HomeMy WebLinkAbout17 Res HA-102 Hovley GardensSTAFF REPORT
PALM DESERT HOUSING AUTHORITY
Community Development Department
MEETING DATE:
PREPARED BY:
REQUEST:
April 8, 2021
Jessica Gonzales, Senior Management Analyst
Adoption of a Resolution of the Board of the Palm Desert Housing
Authority (“Authority”) authorizing and approving the negotiation,
modification, preparation, execution and delivery of documents
and agreements in connection with the proposed re-syndication of
PD Hovley Limited Partnership and the refinancing and
rehabilitation of the Hovley Gardens Project, and taking related
actions
Recommendation
That the Authority Board,
1. Waive further reading and adopt Authority Resolution No. HA-102, a
resolution authorizing and approving the negotiation, modification,
preparation, execution and delivery of documents and agreements in
connection with the proposed re-syndication of PD Hovley Limited
Partnership (“Partnership”) and the refinancing and rehabilitation of the
Hovley Gardens Project (“Project”), and taking related actions (“Resolution”);
and
2. Approve the agreements and documents presented to the Authority Board at
this meeting in substantial form; and
3. Authorize staff and legal counsel to negotiate and modify the agreements and
documents presented to the Authority Board at this meeting, provided such
modifications are materially consistent with the terms set forth in the
Conditional Agreement Regarding Hovely Gardens Re-Syndication, attached
hereto as Attachment A (“Conditional Agreement”), and to negotiate and
prepare all other necessary or proper documents and instruments; and
4. Authorize the Executive Director or Chairman, in consultation with legal
counsel, to execute and deliver, for and in the name of the Authority, the
agreements and documents presented to the Authority Board at this meeting,
as modified, provided such modifications are materially consistent with the
terms set forth in the Conditional Agreement; and
5. Authorize the Executive Director and Chairman, and all other officers of the
Authority, in consultation with legal counsel, to execute and deliver, for and in
the name of the Authority, all other necessary or proper documents and
April 8, 2021 – STAFF REPORT
Housing Authority – Hovley Gardens/Palm Communities Rehabilitation
Page 2
P6401-0001\2515178v4.doc -2-
instruments, and to do all things which they may deem necessary or proper to
effectuate the purposes of the Resolution.
Strategic Plan Objective
Land Use, Housing & Open Space Priority 2: Facilitate development of high-quality housing
for people of all income levels.
Executive Summary
Approval of staff’s recommendations will authorize staff and legal counsel to proceed to
negotiate and finalize the documents and agreements presented to the Authority Board at
this meeting and to negotiate and prepare all other documents and instruments which are
necessary or proper to enable Palm Communities, on behalf of the Partnership, to complete
the re-syndication, refinancing and rehabilitation of the Project. Such documents and
agreements include amendments to the existing (i) Disposition and Development
Agreement (“DDA”), (ii) Promissory Note, (iii) Deed of Trust, and (iv) Regulatory Agreement
and Option, each by and between, or for the benefit of the Authority, as successor-in-
interest to the former Palm Desert Redevelopment Agency (“Former Agency”), and PD
Hovley 1R Limited Partnership (“Developer”), as successor-in-interest to the Partnership
(collectively, “Amended Documents”).
The Amended Documents presented to the Authority Board at this meeting, generally
provide for the following:
1. Project. The affordability covenants in the Regulatory Agreement will be
extended for a period of fifty-five (55) years to provide housing affordable to low and very-
low income households in accordance with the Low-Income Housing Tax Credit financing
being used to fund the Project. The Authority will subordinate the Deed of Trust securing the
Authority Loan (described below) to the liens and encumbrances of the Project’s
construction and permanent lenders. However, the Authority will not subordinate its
interests in the Regulatory Agreement to such liens or encumbrances.
2. Transfer of Land to Project Owner. The Partnership shall convey the Project
to the Developer, a California Limited Partnership whose administrative general partner is
either Palm Communities, an affiliate entity of Palm Communities, Danavon L. Horn, or an
entity controlled by Danavon L. Horn. The managing general partner of the Developer shall
be a nonprofit corporation.
3. Authority Loan Terms. The existing loan made by the Former Agency
pursuant to the DDA in the initial principal amount of Seven Million Six Hundred Fifty-Nine
Thousand Four Hundred Thirty-Seven Dollars ($7,659,437.00) (“Authority Loan”) will be
modified to extend its maturity for fifty-five (55) years and to provide for a suspension of
principal payments for the estimated construction period. The Authority Loan shall bear
interest at the greater of the current applicable federal rate as of the date of the Promissory
Note or one percent (1%) simple interest per annum, and will be repaid from seventy-five
percent (75%) of the Project’s residual receipts remaining after payment of fees and
April 8, 2021 – STAFF REPORT
Housing Authority – Hovley Gardens/Palm Communities Rehabilitation
Page 3
P6401-0001\2515178v4.doc -3-
expenses. In addition, One Million Dollars ($1,000,000.00) of the principal amount of the
Authority Loan shall be paid at the closing of the construction loan.
4. Annual Monitoring Fee. The Developer will pay the Authority an annual
monitoring fee in the amount of Sixty-five Thousand Dollars ($65,000), which shall increase
at the rate of two percent (2%) annually, for fifty-five (55) years.
Background Analysis
In 2001, the Former Agency entered into several agreements with Palm Desert
Development Company (now known as Palm Communities) to assist it with building the
Project. The Project was originally funded and developed by leveraging multiple funding
sources including nine percent (9%) Low Income Housing Tax Credits and a low interest
loan from the Former Agency in the approximate amount of $7.65M. Palm Desert
Development Company assigned its interest in the DDA to the Partnership. The Authority
was assigned the loan made by the Former Agency during the redevelopment agency
dissolution process.
On June 25, 2020, the Authority Board conditionally approved the re-syndication and
restructuring of the Project, including the modifications to the Authority Loan described
above, by entering into the Conditional Agreement. Thereafter, the Partnership submitted
an application to obtain a new allocation of nine percent (9%) Low Income Housing Tax
Credits to allow for an extensive rehabilitation of the Project, which was awarded in October
2020.
The re-syndication and restructuring of the Project will result in 18 of the units being
restricted for rental to extremely low households in accordance with the Low-Income
Housing Tax Credit financing being used to fund the Project, and a refreshed property in the
Authority’s portfolio.
The renovations will include upgrades to current ADA standards, energy efficiencies, a
refresh of the exterior and common areas (repainting, landscaping, new playground
equipment, laundry rooms), and upgrades to the interiors of the units (flooring, cabinets,
countertops, appliances and fixtures).
The Partnership has performed its due diligence in planning and preparing for the re-
syndication and restructuring of the Project and has delivered to staff the Amended
Documents. Because the Amended Documents are not in final form, staff requests
approval of the actions described herein in order to allow the Partnership to meet the Tax
Credits allocation deadline by closing escrow no later than April 26, 2021.
Fiscal Analysis
The primary fiscal impact from this transaction is to the City’s general fund related to the
payment in lieu of property taxes (PILOT) that is payable to the City under the existing DDA
and which will be terminated under the proposed restructuring.
April 8, 2021 — STAFF REPORT
Housing Authority — Hovley Gardens/Palm Communities Rehabilitation
Page 4
LEGAL REVIEW
RWG
DEPT. REVIEW FINANCIAL
REVIEW
��QH. CJ fC /•L4!' I � �Nttf/I %�%. �002G
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Special Counsel to Ryan Stendell Janet M. Moore
the Authority Director of Community Director of
Development Finance
Executive Director, Todd Hileman:
L. -rodd f-Fi.�evuaw
ATTACHMENTS: A) Conditional Agreement
B) Housing Authority Resolution, HA-102
C) Project Site Map
D) Amended Documents
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VERIFIED BY:��I/ ���
Original on file with City C�fie+�k's Office
ASSISTANT CITY
MANAGER
.Andy Firestine
Andy Firestine
Assistant City
Manager
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�ana�on i.. I-Iarn. President
Paln� C:�mmunities
lf]a F'acilica, Suile ?(]5
Irvine. CA 9?618
Re: Ganditional Agree�t�enl Rega�'ding H�zvley �iard�ns Re-SyndiCatiQn
Dear Mr. Horn:
Tl�e Palrrt D�sett HQUsing Authority tthe "Hnusin�; Authority"}, as successor in interest to the
f�rmer Palrn ❑esert Redevelo�nle:it A�ency, is a party to t21at certain Dispr�sition and
���elo��mcnt A�,re�merrt �as amencled, tl�e "�DA"} ��+ith Patm Communities [t��e "i'alm
Communities"}, as su�cessor-in-ir}terest to Palm [3eseri De�elaprrient Company, date� as Qf� June
] 4, ?001, and hy which a loan was made t� the Palm C�mmunities i�i the original pris�c��al
ainaunt �t' Seven Milti�n 5ix Huncire�l Fifty-Nine Thnus�nd Fa�i�� I�undred Thirly-Se�vcn Dollars
(�7,GS9,437.Q�} �the '`i-iausin� f1��lhori4y I.�an"} fnr the dz�efr�pmen[ uf a l�3-�i�iit apartment
carnpl�x laca[ed ❑n that certain r�al �raperty lacated in Palm L]esert, Cal'sf�3rnia ar�d conlnloi�ly
k.riow�7 as 1-I��l�:y �ardens Apariments (t�e "Prc��ect"}. The current princ�pal halarice �f ChL
HQusin� Authariiy I_oan is a�prQximately Six Million Two HLindr��i Th«t�sas�d Dollars
(�6,20i�,fiOD.�f]}. An afTitiate of' Pairrs Communities acts as the Administra�ive General j'artner
ot ihe partner�F�ip. Pa�izz Communiiizs has requestec4 to re-syndicate and restructure th�
f nanciiz� �f tl�� �'r�ject t4 obtain a new allacatian of nine percent t9°/n} l,o�v Inccrme H�7using
Tax Credits {tl�e '�Tax Credit Allocaiian"} to aflow for an e�ctei�si�� rehaL}ilitation of the Prc�ject,
Pursuunt to the Rcsoltition of tl�e F'aim Desert Hausing Authority dater� as of June �5, �a?�1,
at�acl�ed ta this lett�r as �tlaci��r�er�t 1, the 1-iousinb �1uth�ri[y has cc�nditi�nally approve�i ❑f the
prc��Qsed restriic�urin� �f �he 1-Iousin� Eluthority Loan L❑ exter�d the term and reduce the
�rTncipal a►7�ount t� the a��praximate amount of F=i�e Millian Twa I-iundred Tl7ousand Dall�rs
t�5,2[1[l,[�00.[lD}, subjer:t to the falla�vin�:
Prujecl. The Praject will lie aperated For a period Uf �fiy-five (55} ycars
follawing the ciate af cnmpl�tion af the ref�abilitati�n of ll�e Proje�i to �ro�ic��
affr�rc�able housin� ta persons an� ��auseh�lds of it�w af�cE �ery-�o4v in�ome in
aucat'dartce with the af.fardahility reslrictions cor�tained in ihe �I).4 and in
accordanc� with th� Low-ir�come Hausing Tax Creciit financing bein� used by the
Froject. Ta the extent ne�essary, ihe Housin� Authority shall su���r�inate the
deed a!� trust secvrin�, the Hc��tsing A�thariiy LQan tc� th� liens and encumbr�atices
of th� PrajeGt's canstru�tion and �Sermailent le�lders. Th� Housing 11u[l�o�'ity wiEl
..
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Danavmi L. Horn, Presideut
P�lm Communit�ies
June25,2020
Pnge�2
not subordinato ils interests in the regulatory agxeement currently affecting d�e
Project to t6e liens or encumbrances of the Project's cons[ruct�ion end perm�nent�
lenders.
2. Y, roj.ecf Owner. 7'he Project owner shAll be a Califnntia limited partnership
(`Piojeot Owner") whose administrative general partner is eitl�er Palm
Communities, or an affiliate eutity of Palrn CommuniCies, ox Da��avon L. Horn, or
an entity controlled by Danavon L. Horn. T'l�e n�anaging general partner oP the
Project Owner sha.11 be a nonprofil coiporation. The Project Owner will have one
or more limited par�ner invesCors selected by Danavon L,. Floxn.
3. Transfer of,Land l_o Proieot Owner. Palm Commu��ities shall convey [he Froject to
[he Project Ownec in conjunation with the execution of [he restructured Housing
AuChority Loan.
4. Housine Authoritv Loan Documents. 'Che proposed restructurirq; of the Housing
AuYhority Loan will be evideilced by, amoug other tllings, av aivended DDA (the
"Amended I)DA"), and an ¢mended promissory note, deed of trust and regulatory
agreement, (oolleotively, Lhe "Loan Documents"), each executed by the Projeot
Owner and the Housing Authoriry where applicable.
5. F[ousina Auttioritv Loan Terms, Tha Housing Authority Loan sl�all ]�ave a term
of fifty-five (55) years, conimencing as of the effective date of the Amended
DDA and slutlf bcar ]nterest at the geeater of (i) the current Applicnble Federal
Rate at the time the Amended llllA is executed by the parties, ox (ii) one percent
(1%) per azmum. The Housing Authority Loan shnll be eepaid from seventy-live
percent (75%) the Project's residual receipts remaining after payment of fees and
expenses. Tl�e outs[andin� principnl t�mount of Yhe Housing Authorify Loan shall
be prepaid in the amount of One Million Dollaes ($1,000,000.00) at the olosiug o[
the oonstruction loan.
6. Atwual Monitoxina Fee. Commencing on the date the construarion loan converts
to a peimai�ent loan, the Projec[ Owner shall pay the Housing Au[horiTy tul annuAl
monitoring fee in the amount of Sixty-Five 'l`housand Doll¢rs ($65,000.00) nnd
shall inoreese at the rate of two peecznt (2%) nnnually.
Loan Documeuts. The Loau Documants, and all relafed documents and
instrumeuts, shall be submitted to the Housing Autliority for its approval and shall
be in Fot7n 2nd substance accepCable tq and approved by, tlie Board of the
Aousing AuYhoriYy and its counsel.
CIfY Of PflIM OESERi
P6401-0001\]J]]ISBvS.doc
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llana�'c.yn I.. I-f��r�i, Prtsident
Palrn � on�c��unities
Jun�: ?5, ?{]`pfl
f'a�e � 3
$. 1lward t�f �['ax Credit Allncatit7s�. The 1'rc7jcct shall ha4�e been a�varc3ed tl�e '-i'at
Cre�it ELlloeation purs��anl ta an ap��icatian therefor �iy Palm i'ommunities to E}ie
�.alifornia'1'ax Credit �lllacati�n Cammittie an�i tlatea July 1, ?4?�,
�. No "I�17ird P�irt�' Bene�ciaries. This lette�� is solely for the benetit af tl�e }-lousin�
fl�ithority� ar�d Palin Commt�nities, and s�7alI nat inure tn t�e �enefit ot; nr be
relie�� u�7a« by, ariy atfie�� pe��sari or entity.
1f1, Cotintei-��arts. Tl7is i�tter may h� c�cccutcd in �aunter�a��s, with �h� same effect as
if�4ach �aunterparl were ari arigina� tio�umeni.
Very tnil}� y���iF�s,
ACItE�U �3Y PALM C�MM�fNIT1I:S
I'�1LM C'C�MyILI� "i�IF:S
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I3y: ; � � �
L)ana�nn L. Horn,
}�r�:;idtnt
D�te: � �`] , ?U?C�
CI)Y OF PHIM dES�Ri
A6401-��O1�i427158v5,do�
Palm Desert F�.uiisin� Atttl�ority
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�I�111C: t;ina NesLaflde
[(g; ExecuCiae Director
ry�.�w�'.�J�Af•n�li K�:
ATTACHIVII',NT 1
1'alm I�esert Itousine Autfiorilv Kesolation dated Jmis 25, 2020
C11Y OF Pfl�M OEfERi
�a �� ,��, � �� „,P�,,o�o
RESOLUTION N0. HA•97
A RESOLUTION OF TFIE PALM DESERT HOUSING AUTHORITY
APPROVING A LETTER AGREEMENT REGARDING THE RE-
SYNDICATION OF PD HOVLEY LIMITED PARTNERSHIP AND
RELATED MATTERS
RECITALS;
A. Pursuant to AB X1 26 (which became effective in June 2011) and the
California Supreme Court's decision in California RedevelopmentAssociation, et al. v.
Ana Matosantos, et al., 53 Ca1.4th 231 (2011), the former Palm Desert Redevelopment
Agency (the "Former RDA") was dissolved as of February 1, 2012, the Successor
Agency was constituted, and the Oversight Board of the Successor Agency (the
"Oversight Board") was established.
6. Pursuant to Section 34175(b) of the California Health and Safety Code
("HSC"), assets of the Former RDA transferred to the conhol of the Successor Agency
by operation of law.
C. Pursuant to HSC Section 34176(b), the City Council of the City of Palm
qesert (the "City") adopted Resolution No. 2012-07, electing for the City to not retain the
responsibility for performing housing functions previously performed by the Former
RDA, and deterrnining that all of the assets, as allowed by law, and all rights, powers,
liabilities, duties, and obligations associated with the housing activities of the Former
RDA 6e transferred to the Palm Dasert Housing Authority ("Nousing AuthoriP�1').
