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2012-739784
D O C ## 201 2-0739784 11111111 111 11111 11111 11111 11111 11111 11111 11111 11111 11111 11111 1111 IN FREE RECORDING REQUESTED NOV 27, 2012 4:15 PM PURSUANT TO GOV. CODE SECTION , � Tn OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE City of Encinitas Ernest J Dronenburg,Jr,COUNTY RECORDER Planning and Building Department FEES 000 505 S. Vulcan Avenue PAGES: 27 f Encinitas, CA 92024 I And When Recorded Mail To: ) City of Encinitas ) Planning and Building Department ) 505 S. Vulcan Avenue ) Encinitas, CA 92024 ) \� Attn: Housing Administrator ) A.P.N. 258-184-07V AFFORDABLE HOUSING REGULATORY AGREEMENT AMENDMENT This Affordable Housing Regulatory Agreement AMENDMENT (hereinafter the "AMENDMENT") is made and entered into on April 30, 2012 for the purpose of clarifying the Regulatory Agreement (hereinafter the " REGULATORY AGREEMENT") entered into on October 20, 1999 (never recorded), attached herewith and incorporated herein to this AMENDMENT, between the City of Encinitas (hereinafter the "CITY") and Susan S. Hopwood, Trustee of the Revocable Trust of Susan S. Hopwood, as to an undivided 1/2 interest and Donald A. Countryman and Lou Ann Countryman, husband and wife, as joint tenants, as to an undivided Y2 interest, as tenants in common, the owners of the real property as described in Attachment A of the referenced REGULATORY AGREEMENT. RECITALS A. Whereas, after the execution of the REGULATORY AGREEMENT, the ownership vesting of the real property has changed and now reflects: Ara Kaloustian, Trustee, and Susan H. Kaloustian, Trustee, of the Trust of Ara and Susan H. Kaloustian, as amended July 10, 2000; and, The Countryman Family Trust, dated January 29, 2004, Donald A. Countryman and Lettie L.A. Countryman Trustors and Trustees (hereinafter the "OWNER"). B. Whereas, OWNER is the owner of four residential units located at 850, 852, 854, and 856 Second Street, Encinitas, CA (hereinafter the "PROPERTY") C Whereas, the PROPERTY is subject to the REGULATORY AGREEMENT entered into on October 20, 1999 D Whereas, the CITY and OWNER wish to clarify recitals and conditions of the REGULATORY AGREEMENT NOW, THEREFORE, the CITY and OWNER agree as follows: Those recitals requiring clarifications in the REGULATORY AGREEMENT are annotated below with underlined wording All recitals of the REGULATORY AGREEMENT remain in force, except for strikeouts 3 TERM OF AGREEMENT The term of this Agreement shall commence on the date hereof and shall continue for at least 55 years from the date that the Project is certified for occupancy for all four units. The affordability period for designated HOME Investment Partnerships (HOME) units (i.e., units located at 852 and 854) is 20 years from the date of certified occupancy, as cited in the HOME Affordable Housing Agreement, which agreement was also entered into by the CITY and OWNER on October 20, 1999. After the HOME units' affordability period is completed, HOME regulations will no longer be applicable for the balance of the 55-year term. 4 RENT SCHEDULE At the time of initial occupancy, Developer shall charge only those rents approved by the City and which are established pursuant to Program statutes and regulations 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 Developer fails to charge rent according to the Rent Schedule, Developer will repay all City funds Repayment will be subject to the terms and of the Promissory Note and Deed of Trust. A copy of the rent schedule in effect at the time of this AMENDMENT is attached hereto as Attachment B, and incorporated herein Developer agrees to place as a deed restriction on the Property, the Rent Schedule 5 ELIGIBILITY OF ADMISSION An applicant is eligible for admission to the Project lottery selection process if he or she meets all of the following criteria (a) The applicant meets the requirements of the HOME program regulations Income limits are based on the number of persons per household. Refer to Attachment B for eligible income limits for the four (4) affordable units. 15 Financial Assistance Since the City will not be providing additional financial assistance, the City acknowledges that for the operational needs of the Project, the OWNER may need to refinance the first deed of trust on the property. As such, the City will allow refinancing of the first deed of trust up to 85 percent of the loan to value of the property, if the combined loans (i.e, first trust deed and City's second trust deed) do not exceed 100 percent of loan to value of the property. Additionally, as stipulated in the Promissory Note executed by the OWNER on October 24, 1999 and secured by a second deed of trust recorded on November 2, 1999, Document #1999-0732730 of Official Records of the San Diego County Recorder's Office, the principal amount of the Loan shall not bear interest and have a maturity date of October 24, 2054, at which time all principal shall be due and payable subject to the requirements of section "3" ("Payment of Indebtedness") and its subsections of the referenced Promissory Note. ATTACHMENT B RENT SCHEDULE Income Limits Household must have an annual income at or below Hof the below defined area median income