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Haley Ranch Estates Housing Associates, LP
'-$Nol FIRST AMENDMENT TO LEASE This FIRST AMENDMENT TO LEASE (the "Amendment ") is made as of September 2, 2003, by and between the POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency" or "Lessor "), and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership (the "Lessee "). RECITALS A. The parties have entered into a Lease dated as of September 26, 2000 (the "Lease "), pursuant to which the Agency has leased to the Lessee a sixty -five unit manufactured home community (the "Development") on certain real property in the City of Poway (the "City ") as identified in the Lease (the "Site "). B. The Parties desire to make certain modifications to the Lease and to the Regulatory Agreement executed pursuant to the Lease. NOW, THEREFORE, the parties hereto agree as follows: 1. Residual Receipts. The following is hereby added to the end of Section 5.3 of the Lease: "The Lessee shall deposit all Annual Project Revenue (after payment of Operating Expenses, Debt Service and any required deposits to the Subsequent Term Operating Reserve) into the Capital Replacement Reserve. When the parties determine that the Capital Replacement Reserve has been fully funded for that calendar year as provided in Section 10.2 hereof, all other Residual Receipts shall be distributed in equal amounts to Agency (as Additional Rent) and to Lessee." 2. Income Level of Tenants. a. The first paragraph of Section 6.1 of the Lease is revised to read as follows: 116.1 Number of Affordable Units. Lessee agrees to make available, restrict occupancy to, and rent Sixty -Four (64) of the Housing Units to Very Low Income Households, all at an Affordable Rent (except for Pre - Existing Tenants as provided in Section 6.4 hereof). One of the Housing Units may be occupied by the Property Manager." deleted. b. All references in the Lease to Extremely Low Income Households are hereby 3. Operating Reserve Requirements. a. Pursuant to Section 10.1(b) of the Lease, the Agency is obligated to transfer the full balance of the Initial Term Operating Reserve to Lessee upon the commencement of the Subsequent Term, for deposit into the Subsequent Term Operating Reserve. The current balance of the Initial Term Operating Reserve is $164,863.23. b. The second sentence of Section 10.1(b) of the Lease is hereby revised to read as follows: *AW DOC SOC V 75001 v 1 \22345.0015 .pr "Lessee shall also deposit 3% of Annual Project Revenue into the Subsequent Term *MW Operating Reserve, until the balance of the Subsequent Tenn Operating Reserve equals 50% of the amount of the currently approved annual Operating Budget " W✓ 4. Capital Reserve Requirements. Pursuant to Section 10.2 of the Lease, the Agency is obligated to transfer the full balance of the Capital Replacement Reserve to Lessee upon the commencement of the Subsequent Term, which shall continue to be deposited and held in the Capital Replacement Reserve. The current balance of the Capital Replacement Reserve is $724,731.40. Pursuant to Section 10.2 of the Lease, the Capital Replacement Reserve shall be analyzed by a consultant commissioned by Lessee, subject to the reasonable approval of the Agency, with such study to be commenced within six months after the commencement of the Initial Term, and at the end of every five year period thereafter, and the cost of such analysis shall be an Operating Expense of the Development. The Agency and the Lessee acknowledge that such a study was completed in 2002, and as a result of such study the parties have determined that additional funds must be deposited into the Capital Replacement Reserve to adequately maintain the Site and the improvements thereon. In accordance with the recommendations of the study, the Agency shall grant to the Lessee an additional Two Hundred Eighty Thousand Dollars ($280,000), which shall also be deposited in the Capital Replacement Reserve and used only for the purposes of such account under Section 10.2 of the Lease. The parties agree that the next such analysis of the Capital Replacement Reserve shall be conducted in 2008, and the cost of each such analysis shall be subject to the reasonable approval of the Agency. In the event that pursuant to the provisions of the Lease, or in implementation of the recommendations of any future study of the Capital Replacement Reserve, there are excess funds in the Capital Replacement Reserve, the first Two Hundred Eighty Thousand Dollars ($280,000) of such excess funds shall be paid to the Agency, and any additional excess funds shall be divided in equal parts to the Agency (as Additional Rent) and to the Lessee. 5. Amendment to Regulatory Agreement. The Agency and the Lessee shall execute and cause to be recorded in the official records of San Diego County a First Amendment to Regulatory Agreement, in substantially the form attached hereto as Exhibit "A" and incorporated herein. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Lease to be executed by their lawfully authorized officers. ATTEST: +Ageyretary DOCSOC\97500 Iv1A22345.0015 AGENCY: POWAY REDEVELOPMENT AGENCY, a public body corporate and politic By: amen . Bowersox, Executive Director Wr' Von APPROVED AS O FORM: (I , Stradl Yocca Urlson & Rauth Aeenc Special Counsel DOCS00975001 v 1A22345M15 LESSEE: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community HousingWorks, a California nonprofit corporation, its General Partner B a � 4aJTi M. l ds, xec tiv irector %W LWI EXHIBIT A RECORDING REQUESTED BY: ) AND WHEN RECORDED MAIL TO: ) Poway Redevelopment Agency ) 13325 Civic Center Drive ) Poway, California 92064 ) Attention: Redevelopment Director ) This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. FIRST AMENDMENT TO REGULATORY AGREEMENT THIS FIRST AMENDMENT TO REGULATORY AGREEMENT is entered into as of 12003, by and between the POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership (the "Lessee "). RECITALS A. The parties have entered into a Regulatory Agreement dated as of September 26, 2000 (the "Regulatory Agreement'), which was recorded in the official records of San Diego County on , 2000 as Document No. B. The parties hereto desire to make certain modifications to the Regulatory Agreement. NOW, THEREFORE, the parties hereto agree as follows: 1. Income Level of Tenants. The first paragraph of Section 402.1 of the Regulatory Agreement is revised to read as follows: 11402.1 Number of Affordable Units. Lessee agrees to make available, restrict occupancy to, and rent Sixty -Four (64) of the Housing Units to Very Low Income Households, all at an Affordable Rent (except for Pre - Existing Tenants as provided in Section 6.4 hereof). One of the Housing Units may be occupied by the Property Manager." 2. Extremely Low Income Households. All references in the Regulatory Agreement to Extremely Low Income Households are hereby deleted. 3. No Other Changes. Except as expressly provided to the contrary in this First Amendment, the terms of the Regulatory Agreement shall remain in full force and effect as written. All terms used herein and not defined herein but defined in the Regulatory Agreement shall have the meaning given to such terms in the Regulatory Agreement. DOC SOC V 75001 v 1 \22345.0015 IN WITNESS WHEREOF, Agency and the Lessee have executed this First Amendment to Regulatory Agreement as of the date first set forth above. ATTEST: Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Agency Legal Counsel DOCSOCA975001 v1 X22345.0015 AGENCY: POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic By: James L. Bowersox, Executive Director LESSEE: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community HousingWorks, a California nonprofit_corporation, its General Pvlfp� By: 1 "Vs CG usan M. Reynolds, Exe ut e Director BILL OF SALE For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic ( "Agency "), does hereby sell, assign, transfer and convey to HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership ( "Purchaser"), as of September 2, 2003, all of Agency's right, title and interest in and to the personal property (the "Personal Property") described in Exhibit "A" attached hereto and made a part hereof used in connection with the operation of the real property described in Exhibit `B" attached hereto and made a part hereof (the "Site "). Agency hereby represents and warrants that it owns title to the Personal Property and that it has the right to transfer the Personal Property as provided herein. By accepting this Bill of Sale, Purchaser confirms that other than as set forth in the immediately preceding sentence, it is not relying on any representation, written information, data, reports, or statements of Agency or its agents as to the physical condition of the Personal Property, and that it is purchasing the Personal Property from Agency in "AS -IS" condition based solely upon Purchaser's own independent inspection and review of the Personal Property. IN WITNESS WHEREOF, Agency has executed this Bill of Sale as of September 2, 2003. ATTEST: 4AgeSecretary TO FORM: Yocca'darlson & Rauth Special Counsel DOCSOC942459v 1 \22345.0015 AGENCY: POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic By kamclt�' wersox, Executive Director *4rr DOCSOC V42459v1\22345.0015 PURCHASER: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community HousingWorks, a California nonuroffixorporation, its General,Partnp M. Reynolds, ..o EXHIBIT A LIST OF PERSONAL PROPERTY HALEY RANCH ESTATES EQUIPMENT LIST Chevrolet S -10 Series pick -up (1992) (1) Yamaha Golf Cart (2) Automatic Cart Charger (2) Trailer -Model NW 13800 (1) Chain Saw - ECHO Model CS -3000 (1) Edge Trimmer - Kawasaki Model TF22 (1) Table Saw 10" RYOBI Model BT -3000 (1) Radial Arm Saw -Delta Model 10 (1) Lawn Mower - Toro Model TV5002 (1) Pressure Washer - Model PowerMate PRO 200T (1) Lawn Mower Briggs & Stratton Model Kee TM -22 (1) Tru -Cut Power Mower Model P -20 (1) Grass Trimmer Shindawa Model T270 (1) Air - Compressor - Campbell Hausfeld 3 /4HP (1) Power Blower - ECHO Model PB -4600 (1) Blower - Shindawa Model EB240 (1) Extension Ladder Model D1120 -2 (1) Bench Grinder - Model IDS - 150 A (1) Vacuum Cleaner - Sanitaire Commercial (1) RCA 26" Screen TV (1) Spectra 2 Polaroid Camera (1) Brother WP- 3400 Word Processor w /monitor (1) Folding tables (16) EASA Phone- answering machine (broken) (1) Telephone Panasonic EASA Phone (1) AT &T 436 Cordless telephone (1) Motorola Fr50 Hand held radio (2) Pool Furniture: Table with umbrella (4) Pool Side Chair (20) Lounge Chair (6) Kitchen Appliances in Clubhouse Panasonic Microwave (1) Kenmore Stove (1) Ice Maker Refrigerator (1) DOCSOC\942459v 1 \22345.0015 A -1 HALEYRANCHESTATES EQUIPMENT LIST PAGE 2 Park Office Furniture Office desk (2) Office Chair (1) Guests Chair (2) 4- drawer file cabinet (3) Wood conference table (1) Conference chairs (6) Folding Chair (120) Rocking Chair (8) Park Office Equipment Personal computer Sony PVC 7762 (1) Monitor Phillips Magnavox 17" CM4018D1 (1) Facsimile Machine Hewlet Packard 920 (1) DOCSOCV42459v1\22345M 15 VW EXHIBIT B DESCRIPTION OF THE SITE ..f Lots 1 through 65 inclusive and Lots A and C through K inclusive, of CITY OF POWAY TRACT NO. 89 -14, in the City of Poway, County of San Diego, State of California, according to Map thereof No. 12944, filed in the Office of the County Recorder of San Diego County, June 11, 1992. DOCSOC \942459v 1 \22345.0015 RECORDING REQUESTED 87rr NORTH AMERICAN TITLE RECORDING REQUESTED BY: ) AND WiIEN RECORDED MAIL TO: ) Poway Redevelopment Agency ) 13325 Civic Center Drive ) Poway, California 92064 ) Attention: Redevelopment Director 1 Jr ERE OR1ED, nH lEi +1 157, 2� -3 o `GFI M J(.` NIH,_i ffl�T'LL REi�JRDER 4f11F Ji 661 GU�Il�11 RLlu It :liS 01 I4E UME` 3.57 PIM this document is exempt tiara the payment of a rt fee pursuant to Gavemment Code Section 27383. FIRST A.A NDNIENT TO REGULATORY AGREEMENT THIS FIRST A:VIEINDVIENT TO REGULATORY AGREEMENT is entered into as of September 2, 2003, by and between the POWAY REDEVELOPMENT AGENCY, a public body, `Y corporate and politic (the "Agency"), and ILaLEY RANCH ESTATES HOUSING ASSOCLiTES, L.P., a California limited partnership (the "Lessee "). RECIT_4LS A. The parties have entered into a Regulatory Agreement dated as of September 26, 2000 (the "Regulatory Agreement'), which was recorded in the official records of San Diego t Countyon October 21 2000 as Document No. 2000_0S 1718 B. The parties hereto desire to make certain modifications to the Regulatory Agreement. NOW, THEREFORE, the parties hereto agree as follows 1. Income Level of Tenants. The first paragraph of Section 402.1 of the Regulatory Agreement is revised to read as follows: "402.1 Number of Affordable Units. Lessee agrees to make available, restrict occupancy to, and rent Sixty -Four (64) of the Housing Units to Very Low Income Households, all at an Affordable Rent (except for Pre - Existing Tenants as provided in Section 6.4 hereof). One of the Housing Units may be occupied by the Property Manager." 2. Extremely Low Income Households. All references in the Regulatory Agreement to Extremely Low Income Households are hereby deleted. 3. No Other Changes. Except as expressly provided to the contrary in this First Amendment, the terms of the Regulatory Agreement shall remain in full force and effect as written. All terms used herein and not defined herein but defined in the Regulatory Agreement shall have the meaning given to such terms in the Regulatory Agreement. DOCSOC' 990367, i\22 345.001: 1100 IN WITNESS WHEREOF, Agency and the Lessee have executed this First Amendment to Regulatory Agreement as of the date first set forth above. AGENCY: POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic By: Z�=A 6"— Ja es L. owersox, Executive Director ATTEST: Se etary TO FORM: Carlson & Rauth Legal LESSEE: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community HousingWorks, a California nonprofit corporation, its General Partner �6 ' W By( sa0 i n M. Reynolds, Execu iv Director DOCSOC V 903 67v 1 \22345.0015 w STATE OF CALIFORNIA ) ss. COUNTY OF qyk On /11 loo, before me, �1U� l A �N1- � ii4 vi t e A, Notary Public, (Print Name of Notary Public) personally appeared personally known to me -or- proved to me on the basis of satisfactory evidence to be the person(R) whose namew is /are subscribed to the within instrument and acknowledged to me that be/sbe/tliay executed the same in kil/her /their authorized capacity(jo&), and that by brs/her /their signature(s) on the instrument the 2erson , or the entity upon behalf of which the persons} acted, executed the instrument. I@ ZULEIKAM, NATHANIEL CommissioniR 1342850 � i Notary Public- Calitomia 5 p San Diego County [ 1 My Comm. Expxes Feb 4, 2006f WITNESS my hand and official seal. ' 1 OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual Corporate Officer Title(s) ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) DOCSOCA990367vlA22345.0015 DESCRIPTION OF ATTACHED DOCUMENT 11�.`�iytiLtft'L�wt€a.t� �X���'tl�AlzKsq Title Or Type Of DocumentJ �} VA 9 /69 /( Date Of Documents Signer(s) Other Than Named Above , STATE OF CALIFORNIA COUNTY OFS,f0�_ � On personally appeared personally known to me -or- ss. before me, Z 1 �1 k �lotary Public, (Print Name of Notary Public) ❑ 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. MICHFIIE PAU LINE HEnB*OiT Commission # 1298219 Notary Public - CollfOM10 San Diego County My Fores Mar23, 2105 �WITNESS my hand and official seal. l oll C \" � r \\ ,17ti OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer ❑ Partner(s) ritle(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) DOCSOC%990367vl\22345.0015 DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Date Of Documents Signer(s) Other Than Named Above i� i I ;r1j VWO RECOBCING REQUESTED Bv: NORTH AMERICAN TITLE RECORDING REQUESTED BY ) Aw'D WHEN RECORDED -`YLAll, TO: ) ) Poway Redevelopment Agency ) 13325 Civic Center Drive ) Poway, California 92064 1 F IGIMAL OF IRIS DOCUMEi,I !�KCORDED ON `DUB 0?, 'GCS DOCil NT MUMBER 2200171-11H50314 GREGORY J. SMITH, COLM3T`r RECORDER SAM DIEGO COUNTY RECORDER`S OFFICE TTF 1,M Code Section 27333 MEMORANDUM OF CONINIENCENIENT OF SUBSEQUENT TERM OF LEASE to THIS MEMORANDUM OF CONLNLENCEMENT OF SUBSEQUENT TERM OF LEASE ( "Memorandum ") is hereby entered into as of September 2, 2003, by and between the POWAY REDEVELOP .NIENT AGENCY, a public body, corporate and politic (the `:Agency"), and HALEY RANCH ESTATES HOUSING ASSOCLATES, L.P., a California limited partnership (the "Lessee "). RECITALS A. Agency and Lessee have entered into a "Lease" dated September 26, 2000, for a sixty -five unit manufactured housing community lmown as Haley Ranch Estates, located on that certain real property which is legally described therein and incorporated herein by reference (the "Site"). A Memorandum of Lease was recorded in the Official Records of San Diego County on October 24, 2000 as Instrument No. 2000 - 0571729. A copy of the Lease is available for public inspection at Agency's office at 13325 Civic Center Drive, Poway, California. The "Initial Term" of the Lease was up to two (2) years, the "Subsequent Term" of the Lease is an additional forty (40) years, and Lessee has options to extend the term of the Lease for up to four additional ten (10) year periods, exercisable under certain conditions which are set forth in the Lease. B_ The parties have agreed to extend the Initial Tenn of the Lease to the date hereof, and to shorten the Subsequent Term by the same amount as the Initial Term extension. C. The Lease provides for the parties to execute a short form memorandum of the commencement of the Subsequent Term of the Lease. NOW, THEREFORE, the parties hereto certify as follows: 1. The Initial Term of-he Lease commenced on September 26, 2000 (,the "Commencement Date "1 and ended on September 1, 2003. _. The Subsequent "arm of the Lease commenced on September 2. 2003 and shall end on September 25.:0 -i2 ,execnt as mav' -)e earlier terminated pursuant to the --aasel. V. ..� 3. The first Option Period of the Lease (if exercised pursuant to the terms and conditions of the Lease) shall commence on September 26, 2042 and end on September 25, 2052 (except as may be earlier terminated pursuant to the Lease). 4. The second Option Period of the Lease (if exercised pursuant to the terms and conditions of the Lease) shall commence on September 26, 2052 and end on September 25, 2062 (except as may be earlier terminated pursuant to the Lease). 5. The third Option Period of the Lease (if exercised pursuant to the terms and conditions of the Lease) shall commence on September 26, 2062 and end on September 25, 2072 (except as may be earlier terminated pursuant to the Lease). 6. The fourth Option Period of the Lease (if exercised pursuant to the terms and conditions of the Lease) shall commence on September 26, 2072 and end on September 25, 2082 (except as may be earlier terminated pursuant to the Lease). POWAY REDEVELOPMENT AGENCY, a public body corporate and politic_ in ATTEST: Sec tary of the Agency YoccWarlson & Rauth Special Counsel Bowersox, Executive Director HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community HousingWorks, a California nonprofit corporation, its General Partner 1, k-404 _ M. Reynolds"ExeJutiv Director DocsoC�942462vT,22345.0015 %W %-W STATE OF CALIFORNIA ) ss. COUNTYOF , /NA �t� -tA1 ) On q ! II 10 before me, �4,4�CA.4 m- Y\"'+AykktA Notary Public, �- (Print Name of Notary Public) personally appeared 2-�> USIN,vy NN _ Fit AC 4C1 personally known to me -or- F1 proved to me on the basis of satisfactory evidence to be the personksJ whose named is /aFe' subscribed to the within instrument and acknowledged to me that heisbe /they executed the same in his/her /their authorized capacity(ies), and that by.bis/her /their-signature(s�on the instrument the �exspn r hti �r c behalf of which the persort,(o acted, executed the instrument. 7-ULEIKA M. NATHANIEL Commission P 1342850 z WITNESS my hand and official seal. Notary Public - California 5 r San Diego county [% Il �� . My :s . rn. Ezyires Feb 3, 200E I '�' l OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual Corporate Officer Title(s) ❑ Partner(s) ❑ Limited ❑ General Attomey -In -Fact Trustee(s) Guardian/Conservator Other: Signer is representing: Name Of Person(s) Or Entity(ies) ��M11WVUVViTc1 R1;�.1�tt,�r' �V � DOCSOC V 42462v2\22345.0015 DESCRIPTION OF ATTACHED DOCUMENT +{1' \�NnewlLvtL�lt_�w� tz1 CcCMi's -OC .ME -tL�- v Iib3z'�1EE'yk k'yl ,�L�A itle Or Type Of� itle Or Type Of Documedj Number Of Pages 1 1 /0 /U-�' Date Of Documents Signer(s) Other Than %W 4W STATE OF CALIFORNIA ) ss. COUNTY OF kO ) On before me,�k 4l 1 G � ��� 111 �� otary Public, (Print Name of Notary Public) personally appeared �w�S � ,. � t:K � :�( personally known to me -or- proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within 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 ty upon behalf of which the person(s) acted, executed the instrument. MCH LE: PAl1'U'44 Commission # 1298219 s WITNESS my hand and official seal. Notary Public - California Z Soo Diego County 0 Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ❑ Individual ❑ Corporate Officer Title(s) Title Or Type Of Document ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator Number Of Pages ❑ Other: Signer is representing: Name Of Persons) Or Entity(ies) Date Of Documents Signer(s) Other Than Named Above DOCSOCV42462v2\22345.0015 J 1� .` N v i v RECORDING REQUESTED Byrd✓ NORTH AMERICAN TITLE RECORDING REQUESTED BY, ) MAIL TAX STATEMENTS TO ) AND WHEN RECORDED MAIL TO: ) Haley Ranch Estates Housing Associates, L.P. ) 1820 Escondido Boulevard, Suite 101 ) Escondido, California 92025 ) Attention: Executive Director ) T'tic.tRIGINAL OF THIS DOCUMENT WIS RECORDED ON NOV 07, 2003 DOCUMENT NUMBER 2003-135431-5 GREGORY J. SMITH. COUNTY, RECORDER SAN DIEGO COUNTY RECORDER'S GFFICE TIME: 3:57 PM �(c� �y� This document is exempt from payment of a r pursuant to Govemment Code Section 271383. GRANT DEED For valuable consideration, receipt of which is hereby acknowledged, The POW AY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency "), acting to carry out the Redevelopment Plan ( "Redevelopment Plan ") for the Paguay Redevelopment Project (the "Project "), under the Community Redevelopment Law of California, hereby grants to HALEY RANCH ESTATES HOUSING ASSOCI.ATES, L.P., a California limited partnership ( "Purchaser "), as of September 2, 2003, the real property hereinafter referred to as the "Improvements," described in Exhibit A attached hereto and incorporated herein, subject to existing easements, restrictions and covenants of record. 1. Conveyance in Accordance With Redevelopment Plan, Lease. The Improvements are conveyed in accordance with and subject to a Lease entered into between Agency and Purchaser dated September 26, 2000 (the "Lease "), a copy of which is on file with the Agency at its offices as a public record and which is incorporated herein by reference. A Memorandum of Lease was recorded in the Official Records of San Diego County on October 24, 2000 as Instrument No. 2000- 0571729. Pursuant to the Lease, the Agency has leased the land underlying the Improvements (the "Site ") to the Purchaser. All terms used herein shall have the same meaning as those used in the Lease. The Improvements are conveyed subject to the Redevelopment Plan for the Paguay Redevelopment Project which was approved and adopted by Ordinance No. 117 and amended by Ordinance No. 415 of the City Council of the City of Poway. 2. Description of Improvements. There presently are various improvements situated on the Site, including sixty -five residential dwelling units and appurtenant improvements (the "Improvements "). The term "Improvements" is not intended to include, and shall not be construed to include, (i) any interest in the Site, or (ii) items of personal property which, by their character and nature, are not adaptable to permanent affixation to the Improvements or the Site and are not so permanently affixed (which items of personal property are concurrently being conveyed by the Agency to the Purchaser through a separate, unrecorded Bill of Sale). The Improvements shall at all times remain real property. 3. Permitted Uses. The Purchaser covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Site or any part thereof, that upon the date of this Grant Deed and thereafter, the Purchaser shall devote the Improvements to the uses specified in the Redevelopment Plan and the Lease for the periods of time specified therein. DOCS00042458v2'22145.0015 .r 4. Restrictions on Transfer. The Purchaser further agrees that for the period commencing upon the date of this Grant Deed and until the expiration of the term of the Lease, no voluntary or involuntary successor in interest of the Purchaser shall acquire any rights or powers under the Lease or this Grant Deed, nor shall the Purchaser make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Improvements, except as permitted or approved in writing by the Agency pursuant to Section 14 of the Lease. 5. Binding on Successors. All of the terms, covenants and conditions of this Grant Deed shall be binding upon the Purchaser and the permitted successors and assigns of the Purchaser. Whenever the term "Purchaser" is used in this Grant Deed, such term shall include any other successors and assigns as herein provided. 6. Nondiscrimination. The Purchaser herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Improvements herein conveyed, nor shall the Purchaser itself or any person claiming under or through Purchaser, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Improvements herein conveyed. The foregoing covenants shall run with the land. The Purchaser shall refrain from restricting the rental, sale or lease of the Improvements on the basis of race, color, religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the real property herein conveyed The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." DOCSOC \942458v2\22345 .0015 ..• (c) hi contracts pertaining to the disposition of the realty: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises." 7. Violations Do Not Impair Liens. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Grant Deed shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest permitted under the Lease. 8. Covenants Run With Land. All covenants contained in this Grant Deed shall be covenants running with the land. All of Purchaser's obligations hereunder, except as otherwise provided hereunder, shall terminate and shall become null and void upon the expiration of the effectiveness of the Lease, as it may be extended. Every covenant contained in this Grant Deed against discrimination contained in paragraph 6 of this Grant Deed shall remain in effect in perpetuity. 9. Covenants For Benefit of Agency. All covenants without regard to technical classification or designation shall be binding for the benefit of the Agency, and such covenants shall run in favor of the Agency for the entire period during which such covenants shall be in force and effect, without regard to whether the Agency is or remains an owner of any land or interest therein to which such covenants relate. The Agency, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach. 10. Revisions to Grant Deed. Both Agency, its successors and assigns, and Purchaser and the successors and assigns of Purchaser in and to all or any part of title to the Improvements shall have the right with the mutual consent of the Agency and the Purchaser to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, easements or restrictions contained in this Grant Deed without the consent of any tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust or any other person or entity having any interest less than a fee in the Improvements. However, Purchaser and Agency are obligated to give written notice to and obtain the consent of any first mortgagee prior to consent or agreement between the parties concerning such changes to this Grant Deed. The covenants contained in this Grant Deed, without regard to technical classification, shall not benefit or be enforceable by any owner of any other real property within or outside the Project Area, or any person or entity having any interest in any other such realty, other than Agency and Purchaser. No amendment to the Redevelopment Plan shall require the consent of the Purchaser, but no such amendment shall diminish or restrict the Purchaser's rights or expand the Purchaser's obligations hereunder or under the Purchase Agreement without the Purchaser's consent. DOCSOC \942458v2\22345.0015 ATTEST: ecr tary of the Agency TO FORM: Yocca Special DOCSOC V42458v2�22345.0015 & Rauth AGENCY: POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic By: ames . Bowersox, Executive Director PURCHASER: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community HousingWorks, a California nonprofit corporation, its General Pa kS,Aan M. Reynolds, ExecutiU Director pow EXHIBIT A Imale LEGAL DESCRIPTION OF IMPROVEMENTS All buildings and improvements situated on Lots 1 through 65 inclusive and Lots A and C through K inclusive, of CITY OF POWAY TRACT NO. 89 -14, in the City of Poway, County of San Diego, State of California, according to Map thereof No. 12944, filed in the Office of the County Recorder of San Diego County, June 11, 1992, which buildings and improvements are and shall remain real property. DOCSOC\942458v2\22345.0015 .. STATE OF CALIFORNIA COUNTY OF SAti� iN r On "Vit10� personally appeared personally known to me -or- w ss. before me, &U I h VA- M - Notary Public, (Print Name of Notary Public) ❑ proved to me on the basis of satisfactory evidence to be the person whose nameW is/are- subscribed to the within instrument and acknowledged to me that Jae /she /-executed the same in jiis/her /their authorized capacity(io, and that by W/her /theirsignature(.