D. The Housing Authority, as successor in interest to the Former RDA, is a
party to that certain Disposition and Development Agreement (as amended, the "DDA")
with PD Hovley Limited Partnership (the "Partnership") dated as of June 14, 2001, and
by which a loan was made to the Partnership in the original principal amount of Seven
Million Six Hundred Fifty-Nine Thousand Four Hundred ThirtySeven Dollars
($7,659,437.00) (the "Housing Authority Loan") for the development of a 763-unit
apartmeni complex located on that certain real property located in Palm Desert,
California and commonly known as Hovley Gardens Apartments (the "ProjecY'). The
current principal balance of the Housing Authority Loan is approximately 5ix Million Two
Hundred Thausand Dollars ($6,2p0,000.00).
E. An affiliate of Palm Communities acts as the Administrative General
Partner of the Partnership. Palm Communities has requested to re-syndica4e and
restructure the financing of the Project to obtain a new allocation of nine percent (9%)
Low Income Housing Tax Credits (the °Tax Credit Allocation") to allow for an e#ensive
rehabilitation of the Project.
F. The Housing Authority wishes to approve of the proposed re-syndication
and restructuring of the financing of the Project, including the Housing Authority Loan,
as described in the letter addressed to Palm Communities and attached hereto (the
"Letter AgreemenY').
R�soiuz�vN No. HA-s�
N{]VLI, THEREFOAE, THE PALIWI DESERT HOUSING AL.ITHORITY DaES
HEREOY RESa�VE, DET�RMINE AND �RDER AS FDLL�WS:
Sec#inn 1. Recital$. The ahove recitais, and eaci� af them, are true and
carrect.
5ectiQn 2. Aot�raval af Pr��ased Re-SvndicatiQn a�cf Restructurinq oi the
Pr�t. Th� Housing Rut�arity herelay approves the re-syndication and restructuring
af th� Praject and ti�e Hausing Aukharity Loan, as described in the attached Letter
Agreemeni.
5�ction 3. Fur#her Candiiions. Th� Hausing Authority will not be baund by
the at#act�ed Letter A�reemEnt ❑r vt��rwise witF� respect ta the r�-syndicatian or
restructuring of the Pro�ect unfess and until the Tax Gredit A!lncation shall have been
awarded ta the Praject, atl ather conditions descrilo�cf in the �.etter Agr�ement shal!
have been satisfied, anti a41 c[acuments pertair�ing thereto �i�ticluding, wifhaut limitatian,
ti�e Ioan documentatian pertain�ng t� #he praposed car�struciion ancf permanent iaans}
s�all have heen s�s�mitted in final form an�f appraved lay the Pa1m ��ser# Hausi�g
Auth�rity Baarci �the "gc�arti"], and the Board authari�es thair executian and delivery,
as appra�riate.
5ec#ian 4. ❑lher Acts. The Executive ❑irectar of the Ha�sing Au#hority and
al! other ai#icers of t�e Hausing Aut�ority are hereby authflrized, jointly and severalfy,
tfl �xecute and �lefiver any and aIR necessary clacuments and instrumsr�ts arrd ta da all
things w�ich they may deem n��essary ar {�raper to effectuaie t�e pur�oses ofi this
Resalution. Any actions previausly iaken hy �fficers af the Hgusing Authority cansistent
with the pur�ases af #his Resglution are hereby ratified and canfirmed.
PASSED, APPRQVED, AND A�QPTE❑ at a r�gu�ar meetir�g af the Palm D�sert
H�using Authority, an the �5;" day of June, 2�2�, by the fallawEng vvte, ta wit:
AYES:
N�ES:
HARNIR, .IONA�HAN, KEI.LY. WCBER, A�Ifl NESTAHDE
l�L�]��J
ABSENT: n�arr�
A85TAIN: xor�
A�TEST:
. �� � •
GRA E L. ROMCHA, A�TtNG SECRETARY
PA�N! IJESERT HDUSENG ALITHQR�TY
�� ��~f I
� �,�� � _ �.� ( :�
GINA NESTAN�E. CHAIRMAN
psaat-aaoi�a�a�nsv�.doc �
RESOLUTION NO. HA-102
A RESOLUTION OF THE PALM DESERT HOUSING AUTHORITY
AUTHORIZING AND APPROVING THE NEGOTIATION,
MODIFICATION, PREPARATION, EXECUTION AND DELIVERY OF
DOCUMENTS AND AGREEMENTS IN CONNECTION WITH THE RE-
SYNDICATION OF PD HOVLEY LIMITED PARTNERSHIP, AND THE
REFINANCING AND REHABILITATION OF THE HOVLEY GARDENS
PROJECT, AND TAKING RELATED ACTIONS
RECITALS:
A. Pursuant to AB X1 26 (which became effective in June 2011) and the
California Supreme Court’s decision in California Redevelopment Association, et al. v.
Ana Matosantos, et al., 53 Cal.4th 231 (2011), the former Palm Desert Redevelopment
Agency (“Former Agency”) was dissolved as of February 1, 2012, and the successor
agency to Former Agency was constituted (“Successor Agency”).
B. Pursuant to Section 34175(b) of the California Health and Safety Code
(“HSC”), assets of the Former Agency transferred to the control of the Successor Agency
by operation of law.
C. Pursuant to HSC Section 34176(b), the City Council of the City of Palm
Desert (“City”) adopted Resolution No. 2012-07, electing for the City not to retain the
responsibility for performing housing functions previously performed by the Former
Agency, and determining that all of the assets, as allowed by law, and all rights, powers,
liabilities, duties, and obligations associated with the housing activities of the Former
Agency be transferred to the Palm Desert Housing Authority (“Housing Authority”).
D. The Housing Authority, as successor-in-interest to the Former Agency, is a
party to that certain Disposition and Development Agreement with PD Hovley Limited
Partnership (“Partnership”), as successor-in-interest to Palm Desert Development
Company (“PDDC”) (now known as Palm Communities), dated as of June 14, 2001 (as
subsequently amended, the “DDA”), pursuant to which the Former Agency made a loan
to PDDC in the original principal amount of Seven Million Six Hundred Fifty-Nine
Thousand Four Hundred Thirty-Seven Dollars ($7,659,437.00) (“Housing Authority
Loan”) for the development of a 163-unit apartment complex commonly known as Hovley
Gardens Apartments (“Project”) located on certain real property located in the City and
acquired by the Partnership (“Property”). The current principal balance of the Housing
Authority Loan is approximately Six Million One Hundred Forty-Eight Thousand Eight
Hundred Thirteen Dollars ($6,148,813.00).
E. The Housing Authority, as successor-in-interest to the Former Agency, is a
party to that certain Regulatory Agreement and Option with the Partnership, as
successor-in-interest to PDDC, dated as of October 5, 2001, (“Regulatory Agreement”),
pursuant to which 162 units in the Project are restricted for rental to very low and low
income households at an affordable rent for a period of 55 years.
RESOLUTION NO. HA-102
12812-0001\1632445.1
P6401-0001\2515401v3.doc
F. The Partnership desires to re-syndicate and restructure the financing of the
Project and rehabilitate the Project. In connection therewith, on June 25, 2020, pursuant
to its Resolution No. HA-97, the Housing Authority Board (“Board”) conditionally approved
the re-syndication and restructuring, as described in the Conditional Agreement
Regarding Hovley Gardens Re-Syndication, dated June 25, 2020, and on file in the office
of the Housing Authority Secretary (“Conditional Agreement”). The Board’s approval was
conditioned, in part, upon the Project receiving an allocation of 9% Low Income Housing
Tax Credits, and the Project has received such allocation.
G. The re-syndication and restructuring are to be evidenced by, among other
things, an amended DDA and an amended Regulatory Agreement, each to be entered
into by the Housing Authority and PD Hovley 1R Limited Partnership (“Developer”), which
will acquire the Property from the Partnership.
H. Documents and agreements, including an amended DDA and amended
Regulatory Agreement, necessary to effectuate the proposed re-syndication and
restructuring of the financing of the Project, including modification of the Housing
Authority Loan, as described in the Conditional Agreement, have been presented to the
Board at this meeting and are on file in the office of the Housing Authority Secretary.
NOW, THEREFORE, THE PALM DESERT HOUSING AUTHORITY DOES
HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Recitals. The above recitals, and each of them, are true and correct.
Section 2. Approval of Amended Documents. The Board hereby approves the (i)
Amended and Restated Disposition and Development Agreement by and between the
Authority and the Developer; (ii) the Amended and Restated Regulatory Agreement by
and between the Authority and the Developer; (iii) Amended and Restated Promissory
Note Secured by Deed of Trust, made by the Developer to the Authority; and (iv)
Assignment and Modification to Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing among the Developer, Partnership, and Authority, all substantially in
the form presented to the Board at this meeting and incorporated herein by reference
(collectively, the “Amended Documents”).
Section 3. Authorized Actions. The Board hereby authorizes (i) Authority staff and
legal counsel to negotiate and modify the Amended Documents, provided such
modifications are materially consistent with the terms set forth in the Conditional
Agreement, (ii) Authority staff and legal counsel to negotiate and prepare all other
necessary or proper documents and instruments; (iii) the Executive Director or Chairman,
in consultation with legal counsel, to execute and deliver, for and in the name of the
Authority, the Amended Documents, provided such modifications are materially
consistent with the terms set forth in the Conditional Agreement; and (iv) the Executive
Director and Chairman, and all other officers of the Housing Authority, in consultation with
legal counsel, to execute and deliver, for and in the name of the Authority, all other
necessary documents and instruments, and to do all things which they may deem
necessary or proper to effectuate the purposes of this Resolution. Any actions previously
taken by officers of the Housing Authority consistent with the purposes of this Resolution
are hereby ratified and confirmed.
RESOLUTION NO. HA-102
12812-0001\1632445.1
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PASSED, APPROVED, AND ADOPTED by the Authority Board of the Palm
Desert Housing Authority, at its regular meeting held on the 8th day of April, 2021, by
the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
KATHLEEN KELLY, CHAIRMAN
ATTEST:
GRACE L. ROCHA, ACTING CITY CLERK
[This page has intentionally been left blank.]
74501 42nd Avenue
* Multi-Family Community
* 162 Units
[This page has intentionally been left blank.]
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RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attn: Executive Director
SPACE ABOVE THIS LINE FOR RECORDER’S USE
AMENDED AND RESTATED DISPOSITION
AND DEVELOPMENT AGREEMENT
THIS AMENDED AND RESTATED DISPOSITION AND
DEVELOPMENT AGREEMENT (this “Amended Agreement”), dated as of the ____ day of
April, 2021, is entered into by and between the PALM DESERT HOUSING AUTHORITY, a
public body, corporate and politic (the “Authority”), and PD HOVLEY 1R LIMITED
PARTNERSHIP, a California limited partnership (the “Developer”) with reference to the
following facts, purposes, and understandings.
RECITALS
A. The Palm Desert Redevelopment Agency (the “Former Agency”) and Palm
Desert Development Company (“PDDC”) entered into that certain Disposition and Development
Agreement dated as of June 14, 2001, as amended by that certain Amendment to Disposition and
Development Agreement dated as of May 13, 2004 and that Second Amendment to the
Disposition and Development Agreement dated as of May 26, 2005 (as amended, the “DDA”).
The DDA provided for the financing and development of a multi-family rental housing
development for low and very low income households on that certain real property described in
Exhibit A attached hereto and made a part hereof (including the improvements located thereon,
the “Site”).
B. As of February 1, 2012, the Former Agency was dissolved pursuant to California
Health & Safety Code Section 34172. In accordance with California Health & Safety Code
Section 34173(d)(3), the City of Palm Desert (the “City”) elected to serve as the successor
agency to the Former Agency (the “Successor Agency”).
C. Pursuant to Health & Safety Code Section 34176(b), the City Council of the City
adopted Resolution No. 2012-07, electing for the City not to retain the responsibility for
performing housing functions previously performed by the Former Agency, and determining that
all of the assets, as allowed by law, and all rights, powers, liabilities, duties, and obligations
associated with the housing activities of the Former Agency be transferred to the Authority.
D. The housing assets of the Former Agency, including the DDA and related
documents, were assigned by the Successor Agency to the Authority pursuant to that certain
Assignment dated as of May 23, 2013 and recorded on July 12, 2013 as Document No. 2013-
0336336 in the Official Records of the County of Riverside.
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E. PDDC assigned its interest in the DDA and the loan of the Former Agency
provided for therein to PD Hovley Limited Partnership, a California limited partnership (the
“Original Developer”). Pursuant to that certain Assignment Agreement dated as of April ___,
2021, the Original Developer assigned its interest in the DDA and the loan of the Former Agency
provided for therein to the Developer (the “DDA Assignment”).
F. The parties intend that this Amended Agreement amends, restates and supersedes
in its entirety the provisions of the DDA.
NOW, THEREFORE, the Authority and the Developer agree as follows:
ARTICLE 1 SUBJECT OF AGREEMENT; DEFINITIONS.
1.1 Purpose of this Amended Agreement.
The purpose of this Amended Agreement is to effectuate the rehabilitation of the multi-
family rental units on the Site by the Developer and to extend the period the Restricted Units
shall be available for rental to Very Low Income Households and Lower Income Households at
Affordable Rents until 2076.
1.2 Definitions.
As used hereinafter in this Amended Agreement, including the attachments hereto, the
following terms shall have the following respective meanings:
1.2.1. Affordable Rent shall be defined as described in California Health and
Safety Code Sections 50052.5, 50053, 50079.5, 50093 and 50105 and shall have the same
meaning as “Affordable Housing Cost,” and for all purposes of this Agreement shall mean the
amount which is established at a level which ensures that for Very Low or Lower Income
Households, as herein defined, the monthly housing cost shall not exceed thirty percent (30%) of
the applicable income limits described herein. The Developer and the Authority agree that the
Authority shall have the right, but not the obligation, upon notice to the Developer, to define
Affordable Rent, Affordable Housing Cost, and Very Low and Lower Income Households, to be
as described in California Health and Safety Code Sections 50052.5, 50053, 50079.5, 50093 and
50105, as they existed in 1990, in order to provide for a rental amount at a level which ensures
that for Very Low or Lower Income Households, as may be redefined, the monthly housing cost
shall not exceed twenty-five percent (25%) of the applicable income limits, and otherwise in
accordance with regulations adopted by the California Department of Housing and Community
Development for tax credit projects. If the Authority lowers Affordable Rent as provided in the
preceding sentence, then the Developer shall execute any and all documents reasonably required
to effect such change.
1.2.2. Area Median Income shall mean the area median income for Riverside
County, as determined by regulations adopted by the California Department of Housing and
Community Development pursuant to Health & Safety Code Section 50093 or the most closely
related successor thereto.
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1.2.3. Assignment of Deed of Trust shall mean the Assignment and
Modification to Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing in
the form attached hereto as Exhibit B.
1.2.4. Authority Loan shall mean the loan evidenced by the Authority Note.
1.2.5. Authority Note shall mean the Amended and Restated Promissory Note
Secured by Deed of Trust evidencing the Authority Loan in the form attached hereto as Exhibit
C.
1.2.6. Authority Regulatory Agreement shall mean the Amended and Restated
Regulatory Agreement in the form attached hereto as Exhibit D.
1.2.7. Authority Representatives shall mean and include all of the respective
predecessors, successors, assigns, agents, officials, employees, members, independent
contractors, affiliates, principals, officers, directors, attorneys, accountants, representatives, staff,
and board members of Authority.
1.2.8. Authority Trust Deed shall mean that deed of trust dated as October 25,
2001 and recorded as Instrument No. 2001-523499 on October 25, 2001, as amended by the
Assignment of Deed of Trust.
1.2.9. Construction Loan shall mean that loan made to the Developer by Bank
of the West to finance the rehabilitation of the Development.
1.2.10. Control shall mean, for purposes of this Amended Agreement, the
possession, direct or indirect, of the power to direct or cause the direction of the management and
policies of a corporation, partnership, joint venture, trust, or other association.
1.2.11. CTAC shall mean the California Tax Allocation Committee.
1.2.12. Developer shall have the meaning set forth in Section 2.2.
1.2.13. Developer Affiliate shall mean a limited partnership or limited liability
company in which Palm Communities, a California corporation, shall at all times be a general
partner of the partnership or managing member of the limited liability company.
1.2.14. Development shall mean the rehabilitation of the multi-family rental
units located on the Site pursuant to this Amended Agreement, as more particularly described in
the Scope of Development.
1.2.15. Encumbrance shall mean and include any mortgage, trust deed,
encumbrance, lien or other mode of financing the for the construction and permanent financing
of the Development.
