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2001-868422 D01] -0868422 2oo~.o~8422 NOV 29, 2OO]_ 8: 5D AM First American Title ~ J' ~ITH, ~ RE~R ~: 0.~ ~o,v,~,o~ ~,~ ~. WAY: 2 REOORDING REQUESTED BY AND WHEN RE~ORDED MAIL TO: CITY OF ENCINITAS COMMUNITY DEVELOPMENT DEPT.  505 S. Vulcan Ave. Encinitas, CA 92024 ~¢~ This document is exempt from the payment of a recording fee pursuant .~ ~'//9~ to Government Code Section 27383. Dated://-,.~'; 2001 REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS ~ This Regul,,a, tory Agreement and Declaration of Restrictive Coven.aRts (the."Regulatory ---- Agreement ) is made and entered into and is effective as of thisbe' day of, Q,oe~-V~001 by and between the City of Encinitas (hereinafter the "City"), and Encinitas Ranch Apartments, LLC (hereinafter the "Contractor"). RECITALS A. The Contractor (hereinafter the "Contractor") is the owner of real property (hereinafter the "Property") described in Attachment A attached hereto and made a part hereof. The Contractor has been approved by the City to develop and operate a housing project consisting of one hundred twenty ('120) units (hereinafter the "Project"). Certain units located in the project are subject to affordable housing requirements under the Encinitas Ranch Development Agreement, State Density Bonus Law, and Federal HOME Program Regulations. B. The Contractor has received a Density Bonus for this Project. In order to comply with State Density Bonus Law, the Contractor must restrict rent and occupancy for very Iow income households in ten (10) units. ¢. The Contractor has applied to the City for financial assistance for the ten very Iow income units, as defined by the U.S. Department of Housing and Urban Development ("HUD"). That financial assistance will be provided by CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page I 7849 the City subject to the availability of funds and subject to the requirements of the specific source of funds utilized for the Project (hereinafter the "Program"). The Contractor agrees to be bound and to abide by all applicable Program statutes, rules, and regulations with applicable to the Project and the financial assistance provided by the City. D. The Contractor and the City have entered into a HOME Development Agreement, dated ,2001 (the "HOME Agreement"), regarding the Project and the financial assistance to be provided therefor. The HOME Agreement only speaks to the financial assistance for the HOME assisted units. E. There are multiple requirements some overlapping and some more restrictive. There will be twenty-two affordable units located on site. In order to meet Density Bonus Law, ten of those units will be restricted for very Iow income use. As the Contractor is receiving financial assistance for these units, the ten very Iow income units will only be counted as Iow income units towards requirements under the Encinitas Ranch Development Agreement. F. In order to restrict use of the affordable units, the Contractor is bound by this Regulatory Agreement and has consented to be regulated and restricted as provided herein. NOW, THEREFORE, the parties hereto agree as follows: 1. RECITALS. The foregoing recitals, the Contractor's application package as approved by the City, the HOME Development Agreement and its other Exhibits are a part of this Regulatory Agreement. 2. COMPLIANCE WITH LAW. The Contractor agrees that at all times its acts regarding the Project shall be in conformity with all provisions of the Program including the statutes, rules and regulations and such policies and procedures of the City pertaining thereto. The Contractor acknowledges that it is aware of such applicable statutes, rules and regulations, and that professional advice is available as necessary for the purpose of enabling the Contractor to fully comply with such statutes, rules and regulations. 3. TERM OF AGREEMENT. CITY OF ENCINITAS/ENCIN1TAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 2 7850 The term of this Agreement shall commence on the date hereof and shall continue for at least 55 years from the date that the applicable state and/or local government agency certify the Project for occupancy. 4. RENT SCHEDULE. At the time of initial occupancy, Contractor shall charge only those rents for the Iow income housing units approved by the City and which are established pursuant to Program statutes and regulations and the initial rent shall be as set forth on the Rent Schedule attached (the "Rent Schedule") for the Iow income housing units. Subsequent increases or decreases in rent including special rent increases, shall be charged only if consistent with the Program statutes and regulations. If, at any time during the period of this Agreement, Contractor intentionally and willfully fails to charge rent according to the Rent Schedule, Contractor will repay all City funds then currently due and payable. Repayment will be due within 60 days from the date of a written notice of violation delivered by the City. A copy of the Rent Schedule in effect at the time of execution of this Regulatory Agreement is attached hereto as Attachment B and incorporated herein. Contractor and City agree that the Rent Schedule and the initial rent amounts applying to the Iow income units, as attached hereto as Attachment B, and any and all amendments thereto, shall be construed as a deed restriction on the Property. 