* on the instrument the person(,j, or the entity upon behalf of which the person acted, executed the instrument. ZULEfKA M. NATHANIEL Commission M 1342850 ti Notary public - califomia San Diego County MY Comm . Ehpime Fab g, 20f WITNESS my hand and official seal. OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form CAPACITY CLAIMED BY SIGNER ❑ Individual 9 Corporate Officer Title(s) ❑ Partner(s) ❑ Limited ❑ General i Attorney -In -Fact Trustee(s) Guardian/Conservator Other: Signer is representing: Name Of Person(s) Or EntitAies) DOCSOC V42458v2\22345.0015 DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Of Pages Date Of Documents Sumer(s) Other Than Named Above STATE OF CALIFORNIA COUNTY OFs �tb On personally appeared X17 personally known to me -or- ". ss. ,before me, la'\Q, V �,) ( Notary Public, (Print Name of Notary Public) 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. MICHELLE PALIIJNE HEM3?GOTF ■ Commission # 1298219 z y Notary Public - California � San Diego County My Comm. Fires Mar23, 21111.5 ` WITNESS my hand and official seal. OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer ❑ Partner(s) ritle(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) DOCSOC%94245gv2\22345.0015 DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Of Pages Date Of Documents Signer(s) Other Than vrr r.r BILL OF SALE For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic ( "Agency "), does hereby sell, assign, transfer and convey to HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership ( "Purchaser "), as of September 2, 2003, all of Agency's right, title and interest in and to the personal property (the "Personal Property") described in Exhibit "A" attached hereto and made a part hereof used in connection with the operation of the real property described in Exhibit `B" attached hereto and made a part hereof (the "Site "). Agency hereby represents and warrants that it owns title to the Personal Property and that it has the right to transfer the Personal Property as provided herein. By accepting this Bill of Sale, Purchaser confirms that other than as set forth in the immediately preceding sentence, it is not relying on any representation, written information, data, reports, or statements of Agency or its agents as to the physical condition of the Personal Property, and that it is purchasing the Personal Property from Agency in "AS -IS" condition based solely upon Purchaser's own independent inspection and review of the Personal Property. IN WITNESS WHEREOF, Agency has executed this Bill of Sale as of September 2, 2003. ATTEST: �'(cy Secretary TO FORM: Yocca Carlson & Rauth Special Counsel DOCSOC \942459v 1 \22345.0015 AGENCY: POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic By: ,�Al es . Bowersox, Executive Director *.. DOCSOC1942459v1A22345.0015 V, PURCHASER: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community HousingWorks, a California nonprofit corporation, its Gener rtner By: Q � a — u n M. Reynolds, ExUtive Director EXHIBIT A LIST OF PERSONAL PROPERTY HALEY RANCHESTATES EQUIPMENT LIST Chevrolet S -10 Series pick -up (1992) (1) Yamaha Golf Cart (2) Automatic Cart Charger (2) Trailer -Model NW13800 (1) Chain Saw - ECHO Model CS -3000 (1) Edge Trimmer - Kawasaki Model TF22 (1) Table Saw 10" RYOBI Model BT -3000 (1) Radial Arm Saw - Delta Model 10 (1) Lawn Mower - Toro Model TV5002 (1) Pressure Washer - Model PowerMate PRO 200T (1) Lawn Mower Briggs & Stratton Model Kee TM -22 (1) Tru -Cut Power Mower Model P -20 (1) Grass Trimmer Shindawa Model T270 (1) Air - Compressor - Campbell Hausfeld 3 /4HP (1) Power Blower - ECHO Model PB -4600 (1) Blower - Shindawa Model EB240 (1) Extension Ladder Model D1120 -2 (1) Bench Grinder - Model TDS - 150 A (1) Vacuum Cleaner - Sanitaire Commercial (1) RCA 26" Screen TV (1) Spectra 2 Polaroid Camera (1) Brother WP- 3400 Word Processor w /monitor (1) Folding tables (16) EASA Phone - answering machine (broken) (1) Telephone Panasonic EASA Phone (1) AT &T 436 Cordless telephone (1) Motorola Fr50 Hand held radio (2) Pool Furniture: Table with umbrella (4) Pool Side Chair (20) Lounge Chair (6) Kitchen Appliances in Clubhouse Panasonic Microwave (1) Kenmore Stove (1) Ice Maker Refrigerator (1) A -1 DOCSOC \942459v 1 \22345.0015 v HALEY RANCHESTATES EQUIPMENT LIST PAGE 2 Park Office Furniture Office desk (2) Office Chair (1) Guests Chair (2) 4- drawer file cabinet (3) Wood conference table (1) Conference chairs (6) Folding Chair (120) Rocking Chair (8) Park Office Equipment Personal computer Sony PVC 7762 (1) Monitor Phillips Magnavox 17" CM4018D1 (1) Facsimile Machine Hewlet Packard 920 (1) A -2 DOCSOC,942459v 1 \22345.0015 EXHIBIT B DESCRIPTION OF THE SITE Lots 1 through 65 inclusive and Lots A and C through K inclusive, of CITY OF POWAY TRACT NO. 89 -14, in the City of Poway, County of San Diego, State of California, according to Map thereof No. 12944, filed in the Office of the County Recorder of San Diego County, June 11, 1992. DOCSOCV42459v1 A22345.0015 �V 2000-0671727 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Poway Redevelopment Agency P.O. Box 789 California 92074 -0789 2224 DOC 12000-0571727 OCT 24, 2000 0 :37 AM OFFICIAL RECOW SAN DIEGO CM RECaM'S OFFICE GREGORY J. 'KITH, MKTY RECORDER FEES: 0.00 Code Section 27383 COVENANT REGARDING REAL PROPERTY By the terms of Sections 3(3) and 7 of the Judgment entered April 6, 1995, in Judgment Book Number 2438 at page no. 434, in Aleen L. Smith and Cheri L. Craig v. All Persons Interested in the Matter of the Validity of the Amendment to the Redevelopment Plan for the Paguay Redevelopment Project Area, et al., San Diego Superior Court Case No. 667691, housing acquired, built or preserved by the Poway Redevelopment Agency on that real property described in Exhibit "A" attached hereto and incorporated herein is restricted in perpetuity for housing at affordable housing costs (as defined in Health and Safety Code Section 50053 and California Code of Regulations Section 6918) to very low income households (as defined in Health and Safety Code Section 50105), provided that the restrictions may be eliminated if the restricted units can be located within the City of Poway, in accordance with the Community Redevelopment Law, and provided further that the restrictions may be eliminated if it is determined in the future that the need for which the units were reserved no longer exists. The covenant runs with the land. ATTEST: g cy . Secretary APPROVED AS T FORM: Stradling occa ar on & Rauth Agency L gal Counsel POWAY REDEVELOPMENT AGENCY, a public body corporate and oolitic- caa >r Michael P. 3 Co �.�'0 � � bw soi -i -I9 0 D -) (f `r 2225 .r APPROVED BY LESSEE: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community Housing of North County, a California nonprofit corporation, its General Partner By- ',---,'Susan M. Reynolds, Executive Director DOCSOC\747477v4\22345.0015 2226 CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT State of California County of SA6 2c� U ss. On ep"c; ,.—COD , before me, Stz+x+e D. WWxd,1VDta- V49Qb1I G Name and Title of Officer ba,g_ "Jane Doe. Notary Public -) personally appeared Ih11r¢�e� P CQ�aanct ame. of Signets) r. personally known to me f 1. proved to ma -eyidence to be the personal whose name(,s+J &are subscribed to the within instrument and acknowledged to me that &sheJSLiay executed the same in 6914ecEthellr authorized capacity(ye�, and that by 49 r signature($) on the instrument the person(s�, or the entity upon behalf of which the person(3f acted, executed the instrument. WITNESS my hand and official seal. � /1(1J.LloD jr��/lA Place Notary Seal Above Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Dinhument Title or Type of Document: I ou Do f) t fCpgQ,(r i f Document Date: q,./ aLW Number of Pages: U Signer(s) Other Than Named Above: LCR'MW k)01&-, IM yet C_` S"An it jWbS Capacity(ies) Claimed by Signer Signer's Name: ❑ Individual ❑ Corporate Officer — Title(s): ❑ Partner —❑ Limited J General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: RIGHT THUMBPRINT OF SIGNER � 1997 National Notary Association • 9350 De Sato Ave.. PO. Box 2402 • Chatsworth. CA 91313 -2402 Prod. No 5907 Reorder: Call Tall -Free 1 -800 -876 -6827 2227 CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT State of California ss. County of bC A r. On'3�Nem�.eti aSja�before me, EL z0.�oelh F Dente noia¢� fJu�oLrC , Date Name and Title of Office (e.., "Jane Dce, N Pu Ilc') personally appeared 3U.30.r, V*' V1Vv.'n0 \ds Names) of Signers) u Place Notary Seal Above Ll personally known to me X proved to me on the basis of satisfactory evidence to be the person(&) 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(&) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. J Si,ra� of Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attache Title or Type of Document: Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name: ❑ Individual ❑ Corporate Officer— Title(s): ❑ Partner — ❑ Limited ❑ General L Attorney in Fact r'.. Trustee El Guardian or Conservator Other: Signer Is Representing: Number of Pages: RIGHT THUMBPRINT OF SIGNER O 1997 National Notary Association • 9350 Be Soto Ave.. B0. Box 2402 • Chatsworth, CA 91313 -2402 Prod. No 5907 Reorder: Call Toll -Free 1800- 976 -6827 Ifto 2228 EXHIBIT "A" TO COVENANT REGARDING REAL PROPERTY LEGAL DESCRIPTION Lots 1 through 65 inclusive and Lots A and C through K inclusive, of CITY OF POWAY TRACT NO.89 -14, in the City of Poway, County of San Diego, State of California, according to Map thereof No. 12944, filed in the Office of the County Recorder of San Diego County, June 11, 1992. } J_ - �. 2229 ol�_'_ 24, 2000 RECORDING REQUESTED BY: ) OFFICIAL h�CClf'o AND WHEN RECORDED MAIL TO: ) DIEGO C lIY RECURDER' JFi`IF GREGORY J. SMITH, CUTV RECORDS„ t Poway Redevelopment Agency p��1 ) NFEES. D' we P.O. Box C ) I��IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII�IIII /Cr� Poway, California 92074 -0789 ) Attention: Executive Director ) 2000-0571 T is ocument is exempt from t e payment o a recor ing fee pursuant to Government Code Section 27383. REGULATORY AGREEMENT THIS REGULATORY AGREEMENT is entered into as of September 26, 2000 by and between the POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency "), and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership (the "Lessee "). RECITALS A. The parties have entered into a Lease dated as of September 26, 2000 (the "Lease "), whereby the Agency has agreed to lease to the Lessee a sixty -five unit manufactured home community (the "Development ") on that certain real property in the City of Poway (the "City "), as shown on the "Site Map" attached hereto as Attachment No. 1 and incorporated herein by this reference, and having the legal description in the "Site Description" attached hereto as Attachment No. 2 and incorporated herein by this reference (the "Site "). B. The Lessee's operation of the Development is intended to implement the Agency's goals and objectives under the Community Redevelopment Act to increase, improve and preserve housing available at affordable housing cost to persons and families of low and moderate income, pursuant to Health & Safety Code Section 33334.2, et seq., and to provide replacement housing pursuant to Health and Safety Code Section 33413(a). of the Lease. C. The execution and recording of this Regulatory Agreement is a requirement D. The parties hereto intend that this Regulatory Agreement and the Lease specifically supercede that certain Amended and Restated Declaration of Covenants, Conditions and Restrictions made by the Agency as of June 25, 1996, which was recorded on July 8, 1996 in the official records of San Diego County, California, as Instrument No. 1996 - 0339291 (the "1996 CC &Rs "). NOW, THEREFORE, the parties hereto agree as follows: 100. DEFINITIONS "Act" means the Community Redevelopment Law of the State of California, Health and Safety Code Section 33000, et seq. D0CS0CA749860v4 \22345.0015 �� I.SU 1 2230 `.' "ADA" shall mean the Americans with Disabilities Act of 1990, as the same may from time to time be amended (42 U.S.C. § 12101, et seq.). "Affordability Period" shall mean the duration of the affordable housing requirements which are set forth in this Regulatory Agreement and the Lease, as set forth in Section 402.2 hereof. "Affordable Rent" shall have the meaning set forth in Health and Safety Code Section 50053, as furtlt@r defined in Section 402.5 hereof. - "Agency" means the Poway Redevelopment Agency, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California, and any assignee of or successor to its rights, powers and responsibilities. "City" means the City of Poway, California, a California municipal corporation. The City is not a party to this Regulatory Agreement and shall have no obligations hereunder. "County" shall mean the County of San Diego, California. "Default" means the failure of a party to perform any action or covenant required by this Regulatory Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 501 hereof. "Development" means the sixty-five unit manufactured home community on the Site. "Extremely Low Income Household" shall mean a household earning not greater than thirty- five percent (35 %) of San Diego County median income, as such median income is set forth by regulation of the California Department of Housing and Community Development. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders, and decrees of the United States, the state, the County, the City, or any other political subdivision in which the Site is located, and of any other political subdivision, agency, or instrumentality exercising jurisdiction over the Lessee or the Site. "Gross Mismanagement" is defined in Section 405 hereof. "Lease" shall mean the Lease dated as of September 26 2000, by and between the Agency and Lessee. "Hazardous Materials" means any substance, material, or waste which is or becomes regulated by any local governmental authority, the County, the State of California, regional governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter- Presley - Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the DOCSOC \749860x4\22345.0015 �r *0v 2231 California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §6901 et seq. Notwithstanding the foregoing, "Hazardous Materials" shall not include such products in quantities as are customarily used in the construction, maintenance, rehabilitation or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Development, including without limitation alcohol, aspirin, tobacco and saccharine. "Housing Fund" means the Agency's Low and Moderate Income Housing Fund, established pursuant to Health and Safety Code Section 33334.3. "Housing Units" means the individual rental housing units within the Development to be operated by the Lessee on the Site, as provided in Section 301 hereof. "Lower Income Household" shall mean a household earning not greater than that percentage of San Diego County median income (generally 80 %) which is set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50079.5, or successor statute. "Lower Income Household" may include an Extremely Low Income Household or Very Low Income Household. "Lessee" means Haley Ranch Estates Housing Associates, L.P., a California limited partnership. "Notice" shall mean a notice in the form prescribed by Section 601 hereof. "Pre- Existing Tenants" means any tenants of the Housing Units as of the commencement date of the Lease. "Property Manager" shall mean the management company or manager which is hired by the Lessee to operate and maintain the Site and the Development, as set forth in Section 405 hereof. "Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project, as originally adopted on December 13, 1983 by Ordinance No. 117 of the City Council of the City, and amended on June 15, 1993 by Ordinance No. 415, all of which are incorporated herein by reference. "Redevelopment Project" means the Paguay Redevelopment Project, adopted by the City pursuant to the Redevelopment Plan. Lessee. "Regulatory Agreement" means this Regulatory Agreement between the Agency and the "Rent" shall mean the total of monthly payments by the tenants of a Housing Unit for use and occupancy for the Housing Unit and facilities associated therewith, including a reasonable DOCSOC 749860v4M345.00I5 2232 allowance for utilities for an adequate level of service, as defined in 25 California Code of Regulations §6918, or successor statute. "Site" means that certain real property in the City which is owned by the Agency, located between Midland and Community Roads, south of Civic Center Drive, and more particularly described in the Site Legal Description and depicted on the Site Map. "Site Legal Description " means the description of the Site which is attached hereto as Attachment No. 2 and incorporated herein. "Site Map "means the map of the Site which is attached hereto as Attachment No. 1 and incorporated herein. "Very Low Income Household" shall mean a household earning not greater than fifty percent (50 %) of San Diego County median income, as set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50105, or successor statute. 200. CONDITION OF THE SITE 201. Lessee Precautions. Lessee shall take all necessary precautions to prevent the release into the environment of any Hazardous Materials which are located in, on or under the Site. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Lessee shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. 202. Lessee Disclosures. The Lessee shall notify Agency, and provide to Agency a copy or copies, of all environmental permits, disclosures, applications, entitlements, or inquiries relating to the Site, including notices of violation, notices to comply, citations, inquiries, clean -up or abatement orders, cease and desist orders, reports filed pursuant to self - reporting requirements and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials. Lessee shall report to Agency, as soon as possible after each incident, any unusual or potentially important incidents with respect to the environmental condition of the Site. In the event of a release of any Hazardous Materials into the environment, Lessee shall, as soon as possible after the release, furnish to Agency a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request, the Lessee shall furnish to Agency a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Site including, but not limited to, all permit applications, permits and reports including, with limitation, those reports and other matters which may be characterized as confidential. 203. Lessee Indemnity. Lessee agrees to indemnify, defend and hold Agency harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys, fees), resulting from, arising out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in'or about, or the transportation of any such Hazardous Materials to or from, the Site during the term of the Lease (including any extensions thereto) , or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous DOCS0074986N4122345.0015 2233 lw. Materials on, under, in or about, to or from, the Site during the term of the Lease (including any extensions thereto). This indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity after closing, cost or expense arising from or out of any claim, action, suit or proceeding, including injunctive, mandamus, equity or action at law, for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. This indemnity shall exclude such matters which are caused by the gross negligence or willful misconduct of the Agency or its officers, officials, employees, agents, or representatives. 300. INDEMNIFICATION AND COMPLIANCE WITH LAWS 301. Indemnity. Lessee shall defend, indemnify, assume all responsibility for, and hold Agency and City, and their respective officers, employees, agents, and representatives harmless from, all claims, demands, damages, defense costs or liability of any kind or nature (including attorneys' fees and costs) and for any damages to property or injuries to persons, including accidental death which may be caused by or arise out of the Lessee's performance or failure to perform its obligations pursuant to this Regulatory Agreement, whether such activities or performance thereof be by the Lessee or by anyone employed or contracted with by the Lessee and whether such damage shall accrue or be discovered before or after termination of this Regulatory Agreement. Lessee shall not be liable for property damage or bodily injury occasioned by the negligence of, willful misconduct of, or breach of this Regulatory Agreement by Agency or its agents or employees. Agency shall defend, indemnify, assume all responsibility for, and hold Lessee and its officers, employees, agents, and representatives harmless from, all claims, demands, damages, defense costs or liability of any kind or nature (including attorneys' fees and costs) and for any damages to property or injuries to persons, including accidental death which may be caused by or arise out of the Agency's performance or failure to perform its obligations pursuant to this Regulatory Agreement, whether such activities or performance thereof be by the Agency or by anyone employed or contracted with by the Agency and whether such damage shall accrue or be discovered before or after termination of this Regulatory Agreement. Agency shall not be liable for property damage or bodily injury occasioned by the negligence of, willful misconduct of, or breach of this Regulatory Agreement by Lessee or its agents or employees. 302. Compliance With Laws. Lessee shall carry out its responsibilities with respect to the Development in conformity with all applicable laws, including all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, the Fair Housing Act, the California Fair Employment and Housing Act, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12 10 1, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and the California Building Standards Code, Health and Safety Code Section 18900, et seq. 400. COVENANTS AND RESTRICTIONS 401. Use Covenants. Lessee covenants and agrees for itself, its successors, assigns, and every successor in interest to the Site or any part thereof, that the Lessee shall devote the Site to the uses specified in the Lease, this Regulatory Agreement, and that certain "Memorandum of Judgment" 5 D0CS0C%749860v4 \22345.0015 %W 2234 INr which has been recorded with respect to the Site in the Official Records of San Diego County concurrently herewith (the "Memorandum of Judgment "), the Redevelopment Plan, and all applicable provisions of the City Municipal Code, whichever is the more restrictive. 402. Affordable Housing Requirements. 402.1 Number of Affordable Units. Lessee agrees to make available, restrict occupancy to, and rent Fifty -Five (55) of the Housing Units to Very Low Income Households, and Nine (9) of the Housing Units to Extremely Low Income Households, all at an Affordable Rent (except for Pre - Existing Tenants as provided in Section 402.4 hereof). One of the Housing Units may be occupied by the Property Manager. 402.2 Duration of Affordability Requirements. The Housing Units shall be subject to the requirements of this Section 402 in perpetuity. The duration of this requirement shall be known as the "Affordability Period." 402.3. Selection of Tenants. Lessee shall be responsible for the selection of tenants for the Housing Units in compliance with the Management Plan, as approved pursuant to Section 405 hereof. Preference shall be given to tenants who have been displaced by redevelopment activities of Agency in the implementation of the Redevelopment Plan. 402.4 Household Income Requirements. Lessee shall annually submit to Agency, as an operating expense of the Development, a summary of the income, household size and rent payable by each of the tenants of the Housing Units. At the Agency's request, the Lessee shall also provide to the Agency completed income computation and certification forms, in a form acceptable to the Agency, for any such tenant or tenants. Lessee shall obtain, or shall cause to be obtained by the Property Manager, a certification from each household leasing an Affordable Unit demonstrating that such household is a Very Low Income Household, Extremely Low Income Household or Lower Income Household, as applicable, and meets the eligibility requirements established for the Housing Unit. Lessee shall verify, or shall cause to be verified by the Property Manager, the income certification of the household as set forth in Section 403 hereof. No residents of the Housing Units as of the date of this Agreement ( "Pre- Existing Tenants ") shall be evicted from their Housing Units solely because such residents do not meet the income requirements of this Section 402.4. The rent charged to the Pre - Existing Tenants shall be as specified in Section 402.6 hereof. Upon the vacation of a Housing Unit by a Pre - Existing Tenant, the Housing Unit shall then become subject to the requirements of this Section 402.4. The first such Housing Units vacated by Pre - Existing Tenants shall be rented to Very Low Income Households until the satisfaction of the requirement of Section 402.1 to rent fifty -five (55) Housing Units to Very Low Income Households, and the next units vacated by Pre - Existing Tenants shall be rented to Extremely Low Income Households. 402.5 Over - Income Tenants. If, based upon the updated income certification performed pursuant to Section 402.4, an existing tenant of a Housing Unit (other than a Pre- Existing Tenant) no longer qualifies as a Very Low Income Household or Extremely Low Income Household, but qualifies as a Lower Income Household, Lessee shall continue to rent the Housing Unit to such tenant, but the rent shall be increased to the level specified in Section 402.6 hereof for Lower Income Households. If, based upon such income certification, an existing tenant of a Housing Unit (other than a Pre- Existing Tenant) no longer qualifies as either a Very Low Income Household, Extremely Low Income Household or Lower Income Household, Lessee shall notify such tenant that such tenant's lease shall terminate within a reasonable period, not to exceed nine (9) months from the date DOCSOC1749860v4\22345.0015 2235 "' of such notice, and Lessee shall use commercially reasonably efforts to cause such tenants to vacate their Housing Unit by such time. 402.6 Determination of Affordable Rent for the Housing Units. Each Housing Unit shall be rented at an "Affordable Rent' to be established as provided herein: a. The monthly rental amount for the Housing Units to be rented to Extremely Low Income Households (less reasonable utility allowance) shall not exceed one - twelfth (1/12) of thirty percent (30 %) of thirty -five percent (35 %) of San Diego County median income for a family of a size appropriate to the Housing Unit (as defined in Health and Safety Code Section 50053, or successor statute). b. The monthly rental amount for the Housing Units to be rented to Very Low Income Households (less reasonable utility allowance) shall not exceed one - twelfth (1/12) of thirty percent (30 %) of fifty percent (50 %) of San Diego County median income for a family of a size appropriate to the Housing Unit (as defined in Health and Safety Code Section 50053, or successor statute). C. The monthly rental amount for the Housing Units rented to Lower Income Households (less reasonable utility allowance) shall not exceed the greater of (a) one - twelfth (1/12) of thirty percent (30 %) of sixty percent (60 %) of San Diego County median income for a family of a size appropriate to the Housing Unit (as defined in Health and Safety Code Section 50053), or (b) one - twelfth (1/12) of thirty percent (30 %) of the actual income of the resident. d. The monthly rental amount for the Housing Units rented to Pre - Existing Tenants (less reasonable utility allowance) shall not exceed the greater of (i) one - twelfth (1/12) of thirty percent (30 %) of the actual income of the resident, or (ii) the minimum rent payable by such tenant as set forth in Attachment No. 3 hereto, which is incorporated herein. In the event that Lessee accepts excessive rent, Lessee shall promptly after notice from the Agency repay the amount of the overcharge to the residents so charged. 403. Verifications. 403.1 Income Verification. Lessee shall verify, or shall cause its property manager to verify, the income of each proposed and existing tenant of the Housing Units in an appropriate manner on an annual basis. 403.2 Annual Reports. On or before June 30 of each year, commencing 2001, Lessee, as an expense of the Development, shall submit to Agency the reports required pursuant to Health and Safety Code Section 33418, as the same may be amended from time to time, with each such report to be in a form reasonably acceptable to Agency. Each annual report shall cover the immediately preceding fiscal year. 404. Marketing Plan. Lessee has submitted to the Agency Executive Director, and the Agency Executive Director has approved, a plan for marketing the rental of the Housing Units. Such marketing plan shall include a plan for publicizing the availability of the Housing Units within the City, and for notifying employees of businesses located in the City, such as notices in any City sponsored newsletter, newspaper advertising in local newspapers, notices in City offices, and other DOCSOC V 49860v4U2345.00I5 2236 media of general circulation. The marketing plan shall require Lessee to obtain from the Agency the names of low and moderate income persons who have been displaced by the Redevelopment Project, and to notify persons on such list of the availability of units in the Development prior to undertaking other forms of marketing. The marketing plan shall provide that the persons on such list of displaced persons be given not fewer than ten (10) days after receipt of such notice to respond by completing application forms for rental of Housing Units, as applicable. The marketing of the Housing Units in the Development shall be in compliance with the Marketing Plan which is approved by the Agency. The Lessee and Property Manager may from time to time submit proposed amendments to the Marketing Plan, which shall also be subject to the prior written approval of the Agency Executive Director or designee. 405. Management. Lessee shall manage or cause the Site and the Development to be managed in a prudent and business -like manner, consistent with other comparable high quality rental housing projects in San Diego County, California. Lessee may contract with a management company or manager to operate and maintain the Site and the Development in accordance with the terms of this Lease (hereinafter "Property Manager" or "Management Company "); provided, however, that the selection and hiring of such management company shall be subject to approval by Agency's Executive Director or designee. Approval of a management company or manager by Agency shall not be unreasonably withheld or delayed, and the Agency shall use good faith efforts to respond as promptly as practicable in order to assist in facilitating the proper management of the Development. The Agency hereby approves Cuatro Properties as the initial Property Manager. The request for approval of a Property Manager shall be accompanied by a prominent notice that the Agency's failure to approve the proposed Property Manager within fifteen (15) working days of such notice will result in the Property Manager being deemed to have been approved by the Agency. Provided that the foregoing notice requirements have been satisfied, the proposed Property Manager shall be deemed approved by the Agency in the event of the Agency's failure to approve the proposed Property Manager within fifteen (15) working days of such notice. Furthermore, the identity of the Property Manager shall not be changed without the prior approval of the Agency, which approval shall not be unreasonably withheld. The Lessee and its Property Manager has submitted to the Agency Executive Director, and the Agency Executive Director has approved, a detailed "Management Plan" which sets forth in detail the duties of the Property Manager, the tenant selection process, a crime prevention program, the procedures for the collection of rent, the procedures for monitoring of occupancy levels, the procedures for eviction of tenants, the rules and regulations of the Development and manner of enforcement, a standard lease form, and other matters relevant to the management of the Development. The management of the Development shall be in compliance with the Management Plan which is approved by the Agency Executive Director or designee. The Lessee and Property Manager may from time to time submit proposed amendments to the Management Plan, which shall also be subject to the prior written approval of the Agency Executive Director or designee. In the event of "Gross Mismanagement" (as that term is defined below) of the Development, Agency shall have the authority to require that such Gross Mismanagement cease immediately, and further to require the immediate replacement of the Property Manager if such condition is not corrected after expiration of sixty (60) days from the date of written notice from Agency. For purposes of this Regulatory Agreement, the term "Gross Mismanagement" shall mean management of the Development in a manner which violates the terms and/or intention of this Regulatory Agreement to operate a high quality housing complex, and shall include, but is not limited to, any one or more of the following: DOCSOC V 4986Ov4\2? 345.0015 ., 440 2237 (a) Repeatedly leasing to tenants who exceed the prescribed income levels; (b) Repeatedly allowing the tenants to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding; (c) Repeatedly underfunding the prescribed Capital Replacement and Operating Reserves; (d) Repeatedly failing to timely maintain the Development and the Site in accordance with the Management Plan and the manner prescribed herein; (e) Repeatedly failing to submit timely and/or adequate annual reports as required in Section 403 hereof, (f) Fraud or embezzlement of Development monies, including without limitation the funds in the Capital Replacement Reserve and Operating Reserve; and (g) Repeatedly failing to fully cooperate with the San Diego County Sheriff s Department, or other local law enforcement agencies with jurisdiction over the Development, in maintaining a crime -free environment on the Site. Notwithstanding the above, Lessee shall use its best efforts to correct any defects in management at the earliest feasible time and, if necessary, to replace the Property Manager as provided above. 