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2/20/2008 - STAFF REPORTS - RA.2.
OfppLM Spy U y, +f k 44FOR��Pn CRA Staff Repo DATE: FEBRUARY 20, 2008 NEW BUSINESS SUBJECT: APPROVAL OF A OWNER PARTICIPATION AGREEMENT WITH COACHELLA VALLEY HOUSING COALITION AND DESERT HIGHLAND ASSOCIATES, LP TO PROVIDE ASSISTANCE IN THE DEVELOPMENT OF THE ROSA GARDENS APARTMENTS, A 59-UNIT APARTMENT PROJECT ON A 4.45 ACRE AT RADIO ROAD AND MCCARTHY ROAD IN THE DESERT HIGHLAND NEIGHBORHOOD, INCLUDING AGENCY FINANCIAL PARTICIPATION NOT TO EXCEED $1,200,000 IN GAP FINANCING, MERGED PROJECT AREA NO. 1. FROM: David H. Ready, Executive Director BY: Community & Economic Development Department SUMMARY RECOMMENDATION: Adopt Resolution No. A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS APPROVING AN OWNER PARTICIPATION AGREEMENT WITH COACHELLA VALLEY HOUSING COALITION AND DESERT HIGHLAND ASSOCIATES, LP TO PROVIDE ASSISTANCE IN THE DEVELOPMENT OF THE ROSA GARDENS APARTMENTS, A 59-UNIT APARTMENT PROJECT ON A 4.45 ACRE AT RADIO ROAD AND MCCARTHY ROAD IN THE DESERT HIGHLAND NEIGHBORHOOD, INCLUDING AGENCY FINANCIAL PARTICIPATION NOT TO EXCEED $1,200,000 IN GAP FINANCING, MERGED PROJECT AREA NO. 1. STAFF ANALYSIS: Coachella Valley Housing Coalition ("CVHC") has submitted a proposal for an affordable housing project to be developed in collaboration with the Community Redevelopment Agency on a 4.45 acre site owned by CVHC at Radio Road and McCarthy Road in the Desert Highland neighborhood. CVHC and the Agency have a long and successful history of partnering on projects filling the need for affordable housing for families in Palm Springs. CVHC, which has owned the property for several years, wanted to make a contribution to the many exciting new projects and initiatives taking place in the Desert Highland neighborhood, including the City's proposed West Valley campus of the College of the Desert. Item RA2 . CRA Staff Report February 20, 2008- Page 2 of 2 CVHC Rosa Gardens Apartments CVHC has received national recognition for providing attractive, service-enriched affordable housing for low-income households. For example, in conjunction with the Agency, CVHC successfully completed 140 units in Coyote Run Phase One in 1993 and recently opened the second 66-unit phase.. In addition, CVHC and the Agency completed several single-family self-help units including the award winning Cottonwood- Chuckwalla project in 2003. The project includes 59 units of family apartments on the Site. The project will be a mix of one, two, three and four bedroom units and will include their typical site amenities such as pool, community room, laundry, tot lots, etc. The project will also supply a rich variety of community services modeled after Coyote Run, which shall include, computer classes, after school programs, ESL classes, health education, and music and arts programs. Similar to Coyote Run 2, the financing structure will utilize 4% Tax Credits, MHP, HOME, with CALHFA Bonds for Construction Financing as well as City Funds. Based on the project's initial budget projections, CVHC is requesting an Agency contribution of $1.2 million, or approximately 10% of the total development budget. The project has received commitments of HOME and MHP funding, and will cost approximately $16 million to construct, which includes the Agency contribution. The Developer has asked for a commitment of up to $1.2 million (or $21,000 per unit) for the gap financing, which will be spread over two fiscal years for cash-flow purposes. Previous housing projects with CVHC and other developers have allowed the Agency to spread payments over several years, including Coyote Run and Vista Sunrise. There are adequate funds in the Agency's current annual Housing Set-Aside Funds to cover this obligation. Jahn S. Raymond Thomas J. Wilsa Director of Com nity and Assistant City Manager Ec6_nomic Development David H. Ready, Ex e w-" erector Attachments: 1. Resolution 2. Owner Participation Agreement 000002 RESOLUTION NO. A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS APPROVING AN OWNER PARTICIPATION AGREEMENT WITH COACHELLA VALLEY HOUSING COALITION AND DESERT HIGHLAND ASSOCIATES, LP TO PROVIDE ASSISTANCE IN THE DEVELOPMENT OF THE ROSA GARDENS APARTMENTS, A 59-UNIT APARTMENT PROJECT ON A 4.45 ACRE SITE AT RADIO ROAD AND MCCARTHY ROAD IN THE DESERT HIGHLAND NEIGHBORHOOD, INCLUDING AGENCY FINANCIAL PARTICIPATION NOT TO EXCEED $1,200,000 IN GAP FINANCING, MERGED PROJECT AREA NO. 1 WHEREAS, the Community Redevelopment Agency of the City of Palm Springs (the "Agency') has established an affordable housing setaside fund in accordance with Section 33000 et. seq. of the California Health and Safety Code; and WHEREAS, the funds are earmarked for the acquisition, construction, or rehabilitation of affordable housing to benefit the community; and WHEREAS, Rosa Gardens Apartments, proposed for low-income families, was approved on February 13, 2008 by the Palm Springs Planning Commission; and WHEREAS, the property developers, Coachella Valley Housing Coalition and Desert Highland Associates, LLC, sought Agency financial assistance to cover a portion of the development cost; and WHEREAS, the property developers, Coachella Valley Housing Coalition and Desert Highland Associates, LLC, have received project funding from State HOME funds and the State Multi-Family Housing Program (MHP) and will submit a Low Income Housing Tax Credit (LIHTC) application to the California Tax Credit Allocation Committee for the July, 2008 application round and have requested Agency assistance to strengthen the application; and WHEREAS, while all of the units are income-restricted under agreements with HOME, MHP the owners shall agree to restrict, though a Regulatory Agreement approved as an attachment to the Disposition and Development Agreement, the rents on 49% of the proposed units (59) to levels affordable to families with incomes no more than 60% of Area Median Income (AMI); and NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs, as follows: 000003 SECTION 1. The above recitals are true and correct and incorporated herein. SECTION 2. Pursuant to the California Environmental Quality Act (CEQA), the Community Redevelopment Agency finds as follows: a) The City Council adopted a Mitigated Negative Declaration for the project based on the preparation of an Initial Study and the recommendation of the Planning Commission. Mitigation measures are included in the project design and adopted as part of the Conditions of Approval for the Project. b) The Agency finds that the Planning Commission adequately discussed the potential significant environmental effects of the proposed project (land use, traffic/circulation, parking, air quality, noise, aesthetics, geology/soils, water quality, drainage, public utilities, public services, archaeological/historic resources, public controversy, and light and glare). The Community Redevelopment Agency further finds that the Mitigated Negative Declaration reflects its independent judgment. SECTION 3. The Developer has proposed building 59 low- and very low- income apartment units on the site, including 8 one-bedroom units, 23 two-bedroom units, 23 three bedroom units, and 5 four-bedroom units ranging in size from 600 square feet to 1,400 square feet. The project, while receiving several reductions in development standards and a density bonus required under Section 65915 of the California Government Code, contains significant architectural and landscaping upgrades as well a community building and tot lots. This project helps the City meet its requirements to provide affordable housing under California law. SECTION 4. The OPA effectuates the purposes of the Community Redevelopment Law as it is intended to eliminate blight and promote the health, safety and general welfare of the people of Palm Springs. SECTION 6. The proposed project is consistent with the Five Year Implementation Plan and Housing Compliance Plan for the 000064 Palm Springs Community Redevelopment Agency, insofar as this project will provide additional housing for persons of low or moderate income within the City of Palm Springs. SECTION 7. Based on foregoing reasons, this Owner Participation Agreement with Coachella Valley Housing Coalition and Desert Highland Associates, LLC is hereby approved and incorporated herein by this reference. SECTION 8. The Chairman, or his designee, is hereby authorized to execute on behalf of the Agency the Owner Participation Agreement and other documents necessary to the Agreement, and make minor changes as may be deemed necessary, in a form approved by Agency Counsel. PASSED, APPROVED, AND ADOPTED THIS DAY OF FEBRUARY, 2008. STEVE POUGNET, CHAIRMAN ATTEST: James Thompson, City Clerk CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, do hereby certify that Resolution No. is a full, true and correct copy, and was adopted at a regular meeting of the Palm Springs City Council on the day of , 2008, by the following vote: AYES: NOES: ABSENT: ABSTAIN: James Thompson, City Clerk City of Palm Springs, California OWNER PARTICIPATION AGREEMENT By and Between COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS and DESERT HIGHLANDS ASSOCIATES, A California Limited Partnership Desert Highlands Project SPS/GianiOPA 2/13/2008 555788 I 000006 TABLE OF CONTENTS Page No. I. [§1001 SUBJECT OF AGREEMENT.................................................................................I A. [§101] Purpose of this Agreement...........................................................................1 B. [§102] The Redevelopment Plan.............................................................................1 C. [§103] The Project Area..........................................................................................2 D. [§104] The Site........................................................................................................2 E- [§105] Parties to this Agreement.............................................................................2 1 [§106] The Agency............................................................ ..2 2. [§107] The Participant; Prohibition on Assignment of Agreement....... . • ...... .............................................................................2 E- [§200] DEVELOPMENT OF THE SITE ........................................................3 A. [§201] Development of the Site by the Participant .................................................3 1. [§202] Scope of Development........ ..............................................3 2. [§203] Construction Plans,Drawings and Related Documents .. ......................................................... .. ..................3 3. [§204] Cost of Construction............................................... ...............5 4. [§205] Construction Schedule.....................................................................5 5. [§206] Indemnification; Bodily Injury, Property Damage and Workers' Compensation Insurance...........................................5 6. [§207] City and Other Governmental Agency Pen-nits................................6 7. [§208] Rights of Access ................................................... . ......................7 8. [§209] Local, State and Federal Laws............................. .........................7 9. [§210] Antidiscrimination During Construction.........................................7 i 2/13/2008 555798.1 000007 Page No. B. [§211] [INTENTIONALLY OMITTED] ................................................................7 C. [§212] Project Loan... • .......................................................................................8 D. [§213] Taxes, Assessments, Encumbrances and Liens .........................................10 E- [§214] Prohibition Against Transfer of the Site and the Buildings or Structures Thereon................................................................10 F. [§215] Security Financing; Rights of Holders.......................................................I l 1. [§216] No Encumbrances Except Mortgages, Deeds of Trust, Sales and Leases-Back or Other Financing for Development ...........................................................11 2. [§217] Holder Not Obligated to Construct Improvements -------------------------------------------------------------------------11 3. [§218] Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders......................................................11 4. [§219] Failure of Holder to Complete Improvements..................._-..-------12 5. [§220] Right of Agency to Cure Mortgage, Deed of Trust or Other Security Interest Default.........................................13 G. [§221] Right of the Agency to Satisfy Other Liens on the Site.............................13 H. [§222] Certificate of Completion..........................................................................13 III. [§300] USE OF THE SITE ................................................................. ............14 A. [§301] Uses; Priority to Project Area Displacees; Regulatory Agreement and Declaration of Covenants and Restrictions..................................................... ........14 B. [§302] Obligation to Refrain From Discrimination...... .......15 C. [§303] Form of Nondiscrimination and Nonsegregation Clauses.................................... . ........................15 D. [§304] Effect and Duration of Covenants..................................................16 ii 2n3/2008 555�88� Page No- IV. [§400] DEFAULTS, REMEDIES AND TERMINATION...............................................17 A. [§401] Defaults--General.............. . .. .. ..................................................... 17 B. [§402] Legal Action............... .. ...........................................................17 1. [§403] Institution of Legal Actions; Attorneys' Fees................................17 2. [§404] Applicable Law . ...........................................................................IS 3. [§405] Acceptance of Service of Process................................. ..........18 C. [§406] Rights and Remedies are Cumulative........................................................18 D. [§407] Damages........................................ . • .....................................18 E- [§408] Specific Performance. .................................................18 F. [§409] Termination by the Agency........................................................................18 V. [§500] GENERAL PROVISIONS.....................................................................................19 A. [§501] Notices, Demands and Communications Between theParties---------------------------------------------------------------------------------------------------19 B. [§502] Conflicts of Interest......................... • . •• •-• • . ..............................20 C. [§503] Nonliability of Agency Officials and Employees ......................................20 D. [§504] Enforced Delay: Extension of Times of Performance..............................20 E- [§505] Inspection of Books and Records.................................. ........................20 VI. [§600] SPECIAL PROVISIONS........................ ..........................................21 A. [§601] Amendment of Redevelopment Plan.........................................................21 B. [§602] FINTENTIONALLY OMITTED]..............................................................2I C. [§603] Amendments to this Agreement.................................................................21 111 2/13/2008 555798.1 0000a Page No. VII. [§700] ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS.............................21 VIH. [§800] EFFECTIVE DATE OF AGREEMENT...............................................................22 Attachments Attachment No. I Map of the Site Attachment No. 2A Legal Description of the Site Attachment No. 2B Legal Description of the Adjacent Parcel Attachment No. 2C Regulatory Agreement and Declaration of Covenants and Restrictions Attachment No. 3 Schedule of Performance Attaclunent No. 4 ScopeoFDevelopment Attachment No. 5 Intentionally omitted Attachment No. 6 FoTm of Project Note Attachment No. 7 Form of Project Note Deed of Trust iv 2/13/2008 555788 I OWNER PARTICIPATION AGREEMENT THIS AGREEMENT is entered into as of the_th day of 2007, by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS (the "Agency"), and DESERT HIGHLANDS ASSOCIATES, a California Limited Partnership (the "Participant'). The Agency and the Participant agree as follows: I. [§1003 SUBJECT OF AGREEMENT A. [§101] Purpose of this Agreement The purpose of this Agreement is to effectuate the Redevelopment Plan (the "Redevelopment Plan") for the Desert Highlands Project (the "Project") by providing for the development of certain real property (the "Site") included within the boundaries of the Project (the"Project Area"). The Participant will develop a rental housing complex containing fifty-nine (59) rental dwellings on the Site, all of which are to be made available at affordable housing cost to persons and families of low and moderate income, as more particularly described in this Agreement, plus one on-site non-rent-restricted management unit(the "Project'). Pursuant to Section 333342 of the California Health and Safety Code, the Agency has set aside twenty percent (20%) of the tax increment revenues it has received from Merged Project Area Ito be used for the purposes of increasing, improving and preserving the supply of affordable housing in the community (the "Housing Fund Monies"). The Agency will use a portion of these monies to make a loan to the Participant for the development of the Affordable Project. The development of the Site pursuant to this Agreement and the fulfillment generally of this Agreement are in the vital and best interests of the City of Palm Springs, California (the "City"), and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. B. [§102] The Redevelopment Plan This Agreement is subject to the provisions of the Redevelopment Plan for the Merged Project Area I. The Redevelopment Plan for Merged Project Area I was approved and adopted on May 26, 2000, by the City Council of the City of Palm Springs, by Ordinance No. 1583/1584. The Redevelopment Plan, as it now exists and as it may be subsequently amended pursuant to Section 601 hereof, is incorporated herein by reference and made a part hereof as though fully set forth herein. SPB/GIantOPA 2/13/2008 555768.1 000011 C. [§103] The Project Area The Project Area is located in the City of Palm Springs, California, and the exact boundaries thereof are specifically described in the Redevelopment Plan. D. [§104] The Site The Site is that portion of the Project Area shown on the Map of the Site (Attachment No. 1), and is more particularly described in the Legal Description of the Site (Attachment No. 2A). It is the intent of the Participant to retain the Site for the development of the Affordable Project as set forth in this Agreement. E. [§105] Parties to this,Agreement 1. [§106] The Agency The Agency is a public body, corporate and politic, exercising governmental fimctions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000 et seq.). The office of the Agency is located at 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262. "Agency," as used in this Agreement, includes the Redevelopment Agency of the City of San Pablo and any assignee of or successor to its rights,powers and responsibilities. 2. [§107] The Participant: Prohibition on Assigmneat of Agreement The Participant is Desert Highlands Associates, a California Limited Partnership. For purposes of this Agreement, the principal address of the Participant is 45-701 Monroe Street, Suite G, Plaza I, Indio, CA 92201. Wherever the term "Participant" is used herein, such term shall include any permitted nominee, assignee or successor in interest as herein provided. The qualifications and identity of the Participant are of particular concern to the Agency, and it is because of such qualifications and identity that the Agency has entered into this Agreement. Prior to the issuance of a Certificate of Completion for the Site as set forth in Section 222 hereof, except as otherwise provided in this OPA, no voluntary or involuntary successor in interest of the Participant shall acquire any rights or powers under this Agreement, and the Participant shall not assign all or any part of this Agreement without the prior written approval of the Agency. Any such assignment by the Participant in violation of this Agreement 2 2/13/2005 555788 I oa©0 2 shall be void. The Participant qualifies as an `owner participant" as that term is used in the Redevelopment Plan and the Community Redevelopment Law. 11. [§200] DEVELOPMENT OF THE SITE A. [§201] Development of the Site by the Participant 1. [§202] Scope of Development The Site shall be developed as provided in the Scope of Development (Attachment No. 4). 2. [§203] Construction Plans, Drawings and Related Documents The Participant shall prepare and submit construction plans, drawings and related documents for development of the Site to the Agency for architectural and site planning review and written approval as and at the times established in the Schedule of Performance (Attachment No. 3). The construction plans, drawings and related documents shall be submitted in two stages: preliminary and final working drawings. Final drawings and plans are hereby defined as those in sufficient detail to obtain a building permit. The Participant shall also prepare and submit to the Agency for its approval preliminary and final landscaping and finish grading plans for the Site. Such preliminary and final plans shall be prepared and submitted within the times established in the Schedule of Performance (Attachment No. 3), subject to extensions as are authorized herein or as mutually agreed to by the parties hereto. During the preparation of all drawings and plans, Agency staff and the Participant shall hold regular progress meetings to coordinate the preparation of, submission to, and review of construction plans and related documents by the Agency. The Agency and the Participant shall communicate and consult informally as frequently as is necessary to insure that the formal submittal of any documents to the Agency can receive prompt and speedy consideration. If any revisions or corrections of plans approved by the Agency shall be required by any government official, agency, department or bureau having jurisdiction, or any 3 2/13/2008 555788 I gt OOOU�� lending institution involved in financing, the Participant and the Agency shall cooperate in efforts to obtain a waiver of such requirements or to develop a mutually acceptable alternative_ The Agency shall approve or disapprove the plans, drawings and related documents referred to in this Section 203 within the times established in the Schedule of Performance (Attachment No. 3). Approval by the Agency shall not be unreasonably withheld. Any disapproval shall state in writing the reasons for disapproval and the changes which the Agency requests be made. Such reasons and such changes must be consistent with the Scope of Development (Attachment No. 4) and any items previously approved hereunder by the Agency. The Participant, upon receipt of a disapproval based upon powers reserved by the Agency hereunder, shall revise such plans, drawings and related documents and resubmit them to the Agency as soon as possible after receipt of the notice of disapproval, provided that in no case shall the Agency be entitled to require changes inconsistent with the Scope of Development and any previously approved items. If the Participant desires to make any substantial change in the construction plans after their approval by the Agency, the Participant shall submit the proposed change to the Agency for its approval, which approval shall not be unreasonably withheld. A substantial change shall include, without limitation, the following changes, excluding those items generally considered to be tenant improvements: (a) Material changes in the layout, elevation design or square footage; (b) Material changes in the use of exterior finishing materials, substantially affecting architectural appearance or functional use and operation; (c) Material changes in size or design affecting parking, bulk, building coverage or floor area ratio, building height or number of floors, frontage, signage, accessibility of public spaces; (d) Material changes in size or placement of public service or handicapped facilities; (e) Material changes in the number of elevators, stairs and ramps; (f) Material changes in general pedestrian or vehicular circulation in, around or through the public areas of the Project, layout of passenger loading zones, landscaping or size or quality of exterior pavement, and exterior lighting; 4 2n 3/200s 555789.1 000014 (g) Any changes requiring approval of any city, county or state board, body, commission or officer, or any change required by any city, county or state board, body, commission or officer; (h) Any change which would preclude or materially;reduce the ability to use the Affordable Project as intended by this Agreement. If the construction plans, as modified by the proposed change, conform to the requirements of this Section 203, the approvals previously granted by the Agency and the Scope of Development (Attachment No. 4), the Agency shall approve the proposed change and notify the Participant in writing within thirty(30) days after submission to the Agency, 3. [§204] Cost of Construction The cost o[developing the Site and constructing all improvements thereon shall be bonne by the Participant, except For the work to be performed or paid for by the Agency or others. 4. [§205] Construction Schedule The Participant shall begin and complete all construction and development on the Site within the times specified in the Schedule of Performance (Attachment No. 3) or such reasonable extension of said dates as may be granted by the Agency or as provided in Section 504 of this Agreement. The Schedule of Performance is subject to revision from time-to-time as mutually agreed upon in writing between the Participant and the Agency. During the period of construction, but not more frequently than once a month, the Participant shall submit to the Agency a written monthly progress report of the construction when and as requested by the Agency. The report shall be in such form and detail as may reasonably be required by the Agency. 5. [§206] Indemnification; Bodily Injury, Property Damage and Workers' Compensation Insurance During the periods of construction on the Site and until such time as a Certificate of Completion has been issued by the Agency as set forth in Section 222 hereof, the Participant agrees to and shall indemnify, protect, defend and hold the Agency and the City harmless from and against all liability, loss, damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person which shall occur on or adjacent to the Site and which shall be caused by any acts done thereon or any errors or omissions of the Participant or its agents, servants, employees or contractors. The Participant shall not be responsible for (and such indemnity shall not apply to) 5 2/13/2008 i55788 1 000015 any acts, errors or omissions of the Agency or the City, or their respective agents, servants, employees or contractors. The Agency and the City shall not be responsible for any acts, errors or omissions of any person or entity except the Agency and the City and their respective agents, servants, employees or contractors. Prior to the commencement of construction on the Site or any portion thereof, the Participant shall furnish or cause to be furnished to the Agency duplicate originals or appropriate certificates of insurance policies providing the following coverage in the following amounts from insurers acceptable to the Agency's Risk Manager: a. General Liability: $1,000,000 single limit per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Site and the Participant's obligations under this Agreement or the general aggregate limit shall be twice the required occurrence limit; and b. Builders' Risk Property Insurance: Completed value of the improvements on the Site on a Causes of Loss-Special Form. The above-required insurance policies shall narme the Agency and the City as additional insureds and shall be endorsed to provide that coverage shall not be suspended, voided, cancelled or reduced in limit except after thirty (30) days prior written notice to the Agency. The Participant shall include all contractors with whom it has contracted for the performance of work on the Site as insureds under its policies or shall furnish or cause to be furnished separate certificates of insurance for each contractor. All coverages for contractors shall be subject to all of the requirements stated herein. The Participant shall also famish or cause to be furnished to the Agency evidence satisfactory to the Agency that any contractor with whom it has contracted for the performance of work on the Site carries workers' compensation insurance as required by law. Except as otherwise expressly provided herein, the obligations set forth in this Section 206 shall remain in effect only until a Certificate of Completion has been issued as provided in Section 222 hereof. 6. [§207] City and Other Governmental Agency Permits Before commencement of construction or development of any buildings, structures or other work of improvement upon the Site, the Participant 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. The Agency shall provide all assistance deemed appropriate by the Agency to the Participant in securing these permits. 