5. ELIGIBILITY FOR ADMISSION. An applicant is eligible for admission to the Project lottery selection process if he or she meets all of the following criteria: (a) The applicant meets the income limits for the unit. Tenant income must be verified using source documentation (e.g. tax return, wage statement, interest statement, public benefit statement) for the family. Income is based on the Adjusted Gross Income as defined by the IRS for purposing of reporting income on the federal Form 1040. (b) Contractor may determine that an applicant is not eligible for admission if, on the basis of substantial, factual evidence of that person's prior actions there is good cause to believe that the applicant will repeatedly fail to pay rent, will create a substantial threat to the health and safety of other residents, or will repeatedly breach material requirements of the lease. Unsubstantiated oral statements will not be deemed substantial factual evidence. (c) The above eligibility criteria shall be exclusive and no other factors shall be considered in determining eligibility of applicants. Applicants receiving rental assistance must be given equal consideration for the Iow income CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 3 7551 (80%) units, income suitability should be based on required tenant p~)rtion only. 6. OCCUPANCY The minimum household size to occupy a unit is one person per bedroom. The maximum household size to occupy a unit is two persons per bedroom. 7. RESIDENT SELECTION PROCEDURES Contractor shall rent restricted housing units in the Project to eligible residents in accordance with the Program Regulations and the Management Plan approved by and on file with City pursuant to Paragraph 15 of this Regulatory Agreement. That Management Plan shall include at least the following: (a) detailed actions to be taken by Contractor to affirmatively market and rent all units in a manner which ensures equal access to all persons in any category protected by federal, state, or local laws governing discrimination, and without regard to any arbitrary factor; (b) specify reasonable criteria for determination of resident eligibility; (c) require that eligible residents be selected based on lottery method approved by the City; (d) require eligible applicants to be notified of eligibility and, based on turnover history, be notified of when a unit may be available; (e) require ineligible applicants to be notified in writing of the reason for their ineligibility; (f) specify procedures through which applicants deemed to be ineligible may appeal this determination; (g) require maintenance of a waiting list of eligible applicants; (h) prohibit discrimination against any prospective resident on the basis of race, religion, sex, disability, marital status, or any other arbitrary factor in violation of any state, federal, or local law governing discrimination in rental housing; and (i) address other selection issues provided for in the Program Regulations. 8. LEASE AND OCCUPANCY PROCEDURES. CITY OF ENCIN1TAS/ENCINITAS RANCH APARTMENTS, LLC - REGULATORY AGREEMENT Page 4 785 (a) Each eligible applicant selected to occupy a unit shall enter into a written occupancy agreement or lease with the Contractor, the form of which shall have been approved by the City and which shall contain those provisions as are required by the Program Regulations and this Regulatory Agreement. The rental agreement or lease shall provide for good cause eviction and appeal and grievance procedures, all of which shall be in accordance with the Program Regulations. (b) The Contractor shall establish reasonable rules of conduct and occupancy, which shall be consistent with State and Federal law and the Program Regulations. The rules shall be in writing and shall be given to each resident. Any amendment shall be effective no less than 30 days after giving written notice thereof to each resident. (c) Leases and the landlord-tenant relationship shall be subject to California law, Program Regulations, and the provisions of this Regulatory Agreement. 9. REPLACEMENT CHARGES. The charges to residents covering damages to the Project property attributable to the resident shall be made in accordance with a schedule of replacement costs which shall be adopted by the Contractor, posted in the management office of each Project, and shown to applicant at the time the lease is signed. 