406. Maintenance of Site. Lessee agrees for itself and its successors in interest to all or any portion of the Site, to maintain the Site in conformity with the City Municipal Code and the requirements set forth in the Lease, and shall keep the Site free from any accumulation of debris or waste materials. During such period, the Lessee shall also maintain the landscaping planted on the Site in a healthy condition. If at any time Lessee fails to maintain the Site and such condition is not corrected within five days after written notice from Agency with respect to graffiti, debris, waste material, landscaping and general maintenance, or thirty days after written notice from Agency with respect to building improvements, then Agency, in addition to whatever remedy it may have at law or at equity, shall have the right to enter upon the applicable portion of the Site and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Site, and to attach a lien upon the Site, or to assess the Site, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by Agency and/or costs of such cure, including a fifteen percent (15 %) administrative charge, which amount shall be promptly paid by Lessee to Agency upon demand. 407. Nondiscrimination Covenants. Lessee covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Lessee itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site or any portion thereof. The foregoing covenants shall run with the land. DOCSOC \749860v4 \22345.0015 2238 w Lessee shall refrain from restricting the rental, sale or lease of the Site on the basis of race, color, religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." C. In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises." 408. Effect of Violation of the Terms and Provisions of this Regulatory Agreement. Agency is deemed the beneficiary of the terms and provisions of this Regulatory Agreement and of the covenants running with the land, for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Regulatory Agreement and the covenants running with the land have been provided, without regard to whether Agency has been, remains or is an owner of any land or interest therein in the Site or in the Redevelopment Project Area. Agency shall have the right, if this Regulatory Agreement is breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Regulatory Agreement and such covenants may be entitled. 10 DOCSOC V 49s60v4RZ345.0015 IkNw 2239 .W, 500. DEFAULTS AND REMEDIES 501. Default Remedies. Subject to the extensions of time set forth in Section 602 of this Regulatory Agreement, a material failure by either party to perform any action or covenant required by this Regulatory Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Regulatory Agreement. A party claiming a Default shall give written notice of Default to the other parry specifying the Default complained of Except as otherwise expressly provided in this Regulatory Agreement, the claimant shall not institute any proceeding against any other party, and the other parry shall not be in Default if such party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with diligence. 502. Institution of Legal Actions. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Regulatory Agreement, either party may institute an action at law or equity to seek specific performance of the terms of this Regulatory 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 Regulatory Agreement. Such legal actions must be instituted in the Superior Court of the County of San Diego, State of California, in an appropriate municipal court in that county, or in the United States District Court for the Southern District of California. 503. Acceptance of Service of Process. In the event that any legal action is commenced by the Lessee against Agency, service of process on Agency shall be made by personal service upon the Executive Director of Agency or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against the Lessee, service of process shall be made in such manner as may be provided by law and shall be effective whether served inside or outside of California. 504. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Regulatory Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the other party. 505. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 506. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Regulatory Agreement. 600. GENERAL PROVISIONS 601. Notices, Demands and Communications Between the Parties. Any approval, disapproval, demand, document or other notice ( "Notice ") which either parry may desire to give to the other party under this Regulatory Agreement must be in writing and may be given either by (i) li D0CS0CV49860v4A22345.0015 2240 Vol 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 party may later designate by Notice. To Agency: Poway Redevelopment Agency P.O. Box 789 Poway, California 92074-,0789 Attention: Executive Director To Lessee: Haley Ranch Estates Housing Associates, L.P. 1820 S. Escondido Boulevard, Suite 101 Escondido, California 92025 Attention: Executive Director 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. 602. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Regulatory Agreement, performance by either party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Regulatory Agreement shall be extended, where delays or Defaults are due to causes beyond the control or without the fault of the party claiming an extension of time to perform, which may include, without limitation, the following: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; natural disasters; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier (other than a contractor, subcontractor or supplier in which Lessee has a twenty-five percent (25 %) or more ownership interest, or which is controlled by Lessee, or which is an affiliated entity of Lessee); acts or omissions of the other party; or acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of Agency which shall not excuse performance by Agency). Notwithstanding anything to the contrary in this Regulatory Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Regulatory Agreement may also be extended in writing by the mutual agreement of Agency and Lessee. 603. Transfers of Interest in Site or Regulatory Agreement. The qualifications and identity of the Lessee are of particular concern to Agency. It is because of those qualifications and identity that Agency has entered into this Regulatory Agreement with the Lessee. For the term of this Regulatory Agreement, no voluntary or involuntary successor in interest of the Lessee shall acquire any rights or powers under this Regulatory Agreement, nor shall the Lessee make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Site or the Development thereon, except as permitted or approved by the Agency pursuant to Section 14 of the Lease. Agency may assign or transfer any of its rights or obligations under this 12 DOCSOC\74986ov4\22345.0015 2241 Regulatory Agreement with the approval of the Lessee, which approval shall not be unreasonably withheld; provided, however, that Agency may assign or transfer any of its interests hereunder to the City at any time without the consent of the Lessee. 604. Covenants Run With the Land. All covenants without regard to technical classification or designation shall be binding on Lessee, its successors and assigns, and for the benefit of Agency and such covenants shall run in favor of Agency for the entire period during which such covenants shall be in force and effect, without regard to whether Agency is or remains an owner of any land or interest therein to which such covenants relate. All covenants contained in this Regulatory Agreement shall be construed as covenants running with the land and shall bind Lessee and its successors and assigns, and every successor in interest to the Site or any part thereof, and shall not be construed as conditions which might result in forfeiture of the Site or any rights therein. 605. Rights of Mortgagees. The provisions of this Regulatory Agreement do not limit the right of any mortgagee or beneficiary under a deed of trust which secures construction or permanent financing to foreclose or otherwise enforce any mortgage, deed of trust, or other encumbrance upon Lessee's interest in the Site or any portion thereof, or the right of any mortgagee or beneficiary under a deed of trust to exercise any of its remedies for the enforcement of any pledge or lien upon the Site, provided, however, that in the event of any foreclosure under any such mortgage, deed of trust or other lien or encumbrance, or a sale pursuant to any power of sale included in any such mortgage or deed of trust, the purchaser or purchasers and their successors and assigns and the Site shall be, and shall continue to be, subject to the Lease and all of the conditions, restrictions and covenants contained in this Regulatory Agreement. 606. Term of Regulatory Agreement. Except as provided otherwise herein, the terms and requirements set forth in this Regulatory Agreement shall remain in effect in perpetuity. 607. Non - Liability of Officials and Employees of Agency. No member, official, officer or employee of Agency or the City shall be personally liable to the Lessee, or any successor in interest, in the event of any Default or breach by Agency (or the City) or for any amount which may become due to the Lessee or its successors, or on any obligations under the terms of this Regulatory Agreement. 608. Relationship Between Agency and Lessee. It is hereby acknowledged that the relationship between Agency and Lessee is not that of a partnership or joint venture and that Agency and Lessee shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided in this Regulatory Agreement, including the Attachments hereto, Agency shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Development. 609. Agency Approvals and Actions. Whenever a reference is made herein to an action or approval to be undertaken by Agency, the Executive Director of Agency or his or her designee is authorized to act on behalf of Agency unless specifically provided otherwise or the law otherwise requires. 610. Counterparts. This Regulatory Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. This Regulatory Agreement is executed in three (3) originals, each of which is deemed to be an original. 13 Docs00,749860v4\22345.00 t 5 2242 w 611. Integration. This Regulatory Agreement, together with the Lease, and all attachments and documents executed pursuant thereto, contains the entire understanding between the parties relating to the transaction contemplated by this Regulatory Agreement. This Regulatory Agreement and the Lease specifically supercede the 1996 CC &Rs. 612. Real Estate Brokerage Commissions. Agency and Lessee each represent and warrant to the other that no broker or finder is entitled to any commission or finder's fee in connection with this transaction, and each agrees to defend and hold harmless the other from any claim to any such commission or fee resulting from any action on its part. 613. 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 Regulatory 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. 614. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe, or limit the scope or the intent of this Regulatory Agreement or of any of its terms. Reference to section numbers are to sections in this Regulatory Agreement, unless expressly stated otherwise. 615. Interpretation. As used in this Regulatory Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Regulatory Agreement shall be interpreted as though prepared jointly by both parties. 616. No Waiver. A waiver by either parry of a breach of any of the covenants, conditions or agreements under this Regulatory Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Regulatory Agreement. 617. Modifications. Any alteration, change, or modification of or to this Regulatory Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each parry. 618. Severability. If any term, provision, condition, or covenant of this Regulatory Agreement or its application to any parry or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Regulatory Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 619. Computation of Time. The time in which any act is to be done under this Regulatory Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 14 DOCSOC \749860x4\22345.0015 2243 ,,W,: 620. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Regulatory Agreement, and in signing this Regulatory Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Regulatory Agreement, and they have freely signed this Regulatory Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Regulatory Agreement, and without duress or coercion, whether economic or otherwise. 621. Time of Essence. Time is expressly made of the essence with respect to the performance by the parties of each and every obligation and condition of this Regulatory Agreement. 622. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Regulatory Agreement including, but not limited to, releases or additional agreements. 623. Conflicts of Interest. No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Regulatory Agreement, nor shall any such member, official or employee participate in any decision relating to the Regulatory Agreement which affects his personal interests or the interests of any limited partnership, partnership or association in which he is directly or indirectly interested. 624. Time for Acceptance of Regulatory Agreement by Agency. This Regulatory Agreement, when executed by the Lessee and delivered to Agency, must be authorized, executed and delivered by Agency on or before thirty (3 0) days after signing and delivery of this Regulatory Agreement by the Lessee or this Regulatory Agreement shall be void, except to the extent that the Lessee shall consent in writing to a further extension of time for the authorization, execution and delivery of this Regulatory Agreement. 625. No Third Party Beneficiaries. Notwithstanding any other provision of this Regulatory Agreement to the contrary, nothing herein is intended to create any third party beneficiaries to this Regulatory Agreement, and no person or entity other than Agency and Lessee, and the permitted successors and assigns of any of them, shall be authorized to enforce the provisions of this Regulatory Agreement. 15 DOCSOC\74986ov4 \22345.0015 `ww 2244 " IN WITNESS WHEREOF, Agency and the Lessee have executed this Regulatory Agreement as of the date first set forth above. ATTEST: Se etary APPROVED AS TO FORM: ig YOCCa rls Stradl on & Rauth Agenc Legal Counsel AGENCY: POWAY REDEVELOPMENT AGENCY, a public body, corporate and poling I � Michael P. LESSEE: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community Housing of North County, a California nonprofit corporation, its General partner an M. Reynolds, Ex cl 16 DOCSOC\749860v4\22345.0015 %W 2245 STATE OF CALIFORNIA ) COUNTY OF ss. ' i �J ) On �(„ 1�h00 before me, s1'teaie '� . Wove l l Notary Public, (Print Name of Notary Public) personally appeared 1%1Aae1 Ca4una— - personally known to me -or- 9 _rL ed rn th bac�;c nf_ r' f r T 't r,cP to be the personV whose name(4&are subscribed to the within instrument and acknowledged to me tha�ey executed the same in yas =dheir authorized capacity0et), and that bya4w&Aheir signaturef.S) on the instrument the 'r' — —^ Tsnn(,p o.r the entity upon behalf of which the person(s) acted, executed the instrument. •.. `4 WITNESS my hand and official seal. OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer ❑ Partner(s) ❑ Limited Q General • Attorney -In -Fact • Trustee(s) • Guardian/Conservator ❑ Other: Signer is representing: Name Of Pemm(s) Or Entity(ies) DOCS007498 60v4M345.0015 DESCRIPTION OF ATTACHED DOCUMENT fi a Or Type Of Document oak Number Of Pages 4441100 Date Of Documents L" � 2246 CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT State of California � ss. County of ` a" �t On before me, Et,zc>04+�. F• Dec,r noiG�n tarl��c�, Data 7 Name and Title of ORCer (e.g.. " ne Doe, Notary P tic personally appeared SUkSax\ y�o \c,S Names) o(Slgner(s] Place Notary Seal Above ❑ personally known to me *I proved to me on the basis of satisfactory evidence to be the person(&) whose name(-s) is /aFe subscribed to the within instrument and acknowledged to me that he /she/t•Mey executed the same in his /her /their authorized capacity0es), and that by -his /her /their signature(s) on the instrument the person(s}, or the entity upon behalf of which the person(* acted, executed the instrument. WITNESS my hand and official seal. c Sgnature .1i Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Title or Type of Document: Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name: L Individual Corporate Officer — Title(s): Partner — r Limited C General Attorney in Fact Trustee Guardian or Conservator Other: Signer Is Representing: Number of Pages: RIGHT THUMBPRINT OF SIGNER 01997 National Notary Association • 9350 De Soto Ave., PO. Box 2402 • Chatsworth, CA 91313 -2402 Prod. No 5907 Reorder: Call Toll -Free 1- 800 -876 -6827 2247 ATTACHMENT NO. 1 SITE MAP Attachment No. 1 -I . # 2248 ATTACHMENT NO. 2 SITE LEGAL DESCRIPTION Lots 1 through 65 inclusive and Lots A and C through K inclusive, of CITY OF POWAY TRACT NO. 89-14, in the City of Poway, County of San Diego, State of California, according to Map thereof No. 12944, filed in the Office of the County Recorder of San Diego County, June 11, 1992. Attachment No. 2 -1 1%W 2249 ATTACHMENT NO.3 MINIMUM RENT CALCULATIONS There are three minimum rent categories: Category I — Relocatees from the former Haley's Trailer Ranch Category II — Residents of Haley Ranch Estates who moved in between February 1, 1996 and October 1, 2000 Category III — Residents of Haley Ranch Estates who moved in prior to February 1, 1996 The method of minimum rent calculation is as follows: I Minimum Rent for Relocatees from the former Haley's Trailer Ranch. Minimum rent is currently $220 per month. The minimum rent amount is calculated by taking the existing minimum rent amount and increasing it by $20 per month annually (each July 1) until the minimum rent amount reaches the Category II minimum rents adjusted for the appropriate household size. Residents of Haley Ranch Estates who moved in between February 1, 1996 and October 1, 2000. Minimum rent is calculated by taking 35% of the current adjusted Median Annual Income (by Family Size), divided by 12 (to generate a monthly figure) times 30% housing cost, minus the standard utility allowance to generate the minimum rent calculations. 2000 MINIMUM RENT Family Size 3 4 5 6 7 Minimum Rent $360 $407 $444 $482 $520 Minimum Rent for households moving into Haley Ranch prior to February 1, 1996. The transitional minimum rent was established in 1996 to lessen the impact of the minimum rent increases on existing households b'y having the rents gradually increase the Category H minimum rent amount. Minimum rent is calculated first by the method established for the Category H households. Category III households paying less than the minimum rent established by this Attachment No. 3 -1 DOCSOC\749860v4\22345.001 5 2250 Category II method will have their rents gradually increased to the Category II by the following formula. Category III households pay a minimum rent referred to as a "transitional minimum rent'. The transitional minimum rent is calculated by taking the last year transitional rent and increasing it by the increase in the County Median Income Figure (AMI) plus $25.00. In 1996, the transitional minimum rent was $225 per month, $260.72 in 1997, $297.53 in 1998, $332.94 in 1999, and is currently $365.53, for 2000. The current year calculation represents $332.94 (1999 amount) plus the 2.28% increase between the 1999 San Diego Area Median Income of $52,500 and the 2000 Median Income of $53,700, plus $25. 2000 TRANSITIONAL MINIMUM RENT Family Size 3 4 5 6 7 Minimum Rent $360* $365.53 $365.53 $365.53 $365.53 *The minimum rent for a household of 3 would be $360 per month, not $365.53, as $360.00 is the Category II minimum rent for a household of 3. Over the next few years, the transitional rent will exceed the Category II minimum rent amount for all household sizes, and will no longer be necessary. Residents moving in after October 1, 2000, have a flat rent calculation. Attachment No. 3 -2 oocsoC V 49a6ov4\22r45.ao 15 I 2251 7ze RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO: ) yg) fl-I (11 ) Poway Redevelopment Agency ) P.O. Box 789 ) Poway, California 92074 -0789 ) l e.P qQ L- °1 ;JhE[Xnkt i• )ITTV" j�;j}1 F cEa: ijc; Code Section 27383 MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE ( "Memorandum ") is hereby entered into as of September 26 , 2000 by and between the POWAY REDEVELOPMENT AGENCY, a public body corporate and politic (the "Agency "), and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership (the "Lessee "). RECITALS A. Agency and Lessee have entered into a "Lease" dated concurrently herewith for that certain parcel of real property which is legally described in Exhibit A attached hereto and incorporated herein by reference (the "Property"). A copy of the Lease is available for public inspection at Agency's office at 13325 Civic Center Drive, Poway, California. The Initial Term of the Lease is two (2) years, and the Subsequent Term of the Lease is forty (40) years with options to extend for four ten (10) year periods, which Subsequent Term may commence under certain conditions set forth in the Lease. B. The Lease provides that a short form memorandum of the Lease shall be executed and recorded in the Official Records of San Diego County, California. NOW, THEREFORE, the parties hereto certify as follows: Agency hereby leases the Property to the Lessee upon the terms and conditions provided for in the Lease. This Memorandum of Lease is not a complete summary of the Lease, and shall not be used to interpret the provisions of the Lease. C61 yftw 2252 �* ATTEST: 4ge C!yllsecre 1 APPROVED AS TO FORM: Stradli Yocca Ca son & Rauth Agency egal Counsel DOCSOCO47477v4122745.0015 POWAY REDEVELOPMENT AGENCY, a public body corporate and poliEac, 0 Michael P. Catagna,\ chair LESSEE: HALEY RANCH ESTATES ROUSING ASSOCIATES, L.P., a California limited partnership By: Community Housing of North County, a California nonprofit corporation, its General Partner ` Susan M. Reynolds, Le 1 ve Director 2253 CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT State of California I �Qle D ss. County of $ On before me, 6h,6We 6. Wolaeell, Nate1y P4&'c , Date ,M Name and Title of 011l (a g., "Jane Doe, Notary Public ") personally appeared i�icha6l �Y�. vxt• r ,u . • - r .uc Place Notary Seal Above b4 personally aneWllx to be the person whose name(• 1re subscribed to the within instrument and acknowledged to me thaU9440 they executed the same in �/ieffF�eir authorized capacity(iips), an that by 49414� signature(,) on the instrument the person(e, or the entity upon behalf of which the person(' acted, executed the instrument. WITNESS my hand and official seal. Signature of Notary PubII OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Title or Type of Document: _ Document Date: 9P406 Number of Pages: Signers) Other Than Named Capacity(ies) Claimed by Signer Signer's Name: Individual Corporate Officer — Title(s): Partner — — Limited CI General Attorney in Fact it Trustee ❑ Guardian or Conservator f 1 Other: Signer Is Representing: r. RIGHT THUMBPRINT OF SIGNER © 1997 National Notary Association • 9350 De Soto Ave.. PO. Box 2402 • Chatsworth, CA 91313 -2402 Prod. No 5907 Reorder'. Call Tall -Free 1- 800 - 876 6827 *11K 2254 v.w CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT State of California c ss. County of Slav-, 1�) � _-cl D OnJ � � before me, [ ltiZdup2 F. -?QV Y f7- 9u,IOLic. , Date (� Name ands Title of Officer (e.g., TJan�e I.e. No a Pu IC) personally appeared SuSgm )h. 1�eya)i,h i Ni of Signer(.) I n doll LLIZABErH F. DEAN AZM Commission # 1256279 Notary Public - Calfori San Diego County MvComm ExniresApr7,?r�1 Iiiiii Place Notary Seal Above J personally known to me ,K proved to me on the basis of satisfactory evidence to be the persol whose name(sj- Ware subscribed to the within instrument and acknowledged to me that he /she /t#fey executed the same in h4s/her /tIi it authorized capacity(ii and that by pis /her /tfleir signature(.) on the instrument the person(s), or the entity upon behalf of which the person(€} acted, executed the instrument. WITNESS my hand and official seal- OPTIONAL Signature of Notary Public Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: %-QV n:&a nDX4 1fr Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name: J Individual ❑ Corporate Officer —Title(s): ❑ Partner — L Limited J General 'J' Attorney in Fact JI Trustee C'I Guardian or Conservator n Other: Signer Is Representing: Number of Pages: RIGHT THUMBPRINT OF SIGNER C 1997 National Notary Association - 9350 De Soto Ave_ PO_ Box 2402 • Chatsworth. CA 91313 -2402 Prod. No 5907 Reorder. Call Toll -Free 1 - 800 876 6827 %W' 22 5 EXHIBIT A TO MEMORANDUM OF LEASE LEGAL DESCRIPTION Lots 1 through 65 inclusive and Lots A and C through K inclusive, of CITY OF POWAY TRACT NO.89 -14, in the City of Poway, County of San Diego, State of California, according to Map thereof No. 12944, filed in the Office of the County Recorder of San Diego County, June 11, 1992, Exhibit A FIRST AMENDMENT TO LEASE This FIRST AMENDMENT TO LEASE (the "Amendment") is made as of September 2, 2003, by and between the POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency" or "Lessor "), and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership (the "Lessee "). RECITALS A. The parties have entered into a Lease dated as of September 26, 2000 (the "Lease "), pursuant to which the Agency has leased to the Lessee a sixty -five unit manufactured home community (the "Development ") on certain real property in the City of Poway (the "City") as identified in the Lease (the "Site "). B. The Parties desire to make certain modifications to the Lease and to the Regulatory Agreement executed pursuant to the Lease. NOW, THEREFORE, the parties hereto agree as follows: 1. Residual Receipts. The following is hereby added to the end of Section 5.3 of the Lease: "The Lessee shall deposit all Annual Project Revenue (after payment of Operating Expenses, Debt Service and any required deposits to the Subsequent Tenn Operating Reserve) into the Capital Replacement Reserve. When the parties determine that the Capital Replacement Reserve has been fully funded for that calendar year as provided in Section 10.2 hereof, all other Residual Receipts shall be distributed in equal amounts to Agency (as Additional Rent) and to Lessee." deleted. 2. Income Level of Tenants. a. The first paragraph of Section 6.1 of the Lease is revised to read as follows: "6.1 Number of Affordable Units. Lessee agrees to make available, restrict occupancy to, and rent Sixty -Four (64) of the Housing Units to Very Low Income Households, all at an Affordable Rent (except for Pre - Existing Tenants as provided in Section 6.4 hereof). One of the Housing Units may be occupied by the Property Manager." b. All references in the Lease to Extremely Low Income Households are hereby 3. Operating Reserve Requirements. a. Pursuant to Section 10.1(b) of the Lease, the Agency is obligated to transfer the full balance of the Initial Term Operating Reserve to Lessee upon the commencement of the Subsequent Term, for deposit into the Subsequent Term Operating Reserve. The current balance of the Initial Term Operating Reserve is $164,863.23. b. The second sentence of Section 10.1(b) of the Lease is hereby revised to read as follows: DOCS00975001v 1A22345 DO 15 "Lessee shall also deposit 3% of Annual Project Revenue into the Subsequent Term Operating Reserve, until the balance of the Subsequent Tenn Operating Reserve equals 50% of the amount of the currently approved annual Operating Budget " 4. Capital Reserve Requirements. Pursuant to Section 10.2 of the Lease, the Agency is obligated to transfer the full balance of the Capital Replacement Reserve to Lessee upon the commencement of the Subsequent Term, which shall continue to be deposited and held in the Capital Replacement Reserve. The current balance of the Capital Replacement Reserve is $724,731.40. Pursuant to Section 10.2 of the Lease, the Capital Replacement Reserve shall be analyzed by a consultant commissioned by Lessee, subject to the reasonable approval of the Agency, with such study to be commenced within six months after the commencement of the Initial Term, and at the end of every five year period thereafter, and the cost of such analysis shall be an Operating Expense of the Development. The Agency and the Lessee acknowledge that such a study was completed in 2002, and as a result of such study the parties have determined that additional funds must be deposited into the Capital Replacement Reserve to adequately maintain the Site and the improvements thereon. In accordance with the recommendations of the study, the Agency shall grant to the Lessee an additional Two Hundred Eighty Thousand Dollars ($280,000), which shall also be deposited in the Capital Replacement Reserve and used only for the purposes of such account under Section 10.2 of the Lease. The parties agree that the next such analysis of the Capital Replacement Reserve shall be conducted in 2008, and the cost of each such analysis shall be subject to the reasonable approval of the Agency. In the event that pursuant to the provisions of the Lease, or in implementation of the recommendations of any future study of the Capital Replacement Reserve, there are excess funds in the Capital Replacement Reserve, the first Two Hundred Eighty Thousand Dollars ($280,000) of such excess funds shall be paid to the Agency, and any additional excess funds shall be divided in equal parts to the Agency (as Additional Rent) and to the Lessee. 5. Amendment to Regulatory Agreement. The Agency and the Lessee shall execute and cause to be recorded in the official records of San Diego County a First Amendment to Regulatory Agreement, in substantially the form attached hereto as Exhibit "A" and incorporated herein. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Lease to be executed by their lawfully authorized officers. ATTEST: Ag ncy Secretary DOCSOC \975001 v] \22345.0015 AGENCY: POWAY REDEVELOPMENT AGENCY, a public body corporate and politic By: L (Jame . Bowersox, Executive Direc r TO FORM: Yocca'tarlson & Rauth Special Counsel LESSEE: .. I HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community HousingWorks, a California nonprofit corporation, its General Partner B: S san M. Reynolds, Execu i e Director DOC90C \975001 v 1 Q2345.0015 %W LEASE By and Between THE POWAY REDEVELOPMENT AGENCY, AGENCY and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., LESSEE DOCSOC \747477v4\22345.0015 NOW NNOW LEASE This LEASE (the "Lease ") is made as of September 26 2000, by and between the POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency" or "Lessor "), and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership (the "Lessee "). 1. SUBJECT OF LEASE. a. The Agency is required by Health and Safety Code Section 33334.2, et seq., to expend a certain percentage of property tax increment allocated to it for the purpose of increasing, improving and preserving the City of Poway's supply of low- and moderate - income housing available at an affordable housing cost. b. The Agency and Poway Land, Inc., a California corporation, entered into an Owner Participation Agreement dated as of June 27, 1989 (the "OPA "). Pursuant to the OPA, the Developer developed a sixty-five unit manufactured home community (the "Development") on that certain real property in the City of Poway (the "City"), as shown on the "Site Map" attached hereto as Exhibit "A" and incorporated herein by this reference, and having the legal description in the "Site Description" attached hereto as Exhibit "B" and incorporated herein by this reference (the "Site ") C. On October 6, 1995, the Agency acquired the Site from the Developer. d. The Agency now desires to lease the Site to the Lessee, and to provide for the sublease of the housing units thereon (the "Housing Units ") to persons of lower income, very low income, and extremely low income, at an affordable rent (as those terms are defined herein). The Agency intends that thirty -three (33) of the Housing Units in the Development will continue to qualify as replacement housing units pursuant to Health and Safety Code Section 33413(a). e. The parties intend that the initial term of this Lease will be for a short, temporary period of time, and that a longer term will commence upon Lessee (or its affiliate) completing the multifamily housing development pursuant to the Disposition and Development Agreement between the Agency, Breihan Housing Associates L.P. and Community Housing of North County, dated as of June 27, 2000 (the `Breihan DDA "). t. The Agency is subject to a judgment in the case of Aleen L. Smith and Cheri L. Craig v. All Persons Interested in the Matter of the Validity of the Amendment to the Redevelopment Plan for the Paguay Redevelopment Project Area, et al., San Diego Superior Court Case No. 667691, dated January 25, 1995 (the "Smith Judgment"). Pursuant to the Smith Judgment, the Agency is required to provide affordable housing units in proportion to its unmet needs for affordable housing, as set forth in a report which has been prepared by David Paul Rosen and Associates. Such affordable housing is required to be restricted in perpetuity, subject to certain exceptions. However, the Agency retains discretion under the Smith Judgment to determine how to provide those affordable units, in what locations, and with what economic tools. The parties intend that this Lease will be consistent with and implement the Agency's obligations pursuant to the Smith Judgment. g. This Lease is intended to effectuate the Redevelopment Plan ( "Redevelopment Plan') for the Paguay Redevelopment Project (the "Redevelopment Project "), which was originally adopted on December 13, 1983 by Ordinance No. 117 of the City Council of the City of Poway, and amended DOCSOC,747477v41221345.0015 ..