6 2/13/2008 559788 1 000018 7. [§208] Rights of Access For the proposes of assuring compliance with this Agreement, representatives of the Agency and the City shall have the reasonable right of access to the Site without charges or fees and at normal construction hours during the period of construction for the proposes of this Agreement, including, but not limited to, the inspection of the work being performed in constructing the improvements. Any such access shall be tinned and conducted so as not to unreasonably interfere with the work of construction on the Site. Such representatives of the Agency or the City shall be those who are so identified in writing by the Executive Director of the Agency. The Agency and the City shall indemnify the Participant and hold it harmless from any damage caused or liability arising out of this right to access. 8. [§209] Local, State and Federal Laws The Participant shall carry out the construction of the improvements in conformity with all applicable laws, including all applicable federal and state labor standards. When improvements which are considered to be "public works" tinder State law are constructed, the Participant shall, and shall cause its contractor(s) to, pay prevailing wages in the construction of the improvements as those wages are determined pursuant to Labor Code Sections 1720 et seq. and implementing regulations of the Department of Industrial Relations and comply with the other applicable provisions of Labor Code Sections 1720 et seq. and implementing regulations of the Department of Industrial Relations. The Participant shall, and shall causc its contractor(s) to, keep and retain such records as are necessary to determine that prevailing wages have been paid as required by law. The Participant shall, and the construction contracts with Participant's contractor(s) shall require the contractor(s) to, indemnify, hold harmless and defend (with counsel reasonably acceptable to the Agency and the City) the Agency and the City against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including the Participant, its contractor(s) and their subcontractors, if any) to pay prevailing wages as required by law or to comply with the other applicable provisions of Labor Code Sections 1720 et seq. and implementing regulations of the Department of Industrial Relations in connection with the construction of the improvements on the Site and any other work undertaken in connection with the Site. 9. [§210] Antidiscrimination During Construction The Participant, for itself and its successors and assigns, agrees that in the construction of the improvements provided for in this Agreement, the Participant shall use its best efforts not to discriminate against any employee or applicant for employment because of race, color, creed, religion, sex, marital status, ancestry or national origin. B. [§211] [INTENTIONALLY OMITTEDI 7 2/13/2008 i55788,1 C. [§212] Project Loan In consideration of the agreements and covenants of the Participant hereunder, the Agency agrees to loan to the Participant (the "Loan") the sum of ONE MILLION TWO HUNDRED THOUSAND DOLLARS ($1,200,000.00) with simple interest of one percent (1%) per antrum. Subject to satisfaction of all conditions precedent thereto, the Project Loan shall be disbursed to the Participant as soon as possible following execution of this Agreement by the Agency, but in any event within tea (10) days after this Agreement has been executed by the Agency. The Project Loan shall be used only for the following purposes: 1. $600,000.00 of the Project Loan may be used for reimbursement of predevelopment costs for the Project; and 2. The balance of the Project Loan shall be used for the development of the Site in accordance with the approved development budget; Participant's request for expenditure for development costs shall identify the specific use of the funds and shall be submitted in writing to the Agency for approval, which approval shall not be unreasonably withheld. Repayment of the Loan shall be, according to the terms of a promissory note (the "Project Note") to be executed by the Participant in favor oFtbe Agency in substantially the form attached hereto and incorporated herein by reference as Attachment No. 6. The terms of the Project Note shall provide for loan bearing simple interest of one percent (1%) per annum to be repaid in full fifty-five (55) years from the close of the permanent financing amount but not later than December 31, 2065. The Note shall be secured by a deed of trust (the "Deed of Trust") on the Site in substantially the form attached hereto as Attachment No. 7. 1. Subordination The Agency agrees that the Deed of Trust shall be subject and subordinate to the terms and conditions of deeds of trust and/or regulatory agreements securing the following financing from the following lenders (collectively, the "Senior Lenders"), 8 2/13/2008 555788 I 000018 �(}}�ry 0 9('�i p U " provided that each Senior Lender agrees to include in its deed of trust or in a separately recorded subordination agreement with the Agency the following conditions, or other conditions reasonably acceptable to the Agency and the applicable Senior Lender: (a) the Agency shall receive copies of any notices of default issued by the Senior Lender to the Participant; and(b) the Agency shall have the right to cure any default by the Participant within ninety (90) days after a notice of default: a. A construction and permanent loan financed with the proceeds of tax-exempt bonds; b. A Multifamily Housing Program loan from the State of California Department of Housing and Community Development (the "MHP Loan') in the approximate amount of Four Million One Hundred Thousand Dollars ($4,100,000.00); c. A HOME loan from the State of Califonia, Department of Housing and Community Development in the approximate amount of Four Million Thirty Six Thousand Four Hundred Forty One Dollars ($4,036,441). d. Regulatory agreements executed by the Participant in favor of the State of California Department of Housing and Community Development in connection with the MHP and HOME Loans; e. A regulatory agreement executed by the Participant in favor of the California Tax Credit Allocation Committee in connection with the tax credit syndication of the Affordable Project. 9 2/13/2008 sss,ss.i 0 0 a 0:11 9 b. Conditions Precedent to Disbursement Prior to the disbursement of the Loan: (1) The Participant shall have obtained and delivered to the Agency an ALTA Lender's Policy of Title Insurance (the "Title Policy"), insuring the validity and the priority of the lien of the Deed of Trust upon the Site, subject only to the construction and permanent loans described above to which the Agency has agreed the Project Loan will be subordinate and other matters of record approved by the Agency in writing, and showing fee simple title to the Site in the name of the Participant; and (2) The Participant shall have executed and delivered the Note, the Deed of Trust, the Regulatory Agreement and Declaration of Covenants and Restrictions (the "Covenants") (described in Section 301 of this Agreement) and any other documents reasonably requested by the Agency to evidence and secure the Project Loan. D. [§213] Taxes. Assessments, Encumbrances and Liens The Participant shall not place or allow to be placed on any portion of the Site any mortgage, trust deed, encumbrance or lien not approved by the Agency as provided in this Agreement, provided, however, that this prohibition shall not apply following the issuance of a Certificate of Completion for the Site as provided in Section 222 of this Agreement except to the extent prohibited or restricted by the Note, the Deed of Trust or the Covenants. The Participant shall remove or have removed any such unauthorized levy or attachment made on the Site (or any portion thereof), or shall assure the satisfaction thereof, within a reasonable time, but in any event prior to a sale thereunder. Nothing herein contained shall be deemed to prohibit the Participant from contesting the validity or amounts of any tax, assessment, encumbrance or lien, nor to limit the remedies available to the Participant in respect thereto, including but not limited to withholding the payment of any tax, assessment, encumbrance or lien during the pendency of any contest thereof or challenge thereto. E. [§214] Prohibition Against Transfer of the Site and the Buildings or Structures Thereon The Participant shall not, except as expressly permitted by this Agreement, sell, transfer, convey, assign or lease the whole or any part of the Site or the buildings or improvements thereon without the prior written approval of the Agency,which approval shall not be unreasonably withheld, provided, however, that this prohibition shall not apply following the issuance of a Certificate of Completion for the Site as provided in Section 222 of this Agreement except to the extent prohibited or restricted by the Note, the Deed of Trust or the Covenants. This prohibition shall not be deemed to prevent the granting of easements or permits to facilitate the development of the Site or to prohibit or restrict the leasing or rental for occupancy of 10 2n 3/2oos i55788 I 000020 completed dwelling units so long as a certificate of occupancy therefor has been issued by the City. In the absence of specific written agreement by the Agency, no such sale, transfer, conveyance, assignment or leasing, or approval by the Agency, shall be deemed to relieve the Participant or any other party from any obligations under this Agreement. F. [§215] Security Financing; Rights of Holders 1. [§216] No Encumbrances Except Mortgages, Deeds of Trust Sales and Leases-Back or Other Financing for Development Notwithstanding Sections 213 and 214 of this Agreement, mortgages, deeds of trust, sales and leases-back or any other form of conveyance required for any reasonable method of financing are permitted before issuance of a Certificate of Completion for the Site but only for the purpose of securing loans of funds to be used for financing the acquisition and development of the Site and any other expenditures necessary and appropriate to develop the Site under this Agreement. The Participant shall notify the Agency in advance of any mortgage, deed of trust, sale and lease-back or other form of conveyance for financing if the Participant proposes to enter into the same before issuance of a Certificate of Completion for the Site. The Participant shall not enter into any such conveyance for financing without the prior written approval of the Agency. The words "mortgage" and "deed of trust," as used herein, include all other appropriate modes of financing real estate acquisition, construction and land development. 2. [§217] Holder Not Obligated to Construct Improvements The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shall in no way be obligated by the provisions of this Agreement to construct or complete the improvements or to guarantee such construction or completion. Nothing in this Agreement shall be deemed to construe, permit or authorize any such 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 Agreement. 3. [§218] Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders Whenever the Agency shall deliver any notice or demand to the Participant with respect to any breach or default by the Participant in completion of construction of the improvements, the Agency shall at the same time deliver a copy of such notice or demand 11 2/13/2008 555793.1 000023: to each holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement who has previously made a written request to the Agency therefor. 4. [§219] Failure of holder to Complete Improvements In any case where, six (6) months after written notice to the Participant and each holder of record of any mortgage, deed of trust or other security interest encumbering the Site of a default by the Participant in completion of construction of improvements under this Agreement, the holder of record of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon the uncompleted portion of the Site has not exercised the option to construct, or if it has exercised the option and has not proceeded diligently with construction, the Agency may purchase the mortgage, deed of trust or other security interest by payment to the holder of the amount of the unpaid debt, plus any accrued and unpaid interest. If the ownership of the uncompleted portion of the Site has vested in the holder, the Agency, if it so desires, shall be entitled to a conveyance of such portion of the Site from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: a_ The unpaid mortgage, deed of trust or other security interest debt at the tirne title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings); b. All expenses with respect to foreclosure; c_ The net expenses, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of such portion of the Site; 12 211 3/2008 555788.1 000022 d. The costs of any authorized improvements made by such holder; and e. An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. 5. [§220] Right of Agency to Cure Mortgage, Deed of Trust or Other Security Interest Default 1n the event of a default or breach by the Participant of a mortgage, deed of trust or other security interest applicable to the Site prior to the completion of development on the Site, and the holder has not exercised its option to complete the development, the Agency may cure the default prior to completion of any foreclosure. In such event, the Agency shall be entitled to reimbursement from the Participant of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be entitled to a lien upon the Site to the extent of such costs and disbursements. Any such lien shall be subject to mortgages, deeds of trust or other security interests executed for the sole purpose of obtaining funds to develop the Site as authorized herein- G. [§221] Right of the Agency to Satisfy Other Liens on the Site Prior to the issuance of a Certificate of Completion for the Site as provided in Section 222 hereof, and after the Participant has had a reasonable time to challenge, cure or satisfy any liens or encumbrances on the Site, the ,Agency shall have the right to satisfy any such liens or encumbrances, provided, however, that nothing in this Agreement shall require the Participant to pay or make provision for the payment of any tax, assessment, lien or charge so long as the Participant in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject such uncompleted portion of the Site to forfeiture or sale. II. [§222] Certificate of Completion Promptly after completion of all construction and development to be completed by the Participant upon the Site, the Agency shall fiunish the Participant with a Certificate of Completion upon written request therefor by the Participant. The Certificate of Completion shall be in such form as to permit it to be recorded in the Office of the County Recorder of Riverside County, The Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction required by this Agreement upon the Site. After issuance of such Certificate of Completion, any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Site covered by said Certificate of Completion shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement, except that such party shall be bound by any covenants contained in the deed, lease, mortgage, deed of trust, contract or other instrument of 13 2nsi2008 i557gg.