for the County, as adjusted for family size The designated HOME units (i.e., units located at 852 and 854) shall be made available for eligible tenants with a household income that is at or below 65 percent of the Area Median Income (AMI), as published annually by the U.S. Department of Housing and Urban Development (HUD), for the HOME affordability period of 20 years from certification of occupancy for the Project. Thereafter, the units (i.e., 852 and 854) shall become available for eli iq ble tenants with a household income that is at or below 70 percent of the AMI for a period of 15 years. After that 15-year period, the units (i.e., 852 and 854) shall become available to eligible'tenants with a household income that is at or below 65 percent of the AMI for the remainder of the term of the REGULATORY AGREEMENT. The non-HOME units (i.e., units located at 850 and 856) shall be made available for eligible tenants with a household income that is at or below 65 percent of the AMI during the HOME affordability period. With the termination of the HOME affordability period, the units (i.e., 850 and 856) shall become available for eligible tenants with a household income that is at or below 70 percent of the AMI for a period of 20 months. After the 20-month period, the units (i.e., 850 and 856) shall become available to eligible tenants with a household income that is at or below 65 percent of the AMI for the remainder of the term of the REGULATORY AGREEMENT. Rent Limits Maximum rent for the residential units may not exceed the lessor of- The Fair Market Rent (FMR), as determined annually by the U S Department of Housing and Urban Development, for the unit size minus a utility allowance, or Except during the HOME affordability period for Units 852 and 854, the affordable rent ° ° utility allowanGe as defined below is based on the following household sizes for all units. One bedroom unit (two-person household), and, three bedroom unit five-person household. Affordable rent is calculated at 30 percent of the applicable household income (e.g., 30% of 65% of area median income). Allowance for tenant paid utilities is deducted from the maximum allowable rent. HOME UNITS During the HOME affordability period, Unit 852 monthly rent shall not exceed the maximum allowable rent for a one bedroom unit at the High HOME limits, published annually by HUD. After the HOME affordability period, the unit shall become available for eligible tenants with a household income that is at or below 70 percent of the AMI for a period of 15 years. After that 15-year period, the unit shall become available to eligible tenants with a household income that is at or below 65 percent of the AMI for the remainder of the term of the REGULATORY AGREEMENT. Allowance for tenant paid utilities is deducted from the maximum allowable rent. The Developer shall use the Utility Allowance Schedule published annually by the Housing Authority of the City of Encinitas when determining the utility allowance. During the HOME affordability period, Unit 854 monthly rent shall not exceed the maximum allowable rent for a three bedroom unit at the High HOME limits, published annually by HUD. After the HOME affordability period, the unit shall become available for eligible tenants with a household income that is at or below 70 percent of the AMI for a period of 15 years. After that 15-year period, the unit shall become available to eligible tenants with a household income that is at or below 65 percent of the AMI for the remainder of the term of the REGULATORY AGREEMENT. Allowance for tenant paid utilities is deducted from the maximum allowable rent. The Developer shall use the Utility Allowance Schedule, Published annually by the Housing Authority of the City of Encinitas when determining the utility allowance. As a reference, the 2012 HOME Rent Limits are as follows. PROGRAM 0 BR 1113R 2 BR 3113R 4113R 5 BR 6 BR Low HOME 50% $722 $774 $928 $1,073 $1,197 $1,321 $1,445 High HOME 65%) $920 1 $987 1 $1,187 $1,362 $1,500 $1,637 $1,774 Based on HUD FY 2012 MFI. $75,900 Effective 2-9-12 NON-HOME UNITS Unit 850 monthly rent shall not exceed the maximum allowable rent for a one bedroom unit for eligible tenants with household income that is at or below 65 percent of AMI, published annually by HUD during the HOME affordability period With the termination of the HOME affordability period the unit shall become available for eligible tenants with household income that is at or below 70 percent of the AMI for a period of 20 months. After the 20-month period the unit shall become available to eligible tenants with a household income is at or below 65 percent of the AMI for the remainder of the term of the REGULATORY AGREEMENT. Allowance for tenant paid utilities is deducted from the maximum allowable rent. The Developer shall use the Utility Allowance Schedule published annually by the Housing Authority of City of Encinitas when determining the utility allowance. Unit 856 monthly rent shall not exceed the maximum allowable rent for a three bedroom unit for eligible tenants with household income that is at or below 65 percent of the AMI published annually by HUD during the HOME affordability period. With the termination of