2003-95439 RECORDED REQU EST OF
First/lmerican Title
RECORDING Pd~QUESTED BY
AND WHEN RECORDED MAIL TO:
8507
CITY OF ENCINITAS
COMMUNITY DEVELOPMENT DEPARTMENT
505 S. Vulcan Ave.
Eneinitas, CA 92024 0RI$1NAL
000 -2003-00954, . ......
JAN 28, 2003 8:56 AM
OFFIOIAL RECORDB
8AN DIEGO COUNTY RECORDER'80FFEE
GEEGORY J. ~4ITN, COUNTY RE[tBDER
FEE~: 0.00
~Y: 2
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This document is exempt from the
payment of a recording tee pursuant
to Government Code Section 6103~
(Space above this line for Recorder's use)
DEED OF TRUST WITH ASSIGNMENT OF RENTS
This Deed of Trust is made this lath day ofoanu~r? , 2003, by Cantebria Senior Homes, a
California nonprofit public benefit corporation (the "Borrower), whose business address is 500
South Main St., Ste.. ! 10, Orange, CA 92868, to First American Title Company (the "Trustee"),
whose business address is 41.1..Ivy St., San Diego, California 92101 in favor of the City of
Encinitas, ("City"), whose principal office is at 505 S. Vulcan Ave., Encinitas, California 92024.
l. BORROWER HEREBY IRREVOCABLY GRANTS, TRANSFERS AND
ASSIGNS to Trustee in trust, with power of sale and right of entry and possession, all of
Borrower's rights, title and interest now held or hereafter acquired in and to the following: (a) All
of that certain real property located in the City of Eneinitas, State of California, described in
Exhibit A (attached) which Exhibit is incorporated in this Deed of Trust by this reference; and
(b) all buildings, and improvements now or hereafter erected thereon, and all appurtenmaces,
easements, and articles of property now or hereafter affixed to, placed upon or used in
connection with the property and owned by Borrower or in which Borrower has an interest,
together with all additions to, substitutions for, changes in or replacements of the whole or any
part of said articles of property (all of which real and personal property are sometimes ret'erred to
as the ("Property"); all of which are hereby pledged and assigned, transferred, and set over unto
Trustee, and for purposes of this Deed of Trust declared to be part of the realty.
2. BORROWER HEREBY ABSOLUTELY, UNCONDITIONALLY AND
IRREVOCABLY ASSIGNS to the City all rents, royalties, issues, accounts and profits of or
relating to the Property and all of Borrower's interest under all leases, subleases, rental
agreements and other contracts and occupancy agreements relating to the use and possession of
the property, for the purposes and upon the terms and conditions hereinafter set forth. This
assignment is absolute, primary and direct and is not intended to be a separate or secondary
CITY OF ENCINITAS/CANTEBPdA SENIOR HOMES- DI3EO OF TRUST Page I
pledge, or other form of additional security, and no further ~ct or step is or shall be required of
City to perfect this assignment. Notwithstanding the foregoing, the City confers upon the
Borrower a license to collect and retain the rents, issues and profits of the Property as they
become due and payable until an Event of Default (hereinafter defined), upon the occurrence of
which said license shall be automatically revoked. This assignment shall not impose upon City
any duty to cause the Property to produce rents nor shall the City be deemed to be a mortgagee in
possession by reason thereof for any purpose.
3. THE ABOVE GRANT, TRANSFER, AND ASSIGNMENTS ARE FOR
TIIE PURPOSE OF SECURING:
(a) Payment of the indebtedness of the Borrower evidenced by a promissory note of
even date herewith, in the face amount of Six-Hundred Fourteen Thousand_Dollars ($614,000)
(the "Note"), together with interest on such indebtedness according to the terms of such Note,
and any and ail amendments, modifications, extensions or renewals of the Note and the
indebtedness and all other sums becoming due and payable to the City, or Trustee, pursuant to
the terms of this Deed of Trust;
(b) Payment of such additional indebtedness, when evidenced by a promissory note or notes
reciting the same to be secured by this Deed of Trust, together with interest, as the City may
advance to Borrower, or its successor in interest, from time to time and payment or performance
of such other obligations as the then record owner of the Property may agree to pay or perform
when evidenced by a promissory note or other instrument or agreement reciting that it is secured
hereby; and
(c) Performance and observance of all of the terms, covenants and conditions to be
performed or observed by Borrower under any note, Deed of Trust, or other document or
agreement relating to the project as described herein and in the CDBG Affordable Housing
Agreement and Development Agreement which are incorporated herein and made part of this
Deed of Trust.
4. TO PROTECT THE SECURITY OF THIS DEED OF TRUST,
BORROWER AGREE S:
4.1 Maintenance of the Property. (a) To keep the Property in a decent, safe, sanitary, and
tenantable condition and repair and permit no waste thereof; (b) not to commit or suffer to be
done or exist on or about the Property any condition causing the Property to become less
valuable; (e) not to construct any buildings and improvements on the Property, other than the
buildings and improvements now or hereinafter located on the Property and which are listed in
the Development Agreement; (d) to rebuild promptly any buildings or improvements on the
Property that may become damaged or be destroyed while subject to the lien of this Deed of
Trust; (e) to comply with all applicable laws or governmental regulations affecting the Property
or requiring any alteration or improvement thereof, and not to suffer or permit any violations of
any such laws, ordinances or governmental regulations, nor of any covenant, condition or
restriction affecting the Property; (f) not to initiate or acquiesce in any change in any zoning or
other land use or legal classification which affects any of the Property without the City's prior
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- DEED OF TRUST Page 2
written consent; and (g) not to alter the use of all or any part of the Property without the prior
written consent of the City.
4.2 Insurance. To keep the Property insured, with loss payable to the City, against
loss or damage by fire and such other haT~rds, casualties and contingencies and by such
companies, on such forms and in such amounts as the City may from time to time require, and to
deliver the original of all such policies to the City, together with receipts satisfactory to the City
at least thirty (30) days prior to the expiration of existing policies. Neither Trustee nor the City
shall by reason of accepting, rejecting, approving or obtaining insurance incur any liability for
the existence, nonexistence, form or legal sufficiency of such insurance, or solvency of any
insurer for payment of losses.
4.3 Payment of Taxes and Utility. Charges. To pay, at least ten (10) days prior to
delinquency, all taxes and assessments, both general and special, fines, penalties, levies and
charges of every type or nature levied upon or assessed against any part of the Property or upon
Tmstee's or the City's interest in the Property.
4.4 Escrow Deposits. At City's option and upon its demand, to pay to City on the day
upon which installments of interest and/or principal are due under the Note, such mounts as
City from time to time estimates as necessary to create and maintain a fund (the "Fund") from
which to pay, before the same bacome due, the next maturing taxes, assessments, levies, charges
and insurance premiums on or against the Property. Any excess accumulated in the Fund over
the amount required for such purposes shall be held for future use or applied to any indebtedness
or obligation hereby secured, or refunded to Borrower, at the City's option; any deficiency shall
be made up by Borrower on written demand of City. City shall place the amounts in the Fund in
an interest bearing account and shall credit the interest earned on such amounts to the Fund
semiannually; provided that upon the Fund's termination any interest amount due shall not be
payable sooner than six months from the date of the last payment credited to the Fund. Amounts
in the Fund shall be released to Borrower for application to or shall be applied by City to
payment of such taxes, assessments, levies, charges and insurance premiums, even though
subsequent owners of the Property may benefit thereby; provided, however, that in the event of
any default under tiffs Deed of Trust, all or any part of the Fund may be applied to any
indebtedness or obligation hereby secured, in such order and manner as City may determine at its
option.
Borrower agrees that any conveyance of its interest in the Property shall have the effect of
transferr/ng to the grantee of said conveyance all of Borrower's interest in and all its rights to the
Fund without further act on the part of Borrower, and that in refunding ail or any part of the
Fund, City may deal with whoever is represemed to be the owner of the Property. The collection
by City, pursuant to the terms of tiffs paragraph, of monthly installments to cover taxes,
assessments, levies, charges and insurance premiums :may be suspended or terminated by City at
any time upon written notice sent to the owners of the Property, such collection being solely for
the added protection and benefit of City and entailing no responsibility on City other than to
apply sums actually received by it and to pay interest on sams held by it as provided in the Deed
of Trust.
CITY OF ENCINrrA$/CANTEBRIA SENIOR HOMES- DEED OF TRUST Page 3
4.5 payment and Discharge of Liens. Borrower will pay, when due, all Claims of
every kind and nature wh/ch might or could become a lien on the Property or any part thereof of
any kind or nature other than this Deed of Trust; provided, however, that the following are
excepted from this prohibition: (a) liens for taxes and assessments which are not delinquent
although by law are given the status of a lien, and Co) such of the above claims as are, and only
during the time they are, being contested by Borrower in good faith and by appropriate legal
proceedings. Borrower shall post security for the payment of these contested claims as may be
requested by City.
4.6 Rights of City to Remedy Defaults. If Borrower defaults in payment of any tax,
assessment, lien, claim, insurance premium, or any other proper charge in whole or in part, or
defaults in the performance of any of the Loan Documents (as defined in the Development
Agreement), City at any time and from time to time, with or without notice or demand upon
Borrower, may make such payments or perform any such acts required of Borrower, to such
extent and in any form or manner deemed expedient by City and pay any other sums, expenses
and charges, including attorneys' fees, necessary to protect the Property and the lien of this Deed
of Trust, without incurring any obligation so to do or releasing Borrower from any obligations
and without waiving or curing any default. City shall be the sole judge of the validity, priority,
and amount of any such tax, assessment, lien, premium, claim or charge so paid by it and the
necessity for the performance by City of any such obligation which Borrower was required but
failed to perform. City, at its option, shall be subrogated to any tax, assessment, lien, premium,
claim or charge which it has paid under these provisions and any such subrogation rights shall be
additional and cumulative security to those set forth in the Loan Documents.
4.7 Repayment to City, Upon City's payment of any tax, assessment, lien, claim,
insurance premium or other charge which Borrower fails to pay or upon City performance of any
obligation which Borrower fails to perform, all as set forth in paragraph 4.6 above, the amount so
paid or the cost of performing any such obligation, together with other sums paid or incurred by
City, including charges, expenses and reasonable attorneys' fees thereon from date of payment at
the rate of eight percent (8%) per annum, shall be paid by Borrower to City upon written
demand. The aggregate of all such amounts, including interest, shall be secured by the lien of
this Deed of Trust.
4.8 Defense of ActiHns and Payment of Costs. Borrower will appear in and defend all
actions and proceedings purporting to affect the Property or any right or power of City or Trustee
hereunder, provided that City and Trustee, or either of them, may appear in and defend any such
action or proceeding and City is authorized to pay, purchase or compromise on behalf of
Borrower any lien or claim which in its judgment appears to or purports to affect the security of
or to be superior to this Deed of Trust. Borrower will pay on demand all sums so expended and
all charges~ expenses and attomeys' fees reasonably incurred, with interest from the date of
expenditure at eight pement (8%) per annum. Borrower shall give City prompt written notice in
writing of (a) the assertion of any claim, (b) the filing of an action or proceeding, (c) the
occurrence of any damage to any of the Property, (d) any condemnation and (e) any other
material nonmonetary default.
CITY OF ENCINITAS/CANTEBR[A SENIOR hOMES - DEED OF TRUST Pa8* '*
5. IT IS MUTUALLY AGREED THAT:
5.1 Awards and Damages. All judgments, awards of damages, settlements and
compensation made in connection with or in lieu of (a) taking of all or any part of or any interest
in the Property by or under assertion of the power of eminent domain, (b) any other injury or
damage to all or any part of the Property, are hereby assigned to and shall be paid to City. City
is authorized and empowered (but not required) to collect and receive any such sums and is
authorized to apply them in whole or in part upon any indebtedness or obligation secured hereby,
in such order and entitled to settle and adjust all elalms under insurance policies provided under
this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of
all expenses incurred by it in connection with any such settlement or adjustment. All or any part
of the amounts so collected and recovered by City may be released to Borrower upon such
conditions as City may impose for its disposition. Application of all or any part of the amounts
collected and received by City or the release thereof shall not cure or waive any default under
this Deed of Trust.
5.2 Sales and Encumbrances Prohibited. Borrower shall not make any sale,
assignment or conveyance, or transfer in any other form, nor any further pledge, encumbrance or
mortgaging, of the Property, or any part thereof or of any of its interest therein, other than in
accordance with the terms of the Loan Documents.
5.3 Sale or Forbearance. No sale of the Property, forbearance on the part of City or
extension of the time for payment of the indebtedness hereby secured shall operate to release,
discharge, waive, modify, change or affect the liability of Borrower either in whole or in part.
5.4 Late Payment. City's acceptance of late payment of any sum shall not constitute a
waiver of its rights to require prompt payment when due of all other indebtedness, or to declare a
default for any failure so to pay, or to proceed with foreclosure or sale for any other default then
existing. City's acceptance of partial payment of any sum after default shall not cure such default
or affect any notice of default unless City expressly revokes such notice of default in writing.
5.5 City's Rights to Release. Without affecting the liability of any person for
payment of any indebtedness hereby secured (other than any person released pursuant hereto),
including without limitation, any one or more endorsers or guarantors, and without affecting the
lien hereof upon any of the Property not released pursuant hereto, at any time and from time to
time without notice: (a) City may, at its sole discretion, (i) release any person now or hereafter
liable for payment of any or all such indebtedness, (ii) extend the time for or agree to alter the
terms of payment of any or all of such indebtedness, and (iii) release or accept additional security
for such indebtedness, or subordinate the lien or charge hereof; and (b) Trustee, acting pursuant
to the written request of City, may reconvey all or any part of the Property, consent to the
making of any map or plat thereof, join in granting any easement thereon, or join in any such
agreement of extension or subordination.
5.6 Reconveyance. Upon written request of City stating that all sums and obligations
secured hereby have been discharged, or otherwise as requested in writing by City, and upon
surrender of this Deed of Trust and the Note and any additional loan notes to Trustee for
CITY OF ENCINITAS/CAN'I'EB KIA SENIOR HOMES- DEED OF TRUST Page 5
'!
cancellation, and upon payment to Trustee of its fees and expense, Trustee shall reconvey,
without warranty, the Property or that part thereof then held hereunder. The recitals in any
reconveyance shall be conclusive proof of their truthfulness and the grantee in any such
reconveyance may be described "as the person or persons legally entitled thereto." When the
Property has been fully reconveyed, the last such reconveyance shall operate as a reassignment
of all of the rents, royalties, issues, accounts and profits of the Property to the person or persons
legally entitled thereto unless such reconveyance expressly provides to the contrary.
5,7 Even. t~. of Default. Any one or more of the following events shall constitute a
default under this Deed of Trust: (a) Failure of the Borrower to pay the indebtedness secured
hereby or any installment thereof, whether principal or interest, payable, whether at maturity or
by acceleration or otherwise; or (b) failure of Borrower to observe or to perform any covenant
and/or condition to be observed or performed by Borrower pursuant to the Loan Documents,
5.8 Acceleration and Sale.
(a) Aecelaration. In the event of any default as set forth in paragraph 5.7 above, City,
without demand on Borrower, may declare all sums hereby secured immediately due and payable
by notice thereof to the Borrower or by executing and recording or by causing the Tmstee to
execute and record a notice of default and election to cause the Property to be sold to satisfy the
obligations secured hereby, or by the commencement of an appropriate action to foreclose this
Deed of Trust or by any other appropriate manner;
(b) Foreclosure Procedure. Whenever a notice of default and intent to sell is issued
pursuant to Civil Code Section 2924, the City will follow the notice and hearing procedures
established in Section 7938 Title 25, California Administrative Code in addition to other
provisions of law.
5.9 Entry Possession and Receivership. In the event of any default hereunder and
irrespective of whether City accelerates the maturity of all indebtedness secured hereby or files a
notice of defhult hereunder, City at any time, without notice of demand or regard to the adequacy
of any security for the indebtedness and obligations hereby secured, in person, or by any agent or
employee, or by receiver appointed by court, may enter upon and take the possession of the
Property or any part thereof and including the right to rent, lease, operate and maintain any part
or all of the Property, and may sue for or otherwise collect and receive all rents, royalties, issues,
accounts and profits thereof, including these past due as well as those accruing thereafter.
Borrower hereby presently assigns to City, absolutely and regardless of possession of the
Property, all rents and other monies now due or hereafter to become due under any lease or
agreement or otherwise for the use of occupation of all or any part of the Property, now existing
or hereafter made, reserving to Borrower such rents as they become due, but not otherwise.
Borrower shall on demand execute such further assignments to City of any or all such leases,
agreements, rems or monies as the City may require, and deliver to City a fully executed original
of any or all such leases or agreements. City by any agent, employee or receiver, may also take
possession of, and for these purposes use, any and all of Borrower's personal property contained
in or on the Property and used by Borrower in the operation, rental or leasing thereof or any part
thereof. The expense (including, bm not limited to, receivers' fees, attorneys' fees and agents'
CITY OF ENCINITAS/CAIqTEBKIA SENIOR HOMES- DEED OF TRI,IST ['age 6
851.3
compensation) incurred by City pursuant to the power herein contained shall be secured hereby.
City may bring or defend uny legal action in connection with the Property, as it may deem
proper, and may, from time to time, make all necessary or proper repairs, replacements and
alterations to the Property, as it may seem judicious, and may insure and reinsure the same, und
may lease the property or any part or parts thereof in such parcels und for such periods and on
such terms as it may seem fit, including leases for terms und for terms expiring after the maturity
of the indebtedness hereby secured, and may terminate any lease for uny case which would
entitle Borrower to terminate it. After deducting the expenses of managing and operating the
same and all maintenance, repairs, replacements and alterations und all payments which may be
made for taxes, assessments, liens, claims, insurance premiums, or other proper charges of the
Property or any part and for agents employed by City to manage and operate the Property, City
may apply any und all remaining funds to the payments of the indebtedness hereby secured in
such order and proportion as City may determine.
Neither application of said amounts to such indebtedness nor uny other action taken by
City under this paragraph shall cure or waive uny default hereunder or nullify the affect of any
such notice of default or invalidate any act done pursuant to such notice or any cause of action to
foreclose this Deed of Trust. The right to enter and take possession of the Property, to manage
and operate the same, and to collect the rents, issues and profits thereof, whether by a receiver or
otherwise, shall be in addition to any other right to remedy hereunder or afforded by law, and
may be exercised concurrently therewith or independently thereof. City shall be liable to
account only for such rents, royalties, issues, accounts und profits actually received by it.
This provision shall not apply as long as a deed of trust affecting the Project and the
Property is help by the Secretary of the U.S. Department of Housing und Urban Development,
including his successors and assigns (the "HUD Secretary'S), or a regulatory agreement and/or
use agreement in favor of the HUD Secretary is still outstanding.
5.10 Attorneys' Fees, If Trustee or City shall be made parties to or shall intervene in
any action or proceeding affecting the Property or the title thereto or the interest of Trustee or
City under this Deed of Trust, or if City employs an attorney (including the Attorney General of
the State of California) to collect any or all of the indebtedness hereby secured or to foreclose
this Deed of Trust, or authorizes Trustee to act on its behalf, City shall be reimbursed by
Borrower, immediately and without demand, for all reasonable costs, charges and attorneys' fees
incurred by them or either of them in any such case whether or not a suit be commenced, und the
same, together with interest thereon from the date of payment at the rate of eight percent (8%)
per annum, shall be secured hereby as provided in paragraph 4.7.
