Title: Director of Community Services & Water
Area Code/Telephone/F,xtension:
323/583-8811 /245
Date: r
THIS NOTICE WAS POSTED
ON July 17 2013
UNTIL August 16 2013
Date Received for {fling at OPR:
REGISTRAR — RECORDERICOUNTY CLERK