� transfer in accordance with the provisions of Sections 301-304 of this Agreement. Except as otherwise provided herein, after the issuance of a Certificate of Completion for the Site, neither the Agency, the City nor any other person shall have any rights, remedies or controls with respect to the Site that it would otherwise have or be entitled to exercise under this Agreement as a result of a default in or breach of any provision of this Agreement, and the respective rights and obligations of the parties with reference to the Site shall be as set forth in Sections 301-304 hereof. The Agency shall not unreasonably withhold issuance of the Certificate of Completion. If the Agency refuses or fails to furnish the Certificate of Completion after written request from the Participant, the Agency shall, within ten (10) days of the next regularly scheduled Agency meeting after such written request, provide the Participant with a written statement of the reasons the Agency refused or failed to furnish the Certificate of Completion. The statement shall also contain the Agency's opinion of the action the Participant must take to obtain the Certificate of Completion. If the reason for such refusal is confined to the immediate unavailability of specific items or materials for landscaping, the Agency will issue its Certificate of Completion upon the posting of a bond by the Participant with the Agency in an amount representing a fair value of the work not yet completed. The Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Participant to any holder of a mortgage or any insurer of a mortgage securing money loaned to finance the improvements or any part thereof. The Certificate of Completion is not notice of completion as referred to in California Civil Code Section 3093. I. [§223] Partnership Management Fee Participant may pay its general partner a partnership management fee not to exceed $25,000 per year, increasing by 3%per annum. 111. [§300] USE OF THE SITE A. [§301] Uses; Priority to Project Area Displacees; Affordable Housing Covenant Agreement The Participant covenants and agrees for itself, its successors, its assigns and every successor in interest that the Site shall be devoted to the development of an affordable housing complex containing approximately fifty-eight (58) affordable rental dwelling units (the "affordable units") and one (1) non-rent-restricted management unit. Twenty-eight (28) of the affordable units shall be made available for occupancy by persons or families earning no more than fifty percent (50%) or eighty percent (80%) of Riverside County Median Income (as defined below), adjusted for household size, For purposes of this Agreement, "Riverside County Median Income" shall be determined by reference to the regulations published by the California Department of Housing and Community Development pursuant to Health and Safety Code Section 50093, or its successor. 14 2/13/2008 sss�ss i The Participant further covenants and agrees for itself, its successors, its assigns and every successor in interest that the affordable units constructed on the Site shall remain available for occupancy by persons or families of very low and low income for a period of not less than fifty-Cave (55) years from the date of issuance of the Certificate of Completion for the Site. The Participant further covenants and agrees for itself, its successors, its assigns and every successor in interest that the Participant, its successors, its assigns and every successor in interest to the Site will give priority in offering the rental of available dwelling units constructed on the Site to qualified persons or families of very low or low income displaced from other housing in the Project Area as a result of redevelopment activities of or assisted by the Agency. To effectuate the covenants contained herein, concurrently with its execution of this Agreement, the Participant shall execute and deliver to the Agency the Covenants in substantially the form attached hereto as Attachment No. 5. The Covenants shall be recorded against the Site concurrently with the recordation of the Deed of Trust described in Section 212 hereof B. [§302] Obligation to Refrain From Discrimination The Participant covenants by and for itself and any successors in interest 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, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Participant 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 Site. The foregoing covenants shall run with the land. C. [§303] Form of Nondiscrimination and Nonsegregation Clauses The Participant shall refrain from restricting the rental, sale or lease of the Site on the basis of race, color, creed, religion, sex, 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: 1. 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, 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 himself or herself, or any person claiming under or through him or her, establish or permit 15 2/13/2008 5557881 000025 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." 2. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming wider 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, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall the lessee himself or herself, or any person claiming wider 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 leased." 3. In contracts: "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, nor shall the transferee himself or herself, 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 of the land." D. [§304] Effect and Duration of Covenants Except as otherwise provided, the covenants contained in this Agreement shall remain in effect until the termination date of the Redevelopment Plan for the Merged Project Area 1. The covenants against discrimination shall remain in effect in perpetuity. The covenants established in this Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, the City and any successor in interest to the Site or any part thereof. The Agency is deemed the beneficiary of the tennis and provisions of this Agreement and of the covenants running with the land for and in its own rights and for the proposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. This Agreement and the covenants shall run in favor of the Agency without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Site, any parcel or subparcel, or in the Project Area. The Agency shall have the right, if this 16 2/13/2008 $ss788 1 -000026 Agreement or the covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and the covenants may be entitled- TV. [§400] DEFAULTS, REMEDIES AND TERMINATION A. [§401] Defaults--General Subject to the extensions of time set forth in Section 504, failure or delay by either party to perform any material tern or provision of this Agreement constitutes a default under this Agreement Subject to the following notice and cure rights, 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. The injured party shall give written notice of default to the party in default specifying the default complained of by the injured party. Except as required to protect against further damages and except as otherwise expressly provided in Sections 407 and 408 of this Agreement, the injured party may not institute proceedings against the party in default until thirty (30) days after giving such notice_ Failure or delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. Except as otherwise expressly provided in this Agreement, any failure or delay by either party in asserting any of its rights or remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies or deprive such 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. B. [§402] Legal Actions 1. [§403] Institution of Legal Actions; Attorneys' Fees In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default, or recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Riverside, State of California, in an appropriate municipal court in that County or in the appropriate Federal District Court in the State of California. If either party brings a suit or action arising out of this Agreement, the prevailing party shall be entitled to recover, as an element of its cost of suit and not as damages, reasonable attorneys' fees incurred in bringing such suit or action or enforcing any judgment granted therein, to be fixed by the court. 17 2n 3/2008 555788 1 000027 2. [§404] Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 3. [§405] Acceptance of Service of Process In the event that any legal action is commenced by the Participant against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director of the Agency or in such other manner as may be provided by law. In the event that any legal action is commenced by the Agency against the Participant, service of process on the Participant shall be made by personal service upon any corporate officer of the General Partner of the Participant or in such other manner as may be provided by law and shall be valid whether made within or without the State of California. C. [§406] Rights and Remedies are Cumulative Except as otherwise expressly stated in this 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 time or different times, of any other rights or remedies for the same default or any other default by the other party. D. [§407] Damages If the Participant or the Agency 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 or commenced to be cured by the defaulting party within ninety(90) days after service of the notice of default, the defaulting party shall be liable to the other party for any damages caused by such default- E. [§408] Specific Performance If the Participant or the Agency defaults under 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 commenced to be cured by the defaulting party within forty-five (45) days of service of the notice of default, the nondefaulting party, at its option, may institute an action for specific performance of the terms of this Agreement. F. [§409] Termination by the Agency In the event that prior to the disbursement of the Project Loan: 18 2/13/2008 555788.1 GOG023 1. The Participant transfers or assigns or attempts to transfer or assign this Agreement or any rights herein or in the Site in violation of this Agreement; or 2. The Participant fails to satisfy all of the conditions precedent to disbursement of the Project Loan, as the same are set forth in Section 212; and such matter is not cured within the time periods in Section 401, then this Agreement, and any rights of the Participant or any assignee or transferee in this Agreement pertaining thereto or arising therefrom with respect to the Agency, may, at the option of the Agency, be terminated by the Agency by written notice thereof to the Participant. Upon such termination, neither the Agency nor the Participant shall have any further rights against or liability to the other under this Agreement. V. [§500] GENERAL PROVISIONS A. [§501] Notices Demands and Communications Between the Parties Formal notices, demands and communications between the Agency and the Participant shall be in writing and shall be personally delivered (including by means of professional messenger service), sent by a recognized overnight courier, or sent by express or certified mail, postage prepaid, return receipt requested, or sent by facsimile transmission with answer back acknowledged followed by delivery of an original, and shall be addressed as follows: Agency: Cormnunity Redevelopment Agency of the City of Palm Springs 3200 East Tahquitz Canyon Way Palm Springs, CA 92262 Attn: Executive Director Participant: Desert Highlands Associates c/o Coachella Valley Housing Coalition 45-701 Monroe Street, Suite G, Plaza I Indio, CA 92201 Attn: Executive Director Written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time-to-time designate by notice in accordance with this Section 501. Notices which are delivered by hand, ovemight courier or facsimile shall be deemed received upon delivery. The inability to deliver any notice because of a changed address of which no notice was given, or rejection or other refusal to accept any notice, shall be deerned to be the receipt of the notice as of the date of such inability to deliver or rejection or refusal to accept. Delivery. 19 2/13/2008 55.17891 000029 B. [§502] Conflicts of Interest No member, official or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to this Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. The Participant warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement. C. [§503] Nonliability of Agency Officials and Employees No member, official or employee of the Agency shall be personally liable to the Participant in the event of any default or breach by the Agency or for any amount which may become due to the Participant or on any obligations under the terms of this Agreement. D. [§504] Enforced Delay: Extension of Times of Performance In addition to the specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; or quarantine restrictions. An extension of time for any such cause shall only be for the period of the enforced delay, which period shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other parties more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Agreement may also be extended in writing by the Agency and the Participant. E. [§505] Inspection of Books and Records The Agency has the right, upon not less than seventy-two (72) hours written notice, at all reasonable tunes, to inspect the books and records of the Participant pertaining to the Site as pertinent to the purposes of this Agreement. The Participant also has the right, upon not less than seventy-two (72) hours written notice, at all reasonable times, to inspect the books and records of the Agency pertaining to the Site as pertinent to the purposes of this Agreement. 20 2/13/2008 5557891 pp 0�'y3 n 060 y VI. [§6001 SPECIAL.PROVISIONS A. [§601] Amendment of Redevelopment Plan Pursuant to provisions of the Redevelopment Plan for modification or amendment thereof, the Agency agrees that no amendment which changes the uses or development permitted on the Site or changes the restrictions or controls that apply to the Site or otherwise directly affect the use of the Site shall be made or become effective without the prior written consent of the Participant. Amendments to the Redevelopment Plan applying to other property in the Project Area shall not require the consent of the Participant. B. [§6021 [INTENTIONALLY OMITTED] C. [§6031 Amendments to this Agreement The Participant and the Agency agree to mutually consider reasonable requests for amendments to this Agreement which may be made by any of the parties hereto, lending institutions, tax credit investors, or bond counsel or financial consultants to the Agency, provided such requests are consistent with this Agreement and would not substantially alter the basic business terms included herein. VU, [§7001 ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS This Agreement is executed in two (2) duplicate originals, each of which is deemed to be an original. This Agreement comprises pages 1 through , inclusive, and Attachment Nos. I through 7, inclusive, attached hereto and incorporated herein by reference, all of which constitute the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the Agency and the Participant, and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and the Participant. 