1.2.16. Environmental Laws shall mean all federal, state and local laws, rules,
orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government
authority regulating, relating to, or imposing liability or standards of conduct concerning any
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Hazardous Substance (as later defined), or pertaining to occupational health or industrial hygiene
(and only to the extent that the occupational health or industrial hygiene laws, ordinances, or
regulations relate to Hazardous Substances on, under, or about the Site), occupational or
environmental conditions on, under, or about the Site, as now or may at any later time be in
effect, including without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (CERCLA) [42 USCS §§ 9601 et seq.]; the Resource Conservation and
Recovery Act of 1976 (RCRA) [42 USCS §§ 6901 et seq.]; the Clean Water Act, also known as
the Federal Water Pollution Control Act (FWPCA) [33 USCS §§ 1251 et seq.]; the Toxic
Substances Control Act (TSCA) [15 USCS §§ 2601 et seq.]; the Hazardous Materials
Transportation Act (HMTA) [49 USCS §§ 1801 et seq.]; the Insecticide, Fungicide, Rodenticide
Act [7 USCS §§ 136 et seq.]; the Superfund Amendments and Reauthorization Act [42 USCS
§§ 6901 et seq.]; the Clean Air Act [42 USCS §§ 7401 et seq.]; the Safe Drinking Water Act [42
USCS §§ 300f et seq.]; the Solid Waste Disposal Act [42 USCS §§ 6901 et seq.]; the Surface
Mining Control and Reclamation Act [30 USCS §§ 1201 et seq.]; the Emergency Planning and
Community Right to Know Act [42 USCS §§ 11001 et seq.]; the Occupational Safety and Health
Act [29 USCS §§ 655 and 657]; the California Underground Storage of Hazardous Substances
Act [H & S C §§ 25280 et seq.]; the California Hazardous Substances Account Act [H & S C §§
25300 et seq.]; the California Hazardous Waste Control Act [H & S C §§ 25100 et seq.]; the
California Safe Drinking Water and Toxic Enforcement Act [H & S C §§ 24249.5 et seq.]; the
Porter Cologne Water Quality Act [Wat C §§ 13000 et seq.] together with any amendments of or
regulations promulgated under the statutes cited above and any other federal, state, or local law,
statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health
or industrial hygiene (and only to the extent that the occupational health or industrial hygiene
laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Site), or
the regulation or protection of the environment, including ambient air, soil, soil vapor,
groundwater, surface water, or land use.
1.2.17. Governmental Restrictions shall mean and include any and all laws,
statutes, ordinances, codes, rules, regulations, writs, injunctions, orders, decrees, rulings,
conditions of approval, or authorization, now in force or which may hereafter be in force, of any
governmental entity, agency or political subdivision.
1.2.18. Hazardous Substances shall include, without limitation, petroleum or
refined petroleum products, flammable explosives, radioactive materials, asbestos,
polychlorinated biphenyls, chemicals known to cause cancer or reproductive toxicity, substances
described in Civil Code Section 2929.5(e)(2), as it now exists or as subsequently amended, those
substances included within the definitions of hazardous substance, hazardous waste, hazardous
material, toxic substance, solid waste, or pollutant or contaminant in CERCLA, RCRA, TSCA,
HMTA, or under any other Environmental Law, pollutants, contaminants, hazardous wastes,
toxic substances or related materials.
1.2.19. Holder(s) shall mean the mortgagee of record of any mortgage,
beneficiary of a deed of trust or other security interest, the lessor under a financing leaseback, or
grantee under any form of financing conveyance on or affecting the Site or any portion of the
Site.
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1.2.20. Limited Partner shall also mean “Investor Limited Partner” or any other
limited partner of a partnership formed by the Developer or a Developer Affiliate for the purpose
of owning and operating the Site.
1.2.21. Losses and Liabilities shall mean and include all claims, demands,
causes of action, liabilities, losses, damages, judgments, injuries, expenses (including, without
limitation, attorneys’ fees and costs incurred by the indemnified party for legal counsel of
reasonably acceptable to it) charges, penalties or costs of whatsoever character, nature and kind,
whether to property or to person, and whether by direct or derivative action, known or unknown,
suspected or unsuspected, latent or patent, existing or contingent.
1.2.22. Lower Income Households shall mean households whose income does
not exceed sixty percent (60%) of the Area Median Income, adjusted for family size.
1.2.23. Occupancy Standards shall mean Resolution No. 484 approved and
adopted by the Former Agency on October 23, 2003 (as the same may be amended from time to
time, and successor resolutions thereto.
1.2.24. Partnership Agreement shall mean the agreement to be entered into
between PC Hovley 1R Developers LLC, a California limited liability company, and Housing
Corporation of America, a Utah nonprofit corporation (“Housing Corporation”), that provides for
Housing Corporation to be the managing general partner of the Developer.
1.2.25. Permanent Loan shall mean the loan made to the Developer by
California Community Reinvestment Corporation to repay the Construction Loan.
1.2.26. Person shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, firm, joint stock company, trust, unincorporated
association or other entity.
1.2.27. Pro Forma shall mean the schedule of projected funding, rents, income
and debt service attached hereto as Exhibit F and made a part hereof.
1.2.28. Scope of Development shall mean the Scope of Development attached
hereto as Exhibit G and incorporated by reference herein, which describes the proposed
rehabilitation of the improvements located on the Site by the Developer.
1.2.29. Title Company shall mean Fidelity National Title Insurance Company,
or another mutually acceptable title company agreed to by the parties.
1.2.30. Transfer is defined in Section 2.3.
1.2.31. Very Low Income Households shall mean households whose income
does not exceed fifty percent (50%) of the Area Median Income, adjusted for family size. .
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ARTICLE 2 PARTIES TO THE AGREEMENT.
2.1 Authority.
Authority is a public body, corporate and politic, exercising governmental functions and
powers. The principal office of Authority is located at 73-510 Fred Waring Drive, Palm Desert,
California 92260. The term “Authority” includes any assignee or successor to the Authority’s
rights, powers and responsibilities under this Amended Agreement.
2.2 Developer.
Developer is PD Hovley 1R Limited Partnership, a California limited partnership, having
its office at 100 Pacifica, Suite 203, Irvine CA 92618. The term “Developer” includes any
legally and contractually permissible nominee, assignee or successor to the Developer’s rights,
powers and responsibilities hereunder. All of the terms, covenants, and conditions of this
Amended Agreement shall be binding on such successors and assigns of the Developer.
2.3 Prohibition Against Transfer.
As used in this Amended Agreement, the term “Transfer” means:
a) Any total or partial sale, assignment or conveyance, or any trust or power,
or any transfer in any other mode of form, of or with respect to this Amended Agreement, the
Site, or any part thereof or any interest therein or of the improvements located thereon; or
b) Any total or partial sale, assignment or conveyance, or any trust or power,
or any transfer in any other mode or form, of or with respect to more than fifty percent (50%)
ownership interest in the Developer, or any contract or agreement to do any of the same.
2.3.1. The Developer represents that its undertakings pursuant to this
Amended Agreement are for the purpose of rehabilitation of the Site and not for speculation in
land holding. Except where otherwise expressly permitted by this Amended Agreement, the
Developer shall not Transfer all or any part of this Amended Agreement or any interest in the
Site without the prior written approval of the Authority. Nothing in this Section 2.3 shall be
construed to prevent the Developer from transferring its interest in this Amended Agreement or
any interest in the Site to a Developer Affiliate as defined in Section 1.2.11 of this Amended
Agreement.
2.3.2. This Section 2.3 shall not prevent the granting of easements or permits
to facilitate the development of the Site, nor prohibit granting any security interest in the Site or
any other financing arrangement for the purposes of securing funds to be used for financing the
construction of the Improvements on the Site, as permitted by this Amended Agreement. This
Section 2.3 shall not prevent any change in personnel of the Developer. Nothing in this
Amended Agreement shall prohibit the Developer from, or require approval of Authority for, a
Transfer or an assignment to a Developer Affiliate, provided that the Developer shall give prior
written notice of the same to Authority. In addition, nothing in this Amended Agreement or any
other agreement executed in connection herewith shall prohibit or require the Authority approval
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of any pledge, assignment or other conveyance of any limited partnership interests in such
Developer or Developer Affiliate.
2.3.3. Any proposed transferee of the Developer, approved by the Authority,
shall have the qualifications and financial responsibility necessary and adequate, as may be
reasonably determined by the Authority, to fulfill the obligations undertaken in this Amended
Agreement by the transferor. Any proposed transferee, by instrument in writing satisfactory to
the Authority and in form recordable among the land records of Riverside County, for itself and
its successors and assigns, and for the benefit of the Authority, shall expressly assume all of the
obligations of the Developer under this Amended Agreement and shall agree to be subject to all
the conditions and restrictions to which the Developer is subject. All relevant instruments and
other legal documents proposed to affect any such transfer shall be submitted to the Authority,
and if the transferee is approved by the Authority, its approval shall be indicated to the
Developer in writing.
2.4 Delegation to Chief Executive Officer.
The Executive Officer of the Authority is hereby authorized to take any and all steps
necessary to implement the provisions of this Amended Agreement.
2.5 Authority Representations.
2.5.1. The Authority has the legal power, right and authority to enter into this
Amended Agreement and the instruments and documents referenced herein to which the
Authority is a part, to consummate the transactions contemplated hereby, to take any steps or
actions contemplated hereby, and to perform its obligations hereunder.
2.5.2. All requisite action has been taken by the Authority and all requisite
consents have been obtained in connection with entering into this Amended Agreement and the
instruments and documents referenced herein to which the Authority is a party, and the
consummation of the transaction contemplated hereby.
2.5.3. This Amended Agreement is duly executed by the Authority and all
agreements, instruments and documents to be executed by the Authority pursuant to this
Amended Agreement shall, at such time as they are required to be executed hereunder, be duly
executed by the Authority.
2.6 Developer Representations.
2.6.1. The Developer represents and warrants the following to the Authority,
all of which shall be true as of the date hereof:
2.6.1.1 The Developer has the legal power, right and authority to enter
into this Amended Agreement and the instruments and documents referenced herein, to
consummate the transactions contemplated hereby, to take any steps or actions contemplated
hereby, and to perform its obligations hereunder.
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2.6.1.2 The Developer is a duly organized limited partnership
established within and in good standing under the laws of the State of California. The copies of
the documents evidencing the organization of the Developer which have been delivered to the
Authority are true and complete copies of the originals, as amended to the date of the Amended
Agreement. All requisite action has been taken by the Developer and all requisite consents have
been obtained by the Developer in connection with entering into this Amended Agreement and
the instruments and documents referenced herein, and the consummation of the transactions
contemplated hereby.
2.6.1.3 This Amended Agreement is, and all agreements, instruments
and documents to be executed by the Developer pursuant to this Amended Agreement shall be,
duly executed by the Developer.
ARTICLE 3 AUTHORITY LOAN.
3.1 Authority Loan.
The Authority Loan will be due on the fifty-fifth (55th) anniversary date of the date of the
Authority Note. Repayment of the Authority Loan is to be made on an annual basis from
residual receipts as described in and pursuant to the terms and conditions of the Authority Note.
Should there be insufficient residual receipts, repayment is to be deferred and added to the final
payment. The Authority Note shall be secured by the Authority Deed of Trust, which shall
include a security agreement covering all personal property belonging to the Developer now or
hereafter located on or used in connection with the Site.
3.2 Disbursement of Authority Loan Proceeds.
The proceeds of the Authority Loan were previously disbursed to the Original Developer.
Pursuant to the DDA Assignment, the Developer assumed the rights and obligations of the
Original Developer under the DDA and the loan of the Former Agency, which loan is modified,
amended and restated as described herein. As of the date of this Amended Agreement the
outstanding principal balance of the Authority Loan is Five Million One Hundred Forty-Eight
Thousand Eight Hundred Thirteen Dollars ($5,148,813.00).
3.3 Interest on, and Maturity of Authority’s Loan.
The principal balance of the Authority Loan from time to time outstanding shall bear
interest until repaid at the rate of one percent (1%) simple interest per annum beginning on the
date which is one year following the date of the recording of the Assignment and Modification of
Deed of Trust Assignment of Rents, Security Agreement and Fixture Filing in the Official
Records of the County of Riverside (the “Anniversary Date”). The outstanding principal balance
of the Loan, and all accrued but unpaid interest thereon, shall be due and payable on the fifty-
fifth (55th) Anniversary Date. If there is a default by the Developer then all sums outstanding on
the Authority Loan shall become immediately due and payable at the option of the Authority.
3.4 Repayment of Authority Loan.
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3.4.1. Payments. All principal and accrued interest with respect to the
Authority Loan shall be paid in the amounts, at the times and from the sources of funds described
in the Authority Note.
3.4.2. No Other Encumbrances. Developer shall not, without the Authority’s
consent first had and obtained, which consent shall not be unreasonably withheld, conditioned or
delayed, mortgage, hypothecate, grant control of, or encumber the Site or the Developer’s
interest in this Amended Agreement, for purposes of obtaining any loans or Refinancings (as
defined below) with the exception of the Permanent Loan. Notwithstanding the foregoing, the
Developer shall not enter into any Refinancing transaction which would cause the Developer’s
net operating income derived from the operation of the Site (computed without deduction for
debt service) to be less than one hundred five percent (105%) of all mandatory debt service
which will be payable following such Refinancing transaction. The Developer shall be able to
obtain such Refinancing loans as shall allow the Developer to pay back the Authority Loan.
3.4.3. Limitation on Payments. Except with respect to the Monitoring Fee, the
Developer shall not be required to make any payments hereunder to the extent that the
outstanding principal balance of the Authority’s Loan, and all accrued interest thereon, is paid in
full.
3.4.4. “Refinancing” shall mean any act or process by which the Developer
borrows any funds, credit or allowance, repayment or reimbursement of which is secured in
whole or in part by the Developer’s interest in the Site or the Development, or by any direct or
indirect interest in the Developer. Refinancing shall include any so-called “convertible
mortgage”, pursuant to which any person or entity receives an option or right to acquire any
interest in the Site, the Development, the Improvements, or the Developer’s interest therein in
lieu of repayment. Refinancing shall not include any Sale or other transfer of all or any part of
the Site, the Development, the Improvements, the Developer’s interest in any of the foregoing, or
any interest in the Developer or any partner of the Developer (including any transfer of limited
partnership interests or transfers to facilitate the syndication of interests in the Developer or the
Development) except as collateral securing the performance of any obligation. All loan or other
sources of financing shall be commercially reasonable and shall be subject to the Authority’s
approval in accordance with this Amended Agreement.
3.5 Monitoring Fee.
In addition to the Annual Payment (as defined in the Authority Note) and commencing on
the date of closing of the Permanent Loan (or such other financing in lieu thereof the proceeds of
which will be used to repay the Construction Loan, and on the date of each Annual Payment
(provided in the Authority Note) thereafter, the Developer shall make an annual monitoring fee
to the Authority in the amount of Sixty-Five Thousand Dollars ($65,000.00), increasing by the
rate of two percent (2%) annually (the “Monitoring Fee”). The obligation of the Developer to
pay the Monitoring Fee shall be in effect every year during the term of the Authority Regulatory
Agreement. In the event the Developer transfers the Site, the obligation to pay the Monitoring
Fee shall run with the land for the benefit of the Authority.
ARTICLE 4 DEVELOPMENT OF THE SITE.
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4.1 Scope of Development.
The Developer shall rehabilitate the multi-family rental units on the Site in the manner
described in the Scope of Development. In addition to approvals hereunder by the Authority, all
planning and building documents shall be submitted to, reviewed by, and approved or rejected by
the Planning and Building Departments of the City (as appropriate) pursuant to the City’s codes,
resolutions, rules and regulations, within the timelines specified in the Schedule of Performance.
4.2 City and Authority Review of Plans, Drawings and Related Documents.
City Development Services Department shall review all plans submitted for appropriate
entitlements. The City shall act as review authority for the Authority concurrently and shall
review and either approve or disapprove the plans, specifications, drawings and related
documents consistent with the time periods needed for plan review by the City of Palm Desert
Development Services Department.
The Authority does not have any responsibility or duty to the Developer, or to any third
party, to review, inspect, supervise, pass judgment upon or inform the Developer or any third
party of any matter in connection with the Development, whether regarding the quality,
adequacy or suitability of the plans, any labor, service, equipment or material furnished to the
Development, any person furnishing the same or otherwise. The Developer, and all third parties
shall rely upon their own judgment regarding such matter.
4.3 Schedule of Performance.
The Developer shall promptly begin and thereafter diligently prosecute to completion the
work described in the Scope of Development. Subject to Section 7.3 hereof, the Developer shall
begin and complete all rehabilitation within the times specified in the Schedule of Performance
or such reasonable extension of those dates as may be granted by each party to the other in
writing.
The Schedule of Performance is subject to revision from time to time as and if mutually
agreed upon in writing between the Developer and the Authority.
4.4 City and Other Governmental Authority Permits.
Before commencement of the rehabilitation of any buildings, structures or other work of
improvement upon the Site, the Developer shall, at its own expense, secure or cause to be
secured any and all permits which may be required by the City or any other governmental agency
affected by such construction, development or work.
4.5 Authority Rights of Access During Construction.
Without limiting any rights of access which the Authority may have irrespective of this
Amended Agreement, representatives of the Authority shall have a reasonable right of access to
the Site at normal construction hours during the period of construction for the purposes of this
Amended Agreement, including but not limited to the inspection of the work being performed in
constructing the improvements, so long as they comply with all safety rules and observe any
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rules adopted by the Developer for purposes of maintaining order on the Site, including
requirements that such representatives be escorted. Such representatives of the Authority shall
be those designated in writing by the Chief Executive Officer.
