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HomeMy WebLinkAboutDesert Rose and Falcon Crest - Unrestricted Unit Agmt CITY OF PALM DESERT/ PALM DESERT HOUSING AUTHORITY JOINT CONSIDERATION STAFF REPORT REQUEST: AUTHORIZE THE CITY MANAGER/EXECUTIVE DIRECTOR TO ENTER INTO AGREEMENTS TO RESTRICT THE AFFORDABILITY OF HOMES OCCUPIED BY HOUSEHOLDS OF LOWER AND MODERATE INCOMES (UPON THEIR REQUEST) FOR UNRESTRICTED UNITS IN PALM DESERT INCLUDING DESERT ROSE AND FALCON CREST SUBMITTED BY: Janet M. Moore, Director of Housing DATE: December 13, 2012 CONTENTS: Draft Affordable Housing Restriction and Lien Agreement Recommendation By Minute Motion, that the City Council and Authority Boards authorize the City Manager/Executive Director to enter into agreements to restrict the affordability of homes occupied by households of lower and moderate incomes (at the owners request) for unrestricted units in Palm Desert including Desert Rose and Falcon Crest. Background With the elimination of redevelopment and the associated provisions of AB X126 that restricted the actions of the redevelopment agency, several units in both Desert Rose and Falcon Crest have transferred to other parties and the affordable restriction has thus been released and/or lost. Several of the new homeowners, although they purchased without assistance from the City's related entities, qualify as lower income households as do homeowners in Palm Desert that are not within these two developments. As lower income households, they may qualify for incentives to install energy efficient upgrades at no cost to the City or Authority. For example, GRID alternatives is a non-profit organization that implements the Single- Family Affordable Solar Homes (SASH) program funded by the California utility ratepayers under the auspices of the California Public Utilities Commission for qualified households. In order to qualify for the program the owner must be income-qualified, own their home as their primary residence, be customers of PG&E, SCE, or SDG&E, and have an 'affordable housing' restriction on their home. Staff Report Authorize Affordability Covenant December 13, 2012 Page 2 of 2 GRID has installed approximately 18 solar systems in Palm Desert free of charge to homeowners who qualify based on the above criteria. They are scheduled to install over 30 more in Desert Rose beginning in early 2013 and will begin working on the third phase in the development soon after these are completed. Although Falcon Crest has 74 homes that already have integrated solar systems, they may qualify for other energy efficient upgrades. Staff has been contacted by households, who currently do not have an active affordability restriction placed on their home, to voluntarily enter into an affordability covenant agreement with the City and/or Authority so that they may participate in these types of programs. The benefit to the City/Authority is gaining or regaining, as the case may be, the affordability covenant and first right of refusal to re-purchase their home or restrict its resale to encourage the home to stay available to households of lower incomes. Staff recommends that the City Manager/Executive Director establish guidelines to facilitate the requests and be authorized to enter into affordability agreements for the same term previously allowed in Desert Rose and Falcon Crest or up to 30 years for all other homes. Fiscal Impact There is no cost to the City or Authority for this action exce•t the staff time to facilitate each request. /1 dBY HOUSG AUTH Submitted by: Reviewed: R FIED BY: a- in O inai on file with City Clerk's O i„ ", , s(764,„24_,_ . -t M. Moore, Director of Housing I S. Gibson, Director of Finance CITY COUNCIWITON Approval: APPROVED DENIED RECEIVED OTHER MEETU G DAT AYES44 � pre� l Y NOES: J n M. Wohlmuth, Executive Director ABSENT: ABSTAIN:kj'-tTei._ M:pl VERIFIED BY: I2D1(I/ Original on File with City erk's Office G:\HOUSING\PATTY LEONVMM\STAFF REPORT\COVENANT FOR SOLAR 12-13-2012.DOC RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260 Attention: HOUSING DIVISION Exempt from recording fees pursuant to Gov. Code § 6103 AFFORDABLE HOUSING RESTRICTION AND LIEN AGREEMENT THIS AFFORDABLE HOUSING RESTRICTION AND LIEN AGREEMENT (the "Restrictive Agreement") is entered into this day of , 2012, by and between the CITY OF PALM DESERT, a municipal corporation (the "City"), and , a(n) (individually or collectively, the "Owner"). RECITALS A. The Owner owns that certain real property (the "Unit") located in the City of Palm Desert, County of Riverside, State of California, legally described in Exhibit "A" attached hereto and incorporated herein by reference, the address of which is set forth in Section 1(b) of this Restrictive Agreement, and which the Owner shall occupy as the Owner's principal residence. B. For the purpose, among others, of effectuating the City's approved Housing Element, as adopted by Resolution No. 2011-34 on May 12, 2011 (incorporated herein in its entirety by this reference), the City encourages to the development of affordable housing to be available to low and moderate income housing. C. The Owner has represented to the City that the Owner and the Owner's household qualifies as a Person or Family of Very Low, Low or Moderate Income as defined in California Health and Safety Code Section 50093. D. The Owner is executing this agreement voluntarily so that the Owner may participate in programs available to households of very low, low or moderate incomes. NOW, THEREFORE, the parties agree as follows: 1. Fundamental