the HOME affordability period the unit shall become available for eligible tenants with household income that is at or below 70 percent of the AMI for a period of 20 months. After the 20-month period the unit shall become available to eligible tenants with a household income is at or below 65 percent of the AMI for the remainder of the term of the REGULATORY AGREEMENT. Allowance for tenant paid utilities is deducted from the maximum allowable rent. The Developer shall use the Utility Allowance Schedule published annually by the Housing Authority of City of Encinitas when determining the utility allowance. Changes to Income and Rent Limits It is the Developer's responsibility to check with the City annually to determine updated income and rent limits New limits are usually nffeFed in the late Fall, to bee#er�tiertR the Unnnminn As cited in recital 18 of the REGULATORY AGREEMENT (REPORTING As the Developer shall submit a report annually including but not limited to the following_ (1) each tenant's annual income, source of income verification household size and composition, race, length of tenancy utility allowance and actual rent paid ATTACHMENT C PROGRAM REGULATIONS Refer to Title 24 of the Code of Federal Regulations, Part 92-HOME Investment Partnership Program Regulations Refer to the HOME AFFORDABLE HOUSING AGREEUENT. AMENDMENT as of IN WITNESS WHEREOF, OWNER has executed this the date first above written. OWNER By: Ara Kaloustian, Trustee and Susan H. Kaloustian, Trustee, of the Trust of Ara and Susan H. Kaloustian, as amended July 10, 2000 By- l -� Ara Kaloustian, Trust e y Susan H Kaloustian Trustee 1 t V'u S By: The Countryman Family Trust dated January 29, 2004, Donald A. Countryman and Lettie L.A. Countryrr,arfrrustors and Trustees BY' _ Donald A Countrymx, .Tru,st e° Lettie L.A. Countryman, Truste, (notarization of signatures`must be attached) CITY By Gus Vina, Cit Manager City of Encinitas (notarization of signature not required) CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California L County of On t40(_Q- before me, Date �� Her In t Name and Title of the O icer personally appeared N<, . , 3\r'x\b�\G� t .X�6cj\-\ �• �a, �1� ia'Cl, Name(s)of Signer(s) llf� L. k mgr ©cam\�, • Cf;Ull'' ,� who proved to me on the basis of satisfactory evidence to be the person whose name(Q 4e/are subscribed to the within instrument and acknowledged to me that ho4he/they executed the same in their authorized capacity, and that by W&41aeWtheir signature(Q on the DEANA GAY instrument the personQ or the entity upon behalf of Commission# 1862433 Z which the person acted, executed the instrument. -ai Notary Public-California San Diego County I certif under PENALTY OF PERJURY under the laws M Comm.Ex ires Aug 23,20t 3+ y of the State of California that the foregoing paragraph is true and correct. WITNESS my and d official seal Place Notary Seal Above Signature ignature o otary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: ( \(�Q ��a Document Date Number of Pages. Signer(s) Other Than Named Above Capacity(ies) Claimed by Signer(s) ;)Sib• ,&A- b-+ Signer's Name Signer's Name ❑ Individual ❑ Individual ❑ Corporate Officer—Title(s) ❑ Corporate Officer—Title(s) ❑ Partner—❑ Limited ❑ General _ ❑ Partner—❑ Limited ❑ General _ ❑ Attorney in Fact • - ❑Attorney in Fact • - ❑ Trustee Top of thumb here ❑Trustee Top of thumb here ❑ Guardian or Conservator ❑ Guardian or Conservator ❑ Other- ❑Other- Signer Is Representing: Signer Is Representing: 02007 National Notary Association•9350 De Soto Ave. PO.Box 2402•Chatsworth,CA 91313-2402•www.NationalNotary org Item#5907 Reorder Call Toll-Free 1-800-876-6827 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO- CITY OF ENCINITAS HOUSING AND GRANTS ANALYST 505 S. Vulcan Ave. Encinitas, CA 92024 This document is exempt from the payment of a recording fee pursuant to Government Code Section 6103 (Space above this line for Recorder's use) COMMUNITY DEVELOPMENT DEPT. OF THE CITY OF ENCINITAS C Its. Interim City Manager Dated 10120 , 1999 REGULATORY AGREEMENT This Regulatory Agreement dated 10/20, 1999, is made and entered into by and between the City of Encinitas (hereinafter the "City"), and Susan S. Hopwood, Trustee of the Revocable Trust of Susan S. Hopwood, as to an undivided 1/2 interest and Donald A Countryman and Lou Ann Countryman, Husband and Wife as point tenants as to an undivided 1/2 interest as tenants in common (hereinafter the "Developer") RECITALS A. The Developer 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 Developer has applied to the City for financial assistance in order to develop and operate a "Housing Project" (hereinafter the "project"). That financial assistance will be provided by the City subject to the availability of funds and subject to the requirements of the specific source of funds utilized for the Project (hereinafter the "Program"). The Developer 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. B. The Housing Project will be used exclusively by the owner entity for 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. C. The Developer and the City have entered into a HOME Affordable Housing Agreement, dated . 