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HomeMy WebLinkAboutCommunity Development Commission of the County of Mendocino 5/1/07FORGIVABLE LOAN AGREEMENT FOR LOW AND MODERATE INCOME HOUSING DEVELOPMENT (Mendocino County CDC) ($175,000) This Forgivable Loan Agreement (the "Agreement") is entered into as of May 1, 2007, (the "Effective Date"), by and between the Ukiah Redevelopment Agency (the "Agency") and the Community Development Commission of the County of Mendocino (the "Developer"). The Agency and the Developer are referred to in this Agreement individually as a "Party" and collectively as the "Parties". RECITALS A. The Agency has established an Affordable Housing Fund (the "Housing Fund") pursuant to Health and Safety Code Section 33334.2. Pursuant to an agreement with the County of Mendocino (the "County"), the County has the right to expend a certain portion of the Housing Fund for low and moderate income housing developments in the City of Ukiah (the "City") B. The Developer intends to develop two units of single family housing affordable to low and moderate income households in the City (the "Development") to be developed on two separate lots of real property commonly known as 815 Orchard Avenue and 843 Cindee Lane (the "Property"). C. On October 25, 2005, the Board of Supervisors of the County approved the use of One Hundred Seventy Five Thousand Dollars ($175,000) from the County's share of the Housing Fund to assist the Developer with the Development, and approved the use by the Agency of such funds to assist the Developer with the Development. On January 18, 2006, the Board of Commissioners of the Agency approved a forgivable loan of One Hundred Seventy Five Thousand Dollars ($175,000) from the County's share of the Housing Fund to assist the Developer with the Development. D. Pursuant to this Agreement, the Agency agrees to make a forgivable loan of One Hundred Seventy Five Thousand Dollars ($175,000) (the "Loan") to the Developer subject to this Agreement, which will be subject to a Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement"). F. Pursuant to the terms of the California Community Redevelopment Law (the "CRL"), upon sale of the two (2) units to homebuyers, the Developer will record Regulatory Agreement as specified in this Agreement on the two (2) units comprising the Development, ensuring that such units remain affordable to specified income categories of occupants for a specified period. ,lUN 0 b 2007 1112\01\424027.3 G. The Agency has completed the required environmental assessment of the Development in accordance with the provisions of the California Environmental Quality Act CEQA"). In consideration of the recitals and the mutual promises and covenants set forth in this Agreement, the Parties agree as follows: ARTICLE 1 FORGIVABLE LOAN PROVISIONS Section 1.1 Forgivable Loan. The Agency shall lend to the Developer the principal sum not to exceed One Hundred Seventy Five Thousand Dollars ($175,000) for the purposes set forth in Section 1.2 of this Agreement. The outstanding principal balance of the Loan shall not bear interest, subject to the provisions for a default interest rate set forth in this Agreement and further subject to the provisions for forgiveness set forth in Section 1.5 of this Agreement. Section 1.2 Use of Funds. Proceeds of the Loan may be used only for the costs of the Development, unless the Agency approves in writing a different use of the funds. Section 1.3 Security. The obligations under this Agreement shall be unsecured. Section 1.4 Fundin. The Loan amount shall be funded within thirty (30) days after the Effective Date in one payment to the Developer. Section 1.5 Repayment and Forgiveness of the Loan. No payment shall be due on the Loan during the Term (as defined below), and no interest shall accrue on the principal amount. If the Developer completes the Development and sells the two (2) units to Low and Moderate Income Households at an Affordable Housing Cost before the end of the Term, all outstanding principal shall be forgiven. The Regulatory Agreement, however, shall remain in effect. Evidence of completion of the requirements for forgiveness of the Loan shall be: (a) recording of a Grant Deed to a homebuyer; (b) recording of the Regulatory Agreement against the unit purchased by the homebuyer; and (3) a certification by the Developer that the homebuyer is a low and Moderate Income Household and that the homebuyer's required monthly payments are equal to or less than Affordable Housing Cost for a Low and Moderate Income Household. If the Developer does not meet the requirements for forgiveness of the Loan as set forth in this Agreement by the end of the Term, the entire outstanding principal balance shall be due and payable upon the end of the Term. Section 1.6 Term of Agreement. This Agreement and the Loan shall have a term (the "Term") that commences as of the Effective Date of this Agreement and shall terminate on December 31, 2009. Section 1.7 Maintenance of Financial Records. Developer shall maintain at its principal place of business a system of records and accounts that comply with the Statements of Financial Accounting Standards of the Financial Accounting Standards Board and to the extent 1112\01\424027.3 not addressed by such standards generally accepted accounting principals, consistently applied. Agency shall have access to examine and copy such records at all reasonable times during normal business hours. ARTICLE 2 DEVELOPER OBLIGATIONS Section 2.1 