10. TERMINATION OF LEASE. (a) The resident may end the lease at any time with a 30-day notice. Rent is only paid for the period the resident actually occupied the housing unit. Any unused rent shall be returned to the resident. If the resident gives at least a 30 day notice of intent to vacate the Project the Contractor must, on the day the resident moves out, return the unused rent to the resident. If the resident does not give at least 30 days notice of intent to leave, the Contractor has two (2) weeks within which to send the unused rent to the resident's forwarding address. In the event the resident does not give Contractor a forwarding address, Contractor shall hold the unused rent for six months and return it to the resident if the resident picks it up or provides a forwarding address within six months. After six months, the rent is forfeited to the Contractor. (b) The Contractor may require the resident to move out if the resident has seriously or repeatedly violated important terms of the lease agreement such as not paying rent; causing serious interference with the rights of other residents; knowingly giving false statements of important facts to the Contractor concerning eligibility for the Project; or for other good cause. CITY OF ENCINITASPENC1NITAS RANCH APARTMENTS, LLC - REGULATORY AGKEEMENT Page 5 785 (c) In order for the Contractor to begin termination of the lease, it must give the resident a written notice stating the reason(s) for termination and notifying the resident of the right to request a hearing as allowed under the grievance procedure. Requirements of the notice and hearing procedure are set forth in the Program Regulations. (d) If the resident has not paid rent, the Contractor shall give the resident a seven (7) day notice to either pay the rent or move out. If the resident's actions cause an immediate threat to the health and safety of the other residents, the Contractor shall give the resident a reasonable time to move out, but not less than three (3) days. (e) In all other cases, the resident shall be given at least 30 days notice to either comply with the terms of the lease or move out. 11. CONTRACTOR RESPONSIBILITIES. Contractor shall provide administrative, fiscal, and management services, employ staff and pumhase, rent, and use supplies and materials as needed to operate, maintain and protect each Project in accordance with this Regulatory Agreement and the Program Regulations. This shall include, but not be limited to, compliance with the grounds and procedures governing grievance hearings as set forth in the Program Regulations. In addition, grievance hearings, conferences, notices, and summaries pursuant to this Regulatory Agreement shall be in English or in the language of the majority of residents. 12. REQUIRED RESERVES (a) City has approved amounts of funding for a "Replacement Reserve Account" and an "Operating Reserve Account". (b) Consistent with the requirements of the permanent lender, Contractor shall make monthly deposits to reserve accounts. (c) Withdrawals from the accounts shall be made in a manner consistent with the requirements of the permanent lender. 13. FINANCIAL ASSISTANCE Contractor acknowledges that the City will not provide additional financial assistance to the Contractor in the form of operational or capital subsidies for the Project. If Project Income is insufficient to cover operating, maintenance, and capital costs, Contractor agrees to assume full financial responsibility for the operating and maintenance of the Project throughout the term of this Agreement. CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT pa~e 6 7854 14. ACCOUNTING RECORDS Contractor shall maintain a cash basis general ledger accounting system that is posted monthly and that accurately and fully show all assets, liabilities, income and expenses of the Project. All records and books relating to this system shall be retained for not less than seven years and in such a manner as to ensure that the records are reasonably protected from destruction or tampering. All records shall be subject to City inspection and audit, at City's cost. 15. MANAGEMENT AND MAINTENANCE, (a) Contractor is specifically responsible for all maintenance, repair, and management functions including, without limitation, the following: selection of residents, occupancy standards, complaint and grievance proceedings, evictions, collection of rents and security deposits, routine and extraordinary repairs, and replacement of capital items. Contractor shall maintain units and common areas in a safe and sanitary manner in accordance with local health, building, and housing codes; and the Management Plan provided for in this Regulatory Agreement. (b) Contractor is responsible for operating the Project in accordance with the Management Plan to be developed by the Contractor as required by the City, and which is to be approved by and on file with the City (the "Management Plan"). All amendments to the Management Plan must remain in compliance with Federal Regulations