4.6 Local, State and Federal Laws.
The Developer shall carry out the rehabilitation of the improvements being developed in
conformity with all applicable laws, including without limitation, workers’ compensation and
prevailing wage laws, if applicable.
4.7 Indemnification. The Developer shall indemnify, defend and hold the Authority
and the City, and their respective representatives, volunteers, officers, employees and agents,
harmless from and against all liability, claims, loss, damage, costs, penalties, fines or expenses
(including reasonable attorneys’ fees and court costs) arising from, directly or indirectly from or
in connection with any acts or omissions of the Developer or its agents, servants, employees, or
contractors under or related to this Amended Agreement, the rehabilitation of the improvements
on the Site as contemplated herein, or the use, ownership, improvement, occupancy or
possession of the Site, except to the extent such loss or liabilities are caused by the gross
negligence or willful misconduct of the Authority or the City. The indemnification provisions of
this Section 4.7 shall survive the repayment of the Authority Loan and the termination of this
Amended Agreement and shall apply to all losses and damages regardless of whether such losses
or damages accrue or are discovered before or after the date of this Amended Agreement or the
termination hereof.
4.8 Bodily Injury, Property Damage and Workers’ Compensation Insurance.
Prior to the commencement of construction on the Site and throughout the duration of
this Amended Agreement and the Authority Loan, the Developer shall furnish or shall cause to
be furnished, insurance in conformance with the requirements set forth below. The Developer
may use existing coverage to comply with these requirements. If the existing coverage does not
meet the requirements set forth here, it will be amended to do so. The Developer acknowledges
that the insurance coverage and policy limits set forth in this section constitute the minimum
amount of coverage required. Any insurance proceeds available to the Authority in excess of the
limits and coverage required in this Amended Agreement and which is applicable to a given loss,
will be available to the Authority. The Developer shall furnish or cause to be furnished to, the
Authority, duplicate originals or appropriate certificates evidencing the insurance required in this
section. The Developer shall provide the following types and amounts of insurance:
4.8.1. Comprehensive General Liability Insurance, using Insurance Services
Office “Commercial General Liability” policy for CG 00 01 or the exact equivalent. Defense
costs must be paid in addition to limits. There shall be no cross-liability exclusion for claims or
miss by one insured against the other. Such Comprehensive General Liability Insurance shall
insure the Developer and the Authority against losses, costs, liabilities, claims, causes of action
and damages for bodily injury and property damage on the Site in the amount of at least One
Million Dollars ($1,000,000.00) per occurrence for all covered losses and no less than Two
Million Dollars ($2,000,000.00) general aggregate. Such insurance shall include Blanket
Contractual Liability coverage and builder’s risk coverage. All such policies shall be written to
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apply to all bodily injury, property damage, personal injury and other covered loss, however
occasioned, occurring during the policy term, shall be endorsed to add the Authority and the City
as additional insureds, and to provide that such coverage shall be primary and that any insurance
maintained by the Authority and/or the City shall be excess insurance only. Such coverage shall
be endorsed to waive the insurer’s rights of subrogation against the Authority and the City. Such
policy, including any contractor’s policy, shall contain no endorsements limiting coverage
beyond the basic policy coverage grant for any of the following: explosion, collapse or
underground hazard (XCU); products and completed operations; pollution liability; and
contractual liability. Coverage shall be applicable to the Authority and the City for injury to
employees of: contractors, subcontractors or others involved in the Development. Each policy
shall be endorsed to provide a separate limit applicable to the Development.
4.8.2. Course of and Post-Construction property insurance shall provide “all
risk” coverage for the full replacement value of the completed Development. Policies shall
contain the following provisions: (1) the Authority and the City named as loss payees; and (2)
the insurer shall waive all rights of recovery against the Authority and the City. Such insurance
policy shall be maintained in an amount not less than 100 percent (100%) of the “Full Insurable
Value” of the improvements on the Development. The term “Full Insurable Value” as used in
this Section 4 shall mean the actual replacement cost (excluding the cost of excavation,
foundation and footings below the lowest floor and without deduction for depreciation) of the
improvements on the Site, including the cost of construction of the improvements on the Site,
architectural and engineering fees, and inspection and supervision. To ascertain the amount of
coverage required, the Developer shall cause the Full Insurable Value to be determined from
time to time by appraisal by the insurer or, if no such appraisal is available from the insurer, then
to be an amount mutually acceptable to the Authority and the Developer, to be determined not
less often than once every thirty-six (36) months, and if no amount is mutually determined by the
parties, then to be determined by an appraiser.
4.8.3. During the course of construction and post-construction during the term
of the Authority Loan, the Developer shall also furnish or cause to be furnished to the Authority
evidence satisfactory to the Authority that the Developer or any contractor with whom it has
contracted, carries workers’ compensation insurance as required by law, and an employer’s
liability insurance endorsement with limits no less than One Million Dollars ($1,000,000.00) per
accident or disease, which policy shall be endorsed with a waiver of subrogation clause for the
Authority and the City.
4.8.4. All insurance policies required by this Section shall be nonassessable
and shall contain language to the effect that (a) the policies are primary and noncontributing with
any insurance that may be carried by the Authority or the City, (b) the policies cannot be
canceled or materially changed except after thirty (30) days written notice by the insurer to the
Authority, and (c) neither the Authority nor the City shall be liable for any premiums or
assessments. All such insurance shall have deductibility limits reasonably satisfactory to the
Authority and shall contain cross liability endorsements. Insurance procured pursuant to these
requirements shall be written by insurers that are approved carriers in the state of California and
with an A.M. Best rating of A- or better and a minimum financial size VII.
4.9 Non-discrimination During Construction.
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The Developer for itself and its successors and assigns agrees that in the construction of
the improvements on the Site provided for in this Amended Agreement:
1. The Developer will not discriminate against any employee or applicant for
employment because of race, color, religion, creed, national origin, ancestry, physical handicap,
medical condition, age, marital status, sex or sexual orientation. The Developer will take
reasonable action to ensure that applicants are employed, and that employees are treated during
employment without regard to their race, color, religion, creed, national origin, ancestry, physical
handicap, medical condition, age, marital status, sex or sexual orientation. Such action shall
include, but not be limited to, the following: employment, upgrading, demotion, or transfer;
recruitment or recruitment advertising, layoff or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship. The Developer agrees to post
in conspicuous places, available to employees and applicants for employment, notices setting
forth the provisions of this nondiscrimination clause.
2. The Developer will, in all solicitations or advertisements for employees placed by
or on behalf of the Developer, state that all qualified applicants will receive consideration for
employment without regard to race, color, religion, creed, national origin, ancestry, physical
handicap, medical condition, age, marital status, sex or sexual orientation.
3. The Developer will cause the foregoing provisions to be inserted in all contracts
for any work covered by this Amended Agreement so that such provisions will be binding upon
each contractor and subcontractor, provided that the foregoing provisions shall not apply to
contracts or subcontracts for standard commercial supplies or raw materials. The Developer
shall allow representatives of the Authority access to its employment records related to this
Amended Agreement during regular business hours to verify compliance with these provisions
when so requested by the Authority.
4.10 Taxes, Assessments, Encumbrances and Liens.
The Developer shall pay, prior to delinquency, all real estate taxes and assessments
assessed and levied on the Site subsequent to the Developer’s acquisition of fee title thereto.
4.11 Security Financing, Rights of Holders.
4.11.1. Holder Not Obligated to Construct Improvements.
A Holder shall in no way be obligated by the provisions of this Amended Agreement to
construct or complete the Improvements or to guarantee such construction or completion.
Nothing in this Amended Agreement shall be deemed to construe, permit or authorize any
Holder to devote the Site to any uses, or to construct any improvements thereon, other than those
uses or Improvements provided for or authorized by this Amended Agreement.
4.11.2. Notice of Default to Mortgage, Deed of Trust or Other Security Interest
Holders; Right to Cure.
4.11.3.1 Whenever the Authority shall deliver any notice or demand
to the Developer regarding any Breach or default by the Developer in completion of construction
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of the improvements, or any other alleged default, the Authority shall at the same time deliver to
each Holder of record authorized by this Amended Agreement a copy of such notice or demand.
4.11.3.2 Each such Holder shall (insofar as the rights of the
Authority are concerned) have the right at its option, within sixty (60) days after the expiration of
any and all cure periods available to the Developer, to cure or remedy such default and to add the
cost thereof to the security interest debt and the lien on its security interest or to the obligations
of the Developer under any sale lease-back or of the grantor under any other conveyance for
financing. If such default shall be a default which can only be remedied or cured by such Holder
upon obtaining possession of the Site and such Holder seeks to obtain possession with diligence
through a receiver or otherwise, such Holder shall have until sixty (60) days after obtaining
possession to cure such default. Notwithstanding anything to the contrary contained herein, in
the case of a default which cannot with diligence be remedied or cured, or the remedy or cure of
which cannot be commenced, within sixty (60) days, such Holder shall have such additional time
as reasonably necessary to remedy or cure such default with diligence; provided, further, such
Holder shall not be required to remedy or cure any non-curable default of the Developer.
4.11.3.3 Nothing contained in this Amended Agreement shall be
deemed to permit or authorize such Holder to undertake the construction of the improvements
(beyond the extent necessary to conserve or protect the improvements or construction already
made, including, without limitation, the ability to continue the construction or completion of
improvements already begun) without first having expressly assumed the obligations of the
Developer for the portion of the Site in which the Holder has an interest, by written agreement
reasonably satisfactory to the Authority. The Holder in that event shall only be liable or bound
by the Developer’s obligations hereunder for such period as the Holder was in possession of the
portion of the Site in which the Holder has an interest and, notwithstanding anything to the
contrary contained in this Amended Agreement, shall only be liable to the extent of its interest in
the portion of the Site and the improvements owned by it thereon. The Holder in that event must
agree to complete, in the manner provided in this Amended Agreement, the improvements to
which the lien or title of such Holder relates. Any such Holder properly completing such
improvements shall be entitled, upon written request made to the Authority, to a Certificate of
Completion from the Authority for such improvements.
4.11.3.4 Breach of any of the covenants, conditions, restrictions, or
reservations contained in this Amended Agreement shall not defeat or render invalid the lien of
any mortgage or deed of trust made in good faith and for value as to the Site or any portion of the
Site or interest therein, whether or not the mortgage or deed of trust is subordinated to this
Amended Agreement. Unless otherwise herein provided, the terms, conditions, covenants,
restrictions and reservations of this Amended Agreement shall be binding and effective against
the Holder and any owner of the Site, or any portion of the Site, whose title thereto is acquired
by foreclosure, trustee’s sale, or otherwise.
4.11.3.5 No purported rule, regulation, modification, amendment
and/or termination of this Amended Agreement affecting the rights of a Holder shall be binding
upon any Holder holding a mortgage or deed of trust from and after the date of recordation of
such mortgage or deed of trust unless and until the written consent of such Holder is obtained.
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4.11.3.6 Notwithstanding anything to the contrary contained in this
Amended Agreement or any agreement in connection herewith, prior to declaring any default or
exercising any remedies permitted hereunder, under any document entered into in connection
therewith or under applicable law based upon an alleged default of the Developer, including,
without limitation, exercising any option to purchase the Site, a copy of a notice of such alleged
default shall be sent to the Limited Partner, at the address provided by the Developer. The
Limited Partner shall have a period of not less than thirty (30) days to cure such default on behalf
of the Developer; provided, however, if in order to cure such default the Limited Partner
reasonably believes that it must remove one or more of the general partners of the Developer
pursuant to the provisions contained in the partnership agreement of the Developer, the Limited
Partner shall so notify the Authority and so long as the Limited Partner is diligently attempting to
so remove such General Partner, the Limited Partner shall have until the date thirty (30) days
after the effective date of the removal of such General Partner to cure such default; provided,
further, that if any Holder commences foreclosure proceedings and records a Notice of Sale
against the Site, upon written notice to the Limited Partner, the Limited Partner’s cure period
shall be deemed to have concluded on the date that is five (5) days after the recording of such
Notice of Sale.
4.11.3. Failure of Holder to Complete Improvements.
If in any case, within sixty (60) days after all cure periods have expired after
default by the Developer in completion of construction of the Improvements on the Site under
this Amended Agreement, and the notice required by Section 7.1 was properly given, the
Authority may, upon thirty (30) days’ written notice, either: (i) purchase the mortgage, deed of
trust or other security interest by payment to the Holder of the amount of the unpaid debt plus
accrued but unpaid interest and other advances and amounts secured by the security interest, or
in the case of a lessor or grantee by payment to such lessor or grantee of the purchase price paid
for its interest in the Site and the improvements and any unpaid rent and other charges and sums
payable to it under its applicable agreements with its lessee or grantor; (ii) assume such
mortgage, deed of trust or other security interest in accordance with the terms of such mortgage,
deed of trust or other security interest upon the prior written consent of such Holder, or (iii)
terminate this Amended Agreement by notice to the Developer.
4.11.4. Right of the Authority to Cure Mortgage, Deed of Trust, Other Security
Interest, Lease-back or Other Conveyance for Financing Default.
In the event an uncured default or Breach by the Developer of a mortgage, deed of
trust, other security instrument or obligations to the grantee under any conveyance for financing
for the Site or the Development (unless the Developer is contesting such default in good faith),
and the Holder has not exercised its option to complete the development, the Authority may,
pursuant to the terms of this Amended Agreement, cure the default no sooner than immediately
prior to completion of any imminent foreclosure. In such event, the Authority shall be entitled to
reimbursement of all direct and actual costs and expenses incurred by the Authority in curing the
default which reimbursement shall be a nonrecourse obligation of the Developer.
ARTICLE 5 USES OF THE SITE.
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5.1 Uses.
5.1.1. The Developer shall rehabilitate the Site, including the multi-family
housing development consisting of one hundred sixty-two (162) rental units (plus a manager’s
unit) in sixteen (16) residential structures, a community building with common areas to include a
pool and children’s play area, and three hundred fifty (350) parking spaces, as more specifically
described in the Scope of Development. The Developer covenants and agrees for itself and its
successors and assigns, and every successor in interest to the Site, or any portion thereof, that
during the rehabilitation and thereafter, the Developer and such successors and assigns shall use
the Site exclusively for the purposes herein stated and shall not devote the Site to any uses which
are inconsistent with this Amended Agreement and applicable City land use entitlements.
5.1.2. The Developer shall not make or permit to be made any substantial
structural additions or modifications to the exterior of any of the improvements required to be
constructed on the Site pursuant to this Amended Agreement, or permit a use other than as set
forth herein, without the prior written consent of the Authority.
5.2 Affordable Housing.
5.2.1. For a period of not less than fifty-five (55) years from the date of
recording the Authority Regulatory Agreement, the Developer shall assure that one hundred
sixty-two (162) of the multi-family units on the Site (the “Restricted Units”), shall be rented
exclusively to Very Low Income Households and Lower Income Households at Affordable
Rents.
5.2.2. The Developer shall assure that the number of units that are not
Restricted Units does not exceed one (1).
5.2.3. The various Restricted Units are not specifically assigned; they may
change as units become vacant and others are occupied. Once a household has been determined
to be eligible for a particular Restricted Unit pursuant to subsection 5.2.1, it may remain in
occupancy thereof so long as (a) its household income does not exceed one hundred forty percent
(140%) of the then current maximum allowable income for the applicable income category, and
(b) its household size complies with the Occupancy Standards.
5.2.4. The Developer shall submit to the Authority a copy of the annual report
that it submits to the California Tax Credit Allocation Committee (“CTAC”) (the “Annual
Report”). The Annual Report shall include for each Restricted Unit the rental rate and the
income and family size of the occupants. The income information shall be supplied by the tenant
in a certified statement on a form required by CTAC or otherwise provided by Authority. The
Developer shall submit the Annual Report on or before each Payment Date.
5.3 Use and Operation Covenants. For a period of not less than fifty-five (55) years
from the date of recording the Authority Regulatory Agreement, the Developer hereby covenants
and agrees to use and operate the Site to conform to the Municipal Code.
5.4 Rental of Units.
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5.4.1. Number of Units. The Developer agrees to make the Restricted Units
available at Affordable Rents to, and restrict occupancy of the Restricted Units to, Very Low
Income Households and Lower Income Households. Not fewer than seventy-two (72) of the
Restricted Units shall be three bedroom units, seventy-two (72) shall be two bedroom units, and
eighteen (18) shall be four bedroom units, or such unit mix and number as may be amended with
Authority’s prior written approval due to market needs.
5.4.2. Selection of Tenants. The Developer shall be solely responsible for the
selection of tenants of the Restricted Units. The Developer shall use commercially reasonably
efforts to ensure that the Restricted Units are leased to Very Low Income Households or Lower
Income Households that (a) consist of appropriate numbers of persons to prevent the
underutilization or overcrowding of such units in accordance with the Occupancy Standards, and
(b) are able to lease such units at an Affordable Rent without any loan or subsidy from the
Authority.