21 2/13/2009 555788 1 VM, [§800] EFFECTIVE DATE OF AGREEMENT The effective datc of this Agreement shall be the date when this Agreement has been signed by the Agency. 2007 COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS By Executive Director "AGENCY" 2007 DESERT HIGHLANDS ASSOCIATES, a California Limited Partnership By: Tlaquepaque Housing Corporation, a California nonprofit public benefit corporation, its general partner By Title "PARTICIPANT" 22 2/13/2008 sss788 1 000032 ATTACHMENT NO. 1 MAP OF THE SITE [TO BE INSERTED] Attachment No. I SPB/GimtOPA Page I of 1 2/13/2008 555788 1 000033 ATTACHMENT NO. 2A LEGAL DESCRIPTION OF THE SITE ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND MORE PARTICULARLY DESCRIBED AS FOLLOWS: Attachment No. 2A SPS/GimtOPA Page I of 1 2/13/2008 5$5788 1 DQOQ3'4 ATTACHMENT NO. 2B LEGAL DESCRIPTION OF THE ADJACENT PARCEL ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND MORE PARTICULARLY DESCRIBED AS FOLLOWS: Attachment No. 2B SPB/GiantOPA Page 1 of 1 2/13/2008 555788 1 000039 ATTACHMENT NO. 3 SCHEDULE OF PERFORMANCE Action Date 1. Submission - Preliminary Construction January 1, 2008 Drawings and Landscaping and Grading Plans. The Participant shall prepare and submit to the Agency for review and approval Preliminary Construction Drawings and Landscaping and Grading Plans for the Site. (Section 203) 2. Approval Preliminary Construction Within 30 days after submission of the Drawings and Landscaping and GradingP lans. preliminary construction drawings and The Agency shall approve or disapprove the landscaping and grading plans. Preliminary Construction Drawings and Landscaping and Grading Plans. (Section 203) 3. Submission--Final Construction Drawings and April 1, 200E Landscaping and Grading Plans. The Participant shall prepare and submit to the Agency for review and approval Final Construction Drawings and Landscaping and Grading Plans for the Site. (Section 203) 4. Approval -- Final Construction Drawings and Within 30 days after receipt thereof by the Landscaping and Grading Plans. The Agency Agency. shall approve or disapprove the Final Construction Drawings and Landscaping and Grading Plans. (Section 203) 5. Submission -- Certificates of Insurance. The Within 30 days before the commencement Participant shall furnish to the Agency of construction of the Participant's duplicate originals or appropriate certificates of improvements on the Site. bodily injury and property damage insurance policies. (Section 206) 6. Governmental Permits. The Participant shall Prior to the date set forth herein for the obtain any and all permits required by the City commencement of construction of the or any other governmental agency for Participant's improvements on the Site. development of the Site. (Section 207) Attachment No. 3 SPB/GimtOPA Page 1 of 2 2/13/2008 555788 1 00003E Action Date 7. Commencement of Construction of Participant will commence construction as Participant's Imurovements. The Participant soon as deemed reasonable and possible shall commence construction of the after the Participant has secured all the improvements to be constructed on the Site, necessary project financing, bond (Section 205) issuance, permits, insurance, lender approval, and other permissions needed, but in any event no later than December 31, 2009. 8. Completion of Construction of Participant's Within 24 months of commencement of Improvements. The Participant shall complete construction. construction of the improvements to be constructed on the Site. (Section 205) 9. Issuance -- Certificate of Completion. The Promptly after completion of all Agency shall furnish the Participant with a construction required to be completed by Certificate of Completion. (Section 222) the Participant on the Site and upon written request therefor by the Participant. Attachment No. 3 SPa/clantorA Page 2 of 2 2/13/2008 i55788 I ATTACHMENT NO. 4 SCOPE OF DEVELOPMENT 1. PRIVATE DEVELOPMENT A. General The Participant agrees that the Site shall be developed and improved in accordance with the provisions of this Agreement and the construction plans, drawings and related documents approved by the Agency and the City pursuant hereto. The Site Plan for development of the Site is attached to this Scope of Development as Exhibit A and incorporated herein by this reference and is approved by the Agency as part of its approval of this Agreement. B. Participant's Improvements The Participant shall construct, or cause to be constructed, on the Site an affordable housing complex containing fifty-eight (58) rental dwelling units and one (1) on-site management units, for a total of fifty-nine (59) units. The Participant shall also construct, or cause to be constructed, on the Site a community room whose size shall be, not less than 1,500 square feet and will include a computer technology center. Other community space to include the Following proposed uses, or such other uses as reasonably approved by the Agency: • On-site laundry facilities; • Computer lab; and • Residential community space. The Participant shall also construct not less than one hundred twenty-three (123) parking spaces on the Site, including five (5)handicapped accessible spaces. C. Architecture and Design The Participant's improvements shall be of high architectural quality, shall be well-landscaped, and shall be effectively and aesthetically designed. The shape, scale of volume, exterior design and exterior finish of the buildings must be consistent with, visually related to, physically related to, and an enhancement of adjacent buildings within the Project Area. The Attachment No. 4 SPS/GiantOPA Page 1 of 2 2/13/2008 5557881 000038 Participant's plans submitted to the Agency shall describe in detail the architectural character intended for the Participant's improvements- D. Landscaping Landscaping shall embellish all open spaces upon the Site to integrate the Participant's improvements with adjacent sites within the Project Area. Landscaping includes such materials as paving, trees, shrubs and other plant materials, landscape containers, plaza furniture, top soil preparation, automatic irrigation, landscape and pedestrian lighting. Landscaping shall carry out the objectives and principles of the Agency's reasonable requirement to accomplish a high-quality aesthetic environment. E. Applicable Codes The Participant's improvements shall be constructed in accordance with the Uniform Building Code (with City modifications) and the Palm Springs Municipal Code. Attachment No. 4 SPB/GimtOPA Page 2 of 2 2/13/2008 $55788 I Qa0Ci�9 EXHIBIT A SITE PLAN [TO BE INSERTED] Attachment No. 7 SPB/GianIOPA Exhibit A-2 2/13/2005 555786.1 oaoo�o FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS 3200 E. Tahquitz Canyon Way Palm Springs,CA 92262 Attn: Executive Director (Space Above This Line for Recorder's Office Use Only) REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Agreement") is made and entered into this day of 2007, by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic ("Agency"), the CITY OF PALM SPRINGS, a municipal corporation and charter city ("City"), and DESERT HIGHLANDS ASSOCIATES, a California Limited Partnership ("Owner"). RECITALS : A. Pursuant to an Owner Participation Agreement by and between Agency and Owner dated , 2007 (the "OPA") Agency has provided to Owner financial assistance in the amount of One Million Two Hundred Thousand Dollars ($1,200,000.00) (the "Agency Assistance"), all for the purpose of assisting Owner in the acquisition of real property and the development of a residential apartment complex thereon for rental to very low and low income households, on that certain real property located in the City of Palm Springs, County of Riverside, State of California, more particularly described in Exhibit "A" attached hereto and incorporated herein by reference (the "Site"). B. Pursuant to the OPA, Owner has agreed to develop, construct, and maintain a rental apartment housing project consisting of fifty-nine (59) total residential units (including one (1) resident manager's unit) (hereinafter referred to collectively as the "Project") on the Site. The Project is also referred to in the OPA as the "Project," and is further described in the Scope of Development attached to the OPA. C. The Agency and the City have fee or easement interests in various streets, sidewalks and other property within the City and are responsible for the planning and development of land within the City in such a manner so as to provide for the health, safety and welfare of the residents of the City_ That portion of the Agency's and City's interest in real property most directly affected by this Agreement is depicted in Exhibit `B" attached hereto and incorporated herein by reference ("Public Parcel"). 01003/0013/34739.01 V 0®V 4 1" 555790.1 D. Agency, City, and Owner now desire to place restrictions upon the use and operation of the Project, in order to ensure that the Project shall be operated continuously as a rental apartment housing project available for rental by very low and low income persons for the term of this Agreement. E. It is the intent of the parties that the terms hereof shall be binding on the Owner and its successors in interest in the Site for so long as this Agreement shall remain in effect. AGREEMENT : NOW, THEREFORE, the Owner, City, and Agency declare, covenant and agree, by and for themselves, their heirs, executors, administrators and assigns, and all persons claiming under or tkough them, that the Site shall be held, transferred, encumbered, used, sold, conveyed, leased and occupied, subject to the covenants and restrictions hereinafter set forth, all of which are declared to be in furtherance of a common plan for the improvement and sale of the Site, and are established expressly and exclusively for the use and benefit of the Agency, the residents of the City of Palm Springs, and every person renting a dwelling unit on the Site. A. DEFINITIONS. 1. Affordable Low Income Rent. As used in this Agreement, the term "Affordable Low Income Rent" shall mean annual rentals whose amount does not exceed the maximum percentage of income that can be devoted to rent as set forth by Health & Safety Code Section 50053, or its successor, which is currently thirty percent (30%) of sixty percent (60%) of the Riverside County Median Income adjusted for the family size appropriate for the Unit. 2. Affordable Rent. As used in this Agreement, the term "Affordable Rent" shall refer to collectively Affordable Very Low Income Rent and Affordable Low Income Rent. 3. Affordable Very Low Income Rent. As used in this Agreement, the term "Affordable Very Low Income Rent" shall mean annual rentals whose amount does not exceed the maximum percentage of income that can be devoted to rent as set forth by Health & Safety Code Section 50053, or its successor, which is currently thirty percent (30%) of fifty percent (50%) of the Riverside County Median Income adjusted for the family size appropriate for the Unit. 4. Eligible Tenant. As used in this Agreement, the term "Eligible Tenant" shall refer to a Very Low Income Tenant or a Low Income Tenant. 5. Riverside County Median Income. For purposes of this Agreement, the "Riverside County Median Income" shall be determined by reference to the regulations published by the California Department of Housing and Cormmunity Development pursuant to Health and Safety Code Section 50093, or its successor. 2 555790.1 D 0 D D t,.2 6. Low Income Tenant. As used in this Agreement, the term "Low Income Tenant" shall mean those tenants whose household income does not exceed eighty percent (80%) of the Riverside County Median Income. 7. Project Manager. As used in this Agreement, the term "Project Manager" shall refer to that entity, to be designated by Owner and approved by Agency, who shall be responsible for operating and maintaining the Project in accordance with the terms of this Agreement. Prior to Agency's approval, Owner shall act as Project Manager. 8, Resident Manager. As used in this Agreement, the term "Resident Manager" shall refer to that individual (or those individuals) who may reside in the Project and who are responsible for day-to-day management oFthe Project. 9. Unit. As used in this Agreement, the term "Unit" shall refer to any of the fifty-nine (59) residential units reserved for Eligible Tenants or the Resident Manager. 10. Very Low Income Tenant. As used in this Agreement, the term "Very Low Income Tenant" shall mean Arose tenants whose income does not exceed fifty percent (50%) of the Riverside County Median Income. B. RESIDENTIAL RENTAL PROPERTY. The Owner hereby agrees that the Project is to be owned, managed, and operated as a project for very low and low income residential rental purposes for a term equal to fifty-five (55) years, commencing upon the date of the recordation of the Certificate of Completion for the Site in accordance with the OPA (the "Term"). To that end, and for the term of this Agreement, the Owner hereby represents, covenants, warrants and agrees as follows: 1. Purpose_ The Site is being acquired and the Project constructed for the purpose of providing very low and low income rental housing and the Owner shall own, manage, and operate the Project as a project to provide very low and low income rental housing comprised of several interrelated buildings or structures, together with any functionally related and subordinate facilities. 2. Residential Use. None of the Units in the Project will at any time be utilized on a transient basis or used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park without the Agency's prior consent which consent may be given or withheld in its sole and absolute discretion. 3. Conversion of Project. No part of the Project will at any time be owned by a cooperative housing corporation, nor shall the Owner talce any steps in connection with the conversion to such ownership or uses to condominiums, or to any other form of ownership, without the prior written approval of Agency which approval may be given or withheld in its sole and absolute discretion. 4. Preference to Eligible Tenants. All of the Units will be available for rental in accordance with the terms of this Agreement, and the Owner shall not give preference to any particular class or group in renting the Units in the Project, except to the extent 3 603043 5557901 that the Units are required to be leased or rented to Eligible Tenants and except as provided in Section C.6 below. 5. Resident Manager. One, and only one, Unit in the Project may be occupied by a Resident Manager. 