Activities. The Developer shall carry out the construction of the Development and sale of the units to Low and Moderate Income Households. Upon reasonable notice, as from time to time requested by the Agency, the Developer shall make oral or written progress reports advising the Agency on progress made and next steps to be taken by the Developer to complete construction of the Development. Section 2.2 Relocation Obligations. The Developer shall be responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws. The Developer shall defend (with counsel reasonably acceptable to the Agency), the Agency against any claim for damages, compensation, fines, penalties, relocation payments or other amounts arising out of the failure or alleged failure of any person or entity (including the Developer or the Agency) to satisfy relocation obligations related to the acquisition and development of potential developments. . Section 2.3 Affordability Restrictions. The Agency and the Developer shall cause the Regulatory Agreement to be recorded against both units, providing, among other matters, for the sale to and occupancy by Low and Moderate Income Households at Affordable Housing Cost, as defined in the Regulatory Agreement, for a time period not less than forty-five (45) years. Section 2.4 Insurance. During the Term, the Developer shall maintain and keep in force the following insurance in a form acceptable to the Agency with evidence of such coverage provided to the Agency: (a) Worker's Compensation insurance, in scope and amount required by law. (b) Comprehensive General Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence. The Agency shall be named as additional insured on this policy, and the policy shall include a statement that the insurance is primary to any other insurance available to the Agency. (c) If the Developer owns and operates motor vehicles, comprehensive Automobile Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence. If the Developer does not own and operate motor vehicles, Non-owned Vehicle Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence. 1112\01\424027.3 (d) Upon the Developer's acquisition or development of improvements, property insurance covering the improvements, excluding earthquake and flood, for one hundred percent (100%) of the replacement value, with deductible, if any, acceptable to the Agency, naming the Agency as a Loss Payee, as its interests may appear. All policies shall include provisions that the policies will not be cancelled unless the Agency has received thirty (30) days written notice of such cancellation. Section 2.5 Transfers. During the Term, the Developer shall not cause or permit a sale, encumbrance or other transfer of its right, title, and interest in this Agreement or a development (a "Transfer") without the prior written approval of the Agency; except that transfers to nonprofit corporations controlled by the Developer, to limited partnerships of which the Developer or a nonprofit corporation or limited liability company controlled by the Developer is a general partner, or to limited liability companies the managing member of which is the Developer shall not require approval of the Agency and the Developer shall provide notice of such a permitted transfer to the Agency. Section 2.6 Non-Discrimination. The Developer covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, disability, sex, sexual orientation, marital status, familial status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Development, nor shall the Developer or any person claiming under or through the Developer establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Development. Section 2.7 Mandatory Language in All Subsequent Deeds, Leases and Contracts. All deeds, leases or contracts made or entered into by the Borrower, its successors or assigns, as to any portion of the Development shall contain therein the following language: (a) In Deeds: "(1) Grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (in) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property herein conveyed, nor shall the grantee or any person claiming under or through the grantee, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land. 1112\01\424027.3 (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1)." (b) In Leases: "(1) Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government Code in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee or any person claiming under or through the lessee, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1)." (c) In Contracts: "(1)There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government Code in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor shall the transferee or any person claiming under or through the transferee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land. 1112\01\424027.3 (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1)." ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER Section 3.1 Representations and Warranties. The Developer represents and warrants to the Agency as follows: (a) Organization. The Developer is duly organized, validly existing California public body, corporate and politic and is in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. (b) Authority of the Developer. The Developer has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver this Agreement and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above. ARTICLE 4 DEFAULT Section 4.1 Default. A "Default" shall consist of any material breach of any covenant, agreement, provision or warranty contained in this Agreement which has not been cured by the defaulting Party within thirty (30) days of receipt of written notice of such breach from the non- defaulting Party. In the event of a Default, the non-defaulting Party may apply to a court for specific performance of this Agreement or an injunction against any violation of this Agreement, or any other remedies at law or in equity or any such other actions as shall be necessary or desirable so as to correct non-compliance with this Agreement. ARTICLE 5 GENERAL PROVISIONS Section 5.1 Relationship of Parties. Nothing contained in this Agreement shall be interpreted or understood by any of the Parties, or by any third persons, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or 1112\01\424027.3 joint venture between the Agency and the Developer or the Developer's agents, employees or contractors, and the Developer shall at all times be deemed an independent contractor and shall be wholly responsible for the manner in which it or its agents, or both, perform the services required of it by the terms of this Agreement. In regards to the potential developments, the Developer shall be solely responsible for all matters relating to payment of its employees, including compliance with Social Security, withholding and all other laws and regulations governing such matters, and shall include requirements in each contract that contractors shall be solely responsible for similar matters relating to their employees. Section 5.2 No Claims. Nothing contained in this Agreement shall create or justify any claim against the Agency, by any person the Developer may have employed or with whom the Developer may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the potential developments. Section 5.3 Amendments. No amendment, alteration or variation of the terms of this Agreement shall be valid unless made in writing by the Parties. Section 5.4 Indemnification. Except as directly caused by the Agency's negligence or intentional acts arising out of the Agency's performance or non-performance of its obligations under this Agreement, the Developer agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the Agency) the Agency and its board members, officers and employees, from all suits, actions, claims, causes of action, costs, demands, judgments and liens arising out of the Developer's performance or non-performance of its obligations under this Agreement. Section 5.5 Non-Liability of Agency Officials, Employees and Agents. No member, official, employee or agent of the Agency shall be personally liable to the Developer, or any successor in interest, in the event of any Default or breach by the Agency, or for any amount which may become due to the Developer or its successor or on any obligation under the terms of this Agreement. Section 5.6 No Third Party Beneficiaries. There shall be no third party beneficiaries to this Agreement. Section 5.7 Action by the Agency. Whenever any approval, notice, direction, consent, request, extension of time, waiver of condition, termination, or other action by the Agency is required or permitted under this Agreement, such action may be given, made, or taken by the Agency Executive Director without further approval by the Agency Board of Commissioners, and any such action shall be in writing. The amount of the Loan may not be increased without approval of the Agency Board of Commissioners. Section 5.8 Notices, Demands and Communications. Formal notices, demands, and communications between the Agency and the Developer shall be sufficiently given if and shall not be deemed given unless dispatched by certified mail, postage prepaid, return receipt requested, or delivered by express delivery service, with a delivery receipt, or delivered 1112\01 \424027.3 personally, with a delivery receipt, to the principal office of the Agency and the Developer as follows: Agency: Ukiah Redevelopment Agency 300 Seminary Avenue Ukiah, CA 95482 Attn: Executive Director Developer: Mendocino County Community Development Commission 1076 N. State Street Ukiah, CA 95482 Attn: Executive Director Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected Party may from time to time designate as provided in this Section. Receipt shall be deemed to have occurred on the date shown on a written receipt for delivery as the date of delivery, the date delivery was refused, or the date the item was returned as undeliverable. Section 5.9 Applicable Law. This Agreement will be governed by California law. Section 5.10 Parties Bound. Except as otherwise limited in this Agreement, the provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their heirs, executors, administrators, legal representatives, successors and assigns. Section 5.11 Attorneys' Fees. If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing party will have the right to recover its reasonable attorneys' fees and costs of suit from the other party. Section 5.12 Severability. If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation, voiding or unenforceability. Section 5.13 Counterparts. This Agreement may be executed in counterparts. 1112\01 \424027.3 I This Agreement has been entered into by the undersigned as of the date first above written. DEVELOPER: Community Development Commission of the County of Mendocino, a public body, corporate and politic By: 'c5¢~ Todd Crabtree Its: Executive Director AGENCY: Ukiah Redevelopment Agency By: Its: APPROVED AS TO FORM: By: 4/~ 42, y Counsel 1112\01 \424027.3