5.4.3. Lease Agreement. The Developer shall submit to the Authority a copy
of the proposed lease or rental agreement to be used in the Development annually on June 30th
and at such time as necessary revisions are made, which lease shall include the Occupancy
Standards.
5.4.4. Income of Tenants. Upon the lease of any Restricted Unit to a tenant,
the Developer shall retain for the Authority’s review a completed income computation and
certification form utilizing the format of CTAC confirming that only Affordable Rent is being
charged on the Restricted Units. The Developer shall certify, to the best of the Developer’s
knowledge, that each prospective tenant leasing a Restricted Unit is a Very Low Income
Household or Lower Income Household and meets the eligibility requirements established
herein. The Developer shall obtain an income certification from the prospective tenant of each
Restricted Unit and shall certify that, to the best of the Developer’s knowledge, the income of the
prospective tenant is truthfully set forth in the income certification form. The Developer, or its
property manager, shall verify the income certification of the prospective tenant.
5.4.5. Affordability Requirement. The Developer agrees that the Restricted
Units will remain available to Very Low Income Households and Lower Income Households at
Affordable Rents for a period not less than fifty-five (55) years. In order to implement this
affordability requirement, the Authority Regulatory Agreement shall be recorded by the
Authority in the office of the Riverside County Recorder and shall run with the land and shall be
enforceable against the original owner and successors in interest, by the Authority. The fifty-five
(55) year period shall commence from the date the Authority Regulatory Agreement is recorded.
5.4.6. Best Efforts to Lease Restricted Units. The Developer agrees to
exercise reasonable efforts consistent with prudent business practices to lease all of the
Restricted Units to tenant occupants as soon as practical following the vacation of any unit. The
Developer agrees that the Restricted Units shall not be leased or rented by the Developer or any
party related to the Developer.
5.5 Maintenance of the Site.
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From and after the Developer’s acquisition of title, the Developer covenants that the
Developer shall reasonably maintain the improvements on the Site and shall keep the Site free
from any accumulation of debris or waste materials. Further, the Developer agrees to comply
with any maintenance requirements set forth in the Authority Regulatory Agreement.
5.6 Obligation to Refrain from Discrimination; Form of Non-discrimination Clauses.
5.6.1. The Developer covenants by and for itself and any successors in interest
that there shall be no discrimination against, or segregation of, any persons, or group of persons,
on account of sex or sexual orientation, race, color, creed, marital status, religion, national origin
or ancestry in the enjoyment of the Site or any portion or component thereof, nor shall the
Developer itself, or any person claiming under or through it, establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, subleases or vendees of the Site. The
foregoing covenants shall run with the land and shall remain in effect for the periods specified in
the Grant Deed for such the Site and any land subdivided therefrom.
5.6.2. The Developer shall refrain from restricting the rental, sale, or lease of
the Site or any portion or component thereof on the basis of race, color, creed, religion, sex or
sexual orientation, marital status, ancestry or national origin of any person. All such deeds,
leases or contracts shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
(a) In deeds: “The grantee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons claiming under or through
them, that there shall be no discrimination against or segregation of any person or group of
persons on account of race, color, creed, religion, sex or sexual orientation, marital status,
ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the land herein conveyed, nor shall the grantee, or any persons claiming under or
through him or her, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, subleases or vendees in the land herein conveyed. The foregoing covenants
shall run with the land.”
(b) In leases: “The lessee herein covenants by and for himself or herself, his
or her heirs, executors, administrators and assigns, and all persons claiming under or through him
or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion, sex or sexual orientation, marital
status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure
or enjoyment of the land herein leased nor shall the lessee himself, or any person claiming under
or through him or her, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subleases, subtenants or vendees in the land herein leased.”
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(c) In contracts: “There shall be no discrimination against or segregation of
any persons or group of persons on account of race, color, creed, religion, sex or sexual
orientation, marital status, ancestry or national origin in the sale, lease, transfer, use, occupancy,
tenure or enjoyment of land, nor shall the transferee, or any person claiming under or through
him or her, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, subleases or vendees of premises.”
The foregoing covenants shall remain in effect in perpetuity.
5.7 Payment of Taxes.
The Developer shall pay at all times and in the manner set forth in this Amended
Agreement, all applicable real estate taxes payable with respect to the Site. As used herein, “real
estate taxes” means all real estate taxes, including without limitations, all ad valorem property
taxes (or any possessory interest taxed imposed in lieu thereof), all general and special
assessments, license fees, levies, charges, expenses and impositions levied, assessed, or imposed.
5.8 Authority Regulatory Agreement.
The Developer and the Authority shall execute the Authority Regulatory Agreement
substantially in the form attached to this Amended Agreement as Exhibit D. The Authority is
hereby authorized to record the Authority Regulatory Agreement against the Site in the office of
the Riverside County Recorder. The Authority Regulatory Agreement contains such covenants
and restrictions on the use and operation of the Site as required by this Amended Agreement.
The covenants contained in the Authority Regulatory Agreement shall be covenants running with
the land. Further, in order to insure the Developer’s compliance with the use restrictions hereof,
and in order to protect Authority’s interest in seeing that the Site will be improved with the
Improvements, the Authority Regulatory Agreement provides, among other things, that the
Developer must use the Site for the uses described herein.
5.9 Effect and Duration of Covenants.
The covenants established in this Amended Agreement, shall, without regard to technical
classification or designation, be binding on the Developer and any successor in interest to the
Site or any part thereof for the benefit and in favor of the Authority, its successors and assigns,
and the City. Except as otherwise set forth in this Amended Agreement, the covenants contained
in this Amended Agreement shall remain in effect for a period of fifty-five (55) years after the
date of recording of the Authority Regulatory Agreement. The covenants against discrimination
(as described in Section 5.6) shall remain in perpetuity.
5.10 Development of Site.
Following the rehabilitation of the Improvements, the Developer shall not make or permit
to be made any substantial structural additions or modifications to the exterior of any of the
improvements required to be constructed on the Site pursuant to this Amended Agreement, or
permit a use other than as set forth herein, without the prior written consent of the Authority.
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ARTICLE 6 EVENTS OF DEFAULT AND OTHER REMEDIES.
6.1 Defaults – General.
6.1.1. Subject to the extensions of time set forth in Section 7.3, and to the
provisions of paragraph 6.1.3 of this Section 6.1, failure or delay by either party to perform or
comply with any term or provision of this Amended Agreement constitutes a default under this
Amended Agreement. The party who so fails or delays must immediately commence to cure,
correct, or remedy such failure or delay and shall complete such cure, correction or remedy with
reasonable diligence and during any period of curing shall not be in default.
6.1.2. The non-defaulting party shall give written notice of default to the party
in default, specifying the default complained of by the injured party. Delay in giving such notice
shall not constitute a waiver of any default nor shall it change the time of default.
6.1.3. Neither party may exercise any rights or remedies upon a default by the
other party, unless and until such default continues for a period of thirty (30) days after written
notice thereof from the non-defaulting party. Provided, however, that if the nature of the default
is such that more than thirty (30) days are reasonably required for its cure, then the defaulting
party shall not be deemed to be in default if it has commenced a cure within the 30-day period
and thereafter diligently prosecutes such cure to completion.
6.1.4. Applicable Law and Attorneys’ Fees.
The laws of the State of California shall govern the interpretation and
enforcement of this Amended Agreement. Should legal action be brought by either party for
breach of this Amended Agreement to enforce any provision, the prevailing party in such action
shall be entitled to actual and reasonable attorneys’ fees, court costs, and other litigation
expenses including, without limitation, expenses incurred for preparation and discovery. The
entitlement to recover such fees, costs and expenses shall accrue upon the commencement of the
action regardless of whether the action is prosecuted to final judgment.
6.2 Acceptance of Service of Process.
In the event that any legal action is commenced by the Developer against the Authority,
service of process on the Authority shall be made by personal service upon the Chief Executive
Officer or in such other manner as may be provided by law.
In the event that any legal action is commenced by the Authority against the Developer,
service of process on such party shall be made by personal service upon a partner or an officer of
the Developer, and shall be valid whether made within or without the State of California.
6.3 Rights and Remedies are Cumulative.
Except as otherwise expressly stated in this Amended Agreement, the rights and remedies
of the parties are cumulative, and the exercise by any party of one or more of such rights or
remedies shall not preclude the exercise by it, at the same or different times, of any other rights
or remedies for the same default or any other default by any other party. Upon the occurrence of
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an event of default, except as to rights and remedies expressly declared to be exclusive in this
Amended Agreement, the injured party shall have all rights and remedies against the defaulting
party as may be available at law or in equity to cure, correct or remedy any event of default, to
obtain specific performance, to recover damages, or to obtain any other remedy consistent with
the purpose of this Amended Agreement.
6.4 Inaction Not a Waiver of Default.
Any failures or delays by any party in asserting any of its rights and remedies as to any
default shall not operate as a waiver of any default or of any such rights or remedies, or deprive
any party of its right to institute and maintain any actions or proceedings which it may deem
necessary to protect assert or enforce any such rights or remedies.
ARTICLE 7 GENERAL PROVISIONS.
7.1 Notices, Demands and Communications Between the Parties.
Formal written notices, demands, correspondence and communications between the
Authority and the Developer shall be sufficiently given if (i) personally served, (ii) dispatched by
registered or certified mail, first class, postage prepaid, return receipt requested, (iii) delivered
via overnight mail, postage prepaid, or (iv) delivered via facsimile transmission, provided that in
addition to such facsimile notice a copy is also delivered via first class, United States Mail,
postage prepaid. All notices shall be addressed to the principal offices of the Authority, the City
and the Developer, or as applicable to the Developer’s assignee or assignees at addresses stated
in the document or documents effecting the assignment or assignments, with a copy to
designated legal counsel as follows:
For the Authority: Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, California 92260
Attention: Executive Director
with a copy to: Richards Watson & Gershon
350 S. Grand Ave., 37th Floor
Los Angeles, California 90071
Attention: Jim G. Grayson
For the Developer: PD Hovley 1R Limited Partnership
100 Pacific, Suite 203
Irvine, California 92618
Attention: Danavon Horn
with a copy to: Goldfarb & Lipman
1300 Clay Street, 9th Floor
City Center Plaza
Oakland, California 94612
Attention: Thomas H. Webber
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Such written notices, demands, correspondence and communications may be sent in the same
manner to such other persons and addresses as either party may from time to time reasonably
designate by mail as provided in this Section. Notice shall be effective upon the date of personal
delivery or, in the case of mailing, on the date of delivery or attempted delivery as shown on the
U.S. Postal Service certified mail return receipt.
7.2 Nonliability of the Authority, City Officials and Employees.
No member, official or employee of the Authority or the City shall be personally liable to
the Developer, or any successor in interest, in the event of any default or breach by the Authority
or the City or for any amount which may become due to the Developer or its successors, or on
any obligations under the terms of this Amended Agreement.
7.3 Enforced Delay; Extension of Times of Performance.
In addition to specific provisions of this Amended Agreement, performance by any party
hereunder shall not be deemed to be in default, where delays or defaults are due to acts of God,
or the elements, accident, casualty, unavailability or delays in delivery of any product, labor,
fuel, service or materials, failure or breakdown of equipment, strikes, lockouts, or other labor
disturbances, acts of the public enemy, orders or inaction of any kind from the government of the
United States, the State of California, or any other governmental, military or civil authority
(other than the City or the Authority, to the extent that such orders or inaction affect the City’s or
the Authority’s obligations, performance or rights under this Amended Agreement), war,
insurrections, riots, epidemics, landslides, lightning, droughts, floods, fires, earthquakes, arrests,
civil disturbances, explosions, freight embargoes, lack of transportation, breakage or accidents to
vehicles, or any other inability of any party hereto, whether similar or dissimilar to those
enumerated or otherwise, which are not within the control of the party claiming such inability or
disability, which such party could not have avoided by exercising due diligence and care and
regarding which such party shall use all reasonable efforts that are practically available to it in
order to correct such condition.
However, no party hereto shall be entitled to any extension of time pursuant to this
Section 7.3 due to any event or condition caused by a party’s inherent financial condition or
financial inability to pay its monetary obligations when due (as distinguished from a party’s
inability to make a payment by reason of a bank’s failure or some other external cause not
associated with such party’s financial condition).
Notwithstanding anything to the contrary in this Amended Agreement, an extension of
time for any such cause shall be for the period of time reasonable in light of the enforced delay.
The extension of time shall commence to run from the time of the commencement of the cause,
so long as the party claiming the extension has notified the other party in writing of the nature of
the matter constituting the enforced delay within ten (10) days after the occurrence of the
enforced delay.
7.4 Successors and Assigns.
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This Agreement shall bind and inure to the benefit of the parties to this Amended
Agreement and their respective successors and assigns; provided, however, that this provision
shall not authorize the assignment or transfer of any interest which is prohibited specifically by
the other terms of this Amended Agreement.
7.5 Relationship of the Parties.
The terms and provisions of this Amended Agreement shall not cause the parties hereto
to be construed in any manner whatsoever as partners, joint venturers or agents of each other in
the performance of their respective duties and obligations under this Amended Agreement, or
subject either party to this Amended Agreement to any obligations, loss, charge or expense of the
other party unless the party to be held responsible has independently contracted with the claimant
so as to make it directly responsible for the performance and/or payment, as appropriate, of the
pertinent obligation, loss, charge or expense.
7.6 Text to Control; Interpretation.
The headings in this Amended Agreement are included solely for convenience, and if
there shall be any conflict between such headings and the text of this Amended Agreement, the
text shall control.
Should any provisions of this Amended Agreement require interpretation, it is agreed that
the person or persons interpreting or construing the same shall not apply a presumption that the
terms of this Amended Agreement shall be more strictly construed against one party by reason of
the rule of construction that a document is to be construed more strictly against the party thereto
who itself or through its agent or counsel prepared the same or caused the same to be prepared; it
being agreed that the agents and counsel of both of the parties hereto have participated equally in
the negotiation and preparation of this Amended Agreement.
7.7 Severability.
To the best knowledge and belief of the parties to this Amended Agreement, this
Amended Agreement contains no provision that is contrary to any federal, state or local law or to
any regulatory requirement or other ruling or regulation of a federal, state or local authority or
that would be in breach of the obligations of either or both of the parties hereto under the terms
and provision of any legally binding agreement. However, if any provision of this Amended
Agreement, or any part thereof, shall at any time be held to be invalid, in whole or in part, under
any applicable federal, state or local law by a court of competent jurisdiction, or by arbitrators or
an administrative authority of the federal, state or local government with proper jurisdiction, then
such provision or a portion thereof, as appropriate, shall be curtailed and limited only to the
extent necessary to bring it within the requirements of the law and the validity and enforceability
of the remaining provisions of this Amended Agreement shall remain in effect and shall in no
way be affected, impaired or invalidated, unless the invalidated provision(s) shall uniquely,
materially and adversely affect the rights and obligations of a party to this Amended Agreement.
7.8 Approvals.
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Approvals required of the Authority, the City or the Developer shall not be unreasonably
withheld or delayed, and approval or disapproval shall be given within the time set forth in the
Schedule of Performance or this Amended Agreement, or, if no time is given, within a
reasonable time.
7.9 Time of the Essence.
Time is of the essence of this Amended Agreement.
7.10 Computation of Time.
Unless otherwise required by a specific provision of this Amended Agreement, time
hereunder is to be computed by excluding the first day and including the last day.
7.11 Calendar Days.
All references in this Amended Agreement to a number of days in which either party
shall have to consent, approve or perform shall mean calendar days unless specifically stated to
be business days. The term “holiday” shall mean all holidays as specified in section 6700 and
6701 of the California Government Code. If any act is to be done by a particular time during a
day, that time shall be Pacific Time Zone time.
7.12 Further Assurances.
Each of the parties hereto shall execute and deliver any and all additional papers,
documents, instruments and other assurances and shall do any and all other acts and things
reasonably necessary to carry out the purposes of this Amended Agreement and the intent of the
parties hereto.
7.13 Entire Agreement; Waivers and Amendments.
This Amended Agreement may be executed in duplicate originals, each of which is
deemed to be an original. This Amended Agreement includes seven (7) Exhibits, each of which
is incorporated herein by reference, as follows:
Exhibit A Legal Description of Site
Exhibit B Assignment and Modification to Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing
Exhibit C Amended and Restated Promissory Note Secured by Deed of Trust
Exhibit D Authority Regulatory Agreement
Exhibit E Authority Note
Exhibit F Authority Trust Deed
Exhibit G Pro Forma
This Agreement integrates all of the terms and conditions mentioned herein or incidental
hereto and supersedes all negotiations or previous agreements between the parties regarding all
or any part of the subject matter hereof.
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All modifications, additions or amendments to this Amended Agreement shall be in
writing and signed by the parties hereto. The Developer and the Authority agree to mutually
consider reasonable requests for amendments to this Amended Agreement which may be made
by lending parties or institutions, provided the requests are consistent with this Amended
Agreement and would not substantially alter the basic business terms included herein.