5.11 Exercise of Remedi0.~ Delay. No exercise of any right or remedy herein
contained or provided by law, and no delay by City or Trustee in exercising any such right or
remedy hereunder shall operate as a waiver thereof or preclude the exemise thereof during the
continuance of any default hereunder.
5.12 Trustee Substitution. The irrevocable power to appoint a substitute trustee or
trustees hereunder is hereby expressly grunted to City to be exercised at any time hereafter,
without specifying any reason therelbr by filing for record in the office where this Deed of Trust
CITY OF ENCINITA~/CANTEBRIA SENIOR HOMES - DEED OF TRUST Page 7
is recorded a deed of appointment, and said power of appointment of successor trustee or trustees
may be exercised as often as and whenever City deems advisable. The exercise of said power of
appointment, no matter how often, shall not be deemed an exhaustion thereof, and upon
recording of such deed or deeds of appointment, the trustee or trustees so appointed shall
thereupon, without further act or deed of conveyance, succeed to and become fully vested with
identically the same title and estate in and to the Property hereby conveyed and with all the
fights, powers, trusts and duties of the predecessor in the trust hereunder, with the like effect as if
originally named as trustee or as one of the trustees.
5.13 Remedies Cumulative. No remedy herein contained or conferred upon City or
Trustee is intended to be exclusive of any other remedy or remedies afforded by law or by the
terms hereof to the City or Trustee but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter existing at law or in
equity.
5.14 Successors, Assigns, Gend~.r, Number. The covenants and agreements herein
contained shall bind, and the benefit and advantages shall inure to, the respective heirs,
executors, administrators, successors and assigns of the parties. Wherever used, the singular
number shall include the plural, and the plural the singular, and the use of any gender shall be
applicable to all genders.
5.15 Headings. The headings are inserted only for convenience of reference and in no
way define, limit, or describe the scope or intent of this Deed of Trust, or of any particular
provision thereof, or the proper construction thereo£
5.16 Actions on Behalf of City. Except as is otherwise specifically provided herein,
whenever any approval, notice, direction, consent, request or other action by City is required or
permitted under this Deed of Trust such action shall be in writing.
5.17 Obligations....gf Borrower. If more than one person has executed this Deed of
Trust as Borrower, the obligations of all such persons hereunder shall be joint and several.
5.18 Miscellaneous Provisions.
(a) Beneficiar~ Slatement. City may charge a fee of fifty dollars ($50) for farnisking
any statement required by California Civil Code Section 2943.
(b) Severabilitw. If any provision of this Deed of Irust shall be invalid, illegal or
unenfbrceable, the validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired,
(c) Indemnification.. Borrower will indemnify and hold City, its officers and agents
harmless against any and all losses, claims, demands, penalties and liabilities which City, its
officers or agents may sustain or suffer by mason of anything done or omitted in good faith
pursuant to or in connection with this Deed or Trust and not assert any claim against City, its
officers or agents by reason of any action so taken or omitted. Borrower shall, at Borrower's
CITY OF ENCllqlTAS/CANTEBIUA SENIOR HOMES - DEED OF TRUST Pagc 8
expense, defend, indemnify, save and hold expenses, damages (general, punitive or otherwise),
causes of action (whether legal or equitable in nature) asserted by any person; firm, corporation
or other entity arising out of this Deed of Trust and Borrower shall pay City upon demand all
claims, judgments, damages, losses or expenses (including reasonable legal expense) incurred by
City as a result of any legal action arising out of this Deed of Trust.
(d) Offset. Borrower shall not under any circumstances fail or delay to perform (or
resist the enforcement of) any of its obligations to City in connection with this Deed of Trust or
any other contract, note or instrument executed by Borrower in favor of City because of any
indebtedness or obligation of City which has not been confirmed in a final judgment of a court of
competent jurisdiction (sustained on appeal, if any). against City, and Borrower hereby waives
any such rights of set-off (or offse0 which it might otherwise have with respect to any such
claims or causes of action against City or any such obligations or indebtedness of City, unless
and until such right of set-off (or offset) is confirmed and liquidated by such final judgment.
Borrower further waives any right which it might otherwise have (if any) to require a
marshalling of any security of the City or to direct the order in which City pursues its rights or
remedies with respect to any of its security.
5.19 HUD Required Provisions. Notwithstanding any other provisions in this Deed of
Trust and so long as a mortgage affecting the Property is held by the Secretary of Housing and
Urban Development, including any successors or assi~,ms (collectively, the "HUD Secretary"), or
a regulatory agreement and/or use agreement in favor of the HUD Secretary is still outstanding,
the fbllowing provisions shall apply:
(a)
HUD's Consent. The City shall not declare any default pursuant to the
provisions of Paragraph 5.7 herein unless the City has received the prior
written consent of the HUD Secretary.
(b)
Subordination. _The City's rights and powers under this Deed of Trust are
subordinate and subject to the rights of the HUD Secretary under that
certain Deed of Trust With Assignment of Rents (the "First Deed of Trust"
delivered or to be delivered by the Borrower for the benefit of the HUD
Secretary in connection with a Section 202 Program capital advance made
or to be made in the amount of $3,687,900, or such other amount as
approved by the HUD Secretary, and identified by the HUD Secretary as
Project No. 129-EE021-WAH-NP; that certain Security Agreement
executed or to be executed by and between the Borrower and the HUD
Secretary; that certain Capital Advance Program Use Agreement (the
"HUD Use Agreement") executed or to be executed by the Borrower and
the HUD Secretary, and recorded or to be recorded in the Official Records
of the County of San Diego (the "Official Records"); and that certain
Capital Advance Program Regulatory Agreement (the "HUD Regulatory
Agreement") executed or to be executed by the Borrower and the HUD
Secretary, recorded or to be recorded in the Official Records and
incorporated by reference in the First Deed of Trust.
CITY OF ENCINITAS/CANTEBRIA SENIOR hOMES- DEED OF TRUST Pag~ 9
(c)
Rights to Rents Collected. In the event of the appointment of a receiver or
of the appointment of a receiver or of the appointment of the City as
mortgagee-in-possession, in any action by the City or its successors or
assigns, to foreclose the mortgage created by this Deed of Trust, no rents,
revenue or other income of the project collected by the receiver or by the
City, as mortgagee-in-possession, shall be utilized tbr the payment of
interest, principal, or any other charge due and payable under this Deed of
trust, except from residual receipts, if any, as that term is defined in the
HUD Regulatory Agreement; and further, the receiver of City, as
mortgagee-in-possession, shall operate the Project in accordance with all
the provisions of the First Deed of Trust, HUD Use Agreement and the
HUD Regulatory Agreement.
(d)
Deed-in-Lieu of Foreclosure. In the event the HUD Secretary acquires
title to the Project by a deed-in-lieu of foreclosure, the lien of this Deed of
Trust will automatically terminate subject to the conditions hereinafter
described. The City may cure a default under the First Deed of Trust prior
to conveyance by deed-in-lieu of foreclosure. The HUD Secretary shall
give written notice to the City of proposed tender of title in the event the
HUD Secretary decides to accept a deed-in-lieu of foreclosure. The HUD
Secretary will only give such written notice if, at the time of the placing of
the subordinate lien against the Project, the HUD Secretary receives a
copy of any endorsement to the title policy of the Borrower or the City
which indicates that (i) this Deed of Trust has been recorded and (ii) the
HUD Secretary is required to give notice of any proposed election or
tender of a deed-in-lieu of foreclosure. Such notice shall be given at the
address stated herein or such other address as may subsequently, upon
written notice to the HUD Secretary, be designated by the City as its legal
business address. The City shall have thirty (30) days to cure the default
after notice of intent to accept a deed-ln-lieu of foreclosure is mailed.
Borrower's Notice to City. Notwithstanding the above requirements, in
the event that Borrower contemplates executing a deed-in-lieu of
foreclosure, Borrower shall first give the City thirty (30) days' prior
written notice; provided, however, that the failure of the Borrower to give
said notice shall have no effect on the right of the HUD Secretary to
accept a deed-in-lieu of foreclosure.
(t)
No Amendments. This Deed of Trust, and in particular, this Paragraph
5.19, shall not be mended without prior written consent of the HUD
Secretary.
IN WITNESS WHEREOF, Borrower has executed this Deed of Trust on the day and year
set forth above. Ifa mailing address is set forth opposite its signature below, and not otherwise,
the Borrower shall be deemed to have requested that a copy of any notice of default and of.any
notice of sale hereunder be mailed to it at such address.
CITY OF ENCINITAS/CAN'I'E}IRIA S~NIOR HOME.g- DEED OF TRUST Page 10
8517
MAILING ADDRESS FOR NOTICES
To Borrower:
Cantebria Senior Homes
500 South Main St., Ste. 110
Orange, CA 92868
Attn: Regional Director
To Beneficiary:
City of Encinitas
505 S. Vulcan Ave.
Eneinitas, CA 92024
SIGNATURE OF BORROWER
Cantebria Senior Homes
Amy Bayley, Sccr.~tary /
ATTACH ACKNOWLEDGEMENTS HERE
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES - DEED OF TRUST Page 11
EXHIBIT A
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California, County of San Diego, and
described as follows:
Lot 44 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 Eneinitas, County of San Diego, State of California,
according to map thereof No. 13333, filed in the office of the County Recorded of San Diego
County, June 3, 1996.
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- DEED OF 'I'RIOST Page 12
State of California )
County of San Francisco )
On this 14th day of January, 2003, before me, the undersigned, a notary public in and
for said state, personally appeared Amy Bayley, RSM, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(e) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capaclty(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.
WIT,[qESS/~y hand and official seal.
G. Hoshlyama
(print name)
8484
RECORDED REQU'F. ST OF
First Atttericatt Title
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
CITY OF ENCINITAS
COMMUNITY DEVELOPMENT DEPT.
505 S. Vulcan Ave.
Eneinitas, CA 92024
ORIGINAL
DOC 003-0095438
JAN 28, 2003
OFFIOIAL
$qN ~IEGOCXI~TYREtt]RIt'R'80FFIOE
I]~[GORY J, 8NITH, ~l]t~[IY ~OORIIER
FEEg: 0.00
I llll$ lllllll llllllllllllllllllll
20~3.00~3~435 ,
This document is exempt from the
payment of a recording fee pursuant
to Government Code Section 6103.
Dated: 0i / 14,{ 2003
REGULATORY AGREEMENT
This Regulatory Agreement (the "Regulatory Agreement") is made and entered into as of
this i4uaday of January , 2003 by and between the City of Encinitas (hereinafter the
"City"), and Cantebria Senior Homes (hereinafter the "Contractor").
RECITALS
The Contractor or its affiliate, Cantebria Sen/or Housing (''Senior Housing"), is or
is about to become the owner of real property (hereinafter the "Property")
described in Attachment A attached hereto and made a part hereof. Contractor has
applied to the City fbr financial assistance in order to develop and operate a
"Housing Project" consisting of forty-four (44) units for very low income elderly
persons, as defined by the U.S. Department of Housing and Urban Development
("HUD") under Section 202 of the Housing Act of 1959, as mended (the
"Section 202 Program") (hereinafter the "Project"). That financial assistance will
be provided by the Cit~, 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.
The Housing Project will be used exclusively by the Contractor or Senior Housing
tbr secular purposes and will be available to all persons regardless of religious
affiliation. There will be no religious or membership criteria for tenants of the
Project.
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- RECiUI.ATORY AGREEMENT Page I
8485
NOW,
1.
The Contractor and the City have entered into an Affordable Housing Agreement,
dated o~/~4/ , ~003 (the "Affordable Housing Agreement") and a Development
A,~eement dated 0~/~4/ ,2003 (the "Development Agreement"), regarding
the Project and the financial assistance to be provided therefor.
As an inducement to the City to provide the financial assistance made available
under the Program, the Contractor has agreed to enter into this Regulatory
Agreement and has consented to be regulated and restricted as provided herein.
THEREFORE, the parties hereto agree as follows:
RECITALS.
The foregoing recitals, the Contractor's application package as approved by the City, and
the Affordable Housing Agreement, Development Agreement and its other Exhibits are a
part of this Regulatory Agreement.
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, as amended and in effect from time
to time. 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.
TERM OF AGREEMENT,
The term of this Agreement shall coinmence 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.
RENT SCHEDULE.
At the time of initial occupancy, Contractor shall charge only those rents approved by the
City and which are established pursuant to Program statutes and regulations (the "Rent
Schedule"). Rents will provide guaranteed affordability to tenants, charging 30 percent of
actual household income for total housing payment. 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
fails to charge rent according to the Rent Schedule, Contractor will repay all City funds.
Repayment will be due within 30 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.
CITY OF ENC[NITAS/CANTEBRIA SENIOR HOMES- REGULATORY AGREF, M ENT Paso 2
8486
Contractor agrees that the Rent Schedule, as attached hereto as Attachment B, and any
and all amendments thereto, shall be construed as a deed restriction on the Property.
ELIGIBILITY FOR ADMISSION.
An applicant is eligible for admission to the Project lottery selaction process if he or she
meets all of the following criteria:
(a)
The applicant meets the requirements of the HOME, CDBG and Section 202
Program regulations.
(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.
RESIDENT SELECTION PROCEDURES
Contractor shall rent restricted housing units in the Project to eligible residents in
accordance with the Program Regulations (as described in Attachment C) and the
Management Plan approved by and on file with City pursuant to Paragraph 17 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;
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;
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- REOULATORY AOREEMENT. Page 3
I0.
(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.
LEASE AND OCCUPANCY PROCEDURES.
(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 roles 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.
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.
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
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES - REGULATORY AGREEMENT Page 4
(b)
(c)
11.
12.
provides a tbrwarding address within six months. After six months, the rent is
forfeited to the Contractor.
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.
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.
CONTRACTOR RESPONSIBILITIES.
Contractor shall provide administrative, fiscal, and management services, employ staff
and purchase, 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.
ANNUAL OPERATING BUDGET.
(a)
The fiscal year for the Project shall commence on tlul¥ 1 of each year after the
initial period of occupancy, and conclude on~lune30 of each year.
(b)
The Contractor will submit to the City a proposed operating budget for the Project
not less than ninety (90) days subsequent to the completion of the Project and
prior to the beginning of each fiscal year of the Project thereafter. The proposed
operating budget shall set forth the anticipated Project income (the "Project
Income") of the Project, including such payments as may be provided from the
Program and other public and private sources, and a detailed estimate of all
operating costs, capital improvements, deposits to all accounts required by the
CITY OF ENCIN ['I'AS/CANTEBRIA SENIOR HOMES - REGULATORY AOKEEMENT page
8489
13.
14.
City, and all other expenses in the format required by the City. Unless the City
objects to the proposed budget within ten (10) days after submission of a
complete proposed budget, such proposed operating budget shall be the operating
budget for the fiscal year of the Project.
REQUIRED RESERVES
(a)
At the time Contractor receives a Section 202 Program award of construction and
permanent funding from HUD or another source approved by the City, Contractor
shall propose to the City amounts of funding for a "Replacement Reserve
Account" and an "Operating Reserve Account" and provide that information
necessary to indicate the consistency of those accounts with all of the following:
the requirements of the funding entity, the feasibility of the Project, and the
requirements of the City under the Program.
(b)
To the extent that these accounts are required or deemed necessary by the City,
initial deposits shall commence no later than the end of the second month
following the completion of construction, or such other date as the City may
designate in writing, and deposits shall be made in segregated interest-beating
accounts in the name of the Contractor insured by an agency of the federal
government or other comparable federal insurance program. Consistent with the
requirements of the funding agencies, Contractor shall make monthly deposits
from Project Income in amounts as specified in the initial and annual budgets.
(c)
Withdrawals from the accounts shall be made in a manner consistent with the
requirements of the funding entities and the City, if the City elects to impose such
requirements. The City may require its prior written approval of such
withdrawals. Withdrawals from a replacement reserve account shall be made only
for capital improvements such as replacing or repairing structural elements,
furniture, fixtures or equipment of the Project which are reasonably required to
preserve the Project. Reserves from the operating reserve account may be utilized
only to cover actual and reasonable operating expenses in excess of the approved
budget amount, or to compensate for vacancy and bad debt losses in the approved
budget amount.
(d)
if other funding entities have differing requirements, the City may amend this
paragraph in writing to be consistent with those other requirements.
USE OF INCOME FROM OPERATIONS
(a)
The Contractor or Contractor's management agent shall promptly deposit all
Project Income in a segregated account established in the Contractor's name
exclusively for the Project. There shall be no commingling of Project funds with
other funds controlled by the Contractor.
CITY OF ~NCIIqlTAS/CANTEBRIA SENIOR hOMES- REGULATORY AOREEMENT Page 6
15.
16.
17.
(b)
8490
Withdrawals from the Project Income accoum shall be made only in accordance
with the provisions of this Regulatory Agreement and the approved annual
operating budget, and shall be disbursed, applied or reserved and set aside for
payment when due, in the following priority, to the extent available: (1) salaries,
wages and other compensation due and payable to the employees or agents of the
Contractor employed on site in connection with the maintenance, administration
or operation of the Project, along with all .withholding taxes, insurance premiums,
Social Security payments, and other payroll taxes or payments required in
connection with such employee; (2) all charges incurred in the operation of the
Project in connection with utilities, real estate taxes and assessments, and liability,
fire and other hazard insurance; (3) payments of required interest, principal,
impounds, fees and charges, if any on loans which are secured by the Property
which have been approved by the City; (4) all other expenses incurred to cover
operating costs, including the fee of the managing agent and any extraordinary
expenses in accordance with the approved annual operating budget of the Project
or as otherwise approved in advance by the City; (5) deposits to reserve accounts
if applicable; and (6) distributions to the Contractor or other person or entity upon
City approval only.
(c)
If other funding entities have differing requirements, the City may amend this
paragraph in va'iting to be consistent with those other requirements. In addition,
the Contractor may depart from the foregoing priorities of payment only upon the
express prior written approval of the City.
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 and annual HUD operational subsidies are 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.
ACCOUNTING RECORDS
In a manner subject to City approval, Contractor shall maintain an accrual or modified
accrual 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.
MANAGEMENT AND MAINTENANCE,
Contractor is specifically responsible tbr all maintenance, repair, and management
functions including, without limitation, the following: selection of residents,
occupancy standards, complaint and grievance proceedings, evictions, collection
CITY OF ENCINrFAS/CANTEBRIA SENIOR HOMES- REGULATORY AGREEMENT Page 7
(b)
(c)
(d)
(e)
(t)
8491
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; the
Management Plan provided for in this Regulatory Agreement; and in accordance
with applicable Housing Quality Standards.
Contractor is responsible for operating the Project in accordance with the
Management Plan developed by the Contractor as required by the City, and which
is approved by and on file with the City (the "Management Plan"). All
amendments to the Management Plan require prior written approval of the City.
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. Contractor
anticipates to contract with Mercy Management Services for property
management. Such a contract shall be subject to prior written approval by the
City and shall contain a provision allowing the Contractor to terminate the
contract without penalty immediately upon written notice. Upon a determination
by the City and written notice to the Contractor thereof, that the management
agent perlbrming the functions required in subparagraphs (a) and (b) has tailed to
operate the Project in accordance with this Regulatory Agreement and the
approved Management Plan, the Contractor shall exercise such tight to
termination forthwith and shall make immediate arrangements, which shall be
subject to City approval, for continuing performance of the functions required in
subparagraphs (a) and (b).
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).
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.
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.
CITY OF ENCrNTrAS/CANTEBPJ~ SENIOR HOMES- REGULATORY AOR~;EMENT Page 8
18.
8492
REPORTING REQUIREMENTS.