6. Liability of Owner. Owner and Resident Manager shall not incur any liability under this Agreement as a result of ft'aud or intentional misrepresentation by a tenant. C. OCCUPANCY OF PROJECT 13Y ELIGIBLE TENANTS. Owner hereby represents, warrants, and covenants as follows: I. Occupancy. Except as expressly provided herein, throughout the tern of this Agreement the occupancy of the 28 Restricted Units in the Project (excluding the Resident Manager Unit) shall be restricted to Eligible Tenants and qualified members of the Eligible Tenant's household. 2. Ex iration of Occupancy and Rent Restrictions. The Units shall be subject to the restrictions contained in this Section C for the Term of this Agreement. All tenants residing in the Units during the final two (2) years of the Term shall be given notice of the expiration of the Term at least once every six (6) months during the final two years. After the expiration of the Term, the rents payable on the Units may be raised to market rates. 3. Rental Rates. Owner hereby agrees to rent those Units occupied by Low Income Tenants at no greater than .Affordable Low Income Rent, and to rent those Units occupied by Very Low Income Tenants at no greater than Affordable Very Low Income Rent. 4. Occupancy By Eligible Tenant. A Unit occupied by an Eligible Tenant shall be treated as occupied by an Eligible Tenant until a recertification of such tenant's income in accordance with Section C.8 below demonstrates that such tenant no longer qualifies as an Eligible Tenant. 5. Income Computation Certificate. Immediately prior to an Eligible Tenant's occupancy of a Unit, Owner shall obtain and maintain on file an Income Computation and Certification form (which form shall be approved in advance by the Agency) from each such Eligible Tenant dated immediately prior to the date of initial occupancy in the Project by such Eligible Tenant. In addition, the Owner will provide such further information as may be required in the future by the Agency. Owner shall use its best efforts to verify that the income provided by an applicant is accurate by taking the following steps as apart of the verification process: (i) obtain three (3) pay stubs for the most recent pay periods; (ii) obtain a written verification of income and employment from applicant's current employer; (iii) obtain an income verification form from the Social Security Administration and/or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such 4 5557901 000044 applicant's income as is satisfactory to the Agency; or (v) such other information as may be requested by the Agency. A copy of each such Income Computation and Certification shall be filed with the Agency prior to the occupancy of a Unit by an Eligible Tenant whenever possible, but in no event more than thirty (30) days after initial occupancy by said tenant. 6. Rental Priority. During the term of this Agreement, Owner shall use its best efforts to lease vacant Units reserved for Eligible Tenants in the following order of priority: (i) displaced persons entitled to a preference pursuant to California Health and Safety Code Section 33411.3 or successor statute, with highest priority in this category to residents of Palm Springs; (ii) residents of the City of Palm Springs; and (iii) other persons meeting the eligibility requirements of this Agreement. Owner shall and Agency may maintain a list (the "housing List") of persons who have notified Owner and/or Agency of their desire to rent a Unit in the Project and who have incomes which would qualify them as an Eligible Tenant, and Owner shall offer to rent Units on the above- referenced priority basis. Should multiple tenants be equally eligible and qualified to rent a Unit, Owner shall rent available Units to Eligible Tenants on a first-come, first-served basis. 7. Renting Vacant Units. When a Unit becomes available as a result of a tenant vacation, Owner shall rent the Unit to an Eligible Tenant in accordance with the order of priority set forth in Section C.6. 8. Income Recertification. hrunediately prior to the first anniversary date of the occupancy of a Unit by an Eligible Tenant and on each anniversary date thereafter, Owner shall recertify the income of such Eligible Tenant by obtaining a completed Income Computation and Certification based upon the current income of each occupant of the Unit. In the event the recertification demonstrates that such household's income exceeds the income at which such household would qualify as an Eligible Tenant, such household will no longer qualify as an Eligible Tenant_ If the occupants upon recertification do not qualify as an Eligible Tenant, then the occupants' lease shall be terminated in accordance with Section C.9. Owner shall provide the Agency with a copy of each such recertification with the next submission of Certificate of Continuing Program Compliance pursuant to Section C.10. 9. Terminating Iuelr"gible Tenant. Upon recertification, if an Eligible Tenant has become ineligible, Owner shall allow such ineligible tenant to occupy the Unit for a period of sixty (60) days ("Grace Period"). During the Grace Period the rent shall not increase except to the extent of increases in the amount of the Affordable Low Income Rent. If the ineligible tenant becomes an Eligible Tenant upon recertification during the Grace Period, Owner shall continue to rent the Chit to the Eligible Tenant at the Affordable Rent of the income category that the Eligible Tenant falls within following recertification. If after the Grace Period the tenant remains ineligible, the ineligible tenant's lease shall not be renewed and such tenant shall be required to vacate the Unit. 10_ Certificate of Continuing Program Compliance. Upon the issuance of the Certificate of Completion and annually by January 31 of each year, or at any time upon 5 009045 555790.1 the written request of Agency, Owner shall advise the Agency of the occupancy of the Project by delivering a Certificate of Continuing Program Compliance in the fonn attached hereto as Exhibit "C," certifying: (i) the number of Units of the Project which were occupied or deemed occupied pursuant to Section C.1 by an Eligible Tenant during such period, and (ii) to the knowledge of Owner either (a) no unremedied default has occurred under this Agreement, (b) a default has occurred, in which event the Certificate shall describe the nature of the default and set forth the measures being taken by the Owner to remedy such default. 11. Maintenance of Records. Owner shall maintain complete and accurate records pertaining to the Units, and shall permit any duly authorized representative of the Agency to inspect the books and records of Owner pertaining to the Project including,but not limited to, those records pertaining to the occupancy of the Units. 12. Reliance on Tenant Representations. Each lease shall contain a provision to the effect that Owner has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of the Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. 13. Conflicts. The leasing preference provision set forth in Section C.6 shall apply only in the event, and to the extent, such provisions are not in conflict with Internal Revenue Code provisions or IRS regulations. 14. Agency Remedy For Excessive Rent Charge. a. It shall constitute a default for Owner to charge or accept for a Unit rent amounts in excess of the amount provided for in Section C.3 of this Agreement. In the event that Owner charges or receives such higher rental amounts, in addition to any other remedy Agency shall have for such default, Owner shall be required to pay to Agency the entire amount of rent received in excess of the amount permitted pursuant to this Agreement- b. It shall constitute a default for Owner to rent any Unit to a tenant who is not an Eligible Tenant for the particular Unit pursuant to the rental rate requirements set forth in Section C.3 of this Agreement. In the event Owner rents a Unit to an ineligible tenant, in addition to any other equitable remedy Agency shall have for such default, Owner, for each separate violation shall be required to pay to Agency an amount equal to (i) two times the greater of(A) the total rent Owner received from such ineligible tenant, or (B) the total rent Owner was entitled to receive for renting that Unit, plus (ii) any relocation expenses incurred by Agency or City as a result of Owner having rented to such ineligible person. c_ It shall constitute a default for Owner to rent any of the Units in violation of the leasing preference requirements of Sections C.6 of this Agreement. In the event Owner rents a Unit in violation of the leasing preference requirements, in addition to any other equitable remedy Agency shall have for 6 060046 5557901 such default, Owner, for each separate violation shall be required to pay Agency an amount equal to two (2) months of rental charges for the Unit with the highest rent. The terms of this Section C.14 shall not apply if Owner rents to an ineligible person as a result of such person's fraud or misrepresentation. THE PARTIES HERETO AGREE THAT THE AMOUNTS SET FORTH IN SUBPARAGRAPHS (a) THROUGH (c) OF THIS SECTION C.14 (THE "DAMAGE AMOUNTS") CONSTITUTE A REASONABLE APPROXIMATION OF THE ACTUAL DAMAGES THAT AGENCY WOULD SUFFER DUE TO THE DEFAULTS BY OWNER SET FORTH IN SUBPARAGRAPHS (a) THROUGH (c), CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OF THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF THE DAMAGE AMOUNTS TO THE RANGE OF HARM TO AGENCY AND ACCOMPLISHMENT OF AGENCY'S PURPOSE OF ASSISTING IN THE PROVISION OF AFFORDABLE HOUSING TO ELIGIBLE TENANTS THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE AMOUNTS SET FORTH IN THIS SECTION C.14 SHALL. BE THE SOLE MONETARY DAMAGES REMEDY FOR THE DEFAULTS SET FORTH IN THIS SECTION C_14, BUT NOTHING IN THIS SECTION C.14 SHALL BE INTERPRETED TO LIMIT AGENCY'S REMEDY FOR SUCH DEFAULT TO SUCH A DAMAGES REMEDY. IN PLACING ITS INITIAL AT THE PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL WHO HAS EXPLAINED THE CONSEQUENCES OF THE LIQUIDATED DAMAGES PROVISION AT OR PRIOR TO THE TIME EACH EXECUTED THIS AGREEMENT. OWNER'S INITIALS: AGENCY'S INITIALS: 15. Section 8 Tenants. Owner shall accept as tenants on the same basis as all other Eligible Tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. Owner shall not apply selection criteria to Section 8 certificate holders that are more burdensome than criteria applied to all other Eligible Tenants. D. MAINTENANCE. 1. Maintenance Obligation. Owner, for itself and its successors and assigns, hereby covenants and agrees to maintain and repair or cause to be maintained and repaired the Site and all related on-site improvements and landscaping thereon, including, without limitation, buildings, parking areas, lighting, signs and walls in a first class condition and repair, free of rubbish, debris and other hazards to persons using the same, and in accordance with all applicable laws, rules, ordinances and regulations of all federal, state, and local bodies and agencies having jurisdiction, at Owner's sole cost and expense. Such maintenance and repair shall include, but not be limited to, the following: (i) sweeping and trash removal; (h) the care and replacement of all shrubbery, plantings, and other landscaping in a healthy condition; and (iii) the repair, replacement and 7 5557901 restriping of asphalt or concrete paving using the same type of material originally installed, to the end that such pavings at all times be kept in a level and smooth condition. In addition, Owner shall be required to maintain the Property in such a manner as to avoid the reasonable determination of a duly authorized official of the City that a public nuisance has been created by the absence of adequate maintenance such as to be detrimental to the public health, safety or general welfare or that such a condition of deterioration or disrepair causes appreciable harm or is materially detrimental to property or improvements within one thousand(1,000) feet of such portion of the Site. 2. Parking and Driveways. The driveways and traffic aisles on the Site shall be kept clear and unobstructed at all times. No vehicles or other obstruction shall project into any of such driveways or ixaffic aisles. Vehicles associated with the operation of the Site, including delivery vehicles, vehicles of employees and vehicles of persons with business on the Site shall park solely on the Site. 3. Tenant Compliance. Owner shall provide any proposed tenants of any portion of the Site with a copy of this Agreement and shall, prior to entering into any lease agreement, have the proposed tenant execute an affidavit agreeing to comply with the provisions of this Agreement. All lease agreements shall be in writing and shall contain provisions which make compliance with the conditions of this Agreement express covenants of the lease. 4. Right of Entry. In the event Owner fails to maintain the Site in the above- mentioned condition, and satisfactory progress is not made in correcting the condition within thirty(30) days from the date of written notice from Agency, City or Agency may, at their option, and without further notice to Owner, declare the unperformed maintenance to constitute a public nuisance_ Thereafter, either Agency or City, their employees, contractors or agents, may cure Owner's default by entering upon the Site and performing the necessary landscaping and/or maintenance. The Agency or City shall give Owner, its representative or the residential manager reasonable notice of the time and manner of entry, and entry shall only be at such times and in such manner as is reasonably necessary to carry out this Regulatory Agreement. Owner shall pay such costs as are reasonably incurred by Agency or City for such maintenance, including attorneys' fees and costs. 5. Lien. If such costs are not reimbursed within thirty (30) days after Owner's receipt of notice thereof, the same shall be deemed delinquent, and the amount thereof shall bear interest thereafter at a rate of the lower of ten percent (10%)per anuum or the legal maximum until paid. Any and all delinquent amounts, together with said interest, costs and reasonable attorney's fees, shall be an obligation of Owner as well as a lien and charge, with power of sale, upon the property interests of Owner, and the rents, issues and profits of such property. City and/or Agency may bring an action at law against Owner obligated to pay any such sums or foreclose the lien against Owner's property interests. Any such lien may be enforced by sale by the City or Agency following recordation of a Notice of Default of Sale given in the manner and time required by law as in the case of a deed of trust; such sale to be conducted in accordance with the provisions of Section 2924, et seq., of the California Civil Code, applicable to 8 000048 555790.1 the exercise of powers of sale in mortgages and deeds of trust, or in any other manner permitted by law. Any monetary lien provided for herein shall be subordinate to any bona fide mortgage or deed of trust covering an ownership interest or leasehold or subleasehold estate in and to any Site approved by Agency pursuant to the OPA, and any purchaser at any foreclosure or trustee's sale (as well as any deed or assignment in lieu of foreclosure or trustee's sale) under any such mortgage or deed of trust shall take title free from any such monetary lien, but otherwise subject to the provisions hereof; provided that, after the foreclosure of any such mortgage and/or deed of trust, all other assessments provided for herein, to the extent they relate to the expenses incurred subsequent to such foreclosure, assessed hereunder to the purchaser at the foreclosure sale, as owner of the subject Site after the date of such foreclosure sale, shall become a lien upon such Site upon recordation of a Notice of Assessment or Notice of Claim of Lien as herein provided. E. MANAGEMENT. 