7.14 Conflict of Interest.
No member, official or employee of the Authority shall have any personal interest, direct
or indirect, in this Amended Agreement, nor shall any such member, official or employee
participate in any decision relating to this Amended Agreement which affects his personal
interests or the interests of any corporation, partnership or association in which he is directly or
indirectly interested.
7.15 Cooperation.
Each party agrees to cooperate with the other in this transaction and, in that regard, to
sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry
out the purposes and intent of this Amended Agreement including, but not limited to, releases or
additional agreements.
7.16 Counterparts.
This Agreement may be signed in multiple counterparts which, when signed by all
parties, shall constitute a binding agreement. This Amended Agreement is executed in three (3)
originals, each of which is deemed an original.
[Remainder of this page intentionally left blank]
[Signatures begin on next page]
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WITNESS the signatures of the parties as of the date first set forth above.
AUTHORITY
PALM DESERT HOUSING AUTHORITY,
a public body, corporate and politic
By:
Name:
Title:
ATTEST:
Secretary / Clerk
APPROVED AS TO FORM:
AUTHORITY GENERAL COUNSEL
Richards, Watson & Gershon,
a professional corporation
By:
DEVELOPER:
PD HOVLEY 1R LIMITED PARTNERSHIP,
a California limited partnership
By: PC Hovley 1R Developers LLC,
a California limited liability company
Its: Administrative General Partner
By: Palm Communities,
a California corporation
Its: Sole Member and Manager
By:
Danavon L. Horn, President
By: Housing Corporation of America,
a Utah nonprofit public benefit corporation,
Its: Managing General Partner
By:
Carol Cromar, President
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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF
On before me, ________________________________________ Notary
Public, personally appeared ________________________________________, who 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, and that by his/her/their signature(s) on the
instrument the person(s), or the entity(ies) upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public
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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF
On before me, ________________________________________ Notary
Public, personally appeared ________________________________________, who 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, and that by his/her/their signature(s) on the
instrument the person(s), or the entity(ies) upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public
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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF
On before me, ________________________________________ Notary
Public, personally appeared ________________________________________, who 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, and that by his/her/their signature(s) on the
instrument the person(s), or the entity(ies) upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public
DRAFT FOR DISCUSSION
EXHIBIT “A”
Legal Description of the Site
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EXHIBIT “B”
Assignment and Modification to Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing
(see attached.)
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EXHIBIT “C”
Amended and Restated Promissory Note Secured by Deed of Trust
(see attached.)
DRAFT FOR DISCUSSION
EXHIBIT “D”
Authority Regulatory Agreement
(see attached.)
DRAFT FOR DISCUSSION
EXHIBIT “E”
Authority Note
(see attached.)
DRAFT FOR DISCUSSION
EXHIBIT “F”
Authority Trust Deed
(see attached.)
DRAFT FOR DISCUSSION
EXHIBIT “G”
Pro Forma
(see attached.)
DRAFT FOR DISCUSSION
RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
Palm Desert Housing Authority
73-510 Fred Waring Dr.
Palm Desert, CA 92260
Attn: Executive Director
SPACE ABOVE THIS LINE FOR RECORDER’S USE
[Notice to Lenders -- This instrument includes a Request for Special
Notice pursuant to Civil Code Section 2924b]
AMENDED AND RESTATED
REGULATORY AGREEMENT
THIS AMENDED AND RESTATED REGULATORY AGREEMENT (this “Amended
Regulatory Agreement”) is entered into this ___day of April, 2021, by and between the PALM
DESERT HOUSING AUTHORITY, a public body, corporate and politic (the “Housing
Authority”), and PD HOVELY IR LIMITED PARTNERSHIP, a California limited partnership
(the “Developer”).
WHEREAS, the former Palm Desert Redevelopment Agency (the “Former Agency”) and
Palm Desert Development Company (“PDDC”) entered into that certain Disposition and
Development Agreement dated as of June 14, 2001, as amended by that certain Amendment to
Disposition and Development Agreement dated as of May 13, 2004 and that Second Amendment
to the Disposition and Development Agreement dated as of May 26, 2005 (the “DDA”); and
WHEREAS, pursuant to the DDA, PDDC acquired from the Former Agency that certain
real property (the “Property”) located in the County of Riverside, California, more particularly
described in Exhibit A attached hereto and incorporated herein by this reference; and
WHEREAS, PDDC assigned its interest in the DDA to and conveyed the Property to PD
Hovley Limited Partnership, a California limited partnership (the “Original Developer”); and
WHEREAS, pursuant to the terms of the DDA, the Original Developer developed on the
Property one hundred sixty-two (162) residential units and one (1) manager’s unit, as more
particularly described in the DDA (the “Project”); and
WHEREAS, the Former Agency and PDDC entered into that certain Regulatory
Agreement dated as of October 5, 2001 and recorded in the Official Records of the Riverside
County Recorder as Instrument No. 2001-523500 on October 5, 2001 (the “Regulatory
Agreement”) which restricts one hundred sixty-two (162) residential units (the “Restricted
Units’) for rental to Qualified Persons at Affordable Rents; and
WHEREAS, upon the dissolution of the Former Agency, the Housing Authority
succeeded to the Former Agency’s interest in the DDA; and
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WHEREAS, the Original Developer assigned the DDA to the Developer pursuant to that
certain Assignment of Disposition and Development Agreement dated as of April ___, 2021; and
WHEREAS, the Developer and the Housing Authority entered into that certain Amended
and Restated Disposition Agreement dated as of April ___, 2021 (the “Amended DDA”); and
WHEREAS, the Developer will acquire the Property from the Original Developer
concurrently with the recording of this Amended Regulatory Agreement in the Official Records
of the Riverside County Recorder and will rehabilitate the Project pursuant to the Amended
DDA; and
WHEREAS, the parties intend that this Amended Regulatory Agreement amends, restates
and supersedes in its entirety the provisions of the Regulatory Agreement.
NOW, THEREFORE, THE HOUSING AUTHORITY AND THE DEVELOPER
COVENANT AND AGREE AS FOLLOWS:
1. Definitions. For purposes of this Amended Regulatory Agreement, the terms
listed below shall have the meanings hereinafter specified.
(a) “Affordable Rent” shall be defined as described in California Health and
Safety Code Sections 50052.5, 50053, 50079.5, 50093 and 50105 and shall have the same
meaning as “Affordable Housing Cost,” and for all purposes of this Amended Regulatory
Agreement shall mean the amount which is established at a level which ensures that for Very
Low or Lower Income Households, as herein defined, the monthly housing cost shall not exceed
thirty percent (30%) of the applicable income limits described herein. The Developer and the
Housing Authority agree that the Housing Authority shall have the right, but not the obligation,
upon notice to the Developer, to define Affordable Rent, Affordable Housing Cost, and Very
Low and Lower Income Households, to be as described in California Health and Safety Code
Sections 50052.5, 50053, 50079.5, 50093 and 50105, as they existed in 1990, in order to provide
for a rental amount at a level which ensures that for Very Low or Lower Income Households, as
may be redefined, the monthly housing cost shall not exceed twenty-five percent (25%) of the
applicable income limits, and otherwise in accordance with regulations adopted by the California
Department of Housing and Community Development for tax credit projects. If the Housing
Authority lowers Affordable Rent as provided in the preceding sentence, then the Developer
shall execute any and all documents reasonably required to effect such change.
(b) “Area Median Income” shall mean the area median income for Riverside
County, as determined by regulations adopted by the California Department of Housing and
Community Development pursuant to Health & Safety Code Section 50093 or the most closely
related successor thereto.
(c) “Lower Income Households” shall mean households whose income does
not exceed sixty percent (60%) of the Area Median Income, adjusted for family size.
(d) “Occupancy Standards” shall mean Resolution No. 484 approved and
adopted by the Former Agency on October 23, 2003 (as the same may be amended from time to
time, and successor resolutions thereto.
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(e) “Qualified Persons” means Very Low Income Households and Lower
Income Households, with a household size that is appropriate for the number of bedrooms in the
available unit in accordance with the Occupancy Standards, and otherwise meeting the
requirements hereof.
(f) “Very Low Income Households” shall mean households whose income
does not exceed fifty percent (50%) of the Area Median Income, adjusted for family size.
2. Restriction on Transfer. The Developer shall not sell, convey, transfer, lease,
assign, encumber, mortgage, or hypothecate all or any part of the Property or Project, or enter
into an agreement to sell, convey, lease, assign, transfer, encumber, mortgage, or hypothecate all
or any part of the Property or Project, except for rental of Restricted Units to Qualified Persons at
a monthly rent that does not exceed Affordable Rent as set forth in Section l(a) hereof.
3. Term. The term of the restrictive covenants described herein (the “Term”) shall
commence on the date this Amended Regulatory Agreement is recorded in the Official Records
of the Riverside County Recorder, and shall end on the date that is fifty-five (55) years thereafter
(unless sooner terminated pursuant to the provisions hereof); provided, however, the covenants
against discrimination set forth herein shall remain in effect in perpetuity.
4. Covenant to Maintain Affordability Requirement. The Developer covenants and
agrees (for itself, its successors, assigns and every successor-in-interest to the Property or any
part thereof), that the Restricted Units shall be rented only to Qualified Persons and at rental
amounts that do not exceed Affordable Rents.
5. Additional Developer Covenants. The Developer covenants and agrees (for itself,
its successors, assigns, and every successor in interest to the Property or any part thereof) as
follows:
(a) The Developer shall use the Property and the Project, including any
Improvements now or hereafter constructed, only for the permitted uses specified in the
Amended DDA and this Amended Regulatory Agreement, namely, a one hundred sixty-three
(163) unit apartment project.
(b) The Developer shall maintain the Property and the Project in the same
aesthetic and sound condition (or better) as the condition of the Property and the Project at the
completion of the rehabilitation of the Property, reasonable wear and tear excepted. The parties
acknowledge that over the period of time during which this Amended Regulatory Agreement
will be effective, various Improvements on the Property are likely to become obsolete and will
need to be demolished, removed, disposed of and/or replaced, and agree that the standard of
“reasonable” wear and tear as set forth in the first sentence of this paragraph (b) includes and
incorporates this understanding. Subject to the foregoing, this standard for the quality of
maintenance shall be met whether or not a specific item of maintenance is listed below.
Representative items of maintenance shall include frequent and regular inspection for graffiti or
damage or deterioration or failure, and immediate repainting or repair or replacement of all
surfaces, fencing, walls, equipment, including without limitation, plumbing, heating, ventilation
and air conditioning equipment, as necessary; emptying of trash receptacles and removal of litter;
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sweeping of public sidewalks adjacent to the Property, on-site walks and paved areas and
washing-down as necessary to maintain clean surfaces; maintenance of all landscaping in a
healthy and attractive condition, including trimming, fertilizing and replacing vegetation as
necessary; cleaning windows on a regular basis; painting units and the buildings on a regular
program and prior to the deterioration of the painted surfaces; conducting a roof inspection on a
regular basis and maintaining the roof in a leak-free and weather-tight condition; and
maintaining security devices in good working order. In the event the Developer, its successors
or assigns, fails to maintain the Property or Project in accordance with the standard for the
quality of maintenance, the Housing Authority or its designee shall have the right but not the
obligation to enter the Property upon reasonable notice to the then record owner of the Property,
correct any violation, and hold the Developer, or its successors or assigns, responsible for the
cost thereof, and such cost, until paid, shall constitute a lien on the Property. The Developer
shall promptly reimburse the Housing Authority for all costs it might incur in performing such
maintenance. The Developer and each successor and assign shall be liable for maintenance of
the Property or Project, pursuant to this paragraph only for the respective period of time during
which such entity holds an ownership interest in the Property.
(c) Except for the rehabilitation of the Project as described in the Amended
DDA and Permitted Alterations (as hereinafter defined), the Developer shall not make or suffer
to be made any alterations, additions, or improvements to or on the Property or any building or
structure thereon or any part thereof without the prior written consent of the Housing Authority,
which consent will not be unreasonably withheld, conditioned or delayed. Any request for
consent shall be accompanied by plans and specifications for the proposed work in reasonable
detail (including component materials and finish items) to enable the Housing Authority to
consider whether or not to grant approval. The Housing Authority may condition its approval in
any way reasonably deemed necessary by the Housing Authority to protect its interest in the
Property. The term “Permitted Alterations” shall mean (and the Developer shall not be required
to obtain the consent of the Housing Authority for) either of the following, to the extent they
comply with all applicable City procedures and requirements: (aa) any alterations, additions,
improvements, exterior painting or landscaping which alterations, additions, improvements,
exterior painting or landscaping undertaken during a twelve (12) month period cost less than
fifteen percent (15%) of the value of the Property; or (bb) any tenant improvements within tenant
units. All alterations, additions, or improvements by the Developer shall be made without cost or
expense to the Housing Authority, by responsible and licensed contractors. All improvements
and equipment shall be designed, built, and installed in accordance with all applicable building
codes and regulations, and the Developer shall obtain all necessary building permits.
(d) The Developer shall not commit waste upon the Property. The Developer
shall not remove or demolish the Project. The Developer shall keep and maintain the Property
and the Improvements thereon in good condition and repair as set forth above.
6. Covenants Run With Land. In amplification and not in restriction of the
provisions set forth herein above, it is intended and agreed that the Housing Authority and City,
their successors and assigns, shall be deemed beneficiaries of the covenants, restrictions and
provisions contained herein both for and in their own right and also for the purposes of
protecting the interests of the community. All covenants without regard to technical
classification or designation shall be binding for the benefit of the Housing Authority, City, and
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their successors and assigns and such covenants shall run in favor of the Housing Authority,
City, and their successors and assigns for the entire period during which such covenants shall be
in force and effect, without regard to whether the Housing Authority or City is or remains an
owner of any land or interest therein to which such covenants relate. The Housing Authority or
City shall have the right, in the event of any breach of any such covenant or agreement, after
delivery of any required notice and expiration of any cure period provided therefor in the
Amended DDA, to exercise all the rights and remedies, and to maintain any actions at law or
suits in equity or other proper proceedings to enforce the curing of such breach of covenant or
agreement. The Developer shall furnish a copy of this instrument to any successors in interest.
7. Lender Protection. No violation or breach of the covenants, conditions,
restrictions, provisions or limitations contained in this Amended Regulatory Agreement shall
defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust
or security interest permitted by the Amended DDA, provided, however, that any subsequent
owner of the Property shall be bound by such remaining covenants, conditions, restrictions,
limitations, and provisions, whether such owner’s title was acquired by foreclosure, deed in lieu
of foreclosure, trustee’s sale or otherwise, except as otherwise provided herein.
8. Consent Rights. Only the Housing Authority, its successors and assigns, and the
Developer and the successors and assigns of the Developer to all or any part of the fee title to the
Property shall have the right to consent and agree to changes in, or to eliminate in whole or in
part, any of the covenants or restrictions contained in this Amended Regulatory Agreement, or to
subject the Property to additional covenants or restrictions. The Housing Authority, its
successors and assigns, and the Developer and the successors and assigns of the Developer to all
or any part of the fee title to the Property shall have the right to consent and agree to changes in,
or to eliminate in whole or in part, any of the covenants, restrictions or provisions contained in
this Amended Regulatory Agreement or to subject the Property to additional covenants or
restrictions without the consent of any tenant, lessee, easement holder, licensee, mortgagee,
trustee, beneficiary under a deed of trust or any other person or entity having any interest less
than a fee in the Property.
9. Capitalized Terms. The capitalized terms used herein shall have the meanings
defined in the Amended DDA, unless expressly indicated otherwise.
10. Federal and State Laws. Notwithstanding the above provisions, nothing contained
herein shall require the Developer or the Housing Authority to do anything contrary to or refrain
from doing anything required by Federal and State laws and regulations promulgated thereunder
applicable to the construction, management, maintenance, and rental of the Restricted Units to
Qualified Persons.
11. Annual Report. The Developer shall submit to the Housing Authority annually,
on or before June 30 of each calendar year, a report setting forth the rental rate of units on the
Property and the income and family size of the occupants of the Property. The Developer shall
not be deemed to be in default for any failure to deliver such report until thirty (30) days after
receipt of written notice from the Housing Authority requesting such report. The Housing
Authority shall have the option of establishing the type of form on which this information must
be provided.
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12. No Discrimination. The Developer covenants and agrees for itself, its successors,
assigns and every successor in interest to the Property or any part thereof, that there shall be no
discrimination against or segregation of any person, or group of persons, on account of race,
color, religion, creed, national origin, ancestry, physical handicap, medical condition, age,
marital status, or sex in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of
the Property nor shall the Developer itself, or any person claiming under or through it, establish
or permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or
vendees of the Property.
13. Mandatory Language. The Developer shall refrain from restricting the sale, lease,
sublease, rental, transfer, use, occupancy, tenure, or enjoyment of the Property (or any part
thereof) on the basis of race, color, religion, creed, national origin, ancestry, physical handicap,
medical condition, age, marital status, or sex of any person. All such deeds, leases, or contracts
pertaining thereto shall contain or be subject to substantially the following nondiscrimination or
non-segregation clauses:
(a) In deeds: “The 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 race, color, religion,
creed, national origin, ancestry, physical handicap, medical condition, age, marital status, or sex
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein
conveyed, nor shall the grantee itself or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or
vendees in the land herein conveyed. The foregoing covenants shall run with the land.”
