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Agency Regulatory Agreement & Declaration of Restrictive Covenants 2008-0169321 , - ~ ~ I , _..~ ,..". il ; . - 4, '. DOce 2008-01 69321 I Recorded at the request of 1111111111111111111111111111111111111111111111111111111111111111111111 I Chicago Title '2-17 "2- I APR 01,2008 3'10 PM I DFFICI.~L RECDRC", , RECORDING REQUESTED BY ':"u,N [i1EGCi CDUNT'I REI-DR[IER":. OFFICE AND WHEN RECORDED MAIL TCb '"FIEbDR',1 ',II"IITH COUlll, RECDFICHI FEE'" 0,00 I The Poway Redevelopment Agency [Ie:. 1 , PAGES: 2\ I 13325 Civic Center Drive ~\\ I Poway, CA 92064 ~~ 11111111111111111111111111111111111111111111111111111111111111111111111111111111 I Altn: Executive Director , I NO FEE DOCUMENT PURSUANT TO GOVERNMENT CODE SECTION 27383 ,3.0 I 078'O-J\ (p AGENCY REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (Oak Knoll Villas) This Agency Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement") is made and entered into as of March 11,2008, by and between the Poway Redevelopment Agency, a_public body, corporate and politic (the "Agency") and Oak Knoll Housing Associates, L.P., a California limited partnership (the "Owner"). RECITALS I The Agency has entered into a Loan Agreement with Owner under which the Agency will loan Seven Million Three Hundred Twenty-Nine Thousand Dollars ($7,329,000) (the "Loan") to Owner which wit) be used for the acquisition and rehabilitation of a fifty-two (52)-unit multifamily rental housing development (the "Development") located on the real property in the City of Poway, County of San Diego, more particularly described in Exhibit A attached hereto and incorpo'rated herein (the "Property"). 2. The funds loaned to Owner pursuant to the Agency Loan Agreement are Agency Redevelopment Low and Moderate Income Housing Funds. 3 The Agency and the City Council have made the necessary findings to spend Agency Redevelopment Low and Moderate Income Housing Funds outside of the Paguay ProjectArea, as evidenced by Agency Resolution No. Rc08,05 and City Council Resolution No. ,- 08-012 adopted concurrently on March II, 2008. Expenditure of monies deposited in the Housing, Fund to fund the acquisition and related costs will serve the purposes of Health and Safety Code Section 33334.2, as well as the goals and objectives' of the Redevelopment Plan for the Project Area, by improving and increasing the community's supply of affordable housing. 4 The ~gency has agreed to loan funds to Owner on the condition that the Development bc'milintained and' operated in accordance with Health and Safety Code Sections 33334.2 et 2ffi., 33413(a) and 33413(b)(2)(A)(ii) and in accordance with additional restrictions 1552\02\524455,5 I O'61J36 j'l , , - ~ '. . " 21763 concerning ,aff6rdability, operation, and maintenance of the Development, as specified in this Agreement. 5 Through this Agreement and accompanying documents the Agency is imposing occupancy and affordability restrictions on the Development in order to utilize the fifty-two (52) units in partial satisfaction of its adequate sites inventory pursuant to Government Code Section 65583 1 (c). The City received prior approval, on October 29, 2007, from the California Department of Housing and Community Development to credit the units toward the adequate sites requirement pursuant to housing element law (Article 10 6 of the Government Code). 6. Owner intends to substantially rehabilitate the Property pursuant to Health and Safety Code Section 33413(b)(2)(A)(iv); 7 In consideration of receipt of the Loan at an interest rate substantially below the market rate, Owner has further agreed to observe all the terms and conditions set forth below 8. In order to ensure'that the entire Development will be used and operated in accordance with these conditions' and restrictions, the Agency and Owner wish to enter into this Agreement. THEREFORE, the Agency and Owner hereby agree as follows: ARTICLE 1 DEFINITIONS 1 I Definitions, When used in this Agreement, the following terms shall have the respective meanings assigned to them in this Article 1 (a) "Actual Household Size" shall mean the actual number of persons in the applicable household. (b) "Adjusted Income" shall mean the total al).ticipated annual income of all persons in a household, as calculated in accordance with 25 Califonlia,Code of Regulations Section 6914 or pursuant to a successor State housing program that utilizes a reasonably'similar method of calculation of adjusted income. In the event that no such program exists, the Agency shall provide the Owner with.a:reasonably similar method of calculation of adjusted income as provided in said Section 6914 (c) "Agency" shall mean the Poway Redevelopment Agency, a public body, corporate and politic. (d) "Agreement" shall mean this Agency Regulatory Agreement and Declaration of Restrictive Covenants. (e) "Assumed Household Size" shall have the meaning set forth in Section 2.3( c). The definition is utilized to calculate affordable rent and is not intended to be a limit on the number of persons occupying a unit. 1552\02\524455.5 2 - . . 21764 (I) "City" shall mean the City of Po way, a municipal corporation. (g) "Deed of Trust" shall mean the deed of trust ,in favor of the Agency on the Property which. secures repayment of the Loan and performance of this Agreement. (h) "Development" shall mean the Property and the fifty-two (52) units to be rehabilitated on the Property, as well as all landscaping, roads and parking spaces existing thereon, as the same may from time to time exist. (i) "Existing Residents" shall mean the fifty-two (52) households that occupy the units on the date of Owner's acquisition. U) "Income Report" has the meaning set forth in Section 2.] (k) "Loan" shall mean all funds loaned to Owner pursuant to the Loan Agreement. (I) "Loan Agreement" shall mean the Agency Loan Agreement entered into by and between the Agency and Owner, dated of even date herewith. (m) "LowerJncome Household" shall mean a household with an Adjusted Income that does not exceed the qllalifying limits for lower income households, adjusted for Actual Household Size, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as pubhshed by the State of California Department of Housing arid Community Development. (n) "Lower Income Rent" shall mean the rent permitted to be charged for a Lower Income Unit pursuant to Section 2.3(b) below (0) "Lower Income Units" shall mean the Units, which, pursuant to Section 2.2(b) below, are required to be occupied by Lower Income Households. (p) "Median Income" shall mean the median gross yearly income adjusted for Actual Household Size (to qualify resiCIents) or Assumed Household Size (to calculate rents), as applicable, in the County of San Diego, California, as published from time to time by the State of California Department ofHo\Jsing and Community Development. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen (18) months" the Agency shall provide the Owner with other income' determinations which are reasonably similar with respect to methods of calculation to those previously published by the State of California Department of Housing and Community Development. (q) "Note" shall mean the promissory note from the Owner to the Agency evidencing all or any part of the Loan. (r) "Owner" shall mean Oak Knoll Housing Associates, L.P., a California limited partnership, and its succeSSors and assigns to the Development. 1552\02\524455.5 3 . , - . .. 21765 (s) "Property" shall mean the real property 'described in Exhibit A attached h"retoand incorporated herein. (I) "Rent" shall mean tpe total of monthly Rayments by the residents of a Unit (other than the, manager's Unit),fcir the following: use and occupancy of the Unit and land and associated facilities, including parking; any separately charged fees or service charges assessed by Owner which are required of all residents, other than security deposits; the'cost of an adequate level of service for utilities paid by the resident, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not cable or telephone service; any other interest, taxes, fees or charges for use'of the land or associated facilities and assessed by a public:or private entity other than Owner, and paid by the Resident. (u) "Resident" shall mean a household occupying a Unit. (v) "Term"shalllllean the term of this Agreement, which shall commence on the date of recordation of this Agreement, and shall continue for a period of fiftycfive, (55) years. (w) "Units" shall mean the fifty-two (52) rel1tal.units to,be rehabilitated by the Owner on the Property (x) "Very Low Income Household" shall mean a household with an Adjusted Income that does not exceedthe q\lalifying limits for very lowl,fcome households, adjusted for Actual Household Size, as established'and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by the State of Calif ami a Department of Housing and Community Development. (y) "Very Low Income Rent" shall mean the rent permitted to be charged for a Very Low Income Unit pursuant to Section 2.3(a) below (z) "Very Low Income Units" shall mean the Units, which, pursuant to Section 2.2(a) below, are required lObe occupied by Very Low Income Households. ARTICLE 2. AFFORD ABILITY COVENANTS 2.1 Initial Assessment of Resident Incomes and Rents. Promptly fa 1I0wing Owner's acquisition of the Property, Owner shall diligently take reasonable steps'to obtain income al)d rent certifications fromall Existing Residents ohhe Development, and Owner shall verify resident incomes in compliance with the requirements of Section 3,1 b_elow Owner shall provide the Agency with a written report of resident incomes andrents,within sixty (60) days of.acquisition of the Development (the "Income Report"). In the evenUhaUhe Owner is unable to obtain income and rent certification ITom an Existing Resident, the Owner shall include in the Income Report the name and,availablecontact information for such Existing Resident, and the.Owner shall document, in theIncomeReport the reasonable steps the Owner performed in attempting to obtain the income and rent certification from the Existing Resident. The Income Report shall be accompanied by Owner's proposal regarding designation 1552\02\524455,5 4 . . 21766 of Units as Very Low Income Units or Lower Income Units, In designating Units, Owner shall use the following allocation procedures: (a) To the greatest extent feasible, the Units of Existing Residents who qualify as Very Low Income Households shall be,designated as Very Low Income Units and the Units of Existing Residents who qualify as Lower Income Households shall be designated as Lower Income Units. (b) If there are more than twenty-six (26) Existing Resident households who qualify as Very Low Income Households, the Units occupied by the households with the lowest incomes shall be designated as Very Low Income Units, with the remaining Units that are occupied by Very Low Income Households designated as Lower Income Units. (c) With respect to Existing,Residents only, except to the extent rent decreases are required by the terms of the Bond Regulatory Agreement, Owner shall not implement rent decreases or increases until the Agency has approved the Unit income designations proposed by the Owner. The Agency agrees to approve or disapprove of the Unit income designations proposed by the Owner not later than thirty (30) days following submittal by the Owner The failure by the Agency to approve or disapprove within the thirty (30)-day time period shall be deemed an approval. Prior to Agency approval of Unit income, designations, Owner also shall not terminate tenancies except for serious and repeated lease vio lations and no tenancies shall be terminated for overcrowding or, violation of occupancy restrictions. Overcrowded households shall not be evicted, solely because of overcrowding. 2.2 Occupancy Requirements. (a) Very Low Income Umts. Twenty-Six (26) 2 bedroom Units shall be rented to and occupied by or, if vacant, available for occupancy by Very Low Income Househo Ids. (b) Lower Income Units. Twenty-Five (25) 2 bedroom Units shall be rented to and occupied by or, if vacant, available for occupancy by Lower Income Households.. (c) Manager's Unit. One (I) 2 bedroom unit shall be available for designation as the Inanager's unit. (d) Existing Residents. Any Existing Resident lawfully residing in the Development as of the date of this Agreement shall be entitled to remain a resident of the Development if such Resident does not meet the income criteria of this Section 2.2 at a Rent level not exceeding that.set forth in Section 2.3 below Ifanct when such non-qualifying Existing Resident voluntarily vacates the Unit, such Unit shall be rented to a Very Low Income Household or Lower Income Household, as necessary to meet the provisions of this Section. 