Provisions. The following shall serve as the basic terms of this Restrictive Agreement: (a) Name of Owner: The name of the Owner is . (b) Address of the Unit: The address of the Unit is , Palm Desert, California. (c) Owner acquired the property at a sales price of $ on . (d) Owner obtained a purchase money loan in the amount of the from to acquire the unit 2. Definitions. For purposes of this Restrictive Agreement, the terms listed below shall have the meanings thereinafter specified. (a) AMI. As used herein and throughout this Restrictive Agreement, "AMI" means the median family income of the Riverside-San Bernardino SMSA, as determined and published annually by the United States Department of Housing and Urban Development ("HUD"), pursuant to California Health and Safety Code Section 50093, and the regulations promulgated thereunder. The AMI shall be adjusted for family size in accordance with state regulations adopted pursuant to California Health and Safety Code Section 50052.5 for the number of persons in the family occupying the Unit. (b) Affordable Housing Cost. For the purposes hereof, the term "Affordable Housing Cost" means a housing cost which is calculated pursuant to California Health and Safety Code Section 50052.5, and for the purposes hereof, the term "housing cost" shall have the meaning ascribed to such term in Title 25 of the California Code of Regulations Section 6920, as such regulations may be amended from time to time, and the term "Gross Income" shall have the meaning ascribed to such term in Title 25 of the California Code of Regulations Section 6914, as such regulations may be amended from time to time. (c) Person or Family of Very Low, Low, or Moderate Income, or Very- Low Income Household, a Low-Income Household, or a Moderate-Income Household means a person, family or household meeting the income qualification limits set forth in California Health and Safety Code Sections 50093, 50105, 50052.5, and 50053, and Title 25 of the California Code of Regulations Section 6910, et seq., as the case or context may require, as such statutes and regulations may be amended from time to time, and any successor statutes thereto. (d) Qualified Person means a person or family of Very Low, Low or Moderate Income. Unless the City or its designee, in its sole discretion determines otherwise, in the case of a studio unit, Qualified Person means a household of one person, in the case of a one-bedroom unit, Qualified Person means a household of two persons, in the case of a two- bedroom unit, Qualified Person means a household of three persons, in the case of a three- bedroom unit, Qualified Person means a household of four persons, and in the case of a four- bedroom unit, Qualified Person means a household of five persons. (e) Escrow Costs means only those fees charged by an escrow agent or title insurance company charged solely for the cost of closing an escrow and does not include loan fees, refinancing fees, broker commissions, prepaid items, homeowners dues, transfer fees, or other fees, commissions or costs. 2 (f) Unit means the real property described in attached Exhibit "A" and may include vacant land, single-family dwellings and multi-family dwellings and interchangeably may be referenced as Property. (g) Owner means both the party identified as "Owner" in the first paragraph of this Declaration, and any successor in interest of such Owner with respect to the Property. 3. Restriction on Transfer. (a) The Owner shall not sell, voluntarily or involuntarily, in whole or in part, convey, transfer, lease, sublease, assign, encumber, mortgage, or hypothecate the Unit, or enter into agreements to sell, convey, transfer, lease, sublease, assign, encumber, mortgage, refinance or hypothecate the Unit, except in compliance with the terms of this Restrictive Agreement and with the prior written approval of the 'City's City Manager or his designee. Failure to obtain the prior written approval of the City's City Manager or his designee will be deemed a breach of this Restrictive Agreement. (b) Any violation or breach of the provisions of Section 3(a) hereof is prohibited and any such sale or other transfer of interest enumerated in Section 3(a) above, in whole or in part, shall be null, void and unenforceable, and at the City or its designee's option, result in the acquisition of the Unit by the City and/or an acceleration of the Note requiring the Owner to immediately repay the Note in full if such transfer is made prior to the expiration of the Term. (c) In the event of the death of the Owner with no qualified surviving joint tenants, the City or its designee will work with the heirs, probate court, or other responsible party to either exercise its option to reacquire the Unit in accordance with Section 8 hereof or identify a Qualified Person to purchase the Unit. 4. Term of Agreement. This Restrictive Agreement shall become effective on the date it is recorded in the Official Records of Riverside County, California, and shall terminate 30 years after the date of recordation hereof (the "Term"). The City has determined that 30 years is the longest period feasible for continuing the Term of this Restrictive Agreement. 