(b) In leases: “The lessee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, and this lease is made and accepted
upon and subject to the following conditions: That there shall be no discrimination against or
segregation of any person or group of persons, on account of race, color, religion, creed, national
origin, ancestry, physical handicap, medical condition, age, marital status, or sex in the leasing,
subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased,
nor shall lessee itself, or any person claiming under or through it, establish or permit such
practice or practices of discrimination or segregation with reference to the selection, location,
number, or occupancy of tenants, lessees, sublessees, tenants, or vendees in the land herein
leased.”
(c) In contracts: “There shall be no discrimination against or segregation of,
any person or group of persons on account of race, color, religion, creed, national origin,
ancestry, physical handicap, medical condition, age, marital status, or sex in the sale, lease,
sublease, rental, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the
transferee itself or any person claiming under or through it, establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location, number,
use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the land.”
14. Reserved.
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15. Housing Authority Beneficiary. In amplification and not in restriction of the
provisions set forth herein above, it is intended and agreed that the Housing Authority shall be
deemed a beneficiary of the covenants and agreements provided herein above both for and in its
own right and also for the purposes of protecting the interests of the community. All covenants
without regard to technical classification or designation shall be binding for the benefit of the
Housing Authority, and such covenants shall run in favor of the Housing Authority for the entire
period during which such covenants shall be in force and effect, without regard to whether the
Housing Authority is or remains an owner of any land or interest therein to which such covenants
relate. The Housing Authority shall have the right, in the event of any breach of any such
covenant or agreement, after delivery of notice and expiration of the cure period discussed in the
Amended DDA, to exercise all the rights and remedies, and to maintain any actions at law or
suits in equity or other proper proceedings to enforce the curing of such breach of covenant or
agreement.
16. Special Notice. Notwithstanding anything to the contrary contained in this
Amended Regulatory Agreement or any agreement in connection herewith, prior to declaring
any default or exercising any remedies permitted hereunder, under any document entered into in
connection therewith or under applicable law based upon an alleged default of the Developer, a
copy of a notice of such alleged default shall be sent to the Limited Partner at such address as the
Limited Partner shall provide in writing to the Housing Authority. The Limited Partner shall
have a period of not less than thirty (30) days to cure such default on behalf of the Developer;
provided; however, if in order to cure such default the Limited Partner reasonably believes that it
must remove one or more of the general partners of the Developer pursuant to the provisions
contained in the partnership agreement of the Developer, the Limited Partner shall so notify the
Housing Authority and so long as the Limited Partner is diligently attempting to so remove such
General Partner, the Limited Partner shall have until the date thirty (30) days after the effective
date of the removal of such General Partner to cure such default; provided, further, that if any
Holder commences foreclosure proceedings and records a Notice of Sale against the Property,
upon written notice to the Limited Partner, the Limited Partner’s cure period shall be deemed to
have concluded on the date that is five (5) days after the recording of such Notice of Sale.
17. Notices. All notices to be delivered to the parties pursuant to the terms hereof
shall be in writing and shall be delivered in person or by U.S. Mail or other delivery service to
the addresses listed below. Any of the following addresses may be changed by written notice. If
notice is given it shall be deemed effective upon 3 business days after deposit of same, postage
prepaid, in the U.S. Mail, or the date of actual receipt as evidenced by personal
acknowledgement, return receipt or other comparable means.
If to the Developer: PD Hovley 1R Limited Partnership,
a California limited partnership
100 Pacifica, Suite 203
Irvine, CA 92618
Attn: Dan Horn
DRAFT FOR DISCUSSION
P6401-0001\2513660v2.doc -8-
If to the Housing Authority: Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attn: Executive Director
With copy to:
18. Actions. In any action brought to declare the rights granted herein or to enforce
or to interpret any of the terms of this Amended Regulatory Agreement, the prevailing party shall
be entitled to an award of reasonable attorneys’ fees in an amount determined by the court.
19. Administration. The Housing Authority may administer the terms hereof or may,
from time to time assign its rights hereunder or designate another entity, person, licensed real
estate broker or organization to administer the terms hereof.
20. Severability. In the event that any provision of this instrument. is held by a court
of competent jurisdiction to be unenforceable or invalid, such holding shall not render
unenforceable any other provision hereof, each provision hereof being expressly severable and
independently enforceable to the fullest extent permitted by law.
21. Restrictions on Transfer. The restrictions on transfer of the Property shall be
binding upon the Developer and the Developer’s successors and assigns, and shall inure to the
benefit of the Housing Authority City, and their successors and assigns; provided, however, the
Developer and any subsequent owner of the Property shall be liable for performance hereof only
during their respective periods of ownership of the Property.
22. Default. If the Developer defaults with regard to any of the provisions of this
Amended Regulatory Agreement, then the Housing Authority shall serve written notice of such
default upon the Developer. If the default is not cured by the Developer within thirty (30) days
after service of the notice of default, or if the default is not commenced to be cured within thirty
(30) days after service of the notice of default and is not cured promptly within a reasonable
period of time after commencement, then the Developer shall be liable to the Housing Authority
for damages caused by such default, and the Housing Authority may seek an injunction against
the sale of the Property until the Developer is in compliance with the terms hereof.
23. Further Agreements. The Developer covenants that upon request of the Housing
Authority, the Developer, or the Developer’s successors or assigns, will execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such further instruments and
agreements and do such further acts as may be necessary, desirable or proper to carry out more
effectively the purpose of this instrument. At the expiration of the term of this Amended
Regulatory Agreement, the Housing Authority agrees to provide to the Developer an instrument
in recordable form that has the effect of confirming the termination of the affordable housing
requirements of this instrument.
24. Waivers. No waiver by the Housing Authority of its rights hereunder, or of any
breach by the Developer of any covenant, restriction, or condition herein contained, shall be
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P6401-0001\2513660v2.doc -9-
effective unless such waiver is in writing, signed by the Housing Authority and delivered to the
Developer. Any waiver by the Housing Authority of its power to terminate the Developer’s
estate herein or of any covenant, restriction, or condition herein contained, or the failure by the
Housing Authority to exercise any right or remedy with respect to any breach or breaches, shall
not constitute a waiver or relinquishment for the future of any rights regarding any such covenant
or condition nor bar any right or remedy of the Housing Authority in respect of any subsequent
breach.
25. Request for Notice. The Developer covenants to cause a “Request for Special
Notice” as provided in California Civil Code Section 2924b, or any successor or replacement
statute, to be recorded to provide notice to the Housing Authority at the address for the Housing
Authority set forth on the first page hereof. The Developer shall cause such Request for Special
Notice to be recorded in the Official Records of the Riverside County Recorder concurrently
with the recordation of any deed of trust encumbering the Property.
IN WITNESS WHEREOF, the Housing Authority and the Developer have executed this
Amended Regulatory Agreement.
HOUSING AUTHORITY:
Palm Desert Housing Authority,
a public body, corporate and politic
By:
Name:
Title:
ATTEST:
Housing Authority Secretary
APPROVED AS TO FORM:
Assistant Housing Authority General
Counsel
Assistant Housing Authority Counsel
[Signatures Continue On Next Page]
DRAFT FOR DISCUSSION
P6401-0001\2513660v2.doc -10-
DEVELOPER:
PD Hovley 1R Limited Partnership,
a California limited partnership
By: PC Hovley 1R Developers, LLC,
a California limited liability company,
Its: Administrative General Partner
By: Palm Communities,
a California corporation
Its: Sole Member and Manager
By:
Danavon L. Horn,
President and Chief Executive Officer
By: Housing Corporation of America,
a Utah nonprofit corporation,
Its: Managing General Partner
By:
Carol Cromar, President
Address: 100 Pacifica, Suite 203
Irvine, California 92618
Attention: Danavon L. Horn
DRAFT FOR DISCUSSION
EXHIBIT A
LEGAL DESCRIPTION OF SITE
IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA;
THAT PORTION OF THE WEST ONE-HALF OF THE NORTHWEST ONE QUARTER OF
THE NORTHEAST ONE-QUARTER AND THE EAST ONE-HALF OF THE NORTHWEST
ONE-QUARTER OF THE NORTHEAST ONE-QUARTER OF SECTION 16, TOWNSHIP 5
SOUTH, RANGE 6 EAST, S.B.M., SHOWN AS PARCEL "A" AND PARCEL "B" OF
PARCEL MAP WAIVER RECORDED JANUARY 23, 1996 AS INSTRUMENT NO. 25522,
O.R., DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF SAID WEST ONE-HALF OF THE
NORTHWEST ONE-QUARTER OF THE NORTHEAST ONE-QUARTER;
THENCE NORTH 89° 47' 20" EAST ALONG THE NORTHERLY LINE OF SAID WEST
AND EAST ONE-HALF OF THE NORTHWEST ONE-QUARTER OF THE NORTHEAST
ONE-QUARTER A DISTANCE OF 1078.13 FEET TO A POINT, SAID POINT BEING
250.00 FEET WESTERLY OF THE NORTHEAST CORNER OF SAID EAST ONE-HALF OF
THE NORTHWEST ONE-QUARTER OF THE NORTHEAST ONE-QUARTER, AS
MEASURED ALONG SAID NORTHERLY LINE;
THENCE SOUTH 00° 02' 43" WEST, PARALLEL WITH THE EASTERLY LINE OF SAID
EAST ONE-HALF OF THE NORTHWEST ONE-QUARTER OF THE NORTHEAST ONE-
QUARTER A DISTANCE OF 48.00 FEET TO THE TRUE POINT OF BEGINNING;
THENCE CONTINUING SOUTH 00° 02' 43" WEST A DISTANCE OF 575.00 FEET;
THENCE NORTH 89° 47' 20" EAST A DISTANCE OF 250.00 FEET TO A POINT ON SAID
EASTERLY LINE OF THE EAST ONE-HALF OF THE NORTHWEST ONE QUARTER OF
THE NORTHEAST ONE-QUARTER;
THENCE SOUTH 00° 02' 43" WEST ALONG SAID EASTERLY LINE A DISTANCE OF
355.33 FEET;
THENCE SOUTH 89° 48' 51" WEST A DISTANCE OF 822.08 FEET;
THENCE NORTH 00° 01' 57'' EAST A DISTANCE OF 409.75 FEET TO THE BEGINNING
OF A NONTANGENT CURVE, CONCAVE NORTHWESTERLY, HAVING A RADIUS OF
229.00 FEET, A RADIAL LINE PASSING THROUGH SAID POINT BEARS SOUTH 13° 47'
57'' EAST;
THENCE NORTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 70° 08' 16", AN ARC DISTANCE OF 280.33 FEET TO THE
BEGINNING OF A COMPOUND CURVE, CONCAVE WESTERLY, HAVING A RADIUS
OF 985.00 FEET, A RADIAL LINE PASSING THROUGH SAID POINT BEARS SOUTH 83°
56' 13" EAST;
DRAFT FOR DISCUSSION
P6401-0001\2513660v2.doc A-12-
THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL
ANGLE OF 07° 25' 56", AN ARC DISTANCE OF 127.77 FEET TO THE BEGINNING OF A
COMPOUND CURVE, CONCAVE WESTERLY, HAYING A RADIUS OF 200.00 FEET, A
RADIAL LINE PASSING THROUGH SAID POINT BEARS NORTH 88° 37' 51" EAST;
THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL
ANGLE OF 05° 40' 23", AN ARC DISTANCE OF 19.80 FEET TO THE BEGINNING OF A
REVERSE CURVE, CONCAVE EASTERLY, HAVING A RADIUS OF 200.00 FEET, A
RADIAL LINE PASSING THROUGH SAID POINT BEARS SOUTH 82° 57' 28" WEST;
THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL
ANGLE OF 06° 49' 52", AN ARC DISTANCE OF 23.85 FEET;
THENCE TANGENT TO LAST MENTIONED CURVE, NORTH 00° 12' 40" WEST A
DISTANCE OF 151.56 FEET TO A POINT LYING 48.00 FEET SOUTHERLY OF SAID
NORTHERLY LINE OF THE EAST ONE-HALF OF THE NORTHWEST ONE QUARTER
OF THE NORTHEAST ONE-QUARTER;
THENCE NORTH 89° 47' 20" EAST, PARALLEL WITH SAID NORTHERLY LINE, A
DISTANCE OF 397.78 FEET TO THE TRUE POINT OF BEGINNING.
SUBJECT TO EXISTING EASEMENTS AND RIGHTS OF WAY OF RECORD.
COMPRISING 12.39 ACRES, MORE OR LESS.
DRAFT FOR DISCUSSION
AMENDED AND RESTATED
PROMISSORY NOTE SECURED BY DEED OF TRUST
$5,148,813.00 Palm Desert, California
April ___, 2021
FOR VALUE RECEIVED, the undersigned, PD Hovley 1R Limited Partnership, a
California limited partnership (“Borrower”), hereby promises to pay to the order of the Palm
Desert Housing Authority, a public body, corporate and politic (the “Beneficiary”), at Palm
Desert, California, without deduction or offset, the sum of Five Million One Hundred Forty-
Eight Thousand Eight Hundred Thirteen ($5,148,813) (the “Loan”). If more than one person is
signing this as Borrower, then the obligations of the Borrower shall be joint and several. This
“Amended and Restated Promissory Note Secured by Deed of Trust” (this “Note”) arises out of
the terms and conditions of that certain Amended and Restated Development and Disposition
Agreement between the Borrower and the Beneficiary, dated April ___, 2021 (the “DDA”)
regarding the rehabilitation of an existing affordable multifamily housing project described in the
DDA (the “Development”), and fully replaces and supersedes that certain promissory note made
by PD Hovley Limited Partnership, a California limited partnership, predecessor in interest to the
Palm Desert Development Company, to the Palm Desert Redevelopment Agency, predecessor in
interest of the Beneficiary, in the amount of Seven Million Six Hundred Fifty-Nine Thousand
Four Hundred Thirty-Nine Dollars ($7,659, 437).
The principal balance of the Loan from time to time outstanding shall bear interest at one
percent (1%) simple interest per annum from April ___, 2022 (the “Anniversary Date”) until
repaid in full. The outstanding principal balance of the Loan, and all accrued but unpaid interest
thereon, shall be due and payable on the fifty-fifth (55th) Anniversary Date (the “Maturity
Date”). If the Borrower should default in performance of any of the covenants or agreements of
the Borrower contained herein, in the DDA or Regulatory Agreement (as hereinafter defined) or
the Deed of Trust (as hereinafter defined), then all sums outstanding on the Loan shall become
immediately due and payable at the option of the Beneficiary.
Repayment of this Loan is to be made on an annual basis from residual receipts as
follows:
(a) Annual Payments. As described in the DDA, the Borrower shall make
annual payments (each an “Annual Payment”) to the Beneficiary during the term of the Loan
equal the applicable “Authority’s Percentage” (defined below) of “Positive Net Cash Flow”
(defined below) derived from the operation of the Development and the Borrower shall be
entitled to retain the remainder of such Positive Net Cash Flow. The first Annual Payment on
the Loan shall be due on April ___ 2022 for interest only accrued during the prior year. The
Annual Payment of principal and interest for the Loan thereafter shall be due on each April ___
thereafter with respect to the preceding twelve (12) month period. Any Annual Payment shall be
applied first to accrued but unpaid interest on the Loan, and the remainder, if any, to the
reduction of the principal balance of the Loan.
DRAFT FOR DISCUSSION
P6401-0001\2513707v3.doc -2-
(b) Refinancing or Sale Payments. In the event of any “Refinancing” (defined
below) or a “Sale” (as defined below), the Borrower shall pay to Beneficiary the Authority’s
Percentage of the “Excess Proceeds” (defined below) derived from such Refinancing or Sale, to
the extent that the Loan, and all accrued interest thereon, have not previously been paid in full,
and the Borrower shall be entitled to retain the remainder of such Excess Proceeds. Any
payment made to the Beneficiary from such Excess Proceeds (a “Refinancing or Sale Payment”,
or a “Refinancing Payment” or a “Sale Payment,” as the case or context may be) shall be made at
the close of the refinancing and shall be applied first to accrued but unpaid interest on the Loan,
and the remainder, if any, in reduction of the principal balance of the Loan.
As used herein, the following terms shall have the meanings ascribed below:
(a) “Authority’s Percentage” shall be with respect to the Development: 75%
of the Positive Net Cash Flow thereof and 100% of the proceeds from Sale or Refinancing
thereof to the extent of the Loan.