2.3 Allowable Rent. (a) VervLow Income Rent. Subject to Section 2.4 below, the Rent charged to Residents olthi: Very Low Income Units shall not exceed one'twelfth (l/12th) 01 thirty percent 1552\02\524455,5 5 . . 21767 (30%~ 6ffifty percent'(50%) of Median Income, adjusted for Assumed Household Size, Ifany Very').;ow Income Units, are occupied by Existing Residents,whose:incomes are less than the qualifYing amount for Very Low Income Households, and whose Rent will be increased, Owner shall not'increase the existing Rents on such Very Low Income Units for one (I) year commencing on March 3], 2008; and shall be entitled to increase such rents no,more than once per yearby either (I) the percentage increase in Median Income, or (2) five percent (5%), whichever is less. (b) Lower Income,Rent. Subject to Section 2:4 below, the Rent charged to Residents oftheLower Income Unhs shall not exceed one-twelfth (I/12th) of thirty percent (30%) of sixty percent (60%) of Median Income, adjusted for-Assumed Household Size. If any LowerIncome Units are occupied by Existing Residents whose incomes are less than the quaiifying amount for Lower Income Households, and whose Rent.will be increased, Owner shall not increase the existing Rents' on such Lower Income Units for one (I) year commencing on March 3-1,2008, and shall be entitled to increase such rents no more than once per year by either (1) the percentage increase in Median Income, or (2) five percent (5%), whichever is less. (c) In calculating the allowable Rent for the Units, the following Assumed Household Sizes shall be utilized: Number of Bedrooms Assumed Household Size Two 3 (d) No later than March I of each calendar year, the Agency shall provide the Owner with,a schedule of permissible maximum Very Low Income Rents and the permissible maximum Low~r Income Rents for the succeeding year Under no, circumstance may Owner raise rehts above the permissible maximum rents as allowed under the 'annual rent schedule provided by the Agency 2.4 Increased Income of Residents. (a) Very Low Income Household to Lower Income Household. If, upon recertification of a Resident's income, the Owner detemlines that'a fonner Very Low Income Household's Adjusted Income has increased and exceeds the qualifying income for a Very Low Income Household set forth in Section I I(x) above, but does not exceed the qualifying limit for a Lower Insome Household as set forth"in Section 1 I(m) above, then, upon expiration ofthe ResiderH's lease: (I) Such Resident's Unit may be considered a Lower Income Unit; (2) Such Resident's Rent maybe increased to a Lower Income Rent, upon sixty (60) days' written notice to the Resident; and - (3) The Owner shall rent the next available Unit to a Very Low Income Household ala Very Low Income Rent. 1552\02\524455,5 6 . . 21768 (bY, Non-OualifvingHousehold. If, upon'recertification ofa Resident's income, the Owner determines, that a fminer Very Low Income Household or Lower Income Household Adjusted Income has increased and exceeds the qU31lifying income for Lower Income Households setforth'in Section I I (m) (above eighty percent (80%) of area median income), tllen upon exPiration of the Resident's Lease: (1) Owner shall send such resident a written notice oftermination of tenancy informing Resident that Resident must vacate the unit. Owner shall allow Resident at least one hundred twenty (120) days between the notice of termination of tenancy and move out. Such period may be extended for fanlily circumstances at Owner's discretion and upon approval by the Agency; and (2) The Owner shall rent the next available Unit to a Very Low Income Household or a Lower Income Household at Rent not exceeding the maximum Rent specified in Section 2.3(a) or'2.3(b), as applicable, to comply with the requirements of Section 2.2 and Section 2.3 above. (c) Termination ofOccupancv Except if the character of a Unit asa Very Low Income Unit or Lower IncomeUnit has been redetermined pursuant to Section 2.4 above due to the increased income of a, Resident, upon tennination of occupancy ofa Unit by a Resident, such Unit shall be deemed to be continuously occupied by a household of the same income level (e.g., Very Low Income Household or Lower Income Household as the initial income level of the vacating Resident, until such Unit is reoccupied,.at which time the income character of the Unit (e.g., VeryLow Income Unit or Lower Income Unit) shall be redetermined. If the character of the Unit as a Very Low Income Unit or a Lower Income Unit has been redetermined pursuant to Section 2.4 above, upon termination of , occupancy of a Unit by a Resident, such Unit shall be deemed to be continuously occupied by a household of the same income level (e.g., Very Low Income Household or Lower Income Household) as the income level of the vacating Resident, until such Unit is reoccupied, atwhich time the income character of the Unit (e.g., Very Low Income Unit or Lower Income Unit) shall be redetermined. 2.5 Resident Selection. (a) Before leasing any vacant Units in the Development, the Owner must provide the Agency for its review arid approval the Owner's written marketing and resident selection plan. (b) The Owner shall not discriminate against any applicants for tenancy on the basis'of source of income or rent payment (for example, without limitation, Temporary Assistancefor Needy Families (T ANF) or Section 8), and Owner shall consider a prospective Resident's previous rent history of at least one (I) year, or such ,other time period the Owner deemsreasohable, as evidence of the prospective Resident's'ability to pay the applicable Rent. The ability to. payshall be demonstrated if the prospective Resident can document that the prospective Resident's gross income is at least two (2j.times'the prospective rent. The Owner, in the reasonable exercise of its discretion, may waive the requiremenUhat the prospective Resident's gross income equal at least two (2) times the prospective rent, and admit prospective Residents with lower gross incomes. 