1. A roval of Protect Mana er• Designation of Resident Manager- Subject to the terns and conditions contained hereinbelow, Owner shall at all times during the operation of the Project pursuant to this Agreement retain an entity to perform the management and/or supervisory functions ("Project Manager") with respect to the operation of the Project including day-to-day administration, maintenance and repair. Owner shall, before execution of this Agreement or any subsequent amendment or replacement 'thereof, submit and obtain Agency's written approval of a management contract ("Management Contract") entered into between Owner and a Project Manager acceptable to Agency. Subject to any regulatory or licensing requirements of any other applicable governmental agency, the Management Contract may be for a tern of up to fifteen (15) years and may be renewed For successive terms in accordance with its terns, but may not be amended or modified without the written consent of Agency. The Management Contract shall also provide that the Project Manager shall be subject to termination for failure to meet project maintenance and operational standards set forth herein or in other agreements between Owner and Agency. Owner shall promptly terminate any Project Manager which commits or allows such failure, unless the failure is cured within a reasonable period in no event exceeding 60 days from Project Manager's receipt of notice of the failure from Owner or Agency. Owner's obligation to retain a Project Manager shall remain in force and effect for the same duration as the use covenants set forth in Section B of this Agreement. Notwithstanding anything to the contrary in this Section, the Project may be self-managed by Owner with the prior approval of the Agency Executive Director. Any change in the Project Manager shall be, approved, in writing, by the Executive Director, which approval shall not be unreasonably withheld. In addition to the Project Manager, one Resident Manager shall be designated as necessary by Owner or Project Manager, with written notice to Agency of the Resident Manager's naive, address and telephone number. 9 O00049 5557901 2. Serious Mismanagement. In the event of"Serious Mismanagement" (as that term is defined below) of the Project, Agency shall have the authority to require that such Serious Mismanagement cease immediately, and further to require the immediate replacement of the Project Manager or Resident Manager. For purposes of this Agreement the term "Serious Mismanagement" shall mean management of the Project in a manner which violates the terms and/or intent of this Agreement and/or the Management Contract to operate an affordable housing complex of the highest standard, and shall include,but is not limited to, the following: a. Knowingly leasing to ineligible tenants or tenants whose income exceeds the prescribed levels; b. Knowingly allowing the tenants to exceed the prescribed occupancy levels without taking immediate steps to stop such overcrowding; C. Repeatedly failing to timely maintain the Project and the Site in the maimer required by this Agreement; d. Failing to timely submit the reports as required by this Agreement or failing to submit materially complete reports; e. Fraud in connection with any document or representation relating to this Agreement or embezzlement of Project monies; and f. Failing to fully cooperate with the City's Police Department in maintaining a crime-free environment on the Site. G. COMPLIANCE WITH LAWS. I_ State and Local Laws. Owner shall comply with all ordinances, regulations and standards of the City and Agency applicable to the Site. Owner shall comply with all rules and regulations of any assessment district of the City with jurisdiction over the Site. 2. Lease Approval. Agency shall have the right but is not required to approve any lease forms, revisions, amendments or modification made to same, used by the Project Manager or Resident Manager fox leasing Units within the Site. H. INSURANCE. L Duty to Procure Insurance. Owner covenants and agrees for itself, and its assigns and successors-in-interest in the Site that from completion of the Project as evidenced by City's issuance of a certificate of occupancy, and continuing thereafter until the expiration of the Tern of this Agreement, Owner or such successors and assigns shall procure and keep in full force and effect or cause to be procured and kept in full force and effect for the mutual benefit of Owner and Agency, and shall provide Agency evidence reasonably acceptable to Executive Director, insurance policies meeting the minimum requirements set forth below: 10 GOGH 555790 1 a. Commercial General Liability insurance with respect to the Site and the operations of or on behalf of Owner, in an amount not less than Two Million Dollars ($2,000,000) per occurrence combined single limit including products, completed operations, contractual, bodily injury, personal injury, death and property damage liability per occurrence, subject to such increases in amount as Agency may reasonably require from time to time. The insurance to be provided by Owner may provide for a deductible or self-insured retention of not more than Ten Thousand Dollars (510,000), with such maximum amount to increase at the same rate as the periodic increases in the minimum amount of total insurance coverage set forth above. b. With respect to the improvements and any fixtures and furnishings to be owned by Owner on the Site, All Risk Property insurance against fire, extended coverage, vandalism, and malicious mischief, and such other additional perils, hazards, and risks as now are or may be included in the standard "all risk" form in general use in Riverside County, California, with the standard form fire insurance coverage in an amount equal to full actual replacement cost thereof, as the same may change from time to time. The above insurance policy or policies shall include coverage for earthquake to the extent generally and commercially available at commercially reasonable rates. Agency shall be a loss payee under such policy or policies and such insurance shall contain a replacement cost endorsement. C. All policies of insurance required to be carried by Owner shall be written by responsible and solvent insurance companies licensed in the State of California and having a policy-bolder's rating of A or better, in the most recent addition of"Best's Key Rating Guide -- Property and Casualty." A copy of each paid-up policy evidencing such insurance (appropriately authenticated by the insurer) or a certificate of the insurer, certifying that such policy has been issued, providing the coverage required herein, and containing the provisions specified herein, shall be delivered to Agency prior to its issuance of the Certificate of Completion for the Project and thereafter, upon renewals, not less than thirty (30) days prior to the expiration of coverage. Agency may, at any time, and from time to time, inspect and/or copy any and all insurance policies required to be procured by Owner hereunder. In no event shall the limits of any policy be considered as limiting the liability of Owner hereunder. d. Each insurance policy required to be carried by Owner pursuant to this Agreement shall contain the following endorsements, provisions or clauses: (1) The insurer will not cancel or materially alter the coverage provided by such policy in a manner adverse to the interest of the insured without first giving Agency a minimum of thirty (30) days prior written notice by certified mail, return receipt requested; and (2) A waiver by the insurer of any right to subrogation against Agency, its agents, employees, or representatives, which arises or might 11 00001J51 5557901 arise by reason of any payment under such policy or policies or by reason of any act or omission of Agency, its agents, officers, members, officials, employees, or representatives. (3) The City, Agency, their respective agents, officers, members, officials, employees, volunteers, and representatives shall be named insureds on the Commercial General Liability policies. (4) The City and Agency shall be loss payees on the All Risk Property insurance policies. (5) Coverage provided by these policies shall be primary and non-contributory to any insurance carried by the City, Agency, their officers, officials, employees, volunteers, agents, or representatives. (6) Failure to comply with reporting provisions shall not affect coverage provided to City, Agency, their officers, employees, volunteers, agents, or representatives. 2. Failure to Procure Insurance. If Owner fails to procure and maintain the above-required insurance despite its availability, then Agency, in addition to any other remedy which Agency may have hereunder for Owner's failure to procure, maintain, and/or pay for the insurance required herein, may (but without any obligation to do so) at any time or from time to time, after thirty(30) days written notice to Owner,procure such insurance and pay the premiums therefor, in which event Owner shall immediately repay Agency all sums so paid by Agency together with interest thereon at the maximum legal rate. I. OBLIGATION TO REPAIR_ I. Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance. Subject to Section 1.3 below, if the Project shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by Owner, Owner shall promptly proceed to obtain insurance proceeds and take all steps necessary to begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly and diligently commence the repair or replacement of the Project to substantially the same condition as the Project is required to be maintained in pursuant to this Agreement, whether or not the insurance proceeds are sufficient to cover the actual cost of repair, replacement, or restoration, and Owner shall complete the same as soon as possible thereafter so that the Project can continue to be operated and occupied as an affordable housing project in accordance with this Agreement. Subject to extensions of time for "force majeure" events described in the OPA, in no event shall the repair, replacement, or restoration period exceed one (1) year from the date Owner obtains insurance proceeds unless Agency's Executive Director, in his or her sole and absolute discretion, approves a longer period of time. Agency shall cooperate with Owner, at no expense to Agency, in obtaining any governmental permits required for the repair, replacement, or restoration. If, however, the then-existing laws of any other 12 000052 555790.1 governmental agencies or lenders with jurisdiction over the Property do not permit the repair, replacement, or restoration, Owner may elect not to repair, replace, or restore the Project by giving notice to Agency (in which event Owner shall be entitled to all insurance proceeds but Owner shall be required to remove all debris from the Site) or Owner may reconstruct such other improvements on the Site as are consistent with applicable land use regulations and approved by the City, Agency, and the other governmental agency or agencies with jurisdiction. If Owner fails to obtain insurance as required by the OPA or this Agreement (and Agency has not procured such insurance and charged Owner for the cost), Owner shall be obligated to reconstruct and repair any partial or total damage to the Project and improvements located on the Site in accordance with this Section I.1. 2. Continued Operations. During any period of repair, Owner shall continue, or cause the continuation of, the operation of the Project to the extent reasonably practicable ,Croat the standpoint of prudent business management. 3. Damage or Destruction Due to Cause Not Required to be Covered by Insurance. If the improvements comprising the Project are completely destroyed or substantially damaged by a casualty for which Owner is not required to (and has not) insure against, then Owner shall not be required to repair, replace, or restore such improvements and may elect not to do so by providing Agency with written notice of election not to repair, replace, or restore within ninety (90) days after such substantial damage or destruction. In such event, Owner shall remove all debris from the Property. As used in this Section 1.3, "substantial damage" caused by a casualty not required to be (and not) covered by insurance shall mean damage or destruction which is fifty percent (50%) or more of the replacement cost of the improvements comprising the Project. In the event Owner does not timely elect not to repair, replace, or restore the improvements as set forth in the first sentence of this Section I.3, Owner shall be conclusively deemed to have waived its right not to repair, replace, or restore the improvements and thereafter Owner shall promptly commence and complete the repair, replacement, or restoration of the damaged or destroyed improvements in accordance with Section 1.1 above and continue operation of the apartment complex during the period of repair (if practicable) in accordance with Section 12 above. .1. LIMITATION ON TRANSFERS. The Owner covenants that Owner shall not transfer the Site or any of its interests therein except as provided in this Section. 1. Transfer Defined. As used in this Section, the term "Transfer" shall include any assignment, hypothecation, mortgage, pledge, conveyance, or encumbrance of this Agreement, the Site, or the improvements thereon. A Transfer shall also include the transfer to any person or group of persons acting in concert of more than twenty-five percent (25%) (in the aggregate) of the present ownership and/or control of any person or entity constituting Owner or its general partners, taking all transfers into account on a cumulative basis, except transfers of such ownership or control interest between members 13 000053 555790.1 of the same immediate fatnily, or transfers to a trust, testamentary or otherwise, in which the beneficiaries are limited to members of the transferor's immediate fancily, or among the entities constituting Owner or its general partners or their respective shareholders. In the event any entity constituting Owner, its successor or the constituent partners of Owner or any successor of Owner, is a corporation or trust, such transfer shall refer to the transfer of the issued and outstanding capital stock of such corporation, of beneficial interests of such trust; in the event that any entity constituting Owner, its successor or the constituent partners of Owner or any successor of Owner is a limited or general partnership, such transfer shall refer to the transfer of more than twenty-five percent (25%) of such limited or general partnership interest; in the event that any entity constituting Owner, its successor or the constituent partners of Owner or any successor of Owner is a joint venture, such transfer shall refer to the transfer of more than twenty-five percent (25%) of the ownership and/or control of any such joint venture partner, taking all transfers into account on a cumulative basis. 