� on June 15, 1993 by Ordinance No. 415, all of which are incorporated herein by reference. 2. LEASE OF THE SITE. Agency, for and in consideration of the rents, covenants, and agreements hereinafter reserved and contained on the part of Lessee to be paid, kept, performed and observed by Lessee, hereby leases the Site, with all improvements thereon, to Lessee, and Lessee hereby leases the Site, with all improvements thereon, from Agency. 3. LEASE TERM. 3.1. Initial Term. Lessee shall lease the Site from Agency and Agency shall lease the Site to Lessee for a term commencing as of the date of this Lease (the "Commencement Date ") and continuing until the second anniversary of this Lease (the "Initial Term "), unless sooner terminated as provided for herein. The Executive Director of the Agency and Lessee may extend the Initial Term by mutual written agreement, in their sole and absolute discretion. 3.2. Subsequent Term. In the event (a) that the Lessee is not in default of this Lease, and (b) Lessee (or its affiliate) obtains a final certificate of occupancy for the Development pursuant to the Breihan DDA, and (c) Lessee gives written notice to Agency of its intent to commence the Subsequent Term of the Lease, the Term shall be extended for an additional period of forty (40) years (the "Subsequent Term "). In the event that the Lessee is not in default of this Lease, the Lessee shall have the right to extend the Subsequent Term for up to four (4) additional ten (10) year periods (the "Option Periods ") by written notice thereof to Agency not more than one (1) year nor less than six (6) months prior to the expiration of the Subsequent Term or the first Option Period. All of the terms and conditions of this Lease shall apply to the Option Periods so far as applicable. The parties shall execute a memorandum of the Subsequent Term of the Lease upon commencement of the Subsequent Term. As used hereinafter the terms the "Term" and the "Term of the Lease" and similar phrases relating to the duration of the Lease, shall mean the Initial Term, the Subsequent Term and all subsequent Option Periods. 4. USE OF THE SITE. 4.1. Use of the Site. Lessee covenants and agrees for itself, its successors and assigns, that during the Teri, the Site and the Development shall be devoted to those uses as set forth in this Lease, the Regulatory Agreement, and the Redevelopment Plan. In the event of any inconsistency between this Lease, the Regulatory Agreement or the Redevelopment Plan, the most restrictive of the documents shall control. 4.2. Management. Lessee shall manage or cause the Site and the Development to be managed in a prudent and business -like manner, consistent with other comparable high quality rental housing developments in San Diego County, California. Lessee may contract with a management company or manager to operate and maintain the Site and the Development in accordance with the terms of this Lease (hereinafter "Property Manager" or "Management Company "); provided, however, that the selection and hiring of such management company shall be subject to approval by Agency's Executive Director or designee. The Agency hereby approves Cuatro Properties as the initial Property Manager. Approval of a management company or manager by Agency shall not be unreasonably withheld. The request for approval of a Property Manager shall be accompanied by a prominent notice that the Agency's failure to approve the proposed Property Manager within fifteen (15) working days of such notice DOCSOC\747477v4\22345.0015 will result in the Property Manager being deemed to have been approved by the Agency. Provided that the foregoing notice requirements have been satisfied, the proposed Property Manager shall be deemed approved by the Agency in the event of the Agency's failure to approve the proposed Property Manager within fifteen (15) working days of such notice. Furthermore, the identity of the Property Manager shall not be changed without the prior approval of the Agency, which approval shall not be unreasonably withheld. Prior to the Commencement Date, the Lessee and its Property Manager have submitted for the approval of the Agency Executive Director or designee a detailed "Management Plan" which sets forth in detail the duties of the Property Manager, the tenant selection process, a crime prevention program, the procedures for the collection of rent, the procedures for monitoring of occupancy levels, the procedures for eviction of residents, the rules and regulations of the Development and manner of enforcement, a standard lease form, and other matters relevant to the management of the Development. The management of the Development shall be in compliance with the Management Plan (as defined above) which has been approved by the Agency Executive Director or designee. The Lessee and Property Manager may from time to time submit proposed amendments to the Management Plan, which shall also be subject to the prior written approval of the Agency Executive Director or designee. In the event of "Gross Mismanagement" (as that term is defined below) of the Development, Agency shall have the authority to require that such Gross Mismanagement cease immediately, and further to require the immediate replacement of the Property Manager if such condition is not corrected after expiration of sixty (60) days from the date of written notice from Agency. For purposes of this Agreement, the term "Gross Mismanagement" shall mean management of the Development in a manner which violates the terms and/or intention of this Lease to operate a high quality housing complex, and shall include, but is not limited to, the following: (a) Repeatedly leasing to residents who exceed the prescribed income levels; (b) Repeatedly allowing the residents to exceed occupancy limits prescribed by law or set forth in the Management Plan without taking immediate action to stop such overcrowding; (c) Repeatedly underfunding the prescribed Capital Replacement Reserve and Operating Reserve (Sections 10.1 and 10.2); (d) Repeatedly failing to timely maintain the Development and the Site in accordance with the Management Plan and the manner prescribed in Section 10; (e) Repeatedly failing to submit timely and/or adequate annual reports as required in Section 6.6; (f) Fraud or embezzlement of Development monies, including without limitation the funds in the Capital Replacement Reserve and Operating Reserve; and (g) Repeatedly failing to fully cooperate with the San Diego County Sheriffs Department, or other local law enforcement agencies with jurisdiction over the Development, in maintaining a crime -free environment on the Site. DOCSOC V 47477v4%22345.0015 Notwithstanding the above, Lessee shall use its best efforts to correct any defects in management at the earliest feasible time and, if necessary, to replace the Property Manager as provided above. 4.3. Only Lawful Uses Permitted. Lessee shall not use the Site or the Development for any purpose that is in violation of any law, ordinance or regulation of any federal, state, county or local governmental agency, body or entity. Furthermore, Lessee shall not maintain or commit any nuisance or unlawful conduct (as now or hereafter defined by any applicable statutory or decisional law) on the Site or the Development, or any part thereof. 4.4 Management Fee. Concurrently with the commencement of the Initial Term, the Agency shall pay to Lessee a one -time administrative fee of Forty Thousand Dollars ($40,000), for Lessee's time and expenses incurred with respect to the planning, due diligence, negotiation, execution and administration of this Lease, including without limitation fees charged by Lessee's attorneys and consultants. 5. RENT. 5.1 Net Lease. It is the intent of the parties hereto that the rent provided herein shall be absolutely net to Agency and that Lessee shall pay all costs, taxes, charges, and expenses of every kind and nature against the Site and the Development which may arise or become due during the Term, and which, except for execution hereof, would or could have been payable by Agency. 5.2 Basic Rent. During the Initial Term of this Lease and the Subsequent Term, Lessee agrees to pay in advance, on the Commencement Date and thereafter on the first day of each "Lease Year" (as hereinafter defined), rent in the amount of One Dollar ($1.00) ( "Basic Rent "). The parties understand and acknowledge that the primary consideration for this Lease is the performance of the covenants set forth in this Lease and the Regulatory Agreement, particularly (without limitation, however) the covenants to rent the units to Extremely Low Income Residents, Very Low Income Residents and Lower Income Residents at an Affordable Rent pursuant to Section 6 hereof and Section 402 of the Regulatory Agreement. As used herein, a "Lease Year" shall mean a period commencing on the anniversary (the "Anniversary Date ") of the Commencement Date, and continuing for one full year thereafter. 5.3 Additional Rent. During the Initial Term and Subsequent Term of this Lease, Lessee shall pay to the Agency as "Additional Rent" an amount equal to fifty percent (50 %) of the Residual Receipts (as defined below) from operation of the Development, as determined by a residual receipts calculation from the operation of the Development the preceding calendar year. In the event that fifty percent (50 %) of the Residual Receipts exceeds Sixty Thousand Dollars ($60,000), Lessee shall pay as Additional Rent all Residual Receipts in excess of Sixty Thousand Dollars ($60,000). Such number shall increase annually by the percentage change in the Consumer Price Index (All Urban Consumers) (Base Year 1982 -84 = 100) for the San Diego area, as published by the United States Department of Labor, Bureau of Labor Statistics, or its successor index, during the last reported one year period. Annual Additional Rent payments shall be by the Lessee by cashier's check and shall be delivered on or before June 30 of each year during the Term. As set forth in Section 10.1(b) hereof, the' Agency may, in its sole and absolute discretion, elect to contribute all or a portion of the Additional Rent to the Development to be placed into the Subsequent Term Operating Reserve. 4 DOCSOC \747477v4 \22345.0015 4.. As used herein, "Annual Project Revenue" shall mean all gross income and all revenues of any kind from the Development in a calendar year, including without limitation, Development rents, Section 8 housing assistance payments, if any, late charges, vending machine income, rent and other fees received with respect to the recreational vehicle lot located on the Site, and any other revenues of whatever kind or nature from the Development, except that interest on security deposits and required reserves shall not be considered Annual Project Revenue. As used herein, "Debt Service" means payments wade in a calendar year pursuant to the financing approved pursuant to Section 15 hereof, if any. As used herein, "Operating Expenses" shall mean actual, reasonable and customary (for comparable high quality rental housing developments in San Diego County) costs, fees and expenses directly incurred, paid, and attributable to the operation, maintenance and management of the Development in a calendar year, which are in accordance with the Operating Budget approved by the Agency pursuant to Section 10 hereof, 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 the Capital Replacement Reserve, funds for computers and learning materials as set forth in the Operating Budget, an asset management fee to Lessee initially set at the amount of Fifteen Thousand Dollars ($15,000) per year, to be increased by three and one- half percent (3'h %) per year, a property management fee initially set at the amount of Thirty -Five Dollars ($35) per Housing Unit per month (as such fee may be adjusted in accordance with the approved Operating Budget), the cost of resident services as set forth in the approved Operating Budget, 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 Lessee, but which are not paid from the Operating Reserve or other reserve accounts. The Operating Expenses shall not in any event include expenses not related to the Development's operations, including without limitation, depreciation. As used herein, "Reserve Deposits" shall mean any payments to the Initial Term Operating Reserve or Subsequent Term Operating Reserve pursuant to Section 10.1 hereof and payments to the Capital Replacement Reserve account pursuant to Section 10.2 hereof. As used herein, "Residual Receipts" shall mean Annual Project Revenue less the sum of (i) Operating Expenses, (ii) Debt Service, and (iii) Reserve Deposits, for each calendar year; provided, however, that if such calculation results in a negative number, Residual Receipts shall be zero for that year. On or before June 30 of each year, commencing in 2001, Lessee shall annually provide the Agency a Residual Receipts report, in the form provided by the Agency, which shall describe in detail the Annual Project Revenue, Debt Service, Operating Expenses, Reserve Deposits, and Residual Receipts for that year. The Lessee shall also submit to the Agency, on or before June 30 of each year commencing in 2001, annual financial statements with respect to the 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. DOCSOC\747477v4\22345.00 15 ..r 5.4 Payment of Rent. All Basic Rent and Additional Rent (collectively, "Rent") that becomes due and payable pursuant to this Lease shall be paid to Agency at the address of Agency listed in Section 25.7 or such other place as Agency may from time to time designate by written notice to the Lessee without notice or demand, and without setoff, counterclaim, abatement, deferment, suspension or deduction. 6. AFFORDABLE HOUSING REQUIREMENTS. 6.1 Number of Affordable Units. Lessee agrees to make available, restrict occupancy to, and rent Fifty -Five (55) of the Housing Units to Very Low Income Households, and Nine (9) of the Housing Units to Extremely Low Income Households, all at an Affordable Rent (except for Pre - Existing Tenants as provided in Section 6.4 hereof). One of the Housing Units may be occupied by the Property Manager. For the purposes of this Lease, "Extremely Low Income Household" shall mean a household earning not greater than thirty-five percent (35 %) of San Diego County median income, as set forth by regulation of the California Department of Housing and Community Development. For the purposes of this Lease, "Very Low Income Household" shall mean a household earning not greater than fifty percent (50 %) of San Diego County median income, as set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50105, or successor statute. 6.2 Duration of Affordability Requirements. The Housing Units shall be subject to the requirements of this Section 6 for the Term of this Lease. The duration of this requirement shall be known as the "Affordability Period." 6.3. Selection of Residents. Lessee shall be responsible for the selection of residents for the Housing Units in compliance with the selection criteria set forth in the Management Plan, as approved by the Agency Executive Director or designee pursuant to Section 4.2 hereof. Preference shall be given to residents who have been displaced by redevelopment activities of Agency in the implementation of the Redevelopment Plan. 6.4 Income of Residents. Lessee shall annually submit to Agency, as an operating expense of the Development, a summary of the income, household size and rent payable by each of the residents of the Housing Units. At the Agency's request, Lessee shall also provide to the Agency completed income computation and certification forms, in a form acceptable to the Agency, for any such tenant or residents. Lessee shall obtain, or shall cause to be obtained by the Property Manager, a certification from each tenant leasing an Affordable Unit demonstrating that such tenant is a Very Low Income Household, Extremely Low Income Household or Lower Income Household, as applicable, and meets the eligibility requirements established for the Housing Unit. Lessee shall verify, or shall cause to be verified by the Property Manager, the income certification of the tenant as set forth in Section 6.6 hereof. No residents of the Housing Units as of the date of this Lease ("Pre - Existing Tenants ") shall be evicted from their Housing Units solely because such residents do not meet the income requirements of this Section 6.4. The rent charged to the Pre - Existing Tenants shall be as specified in Section 6.6 hereof. Upon the vacation of a Housing Unit by a Pre - Existing Tenant, the Housing Unit shall then become subject to the requirements of this Section 6.4. The first such Housing Units vacated by Pre - Existing Tenants shall be rented to Very Low Income Households until the satisfaction of the requirement of Section 6.1 to rent fifty -five (55) Housing Units to Very DOCSOC \747477v4\22345.00 I5 03 Low Income Households, and the next units vacated by Pre - Existing Tenants shall be rented to Extremely Low Income Households. 6.5 Over - Income Tenants. If, based upon the updated income certification performed pursuant to Section 6.4, an existing tenant of a Housing Unit (other than a Pre - Existing Tenant) no longer qualifies as a Very Low Income Household or Extremely Low Income Household, but qualifies as a Lower Income Household, Lessee shall continue to rent the Housing Unit to such tenant, but the rent shall be increased to the level specified in Section 6.6 hereof for Lower Income Households. If, based upon such income certification, an existing tenant of a Housing Unit (other than a Pre - Existing Tenant) no longer qualifies as either a Very Low Income Household, Extremely Low Income Household or Lower Income Household, Lessee shall notify such tenant that such tenant's lease shall terminate within a reasonable period, not to exceed nine (9) months from the date of such notice, and Lessee shall use commercially reasonably efforts to cause such tenants to vacate their Housing Unit by such time. For the purposes of this Lease, "Lower Income Household" shall mean a household earning not greater than that percentage of San Diego County median income (generally 80 %) which is set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50093, or successor statute. "Lower Income Household" may include an Extremely Low Income Household or Very Low Income Household (as defined in Health and Safety Code Section 50105, or successor statute). 6.6 Determination of Affordable Rent for the Housing Units. Each Housing Unit shall be rented at an "Affordable Rent" to be established as provided herein: (a) The monthly rental amount for the Housing Units to be rented to Extremely Low Income Households (less reasonable utility allowance) shall not exceed one - twelfth (1/12) of thirty percent (30 %) of thirty -five percent (35 %) of San Diego County median income for a family of a size appropriate to the Housing Unit (as defined in Health and Safety Code Section 50053). (b) The monthly rental amount for the Housing Units to be rented to Very Low Income Households (less reasonable utility allowance) shall not exceed one - twelfth (1/12) of thirty percent (30 %) of fifty percent (50 %) of San Diego County median income for a family of a size appropriate to the Housing Unit (as defined in Health and Safety Code Section 50053). (c) The monthly rental amount for the Housing Units rented to Lower Income Households (less reasonable utility allowance) shall not exceed the greater of (a) one - twelfth (1/12) of thirty percent (30 %) of sixty percent (60 %) of San Diego County median income for a family of a size appropriate to the Housing Unit (as defined in Health and Safety Code Section 50053), or (b) one - twelfth (1/12) of thirty percent (30 %) of the actual income of the resident. (d) The monthly rental amount for the Housing Units rented to Pre - Existing Tenants (less reasonable utility allowance) shall not exceed the greater of (i) one - twelfth (1/12) of thirty percent (30 %) of the actual income of the resident, or (ii) the minimum rent payable by such tenant as set forth in Exhibit "F" hereto, which is incorporated herein. For the purposes of this Lease, "rent" shall mean the total of monthly payments by the residents of a Housing Unit for use and occupancy of the Housing Unit and facilities associated therewith, including a reasonable allowance for utilities for an adequate level of service, as defined in 25 California Code of Regulations Section 6918. DOCSOC V 47477v4 \22345.0015 ..y y.. In the event that Lessee accepts excessive rent, Lessee shall promptly after notice from the Agency repay the amount of the overcharge to the residents so charged. 6.7. Verifications. Lessee shall verify, or shall cause to be verified by the Property Manager, the income of each proposed and existing tenant of the Housing Units in an appropriate manner. On or before June 30 of each year, Lessee, as an expense of the Development, shall submit to Agency the reports required pursuant to Health and Safety Code Section 33418, as the same may be amended from time to time, with each such report to be in a form reasonably acceptable to the Agency. Each annual report shall cover the immediately preceding fiscal year. 6.8 Regulatory Agreement. Lessee shall execute, acknowledge, and deliver to Agency a "Regulatory Agreement," substantially in the form of Exhibit "D" hereto, to be recorded with respect to the Site in the official records of San Diego County, California. The Regulatory Agreement shall contain those portions of this Lease relating to affordable housing requirements. 6.9 Memorandum of Smith Judgment. Lessee shall execute, acknowledge, and deliver to Agency a "Covenant Regarding Real Property" substantially in the form of Exhibit "E" hereto, to be recorded with respect to the Site in the official records of San Diego County, California. The Covenant Regarding Real Property shall contain a memorandum of the Smith Judgment. 7.` UTILITIES AND TAXES. 7.1 Utilities. Lessee shall pay, or provide for the payment by residents of the Housing Units, all charges for gas, electricity, water, sewer, garbage collection, and other utilities furnished to the Site and the Development and all sewer use charges, hookup or similar charges or assessments for utilities levied against the Site and the Development for any period included within the Term. 7.2 Real Estate Taxes. (a) As used herein, the term "real estate taxes" shall mean all real estate taxes, assessments for improvements to the Site, municipal or county water and sewer rates and charges, or any other assessments or taxes, which shall be levied against the Site or the Development, or any interest therein, and which become a lien thereon and accrues during the Term. (b) Any real estate taxes which are payable by Lessee hereunder shall be prorated between Agency and Lessee as of the Commencement Date and then again at the expiration or earlier termination of the Term. (c) Lessee shall have the right to contest the amount or validity of any real estate taxes, in whole or in part, by appropriate administrative and legal proceedings, without any costs or expense to Agency. 7.3 Personal Property. Lessee covenants and agrees to pay before delinquency all personal property taxes, assessments and liens of every kind and nature upon all personalty as may be from time to time situated within the Site and any Development. 7.4 Possessory Interest. Pursuant to Health and Safety Code Section 33673, the Site is required to be assessed and taxed in the same manner as privately owned property. Agency shall provide notice to the San Diego County Assessor within thirty (30) days of the commencement of this Lease as required by Health and Safety Code Section 33673.1. Lessee shall pay or cause to be paid, before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof, all 8 DOCSO0747477v4M345.0015 Now real estate taxes which may be levied against any and all interests in the Site and the Development during the Term, and not merely the assessed value of the leasehold interest in the Site; provided, however, that Lessee may apply for and receive any applicable exemption from the payment of property taxes and assessments. Notwithstanding the above, however, the Agency acknowledges that Lessee intends to obtain an exemption from the payment of property taxes with respect to the Site, and nothing in this Lease shall prevent the Lessee from obtaining such an exemption. 8. OWNERSHIP OF IMPROVEMENTS, FIXTURES AND FURNISHINGS. 8.1. Ownership During Initial Term. All improvements on the Site (the "Development ") shall, during the Initial Term, be and remain the property of Agency. 8.2 Ownership During Subsequent Term. Upon the commencement of the Subsequent Term, the Agency shall sell to Lessee all of its interest in and to the improvements, fixtures and personal property located on the Site (but not the land) which are owned by the Agency, for the sum of One Dollar ($1.00). The Agency shall at such time execute and acknowledge a grant deed and bill of sale which so transfers ownership of the Development to Lessee. Notwithstanding the foregoing, however, Lessee shall have no right to waste the Development, or to destroy, demolish or remove the Development except as otherwise permitted pursuant to this Lease; and provided further that Lessee's rights and powers with respect to the Development are subject to the terms and limitations of this Lease. Agency and Lessee intend that the improvements constituting the Development shall be real property. 8.3. Ownership at Termination. Upon termination of this Lease, whether by expiration of the Term or otherwise, the Development shall, without compensation to Lessee, then become Agency's property, free and clear of all liens, encumbrances, and claims to or against them by Lessee or any third person, firm or entity, including but not limited to any mortgagee or lender. At the option of the Agency, the Agency may require the Lessee to demolish and remove any improvements to the Site which have not previously been approved by the Agency. Lessee shall at such time execute and acknowledge a grant deed which so transfers ownership of the Development to the Agency. 8.4 Security Deposits. Concurrently with the date of this Lease, Agency shall transfer to Lessee all of the security deposits which it holds with respect to the Housing Units. Upon such transfer Lessee shall assume all liability of the Agency with respect to the repayment of such security deposits to tenants of the Housing Units. Upon termination of this Lease, Lessee shall transfer to Agency all of the security deposits which it then holds with respect to the Housing Units, and upon such transfer Agency shall assume all liability of Lessee with respect to the repayment of such security deposits to tenants of the Housing Units. 9. INDEMNIFICATION: FAITHFUL PERFORMANCE. Lessee shall not suffer or permit any liens to be enforced against the fee simple estate in reversion of Agency as to the Site and Development, nor against Lessee's leasehold interest therein by reason of work, labor, services or materials supplied or claimed to have been supplied to Lessee or anyone holding the Site and the Development, or any part thereof, through or under Lessee. Lessee agrees to defend, indemnify, and hold Agency and City and their respective officers, officials, employees, agents, and representatives, harmless against such liens, except for such liens which are caused by the Agency or its officers, officials, employees, agents, or representatives. If any such lien shall at any time be filed against the Site or the Development, Lessee shall, within thirty (30) days 9 DocsoC V 47477v412234s.00 1 s after notice to Lessee of the filing thereof, cause the same to be discharged of record; provided, however, that Lessee shall have the right to contest the amount or validity, in whole or in part, of any such lien by appropriate proceedings but in such event, Lessee shall notify Agency and promptly bond such lien in the manner authorized by law with a responsible surety company qualified to do business in the State of California or provide other security acceptable to Agency. Lessee shall prosecute such proceedings with due diligence. Nothing in this Lease shall be deemed to be, nor shall be construed in any way to constitute, the consent or request of Agency, express or implied, by inference or otherwise, to any person, firm or limited partnership for the performance of any labor or the furnishing of any materials for any construction, rebuilding, alteration or repair of or to the Site, the Development, or any part thereof. Prior to commencement of construction of the Development on the Site, or any repair or alteration thereto, Lessee shall give Agency not less than thirty (30) days advance notice in writing of intention to begin said activity in order that nonresponsibility notices may be posted and recorded as provided by State and local laws. 10. MAINTENANCE AND REPAIR. Lessee agrees to assume full responsibility for the management, operation and maintenance of the Development and the Site throughout the Term without expense to Agency, and to perform all repairs and replacements necessary to maintain and preserve the Development and the Site in good repair, in a neat, clean, safe and orderly condition reasonably satisfactory to Agency and in compliance with all applicable laws. Lessee agrees that Agency shall not be required to perform any maintenance, repairs or services or to assume any expense in connection with the Development and the Site. Except as otherwise specified in this Lease, including without limitation Section 10.4 hereof, Lessee hereby waives all rights to make repairs or to cause any work to be performed at the expense of Agency as may be provided for in Section 1941 and 1942 of the California Civil Code, if applicable, and Lessee shall be solely responsible under those sections to make the Development habitable for the residents of the Development. The Lessee shall manage and maintain the Development on the Site in conformity with the Poway Municipal Code. The following standards shall be complied with by Lessee and its maintenance staff, contractors or subcontractors: (a) Lessee shall maintain the Development, including the interiors and exteriors of individual Housing Units, the front yard areas of individual Housing Units, the swimming pool and surrounding pool deck area, the recreation building and office, the "tot lot' play area, the recreational vehicle lot, all common areas and buildings, all exterior facades, all sidewalks, fences, railings, walls, and all exterior common areas, in a safe and sanitary fashion suitable for a high quality housing development. The Lessee agrees to provide administrative services, supplies, contract services, maintenance, maintenance reserves, and management which are necessary for the maintenance of the entire Development including both interior tenant spaces, common area spaces and exterior common areas. Tenants of individual Housing Units shall be responsible for ordinary cleaning and maintenance of the interiors of their Housing Units, and for maintenance of the back yard areas of their Housing Units. (b) Landscape maintenance shall include, but not be limited to: watering and irrigation; fertilization; mowing, edging, and trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and optimum irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. 