5. Covenant to Maintain Affordability. (a) The Unit is restricted to increase and improve the community's supply of low and moderate income housing available at an Affordable Housing Cost in accordance with the affordable housing requirements as defined in California Health and Safety Code Section 50093. Subject to the provisions of Section 3 hereof, the Owner shall sell, convey, assign, or transfer ownership or occupancy of the Unit only to Qualified Persons who cannot obtain comparable housing at an Affordable Housing Cost on the open market as provided in Health and Safety Code Section 50052.5, as amended. In addition, if, without the City or its designee's consent, the Owner fails to occupy the Unit as the Owner's sole principal residence for a period of 90 calendar days, cumulatively, in any calendar year, then the Owner shall be in breach of this Restrictive Agreement. (b) Subject to the provisions of Section 12 hereof, if upon the expiration of the entire Term the Owner previously has not either (i) sold, conveyed, transferred, or 3 assigned the Unit except to a Qualified Person, except where expressly permitted by Section 6 hereof, or (ii) leased or subleased the Unit in violation of the terms hereof, or (iii) refinanced, hypothecated, encumbered, or mortgaged the Unit in violation of the terms hereof, or (iv) sold the Unit at a price exceeding the maximum price permitted under Section 11 hereof, or (v) otherwise breached the terms and provisions hereof, then the City shall remove the affordability restriction 6. Permitted Transfers and Mortgages. (a) Conveyances to Qualified Persons. Subject to the option rights of the City herein, the Owner may convey the Unit to Qualified Persons on the condition that (i) the Owner complies with the requirements of Sections 8 and 9 hereof, (ii) the purchaser covenants to occupy the Unit as such party's sole principal residence, and (iii) the purchase price does not exceed the maximum permitted resale price set forth in Section 11 hereof. Any permitted transferee, shall acquire the Unit subject to the terms and conditions hereof or, at City or its designee's option, a new Affordable Housing Restriction and Lien Agreement and shall execute in recordable form any documents necessary to accommodate the transfer. (b) Intra-Family Conveyances. The following transfers of title shall not be breaches of this Restrictive Agreement: transfer by gift, devise, or inheritance to the Owner's spouse; taking of title by surviving joint tenant that is the Owner's spouse; transfer of title to a spouse as part of a divorce or dissolution proceeding; acquisition of title in conjunction with marriage; transfers of title to an adult child when the child is approved by the City Manager or his designee as a Qualified Person at the time of transfer. A transfer to children of the Owner who are not Qualified Persons shall give rise to the option in favor of the City to acquire the Unit described in Section 8 hereof; provided, however, such option to acquire shall be exercised by the City within 45 days after receipt by the City or its designee of written notice of such transfer, and the purchase price shall be the amount set forth in Section 8(e). (c) Refinancing of Mortgage. Subject to compliance with the provisions of Section 10 hereof, the Owner may refinance the first deed of trust encumbering the Unit noted in Section 1(d) provided that the City Manager or his designee has previously reviewed and approved the terms and conditions thereof including, but not limited to, the principal amount of the proposed loan, the interest rate, the terms of repayment, the identity of the maker of the proposed loan, any documentation pertaining to the subordination or enforcement of this agreement. The costs and fees associated with the making of the proposed loan, and the Owner shall have received the written approval of the proposed loan by the City Manager or his designee prior to the date of its closing. Any refinancing of a first deed of trust which has not been previously approved by the City Manager or his designee as herein above described shall constitute a default under this Restrictive Agreement. (d) Junior Trust Deeds. Subject to compliance with the provisions of Section 10 hereof, the Owner may enter into a loan secured by a deed of trust or mortgage junior and subordinate to the Deed of Trust provided that (i) the proceeds of each loan shall be used solely to pay for repairs or the construction of improvements to the Unit, and (ii) the City Manager or his designee has previously reviewed and approved the terms and conditions thereof, including, but not limited to, the principal amount of the proposed loan, the interest rate, the terms of repayment, the identity of the maker of the proposed loan, the costs and fees associated with the making of the proposed loan, and the nature and costs of the proposed 4 repairs or the construction of improvements, to be paid with the proceeds thereof, and (iii) the Owner shall have received the written approval of the proposed loan by City Manager or his designee prior to the date of its closing. The failure of the Owner to comply fully with the provisions of this Section 6(e) when entering into a loan which is secured by a deed of trust or mortgage junior and subordinate to the Deed of Trust shall constitute a default under this Restrictive Agreement. 