The Contractor shall file with the City an annual report in a form approved by the City no
later than 60 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:
each tenant's annual income, family size and composition, race, length of
tenancy, actual monthly rent paid;
(2)
records demonstrating the contractor's etlbrts 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 may enter and inspect the physical premises and inspect all accounting
and resident records pertaining to the 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 information that it deems necessary to monitor
compliance with requirements set forth in this Regulatory Agreement and the
Affordable Housing Agreement or Development Agreement. Such information
shall be provided promptly by the Contractor.
CITY OF ENCIN I'I'AS/CAN'r ~BRIA SENIOR HOMES- REGULATORY AGREEMENT Page 9
8493
19.
(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; (vi) evidence that the
contractor, any subcontractor, agent, representative, or consultant working on the
Project is not debarred or suspended from participation in federal programs.
(i)
Prior to the disbursement of funds, the Contractor will provide City with: (i)
evidence of actual costs incurred or 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 monthly basis.
PROJECT RECORDS:
The Contractor shall maintain for a period consistent with the Program Regulations the
following records:
(a)
Records that demonstrate that each project meets the property standards in
Program Regulations;
Records that demonstrate that each rental housing project meets the requirements
of Program Regulations for the required period of affordability. Records must be
kept for each family assisted;
(c) Records that demonstrate compliance with the requirements of Program
Regulations for tenant and participant protections;
(d)
Records evidencing the guidelines adopted by the City and supporting the
certification/hr each housing project that the combination of federal assistance to
the Project is not any more than is necessary to provide affordable housing, as
required by Program Regulations;
(e) Equal oppommity and fair housing records containing:
(1)
Data on the extent to which each racial and ethnic group and single-
headed households (by gender of household head) have applied for,
participated in, or benefited from, any program or activity funded in whole
or in part with City funds;
CITY OF ENCINI'I'AS/CANTEBRiA SENIOR HOMES- REGUI_ATORY AGREEMENT Page 10
20.
21.
(2)
B494
Documentation of actions undertaken to meet the requirements of Section
3 of the Housing Development Act of 1968, as amended (12 U.S.C.
1701u);
(3)
Documentation and data on the steps taken to implement outreach to
minority-owned and female-owned businesses including data indicating
the racial/ethnic or gender character of each business entity receiving a
contract or subcontract of $25,000 or more paid, or to be paid, with City
funds; the amount of the contract or subcontract, and documentation of
Contractor's affirmative steps to assure that minority-business and
women's business enterprises have an equal oppormn/ty to obtain or
compete for contracts and subcontracts as sources of supplies, equipment,
construction, and services;
(4)
Documentation of the actions the Contractor has taken to affirmatively
further fair housing;
(5)
Records demonstrating compliance with federal and state labor
requirements including contract provisions payroll records, and
certifications concerning debarment and suspension;
HAZARD INSURANCE
'Ilae Contractor shall keep the Property and all improvements thereon insured by carriers
at all times satisfactory to the City against loss, by fire, earthquake and such other
hazards, casualties, liabilities and contingencies as the City may require and in such
amounts and for such periods as the City shall require. All insurance policies and
renewals thereof shall be issued by a carder and in a form acceptable to City. Property
insurance policies shall name City as an additional loss payee. Insurance proceeds and
condemnation awards for any loss to or taking of the Project shall be applied or utilized
in a manner which ensures that County's and Program interests are reasonably fulfilled.
CERTAIN ACTS PROHIBITED.
The Contractor shall not make any sale, encumbrance, assignment or conveyance, or
transfer in any other form, of the Property or Project or any part thereof or of any of its
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 17;
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- REGULATORY AGREEMEIqT Page 11
22.
(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. Any
funds collected as security deposits shall be kept separate and apart from all other
funds of the Project in a trust account with a depository insured by the Federal
Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation, and shall be held and disbursed in accordance with California law
and Paragraph 14 of this Regulatory Agreement. The balance of such account
shall at all times equal or exceed the aggregate of all outstanding obligations
under said account, plus accrued interest thereon;
(e)
Permit the use of the units in the Project for any purpose except that which was
approved by the City;
(f)
Incur any liability or obligation in connection with the Project, contingent or
otherwise;
(g)
Enter into any contract or contracts tbr supervisory or manager/al services except
as permitted by this Regulatory Agreement; or
(h)
Invest any funds from the Project in any property, real or personal, except as
author/zed by this Regulatory Agreement or by the City or deposit any such funds
in a depository not authorized by this Regulatory A~eement or approved by the
City.
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
afier the date such notice is mailed (or within such further time as the City, in its sole
discretion, may permi0, 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
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- REGUI,A'I'ORY AGREF, MI~N'I' Page 12
23.
24.
25.
26.
27~
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.
AMENDMENT,
This Regulatory Agxeement shall not be altered or amended except by writing executed
between the parties.
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, except to the extent that the City determines, at its
discretion, that the remaining provisions will not adequately protect the interests of the
City or fulfill the purposes of this Regulatory Agreement.
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~
Notwithstanding the foregoing, in accordance with Section 202 Program Regulations, it
is the intention of the Contractor to assign all rights and interest in the property and
Project to Senior Housing. Any such assignment shall include an assignment and
assumption of the Affordable Housing Agreement, Development Agreement and this
Regulatory Agreement unless new agreements are executed by Senior Honsing to replace
those executed by the Contractor. All such assignments and assumptions shall be subject
to approval by the City, which approval shall not be unreasonably withheld.
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.
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. Notwithstanding the foregoing, this
Regulatory Agreement shall be executed and delivered to the City, but not recorded until
Contractor has acquired title to the property.
CITY OF ENCrNTfAS/CANTEI~RIA SENIOR IIOMES- REGULATORY AGREEMENT Page 13
28.
29.
30.
31.
32.
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.
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.
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.
GOVERNING LAW.
This Regulatory Agreement shall be construed in accordance with and governed by the
laws of the State of Califomia.
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, Subtitle A, Part
58 of the Code of Federal Regulations; Title VI of the Civil Rights Act of
1964; Title VIII of the Civil Rights Act of 1968; 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.
(b) Section 202 Program. Notwithstanding any other provisions in this Regulatory
Agreement and so long as a mortgage affecting the Project and the Property is
held by the Secretary of Housing and Urban Development, including his
successor and assigns (collectively the "HUD Secretary"), or a regulatory
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES - REOULATORY AGREEMENT Page 14
$495-
agreement and/or use agreement in favor of the HUD Secretary is still
outstanding, the following provisions shall apply:
0)
All of thc provisions of this Regulatory Agreement shall be subject and
subordinate to all applicable HUD mortgage and capital advance
regulations and related administrative requirements under the Section 202
Program. In the event of any conflicts between the provisions of this
Regulatory Agreement and the provisions of any applicable HUD
regulations, related HUD administrative requirements or HUD capital
advance documents, including, but not necessarily limited to, a Capital
Advance Program Use Agreement, a Capital Advance Regulatory
Agreement, a Deed of Trust with Assignment of Rents, a Security
Agreement, a UCC-I, Financing Statement and a HUD Project Rental
Assistance Contract (collectively, the "HUD Documents"), the HUD
Regulations, related HUD administrative requirements and HUD
documents shall govern and control.
(ii)
Enforeemem of the provisions of this Regulatory Agreement shall not
result in any claim against the Project, the Section 202 Program capital
advance proceeds, any reserve or deposit required by HUD in connection
with the Section 202 Program transaction, or available residual receipts
authorized for release by HUD and the non-Project assets of the
Contractor.
(iii)In the event that any of the restrictions on occupancy, use and rents
described in this Regulatory Agreement at any time exceeds HUD's
restrictions on occupancy, use and rents under the Section 202 Program, or
otherwise affects the financial viability of the Project (i.e. impairing the
Contractor's ability to sustain a level of income sufficient to meet all
financial obligations of the Project, including HUD required escrows and
Project operating reserves), as determined by HUD, then HUD reserves
the fights to require the City to remove or void all or any portion of the
occupancy, use and rent restrictions described in this Regulatory
Agreement. In the absence of the City's compliance with a HUD request
that the City remove or void the restrictions, then the City expressly
recognizes the power of the HUD Secretary to take the appropriate action
to unilaterally remove or void the restriction(s) and that HUD shall not
have to look any further than this Regulatory Agreement containing the
restriction(s) for the power to remove or void it/them.
(iv)The City shall not declare a default under this Regulatory Agreement
without the prior written consent of the HUD Secretary.
(v) This Regulatory Agreement shall not be amended without the prior written
consent of the HUD Secretary, which consent shall not be unreasonably
withheld.
CITY OF ENCINITAS/CANTEBRiA SENIOR HOMES- REGULATORY AOREEMENT Page 15
8499'
33. 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.
CONTRACTOR
City of Encinitas
505 S. Vulcan Ave.
Encinitas, CA 92024
Attn: Housing & Grants Coordinator
Cantebria Senior Homes
500 South Main St., Ste. 110
Orange, CA 92868
Attn: Regional Director
34. iNDEMNIFICATION AND WAIVER.
(a)
In addition to the provisions of the Affordable Housing Agreement and
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 t¥om, 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) the making of the Program grant to Contractor, (ii) Contractor's failure to
perform any obligations as and when required by this Regulatory Agreement, the
Affordable Housing Agreement, or the Development Agreement; (iii) any failure
at any time of any of Contractor's representations or warranties to be true and
correct; (iv) 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 (v) the presence of hazardous substances at the Project or on the
Property. Contractor shall pay immediately upon the City's demand any amounts
owing under this indemnity together with interest thereon from the date the
indebtedness arises until paid, at the rate of five percent (5%) per aimum. 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 inderunify and
hold harmless the City and its agents, officers, and employees as set forth herein
regardless of the existence or degree of fault or negligence whether active or
passive, primary or secondary, on the part of the City, the Contractor, or their
respective agents, officers, employees, contractors, or subcontractors. Contractor's
duty to indemnify the City shall survive the term of this Regulatory Agreement.
(b)
The Contractor waives and releases any and all rights to any types of express or
implied indemnity against the City or its agents, officers, or employees.
(c)
Contractor expressly waives the protections of Section 1542 of the Civil Code in
relation to subparagraphs (a) and (b) above.
CITY OF ENCINITAS/CANTEeRIA SENIOR HOMES - REGIJLATORY AGREEMENT Page 16
(d)
This provision shall not apply as long as a deed of trust affecting the Project and
the Property is held by the Secretary of the U.S. Department of Housing and
Urban Development, including his successors and assigns (the "HUD Secretary"),
or a regulatory agreement and/or use agreement in favor of the HUD Secretary is
still outstanding.
IN WITNESS WHEREOF, Trustor has executed this Regulatory Agreement as of the day and
year first above written.
CONTRACTOR
Cantebria Senior Homes
By: ~ ~o~_ , ~ DATE: o:t /t4 /2003
Amy B~y*ley, ,~ecret~y u~"~
By:
CITY
City of Encinitas
/l~ep'~L.~Mil~ler, City Manager
DATE: o~A4/2003
-~y7 ............................
CITY OF ENCINITA~CANTEBRiA SENIOR HOMES- REGULATORY AGREEMENT Page
(d)
This provision shall not apply as long as a deed of trust affecting the Project ahd
the Property is held by the Secretary of the U.S. Department of Housing and
Urban Development, including his successors and assigns (the "HUD Secretary"),
or a regulatory agreement and/or use agreement in favor of the HUD Secretary is
still outstanding.
IN WITNESS WHEREOF, Trustor has executed this Regulatory Agreement as of the day and
year first above written.
CONTRACTOR
Cantebria Senior Homes
By: DATE: / /2003
Amy Bayley, Secretary
By:
CITY
City of Encinitas
DATE: * /zt/2003
CrI'Y OF ENC[lqlTAS/(2ANTEBRIA SENIOR HOMES - REOULATOKY ACOILEEMENT Page 1 "/
8502
ATTACHMENT A
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California, County of San Diego, and
described as lbllows:
Lot 44 of amended map of City of Encinitas Map No. 13258, City of Encirdtas, Tract No. 94-
066, Units 1, II and III, in the City of Eneinitas, County of San Diego, State of California,
according to map thereof No. 13333, filed in the office of the County Recorded of San Diego
County, June 3, 1996.
CITY OF ENCINITA,q/CANTEBRIA SENIOR HOMES- REGULATORY AGREEMENT Pagc 18
ATTACHMENT B
RENT SCHEDULE
44 units will be ranted to very low income seniors at a guaranteed affordable price. Households
will pay 30% of their income for rent according to HUD 202 Program Guidelines. Income
eligibility will be based on 50% of the median income as adjusted for family size, as determined
annually by HUD.
CITY OF ENCINITAS/CANTEERIA gENIOR HOMES - REGULATORY AGREEMENT Page 19
85O4
ATTACHMENT C
PROGRAM REGULATIONS
Refer to Title 24 of the Code of Federal Regulations, Part 570-Community Development Block
Grant Program Regulations and Part 92-HOME Investment Partnership.
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- REOULATORY AGREEMENT Page 20
State of California )
) SS.
County of San Francisco )
On this 14th day of January, 2003, before me, the undersigned, a notary public in and
for said state, personally appeared Amy Bayley, RSM, 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.
G, Hoshlyama
(print name)
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California t ss.
County of
pareoeally appeared [Z...-'T~" /.--- ~l.~ ~
.~"Persenally known to me
~ proved to me an the basis of satisfactory
evidence
to be the person(~']' whose name(~"' is/a,*e"
subscribed to the within instrument and
acknowledged to me that he/~,,~/tbe~executed
the same in his/her/J~-~' authorized
capacity~;~'), and that by his/t~Ttbeh'~'
eignature.(.~)~3n the instrument the person(s,);, or
the entity upon behalf of which the person(~F'
acted, executed the instrument.
WITNESS my hand and official seal,
Description of Attached Document .......
Title or Type of Document: ,.- _
Document Date: ,. Number of Pages:
Signer(s) Other Than Named Above: ..,
Capacity(ies) Claimed
/-
Signer's Name: .......
q Individual /
2 Corporate~fficer-- Title(s):
~ Partner/q Limited r-: General
r~ Attorcy-in-Fact
uastee
rdian or Conservator
Other:
Signer Is Representing:.
i
RECORDING REQUESTED BY:
First American Title Insurance Company
Escrow #182802
WHEN RECORDED MAIL TO:
Mlchaud and Hoshlyama
414 Jackson Street, Suite 202
San Francisco, CA 94111
ORIGINAL
SPACE ABOVE THIS LINE FOR RECORDER'S USE
SUBORDINATION AGREEMENT
(City of Enoinitaa)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT OR
INSTRUMENTS,
THIS SUBORDINATION AGREEMENT, made as of this21ac day of January, 2003,
by Cantebria Senior Homes, a California nonprofit public benefit corporation, owner of the land
hereinafter described and hereinafter referred to as "Owner," and the City of Encinitas,
present owner and holder of the deed of trust and note first hereinafter described and
hereinafter referred to as "FleneficJary".
WITNESSETH
WHEREAS, aa Trustor. Owner executed that certain Deed of Trust With Assignment
of Rents dated as of January .;[4 , 2003, to First American Title Insurance Company, as
Trustee, in favor of Beneficiary (the "Deed of Trust"), covering certain real property
described in Exhibit "A" attached hereto, to secure a Promissory Note dated of even date with
the Deed of Trust in the sum of $614,000 (the "Note"), which Deed of Trust is being recorded
concurrently herewith in the Official Records of the County Recorder of San Diego County,
California (the "Official Records"); and
WHEREAS, Owner and Beneficiary executed that certain Regulatory Agreement (the
"Regulatory Agreement') dated January 3.4 , 2003. recorded concurrently herewilh in the
Official Records; and
WHEREAS, the Deed .of Trust, the Note and the Regulatory Agreement are sometimes
hereafter referred to collectively as the "City Loan Documents"; and
WHEREAS, Owner has executed, or is about to execute, a Deed of Trust and a
Mortgage Note (the "Mortgage Note") in the sum of $3,687,900 dated January 1, 2003, in
favor of the United States of America, acting by and through the Secretary of Housing and
Urban Development, hereinafter referred to as "HUD," payable and upon the terms and
conditions described therein, which Deed of Trust (the 'HUD Deed of Trust") is to be recorded
concurrently herewith; and
City Subordination to HUD 1
WHEREAS, in addition to the HUD Deed of Trust executed or to be executed in favor of
HUD, Owner has executed, or le about to execute, with HUD a Capital Advance Program Use
Agreement (the "Use Agreement") and a Capital Advance Program Regulatory Agreement (the
"HUD Regulatory Agreement"), both of even date with the HUD Deed of Trust and Mortgage
Note in favor of HUD and to be recorded concurrently herewith (the HUD Deed of Trust,
Mortgage Note, Use Agreement and HUD Regulatory Agreement are sometimes hereafter
collectively referred to as the "HUD Documents"); and
WHEREAS, it Is a condition precedent to obtaining said financing (the "Capital
Advance~) from HUD that the HUD Documents shall unconditionally be and remain at all times
liens or charges upon the lend herein before described, prior end superior to the liens or
charges of the City Loan Documents; and
WHEREAS, HUD is willing to make the Capital Ac'vance provided the HUD Deed of
Trust, Use Agreement and HUD Regulatory Agreement are liens or charges upon the above
described property prior and superior to the liens and charges of the Deed of Trust and
Regulatory Agreement in favor of Beneficiary, and provided that Beneficlar,j will specifically
and unconditionally subordinate the liens or charges of the City Loan Documents in favor of
Beneficiary to the liens or charges of the HUD Documents in favor of HUD; and
WHEREAS, it is to the mutual benefit of the parties hereto that HUD make such Capital
Advance to Owner; and Beneficiary is willing that the HUD Deed of Trust, Use Agreement and
HUD Regulatory Agreement shall, when recorded, constitute liens or charges upon said land
which are unconditionally prior end superior to the liens or charges of the Deed of Trust and
Regulatory Agreement in favor of Beneficiary.
NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties
hereto and other valuable consideration, the receipt and sufficiency of which consideration is
hereby acknowledged, and Jn artier to induce HUD to make the Capital Advance above referred
to, It is hereby declared, understood and agreed as follows;
(1) That the HUD Deed of Trust securing the Mortgage Note in favor of HUD, and
any renewals or extensions thereof, shall unconditionally be and remain at all times a
lien or charge on the property therein described, prior and superior to the liens or
charges of the Deed of Trust and Regulatory Agreement in favor of Beneficiary.
(2) That the Use Agreement and HU~ Regulatory Agreement in favor of HUD, and
any amendments thereof, shall each, unconditionally be and remain at ell times, a lien
or charge on the property therein described, prior end superior to the liens or charges
of the Deed of Trust and Regulatory Agreement in favor of Beneficiary.
(3) That HUD would not make the Capital Advance without this subordination
agreement.
(4) That this agreement shall be the whole and only agreement with regard to the
subordination of the liens or charges of the City Loan Documents in favor of Beneficiary
to the liens or charges of the HUD Documents in favor of HUD and shall supersede and
cancel, but only insofar as would affect the priority between the documents herein
before specifically described, any prior agreements as to such subordination, Including,
but not limited to, those provisions, if any, contained In the Deed of Trust and
Regulatory Agreement in favor of Beneficiary or to another mortgage or mollgages.