1552\02\524455.5 7 . . 21769 2.6 Lease Provisions, Owner shall include in leases for all Units provisions which autho.rize Owner to immediately tenninate the tenancy of any household one or more of whose members misrepresented any fact material to the household's qualification as a Very Low Income Household or Lower Income Household. Each lease or rental agreement shall also provide that the household is subject to annual certification in accordance with Section 3 I below, and that, if the household's income increases above the applicable limits for a Very Low Income Household or Lower Income Household, as applicable, such household's Rent may be subject to increase. 2.7 Condominium Conversion. The Owner shall not convert Development units to condominium or cooperative ownership or sell condominium or cooperative conversion rights to the Property during the Term of this Agreement. ARTICLE 3 INCOME CERTIFICATION AND REPORTING 3 I Income Certification. With respect to new Residents, the Owner will obtain, and complete, as a-condition to initial occupancy and with respect to new Residents and Existing Residents, maintain on file annually thereafter, income certifications from each Resident renting any of the Units. The Owner shall make a good faith effort to verify that the income provided by an applicant or occupying household in an income certification is accurate by taking two or more of the following steps as a part of the verification process: (1) obtain a minimum of the three (3) most current pay stubs for all adults age eighteen (18) or older; (2) obtain an income tax return for the most recent tax year; (3) conduct a credit agency or similar search; (4) obtain the three (3) most current savings and checking account bank statements;(S) obtain an income verification form from the applicant's current employer; (6) obtain an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies; or (7) if the applicant is unemployed and has no such tax return, obtain another form of independent verification. Copies of Resident income certifications shall be available to the Agency upon request. 3.2 Annual Report to Agencv Owner shall submit to the Agency (a) not later than the forty-fifth (4Sth) day after the close of each calendar year, or such other date as may be requested by the Agency, a statistical report, including income and rent data for all Units, setting forth the information called for therein, and (b) within fifteen (IS) days after receipt of a written request. any other information or completed forms requested by the Agency 3.3 Additional Information. Owner shall provide any additional infonnation reasonably requested by the Agency The Agency shall have the right to examine and make copies of all books, records or other documents of Owner which pertain to any Unit. 3 4 Records. Owner shall maintain complete, accurate and current records pertaining to the Development, and shall permit any duly authorized representative of the Agency to inspect records, including records pertaining to income and household size of Residents. All Resident lists, applications and waiting lists relating to the Development,shall at all times be kept separate and identifiable from any othcr business of the Owner and shall be maintained as required by the 1552\02\524455,5 8 . . 21770 Agency,.in,a reasonable condition for proper audit and subject to examination during business hours byrepre"sentatives ofthe Agency The Owner shall retairicopies of all materials obtained or produced with respect to occupancy of the Units for a period of at least five (5) years. 3.5 Annual Ooerating Budget. The Owner, shall within sixty (60) days of the end of each of the Owner's fiscal year, furnish the Agency an Annual Operating Budget. Upon receipt by the Agency of the proposed Annual Operating Budget, the Agency shall promptly review the same and approve or disapprove it within ten (10) working days. Ifthe Annual Operating Budget is not approved by the Agency, the Agency shall set forth in. writing and notify the Owner of the Agency's ,reasons for withholding such approval. The Owner shall thereafter submit a revised Annual Operating Budget for Agency approval, which approval shall be granted or denied withifl five (5) working days~in accordance with the procedures set forth above. Satisfaction of the requirements, specified under this Section 3.5 shall be deemed compliance with Sections 2.8(d) and 412 of the Agency Loan Agreemcnt. 36 Aooroval of Use of Reserve Funds. Owner agrees to create and maintain two reserves: Operating Reserve with.an initial capitalization of One Hundred One Thousand Eight Hundred Fifty-One Dollars ($-101,851) and a Replacement Reserve with an initial capitalization of Sixty-Seven Thousand Dollars ($67,000) to use for emergency repairs, transitional management costs, and other costs related to the rehabilitation and lease up of the Development. The Operating reserve shall be capitalized at funding of the Completion Component and the Replacement Reserve shall be capitalized at funding of the Acquisition Component. Prior to the use of funds from the Operating Reserve or Replacement Reserve, Owner must submit a written requestto withdraw funds fromthereserve account. The written request shall specify the amount requested and state how the funds will be used. The Agency shall approve such request within thirty (30) days of receipt of the written request for use ofteserves; such request shall not be unreasonably withheld. If the Agency fails to approve a request within the thirty (30) days, such request shall be deemed approved. Satisfaction of the requirements specified under this Section 3.6 shall be deemed compliance with Section 413 of the Agency Loan Agreement. 