7. Subordination to First Trust Deed Encumbrances. (a) The City recognizes that Owner entered into a purchase money loan to acquire the Unit and the deed of trust in connection with such financing that shall be superior to this Restrictive Agreement. A default of such deed of trust will also be deemed a default of this Restrictive Agreement, if any. Therefore, in the event of the foreclosure of such deed of trust, or the conveyance by deed in lieu of foreclosure of the Unit to a bank, savings and loan, or other institutional lender that is the beneficiary of such deed of trust, the provisions hereof shall terminate and be of no force or effect; provided, however, if the senior lien holder acquires title to the Unit pursuant to a deed in lieu of foreclosure, then the terms hereof shall terminate only if (i) the City has been given written notice of a default under the senior deed of trust and (ii) the City shall not have cured the default under the senior deed of trust, or diligently pursued the curing of the default, within 90 days after the date the notice is received by the City or its designee. (b) The City further agrees that, in the event of a refinancing of a deed of trust that was superior to Restrictive Agreement, and which such refinancing complied in all respects to the requirements of Section 6(d) hereof, the City agrees to execute a subordination agreement, in form and substance acceptable to the City or its designee, subordinating this Restrictive Agreement to any first deed of trust, in favor of any bank, savings and loan association, or other institutional lender which makes a loan to refinance the Loan for the purchase of the Unit and which secures the obligations under such loan, subject to the following terms and conditions: (i) The principal amount of the new loan does not exceed the original principal amount of the loan being refinanced, plus reasonable loan fees and costs up to a maximum of five percent (5%) of the original principal amount, unless City or its designee has provided written authorization otherwise. (ii) The terms and provisions of the loan secured by such deed of trust, including interest rate, term, amortization, fees, acceleration clauses, late payment charges, and prepayment charges, shall conform substantially to the provisions in the lender's loan documents for comparable loans, unless deviations are given written approval in advance of the subordination by the City Manager or his designee. (iii) The Owner shall deliver to the City or its designee true and accurate copies of the loan agreement, proposed promissory note, deed of trust, and a written statement from the Owner certifying that such documents are true and accurate copies of the loan documents which the Owner intends to execute in connection with the loan; and (iv) The City or its designee may condition any such subordination upon its receipt of a title policy or endorsement from a reputable title company, 5 at the Owner's sole cost and expense, assuring that this Restrictive Agreement are not being subordinated to any liens or encumbrances other than those imposed by the deed of trust or mortgage securing such new loan as the result of such subordination. If the City, at the election by the City Manager or his designee, has advanced any sums to any senior lien holders such amounts shall immediately be due and payable by the Owner to the City, together with interest accrued thereon at the maximum legal rate permitted under California usury laws, upon the closing of any refinancing or sale. 8. City Option to Purchase. (a) Option. In order to maintain and insure that the Unit shall remain affordable to and only occupied by Qualified Persons, the City is hereby granted an option, throughout the Term hereof, to purchase the Unit if the Owner desires to transfer the Unit, or to find another Qualified Person to purchase the Unit. The option shall be exercised in writing by the City or its designee, if at all, within 45 days after the City Manager or his designee's receipt of the written notice (the "Notice of Proposed Sale") of the Owner's desire to transfer the Unit (as more fully described in Section 9(a) hereof). During such 45 day period Owner may also concurrently attempt to market the Unit to sell it to a Qualified Person, as provided in Section 9 hereof. The Owner may enter into an agreement to sell the Unit to a Qualified Person (previously approved by the City Manager of the City or his designee) at a price that does not exceed the maximum price set forth in Section 11 hereof. In such event, the City shall not then exercise the option to purchase the Unit or find another Qualified Person to purchase the Unit. If the City or its designee exercises the option to purchase the Unit, then the City Manager or his designee shall promptly open escrow therefor and shall close escrow for the purchase of the Unit prior to the date that is 60 days after the City opens escrow. Title to the Unit shall be delivered to the City at the close of escrow free and clear of monetary liens and encumbrances, and closing costs shall be allocated in the fashion as is customary for buyers and sellers in Riverside County. As part of the City's option and in accordance with Section 15 herein, all items in the home which are affixed, including but not limited to ceiling fans, light fixtures, and window coverings, are included in the sales price already established and must remain in the unit. Any items that have been added to the home, the function of which will not affect the home's use (such as decorative items) may be removed however, if such items leave marks, holes, or impressions, etc. due to their removal, the location must be restored to the original condition. The Owner will also be required to maintain, through close of escrow, any items necessary to keep the home's appearance and mechanical function in tact including but not limited to all front and back yard landscaping, connections to utilities (natural gas, water, electric), and overall maintenance. In the event the home is not maintained or restored, any cost associated to bring the home into the original condition may be adjusted as necessary through escrow. (b) City's Failure to Close Following Exercise of the Option to Purchase the Unit. If the City or its designee exercises the option to purchase the Unit but, due to the City's sole fault, the City does not close escrow within 60 days after the date the City Manager or his designee opens escrow, then the Owner shall be entitled to sell the Unit to a person or family that is not a Qualified Person. 