1999 regarding the Project and the financial assistance to be provided therefore. D. As an inducement to the City to provide the financial assistance made available under the Program, the Developer has agreed to enter into this Regulatory Agreement and has consented to be regulated and restricted as provided herein, on the HOME assisted (residential) units only. NOW,THEREFORE,the parties hereto agree as follows: 1. RECITALS. The foregoing recitals, the Developer's application package as approved by the City, and the HOME Agreement and its other Exhibits are a part of this Regulatory Agreement. 2. COMPLIANCE WITH LAW. The Developer 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 Developer 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 Developer to fully comply with such statutes, rules and regulations. 3. TERM OF AGREEMENT The term of this Agreement shall commence on the date hereof and shall continue for at least 55 years from the date that the Project is certified for occupancy. 4. RENT SCHEDULE At the time of initial occupancy, Developer shall charge only those rents approved by the City and which are established pursuant to Program statutes and regulations. 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 Developer fails to charge rent according to the Rent Schedule, Developer will repay all City funds. Repayment will be subject to the terms of the Promissory Note and Deed of Trust. 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. Developer agrees to place as a deed restriction on the Property, the Rent Schedule. 5. ELIGIBILITY FOR ADMISSION An applicant is eligible for admission to the Project lottery selection process if he or she meets all of the following criteria: (a) The applicant meets the requirements of the HOME Program regulations. Income limits are based on the number of persons in the household. (b) Developer 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. 6. RESIDENT SELECTION PROCEDURES Developer shall rent a housing unit in the Project to eligible residents in accordance with the Program Regulations and the Management Plan approved by and on file with the 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 Developer to affirmatively market and rent all units in a manner which ensures equal access to all persons in any category protected by federal, state, or local laws governing discrimination, and without regard to any arbitrary factor; (b) specify reasonable criteria for determination of resident eligibility; (c) require that eligible residents be selected based on waiting list method approved by City; (d) require eligible applicants to be notified of eligibility and, based on turnover history, be notified of when a unit may be available; (e) require ineligible applicants to be notified in writing of the reason for their ineligibility; (f) specify procedures through which applicants deemed to be ineligible may appeal this determination; (g) require maintenance of a waiting list of eligible applicants; (h) prohibit discrimination against any prospective resident on the basis of race, religion, sex, age, disability, marital status, or any other arbitrary factor in violation of any state, federal, or local law governing discrimination in rental housing; (i) accept persons who are recipients of Federal rent subsidies(such as Section 8 and HOME)as tenants on the same basis as all other prospective tenants; 0) address other selection issues provided for in the Program Regulations 8. LEASE AND OCCUPANCY PROCEDURES (a) Each eligible applicant selected to occupy a unit shall enter into a written occupancy agreement or lease with the Developer, 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 Developer shall establish reasonable rules of conduct and occupancy which shall be consistent with State and Federal law and the Program Regulations. The rules shall be in writing and shall be given to each resident. Any amendment shall be effective no less than 30 days after giving written notice thereof to each resident. (c) Leases and the landlord-tenant relationship shall be subject to California law, Program statues and regulations, and the provisions of this Regulatory Agreement. 9. REPLACEMENT CHARGES. The charges to residents covering damages to the Housing Project property attributable to the resident shall be made in accordance with a schedule of replacement costs which shall be adopted by the Developer, posted in the management office of each Housing Project, and shown to applicant at the time the lease is signed. 