and this Regulatory Agreement. (c) Contractor, with the prior written approval of the City, may contract with a management agent for the performance of the services or duties required in subparagraphs (a) and (b). However, such an arrangement does not relieve the Contractor of responsibility for proper performance of these duties. (d) Upon a determination by the City, and written notice to the Contractor thereof, that the Contractor has failed to operate the Project in accordance with this Regulatory Agreement, the City may require the Contractor to contract with a qualified management agent to operate the Project, or to make such other arrangements as the City deems necessary to ensure performance of the functions required in subparagraphs (a) and (b). (e) Contractor agrees to assume full financial and management responsibility for all operating and maintenance costs, including all repairs, corrections and replacements necessary to maintain and preserve the Project in a safe and sanitary condition in accordance with standards prescribed by the City, all obligations of this Regulatory Agreement, and all applicable State laws and local ordinances. CITY OF ENCINITASPENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 7 ?855 (f) To the extent that a permanent lender or grantor imposes requirements that are substantially different than the City's, the City may agree to adopt those requirements or allow that entity to have primary responsibility for monitoring management and maintenance. 16. REPORTING REQUIREMENTS. The Contractor shall file with the City an annual report, as shown as Attachment D, no later than 90 days after the end of each fiscal year established for the Project. The report shall contain such information as the City may then require, including, but not limited to, the following: (a) An audit of the fiscal condition of the Project is required whenever financial assistance is provided by the City. This includes a financial statement indicating surplus or deficits in operating accounts, a detailed itemized listing of income and expenses, and the amounts of any fiscal reserves. Such audit shall be prepared in accordance with the requirements of the City, certified by an independent certified public accountant licensed in California or other accountant acceptable to the City; (b) Any substantial physical defects in the Project, including a description of ; any major repair or maintenance work undertaken in the reporting year; (c) The occupancy of the Project indicating: (1) each tenant's annual income, family size and composition, race, length of tenancy, actual monthly rent paid; (2) records demonstrating the contractor's efforts to comply with its Fair Housing Marketing and Equal Opportunity Plan; (3) the number of residents actually occupying the Project. (4) general management performance, including tenant relations and other relevant information; (d) A description of any fiscal or program difficulties related to the operation of the Project consistent with the Program requirements; (e) Each such report shall be subject to the approval of the City; (f) At any time during the term of this Regulatory Agreement, the City or its designee, at City's sole cost, may enter and inspect the physical premises and inspect all accounting and resident records pertaining to the CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC - REGULATORY AGREEMENT Page 8 785-6 construction, development, or operation of the Project. Upon request by the City, Contractor shall notify residents of upcoming inspections of their units or records in accordance with State law; (g) The City may request any other reasonable information that is to monitor compliance with requirements set forth in this Regulatory Agreement and the HOME Development Agreement. Such information shall be provided promptly by the Contractor. (h) Prior to the commitment of funds, the Contractor will submit to the City certified copies of: (i) Equal Opportunity and Fair Housing marketing plan; (ii) records demonstrating that the units meet or will meet all applicable property standards; (iii) certification that no layering of federal funds has or will occur; (iv) conflict of interest statements; (v) evidence of flood insurance. (i) Prior to the disbursement of funds, the Contractor will provide City with: (i) evidence of actual costs incurred or estimated costs to be incurred; (ii) an itemized Request For Payment; (iii) a certification that all funds requested will be spent in accordance with all federal requirements; (iv) and a final itemized development and operating budget for the Project. In addition to the annual report required above, if required by the City, the Contractor shall file with the City an operating report including such information as the City may reasonably require and submitted at intervals as directed by the City, but in no case more often than on a quarterly basis. 