3 7 Resident Services Plan and Resident Services Budget. The Agency hereby authorizes the use of an amount not to exceed Eighty- Three Thousand Dollars ($83,000), to be capitalized from the Pennanent GOomponent of the Agency Loan, to enable Owner to hire a resident service coordinator (the "Resident Services Reserve"). Owner hereby agrees to hire and employ an on-site resident service coordinator simultaneously to Owner's acquisition of the Property Within sixty (60) days of the end of Owner's fiscal year, Owner shall furnish to the Agency a,draft Resident Services Plan and Resident Services Budget. Upon receipt by the Agency of the proposed Resident Services Plan and Resident Services Budget, the Agency shall promptly review the same and approve or disapprove it within ten (10) working days. If the Resident Services Plan and/or Resident Services Budget are not approved by the Agency, the Agency shall set forth in writing'and notify the Owner of the Agency's reasons for withholding such approval, which may include a request by the Agency for a-c.hange in the nature or scope of residenLservices ora change in service provider The Owner shall thereafter submit a revised Resident Services Plan andlor Resident Services Budget for Agency approval, which approval shall be granted or denied within ten (10) working days in accordance with procedures set forth above. 1552\02\524455,5 9 , . . 21771 3.8 en-site Inspection. The Agency shall have the righuo perform an on-site inspection of the Developim,nt at least one (I) time per year The Owner agrees to cooperate in such inspection. ARTICLE 4 OPERATION OF THE DEVELOPMENT 4 I Residential Use, The Development shall be operated only for residential use as permanent multifamily rental housing. 4.2 Taxes and Assessments. Owner shall pay all real and personal property taxes, assessments, if any, and charges and all franchise, income, employment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any line or charge from attaching to the Property; provided, however, that Owner shall have the right to contestin good faith, any such taxes, assessments, or charges. In the event Owner exercises its right to contest any tax, assessment, or charge against it, Owner, on final detennination of the proceeding or contest, shall immediately payor discharge any decision or judgment rendered against it, together with all costs, charges and interest. 4.3 Nondiscrimination. All of the Units shall be available for occupancy on a continuous basis to members of the general public who are income eligible. Owner shall not give preference to any particular class or group of persons in renting the Units, except to the extent that the Units are required to be leased to Very Low Income Households or Lower Income Households, or pursuant to Section 4.5 below There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, source of income, disability, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit nor shall Owner or any person claiming under or through the Owner, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of residents, lessees, sub lessees, subtenants, or vendees of any Unit or in connection with the employment of persons for the operation and management of the Development. All deeds, leases or contracts made or entered into by Owner as to the Units or the Development or portion thereof, shall contain covenants conceming discrimination as prescribed by the Loan Agreement. 44 Section 8 Certificate Holders. The Owner will accept as residents, on the same basis as all othyr prospective residents, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant, to the existing housing program under Section 8 of the United'States Housing Act, or its successor The Owner shall not apply selection criteria to Section 8 certificate or voucher holders that is more burdensome than criteria applied to all other prospective resigents, nor shall the Owner apply or permit the application of management policies or lease provisions with respect to the Developmeni which have the effect of precluding occupancy of units by such prospective Residents. 1552\02\524455,5 10 . . 21772 4.5 PreferencetoCitv and Agencv Displacees. Owner,shall give a preference in the rental of any Units,to'eligible,households displaced by activity of the Agency or the City, as provided in Health and Safety Code Section 33411.3 The preferences stated in this section apply to the rentals of Units throughout the Tenn. ARTICLE 5 PROPERTY MANAGEMENT AND MAINTENANCE 5 1 Management,ResDonsibilities. The Owner is responsible for all management functions with respect to the Development, including without limitation the selection of residents, certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security The Agency shall have no responsibility over management of the Development. The Owner shall retain a professional property management company, approved by the Agency in its reasonable,discretion, to perfonn its management duties hereunder A resident manager shall also be required. At least six (6) months prior to completion of rehabilitation of the Development Owner shall submit a proposed management plan to the Agency for approval by the Agency The Agency shall approve or disapprove (with written explanation for disapproval)oftheproposed management plan by notifying the Owner in writing within sixty (60) days of the date of submission to the Agency 5.2 Management Agent; Periodic Reports. The Development shall at all times be managed by an experienced management agent reasonably acceptable to the Agency, with demonstrated ability to operate residential facilities like the Development in a manner that will providedecent,-safe, and sanitary housing (as approved, the "Management Agent"). The Agency approves the John Stewart Company as the initial Management Agent. The Owner shall submit for the Agency's approval the identity of any proposed Management Agent and on-site resident manager The Owner shall also submit such additional information about the background, experience and financial conditioU'of any proposed Management Agent and on-site resident manager as is reasonably necessary for the Agency to detennine whether the proposed Management Agent or on-site resident manager meets the standard for a qualified Management Agent or on-site resident manager set forth above. If the proposed Management Agent or on-site resident manager meets the standard for a qualified ManagementAgent or on-site resident manager set forth above, the Agency shall approve the proposeCl Management Agent or on-site resident manager by notifying the Owner in writing. Unless the proposed Management Agent or on'site resident manager is disapproved by the Agency within thirty (30) days, which disapproval shall state with reasonable specificity the basis for disapproval, it shall be deemed approved. 