10. TERMINATION OF LEASE (a) The resident may end the lease at any time with a 30 day Notice. Rent is only paid for the period the resident actually occupied the housing unit. Any unused rent shall be returned to the resident. If the resident gives at least a 30 day notice of intent to vacate the Housing Project the Developer 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 Developer has two (2) weeks within which to send the unused rent to the resident's forwarding address, Developer shall hold the unused rent for six months and return it to the resident if the resident picks it up or provides a forwarding address within six months. After six months, the rent is forfeited to the Developer. (b) The Developer 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 Developer concerning eligibility for the Project; or for other good cause. (c) In order for the Developer 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 Developer 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 Developer shall give the resident a reasonable time to move out, but not less than three (3) days. (e) In all other cases, the resident shall be given at least 30 days notice to either comply with the terms of the lease or move out. 11. DEVELOPER RESPONSIBIILTIES Developer shall provide administrative, fiscal, and management services, employ staff and purchase, rent, and use supplies and materials as needed to operate, maintain and protect the Housing Project in accordance with the Regulatory Agreement and the Program statutes and regulations. This shall include, but not be limited to, compliance with the grounds and procedures governing grievance hearings as set forth in the Program Regulations. In addition, grievance hearings, conferences, notices, and summaries pursuant to this Regulatory Agreement shall be in English or in the language of the majority of residents. 12. ANNUAL OPERATING BUDGET (a) The fiscal year for the Project shall commence on July 1 of each year after the initial period of occupancy, and conclude on June 30 of each year. (b) The Developer 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 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, and all other expenses in the format required by the City. Unless the City objects to the proposed budget within ten (10) days after the submission of a complete proposed budget, such proposed operating budget shall be the operating budget for the fiscal year of the Project. 13. REQUIRED RESERVES (a) At the time Developer receives and award of permanent funding from the U.S. Department of Housing and Urban Development or another source approved by the City, Developer 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 sixth 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-bearing accounts in the name of the Developer insured by an agency of the federal government or other comparable federal insurance program. Consistent with the requirements of the funding agencies, Developer shall make deposits bi-annually 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. 14. USE OF INCOME FROM OPERATIONS (a) The Developer or Developer's management agent shall promptly deposit all Operating Income in a segregated account established in the Developer's name exclusively for the Project. There shall be no commingling of Project finds with other funds controlled by the Developer. (b) Withdrawals from the account 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 Developer 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 Developer or other person or entity upon City approval only. (c) If other funding entities have differing requirements, the City may amend this paragraph in writing to be consistent with those other requirements. In addition, the Developer may depart from the foregoing priorities of payment only upon the express prior written approval of the City. 15 FINANCIAL ASSISTANCE Developer acknowledges that the City will not provide additional financial assistance to the Developer 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, Developer agrees to assume full financial responsibility for the operating and maintenance of the Project throughout the term of this Agreement. 16. ACCOUNTING RECORDS In a manner subject to City approval, Developer shall maintain an accrual or modified accrual basis general ledger accounting system that is posted monthly and that accurately and fully shows 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. 17. MANAGEMENT AND MAINTENANCE, (a) Developer is specifically responsible for all maintenance, repair, and management functions including, without limitation, the following: selection of residents, occupancy standards, complaint and grievance proceedings, evictions, collection of rents and security deposits, routine and extraordinary repairs, and replacement of capital items. Developer 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. (b) Developer is responsible for operating the Project in accordance with the Management Plan developed by the Developer as required by the City, and which is approved by and on file with the City (the "Management Plan"). All amendments to this Plan require prior written approval of the City. (c) Developer, 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 Developer of responsibility for proper performance of these duties. Developer anticipates to contract with a property management company to be named later. Such a contract shall be subject to prior written approval by the City and shall contain a provision allowing the Developer to terminate the contract without written notice to the Developer thereof,that the management agent performing the functions required in subparagraphs (a) and (b) has failed to operate the Project in accordance with this Regulatory Agreement and the approved Management Plan, the Developer shall exercise such right 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). (d) Upon a determination by the City, and written notice to the Developer thereof, that the Developer has failed to operate the Project in accordance with this Regulatory Agreement, the City may require the Developer to contract with a qualified management agent to operate the Project, or to make such other arrangements as the City deems necessary to ensure performance of the functions required in subparagraphs(a) and (b). (e) Developer 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. (f) To the extent that a permanent lender or grantor imposes requirements which 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. 