6 (c) Terms of Purchase. If the City or its designee exercises the option to purchase the Unit, the purchase price to be paid by the City shall be paid all in cash at the close of escrow. The Owner may require a deposit to open escrow in an amount not to exceed three percent (3%) of the purchase price. Title to the Unit shall be delivered to the City at the close of escrow free and clear of monetary liens and encumbrances. Closing costs shall be allocated between the buyer and seller according to the customary practices in Riverside County in effect at the time the option is exercised. (d) Conditions to Close of Escrow. The escrow instructions may provide for conditions or contingencies of the type and nature customarily included in residential purchase escrows (including but not limited to inspection by the City and elimination of pests, and preliminary title report approvals), provided that any such conditions or contingencies (other than the status of title to the Unit at the time of conveyance and other conditions which by their nature cannot be satisfied prior to closing) must be satisfied or waived on or before the close of escrow. The proceeds of the sale shall be used to pay off all monetary liens and encumbrances upon the close of escrow. Escrow shall close within 60 days after the opening of escrow unless due to the seller's sole fault the escrow does not close within 60 days, the City shall be granted an extension equal to the number of days of the delay caused by no fault of the City. (e) Purchase Price. The purchase price of the Unit to be paid by the City pursuant to the City's exercise of the option shall be the lesser of: (i) The actual purchase price paid by the Owner for the Unit plus reasonable and customary escrow closing and title costs (described in Section 2(e) hereof) actually incurred by the Owner in purchasing such Unit, times a fraction, the numerator of which is the AM! for the year in which the sale takes place, and the denominator of which is AMI in which the Owner purchased the Unit (and subtracting therefrom the amount of the Loan, which the City shall assume from the Owner); or (ii) the maximum resale price determined pursuant to Section 11(a) hereof, assuming that the City, as purchaser, is of the same income level as was the Owner at the time the Owner purchased the Unit; or (iii) the fair market value of the Unit, as determined by an appraiser approved by the City or its designee. 9. Resale Price Controls and Procedures. (a) If the Owner elects at any time to sell the Unit, then the Owner shall, prior to signing a listing agreement or other authorization to sell with a real estate broker, first provide to the City Manager or his designee the Notice of Proposed Sale setting forth the Owner's intention to sell the Unit. Such Notice of Proposed Sale shall contain information about the Owner's original purchase price of the Unit and such other information as the City shall require. City or its designee shall have sixty (60) days from the time following the receipt by the City or its designee of the Notice of Proposed Sale to find a new buyer for the Unit being sold, or forty-five (45) days to exercise the City or its designee's option to purchase described in Section 8 hereof; provided, however, the City or its designee may shorten such time period upon a showing of hardship by the Owner. The Owner agrees to consider as purchasers those Qualified Persons identified on a list that may be maintained by the City Manager or his designee. Nothing contained herein shall be construed as imposing on the City any obligation to find a purchaser of the Unit if the Owner has elected to sell the Unit. (b) If the Owner resells the Unit to a Qualified Person at a price that does not exceed the price set forth in Section 11 hereof, then the provisions hereof shall continue to encumber the Unit, and the City or its designee, if necessary, shall subordinate its interest in this Restrictive Agreement and the Deed of Trust as provided in Section 7 hereof. Each successor in interest to Owner that is a Qualified Person shall acquire the Unit subject to the continuation of the restrictions on such property provided in this Restrictive Agreement; and if City purchases such property and resells the Unit, such acquisition shall not operate to merge this Restrictive Agreement into City's fee interest. (c) If, after expiration of the sixty (60) day period, City or its designee has failed to procure an acceptable and qualified buyer and the City or its designee has not exercised its option to purchase the Unit, then the Owner shall then be free to seek a buyer for the Unit without any limitation on resale price or income level of the purchaser. (d) The escrow instructions may provide for conditions or contingencies of the type and nature customarily included in residential purchase escrows (including but not limited to financing contingencies, inspection rights, and preliminary title report approvals), provided that any such conditions or contingencies (other than the status of title to the Unit at the time of conveyance and