17. PERSONAL INJURY AND PROPERTY DAMAGE INSURANCE a) Borrower shall purchase and maintain, and shall cause its Contractor (and any subcontractors (hereafter, 'Contractors') to purchase and maintain, at their sole cost and expense, throughout the term of this agreement, the following insurance policies: i) Comprehensive general liability insurance, with minimum limits of One Million Dollars ($1,000,000) combined single limit per occurrence, covering all bodily injury and property damage arising out of this agreement. Policy must include contractual liability. ii) Vehicle insurance covering all bodily injury and property liability incurred during the performance of this agreement, with a minimum coverage of $1,000,000 combined single limit per accident. If there are no company owned vehicles, vehicle insurance covering non-owned and hired vehicles shall be obtained. CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 9 7857 (1) Regarding above policies: the City and their officials, elected officials and employees are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of Borrower and Contractors; products and completed operations of Borrower and Contractors; premises owned, leased or used by Borrower and Contractors; or automobiles owned, leased, hired or borrowed by Borrower and Contractors. The coverage shall contain no special limitations on the scope of protection afforded to City, the City and their officials, employees or elected officials. Notwithstanding the foregoing, the above policies shall only coyer activities performed pursuant to this Agreement. (2) City, as well as their officials, employees, agents, and elected officials shall be named as additional insured only as respects those activities arising out of this Agreement. iii) Workers' compensation insurance covering all employees. Workers' compensation limits as required by the Labor Code of the State of California and Employers' Liability limits of $1,000,000 per accident. The insurer shall agree to waive all rights of subrogation against City, its officials, employees and elected officials for losses arising from work performed by Borrower and Contractor for City. iv) Borrower shall procure and maintain comprehensive dishonesty, destruction fire, all risk and disappearance coverage with minimum limits of $300,000 with City named and a co-obligee covering all Borrower's employees and owners. v) Borrower shall keep the building and improvements located on Sites insured for replacement value of not less than 100 percent of structural value. b) Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its officials, employees or elected officials. c) Borrower's and Contractors insurance coverage shall be primary insurance as respects City, their officials, employees and elected officials as respects to this Agreement. Any insurance or self-insurance maintained by City, their officials, employees or elected officials shall be excess of Borrower's and Contractors insurance and shall not contribute with it. d) Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, cancelled, reduced in coverage or in limit except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to City. CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 10 7855 e) Coverage shall be provided on an "occurrence" basis only. f) Insurance will be written with only California admitted companies having a Best Rating of A+7 or better. g) As to all insurance coverage required herein, any deductible or self-insured retention exceeding $5,000.00 shall be disclosed to and be subject to written approval by City. h) If Borrower does not keep an insurance policy in full force and effect at all times during the term of the Agreement, City may elect to treat the failure to maintain the requisite insurance as a breach of the Agreement and terminate this Agreement as provided herein. i) The effective term of this insurance provision shall continue during the term of this Agreement. 18. CERTAIN ACTS PROHIBITED. The Contractor shall not make any sale, encumbrance, assignment or conveyance, or transfer in any other form, of the entire Property or the entire Project or of its entire interest therein other than in accordance with the terms of this Regulatory Agreement and shall not, without the prior approval of the City: (a) Make any distribution not permitted by the terms of this Regulatory Agreement; (b) Assign or transfer any right to operate or manage the Project, except pursuant to Paragraph 15; (c) Remodel, remove, add to, reconstruct or demolish any part of the Project or impair any real or personal property of the Project without prior written approval by the City; (d) Require, as a condition of the occupancy or leasing of any dwelling unit in the Project, any consideration or deposit in excess of that permitted by the Program Regulations to guarantee the performance of the covenants of the lease. (e) Permit the use of the units in the Project for any purpose except that which was