18 REPORTING REQUIREMENTS The Developer 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; (b) Any substantial physical defects in the Project, including a description of any major repair or maintenance work undertaken in the reporting year; (c) The occupancy of the Project indicating: (1) each tenant's annual income, family size and composition, race, length of tenancy, actual monthly rent paid (2) records demonstrating the Developer's efforts to comply with its Fair Housing Marketing and Equal Opportunity Plan; (3) the number of residents actually occupying the project. (4) general management performance, including tenant relations and other relevant information; (d) A description of any fiscal or program difficulties related to the operation of the Project consistent with the Program requirements; (e) Each such report shall be subject to the approval of the City, (f) At any time during the term of this Regulatory Agreement, the City or its designee may enter and inspect the physical premises and inspect all accounting and resident records pertaining to the construction, development, or operation of the Housing Project. Upon request by the City, Developer 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 Standard Agreement or Developer Agreement. Such information shall be provided promptly by the Developer. (h) Prior to the commitment of funds, the Developer 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 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 Developer will provide the 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 Developer 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. 19. PROJECT RECORDS: The Developer 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; (b) 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 for 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 opportunity 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; (2) Documentation of actions undertaken to meet the requirements of Section 3 of the Housing Development Act of 1968, as amended (12 U.S.C. 1701 u); (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 of subcontract, and documentation of Contractor's affirmative steps to assure that minority-business and women's business enterprises have an equal opportunity to obtain or compete for contracts and subcontracts as sources of supplies, equipment, construction, and services; (4) Documentation of the actions the Developer 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, 20. INSURANCE The Developer 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, and general liability of not less than one million dollars ($1,000,000) for each occurrence of the aggregate. All insurance policies and renewals thereof shall be issued by a carrier acceptable to the City and licensed and admitted to be transacting business in the State of California. Insurance policies shall name City as an additional loss payee. Insurance proceeds and condemnation awards for any loss to or taking of the Housing Project shall be applied or utilized in a manner which ensures that City's and Program interests are reasonably fulfilled. 21. CERTAIN ACTS PROHIBITED. The Contractor shall not make any sale, encumbrance, assignment or conveyance, or transfer in any other form, of the Property of Project or any part thereof or 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; (c) Remodel, remove, add to, reconstruct or demolish any part of the Project of 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 n 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 for supervisory or managerial services except as permitted by this Regulatory Agreement; or (h) Invest any funds from the Project in any property, real or personal, except as authorized by this Regulatory Agreement or by the City or deposit any such funds in a depository not authorized by this Regulatory Agreement or approved by the City. 22. VIOLATION OF REGULATORY AGREEMENT BY THE DEVELOPER. In the event of the violation of any of the provisions of this Regulatory Agreement by the Developer, the City may give written notice thereof to the Developer by registered or certified mail addressed to the Developer at the address stated in this Regulatory Agreement, or to such other address as may have been designated by the Developer, and if such violation is not corrected to the satisfaction of the City within thirty (30) days after the date such notice is mailed (or within such further time as the City, in its sole discretion, may permit), the City may, without further prior notice, declare in writing a default under this Regulatory Agreement effective on the date of such declaration of default, and upon any such declaration of default the City may apply to any court, State or Federal, for specific performance of this Regulatory Agreement; for an injunction against any violation by the Developer 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 Developer that the injury to the City arising from a default under any of the terms of this Regulatory Agreement would be irreparable and that it would be extremely difficult to ascertain the amount of compensation of the City which would afford adequate relief, in light of the purposes and policies of the Program. 