Beneficiary declares, agrees and acknowledges that;
City Subordination to HUD 2
(a) It consents to (i) all provisions of the Mortgage Note and HUD Deed of
Trust in favor of HUD above referred to (ii) all provisions of the Use Agreement
and HUD Regulatory Agreement in favor of HUD above referred to and (iii) all
agreements, including, but not limited to, any Capital Advance or escrow
agreements, between Owner and HUD for the disbursement of the proceeds of
HUD's Capital Advance;
(b) HUD, in making disbursements pursuant to any such agreement, is under
no obligation or duty to, nor has HUD represented that it will, see to the
application of such proceeds by the person or persons to whom HUD disburses
such proceeds and any application or use of such proceeds for purposes other
than those provided for in such agreement or agreements shall not defeat the
subordination herein made in whole or in part;
(c) It intentionally and unconditionally subordinates the liens or charges of
the Deed of Trust and Regulatory Agreement in favor of Beneficiary to the liens or
charges upon said land of the HUD Documents in favor of HUD and understands
that in reliance upon, and in consideration of this subordination, specific advances
of funds are being and will be made and, as part and parcel thereof, specific
monetary and other obligations are being and will be entered into which would not
be made or entered into but for said reliance upon this subordination; and
(d) An endorsement has been or will be placed upon the Note secured by the
Deed of Trust in favor of Beneficiary indicating that the Deed of Trust has by this
instrument been subordinated to the liens or charges of the HUD Documents.
This agreement may be executed in counterparts, and if so executed, the counterparts
when read together will constitute a single instrument that is binding on the parties hereto.
IN VVITNESS WHEREOF, the parties hereto have caused this agreement to be executed
by their duly authorized official and to be made effective on and as of the day and year first above
written.
OWNER:
Cantebria Senior Homes, a
California nonprofit public benefit
corporation
Amy B~l~y ~ .]
Title: Secretary/Treasurer
BENEFICIARY:
City of Encinitas
City Subordination to HUD 3
County of )
On this · day of December 2002, before me, the undersigned, a no~ in and for seid_
state, p~rsonally appeared ~, personally known to me(or p~to me on the basis of
satisfactory evidence) to be the person(s) whose n~scribed to the w.i~hin
instrument and acknowledged to me that he/sh~ame in his/her/their
authorized capacity(les) and that by his/herlth~~ mment hte person(s), or
the entity upon behalf of which thee cuted the instrument.
wITNESS my hand and official .
~print name)
State of California )
· ) SS.
County of ~,~"~l,~l~"~ )
On this [~ day of December, 2002, before me, the undersigned, a notary public in and for
sa d state, personally appeared '~..~_,~_),Ll~,}l~l~l~*ll~'ersonally known to me (~
^,, ~k,- ,-~ ~ '-',:;;,;;;.3; c-.-:~;:~-_ *~ to bt~ the person(e) whose name(~) is/a~e subscribed to the
~vit~in i~'l:~r~'and acl~nowl~~a~-;~y executed Jhe same in his/her/their
authorized capacity(les) and thatby his/keakv~r signature/~) on the instrument the persorV~), or
the entity upon behalf of which the person/~,~) acted, executed the instrument.
VVI/T,[qES,~ my hand and official seal.
~,~atur~
~,~illJjJ~ DEBORAH CERVONE~,
or cot~. # ~332384
~EY PUBLIC-CALEORNIA ~
SAN DIEC, O COUNTY
¢o~,t~ ,~. No¥. ~, ~oo~.
City Subordination to HUD 4
State of California )
) SS.
County of Los Angeles )
On this ~.[5~ day of January 2003, before me, the undersigned, a notary public in and
for said state, personally appeared Am_v Ba_vle~v. 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(les) 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.
WIT~I.
Signature ~/
(print name)
County of ) ~
On this _ day of December, 2002, before me, the undersi~, a notary public
in and for said state, personally appeared .... , ......... ~ personally known to
me (or proved to me on the basis of satisfactory evide~0r.,e~ to bethe person(s) whose
name(s) is/are subscribed to the within instr~t and acknowledged to me that
he/she/they executed the same in his/her/th...eh-"' authorized capacity(les) and that by
his/her/their signature(s) on the instru~l~l:it the person(s), or the entity upon behalf
of which the person(s) acted, ex~te~rthe instrument.
.............
(print name)
City Subordination to HUD 5
Exhibit "A"
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California, County of San Diego, and is
described as follows:
Lot 44 of Amended Map of City of Encinitas Map No. 13258, City of Encinitas Tract No. 9 4 -
066, Units I, II and III, in the City of Enoinitas, 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.
City Subordination to HUD 6
ORIGINAL
CORPORATE RESOLUTION AUTHORIZING
BORROWING
TO: CITIBANK (WEST), FSB, a federal savinge bank
RESOLVED: that any one of the follewing officers: Vel Au;~osttn% as Presideat~ a]3d Am7 BaT'le7, as .....
Sec~:et:a~:y/"~]:ees. (insert names and titles}, of this corporation, CANTEBRIA SENIOR HOMES, a California nonprofit
public benefit corporation ("Borrower"), be, and they are hereby, authorized and empowered to act for and on behalf of and
in the name of this corpOration and as its corporate act and deed as follows:
To borrow money from CITIBANK(WEST), FSB, a federal savings bank ("Lender") and to assume any liabilities
of any other person or entity to Lender, in such form and on such terms and conditions as shell be agreed upon
by those authorized above and Lender, and sign and deliver such promissory notes and other evidences of
indebtedness for money borrowed or advanced and/or for indebtedness assumed as Lender shall require;
Borrower shall be bound to Lender by, and Lender may rely upon, any communication or act, including telephone
communications, purporting fo be done by any partner, member, employee or agent of Borrower provided that
Lender believes, in good faith, that the same is done by such person.
To discount with Lender notes, acceptances and evidences of indebtedness payable to or due Borrower and to
endorse the same and execute such contraots and instrUments for repayment thereof to Lender as Lender shall
require,
To mortgage, encumber, pledge, convey, granL assign, or otherwise transfer all or ahY part of Borrower's real or
personal property for the purpose of securing the payment of any Of the promissory notes, contracts, instrUments
· and other evidences of Indebtedness authorized hereby; and to enter into such agreements as Lender shall
require to protect and preserve Lender's interest in such collateral; and fo execute and deliver to Lender suoh
deeds of trust, mortgages, pledge agreements and/er other security agreements as Lender shall require,
To perform all acts and execute and deliver all documents described above and all other contracts and instruments
which Lender deems necessary or convenient fo accomplish the purposes of this certificate and/er to perfect or
continue the dghts, remedies and security interests to be given to Lender hereunder, including without limitation,
any modifications, renewals and/or extensions of any of Borrower's obligations to Lender, however evidenced;
provided that the aggregate principal amount of all sums borrowed and credits established pursuant to this
certificate shall not at any time exceed the sum of $176,000.00 outstanding and unpaid.
BE IT FURTHER RESOLVED, that the authority hereby confen'ed shall be deemed retroactive, and any and all acts under the
authority hereby conferred is In addition to that conferred by any other resolution heretofore or hereafter delivered to Lender
and shall continue in full force and effect until Lender shall have received notice in writing, certified by the Secretary of this
corporation, of the revocation hereof by a resolution duly adopted by the Board of Directors of this corporation. Any such
revocation shall be effective only as to actions taken by this corporation subsequent to Lender's receipt of such notice.
Loan No, 03.8096554
CERTIFICATION
I, Aay Bayley . ., Secretary of Cantebrla Senior Homes, a
corporation =teated and existing under the laws of the State of California, do hereby ce~fy and declare that the foregoing ia
a full, true and correct copy of the resolutions duly passed and adopted by the Board of Directors of said corporation, by written
consent of all Directors of said corporation or at a meeting of said Board duly and regularly called, noticed and held, at which
meeting a quorum of the Board of Directors was present and voted in favor of said resolutions; that said resolutions are now
in full force and effect; that there is no provision in the Articles of Incorporation or Bylaws of said corporation, or any
shareholder agreement limiting the power of the Board of Directors of said corporation ta pass the foregoing resolutions and
that such resolutions are in conformity with the provisions of said Articles of Incorporation and Bylaws; and that no approval
by the shareholders of, or the outstanding shares of,.said corporation is required with respect to the matters which are the
subjec~ of the foregoing resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said corporation this day of
, 200 3 .
Aa¥ Ba?le¥ }) [Sec~tary of Cantebrla Senior
Homes, a California nonprofit public benefit corporation
[Corporate Seal]
[NOTE: THIS CERTIFICATION IS TO BE EXECUTED BY THE SECRETARY OR ASSISTANT SECRETARY OF THE
CORPORATION AND SHOULD NOT BE EXECUTED BY THE SAME INDMDUAL EXECUTING THE OTHER LOAN
DOCUMENTS]
Loan No. 03-8096554
WILLIAM F. MICHAUD
GARY HOSHIYAMA
LAW OFFICES OF
MICHAUD AND HOSHIYAMA
A LAW CORPORA'~ON
414 Jackson Street, Suite 202
San Francisco, CA 94111
TEL: (415) 986-6422 FAX:(415) 986-2161
February 3, 2003
e-mail:
michoshlaw@ aol,com
ghoshlyama @ earthlink,net
Amanda Mills
Community Development Dept,
City of Enclnltas
5O5 South Vulcan Avenue
Enclnitas, CA 92024-3633
Re:
Cantebria Sentor Homes
Encinitas, CA
Dear Amanda:
Enclosed for the files of the City of Enclnitas are the following:
1) Copy of City of Encinitas loan documents checklist
2) Original Affordable Housing Agreement/Community Development Block Grant
Loan Documents coversheet
3) ~ Affordable Housing Agreement dated January 14, 2003 between the
City of Encinitas ("City") and Cantebria Senior Homes ("Cantebria")
Orlainal Development Agreement dated January 14, 2003 between the City
and Cantebria
5) ~ Promissory Note in the sum of $614,000 dated January 14, 2003
from Cantebria to the City
6)
~ copy of recorded Deed of Trust With Assignment of Rents dated
January 14, 2003 from Cantebria to First American Title Company for the
benefit of City
7) Certified copy of recorded Regulatory Agreement dated January 14, 2003
between City and Cantebria
8) ~ copy of recorded Subordination Agreement (City of Encinitas) dated
January 21, 2003 between Cantebria and City in favor of HUD
Page 2
I wish to thank you for your cooperation and patience during the last two
months, It was a pleasure working with you, Please let me know If you have any
questions regarding the documents I have enclosed.
Encl,
cc: Maury Ruano
SECOI~ARY FINANCING
City of Encinitas
($614,000)
1. Affordable Housing Agreement
2. Development Agreement
3. Promissory Note ($614,000)
4, Deed of Trust with Assignment of Rents
5. Regulatory Agreement
6. Subordination Agreement (to HUD)
ORiGiNAL
AFFORDABLE HOUSING AGREEMENT/
COMMUNITY DEVELOPMENT BLOCK GRANT
LOAN DOCUMENTS
by and between
THE CITY OF ENCINITAS
and
CANTEBRIA SENIOR HOMES
AFFORDABLE HOUSING AGREEMENT
THIS AGREEMENT, made and entered into this 14th:day of Jan~':., 2003 , in the State of
California by and between the City of Encinitas ("City") and Cantebria Senior Homes
("Contractor").
..... The provisions on the following pages constitute a pan 0fthis agreement.
WITNESS WHEREOF, this agreement has been executed by the parties hereto, upon the date first above
written.
..... Ci;rY oF ENCINITAS
(Auth~fizlc~qg[at u~e)-- --
Printed name and title of person signing
CONTRACTOR
Cantebfia Senior Homes
By (Authorized signature)
Printed name and title of pemon signing
Kerry L. Miller
City Manager
Address
505 S. Vulcan Ave. Encinitas, CA 92024
Amy Bayley
Secretary
Address
500 South Mah~ St., Ste. 110, Orange, CA 92868
Contractor is responsible for all of its obligations imposed by law or this Agreement,
including but not limited to supervising and managing the acquisition of the Property and
development of the Housing Project in accordance with the Scope of Development set
forth in Exhibit B and the Development Agreement (if applicable), and operating and
maintaining the Housing Project in accordance with the Regulatory Agreement, all of
which are attached hereto and made a part hereof, and also in accordance with the other
contract documents and specifications for the Housing Project.
Contractor agrees to perform all activities and complete all tasks on or before the dates
delineated with each task or activity as outlined in Exhibit B "Scope of Development".
All permits, plans, approvals, contracts, reviews, agreements, financing as well as all
other necessary documentation must be completed within 12 months of the signing of this
Agreement by the City. If the City determines, at any time, in its sole discretion that the
Housing Project is no longer feasible, the City will require that all funds reserved,
committed, or awarded to the Contractor be returned within thirty (30) days, The City
shall notify Contractor of its decision concerning the continued feasibility of the Housing
CITY OF ENCINITAS/CANIEBIUA SENIOR HOMES-AFFORDABLE HOUSINO AOREEMENT Page 1
Project within ten (10) working days after the review is completed. Contractor shall have
the right to appeal this decision to the City Council.
The total amount of this Agreement shall not exceed $614,000 and shall be expended in
the manner prescribed, as set forth in Exhibit B, Scope of Development and Exhibit C,
Construction Budget, both o£whlch are attached hereto and incorporated herein.
As an inducement to the City to provide the financial assistance made available through
this Agreement, Contractor has agreed to operate and maintain the Housing Project for 55
years, starting from the date of a Certificate of Occupancy, and pursuant to the rules and
regulations imposed by applicable statutes and regulations.
The Contractor's contribution to the Honsing Project assisted under this Agreement is in
the form of in-kind staff time, a $10,000 capital investment, land donation and fee credits
from the Carltas Company, and at least $3,687,900 in federal funding from the U.S.
Department of Housing and Urban Development, pursuant to Section 202 of the Housing
Act of 1959, as amended, (the L'Section 202 Program").
The Contractor agrees to comply with all income targeting and affordability requirements
as follows:
Forty-lbur (44) units shall be made affordable at and rented to very-low income seniors.
One (1) unit will be used for on-site manager.
In accordance with the Community Development Block Grant Program Rule, 24 CFR
Part 570, the Contractor certifies that:
Before committing any funds to a project, it will evaluate the Housing Project in
accordance with the guidelines that it adopts for this purpose and will not invest
any more CDBG funds in combination with other Federal assistance than is
necessary to provide affordable housing;
It will comply with the acquisition and relocation requirements of the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of 1970, as
amended;
It will use CDBG funds pursuant to the Consolidated Plan approved by HUD and
all requirements of 24 CFR Part 570;
4. It does and will continue to provide a drug-free workplace by:
a. Publishing a statement notifying employees that the unlawful
manufacture, distribution, dispensing, possession, or use of a controlled
substance is prohibited in the grantee's workplace and specifying the
actions that will be taken against employees for violation of such
prohibition;
CITY OF ENCINITAS/CANTEBRIA SEIqlOR ItOMES-AFFORDABLE HOUSING AGREEMENT Page 2
b. Establishing an ongoing drug-free awareness program to inform
employees about the dangers of drug abuse in the workplace; the
participating jurisdietion's policy of maintaiuing a drug-free workplace;
any available drug counseling, rehabilitation, and employee assistance
programs; and the penalties that may be imposed upon employees for drag
abuse violations occurring in the workplace; making it a requirement that
each employee to be engaged in the performance of the grant be given a
copy of the statement required by paragraph "a."; notifying the employee
in the statement required by paragraph "a." that, as a condition of
employment under the grant, the employee will abide by the terms of the
statement and notify the employer in writing of his or her conviction tbr a
violation of a criminal drug statute occurring in the workplace no later
than five calendar days after such conviction. Notifying the agency in
writing, within ten calendar days after receiving notice under paragraph
4(a) from an employee or otherwise receiving actual notice of such
conviction. Employers of convicted employees must provide notice,
including position title, to every grant officer or other designee on whose
grant activity the convicted employee was working, unless the Federal
agency has designated a central point for the receipt of such notices.
Notice shall include the identification number(s) of each affected grant.
Taking one of the following actions, within 30 calendar days of receiving
notice with respect to any employee who is so convicted: (a) Taking
appropriate personnel, action against such an employee, up to and
including termination, consistent with the requirements of the
Rehabilitation Act of 1973, as amended; or (b) Requiring such employee
to participate satisfactorily in a drug abuse assistance or rehabilitation
program approved for such purposes by a Federal, State, or local health,
law enforcement, or other appropriate agency, Making a good faith effort
to continue to maintain a drug-free workplace through implementation of
this paragraph;
No Federal appropriated funds have been paid or will be paid, by or on behalf of
it, to any person for influencing or attempting to influence an officer or employee
of any agency, a Member of Congress in connection with the awarding of any
Federal loan, the entering into of any cooperative agreement, and the extension,
continuation, renewal, amendment, er modification of any Federal contract, grant,
loan, or cooperative agreement;
If any funds other than Federal appropriated funds have been paid or will be paid
to any person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or an
employee of a Member of Congress in connection with this Federal contract,
grant, loan, or cooperative alg'eement, it will complete and submit Standard
Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its
insmmtions; and
CITY OF E~q'C INITA S/CANTEBRI A SENIOR HOMES-AFFORDABLE HOiJS[NG AGREEMENT Page 3
It will require that the language of paragraph (4) of this certification be included
in the award documents for all subawards at all tiers (including subcontracts,
subgrants, and contracts under grants, loans, and cooperative agreements) and that
all subrecipients shall certify and disclose accordingly.
Contractor agrees to comply with the applicable portions of: Title 24, Part 570 of the
Code of Federal Regulations; the Housing and Community Development Act of 1974 as
amended; Title 24, Subtitle A, Part 58 of the code of Federal Regulations; Title VI of the
Civil Rights Act of 1964; Title VIII of the Civil Rights Act of 1968; Section 109 of the
Housing and Commun/ty 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 and Attachments A, B, C,
F, H, N and O; the Areheological and Historical Preservation Act of 1974; the
Amhitectural 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.
In accordance with the foregoing, the City and Contractor agree to undertake the activities
provided for in this Agreement and that the following paragraphs 1 through 26 are incorporated
as part of this Agreement.
Contractor agrees that, at all times its acts regarding the development of the Housing
Project and the use of funds provided herein, including the contributions prescribed by
Paragraph H above, shall be in conformity with all provisions of the City, including the
statutes, roles and regulations, and the policies and procedures of the City which are
applicable thereto.
Contractor shall ensure that development of the Housing Project shall comply with all
requirements of the City and the Contract Documents and that it shall employ staff and
purchase, rent, and use materials and services as needed in the performance of this
Agreement in a matmar consistent with ail requirements of the City and the Contract
Documents.
In the event that the Contractor purchases materials or services in the performance of this
Agreement, it shall do so in that manner required by the Contract Documents. In the
event that the Contract Documents do not adequately establish standards for these
activities, Contractor shall comply with all State and Federal requirements.
Contractor shall maintain such records and accounts, including property, personnel and
financial records, as are deemed necessary by the City and the Contract Documents, to
insure a proper accounting of all City funds and other contributions, and shall 'retain the
same for at least five years after the final payment under this Agreement. The City shall
CITY OF ENCINITASdCANTEBRIA SENIOR HOMES-AFFORDAIILE IqOUSING AGREEMENT Page 4
have access to and the right to examine and audit all reports, records, books, papers, and
other documents related to the Contractor's performance under this Agreement.
If property costing less than $300.00 per item is properly acquired with City funds and is
expected at the time of acquisition to be used indefinitely for the purpose for which it was
purchased, title to such property shall vest in the Contractor at the time of acquisition. If
property acquired with City funds has a cost of $300.00 or more per item, or is not
expected at the time of acquisition to be used indefinitely for the purpose for which it was
acquired, title to such property shall vest in Contractor with a first lien appropriately
recorded in the name of the City of Eneinitas until receipt of construction and permanent
financing. If property or improvements purchased under this Agreement is diverted to
uses inconsistent with this Agreement, Contractor shall be liable to the City for the
replacement value of such property or improvements.