(b) “Positive Net Cash Flow” shall mean the revenues (without regard to the
source) derived from the operation of the Development minus (i) all real estate and personal
property taxes and assessments, insurance premiums and reasonable costs of maintenance,
operation and management incurred by the Borrower in connection with the operation and
maintenance of the Development, (ii) an annual monitoring fee paid to Lender in the amount of
Sixty-Five Thousand Dollars ($65,000), increasing at the rate of two percent (2%) annually,
(iii) the costs of servicing the Construction Loan (and any approved Refinancing thereof) or
other sources of financing approved by Authority (other than the Authority Loan); (iv) amounts
necessary to maintain a guaranty or other form of security or bond for an operation reserve
account existing on the date hereof, and required to maintain the amount of Fifty-Two Thousand
Six Hundred Fifty Dollars ($52,650.00) which shall be maintained in the amount not to exceed
$302,116.00, (v) amounts deposited into a replacement reserve account existing on the date
hereof, (vi) the repayment of any amounts loaned by the Borrower to the Development for
material Development costs which costs were not reasonably foreseeable, and which loan, and
the items for which funds were expended pursuant to such loan, are approved in advance by the
Beneficiary’s Executive Director, [(vii) deferred developer fees in the total maximum amount of
$600,000.00], (viii) a Limited Partner monitoring fee in the annual amount of $5,000.00; (ix) a
managing general partner fee in the annual amount of $15,000.00, increasing three percent (3%)
annually; and (xi) an administrative general partner fee in the annual amount of $20,000.00,
increasing three percent (3%) annually. The amounts of the operation reserves and replacement
reserves described above may increase in accordance with the annual percentage increases from
the date hereof in the Consumer Price Index, U.S. City Average, All Urban Consumers as
published by the U.S. Bureau of Labor Statistics (the “CPI”).
(c) “Sale” shall mean any sale, land sale contract, ground lease or any transfer
of fee title to all or any part of the Development. The term Sale shall not include (i)
encumbrance of the Development pursuant to any Refinancing, (ii) any transfer of all or any part
of the Development, the Borrower’s interest in any of the foregoing, or any interest in the
Borrower or any partner of the Borrower as collateral securing performance of any obligation, or
(iii) any transfer of corporate/limited partnership interests or transfers to facilitate the syndication
of interests in the Borrower or the Development.
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P6401-0001\2513707v3.doc -3-
(d) “Refinancing” shall mean any act or process by which the Borrower
borrows any funds, credit or allowance, repayment or reimbursement of which is secured in
whole or in part by the Borrower’s interest in the Development, or by any direct or indirect
interest in the Borrower. Refinancing shall include any so-called “convertible mortgage”,
pursuant to which any person or entity receives an option or right to acquire any interest in the
Development, or the Borrower’s interest therein in lieu of repayment. Refinancing shall not
include any Sale or other transfer of all or any part of the Development, the Borrower’s interest
in any of the foregoing, or any interest in the Borrower or any partner of the Borrower (including
any transfer of limited partnership interests or transfers to facilitate the syndication of interests in
the Borrower or the Development) except as collateral securing the performance of any
obligation. All loan or other sources of financing shall be commercially reasonable and shall be
subject to the Beneficiary’s approval in accordance with the DDA.
(e) “Gross Sales Proceeds” shall mean in the case of a Sale, the gross sales
consideration (adjusted for customary prorations and security deposit credits) realized from the
Sale; provided, however, that if the Sale involves any seller financing, then the Sale Payment
attributable to payments made pursuant to such seller financing shall be paid to the Beneficiary
only as and if the Borrower actually receives such payments (i.e., the Beneficiary agrees that the
Borrower shall not be responsible for making any Sale Payment from a portion of Gross Sales
Proceeds which might otherwise be attributable to any payment made pursuant to the terms of
any purchase money financing until and unless the Borrower actually receives such payment).
(f) “Excess Proceeds” with respect to any Refinancing shall mean (i) any and
all proceeds, credits, offsets and allowances directly or indirectly received by or allowed to the
Borrower from or by any source in any way, relating to any Refinancing, minus (ii) the sum of
(aa) Deductible Expenses relating to such Refinancing, (bb) the sum of principal and interest
paid from the proceeds of such refinancing on account of any and all loans made by any person
or entity approved by the Beneficiary (other than a governmental or quasi-governmental entity),
repayment of which is secured by a mortgage or deed of trust encumbering all or any part of the
Project or any interest therein, which mortgage or deed of trust is superior to the applicable deed
of trust securing the Loan, (cc) the repayment of any amounts loaned by the Borrower to the
Development for material Development costs which costs were not reasonably foreseeable, and
which loan, and the items for which funds were expended pursuant to such loan, are approved in
advance by the Beneficiary’s Executive Director, and [(dd) deferred developer fees in the
maximum amount of $600,000.00.]
(g) The term “Excess Proceeds” with respect to any Sale shall mean (i) the
Gross Sales Proceeds, minus (ii) the sum of (aa) Deductible Expenses relating to such Sale,
(bb) the sum of principal and interest paid with the proceeds of such Sale on account of any and
all loans made by any person or entity approved by the Beneficiary (other than a governmental or
quasi-governmental entity), repayment of which is secured by a mortgage or deed of trust
encumbering all or any part of the Project or any interest therein, which mortgage or deed of trust
is superior to the Deed of Trust securing the Loan, (cc) the repayment of any amounts loaned by
the Borrower to the Development for material Development costs which costs were not
reasonably foreseeable, and which loan, and the items for which funds were expended pursuant
to such loan, are approved in advance by the Beneficiary’s Executive Director, and [(dd)
deferred developer fees in the maximum amount of $600,000.00.]
DRAFT FOR DISCUSSION
P6401-0001\2513707v3.doc -4-
(h) “Deductible Expenses” shall mean reasonable, customary and usual
expenses actually paid by or on behalf of the Borrower in connection with any Refinancing or
Sale, including without limitation reasonable (1) mortgage brokerage or sale commissions,
(2) reasonable lender and Borrower legal fees, (3) title insurance and survey fees, (4) escrow fees
and closing costs, (5) transfer and recording taxes and fees, (6) loan commitment fees, (7) points
and/or (8) prepayment penalties.
(i) “Developer’s fees” shall mean fees payable to the Borrower in the
maximum amount of $1,200,000.00. Any unpaid portion of the Developer’s fee shall accrue
interest at the applicable federal rate as determined pursuant to the Limited Partnership
Agreement and shall be paid out of Positive Net Cash Flow.
(j) Any term not defined specifically herein shall be governed by the
definition set forth in the DDA.
Notwithstanding anything to the contrary contained herein, Borrower shall not be
required to make any payments hereunder (including, without limitation the Annual Payment) to
the extent that the outstanding principal balance of the Loan, and all accrued interest thereon, is
paid in full. Any unpaid balance of interest and principal shall be due and payable on the
Maturity Date.
This Note is secured by that certain Deed of Trust and Assignment of Rents dated as
October 25, 2001 and recorded as Instrument No. 2001-523499 on October 25, 2001, as
modified by the Assignment of and Modification Deed of Trust and Assignment of Rents of even
date herewith executed for the benefit of Beneficiary and encumbering certain real property
located in the City of Palm Desert, California (the “Deed of Trust”). In addition to the Deed of
Trust and the DDA, this Note is issued pursuant to and arises out of the terms and conditions of
the Amended and Restated Regulatory Agreement, also of even date herewith, between the
Borrower and the Beneficiary (the “Regulatory Agreement”).
The Borrower may prepay, without penalty or premium, any amount of the interest, if
any, or principal under this Note prior to the due date hereof. Prepayments shall be credited first
against accrued interest, if any, and the balance shall be credited to principal.
The Borrower acknowledges that late payments shall cause the Beneficiary to incur costs
not contemplated by this Note or the loan evidenced hereby. Hence, the Borrower promises to
pay, for each monthly payment not received within fifteen (15) days after payment is due, a late
charge equal to five percent (5%) of the payment due. Acceptance of any late charge shall not
constitute a waiver of the default with respect to the overdue amount and shall not prevent the
Beneficiary from exercising any of the rights and remedies available to the Beneficiary. The
parties agree that this late charge represents a fair and reasonable estimate of the costs that the
Beneficiary will incur by reason of late payment.
Should default be made by the undersigned in the performance of any of the covenants or
agreements of the Borrower contained in the Regulatory Agreement, this Note, or the Deed of
Trust, and if such default is not cured within five (5) days from the Beneficiary’s notice to the
Borrower of such default, then, at the Beneficiary’s option, all sums owing hereunder shall, at
DRAFT FOR DISCUSSION
P6401-0001\2513707v3.doc -5-
once, become due and payable. Thereafter, interest shall accrue at the maximum legal rate
permitted to be charged by non-exempt lenders under the usury laws of the State of California.
Notwithstanding anything to the contrary contained in this Note or any agreement in connection
herewith, prior to declaring any default or exercising any remedies permitted hereunder, under
any document entered into in connection therewith or under applicable law based upon an
alleged default of the Borrower, a copy of a notice of such alleged default shall be sent to the
Borrower and to the Limited Partner (as defined in the DDA). The Limited Partner shall have a
period of not less than thirty (30) days to cure such default on behalf of the Borrower; provided,
however, if in order to cure such default the Limited Partner reasonably believes that it must
remove one or more of the general partners of the Borrower pursuant to the provisions contained
in the partnership agreement of the Borrower, the Limited Partner shall so notify the Beneficiary
and so long as the Limited Partner is diligently attempting to so remove such General Partner,
the Limited Partner shall have until the date thirty (30) days after the effective date of the
removal of such General Partner to cure such default; provided, further, that if the Beneficiary
commences foreclosure proceedings and records a Notice of Sale against the Project, upon
written notice to the Limited Partner, the Limited Partner’s cure period shall be deemed to have
concluded on the date that is five (5) days after the recording of such Notice of Sale.
This Note and the Deed of Trust by which this Note is secured shall be governed by and
construed in accordance with the laws of the State of California.
All parties who are obligated to pay any portion of the indebtedness represented by this
Note, whether as principal, surety, guarantor or endorser, hereby waive presentment for payment,
demand, protest, notice of protest and notice of dishonor, and all other notices to which they
might otherwise be entitled, and further waive all defenses based on release of security,
extension of time or other indulgence given in respect to payment of this Note, to whomsoever
given, and further waive all defenses, generally, except the defense of actual payment of this
Note according to its tenor.
The undersigned hereby covenants and agrees to pay all costs and expenses of collection,
whether by suit or otherwise, at any time or from time to time incurred, including without
limitation attorneys’ fees and all costs and expenses actually incurred in connection with the
protection or realization of the property secured by the Deed of Trust.
If the Borrower shall sell, lease (other than rental units in the normal course of business),
assign, convey, transfer, encumber, mortgage, hypothecate or alienate the property encumbered
by the Deed of Trust, or any part thereof, or any interest therein, or shall be divested of their title
in any manner or way, whether voluntarily or involuntarily, the indebtedness evidenced hereby,
irrespective of the maturity date expressed herein, at the option of the Beneficiary, upon demand,
shall immediately become due and payable, except as permitted by the Beneficiary pursuant to
the terms and conditions set forth in the Regulatory Agreement. Except as permitted by the
DDA or the Regulatory Agreement, if the Trustor shall sell, lease, transfer, assign, convey,
encumber, mortgage, hypothecate or alienate the real property described herein, or any part
thereof, or any interest therein, or shall be divested of title or any interest therein in any manner
or way, whether voluntarily or involuntarily (except as permitted by Beneficiary pursuant to the
terms and conditions set forth in the Regulatory Agreement), or if Trustor shall fail to make any
payments due under the note secured by this deed of trust, or fail to perform any other obligation
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P6401-0001\2513707v3.doc -6-
under said Regulatory Agreement of even date herewith, this deed of trust or the note secured
hereby, or any other deed of trust encumbering the subject property, then Beneficiary shall have
the right, at its option, to declare any indebtedness or obligations secured hereby, irrespective of
the maturity date specified in any note evidencing the same, immediately due and payable.
Subject to the foregoing, the terms of this Note shall be binding upon and inure to the
benefit, as the case or context may require, of the respective heirs, successors in interest and
assigns of the undersigned and the Beneficiary.
Time is of the essence with respect to each and every provision hereof. If any provision
hereof is found to be invalid or unenforceable by a court of competent jurisdiction, the invalidity
thereof shall not affect the enforceability of the remaining provisions of this Note.
“Borrower”
PD HOVLEY 1R LIMITED PARTNERSHIP,
a California limited partnership
By: PC Hovley 1R Developers, LLC,
a California limited liability company,
Its: Administrative General Partner
By: Palm Communities,
a California corporation
Its: Sole Member and Manager
By:
Danavon L. Horn,
President and Chief Executive Officer
By: Housing Corporation of America,
a Utah nonprofit corporation,
Its: Managing General Partner
By:
Carol Cromar,
President
DRAFT FOR DISCUSSION
RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
PALM DESERT HOUSING AUTHORITY
73-510 Fred Waring Drive
Palm Desert, California 92260
Attn: Executive Director
SPACE ABOVE THIS LINE FOR RECORDER’S USE
ASSIGNMENT AND MODIFICATION TO DEED OF TRUST,
ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
THIS ASSIGNMENT AND MODIFICATION TO DEED OF TRUST, ASSIGNMENT
OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Assignment and
Modification”) is made as of _____________, 2021 by and among PD HOVLEY LIMITED
PARTNERSHIP, a California limited partnership (“Original Partnership”), PD HOVLEY 1R
LIMITED PARTNERSHIP, a California limited partnership (the “Borrower”) whose address is
100 Pacifica, Suite 203, Irvine CA 92618, and PALM DESERT HOUSING AUTHORITY, a
public body, corporate and politic, as Beneficiary (“Lender”), whose address is 73-510 Fred
Waring Drive, Palm Desert, California 92260.
RECITALS
A. Palm Communities, the predecessor to the Original Partnership, and Palm Desert
Redevelopment Agency (“Former Agency”) entered into that certain Disposition and
Development Agreement, as amended (the “DDA”) pursuant to which the Former Agency
agreed to convey those parcels of real property, more particularly described in Exhibit A
attached hereto (the “Property”), to Palm Communities and to loan Palm Communities the
amount of Seven Million Six Hundred Fifty Nine Thousand Four Hundred Thirty Nine Dollars
($7,659, 437) (“Former Agency Loan”).
B. Palm Communities assigned its interest in the DDA and the Former Agency Loan,
to the Original Partnership and the Original Partnership acquired the Property from the
Partnership.
C. The Original Partnership executed a deed of trust against the Property in favor of
the Former Agency dated as October 25, 2001 and recorded as Instrument No. 2001-523499 on
October 25, 2001 (the “Deed of Trust”) to secure the repayment of the Former Agency Loan.
D. The Former Agency assigned its interest in the Deed of Trust to Lender pursuant
to the certain Assignment of Deed of Trust et al. recorded dated as May 2, 2013 and recorded as
Instrument No. 2013-0336336 on July 12, 2013.
E. Through this Assignment and Modification, the Original Partnership wishes to
assign its interest in the Deed of Trust to the Borrower.
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F. Borrower has assumed the Former Agency Loan from the Original Partnership
pursuant to that certain Assignment Agreement by and between the Original Partnership and the
Borrower dated as of April ____, 2021.
G. Lender and Borrower wish to modify certain provisions of the Deed of Trust in
connection with the Borrower’s assumption of the Former Agency Loan.
WITH REFERENCE TO THE FACTS RECITED ABOVE, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Original
Partnership, Lender and Borrower (each a "Party", and, collectively, the "Parties") agree as
follows:
1. Assignment and Assumption. Original Partnership hereby assigns and transfers to
Borrower, without representation, warranty or recourse, express or implied, the Deed of Trust.
The Assignee hereby accepts such assignment of the Deed of Trust.
2. Modifications of Deed of Trust.
a. The reference to Seven Million Six Hundred Fifty-Nine Thousand Four
Hundred Thirty-Nine Dollars ($7,659,437.00) is replaced with Five Million One Hundred
Forty-Eight Thousand Eight Hundred Thirteen Dollars ($5,148,813.00).
b. All references to the Note shall mean that certain Amended and Restated
Promissory Note Secured by Deed of Trust executed by Borrower in the amount of Five
Million One Hundred Forty-Eight Thousand Eight Hundred Thirteen Dollars
($5,148,813.00) dated as of _________, 2021.
c. All references to Borrower shall mean PD Hovley 1R Limited Partnership,
a California limited partnership.
3. Consent to Assignment. Lender consents to the assignment by the Original
Partnership of its interest in the Deed of Trust to the Borrower.
4. No Other Changes. Except as provided in this Assignment and Modification, all
terms and conditions of the Deed of Trust shall continue in full force and effect. Only those
provisions of the Agreement specifically amended herein shall be affected by this Assignment
and Modification.
5. Counterparts. This First Amendment may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
agreement.
[SIGNATURES ARE ON THE FOLLOWING PAGES]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.
PD Hovley 1R Limited Partnership,
a California limited partnership
By: PC Hovley 1R Developers LLC,
a California limited liability company,
Its: Administrative General Partner
By: Palm Communities,
a California corporation,
Its: Sole Member and Manager
By:
Danavon L. Horn,
President and CEO
By: Housing Corporation of America,
a Utah nonprofit public benefit corporation,
Its: Managing General Partner
By:
Carol Cromar,
President
Address: 100 Pacifica, Suite 203
Irvine, CA 92618
Attention: Danavon L. Horn
Palm Desert Housing Authority,
a public body, corporate and politic
By:
Name:
Title:
DRAFT FOR DISCUSSION
“EXHIBIT “A”
Property Description