2. Agency Approval of Transfer Required. Owner shall not Transfer the Site or any of Owner's rights hereunder, or any interest in the Site or in the improvements thereon, directly or indirectly, voluntarily or by operation of law, except as provided below, without the prior written approval of Agency, and if so purported to be Transferred, the same shall be null and void. In considering whether it will grant approval of any Transfer by Owner of its interest in the Site, Agency shall consider factors such as (i) whether the completion and operation of the Project is jeopardized; (n) the financial credit, strength, and capability of the proposed transferee to perform Owner's obligations heretmder; and (iii) the proposed transferee's experience and expertise in the planning, financing, development, ownership, and operation of similar projects. In the absence of specific written agreement by Agency, no transfer by Owner of all or any portion of its interest in the Site (including without limitation a transfer not requiring Agency approval hereunder) shall be deemed to relieve it or any successor party from the obligation to complete the Project or any other obligations under this Agreement. In addition, no attempted transfer of any of Owner's obligations hereunder shall be effective unless and until the successor party executes and delivers to Agency an assumption agreement in a form approved by the Agency assuming such obligations. 3. Exceptions. The foregoing prohibition shall not apply to any of the following: (a) Any mortgage, deed of trust, sale/lease-back, or other form of conveyance for financing, but Owner shall notify Agcncy in advance of any such mortgage, deed of trust, or other form of conveyance for financing pertaining to the Site. (b) Any mortgage, deed of trust, sale/lease-back, or other form of conveyance for restructuring or refinancing of any amount of indebtedness described in subsection (a) above, provided that the amount of indebtedness incurred in the restructuring or refinancing does not exceed the outstanding 14 QQQQ�� 555790.1 balance on the debt incurred to finance the acquisition of the Site and construction of improvements on the Site, including any additional costs for completion of construction, whether direct or indirect, based upon the estimates of architects and/or contractors. (c) After recordation of the Certificate of Completion, any mortgage, deed of trust, sale/lease-back, or other form of conveyance for financing provided that the principal amount of the loan does not exceed eighty-five percent (85%) of the value of the land and improvements thereon. (d) The granting of easements to any appropriate governmental agency or utility to facilitate the development of the Site. (e) A sale or transfer resulting from or in connection with a reorganization as contemplated by the provisions of the Internal Revenue Code of 1986, as amended or otherwise, in which the ownership interests of a corporation are assigned directly or by operation of law to a person or persons, firm or corporation which acquires the control of the voting capital stock of such corporation or all or substantially all of the assets of such corporation. (f) A transfer of twenty-five percent (25%) or more ownership interest to a member of the transferor's immediate family, a trust, testamentary or otherwise, in which immediate family members of the transferor are the sole beneficiaries, or a corporation or partnership in which the immediate family members or shareholders of the transferor have controlling majority interest of more than fifty percent(50%). (g) A change in the respective percentage ownership interests exclusively of the present owners of Owner (as of the date of this Agreement), but this shall not authorize the transfer of any interest to any person or entity who is not a present owner of Owner. (h) A sale or transfer to the Owner's general partner or to the Coachella Valley Housing Coalition. (i) The removal of the general partner of Owner for an uncured default under Owner's partnership agreement provided that any substitute general partner is reasonably acceptable to the Agency. K. ENFORCEMENT. In the event Owner defaults in the performance or observance of any covenant, agreement or obligation of Owner pursuant to this Agreement, and if such default remains uncured for a period of thirty (30) days after written notice thereof shall have been given by Agency, or, in the event said default cannot be cured within said time period, Owner has failed to commence to cure such default within said thirty (30) days and thereafter fails to diligently prosecute said cure to completion, then Agency shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one or more of the following steps: 15 000055 555790/1 1. By mandamus or other suit, action or proceeding at law or in equity, require Owner to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or 2. Take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of Owner hereunder; or 3. Enter the Site and cure the Event of Default as provided in Section E hereof. 4. Impose, through Agency's Executive Director, an administrative fine for each day the violation continues. The amount of the fine shall be Twenty-Five dollars (525.00) per day, unless the violation is deemed a major violation, in which case the fine shall be Seventy-Five dollars ($75.00) per violation per day. A "major"violation shall be one which affects adjacent property or the health and safety of persons. Owner may appeal the assessment of any fine to the City Council who may reverse, modify or upbold the decision of the Executive Director. In making this decision, the City Council shall determine whether the violation exists and whether the amount of the fine is appropriate under the circumstances. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of its 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 another party. L. NONDISCRIMINATION. 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 Site, or any part thereof, nor shall Owner, 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 Site, or any part thereof(except as permitted by this Agreement). M. COVENANTS TO RUN WITH THE LAND. Owner hereby subjects the Site to the covenants, reservations, and restrictions set forth in this Agreement. Agency and Owner hereby declare their express intent that all such covenants, reservations, and restrictions shall be deemed covenants running with the land and shall pass to and be binding upon the Owner's successors in title to the Site; provided, however, that on the termination of this Agreement said covenants, reservations and restrictions shall expire. All covenants without regard to technical classification or designation shall be binding for the benefit of the Agency, and such covenants shall run in favor of the Agency for the entire term of this Agreement, without regard to whether the Agency is or remains an owner of any land or interest therein to which such covenants relate. Each and every contract, deed or other instrument hereafter executed covering or conveying the Site or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations, and restrictions, regardless of whether such covenants,reservations, and restrictions are set forth in such contract, deed or other instrument. 16 000056 555790.1 Agency and Owner hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that Owner's legal interest in the Site is rendered less valuable thereby. Agency and Owner hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project by Eligible Tenants, the intended beneficiaries of such covenants, reservations, and restrictions, and by furthering the public purposes for which the Agency was formed. Owner, in exchange for the Agency entering into the OPA, hereby agrees to hold, sell, and convey the Site subject to the terms of this Agreement. Owner also grants to the Agency and the City the right and power to enforce the terms of this Agreement against the Owner and all persons having any right, title or interest in the Site or any part thereof, their heirs, successive owners and assigns. N. INDEMNIFICATION. Owner agrees for itself and its successors and assigns to indemnify, defend, and hold harmless Agency, City, and their respective officers, members, officials, employees, agents, vohmteers, and representatives from and against any loss, liability, claim, or judgment relating in any manner to the Project excepting only any such loss, liability, claim, or judgment arising out of the intentional wrongdoing or gross negligence of Agency, City, or their respective officers, officials, employees, members, agents, volunteers, or representatives. Owner, while in possession of the Site, and each successor or assign of Owner while in possession of the Site, shall remain fully obligated for the payment of property taxes and assessments in connection with the Site. The foregoing indemnification, defense, and hold harmless agreement shall only be applicable to and binding upon the party then owning the Site or applicable portion thereof. O. ATTORNEYS' FEES. In the event that a party to this Agreement brings an action against the other party hereto by reason of the breach of any condition, covenant, representation or warranty in this Agreement, or otherwise arising out of this Agreement, the prevailing party in such action shall be entitled to recover from the other reasonable expert witness fees, and its reasonable attorney's fees and costs. Attorney's fees shall include attorney's fees on any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, including the conducting of discovery. P. AMENDMENTS. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Riverside. Q. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: Agency: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 17 000057 5557901 Attn: Executive Director Owner: DESERT HIGHLANDS ASSOCIATES c/o Coachella Valley Housing Coalition 45-701 Monroe Street, Suite G, Plaza I Indio, CA 92201 Attn: General Partner Copy to: Investor limited partner at address to be provided by Owner The notice shall be deemed given three (3) business days after the date of mailing, or, if personally delivered,when received. R. SEVERABILITX/WAIVER/TNTEGRATION. 1. Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. 2. Waiver. A waiver by either party of the performance of any covenant or condition herein shall not invalidate this Agreement nor shall it be considered a waiver of any other covenants or conditions, nor shall the delay or forbearance by either party in exercising any remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right. 3. Integration. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement- S. FUTURE ENFORCEMENT. The parties hereby agree that should the Agency cease to exist as an entity at any time during the term of this Agreement, the City of Palm Springs shall have the right to enforce all of the terms and conditions herein, unless the Agency had previously specified another entity to enforce this Agreement. T. GOVERNING LAW. This Agreement shall be governed by the laws of the State of California. U. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. IN WITNESS WHEREOF, the Agency and Owner have executed this Regulatory Agreement and Declaration of Covenants and Restrictions by duly authorized representatives on the date first written hereinabove. 1s QQQ0�8 555790.1 "AGENCY" COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS a public body, corporate and politic By: Chair ATTEST: Agency Secretary APPROVED AS TO FORM: By: "OWNBR" DESERT HIGHLANDS ASSOCIATES, a California Limited Partnership By: Tlaquepaque Housing Corporation, Its General Partner By: Naive: Title: [END OF SIGNATURES] 19 000059 555790.1 STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] STATE OF CALTFORNIA ) ss. COUNTY OF ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 20 000060 5557901 STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their siguatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 21 0000GI 555790/1 EXHIBIT "A" LEGAL DESCRIPTION OF SITE That certain real property located in the City of Palm Springs, County of Riverside, State of California, more particularly described as: EXHIBIT B-1 'yy p�e� 555790.1 G O "(� �2 EXIIIBIT "B" DESCRIPTION OF PUBLIC PROPERTY EXHIBIT B-2 006063 5557901 EXHIBIT "C" Period Covered CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS The undersigned, DESERT HIGHLANDS ASSOCIATES, a California limited partnership (the "Owner"), has read and is thoroughly familiar with the provisions of the Owner Participation Agreement ("OPA") and documents referred to therein executed by Owner and the Community Redevelopment Agency of the City of Palm Springs ("Agency") including but not limited to the Regulatory Agreement, as such term is defined in the OPA_ As of the date of this Certificate, the following Units in the Project are: (i) occupied by Eligible Tenants (as defined in the Regulatory Agreement), or (ii) currently vacant and being held available for such occupancy and have been so held continuously since the date an Eligible Tenant vacated such Unit: Occupied Vacant Eligible Tenants As of the date of this Certificate, the following are numbers of Very Low Income Tenants and Low Income Tenants who commenced occupancy of Units during the preceding year: Very Low Income Low Income Tenants Tenants Unit Nos, Unit Nos. Attached is a separate sheet (the "Occupancy Summary") listing, among other items, the following information for each Unit: the number of each Unit, the occupants of each Unit, the rental paid for each Unit, and the size and number of bedrooms of each Unit. The Owner certifies that the information contained in the Occupancy Summary is true and accurate. EXHIBIT C-1 000064 555790.1 The undersigned hereby certifies that (1) a review of the activities of the Owner during such period and of the Owner's performance Linder the OPA and the documents referred to therein has been made under the supervision of the undersigned, and (2) to the best knowledge of the undersigned, based on the review described in clause (1) hereof, the Owner is not in default under any of the terms and provisions of the above documents (or describe the nature of any detail and set forth the measures being taken to remedy such defaults). DESERT HIGHLANDS ASSOCIATES, a California limited partnership By: Its General Partner [END OF SIGNATURES] EXHIBIT C-2 555790.1