approved by the City; (f) Enter into any contract or contracts for supervisory or managerial services except as permitted by this Regulatory Agreement; or CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 11 (g) ~nvest any funds from the Proiect in any prope~, real or persona~, except as authorized by this Regulatory Agreement or by the City or deposit any such funds in a depository not authorized by this Regulatory Agreement or approved by the City. 19. VIOLATION OF REGULATORY AGREEMENT BY THE CONTRACTOR. In the event of the violation of any of the provisions of this Regulatory Agreement by the Contractor, the City may give written notice thereof to the Contractor by registered or certified mail addressed to the Contractor at the address stated in this Regulatory Agreement, or to such other address as may have been designated by the Contractor, and if such violation is not corrected to the satisfaction of the City within thirty (30) days after the date such notice is mailed (or within such further time as the City, in its reasonable discretion, may permit), the City may, without further prior notice, declare in writing a default under this Regulatory Agreement effective on the date of such declaration of default, and upon any such declaration of default the City may apply to any court, State or Federal, for specific performance of this Regulatory Agreement; for an injunction against any violation by the Contractor of this Regulatory Agreement; for the appointment of a receiver to take over and operate the Project in accordance with the terms of this Regulatory Agreement; or for such other relief as may be appropriate, it being agreed by the Contractor that the injury to the City arising from a default under any of the terms of this Regulatory Agreement would be irreparable and that it would be extremely difficult to ascertain the amount of compensation of the City which would afford adequate relief, in light of the purposes and policies of the Program. 20. AMENDMENT. This Regulatory Agreement shall not be altered or amended except by writing executed between the parties. 21. PARTIAL INVALIDITY. If any provision of this Regulatory Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. 22. BINDING ON SUCCESSORS. This Regulatory Agreement shall bind, and the benefits thereof shall inure to, the respective parties hereto, their legal representatives, executors, administrators, successors in the office or interest, and assigns; provided, however, that the Contractor may not assign this Regulatory Agreement or any of its obligations hereunder, voluntarily or by operation of law, without the prior approval of the City, excluding an assignment to an affiliate. As used herein, "affiliate" means CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AOREEMENT Page 12 78 0 any entity in which Contractor holds a6 ownership interest, or any person or entity that holds an ownership interest in the real property or the Housing Project. 23. GENDER. The use of the plural in this Regulatory Agreement shall include the singular and the singular shall include the plural; and the use of one gender shall be deemed to include all genders. 24. RECORDING AGREEMENT. This Regulatory Agreement, and any amendments thereof, shall, at the expense of the Contractor, be acknowledged by each of the parties and recorded or referenced in the official records of the County of San Diego. 25. ELECTION OF REMEDIES: EVENT OF DEFAULT. The remedies of the City hereunder or under any other instrument providing for or evidencing the financial assistance provided herein are cumulative, and the exercise of one or more of such remedies shall not be deemed an election of remedies and shall not preclude the exercise by the City of any one or more of its other remedies. 26. WAIVER. No waiver by the City of any breach of or default under this Regulatory Agreement shall be deemed to be a waiver of any other or subsequent breach or default hereunder. 27. CAPTIONS. The captions used in this Regulatory Agreement are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of the intent of this Regulatory Agreement. 28. GOVERNING LAW. This Regulatory Agreement shall be construed in accordance with and governed by the laws of the State of California. 29. OTHER FEDERAL REGULATIONS. (a) General. Contractor agrees to carry out all activities in compliance with Title 24, Part 570 of the Code of Federal Regulations; the Housing and Community Development Act of 1974 as amended; Title 24, CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 13 7861 Subtitle A, Part 58 of the Code of Federal Regulations; TiUe VI of the Civil Rights Act of 1964; TiUe VIII of the Civil Ri9hts Ac~ of lg68; Section 109 of the Housing and Community Development Act of 1974; Section 3 of the Housing and Urban Development Act of 1968; Executive Orders 11246, 11063 and 11593; the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; Title 24, Part 42 of the Code of Federal Regulations; OMB Circular A-122; the Archeological and Historical Preservation Act of 1974; the Architectural Barriers Act of 1968; the Hatch Act (Chapter 15 of Title 5, U.S.C.); the Flood Disaster Protection Act of 1974; the Clean Air Act (42 U.S.C. Section 1857 et seq.) and the Federal Water Pollution Control Act, as amended (33 U.S.C. Section 1251 et seq.); and the Drug-Free Workplace Act of 1988. 