5.3 Performance Review The Agency reserves the right to conduct an annual (or more frequently, if deemed reasonably necessary by the Agency) review of the management practices,and financial status ofthe Development. The purpose of each periodic review wi]] be to enable the Agency to determine if the Development is being operated and managed in accordance with the requirements and standards of this Agreement. The Owner shall cooperate with the Agency in such reviews. 1552\02\524455.5 II . . 21773 SA Replacement of Management Agent or One Site Resident Manager If, as a result of II periodic review, the Agency detennines, in its reasonablejudgment,thatthe Development is not being operated and managed in accordance with any of the material requirements and standards of this Agreement, the Agency shall deliver notice to Owner of its intention to cause replacement of the Management Agent or on-site resident manager, including the reasons therefor Within fifteen (15) days Of receipt by Owner of such written notice, Agency staff and the Developer shall meet in good faith to consider methods for improving the financial and operating status of the Development. If, after a reasonable period as determined by the Agency (not to exceed sixty (60) days), the Agency determines that the Owner is not operating and managing the Development in accordance with the material requirements and standards of this Agreement, the Agency may require replacement of the Management Agent or on-site resident manager If, after the above procedure, the Agency requires in writing the replacement of the Management Agent or on-site resident manager, Owner shall promptly dismiss the then Management Agent or on-site resident manager, and shall appoint as the Management Agent or on-site resident manager a person or entity meeting the standards for a Management Agent or on- site resident manager set forth in Section 5.2 above and approved by the Agency pursuant to Section 5.2 above. Any contract for the operation or management of the Development entered into by Owner shall provide that the contract can be terminated as set forth above. Failure to remove the Management Agent or on-site resident manager in accordance with the provisions of this Section shall constitute default under this' Agreement, and the Agency may enforce this provision through legal proceedings as specified in Section 6.4 5.5 Approval of Management Policies. The Owner shall submit its written management policies with respect' to the Development to the Agency for its review, and shall amend such policies in any way necessary to ensure that such policies comply with the provisions of this Agreement. 5.6 ProperlY Maintenance. The Owner agrees, for the entire Term of this Agreement, to maintain all interior and exterior improvements, including landscaping, on the Property in good condition and repair (and, as to landscaping, in a healthy condition) and in accordance'with all applicable laws, mles, ordinances, orders and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials, and in accordance with the following maintenance, condi t ions: (a) Landscaoing. The Owner agrees to have landscape maintenance performed every other week, including replacement of dead or diseased plants with comparable plants. Owner agrees to adequately water the landscaping on the Property No improperly maintained landscaping on the Property shall be visible from ,public streets andlor rights of way (b) Yard Area. No yard areas on the Property shall be left unmaintained, including: 1552\02\524455.5 12 . . 21774 (I) broken or discarded furniture, appliances and other, household equipment stored in yard areas for a period exceeding one (I) week; (2) packing boxes, lumber trash, dirt and other debris in areas visible from public property or neighboring properties; and (3) vehicles parked or stored in other than approved parking areas. (c) Building. No buildings located on the Property may be left in an unmaintained condition so that any of the following exist: (I) violations of state law, uniform codes, or City ordinances; (2) conditions that constitute an unsightly appearance that detracts from the aesthetics or value of the Property or constitutes a private or public nuisance; (3) broken windows, (4) graffiti (must be removed within seventy-two (72) hours); and (5) conditions constituting hazards and/or inviting trespassers, or malicious mischief. (d) Sidewalks. The Owner shall maintain, repair, and replace as necessary all public sidewalks adjacent to the Development. The Agency places prime importance on quality maintenance to protect its investment and to ensure that all Agency and City-assisted affordable housing projects within the City are not allowed to deteriorate due to below-average maintenance. Normal wear and tear of the Development will be acceptable to the Agency assuming the Owner agrees to provide all necessary improvements to assure the Development is maintained in good condition. The Owner shall make all repairs and replacements necessary to keep the improvements in good condition and repair In the event that the Owner breaches any of the covenants contained in this section and such default continues for a period of seven (7) days after written notice from the Agency with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after written notice from the Agency with respect to landscaping and building improvements, then the Agency, in addition to whatever other remedy it may have at law or in equity, shall have the right to enter upon the Property and perfonn or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the Agency shall be permitted (but is not required) to enter upon the Property and perfonn all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Property, and to attach a lien on the Property, or to assess the Property, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the Agency and/or costs of such cure, including a ten percent (10%) administrative charge, which amount shall be promptly paid by the Owner to the Agency upon demand. 