All real and personal propcmy and improvements shall be maintained and protected in
accordance with City standards.
Contractor shall carry out its responsibilities under this Agreement in accordance with the
civil rights provisions of the Contract Documents and the State's Nondiscrimination
Clause, as follows:
During the performance of this contract, Contractor and its subcontractors shall
not unlawfully discriminate against any employee or applicant for employment
because of race, religion, color, national origin, ancestry, physical handicap,
medical condition, marital status, age (over 40) or sex. Contractors and
subcontractors shall insure that the evaluation and treatment of their employees
and applicants for employment are free of such discrimination. Contractors and
subeontractom shall comply with the provisions of the Fair Employment and
Housing Act (Government Code Section 12900, et seq.) and the applicable
regulations promulgated thereunder (California Code of Regulations, Title 2,
Section 7285.0, et seq.). The applicable regulations of the Fair Employment and
Housing Commission implementing Government Code Section 12990, set forth in
Chapter 5 of Division 4 of Title 2 of the California Code of Regulations are
incorporated into this contract by reference and made a part hereof as if set forth
in' I'ull. Contractor and its subcontractors shall give wxitten notice of their
obligation under this clause to labor organizations with which they have a
collective bargaining or other agreement; and
This Contractor shall include the nondiscrimination and compliance provisions of
this clause in all subcontracts to perform work under the contract.
Contractor shall include a provision in all subcontracts of $10,000 or more of City funds,
that indicates that the contracting parties and all project related records will be subject to
the examination of the City for a period of three years after the final payment under the
contract.
CITY OF ENCINITAS/CAN'I'b;B Ri A SENIOR HOMES -AFFORDABLE HOUSING AGREEMENT Page
10.
11.
12.
13.
14.¸
Contractor shall provide the City with written progress reports at the times and in the
format required by the City.
The City may, at its option, terminate this Agreement at any time upon giving 30 days
advance notice in writing to Contractor in the maimer provided by law. In such event,
Contractor agrees to use all reasonable efforts to mitigate expenses and obligations
hereunder. In such event, the City shall pay Contractor for all satisfactory services
rendered prior to such notice of termination; lbr all expenses incurred by Contractor prior
to said termination which are not included in charges for services rendered prior to
termination and which could not by reasonable efforts of Contractor have been avoided,
but not in excess of contract maximum payable, in the event of termination pursuant to
this paragraph, if Contractor has acquired real property or improvements thereto with
City funds, the City may require Contractor to reimburse costs related to those
expenditures to the extent necessary to ensure that the County's interests are fulfilled,
In the event of any breach of this Agreement, the City may, without any prejudice to any
of its other legal remedies, terminate this Agreement upon five days written notice to the
Contractor. In such event, the City shall pay Contractor only the reasonable value of the
services rendered as the same may be agreed upon by the parties or determined by a court
of competent jurisdiction. In the event of termination pursuant to this paragraph, if
Contractor has acquired real property or improvements thereto with City funds, the City
may require Contractor to reimburse costs related to those expenditures to the extent
necessary to ensure that the City's interests are fulfilled.
No waiver of any breach of this Agreement shall be held to be a waiver of any other or
subsequent breach. All remedies afforded in this Agreement shall be taken and construed
as cumulative, that is, in addition to every other remedy provided therein or by law. The
failure of the City to enforce at any time the provisions of this Agreement, or to require at
any time performance by Contractor of any of the provisions, shall in no way be
construed to be a waiver of such provision nor to afl~ct the validity of this Agreement or
the fight of the City to enforce such provisions.
Contractor shall submit any subcontracts over $5,000 that are proposed to be entered into
to the City for its prior written approval before entering into same if those subcontracts
are wholly or partially financed by City funds or contributions subject to this Agreement.
Every such subcontract shall include or incorporate by reference all the relevant terms
and conditions of this Agreement and its attachments in addition to other relevant terms
and conditions.
The Contractor shall procure all permits and licenses necessary to accomplish the work
contemplated in this Agreement, and give all notices necessary and incident to the lawful
prosecution of the work. The Contractor shall keep informed of, observe, comply with,
and cause all of its agents and employees to observe and comply with all prevailing
Federal, State, and local laws, and roles and regulations made pursuant to said Federal,
State, and local laws, if any, which affect the conduct of the work of this Agreement. If
CITY OF E~qCINITAS/CANTEBRIA SENIOR HOMES-AFFOKOABLE HOUSING AOREEMENT Page 6
any conflict arises between provisions of the plans and specifications and any such law
referenced above, then the Contractor shall immediately notify the City in writing.
15.
The City, promptly after receiving notice thereof, shall notify the Contractor in writing of
the commencement of any claim, suit, or action against the City, its agents, officers or
employees for which the Contractor must provide indemnification under this Agreement.
To the extent permitted by law, the City shall authorize the Contractor or its insurer m
defend such claims, suits, or actions, and shall provide it or its insurer, at the Contractor's
expense, information and assistance both necessary and available for such defense. The
failure of the City to give such notice, irfformation, authorization, or assistance, shall not
relieve the Contractor of its indemnification obligation. The Contractor shall immediately
notify the City of any claim or action against it which affects or may affect this
Agreement, the terms and conditions hereunder, or the City, and shall take such action
w/th respect to said claim or action which is consistent with the terms of this Agreement
and the interests of the City.
16.
This Agreement may be amended in writing upon the mutual written agxeement of both
parties hereto; however, such amendment shall not take effect until approval by the City
and shall not have retroactive effect.
17.
Contractor may not transfer by assignment, subcontract, or novation the performance of
this Agreement or any part thereof except with the prior written approval of the City as to
each such assignment, subcontract, or novation.
18.
Neither the City nor the Contractor shall be deemed to be in delhult in the performance of
the terms of this Agreement if either party is prevented from performing the terms of this
Agreement by causes beyond its control, including without being limited to: acts of God
or the public enemy; interference, rulings or decisions by Municipal, Federal, State, or
other governmental agencies, boards or commissions; any laws and/or regulations of such
Municipal, State, Federal, or other goverrtmental bodies; or any catastrophe resulting
from flood, fire, explosion, or other causes beyond the control of the defaulting party. If
any of the stated contingencies occur, the delayed party shall immediately give the other
parties written notice of the cause of delay. The delayed party shall use reasonable
diligence to correct the cause of the delay, the party delayed shall immediately give the
other parties written notice thereof and shall resume operations under this Agreement.
19.
If any provision of this Agreement is held invalid by a court of competent jurisdiction,
such invalidity shall not affect any other provision of this Agreement and the remainder
of this Agreement shall remain in full force and effect unless, at the County's sole
discretion, the invalid portion of the Agreement has a material effect on the interests of
the City and the City, at its sole discretion, determines that the entire Agreement is
therefore invalid.
20.
Except as otherwise provided in this Agreement, any dispute arising under or relating to
the performance of this Agreement, which is not disposed of by Agreement shall be
decided by the Community Development Director, who shall reduce decisions to writing
CITY OF ENCIN1TA~/CANTEBRIA SENIOR HOMES-AFFOR DABLE 1-1OIISING AGILEEMENT Page 7
21.
22.
23.
in regard to the dispute and shall transmit a copy thereof to the Contractor. The decision
of the Community Development Director shall be final and conclusive unless within
thirty (30) days from the date of receipt of such copy, the Contractor transmits to the City
a written appeal. Pending the final decision of the City Attorney, the Contractor shall
proceed diligently with the performance of tkis Agreement and in accordance with the
written decision of the Community Development Director, which is the subject of the
Contractor's appeal.
With regard to the development of the Housing Project, Contractor agrees to undertake
and complete all responsibilities in the Contract Documents and Regulatory Agreement
or any other documents which are prescribed as duties of "the City" if, and to the extent,
they are delegated to Contractor by the City.
In connection with the purchase of real property described in Exhibit A, the parties hereto
acknowledge that said property will be owned by Cantebria Senior Homes, or its affiliate,
Cantebria Senior Homes, and that after the development of said Housing Project,
Contractor, or its affiliate, shall operate and maintain said Housing Project as prescribed
in the Regulatory Agreement. If the Housing Project is owned by Cantebria Senior
Homes, Contractor and Cantebria Senior Homes shall execute assignment and
assumption agreements to this Agreement, the Regulatory Agreement, and such other
Contract Documents, as the City deems necessary.
Hazardous Substances - In implementing this Agreement, Contractor shall be responsible
for performing those obligations required by the City related to hazardous substances as
follows:
For the purpose of this Agreement, "Hazardous Substance Laws" are all Local,
State, and Federal environmental laws, ordinances, and regulations relating to any
Hazardous Substance.
Prior to the draw down of funds for acquisition of the Property or for the
construction of improvements, or for the rehabilitation of existing property, the
Contractor shall perform, or cause to be performed, a "Phase 1" environmental
audit to determine the possible presence of Hazardous Substances on the Property
and in any improvements thereon. For the completion of any environmental
audits, hazardous substance removal plans, hazardous substance operations and
maintenance plans, or other hazardous work done pursuant to this paragraph, the
Contractor shall employ personnel with the training, experience, references, and
insurance coverage that evidence an ability to competently complete the relevant
task. It is fully understood that the City may, in its sole discretion, decline to
release any funds for acquisition, construction, or rehabilitation work until all
possible violations of Hazardous Substance have been resolved. The Contractor,
or the consultant preparing the environmental audit shall provide a copy of the
environmental audit for the City and shall provide a certification as to the
accuracy of the environmental audit and the methodology employed in its
preparation.
Gl'l'¥ OF EIqCINITAS/CANTEBPd A SENIOR I-IOMES -AFFORDABI,F, FIOILqING AOREEMENT Page
In the event the "Phase 1' environmental audit indicates the possible presence of
Hazardous Substances as determined by the City, and the Contractor desires to
proceed with the project, the Contractor shall determine if hazardous substances
are actually present, and to what extent they are present. This "Phase 2"
environmental audit may include: (1) testing underground storage tanks for
content and integrity, (2) analyzing soil gas, (3) bulk soil sampling, (4)
groundwater and surface water sampling, (5) analyzing local geology for potential
chemical spill pathways and, (6) listing individual groundwater wells and
subsurface water bodies that may be affected by a hazardous substance release. In
the event that the City determined, based on the Phase II audit, that Hazardous
Substances are actually present, the Contractor shall prepare and submit to the
City a detailed plan it would be willing to follow to remove or mitigate these
hazards in a manner which will result in full compliance with all applicable
Hazardous Substance Laws. This plan shall include time frames, costs, sources of
funds, necessary governmental approvals and any other relevant information
related to the scope of the work needed to remove or mitigate the presence of
Hazardous Substances. The City reserves the right to terminate this Agreement
pursuant to paragraph 10 if it determines, in its sole discretion, that the additional
risks and costs posed by the presence of Hazardous Substance would jeopardize
the security for the loan, render the project impossible or financially infeasible, or
present an undue risk of liability to the City.
The City may waive or reduce any of the requirements in subparagraphs b and c if
it determines that equivalent studies or plans have been completed or that other
evidence satisfactory to the City exist which eliminates the necessity of
undertaking any of the activities required by subparagraphs b and c of this
paragraph 23.
Upon the completion of an environmental audit, hazardous substance removal or
any related work required under this paragraph, the Contractor shall certit¥ that
the work has been appropriately completed.
At all times the Contractor shall comply and cause all subcontractors, agents, or
employees to comply with all Hazardous Substance Laws. The Contractor shall ·
immediately notify the City in writing of:
(1)
the discovery by the Contractor, or any of its subcontractors, agents or
employees working with the Property, of any concentration or amount of
HaTardous Substance on or under the Property requiring notice to be given
to any governmental entity or agency under Hazardous Substance Laws.
In the event of such a discovery, work shall be halted on any portion of the
project that may result in violation of occupational health and safety
regulations, in violations of public health regulations, in waste or
increased costs of hazard removal or mitigation, or in exposing project
residents to an urrreasouable risk of harm. Work may be resumed when
CITY OF ENCINITAS/CANTEBRIA SENIOR UOMES-AI:FORDABLE HOUSING AGREEMENT Page 9
The City determines that appmprlate precautions are taken to avoid these
results;
(2)
any knowledge by the Contractor or its subcontractors, agents or
employees that the project does not comply with any Hazardous Substance
Laws;
(3)
the receipt by the Contractor or its subcontractors, agents or employees of
written notice of any legal actions or claims regarding Hazardous
Substances affecting the project; and
(4)
the discovery by Contractor or its subcontractors, agents or employees, of
any occurrence or condition on any real property located within 2,000 feet
of the Property that could cause the Property or any part thereof to be
designated as "border zone property" under the pmvlsions of Health and
Safety Code Section 25220, et seq.
in the event the Contractor or its subcontractors, agents or employees is not in
compliance with all Hazardous Substance Laws, the Contractor shall attain
compliance, or ensure compliance not more than thirty (30) days after
Contractor's receipt of written notice by the City to do so.
The Contractor hereby agrees to indemnify and hold the City harmless for any
and all liability arising out of the presence of hazardous substances at the project
during the longer of the term of this Agreement or the term of the Regulatory
Agreement. Liability may be established by, among other forms of demands, a
demand in the form of a judgement, a settlement, or an administrative order, and
may include costs, fees, penalties, interest, and other costs related thereto.
Whereas the purpose of this indemnity is to protect the City from harm, the
County's rights to recover accrue as soon as the liability is incurred. "Any and all
liability" includes, but is not limited to, liability for: (1) the clean-up of hazardous
substances; (2) claims for contribution or apportionment of remedies and; (3)
claims for physical or other damages to persons, property, or natural resources.
The duty of the Contractor to indemnity and hold harmless includes the duty to
defend. The Contractor's duties herein arise regardless of the existence or degree
of fault or negligence, whether active or passive, on the part of the City.
This provision shall not apply as long as a deed of trust affecting the Project and
the Property is held by the Secretary of the U.S. Department of Housing and
Urban Development, including his successors and assigns (the "HUD Secretary"),
or a regulatory a~eement and/or use agreement in favor of the HUD Secretary is
still outstanding.
This subparagraph is in addition to any other indemnity provision of this
Agreement and is not to be considered in any manner to supersede any other
indenmity provision of this Agreement.
CITY OF ENCINI'I'AS/CANTEBRIA SENIOR HOMES -AFFORDABLE HOUSING AGREEMENT Page 10
24.
25.
The Contractor releases the City from any and all claims that the Contractor may
currently or subsequently have against the City, arising out of the presence of
hazardous substances at the Development. The Contractor expressly waives the
protection of Civil Code Section 1542.
This provision shall not apply as long as a deed of trust affecting the Project and
the Property is held by the Secretary of the U.S. Department of Housing and
Urban Development, including his successors and assigns (the "HUD Secretary"),
or a regulatory agreement and/or use agreement in favor of the HUD Secretary is
still outstanding.
As additional consideration for receipt of City funds, the Contractor agrees to hold
harmless and defend the City and its agents, officers and employees from and against any
and all claims, actions, liabilities, loss, damage or injury, including any of the foregoing
by way of indemnification or contribution, arising directly or indirectly out of
Contractor's activity, performance, operation, acts, or omissions relating to the
Contractor's duties, responsibilities and rights under the terms and conditions of this
Agreement, whether or not such claims, actions, loss, damage or injuries result directly or
indirectly from the sole, contributory, comparative, active, passive, primary or secondary
negligence of the Contractor, and the Contractor shall defend, at its expense, including
attorney fees, the City, its agents, officers and employees in any legal action based upon
such claim actions, liabilities, loss, damage or injury. The provisions of this paragraph
shall be subject to, and liimted by, any applicable provision of State law and shall be in
addition to the provisions of paragraph 23(i). In addition, the provisions of this paragraph
shall be subject to the rights of HUD, if any, under the Section 202 Program, and the
restrictions therein with respect to the use of Project assets to satisfy the Contractor's, or
Contractor's affiliate's, obligations hereunder.
In implementing this Agreement and in accordance with the Public Contract Code unless
precluded by Federal law, the Contractor shall be responsible for compliance with all
conditions set forth in Scope of Development and for certain activities, including but not
limited to:
Reviewing, and preparing to the extent necessary, documents related to the
acquisition of the Property; and preparing contracts for site development and
construction;
Preparation and oversight of bid process in accordance with State, City, and
Federal requirements
c. Enfoming bid and construction bond requirements;
d. Ensuring compliance with prevailing wage requirements;
CITY OF ENCINITAS/¢ANTEBRIA SENIOR HOMES-AFFORI)AItLE ROUSING AGREi~MEN'r Page ! 1
26.
e. Supervising construction. The Contractor shall supervise and monitor the
construction work by fulfilling or causing to be fulfilled, certain responsibilities,
including, but not limited to, the following:
1) Act as clerk of the works to monitor the daily progress of construction and
ensure compliance with all applicable codes and contract documents and
specifications;
2) Notify construction contractor(s) in writing of the date for commencement
of construction. Prior to the start of the construction, the contractor must
schedule a preeonstruetion conference;
3) Review and approve requests for payments to construction contractor(s)
for work satisfactorily completed in accordance with the terms of the
contract for construction;
4) Maintain and retain all pertinent records related to the work including, but
not limited to, inspection reports, request for payment documentation,
change order requests, and prevailing wage verifications; and
5) Maintain books of record for receipt and disbursement of funds in
accordance with the City, State, and federal requirements.
f. Executing a management agreement between the management agency and the
Contractor, which ensures that the Housing Project will be operated in a manner
consistent with the Program and the Regulatory Agreement.
In implementing this Agreement, the City shall be responsible for certain activities,
including but not limited to the fullowing:
a. Review and approve bids, bid award and the construction contract;
b. Review and approve preliminary title reports and title policy;
c. Approve all change orders prior to their implementation; and
d. Approve all budget line item changes.
CITY OF ENCINITAS/CANTEBKIA SENIOR I1OMES -AFFORDABLE }lOUSING AOREEMENT Page [2
EXHIBIT A
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California, County of San Diego, and
described as follows:
Lot 44 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 Eneinitas, County of San Diego, State of California,
according to map thereof No. 13333, filed in the office of the County Recorded of San Diego
County, June 3, 1996.
CITY OF ENCINITAS/CANTEBlUA SENIOR HOMES-AFFORDABLE HOUSING AGREEMENT Page 13
EXHIBIT B
SCOPE OF DEVELOPMENT
I. OENERAL DESCRIPTION
The Site is approximately 1.4 acres in size and is located at Via Cantebria on the
Encinitas Ranch, Encinitas, California.
DEVELOPMENT
Developer shall construct 45 units that will consist of either two or three levels of living
space. It is anticipated that 2,820 square feet of common space will be constructed. Forty-four
of the units will consist of one bedroom and one bathroom. One unit will consist of two
bedrooms and one bathroom, wlfich will be reserved for an on-sim manager. Building design will
conform to the City of Encinitas zoning codes and design review guidelines.
All of the improvements, including off-site improvements, as required by the City
pursuant to the usual City building permit mquiremants will be provided by the developer, at its
own cost and expense.
III. DEVELOPMENT STANDARDS
The improvements shall be designed and constructed and the Property shall be developed
in accordance with the Encinltas Municipal Code.