30. NOTICES. Written notices and other written communications by and between the parties hereto shall be addressed as follows unless and until a party hereto has in writing, communicated a different address to the other party hereto. City CONTRACTOR City of Encinitas Encinitas Ranch Apartments, LLC 505 S. Vulcan Ave. 10679 Westview Parkway Encinitas, CA 92024 San Diego, CA 92126 Attn: Housing & Grants Analyst Attn: President 31. INDEMNIFICATION AND WAIVER. (a) In addition to the provisions of the HOME Development Agreement, Contractor agrees to indemnify the City and its agents, employees, and officers, and holds the City and its agents, employees and officers harmless from, any losses, damages, liabilities, claims, actions, judgments, court costs, and legal or other expenses (including attorneys' fees) of every name, kind and description, which the City may incur as a direct or indirect consequences of (i) Contractor's failure to perform any obligations as and when required by this Regulatory Agreement, the HOME Development Agreement; (ii) any failure at any time of any of Contractor's representations or warranties to be true and correct; (iii) any act or omission by Contractor, any contractor, subcontractor, material supplier, engineer, architect or other person or entity with respect to the Property or the construction, management, maintenance or operation of the Project; or (iv) the presence of hazardous substances at the Project or on the Property. The duty of Contractor to indemnify and save harmless includes the duties to defend as set forth in Section 2778 of the Civil Code; Contractor shall indemnify and hold harmless the City and its CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 14 78.62 agents, elected officials, ofcers,-'and employees as set forth herein regardless of the existence or degree of fau~t or negligence whether active or passive, primary or secondary, the Contractor, or its agents, officers, employees, contractors, or subcontractors. Contractor's duty to indemnity the City shall survive the term of this Regulatory Agreement. IN WITNESS WHEREOF, Trustor has executed this Regulatory Agreement as of the day and year first above written. CONTRACTOR Encinitas Ranch Apartments, LLC By~ DATE: il ~7/2001 CITY City of E~cin~ By: ,.~/'~~,~/. DATE:/~Il12001 ~'r~ L/.. MilleK', City Manager ^TTAC. ^C "OW E E E.TS CITY OF ENCINITASFENCINITAS RANCH APARTMENTS, LLC - REGULATORY AGREEMENT Page 15 ALL-PURPOSE ACKNOWLEDGEMENT State of California ) ) SS. County of San Diego ) On November 1, 2001, before me, Patricia Drew, Notary Public, appeared Kerry L. Miller, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal Patricia Drew, Notary Public My Commission Expires June 22, 2006 SEAL pd~nisc\ack. LW CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of (~]~ / ,,_,F_~,~ ,. ~ Countyof ~.~'~,-- ,/-'),*.~ ~ On /~),/ ,~ 7, g~c~ o / before me, personally appeared [~_,~ ~' ~ /'~,~-~/,~ NAME(S} OF SiGNER(S) [~ersonally 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 ac- knowledged 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. 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 Tm.E(S) TITLE OR TYPE OF DOCUMENT [] PARTNER(S) [] LIMITED [] GENERAL [] A'I-rORNEY-IN-FACT NUMBER OF PAGES [] TRUSTEE(S) [] GUARDIAN/CONSERVATOR [] OTHER: DATE OF DOCUMENT SIGNER IS REPRESENTING: NAME OF ~RSO~(S) O~ E~m'rY(~ES) SIGNER(S) OTHER THAN NAMED ABOVE ?865 ATTACHMENT A LEGAL DESCRIPTION The land referred to herein is situated in the State .of California, County of San Diego, and described as follows: Lot 45 of amended map of City of Encinitas Map No. 13258, City of Encinitas Tract No. 94-066, Units I, II and III, in the City of Encinitas, County of San Diego, State of California, according to Map thereof No. 13333, filed in the office of the County Recorder of San Diego County, June 3, 1996. APN: 257-040-46-00 CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC - REGULATORY AGREEMENT Page 16 7866 ATTACHMENT B RENT SCHEDULE Very Low Income Units The ten (10) HOME assisted units will count as both Iow income units for the Encinitas Ranch Affordable Housing Compliance Plan as well as the very Iow income units for Density Bonus provisions. The ten Iow income units will consist of 1 one-bedroom unit, 7 two-bedroom units and 2 three-bedroom units. The following restrictions apply to the very Iow income assisted units. Maximum Income- Qualified tenants must have an adjusted gross income that is at or below 50% of the median income, as adjusted for family size. Maximum Rents- Rents must be equal to or less than the lessor of: · the Section 8 Fair Market Rents (FMRs) for existing housing, minus a utility allowance, or · 30% of monthly incomes for households at 50% of median income for unit size, minus a utility allowance. Initial Ru.