other conditions which by their nature cannot be satisfied prior to closing) must be satisfied or waived on or before the close of escrow. The proceeds of the sale shall be used to pay off all monetary liens and encumbrances upon the close of escrow. Escrow shall close within a reasonable time after opening thereof. (e) The Owner shall notify any proposed purchaser in writing prior to such person's execution of escrow instructions, deposit receipt, purchase and sale agreement or similar agreement, whichever is earliest, that the title to the Unit will be restricted as provided in this Restrictive Agreement. (f) The Owner may require a deposit to open escrow in an amount not to exceed three percent (3%) of the purchase price. Title to the Unit shall be delivered to the purchaser at the close of escrow free and clear of monetary liens and encumbrances, except as provided for in this Restrictive Agreement. Closing costs shall be allocated between the buyer and seller according to the customary practices in Riverside County in effect at the time the escrow is opened. (g) For the purpose of confirming with the City that a proposed purchaser is a Qualified Person that will be paying a purchase price that is in compliance with the terms hereof, the Owner shall notify the City Manager or his designee in writing of any offer from a prospective purchaser which the Owner intends to accept, disclosing the identity of such prospective purchaser and providing the City Manager or his designee with such financial, credit, and other information on such prospective purchaser as required by the City, including the following: (i) Name and address of the purchaser. 8 (ii) Number of persons comprising the purchaser's household and their names and ages. (iii) Proposed purchase price of the Unit, and any other consideration for the purchase of the Unit. (iv) Amount of down payment. (v) Terms of any loan that will be used by the purchaser to finance the purchase of the Unit, including, but not limited to, principal, interest rate, term, and loan fees. (vi) Closing date. (vii) Aggregate annual income of the purchaser's household. (viii) Most recent federal and state income tax returns of the purchaser and all other members of the purchaser's household for the preceding two (2) calendar years, and verification of the proposed purchaser's salary or wages from the purchaser's employer or from current pay stubs showing year to date as well as period payroll for the preceding two (2) calendar years. (ix) Copy of any proposed purchase and sale agreement, escrow instructions, loan application, or other agreements between the Owner and the purchaser of the Unit or relating to the sale of the Unit including closing documents or any other documentation that the City Manager or his designee deems appropriate to implement this Restrictive Agreement. (x) A written statement signed by the proposed purchaser that the Unit will be occupied by the purchaser and used as his or her sole residence. In lieu of providing the foregoing information, these requirements shall be deemed to have been satisfied by delivery to the City of a written certification of the foregoing information from the purchaser's lender who shall hold a first position trust deed encumbering the Unit, which certification shall be furnished to City Manager or his designee at least 20 days prior to the close of escrow for the Unit. The City Manager or his designee shall have 30 days from the date of its receipt by the City to review the information (unless the City received the certification from prospective purchaser's lender, in which case the City Manager or his designee shall have 15 days to review the information). If the City or its designee fails to approve the purchaser within such period of time, then the purchaser shall be deemed disapproved by the City. The City Manager or his designee may require the purchaser to submit other written documentation reasonably requested by the City to verify the information set forth herein and to determine that the Affordable Housing Cost restrictions of this Restrictive Agreement shall be satisfied. If the City Manager or his designee receives all such prospective purchaser information requested by the City, the City Manager or his designee shall determine whether the prospective purchaser is a Qualified Person, and shall thereafter immediately notify the Owner in writing that the prospective sale is authorized and approved, or that the prospective purchaser does 9 not qualify to purchase the Unit as a Qualified Purchaser. The City hereby designates the City Manager of the City or his designee to make the evaluations, reviews and determinations set forth in this Section 9(g). If the City notifies the Owner that the sale is authorized and approved, the Owner shall proceed to complete the sale of the Unit within 75 days of the date of such approval from the City. As part of any sale and in accordance with Section 15 herein, all items in the home which are affixed, including but not limited to ceiling fans, light fixtures, and window coverings, are included in the sales price already established and must remain in the unit. Any items that have been added to the home, the function of which will not affect the home's use (such as decorative items) may be removed however, if such items leave marks, holes, or impressions, etc. due to their removal, the location must be restored to the original condition. In the event the home is not maintained or restored, any cost associated to bring the home into the original condition may be adjusted as necessary through escrow. 