1552\02\524455,5 13 . . 21775 5 7 Safety Conditions. (a) The Owner acknowledges that the Agency places a prime importance on the security of Agency assisted projects and the safety ofthe residents and surrounding community The Owner agrees to implement and maintain throughout the Term the following securi ty measures in the Development: (1) to the extent feasible employ defensible space design principles and crime prevention measures in the operation of the Development including but not limited to maintaining adequate lighting in parking areas and pathways; (2) use its best efforts to work with.theCity Police Department to implement and operate an effective neighborhood watch program; and (3) provide added security including dead-bolt locks for every entry door, and where entry doors are'damaged, replace them with solid-core doors. (b) The Agency shall have the right to enter on the Property and/or contacnhe City,Police Department if it ,becomes aware of or is notified ofanycconditions that pose a danger to the.peace, health, welfare or safety of the Residents and/or the surrounding community, and to perform or cause to be performed such acts as are necessary to correct the condition. ARTICLE 6. MISCELLANEOUS 6.1 Term. The provisions of this Agreement shall apply to the Property for the entire Term,even if the entire Loan iS'paid in full prior to the end of the Term, provided, however, that the provisions of Sections 4.3 and 5 6 of the Agreement shall run with the Property and shall remain. in effect in perpetuity This Agreement shall bind any successor, heir or assign of Owner, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by the Agency The Agency makes the Loan on the condition, and in consideration of, this provision, and would not do so otherwise. 6.2 Compliance with Loan Agreement and Program Requirements. The Owner's actions with respect to the Property shall at all times be in full conformity with: (i) all requirements of the Agency Loan Agreement; (ii) all requirements imposed on projects assisted with Redevelopment Low and Moderate Income Housing Fund monies under California Health and Safety Code Section 33334.2 et ~. 6.3 Covenants to Run With the Land. The Agency and Owner hereby declare their express intent that the covenants and restrictions set forth in this Agreement shall run with the land, and shall bind all successors in title to the Property, provided, however, that on the expiration of the Term of this Agreement said covenants andrestrictions shall expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Property or any portion thereof shall be held conclusively to have been executed, delivered and accepted subject to such covenants and restrictions, regardless of whether such covenants or restrictions J 552\02\524455,5 14 . . 21776 are set forth in,such contract; deed or other instrument, unless the Agency expressly releases such conveyed portion of the Property from the requirements of this' Agreement. 6.4 Enforcement bv the Agencv If Owner fails to perform any obligation under this Agreement, and fails to cure the default within thirty (30) days after the Agency has notified the Owner in writing of the default or, if the default cannot be cured within thirty (30) days, failed to commence to cure within thirty (30) days and thereafter diligently pursue such cure, the Agency shall have the right to enforce this Agreement by any or all of the following actions, or any other remedy provided by law' (a) Calling the Loan. The Agency may declare a default under the Note, accelerate the indebtedness evidenced by the Note, and proceed with foreclosure under the Deed of Trust. (b) Action to Compel Performance or for Damages. The Agency may bring an action at law or in equity to compel Owner's performance of its obligations under this Agreement, and/or for damages, (c) Remedies Provided Under Loan Agreement. The Agency may exercise any other remedy provided under the Loan Agreement. 6.5 Rights of Third Parties to Enforce Covenants. Notwithstanding any other provisions of law, all covenants and restrictions contained herein which implement Health and Safety Code Sections 33334.3 and/or 33413(b)(4), or successor provisions, shall run with the land and shall be enforceable by the Agency, the City of Poway, and any of the parties listed in Health and Safety Code Section 33334.3(1)(7), so long as such provision or successor provision remains in effect. 6.6 Listing of Propertv in Database. Owner hereby acknowledges and agrees that Health and Safety Code Section 33418( c) requires that the Property be listed in a database that shall be made available to the public on the internet and which will include the street address, assessor's parcel number, and other information about the Property The Owner must disclose this requirement to all Residents and prospective Residents. 6.7 Attornevs Fees and Costs. In any action brought to enforce this Agreement, the prevailing party shall be entitled to all costs and expenses of suit, including attorneys' fees. This section shall be interpreted in accordance with California Civil Code Section 1717 and judicial decisions interpreting that statute. 6.8 Recording and Filing. The Agency and Owner shall cause this Agreement, and all amendments. and supplements to it, to be recorded against the Property in the Official Records of the County of San Diego 6.9 Governing Law This Agreement shall be governed by the laws of the State of California. 1552\02\524455.5 15 - '. . 21777 6.10 ,Amendments.: 'This Agreement may be amendedorily by'il'written instrument executed' by all the:parties hereto or their successors in title; and duly recorded in the real projierty records of the County of San Diego, California. 