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES-AFFORDABLi~ HOUSING AGREEMENT Page 14
EXIq/BIT C
CONSTRUCTION BUDGET
Deacrl tion Estimate HUD CIT~' Carltas Additional Fun~ln~l Difference
Construction $ 3,380,404 $ ;].269,917 $ .... $ 99,48715
Cost Estlmat°r $ 4,000 $ 4,000 ' $
Lane-per appraisal $ ~ 035,000 $1,035,000
Architecture,Engineer $ 259,850 $ 51.9~0 $194,887 " $, 12,993
EnvironmentaJ(Phese I) $ 10,000 $ 10,000 ' $
Survey(ALTA) $ 10,000 , ~' '10,000 [ $
Soil~ (geotech rpt and monitoring) ' $ 5,000 $ 5,000 $
~.coustlc Surve;/ ' $ 1,000 $ 1,000
Fees/Permits $ 421,405 $ 54.4'87 $ 366,918
building(struc./meci~/elec,/plmb) $ 6,600
Sewer(baSic fee+planchk+{nspection $ 185,750
water $ 41 806
traffic ~nd park fees $ 145,613 ,
flood control impact fees $ 16,466
planning, ftrelplan check and alarms $ 12,170
building permit $ 13,00Q
.'i'nancial Consultant $ , ,'1
Taxes/InsuranCe $ 15,000 , $ 15,000 $
Le~sl $ .35,000 $ 10,000 $ 9,6261 $ 1,~,374i$
Tltle/Closir~l , $ 20,00(: $ 12,993 i~" 7,007
Appraisal $. 5,000 $ 5,000, $
Min. imum Cap[tallnvestment $ 10,000 .. $ 10,000 $.
Coat Certification Audit $ 15,000 $ !51~00
~.dmieistrative Fee $ 250,000 $ 125,000 $125,000 $
Rent-up/Marketing* $ 25,000 $ 25,000 $
Hard Cost Contin!~ency' $ 168,020 $ '" 118,020 50,000 $ 0
Furnishings/Fit-up, $ 601000 $ 601~0
TOTAL COST $. 5,709,67~ $ 3,687,900 $414,000 $1,035,00~ $. 572,779 $ 0
TOTAL COMMITTED $ $,135,900 $ 3,687,9.00 $414,000 $1,035,000 $ ,,
~,mount Remaining $ (57;2,779) $ $ .. $ $ (5~2,779)
CITY OF ENCINITAS/CANTEBRiA SENIOR IIOMES-AFFORDABLI~ HOUSING AGREEMENT Page 15
DEVELOPMENT AGREEMENT
This Development Agreement, dated as of 1/14d2003, (the 'Development Agreement"), is made
and entered into by and between the City of Eneinitas, ("the City") and Cantebria Senior.Homes,
("the Contractor").
RECITALS
The Contractor, or Contractor's affiliate, Cantebfia Senior Homes, is or will be the owner
of, or holder of a fee estate in, the real property located at Lot 44 of the Encinitas Ranqh_,
in the County of San Diego, State of California (the "Property') and more fully described
in Attachment A, which is attached hereto and incorporated herein.
The Contractor has proposed to develop, construct and operate on the Property an
affordable senior housing project (the "Project"). The Project will consist of tbrt¥-five
(45) units, of which ..fort3,-four (44) one bedroom units will be rented at a guaranteed
affordable rate to ver~ low income seniors.
The Project shall be fmanced and regulated in accordance with the application approved
by the City and the roles and regulations governiag the applicable program(s) that
funding was received from (hereinafter "Program"). The Contractor agrees to be bound
and abide by all applicable statutes, rules and regulations applicable to the Project and the
financial assistance provided by the City, and the Project shall be developed in
accordance with the plans and specifications submitted by the Contractor and approved
by the City as described in Attachment B, "Construction Description", and Attachment C,
"Sources and Uses of Funds", each of which is attached hereto and incorporated herein,
The acquisition, development and construction of the Project are to be financed in part by
a loan from the City in a principal amount not to exceed $.. 614,000 (the "Loan"). In
consideration of the City's commitment to make the Loan, the Contractor has entered into
an Affordable Housing Agreement, dated ~, and has agreed to enter into this
Development Agreement, with the City; and in consideration of said Loan, has entered or
will enter into a Regulatory Agreement, dated as of the date hereof, with the City.
In addition to the Loan from the City, the Contractor has received, or will receive, funds
for the construction of the Project from the entities identified in the chart identified in
Attachment C 'Sources and Uses of Funds'. All such funds shall be used, and secured, in
the manner specified in Attachment C.
NOW, TI-IEREFORE, the parties hereto agree as follows:
GENERAL
1. Recitals. The foregoing recitals are part of this Development Agreement.
2. Definitions. l'he following definitions apply
CITY OF ENCINrr.~CANTEBRIA SENIOR IIOMES ~ DEVELOPMENT AGREEMENT Page I
(a)
"Development" or "Construction' shall include uny site development, mitigation
of hazardous substances, acquisition of land, or other activities financed by the
Loan;
(b) "City", as used herein, refers to the City of Eneinitas;
(c)
"Loan Documents", as used herein, means the Affordable Housing Agreement,
the Regulatory Agreement, this Development Agreement, a Promissory Note, a
Deed of Trust with Assignment of Rents, and any other instruments required by
those agreements.
Work Description. The Contractor shall cause the development and construction of the
Project to be performed in an expeditious and professional manner, in accordance with
Attachment B "Consmlction Desefiption" und Attachment C "Soumes and Use of
Funds".
Construction Schedule. The Contractor shall follow the construction schedule, including
all pertinent events from transfer of ownership, if applicable, through and including
occupancy, as set forth in Attachment B. Prior to the commencement of construction,
Contractor shall schedule und conduct a preconstmction conference to be attended by
representatives of the Contractor, all grant sources and lenders (including the City's
designated construction inspector), the project architect, and the general contractor.
Contractor shall notify the City's designated construction inspector by telephone of this
preconstruction conference no later than seven (7) days prior to its occurrence. The
Contractor shall notify the City's designated construction inspector by telephone no later
than three (3) days prior to beginning work on each of the following construction phases:
(a) site improvements - utilities;
(b) fotmdations;
(c) framing und roofing; and
(d) final construction.
Contractor shall also notify the City's designated construction inspector by telephone
when the "punch list" items listed at final inspection have been completed.
Term. This Development Agreement shall be effective on the date set forth above and,
except for the obligation contained in Recital B hereof, shall terminate upon the earlier of
the following: December 31~ 2005 or the first anniversary of the issuance to the
Contractor of a Certificate of Completion and Certificate of Occupuncy for the Project by
the State or Local building officials or State or Local jurisdiction, as may be applicable;
this Agreement may be terminated sooner pursuant to Paragraph 24 hereof.
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- DEVELOPMENT AGP~EE .MENT Page 2
Form of Documents. The form and substance of all documents, instruments and forms of
evidence to be delivered to the City under the terms of any of the Loan Documents,
including, but not limited to, the Plans and Specifications and the documents evidencing
or securing the sources of funds specified in Attachment C, shall be subject to the City's
approval and shall not be modified, superseded or terminated in any respect without the
City's prior written approval.
REPRESENTATIONS AND WARRANTIES
Representations and Warranties. Contractor represents and warrants to the City as
follows:
(a)
Organization. Contractor and Cantebria Senior Homes are each duly organized,
validly existing and in good standing under the laws of the State of California and
has the power and authority to own or lease the Property and carry on its business
as now being conducted or contemplated. The copies of the documents evidencing
the organization of Contractor and Cantebria Senior Homes delivered to the City
are tree, complete, and correct copies of the originals, as amended to the date of
this Development Agreement.
(b)
Authority of Contractor. Contractor has full power and authority to execute and
deliver this Development Agreement, the other Loan Documents and all
documents or insmaments executed and delivered, or to be executed and
delivered, pursuant to this Development Agreement, and to perform and observe
the terms and provisions of all of the above.
(c)
Authority of Persons Executing Documents. The Loan Documents and all
documents or instruments executed and delivered, or to be executed and
delivered, pursuant to this Development Agreement, have been executed and
delivered by persons who are duly authorized to execute and deliver the same for
and on behalf of Contractor, and all actions required under Contractor's
organizational documents and applicable governing law for the authorization,
execution, delivery and performance of this Development Agreement, the other
Loan Documents and all documents or instruments executed and delivered, or to
be executed and delivered, pursuant to this Development Agreement, have been
duly taken,
(d)
Valid Binding Agreements. The Loan Documents and all documents or
instruments executed and delivered pursuant to or in connection with this
Development Agreement constitute or, if not yet executed or delivered, will when
so executed and delivered constitute, legal valid and binding obligations of
Contractor enforceable against it in accordance with their respective terms.
(e)
No Breach of Law or Agreement. None of the execution or delivery of the Loan
Documents or of any document or instrument executed and delivered, or to be
executed or delivered, pursuant to this Development Agreement, or the
CITY OF ENCI NI'I'AS/CANTEBRIA SENIOR HOMES- DEVELOPMENT AGREEMENT Page 3
(f)
(g)
(h)
(i)
performance of any provision, condition, covenant or other term hereof or thereof,
will conflict with or result in a breach of any statute, role or regulation, or any
judgement, decree or order of any court, board, commission, or agency
whatsoever binding on Contractor or any provision of the organizational
documents of Contractor, will conflict with or constitute a breach of or a default
under any agreement to which Contractor is a party, or will result in the creation
or imposition of any lien upon any assets or property of Contractor, other than
liens approved by the City.
Compliance with Laws; Consents and Approvals, The Project will comply
with all applicable laws, ordinances, rules and regulations of Federal, State and
Local governments and agencies having jurisdiction over either the Contractor,
the Property or the Project and with all applicable directions, rules and regulations
of the fire marshal, health officer, building inspector and other officers of any
such government or agency. Except as specified in Attachment B, all permits,
consents, permissions and licenses required by any Federal, State or Local
government or agency to which Contractor, the Property or the Project is subject,
which may be necessary in relation to this Development Agreement or the
acquisition, development, conslruction or ownership operation of the Project, at or
prior to, the commencement of construction have been obtained, and none of such
consents, permissions and licenses are subject to appeal or to conditions which
have not been met.
Pending Proceedings. Contractor is not in default under any law or regulations or
under any order of any court, board, commission or agency whatsoever, and there
are no claims, actions, suits or proceedings pending or, to the knowledge of
Contractor, threatened against or affecting Contractor, the Property or the Project,
at law or in equity, before or by any court, board, commission or agency
whatsoever which might, if determined adversely to Contractor, materially affect
Contractor's ability to acquire, construct or develop the Project.
Title. Upon disbursement of the Loan and recordation of the Regulatory
Agreement, Contractor or Cantebria Senior Homes shall have title to the Property.
The Regulatory Agreement shall remain in first position until permanent
financing by HUD is recorded,
If Cantebria Senior Homes acquires title to the Property, Contractor shall first
obtain the consent of. the City. Such City consent shall require as a condition
precedent, the execution and delivery to the City of assignment and assumption
agreements to the Loan Documents that are acceptable in form and substance to
the City.
Adequacy of Loan, The mount of the Loan, together with any funds to be
provided by the Contractor or to the Contractor from any other sources, is
adequate to pay all costs incurred in connection with the acquisition and
development of the Property. In addition, funds provided by Contractor and from
CITY OF ENCINITAS/CANTEBRIA SENIOR IIOMES- DEVELOPMENT AOKEEMENT Page 4
other sources will be adequate to pay for the construction and development of the
Project and to enable Contractor to satisfy the covenants contained in this
Development Agreement. The costs set forth in the sources and uses charts in
Attachment C are the anticipated costs of acquiring, constructing and developing
the Project.
0)
Payment of Taxes. All Federal, State, City and Municipal taxes required to be
paid by the Contractor or on accoum of thc Property duc and payable as of the
date of this Development Agreement have been paid in full as of such date.
(k)
Conflict of Interest. No person who is an employee, agent, consultant, officer, or
elected official or appointed official of the Contractor and who exercise or have
exercised any functions or responsibilities with respect to any activities assisted
with any City funds, or who are in a position to participate in a decision making
process or gain inside information with regard to these activities, may obtain a
financial interest or benefit from a City or program assisted activity, or have an
interest in any contract, subcontract or agreement with respect thereto, or the
proceeds thereunder, either for themselves or those with whom they have family
or business ties, during their tenure or one year themafier.
ACQUISITION AND CONSTRUCTION
Plans and Specifications/Change Orders. There shall be no change in the approved Plans
and Specifications of the Project without the City's prior written approval. All change
orders shall be submitted on a form acceptable to the City, signed by Contractor, the
project architect and the general contractor; and shall be accompanied by working
drawings, an itemized cost statement and a written narrative of the proposed change. To
the extent the City determines that the proposed change shall result in increased cost of
the Project, the Contractor shall provide satisfactory evidence that adequate funds are
available for any such change. All profit associated with any change order shall not
exceed 6.5 percent of the total amount of the change order. All overhead associated with
any change order shall not exceed 6.5 pement of the total amount of the change order.
Architect. For the performance of design and construction supervision work on the
Project, Contractor agrees to use the Architect approved by the City prior to execution of
a contract with the Architect. The City must approve any successor to or substitute for the
Architect in writing. Contractor shall not terminate or amend that contract without written
notice to the City. Contractor shall monitor and enforce the terms and conditions of that
contract.
10.
Contractors and Subcontractors. For the performance of any construction work on the
Project, Contractor agrees to use the general contractor(s) approved by the City prior to
execution of a conswaction contract. The City must approve any successor to or substitute
for the general contractor(s) in writing. The Contractor hereby certifies that the general
contractor(s) will be appropriately licensed by, and in good standing with, the California
Contractors' State License Board and agrees that the Contractor shall only contract with
CITY OF ENCRqlTAS/'CANTEBKiA SENIOR HOMES- DEVELOPMENT AGILEEMENT Page
11.
121
14.
15.
general contractors, and shall ensure that the general contractor(s) and any successors
thereto shall only contract with subcontractors which are so licensed.
Construction Contract. The Contractor shall enter into a written contract with the general
contractor(s) for the performance of the construction work as set forth in Paragraph 3
above. That contract shall not be entered into by the Contractor prior to receiving the
City's written approval of the general contractor(s) and the form of the contract. The
contract shall include any addendum required by the City which relate to the use of the
City funds. Contractor shall not terminate or amend that construction contract without
prior written notice to the City. Contractor shall monitor and enforce the terms and
conditions of that contract.
Construction Responsibilities. Contractor shall be solely responsible for all aspects of
Contractor's business and conduct in connection with the Property and the Project
including, but not limited to, the quality and suitability of the Plans and Specifications
and the equipment and materials used in the construction of the Project; the supervision
of the work of construction; the qualifications, financial condition and performance of all
architects, engineers, contractors, and contractors of any tier; material suppliers;
consultants; and property managers. In addition Contractor shall be solely responsible for
the accuracy of all applications for payment and the proper application of all
disbursements. The Contractor shall submit a Prevailing Wage Payment Plan to the City
which shall specify the means by which the Contractor shall comply with the State
prevailing wage law as set forth in Labor Code Section 1720, et seq and with all federal
wage and labor standards.
Purchase of Materials Under Title Retention Agreement. With respect to the Project, the
Contractor shall not purchase or install or permit to be purchased or installed any
materials, equipment, fixtures or other part of the Project under any agreements or
arrangements wherein the supplier or seller reserves or purports to reserve the right to
remove or to repossess any such items or to consider them personal property after their
incorporation into the Project, unless authorized in writing by the City.
Material Warranties. The Contractor shall procure from the general contractor all
warranty documents, including warranties on appliances and on building components
(such as the roof and siding), etc., and all service manuals and operating instructions
pertaining to the Project.
Inspections.
(a)
Authorized representatives and agents of thc City shall be permitted upon
reasonable demand to inspect all work, materials, payrolls, personnel records,
materials invoices and other relevant data pertaining to the Project, and shall have
the fight of entry and full access to the Property and the Project. Based on the
findings during any inspection, the City may issue correction notices or stop work
orders. In all cases, the Contractor shall cause to be corrected any items noticed in
CITY OF ENCIN1TAS/CAN3'EBRIA SENIOR HOMES- OEVELOPMENT AGREEMENT Page 6
16.
17.
the correction notice or stop work order, and request a relnspection, prior to
proceeding to the next phase of work.
(b)
The City shall not have any affirmative duty to make any inspection, to make any
investigation, or to supervise or inform Contractor or any third party as to any
aspect of the construction of the Project and shall not incur any liability for falling
to do so. Any irmpection, investigation, or review undertaken by the City shall be
solely to determine whether the Contractor is properly discharging its obligations
to the City and may not be relied upon by Contractor or any third party to protect
against, or to inform Contractor or any th/rd party of any negligent, faulty,
inadequate, or defective design or construction of the Project.
The fact that inspection, investigation or review of the design or construction of
the Project may or may not have been made by the City shall not relieve the
Contractor or the general contractor of any obligation that they may otherwise
have to inspect the Project or to otherwise comply with the terms of this
Development Agreement.
Completion Certificate. Contractor shall submit to the City a Notice of Completion or
Certificate of Occupancy for the Project upon the occurrence of all of the following:
(a)
completion of the acquisition, construction, and development of the Project in
accordance with the Plans and Specifications as modified in accordance with the
terms of this Development Agreement and acceptance thereof by the City;
(b)
compliance by Contractor with all applicable laws, ordinances, roles and
regulations of State and Local governments, and all the terms and provisions of
this Development Agreement; and
(c)
satisfaction of the conditions precedent to payment to, or on behalf of Contractor
of the final disbursement of funds due and payable pursuant to this Agreement.
DISBURSEMENT OF FUNDS
Conditions Precedent to Disbursements, The City shall not be obligated to make the
initial or any subsequent disbursements of proceeds of the Loan to Contractor or take any
other action under the Loan Documents unless all of the following conditions are
satisfied prior to the time of such action:
there exists no Event of Default (as defined in Paragraph 23 hereof) hereunder or
any default under any of the other Loan Documents, or event, omission or failure
of condition which would constitute such a default or Event of Default after
notice or lapse of time, or both;
(b)
the undisbursed Loan proceeds, including the roll-over Loan proceeds, and all
sums (if any) to be provided by Contractor, and all sums (if any) shown in the
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- DEVELOPMENT AOI~EMENT Pag* 7
(c)
(d)
(e)
(g)
(h)
chart entitled "Sources and Uses of Funds" in Attachment C to be provided by
other sources, shall at all times be not less than the amount which the City, in its
sole judgement, determines necessary to: (i) pay all costs of acquisition and costs
related thereto; (ii) pay all sums which may be payable under the Loan
Documents during the term of this Development Agreement; and (iii) enable the
Contractor to perform and satisfy all of the covenants of the Contractor contained
in this Development Agreement; provided that if the City determines at any time
that said funds are not sufficient for said purposes, the Contractor may satisfy this
condition by depositing the amount of such deficiency in the account within seven
(7) days of the City*s written demand or by providing evidence satisfactory to the
City that Contractor has obtained a binding commitment from another entity
which will provide funds to Contractor in such amounts and upon terms which are
satisfactory to the City;
the Contractor has executed and delivered to the City all Loan Documents, other
documents, instruments, policies, and forms of evidence or other materials
required under the terms of this Development Agreement or any of the other Loan
Documents, all in form and substance satisfactory to the City;
Each of the Deed of Trust and the Regulatory Agreement has been executed and
delivered to the City with the understanding that upon acquisition of the Property
by the Contractor or Cantebria Senior Homes they will be recorded in the Office
of the County Recorder for the County of San Diego, and are not subordinate in
priority to any documents unless subordination was agreed to in writing by the
City;
a letter of funding commitment from the U.S. Department of Housing and Urban
Development has been received, in an amount not less than $3,687,900 and to the
satisfaction of the City;
the disbursement of funds shall be contingent upon the continued availability of
funds;
there shall be no unrelated mechanic's liens or stop notices in connection with the
Project and Contractor shall have furnished to the City, if demanded by the City,
full waivers of lien claims from the general contractor and all subcontractors and
materials suppliers for all work performed and materials supplied to date;
the Contractor shall have obtained for the City such endorsements to the Title
Policy as described in Paragraph 19 as the City may require including but not
limited to an endorsement that the Regulatory Agreement is prior to any liens,
encumbrances, or matters of record affecting the Project except for those
approved in writing by the City, and to any statutory lien for labor or material
arising out of the Construction;
CFFY OF ENCINITAS/CANTEBP, JA SENIOR UOMES ~ DEVELOPMENT AGREEMENT Page 8
(i)
funds disbursed may only be for the amount needed for payment of actual eligible
expenses. The amount requested must be limited to the amount needed as
evidenced by actual invoices and/or signed statements of cost.