10. Notification Prior to Mortgage, Encumbrance or Hypothecation. If Owner desires to refinance any loan secured by a first trust deed encumbering the Unit, pursuant to Section 6(c) hereof, or to borrow funds for a new loan to be secured by a junior trust deed encumbering the Unit the proceeds of which are to be used to pay for repairs or the construction of improvements to the Unit, pursuant to Section 6(d) hereof, prior written approval of the City Manager or his designee is required. Only loans encumbering the Unit pursuant to Section 6 will be allowed. The Owner must request such approval in writing at least 30 days prior to the recordation of a deed of trust or mortgage securing any such refinancing or loan, the Owner shall submit to the City Manager or his designee in writing the following information: (a) Name and address of lender. (b) Terms of the loan, including, but not limited to, principal, interest rate, term, and loan fees. (c) Closing date of the loan. (d) Copy of any proposed escrow instructions, loan application, or other agreements between the Owner and the lender. (e) Written documentation of compliance with the conditions for City approval as set forth in Section 6(c) or Section 6(d) hereof, as applicable. (f) Other written documentation reasonably requested by the City or its designee. The City Manager or his designee shall have 20 working days after its receipt of all of such information to approve or disapprove the proposed refinancing or loan. 11. Restriction on Resale Price. Except as permitted by Sections 8 and 9(c) hereof, the Owner shall not resell the Unit at a price higher than the lesser of the following: 10 (a) An Affordable Housing Cost (as defined in Section 2(b) hereof) for the prospective purchaser, assuming (i) a reasonable down payment, and (ii) a 30 year fixed rate mortgage at prevailing interest rates. (b) The sum of: (i) the selling Owner's original purchase price of the Unit times a fraction, the numerator of which is the AMI for the year in which the sale takes place, and the denominator of which is AMI in which the Owner purchased the Unit; plus (ii) escrow costs, title insurance premiums paid, and other customary closing costs and fees as described in Section 2(e) hereof; plus (iii) if the Owner sells the Unit after a default under a mortgage or deed of trust, but prior to a trustee's sale or foreclosure sale, all expenses actually incurred by the holder of such mortgage or beneficiary under such deed of trust due to the Owner's default including, but not limited to, trustee's fees, attorney's fees, costs of sale and debt service on the debt secured by such mortgage or deed of trust will be paid from Owner's proceeds. (c) the fair market value of the Unit, as determined by an appraiser approved by the City or its designee. 12. Annual Report. The City shall have the option of requiring that the Owner provide, on an annual basis, such information as the City Manager or his designee deems necessary to implement this Restrictive Agreement. 13. Nondiscrimination Covenants. By the Owner's acceptance hereof, the Owner agrees, for itself, its successors and assigns, to refrain from restricting the transfer of the Unit on the basis of race, color, creed, religion, ancestry, sex, marital status, national origin or age of any person. All such deeds entered into with respect to the Unit shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: "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, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee 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, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." The foregoing shall be a covenant running with the land for the benefit of, and as a burden upon the Unit, and shall remain in effect in perpetuity. Nothing contained herein shall be construed as permitting the Owner to transfer the Unit without the City Manager or his designee's prior written consent. 14. Maintenance of the Unit/Prohibition Against Waste. The Owner shall, throughout the Term hereof, keep and maintain the Unit and the improvements thereon in good condition and repair. The Owner shall not commit waste upon the Unit. The Owner shall not remove or demolish the improvements on the Unit. The Owner agrees to complete or restore promptly and in good workmanlike manner any building or improvement which may be damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefore; to comply with all laws affecting the Unit and not to commit or permit any act upon the Unit in violation of the law. If the Owner at any time fails to so keep and maintain the Unit in good condition and repair, after 30 days notice from the City, the City Manager or his designee shall have a right to enter onto the Unit and perform such deferred maintenance, and the Owner shall promptly reimburse the City for all costs incurred by the City in performing such maintenance. The City shall have no liability whatsoever for any acts or omissions of Owner or its contractors, or agents, or any one of them, or any other person furnishing services, labor and/or material to Owner in connection with the Unit. The City shall also use reasonable efforts to provide notice andhomeowner's association prior to such entry. 15. Default. If either party defaults with regard to any of the provisions of this Agreement, the nondefaulting party shall serve written notice of such default upon the defaulting party. If the default is not cured by the defaulting party 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, the defaulting party shall be liable to the other party for damages caused by such default. 