10 DOCSOC %747477v4\22345.0015 (c) Clean -up maintenance shall include, but not be limited to: maintenance of all private paths, sidewalks, parking areas, driveways, curbs, gutters and other paved areas in clean and weed -free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of (d) `The Development shall be maintained in conformance with, in accordance with and in compliance with the approved construction and architectural and landscape plans and design scheme. Lessee may propose changes to the construction, architectural or landscape plans or design scheme, which changes shall be subject to the approval of the Agency, which approval shall not unreasonably be withheld. The Agency and Lessee agree and acknowledge that the Development is, at the Commencement Date, in compliance with the previously approved construction and architectural and landscape plans and design scheme. (e) All maintenance work shall conform to all applicable federal and state standards and regulations for the performance of maintenance, including without limitation the Occupation Safety and Health Act. (f) Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance performed by Lessee, Property Manager or their contractors shall be applied in strict accordance with all governing regulations and in accordance with the manufacturer's directions for their use. (g) Parking lots, lighting fixtures, trash enclosures, and all areas which can be seen from the adjacent streets shall be kept free from any debris or waste materials by regularly scheduled maintenance. (h) Lessee shall perform all necessary weed abatement on the Site in order to keep the Development protected from wildfires. Agency and Lessee shall use good faith efforts to obtain an easement or other permission for Lessee to enter upon adjacent land owned by the City or the Agency to perform such weed abatement. 10.1 Operating Reserve. a. During the Initial Term of this Lease, the Agency shall retain the existing Haley operating account (Account No. 294) as a separate account of the Agency (the "Initial Term Operating Reserve "). The Agency shall deposit all Additional Rent paid during the Initial Term into the Initial Term Operating Reserve (but in no event shall the Agency be required to make deposits which increase the fund balance to more than the total Operating Budget for the current year), and shall retain the principal balance and interest earnings in such account, to be used only for the purposes described herein. The Agency shall retain such amount in the Initial Term Operating Reserve to fund shortfalls between Development income and actual Development operating expenses during the Initial Term. In the event that such a shortfall arises, Lessee may withdraw such funds from the Initial Term Operating Reserve to or on behalf of Lessee as are necessary to pay such operating expenses. Lessee shall not make any disbursements of the Initial Term Operating Reserve in a cumulative amount in excess of Ten Thousand Dollars ($10,000) without the prior written consent of the Agency Executive Director or designee, which consent shall not be unreasonably withheld. The Agency shall not be required to replenish the Initial Term Operating Reserve upon 11 DOCSOC \747477x4\22345.00 f 5 .. disbursements from such reserve account. Deposits to and income on the Initial Term Operating Reserve shall not be deemed to be Annual Project Revenue for purposes of calculating Additional Rent. b. Upon the commencement of the Subsequent Term, ownership of the Initial Term Operating Reserve (but in no event more than the total Operating Budget for the current year) shall be transferred to Lessee (the "Subsequent Term Operating Reserve "). Lessee shall also deposit 3% of Annual Project Revenue into the Subsequent Term Operating Reserve, until the balance of the Subsequent Term Operating Reserve equals the amount of the currently approved annual Operating Budget. The Agency may, in its sole and absolute discretion, elect to contribute all or a portion of the Additional Rent to the Development to be placed into the Subsequent Term Operating Reserve. Interest earned on funds in the Subsequent Term Operating Reserve shall remain in the Subsequent Term Operating Reserve. Lessee may withdraw from the Subsequent Term Operating Reserve those amounts exceeding the current year budget for operating expenses. Lessee shall provide, on not less than an annual basis during the Subsequent Term, evidence reasonably satisfactory to Agency Executive Director or designee of compliance herewith. Lessee shall retain such amount in the Subsequent Term Operating Reserve to cover shortfalls between Development income and actual Development operating expenses. Lessee shall not make any disbursements of the Subsequent Term Operating Reserve in a cumulative amount in excess of Ten Thousand Dollars ($10,000) per year for both the Subsequent Term Operating Reserve and Capital Replacement Reserve without the prior written consent of the Agency Executive Director or designee, which consent shall not be unreasonably withheld. Deposits to and income on the Subsequent Term Operating Reserve shall not be deemed to be Annual Project Revenue for purposes of calculating Additional Rent. 10.2 Capital Replacement Reserve. During the Initial Term of this Lease, Agency shall retain the existing capital replacement reserve account for the Development (Account No. 616) as a separate account of the Agency, and shall retain the principal balance and interest earnings in such account (the "Capital Replacement Reserve "), to be used only for the purposes described herein. In the event that the Agency determines that additional funds are necessary, the Agency may, in its sole and absolute discretion, elect to contribute additional funds to the Development to be placed into the Capital Replacement Reserve, to the extent that such additional funds are available. During the Initial Term, Lessee shall pay to the Agency for the Agency's deposit into the Capital Replacement Reserve Three Thousand Seven Hundred Seventy Dollars ($3,770) per month; provided that such amount shall be revised as provided below. Upon the commencement of the Subsequent Term, ownership of the Capital Replacement Reserve shall be transferred to Lessee. During the Subsequent Term, Lessee shall pay into the Capital Replacement Reserve Three Thousand Seven Hundred Seventy Dollars ($3,770) per month; provided that such amount shall be revised as provided below. The Capital Replacement Reserve shall be analyzed by a consultant commissioned by Lessee, subject to the reasonable approval of the Agency, with such study to be commenced within six months after the commencement of the Initial Term, and at the end of every five year period thereafter. The cost of such analysis shall be an Operating Expense of the Development. The Capital Replacement Reserve deposit requirement shall be revised if recommended by such analysis, subject to the Agency's approval of the Operating Budget, as needed to cover anticipated repairs and replacement. Interest earned on funds in the Capital Replacement Reserve shall remain in the Capital Replacement Reserve. Funds in the Capital Replacement Reserve shall be used for capital replacements to the Development fixtures and equipment which are normally capitalized under generally accepted accounting principles. At capital repairs and improvements of the Development become necessary, Lessee may either expend funds from the Capital Replacement Reserve therefor or other funds, in Lessee's reasonable discretion. In the event that capital repairs and improvements are necessary during the Initial Term, Lessee shall deliver a written request for disbursement from the Capital 12 DOCSOC \747477x4\22345.0015 **W Replacement Reserve, together with such supporting information as may be required by the Agency. The Agency shall disburse such funds from the Capital Replacement Reserve to or on behalf of Lessee as are necessary to pay for such capital repairs and replacement. In the event that capital repairs and improvements are necessary during the Subsequent Term; Lessee may withdraw funds from the Capital Replacement Reserve to pay such expenses; provided, however, Lessee shall not make any disbursements of the Capital Replacement Reserve, in a cumulative amount in excess of Ten Thousand Dollars ($10,000) per year for both the Subsequent Term Operating Reserve and Capital Replacement Reserve, without the prior consent of the Agency Executive Director or designee. A failure by the Agency to approve, disapprove or respond to a reserve withdrawal request within fifteen (15) days of the date of receipt of the written request shall be deemed approval, provided that the written request states that failure to approve or disapprove within such fifteen (15) day period shall be deemed approval. The non - availability of funds in the Capital Replacement Reserve does not in any manner relieve Lessee of the obligation to undertake necessary capital repairs and improvements and to continue to maintain the Site in the manner prescribed in this Section 10 and the Regulatory Agreement, using other funds of the Development. Lessee, as an expense of the Development, shall submit to Agency on not less than an annual basis a budget and an accounting for the Capital Replacement Reserve. Deposits to and income on the Capital Replacement Reserve shall not be deemed to be Annual Project Revenue for purposes of calculating Additional Rent. Capital repairs to and replacement of the Development shall include only those items with a long useful life, including without limitation the following: (i) Carpet and drape replacement; (ii) Appliance replacement; (iii) Exterior painting, including exterior trim; (iv) Hot water heater replacement; (v) Plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; (vi) Air conditioning and heating replacement; (vii) Asphalt repair and replacement, and seal coating; (viii) Roofing repair and replacement; (ix) Landscape tree replacement and irrigation pipe and controls replacement; (x) Gas line pipe replacement; (xi) Lighting fixture replacement; (xii) Swimming pool and tot lot replacement and upgrade work; (xiii) Miscellaneous motors and blowers; 13 DOCSOC \747477v4 \22345.0015 Orr u (xiv) Common area furniture replacement, and common area repainting; (xv) Technological upgrades to computer, telephone, cable and security systems; (xvi) Sidewalk repair and replacement; and (xvii) Handrail repair and replacement. 10.3 Operating Budget. Lessee shall annually submit to the Agency for its reasonable approval a budget for the operation of the Development (the "Operating Budget'). The initial monthly fee paid to Property Manager shall not exceed Thirty-Five Dollars ($35) per Housing Unit (subject to adjustments as provided in the approved Operating Budget). All fees and payments shall be consistent with prevailing market rates for the services performed and goods provided in consideration for such fees and payments. Lessee shall ensure that the expenses of operating the Development do not materially exceed the Operating Budget which has been approved by the Agency. Lessee shall annually provide to the Agency a detailed accounting of operating expenses and shall make available its books and records to the Agency for inspection and copying, upon reasonable advance notice during its normal hours of business. 10.4 Termite Inspection and Repairs. During the Initial Term Agency shall cause, at Agency expense, a termite inspection of the Property to be performed which is reasonably acceptable to Lessee. Lessee shall complete the recommendations of such report, as reasonably approved by the Agency, which may include temporary relocation of residents of the Housing Units. Lessee shall provide to Lessee a notice of completion of such work and copies of invoices received from contractors, and Agency shall reimburse Lessee for such costs. 11. ENVIRONMENTAL MATTERS. 11.1 Definitions. For the purposes of this Lease, unless the context otherwise specifies or requires, the following terms shall have the meanings herein specified: (a) The term "Hazardous Materials" shall mean any substance, material, or waste which is or becomes regulated by any local governmental authority, the County of San Diego, the State of California, regional governmental authority or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter - Presley- Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903) or (xi) defined as 14 DOCSOC V 47477v4U2345.0015 yr ..W "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. Notwithstanding the foregoing, "Hazardous Materials" shall not include such products in quantities as are customarily used in the construction, maintenance, rehabilitation or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Development, including without limitation alcohol, aspirin, tobacco and saccharine. (b) The term "Hazardous Materials Contamination" shall mean the contamination (whether presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or other elements on, in or of the Site by Hazardous Materials, or the contamination of the buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a result of Hazardous Materials at any time (whether before or after the Date of Lease) emanating from the Site. (c) The term "Governmental Requirements" shall mean all past, present and future laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the city, or any other political subdivision in which the Site is located, and any other state, county city, political subdivision, agency, instrumentality or other entity exercising jurisdiction over Agency, Lessee or the Site. 11.2 Site Evaluation. Lessee has had an opportunity, prior to the Commencement Date of this Lease, to engage its own environmental consultant to make such investigations of the Site as Lessee has deemed necessary, and Lessee has approved the environmental condition of the Site. Lessee assumes any and all responsibility and Liabilities (as defined in Section 11.3 of this Lease) for all Hazardous Materials Contamination of the Site which occurs during the Term of this Lease, except for such Hazardous Materials Contamination which is caused by the gross negligence or willful misconduct of the Agency or its officers, officials, employees, agents, or representatives. 15 Docsocv47477v4\22345.0015 11.3 Indemnification. (a) Lessee's Indemnity. Upon and after the Commencement Date of this Lease, Lessee agrees to indemnify, defend and hold Agency harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees), resulting from, arising out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Site during the term of this Lease, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Site during the term of this Lease. This indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity after closing, cost or expense arising from or out of any claim, action, suit or proceeding, including injunctive, mandamus, equity or action at law, for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. This indemnity shall exclude such matters which are caused by the gross negligence or willful misconduct of the Agency or its officers, officials, employees, agents, or representatives. Lessee's obligations under this Section 11.3(a) shall survive the expiration of this Lease. (b) Agency's Indemnity. Upon and after the Commencement Date of this Lease, Agency agrees to indemnify, defend and hold Lessee harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees), resulting from, arising out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Site during the period of the Agency's ownership of the Site prior to the term of this Lease, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Site during the period of the Agency's ownership of the Site prior to the term of this Lease. This indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity after closing, cost or expense arising from or out of any claim, action, suit or proceeding, including injunctive, mandamus, equity or action at law, for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. Agency's obligations under this Section 11.3(b) shall survive the expiration of this Lease. 11.4 Duty to Prevent Hazardous Material Contamination. Lessee shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Lessee shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards generally applied by housing complexes in San Diego County, California as respects the disclosure, storage, use, removal, and disposal of Hazardous Materials. 11.5 Obligation of Lessee to Remediate Premises. Notwithstanding the obligation of Lessee to indemnify Agency pursuant to Section 11.3 of this Lease, Lessee shall, at its sole cost and expense, (i) promptly take all actions required by any federal, state, regional, or local governmental 16 DOCSOC \747477v4Q2345.0015 6VAW, 1.01 agency or political subdivision or any Governmental Requirements and (ii) use commercially reasonable best efforts to make full economic use of the Site for the purposes contemplated by this Lease and the Regulatory Agreement, which requirements or necessity arise from the presence upon, about or beneath the Site of any Hazardous Materials or Hazardous Materials Contamination no matter when occurring. Such actions shall include, but not be limited to, the investigation of the environmental condition of the Site, the preparation of any feasibility studies or reports and the performance of any cleanup, remedial, removal or restoration work. Lessee shall take all actions necessary to promptly restore the Site to an environmentally sound condition for the uses contemplated by this Lease and the Regulatory Agreement notwithstanding any lesser standard of remediation allowable under applicable Governmental Requirements. 11.6 Right of Entry. Notwithstanding any other term or provision of this Lease, Lessee shall permit Agency or its agents or employees to enter the Site at any time during normal business hours (except in the event of an emergency ), without prior notice in the event of an emergency, and with not less than forty-eight (48) hours advance notice if no emergency is involved, to inspect, monitor and/or take emergency or long -term remedial action with respect to Hazardous Materials and Hazardous Materials Contamination on or affecting the Site, or to discharge Lessee's obligations hereunder with respect to such Hazardous Materials and Hazardous Materials Contamination when Lessee has failed to do so after notice from Agency and a reasonable opportunity to cure such deficiency. All costs and expenses incurred by Agency in connection with performing Lessee's obligations hereunder shall be reimbursed by Lessee to Agency within thirty (30) days of Lessee's receipt of written request therefor. 11.7 Storage or Handling of Hazardous Materials. Lessee, at its sole cost and expense, shall comply with all Governmental Requirements for the storage, use, transportation, handling and disposal of Hazardous Materials on or about the Site. In the event Lessee does store, use, transport, handle or dispose of any Hazardous Materials, Lessee shall notify Agency in writing at least ten (10) days prior to their first appearance on the Site and Lessee's failure to do so shall constitute a material default under this Lease. Lessee shall conduct all monitoring activities required or prescribed by applicable Governmental Requirements, and shall, at its sole cost and expense, comply with all posting requirements of Proposition 65 or any other similarly enacted Governmental Requirements. In addition, in the event of any complaint or governmental inquiry, or if otherwise deemed necessary by Agency in its reasonable judgment, Agency may require Lessee, at Lessee's sole cost and expense, to conduct specific monitoring or testing activities with respect to Hazardous Materials on the Site. Lessee's monitoring programs shall be in compliance with applicable Governmental Requirements, and any program related to the specific monitoring of or testing for Hazardous Materials on the Site, shall be satisfactory to Agency, in Agency's reasonable discretion. Lessee shall further be solely responsible, and shall reimburse Agency, for all reasonable costs and expenses incurred by Agency arising out of or connected with the removal, clean-up and/or restoration work and materials necessary to return the Site and any property adjacent to the Site affected by Hazardous Materials emanating from the Site to their condition existing at the time of the Lessee's Site Evaluation. Lessee's obligations hereunder shall survive the termination of this Lease and shall not merge with any grant deed. 11.8 Environmental Inquiries. Lessee shall notify Agency, and provide to Agency a copy or copies, of the following environmental permits, disclosures, applications, entitlements or inquiries relating to the Site: notices of violation, notices to comply, citations, inquiries, clean -up or abatement orders, cease and desist orders, reports filed pursuant to self - reporting requirements, and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous 17 DOCSOCl747477v4\22345.0015 +.r' 1.r Materials and underground tanks, and Lessee shall report to Agency, as soon as possible after each incident, any unusual, potentially important incidents. In the event of a release of any Hazardous Materials into the environment, Lessee shall, as soon as possible after the release, famish to Agency a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request of Agency, Lessee shall furnish to Agency a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Site including, but not limited to, all permit applications, permits and reports including, without limitation, those reports and other matters which may be characterized as confidential. 12. ALTERATION OF IMPROVEMENTS. Lessee shall not make or permit to be made any structural alteration of the Development, nor demolish all or any part of the Development, without obtaining all required City permits and entitlements, and without obtaining the prior written consent of Agency; provided, however, that the foregoing shall not prohibit or restrict the repair and/or replacement of the Development by Lessee in accordance with Section 10 hereof. In requesting such consent of the Agency Lessee shall submit to Agency detailed plans and specifications of the proposed work and an explanation of the need and reasons therefor. This provision shall not limit or set aside any obligation of Lessee under this Lease to maintain the Development and the Site in a clean and safe condition, including structural repair and restoration of damaged Development. Agency shall not be obligated by this Lease to make any improvements to the Site or to assume any expense therefor. Lessee shall not commit or suffer to be committed any waste or impairment of the Site or the Development, or any part thereof, except as otherwise permitted pursuant to this Lease. 13. DAMAGE OR DESTRUCTION. 13.1 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance. Subject to Section 13.3 below, if the Development shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by Lessee, Lessee shall promptly proceed to obtain insurance proceeds on behalf of itself and/or the Agency, as applicable, and take all steps necessary to begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly and diligently commence the repair or replacement of the Development to substantially the same condition as the Development is required to be maintained in pursuant to this Lease, whether or not the insurance proceeds are sufficient to cover the actual cost of repair, replacement, or restoration, and Lessee shall complete the same as soon as possible thereafter so that the Development can be occupied in accordance with this Lease. Subject to Section 25.23, in no event shall the repair, replacement, or restoration period exceed one (1) year from the date Lessee obtains insurance proceeds unless Agency's Executive Director or designee, in his or her sole and absolute discretion, approves a longer period of time. Agency shall cooperate with Lessee, at no expense to Agency, in obtaining any governmental permits required for the repair, replacement, or restoration. If, however, the then- existing laws of any other governmental agencies with jurisdiction over the Site do not permit the repair, replacement, or restoration, Lessee may elect not to repair, replace, or restore the Development by giving notice to Agency (in which event Agency will be entitled to all insurance proceeds, subject to Lessee's obligations to lenders or other third parties, and Lessee shall be required to remove all debris from the Site) or Lessee may reconstruct such other improvements on the Site as are consistent with applicable land use regulations and approved by the City, Agency, and the other governmental agency or agencies with jurisdiction. In the event Lessee 18 DOCSOC %747477v4\22345.0015 4W* .r elects not to repair, replace, or restore and give Agency notice of such election as provided herein, this Lease shall terminate. 13.2. Continued Operations. During any period of repair, Lessee shall continue, or cause the continuation of, the operation of the Development on the Site to the extent reasonably practicable from the standpoint of prudent business management. 13.3 Damage or Destruction Due to Cause Not Required to be Covered by Insurance. If the Development is completely destroyed or substantially damaged by a casualty for which Lessee is not required to (and has not) insured against, then Agency shall deliver written notice to Lessee of its obligations under this Section 13.3 within thirty (30) days of such event of substantial damage or destruction, and Lessee shall not be required to repair, replace, or restore such improvements and may elect not to do so by providing Agency with written notice of election not to repair, replace, or restore within ninety (90) days after such substantial damage or destruction. In such event, Lessee shall remove all debris from the applicable portion of the Site. As used in this Section 13.3, "substantial damage" caused by a casualty not required to be (and not) covered by insurance shall mean damage or destruction which is fifteen percent (15 %) or more of the replacement cost of the improvements comprising the Development. In the event that the Agency delivers such notice to Lessee but Lessee does not timely elect not to repair, replace, or restore the Development as set forth in the first sentence of this Section 13.3, Lessee shall be conclusively deemed to have waived its right not to repair, replace, or restore the Development and thereafter Lessee shall promptly commence and complete the repair, replacement, or restoration of the damaged or destroyed Development in accordance with Section 13.1 above and continue operation of the Development during the period of repair (if practicable) in accordance with Section 13.2 above. In no event, however, shall the Lessee be obligated to expend more than One Hundred Thousand Dollars ($100,000) of its own funds (as adjusted as provided below) to satisfy its obligations under this Section 13.3 to repair, replace or restore the Development. Such maximum expense number shall increase annually by the percentage change in the Consumer Price Index (All Urban Consumers) (Base Year 1982 -84 = 100) for the San Diego area, as published by the United States Department of Labor, Bureau of Labor Statistics, or its successor index, during the last reported one year period. In the event Lessee elects not to repair, replace, or restore, and gives Agency notice of such election as provided herein, this Lease shall terminate. Any casualty caused by flood damage may be satisfied from the Capital Replacement Reserve, and if such fund is insufficient to cure such damage, then from the applicable Operating Reserve. 14. SALE, ASSIGNMENT, SUBLEASE OR OTHER TRANSFER Except as set forth below, Lessee shall not sell, assign, sublease, or otherwise transfer this Lease or any right therein, nor make any total or partial sale, assignment, sublease, or transfer in any other mode or form of the whole or any part of the Site or the Development (each of which events is referred to in this Lease as an "Assignment "), without prior written approval of Agency, which approval shall not be unreasonably withheld as more particularly set forth below in this Section 14. Any purported assignment without the prior written consent of Agency shall render this Lease absolutely null and void and shall confer no rights whatsoever upon any purported assignee or transferee. Notwithstanding any other provision of this Lease to the contrary, Agency approval of an assignment of this Lease or conveyance of the Site or Development, or any part thereof, shall not be required in connection with any of the following: 19 DOCS00747477v4M345.0015 (a) any transfers to a limited partnership in which Community Housing of North County is the sole general partner, and a nonprofit corporation affiliated with Community Housing of North County is the sole limited partner, and Community Housing of North County retains management and control of the transferee entity. (b) the Lessee's sublease of particular Housing Units to residents. In the event of an assignment by Lessee under subparagraph (a) above not requiring Agency's prior approval, Lessee nevertheless agrees that at least thirty (30) days prior to such assignment it shall give written notice to Agency of such assignment and satisfactory evidence that the assignee or sublessee has assumed jointly with Lessee the obligations of this Lease. Agency agrees that it will not unreasonably withhold approval of a request made pursuant to this Section 14, provided Lessee delivers written notice to Agency requesting such approval. Such notice shall be accompanied by sufficient evidence regarding the proposed assignee's or purchaser's development and/or operational qualifications and experience, and its financial commitments and resources, in sufficient detail to enable Agency to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 14 and as reasonably determined by Agency. Agency shall evaluate such proposed transferee or assignee on the basis of its development qualifications and experience and/or qualifications and experience in the operation of facilities similar to the Development, and its financial commitments and resources, and may reasonably disapprove any proposed transferee or assignee, which Agency reasonably determines does not process sufficient qualifications. An assignment and assumption agreement in form satisfactory to Agency's Executive Director or designee shall also be required for all proposed assignments. Within thirty (30) days after the receipt of the Lessee's written notice requesting approval of an assignment or transfer pursuant to this Section 14, Agency shall either approve or disapprove such proposed assignment or shall respond in writing by staring what further information, if any, Agency reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, the Lessee shall promptly furnish to Agency such further information as may be reasonably requested. Review of experience in operating similar Developments shall not be required with respect to institutional lenders providing financing pursuant to Section 15 hereof so long as the original Lessee (or a successor that has been expressly approved in writing by Agency) remains responsible for operating the Development and performing as Lessee pursuant to this Lease. Approval by Agency of any such sale, assignment, sublease or transfer shall be deemed to relieve Lessee or any approved or permitted assign or successor from any obligations under this Lease. Lessee shall only sell, assign, sublease, or transfer the Site and the Development as a whole and is not permitted to subdivide the Site and the Development for the duration of this Lease without the prior written approval of Agency. Notwithstanding anything else contained in this Section 14, this Lease may be assigned, without the consent of Agency, to the purchaser at any foreclosure sale relating to a permitted first trust deed encumbrance, whether judicial or non judicial, or to the beneficiary or mortgagee under any Permitted Encumbrance (as defined in Section 15), pursuant to foreclosure or similar proceedings, or pursuant to an assignment or other transfer of this Lease to such beneficiary or mortgagee in lieu thereof, and may thereafter be assigned by such beneficiary or mortgagee without Agency's consent, and any such purchaser, beneficiary, mortgagee or assignee shall be liable to perform the obligations herein imposed on Lessee, other than as set forth in Section 15 of this Lease, 20 DOCSOC \747477v4M345.00 15 r✓ only for and during the period that such purchaser, beneficiary, mortgagee or assignee is in possession or ownership of the leasehold estate created hereby. Notwithstanding any provision in this Section 14 to the contrary, in no event shall Lessee make any assignment which would or could be effective beyond the Term without the prior written consent of the Agency. Agency may assign or transfer any of its rights orjobligations under this Lease with the approval of the Lessee, which approval shall not be unreasonably withheld; provided, however, that Agency may assign or transfer any of its interests hereunder to the City at any time without the consent of the Lessee. 