[~/50% Median Income Bed/Bath # of Units Square Feet Housing Utility Net Monthly Payment Allowance Rent 1/1 1 812 $569 $20 $549 2/2 7 903 $711 $26 $685 3/2 2 1229 $768 $34 $734 Low Income Units The twelve (12) Iow income units will count as Iow income units for the Encinitas Ranch Affordable Housing Compliance Plan. The twelve iow income units will consist of 2 one- bedroom units, 8 two-bedroom units and 2 three-bedroom units. The following restrictions apply to the Iow income units. Maximum Income-Qualified tenants must have an adjusted gross income that is at or below 80% of the median income, as adjusted for family size. Maximum Rents-Rents must be equal to or less than 30% of monthly incomes for households at 80% of median income for unit size, minus a utility allowance. Initial Rents/80% Median Income Bed/Bath # of Units Square Feet Housing Utility Net Monthly Payment Allowance Rent 111 2 812 $910 $20 $890 2/2 8 903 $1,138 $26 $1,112 3/2 2 1229 $1,229 $34 $1,195 General Requirements Annual Adjustments- Maximum monthly rents and income levels will be given to Contractor by City annually. Rent increases are permitted, but tenants must be given at least 30 days CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 17 ATTACHMENT C PROGRAM REGULATIONS Refer to Title 24 of the Code of Federal Regulations, Par[ 92 HOME Program regulations. CITY OF ENCINITAS/E2qCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 19 7867 written notice before increases are implemented. Maximum rents could decrease. However, project rents are not required to fall below the rent limits in effect at the time of project commitment. Annual Recertification of Income- The annual incomes of tenants in rent restricted units must be reexamined each year using the definition used at initial occupancy. Typically, each tenant's income will be examined on the anniversary of their original income evaluation and lease signing. Increases in Tenant Income- Tenants occupying rent restricted units whose annual incomes exceed 80% of median income may stay in their apartments. Over income tenants must pay the lessor of 30% of their adjusted monthly income for rent minus a utility allowance or the market rent. CITY OF ENCIN1TAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 18 7869 ATTACHMENT D CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE The undersigned, being duly authorized to execute this certificate on behalf of Encinitas Ranch Apartments, LLC (the "Owner"), hereby represents and warrants that: 1. They have read and are thoroughly familiar with the provisions of the various Loan Documents, including: (a) the Promissory Note dated September 1,2001 from the Owner to the City representing the Owner's obligation of the Loan; (b) the HOME Development Agreement dated September 1, 2001 (c) The Regulatory Agreement and Declaration of Restrictive Covenants dated as of September 1, 2001 (the "Regulatory Agreement") among the Owner and the City. 2. As of the date of this certificate, the following percentages of restricted residential units in the project (i) are occupied by income qualified tenants at Affordable Rents (in accordance with the Regulatory Agreement) or (ii) are currently vacant and being held available for such occupancy and have been so held continuously since the date the previous qualified tenant vacated such unit; as indicated: Occupied by Very Low Income Tenants: __% Units Held vacant since last Very Low Income Tenant: __% -- Units Occupied by Low Income Tenants: % Units Held vacant since last Low Income Tenant: % Units Very Low Income Affordable Rents: One BR Two BR Three BR Low Income Affordable Rents: .One BR Two BR Three BR 3. To the best knowledge of the Owner is not in default under the terms of the Regulatory Agreement. Owner Encinitas Ranch Apartments, LLC By: DATE: / / Its: CITY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC- REGULATORY AGREEMENT Page 20 7870 Encinitas Ranch Apartments 1100 Garden View Rd. Encinitas, CA 92024 Annual Report through Listing of Very Low Income 1 BP: Apt. # Last Name # Persons Race Move-in Date Annual Income Rent Listing of Very Low Income 2 BP: Apt. # Last Name # Persons Race Move-in Date Annual Income Rent Listing of Very Low Income 3 BP: Apt. # Last Name I # Persons Race Move-in Date Annual Income Rent I Listing of Low Income 1 BP: Apt. # Last Name # Persons [ Race Move-in Date I Annual Income Rent I I Listing of Low Income 2 BP: Apt. # Last Name # Persons Race Move-in Date Annual Income Rent Listing of Low Income 3 BP: Apt. # Last Name # Persons I Race Move-in Date Annual Income Rent CiTY OF ENCINITAS/ENCINITAS RANCH APARTMENTS, LLC - REGULATORY AGREEMENT Page 2 !