16. 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 acknowledgment, return receipt or other comparable means. If to Owner: At the address for the Unit set forth in Section 1(b). If to the City: City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260 Attn: Housing Division 17. Covenants to Run With the Land. Except as otherwise provided in this Restrictive Agreement, the covenants established in this Restrictive Agreement shall be binding on the Owner and any successor in interest of the Owner to the Unit, and shall be for the benefit and in favor of the City, its successors and assigns, and the covenants shall run with the land in favor of the City and shall be a burden upon the Unit. The covenants established in this Restrictive Agreement shall be incorporated by reference in all deeds conveying all or any portion of the Unit. The Owner (and each successor in interest, as the case may be) shall furnish a copy of this instrument to any successors in interest. The City shall have the right, in the event of any breach by the Owner of any covenant or agreement herein, 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 12 agreement. Notwithstanding the foregoing, however, the Owner and the successors in interest to the Owner named herein shall be liable for performance hereof only during their respective period of ownership of the Unit, provided that the "transferee" Owner has in writing assumed and agreed to perform the "transferor" Owner's obligations hereunder. 18. Administration. The City 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. 19. Independent and Severable Provisions. If 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. 20. Further Assurances and Recordations. The Owner covenants that upon request of the City, the Owner, or its heirs, 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, the City agrees to provide to the Owner an instrument in recordable form that has the effect of confirming the termination of the affordable housing requirements of this instrument. Concurrent with the recordation of any deed of trust or mortgage which is senior or subordinate to the Deed of Trust, the Owner, at its sole cost and expense, shall cause to be recorded in the official records of the Office of the Riverside County Recorder a written request for a special notice of default in favor of the City. 21 . Captions and Section Headings. Captions and section headings used herein are for convenience only and shall not be used in construing this instrument. 22. No Waiver. No waiver by the City of its rights hereunder, or of any breach by the Owner of any covenant, restriction, or condition herein contained, shall be effective unless such waiver is in writing, signed by the City Manager or his designee and delivered to the Owner. Any waiver by the City of its power to terminate the Owner's estate herein or of any covenant, restriction, or condition herein contained, or the failure by the City 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 subsequent sales, or of any such covenant or condition nor bar any right or remedy of the City in respect of any subsequent breach. 23. Entire Agreement. This instrument constitutes the entire agreement of the parties hereto, and the provisions hereof may be modified or amended only by a written instrument signed by the party to be charged. 24. Attorneys' Fees. In any action brought to declare the rights granted herein or to enforce or to interpret any of the terms of this Restrictive Agreement, the prevailing party shall be entitled to an award of reasonable attorney's fees in an amount determined by the court. 13 25. Amendments. Only the City, its successors and assigns, and the Owner and the successors and assigns of the Owner in and to all or any part of the fee title to the Unit shall have the right to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, easements, or other restrictions contained in this Restrictive Agreement. 26. Successors and Assigns. This Declaration shall be binding upon and inure to the benefit of the City and the Owner, and their respective successors, owners and assigns. The terms and provisions hereof shall run with the land and shall be a burden upon the land, including the Unit and each Unit, and shall be binding upon the Owner's successors in interest as purchasers of the Unit, for the benefit of the City. (END OF REPORT) 14 IN WITNESS WHEREOF, the parties hereto have executed this Restrictive Agreement as of the day and year first above written. "CITY" "OWNER" CITY OF PALM DESERT, a municipal corporation By: , MAYOR Attest: , DEPUTY CITY CLERK 15 State of California ) ) SS. County of Riverside ) On , 2012 before me, , a 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(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. 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. (Seal) Signature State of California ) ) SS. County of Riverside ) On , 2012 before me, , a 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(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. 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. (Seal) Signature EXHIBIT A LEGAL DESCRIPTION That certain real property situated in the City of Palm Desert, County of Riverside, State of California, described as follows: LOT - OF TRACT MAP NO. 27546, IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 249 OF MAPS, PAGES 63 THROUGH 68, INCLUSIVE, RECORDS OF SAID COUNTY. APN: DR-12-070-2-PL Exhibit A