15. FINANCING. Lessee may, at any time and from time to time, upon prior written notice to Agency and subject to the requirements of Section 14 hereof, request that Agency authorize Lessee to mortgage, pledge, hypothecate or otherwise encumber to a federally or state chartered bank or savings and loan, a life insurance company, a mortgage company, a pension fund, investment trust or similar institutional lender (herein called "Lender "), by deed of trust or mortgage or other security instrument, all of Lessee's right, title and interest pursuant to this Lease and the leasehold estate hereby, following thirty (30) days prior written notice to Agency (which notice shall include an itemization of and budget for the capital improvements to be financed), to secure financing of capital improvements to the Development ( "Capital Improvement Loan(s)"). Agency shall consider such request in good faith, and may approve, disapprove, or conditionally approve such requested Capital Improvement Loan in Agency's reasonable discretion. The encumbrances securing the Capital Improvement Loan(s), together with refinancing of the Capital Improvement Loan(s) approved by Agency pursuant to Section 14, and any other loan or encumbrance approved by Agency pursuant to this Lease shall be deemed to be "Permitted Encumbrances." The proceeds of any Capital Improvement Loan(s) shall be used solely to pay (i) the costs of construction of capital improvements to the Development, and (ii) the costs of obtaining the Capital Improvement Loan(s). Notwithstanding anything in this Section 15 to the contrary, Lessee shall not, without the prior written consent of Agency, which may be given or withheld in Agency's sole discretion, obtain any Capital Improvement Loan or other conveyance for financing secured by the Development or this Lease, the term of which Capital Development Loan or other conveyance for financing purposes extends beyond the Term. 16. INDEMNITY. 16.1 Lessee's Indemnity. Lessee shall defend, indemnify,' assume all responsibility for, and hold Agency and City, and their respective officers, employees, agents, and representatives harmless from, all claims, demands, damages, defense costs or liability of any kind or nature (including attorneys' fees and costs) and for any damages to property or injuries to persons, including accidental death, which may be caused by or arise out of the Lessee's performance or failure to perform its obligations pursuant to this Lease, whether such activities or performance thereof be by the Lessee or by anyone employed or contracted with by the Lessee and whether such damage shall accrue or be discovered before or after termination of this Lease, or from any defect in the Site or the Development, or from any displacement of residents or liability for relocation assistance pursuant to 21 DOCSOC\747477v4\22345.0015 .. ..J Government Code Section 7260, et seq., due to the acts of Lessee hereunder. Lessee shall not be liable for property damage or bodily injury occasioned by the negligence of, willful misconduct of, or breach of this Lease by Agency or its agents or employees. 16.2 Agency's Indemnity. Agency shall defend, indemnify, assume all responsibility for, and hold Lessee and its officers, employees, agents, and representatives harmless from, all claims, demands, damages, defense costs or liability of any kind or nature (including attorneys' fees and costs) and for any damages to property or injuries to persons, including accidental death which may be caused by or arise out of (i) the Agency's performance or failure to perform its obligations pursuant to this Lease, whether such activities or performance thereof be by the Agency or by anyone employed or contracted with by the Agency and whether such damage shall accrue or be discovered before or after termination of this Agreement, and (ii) any legal challenge to the validity of this Lease, or the Agency's obligations hereunder, and (iii) any legal action with respect to the Property relating to matters occurring prior to the date of this Lease. Agency shall not be liable for property damage or bodily injury occasioned by the negligence of, willful misconduct of, or breach of this Agreement by Lessee or its agents or employees. 17. INSURANCE. 17.1. Insurance to be Provided by Lessee. During the Term, Lessee, at its sole cost and expense, shall itself take out and maintain, or cause to be taken out and maintained, the following insurance coverage, in addition to any insurance which may be required pursuant to the DDA: (a) Maintain or cause to be maintained a policy or policies of all -risk property insurance. Such insurance policy shall be maintained in an amount not less than one hundred percent (100 %) of the "Full Insurable Value" of the Development, as defined herein in this Section 17. (b) Maintain or cause to be maintained a policy of use and occupancy or business interruption or rental income insurance against the perils of fire, lighting, vandalism, malicious mischief, and such other perils ordinarily included in extended coverage fire insurance policies, in an amount equal to not less than twelve (12) months' gross rental income payable to Lessee from residents on the Site, assuming one hundred percent (100 %) occupancy. Notwithstanding the foregoing, however, the parties agree that Lessee shall not be required hereunder to obtain and maintain flood insurance for any of the Housing Units located in a flood plain. (c) Maintain or cause to be maintained, in an amount not less than Three Million Dollars ($3,000,000), combined single limit, comprehensive general liability insurance. The required amount of insurance shall be subject to increases as Agency may reasonably require from time to time, but not more frequently than every twenty-four (24) months. In no event shall such increase or increases exceed the increase during such period in the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for Urban Wage Earners and Clerical Workers, Subgroup "All Items," in the geographical area applicable to the Poway area. Lessee agrees that provisions of this paragraph as to maintenance of insurance shall not be construed as limiting in any way the extent to which Lessee may be held responsible for the payment of damages to persons or property resulting from Lessee's activities, activities of its sublessees or the activities of any other person or persons for which Lessee is otherwise responsible. (d) Maintain or cause to be maintained by the Property Manager worker's compensation insurance issued by a responsible carver authorized under the laws of the State of California to insure employers against liability for compensation under the workers' compensation 22 DOCSOC\747477v4 \22345.0015 VOW *410, laws now in force in California, or any laws hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such workers' compensation insurance shall cover all persons employed by Lessee and/or Property Manager in connection with the Site and the Development and shall cover full liability for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for on behalf of any person incurring or suffering injury or death in connection with the Site or the Development or the operation thereof by Lessee or Property Manager. 17.2. Definition of "Full Insurable Value." The term "Full Insurable Value" as used in this Section 17 shall mean the actual replacement cost of the Development, including the cost of construction of the Development, architectural and engineering fees, applicable governmental fees, and inspection and supervision. Lessee shall maintain the insurance policy required by Section 17.1(a) hereof at the current Full Insurable Value of the Development. 17.3. General Insurance Provisions. All policies of insurance provided for in this Section 17, except for the workers' compensation insurance, shall name Lessee as the insured and Agency and the City, and their respective officers, employees, agents, and representatives, as additional insureds, as their respective interests may appear. All property casualty insurance policies shall include the interest of any Lessee's Mortgagee, and may provide that any loss is payable jointly to Lessee and Lessee's Mortgagee in which event such policies shall contain standard mortgage loss payable clauses. Lessee agrees to timely pay or cause to be timely paid all premiums for such insurance and, at its sole cost and expense, to comply and secure compliance with all insurance requirements necessary for the maintenance of such insurance. Lessee agrees to submit policies of all insurance required by this Section 17 of this Lease, or certificates evidencing the existence thereof, to Agency on or before the effective date of this Lease, indicating full coverage of the contractual liability imposed by this Lease. At least thirty (30) days prior to expiration of any such policy, copies of renewal policies, or certificates evidencing the existence thereof, shall be submitted to Agency. All policies shall be written by good and solvent insurers qualified to do business in California and reasonably acceptable to the Agency Executive Director or designee. All policies or certificates of insurance shall also: (i) provide that such policies shall not be cancelled or limited in any manner without at least thirty (30) days prior written notice to Agency; and (ii) provide that such coverage is primary and not contributing with any insurance as may be obtained by Agency and shall contain a waiver of subrogation for the benefit of the City and Agency. 17.4. Failure to Maintain Insurance. If Lessee fails or refuses to procure or maintain insurance as required by this Lease, Agency shall have the right, at Agency's election, and upon ten (10) days prior notice to Lessee, to procure and maintain such insurance. The premiums paid by Agency shall be treated as added rent due from Lessee, to be paid on the first day of the month following the date on which the premiums were paid. Agency shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s). 17.5. Insurance Proceeds Resulting from Loss or Damage to Development. All proceeds of insurance with respect to loss or damage to the Development during the term of this Lease shall be payable, under the provisions of the policy of insurance, to Lessee, and said proceeds shall constitute a trust fund to be used for the restoration, repair and rebuilding of the Development in accordance with plans and specifications approved in writing by Agency. To the extent that such proceeds exceed the cost of such restoration, repair or rebuilding, then such proceeds shall be used to repay any outstanding loans secured by encumbrances upon the Site, and any remaining proceeds shall be apportioned between Lessee and Agency as their interests may appear. Notwithstanding the foregoing, within the period during which there is an outstanding mortgage upon the Development, such proceeds shall be payable in accordance with mortgage loan documents. 23 DocsoC \747477v4\22345.00 1 s .ow In the event this Lease is terminated by mutual agreement of Agency and Lessee and the Development is not restored, repaired or rebuilt, the insurance proceeds and proceeds of the Capital Replacement Reserve and Operating Reserve shall be jointly retained by Agency and Lessee and shall be applied first to any payments due under this Lease from Lessee to Agency, second to restore the Site and Development to their original condition and to a neat and clean condition, third to repay any outstanding loans secured by encumbrances upon the Site, and finally any excess shall be apportioned between Lessee and Agency as their interests may appear, and Lessee shall have no further obligation hereunder to restore, repair or rebuild the Development; provided, however, that within any period when there is an outstanding mortgage upon the Development, such proceeds shall be applied in accordance with mortgage loan documents. The value of each interest for the purpose of apportioning excess proceeds under this Section 17.5 shall be the fair market value of such interests immediately prior to the occurrence of the damage or destruction. In the event this Lease is partially terminated by mutual agreement of Agency and Lessee and a portion of the Development is not restored, repaired or rebuilt, a pro rata portion of the insurance proceeds and proceeds of the Capital Replacement Reserve and Operating Reserve attributable to the portion of the Improvements which has been terminated shall be jointly retained by Agency and Lessee and shall be applied first to any payments due under this Lease from Lessee to Agency, second to restore the applicable portion of the Site and Development to their original condition and to a neat and clean condition, third to repay any outstanding loans secured by encumbrances upon the Site, and finally any excess shall be apportioned between Lessee and Agency as their interests may appear, and Lessee shall have no further obligation hereunder to restore, repair or rebuild the applicable portion of the Development subject to termination; provided, however, that within any period when there is an outstanding mortgage upon the Development, such proceeds shall be applied in accordance with mortgage loan documents. The value of each interest for the purpose of apportioning excess proceeds under this Section 17.5 shall be the fair market value of such interests immediately prior to the occurrence of the damage or destruction. 18. EMINENT DOMAIN. In the event that the Site and/or the Development or any part thereof shall be taken for public purposes by condemnation as a result of any action or proceeding in eminent domain, then, as between Agency and Lessee (or mortgagee, if a mortgage is then in effect), the interests of Agency and Lessee (or mortgagee) in the award and the effect of the taking upon this Lease shall be as follows: (a) In the event of such taking of only a part of the Site, leaving the remainder of the Site in such location and in such form, shape and size as to be used effectively and practicably for the conduct thereon of the uses permitted hereunder, this Lease shall terminate and end as to the portion of the Site so taken as of the date title to such portion vests in the condemning authority, but shall continue in full force and effect as to the portion of the Site not so taken and from and after such date the rental required by this Lease to be paid by Lessee to Agency shall be reduced in the proportion which the number of square feet so taken bears to the total number of square feet in the Site. (b) In the event of taking of only a part of the Site, leaving the remainder of the Site in such location, or in such form, shape or reduced size as to render the same not effectively and practicably usable, for the conduct thereon of the uses permitted hereunder, this Lease and all right, title and interest thereunder shall cease on the date title to the Site or the portion thereof so taken vests in the condemning authority. 24 DOCSOC1747477v4\22345.0015 14W �440V (c) In the event the entire Site is taken, this Lease and all of the right, title and interest thereunder, shall cease on the date title to the Site so taken vests in the condemning authority. (d) In the event of taking of only Lessee's leasehold interest in the Site, this Lease shall terminate. (e) Promptly after a partial taking, at Lessee's expense and in the manner specified in provisions of this Lease related to maintenance, repairs, alterations, Lessee shall restore the Development, to the extent possible and as permitted by law, and to the extent of condemnation proceeds received by Lessee, so as to place them in a condition suitable for the uses and purposes for which the Site was leased. (f) In the event of any taking under subparagraphs (a), (b), (c) or (d) hereinabove, that portion of any award of compensation attributable to the fair market value of the Site and Improvements or portion thereof taken, valued as subject to this Lease, shall belong to Agency. That portion of any award attributable to the fair market value of Lessee's leasehold interest in the Site and Improvements pursuant to this Lease shall belong to Lessee. That portion of any award attributable to the fair market value of the Development or portion thereof taken shall belong to Agency and Lessee, as their interests may appear, except that in the event of a partial taking, where the Lease remains in effect and Lessee is obligated to restore or repair the Development, then Lessee shall be entitled to any portion of the award attributable to severance damages to the remaining Development to the extent necessary to restore or repair the Development and any remaining severance damages shall be payable to Agency. Said award shall be used for the restoration, repair or rebuilding of the Development in accordance with plans and specifications approved in writing by Agency to the extent necessary to restore or repair the Development and nay remaining severance damages shall be payable to Agency. The value of each interest for the purpose of apportionment under this Section shall be the fair market value of such interests at the time of the taking. (g) Provided, however, that within the period during which there is an outstanding mortgage on the Development, the mortgagee shall be entitled to any portion of the award attributable to the Development, consistent with the loan documents between Lessee and the mortgagees. Any excess portion of the award attributable to the condemnation of the Development shall be payable to Agency. (h) Notwithstanding the foregoing provisions of this Section, Agency may, in its discretion and without affecting the validity and existence of this Lease, transfer Agency's interests in the Site in lieu of condemnation to any authority entitled to exercise the power of eminent domain In the event of such transfer by Agency, Lessee (or mortgagee if a mortgage is then in effect) and Agency shall retain whatever rights they may have to recover from said authority the fair market value of their respective interests in the Development taken by the authority. (i) All valuations to be made pursuant to this Section 18 shall be made by mutual agreement of Agency and Lessee. 19. OBLIGATION TO REFRAIN FROM DISCRIMINATION Lessee covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, 25 DOCSOC \747477v4\22345.0015 +rr lqw use, occupancy, tenure or enjoyment of the Site, nor shall Lessee itself or any person claiming under or through it 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, subtenants, sublessees or vendees of the Site or any portion thereof. The foregoing covenants shall run with the land. Lessee shall refrain from restricting the rental or lease of the Site and the Development, or any portion thereof, on the basis of sex, marital status, race, color, creed, religion, ancestry or national origin of any person. All such leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In Leases: "The lessee herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, creed, religion, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, 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, sublessees, subtenants, or vendees in the premises herein leased." (b) In Contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use of occupancy of residents, lessees, subtenants, sublessees or vendees of the premises." 20. NONDISCRIMINATION IN EMPLOYMENT. Lessee, for itself and its successors and assigns, agrees that during the operation of the Development provided for in this Lease, and during any work of repair or replacement, Lessee shall not discriminate against any employee or applicant for employment because of race, color, creed, religion, sex, marital status, physical or mental disability, sexual orientation, ancestry or national origin, or on the basis of any other category or status not permitted by law. 21. COMPLIANCE WITH LAW. Lessee agrees, at its sole cost and expense, to comply and secure compliance by all contractors and residents of the Site and Development with all the requirements now in force, or which may hereafter be in force, of all municipal, county, state and federal authorities, pertaining to the Site and the Development, as well as operations conducted thereon, and to faithfully observe and secure compliance by all contractors and residents of the Site and Development with, in the use of 26 DOCSOC \747477v4\22345.0015 14W *.o the Site and the Development all applicable county and municipal ordinances and state and federal statutes now in force or which may hereafter be in force, and to pay before delinquency all taxes, assessments, and fees, if any, assessor levied upon Lessee or the Site or the Development, including the land and any buildings, structures, machines, appliances or other improvements of any nature whatsoever, erected, installed or maintained by Lessee or by reason of the business or other activities of Lessee upon or in connection with the Site and the Development. Lessee shall use good faith efforts to prevent residents from maintaining any nuisance or other unlawful conduct on or about the Property, and shall take such actions as are reasonably required to abate any such violations by residents of the Site and Development. The judgment of any court of competent jurisdiction, or the admission of Lessee or any sublessee or permittee in any action or proceeding against them, or any of them, whether Agency be a party thereto or not, that Lessee, sublessee or permittee has violated any such ordinance or statute in the use of the Site or the Development shall be conclusive of that fact as between Agency and Lessee, or such sublessee or permittee. 22. ENTRY AND INSPECTION. Agency reserves and shall have the right during reasonable business hours (except in cases of emergency), upon forty-eight (48) hours prior notice (except in cases of emergency) to Lessee by the Executive Director of Agency or designee, to enter the Site and the Development for the purpose of viewing and ascertaining the condition of the same, or to protect its interests in the Site and the Development or to inspect the operations conducted thereon, subject to the Agency's indemnification obligations as set forth in Section 16 hereof. Q 0411 In the event that the entry or inspection by Agency pursuant to Section 22 hereof discloses that the Site or the Development are not in a decent, safe, and sanitary condition, Agency shall have the right, after thirty (30) days written notice to Lessee (except in case of emergency, in which event no notice shall be necessary), to have any necessary maintenance work done for and at the expense of Lessee and Lessee hereby agrees to pay promptly any and all reasonable costs incurred by Agency in having such necessary maintenance work done in order to keep the Site and the Development in a decent, safe and sanitary condition, provided that the Agency delivers such notice which is required hereunder. The rights reserved in this Section shall not create any obligations on Agency or increase obligations elsewhere in this Lease imposed on Agency. 24. EVENTS OF DEFAULT AND REMEDIES. 24.1. Events of Default by Lessee. The occurrence of any one (1) or more of the following shall constitute an event of default hereunder: (a) Lessee shall abandon or surrender the Site, or the Development; or (b) Lessee shall fail or refuse to pay, within ten (10) days of notice from Agency that the same is due, any installment of Rent or any other sum required by this Lease to be paid by Lessee; or (c) Lessee shall fail to materially perform any covenant or condition of this Lease, the Regulatory Agreement or the Breihan DDA, and any such failure shall not be cured within thirty (30) days following the service on Lessee of a written notice from Agency specifying the failure complained of, or if it is not reasonably practicable to cure or remedy such failure within such thirty (30) day period, then Lessee shall not be deemed to be in default if Lessee shall commence 27 DOCSOC \747477v4\22345.0015 y.- .oe such cure within such thirty (30) day period and thereafter diligently prosecute such cure to completion; or (d) Subject to any restrictions or limitations placed on Agency by applicable laws governing bankruptcy, Lessee's (i) application for, consent to or suffering of the appointment of a receiver, trustee or liquidator for all or for a substantial portion of its assets; (ii) making a general assignment for the benefit of creditors; (iii) admitting in writing its inability to pay its debts or its willingness to be adjudged a bankrupt; (iv) becoming unable to or failing to pay its debts as they mature; (v) being adjudged a bankrupt; (vi) filing a voluntary petition or suffering an involuntary petition under any bankruptcy, arrangement, reorganization or insolvency law (unless in the case of an involuntary petition, the same is dismissed within thirty (30) days of such filing); (vii) convening a meeting of its creditors or any class thereof for purposes of effecting a moratorium, extension or composition of its debts; or (viii) suffering or permitting to continue unstayed and in effect for thirty (30) consecutive days any attachment, levy, execution or seizure of all or a portion of Lessee's assets or of Lessee's interest in this Lease; then such event shall constitute an event of default under this Lease. 24.2. Remedies of Agency. In the event of any such default as described in Section 24. 1, Agency may, at its option: (a) Correct or cause to be corrected said default and charge the costs thereof (including costs incurred by Agency in enforcing this provision) to the account of Lessee, which charge shall be due and payable within thirty (30) days after presentation by Agency of a statement of all or part of said costs; (b) Correct or cause to be corrected said default and pay the costs thereof (including costs incurred by Agency in enforcing this provision) from the proceeds of any insurance; (c) Exercise its right to maintain any and all actions at law or suits in equity to compel Lessee to correct or cause to be corrected said default; (d) Terminate the Term of this Lease; or (e) Maintain and operate the Site and the Development, without terminating this Lease. 24.3. Damages. Damages which Agency recovers in the event of default under this Lease shall be those which are then available under applicable California case and statutory law to lessors for leases in the State of California including, but not limited to, any accrued but unpaid rent and the worth at the time of award of the amount by which the unpaid rent for the balance of the term of this Lease after the date of award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided. 24.4. Rights and Remedies are Cumulative. The remedies provided by this Section 24 are not exclusive and shall be cumulative to all other rights and remedies possessed by Agency. The exercise by Agency of one or more such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by Lessee. 28 DOCSOC \747477v4\22345.0015 NOW 24.5. Rights of Lenders. (a) Cure by Mortgagee. Any mortgagee shall have the right, at any time during the Term, while this Lease is in full force and effect: (i) to do any act required by Lessee hereunder, and all such acts done or performed shall be effective as to prevent a forfeiture of Lessee's rights hereunder as if the same had been done or performed by Lessee; (ii) to rely on the security afforded by the leasehold estate, and to acquire and to succeed to the interest of Lessee hereunder by foreclosure, whether by judicial sale, by power of sale contained in any security instrument, or by deed given in lieu of foreclosure, and thereafter convey or assign title to the leasehold estate so acquired to any other person, firm or corporation. If the mortgagee or Lessee shall have famished, in writing, to Agency a request for notice, in the event of any default or breach hereunder on the part of Tenant, then Agency will not terminate this Lease by reason of such default or breach if the mortgagee shall, within sixty (60) days after the expiration of the applicable cure periods set forth herein and service on mortgagee of written notice from Agency or Agency's intention to terminate this Lease, either (i) cure such default if the same can be cured by the payment of money; or, if such is not the case (ii) undertake, in writing, to perform all covenants of this Lease capable of performance by mortgagee. In the event of such undertaking, mortgagee shall be deemed to have cured such default if mortgagee proceeds in a timely and diligent manner to accomplish said cure; provided, however, that if in order to accomplish such cure, mortgagee must foreclose on its security interest or obtain leave of the court as in the case of bankruptcy proceedings, such default shall be deemed cured, nevertheless, if mortgagee shall have made every reasonable effort to obtain such leave in a timely and diligent manner or shall have commenced foreclosure proceedings. Provided that mortgagee cures any additional defaults in the manner and within the time herein specified, the inability of mortgagee to cure a default based upon Lessee's bankruptcy or insolvency or other non - curable default shall not permit Agency to terminate the Lease on account of such default. Further, this section shall not be deemed to obligate mortgagee to undertake or cure any default based upon Lessee's bankruptcy or insolvency, or other non - curable default. This obligation of mortgagee for the performance of the terms of this Lease shall terminate upon the sale, transfer or assignment of the right, title and interest of mortgagee in the leasehold estate to any other person, firm or corporation. Any provisions contained in this Lease to the contrary notwithstanding, any mortgagee of the Site or its assignee, may enforce such mortgage and acquire title to the leasehold estate in any lawful manner; and, pending foreclosure of any such mortgage, may take possession of the Site. (b) Consent of Mortgagee. Notwithstanding the provisions of this Lease to the contrary, until such time as the indebtedness of Lessee to mortgagee shall have been fully paid, Agency shall not, without the prior written consent of mortgagee first had and obtained, accept any surrender of this Lease, consent to any modification hereof or consent to the assignment hereof or of any part or portion of the term created thereby or of any of interest therein. 25. MISCELLANEOUS. 25.1 Governing Law. The laws of the State of California shall govern the interpretation and enforcement of this Lease. 29 DOCSOC747477v4\22345.0015 25.2 Legal Actions. In addition to any other rights or remedies, either party may institute legal action 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 Lease. Such legal actions must be instituted in the Superior Court of San Diego County, State of California, in any other appropriate court in that County, or in the United States District Court in the Southern District of California. 25.3 Acceptance of Service of Process. In the event that any legal action is commenced by Lessee against Agency, service of process on Agency shall be made by personal service upon the Chairman or Executive Director or designee of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Lessee, service of process on Lessee shall be made by personal service upon Lessee or in such other manner as may be provided by law, and shall be effective whether made within or without the State of California. 