23. AMENDMENT. This Regulatory Agreement shall not be altered or amended except by writing executed between the parties. 24. 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. 25. 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 Developer 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. 26. 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. 27. RECORDING AGREEMENT This Regulatory Agreement and any amendments thereof, shall, at the expense of the Developer, be acknowledged by each of the parties and recorded or referenced in the official records of the County. 28. 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. 29. WAIVER No waiver by the City of any breach or of default under this Regulatory Agreement shall be deemed to be a waiver of any other or subsequent breach or default hereunder. 30 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. 31. GOVERNING LAW This Regulatory Agreement shall be constructed in accordance with and governed by the laws of the State of California. 32. OTHER FEDERAL REGULATIONS Developer 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 VII 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 Order 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. 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, communication a different address to the other party hereto. city Developer City of Encinitas Housing&Grants Analyst Don Countryman & Sue Hopwood 505 S. Vulcan Ave. 170-1 Jupiter St. Encinitas, CA 92024 Encinitas, CA 92024 34. INDEMNIFICATION AND WAIVER (a) In addition to the provisions of the Standard Agreement, the Developer agrees to indemnify the City and its agents, employees, and officers, and holds the City and its agents, employees and officers harmless from, any losses, damages, liabilities, claims, actions, judgments, court costs, and legal or other expenses (including attorney's 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 Developer, (ii) Developer's failure to perform any obligations as and when required by this Regulatory Agreement or the Standard Agreement; (ii) any failure at any time of any of Developer's representations or warranties to be true and correct; (iv) any act or omission by Developer, 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 Housing Project; or (v) the presence of hazardous substances at the Housing Project or on the Property. Developer 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 annum. The duty of Developer to indemnify and save harmless includes the duties to defend as set forth in Section 2778 of the Civil Code; Developer 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, the Developer, or their respective agents, officers, employees, contractors, or subcontractors. Developer's duty to indemnify the City shall survive the term of this Regulatory Agreement. (b) The Developer 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) Developer expressly waives the protections of Section 1542 of the Civil Code in relation to subparagraphs(a) and (b) above. IN WITNESS WHEREOF, Trustor has executed this Regulatory Agreement as of the day and year first above written. j f / ATTACHMENT A LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS. LOTS 7 AND 8 IN BLOCK 17 OF ENCINITAS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 148, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,JUNE 12, 1883 EXCEPTING THEREFROM THE SOUTHERLY 45 FEET OF LOT 8 ATTACHMENT B RENT SCHEDULE; Income Limits: Household must have an annual income at or below 65% of the median income for the County, as adjusted for family size. Rent Limits: Maximum rent for the residential units may not exceed the lessor of: The Fair Market Rent (FMR), as determined annually by the U.S. Department of Housing and Urban Development, for the unit size minus a utility allowance, or The affordable rent (30%of 65% median monthly income) for the unit size (2 person income for the I bedroom, and 5 person income for the 3 bedroom)minus a utility allowance. Changes to Income and Rent Limits It is the Developer's responsibility to check with the City annually to determine updated income and rent limits. New limits are usually offered in the late Fall, to be effective in the upcoming year. ATTACHMENT C PROGRAM REGULATIONS Refer to Title 24 of the Code of Federal Regulations, Part 92-FIOME Investment Partnership Program Re;;ulations. TRUE COPY CERTIFICATION (Govemment Code 27361.7) Encinitas, CA Place of Execution I certify under penalty of perjury that this material is a true copy of the original material contained in this document. 11 / 26 / 2012 Date Signatur�of De larant Ron Barefield Type or Print Name koc Form#R9.1(611-03)