18. Final Disbursemem
19.
(a)
The final disbursement of the proceeds of the grant, without any withhold, shall
be made upon the satisfactory accomplishmem of the requirements in this
Development Agreement.
(b)
Contractor may reimburse its administrative costs in an amount up to $125,000
in accordance with Attachment C, "Sources and Uses of Funds", upon
demonstrating to the City's satisfaction that it has incurred reasonable and
necessary costs in this amount for administration of the project and
accomplishment of the following items:
(i)
submission to the City of a Notice of Completion duly recorded by
Contractor and a Certificate of Occupancy for the Project issued by the
local government agency having jurisdiction over the project or any
equivalent thereto acceptable to the City;
(ii)
submission to the City of all lien waivers required by the City or passage
of the applicable statutory periods ~br filing mechanic and other similar
liens;
(iii)
issuance of a certificate or certificates, each in form and substance
satisfactory to the City, executed by Contractor, the general contractor,
and the architect, either joimly or severally, each certifying that the Project
has been completed in accordance with the Plans and Specifications;
(iv) receipt by the City ora cost audit for the Project satisfactory to the City; and
(v)
compliance with all other applicable requirements of this Development
Agreement and the Affordable Housing Agreement.
Title Insurance. Upon acquisition of the Property by the Contractor or Cantebria Senior
Homes, Contractor shall procure from a title insurer acceptable to the City a 1970 LP~10
ALTA Lender's Policy of Title Insurance (the "Title Policy"), with any endorsement the
City may require, insuring the City of the validity and the priority of the liens of the Deed
of Trust and the Regulatory Agreement upon the Property and Project, in the principal
amount of the Loan, subject only to matters of record approved by the City in writing.
During the term of this Agreement, Contractor shall procure and deliver to the City,
within five (5) working days of the City's request, other endorsements to the Title Policy
as the City may reasonably require.
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES - DEVELOPMENT AGREEMENT Page 9
20.
21.
22.
Methods and Conditions of Payment. The City agrees to provide to or on behalf of the
Contractor, Loan funds in the amount and in accordance with the manner, timing, and
terms--including retention--as specified in this Development Agreement. All mounts
paid to or on behalf of Contractor hereunder shall be considered payments subject to the
Regulatory Agreement.
(a)
The City may, at its option and subject to the requirements of State law, deposit
Loan proceeds into an interest-bearing escrow account approved by the City in
those amounts necessary to cover actual acquisition costs, as determined by the
City. Any and all interest earned on such advanced funds held in an escrow
account shall be remitted to the City upon completion of the acquisition phase.
Except as may otherwise be provided in this Development Agreamant or
approved in writing by the City, all funds which are deposited by the City and by
all other funding sources identified in Attachment C, shall be placed into an
escrow account approved by the City, for disbursement pursuant to this
Development Agreement.
Liens and Stop Notices. If a claim of lien is recorded affecting the Property or Project, or
a bonded stop notice is served upon the City which affects the Loan or the Contractors
funds, Contractor shall, within twenty (20) days of such recording or service or within
five (5) days of the City's demand (whichever last occurs): (i) pay and fully discharge the
same; or (ii) effect the release thereof by recordings, or delivering to the City a surety
bond in sufficient form and amount, or otherwise; or (iii) provide the City with other
assurance which the City deems, in its sole discretion, to be satisfactory for the payment
of such lien or bonded stop notice and for the full and continuous protection of the City
from the effect of such lien or bonded stop notice. If Contractor has not received actual
notice of the claim of lien or bonded stop notice prior to the City's demand, then the five
(5) day period described above shall be extended to twenty (20) days. Contractor shall
give the City prompt written notice of all known lien claims affecting the Property or
Project.
.Eligible Use of Funds.
(a)
Funds advanced to Contractor and roll-over funds shall be used only for payment
of amounts set forth in the chart entitled "Sources and Uses of Funds" in
Attachment C.
(b)
In addition, costs, to be eligible, must be reasonable and necessary for the
completion of the Project.
(c)
CDBG funds may only be used to pay for construction costs as Contractor has
proven to be a Community Based Development Organization (CBDO). Eligible
CDBG expenses related to the development of the new housing project have been
identified in Attachment C.
CITY OF ENCINITAS/CANTEBRIA SENIOR HOM~$ -DEVELOPMENT AGREEMENT Page 10
23.
DEFAULTS, REMEDIES AND ENFORCEMENT
Events of Default. The occurrence of any of the following events shall constitute an
"Event of Default" hereunder following notice to the Contractor by the City, specifying
(1) the applicable event, (2) the action required to prevent such event becoming an Event
of Default, and (3) a date, which shall be not less than fifteen (15) days after the date the
notice is mailed to Contractor, by which such action must be taken:
(a)
Monetary. (i) Contractor's failure to deposit any of Contractor's funds as and
when required by tiffs Development Agreement; (ii) Contractor's failure or
inability to secure anticipated financing from parties other than the City as
specified in Attachment C, regardless of fault of the Contractor, (iii) Contractors
failure to use or apply Loan funds or other party's funds in the manner specified
by, or consistent with the purposes of this Development Agreement and as
specified in Attachment C; or (iv) the occurrence of an event of default under the
terms of any of the grants or loans received from the £mancing sources specified
in the sources and uses charts in Attachment C.
(b)
Construction; Use of Materials and Workmanship. (i) Contractor's failure to
remedy any material deviation in the work of construction from the Plans and
Specifications that occurred with thc City's approval or defective workmanship or
materials in, or usc of defective workmanship or materials in constructing the
Project in each case to the City's satisfaction, within ten (10) days of the City's
written demand to do so; or (ii) Contractor's failure to complete construction and
obtain a Certificate of Occupancy and Notice of Completion by December 31,
2002.
¢)
Liens; Attachment, Condemnation; Encroachments. (i) the filing of any claim
of lien against the Property or the Project, or any part thereof, or service on the
City of any bonded stop notice relating to the Loan and the continuance of the
claim for lien or bonded stop notice for twenty (20) days after Contractor receives
actual notice thereof without discharge, satisfaction or provision for payment
being made as provided for in Paragraph 24 thereof, (ii) the condemnation,
seizure or appropriation of, or the occurrence of an uninsured casualty with
respect to, any material portion of the Property or the Project, such materiality to
be determined by the City in its sole and absolute discretion; (iii) the sequestration
or attachment of, assignment by Contractor tbr the benefit of its creditors of, or
any levy or execution upon, the Property, the Project, other contribution provided
by Contractor under any of the Loan Documents, monies in accounts established
for the deposit of operating income, or substantial portion of the other assets of
Contractor, which is not released, expunged or dismissed prior to the earlier of
sixty (60) days after sequestration, attachment or execution or the sale of the
assets affected thereby, or (iv) any survey provided to the City upon a request for
a disbursement of Loan funds shows encroachments which occurred without the
written approval of the City which, in its sole discretion, the City requires to be
CITY OF ENCINITAS/CANTEBRIA SENIOR HOM~SS - DEVELOPMIENT AGREEMEN'r Patg 11
(d)
(e)
(g)
removed or corrected, and the failure to remove or correct any such
encroachments within thirty (30) days after receipt of the survey.
Performance of Obligations. Contractor's default under any of the other Loan
Documents, or Contractor's failure to perform its obligations under this
Development Al~B'eement and, in each case, the expiration of any time provided
for the remedy of such failure.
Representations and Warranties. (i) Any of Contractor's representations or
warranties in any of the Loan Documents or any statements, certificates or
schedules furnished by Contractor to the City, shall prove to have been untrue in
any material respect when made or the Contractor shall have concealed any
material fact from the City, (ii) any of the Contractor's representations or
warranties in any of the Loan Documents or any statement, certificates or
schedules furnished by Contractor to the City, other than representations,
warranties, statements and certificates as to the financial condition of Contractor
or any other person, shall cease to be tree and shall remain untrue for fifteen (15)
days after notice of such change to Contractor by the City, or (iii) any material
adverse change in the financial condition of Contractor or any other person or
entity obligated in any manner to the City under the Loan Documents from the
financial condition represented to the City as of the date of this Development
Agreement.
Voluntary Bankruptcy; Insolvency; Dissolution. Contractor's (i) filing ora
petition for relief under any state or federal law regarding bankruptcy,
reorganization or other relief to debtors; (ii) filing any pleading in any involuntary
proceeding under any state or federal law regarding bankruptcy, reorganization or
other relief to debtors which admits the jurisdiction of the court or the petition's
material allegations regarding their insolvency; (iii) making a general assignment
for the benefit of creditors; (iv) applying for, or the appointment of, a receiver,
trustee, custodian or liquidator of any of thc above; (v) inability or admission in
writing of inability to pay debts as they arc duc; or (vi) death, if an individual, or
the filing by or against Contractor of a petition seeking its liquidation or
dissolution or the commencement of any other procedure to liquidate or dissolve
it.
Involuntary Bankruptcy. Contractor's failure to effect a full dismissal of any
involuntary (i) petition under any state or federal law regarding bankruptcy,
reorganization or other relief to debtors; (ii) proceeding for the appointment of a
receiver, trustee or liquidator of it or all or a material part of its assets, or (iii)
petition or proceeding under other state or federal law regarding bankruptcy,
reorganization or other relief to debtors that is filed against it or in any way
restrains or limits it or the City regarding the Loan, the Property or the Project" in
any event prior to the earlier of the entry of any order granting relief sought in the
involuntary petition or proceeding, or sixty (60) days after the date of filing of the
petition or beginning of the proceeding.
CITY OF I~NCINITA S/CANTEBRIA SENIOR HOMES- DEVELOPMENT AGREEMENT Page 12
(h)
General. Contractor's breach of any condition, covenant, warranty, promise or
representation contained in this Development Agreement not otherwise resulting
in an Event of Default hereunder and the continuance of such breach for a period
of thirty (30) days after written notice thereof to Contractor to cure same.
24.
Remedies upon an Event of Default. Upon the happening of an Event of Default the
City's obligation to disburse proceeds of the Loan shall terminate and the City shall have
the right to terminate this Development Agreement. All such disbursements shall be
deemed to have been paid to the Contractor by the City. Any funds so advanced shall be
paid to the City or its receiver by Contractor on demand, together with interest thereon at
the rate of eight (8%) percent per annum from the date of expenditure.
25.
Ri~ts Cumulati.v...e.~.No Waiver, All the City's rights and remedies provided in the Loan
Documents, or granted by law or otherwise, are cumulative and may be exercised by the
City at any time. No waiver shall be implied from any failure of the City to take, or any
delay by the City in taking, action concerning any Event of Default or failure of condition
under the Loan Documents, or from any previous waiver of any similar or unrelated
Event of Default or failure of condition. Any waiver or approval under any of the Loan
Documents must be in writing and shall be limited to its specific terms.
26.
Attorneys' Fees; Enforcement. If any attorney, including the City of Encinites City
Attorney, is engaged by the City to enforce, construe or defend any provision of any of
the Loan Documents, or as a consequence of any Event of Default hereunder or default
under any other Loan Document, with or without the filing of any legal action or
proceeding, Contractor shall pay to the City, immediately upon receipt of the City's
demand, the amount of all reasonable attorneys' fees and costs incurred by the City or the
City in connection therewith, together with interest thereon from the date that such
demand is received at the rate of eight (8%) percent per annum of interest.
INDEMNIFICATION
27. Indemnification and Waiver.
(a)
Indemnification. Contractor agrees to indemnify the City and its agents, employees
and officers against, 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 reasonable attomeys' fees), of every name,
kind and description, which the City may incur as a direct or indirect consequence of:
(i) the making of the Loan to the Contractor, except for violations of banking laws or
regulations by the City; (ii) Contractor's failure to perform any obligations as and
when required by this Development Agreement or any other Loan Document; (iii)
any failure at any time of any of Contractor's representations or warranties to be mae
and correct; (iv) any act or omission by Contractor, any contractor, subcontractor,
material supplier, engineer, architect or other person or entity with respect to the
Property or Project; or (v) the presence of hazardous substances (as defined in the
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- DEVELOPMENT AGREEMENT
28.
Standard Agreement) at the Project or on the Property. Contractor shall pay
immediately upon the City's demand any amounts owing under this indemnity
together with interest from the date of the demand until paid at the rate of eight
percent (8%) per annum. The duty of the Contractor to indemnify and hold 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 agents, officers and
employees as set forth herein regardless of the existence or degree of fault or
negligence whether active or passive, primary or secondary on the part of the City or
the Contractor or their respective agents, officers, employees, contractors or
subcontractors; provided, however, that Contractor's duty to indemnify and hold
harmless hereunder shall not extend to liability arising from gross negligence or
willful misconduct of the City.
Contractor's duty to indemnify the City shall survive the term of this Development
Agreement. However, this provision shall not apply as long as a deed of trust
affecting the Project and the Property is held by the Secretary of the U.S. Department
of Housing and Urban Development, including his successors and assigns (the "HUD
Secretary"), or a regulatory agreement and/or use agreement in favor of the HUD
Secretary is still outstanding.
(b)
Waiver and Release, The Contractor waives and releases any and all rights to
any types of express or implied indemnity against the City or its agents, officers
or employees.
(c)
Waiver. The Contractor expressly waives the protections of Section 1542 of the
Civil Code in relation to subparagraphs (a) and (b) above.
MISCELLANEOUS
Further Assurances. At the City's request and at Contractor's expense, Contractor shall
execute, acknowledge and deliver any other instrument and perform any other act
necessary, desirable or proper (as determined by the City) to carry out the purpose of the
Loan Documents or to perfect and preserve any liens created by the Loan Documents.
29. Notices. All written notices and demands under the Loan Documents shall be deemed
served upon delivery or, if mailed, upon the date shown on the delivery receipt (or the
date on which delivery was refused as shown on the delivery receipt) after deposit in
United States Postal Service certified mail, postage prepaid, return receipt requested, or
after delivery or attempted delivery by an express delivery service, and addressed to the
address of Contractor or to the primary place of business or the mailing address of the
City, as applicable, appearing below. Notice of change of address may be given in the
same manner, provided Contractor's address shall be in the State of California or the state
where Contractor's principal place of business is located, as represented to the City in the
Loan Documents.
30. Amendments and Additional Agreements. This Agreement shall not be altered or
amended except in writing executed by all parties. The Contractor agrees that any other
CITY OF ENCINITAS/CANTEBRIA SENIOR I-IOMES- DEVELOPMENT AGILEEMENT Page 14
31.
32.
34.
35.
371
agreements entered into by the Contractor relating to the performance of this Agreement
shall be subject to the written approval of the City.
Books and Records. Contractor shall maintain complete books of accounts and other
records for the Project and for the use of the Loan proceeds and other sources of funds
during Project development including, but not limited to, records of preliminary notices,
lien releases, invoices and receipts, and certificates of insurance pertaining to the general
contractor and each subcontractor. These books and accounts shall be available for
inspection and copying by the City upon reasonable notice to Contractor.
No Third Parties Benefited. No person other than the City and Contractor, and their
permitted successors and assigns or, in the case of the Regulatory Agreement, the tenants
of the Project to the extent specified therein, shall have any right of action under any of
the Loan Documents.
Authority to File Notices. Contractor irrevocably appoints and authorizes the City, as
Contractor's attorney-in-fact, which agency is coupled with an interest, to execute and
record, on either of them, in the City's or Contractor's name, any notices, instruments or
documents that the City deems appropriate to protect the City's interest under any of the
Loan Documents.
Actions. the City may commence, appear in or defend any action or proceeding
purporting to affect the Property, Project, Loan Documents or the rights, duties or
liabilities of Contractor or the City under the Loan Documents. In exercising this right,
the City may incur or incur and pay reasonable costs and expenses including, wilhout
limit, attorneys' fees and court costs and Contractor agrees to pay all such expenses so
incurred and reimburse the City for any expense so paid.
Relationship of Parties. The relationship of Contractor and the City under the Loan
Documents is, and shall at all times remain, solely that of grantee and grantor. The City
neither undertakes nor assumes any responsibility or duty to Contractor or to any third
party with respect to the Property for the Project, except as expressly provided in the
Loan Documents.
Assi~ument of Loan Documents. Except as contemplated by Paragraph 7(h), Contractor
shall not assign Contractor's interest, or any portion thereof, under any of the Loan
Documents, or in any monies due or to become due thereunder, without the City's prior
written consent. Notwithstanding the foregoing, any assignment made without the City's
consent shall be void. Contractor recognizes that this is not an ordinary Loan and that the
City would not make the Loan except in reliance on Contractor's expertise and reputation,
the City's knowledge of Contractor, and the City's understanding that this Development
Agreement is more in the nature of an agreement involving personal services than a
standard grant where the City would rely on security which already exists. In this
instance, the work funded has not been performed at the time of Loan approval and the
City is relying on Contractor's expertise and prior experience to construct and develop the
Project in accordance with the terms of the Loan Documents. As such any approval by
CITY OF ENCINITAS/CANTEBRIA SENIOR tlOMES- DEVELOPMENT AGR. EEMF. IqT Pagc 15
37~
38.
39.
40~
41.
42.
43.
the City of an assignment of any Loan Document shall be conditioned on the Contractor
being the sponsor, parent or affiliate of the assignee.
Restrictions on Transfer of Property, Proiect and Interest in Contractor. Except as
contemplated by Paragraph 7(h), Contractor shall not assign, sell, transfer or convey any
interest in the Contractor, the Property, or the Project, without the City's prior, written
consent, the City acknowledges that it is Contractor's intent to obtain financing from th__e
U.S. Department of Housing and Urban Development, which financing will be superior
in priority to the City's interest and which financing requires that the owner of the
Property and the Project be a single asset, single activity non-profit corporation that is
sponsored by the Contractor. Contractor shall promptly notify the City of any such
transfer to a HUD-required affiliate before such transfer occurs and obtain the City's
consent in accordance with Paragraphs 7(h), 36 and this Paragraph 37, and shall provide
the City with any documents respecting such transfer as the City may reasonably request.
Provided however that Contractor, if Contractor is a limited partnership, may sell, assign,
transfer or convey limited partnership interests without the prior approval of the City.
~. During the construction period the Contractor will place on the Property signs
stating that the City is providing funding assistance through Community Development
Block Grant Funds :for the Project.
City's Agents. The City may designate an agent or independent contractor to exercise any
of the City's rights under this Development Agreement and the other Loan Documents.
Any reference to the City in this Development Agreement and the other Loan Documents
shall include the City's agents, employees or independent contractors.
Severability. If any provision of any Loan Document, including this Development
Agreement, shall be determined by a court of competent jurisdiction to be invalid, illegal
or unenforceable, that portion shall be deemed severed from such Loan Document and
the remaining parts shall remain in full force as though the invalid, illegal, or
unenforceable portion had never been part of the said Loan Document. However, if the
City in its sole discretion, determines that the invalid portion of such Loan Document has
a material effect on the interests of the State and the City, the City may thereafter declare
that entire Loan Document invalid and require the Contractor to enter into a new one.