25.4 Attorneys' Fees And Court Costs. In the event that either Agency or Lessee shall bring or commence an action to enforce the terms and conditions of this Lease or to obtain damages against the other party arising from any default under or violation of this Lease, then the prevailing party shall be entitled to and shall be paid reasonable attorneys' fees and court costs therefor in addition to whatever other relief such prevailing party may be entitled. 25.5 Financial Statement; Inspection of Books And Records. Lessee shall submit to the Agency on an annual basis, not later than June 30 of each year during the term of this Lease, a financial statement for the operation of the Site and Development, which is prepared by a certified public accounting firm. In addition, Agency shall have the right (at Lessee's office, upon not less than forty-eight (48) hours' notice, and during normal business hours) to inspect the books and records of Lessee pertaining to the Site as pertinent to the purposes of this Lease. Lessee also has the right (at Agency's office, upon not less than forty-eight (48) hours' notice, and at all reasonable times) to inspect the books and records of Agency pertaining to the Site as pertinent to the purposes of this Lease. Lessee shall retain all records with respect to the income of tenants, and the affordable housing requirements pursuant to Section 6 hereof, for a minimum of seven years. 25.6 Interest. Any amount due Agency that is not paid when due shall bear interest from the date such amount becomes due until it is paid. Interest shall be at a rate equal to the lesser of (i) the discount rate established by the San Francisco office of the Federal Reserve Bank, plus two percent (2 %), on the first day of the month such amount becomes due, and (ii) the maximum rate permitted by applicable law. 25.7 Notices. All notices, statements, demands, requests, consents, approvals, authorizations, offers, agreements, appointments or designations hereunder by either party to the other shall be in writing and shall 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 or registered mail, return receipt requested, postage prepaid, and addressed as follows: 30 DOCSOC \747477v4 \22345.0015 +r. °r" Agency: Poway Redevelopment Agency P.O. Box 789 Poway, California 92074 -0789 Attention: Executive Director Lessee: Haley Ranch Estates Housing Associates, L.P. 1820 Escondido Boulevard, Suite 101 Escondido, California 92025 Attention: Executive Director or to such other address as either parry shall later designate for such purposes by written notice to the other parry. Agency shall also give copies of such notices to any Lender or mortgagee which has requested such notice. Notices shall be deemed effective upon personal delivery or within three (3) days after mailing thereof as provided above; 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 to the delivering parry shall be effective on the third day after the attempted delivery or deposit in the United States mail. 25.8 Time is of the Essence. Time is of the essence in the performance of the terms and conditions of this Lease. 25.9 Non - Merger of Fee And Leasehold Estates. If both Agency's and Lessee's estates in the Site or the Development or both become vested in the same owner, this Lease shall nevertheless not be destroyed by application of the doctrine of merger except at the express election of Agency and Lessee's Mortgagee. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, shall not work as a merger and shall, at the option of Agency, terminate all or any existing sublease or subtenancies or may, at the option of Agency, operate as an assignment to Agency of any or all such existing subleases or subtenancies. 25.10 Holding Over. The occupancy of the Site after the expiration of the Tenn of this Lease shall be construed to be a tenancy from month to month, and all other terms and conditions of this Lease shall continue in full force and effect. 25.11 Conflict of Interest. No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Lease nor shall any such member, official or employee participate in any decision relating to the Lease which affects his personal interests or the interests of any limited partnership, partnership or association in which he or she is directly or indirectly interested. Lessee warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Lease. 25.12 Non - Liability of Agency and City Officials And Employees. No member, official, officer, employee, agent, or representative of Agency or City shall be personally liable to Lessee, or any successor in interest, in the event of any default or breach by Agency or for any amount which may become due to Lessee or successor or on any obligations under the terms of this Lease. 25.13 Relationship. The relationship between the parties hereto shall at all times be deemed to be that of landlord and tenant. The parties do not intend nor shall this Lease be deemed to create a partnership or joint venture. 31 DOCSOC \747477v4\22345.0015 vA0 .�0 25.14 Transactions with Affiliates. Lessee shall not have the right to enter into transactions with subsidiaries, affiliates and other related entities for the purpose of leasing space, providing cleaning, maintenance and repair services, insurance policies and other purposes related to the use and development of the Site and the Development, without the prior written approval of the Agency, which approval shall be given only if the Agency reasonably concludes that all such costs, charges and rents are competitive with the costs, charges, rent and other sums which would be paid by or to, as the case may be, an unrelated third party. 25.15 Waivers And Amendments. All waivers of the provisions of this Lease must be in writing and signed by the appropriate authorities of Agency or Lessee. The waiver by Agency of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition, or any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Agency shall not be deemed to be a waiver of any preceding breach of Lessee of any term, covenant or condition of this Lease, regardless of Agency's knowledge of such preceding breach at the time of acceptance of such rent. Failure on the part of Agency to require or exact full and complete compliance with any of the covenants or conditions of this Lease shall not be construed as in any manner changing the terms hereof and shall not prevent Agency from enforcing any provision hereof. All amendments hereto must be in writing and signed by the appropriate authorities of Agency and Lessee. The Lessee's mortgagee permitted by this Lease shall not be bound by any waiver or amendment to this Lease without Lessee's mortgagee giving its prior written consent. 25.16 Non- Merger With Breihan DDA. None of the terms, covenants or conditions agreed upon in writing in the Breihan DDA and other instruments between the parties to this Lease with respect to obligations to be performed, kept or observed by Lessee or Agency in respect to the Site or any part thereof, shall be deemed to be merged with this Lease. 25.17 Entire Agreement; Duplicate Originals; Counterparts. Except as set forth in Section 25.16, this Lease sets forth the entire understanding of the parties with respect to Lessee's lease of the Site. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, with respect to Lessee's lease of the Site are merged in this Lease and shall be of no further force or effect. This Lease is executed in three (3) duplicate originals and counterparts, each of which is deemed to be an original. This Lease includes six exhibits, Exhibits A, B, C, D, E and F, all of which are incorporated herein. This Lease specifically supercedes that certain Amended and Restated Declaration of Covenants, Conditions and Restrictions made by the Agency as of June 25, 1996, and the Regulatory Agreement shall so provide. 25.18 Severability. If any provision of this Lease or the application thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Lease and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforceable to the greatest extent permitted by law. 25.19 Terminology. All, personal pronouns used in this Lease, whether used in the masculine, feminine, or neuter gender, shall include all other genders; the singular shall include the plural, and vice versa. Titles of sections are for convenience only, and neither limit nor amplify the provisions of the Lease itself. Except for terms expressly defined in this Lease, all terms shall have the same meaning as set forth in the DDA. 32 Docs00747477v4\22345.00 15 25.20 Recordation. A short form memorandum of this Lease, in the form attached hereto as Exhibit "C ", shall be recorded at or within one (1) day after the time the Lease is executed. 25.21 Binding Effect. This Lease, and the terms, provisions, promises, covenants and conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. 25.22 Estoppel Certificate. Each of the parties-shall at any time and from time to time upon not less than twenty (20) days' prior notice by the other, execute, acknowledge and deliver to such other party a statement in writing certifying that this Lease is unmodified and is in full force and effect (or if there shall have been modifications that this Lease is in full force and effect as modified and stating the modifications), and the dates to which the rent has been paid, and stating whether or not to the best knowledge of the signer of such certificate such other party is in default in performing or observing any provision of this Lease, and, if in default, specifying each such default of which the signer may have knowledge, and such other matters as such other party may reasonably request, it being intended that any such statement delivered by Lessee may be relied upon by Agency or any successor in interest to Agency or any prospective mortgagee or encumbrancer thereof, and it being further intended that any such statement delivered by Agency may be relied upon by any prospective assignee of Lessee's interest in this Lease or any prospective mortgagee or encumbrancer thereof. Reliance on any such certificate may not extend to any default as to which the signer of the certificate shall have had no actual knowledge. 25.23 Force Majeure. In addition to specific provisions of this Lease, performance by either party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Lease shall be extended, where delays or Defaults are due to causes beyond the control or without the fault of the party claiming an extension of time to perform, which may include, without limitation, the following: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; natural disasters; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier (other than a contractor, subcontractor or supplier in which Lessee has a twenty -five percent (25 %) or more ownership interest, or which is controlled by Lessee, or which is an affiliated entity of Lessee); acts or omissions of the other party; or acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of Agency which shall not excuse performance by Agency). Notwithstanding anything to the contrary in this Lease, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Lease may also be extended in writing by the mutual agreement of Agency and Lessee. 25.24 Quiet Enjoyment. Agency does hereby covenant, promise and agree to and with Lessee that Lessee, for so long as Lessee is not in default hereof, shall and may at all times peaceably and quietly have, hold, use, occupy and possess the Site throughout the Term. 25.25 Approvals and Actions. Whenever a reference is made herein to an action or approval to be undertaken by Agency, the Executive Director of Agency or his or her designee is authorized to act on behalf of Agency unless specifically provided otherwise or the law otherwise requires. Unless specifically provided otherwise herein, neither party shall unreasonably withhold its approval to any request for such an approval. 33 DOCSOC1747477v4\22345.0015 0 *"w IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed by their lawfully authorized officers. AGENCY: POWAY REDEVELOPMENT AGENCY, a public body corporate and " ^litic By:� ATTEST: Michael P. Caf A ency Secretary APPROVED AS TO FORM: Stradlin Yocca Carlson & Rauth Agency Legal Counsel LESSEE: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community Housing of North County, a California nonprofit corporation, its General Partner Susuan M. Reynolds, Execuri a Director 34 oocsoa747477v4\22345.00 t 5 EXHIBIT A RECORDING REQUESTED BY: ) AND WHEN RECORDED MAIL TO: ) Poway Redevelopment Agency ) 13325 Civic Center Drive ) Poway, California 92064 ) Attention: Redevelopment Director ) This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. FIRST AMENDMENT TO REGULATORY AGREEMENT THIS FIRST AMENDMENT TO REGULATORY AGREEMENT is entered into as of , 2003, by and between the POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership (the "Lessee "). RECITALS A. The parties have entered into a Regulatory Agreement dated as of September 26, 2000 (the "Regulatory Agreement'), which was recorded in the official records of San Diego County on , 2000 as Document No. B. The parties hereto desire to make certain modifications to the Regulatory Agreement. NOW, THEREFORE, the parties hereto agree as follows: 1. Income Level of Tenants. The first paragraph of Section 402.1 of the Regulatory Agreement is revised to read as follows: "402.1 Number of Affordable Units. Lessee agrees to make available, restrict occupancy to, and rent Sixty -Four (64) of the Housing Units to Very Low Income Households, all at an Affordable Rent (except for Pre - Existing Tenants as provided in Section 6.4 hereof). One of the Housing Units may be occupied by the Property Manager." 2. Extremely Low Income Households. All references in the Regulatory Agreement to Extremely Low Income Households are hereby deleted. 3. No Other Changes. Except as expressly provided to the contrary in this First Amendment, the terms of the Regulatory Agreement shall remain in full force and effect as written. All terms used herein and not defined herein but defined in the Regulatory Agreement shall have the meaning given to such terms in the Regulatory Agreement. DOCSOC \975001 v 1 \22345.0015 �4 l I IN WITNESS WHEREOF, Agency and the Lessee have executed this First Amendment to Regulatory Agreement as of the date first set forth above. ATTEST: Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Agency Legal Counsel DOCSOC97500 I x1A22345.0015 AGENCY: POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic Lo James L. Bowersox, Executive Director LESSEE: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community HousingWorks, a nonpt corporation, its Gegp M. Reynolds," Executive Director *me EXHIBIT A SITE MAP .III!! ' '- Lcbrar Par's View. Terrace Vaiky i City Eau Elc --camry Complex School 111111111' Ili llill� Poway Royal E=-S eta uc-oce P: Town & Couattv Plaza Cresside PLzza Brcxhari Sits .w I x A -1 on EXHIBIT B SITE DESCRIPTION Lots 1 through 65 inclusive and Lots A and C through K inclusive, of CITY OF POWAY TRACT NO.89 -14, in the City of Poway, County of San Diego, State of California, according to Map thereof No. 12944, filed in the Office of the County Recorder of San Diego County, June 11, 1992. [a *W 1.0 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO Poway Redevelopment Agency P.O. Box 789 Poway, California 92074 -0789 EXHIBIT C Exempt Prom Recording Fee Pursuant to Government Code Section 27383 MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE ( "Memorandum ") is hereby entered into as of 12000 by and between the POWAY REDEVELOPMENT AGENCY, a public body corporate and politic (the "Agency "), and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership (the "Lessee "). RECITALS A. Agency and Lessee have entered into a "Lease" dated concurrently herewith for that certain parcel of real property which is legally described in Exhibit A attached hereto and incorporated herein by reference (the "Property"). A copy of the Lease is available for public inspection at Agency's office at 13325 Civic Center Drive, Poway, California. The Initial Term of the Lease is two (2) years, and the Subsequent Term of the Lease is forty (40) years with options to extend for four ten (10) year periods, which Subsequent Term may commence under certain conditions set forth in the Lease. B. The Lease provides that a short form memorandum of the Lease shall be executed and recorded in the Official Records of San Diego County, California. NOW, THEREFORE, the parties hereto certify as follows: Agency hereby leases the Property to the Lessee upon the terms and conditions provided for in the Lease. This Memorandum of Lease is not a complete summary of the Lease, and shall not be used to interpret the provisions of the Lease. C -1 DOCSOC \747477v4\22345.00 t 5 1%w .0 ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Agency Legal Counsel POWAY REDEVELOPMENT AGENCY, a public body corporate and politic 0 LESSEE: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community Housing of North County, a California nonprofit corporation, its General Partner M C -2 DOCSOC\747477v4\22345.0015 Susan M. Reynolds, Executive Director +rr� EXHIBIT D .Mo RECORDING REQUESTED BY: ) AND WHEN RECORDED MAIL TO: ) Poway Redevelopment Agency ) P.O. Box 789 ) Poway, California 92074 -0789 ) Attention: Executive Director L ms aocument 1s exempt trom the payment o art fee pursuant to Government Code Section 27383. REGULATORY AGREEMENT THIS REGULATORY AGREEMENT is entered into as of , 2000 by and between the POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency "), and HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership (the "Lessee "). RECITALS A. The parties have entered into a Lease dated as of 2000 (the "Lease "), whereby the Agency has agreed to lease to the Lessee a sixty -five unit manufactured home community (the "Development ") on that certain real property in the City of Poway (the "City"), as shown on the "Site Map" attached hereto as Exhibit "A" and incorporated herein by this reference, and having the legal description in the "Site Description" attached hereto as Exhibit `B" and incorporated herein by this reference (the "Site "). B. The Lessee's operation of the Development is intended to implement the Agency's goals and objectives under the Community Redevelopment Act to increase, improve and preserve housing available at affordable housing cost to persons and families of low and moderate income, pursuant to Health & Safety Code Section 33' )34.2, et seq., and to provide replacement housing pursuant to Health and Safety Code Section 33413(a). of the Lease. C. The execution and recording of this Regulatory Agreement is a requirement D. The parties hereto intend that this Regulatory Agreement and the Lease specifically supercede that certain Amended and Restated Declaration of Covenants, Conditions and Restrictions made by the Agency as of June 25, 1996, which was recorded on July 8, 1996 in the official records of San Diego County, California, as Instrument No. 1996- 0339291 (the "1996 CC &Rs "). NOW, THEREFORE, the parties hereto agree as follows: 100. DEFINITIONS "Act" means the Community Redevelopment Law of the State of California, Health and Safety Code Section 33000, et seq. DOCSOCV49860v4122345.0015 Exhibit D -1 "ADA" shall mean the Americans with Disabilities Act of 1990, as the same may from time to time be amended (42 U.S.C. § 12101, et seq.). "Affordability Period" shall mean the duration of the affordable housing requirements which are set forth in this Regulatory Agreement and the Lease, as set forth in Section 402.2 hereof. "Affordable Rent" shall have the meaning set forth in Health and Safety Code Section 50053, as furtli@r defined in Section 402.5 hereof.- "Agency" means the Poway Redevelopment Agency, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California, and any assignee of or successor to its rights, powers and responsibilities. "City" means the City of Poway, California, a California municipal corporation. The City is not a party to this Regulatory Agreement and shall have no obligations hereunder. "County" shall mean the County of San Diego, California. "Default" means the failure of a party to perform any action or covenant required by this Regulatory Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 501 hereof. "Development" means the sixty-five unit manufactured home community on the Site. "Extremely Low Income Household" shall mean a household earning not greater than thirty- five percent (35 %) of San Diego County median income, as such median income is set forth by regulation of the California Department of Housing and Community Development. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders, and decrees of the United States, the state, the County, the City, or any other political subdivision in which the Site is located, and of any other political subdivision, agency, or instrumentality exercising jurisdiction over the Lessee or the Site. "Gross Mismanagement" is defined in Section 405 hereof. "Lease" shall mean the Lease dated as of Agency and Lessee. 2000, by and between the "Hazardous Materials" means any substance, material, or waste which is or becomes regulated by any local governmental authority, the County, the State of California, regional governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance.' under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter - Presley- Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the DOCSOC1749860v4\22345.0015 .✓ *AW California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §6901 et seq. Notwithstanding the foregoing, "Hazardous Materials" shall not include such products in quantities as are customarily used in the construction, maintenance, rehabilitation or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Development, including without limitation alcohol, aspirin, tobacco and saccharine. "Housing Fund" means the Agency's Low and Moderate Income Housing Fund, established pursuant to Health and Safety Code Section 33334.3. "Housing Units" means the individual rental housing units within the Development to be operated by the Lessee on the Site, as provided in Section 301 hereof. "Lower Income Household" shall mean a household earning not greater than that percentage of San Diego County median income (generally 80 %) which is set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50079.5, or successor statute. "Lower Income Household" may include an Extremely Low Income Household or Very Low Income Household. "Lessee" means Haley Ranch Estates Housing Associates, L.P., a Califor niaJimited partnership. "Notice" shall mean a notice in the form prescribed by Section 601 hereof. "Pre- Existing Tenants" means any tenants of the Housing Units as of the commencement date of the Lease. "Property Manager" shall mean the management company or manager which is hired by the Lessee to operate and maintain the Site and the Development, as set forth in Section 405 hereof. "Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project, as originally adopted on December 13, 1983 by Ordinance No. 117 of the City Council of the City, and amended on June 15, 1993 by Ordinance No. 415, all of which are incorporated herein by reference. "Redevelopment Project" means the Paguay Redevelopment Project, adopted by the City pursuant to the Redevelopment Plan. "Regulatory Agreement" means this Regulatory Agreement between the Agency and the Lessee. "Rent" shall mean the total of monthly payments by the tenants of a Housing Unit for use and occupancy for the Housing Unit and facilities associated therewith, including a reasonable DOCSOC174986uv4122345.0015 03 n.. allowance for utilities for an adequate level of service, as defined in 25 California Code of Regulations §6918, or successor statute. "Site" means that certain real property in the City which is owned by the Agency, located and more particularly described in the Site Legal Description and depicted on the Site Map. "Site Legal Description "means the description of the Site which is attached hereto as Attachment No. 2 and incorporated herein. "Site Map" means the map of the Site which is attached hereto as Attachment No. 1 and incorporated herein. "Very Low Income Household" shall mean a household earning not greater than fifty percent (50 1/o) of San Diego County median income, as set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50105, or successor statute. 200. CONDITION OF THE SITE 201. Lessee Precautions. Lessee shall take all necessary precautions to prevent the release into the environment of any Hazardous Materials which are located in, on or under the Site. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Lessee shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. 202. Lessee Disclosures. The Lessee shall notify Agency, and provide to Agency a copy or copies, of all environmental permits, disclosures, applications, entitlements, or inquiries relating to the Site, including notices of violation, notices to comply, citations, inquiries, clean -up or abatement orders, cease and desist orders, reports filed pursuant to self - reporting requirements and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials. Lessee shall report to Agency, as soon as possible after each incident, any unusual or potentially important incidents with respect to the environmental condition of the Site. In the event of a release of any Hazardous Materials into the environment, Lessee shall, as soon as possible after the release, furnish to Agency a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request, the Lessee shall fumish to Agency a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Site including, but not limited to, all permit applications, permits and reports including, without limitation, those reports and other matters which may be characterized as confidential. 203. Lessee Indemnity. Lessee agrees to indemnify, defend and hold Agency harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees), resulting from, arising out of, or based upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in 'or about, or the transportation of any such Hazardous Materials to or from, the Site during the term of the Lease (including any extensions thereto), or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous DOCSOC \749860v4 \22345.0015 Materials on, under, in or about, to or from, the Site during the term of the Lease (including any extensions thereto). This indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity after closing, cost or expense arising from or out of any claim, action, suit or proceeding, including injunctive, mandamus, equity or action at law, for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. This indemnity shall exclude such matters which are caused by the gross negligence or willful misconduct of the Agency or its officers, officials, employees, agents, or representatives. 300. INDEMNIFICATION AND COMPLIANCE WITH LAWS 301. Indemnity. Lessee shall defend, indemnify, assume all responsibility for, and hold Agency and City, and their respective officers, employees, agents, and representatives harmless from, all claims, demands, damages, defense costs or liability of any kind or nature (including attorneys' fees and costs) and for any damages to property or injuries to persons, including accidental death which may be caused by or arise out of the Lessee's performance or failure to perform its obligations pursuant to this Regulatory Agreement, whether such activities or performance thereof be by the Lessee or by anyone employed or contracted with by the Lessee and whether such damage shall accrue or be discovered before or after termination of this Regulatory Agreement. Lessee shall not be liable for property damage or bodily injury occasioned by the negligence of, willful misconduct of, or breach of this Regulatory Agreement by Agency or its agents or employees. Agency shall defend, indemnify, assume all responsibility for, and hold Lessee and its officers, employees, agents, and representatives harmless from, all claims, demands, damages, defense costs or liability of any kind or nature (including attorneys' fees and costs) and for any damages to property or injuries to persons, including accidental death which may be caused by or arise out of the Agency's performance or failure to perform its obligations pursuant to this Regulatory Agreement, whether such activities or performance thereof be by the Agency or by anyone employed or contracted with by the Agency and whether such damage shall accrue or be discovered before or after termination of this Regulatory Agreement. Agency shall not be liable for property damage or bodily injury occasioned by the negligence of, willful misconduct of, or breach of this Regulatory Agreement by Lessee or its agents or employees. 302. Compliance With Laws. Lessee shall carry out its responsibilities with respect to the Development in conformity with all applicable laws, including all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, the Fair Housing Act, the California Fair Employment and Housing Act, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and the California Building Standards Code, Health and Safety Code Section 18900, et seq. 400. COVENANTS AND RESTRICTIONS 401. Use Covenants. Lessee covenants and agrees for itself, its successors, assigns, and every successor in interest to the Site or any part thereof, that the Lessee shall devote the Site to the uses specified in the Lease, this Regulatory Agreement, and that certain "Memorandum of Judgment" 5 DOCS00749860v4122345.0015 r✓ ..r which has been recorded with respect to the Site in the Official Records of San Diego County concurrently herewith (the "Memorandum of Judgment "), the Redevelopment Plan, and all applicable provisions of the City Municipal Code, whichever is the more restrictive. 402. Affordable Housing Requirements. 402.1 Number of Affordable Units. Lessee agrees to make available, restrict occupancy to, and rent Fifty -Five (55) of the Housing Units to Very Low Income Households, and Nine (9) of the Housing Units to Extremely Low Income Households, all at an Affordable Rent (except for Pre - Existing Tenants as provided in Section 402.4 hereof). One of the Housing Units may be occupied by the Property Manager. 402.2 Duration of Affordability Requirements. The Housing Units shall be subject to the requirements of this Section 402 in perpetuity. The duration of this requirement shall be known as the "Affordability Period." 402.3. Selection of Tenants. Lessee shall be responsible for the selection of tenants for the Housing Units in compliance with the Management Plan, as approved pursuant to Section 405 hereof. Preference shall be given to tenants who have been displaced by redevelopment activities of Agency in the implementation of the Redevelopment Plan. 402.4 Household Income Requirements. Lessee shall annually submit to Agency, as an operating expense of the Development, a summary of the income, household size and rent payable by each of the tenants of the Housing Units. At the Agency's request, the Lessee shall also provide to the Agency completed income computation and certification forms, in a form acceptable to the Agency, for any such tenant or tenants. Lessee shall obtain, or shall cause to be obtained by the Property Manager, a certification from each household leasing an Affordable Unit demonstrating that such household is a Very Low Income Household, Extremely Low Income Household or Lower Income Household, as applicable, and meets the eligibility requirements established for the Housing Unit. Lessee shall verify, or shall cause to be verified by the Property Manager, the income certification of the household as set forth in Section 403 hereof. No residents of the Housing Units as of the date of this Agreement ( "Pre- Existing Tenants ") shall be evicted from their Housing Units solely because such residents do not meet the income requirements of this Section 402.4. The rent charged to the Pre - Existing Tenants shall be as specified in Section 402.6 hereof. Upon the vacation of a Housing Unit by a Pre- Existing Tenant, the Housing Unit shall then become subject to the requirements of this Section 402.4. The first such Housing Units vacated by Pre- Existing Tenants shall be rented to Very Low Income Households until the satisfaction of the requirement of Section 402.1 to rent fifty -five (55) Housing Units to Very Low Income Households, and the next units vacated by Pre - Existing Tenants shall be rented to Extremely Low Income Households. 