6..11 Notice. All notices given or certificates delivered under this Agreement shall be in writingand.be deemed received on the delivery or refusal date shown on the delivery receipt, if: (i) personally delivered by a commercial service which furhishes',signed receipts of delivery or (ii),mailed by certified mail, return receipt requested, postage prepaid, addressed as shown on the signature page. Any of the parties may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or communications shall be sent. 6.12 Severabilitv Ifany provision of this AgreementshalLbe invalid, illegal or unenforceable, the validity, legality and enforceability of the remairung portions of this Agreement shall not in any way be affected or impaired thereby [Signatures on following Page] 1552\02\524455.5 16 - . . 21778 IN WITNESS WHEREOF, the Agency and Owner have executed this Agreement by duly authorized representatives, all on the date first written above. Address: AGENCY The Poway Redevelopment Agency THE POW A Y REDEVELOPMENT 13325 Civic Center Drive AGENCY, a public body corporate and politic Poway, CA 92064 BY'~~~ Attn: Executive Director APPROVED AS TO FORM BY' Goldfarb & Lipman LLP Agency Special Counsel BY' v- t{c.AI~' V Marshall OWNER. Address: Oak Knoll Housing Associates, L.P., Oak Knoll Housing Associates, L.P., 1820 S. Escondido Blvd, Suite 101 a California limited partnership Escondido, CA 92025 BY' Fallbrook Renaissance, LLC, a California limited liability company Its: General Partner BY' Community HousingWorks, a California nonprofit public benefit corporation. Its: Sole Member By' Susan M. Reynolds, President 1552\02\524455.5 17 . . 21779 STATE OF CALIFORNIA ) . ) COUNTY OF ~ ) (J)Ui'VbiNb~uhl \C On ~~(~'7)\ (2OlYb ,~before me, IJvIULW) Notary Public, personally appeared ~ , who proved to me on the basis of satisfactory evidence to bc the perso~whose nam# @re-subscribed to the within instrument and acknowledged to me th@lte4Itey executed the same i~ir authorized capacity(~, and that by~r signatu~ on the instrument the person~ or the entity upon behalf of which the person.{sJacted, executed the instrument. I certifY under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. Signature (Seal) 1- -----~lol~ . --. ,;..... STATE OF CALIFORNIA ) I IeDtalyMllc . Call1omIa I ) '" ~ DIego county COUNTY OF ) l~_ _ ~ _~~~~~_1_1 On ,20 before me, , - Notary Public, 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 signaturels) on the instrument the person(s), or the entity upon bchalf 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 foregomg paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) 1552\02\524455.5 - . . . .. 21780 IN WITNESS WHEREOF, the Agency and Owner have,executed this Agreement by duly authorizedTepreseritatives, all on the date first written above. Address: AGENCY The Poway Redevelopment Agency THE POW A Y REDEVELOPMENT 13325 Civic Center Drive AGENCY, a public body corporate and politic Poway, CA 92064 Attn: Executive Director By: APPROVED AS TO FORM BY' Goldfarb & Lipman LLP Agency Special Counsel BY' Polly V Marshall OWNER. Address: Oak Knoll Housing Associates, L.P., Oak Knoll Housing Associates, L.P., ] 820 S. Escondido Blvd, Suite 101 a California limited partnership Escondido, CA 92025 By Fallbrook Renaissance, LLC, a California limited liability company Its: General Partner By' Community HousingWorks, a California nonprofit public benefit corporation. Its: BY' 1552\02\524455,5 17 : . .. . 21781 STATE OF CALIFORNIA ) COUNTY OF 9n J+,'R~ ) ) v On /l ucA dl--Y , 20:11 before me, j)de~ 4' ~(;':'I",e2.. , Notary Public, personally appeared 5/AsQn 11 /?<1'c/;'Io/dd , , who p~d to me on the basis of satisfactory evidence to be the person(;s-) whose namei,gJ is~ subscribed to the within instrument and acknowledged to me that)re/she/!PeY executed the same in )Hs/her/ti;leir authorized capacity(j.0i), and that by ~er/tbeir signature.ks-) on the instrument the personjsJ, or the entity upon behalf of which the person.'s1 acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. 1~---- ~ ,J",;..,~.., (Seal)i _". , Commission # 1548691 . ,,' : Notary Public. California ~ i '. .. ' San Diego County - _ _ _ ~:omm. ExplresJan29,2009 STATE OF CALIFORNIA ) ) COUNTY OF ) On 20_ before me, Notary Public, 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 instrumeilt 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 paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) 1552\02\524455,5 : . , . . . d\ 21782 EXHIBIT A Property Description THOBE PORTION? OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 14 AND OF THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF S~CTION 23, TOWNSHIP 14 SOUTH, RANGE 2 WES1', SAN BERN~INO MERIDIAN, IN THE COUNTY OF SAN DIEGO, State of Cali fornia, .ACCORDING TO UNITED STATES GOVERNMENT SUR'llEY, APPROVED NOVEMBER 19, 1880 AND AUGUST 29. 1890, DBSCRIBED AS FOLLOWS COMMENCING AT A POINT WHICH IS 30 00 FEET DISTAN'f SOUTHERLY MEASURED AT RIGHT ANGLES~ FROM THE CENTER LINE: OF 'tHE .40 00 FOOT WIDEGOUNTY ROAD TO POWAY, SAID POINT OF COMMENCEMENT BEARING NORTH 590 54' 20" EAST 454 '09 FEET FROM THE POINT OF INTERSECTION OF THE SOUTHERIN LINE OF SAID SECTION 14, WI~ THE CENTER I~INE OF MISSION ROAD l-A, AT STATION 378+70 90 THEREOF, AS, SHOWN ON SHEET 15 OF THE MAP OF SAID MISSION ROAD l-A_,SAN DIEGO COUNTY HIGHWAY COMMISSION ON B'IJJE IN THE OFFICE OF THE SURVEYOR OF SAID COUNTY AND SAID POINT OF INTERSECTION BEARING NORTH 880 57' 00" WEST 3955 50 FEET FROM THE SOUTHEAST CORNER OF SAID SECTION 14, THENCE NORTH 830 20' 00" EAST ALONG A LINE PARALLEL WITH AND 30 00 FEET bISTANT AT ~IGHT ANGLES SOUTHERLY PROM THE CENTER LINE OF SAID CO~TY ROAD TO POWAY, 239 38 FEET TO THE TRUE POINT OPBEGINNING; THENCE CONTINUING NORTH 830 20' 00" "EAST ALONG SAID PAIU..I.EL 'wINE 234 .55 FEET TO THE NORTHWEST CORNER OF THAT PORTION OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 14, CONVEYED TO THE BANK OF ITALY NATIgNAL TRUST AND SAVINGS ASSOCIATION, TO EDWARD C MC ALE~S, ET UX, BY DEED DATED JULY 1, 192 7 AND RECORDED IN BOOK 13 61 , PAGE 278 OF DEEDS; THENCE SOUTH 000 43' 00" WEST ALONG THE WESTERLY LINE_ OF SAID PORTION CONVEYED TO Me ALEES AND ALONG THE SOUTHERLY PROLONGATION OF SAID WESTERl~Y I,INE, A DISTANCE OF 330,00 FEET; THENCE SOOTH 630 29' 15u WES'!' 224 94FEBT; THENCE SOUTH 700 08' 45" WEST'-34 82 FEET; THENCE NORTH 000 43' Oon EAST 415 00 FEET TO TIlE TRUE POINT OF BEGINNING 1552\02\524455.5 A-I