Heirs, Successors and As~igns~ The terms of this Development Agreement and the other
Loan Documents shall be binding upon and inure to the benefit of the heirs, successors
and assigns of the parties; provided however, that this Paragraph shall not waive the
provisions of Paragraph 37.
Time. Time is of the essence of each term of this Development Agreement and the other
Loan Documents.
Headings. All headings appearing in any of this Development Agreement and the other
Loan Documents are for convenience only and shall be disregarded in construing this
Development Agreement and the other Loan Documents.
CITY OF ENCINITAS/CANTEBKIA SENIOR IlO/VIES - DEVELOPMENT AGREEMENT Page 16
44.
45.
46.
47.
48.
Governing Law. This Development Agreement and the Loan Documents shall be
governed by, and construed in accordance with, the laws of the State of California, except
to the extent preempted by Federal laws. Contractor and all persons and entities in any
manner obligated to the City under this Development Agreement and the other Loan
Documents consent to the jurisdiction of any Federal or State Court within the State of
California having proper venue and also consent to service of process by any means
authorized by Caliibrnia or Federal law.
Integration; Interpretation. This Development Agreement and the other Loan Documents
contain or expressly incorporate by reference the entire agreement of the parties with
respect to the matters contemplated herein and supersedes all prior negotiations. No Loan
Document shall be modified except by written instrument executed by all the parties
thereto. Any reference in any of the Loan Documents to the Property or Project shall
include all or any parts of the Property or Project. Any reference to Loan Documents
herein and therein includes any amendments, renewals or extensions approved by the
City.
Joint and Several Liability. The liability of all persons and entities who are in any manner
obligated under this Development Agreement and the other Loan Documents shall be
joint and several.
Incorporation. The following Attachments, all attached hereto, are hereby incorporated
into this Agreement:
Attachment A Legal Description
Attachment B Construction Description
Attachment C Sources and Uses of Funds
HUD Required Provisions. Notwithstanding and other provision in this Development
Agreement or in any other Loan Document, and so long as a mortgage affecting the
Project and the Property is held by the Secretary of Housing and Urban Development (the
"HUD Secretary'), or a regulatory agreement and/or use agreement in favor of the HUD
Secretary is still outstanding, the follow'ms provisions shall apply:
(a)
All of the provisions of this Development Agreement and the other Loan
Documents shall be subject and subordinate to all applicable HUD mortgage and
capital advance regulations and related administrative requirements under Section
202 of the Housing Act of 1959, as amended (the "Section 202 Program"). In the
event of any conflicts between the provisions of this Development Agreement or
any other Loan Document and the provisions of any applicable HUD regulations,
related HUD administrative requirements or HUD capital advance documents,
including, but not necessarily limited to, a Capital Advance Program Use
Agreement, a Capital Advance Program Regulatory Agreement, a Deed of Trust
with Assignment of Rents, a Security Agreement, a UCC-i, Financing Statement
and a HUD Project Rental Assistance Contract (collectively, the "HUD
CITY OF ENC1NITA~CANTEBPdA SENIOR HOMES- DI~VELOPIvI~NT AGREEMENT Page 17
Documents"), the HUD regulations, related HUD administrative requirements and
HUD Documents shall govern and control and this Development Agreement shall
be deemed amended so as to comply with the applicable HUD Acts, regulations,
related HUD administrative requirements and HUD Documents.
(b)
Enforcement of the provisions of this Development Agreement or any other Loan
Document shall not result in any claim against the Project, the Section 202
Program capital advance proceeds, any reserve or deposit required by HUD in
connection with the Section 202 Program transaction, or the rents or other income
from the Project and the Property, other than available residual receipts authorized
for release by HUD and the non-Project assets of the Contractor.
(c)
Compliance by the Contractor with HUD requirements will satisfy any similar
requirements of the City in this Development Agreement and the other Loan
Documents. No requirements by the City will be permitted which interfere with
or conflict with the HUD requirements concerning the development or operation
of the Project, or in any way jeopardize the continued operation of the Project on
terms at least as favorable to existing future tenants as required under the Section
202 Program.
(d)
HUD approval of a transfer of physical assets (TPA) will constitute approval of
the TPA by the City.
(e)
The City shall not declare a default under this Development Agreement or any
other Loan Documents without prior written approval of the HUD Secretary.
Notwithstanding anything in this Agreement to the conlxary, no amendment to
this Agreement shall be effective 'without prior written approval of the Secretary
of HUD.
(g)
Notwithstanding anything in this Agreement to the contrary, if the Secretary of
HUD should acquire title to the site by foreclosure, deed in lieu of foreclosure, or
otherwise, all covenants, conditions and restrictions shall terminate and be of nor
force or effect.
IN WITNESS WHEREOF, the City and Contractor have each caused this Development
Agreement to be executed by its .duly authorized officer and to make same effective on
the day and year first above written.
CITY
City of Encinitas
CONTRACTOR
Cantebria Sen/or Homes
By: /~ ~/ j.~' . ~_
/K~rry~. ~iller, '~i¢ ~anager
Amy Bayley, ~c~etar~r
CITY OF ENCIN ITAS/CANTEBRIA SENIOR HOMES- DEVEI..OPMElqT AGREEMENT l~age t 8
CITY OF ENCINITAS/CAlqTEI~RIA SENIOR HOMES- DEVELOPMENT A~REEMENT Page 19
ATTACHMENT A
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California, County of Sun Diego, and
described as follows:
Lot 44 of amended map of City of Encinitas Map No. 13258, City of Encinitas, Tract No. 94-
066, Un/ts I, II and III, in the City of En¢initas, County of San Diego, State of California,
according to map thereof No. 13333, filed in the office of the County Recorded of San Diego
County, June 3, 1996.
CITY OF ENCiNITAS/CANTEBRIA SENIOR HOMES - DEVELOPMENT AGREEMF;NT Page 20
ATTACHMENT B
CONSTRUCTION DESCRIPTION
I. GENERAL DESCRIPTION
The Site is approximately 1.4 acres in size and is located at Via Cantebria on the
Enciuitas Ranch, Encinitas, California.
II. DEVELOPMENT
Developer shall construct 45 units that will consist of either two or three levels of living
space, it is anticipated that 2,820 square feet of common space will be constructed. Forty-four
of the units will consist of one bedroom and one batttroom. One unit will consist of two
bedrooms and one bathroom, which will be reserved for an on-site manager. Building design will
conform to the City of Encinitas zoning codes and design review kmidelines.
All of the improvements, including off-site improvements, as required by the City
pursuant to the usual City building permit requirements will be provided by the developer, at its
own cost and expense.
III. DEVELOPMENT STANDARDS
The improvements shall be designed and constructed and the Property shall be developed
in accordance with the Encinitas Municipal Code.
CITY OF ENCINITAS/CANTEBKIA SENIOR IIOMES - DEVELOPMENT AGREEM EN'I- Page 21
ATTACHMENT C
SOURCES AND USES OF FUNDS
Description ......... . .......... Estimate HUD CITY '" Carltas .A. dditlonal'l;:~'~'~ln~lDifference
Construction $ 3~360,404 $ 3,269,917 $ $ 90,487 $ ......
Cost Estimator $ 4,000 $ 4,000 $
Laq~;per appraisal $ 1,035,000 ........... $1,035,000 $.,,
Architecture,Engineer $ 259,850 $ 51,970 .......... $194,887 $ 12~93 $ (0
~nvironmental/P~ase I) ....... $,,, 10,000 $ 10,000
Survey(ALTA) $ 10,000 $ 10,000 ............ $
Soii~ (geotec. h,.rpt aed monifering} $ , .5.~0~0 $ 5,000 ,, $
AcoustiC,.$u~ve), $ .., 1,00~ $ 1,000, $ .......
Fees/Permits $ 421,405 $ 54.~8.,7 $ 366,916
buildin~(atruc.lmechlelec,/Plmb) ....... $ 6,600 ..................
sewer(basic fee+planchk+!ns.~ection $ 185,750 ..........
water $ 41,806
traffic and [~,,e. rk fees $ , , 1~;_5,~.613 ....
ROOd Contr~l.,[mpact fees $ ,16,466 ......
planning.,fire(131sn check and alarms $ ,_. 12,170 .......
bulldln~l permit $ 13,000 ...............
Financial Consultant $ $
Taxes/insurance ....... $ 151~3~)~3 "$ ........ 15,000 $
i.e~al........ ,._ $ ...... 35,000 $ 10,000 $.,,.,9,62~ ....... ,$ 15,374 $
Title/Closing $ 20,000 $ ...... 12,9931 $ 7,00'~ $
Appraisal $ 5,000 $ ?,. 5,000 $
Minimum Capltai'i~vestment $ 'I'0,000 ...... I $ 10,000 $ ,
Cost Certification Audit ,. $ 15,000 $ 1,~,0.,0..0_ $
Administrative Fee ......... $ 250,000 $ , 125,000 $125,000 $
Rent-up/Marketing* $ 25,000 $ ..... 25,000 $
Hard C(~,Contin~enc¥ .... $ .,, 168,020 $ 118,020 ......$ '~0,000 $ 0
Furntshlnc. ls/Fit-up $ 60,000 $ 60,000 $
TOTAL COST '" =$ S709679 ~ 3,687,'9'0'~)" '"~,;1~4,000$t,035,000 $ ...... 572,779 $ 0
TOTAL COMMi~T~=D $ ...... 5,136,900 $ 3,687,900 $414,000, $1.035,0,00 $
Amou~t"Remainin~ ....... $ (572,779) $ ...... $ $ $ (57~2,7791
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES- DEVELOPMENT AGREEMENT Pag~ 22
PROMISSORY NOTE
NOTICE TO BORROWER
THIS DOCUMENT CONTAINS PROVISIONS RESTRICTING
ASSUMPTIONS AND IS SECURED BY A DEED OF TRUST
$614,000 January 1/~ ,2003
Encinitas, California
FOR VALUE RECEIVED, the undersigned, Cantebria Senior Homes, a California
nonprofit public benefit corporation with its principal office at 500 South Main St., Ste. 110,
Orange, CA 92868, (the "Borrower"), hereby promises to pay to the City of Eneinitas (the
"City"), or order, at 505 S. Vulcan Ave., Encinitas, CA 92024, a principal amount equal to Six-
Hundred Fourteen Thousand Dollars ($614,000), or so much thereof as may be advanced by the
City to the Borrower pursuant to a loan provided to Borrower under the Community
Development Block Grant (CDBG) and HOME Programs, which is secured by a Deed of Trust
with Assignment of Rents, an Affordable Housing Agreement, a Development Agreement, and a
Regulatory Agreement, dated as of this date (collectively the "Loan Documents") between the
Borrower and City. The terms and conditions of the Loan Documents are incorporated by
reference herein.
1. Borrower's Obligation. This Note evidences the obligation of the Borrower to the City
hereof for the repayment of funds loaned to the Borrower by City to partially finance the
development of real property, appurtenances, improvements and fixtures thereon, described in
the Loan Documents.
2. Prohibition Against Transfer of Interest. The Borrower shall not make any sale,
assignment or conveyance or transfer in any other form, nor any further pledge, encumbrance or
mortgaging of the Property or any part thereof or any of its interests therein, other than in
accordance with the terms of the Loan Documents.
3. Payment of Indebtedness.
a. The principal amount of the Loan, which shall bear no interest, will be due and payable,
January 31, 2058 ("Maturity Date"). This Note may be prepaid in whole or in part at any time,
and from time to time, without notice or penalty.
b. Each full year, from the original execution date, of compliance with the Loan Documents, the
loan mount shall be reduced by an amount equal to 1/55 (1.8%) of its original principal amount.
It is anticipated that at Maturity Date the balance of this Note should be zero, and that all
conditions agreed upon shall have been met. At that time, this Note will be forgiven and all
restrictions against the Property will be reconveyed.
4. Place and Manner of Payment. All amounts due and payable under this Note and the
other Loan Documents are payable at the principal office of the City set forth below, or at such
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES - PROMISSORY NOTE Pagc I
other place or places as a subsequent holder (a "Holder") hereof may designate to the Borrower
in writing from time to time, in any coin or currency of the United States of America, which on
the respective dates of payment thereof shall be legal tender for the payment of public and
private debts, and shall be immediately available funds (cashier's or certified check).
5. Late Charge. The Borrower agrees that it would be impracticable or extremely difficult
to fix the actual damage to the City or Holder hereof in the event the Borrower shall be late in the
making of any payment due hereunder, and that therefore in the event the Borrower shall fall to
make any such payment within fifteen (15) days after the due date thereof, the City or Holder
hereof, at its option and in addition to any other remedy hereunder, may impose on the Borrower,
and the Borrower shall pay, a "late charge" of five percent (5%) of the amount of such delinquent
payment.
6. Borrower's Waiver. To the extent permitted by law, the Borrower and any guarantor of
this Note, or of the obligation represented by this Note, hereby waives (a) notlee of default or
delinquency, (b) notice of acceleration, (c) notice of nonpayment, (d) notice of costs, expense
and losses and interest therein, (e) notice of interest on interest and late charges, (f) diligence in
taking any action to collect any sums owing under the Note or in proceeding against any of the
rights and presentment fbr payment, demand, protest, and notices of dishonor and/or Protest; (g)
the benefits of all waivable exemptions; and (h) all defenses and pleas on the Founds of any
extension or extensions of the time of payment or of any due date under this Note, in whole or in
part, whether before or after maturity and with or without notice.
7. Attorneys' Fees. The Borrower hereby agrees to pay all costs and expenses, including
reasonable attorneys' fees, including any such fees paid to the City Attorney of the City of
Encinitas which may be incurred by the City or Holder hereof in the enforcement of this Note,
the Loan Documents or any term or provision of any thereof. This provision shall be construed
in accordance with California Civil Code Section 1717.
8. De~.a..ult under other Loan Documents and Acceleration. All covenants, conditions, and
agreements contained in the Loan Documents are hereby made a part of this Note. The Borrower
agrees that the unpaid balance of the principal amount of this Note, shall, at the option of the
City or Holder hereof, if so prov/ded in the Loan Documents executed by the Borrower, become
immediately due and payable, and thereafter until paid bear interest at the rate of three percent
(3%) per annum, upon the failure of the Borrower to make any payment hereunder as and when
due, upon the failure of the Borrower to perform or observe any other term or provision of tiffs
Note, or upon the occurrence of any event (whether termed default, event of default or similar
term) wiffch under the terms of the Loan Documents shall entitle the City or Holder hereof to
exercise fights or remedies thereunder.
9. Nonrecourse Obligation. Neither the Borrower nor any partner, officer, director, or
stockholder of the Borrower shall have any direct or indirect personal liability for payment of the
principal of, or interest on, this Note. The sole recourse o1' the City or Holder with respect to the
principal of, or interest on, this Note shall be to the Property, real and/or personal, securing the
indebtedness evidenced by the Note. No judgment, or execution thereon, entered in any action,
legal or equitable, on this Note or the Deed of Trust securing this Note shall be enforced
CITY OF ENCINITAS/CAN'FEBRI^ SENIOR HOMES- PROMISSORY NOTE Page 2
personally against the Borrower, or any partner, officer, director or stockholder of the Borrower,
but shall be enfomed only against the Property described in the Loan Documents and such other
or further security as, from time to time, may be hypothecated for this Note; provided, however,
that nothing contained in the foregoing limitation of liability shall (a) limit or impair the
endorsement against all such security for this Note of all the rights and remedies of the City or
Holder hereof, or (b) be deemed in any way to impair the right of the City or Holder hereof to
assert the unpaid principal mount of this Note as a demand for money within the meaning and
intent of Section 431.70 of the California Code of Civil Procedure or any successor provision
thereto. The fore~oin~ limitation of liability is intended to apvl¥ only to the obligation for the
repayment of the principal of and payment of interest on this Note; nothing, ore,rained herein is
intended to relieve, the Borrower or any successors thereto of liability for (a) fraud or willful
misrepresentation; (b) the failure to pay taxes, assessments or other charges which may create
liens on the real property described in the Loan Documents that are payable or applicable prior to
any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other
charges); (c) the retention of any rental income or other income arising with respect to the
Project collected by Borrower after the City or Holder has given any notice that Borrower is in
default to the full extent of the rental income or other income retained and collected by Borrower
after the giving of any such notice; (d) the fair market value as of the time of the giving of any
notice referred to in subparagraph (c) above of any personal property removed or disposed of by
Borrower other than in accordance with the Loan Documents after the giving of any notice
referred to in subparagraph (c) above; and (e) the misapplication of any proceeds under any
insurance policies or awards resulting from condemnation or the exercise of the power of
eminent domain or by reason of damage, loss or destruction of any portion to the Project.
10. Governing Law. This Note shall be construed in accordance with and be governed by
laws of the State of Caiifumia.
11. Time, Time is of the essence in this Note.
12. No Waiver by the City or Holc~. No waiver of any breach, default or failure of
conditions under the terms of the Note or the Loan Documents or the obligations secured thereby
shall be implied from any failure of the City or Holder to take, or any delay by the City or Holder
in taking, action with respect to such breach, default, or failure from any previous waiver of any
similar or unrelated breach, default or failure; and a waiver of any term of the Note or the Loan
Documents or any of the obligations secured thereby must be made in writing and shall be
limited to the express written terms of such waiver.
13. Notices. Except as may be otherwise specifically provided herein, any approval, notice,
direction, consent, request or other action by the City or Holder or Borrower shall be in writing
and may be communicated to the addressee designated herein, or at such other place or places as
the Borrower or holder shall designate in writing. Notices required or permitted under the terms
of this Note shall be given:
CITY OF ENCINITAS/CANTEBRIA SENIOR HOMES - PROMISSORY NO'I'E Page 3
To
To City:
Cantebria Senior Homes
500 South Main St., Ste. 110
Orange, CA 92868 ......
City of Encinitas
Community Development Dept.
505 S. Vulcan Ave.
Encinitas, Ca. 92024
14. HUD Required Provisions
Notwithstanding any other provision in this Note, so long as a mortgage affecting the Project and
the Property is held by the Secretary of Housing and Urban Development (the "HUD
Secretary"), or a regulatory agreement and/or use agreement in favor of the HUD Secretary is
still outstanding, the following provisions shall apply:
Any payments under this Note, including prepayments, shall be made only with
(i) residual receipts, as that term is defined in the regulatory agreement between
the Borrower and the HUD Secretary and executed in connection with the
Property (the "HUD Regulatory Agreement"), and only after obtaining the prior
written approval of the HUD Secretary, or (ii) funds which are separate and apart
from the Project or the assets or income of the Project (except residual receipts as
approved for disbursement by the HUD Secretary).
Prepayments made from residual receipts may be made only after final closing of
the HUD Section 202 Progrmn capital advance and only after the end of a semi-
annual or annual fiscal period as approved by the HUD Secretary.
In the event of a default under this Note, the City or Holder shall have no claim
and will not later assert any claim for prepayment against the mortgaged Property,
the Section 202 Program capital advance proceeds, any reserve or deposit
required by HUD and deposited with the HUD Secretary or another in connection
with the Section 202 Program capital advance transaction, or against the rents or
other income from the Project and the Property, other than available residual
receipts authorized by HUD and the non-Projeat assets of the Contractor.
The City or Holder shall not declare a default under this Note unless it has
received the prior written approval of the }IUD Secretary.
Borrower
Cantebria Senior Homes
By: ,tr
B y y, Sec t '
DATE:Ol /14 /2003
CITY OF ENCINITAS/CANTEItRIA SENIOR HOMES - PROMISSORY NOTE Page 4