402.5 Over- Income Tenants. If, based upon the updated income certification performed pursuant to Section 402.4, an existing tenant of a Housing Unit (other than a Pre - Existing Tenant) no longer qualifies as a Very Low Income Household or Extremely Low Income Household, but qualifies as a Lower Income Household, Lessee shall continue to rent the Housing Unit to such tenant, but the rent shall be increased to the level specified in Section 402.6 hereof for Lower Income Households. If, based upon such income certification, an existing tenant of a Housing Unit (other than a Pre- Existing Tenant) no longer qualifies as either a Very Low Income Household, Extremely Low Income Household or Lower Income Household, Lessee shall notify such tenant that such tenant's lease shall terminate within a reasonable period, not to exceed nine (9) months from the date DOCSC C V 49860v4\22345.0015 of such notice, and Lessee shall use commercially reasonably efforts to cause such tenants to vacate their Housing Unit by such time. 402.6 Determination of Affordable Rent for the Housing Units. Each Housing Unit shall be rented at an "Affordable Rent' to be established as provided herein: a. The monthly rental amount for the Housing Units to be rented to Extremely Low Income Households (less reasonable utility allowance) shall not exceed one - twelfth (1/12) of thirty percent (30 %) of thirty -five percent (35 %) of San Diego County median income for a family of a size appropriate to the Housing Unit (as defined in Health and Safety Code Section 50053, or successor statute). b. The monthly rental amount for the Housing Units to be rented to Very Low Income Households (less reasonable utility allowance) shall not exceed one - twelfth (1/12) of thirty percent (30 %) of fifty percent (50 %) of San Diego County median income for a family of a size appropriate to the Housing Unit (as defined in Health and Safety Code Section 50053, or successor statute). C. The monthly rental amount for the Housing Units rented to Lower Income Households (less reasonable utility allowance) shall not exceed the greater of (a) one - twelfth (1/12) of thirty percent (30 %) of sixty percent (60 %) of San Diego County median income for a family of a size appropriate to the Housing Unit (as defined in Health and Safety Code Section 50053), or (b) one - twelfth (1/12) of thirty percent (30 %) of the actual income of the resident. d. The monthly rental amount for the Housing Units rented to Pre - Existing Tenants (less reasonable utility allowance) shall not exceed the greater of (i) one - twelfth (1/12) of thirty percent (30 %) of the actual income of the resident, or (ii) the minimum rent payable by such tenant as set forth in Attachment No. 3 hereto, which is incorporated herein. In the event that Lessee accepts excessive rent, Lessee shall promptly after notice from the Agency repay the amount of the overcharge to the residents so charged. 403. Verifications. 403.1 Income Verification. Lessee shall verify, or shall cause its property manager to verify, the income of each proposed and existing tenant of the Housing Units in an appropriate manner on an annual basis. 403.2 Annual Reports. On or before June 30 of each year, commencing 2001, Lessee, as an expense of the Development, shall submit to Agency the reports required pursuant to Health and Safety Code Section 33418, as the same may be amended from time to time, with each such report to be in a form reasonably acceptable to Agency. Each annual report shall cover the immediately preceding fiscal year. 404. Marketing Plan. Lessee has submitted to the Agency Executive Director, and the Agency Executive Director has approved, a plan for marketing the rental of the Housing Units. Such marketing plan shall include a plan for publicizing the availability of the Housing Units within the City, and for notifying employees of businesses located in the City, such as notices in any City sponsored newsletter, newspaper advertising in local newspapers, notices in City offices, and other D0CSOC'049860v4122345.0015 media of general circulation. The marketing plan shall require Lessee to obtain from the Agency the names of low and moderate income persons who have been displaced by the Redevelopment Project, and to notify persons on such list of the availability of units in the Development prior to undertaking other forms of marketing. The marketing plan shall provide that the persons on such list of displaced persons be given not fewer than ten (10) days after receipt of such notice to respond by completing application forms for rental of Housing Units, as applicable. The marketing of the Housing Units in the Development shall be in compliance with the Marketing Plan which is approved by the Agency. The Lessee and Property Manager may from time to time submit proposed amendments to the Marketing Plan, which shall also be subject to the prior written approval of the Agency Executive Director or designee. 405. Management. Lessee shall manage or cause the Site and the Development to be managed in a prudent and business -like manner, consistent with other comparable high quality rental housing projects in San Diego County, California. Lessee may contract with a management company or manager to operate and maintain the Site and the Development in accordance with the terms of this Lease (hereinafter "Property Manager" or "Management Company "); provided, however, that the selection and hiring of such management company shall be subject to approval by Agency's Executive Director or designee. Approval of a management company or manager by Agency shall not be unreasonably withheld or delayed, and the Agency shall use good faith efforts to respond as promptly as practicable in order to assist in facilitating the proper management of the Development. The Agency hereby approves Cuatro Properties as the initial Property Manager. The request for approval of a Property Manager shall be accompanied by a prominent notice that the Agency's failure to approve the proposed Property Manager within fifteen (15) working days of such notice will result in the Property Manager being deemed to have been approved by the Agency. Provided that the foregoing notice requirements have been satisfied, the proposed Property Manager shall be deemed approved by the Agency in the event of the Agency's failure to approve the proposed Property Manager within fifteen (15) working days of such notice. Furthermore, the identity of the Property Manager shall not be changed without the prior approval of the Agency, which approval shall not be unreasonably withheld. The Lessee and its Property Manager has submitted to the Agency Executive Director, and the Agency Executive Director has approved, a detailed "Management Plan" which sets forth in detail the duties of the Property Manager, the tenant selection process, a crime prevention program, the procedures for the collection of rent, the procedures for monitoring of occupancy levels, the procedures for eviction of tenants, the rules and regulations of the Development and manner of enforcement, a standard lease form, and other matters relevant to the management of the Development. The management of the Development shall be in compliance with the Management Plan which is approved by the Agency Executive Director or designee. The Lessee and Property Manager may from time to time submit proposed amendments to the Management Plan, which shall also be subject to the prior written approval of the Agency Executive Director or designee. In the event of "Gross Mismanagement" (as that term is defined below) of the Development, Agency shall have the authority to require that such Gross Mismanagement cease immediately, and further to require the immediate replacement of the Property Manager if such condition is not corrected after expiration of sixty (60) days from the date of written notice from Agency. For purposes of this Regulatory Agreement, the term "Gross Mismanagement" shall mean management of the Development in a manner which violates the terms and/or intention of this Regulatory Agreement to operate a high quality housing complex, and shall include, but is not limited to, any one or more of the following: DOCSOC \74986Ov4\22345.0015 i.r INWY (a) Repeatedly leasing to tenants who exceed the prescribed income levels; (b) Repeatedly allowing the tenants to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding; (c) Repeatedly underfunding the prescribed Capital Replacement and Operating Reserves; (d) Repeatedly failing to timely maintain the Development and the Site in accordance with the Management Plan and the manner prescribed herein; (e) Repeatedly failing to submit timely and/or adequate annual reports as required in Section 403 hereof; (f) Fraud or embezzlement of Development monies, including without limitation the funds in the Capital Replacement Reserve and Operating Reserve; and (g) Repeatedly failing to fully cooperate with the San Diego County Sheriffs Department, or other local law enforcement agencies with jurisdiction over the Development, in maintaining a crime -free environment on the Site. Notwithstanding the above, Lessee shall use its best efforts to correct any defects in management at the earliest feasible time and, if necessary, to replace the Property Manager as provided above. 406. Maintenance of Site. Lessee agrees for itself and its successors in interest to all or any portion of the Site, to maintain the Site in conformity with the City Municipal Code and the requirements set forth in the Lease, and shall keep the Site free from any accumulation of debris or waste materials. During such period, the Lessee shall also maintain the landscaping planted on the Site in a healthy condition. If at any time Lessee fails to maintain the Site and such condition is not corrected within five days after written notice from Agency with respect to graffiti, debris, waste material, landscaping and general maintenance, or thirty days after written notice from Agency with respect to building improvements, then Agency, in addition to whatever remedy it may have at law or at equity, shall have the right to enter upon the applicable portion of the Site and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Site, and to attach a lien upon the Site, or to assess the Site, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by Agency and/or costs of such cure, including a fifteen percent (15 %) administrative charge, which amount shall be promptly paid by Lessee to Agency upon demand. 407. Nondiscrimination Covenants. Lessee covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Lessee itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site or any portion thereof. The foregoing covenants shall run with the land. DDC SOC V 49860v4\22345.0015 NW ..r Lessee shall refrain from restricting the rental, sale or lease of the Site on the basis of race, color, religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." C. In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises." 408. Effect of Violation of the Terms and Provisions of this Regulatory Agreement. Agency is deemed the beneficiary of the terms and provisions of this Regulatory Agreement and of the covenants running with the land, for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Regulatory Agreement and the covenants running with the land have been provided, without regard to whether Agency has been, remains or is an owner of any land or interest therein in the Site or in the Redevelopment Project Area. Agency shall have the right, if this Regulatory Agreement is breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Regulatory Agreement and such covenants may be entitled. 10 DOCSOC V 49860v4\22345.0015 ti.., 140se 500. DEFAULTS AND REMEDIES 501. Default Remedies. Subject to the extensions of time set forth in Section 602 of this Regulatory Agreement, a material failure by either party to perform any action or covenant required by this Regulatory Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default' under this Regulatory 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 Regulatory Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with diligence. 502. Institution of Legal Actions. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Regulatory Agreement, either party may institute an action at law or equity to seek specific performance of the terns of this Regulatory 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 Regulatory Agreement. Such legal actions must be instituted in the Superior Court of the County of San Diego, State of California, in an appropriate municipal court in that county, or in the United States District Court for the Southern District of California. 503. Acceptance of Service of Process. In the event that any legal action is commenced by the Lessee against Agency, service of process on Agency shall be made by personal service upon the Executive Director of Agency or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against the Lessee, service of process shall be made in such manner as may be provided by law and shall be effective whether served inside or outside of California. 504. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Regulatory Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the other party. 505. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 506. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Regulatory Agreement. 600. GENERAL PROVISIONS 601. Notices, Demands and Communications Between the Parties. Any approval, disapproval, demand, document or other notice ( "Notice ") which either party may desire to give to the other party under this Regulatory Agreement must be in writing and may be given either by (i) 1t DOCSOC \749860v4 \22345.0015 .r. 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 party may later designate by Notice. To Agency: Poway Redevelopment Agency P.O. Box 789 Poway, California 9207410789 Attention: Executive Director To Lessee: Haley Ranch Estates Housing Associates, L.P. 1820 S. Escondido Boulevard, Suite 101 Escondido, California 92025 Attention: Executive Director 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. 602. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Regulatory Agreement, performance by either party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Regulatory Agreement shall be extended, where delays or Defaults are due to causes beyond the control or without the fault of the party claiming an extension of time to perform, which may include, without limitation, the following: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; natural disasters; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier (other than a contractor, subcontractor or supplier in which Lessee has a twenty-five percent (25 %) or more ownership interest, or which is controlled by Lessee, or which is an affiliated entity of Lessee); acts or omissions of the other party; or acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of Agency which shall not excuse performance by Agency). Notwithstanding anything to the contrary in this Regulatory Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Regulatory Agreement may also be extended in writing by the mutual agreement of Agency and Lessee. 603. Transfers of Interest in Site or Regulatory Agreement. The qualifications and identity of the Lessee are of particular concern to Agency. It is because of those qualifications and identity that Agency has entered into this Regulatory Agreement with the Lessee. For the term of this Regulatory Agreement, no voluntary or involuntary successor in interest of the Lessee shall acquire any rights or powers under this Regulatory Agreement, nor shall the Lessee make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Site or the Development thereon, except as permitted or approved by the Agency pursuant to Section 14 of the Lease. Agency may assign or transfer any of its rights or obligations under this 12 DOCS00749860 V 4Q2345.0015 VOW .0 Regulatory Agreement with the approval of the Lessee, which approval shall not be unreasonably withheld; provided, however, that Agency may assign or transfer any of its interests hereunder to the City at any time without the consent of the Lessee. 604. Covenants Run With the Land. All covenants without regard to technical classification or designation shall be binding on Lessee, its successors and assigns, and for the benefit of Agency and such covenants shall run in favor of Agency for the entire period during which such covenants shall be in force and effect, without regard to whether Agency is or remains an owner of any land or interest therein to which such covenants relate. All covenants contained in this Regulatory Agreement shall be construed as covenants running with the land and shall bind Lessee and its successors and assigns, and every successor in interest to the Site or any part thereof, and shall not be construed as conditions which might result in forfeiture of the Site or any rights therein. 605. Rights of Mortgagees. The provisions of this Regulatory Agreement do not limit the right of any mortgagee or beneficiary under a deed of trust which secures construction or permanent financing to foreclose or otherwise enforce any mortgage, deed of trust, or other encumbrance upon Lessee's interest in the Site or any portion thereof, or the right of any mortgagee or beneficiary under a deed of trust to exercise any of its remedies for the enforcement of any pledge or lien upon the Site, provided, however, that in the event of any foreclosure under any such mortgage, deed of trust or other lien or encumbrance, or a sale pursuant to any power of sale included in any such mortgage or deed of trust, the purchaser or purchasers and their successors and assigns and the Site shall be, and shall continue to be, subject to the Lease and all of the conditions, restrictions and covenants contained in this Regulatory Agreement. 606. Term of Regulatory Agreement. Except as provided otherwise herein, the terms and requirements set forth in this Regulatory Agreement shall remain in effect in perpetuity. 607. Non - Liability of Officials and Employees of Agency. No member, official, officer or employee of Agency or the City shall be personally liable to the Lessee, or any successor in interest, in the event of any Default or breach by Agency (or the City) or for any amount which may become due to the Lessee or its successors, or on any obligations under the terms of this Regulatory Agreement. 608. Relationship Between Agency and Lessee. It is hereby acknowledged that the relationship between Agency and Lessee is not that of a partnership or joint venture and that Agency and Lessee shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided in this Regulatory Agreement, including the Attachments hereto, Agency shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Development. 609. Agency Approvals and Actions. Whenever a reference is made herein to an action or approval to be undertaken by Agency, the Executive Director of Agency or his or her designee is authorized to act on behalf of Agency unless specifically provided otherwise or the law otherwise requires. 610. Counterparts. This Regulatory Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. This Regulatory Agreement is executed in three (3) originals, each of which is deemed to be an original. 13 DOCSOC 749860v4122345.0015 611. Integration. This Regulatory Agreement, together with the Lease, and all attachments and documents executed pursuant thereto, contains the entire understanding between the parties relating to the transaction contemplated by this Regulatory Agreement. This Regulatory Agreement and the Lease specifically supercede the 1996 CC &Rs. 612. Real Estate Brokerage Commissions. Agency and Lessee each represent and warrant to the other that no broker or finder is entitled to any commission or finder's fee in connection with this transaction, and each agrees to defend and hold harmless the other from any claim to any such commission or fee resulting from any action on its part. 613. 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 Regulatory 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. 614. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe, or limit the scope or the intent of this Regulatory Agreement or of any of its terms. Reference to section numbers are to sections in this Regulatory Agreement, unless expressly stated otherwise. 615. Interpretation. As used in this Regulatory Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Regulatory Agreement shall be interpreted as though prepared jointly by both parties. 616. No Waiver. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Regulatory Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Regulatory Agreement. 617. Modifications. Any alteration, change, or modification of or to this Regulatory Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 618. Severability. If any term, provision, condition, or covenant of this Regulatory Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Regulatory Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 619. Computation of Time. The time in which any act is to be done under this Regulatory Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 14 DOCSOC \749860x4\22345.0015 'r/ W 620. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Regulatory Agreement, and in signing this Regulatory Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Regulatory Agreement, and they have freely signed this Regulatory Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Regulatory Agreement, and without duress or coercion, whether economic or otherwise. 621. Time of Essence. Time is expressly made of the essence with respect to the performance by the parties of each and every obligation and condition of this Regulatory Agreement. 622. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Regulatory Agreement including, but not limited to, releases or additional agreements. 623. Conflicts of Interest. No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Regulatory Agreement, nor shall any such member, official or employee participate in any decision relating to the Regulatory Agreement which affects his personal interests or the interests of any limited partnership, partnership or association in which he is directly or indirectly interested. 624. Time for Acceptance of Regulatory Agreement by Agency. This Regulatory Agreement, when executed by the Lessee and delivered to Agency, must be authorized, executed and delivered by Agency on or before thirty (30) days after signing and delivery of this Regulatory Agreement by the Lessee or this Regulatory Agreement shall be void, except to the extent that the Lessee shall consent in writing to a further extension of time for the authorization, execution and delivery of this Regulatory Agreement. 625. No Third Party Beneficiaries. Notwithstanding any other provision of this Regulatory Agreement to the contrary, nothing herein is intended to create any third parry beneficiaries to this Regulatory Agreement, and no person or entity other than Agency and Lessee, and the permitted successors and assigns of any of them, shall be authorized to enforce the provisions of this Regulatory Agreement. 15 DOCSOC 749860v4 \22345.0015 ,also, IN WITNESS WHEREOF, Agency and the Lessee have executed this Regulatory Agreement as of the date fast set forth above. ATTEST: Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Agency Legal Counsel AGENCY: POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic 0 LESSEE: HALEY RANCH ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community Housing of North County, a California nonprofit corporation, its General Partner By: Susan M. Reynolds, Executive Director 16 DOCSOC \749860x4\22345.0015 *AW r.. ATTACHMENT NO.3 MINIMUM RENT CALCULATIONS There are three minimum rent categories: Category I — Relocatees from the former Haley's Trailer Ranch Category II — Residents of Haley Ranch Estates who moved in between February 1, 1996 and October 1, 2000 Category III — Residents of Haley Ranch Estates who moved in prior to February 1, 1996 The method of minimum rent calculation is as follows: Minimum Rent for Relocatees from the former Haley's Trailer Ranch. Minimum rent is currently $220 per month. The minimum rent amount i2 calculated by taking the existing minimum rent amount and increasing it by $20 per month annually (each July 1) until the minimum rent amount reaches the Category II minimum rents adjusted for the appropriate household size. Residents of Haley Ranch Estates who moved in between February 1, 1996 and October 1, 2000. Minimum rent is calculated by taking 35% of the current adjusted Median Annual Income (by Family Size), divided by 12 (to generate a monthly figure) times 30% housing cost, minus the standard utility allowance to generate the minimum rent calculations. 2000 MINIMUM RENT Family Size 3 4 5 6 7 Minimum Rent $360 $407 $444 $482 $520 Minimum Rent for households moving into Haley Ranch prior to February 1, 1996. The transitional minimum rent was established in 1996 to lessen the impact of the minimum rent increases on existing households by having the rents gradually increase the Category II minimum rent amount. Minimum rent is calculated first by the method established for the Category II households. Category III households paying less than the minimum rent established by this Attachment No. 3 -1 DOCSOC W49860v4\22345.0015 %WO VAKWI Category II method will have their rents gradually increased to the Category II by the following formula. Category III households pay a minimum rent referred to as a "transitional minimum rent". The transitional minimum rent is calculated by taking the last year transitional rent and increasing it by the increase in the County Median Income Figure (AMI) plus $25.00. In 1996, the transitional minimum rent was $225 per month, $260.72 in 1997, $297.53 in 1998, $332.94 in 1999, and is currently $365.53, for 2000. The current year calculation represents $332.94 (1999 amount) plus the 2.28% increase between the 1999 San Diego Area Median Income of $52,500 and the 2000 Median Income of $53,700, plus $25. 2000 TRANSITIONAL MINIMUM RENT Family Size 3 4 5 6 7 Minimum Rent $360* $365.53 $365.53 $365.53 $365.53 *The minimum rent for a household of 3 would be $360 per month, not $365.53, as $360.00 is the Category II minimum rent for a household of 3. Over the next few years, the transitional rent will exceed the Category II minimum rent amount for all household sizes, and will no longer be necessary. Residents moving in after October 1, 2000, have a flat rent calculation. Attachment No. 3 -2 DOCSOC\749860v4\22345.0015 STATE OF CALIFORNIA COUNTY OF On personally appeared , before me, ss. .,,. (Print Name of Notary Public) Notary Public, ❑ personally known to me -or- F1 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer Title(s) ❑ Partner(s) ❑ Limited ❑ General ❑ Attomey -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) DOCSOC \74986Ov4\22 345.0015 DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Of Pages Date Of Documents Signer(s) Other Than Named Above .r STATE OF CALIFORNIA COUNTY OF On personally appeared r..r ss. before me, , Notary Public, (Print Name of Notary Public) ❑ personally known to me -or- proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document ❑ Partner(s) ❑ Limited ❑ General ❑ Attomey -In -Fact ❑ Trustee(s) ❑ Number Of Pages Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) Date Of Document Signer(s) Other Than Named Above DOC SOC17499N)v4�22745.0015 RECORDING.REQUESTED BY AND WHEN RECORDED,MAII,'TO: Poway Redevelopment Agency P.O. Box 789 Poway, California 92074 -0789 EXHIBIT E Code 0 COVENANT REGARDING REAL PROPERTY By the terms of Sections 3(3) and 7 of the Judgment entered April 6, 1995, in Judgment Book Number 2438 at page no.. 434, in Aleen L. Smith and Cheri L. Craig v. All.Persons Interested in:the Matter of the Validity of the Amendment to the Redevelopment Plan for the;Paguay Redevelopment Project Area, et al., San Diego Superior Court Case No. 667691, housing:acquited, built or preserved by the Poway Redevelopment Agency on that real property described in Exhibit "A" attached hereto and incorporated herein is restricted,inperpetuity for housing at affordable housing costs (as defined in Health and Safety Code;Section'50053 and California Code of Regulations Section 69 18) to very low income households (as,defined'in Health and Safety Code Section 50105), provided, that the restrictions may be eliminated iif the restricted units can be located within the City of Poway, in accordance with the Community' Redevelopment Law, and provided further that the restrictions may be eliminated if it is determined in the future that the need for which the units were reserved no longer exists. POWAY REDEVELOPMENT AGENCY, a public body corporate and politic ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson, &Rauth Agency Legal Counsel E -1 DOCSOC \747477v4\22345.0015 APPROVED BVLESSEEi HALEY RANCH °ESTATES HOUSING ASSOCIATES, L.P., a California limited partnership By: Community Housing of North County, a California nonprofit corporation, its General Partner M E -2 DOCSOC \747477v4 \22345.0015 Susan M. Reynolds, Executive Director • it EXHIBIT "A" TO COVENANT REGARDING REAL PROPERTY LEGAL DESCRIPTION' A -1 DOCSOC V a7477va\22345.ao 15 EXHIBIT F MINIMUM RENT CALCULATIONS There are three minimum;rent categories: Category I — Relocatees from the former Haley's Trailer Ranch Category II — Residents of Haley.Ranch Estates who moved in ,between February 1, 1996 and October 1, 2000 Category III — Residents of Haley Ranch Estates who moved in prior to February 1, 1996 The method of minimum:rent calculation is as follows: Cate-ory Minimum Rent for Relocatees from the former Haley's Trailer Ranch. Minimum rent is currently $220 per month. The minimum,rent amount is !calculated by taking. the existing minimum rent amount and increasing if by $20 per month annually (each July °1) until the minimum rent amount;reaches the Category II minimum rentsadjusted for the_ appropriate household size. Category II Residents of Haley Ranch Estates who°moved in between February 1, 1996, and October 1, 2000. Minimum rent is calculated by taking 35% of the current adjusted.Median Annual Income (by Family Size), divided by 12 (to generate a monthly figure) times 30%u housing cost, minus the standard utility allowance to generate the minimum rent calculations. 2000 NEDMgUNI RENT Family Size 3 4 5 6 7 Minimum Rent $360 $407 $444 $482 $520 Minimum Rent for.households moving into Haley Ranch prior to February 1, 1996. The transitional minimum': rent was established in 1996 to lessen the impact of the minimum rent increases on existing households by having the rents, graduallyincreasethe Category II minimum rent amount. Minimum renfis calculated first by the method established:foc'th- Category II households. Category III: households,paying less than the minimum rent established by this F -1 6 0 Category 11 method will' have,theinrents gradually increased to the Category II by the following formula. Category III households;pay a,mimm— um,rent referred to as,a "transitional minimum rent ". The transitional minimum rent is calculated by taking the last year transitional rent and increasing, it by the increase in the County Median Income Figure (AMI) plus $25.00. In 1996,the transitional, minimum rent was $225 per month, $260.72 in,1997, $297.53 in 1998, $332:94 in' 1999, and is currently '$365.53, for 2000. The current year calculation represents $332.94 (1999 amount) plus the 2:38 %.increase', between the 1999 San ,Diego Area Median Income of $52,500 and the 2000 Median Income of $53,700, plus $25. 2000 TRANSITIONAL MINLMUIM RENT Family Size 3 4 5 6 7 Minimum Rent $360* $365.53 $365.53 $365.53 $365.53 *The minimum rent for a household df 3 would be $360 per month,,not$365.53, as $360.00 is the Category II minimum rent for aihousehold,of,3. Over the next few years, the'transitional rent will exceed the Category 11 minimum rent amount ,for all household sizes; and will no longer be . necessary. Residents moving in after Octobet-4, 2000, have a flat rent calculation. F -2 I